2016 Supreme(Del) 572

IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J. MEHTA, J.
M/s Shri Neelpadmaya Consumer Products Pvt. Ltd. - Plaintiff
Versus
Sh. Satyabir @ Satbir & Ors. - Defendants
CS(OS) No.78/2007
Decided on : 03-02-2016

The provisions of Sections 33 and 42 of the Delhi Land Reforms Act, 1954, which restrict the transfer of agricultural land, do not apply to land that has been urbanized and is part of a zonal development plan issued by the Delhi Development Authority (DDA).

Headnote:

SPECIFIC PERFORMANCE - AGREEMENT TO SELL - SUBJECT LAND GOVERNED BY DELHI LAND REFORMS ACT, 1954 - SECTIONS 33 AND 42 - APPLICABILITY - URBANIZATION - ZONAL DEVELOPMENT PLAN - EFFECT - READINESS AND WILLINGNESS TO PERFORM - FINANCIAL CAPACITY - BREACH OF CONTRACT - DISCRETIONARY RELIEF - SPECIFIC PERFORMANCE OR DAMAGES - BALANCING EQUITIES - INCREASE IN PRICE.

Fact of the Case:

Plaintiff filed a suit for specific performance of two agreements to sell dated 25.9.2006, pertaining to a total land of 20 bighas and 8 biswas situated in village Goela Khurd, New Delhi. The defendants contested the suit, claiming that the agreements to sell were not valid and were only advance payment receipts, and that the plaintiff had breached the contract by failing to pay Rs.2 crores in October, 2006 and Rs.1 crore in November, 2006. The defendants also pleaded that the suit land was governed by the provisions of the Delhi Land Reforms Act, 1954 (the Act), and the agreements to sell were in violation of the provisions of the said Act.

Finding of the Court:

1. The agreements to sell dated 25.9.2006 were complete contracts under the Indian Contract Act, and not merely advance payment receipts. 2. The suit land was not governed by the provisions of Sections 33 and 42 of the Act, as the land had been urbanized and was part of the zonal development plan issued by the Delhi Development Authority (DDA). 3. The plaintiff was ready and willing to perform its obligations under the agreements to sell, as evidenced by the sale deeds executed in favor of the plaintiff with respect to lands in the near vicinity of the subject land, and the statement of account in Citibank showing an amount of Rs.5.50 crores in its bank account. 4. The defendants were guilty of breaches of contracts by failing to obtain the necessary NOC for execution of the sale deeds and by falsely alleging that the plaintiff had breached the contract by not making payment of Rs.2 crores in October, 2006 and Rs.1 crore in November, 2006. 5. The plaintiff was entitled to the discretionary relief of specific performance, as the defendants were guilty of breaches of contracts and the plaintiff was not in any manner guilty of breaches of contracts. 6. In order to balance equities, the defendants were directed to execute the sale deeds in favor of the plaintiff at a price of Rs.3,25,00,000/- per acre, instead of the original price of Rs.1,25,25,000/- per acre.

Issues: 1. Whether the agreements to sell dated 25.9.2006 were valid and binding contracts between the parties. 2. Whether the suit land was governed by the provisions of the Delhi Land Reforms Act, 1954, and the agreements to sell were in violation of the provisions of the said Act. 3. Whether the plaintiff was ready and willing to perform its obligations under the agreements to sell. 4. Whether the defendants were guilty of breaches of contracts. 5. Whether the plaintiff was entitled to the relief of specific performance. 6. Whether the price payable by the plaintiff should be increased in order to balance equities.

Ratio Decidendi: 1. An agreement to sell is a complete contract under the Indian Contract Act if it contains all the requisite ingredients, such as the identity of the buyer and seller, the land in question, the price, and the time of payment of the price. 2. The provisions of Sections 33 and 42 of the Delhi Land Reforms Act, 1954, which restrict the transfer of agricultural land, do not apply to land that has been urbanized and is part of a zonal development plan issued by the Delhi Development Authority (DDA). 3. A plaintiff is considered ready and willing to perform its obligations under a contract if it has the financial capacity to make the payment and the intention to go ahead with the transaction. 4. A defendant is guilty of breach of contract if it fails to perform its obligations under the contract, such as by failing to obtain the necessary NOC for execution of a sale deed. 5. The grant of specific performance is a discretionary relief, and the court may consider factors such as the conduct of the parties, the hardship that may be caused to the defendant, and the increase in the value of the property, in determining whether to grant specific performance. 6. In order to balance equities, the court may increase the price payable by the buyer to the seller, especially in cases where the seller has been guilty of breaches of contracts and the buyer is not in any manner guilty of breaches of contracts.

Final Decision: The suit for specific performance was decreed in favor of the plaintiff. The defendants were directed to execute the sale deeds in favor of the plaintiff at a price of Rs.3,25,00,000/- per acre, instead of the original price of Rs.1,25,25,000/- per acre. The defendants were also directed to obtain the necessary NOC for transfer of the suit land under the Delhi Land (Restriction on Transfer) Act, 1972, within three months from the date of the order. The plaintiff was directed to deposit the balance sale consideration in Court within two months after the defendants gave notice that the NOC had been obtained. If the defendants failed to execute the sale deeds, the plaintiff could get the sale deeds executed in execution proceedings under Order XXI Rule 32 of the Code of Civil Procedure, 1908.