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1990 Supreme(Del) 161
High Court Of Delhi
GREATER KAILASH-II WELFARE ASSOCIATION - Appellant
Versus
MUNICIPAL CORPORATION OF DELHI - Respondent
Civil Writ 3413 of 1989
Decided On : 05/21/1990
Ashok Sagar, D.K.JAIN, F.S.NARIMAN, H.N.SALVE, J.M.SABHARWAL, MAHESHVAR DAYAL, R.N.VERMA, RAVNDER NARAIN, S.S.SHROFF
A compromise of doubtful claims and counter-claims is not fraudulent or mala fide if it is not in violation of any law and is entered into to end protracted litigation.
Headnote:
MUNICIPAL CORPORATION OF DELHI - SETTLEMENT WITH D. L. F. UNIVERSAL LTD. - RESOLUTION AND DEED OF SETTLEMENT - VALIDITY - CHALLENGED - NO FRAUD OR MALA FIDE - COMPROMISE OF DOUBTFUL CLAIMS AND COUNTER-CLAIMS - NO VIOLATION OF LAW - PETITION DISMISSED.
Fact of the Case:
Petitioners, a society consisting of residents of Greater Kailash-II, challenged a resolution passed by the Standing Committee of the Municipal Corporation of Delhi (MCD) and a subsequent settlement between MCD and respondent No. 3, D. L. F. Universal Ltd. (DLF), alleging that the actions adversely affected their rights and amounted to a fraud on the public exchequer. The dispute arose from a long-standing litigation between MCD and DLF regarding open spaces and open sites in 16 colonies developed by DLF in Delhi.
Finding of the Court:
The court found that the resolution and settlement were not fraudulent or mala fide. The compromise between the parties ended 25 years of litigation and resulted in DLF handing over 75 sites to MCD for public buildings, free of cost. DLF retained ownership of 9 sites, which it was entitled to under the settlement. The court held that the compromise was not in violation of any law and that the re-alignment of the layout plan did not adversely affect any of the residential plots or public facilities.
Issues: 1. Whether the resolution and settlement between MCD and DLF constituted a fraud on the public exchequer. 2. Whether the compromise was in violation of any law. 3. Whether the re-alignment of the layout plan adversely affected the petitioners.
Ratio Decidendi: 1. A compromise of doubtful claims and counter-claims is not fraudulent or mala fide if it is not in violation of any law and is entered into to end protracted litigation. 2. The provisions of Chapter 20-C of the Income-tax Act are not attracted when there is no transfer of property by the assessee to any other person. 3. A local authority has the power to amend a layout plan under section 313 of the MCD Act, as long as the amended plan is in accordance with the bye-laws and other rules and regulations.
Final Decision: The petition was dismissed, with no order as to costs.
( 1 ) RULE D. B.
( 2 ) THE challenge in this writ petition is to a Resolution dated 3rd May, 1989 passed by the Standing Committee of the Municipal Corporation of Delhi followed by a settlement dated 24th July, 1989 between the M. C. D. and respondent No, 3, D. L. F. Universal Ltd.
( 3 ) THE petitioners are a Society consisting of the residents of Greater K. ailash-11. The main contention in the writ petition is that by virtue of the impugned resolution and settlement the rights of the petitioners are being adversely affected inasmuch as a fraud has been played on the public exchequer and the Municipal Corporation of Delhi by showing undue favour to respondent No. 3 at the expense of the welfare of the residents, the specific of grievance of the petitioners is that as a result of the impugned action of the respondents, an area of 3. 65 acres in Greater Kailash II is going to be used for group housing.
( 4 ) BEFORE going into the legal contentions raised by the petitioners, it will be necessary to advert to a few facts.
( 5 ) RESPONDENT No. 3 is stated to be a coloniser. From the facts on record, including the facts as revealed by I he resolution dated 3rd May. 1989, it appears that respondent No. 3 developed 16 colonies in Delhi. The lay out plans of these colonies had to be approved by the erstwhile Improvement Trust and thereafter by the Municipal Committee and the Municipal Corporation of Delhi. The land in respect of these colonies was purchased by respondent No. 3 and thereafter building plans were submitted.
( 6 ) THE Municipal bye-laws require that certain areas in the colonies was to be kept as open spaces meant for parks, roads and other services whereas certain other areas had to be kept as open sites meant for public utility buildings.
( 7 ) THERE has been an on-going litigation between respondent No. 3 and the Municipal Corporation of Delhi since 1965 with regard to open spaces and open sites. The case of respondent No. 3 has been that they were obliged to hand over to the Municipal Corporation of Delhi open spaces without charging any money. These open spaces were to be maintained and looked after by the M. C. D. and were to consist of parks, roads etc. With regard to open sites which were meant for public utility buildings, the case of respondent No. 3 was that they were to be transferred only on no profit no loss basis. According to the lay-out plans, in some of the colonies there were sites for schools. According to respondent No. 3 these sites were not required to be transferred by respondent No. 3 to the Corporation.
( 8 ) AS already indicated, litigation between the parties commenced in 1965. One round was completed when the case went upto the Supreme Court against a judgment of the Division Bench of this Court reported as Messrs D. L. F. Housing and Construction. (P) Ltd. v. Delhi Municipal Corporation and others, ILR (1969) Delhi 1055. The Supreme Court in D. L. F. Housing Construction (P) Lid. v. Delhi Municipal Corpn. and others, AIR 1976 S. C. 386 came to the conclusion that disputed questions of fact were involved in the case and the matter should be decided by the civil courts. After this decision of the Supreme Court on 4th December, 1975, suits were again instituted in 1979, 1980 and 1981 and interim injunctions were obtained. On 29th November, 1986 interim injunctions were vacated and an appeal was filed. In appeal the interim orders were passed whereby respondent No. 3 continued to retain possession of 85 sites in 16 different colonies of Delhi. At this stage it may be noted that one of the colonies in respect of which the litigation was continuing was Mode! Town. One of the two plots in the said colony was sold by respondent No. 3 to M/s Lal Chand Public Charitable Trust. The question arose whether the sale of this plot was valid or not. It had been contended that this plot had been earmarked for a public building and, therefore, it Could not be sold. It was submitted, in that case,
