Delhi District Court
Sanjeet Dagar vs Sandeep Verma on 28 July, 2022
IN THE COURT OF SH. SUDHANSHU KAUSHIK :
ADDITIONAL DISTRICT JUDGE-02 & WAQF TRIBUNAL :
PATIALA HOUSE COURTS : NEW DELHI
CIVIL SUIT NO.56012/2016
CNR NO.DLND01-000586-2015
IN THE MATTER OF :-
SANJEET DAGAR
S/O SHRI OM NARAIN
R/O HOUSE NO.75, MAIDAN GARHI,
NEW DELHI-110068
.....PLAINTIFF
VERSUS
1. SANDEEP VERMA
S/O LATE SH. HUKUM SINGH
R/O B-1159, SANGAM VIHAR,
NEW DELHI-110062
&
OFFICE AT :
B-157, DDA SHADE,
OKHLA PHASE-I, NEW DELHI
.....DEFENDANT NO.1
2. NIRMLA
W/O SH. SANDEEP VERMA
R/O B-1159, SANGAM VIHAR,
NEW DELHI-110062
&
OFFICE AT :
B-157, DDA SHADE,
OKHLA PHASE-I, NEW DELHI
.....DEFENDANT NO.2
3. ADARSH BHARDWAJ
MANAGING DIRECTOR
M/S MAHAGAURI BUILDERS
A-5, OKHLA PHASE-II,
NEW DELHI-110020
.....DEFENDANT NO.3
Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 1 of 21
DATE OF INSTITUTION : 26.03.2015
DATE OF CONCLUSION OF FINAL ARGUMENT : 15.07.2022
DATE OF PRONOUNCEMENT OF ORDER : 28.07.2022
JUDGMENT
Brief facts as disclosed in the plaint
1. Plaintiff Sanjeet Dagar has instituted the present suit for specific performance of an agreement to sell dated 29.05.2014 purported executed by Sandeep Verma and his wife Nirmla (impleaded as defendant No.1 & 2 respectively) in respect of a flat to be constructed on the second floor (back side) of a plot of land measuring 270 sq.yards situated at Village Ghitorni, Tehsil Vasant Vihar, Kapashera, New Delhi (hereinafter referred to as 'the property').
2. Defendant No.3/Adarsh Bhardwaj is stated to be a builder, who entered into a collaboration agreement dated 31.12.2012 with the original owner of the property for raising three floors and constructing flats on each floor including the parking area of the property.
3. The brief background of the matter:
A) On 31.12.2012, the original owner of plot entered into a collaboration agreement with defendant No.3 for building flats on the Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 2 of 21 plot. In terms of this agreement, it was agreed upon between the parties that the entire cost of construction shall be borne by defendant No.3 and the building would be constructed upto three floor and there would be flats on each floor including the parking area. It was agreed that in lieu of bearing the cost of construction, defendant No.3 would get the ownership of entire first floor, second floor and two flats constructed in the parking area while the entire upper ground floor, third floor and the remaining area of the parking space would be retained by the original owner. It was decided that both the parties shall have common roof rights. The collaboration agreement authorized defendant No.3 to take booking of the flats falling to his share and it was agreed that he would be fully entitled to dispose off those flats.
B) On the basis of collaboration agreement, on 29.05.2014, defendant No.3 entered into an agreement to sell his flats to defendant No.1. In the agreement to sell, the sale consideration amount was fixed at Rs.2,19,00,000/-. Defendant No.3 took an advance of Rs.90,00,000/-
from defendant No.1 and it was decided that the balance payment shall be made in two stages. It was agreed that the payment of Rs.50,00,000/- shall be made by defendant No.1 on the finishing of Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 3 of 21 the construction of flats while the remaining amount of Rs.79,00,000/- shall be paid on possession.
C) It has been stated that on 24.05.2014, defendant No.1 & 2 entered into an agreement to sell a flat on the second floor (back side) to the plaintiff for a sum of Rs.7,20,000/-. Plaintiff paid an advance of Rs.4,00,000/- to defendant No.1 & 2 and it was agreed that the balance amount of Rs.3,20,000/- shall be paid afterwards. No time period for the subsequent payment was specified. D) Plaintiff approached defendant No.1 & 2 to complete the construction of the flat and execute the sale deed but they failed to do so. He served a legal notice dated 31.01.2015 on the defendants asking them to execute the sale deed but the situation remained same. Hence, the present case.
4. On the above set of averments, plaintiff filed the present suit seeking three reliefs; (a) Decree of specific performance of agreement to sell dated 24.05.2014; (b) Decree of mandatory injunction that defendants may be directed to carry out the construction of the flat in respect of which agreement to sell was executed by them; and (c) Decree of permanent injunction to restrain the defendants from selling the flat.
Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 4 of 21
5. Since, defendants did not appear despite service of summons, they were proceeded ex-parte. Defendant No.1 & 2 were proceeded ex- parte vide order dated 30.09.2015 while defendant No.3 was proceeded ex-parte on 25.05.2016.
Evidence led by the plaintiff
6. Plaintiff led ex-parte evidence and examined himself as PW-1. He tendered his evidence by way of affidavit, which is Ex.PW-1/A. He placed on record the copy of collaboration agreement dated 31.12.2012 (Mark-A) and original agreement to sell dated 24.05.2014 (Ex.PW-1/4). The site plan is Ex.PW-1/1 while the agreement dated 29.05.2014 is Ex.PW-1/2. The settlement agreement and possession letter dated 31.12.2012 are Mark-B & C respectively. Legal Notice dated 31.01.2015 is Ex.PW-1/5. Thereafter, the plaintiff's evidence was closed.
7. Submissions heard on behalf of plaintiff. Counsel for the plaintiff has submitted that defendant No.1 & 2 may be directed to perform the specific performance of agreement-to-sell dated 24.05.2014. He has prayed that in the alternative, the amount paid by the plaintiff under the said agreement-to-sell may be refunded. In order to support his arguments, counsel has placed reliance on the decision in "ABP Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 5 of 21 Network Private Limited Vs Malika Malhotra" 2021 (6) RAJ 628 (del).
Finding
8. Plaintiff has sought specific performance of agreement to sell dated 24.05.2014 purportedly executed by defendant No.1 & 2 in his favour. It is the case of plaintiff that original owner sold a portion of the property bearing No.479/31, Tehsil Vasant Vihar, Kapashera, New Delhi to defendant No.3 by means of a collaboration agreement dated 31.12.2012. On the force of this collaboration agreement, defendant No.3 sold his portion of the property to defendant No.1 & 2 by entering into an agreement to sell dated 29.05.2014 and out of the purchased portion, defendant No.1 & 2 sold a flat on the second floor (back side) to the plaintiff for an agreed sale consideration of Rs.7,20,000/- by means of an agreement to sell dated 24.05.2014. Photocopies of collaboration agreement dated 31.12.20212, agreement to sell dated 29.05.2014 and the original agreement to sell dated 24.05.2014 were tendered in evidence and the same are on record.
9. Plaintiff has filed the suit for specific performance of agreement to sell dated 24.05.2014 seeking directions that defendant No.1 to 3 Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 6 of 21 may be directed to execute and register the sale-deed in respect of the flat purchased by him on the second floor (back side) of the property. He has also sought a decree of mandatory injunction that defendant No.1 to 3 may be directed to carry out the construction of his flat. Besides these reliefs, plaintiff has sought a decree of permanent injunction that defendants may be restrained from selling this flat to third person.
10. On appreciating the record, I do not find any merit in the the present suit. None of the reliefs sought in the plaint could be granted to the plaintiff. In order to seek the relief of Specific Performance of an agreement to sell, plaintiff must demonstrate that he had acquired some right or interest in the property on the basis of the agreement to sell. Similarly, for seeking injunction, he must show that he has a legal right that deserves to be protected. Plaintiff is under an obligation to establish his claim by leading reliable and cogent evidence. Indeed, in the present matter, the plaintiff's evidence has gone unrebutted but that itself is not sufficient to grant the relief of specific performance of contract. It is a settled position of law that the burden of establishing his case remains on the plaintiff. The absence of defendant does make this task of the plaintiff less onerous Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 7 of 21 but it does not mean that his claim shall be deemed to be established because the defendant is absent. Merely because the defendant is absent, the court shall not admit evidence the admissibility whereof is excluded by law.
11. In the present matter, the foundation of the transaction is the collaboration agreement dated 31.12.2012 executed by the original owner of the property in favour of defendant No.3. It has been pleaded by the plaintiff that in terms of this collaboration agreement, the original owner sold a portion of the property to defendant No.3. The copy of collaboration agreement dated 31.12.2012 is Mark-A. Record suggests that on the day of entering into the collaboration agreement with defendant no.3, the owner of the property also handed him over the possession of the property by executing a possession letter (Mark-C). The question which arises is that whether these documents confer title of the property on defendant No.3 to the extent that he could have executed further agreement to sell in favour of defendant No.1. The answer is indeed negative.
12. Section 54 of the Transfer of Property Act in specific terms provides that a contract for sale does not, of itself, create any interest in or charge on such property. Such contract is merely a document creating Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 8 of 21 a right to obtain another document in form of sale deed to be registered in accordance with law. In other words, a contract for sale is a right created in personam and not in estate. No privity in estate can be deduced there from which can bind the estate, as is the position in cases mortgage, charge or lease. Of course, such personal right created against the vendor to obtain specific performance can ultimately bind any subsequent transferee who obtains transfer of the property with notice of the agreement of sale. However, the position of law is absolutely clear that an agreement to sell does not create any right or title in favour of intending buyer. Reliance can be placed in this regard to the decision in "Neghmala Vs G.Narasimha Reddy"
2010 (8) SCC 383 wherein it was categorically held that an agreement to sell does not create any right or title in favour of intending buyer.
13. It has been held in "Suraj Lamp & Industries Pvt. Ltd. Vs State of Haryana" JT 2011 (12) SC 654 that transfer of immovable property by way of sale can only be by deed of conveyance (sale deed) and in the absence of deed of conveyance, no right title or interest in an immovable property can be transferred.
14. It was observed in "Crest Hotel Ltd. Vs Asstt. Superintendent of Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 9 of 21 Stamps" AIR 1994 Bom 228 that a contract for sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself create any interest in or charge on such property. An agreement for sale is merely a document creating a right to obtain another document of sale on fulfillment of terms and conditions specified therein. On the strength of such an agreement, a buyer does not become the owner of the property. The ownership remains with the seller. It was observed in the matter that the ownership would be transferred to the buyer only on the execution of sale deed by the seller and under an agreement to sell, the buyer only only obtains a right to get the sale deed executed in his favour.
15. Coming to the facts of the present case. The collaboration agreement between the original owner and defendant No.3 was executed on 31.12.2012. On appreciating the terms of this collaboration agreement, it becomes obvious that it was basically an agreement between the owner of the plot and the builder (defendant No.3) whereby the owner handed over the possession of the plot to the builder for carrying out the construction. There are various clauses in the collaboration agreement which points in this direction. Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 10 of 21
16. It stands recorded in the collaboration agreement that the owner executed the said contract with the builder because he was not possessing financial means to raise construction over the property. It has been mentioned in the agreement that the entire cost of construction shall be borne by the builder. The extent and the time period of construction has also been specified in the agreement. It was agreed upon in the agreement that the construction shall be completed within 15 months. After laying down these terms and conditions, the agreement contains a clause that the builder shall be entitled to dispose off his share of the constructed portion of the property and the original owner shall recognize the sale made by him. The portions which would fall to the share of owner and the builder were specified in the agreement. It was agreed upon that after completion of two lanterns, the owner shall execute the sale documents in favour of buyer or any other person as asked for by the builder. The intention of the parties can be gathered from these clauses of the collaboration agreement.
17. On reading the collaboration agreement as a whole, it is apparent that it was intention of the original owner that the builder shall complete the construction of building and thereafter, he would be competent to Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 11 of 21 sell his portion of the constructed property. The portions coming to the share of the original owner and the builder were also specified in the collaboration agreement. The terms & conditions contained in the collaboration agreement goes on to show that the original owner had conceived that the builder shall be entitled to his portion of the property only after completion of construction work. Although, it has been mentioned in the agreement that for arranging funds, the builder may take prior booking of the flats falling to his share but the agreement clearly suggests that it was the intention of the owner that the ownership would be transferred only after completion of construction.
18. There is material on record to suggest that the construction of the building had not been completed. Plaintiff has filed photographs of the suits property which demonstrate that construction is far from completion. The fact that the plaintiff has sought a decree of mandatory injunction to direct defendant No.1 to 3 to carry out the construction of the flat purchased by him demonstrates that the construction of the property was not completed. Since, the construction was not completed, therefore, defendant No.3 did not acquire the right to sell his portion of the constructed property. The Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 12 of 21 collaboration agreement was executed for the purpose of construction of the property and it did not confer right on defendant No.3 to sell the property to defendant No.1 & 2.
19. The material on record raises serious doubts over the validity and enforceability of subsequent agreements to sell purportedly executed on the basis of the initial collaboration agreement dated 31.12.2012. It has been held by the Apex Court in "Mayawati v. Kaushalya Devi"
113 (2004) DLT 675 that the jurisdiction to order specific performance of a contract is based on the existence of a valid and enforceable contract. Where a valid and enforceable contract has not been made, the Court will not make a contract for them and the specific performance will not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable.
It was held that even if the contract is valid and enforceable, the discretion of the Court will be there to pass or not to pass a decree of specific performance but if the stipulation and terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all. It was observed by the Supreme Court:
"8...The jurisdiction to order a specific performance of a contract is based on the existence of a valid and enforceable Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 13 of 21 contract. The law of contract is based on the ideal of freedom of contract and it provides the limiting principles within which the parties are free to make their own contracts. Where a valid and enforceable contract has not been made, the court will not make a contract for them. Specific performance will not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable. The discretion of the court will be there even though the contract is otherwise valid and enforceable and it can pass a decree of specific performance even before there has been any breach of the contract. It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the nature and obligations arising out of it. The contract being the foundation of the obligation the order of specific performance is to enforce that obligation.
11. It is settled law that if a contract is to be made, the intention of the offeree to accept the offer must be expressed without leaving room for doubt as to the fact of acceptance or to the coincidence of the terms of acceptance with those of the offer. The rule is that the acceptance must be absolute, and must correspond with the terms of the offer. If the two minds were not ad idem in respect of the property to be sold, there cannot be said to have been a contract for specific performance. If the parties themselves were not ad idem at to the subject matter of the contract the Court cannot order specific performance.
18. The specific performance of a contract is the actual execution of the contract according to its stipulations and terms, and the courts direct the party in default to do the very thing which he contracted to do. The stipulations and the terms of the contract have, therefore, to be certain and the parties must have been consensus ad idem. The burden of showing the stipulations and terms of the contract and that the minds were ad idem is, of course, on the plaintiff. If the stipulations and the terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all. Where there are negotiations, Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 14 of 21 the Court has to determine at what point, if at all, the parties have reached agreement. Negotiation thereafter would also be material if the agreement is rescinded".
20. As observed in the preceding paras, the collaboration agreement dated 31.12.2012 cannot be termed as an agreement to sell. Even if it is presumed that it constituted an agreement to sell, still it did not confer any right or title on defendant No.3. The original owner never executed the conveyance deed in his favour. The possession letter dated 31.12.2012 only indicates that the owner handed over the possession of the property to defendant No.3 for the purpose of construction. The collaboration agreement was the foundation of the entire transaction. Since, defendant No.3 had no title in respect of the property, therefore, he was not competent to execute a further agreement to sell in favour of defendant No.1. By the same logic, defendant No.1 & 2 were also not competent to execute an agreement to sell in respect of a flat on the second floor, which was yet to be constructed. There could be no specific performance of the agreement to sell dated 24.05.2014 purportedly executed by defendant No.1 & 2 in favour of the plaintiff.
21. The fact that defendant no.3 gained possession of property does not alter the legal position. The possession does not confer upon him any Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 15 of 21 title to execute an agreement to sell in favour of a third party. It has been held in the matter of "M/s Jagdambey Builders Pvt. Ltd. Vs J.S.Vohra" AIR 2016 Del 203 that in the absence of a registered agreement to sell, the plea of part performance cannot protect the possession of a party. The observation contained in para-17, 18 & 19 are as under;
"17. A mere agreement to sell of immovable property does not create any right in the property save the right to enforce the said agreement. Thus, even if the respondent/plaintiff is found to have agreed to sell the property let out to the appellant to the appellant, the appellant/defendant would not get any right to occupy that property as an agreement purchaser. This Court in Jiwan Das Vs. Narain Das AIR 1981 Delhi 291 has held that in fact no rights enure to the agreement purchaser, not even after the passing of a decree for specific performance and till conveyance in accordance with law and in pursuance thereto is executed. Thus in law, the appellant has no right to remain in occupation of the premises or retain possession of the premises merely because of the agreement to sell in his favour.
18. Section 53A of the Transfer of Property Act, 1882 codifies the doctrine of part performance. A purchaser of immovable property, who in pursuance to an agreement to sell in writing has been put into possession of the property, is entitled to so remain in possession. However, the writings relied upon by the appellant in this regard, even if were to be looked into (notwithstanding the contention of the counsel for the respondent that the same were not brought before the Trial Court), do not record the possession of the premises having been delivered to the appellant in pursuance to or in part performance of the agreement to sell. The writings do not even state that the appellant shall be entitled to continue in the premises free of rent as has Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 16 of 21 been pleaded.
19. Even otherwise, the Stamp Act, 1899 and the Registration Act, 1908 as applicable to Delhi were amended w.e.f. 24th September, 2001. After the said amendment, an agreement to sell of immovable property, where-under the possession of the premises is delivered in part performance, can only be by a registered document bearing the prescribed stamp duty i.e. on 90% of the total agreed sale consideration. Section 49 of the Registration Act was also amended. A plea of part performance, in the absence of a registered document, cannot thus be taken. The appellant/defendant cannot thus in the absence of a registered agreement to sell, protect his possession in part performance of the agreement to sell or take such a plea.
20. What follows is that even if the appellant/defendant were to succeed in his suit for specific performance of agreement to sell, till the execution of a conveyance deed in pursuance to the decree, if any in favour of the appellant, the appellant has no ground in law to save his possession of the premises. The status of the appellant would continue to be as before i.e. of a tenant whose tenancy has been determined".
22. The position of law as explained in M/s Jagdambey Builders Pvt. Ltd. (supra) further fortifies the conclusion that under the collaboration agreement dated 31.12.2012, defendant No.3 did not get any right or title in the property except the right to enforce the said collaboration agreement. There is nothing on record to indicate that defendant No.3 ever sought specific performance of the collaboration agreement. Thus, defendant No.3 did not get any right or title in the property and he was not competent to enter into an Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 17 of 21 agreement to sell with defendant No.1. The subsequent agreement to sell purportedly executed by defendant No.1 & 2 in favour of plaintiff was also not enforceable. There could be no specific performance of void contract.
23. Further, there are inherent defects in the plaint which goes to the root of the matter. The original owner of the property was not made party to the present suit. The parties are litigating in respect of property owned by the original owner. There is material on record to suggest that the construction on the property was not completed and in such circumstances, the area falling to the share of the owner and defendant No.3 was not specified. In these circumstances, the owner should have been made a party in the present suit.
24. It is the case of the plaintiff that defendant No.1 & 2 executed an agreement to sell in his favour on the basis of an agreement to sell executed in their favour by defendant No.3. As observed in preceding paras, defendant No.3 did not acquire any title or interest in the property as the construction was not completed and therefore, he was not competent to enter into an agreement to sell with defendant No.1. Defendant No.1 & 2 were also not competent to execute agreement to sell in favour of plaintiff.
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25. The time-line of the successive agreements to sell is interesting. It is the plaintiff's case that he entered into an agreement to sell with defendant No.1 & 2 on 24.05.2014 for purchasing flat in the parking area of the property. Plaintiff has mentioned that defendant No.1 & 2 acquired right to execute the agreement to sell on the basis of an agreement to sell executed by defendant No.3 on 29.05.2014. In case, defendant No.1 & 2 acquired rights under the agreement to sell on 29.05.2014, then how could they execute agreement to sell in favour of plaintiff on 24.05.2014. In case, this version is accepted, it means that plaintiff entered into an agreement to sell with defendant No.1 & 2 before they acquired any alleged rights under the agreement to sell dated 29.05.2014. Although, the agreement dated 29.05.2014 contained a clause whereby defendant No.1 was granted liberty to enter into an agreement-to-sell with other intending buyers but this clause is invalid as there could be no contract in violation of law. Since defendant No.3 did not acquire any title or interest in the property at the time when he executed the agreement-to-sell on 29.05.2014, therefore, he could not have entered into such an agreement with defendant No.1. The clause-12 of the agreement dated 29.05.2014 is void and it is not enforceable. Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 19 of 21
Conclusion
26. I am of the considered opinion that the suit of the plaintiff deserves to be dismissed. The judgment APB Network Private Limited's case (supra), on which reliance has been placed by the plaintiff, is distinguishable as in the said matter, the Hon'ble High Court was dealing with the specific performance of a contract of employment. In the present matter, the initial collaboration agreement dated 31.12.2012, which is the foundation of the claim of the plaintiff, was merely a construction agreement between the owner and the builder. The collaboration agreement falls short of being construed as an agreement to sell. Defendant No.3 did not file suit for specific performance of collaboration agreement dated 31.12.2012 and he acquired no right or title in the property as the construction was not completed. The subsequent agreements entered on the force of the collaboration agreement were not valid contracts. Plaintiff entered into an agreement to sell with defendant No.1 & 2 on 24.05.2014 before defendant No.2 acquired any right in respect of the property in terms of agreement-to-sell dated 29.05.2014. No case is made out either for granting specific performance or permanent and mandatory injunction as the agreement-to-sell dated 24.05.2014 is void. The suit Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 20 of 21 is dismissed. However, plaintiff is entitled to the refund of the part payment made under the agreement-to-sell as Section 65 of the Indian Contract Act creates an obligation on a person having received any advantage under a void agreement, to restore it, or to make compensation for it, to the person from whom it was received. In view of this, defendant No.1 & 2 are directed to return the amount of Rs.4,00,000/- received by them under the agreement dated 24.05.2014 along with an interest at the rate of 6% per annum from the date of the agreement till realization.
27. File be consigned to record room.
Announced in the open court on 28.07.2022 (Sudhanshu Kaushik) Addl. District Judge-02 & Waqf Tribunal New Delhi District, Patiala House Courts, New Delhi/28.07.2022 Civil Suit No.56012/2016 Sanjeet Dagar Vs Sandeep Verma & Ors. Page 21 of 21