Delhi High Court
Ce Construction Ltd. And Anr. vs Durga Builders Pvt. Ltd. And Ors. on 16 May, 2007
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
JUDGMENT Sanjay Kishan Kaul, J.
IA No. 9719/2005 ( Under Order 7 Rule 11 CPC)
1. The plaintiffs have filed the present suit making the following prayers:
a) Pass a decree of declaration to the effect that the agreement to sell dated 30.4.1993 executed between the defendant No. 1 to 3 and defendant No. 4 is null and void.
b) Pass a decree of declaration in favor of the plaintiff and against the defendants declaring that the decree dated 28.3.2003 passed in Suit No. 749 of 1994 is a nullity in the eyes of law and the same is not binding upon the plaintiff in any manner and the said decree be cancelled. A direction may also be issued to the Revenue Authorities to de-mutate the mutation if any effected in favor of the Defendant No. 4 in respect of the suit property.
c) Pass a decree of permanent injunction permanently restraining the defendants and/or every other persons acting on their behalf including their agents, attorneys, accomplices and servants from interfering with the actual possession and renovation/construction of the plaintiff in respect of the suit property and restraining them from creating any further any charge, encumbering or third party right pursuant to the passing of the decree dated 28.3.2003, in respect of the suit property bearing Nos. S-23, Panchsheel Park, New Delhi.
d) Pass a decree of mandatory and permanent injunction restraining the defendants from not to use the suit property same except for residential purpose and in accordance with the sanctioned lay out plans.
2. The plaintiffs claimed that in the year 1993 it had developed a Satellite Town, Phase-I, Okhla Enclave, Faridabad for a value of approximately Rs. 12.22 crore, awarded by defendant No. 1. Thereafter the work was also awarded for Phase-II of the project which was carried out by the plaintiff and by July 1993, the plaintiffs had executed the works of the value of Rs. 3.15 crore to the satisfaction of defendant No. 1. The payments due under the contract are stated not to have been made by defendant No. 1 but instead defendant No. 1 is stated to have approached both the plaintiffs that in lieu of the work executed by the plaintiffs for development of the township, the title deeds of the suit property bearing No. S-23, Panchsheel Park (hereinafter referred to as the suit property) would be deposited with the plaintiff company as collateral security.
3. In December 1992, defendant No. 2, who was the overall in-charge and responsible for the affairs of defendant No. 1 company is stated to have located the suit property and a deal is stated to have been finalised between defendant No. 2 and late Shri K.D. Somaia in respect of the suit property towards the end of January 1993. The possession with original title deed of the suit property are stated to have been given to defendant No. 2 on 27.1.1993, who in turn handed over the possession of the first floor along with terrace rights and other common area of the suit property to the plaintiffs and further created a mortgage in favor of the plaintiff in respect of the suit property by depositing the said original title deeds. In the end of February 1993, late Shri K.D, Somaia, the owner of the property is stated to have executed a Will and a Power of Attorney in favor of defendant No. 2 and defendant No. 2 in turn handed over the original documents to the plaintiff. The object of taking over of possession of the first floor was to have a small set up in the said property for the purposes of co-ordinating their works for the Okhla Enclave project. The arrangement did not work out and the plaintiff set up another office at the site itself. In March 1993, defendant No. 2 is stated to have approached plaintiff No. 2 for sale of the suit property and for use of the money for buying alternative office accommodation. The name of defendant No. 4 was suggested as a prospective buyer. This was objected to by plaintiff No. 2 and thus the proposal was dropped. Plaintiff No. 1 is stated to have continued to use the first floor along with terrace for the purposes of keeping the records of the company till late 1995. The business relations between the plaintiff company and defendant No. 1 are stated to have grown resulting in financing of projects of defendant No. 1 by the plaintiff No. 1 company. This is stated to have commenced some time in January 1994. To secure the loan mortgages are stated to have been created in respect of various properties towards the end of 1994-1995 as the suit property was not sufficient to cover the entire liabilities of defendants 1 and 2.
4. The plaint goes on to state that M/s. Motor General Finance Limited (MGF) filed a suit for permanent injunction being CS (OS) No. 612/2001 before This Court in view of the threatened action of defendant No. 1 to create third party interest in the mortgaged properties and interim orders were granted on 26.3.2001.
5. The plaintiff No. 1 company claims to have started running their Guest House from the first floor of the suit premises from the end of 1995 till the beginning of 2000. Thereafter Col. Jairath, Executive Director of the plaintiff No. 1 company along with his family moved into the said premises.
6. The cause of action for filing of the suit is stated to have arisen when the Local Commissioner had visited the premises in pursuance to the order passed in Execution Petition No. 321/2003. The plaintiff No. 1 company is stated to have filed the reply in the execution proceedings as an obstructionist to the Execution Petition. The Execution Petition had been filed by defendant No. 4, Mr. Ajay Relan to execute the decree dated 28.3.2003 and defendant No. 4 was seeking possession of the entire first floor of the suit property. It is alleged that a consent decree was passed in CS (OS) No. 749/1994 in collusion between defendants 1 to 3 on the one hand and defendant No. 4 on the other. The compromise decree dated 28.3.2003 was based on an alleged Agreement to Sell dated 30.4.1993 and the Agreement is stated to be fraudulent and void to defeat the rights of the plaintiffs/creditors, vis-a-vis defendant No. 1. The compromise required defendants 1 to 3 to deliver vacant and peaceful possession of the first floor except one room and to execute the documents in respect thereof. It is stated that a false averment was made that defendants 1 to 3 were in possession while it was the plaintiff No. 1 company who was in possession. The compromise application is also alleged to have mentioned that there was no defect of title, mortgage or lease, which was factually incorrect. It is in view thereof that the suit has been filed.
7. The present application has been filed by defendant No. 1 setting forth the circumstances under which the compromise decree was passed and seeking rejection of the plaint as the suit is barred by law.
8. The application states that defendant No. 4 entered into an Agreement to Purchase dated 30.4.1993 in respect of the suit property from defendant No. 1 of which defendants 2 and 3 are Directors. Defendants 2 and 3 were acting as the General Power of Attorney holders of the perpetual lessee K.D. Somaia, HUF and the sale consideration agreed upon was Rs. 2.40 crore. Defendant No. 4 had paid a sum of Rs. 60.00 lakh at the time of execution of the Agreement to Sell towards part payment and the balance was to be paid on sale permission being obtained from DDA and an NOC from the competent authority under the Income Tax Act. Since defendants 2 and 3 failed to perform their obligations, suit No. 749/1994 was filed in This Court.
9. One Mr. Balwant Singh Nag was stated to be the original perpetual sub-lessee in pursuance to a Deed executed by the President of India through DDA as Lesser and the Panchsheel Co-operative House Building Society Limited being the perpetual lessee. K.D. Somaia HUF through Karta had purchased the said plot measuring 800 sq.yds. with two storey residential building, the sale deed dated 3.2.1979 being duly registered. Shri K.D. Somaia in turn had sold and transferred the property to defendant No. 1 for a consideration of Rs. 2.00 crore vide registered Agreement to Sell dated 27.12.1992. Though the No Objection Certificate was granted under Chapter XX-C of the Income Tax Act, defendants 1 to 3 did not execute the Sale Deed resulting in filing of the suit. The suit was contested by defendants 1 to 3 herein but the LRs of Shri K.D. Somaia did not contest the suit as they had already sold their rights in the property. At the stage when the case was fixed for recording of evidence the parties entered into a compromise whereby the property was to be transferred to defendant No. 4 on payment of balance consideration of Rs. 1.80 crore and an application under Order 23 Rule 3 CPC, being IA No. 10189/2002 was filed. The compromise recorded that on 23.3.2003 the balance consideration of Rs. 1.80 crore was paid through a bank draft before This Court. Defendants 1 to 3 gave an undertaking to This Court to deliver actual physical possession of the entire property except one room on the first floor and also undertook to execute the Sale Deed and get it registered with the Sub-Registrar failing which the plaintiff (defendant No. 4 herein) was entitled to execute the decree.
10. In pursuance to the settlement defendants 1 to 3 delivered the actual physical possession of the ground floor but did not deliver the possession of the first floor nor did they deliver the original title deed. The Sale Deed was also not executed in favor of the plaintiff (defendant No. 4 herein). Thus, the execution petition had to be filed.
11. In the execution petition apart from seeking the execution, registration of the documents, custody of the original title documents, warrants of possession in respect of the entire first floor were also prayed for. A bailiff was sought for the said purpose with police aid. It was at that stage seeking execution that judgment debtors being defendants 1 to 3 herein filed objections under Order 21 Rule 58 CPC alleging that they have not violated the terms of the compromise decree and that the original title documents had been misplaced for which police report had been lodged. In respect of the first floor, it was stated that the same was in possession of occupants under them who were now refusing to vacate. It was in these circumstances that a Local Commissioner was appointed vide order dated 27.1.2004 to make a report about the identity of the occupants on the first floor who submitted the report. The objections were thereafter filed by M/s. CE Construction Limited, plaintiff No. 1.
12. The application filed by defendant No. 4 is resisted by the plaintiffs.
13. It is the submission of learned Counsel for defendant No. 4 that the suit is barred under the provisions of Section 47 of the Code of Civil Procedure, 1908 (hereinafter referred to as the said Code):
47. Questions to be determined by the Court executing decree. - (1) All questions arising between the parties to the suit in which the decree was passed, or their, representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.
14. It is, thus, contended that it is only in execution proceedings that the Court would determine the question and not in a separate suit. The bar is also claimed on account of provisions of Order 21 Rules 97, 98, 100, 101 and 103 of the said Code. The same read as under:
ORDER XXI EXECUTION OF DECREES AND ORDERS ...
97. Resistance or obstruction to possession of immovable property. - (1) Where the holder of a decree for the possession of immovable property or the purchaser of any such property sold in execution of a decree is resisted or obstructed by any person obtaining possession of the property, he may make an application to the Court complaining of such resistance or obstruction.
(2) Where any application is made under Sub-rule (1), the Court shall proceed to adjudicate upon the application in accordance with the provisions herein contained.
98. Orders after adjudication. - (1) Upon the determination of the questions referred to in Rule 101, the Court shall, in accordance with such determination and subject to the provisions of Sub-rule (2), -
(a) make an order allowing the application and directing that the applicant be put into the possession of the property or dismissing the application; or
(b) pass such order as, in the circumstances of the case, it may deem fit.
(2) Where, upon such determination, the Court is satisfied that the resistance or obstruction was occasioned without any just cause by the judgment debtor or by some other person at his instigation or on his behalf, or by any transferee, where such transfer was made during the pendency of the suit or execution proceeding, it shall direct that the applicant be put into possession of the property, and where the applicant is still resisted or obstructed in obtaining possession, the Court may also, at the instance of the applicant, order the judgment debtor, or any person acting at his instigation or on his behalf, to be detained in the civil prison for a term which may extend to thirty days.
...
100. Order to be passed upon application complaining of dispossession. - Upon the determination of the questions referred to in Rule 101, the Court shall, in accordance with such determination, -
(a) make an order allowing the application and directing that the applicant be put into the possession of the property or dismissing the application; or
(b) pass such other order as, in the circumstances of the case, it may deem fit.
101. Question to be determined. - All questions (including question relating to right, title or interest in the property) arising between the parties to a proceeding on an application under Rule 97 or Rule 99 or their representatives, and relevant to the adjudication of the application, shall be determined by the Court dealing with the application, and not by a separate suit and for this purpose, the Court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions.
...
103. Orders to be treated as decrees. - Where any application has been adjudicated upon under Rule 98 or Rule 100, the order made thereon shall have the same force and be subject to the same conditions as to an appeal or otherwise as it it were a decree.
15. It is thus contended that the aforesaid provisions envisage that where a decree for possession of immovable property is resisted or obstructed, the application would be decided in accordance with the provisions of the aforesaid Rules. Rule 101 of Order 21 of the said Code envisages that the controversy would be determined by the Court dealing with the application and not in a separate suit notwithstanding anything to the contrary contained in any other law for the time being in force. The contention thus is that the combined reading of the aforesaid provisions makes it clear that any person who claims an independent title or independent right in the property and is claiming entitlement not to be dispossessed in execution of the decree, all the questions relating to such claim of a right, title or interest in the property are to be decided only by the executing court.
16. Learned Counsel further states that the defense raised by the obstructionist is that the property is mortgaged with it by deposit of title deeds along with delivery of possession of the first floor but no particulars of the same have been given nor any letter or Memorandum regarding the creation of the alleged mortgage has been produced or filed. It may be noted herein that though parties were given time even after completion of pleadings to file the original documents and the matter was listed for admission/denial of documents before the Joint Registrar, the plaintiff failed to file the documents in the present case and has now filed a separate application seeking extension of time to file such documents.
17. Learned Counsel also contends that the mortgage is neither registered nor is there any document evidencing the deposit of title documents. The alleged mortgage is stated to be hit by doctrine of lis pendens and thus is barred under Section 52 of the Transfer of Property Act, 1882.
18. Learned Counsel for defendant No. 1 has strongly relied upon the judgment of the Apex Court in N.S.S. Narayana Sarma and Ors. v. M/s. Goldstone Exports (P) Ltd. and Ors. . It was held that in case of resistance or obstruction to possession in the execution proceedings all relevant issues arising in the matter on an application under Order 21 Rule 97 or Rule 99 of the said Code would be determined by the executing court and not in a separate suit. It would be useful to reproduce the discussion in this behalf contained in paragraph 15 as under:
15. Provision is made in the Civil Procedure Code for delivery of possession of immovable property in execution of a decree and matters relating thereto. In Order 21 Rule 35 provisions are made empowering the executing court to deliver possession of the property to the decree holder if necessary, by removing any person bound by the decree who refuses to vacate the property. In Rule 36 provision is made for delivery of formal or symbolical possession of the property in occupancy of a tenant or other person entitled to occupy the same and not bound by the decree to relinquish such occupancy. Rules 97 to 101 of Order 21 contain the provisions enabling the executing court to deal with a situation when a decree holder entitled to possession of the use property encounters obstruction from 'any person. From the provisions in these rules which have been quoted earlier the scheme is clear that the legislature has vested wide powers in the executing court to deal with' all issues relating to such matters. It is a general impression prevailing amongst the litigant public that difficulties of a litigant are by no means over on his getting a decree for immovable property in his favor. Indeed, his difficulties in real and practical sense, arise after getting the decree. Presumably, to tackle such a situation and to allay the apprehension in the minds of litigant public that it takes years and years for the decree holder to enjoy fruits of the decree, the legislature made drastic amendments in provisions in the aforementioned Rules, particularly, the provision in Rule 101 in which it is categorically declared that all questions including questions relating to right, title or interest in the property arising between the parties to a proceeding on an application under Rule 97 or Rule 99 or their representatives, and relevant to the adjudication of the application shall be determined by the Court dealing with the application and not by a separate suit and for this purpose, the Court shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be deemed to have jurisdiction to decide such questions. On a fair reading of the rule it is manifest that the legislature has enacted the provision with a view to remove, as far as possible, technical objections to an application filed by the aggrieved party whether he is the decree holder or any other person in possession of the immovable property under execution and has vested the power in the executing court to deal with all questions arising in the matter irrespective of whether the Court otherwise has jurisdiction to entertain a dispute of the nature. This clear statutory mandate and the object and purpose of the provisions should not be lost sight of by the Courts seized of an execution proceedings. The Court cannot shirk its responsibility by skirting the relevant issues arising in the case.
19. Learned Counsel for the plaintiffs, on the other hand, while not disputing that they had filed the objections in the execution proceedings, claim that they are entitled to maintain the separate suit simultaneously. Learned Counsel contends that since the plea of fraud has been raised a separate suit is maintainable. Learned Counsel relied upon the judgment of the Apex Court in Balvant N. Viswamitra and Ors. v. Yadav Sadashiv Mule (Dead) Through LRs and Ors. . The said judgment is, however, on the issue of a distinction between a void decree and a decree which is wrong, incorrect, irregular and illegal. A void decree can be challenged at any stage even in execution or collateral proceedings, while on the other hand, an erroneous or illegal decision, which is not void, cannot be objected to in execution or collateral proceedings. It is thus contended that a separate suit would be maintainable.
20. Learned Counsel refers to the judgment of the Apex Court in Manish Mohan Sharma and Ors. v. Ram Bahadur Thakur Ltd. and Ors. to advance the proposition that an executing court cannot go behind the decree, unless the decree is a nullity and lack of jurisdiction is patent on the face of the decree. Once again, the emphasis is the distinction between a decree sought to be executed which is a nullity for lack of inherent jurisdiction as compared to an irregular decree. To the same effect is the observation made in Rafique Bibi (Dead) by LRs v. Sayed Waliuddin (Dead) by LRs and Ors. and Vasudev Dhanji Bhai Modi v. Rajabhai Abdul Rehman and Ors. 1970 All Indian Rent Control Journal 716.
21. On the question of fraud learned Counsel has relied upon the judgment of the Apex Court in S.P. Chengalvaraya Naidu (Dead) By LRs. v. Jagannath (Dead) By LRs and Ors. . It was held that a decree obtained by fraud by non-disclosure of relevant and material documents is liable to be set aside.
22. On hearing learned Counsels for the parties it is apparent that the only claim of the plaintiffs at the highest is in respect of an alleged mortgage by deposit of title documents. No document in support thereof has been filed on record. It is also not in dispute that defendant No. 4 had filed a suit against defendants 1 to 3 for specific performance of the Agreement which suit stands decreed. The plaintiffs claim right as mortgagee in pursuance to a mortgage created by defendants 1 to 3.
23. The plaintiffs have also filed objections to the execution of the decree as obstructionist. In the said execution petition, it has been agreed that trial has to take place and the following issues have been framed:
1. Whether the obstructionists acquired any right or interest in the suit property? If so, the date thereof? Onus on the obstructionists
2. Whether the decree in question was obtained in collusion between the parties to the suit and suffers from any fraud in turn affecting the rights of obstructionists? Onus on the obstructionists
3. Relief.
24. The aforesaid execution petition has been set down for trial.
25. In my considered view all aspects that are required to be examined insofar as the claim of the plaintiffs about their right of possession of the first floor (which in turn is arising from the alleged mortgage of the property) as also about the plea of fraud would be adjudicated in those execution proceedings after trial.
26. It cannot be lost sight of that the judgments cited have to be made applicable to the facts of the case and cannot be read in isolation. The relevant aspect here in the present application is whether the suit would be barred by law which in turn arises from the question whether all the questions in controversy are to be determined in the execution proceedings. The Apex Court in N.S.S. Narayana Sarma and Ors. case (supra) has succinctly set out the scheme of Section 47 read with Order 21 of the said Code, which envisages enquiry by the executing court. It is not as if the pleas of the plaintiffs are not being gone into in the execution proceedings especially in view of the issues framed aforesaid. A separate suit has been held not to be maintainable.
27. Another relevant aspect is also the nature of the suit. There is no positive claim in the suit filed by the plaintiffs seeking relief in the nature of specific performance of foreclosure of mortgage. It is not the case of the plaintiffs that the suit property has been sold to them. The plea is only of equitable mortgage. No proceedings have been initiated by the plaintiffs for recovery of the amount or for foreclosure of mortgage. The claims in the present suit are limited which are declaratory and injunctive in nature only in respect of the agreement entered into between the defendants and the decree passed in CS (OS) No. 749/1994. Thus, the nature of reliefs are such that they are liable to be examined only in the execution proceedings and thus the judgments cited by learned Counsel for the plaintiffs would have no application to the facts of the present case. The nature of reliefs claimed by the plaintiffs and the issues framed in the execution proceedings leave no manner of doubt that it is in the execution proceedings that the enquiry about the objections and claims of the plaintiffs would have to be carried out and a separate suit for the reliefs as claimed is not maintainable.
28. The application of defendant No. 4 is thus allowed. CS (OS) No. 1358/2005
29. In view of IA No. 9719/2005 under Order 7 Rule 11 of the said Code of defendant No. 4 being allowed, the suit is dismissed, leaving the parties to bear their own costs.
IA No. 7673/2005 (Under Order 39 Rule 1 and 2 CPC) IA No. 5320/2007 (Under Section 151 CPC)
30. Dismissed.