Delhi District Court
M/S Pawan Builders Pvt. Ltd vs Delhi Development Authority on 22 January, 2013
IN THE COURT OF MS. PRABH DEEP KAUR
CIVIL JUDGE 05: (WEST DISTRICT)
TIS HAZARI COURTS: DELHI
Suit No. 212/11
Unique ID No.
M/S Pawan Builders Pvt. Ltd,
2, Zamrudpur Community Centre,
Kailash Colony Extension,
New Delhi.
.............Plaintiff
Versus
Delhi Development Authority,
Vikas Sadan, INA,
New Delhi.
.............Defendants
Date of filing : 21.09.1992
Date on which order has been reserved: 19.01.2013
Date of pronouncement of judgment : 22.01.2013
JUDGMENT
1. Plaintiff has filed the suit for the following reliefs:
(i) To pass a decree for permanent injunction in favour of the plaintiff and against the defendant restraining the defendant from in any manner cancelling the bid of the plaintiff with regard to Plot No. 2, Community Centre, Zamrudpur, Kailash Colony Extension, New Delhi (hereinafter called "suit property") as stated in the final notice Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 1/30 dated 26.08.1992.
(ii) To pass a decree for mandatory injunction in favour of the plaintiff and against the defendant directing the defendant to execute the lease deed of the suit property.
2. Plaintiffs Version: In the present suit, the plaintiff stated that "the plaintiff is a deemed limited company duly incorporated and registered under the Indian Companies Act, having its registered office at 2, Zamrudpur Community Centre, Kailash Colony Extension, New Delhi. Mrs. Neeru Puri W/o Sh. A.K. Puri is one of the directors of the plaintiff company and is duly authorized and empowered vide resolution dated 10th September, 1992 to sign, verify and institute the present on behalf of the plaintiff company and the defendant is the Delhi Development Authority which is a statutory authority under Article 12 of the Constitution of India. In the beginning of the year, 1978, the defendant advertised in the newspaper about the auction of 10 commercial plots of land at Community Centre, Zamrudpur, Kailash Colony Extension, New Delhi. Pursuant to the said auction notice, the then Promoter Director of the plaintiff company participated in the bid on 02.03.1978 and purchased a plot No. 2 measuring 145.67 Sq. Meters at Community Centre, Zamrudpur, Kailash Colony Extension, New Delhi on behalf of the plaintiff company, which was under
incorporation at that time for a sale price of Rs. 2,84,000/. The plaintiff company also paid 25% of the bid amount i.e Rs. 71,000/ with the fall of the hammer by way of earnest money, to the defendant. Thereafter the bid of the plaintiff company was Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 2/30 accepted on 15.03.1978 viee office order No. F.18(1)/78Imp by the defendant and the plaintiff company paid the balance sale price to the defendant as under: Rs. 80,000/ on 01.05.1978;
Rs. 1,33,000/ on 12.05.1978.
After receiving the entire sale consideration, the defendant issued letter No. F121/78/Impl. calling upon the plaintiff to take possession of the said plot on 11.01.1979 at site. Accordingly, on 11.01.1979, the representative of the plaintiff company received the said plot from the defendant and the section officer of the defendant executed a certificate of handing over of possession of the plot to the plaintiff.
On 02.03.1978 the plaintiff company was declared the highest bidder for the plot in question and the said company was thereafter duly registered with the Registrar of companies on 27.04.1978. As such on the date of handing over the possession of the plot, the plaintiff company had been duly incorporated under the Indian Companies Act. Thereafter, plaintiff made an application to the defendant for grant of sanction for erecting a building on the said plot, on 21.03.1980 and the defendant sanctioned the plan of the plaintiff on 24.04.1980 vide letter No. F186/3/80/2926. After it, the plaintiff constructed a building on the said plot and has been in occupation of the same since 198384. In July 1981, the defendant wrote a letter to the plaintiff for the payment of stamp duty on the perpetual lease in respect of the plot in question. On 24th of September, 1981, the defendant issued a reminder to the plaintiff and the plaintiff submitted three copies of the perpetual lease deed duly stamped in the concerned office of the defendant on 26.10.1981 but the said lease deed has not been Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 3/30 executed by the defendant till the date. On 04.05.1990, the plaintiff received a letter No. F.12(1)/78Impl/CL/SUS from the defendant requesting the plaintiff to furnish the assessment orders as well as copies of the balance sheet of the plaintiff company from 197778 up to 30th of March, 1990, duly certified by a Chartered Accountant. The plaintiff supplied the said documents along with its letter dated 22.05.1990. Thereafter, the defendant demanded certain more documents vide their letter No. F. 12(1)/78/Impl/CL dated 25.07.1990 and the same were also furnished by the plaintiff vide letter dated 23.02.1991. In the said letter the plaintiff also informed the defendant that the plaintiff company became a deemed limited company with effect from 15.06.1988. The defendant again wrote a letter to the plaintiff dated 26.04.1991 calling upon the plaintiff to furnish the documents. In the said letter, the defendant asked the plaintiff to give an undertaking on behalf of Sh. Narinder Singh (wrongly mentioned as Narinder Kumar) as well as from M/s Pawan Builders Pvt. Ltd to pay the 50% unearned increase to be decided by the DDA. Therefore, the plaintiff company requested the defendant to give them the proforma of the Indemnity Bond and the affidavit required to be executed by the plaintiff. The plaintiff also wrote a letter dated 09.08.1991 in reply to the letter dated 26.04.1991 and stated that the documents are wrongly being demanded by the defendant and the plaintiff also highlighted the malafide conduct of the defendant with regard to the execution of the lease deed in favour of the plaintiff. Despite receipt of the said letter, the defendant did not take any action for completing the lease deed. Thereafter, the plaintiff submitted vide its letter dated 11.09.1991 the Indemnity Bond and the affidavit. After it, the plaintiff received a letter dated 26.08.1992 stated to be a Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 4/30 final notice that the documents mentioned herein above have not been furnished by the plaintiff. The plaintiff submited that the documents mentioned in the letter dated 26.04.1991 can not be demanded by the defendant in the facts and circumstances of this case. The purchaser of the property and the plaintiff before this Hon'ble Court is the same party. The defendant is wrongfully and illegally alleging that the property was purchased by Narinder singh and not by Ms/ Pawan Builders Pvt. Ltd. As stated above, the bid of M/s Pawan Builders was accepted and the possession was also handed over to Pawan Bilders. At the time of the auction, the auction conditions were signed between the parties, the copy whereof is only in possession of the defendant. It is the case of the plaintiff that the plaintiff company is the first original purchaser of the property and the defendant is not entitled to demand any unearned increase from the plaintiff. The defendant is acting in an arbitrary and high handed manner. The plaintiff is also ready and wiling to pay the ground rent as demanded by the defendant for the first time in its letter dated 26.08.1992. The defendant is liable to execute the lease deed in favour of the plaintiff and the plaintiff is entitled to a relief of mandatory injunction against the defendant in this behalf. The plaintiff' is also entitled to seek a relief of permanent injunction against the defendant who is wrongfully and illegally threatening to cancel the bid in respect of the plot in question which was accepted by the defendant on 15.03.1978. Hence, the present suit has been filed by the plaintiff.
3. Defendant's Version: In the WS, the defendant has denied all the claims of the plaintiff and defendants has taken the following stands: Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 5/30
(i) That the suit has not been filed, signed and verified by duly authorized persons. Smt. Neera Puri is not competent and authorized to file, sign and verify the plaint and as such the suit is liable to be dismissed on this score only.
(ii) That the plaintiff has no locus standi to file the present suit as at the time of auction the plaintiff company was not even in existence and the bid was given by one Sh. Narinder Kumar who is neither the share holder not the director etc of the plaintiff company and the suit is barred by time.
(iii) That the suit is not properly valued for the purposes of the court fees and jurisdiction. The value of the suit property is more than Rs. 5,01,000/ as valued by the plaintiff.
Further, defendant stated that the plaintiff company was not even in existence on 02.03.1988 and as such the bid was given by Sh. Narinder Kumar in his individual capacity for plot measuring 145.65 Sq. Meters. The payment of the premium also been made in the case. Further, the auction was called to take possession of the plot on 04.01.1979 and not on 11.01.1979 as alleged and the lease deed papers for getting the same stamped, were sent to the plaintiff on 07.07.1981 and thereafter two reminders were issued to the plaintiff on 04.09.1981 and 21.10.1981 but the purchaser did not return the lease deed papers duly stamped within the stipulated period of 15 days but the lease deed papers were submitted by the auction purchaser late on 02.11.1981. No letter has been received by the defendant which is dated 09.08.1981 but a letter was received on 29.07.1991 contents of which have been reproduced by the plaintiff and the bid in case was given by one Sh. Narinder Kumar on behalf of the proposed company M/s Pawan Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 6/30 Builders Pvt. Ltd on 02.03.1978. In fact on 02.03.1978 M/s Pawan Builders Pvt. Ltd was not even in existence. As such the bid was given by Sh. Narinder Kumar in his individual capacity. As per the copy of the certificate of incorporation of the company, the plaintiff was incorporated on 27.04.1978 but the name of the said Sh. Narinder Kumar did not find place in the list of the share holders of the company or directors etc of the company in the memorandum of association furnished by the plaintiff company and the terms and conditions of the auction furnished before taking over/issue of possession letter were also signed by some other person. The present case is a case of transfer and the plaintiff company now wants to get the lease deed of the property in dispute executed and registered in its name without payment of unearned increase which can not be allowed under the law and the rules. In the present case, the bid was given by individual and not by the company. In fact, the company was not even in existence at the time of making the bid. The plot in question can be transferred in the name of the plaintiff after recovering unearned increase by the defendant. The requisite documents and the ground rent etc have not been furnished and deposited by the plaintiff. In case the plaintiff fulfill the requisite formalities as fully stated above, the defendant will do the needful by executing and registering the lease deed in favour of the plaintiff.
4. By way of replication, the plaintiff has denied all the claims of the defendant stating that the suit has been filed, signed and verified by a duly authorized person. Ms. Neeru Puri is one of the directors of the plaintiff company and duly authorized and empowered vide resolution dated 10.09.1992. The suit is properly instituted and liable to be decreed in favour of the plaintiff company. It is further denied Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 7/30 that the plaintiff has no locus standi to file the present suit. The plaintiff company was declared the highest bidden for the plot in questions on 02.03.1978 and the company was thereafter duly registered with the registrar of companies on 27.04.1978. In fact on the date of handing over the possession of the plot, the plaintiff company had been duly incorporated under the Indian Companies Act. It is reiterated that Mrs. Neeru Puri is one of the directors of the plaintiff company. It is also reiterated that the prompter director of the plaintiff company participated in the bid on behalf of the plaintiff company which was under in corporation at that time.
5. On the basis of pleading and arguments of the parties, vide order dated 08.04.2003, the following issued have been framed: I. Whether the suit is bad for want of Notice U/sec 53B of DDA Act?OPD.
II. Whether the suit is barred by time?OPD.
III. Whether the plaintiff is entitled for the relief of mandatory injunction as
prayed for?OPP.
IV. Whether the plaintiff is entitled for the relief of permanent injunction as
prayed for?OPP.
V. Relief, if any.
6. In, PE plaintiff has examined Sh. Sajan Gupta as PW1.
7. Plaintiff has relied upon the following documents:
(i) The SPA which is Ex. PW1/1.
(ii) The certified copy of the resolution dated 10.09.1992 which is Ex. PW1/2.
Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 8/30
(iii) The copy of auction notice of DDA which is Ex.PW1/3.
(iv) The copy of the application dated 02.03.1978 by the highest bidder which is
Ex. PW1/4.
(v) The copy of the bid form dated 02.03.1978 which is Ex. PW1/5.
(vi) The copy of the intimation letter by the defendant for taking over the
possession which is Ex. PW1/6.
(vii) The letter dated 11.01.1979 which is Ex. PW1/7.
(viii) The copy of the certificate of incorporation dated 27.04.1978 which is Ex.
PW1/8.
(ix) The copy of the sanction letter dated 24.04.1980 which is Ex. PW1/9.
(x) The copy of the perpetual lease deed duly stamped vide letter dated
26.10.1981 which is Ex. PW1/10.
(xi) The letter dated 22.05.1990 which is Ex. PW1/11.
(xii) The record of the plaintiff company which is Ex. PW1/12.
(xiii) The copy of the letter dated 26.04.1991 which is Ex. PW1/13.
(xiv) The letter dated 09.08.1991 which is Ex. PW1/14.
(xv) The letter dated 11.09.1991 which are Ex. PW1/15.
(xvi) The letter dated 26.08.1992 which is Ex. PW1/16.
8. In defence evidence, the defendants have examined Sh. P.C. Gupta, Assistant Director (CL) as DW1.
9. Defendant has relied upon the following documents: Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 9/30
(i) Copy of the bid form dated 02.03.1978 which is Ex. DW1/1.
(ii) The application given by the highest bidder for purchase of the plot dated 02.03.1978 which is Ex. DW1/2.
(iii) The copy of the letter dated 25.05.1978 which are Ex. DW1/3 and Ex. PW1/4.
(iv) The possession of the plot was handed over to the DDA on 28.07.1978 which is Ex. DW1/5.
(v) The copies of the letters dated 07.07.1981 and 21.121981 which are Ex. DW1/6 to Ex. DW1/8.
(vi) The copy of the letter dated 29.07.1991 which is Ex. DW1/9.
(vii) The copy of the letter dated 16.07.1979 which is Ex. DW1/10.
(viii) The copy of the letter dated 28.07.1979 which is Ex. DW1/11.
(ix) The certificate of incorporation which is Ex. DW1/12. (x) The memorandum of Association which is Ex. DW1/13. (xi) The copies of the letters dated 05.05.1981, 04.07.1981, 11.12.1981,
21.06.1982, 26.09.1988, 26.10.1988, 25.11.1988, 16.12.1988 and 14.09.1989 which are Ex. DW1/14.
(xii) The copy of the letter dated 02.01.1989 which is Ex. DW1/15.
(xiii) The copy of the letter dated 06.01.1990 which is Ex. DW1/16.
10. My Issue Wise Findings:
11. Issue No. 3 & 4.
Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 10/30
Whether the plaintiff is entitled for the relief of mandatory injunction as prayed for?OPP.
Whether the plaintiff is entitled for the relief of permanent injunction as prayed for?OPP.
The onus to prove these issues is upon the plaintiff. To discharge this onus, the Plaintiff has examined Sh. Sajan Gupta as PW1. In examination by of affidavit, PW1 has reasserted the facts stated in the plaint. PW1 has been duly cross examined and during cross examination, he has stated that "............I do not remember whether the company has given the names of the directors at any point with the DDA. Sh. Narinder Singh has given the bid in the name of proposed company i.e plaintiff company in 02.03.1978. It is correct that during March, 1978 memorandum was not approved by ROC. Vol. Memorandum is registered at the time of incorporation of the company. I do not remember whether in the year 1978 names of the present directors were included in the memorandum of year 1978. It is correct that company has not deposited memorandum or articles in DDA. Vol. Same was not required. It is correct that at the time of auction/bid the list of the proposed directors were not submitted to DDA as the company was not incorporated by then..........."
"............I have been advisor of the plaintiff company for the last 17 years. There is no written appointment letter whereby I have been appointed as an advisor/consultant by the plaintiff company............"
"..........The present directors of the company are Deepak Mohan Puri, Mohan Puri and Mrs. Ritu Puri. As far as I remember, the above directors are for the Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 11/30 last 45 years. Prior there was one another director Mr. A.K. Puri. However, I do not recollect the name of the other directors. I am aware of the fact that to appoint or delete the directors, the return is submitted by the ROC and the company do maintain the said record. I can produce the said record as the same is with the company..........."
".............At the time of giving the bid on 02.03.1978 the plaintiff company was not registered. It is incorrect to suggest that the company was incorporated as directors by Smt. Harminder Kaur Kohli, Sh. Narender Singh Kohli, Sh. Urinder Singh Kohili, Smt. Navjeet Kaur Kohli and Sh. Kulvinder Singh Kohli. It is incorrect to suggest that the proposed plaintiff company has informed that the above five are the proposed directors of the proposed company. It is correct that Sh. A.K. Puri, Ms. Neeru Puri and Ms. Ritu Puri were not the directors of the company at the time of its incorporation. It is incorrect to suggest that Sh. Narinder Singh Kohli had given the bid on 02.03.1978 in his individual capacity. Vol. DDA had accepted the bid in the name of the M/s Pawan Builders (proposed)..............."
"...........It is incorrect to suggest that in 1990 M/s Pawan Builders Pvt. Company was purchased by Sh. A.K. Puri, Smt. Neeru Puri and Smt. Ritu Puri from Smt. Harminder Kaur Kohli, Sh. Narender Singh Kohli, Sh. Urinder Singh Kohli, Smt. Navjeet Kaur Kohli and Sh. Kulvinder Singh Kohli. I am not aware as to whether Mr. A.K. Puri, Smt. Ritu Puri and Smt. Neeru Puri are relative to Sh. Narinder Singh Kohli or his family. It is wrong to suggest that after purchase of the plaintiff company only, names of Sh. A.K. Puri, Smt. Ritu Puri and Smt. Neeru Puri were substituted............"
"............The possession of the plot was taken by one Sh. Darshan Singh on Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 12/30 behalf of the plaintiff company. I can not tell what post Sh. Darshan Singh was holding in the plaintiff company. It is correct that the bid form was signed by Sh. Narinder Singh at point A on Ex. PW1/5. It is correct that initial bid amount and earnest money was paid by Sh. Narinder Singh. The terms and conditions of the sale by auction is dated 25.05.1978 and the same is Ex. PW1/D1. Sh. Urvinder Singh has signed the terms and conditions which is Ex. PW1/D1. It is correct that in the terms and conditions, 50% of the unearned increase has to be paid in case of transfer. It is wrong to suggest that the plot was transferred by Sh. Narinder Singh to M/s Pawan Builders after the acceptance of the bid..........."
"..........I do not remember as to where the Pawan Builders was having its account in the year 1978. In march, 1978 there was no account of Pawan Builders. The amount paid by Sh. Narinder Singh towards bid amount and earnest money on 02.03.1978 of Rs. 71,000/ was not paid from his own account and must have been paid on behalf of the proposed company on behalf of the initial subscribers.............."
On the other hand, the defendant has examined Sh. P.C. Gupta as DW1. In the examinationinchief by way of affidavit, DW1 has stated that ".............The plaintiff company has no locus standi to file the present suit as at the time of furnishing of bid from as well as at the time of auction, the plaintiff company was not even in existence and the bid was given by one Sh. Narender Singh who is neither the share holder no he director of the plaintiff company. .......
...........Further the DDA, vide letter dated 16.07.1979, requested the plaintiff to furnish the certificate of memorandum of association.......... Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 13/30
........Further the plaintiff vide letter dated 28.07.1979 enclosed the copy of the memorandum of association of the company and a copy of the incorporation certificate of the plaintiff company..........
.........Further the defendant/DDA has also made correspondence with the plaintiff company, vide their letters dated 05.05.1981, 04.07.1981, 11.12.1981, 21.06.1982, 26.09.1988, 26.10.1988, 25.11.1988, 16.12.1988 and 14.09.1989 wherein DDA asked the plaintiff company to clarify regarding Sh. Narinder Singh who had signed the bid form. However, in the memorandum of association, the name of Sh. Narinder Singh is not mentioned in the list of directors. ............
............Further, the plaintiff company was incorporated on 27.04.1978 as per the documents submitted by the plaintiff company and the name of Sh. Narinder Singh was not in the list of share holders/directors of the company in the memorandum of association. Hence, as per the terms and conditions of the auction, the plot can not be transferred or parted with by the bidder. Hence, the present case is a clear case of transfer and now the lease deed can not be registered in the name of M/s Pawan Builders, as the transfer is not permissible under the terms and conditions of the auction with payment of unearned increase by the plaintiff company, as the bid for the plot has been give by Sh. Narinder Singh in his individual capacity and no bid has been given by M/S Pawan Builders. .............
...............Further, the plaintiff has not served any notice U/s 53B of the DDA Act on the DDA prior to filing of the present suit............
................Further, the plaintiff is not entitled for any relief as the action of Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 14/30 the DDA is absolutely according to the policy and procedure as the present case of the plaintiff company is of transfer from individual to company, which is not permissible without payment of unearned increase............"
DW1 has been duly cross examined and during cross examination, DW1 has stated that "..........I am aware of the terms and conditions of the auction held by the DDA vide Ex. PW1/D1. It is correct that if there is misrepresentation by the bidder or intending purchaser the earnest money could be forfeited by DDA before acceptance of bid. It is also correct that if the bid is not accepted then the earnest money is refunded to the bidder or intending purchaser by the DDA. It is also correct that if the bid is accepted the DDA will accept the balance amount of bid in cash of by demand draft in favour of DDA. It is also correct that if the bid is to be accepted or rejected by DDA, it has to be done before acceptance of balance amount of bid amount from the bidder or intending purchaser. It is correct that an earnest money of Rs. 71,000/ was received by DDA on 02.03.1978. It is correct that the bid was accepted on 15.03.1978. The total amount of the bid amount accepted by the DDA was of Rs. 2,84,000/. Plaintiff paid the balance amount of Rs. 80,000/ on 01.05.1978 and Rs. 1,33,000/ on 12.05.1978. I am not aware whether at the time of approving the bid the process of approval of the name of plaintiff company was already under process with the register company..............."
"......... I am also not aware that the fee for registration of the name of the plaintiff company was deposited with the Registrar of the company on 24.01.1977........"
".........The document Ex. DW1/P1 is the photocopy of the document Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 15/30 submitted by the plaintiff company with the DDA which has been filed by the DDA along with its documents before this Hon'ble Court. It is correct that Ex. PW1/4 mentions that the bid has been given by Sh. Narender Singh on behalf of the M/S Pawan Builders (proposed). It is correct that before acceptance of the balance bid amount as mentioned aforesaid, the plaintiff company was registered on 27.04.1978 which was given by the plaintiff company to the DDA..........."
"..........I can not tell that the DDA was aware that the bid was given by Sh. Narender Singh on behalf of the proposed plaintiff company and therefore, the possession was handed over to the plaintiff company as I was not posted in that period in that particular branch. I am not aware that the building plans were sanctioned by the DDA vide Ex. PW1/9 in favour of the plaintiff company since the same does not pertain to my branch of DDA............."
"...............It is also wrong to suggest that after acceptance of the entire bid amount of Rs. 2,84,000/ from the plaintiff company, the DDA could not have issued the letter on 26.08.1992 after a long period of 14 years. It is wrong to suggest that present case is not a case of transfer..........."
".............It is wrong to suggest that the notice u/sec 53B of DDA act was not required prior to filing of present suit. It is wrong to suggest that the DDA was aware of the Directors of the plaintiff company at the time of its incorporation on
27.04.1978 and therefore, balance bid amount was received from the plaintiff company after its incorporation..............."
"...........It is wrong to suggest that since the bid was given by Sh. Narender Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 16/30 Singh on behalf of the proposed plaintiff company, therefore, it was not relevant or required that after incorporation of the plaintiff company name of Sh. Narender Singh must be included in the list of Directors or as share holder of the plaintiff company..............."
In the present suit, the plaintiff is seeking two reliefs:
(i) First relief of permanent injunction that the defendant should be restrained from canceling the bid of the plaintiff with regard to the suit property. In other words, the defendant should be restrained from committing the breach of the contract;
(ii) Second relief of mandatory injunction that the defendant should be restrained to execute the lease deed of suit property in favour of the defendant. In other words, the defendant should be directed to perform its part of contract i.e the contract should be specifically performed by the defendant.
Section 41(e) of the Specific Relief Act, 1963 states "An injunction can not be granted to prevent the breach of a contract, the performance of which would not be specifically enforced" To put otherwise, injunction can be granted to prevent breach of contract, provided the contract can be specifically enforced. Therefore, the court has to consider the principles regarding Specific Performance of Contract as enumerated in chapter III ( Section 9 to 25) of the Specific Relief Act, 1963.
The brief facts of the suit in hand are as such:
(a) Vide Adv. No. 87H/7778(which is Ex. PW1/3), the defendant/DDA invited bids for auction of 10 plots including the suit property.
(b) The auction was held on 02.03.1978 and plaintiff participated in the auction Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 17/30 through one Sh. Narinder Singh and the plaintiff company was accepted as highest bider and the bid form and application which are Ex. PW1/5 and Ex. PW1/4 dated 02.03.1978.
(c) The plaintiff company was duly incorporated on 27.04.1978 and the incorporation certificate is Ex. PW1/8 and Ex. DW1/12.
(d) The bid form dated 02.03.1978 is Ex. PW1/5 and Ex. DW1/1. (e) Application given by the highest bidder for purchase of plot dated 02.03.1978 is Ex. PW1/4 and Ex. DW1/2. (f) Letter dated 25.05.1978 which is Ex. DW1/3 written by plaintiff to the
defendant/DDA and terms and conditions of auction signed by MD Sh. Urinder Singh Kohli which is Ex. PW1/D1 (admitted).
(g) Letter dated December, 1978 by defendant to plaintiff' to take possession of plot on 04.01.1979 and the letter mentions the name of the plaintiff as M/S Pawan Builders Pvt. Ltd which is Ex. PW1/6.
(h) Certificate dated 04.01.1979 that plaintiff has taken possession through one Sh. Darshan Singh is Ex. PW1/7. (lessee mentioned as Pawan Builders Pvt. Ltd).
(i) Sanction dated 24.04.1980 by defendant to the plaintiff regarding erretion of building on suit property.
(j) Terms and conditions of the auction is Ex. PW1/D and Ex. DW1/4.
(k) Ex. DW1/6 dated 07.07.1981 to collect unstamped copies of the lease deed and to submit three duly stamped copies of lease deed within 15 days.
(l) Ex. DW1/8, dated 21.10.1981, again reminder to plaintiff to comply with Ex. DW1/3 within 15 days.
Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 18/30
(m) Ex. DW1/P2, letter dated 04.09.1981 by defendant to plaintiff to submit three copies of perpetual lease deed.
(n) Ex. PW1/10, letter dated 26.11.1981 written by the plaintiff to defendant that plaintiff is supplying three copies of perpetual lease deed duly stamped to defendant.
(o) Ex. PW1/11, letter dated 22.05.1990 written by the plaintiff to defendant/DDA that the plaintiff is supplying certain documents demanded by the defendant for execution of lease deed in favour of the defendant.
(p) Ex. PW1/12, letter dated 23.02.1992 written by the plaintiff to the defendant (reply of letter dated 25.07.1990) stating that the plaintiff has complied all formalities and there is no transfer of plot by plaintiff.
(q) Letter dated 16.07.1979 is Ex. DW1/10. (r) As per the defendant, letters sent by the defendant to the plaintiff is Ex.
DW1/10 : Dated 05.05.1981 & Dated 04.07.1981 To clarify the position of Sh. Narinder Singh, Dated 11.12.1981To supply copy of cash receipt through which the plaintiff applied for incorporation, Dated 21.06.1982 & Dated 26.09.1988 To furnish list of directors, Dated 26.10.1988To furnish the audited statement of account.,Dated 25.11.1988 & Dated 16.12.1988 To give details of Directors, Dated 14.09.1989 Again for supply of particulars & Reply of letter dated 03.08.1989, 14.09.1989Ex. DW1/16.
Reply letter by plaintiff to defendant on 02.01.1989Ex. DW1/15Supplying the particulars of directors on 02.03.1978 and on present.
Letter by plaintiff to the defendant on 06.01.1990Ex. DW1/16 where plaintiff stated that the Present company is the owner and no transfer of plot and as per Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 19/30 contract, no restriction over change/transfer of directors.
(s) Ex. PW1/13, letter dated 26.04.1991, written by the defendant to the plaintiff regarding non compliance of letter dated 23.02.1991 and to provide certain documents like indemnity bond by Sh. Narinder Singh and to pay 50% unearned increase etc & Reply to the same is Ex. PW1/14, letter dated 09.08.1991 (u) Ex. PW1/15, letter dated 11.09.1991 written by the plaintiff to the defendant (in reply to letter dated 29.08.1991 to furnish the non encumbered)
(v) Ex. PW1/16, final notice dated 26.08.1992 by defendant to plaintiff to cancell the bid.
Letter dated 16.07.1979 by defendant to plaintiff to supply MOA is Ex. DW1/10 and reply by plaintiff to defendant is Ex. DW1/11 and MOA along with it is Ex. DW1/12 and Ex. DW1/13.
From all these communication, it is clear that in the present suit, the crux of the dispute is that the defendant alleges that one Sh. Narinder Singh has appeared in the auction held on 02.03.1978 in his individual capacity as the plaintiff company was not in even existence on the date of auction and later on, that person i.e Sh. Narinder Singh has transferred the suit property to the plaintiff company and as per the terms and conditions of the lease which is Ex. PW1/D1, the lease can be transferred in name of the plaintiff company only after payment of 50% unearned increase. On the other hand, the plaintiff avers that promoter/Director Sh. Narinder Kohli has appeared on behalf of the plaintiff company which was under incorporation (as the fees for corporation has been paid vide Ex. DW1/P1) and company was duly incorporated on 02.03.1978 and the same fact was Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 20/30 already disclosed to defendant/DDA as the bid form and application form (Ex. PW1/5 and Ex. PW1/4) clearly states that the bid was made by the proposed company i.e Pawan Builders Pvt. Ltd (Proposed) through its representative Sh. Narinder Kohli and there was no misrepresentation by plaintiff company. Further, even the possession was handed over to plaintiff company on 04.01.1979 vide Ex. PW1/6 and Ex. PW1/7 and further on the application of the plaintiff, sanction was granted on 24.04.1980 vide Ex. PW1/9. There was no question of transfer.
Arguments heard. Record perused.
In the present suit, the only determining question is "Whether in view of the above discussed facts, it can be concluded that there is a transfer of property in view of the terms and conditions of the bid or not."
In the present suit from perusal of the record, it is clear that in the auction/bid form which is Ex. PW1/5, the name and address of the bider is mentioned as M/S Pawan Builders Private Ltd (Proposed). Similarly, in the application form which is Ex. PW1/4, the name of the bider is mentioned as M/S Pawan Builderns Private Ltd (proposed). Further, the letter dated 24.01.1979 which is Ex. DW1/P1 i.e letter submitted by the plaintiff before the Registrar of Companies for registration of plaintiff company, shows that at the time of bid i.e 02.03.1978, the plaintiff company was under
the process of incorporation. Further, in the plaint, plaintiff has stated that Sh. Narender Singh has appeared in the auction/bid on 02.03.1978 as Promoter Director of the proposed company. Furhtheer, DDA/Defendant has addressed a letter to the plaintiff which is Ex.Dw1/10, letter to take the possesion of the suit property and the said letter Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 21/30 itself mentions the name of addressee as M/S. Pawan Builders Pvt. (P) Ltd.Thus, it is clear that there was no misrepresentation or misstatement by the plaintiff to the defendant/DDA and the bid was given by the deemed company which was not registered at that time of the auction 0n 02.03.1978 and even the application was filled by M/s Pawan Builders Private Ltd (Proposed).
It is well settled legal principle that a promoter/subscriber/director of a proposed company may enter into contract for the benefit of the company. Such acts are called preincorporation acts/contracts. If a promoter/director purchases the property from a third party, he will be acquiring the title though apparently in his name for the benefit of the company yet to be formed. The property vests in his name for the benefit of the company and his assurance is sufficient to clothe the company after its birth to claim full title and thus, the property acquiring by a promoter etc of a proposed company can become the property of the company by its acceptance and its adoption after its birth. In the present suit, Sh. Narender Singh has appeared on behalf of M/s Pawan Builders Private Ltd (proposed) as a promoter director of the deemed company and in such cases, the deemed company after its registration has right to sue the other contracting party provided private contract is warranted by the terms and conditions of its corporation and the same is also clear from Section 575 of the Companies Act, 1956 where the world (company) has been used for a deemed company and not for a company registered under this act. Thus, a registered company may compel an other contracting party to perform its part of contract for the contracts entered into before the incorporation of the company provided (a) the authorized promoter or subscribers etc Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 22/30 has appeared on behalf of the proposed company, and (b) the nature of the contract is not in contravention of the objectives of the incorporation of the company. In the present suit, Sh. Narender Singh has participated in the bid on behalf of the deemed company and the contract is in conformity with the objectives of the incorporation of the company i.e M/s Pawan Builders Private Ltd and the conduct of the company is implied ratification of the contract by such person that the company has adopted such pre incorporation contract agreed on behalf of the deemed company.
Further, it is also well established legal proposition that the company has rights to sue the other contracting party for preincorporation contracts and therefore, in the present suit the plaintiff company has all the rights to sue the other contracting party i.e DDA to seek performance of contract from the defendant.
Further, it is also relevant to mention that in cases of bid, the contract raises only when the highest bid is accepted by the competent authority and such acceptance is incorporated to the tenderer. In the present suit, bid has been accepted by the DDA/Defendant and even DDA has called upon the plaintiff company to take possession vide letter Ex. PW1/10 and in the said letter, the DDA himself has addressed the highest bidder as M/S Pawan Builders Private Ltd (proposed). Thus, it is clear that there was no misrepresentation or misstatement on behalf of the plaintiff.
Further, defendant has contended that the bid is not binding upon the DDA as the DDA has never entered into any contract in form of bid with the plaintiff company as the plaintiff company or not even in existence at the time of bid on 02.03.1978. As far as this contention is concerned, from the above discussion, it is clear Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 23/30 that the deemed company may enter into contract through promoter or subscribers and there is no such restrictions that the deemed company does not have authority or capacity to enter into contract. Further, it is also clear that when the proposed company has appeared in the bid, there can be said to be no mistake as to the identity of the bidder because in cases of bid, a bid can be canceled when the identity of the bidder is not in possession to be verified. In the present facts in the hands, the identity of the bidder can be easily verified. Further, from auction form which is ex. PW1/15 and application form which is Ex. PW1/4 and letter by DDA to the plaintiff for handing over the possession Ex. DW1/10, it is clear that DDA has intended to auction the plot to the proposed company and the same was latter on auctioned to the highest bideer i.e M/S Pawan Builders Private Ltd (proposed). It can be explained with the help of one example i.e if A and B agrees to enter into a contract and C appeared on behalf of B at the time of execution of the contract and A entered into contract with having knowledge that C is appearing on behalf of B and B refies the same later on, then A can not take the plea that C was not appearing on behalf of the B as A entered into the contract with C having knowledge that C is appearing on behalf of the B and B is estoped from challenging the authority of C to appear appear on behalf of B. Similarly, in the present suit, perusal of these documents shows that it can be presumed from these documents that at the time of contract DDA has averred that Sh. Narender Singh is appearing on behalf of deemed company as promoter director of the deemed company and latter on DDA/defendant can not challenge the authority of such person who appeared on behalf of the deemed company and if the DDA has no objection that the company was not in existence at the Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 24/30 time of auction, DDA should have raised this objection and should have stopped the proposed company to give bid. Similarly, if the DDA was having apprehension that Sh.
Narender Singh is not appearing on behalf of the deemed company i.e M/S Pawan Builders Private Ltd (proposed), DDA should have raised the same objection at the time of bid and should not have accepted the bid. Further, even during cross examination, DW1 has clearly admitted that "............It is also correct that if the bid is to be accepted or rejected by DDA, it has to be done before acceptance of balance amount of bid amount from the bidder or intending purchaser. It is correct that an earnest money of Rs. 71,000/ was received by DDA on 02.03.1978. It is correct that the bid was accepted on 15.03.1978. The total amount of bid amount accepted by the DDA was of Rs. 2,84,000/. Plaintiff paid the balance amount of Rs. 80,000/ on 01.05.1978 and Rs. 1,33,000/ on 12.05.1978.........."
Thus, it is clear that bid would be taken/accepted after payment of balance amount. Further, as per lease deed, plaintiff has made the application for erection of plot and the same was also accepted by the defendant/DDA and in compliance of terms and conditions of bid, the plaintiff company has erected the construction on the plot in question. Further, there is no such condition of the bid that a proposed or deemed company may not participate in the bid and there is no misrepresentation or misstatement on behalf of the plaintiff so as to conclude that there was not misrepresentation or misstatement on behalf of the plaintiff.
Now, the onus is upon the defendant to show that Sh. Narender Kohli has Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 25/30 participated in the bid proceedings in his individual capacity but the defendant has not filed the copy of auction proceeding so as to show that on which ground or on the basis of which record of DDA has come to the conclusion that on 02.03.1978, the said Sh. Narender Singh has participated in the auction in his individual capacity and no on behalf of the plaintiff company.
In the present suit, there are only one document i.e letter dated 02.01.1999 which is Ex. DW1/15 (also Ex. DW1/P1) which states that plaintiff has submitted this letter to the defendant thereby submitting that Sh. Narender Singh was one of the Directors on 02.03.1978 and it is the only document on record to show that plaintiff company has given falls opinion but this document was also put to the PW1 during cross examination and PW1 has denied the same and further it is also clear that only this one letter can not be said to be sufficient proof so as to show that the plaintiff company has played a fraud upon the defendant/DDA.
The court has to set a balance between two conflicting interests:
(i) The interest of plaintiff which has awarded to the plaintiff by virtue of the bid on 02.03.1978 and
(ii) The interest of DDA as a Government body established for social welfare.
The defendant kept mum when the balance amount in pursuance of bid was paid, when the possession was handed over to the plaintiff and when on the application of the plaintiff, sanction plan was passed and in pursuant to same, the plaintiff errected the building. Till, now, the defendant has never raised any objection and it is only at the time of execution of lease documents by defendant when for the first time, defendant Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 26/30 raised the objections. But the defendant is estopped from raising objection, DDA/defendant can not make other to suffer for delay/latches on the part of defendant/DDA.
As far as, change in Board of Directors is concerned, company is a separate legal entity and the share holders and directors may change but the said change is ineffective as to legal identity of the company.
In view of the above discussion, it can be easily concluded that Sh. Narender Singh has appeared in the bid on 02.03.14978 not in his personal capacity but on behalf of the proposed/deeded company and the company has, later on, revived the same contract after its registration and now the person appearing on behalf of the deemed company as well as the other contracting parties are estopped from reverting back from the contract as Sh. Narender Singh has appeared on behalf of the deemed company having knowledge of the same and the defendant/DDA has also entered into contract with the deemed company at the time of contract. Further, it is also clear that as per the terms and conditions which are Ex. PW1/D1there was a restriction over the transfer of the property for a stipulated time period but there is no restriction over the change of board of Directors of the company and the company is a settled legal entity from its Directors and was his shareholders and therefore, if there is no change of board of directors of the company from the part of auction i.e 02.03.1978 that can not be considered as the transfer of the property. In view thereof, there is no transferred by the plaintiff therefore, the plaintiff is not liable to pay 50% of the unearned increase as claimed by the defendant. Therefore, from the above discussion, it can be said that Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 27/30 plaintiff is entitled to restrained the defendant from cancelling the bid of the suit property and to enforce the defendant to execute the lease deed in name of the plaintiff for the performance of the contract entered into between the plaintiff company and defendant/DDA. In view of the above discussion, issue No. 3 & 4 are decided in favour of the plaintiff and against the defendant.
12. Issue No. 1
Whether the suit is bad for want of notice U/sec 53B of the DDA Act? OPD.
The onus to prove this issue is upon the defendant.
It is argued on behalf of the defendant that the suit is liable to be dismissed as plaintiff has not served the legal notice U/sec 53(b) of DDA Act.
On the other hand, it is argued on behalf of the plaintiff that the suit is maintainable even in absence of notice as it is well settled rule of law that in cases of suit for injunction when the threat is grave there is no requirement of any such notice.
Arguments heard. Record perused.
It is admitted fact that plaintiff has not served a legal notice upon defendant. It is also clear that vide letter dated 26.08.1992 the plaintiff was given the final notice that the bid shall be cancelled and just after receiving the letter in last week of September, 1982, the plaintiff has filed the present suit. From the facts and circumstances of the case, it is clear that the plaintiff's interest was at high stake and there was an emergent situation and if the plaintiff would not have approached the court and had waited for the time period of notice, the defendant might have cancelled the bid Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 28/30 which would have cause irreparable loss and injury to the plaintiff and the same can not be compensated in monetary terms. Therefore, the plaintiff is entitled to exempt from the mandate of statutory notice to the DDA and accordingly, the issue No. 1 is decided in favour of the plaintiff and against the defendant.
13. Issue No. 2
Whether the suit is barred by time?OPD.
The onus to prove this issue is upon the defendant.
It is argued on behalf of the defendant that the suit is highly time barred as the bid was held on 02.03.1978 and the plaintiff has filed the suit for specific performance of bid in 1991 i.e after lapse of almost 14 years and therefore, the suit is highly time barred.
On the other hand, it is argued on behalf of the plaintiff that the suit is well within period of limitation as the cause of action in the present suit has risen on 02.03.1978 when the bid was held and the same continuous in favour of the plaintiff till 26.08.1992 when the defendant admitted the final notice to the plaintiff threatening the plaintiff to cancell the bid of the plot in favour of the plaintiff and the cause of action is even still continuing as in cases of threats, the cause of action is always continuing till the threats are stopped.
Arguments heard. Record perused.
It is admitted fact that auction was held on 02.03.1978 and final notice was issued to the plaintiff by defendant on 26.08.1992. In view thereof, it can be said that the cause of action in the present suit is threat of cancellation of bid forwarded by the Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 29/30 defendant and as the threat has been forwarded vide letter dated 26.08.1992. The period of limitation shall be computed from the date of threat and in view thereof, the suit can be said to be well within period of limitation and therefore, the issue No. 2 is also decided in favour of the plaintiff and against the defendant.
14. As all the issues have been decided in favour of the plaintiff and against the defendant, the suit is liable to be decreed in favour of the plaintiff and against the defendant. Accordingly, the suit is decreed in favour of the plaintiff and against the defendant and a decree of permanent injunction is passed in favour of the plaintiff and against the defendant thereby restraining the defendant from in any manner cancelling the bid of the plaintiff with regard to Plot No. 2, Community Centre, Zamrudpur, Kailash Colony Extension, New Delhi as stated in the final notice dated 26.08.1992 and a decree of mandatory injunction is also passed in favour of the plaintiff and against the defendant directing the defendant to execute the lease deed of the suit property.
Decree sheet be prepared accordingly.
File be consigned to the record room after due compliance.
Announced in the open court on 22nd January, 2013 (PRABH DEEP KAUR) CIVIL JUDGE05(WEST) THC/DELHI/22.01.2013 Suit No. 212/11 M/S Pawan Builders Vs. DDA Page No. 30/30