2014 Supreme(Del) 333

High Court of Delhi
THE HONOURABLE MR. JUSTICE RAJIV SAHAI ENDLAW
Ing Vysya Bank Ltd & Another
Versus
Vikram Hingorani & Others
RFA Nos. 500 of 2012, 93 of 2013, 105 of 2013 & CM Nos. 20871, 20867 of 2012, 4689, 3127 of 2013
Decided On : 31-01-2014

A builder and a bank claiming through the builder, after having failed to challenge the termination of the Collaboration Agreement, have no locus to challenge the preliminary and final decree for partition even if on consent between the plaintiffs and the defendants no.2&3, mutually dividing the property between themselves.

Headnote:

COLLABORATION AGREEMENT - TERMINATION - POSSESSION - PARTITION - SUIT FOR - DECREE - APPEAL - DELAY - CONDONATION - ARBITRATION AWARD - REGISTRATION - ADMISSIONS - DECREE ON - COLLUSION - EQUITIES OF THE CASE - VESTED RIGHTS - PRELIMINARY DECREE - FINAL DECREE - LIMITATION - WILL - GIFT DEED - LICENSE - ACQUIESCENCE - WAIVER - EXECUTRIX - BENAMI TRANSACTION - TRANSFER OF PROPERTY ACT, 1882 - SECTION 53A - MEANING OF DELIVERY - MEANING OF LEGACY - MEANING OF DELIVER - MEANING OF ADMISSIONS - MEANING OF COLLUSION - MEANING OF WAIVER - MEANING OF ACQUIESCENCE - MEANING OF EXECUTRIX - MEANING OF BENAMI TRANSACTION - MEANING OF LICENSE - MEANING OF VESTED RIGHTS - MEANING OF PRELIMINARY DECREE - MEANING OF FINAL DECREE - MEANING OF COLLABORATION AGREEMENT - MEANING OF ARBITRATION AWARD - MEANING OF GIFT DEED - MEANING OF WILL:

Fact of the Case:

The plaintiffs instituted the suit for the relief of delivery of legacy/share in immovable property with consequential reliefs of partition, injunction and rendition of accounts, pleading that their paternal grandfather had purchased the property in the name of his son-in-law being the husband of his daughter; that the son-in-law vide registered Gift Deed gifted the said property to his wife; that the monies on the acquisition and construction of the said property were however also contributed by the son of the paternal grandfather; that disputes arose between the wife, the paternal grandfather and the son as to the ownership of the said property as well as another property at Bombay and which were referred to arbitration and in which arbitration proceedings, the wife took a stand that she was the owner of half share only in the property and the other half share was owned by her father; the paternal grandfather executed his Will whereunder he bequeathed his undivided half share in the said property to his wife for her lifetime and after her death equally to (i) his another son; (ii) to his yet another son; and (iii) to the children of his son; that in the arbitration proceedings aforesaid, an Award was published holding/declaring the paternal grandfather and the wife to be the owners in equal share of the said property; that the said Award was vide order of this Court made the rule of the Court and a decree passed in terms thereof; that the paternal grandfather died and as per his Will aforesaid, his half undivided share in the property devolved on his wife for her lifetime; that the wife though owner of only one half share in the property, entered into a Collaboration Agreement with the builder, whereunder the builder was to at its own expense construct a new building in place of the construction then existing on the said property and was to in turn take 50% of the sale proceeds of the new construction on the said property; a Power of Attorney was also executed in favour of the Managing Director of the builder; that the builder in or about the year 1990 demolished the old construction on the said property and commenced new construction; that however the Municipal Corporation served a Notice alleging unauthorized construction in the property and owing whereto the wife vide Legal Notice terminated the Collaboration Agreement with the builder and revoked the Power of Attorney given to the Managing Director of the builder; that the wife also filed suit to restrain the builder and its Managing Director from raising further construction on the property and for demolition of the unauthorized construction raised; vide order in the said suit, the builder and its Managing Director were so restrained from raising unauthorized construction in the property; that the wife died; that the plaintiffs called upon the son of the paternal grandfather, the sons of the wife and the builder to partition the property but to no avail; that the builder had granted license to the bank of a substantial portion of the said property for opening its branch and a showroom against the security deposit and annual payment as licence fee; and, that neither the builder nor the bank which had come into use and occupation of the substantial portion of the property through the builder had any right to the property after the dismissal of the suit under Section 20 of the Arbitration Act, 1940 earlier filed by the builder. Accordingly, the suit for the reliefs of (i) partition of the property; (ii) delivery of possession of the property; (iii) injunction; and, (iv) rendition of accounts, was filed impleading the aforesaid son of the paternal grandfather, the sons of the wife, builder and its Managing Director and the bank as defendants thereto.

Finding of the Court:

The Court found that the Collaboration Agreement was not fully performed. Once a Collaboration Agreement is not performed, the appellant no.1/builder cannot claim complete rights under the Collaboration Agreement without having performed the complete obligation. A contract is a package deal. Contract means reciprocal promises which have to be performed before benefit is claimed of the corresponding reciprocal promise. Considering the fact that the builder had filed a suit to claim rights on the basis of Collaboration Agreement and which suit was not pursued by the builder itself and which dismissal in default became final vide order, the position which would emerge is that the rents from the property which are being received need to be protected by depositing the same in the Court. The Court also found that the builder and the bank were not required to be joined as a party to the compromise between the plaintiffs on the one hand and the defendants no. 2 and 3 on the other hand; the builder and the bank were even otherwise not the members of the family to be joined to the family settlement leading to the compromise; that the builder and the bank even otherwise being not parties to the compromise were not entitled to challenge the same; that it is open to a few of the parties to a litigation to enter into a mutual settlement and it is not necessary for them to join the other parties to the suit in the compromise and the suit can continue qua the remaining defendants; that the builder and its Managing Director under the Collaboration Agreement were acting only as an agent of the wife and which agency was terminated by the wife vide Legal Notice and vide Public Notice and whereafter the builder had no right to remain in the property or to handover possession of any part of the property to the bank; that the delivery of possession of part of the property by the builder to the bank was “admittedly” in contravention of the status quo order which had been passed in suit; that though suit was filed by the builder challenging the termination of the Collaboration Agreement but the said suit itself was dismissed in default; that the right if any of the builder was to prefer an appeal against the compromise decree; and, that the compromise decree was of sharing of rights in the property between the co-owners; the builder on the basis of the Collaboration Agreement had no such rights; thus nothing precluded the plaintiffs and the defendants no.2&3 to enter into the compromise.

Issues: None

Ratio Decidendi: The Court held that the builder and the bank claiming through the builder, after having failed to challenge the termination of the Collaboration Agreement were left with no rights whatsoever in the property, they would have no locus to challenge the preliminary and final decree for partition even if on consent between the plaintiffs and the defendants no.2&3, mutually dividing the property between themselves.

Final Decision: The Court dismissed the appeals with costs.