Delhi District Court
Lic Housing Fin. Ltd vs Manoj Kumar Sharma on 13 January, 2026
IN THE COURT OF VIKAS GARG, DISTRICT
JUDGE-05 (EAST),
KARKARDOOMA COURTS, DELHI.
CS No. 1590/16
CNR No. DLET01-003114-2014
LIC Housing Finance Ltd.
Laxmi Insurance Building,
Asaf Ali Road, New Delhi,
(Through its Authorized Signatory Sh. Rajni Kant Uniyal).
.......Plaintiff
Versus
1. Sh. Manoj Kumar Sharma
S/o Sh. Brij Nandan Sharma,
B-60, Manavsthali Apartment,
Vasundhara Enclave,
Delhi-96.
2. Golf Course Sahakari Awas Samiti Ltd
D-162, Sector-10,
Noida.
Also through:-
Secretary
Interim Committee
Golf Course Sahakari Awas Samiti Ltd
Uttar Pradesh Awas Vikas Parishad
Second Floor, Sector 16 A
Hall No. S-4, Vasundhara Complex,
Vasundhara, Ghaziabad,
......Defendants
CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 1 of 25 Digitally
signed by
VIKAS VIKAS GARG
Date:
GARG 2026.01.13
16:24:48
+0530
Date of Institution Suit : 25.07.2014
Date of Final Arguments : 29.10.2025
Date of Decision : 13.01.2026
Final Decision of the suit : Decreed
SUIT FOR RECOVERY OF RS. 33,93,759.12 (RUPEES
THIRTY THREE LACS NINETY THREE THOUSAND
SEVEN HUNDRED FIFTY NINE AND PAISA TWELVE
ONLY)
JUDGMENT
1. This judgment pertains to a suit for recovery of a sum of ₹33,93,759.12 (Rupees Thirty-Three Lakh Ninety-Three Thousand Seven Hundred Fifty-Nine and Paise Twelve only).
2. Initially, the present suit was filed under Order XXXVII of the CPC. Vide order dated 22.12.2016, the application seeking leave to defend filed on behalf of Defendant No. 1 was allowed, pursuant to which the written statement was filed by Defendant No. 1. No one appeared on behalf of Defendant No. 2, and accordingly, Defendant No. 2 was proceeded ex parte vide order dated 08.01.2018.
3. CASE OF THE PLAINTIFF AS PER PLAINT :-
Briefly, the essential facts and averments required for a fair adjudication of the present suit, as presented in the plaint, are as follows:
CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 2 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:25:05 +0530 The plaintiff is engaged in the business of providing financial assistance in the form of loan schemes for the purchase and construction of residential accommodation, including its individual home loan scheme. Under this scheme, every prospective borrower who approaches the plaintiff company for a loan is required to submit a prescribed application form, which is duly scrutinized, and thereafter to enter into a written agreement or contract governing the terms and conditions of the loan.
The defendant no. 1 is a borrower under the said loan scheme within the meaning of the loan agreement executed between the plaintiff and defendant no. 1. The defendant no. 2 is the builder and co- operative society to whom the loan amount was disbursed and is represented through its Secretary, Interim Committee, appointed by the Uttar Pradesh Awas Vikas Parishad, Lucknow. The defendant no. 2, being a co-operative society bearing Registration No. 3289 and registered on 07.04.2004, through its authorized signatory, was allotted a plot of land bearing No. 7, Sector Pi-II, Greater Noida, in terms of a Lease Deed dated 29.03.2005, registered in Book No. 1, Volume No. 916, pages 213 to 248, vide Registration No. 2509 dated 29.03.2005 in the office of the Sub-Registrar, Gautam Budh Nagar, Ghaziabad, Uttar Pradesh, and was undertaking construction of a multi-storey group housing society. The defendant no. 2 had proposed that, as per its scheme, it was in the process of constructing various flats for its members.
In or about February 2010, the defendant no. 1 approached the CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 3 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:25:17 +0530 plaintiff company and applied for a loan against Property/Flat/Unit No. 2531, situated on the 3rd Floor in Block/Tower T-2, Shiv Kala Charms, Plot No. 07, Sector Pi-II, Greater Noida, Uttar Pradesh, under the plaintiff's individual home loan scheme for the purpose of purchasing the said property. The defendant no. 1 informed the plaintiff that he was a member of defendant no. 2 society and that he had been allotted the aforesaid flat by the said society. The defendant no. 2 also assured the plaintiff that it would not issue any duplicate share certificate to defendant no. 1 without obtaining the prior written consent of the plaintiff and further assured that, in the event of default by defendant no. 1 and enforcement of security by sale by the plaintiff, it would accept the purchaser of the said property as its member. It was further agreed by defendant no. 2 that in the event of cancellation of the allotment on any ground whatsoever, the entire amount advanced or disbursed by the plaintiff towards the cost or value of the said property would be refunded to the plaintiff company. Both defendants further confirmed that all conditions imposed by the local authorities, including those relating to sanction of the layout plan, had been duly complied with.
Considering the request of the defendants, the plaintiff company sanctioned and granted a loan of Rs. 25,00,000/- (Rupees Twenty Five Lacs only) to defendant no. 1 for purchase of the said flat. Defendant no. 1 duly signed and executed a written loan agreement on 24.02.2010, undertaking to abide by all its terms and conditions, and also informed the plaintiff that defendant no. 2 had obtained all necessary permissions and approvals from the concerned authorities CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 4 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:25:26 +0530 in respect of the project in which the flat had been booked. Defendant no. 1 further agreed to repay the loan amount along with interest in 240 equated monthly installments and also undertook to pay additional interest and other applicable charges, as per the rules and policy of the plaintiff company, in case of any delay or default in repayment.
In order to secure repayment of the loan, defendant no. 1 created a security and lien in favour of the plaintiff against the said flat by depositing the relevant title documents, including the original agreement-cum-allotment letter and the original share certificate. The plaintiff, defendant no. 1 and defendant no. 2 also entered into a tripartite agreement, whereby it was agreed that upon handing over possession of the flat, defendant no. 1 would mortgage the flat in favour of the plaintiff. It was further agreed that until such mortgage was created, the flat would be treated as security against which the plaintiff had advanced the loan amount to defendant no. 1 and disbursed the same to defendant no. 2.
After availing the loan, defendant no. 1 failed to maintain financial discipline and started committing defaults in payment of the equated monthly installments, thereby acting negligently and deliberately defaulting in repayment, which resulted in accumulation of huge arrears in the loan account. It is pertinent to state that defendant no. 1 has not paid any amount towards repayment of the loan since November 2011. The last payment of Rs. 22,325/- was made on 05.10.2011, and thereafter no further payment was made. It is also relevant to mention that defendant no. 2 failed to complete the CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 5 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:25:33 +0530 construction work and indulged in multiple allotments, compelling the plaintiff to lodge a criminal complaint before the Economic Offences Wing against the builder and society.
Despite repeated follow-ups by the officials of the plaintiff through telephone calls, visits and oral requests, and despite issuance of a legal notice dated 07.11.2013 calling upon the defendants to clear the closure dues in terms of the loan agreement, the defendants failed to pay the outstanding amount. Consequently, defendant no. 1 violated the terms and conditions of the loan agreement by continuing in default, and defendant no. 2 also failed to comply with the terms and conditions of the tripartite agreement, rendering it jointly and severally liable for the outstanding dues.
The plaintiff further submits that it is entitled to interest at the rate of 18% per annum. As per the books of account maintained by the plaintiff in the regular course of its business, the defendants are liable to pay a sum of Rs. 33,93,759.12 (Rupees Thirty Three Lacs Ninety Three Thousand Seven Hundred Fifty Nine and Paisa Twelve only) towards the outstanding loan amount as on 02.07.2014.
Particulars Amount (Rs.) EMI Principal 1,29,381.26 Broken Period Interest 19,916.00 EMI Interest 6,73,680.74 Additional Interest 2,76,224.00
Document Retrieval Charges-Higher Education 3.00 Cess CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 6 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:25:39 +0530 Document Retrieval Charges-Education Cess 6.00 Document Retrieval Charges 2,500.00 Document Retrieval Charges-Service Tax 300.00 Cheque Dishonour charges 350.00 Principal 22,91,398.12 Total 33,93,759.12 It is prayed that this Court may be pleased to pass a decree for a sum of Rs. 33,93,759.12 (Rupees Thirty Three Lacs Ninety Three Thousand Seven Hundred Fifty Nine and Paisa Twelve only) in favour of the plaintiff and against the defendants. It is further prayed that this Court may be pleased to award pendente lite as well as future interest at the rate of 18% per annum in favour of the plaintiff and against the defendants, from 03.07.2014 till the date of realization of the decreetal amount, the interest having been calculated up to 02.07.2014.
The plaintiff also prays that the costs of the present suit be awarded in its favour and against the defendants. The plaintiff further prays that this Court may be pleased to pass such other or further order(s) or relief(s) as may be deemed fit and proper in the facts and circumstances of the present case, in the interest of justice.
4. CASE OF THE DEFENDANT No. 1 AS PER WRITTEN STATEMENT:-
Briefly, the essential facts and averments required for a fair adjudication of the present suit, as presented in the Written Statement, are as follows:
CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 7 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:25:47 +0530 The suit is not maintainable against him in view of the admitted terms of the tripartite agreement entered into between the parties, wherein it was clearly stipulated that in the event of cancellation of allotment on any ground, the obligation to refund the loan amount rests exclusively upon defendant no. 2, as specifically provided under clause 6 of the said agreement. It is an admitted position that the lease deed executed in favour of defendant no. 2 was cancelled by the Greater Noida Development Authority on 09.09.2011 due to non-payment of lease rent, rendering the continuation or completion of the project impossible. The loan amount was admittedly disbursed directly by the plaintiff to defendant no. 2, and therefore, in the event of cancellation of allotment, the repayment obligation could not, in any circumstance, be fastened upon the defendant no.
1.
The defendant no. 1 further submits that the suit is liable to be dismissed in view of the findings of the enquiry committee report dated 05.03.2012, constituted by the then District Magistrate, Gautam Budh Nagar, which conclusively established that multiple flats in the same project were allotted to several allottees and were simultaneously financed by more than one bank or financial institution. The enquiry report also records that the office bearers of the society and officers of the lending institutions were acting in collusion and strongly recommended that the conduct of the concerned bank and financial institution officials be referred to the Reserve Bank of India for appropriate enquiry and action. In these circumstances, the defendant no. 1 himself was a victim of fraud CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 8 of 25 Digitally signed by VIKAS VIKAS GARG Date:
GARG 2026.01.13
16:25:54
+0530
perpetrated by defendant no. 2 in connivance with officers of the plaintiff institution.
Due to the fraud, cheating, and persistent harassment by the plaintiff for repayment of the loan, despite the clear contractual obligation of defendant no. 2 to refund the same, the defendant no. 1 was compelled to lodge an FIR on 08.08.2013 at Police Station Sector 20, Noida, under Sections 420, 467, 468, 471, 323, 504, and 506 of the Indian Penal Code against the owner of defendant no. 2 along with three others, including the Regional Manager of the plaintiff corporation. Having no alternative remedy, the defendant no. 1 also approached the Learned State Consumer Disputes Redressal Commission, New Delhi, by filing Consumer Complaint No. 166 of 2015, seeking either delivery of the flat or refund of the amount paid.
It is admitted by the plaintiff itself, including in paragraph 9 of the plaint, wherein it is acknowledged that in the event of cancellation of allotment, defendant no. 2 was liable to refund the entire amount advanced. The lease in favour of defendant no. 2 having been cancelled and the project having failed entirely, no liability can be attributed to the defendant no. 1. The defendant no. 1 had no role whatsoever in obtaining sanctions or permissions for the project, nor in the submission of documents to local authorities.
The defendant no. 1 further submits that he had regularly paid instalments through ECS till October 2011 and had also made additional payment by cheque, amounting in aggregate to Rs. 3,52,200/-. The payments were stopped only after it became evident CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 9 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:26:00 +0530 that the project had come to a standstill, the lease had been cancelled, and the entire transaction was tainted with fraud. The alleged default, therefore, was neither deliberate nor wilful but was compelled by circumstances beyond the control of the defendant no.
1. The calculations, claims of interest, and alleged outstanding amounts put forth by the plaintiff are imaginary, arbitrary, and wholly unsustainable.
The plaintiff is not entitled to any relief against the defendant no. 1. The suit is frivolous, vexatious, and an abuse of the process of law and is liable to be dismissed with exemplary costs.
5. REPLICATION:-
Replication has been filed by the plaintiff to the written statement filed by defendant no. 1 wherein the plaintiff has denied the submissions of the defendant no. 1 as contained in the written statements and has reaffirmed and reiterated the contents of the plaint.
6. ISSUES:-
Upon completion of pleadings, the following issues were framed for trial on 08.01.2018.
(1) Whether the plaintiff is entitled for recovery of Rs.
33,93,759.12 as prayed? OPP
(ii) Whether the plaintiff is entitled for interest, if yes, at what rate and for what period? OPP CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 10 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:26:08 +0530
(iii) Whether the suit is not maintainable against the defendant No.1 in view of clause 6 of Tripartite Agreement between plaintiff, defendant No. 1 and defendant No. 2 whereunder repayment of loan was to be made by defendant No. 2 to the plaintiff in case of cancellation of allotment? OPD-1
7. PLAINTIFF'S EVIDENCE:-
The Authorized Representative of the plaintiff, Sh. Rajat Kumar, appeared as PW-1 and tendered his evidence by way of affidavit (Ex. PW1/A), wherein he reiterated and reaffirmed the contents and averments made in the plaint. In support of his case, he relied upon the following documents:
1. The authorization letter dt. 13.05.2014 as Ex.
PW-1/1.
2. The GPA in favour of Smt. Sunita Sharma (M.D. & CEO of plaintiff company) as Ex. PW-1/2.
3. The loan offer letter dt. 17.02.2010 as Ex. PW- 1/3.
4. The loan agreement dt. 24.02.2010 as Ex. PW-1/4.
5. The Tripartite Agreement as Ex. PW-1/5.
6. The agreement cum allotment letter dt. 15.02.2010 as Ex. PW-1/6.
7. The share certificate dt. 15.02.2010 as Ex. PW-1/7.
8. The legal notice dt. 07.11.2013 as Ex. PW-1/8.
9. The postal receipts as Ex. PW-1/9 to Ex. PW-1/12 CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 11 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:26:15 +0530
10. The statement of account as Ex. PW-1/13.
PW-1, Sh. Rajat Kumar, was duly cross-examined by learned counsel for Defendant No. 1.
8. DEFENDANT'S EVIDENCE:
In support of his defence, Defendant No. 1, Sh. Manoj Kumar Sharma, examined himself as DW-1 and tendered his affidavit in evidence (Ex. DW-1/A), wherein he reiterated the statements made in his written statement with certain modifications. In support of his case, he relied upon the following documents:
1. The photo copy of the tripartite agreement as Mark A.
2. The photo copy of the enquiry committee report dt. 05.03.2012 as Mark B.
3. The photo copy of FIR dt. 08.08.2013 as Mark C.
4. The copy of Consumer complaint No. 166/15, filed in State Commission as Mark D. DW-1 was extensively cross-examined by learned counsel for the plaintiff.
On 27.10.2023, DW-1 was further recalled for examination-in-chief and for tendering of documents in terms of the order of the Court dated 25.10.2023, pursuant to which he relied upon documents marked as Mark A to Mark V. He also relied upon a certificate under Section 65B of the Indian Evidence Act, 1872, marked as CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 12 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:26:23 +0530 Mark W. Thereafter, DW-1 was again duly cross-examined by learned counsel for the plaintiff.
9. ARGUMENTS:-
Plaintiff's Arguments:
Learned counsel for the plaintiff advanced arguments in terms of the plaint and reiterated the contents thereof. It was contended that the liability of Defendant Nos. 1 and 2 is joint and several. Learned counsel further argued that Clause 6 of the Tripartite Agreement is not attracted to the facts of the present case, as there was no formal cancellation of the allotment of the flat by Defendant No. 2 in favour of Defendant No. 1. It was submitted that cancellation of the lease in favour of Defendant No. 2 cannot be construed as cancellation of allotment within the meaning of Clause 6 of the Tripartite Agreement.
Defendant's Arguments:
It is argued by the counsel for Defendant No. 1 that the present suit reflects the well-known and unfortunate state of affairs prevailing in the construction and housing finance industry. Defendant No. 1 is a retired officer of the Indian Air Force and a genuine homebuyer who booked the subject flat by paying initial advance instalments from his hard-earned income. Despite clear circulars issued by the CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 13 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:26:31 +0530 Reserve Bank of India and the National Housing Bank mandating that housing loans be disbursed strictly in accordance with stages of construction, banks and housing finance institutions, including the Plaintiff, have been disbursing entire loan amounts upfront without verifying whether the developer was capable of completing the project.
It is further submitted that Defendant No. 1 availed a housing loan from the Plaintiff on the recommendation of Defendant No. 2 and applied for the loan for purchase of Flat No. 2531, Tower-2, 3rd Floor, in the project "Shiv Kala Charms" at Greater Noida. A Loan Agreement dated 24.10.2010 was executed between the Plaintiff and Defendant No. 1, which expressly provided that disbursement would be made in stages based on construction progress. Contrary to this contractual stipulation, the Plaintiff disbursed the entire loan amount in a single transaction. The agreement further required the Plaintiff to be satisfied, on the basis of documentary evidence, that each disbursement was immediately required, and to ensure delivery of all necessary consents, approvals and permissions. No such documents were ever demanded or verified by the Plaintiff. It is argued that the entire loan was disbursed in connivance with Defendant No. 2, causing unlawful loss to Defendant No. 1.
Counsel submits that the agreement also contemplated completion of construction strictly in accordance with sanctioned plans. However, the lease of the project land was cancelled due to non- payment of lease rent by Defendant No. 2, making completion and handing over of the flat impossible and resulting in deemed CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 14 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:26:38 +0530 cancellation. Defendant No. 1 promptly informed the Plaintiff, through letters, emails and personal visits, about irregularities and delays, yet the Plaintiff neither responded nor took any corrective steps. It is argued that Defendant No. 1 fully complied with his disclosure obligations by informing the Plaintiff of disputes, irregularities and material developments, whereas the Plaintiff failed to act.
It is contended that upon cancellation of the lease, the security itself became unenforceable, thereby triggering the remedies clause of the Loan Agreement and necessitating reference to the Tripartite Agreement executed between the Plaintiff, Defendant No. 1 and Defendant No. 2. The Tripartite Agreement categorically provides that in the event of cancellation of allotment, the developer is bound to refund the entire amount received from the Plaintiff. The Plaintiff itself admitted this position in its pleadings. The cancellation of the lease by the Greater Noida Development Authority squarely amounted to cancellation of allotment, thereby fastening liability upon Defendant No. 2 to refund the loan amount.
It is further argued that Defendant No. 2 made multiple allotments of the same flat and that the Plaintiff failed to protect its own rights as well as those of Defendant No. 1. During cross-examination, the Plaintiff's witness admitted lack of knowledge regarding double or multiple financing of flats and failed to produce any verification or sanction documents. The Plaintiff's own pleadings admit multiple allotments by Defendant No. 2. Public notices issued by the Plaintiff and another financial institution clearly show that several flats, CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 15 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:26:46 +0530 including Flat No. 2531, were mortgaged multiple times. In fact, Flat No. 2531 was mortgaged to both the Plaintiff and another bank, demonstrating grave lapses and negligence.
Counsel submits that Defendant No. 1 had already taken steps to discharge the alleged liability by handing over a security cheque of Rs. 25,00,000/- originally issued by Defendant No. 2 in favour of the Plaintiff. The Plaintiff has not disclosed whether the cheque was encashed, nor did it initiate any proceedings for dishonour or recovery against Defendant No. 2. No notice under Section 138 of the Negotiable Instruments Act was ever issued. This inaction, it is argued, strongly indicates collusion between the Plaintiff and Defendant No. 2 and resulted in loss of timely legal remedies against the builder.
It is emphasised that the Plaintiff has itself admitted that Defendant No. 2 is liable to refund the entire loan amount upon cancellation of allotment. The Tripartite Agreement and a separate undertaking given by Defendant No. 2 unequivocally bind Defendant No. 2 to refund the loan amount in the event of cancellation or withdrawal prior to possession. Defendant No. 2 also issued cheques towards repayment of the loan, which were acknowledged by the Plaintiff, further reinforcing the builder's liability.
Counsel further argues that an enquiry committee constituted by the District Magistrate, Gautam Budh Nagar, comprising senior government officers, found that the Plaintiff, in connivance with Defendant No. 2, had defrauded allottees, including Defendant No.
1. The enquiry report recorded that Flat No. 2531 was mortgaged CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 16 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:26:54 +0530 twice and even identified certain flats as fictitious. Despite public notices issued by another bank prior in time, the Plaintiff failed to inform Defendant No. 1 or take any steps to safeguard his interests.
It is argued that, as a result, Defendant No. 1 stands to lose both the flat and his money, solely due to the Plaintiff's negligence and misconduct.
It is submitted that the Plaintiff displayed gross negligence and deficiency of service at every stage, including sanction of loan for a stalled project, failure to verify title, approvals, construction status and credentials of the builder, incomplete documentation, suppression of information and non-response to repeated communications from Defendant No. 1. Defendant No. 1 acted in good faith, relying on the Plaintiff's sanction of the project and believing that all mandatory technical and legal checks had been carried out. The loan documents were signed in trust, which later turned out to be misplaced.
Counsel further submits that Defendant No. 1, due to his military deployment abroad, faced practical difficulties in monitoring the project but nonetheless continuously sought updates through emails, letters and personal visits after his return. Despite repeated communications highlighting irregularities and seeking corrective action, neither the Plaintiff nor Defendant No. 2 responded. The allegation of default in EMI payments is denied, as Defendant No. 1 regularly paid EMIs through ECS and even made payments by cheque when ECS was stopped due to the Plaintiff's own instructions. EMIs were stopped only after continued irregularities, CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 17 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:27:03 +0530 stoppage of construction and complete inaction by the Plaintiff, and the reasons for stoppage were duly communicated.
It is further argued that Defendant No. 1 sought technical and legal details of the project through letters and multiple RTI applications, but no information was furnished. Complaints were also lodged, leading to registration of an FIR against the Plaintiff and Defendant No. 2, and a consumer complaint was filed before the State Consumer Commission, both of which are pending adjudication.
With respect to evidence, it is submitted that Defendant No. 1 duly led evidence and identified relevant documents, including the enquiry report, FIR and consumer complaint. These are public documents and could not be produced in original due to reasons beyond the control of Defendant No. 1. Admissions made during cross-examination regarding non-visitation of the site prior to booking were based on reasonable reliance upon colleagues who had already booked flats in the same project and should not prejudice the defence. Cross-examination further establishes collusion between the Plaintiff and Defendant No. 2, as Defendant No. 1 was specifically directed by the builder to approach the Plaintiff for the loan, and was even accompanied to the Plaintiff's office by the builder's staff.
It is also pointed out that subsequent orders of this Hon'ble Court allowed Defendant No. 1 to place additional documents on record, curing any alleged deficiencies in earlier testimony. Counsel further brings to the notice of the Court that the Plaintiff has now issued a demand notice under the SARFAESI Act claiming an exorbitant CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 18 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:27:10 +0530 outstanding amount and seeking to enforce mortgage and personal recovery against Defendant No. 1, despite its own negligence, wrongful disbursement and failure to proceed against Defendant No.
2. Finally, it is submitted that Defendant No. 1 has also approached the Hon'ble Supreme Court in connected proceedings concerning cancellation of land lease and allotments, pursuant to which a one- Judge Committee headed by a retired High Court Judge has been constituted to enquire into the entire factual matrix. In view of all these facts and the evidence on record, it is prayed that the liability to repay the loan amount be held to be that of Defendant No. 2, and that the recovery proceedings against Defendant No. 1 be dismissed.
10. APPRECIATIONS OF ARGUMENTS AND RECORD:-
I have carefully listened to and considered the arguments presented by both the parties, thoroughly reviewed the records, and taken into account the relevant laws and precedents.
11. ANALYSIS AND FINDINGS:-
All the issues raised in the present matter are closely interlinked and interdependent; therefore, they are being considered and decided collectively.
It is an admitted position that the plaintiff bank had financed Defendant No. 1 for the purchase of a flat from Defendant No. 2. A CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 19 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:27:18 +0530 tripartite agreement was executed among the plaintiff, Defendant No. 1 (borrower/flat purchaser), and Defendant No. 2 (builder/housing society). It is also undisputed that Defendant No. 1 stopped making payments to the plaintiff bank, which led to the institution of the present suit against Defendant No. 1 as borrower and Defendant No. 2 as builder/housing society.
It is further an admitted fact that Defendant No. 2 could not hand over possession of any flat to Defendant No. 1, as the lease deed in favour of Defendant No. 2, pertaining to the land on which the flats were being constructed, stood cancelled. In paragraph no. 4 of the preliminary objections in the written statement, Defendant No. 1 has specifically stated that the lease deed in favour of Defendant No. 2 had been cancelled.
In the replication, there is no specific denial of the factum of cancellation of the lease deed. Rather, the said fact stands expressly admitted during the cross-examination of PW-1, wherein he admitted that the lease in favour of the builder had been cancelled sometime towards the end of the year 2011. Even during the course of arguments, there was no denial on behalf of the plaintiff regarding the cancellation of the lease in favour of Defendant No. 2.
Further, in the legal notice as Ex. PW-1/8, it has been categorically stated that the lease deed of the plot on which the flats were proposed to be constructed had been cancelled by the concerned authorities. Paragraph no. 11 of the said notice, which is relevant for the present purpose, is reproduced hereinbelow:
CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 20 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:27:26 +0530 "That neither the Addressee No.1 completed the flat on plot of land bearing Plot 07, Sector Pi, II, Greater Noida, nor handed over the possession of the same to Addressee No.2. The Addressee No. 1, it appears, had misappropriated the funds/loans paid to it by our client and failed to pay the lease money, agreed to have been paid, to Greater Noida Industrial Development Authority. The result was that the Greater Noida Industrial Development Authority determined/cancelled/terminated the lease of plot in question for non-payment of outstanding dues. It has also appeared that the Addressee No. 1, without the knowledge of our clients, had made multiple allotments, due to which, our aforesaid client was cheated. Because of misconduct and acts of cheating and fraud, committed by Addressee No. 1, the construction of flats has been standstill and the project has been abandoned by Addressee No.1 and that value of the property has been diminished. Because of violation of terms and conditions of the various loan documents executed by the Addressees and defaults in making the payment of Equated Monthly Installments (EMIs), by Addressee Nos. 1& 2, the loan paid to the Addressees has become payable, immediately"
Defendant No. 1 has placed reliance on Clause 6 of the Tripartite Agreement, exhibited as Ex. PW-1/5, which is reproduced hereinbelow:
" In the event of cancellation of the allotment by the Society the Society shall refund to the Company forthwith entire amount received from it."
The plaintiff itself has referred to the said clause in the plaint. In this context, paragraph 9 of the plaint is reproduced hereinbelow:
CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 21 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:27:33 +0530 "9. The plaintiff submits that defendant no. 2 also assured that it will not issue any duplicate share certificate to the defendant no. 1 without obtaining written consent of the plaintiff and further assured that in the event of default by the defendant no. 1, if the plaintiff enforced the security by sale, the defendant no. 2 would accept the purchaser of said property as its member. It was further agreed by the defendant no. 2 that in the event of cancellation of above allotment on any ground, the defendant no. 2 shall refund to the plaintiff company the entire amount advanced / disbursed by the plaintiff to the defendant no. 2 towards the cost / value of the said property. It was further confirmed by the defendant no. 1 & 2 that they have complied with all the conditions set out by the local authorities, while sanctioning the layout plan etc."
The said clause has also been referred to in the evidentiary affidavit. Learned Counsel for the plaintiff argued that the liability of Defendant Nos. 1 and 2 is joint and several, and that Clause 6 of the Tripartite Agreement would not apply to the facts of the present case, as there was no formal cancellation of the allotment of the flat by Defendant No. 2 in favour of Defendant No. 1. It was contended that the cancellation of the lease in favour of Defendant No. 2 cannot be construed as cancellation of allotment within the meaning of Clause 6 of the Tripartite Agreement.
The said argument does not carry merit. The plaintiff itself has referred to Clause 6 of the Tripartite Agreement not only in the plaint but also in the evidence led by it. It is an admitted position that Defendant No. 1 could not be handed over possession of the flat CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 22 of 25 Digitally signed VIKAS byDate:VIKAS GARG GARG 2026.01.13 16:27:41 +0530 due to cancellation of the lease deed standing in favour of Defendant No. 2. No allotment of any flat could subsist once the lease of the land, on which the flats were proposed to be constructed, stood cancelled. The inevitable consequence of cancellation of the lease deed was automatic cancellation of the allotment of the flat.
It is also undisputed that the loan amount was not disbursed to Defendant No. 1 and was paid directly by the plaintiff to Defendant No. 2. The plaintiff itself treated the outstanding amount as a liability of Defendant No. 2. In the plaint, the evidentiary affidavit, as well as the legal notice (already referred to hereinabove), it has been categorically stated that in the event of cancellation of allotment, Defendant No. 2 would be liable to refund the entire amount received from the plaintiff. It is also specifically mentioned in the legal notice that the project had been abandoned by addressee no. 1, i.e., Defendant No. 2.
In view of the above discussion, it is clear that the allotment of the flat stood cancelled and, consequently, Clause 6 of the Tripartite Agreement came into operation. By virtue thereof, Defendant No. 2 is liable to refund to the plaintiff company the entire amount received from it.
An argument was advanced on behalf of Defendant No. 1 that the plaintiff had made payment to Defendant No. 2 in breach of the terms of the Loan Agreement. However, there are no pleadings to this effect in the written statement. In the absence of any such pleadings, the said argument cannot be entertained.
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Digitally signed
VIKAS by VIKAS GARG
Date:
GARG 2026.01.13
16:27:48 +0530
As regards the remaining arguments raised on behalf of Defendant No. 1, the same are beyond the pleadings and are unsupported by any evidence.
It is also pertinent to note that no one appeared on behalf of Defendant No. 2, and Defendant No. 2 was proceeded ex parte. The evidence regarding disbursement of the loan amount by the plaintiff to Defendant No. 2 has thus remained unrebutted.
In view of the aforesaid discussion, the plaintiff is entitled to refund of the amount disbursed by it to Defendant No. 2 in terms of Clause 6 of the Tripartite Agreement. Accordingly, the loan amount of ₹25,00,000/- (Rupees Twenty-Five Lakhs only), received by Defendant No. 2 from the plaintiff, is liable to be refunded to the plaintiff by Defendant No. 2. The plaintiff is also entitled to simple interest at the rate of 8.9% per annum, being one of the rates of interest stipulated in the offer letter (Ex. PW-1/3), calculated from the expiry of 60 days from the date of receipt of the legal notice, which, as per the postal receipt on record, is taken as 13.11.2013.
All the issues are decided accordingly.
12. RELIEF:-
In view of the foregoing discussion, the suit of the plaintiff is decreed in the following terms:
a) The plaintiff is held entitled to recover a sum of ₹25,00,000/- (Rupees Twenty-Five Lakhs only) from Defendant No. 2.
CS No. 1590/16 LIC Housing Fin. Ltd. Vs. Manoj Kumar Sharma Page of 24 of 25 Digitally signed VIKAS by VIKAS GARG Date: GARG 2026.01.13 16:27:57 +0530
b) The plaintiff is also entitled to simple interest at the rate of 8.9% per annum, calculated from the expiry of 60 days from the date of receipt of the legal notice, which is taken as 13.11.2013.
c) The plaintiff is also entitled to the costs of the suit, to be paid by Defendant No. 2.
13. The decree-sheet be prepared accordingly.
14. The file be consigned to record room after due compliance.
Pronounced in the open court VIKAS Digitally signed
by VIKAS GARG
on 13th January, 2026. Date: 2026.01.13
GARG 16:28:06 +0530
(Vikas Garg)
District Judge-05 /EAST
KKD, Delhi-13.01.2026.
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