Delhi High Court
Satish Kumar vs Purshottam Maheshwari & Anr. on 17 May, 2019
Equivalent citations: AIRONLINE 2019 DEL 2392
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 17th May, 2019
+ CS(OS) NO.578/2016
SATISH KUMAR ..... Plaintiff
Through: Mr. V.K. Jain & Mr. Vijay Kumar,
Advs.
Versus
PURSHOTTAM MAHESHWARI & ANR. ...Defendants
Through: Mr. Jayant Mehta, Ms. Sanyogita
Jain & Mr. Sajal Jain, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The plaintiff has instituted this suit for recovery of Rs.2,35,12,000/-
jointly and severally from the two defendants viz. Purshottam Maheshwari
and Lalit Maheshwari, pleading that (i) the two defendants being brothers
and claiming to be Kartas of Purshottam Maheshwari (HUF) and Lalit
Maheshwari (HUF) respectively, on 14th October, 2014 represented to the
plaintiff to be the owner of 30% share in Kothi No.61, having an area of 2
acres, 2 rod and 5 poles situated at Civil Lines, Roorkee, district Haridwar;
(ii) the defendants further represented that the said share in the property had
devolved on them by virtue of registered Will of their deceased mother
Vidyawati Maheshwari; (iii) the defendants yet further represented that the
property was leased by Government of United Provinces to the predecessor
of the defendants and their co-owners for a period of 90 years for the
purpose of building residence of SDM, Roorkee and the last renewal of the
lease had expired in 1978 but they had subsisting right in the property and
that the remaining share in the property was held by legal heirs of
CS(OS) No.578/2016 Page 1 of 19
Lakshman Prakash and Puran Chand Jain; (iv) believing the aforesaid
representations, the plaintiff agreed to purchase the share aforesaid of the
defendants for a consideration of Rs.2.40 crores; (v) out of the entire agreed
consideration, part payment of Rs.2 crores was made by the plaintiff to the
defendants; (vi) a Memorandum of Understanding (MoU) dated 14 th
October, 2014 was signed by the parties; (vii) the said MoU also bears the
name of one Prit Pal Singh as prospective buyer but who made no payment
towards the aforesaid consideration amount and the said Prit Pal Singh was
holding an authority letter on behalf of the defendants and other self-
claimed shareholders in the property; (viii) the entire payment has been
made by the plaintiff; (ix) in January, 2016, it transpired that the defendants
made false assurance and commitments, with a view to cheat the plaintiff;
(x) the defendants refused to handover copies of the documents and
represented that they will show the said documents only to the next
prospective buyer to whom the plaintiff may sell the property; (xi) it has
also been learnt that the property vests for all purposes in the SDM,
Roorkee and no right, title or interest is vested in favour of the defendants
or in favour of anyone else and no rent is being paid by the SDM, Roorkee
and the property is in exclusive possession and control of SDM, Roorkee;
(xii) it has also been realized that there is no HUF in question and the
defendants used the HUF only to avoid tax; (xiii) the defendants had no
saleable and marketable right, title or interest in the property and are not in
possession of the property; (xiv) the payment of Rs.2 crores was made by
the plaintiff to the defendants based on the assurances and commitments of
the defendants, which have turned out to be false; and, (xv) the plaintiff is
CS(OS) No.578/2016 Page 2 of 19
entitled to recover back the amount of Rs.2 crores paid with interest till the
date of institution of the suit amounting to Rs.35,12,000/-.
2. The suit came up first before this Court on 18 th November, 2016 and
vide subsequent order dated 22nd November, 2016, summons of the suit
were ordered to be issued to the defendants.
3. The defendants have filed a joint written statement pleading that, (a)
a Memorandum of Transfer (MoT) dated 15th October, 2014 was entered
into between the plaintiff and one Prit Pal Singh on the one hand and
Purshottam Maheshwari and Lalit Maheshwari on the other hand; (b) a bare
perusal of the MoT dated 15th October, 2014 filed by the plaintiff himself
reveals that the contents of the plaint are contrary to the contents of the
MoT dated 15th October, 2014; (c) the MoT dated 15th October, 2014
clearly reveals that the plaintiff, on the date of execution thereof, was aware
that the property is Nazul property and the lease with respect to the same
had not been renewed since 1978 and the defendants had no inclination to
pursue their title with the government or the Court of law; (d) the plaintiff is
now stopped from claiming otherwise; (e) the consideration under the MoT
was a distress consideration; (f) it was in fact the plaintiff and Prit Pal Singh
who had proposed to the defendants that they will take up the issue with the
appropriate authorities and get the lease renewed from their own resources
and had agreed that the defendants were entitled to Rs.2.40 crores even in
case the lease deed was not renewed, and not liable to return the same as it
was well understood between the parties that the essence of the agreement
was transfer of only those rights of the defendants in the property, which
were contingent / subsisting as per law, as on the date of execution of the
CS(OS) No.578/2016 Page 3 of 19
MoT; (g) the plaintiff had entered into separate agreements with the co-
lessees / owners of the property, even prior to execution of the MoT dated
15th October, 2014; (h) the plaintiff, out of total consideration of Rs.2.40
crores, paid a sum of Rs.1.2 crores on 14th October, 2014 and issued two
post dated cheques dated 13th April, 2015 for Rs.60 lacs each to make the
balance payment; (i) the plaintiff thereafter paid Rs.30 lacs in cash between
9th June, 2015 and 12th June, 2015 and failed to make the balance payment
of Rs.90 lacs; (j) the two cheques for Rs.60 lacs each when presented were
dishonoured, resulting in notices dated 29th July, 2015 being issued to the
plaintiff under Section 138 of the Negotiable Instruments Act, 1881; (k) the
plaintiff, on receipt of the notices issued two cheques of Rs.45 lacs each
dated 25th September, 2013 in favour of each of the defendants; (l) the
plaintiff thereafter made part payment of Rs.20 lacs on 8th October, 2015;
(m) the said cheques dated 25th September, 2013 were also dishonoured
resulting in fresh notices dated 16th January, 2016 under Section 138 of the
Act; (n) the plaintiff has thus paid a sum of Rs.1.70 crores only against the
total consideration of Rs.2.40 crores; (o) the payment pleaded by the
plaintiff of Rs.30 lacs by cash on 8th December, 2014 was never made and
no receipt executed by the defendants; (p) the parties, simultaneously, also
negotiated for sale of another property of the defendants at Jhabara and
Rs.30 lacs in cash was paid to the defendants by the plaintiff on 14 th
October, 2014 which amount was to be refunded if the terms of sale and the
details of the property were not finally agreed upon between the parties; (q)
the said negotiations were not successful and the understanding between the
parties was terminated and the amount of Rs.30 lacs in cash tendered
towards transaction in question and admitted in the MoT dated 15 th
CS(OS) No.578/2016 Page 4 of 19
October, 2015; the plaintiff is however interpolating the said undated
receipt by adding the date 8th December, 2014 on the said receipt; (r) the
plaintiff immediately after receipt of legal notices dated 29 th July, 2015, by
issuing cheques for Rs.45 lacs each, admitted the same to be due then from
the plaintiff to the defendants; (s) "it is the plaintiff himself who has
committed default of the performance of the terms of Memorandum dated
15.10.2014"; (t) the lease of the property in question was perpetual and
renewal of lease and mutation had been applied for with the government;
(u) as per the policy of the government of Uttaranchal for conversion of the
leasehold property into freehold, even the leasehold properties whose lease
deeds had not been renewed, were entitled to get the leasehold properties
converted into freehold; (v) the predecessor in interest of the defendants
had applied for conversion of the leasehold rights into freehold and which is
pending; (w) lease rent / ground rent was also paid with respect to the
property with one such payment having been made on 8th May, 2018; (x)
however, the defendants were not able to get the needful done and were
constrained to enter the MoT in question on "as is where is basis"; (y) the
suit is bad for non-joinder of necessary parties; and, (z) "in fact it is the
plaintiff and the said Mr. Prit Pal Singh, who are in breach of the aforesaid
Memorandum dated 15.10.2014 and the answering defendants are taking
appropriate action in accordance with law for specific performance of the
aforesaid Memorandum against the plaintiff and the said Mr. Prit Pal
Singh."
4. The plaintiff has filed a replication pleading, that (i) the MoU is not a
legal document and has not been executed validly; (ii) the defendants have
CS(OS) No.578/2016 Page 5 of 19
no legal right to sell the land which is not vested in the defendants and the
defendants have no title to execute any deed for the transfer of the same;
(iii) the MoU is not registered and is not sufficiently stamped; and, (iv) the
illegality of the transaction cannot be cured by the alleged knowledge of the
plaintiff and the transaction is void.
5. The suit, on completion of pleadings came up before this Court on 3rd
April, 2018, when finding that the defendants had not denied receipt of
Rs.1.70 crores from the plaintiff and that the said money in the MoU had
been described as consideration and not as earnest money and that the
defendants had not pleaded any damage suffered by them, it was felt that
notwithstanding the factual dispute whether the defendants practiced any
concealment and misrepresentation, the defendants were not entitled to
retain the monies received. It was thus felt that no issues need to be framed
at least qua admitted amount and a decree for recovery whereof could be
passed immediately. Referring to Kailash Nath Associates Vs. Delhi
Development Authority (2015) 4 SCC 136 and order dated 31st January,
2018 in CS(OS) No.308/2016 titled Mera Baba Pvt. Ltd. Vs. Ram
Lubhaya Puri, it was enquired from the counsel for the defendants why a
decree in favour of the plaintiff and against the defendants for recovery of
Rs.1.70 crores be not passed immediately. On request of the counsel for the
defendants however, the hearing was adjourned.
6. The counsel for the defendants was further heard on 2nd August, 2018
and inspite of several opportunities has failed to address further arguments
but was granted liberty to file written arguments which have been
submitted.
CS(OS) No.578/2016 Page 6 of 19
7. Before dealing with the contentions of the counsel for the defendants,
the admitted MoT dated 15th October, 2014 between the parties may be
reproduced hereunder:
"MEMORANDUM OF TRANSFER
This Memorandum of Transfer is made on this 15th day of October, 2014
between:
Party „A‟
1) Shri Satish Goyal S/o Shri OM Prakash Goyal, resident of
Rohini Naharpur 33, Delhi.
2) Shri Prit Pal Singh, S/o Shri Rustam Singh, resident of Flat
No.525, house PED Complex, Pakhowal Road, District
Ludiana (Punjab).
Party „B‟:
1) Shri P. Maheshwari (H.U.F.) S/o Late Shri Asa Ram
Maheshwari Resident of B-75, Gulmohar Park, New Delhi-
110049.
2) Shri Lalit Maheshwari (H.U.F.) S/o Late Shri Asa Ram
Maheshwari Resident of 42 Civil Lines Roorkee, (U.A.)
Both parties hereinafter individually referred to as Party „A‟ & Party „B‟
or each party and collectively referred to as the parties, which expressions
unless repugnant to context shall include their heirs, successors and
executors.
That the Father of the Party „B‟, Late Shri Asa Ram Maheshwari was the
Co-Lessee Owner of, 30% share in „the property‟; described below in
detail:
The Property
Kothi No.61 having an area of 2 Acre 2 rod poles Civil Lines
Roorkee District, Haridwar, in which Kothi S.D.M. Roorkee, resides.
The said share in the said property devolved on the Mother of Party „B‟,
Late Shrimati Vidyawati Maheshwari upon the death of the Father of
Party „B‟, in accordance to his registered Will.
CS(OS) No.578/2016 Page 7 of 19
And upon the death of the Mother of Party „B‟ the subsisting rights in the
property to the extent of her 30% share devolved upon the party „B‟, as
per the registered will of Late Shmt Vidyawati Maheshwari.
The aforesaid property is a Nazul property, which was leased by the then
Govt. of United Provinces to the predecessors of the Father of Party „B‟
and the other Co-Lessee Owners for a period of 90 years for the purpose
of building residence of SDM, Roorkee.
As per conditions of the lease deed, there was a condition and provision
that after every thirty years the lease deed will be renewed. The previous
two lease deeds have been renewed but the third lease deed which had to
be renewed in 1978 has not been renewed up till now.
That Party „B‟ have applied and filed an application for the renewal of the
lease deed and mutation of their names before competent authorities, and
reminded the Government, many a times.
But the Government has not acted upon the same till now and has expired
the 90 year period of lease deed.
Party „A‟ has learnt about this property and has approached Party „B‟
(and also the other Co-Lessee Owners / legal heirs of other Co-Lessee
Owners) for the transfer of their (subsisting / residual) rights in the
aforesaid property.
Party „A‟ has also proposed to Party „B‟ that they have the legal and
technical expertise to take up the issue with the appropriate authorities
and they are further ready and willing to spend their resources of time,
effort & money to pursue this matter with the authorities; executive,
administrative and / or judicial, whichever required for the said cause.
And whereas Party „B‟ neither has the time nor energy nor financial
resources or legal expertise to pursue their title with the Govt. or the
Court of Law.
Party „B‟ understands that such efforts will require serious and
considerable efforts which Party „B‟ is not inclined to devote on its part at
present.
That Party „A‟ has also already entered, into a separate agreement with
the other Co-Lessee Owners and the present Memorandum of transfer is
with Party „B‟.
It is now hereby agreed, to by and between, the parties as hereunder:
1. That Party „A‟ knows, in detail and totality, about the above
mentioned title status of Party „B‟ in the aforesaid property and it has
CS(OS) No.578/2016 Page 8 of 19
taken all legal and other requisite inputs before entering into this
agreement.
That Party „A‟ hereby confirm that Party „B‟ has not concealed any fact
material or otherwise from Party „A‟ regarding the existing and the
current status of their imperfect title in the aforesaid property.
That Party „A‟ confirms that they have chosen, on their free will and with
full knowledge to enter into this one time transaction with Party „B‟, on the
basis of positive and legitimate expectation of revival of the rights of party
B and are "ESTOPPED" from raising any dispute such as competence,
ownership, title, possession or eligibility of the party „B‟ at any later time.
2. Thus, in view of this positive and legitimate expectation of the
reactivation/reinstatement/re-establishment/renewal of the rights of Party
„B‟ in the property, Party „A‟ has offered to, take over / purchase the
subsisting rights of Party „B‟ in the property and the right to have the
property conveyed in their name without any additional consideration; by
entering into this one time transaction for a total consideration of Rs. Two
Crores & Forty Lakhs only;
3. The Party „A‟ has Paid 50% of the above consideration as per
details given below:-
(a) Rs. Ninety Lakhs by electronic transfer into the respective Banks of
Party B i.e. Punjab National Bank a/c no.0159000126606116 of Mr. P.
Maheshwari (H.U.F.) & Yes Bank a/c no.020890700000392 of Mr. Lalit
Maheshwari (HUF) accounts of Party „B‟ in equal Proportion on
14.10.2014.
&
b) Rs. Thirty Lakhs by cash to Party "B" on 14.10.2014.
4. That for making balance 50% payment Party „A‟ has requested for
180 days time from Party „B‟ and has agreed to pay the same by Post
Dated cheque bearing No.605232 of Punjab National Bank Sec-7, Rohini,
Delhi-85 favouring Mr. P. Maheshwari (HUF) for a sum of Rs. Sixty Lacs
from the account of Shri Satish Kumar A/c No.3028000100276559 bearing
date 13.04.2015 and another cheque bearing no.605231 dated 13.04.2015
for the balance sum of Rs. Sixty Lacs favouring Mr. Lalit Maheshwari
(HUF) from the same account and same Bank which are being delivered
today alongwith covering confirmatory letters at the time of signing of this
agreement.
5. That Party „B‟ has accepted the above offered payment terms of
Party „A‟; as against the total cash down payment terms which they were
CS(OS) No.578/2016 Page 9 of 19
getting from another purchaser, because of the total consideration offered
by Party „A‟ is higher by about 10%; the knowledge of which fact does
Party „A‟ acknowledges hereby.
6. That Party „B‟ will sign the Conveyance Deed, as and when
required by Party „A‟, any time after the PDCs have been paid but not
later than 13/04/2015 without any demand for any extra consideration.
Party „B‟ shall also execute any documents pertaining to present property
only required by Party „A‟, but only if they are for improving the title of
Party „B‟ in the property viz. application for mutation of their name in
place of their forefathers / ancestors; request for renewal of lease or
making the property free-hold etc. without any demand for any extra
consideration but not later than 13/04/2015.
7. It is clearly understood and agreed by both the parties that Party
„B‟ is in no way responsible for the success of the efforts of Party „A‟,
which means that even in the event of Party „A‟ failing in the efforts with
the authorities, they shall still be liable to honour payment undertaken
through above mentioned PDCS. Because this transaction is for the
positive legitimate expectation of Party „A‟ and for giving them an
opportunity for trying their expectation. Party „B‟ under any
circumstances will not be liable to return the amount received or forego
the claim on the balance amount committed under this agreement and
secured by PDCs by Party „A‟, because it is well understood that the
essence of the agreement is the transfer of only those rights of Party „B‟,
which are currently contingent / subsisting as per law in the property on
legitimate expected hopes of their revival; for a distress consideration.
8. That in the event of non payment of PDCs on the due date of
PDCs, Party „A‟ will lose their right to pursue the reactivation / renewal /
restoration of the title of Party „B‟ and the right of getting the conveyance
deed executed in their favour, as the essence of this transfer deed is the
payment of full consideration within an agreed time frame, which latest is
the date of the PDC.
9. Party „A‟ also contracts that if they dispute the payment of
aforesaid PDCs or this agreement on any ground whatsoever they shall be
liable to pay a DAMAGE of Rs. Two Crore & Forty Lakhs Only / (an
equal amount of the consideration of this agreement) because it is
confirmed by them that this Transfer is firm and final and is irrevocable
and is being entered by Party „B‟, in preference over another collaborator.
Reciprocally Party „B‟ agrees to a DAMAGE charge of Rs. Two Crore &
Forty Lakhs Only / (an equal amount of the consideration of this
agreement) if they fail to perform their of part this deed.
CS(OS) No.578/2016 Page 10 of 19
10. All the municipal taxes including commercial property tax,
freehold conversion charge, any cess or any other charges imposed by any
concerned authority in respect to the premises shall be borne and paid by
Party „A‟, hereinafter.
11. That all payments regarding duties, taxes, levies rents or charges
of the Government / Authorities with respect to the original lease
agreement or for its renewal / mutation / freehold / conversion charge
municipal taxes, commercial property tax, shall be secured by Party „A‟ at
its own costs and expenses on behalf of Party „B‟, and nothing shall be
payable in these or any other circumstances on that account by Party „B‟.
12. Notice: Any notice or other communication hereunder shall be in
writing and shall be sent via registered Post with Acknowledgment due
and / or renowned courier service, only to the registered offices of the
parties hereto.
13. No Assignment: This agreement or any part hereof shall not be
assigned, or otherwise transferred by A or B without the prior written
consent of the other.
14. Relationship of Parties: The parties are acting hereof as
independent contractors and nothing herein contained shall create or be
construed as creating a partnership, joint venture agency, or association
relationship, or lease transaction between the parties and neither party
shall have the authority to bind the other party or create any liability
thereon in any respect before any authority.
15. Severability: If any provision of this agreement or part thereof is
rendered void, illegal and unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
16. This agreement is witnessed by the legal counsels of Party „A‟ to
confirm that they & their legal counsels are in the full knowledge of the
facts and will not make any claim contrary to the intent and the content of
this agreement at any or all time.
17. Any divergence / defect arising out of this agreement should be
best resolved by the Two Parties through friendly negotiation failing which
all disputes shall be finally settled under the Rules of Arbitration of the
Indian Arbitration Act, by one or more arbitrators appointed in
accordance with the said Act. The place of arbitration shall be Delhi with
costs to losing the party.
18. Notwithstanding subject to the arbitration clause above, the court
in Delhi alone shall have exclusive jurisdiction, in situations where the
CS(OS) No.578/2016 Page 11 of 19
parties are entitled to approach the Courts, such as for appointment of an
arbitrator in case of dispute and interim measures etc.,
19. Laws of limitation will apply.
20. This contract is concluded on 15th day of October, 2014 and made
in four originals."
8. The counsel for the defendants has argued, that:
(i) the Court must give effect to the plain meaning of the words in
the MoU howsoever it may dislike the result thereof; reliance in this
regard is placed on paragraph 7 of Central Bank of India Ltd. Vs.
Hartford Fire Insurance Co. Ltd. AIR 1965 SC 1288, paragraph 6
of Union of India Vs. Kishorilal Gupta AIR 1959 SC 1362,
paragraphs 19 and 21 of Polymat India (P) Ltd. Vs. National
Insurance Co. Ltd. (2005) 9 SCC 174, paragraphs 37 and 38 of
Phulchand Exports Ltd. Vs. O.O.O. Patriot (2011) 10 SCC 300 and
paragraph 51 of Nabha Power Ltd. (NPL) Vs. Punjab State Power
Corporation Ltd. (PSPCL) (2018) 11 SCC 508;
(ii) when terms of the contract are clear, they cannot be
disregarded;
(iii) the MoT dated 15th October, 2014 contains two contracts: one
concluded and the other contingent;
(iv) the first part has been fully and completely performed by the
defendants by authorizing the plaintiff to pursue the matter of
renewal of lease with the authorities concerned;
CS(OS) No.578/2016 Page 12 of 19
(v) this part was not for conveying any immovable property - it
was simply an assignment of right to represent / deal which the
plaintiff would not have had absent this contract;
(vi) the defendants, in pursuance to the MoU, furnished authority
dated 26th September, 2014 to the plaintiff;
(vii) the plaintiff cannot resile from such concluded bargain;
reliance is placed on paragraph 10 of Naihati Jute Mills Ltd. Vs.
Khyaliram Jagannath AIR 1968 SC 522;
(viii) the second part is the contingent contract which become
operational only on the plaintiff being able to get the lease renewed;
under such contingent contract, the defendants have agreed to convey
to the plaintiff their rights in the leasehold property; the consideration
for this part of the contract is the performance of the first part of the
contract; reliance is placed on paragraph 6,7 and 10 of Shardaprasad
Vs. Sikandar AIR 1915 Nag 15;
(ix) the plaintiff has not filed any application under Order XII Rule
6 of the CPC; reliance is placed on Alka Gupta Vs. Narender Kumar
Gupta (2010) 10 SCC 141, Himani Alloys Ltd. Vs. Tata Steel Ltd.
(2011) 15 SCC 273 and State Bank of India Vs. Midland Industries
(1987) ILR 1 Delhi 524;
(x) the pleas of the plaintiff of misrepresentation and concealment
of facts are contrary to the MoU; reliance is placed on Ganga Retreat
& Towers Ltd. Vs. State of Rajasthan (2003) 12 SCC 91 and
Premchand Vs. Ram Sahai AIR 1932 Nag 148;
CS(OS) No.578/2016 Page 13 of 19
(xi) Kailash Nath Associates and Mera Baba Pvt. Ltd. supra are
inapplicable to the facts of the case.
(xii) the amount of Rs.1.70 crores is not in the nature of liquidated
damages or part sale consideration;
(xiii) the aforesaid payment, as per the words of the MoU, is only
for grant of a right to the plaintiff to pursue with the authorities for
renewal of the lease and the payment of this consideration is
unrelated to any success or failure of renewal of lease; if lease was
not renewed, the amount is not refundable; thus, there is no question
of any forfeiture of any amount in the present case.
9. As far as the arguments of the counsel for the defendants qua
misrepresentation and the judgments cited thereon are concerned, the pleas
of the plaintiff for misrepresentation and fraud are such which cannot be
decided without evidence. The question for consideration at this stage is,
whether, even if the said pleas were not proved, the plaintiff is entitled to a
decree for recovery of Rs.1.70 crores admittedly received by the defendants
from the plaintiff.
10. Similarly, as far as the reference by the counsel for the defendants to
Order XII Rule 6 and to the judgments in Alka Gupta, Himani Alloys Ltd.
and State Bank of India supra is concerned, issues under Order XIV of the
CPC are to be framed only on "material" pleas of laws and fact and not on
all pleas of law and fact and if the Court finds none of the pleas to be
"material", including on the ground that even if what is pleaded were to be
construed to be correct, the same does not constitute a defence in law, the
CS(OS) No.578/2016 Page 14 of 19
Court is not required to mechanically frame an issue and the suit is to be
decided forthwith under Order XV of the CPC. I have in Anil Kumar Vs.
Devender Kumar 2019 SCC OnLine Del 8782 discussed the law in this
regard in detail and the need to reiterate the same is not felt.
11. Thus, the question for consideration is the interpretation of the
agreement between the parties titled as "Memorandum of Transfer" dated
15th October, 2014 and whether the defendants thereunder in law have a
right to retain the monies received. If the defendants are not held entitled to
retain the monies; decree shall follow forthwith. It is not the case of the
defendants also that the interpretation of the MoT is a matter of evidence.
According to the written arguments of the counsel for the defendants also,
the terms of the MoT as per express language thereof are clear.
12. The defendants, under the "Memorandum of Transfer" dated 15th
October, 2014, had agreed to "transfer all their (subsisting / residual) rights
in the aforesaid property". The aforesaid property is an immovable property
viz. Kothi No.61, having an area of 2 acres, 2 rod and 5 poles situated at
Civil Lines, Roorkee, district Haridwar.
13. The consideration for "take over / purchase of the subsisting rights"
of the defendants in the property was fixed at Rs.2.40 crores, of which
Rs.1.20 crores was paid at the time of execution of the MoT and the balance
Rs.1.20 crores was to be paid within 180 days of the MoT. On non-
payment of the balance sale consideration, the plaintiff was to lose the right
to pursue, reactivation, renewal, restoration of the title of the defendants in
CS(OS) No.578/2016 Page 15 of 19
the property and on breach of the MoT by the defendants, the defendants
were to compensate the plaintiff with Rs.2.40 crores.
14. Though the counsel for the defendants has sought to bifurcate the
above MoT into two agreements, one of transfer of right to pursue
reactivation, restoration, renewal of title in the property and the second of
transfer of the property, but the agreement otherwise has all the ingredients
of an agreement to sell of immovable property i.e. (i) immovable property;
(ii) a transferor who agrees to transfer and a transferee who agrees to pay
the consideration of transfer and who has a right to enforce the transfer; (iii)
consideration; and, (iv) the terms of transfer.
15. I fail to see how the MoT can in law be held any different from the
agreements with which Kailash Nath Associates and Mera Baba Pvt. Ltd.
supra and a host of other judgments viz. Palm Art Apparels Pvt. Ltd. Vs.
Enkay Builders Pvt. Ltd 2017 SCC OnLine Del 12776, Mera Baba Pvt.
Ltd. Vs. Ram Lubhaya Puri 2018 SCC OnLine Del 9502, Klintoz
Pharmaceuticals Pvt. Ltd. Vs. Ravinder Shankar Mathur 2018 SCC
OnLine Del 11954 and Satish Varma Vs. Garment Craft (India) Pvt. Ltd.
2018 SCC OnLine Del 6829 were concerned. In all the said judgments
also, the amount sought to be recovered or at least a part thereof, was not
refundable though said so in a language different from the language used in
the subject MoT. However it was held that without the seller pleading and
proving a loss suffered, the monies received could not be retained even if
the purchaser was in breach. In the lead judgment, being Kailash Nath
Associates supra also, Kailash Nath Associates had been held by the Suit
Court to have been in breach but still held entitled to refund of the monies
CS(OS) No.578/2016 Page 16 of 19
paid in the form of earnest deposit, for the reason of Delhi Development
Authority (DDA) having not suffered any loss from breach by the Kailash
Nath Associates.
16. Merely because, under the MoT the subject matter of the present
case, the responsibility for having the title in the property restored in favour
of the defendants was taken over by the plaintiff, would make no
difference. The same is akin to the purchaser in other cases cited above,
taking over the responsibility of obtaining the permission required, whether
of lessor of the land underneath the property agreed to be sold, or in the
case of agricultural land, for transfer of the land and in such situations also
it has been held that unless the seller pleads loss, the seller cannot retain the
monies received. The defendants in the present case have pleaded none.
17. The written arguments in fact are contrary to the pleadings of the
defendants in their written statement. The defendants, in paragraph 7 of
their preliminary objections, have pleaded that "it is the plaintiff himself
who has committed default of the performance of the terms of
Memorandum dated 15.10.2014" and that the plaintiff cannot be permitted
to take benefit of his own wrongs. Similarly, the defendants in paragraph
12 of the Preliminary Objections have pleaded "that in fact it is the plaintiff
and the said Mr. Prit Pal Singh, who are in breach of the aforesaid
Memorandum dated 15.10.2014 and the answering defendants are taking
appropriate actions in accordance with law for specific performance of the
Memorandum against the plaintiff and the said Mr. Prit Pal Singh". The
said pleadings run contrary to the written arguments to the effect that the
agreement was a concluded agreement.
CS(OS) No.578/2016 Page 17 of 19
18. I am thus unable to hold that the present contract is to be treated any
differently.
19. Though the counsel for the defendants in his written arguments has
justified the transaction as a transaction of transfer of right to pursue
restoration, reactivation, renewal of the lease of the property but without
justifying transferability in law of the same. The law viz. Transfer of
Property Act, 1882, besides transfer of movable and immovable properties,
contemplates only transfer of actionable claims and neither does the MoT in
fact was nor is it the plea of the defendants that the MoT was with respect
to any actionable claim. Actionable claim is defined in Section 3 of the
Transfer of Property Act inter alia as a claim to any beneficial interest in
any property and provides for the same to be way of a registered
instrument. The contention of the defendants, of the MoT being a
document of transfer of right to pursue, is thus no argument in law, for it to
be put to trial.
20. I was in Ambawatta Buildwell Pvt. Ltd. Vs. Imperia Structure Ltd.
2019 SCC OnLine Del 8657, heard about the same time as the present suit
also, concerned with a plea of the consideration thereunder having been
received towards a concluded transaction and which plea has also been
negated, reasoning that there can be no concluded transaction of immovable
property without a registered document. Detailed reasons having been given
therein, need to repeat is not felt.
21. I am therefore unable to find the pleas of the defendants in their
written statement to be material, insofar as the suit for recovery of Rs.1.70
CS(OS) No.578/2016 Page 18 of 19
crores is concerned and thus, no issue arises thereon. Resultantly, the
plaintiff is found entitled to a decree for recovery of Rs.1.70 crores
forthwith. However in the facts, it is not deemed appropriate to award any
interest to the plaintiff against the defendants for the period prior to
institution of the suit or pendente lite or for a period of one month herefrom
granted to the defendants to make the payment. However, if the defendants
do not make the payment, the defendants shall be liable for interest
thereafter on the said amount of Rs.1.70 crores at the rate of 9% per annum.
22. A decree is accordingly passed, in favour of the plaintiff and jointly
and severally against the defendants, of recovery of Rs.1.70 crores with
interest at 9% per annum with effect from the 30th day of the date when this
judgment has been corrected and released, and till the date of realization.
Decree sheet be drawn up.
23. List for further consideration on 29th July, 2019.
RAJIV SAHAI ENDLAW, J.
MAY 17, 2019 „gsr‟..
(Corrected & released on 11th July, 2019) CS(OS) No.578/2016 Page 19 of 19