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2007 Supreme(Del) 2762
IN THE HIGH COURT OF DELHI
Sanjay Kishan Kaul, J.
Mrs. Nisha Raj and Anr. - Appellants
Vs.
Mr. Pratap K. Kaula and Ors. - Respondent
C.S. (OS) 2630/1994
Decided On: 20.12.2007
For Appellant/Petitioner/Plaintiff: Rajive Sawhney, Sr. Adv., Kajal Chandra and Sanjiv Anand, Advs.
For Respondents/Defendant: Pravir Jain, Adv. for Defendant Nos. 1 to 4, N.S. Vashisht, Adv. for Defendant No. 6 and P.R. Aggarwal, Adv. for Defendant Nos. 7 and 8
The Government's pre-emptive right to purchase the suit property being the mandatory statutory provisions has to be read into the said agreement.
Headnote:
Suit for specific performance of an agreement to sell dated 30-09-1986. Plaintiff paid Rs. 10,000/- as advance. Seller died leaving behind legal heirs (defendant Nos. 1-4). Seller had obtained NOC from the Appropriate Authority under Section 269UD of the Income Tax Act. Defendant Nos. 1-4 entered into an alleged agreement to sell with defendant No. 6 for a total sale consideration of Rs. 1.92 crores and also leased out the said property to defendant No. 7 on a monthly rent of Rs. 15,000/- (which is Rs. 20,000/- at present).
Fact of the Case:
Plaintiffs filed a suit for specific performance of an agreement to sell dated 30-09-1986. The seller had obtained NOC from the Appropriate Authority under Section 269UD of the Income Tax Act. Defendant Nos. 1-4 entered into an alleged agreement to sell with defendant No. 6 for a total sale consideration of Rs. 1.92 crores and also leased out the said property to defendant No. 7 on a monthly rent of Rs. 15,000/- (which is Rs. 20,000/- at present).
Finding of the Court:
The court held that the agreement to sell dated 30-09-1986 was valid and enforceable. The court also held that the plaintiffs were ready and willing to perform their part of the agreement. The court further held that defendant Nos. 6-8 were not bonafide purchasers for valuable consideration without notice of the suit property.
Issues: 1. Whether the suit is within time? OPP 2. Whether the suit is not maintainable on the plea of the defendant that the agreement to sell dated 30-09-1986 had been frustrated, rendered invalid and null and void upon passing of the order dated 26-12-1986 Under Section 269UD(1) of the I.T.A.? OPD 3. Whether the agreement to sell dated 30-09-1986 is valid and enforceable in view of subsequent No Objection Certificate dated 26-04-1984 granted by the Appropriate Authority Under Section 269UD of the Income Tax Act? OPP 4. Whether the agreement to sell dated 30-09-1986 is illegal, invalid and unenforceable as being contrary to the terms of the sub-lease as pleaded in para-6 of the preliminary objection of the written statement? OPD 5. Whether the agreement dated 30-09-1986 is unjust, inequitable and thereforee unenforceable? OPD 6. Whether the plaintiffs were ready and willing to perform the agreement dated 30-09-1986 even after the grant of No Objection Certificate dated 29-04-1994? OPP Additional Issue No. 1: Whether plaintiffs are guilty of misrepresentation and fraud upon the mother of defendant Nos. 1-4 as alleged? Additional Issue No. 2: Whether defendant No. 6 is a bonafide purchaser for valuable consideration without notice of the suit property? If so, its effect? Additional Issue No. 3: Whether defendant No. 8 was validly inducted as tenant in suit property?
Ratio Decidendi: The court held that the agreement to sell dated 30-09-1986 was valid and enforceable. The court also held that the plaintiffs were ready and willing to perform their part of the agreement. The court further held that defendant Nos. 6-8 were not bonafide purchasers for valuable consideration without notice of the suit property. The court relied on the following principles: * The Government's pre-emptive right to purchase the suit property being the mandatory statutory provisions has to be read into the said agreement. * The seller was divested of the title and the government stepped into the shoes of the plaintiffs and paid the apparent consideration to the seller. * The plaintiffs were divested of their rights against the seller pursuant to this order but these rights stood reinstated on passing of the order dated 18-01-1994 by this Court in the Writ petitions whereby the order dated 26-12-1986 stood quashed. * The said agreement became legally enforceable in 1994. * The performance of such agreement thus cannot be considered to have frustrated though the plaintiffs claims against the seller were suspended for the period such order dated 26-12-1986 was in operation.
Final Decision: A decree for specific performance of the agreement dated 30-09-1986 is passed in favor of the plaintiffs and against the defendants subject to the modifications that the plaintiffs will pay a sum of Rs. 49,43,349/- [Rs. 44.18 lacs (+) Rs. 5, 35, 349 (-) Rs. 10,000.00 paid earlier by the plaintiff] along with simple interest @ 12% p.a. on Rs. 5, 35, 349/- from 1.2.1987 till date of payment to defendants 1 to 4 as consideration and the possession of the property is to be handed over on payment of such amount to the plaintiffs. The Conveyance Deed would also be registered in favor of the plaintiffs by defendants 1 to 4 upon the payment of such amount at the cost of the plaintiff. The plaintiffs shall also be entitled to costs.
Sanjay Kishan Kaul, J.
1. The plaintiffs the purchasers have filed the present suit for specific performance of Agreement to sell dated 30-09-1986 (Ex. PW1/2 ) of the property situated at A-2, Pamposh Enclave, New Delhi admeasuring 698.60 sq. yds (hereinafter referred to as the said property). The defendant Nos. 1-4 in the present case are the legal heirs of Smt. Vijay Malini Kaula, the seller, of the said property.
2. A perpetual sub-lease (Ex. P1), duly registered, dated 05-02-1973 was executed in favor of the said seller by the President of India as the Lesser and the Kashmir Cooperative House Building society Ltd. as the lessee for a consideration of Rs. 13,105 towards development charges.
3. The said seller constructed a residential house with a covered area of 3723.08 sq. ft. at the cost of Rs. 2,48,000 on the said property (being a residential plot of land) for which an occupancy certificate was issued by the DDA on 29-12-1984. Later the seller decided to permanently settle in Nilgiris, Tamil Nadu and thereforee appointed one Col. Janki Raina as her attorney by way of a Special Power of Attorney dated 13-12-1979 (Ex. PW1/1). On 01-03-1985, the said property was let out to M/s Tin Plate Company of India Ltd. for a period of three years.
4. It is stated that later, the aforesaid attorney of the seller expressed his inability to look after and manage the property on account of his old age. Hence, the seller decided to sell the said property to the plaintiffs vide Agreement to sell dated 30-09-1986 (Ex. PW1/2) for a consideration of Rs. 29 lacs. Accordingly, the plaintiffs paid a sum of Rs. 10,000 to the seller by way of advance vide Cheque No. 389984 dated 30-09-1986 in pursuance to the said Agreement to Sell (Ex. PW1/2). At that time the said property was under the occupancy of the aforesaid tenant.
5. An application was made under Section 230(A) of the Income Tax Act (hereinafter referred to as the said Act) to seek permission to sell the said property in favor of the Plaintiffs which was duly obtained by the seller on 30-10-1986 (Ex. PW1/4). In compliance with the provisions of Section 269UC of the said Act, the plaintiffs along with the seller filed the prescribed Form No. 37(I).
6. By an Order dated 26-12-1986 (Ex. PW 1/5), the Appropriate Authority exercised its pre-emptive right to purchase the said property for an apparent consideration of Rs. 29 lacs as disclosed in the said Agreement to Sell on behalf of the Central Government. Pursuant to the same, the possession was handed over to the Appropriate Authorities in January 1987 by the seller under protest. Accordingly, the Income Tax Authorities made a payment of Rs. 17,64,651/- vide a cheque dated 27-01-1987 enclosed with a letter (Ex. PW 1/9) to the said seller and also informed the seller that a sum of Rs. 11,35,349/- had been paid to the DDA towards their claim for unearned increase.
.7. Subsequently, two writs being C.W. No. 225/1987 and C.W. No. 421/1987 were filed by the plaintiffs i.e. one on behalf of the seller and the other on behalf of the plaintiffs challenging the said pre-emptive purchase by the Appropriate Authority. For the said purpose, the plaintiffs approached the seller to sign certain papers and the seller at the request of the plaintiffs signed a blank vakalatnama (Ex. PW 1/13) and blank papers (Ex. PW 1/7) and sent the same to the plaintiffs.
8. The said two writs were allowed on 18-01-1994 with the observations that the Appropriate Authority may decide the matter afresh, complying with the directions laid down by the Apex Court in the case of C.B. Gautam v. UOI [1993] 199 ITR 530 (SC) . Accordingly, objections before the Appropriate Authority were filed by the plaintiffs. All costs including the professional fees before the appropriate authorities were also borne by the plaintiffs. In compliance with the Orders of the Court, the Appropriate Authority reconsidered the matter and issued a No Objection Certificate on 29-04-1994 (Ex. P
