S. Ravindra Bhat, J.

1. This judgment will dispose of two suits, CS (OS) 2580/1989 (hereafter the "specific performance suit") and CS (OS) 1386/90 (hereafter "the possession suit"), which were consolidated. The specific performance suit was filed by M/S Asman Investments Ltd. (hereafter "Asman"and "the Asman suit"); the Defendant in this suit is K.L. Suneja (hereafter "Suneja"). Suneja filed the possession suit, (hereafter "the possession suit") against Asman for ejectment and recovery of damages/mesne profits for use and occupation of the property i.e Plot No. 8 Malviya Nagar Extension (Saket) Community centre, New Delhi (hereafter "the suit property"; it is the subject matter of both suits).

Pleadings in the specific performance suit

2. The facts in the specific performance suit are that Asman, is a registered company under the Indian Companies Act. Suneja had purchased, in an auction from Delhi Development Authority (DDA), the suit property measuring 115.2 sq metres on 27.3.1980 for ` 6,15,000/- . The sale was confirmed by DDA through letter dated 15.4.1980. A perpetual lease deed was executed in favor of Suneja on 21.7.1986 by DDA (on behalf of President of India) and was registered on 1.8.1986. Suneja constructed a super structure on the suit property consisting of a basement, ground, second and third floors on a total covered area of about 6749 sq. feet. According to Asman, Suneja approached it offering to sell the suit property and the price was settled at ` 53.5 lakhs plus the charges payable to DDA.

3. Asman says that as the perpetual lease executed by DDA with Suneja imposed a bar on the transfer of the said plot for ten years therefore it entered into a "lease" arrangement along with an "Agreement to Sell" to doubly safeguard itself. Suneja agreed to the arrangement, provided the money that was paid as "rent" representing "interest" at prevailing market rates on the unpaid balance of sale consideration. A lease deed dated 12.08.1986 was executed and registered with the Sub Registrar, New Delhi, on 13.08.1986. The other document i.e. the Agreement to Sell was executed on 13.08.1986. ` 5,00,000/- was paid as part consideration to Suneja, through a cheque of the same date, drawn on State Bank of Saurashtra which was accepted by the Defendants. The balance amount of ` 48,50,000/- was payable in terms of the agreement. Asman took the possession of the said property which to their belief was primarily under the agreement to sell and additionally under the lease as well.

4. Asman avers that at the time of the lease the prevailing market rate of rent in that complex was between ` 7.75 to 8.25/- per sq.ft, per month while the sale price was ` 800/- per square feet. According to them the reason for this is that the rent is usually @ 1% of the sale value unlike interest which is normally 1.5 % per month. If what was being paid for the property was rent the same would have been at the rate prevailing in the market, i.e. ` 54,000/- and not ` 77,000/- .

5. As per requirement of law prevailing then (Section 269 AB of the Income Tax Act) a statement in Form 37EE was also filed before the Income Tax authorities. With effect from 1.10.1988 Chapter XX-C was introduced. Under the rules, as the transaction was above Rupees ten lakhs, a statement in Form 37 - I was also filed before the appropriate authority. The appropriate authority initiated proceedings and thereafter granted a "No Objection Certificate" dated 31.12.1986 under Section 269 UL of the Income Tax Act. Asman submits that after assuming possession it spent ` 29.41 lakhs to carry out extensive decoration keeping in mind that they were going to own the premises in terms of the agreement to sell. Under the agreement Suneja was to obtain all permissions and "No Objection Certificate" from the respective authorities and was to inform Asman about it, in writing. Asman was required to get the sale completed within 30 days of the notice from Suneja and to pay the balance consider