Delhi High Court
Dr Fresh Assets Ltd vs Dda And Anr on 29 July, 2015
Author: Hima Kohli
Bench: Hima Kohli
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 1936/2014
Reserved on: 03.07.2015
Date of decision: 29.07.2015
IN THE MATTER OF:
M/S DR FRESH ASSETS LTD ..... Plaintiff
Through: Mr. Anil K. Khaware, Advocate
versus
DDA & ANR ..... Defendants
Through: Mr. Dhanesh Relan, Advocate with
Mr. Arush Bhandari, Advocate for D-1/DDA.
Mr. Dev P. Bhardwaj, CGSC for D-2/UOI.
CORAM
HON'BLE MS.JUSTICE HIMA KOHLI
HIMA KOHLI, J.
I.A. 24684/2014 (by D-1/DDA under Order VII Rule 11 CPC)
1. The present application has been filed by the defendant No.1/DDA praying inter alia that the suit instituted by the plaintiff/ company for recovery of a sum of `46,85,671/- towards interest on the principal amount of `63,12,500/- retained by the DDA between 07.12.2008 till 29.01.2013, alongwith future interest @18% per annum thereon, is liable to be rejected, being barred under Section 53B of the Delhi Development Act, 1957 (hereinafter referred to as „the Act‟).
CS(OS) 1936/2014 Page 1 of 20
2. The relevant facts for determining the controversy raised in the present application are that in the year 2008, the defendant No.1/DDA had issued an advertisement for auctioning a plot bearing No.4, near plot No.A-373, Defence Colony, New Delhi, measuring 91 sq. meters. The plaintiff/company had participated in the auction held for the subject plot on 17.12.2008. The reserve price of the subject plot was fixed by the defendant no. 1/DDA as `1,29,90,614/-. The plaintiff/company was declared as the highest bidder at `2,52,50,000/, whereafter between the period 07.12.2008 to 17.12.2008, it had deposited a sum of `63,12,500/- with the defendant No.1/DDA towards the earnest money.
3. Early in the year 2009, one Shri Rajesh Kumar Sethi and some other residents of Defence Colony had filed a writ petition, registered as W.P.(C) 123/2009, challenging the action of the defendant No.1/DDA of auctioning the subject plot on the ground that in the event construction activities are undertaken on the said plot, the width of the surrounding road would be narrowed down and the access of the petitioners to air and light in the adjoining properties would be impeded. Initially, the defendant No.1/DDA had filed a counter CS(OS) 1936/2014 Page 2 of 20 affidavit in opposition to the aforesaid petition, but later on it had agreed to cancel the auction of the subject plot. Pertinently, the plaintiff/company had filed an application for impleadment in the aforesaid writ petition and vide order dated 15.03.2011, it was impleaded as respondent No.4. During the pendency of the aforesaid petition, the plaintiff/company claims to have made repeated representations to the defendant No.1/DDA for early culmination of the auction vide letters dated 14.02.2008, 18.12.2008, 22.12.2008, 29.12.2008, 25.02.2009, 27.08.2009 and 07.08.2010. Finally, vide order dated 26.04.2012 passed in the captioned petition, having regard to the additional affidavit filed by the DDA, the relief prayed for by the petitioners therein and on the DDA‟s counsel conveying to the Court that steps were being taken to cancel the auction of the subject plot, the writ petition was disposed of while granting eight weeks‟ time to the DDA to take steps for cancellation of the plot.
4. After passage of four years and four months from the date of deposit of the earnest money, the defendant No.1/DDA returned the principal amount of `63,12,500/- to the plaintiff on 29.01.2013. Aggrieved by the action of the defendant No.1/DDA in failing to return the principal amount to the plaintiff/company alongwith interest for the period w.e.f. 17.12.2008 to 29.01.2013, in July, 2013, the CS(OS) 1936/2014 Page 3 of 20 plaintiff/company had filed an interim application in the aforecited writ petition (CM APPL. 10781/2013). However, vide order dated 29.07.2013, the said application was withdrawn by the plaintiff/company with liberty to file appropriate proceedings against the DDA in accordance with law. Thereafter, in August, 2013, the plaintiff/company had filed a separate petition, registered as W.P.(C) 5483/2013, praying inter alia for directions to the DDA to pay interest @18% per annum on the principal amount of `63,12,500/- w.e.f. 17.12.2008 to 29.01.2013. Vide order dated 10.09.2013, the said writ petition was dismissed by the High Court by relying on a decision of the Supreme Court in the case of Suganmal vs. State of Madhya Pradesh reported as AIR 1965 SC 1740, wherein it was held that normally, a writ petition asking for mandamus for the sole relief of refund of money against the State ought not to be entertained. However, liberty was granted to the plaintiff/company to institute a suit against the DDA for recovery of money.
5. Within a month of the dismissal of the aforesaid writ petition, the plaintiff/company had served a legal notice dated 15.10.2013 on the defendant No.1/DDA and the defendant No.2/GNCTD under Section 80 of the CPC read with Section 53B of the Act, calling upon the CS(OS) 1936/2014 Page 4 of 20 addressees to pay a sum of `46,85,671/- towards the interest calculated @18% per annum, as accrued on the principal sum of `63,12,500/- with future interest. The aforesaid legal notice was dispatched by the plaintiff/company to the defendants by speed post with AD card. As per the documents filed by the plaintiff, the original speed post with AD card bears an endorsement of receipt by the DDA on 06.12.2013. When the plaintiff/company failed to receive any response from the DDA, it instituted the accompanying suit for recovery of the interest component on 30.06.2014.
6. Summons were issued in the suit on 07.07.2014, returnable on 03.12.2014. As the defendants failed to file their written statements within the prescribed timeline, the plaintiff/company filed an application under Order VIII Rule 10 CPC, registered as I.A. 23244/2014 that was listed on 25.11.2014 and directed to be placed before the Joint Registrar on 03.12.2014. On 03.12.2014, the defendant No.1/DDA proceeded to file the present application praying inter alia for rejection of the plaint on the ground that the suit is barred under the provisions of Section 53B of the Act.
7. Mr. Relan, learned counsel for the defendant No.1/DDA had submitted that Section 53B of the Act prescribes that any person filing CS(OS) 1936/2014 Page 5 of 20 a suit against the DDA is required to serve a legal/demand notice giving two months‟ notice to the DDA and the aggrieved party is required to institute a suit against the DDA within six months from the date of the cause of the action arising. He urged that the last cause of action had arisen in favour of the plaintiff/company and against the defendant No.1/DDA on 29.01.2013, the date when the principal amount was released in favour of the plaintiff/company and if reckoned from the said date, the plaintiff/company ought to have instituted the suit against the DDA latest by 28.07.2013, whereas the present suit was instituted after one year, in July, 2014, which makes it barred under the provisions of Section 53B of the Act. Learned counsel had argued that the provisions of Section 53B of the Act are mandatory in nature and have to be strictly complied with and the plaintiff/company having failed to institute the suit within the timeline stipulated under the aforesaid provisions, the same ought to be dismissed outright. In support of his submission, he had placed reliance on the decision of a Single Judge of this court in the case of Lucky Star Estates vs. DDA reported at 1987 RLR 148.
8. A reply in opposition to the present application was filed by the plaintiff/company. It has been stated that the Delhi Development Act, 1957 is applicable only if any relief is sought within the prescription of CS(OS) 1936/2014 Page 6 of 20 the said Act and the present suit having been filed for recovery of amounts based on DDA‟s failure to carry out the auction despite declaring the plaintiff/company as the highest bidder and receiving the earnest money within the prescribed timeline, does not fall within the purview of the Act.
9. Mr. Khaware, learned counsel for the plaintiff/company had also referred to para 20 of the plaint, wherein it has been averred that the Act does not have any application in the present case which is based on the wrongful retention of the interest on the amount deposited with the DDA, pursuant to the advertisement of the proposed auction. Without prejudice to the aforesaid argument, in the alternative, it was urged on behalf of the plaintiff/company that even if the submission of the other side to the effect that the prescription contained in Section 53B of the Act would apply to the facts of the present case is upheld, as per the said section, the cause of action to institute the suit would commence after two months from the date of issuance of the statutory notice. In the present case, the statutory notice was issued on 15.10.2013 and the period of two months reckoned therefrom would end on 15.12.2013 and further, the prescribed period of six months reckoned from 15.12.2013 would have expired on 15.06.2014. Learned counsel had pointed out that the High Court being closed for CS(OS) 1936/2014 Page 7 of 20 summer vacations in the month of June, the suit was filed in the Registry on 30.6.2014, after the Court had reopened and in this background, it cannot be contended that the suit is barred by limitation prescribed under the Act.
10. In support of the aforesaid submission, learned counsel for the plaintiff/company had referred to the decision of the Division Bench of this Court in the case of M/s Lucky Star Estates (India) Pvt. Ltd. Vs. DDA reported at 113 (2004) DLT 802 (DB), whereunder the decision of the Single Judge relied upon by the counsel for the defendant No.1/DDA in the case of Lucky Star Estates (supra) was set aside in appeal and the issue of application of Section 53B of the Act for the purpose of calculating the period of limitation in the facts of the said case was decided against the defendant No.1/DDA and in favour of the private party. Learned counsel for the plaintiff/company had contended that the said decision applies on all fours to the facts of the present case.
11. The Court has perused the averments made in the application, examined the documents placed on record and has carefully considered the arguments advanced by the counsels for the parties in the light of the decisions cited by them.
12. Before proceeding to consider the respective contentions of the CS(OS) 1936/2014 Page 8 of 20 parties, it is necessary to refer to the provisions of Section 53B of the Act, which is reproduced hereinbelow for ready reference:-
"53B. Notice to be given of suits - (1) No suit shall be instituted against the Authority, or any member thereof, or any of its officers or other employees, or any person acting under the directions of the Authority or any member or any officer or other employee of the Authority in respect of any act done or purporting to have been done in pursuance of this Act or any rule or regulation made thereunder until the expiration of two months after notice in writing has been, in the case of the Authority, left at its office, and in any other case, delivered to, or left at the office or place of abode of, the person to be sued and unless such notice states explicitly the cause of action, the nature of relief sought, the amount of compensation claimed and the name and place of residence of the intending plaintiff and unless the plaintiff contains a statement that such notice has been so left or delivered.
(2) No suit such as is described in sub-section (1) shall, unless it is a suit for recovery of immovable property or for a declaration of title thereto, be instituted after the expiry of six months from the date on which the cause of action arises.
(3) Nothing contained in sub-section (1) shall be deemed to apply to a suit in which the only relief claimed is an injunction of which the object would be defeated by the giving of the notice or the postponement of the institution of the suit."
13. The plaintiff/company had instituted the accompanying suit for recovery of interest on the principal amount deposited by it with the defendant No.1/DDA, pursuant to the auction of the subject plot conducted on 17.12.2008. The same was filed on 30.6.2014. Ordinarily, under the law of limitation, a suit for recovery of money can CS(OS) 1936/2014 Page 9 of 20 be filed within a period of three years from the date of the cause of action arising. The relevant Article of the Limitation Act, 1963, i.e., Article 25 which is applicable in this case, is as below :
Description of suit Period of Time from
limitation which period
begins to
run
25. For money payable for Three When the
interest upon money due years interest
from the defendant to the become due
plaintiff.
14. In the instant case, the defendant No.1/DDA had refunded the earnest money to the plaintiff/company through RTGS on 29.01.2013. Therefore, the cause of action had last arisen on the said date, when the payment was released to the plaintiff/company. Under the Limitation Act, the period of three years reckoned from 30.1.2013, would expire on 29.1.2016. The plaintiff/ company had however served a legal notice dated 15.10.2013 on the defendant No.1/DDA under Section 80 of the CPC read with Section 53B of the Act, for seeking recovery of the interest component and the notice was dispatched by speed post. The speed post acknowledgement card bears an acknowledgement from the office of the DDA, dated 06.12.2013. If the period of two months as stipulated under Section CS(OS) 1936/2014 Page 10 of 20 53B of the Act is reckoned from the date of issuing the legal notice, i.e., from 15.10.2013, the same would have expired on 15.12.2013 and the period of six months reckoned from 15.12.2013, would have expired on 15.06.2014. The legal notice dated 15.10.2013 was, however, received by the defendant No.1/DDA only on 06.12.2013 and resultantly, the period of two months calculated from the date of service would have expired on 05.2.2014 and the period of six months reckoned from 05.2.2014, would have expired on 04.8.2014, whereas the present suit was instituted on 30.6.2014.
15. On the assumption that the present case falls within the ambit of Section 53B of the Act as urged on behalf of the defendant no.1 / DDA, at the earliest, the period of limitation would have expired on 15.6.2014, and latest by 04.8.2014. The plaintiff/company having instituted the present suit on 30.06.2014, which happened to be the first day after the Court had re-opened at the end of the summer vacations, it cannot be urged by learned counsel for the defendant No.1/DDA that the same is barred by limitation. Nor can it be argued that the period of limitation had started to run from 29.1.2013, the date when the principal amount had been refunded to the plaintiff/company for the reason that the sequence of events reveal that till 10.9.2013, it had been diligently and in good faith pursuing its CS(OS) 1936/2014 Page 11 of 20 legal remedies, first by filing an application in W.P.(C) 123/2009 for directions to the DDA to pay the interest component and then by filing a separate petition for the same relief, which were both turned down.
16. Proceeding next to the argument advanced by the counsel for the plaintiff/company on the non-application of the prescription laid in Section 53B of the Act to a suit for recovery of interest on the principal amount against the defendant No.1/DDA, the facts of the instant case clearly reveal that the plaintiff/company was in no way to be blamed for the non-compliance of the terms and conditions of the auction stipulated by the defendant No.1/DDA. Admittedly, the plaintiff/company was the successful bidder of the auction held for the subject plot and it had taken steps to deposit the earnest money of `63,12,500/- with the DDA within the prescribed timeline, i.e., between 07.12.2008 to 17.12.2008. But thereafter, some residents of the area had filed a writ petition for setting aside the said auction, that had stalled the entire process of finalizing the auction. In the course of the said proceedings, the defendant No.1/DDA had finally conceded that it would cancel the auction. In this duration, the plaintiff/company claims to have made several written representations to the defendant No.1/DDA for early culmination of the auction, but to no avail. It had also sought impleadment as a co-respondent in the petition, which was CS(OS) 1936/2014 Page 12 of 20 duly allowed. It was only on 06.08.2012, that the defendant No.1/DDA had informed the writ court that it had decided to cancel the auction and this had brought the said proceedings to a closure on 06.08.2012. However, the principal amount deposited by the plaintiff/company was retained by the defendant No.1/DDA in all this duration and was refunded on 29.1.2013, after a lapse of almost four years and four months.
17. Aggrieved by the failure on the part of the defendant No.1/DDA to pay any interest on the principal amount retained by it, the plaintiff/company had approached the writ court for issuing directions to the DDA by filing an application that came to be dismissed as withdrawn vide order dated 29.07.2013 with liberty granted to it to seek appropriate legal proceedings. This was followed by the plaintiff/company filing an independent writ petition against the DDA for recovery of interest in August, 2013, which was dismissed as withdrawn vide order dated 10.09.2013 with liberty granted to it to institute a civil suit.
18. In this background, the contention of the learned counsel for the defendant No.1/DDA that as the plot of land in question was a Nazul land, the DDA was authorized to auction the same and the said auction was held in due discharge of its functions under the Act and would CS(OS) 1936/2014 Page 13 of 20 consequently be covered by Section 53-A of the Act that prescribes that statutory notice be issued before institution of a suit within the fixed timeline and failure to adhere to the fixed timeline would result in such a suit being barred by limitation, is found to be devoid of merits for the simple reason that auction of Nazul land by the DDA cannot be treated as an act undertaken by the authority in due discharge of its functions under the Act or any rules or regulations framed thereunder. As a result, there cannot be any reduction of the period of limitation for instituting a suit for recovery of monies arising out of the cancellation of an auction held by the DDA.
19. It may be noted that the aforesaid issue is no longer res integra and was examined at some length by a Division Bench of this Court in the case of M/s Lucky Star Estates (India) Pvt. Ltd. (supra), where an appeal preferred by the plaintiff in Suit No.857/1976, that was dismissed by the Single Judge vide judgment dated 01.12.1986 reported as 1987 RLR 148, was allowed. Counsel for the defendant No.1/DDA had relied on the decision of the Single Judge to urge that the present suit has been instituted by the plaintiff/company beyond the period of limitation prescribed under the provisions of Section 53B of the Act and it was liable to be dismissed being barred by limitation. But the said view does not hold good in the light of the decision of the CS(OS) 1936/2014 Page 14 of 20 Appellate Court in the very same case, reported at 113 (2004) DLT 802 (DB). Pertinently, the decision of the Division Bench was challenged by the DDA before the Supreme Court in SLP (Civil) 8482/2006, that was dismissed on 05.05.2008.
20. In the case of M/s Lucky Star Estates (India) Pvt. Ltd. (supra), the Division Bench had held that the rejection of the highest bid of the appellant after a lapse of one year four months and failure on the part of the DDA to return the earnest money deposited by the appellant for about four months after the rejection of his bid, cannot be construed as an act done or purported to be done in pursuance to the provisions of the Delhi Development Act, 1957 or any rule or regulation framed thereunder, so as to attract the provisions of Section 53B(2) of the Act. To fortify its view, the Division Bench had referred to the following decisions rendered on the same lines:-
(i) Vishwanath Sadashiv Nathu and Anr. vs. Municipal Corporation of Bombay reported at AIR 1938 Bombay 410
(ii) S.V. Mandlik vs. Borough Municipality of Jalgaon reported at AIR (31) 1944 Bombay 97
(iii) Municipal Borough of Ahmedabad vs. Jayantlal Chhotalal Patel reported at AIR (35) 1948 Bombay 98
(iv) Durga Chand Kaushik vs. Union of India reported at ILR (1971) II Delhi 350
(v) Delux Estates (P) Ltd. Vs. DDA reported at 105 (2003) DLT 829.CS(OS) 1936/2014 Page 15 of 20
21. In the case of Vishwanath Sadashiv Nathu (supra), the Division Bench of Bombay High Court had held that the act of Municipal Corporation of Bombay in issuing debentures containing option of renewal and giving effect to that option were not acts required to be undertaken under the Municipal Corporation of Bombay Act and therefore, protection under Section 527 was unavailable. In the case of S.V. Mandlik (supra), the Division Bench of the Bombay High Court had held that a deliberate breach of the contract cannot be treated as an act done in pursuance of the statute and therefore a notice under Section 206 of the Act was not necessary before instituting a suit based on a contract.
22. In the case of Jayantlal Chhotalal Patel (supra), a Full Bench of Bombay High Court held that the provision of Section 206 of the Act contains a restriction on the ordinary rights of the litigants and therefore, it ought to be construed strictly and applied only to such suits that fall within the ambit of the Section, which are in respect of anything done or purported to have been done by the Municipality in pursuance to the Act. In the case of Durga Chand Kaushik (supra), where a suit was instituted for recovery of amounts purportedly charged by the DDA in excess of what was due under the lease, it was held that collection of excess amount could not be treated as an act CS(OS) 1936/2014 Page 16 of 20 that falls within the scope of the Delhi Development Act and consequently, it could not be urged that there can be a reduction of the period of limitation, as envisaged under Section 53B(2) of the Act. It was particularly observed that such a provision, which restricts the larger period of limitation prescribed under the Limitation Act, ought to be construed strictly and in this context, the Division Bench had made the following pertinent observations :-
"Since the second defendant was not authorized to collect what was not legally due under the lease deed the collection of the excess amount was not an act falling within the scope of the Delhi Development Act and there could not be any reduction of any period of limitation in respect of it. Consequently, the period of limitation of three years which was available to the plaintiff under the Limitation Act to bring a suit for recovering the amount recovered from him in excess of what as legally due under the said lease deed could not be reduced by Section 53B(2). The expression employed in section 53B(1), "in respect of any act done or purporting to have been done in pursuance of the Act or any rules or regulations made there under", does not warrant the contention put forward by Mr. Keshav Dayal that the act in the present case, namely, demanding and recovering an amount in excess of what was due under the lease deed was something done in pursuance of this Act. The said provision being one which restricts the larger period of limitation allowed by the Limitation Act has to be strictly construed. Hence we find no merit in the plea of imitation." (emphasis added)
23. In a suit for recovery of the amount paid by the bidder to the DDA on the ground that the bid had been cancelled, though on account of some lapse on the part of the bidder, it was observed in the case of CS(OS) 1936/2014 Page 17 of 20 Delux Estates (supra) that where the refund was belated, the act of the authority that was not done pursuant to any provision of the DDA Act or rules and regulations framed thereunder, would not attract the provisions of limitation prescribed under the Act and instead, the limitation ordinarily applicable under the Limitation Act would apply for instituting a suit for recovery of amounts.
24. Given the facts of the present case, it is an undisputed position that after cancellation of the auction, the defendant No.1/DDA had retained the amount paid by the plaintiff/company in December, 2008, till 29.01.2013. The plaintiff/company had issued the statutory notice to the DDA under Section 80 of the CPC read with Section 53B of the Act on 15.10.2013, wherein it had clearly stated that it proposed to file a suit for recovery of interest on the principal amount against the DDA and the same did not pertain to any relief arising under the Act. The same fact has been reiterated by the plaintiff/company in para 20 of the plaint.
25. In view of the law laid down hereinabove, the submission made by learned counsel for the plaintiff/company to the effect that the prescriptions laid down under Section 53B of the Act does not have any application to the nature of relief sought by the plaintiff/company in the accompanying suit, is found to be justified and is upheld. The CS(OS) 1936/2014 Page 18 of 20 facts of the instant case do not warrant the restriction of the larger period of limitation prescribed under the Article 25 of the Limitation Act to the whittled down period under Section 53B of the Act. Even otherwise, this Court is of the opinion that if the provisions of Section 53B of the Act were to apply to the facts of the present case, it cannot be argued that the cause of action for instituting the suit had arisen on 29.01.2013, the date when the payment of the principal amount had been released by the DDA in favour of the plaintiff/company. As noted above, the plaintiff/company had taken legal recourse by first filing an application in W.P.(C) 123/2009, for issuing directions to the DDA to pay it interest on the principal amount, which was dismissed as withdrawn on 29.07.2013, with liberty to seek its legal recourse in accordance with law. This was followed by the plaintiff/company filing a writ petition against the DDA in August, 2013, which was also dismissed as withdrawn vide order dated 10.09.2013, again, with liberty granted to it to institute a civil suit. Within a month therefrom, the plaintiff/company had issued a statutory notice dated 15.10.2013 to the DDA under Section 80 of the CPC read with Section 53B of the Act. If at all the case would fall within the ambit of Section 53B of the Act, which argument has been negated by this court, the said date would have to be treated as the correct date for calculating the period CS(OS) 1936/2014 Page 19 of 20 of two months prescribed thereunder. Calculated from 15.10.2013, the period of two months would have expired on 14.12.2013 and the period of six months prescribed under Section 53B of the Act for instituting a civil suit, would have expired on 13.06.2014, i.e. during the summer vacations when the court was closed. The plaintiff/company having instituted the suit on 30.06.2014, i.e., immediately upon the High Court re-opening after the end of the summer vacations, it has to be held that either ways, the present suit has been filed within the period of limitation and is maintainable.
26. In view of the aforesaid facts and circumstances, the present application is found to be devoid of merits and is accordingly dismissed while leaving the parties to bear their own expenses.
(HIMA KOHLI)
JULY 29, 2015 JUDGE
rkb/sk/ap
CS(OS) 1936/2014 Page 20 of 20