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2023 Supreme(Del) 5669

IN THE HIGH COURT OF DELHI AT NEW DELHI
Neena Bansal Krishna, J.
Cpt. Rajesh Sethi S. C. & Ors. - Appellants
Versus
Col. P . C . Sethi & Ors. - Respondents
CS(OS) 436 of 2004 & IA No.1871 of 2021
Decided On : 01-11-2023

Advocates appeared:
Mr.Arjun Mukherjee, Advocate, Mr.Ashish Mohan, Mr.Samarth Chowdhary and Ms.Gargi Sethee, Advocate, for the Appellant; Mr.Hrishikesh Baruah, Mr.Pranav Jain, Advocates for D-1 Mr.Ashish Mohan, Mr.Samarth Chaudhary and Ms.Gargi Sethee, Advocate, Mr.Hrishikesh Baruah and Mr.Pranav Jain, Advocate, Mr.Arjun Dewan and Ms.Varisha B., Advocate, for the Respondent.

An HUF property cannot be unilaterally sold by the Karta without consent from coparceners; agreements executed in such a manner are void. Undue influence claims require substantial proof to affect contract validity.

Headnote:(A) Specific Relief Act, 1963 - Section 16 - Suit for Specific Performance - The Agreement to Sell dated 14.01.2004 executed by defendant No.1 in favor of defendant No.2 is void ab initio as suit property is an HUF property managed by defendant No.1 as Karta; it cannot be sold without consent of coparceners. Reaffirmed that unilateral rescission by the Karta without legal necessity cannot be valid. (Paras 106, 187, 189)

(B) Undue influence - The court found no evidence to support the claim of undue influence exercised by the defendant No.2 as the alleged influence did not violate legal terms nor generate an unfair advantage over defendant No.1. (Paras 141, 143)

(C) Locus Standi - The plaintiff Captain Rajesh Sethi, being a coparcener, has the locus to file the suit against Karta for relief, as he claims an interest in the joint property. (Paras 60, 66)

Facts of the case:
The plaintiff Captain Rajesh Sethi filed a suit seeking to declare that the Agreement to Sell dated 14.01.2004 is void, asserting that the property in question is part of the HUF managed by his father, defendant No.1. Plaintiff claims he contributed to the upkeep of the property and had rightful interest in it. (Paras 1-9)

Findings of Court:
The Court held the suit property is indeed an HUF property. The Agreement to Sell was signed by defendant No.1 in his individual capacity and, therefore, is unenforceable. Unilateral termination by defendant No.1 was not valid as he failed to provide a legitimate reason for dissatisfaction. (Paras 69, 187)

Issues: Key issues included the determination of property ownership status, the validity of the Agreement to Sell, and the legal standing of the parties involved. (Paras 30-31)

Ratio Decidendi: The court ruled that an HUF property cannot be sold or disposed of unilaterally by the Karta without approval from other coparceners. Finding that elements of undue influence were not established, the Agreement was declared void. (Paras 106, 187)

Result: Agreements invalid; plaintiff’s suit for specific performance dismissed; defendant No.2 awarded a refund of Rs.39,00,000 with interest. (Paras 189)

Table of Content
1. suit initiation regarding property ownership. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. dispute over property being huf property. (Para 11 , 12)
3. defense claims regarding authority to sell huf property. (Para 13 , 14 , 15)
4. court's examination of registration validity relevant to assets. (Para 16 , 17 , 18 , 19)
5. arguments over the nature of property. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29)
6. issues framed for determination. (Para 30 , 31 , 32 , 33 , 54 , 55)
7. consolidation of suits indicates ongoing litigation. (Para 34)
8. locus standi of coparceners in suits. (Para 60 , 61 , 62 , 63)
9. karta's authority over huf property. (Para 89 , 100 , 106 , 107 , 108)
10. existence of undue influence in agreements. (Para 117 , 138 , 139 , 142 , 144)
11. equitable considerations in specific performance. (Para 164 , 186)
12. court decisions on agreements and property rights. (Para 187 , 188)

JUDGMENT

1. The plaintiff Capt. Rajesh Sethi, has filed a suit for Declaration that the Agreement to Sell dated 14.01.2004 executed by his father, Col. P.C. Sethi, defendant No.1 in favour of Shri Ravinder Nangia, defendant No.2 is void ab initio & non est, a Mandatory Injunction to direct defendant No.1 to cancel the Agreement to Sell and also Permanent Injunction to restrain the defendants from creating third party interest on the suit property in furtherance of the Agreement to Sell.

2. A civil suit is filed by Sh. Ravinder Nangia (defendant no.2 in afore mentioned Civil Suit No CS(OS) 436/2000 ) seeking Specific Performance of Agreement to Sell dated 14.01.2004 entered into by him with Col. P. C. Sethi, and in the alternative specific performance in respect of the share of Col. P.C. Sethiub or a refund of Rs. 39,00,000/- & damages of Rs. 75,00,000/- along with interest @ 18% per annum.

3. All the parties are concordant that defendant No.1 Col. P. C. Sethi, who is the father of the plaintiff Capt. Rajesh Sethi, having lost all assets in Pakistan, had applied and obtained provisional allotment of a 325 sq. yards plot bearing No. C-269, Defence Colony, New Delhi (hereinafter referred to as the "suit property") vide a Perpetual Lease. The possession of the plot was handed over to defendant No.1 on 13.05.1954 and the construction was carried out by Kilokri Defence Service Co-operative House Building Society Ltd. in January, 1955.

4. He entered into an Agreement to Sell dated 14.01.2004 for the sale of the suit property for a total consideration of Rs.2,74,00,000 (Rupees two crores seventy four lakhs) against which Rs.26,00,000 was paid at the time of signing the Agreement to Sell and further payment of Rs.13,00,000 was made on 22.01.2004. However, the circumstances leading to the signing of the Agreement to Sell and the events thereafter have come under challenge by way of these two suits.

5. The plaintiff in CS (OS) 436/2004, Captain Rajesh Sethi has claimed that the suit property was purchased partly out of the money received towards claims in respect of ancestral properties left behind in Pakistan and partly from loans which were paid from the sale of ancestral jewellery. It is an HUF property that was managed by his father, defendant No.1 Col. P.C. Sethi and has all along been reflected as a joint family property in the Income Tax Returns filed by defendant No.1 in the capacity of Karta of Col. P.C. Sethi, HUF (hereinafter referred to as -HUF").

6. It is claimed that the Captain Rajesh Sethi as a coparcener of the HUF, has also contributed for the upkeep and maintenance of the property including having paid Conversion fee amounting to Rs.52,200/- vide cheque dated 03.08.1996 to get the property converted to freehold. It is further stated that defendant No.1 and his youngest son defendant No.3 Shri Raman Sethi resided in the suit property; however, after the marriage of defendant No. 3, he and his wife had an extremely acrimonial relationship with defendant No.1.

7. On 28.01.2004, Col. Ranjan Narang, a family friend e

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