Delhi High Court
Smt Gurpreet Sethi vs Sh Yogender Nath Bhardwaj on 16 March, 2022
Author: Sanjeev Narula
Bench: Sanjeev Narula
$~53
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 16th March, 2022
+ CS(OS) 169/2021
SMT GURPREET SETHI ..... Plaintiff
Through: Mr. Hitender Kapur, Advocate.
versus
SH YOGENDER NATH BHARDWAJ .....Defendant
Through: Mr. Anunaya Mehta, Mr. Davinder
N. Grover, and Mr. Vinayak Thakur,
Advocates.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
JUDGMENT
SANJEEV NARULA, J. (Oral) I.A. 11253/2021 (u/O XII Rule 6 r/w Section 151 of the Code of Civil Procedure, 1908 on behalf of the Plaintiff)
1. The Plaintiff has filed the instant suit seeking partition of property bearing plot no. 42 & 43, admeasuring 87.6 Sq. mtrs (each), situated at Transport Centre, Azadpur Mandi, Delhi-110033 [hereinafter, 'Suit Property'].
2. The Suit Property was jointly purchased by the Plaintiff and Defendant under a Sale Deed dated 02nd June, 2014, registered with the office of the Sub-Registrar bearing Registration No. 9745, Book No.1, Volume No. 5312 from page 1 to 8 [hereinafter, 'Sale Deed'].
3. The Plaintiff served a legal notice dated 19th August, 2019 upon the Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 1 of 10 Signing Date:22.03.2022 20:09:37 Defendant for partition of Suit Property, to which the Defendant did not reply or agree. Thus, the instant suit has been instituted, seeking partition thereof, in equal share.
4. In light of the averments made by the Defendant in the written statement, the instant application has been filed, seeking judgment on admissions under Order XII Rule 6 of the Code of Civil Procedure, 1908.
5. The short question before the Court is whether there is an admission which entitles the Plaintiff to the judgment as prayed for.
6. The Defendant, in paragraph no. 10 of the written statement, admits the execution of the Sale Deed, in the following words:
"10. That on 22nd July 2014 a sale deed was executed wherein the plot no. 42 and 43 along with construction thereon situated at Transport Nagar, Azadpur Mandi, Delhi-110033 were transferred by Mr. Manwani to defendant and Smt. Gurpeet Sethi wife of Sanjay Sethi and daughter in law of Mr. Ramesh Sethi for a sum of Rs. 3.50 crores and he assured to pay an amount of-Rs 5.50 lacs per month as assured return on Rs 3.50 crores for using this premises. Mr. Manwani agreed to execute the documents rent/lease deed for this but never did so. Mr. Manwani had paid Rs. 5.50 lacs to defendant and Mr. Sethi only for one month and that too in parts like Rs. 50000/- and Rs. 25000/- in cash and kept on assuring that he will pay the money but did not keep his promises. The defendant has come to know that all this manipulation was created by Mr. Manwani to get money from defendant and from Mr. Sethi for his own business needs and he had dishonest intention from the beginning to cheat the defendant and Mr. Ramesh Sethi."
7. Despite admission of execution of the sale deed, the relief sought in the suit is vehemently opposed by the Defendant. The sum and substance of the objection is founded on the plea that the Sale Deed, as on date of execution, was under a mortgage with HDFC Bank, Azadpur Branch. Since the Suit Property was a collateral security against loan of working capital, availed by the seller, it limited the beneficial enjoyment of the seller to dispose the Suit Property and thus, Mr. Bhagwan Das Manwani did not have Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 2 of 10 Signing Date:22.03.2022 20:09:37 legal competence to execute the Sale Deed, without first having obtained permission and No Objection from HDFC Bank. Hence, Mr. Bhagwan Das Manwani did not have "clear title" in respect of the Suit Property and the Sale Deed so executed by him is void ab initio.
8. The averments to that effect are as follows:
"That in fact Mr. Bhagwan Das Manwani did not have legal competence to execute the said Sale Deed in favour of any party without first having obtained permission and No Objection in writing from HDFC Bank which was not done. There is well established doctrine of law namely "nemo defendant quad non habet" which means "no one can transfer a better title than he himself possesses". Since Mr. Bhagwan Das Manwani had mortgaged the said Cold Storage in favour of HDFC Bank, he did not have a "clear title" in respect of the said Cold Storage on July 22", 2014 and thus the Sale Deed so executed by him was ab initio invalid in law. Mr. Manwani made a false statement in the said Sale Deed that the property is free from all encumbrances as the said property was mortgaged with the HDFC Bank on the day of execution of the said Sale Deed and the said fact was deliberately concealed by Mr. Manwani from the defendant."
9. Apart from the aforenoted submissions, in the written statement, several other allegations have been made against Mr. Bhagwan Das Manwani, which, for the reasons discussed hereinafter, are completely irrelevant for adjudication of the instant application.
10. Mr. Mehta, counsel for the Non-Applicant/ Defendant, places reliance upon Section 43 of the Transfer of Property Act, 1882 to submit that the seller - Mr. Bhagwan Das Manwani - was not authorised to execute the Sale Deed, and notwithstanding the fact that he may have subsequently acquired any interest therein, the transferee (i.e., the Defendant) has the option to operate on any such interest. In other words, the transfer of interest in the Suit Property would be only at the option of the transferee (i.e., the Defendant). The Plaintiff therefore cannot seek partition on the basis of the afore-noted Sale Deed.
Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 3 of 10 Signing Date:22.03.2022 20:09:3711. Further, Mr. Mehta submits that he has advised his clients to file an independent action qua the seller, in respect of the Sale Deed in question, and therefore, hearing in the present suit should be deferred. Any order passed in the suit, he claims, would prejudice the rights of the Defendant in the said action.
12. On a specific query of the Court, in light of the averments made in the written statement as to what is the stand of the Defendant qua his title of the Suit Property, Mr. Mehta on instructions states that the Defendant does not have any title. He, however, qualifies the statement by saying that since the Sale Deed is invalid, both the Plaintiff and the Defendant do not have any title over the Suit Property.
13. The Court has considered the aforenoted contentions, and in its opinion, there is no merit in the objections raised by the Defendant.
14. In a suit for partition, the court has to see whether the person seeking division is entitled to the Suit Property and separate possession or not. Therefore, the paramount consideration is to first determine whether the person seeking partition has co-ownership in the Suit Property. Here, Plaintiff's joint title and the interest in the Suit Property has been conveyed under the Sale Deed referred above, which was executed in 2014. The execution thereof is admitted by the Defendant. That the Sale Deed vests title in favour of both the parties in equal share is also not in controversy. Till date, no action has been instituted by the Defendant challenging the same. That the seller Mr. Bhagwan Das Manwani was the erstwhile owner is also an admitted fact. It is also admitted that there is no charge or encumbrance on the Suit Property as on date; the dues of the bank have been settled and the mortgage redeemed. The only ground to oppose the suit is the Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 4 of 10 Signing Date:22.03.2022 20:09:37 alleged blemish on the legal capacity of the erstwhile owner to convey the title. However, pertinently, the Sale Deed as on date is valid and there is no action in law, pending before any Court, wherein cancellation of the Title Deed has been sought. The suit is thus liable to be decreed in light of the afore-noted facts.
15. Nevertheless, the court has also examined whether the defence/ written statement raises any triable issue that warrants a trial. In order to determine this question, the legal aspect that needs contemplation is whether the sale of Suit Property, which was encumbered, on the date of execution, could not be transferred or conveyed and whether the title of the Plaintiff (as a bonafide purchaser thereunder) can be said to be ipso facto invalid and non-est in law, notwithstanding the intervening facts.
16. In this light, let's consider Section 43 of the Transfer of Property Act, 1882 relied upon by Mr. Mehta, which reads as under:
"43. Transfer by unauthorised person who subsequently acquires interest in property transferred. --
Where a person fraudulently or erroneously represents that he is authorised to transfer certain immoveable property and professes to transfer such property for consideration, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists.
Nothing in this section shall impair the right of transferees in good faith for consideration without notice of the existence of the said option"
17. The aforenoted provision is wholly inapplicable as there can be no dispute that interest in the Suit Property vested in favour of the erstwhile seller. It is not a case where he acquired the interest subsequently. His ownership is not in dispute and thus he cannot be called an authorised person. Hence, the reliance on the said provision is misconceived and does not advance the argument made by the Defendant. Further, the Defendant is also protected by the proviso of this Section which does not impair the rights Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 5 of 10 Signing Date:22.03.2022 20:09:37 of transferees in good faith.
18. At this juncture, reference to Section 13 of the Specific Relief Act, 1963 would be apposite, which reads as follows:
"13. Rights of purchaser or lessee against person with no title or imperfect title.--
(1) Where a person contracts to sell or let certain immovable property having no title or only an imperfect title, the purchaser or lessee (subject to the other provisions of this Chapter), has the following rights, namely:--
(a) if the vendor or lessor has subsequently to the contract acquired any interest in the property, the purchaser or lessee may compel him to make good the contract out of such interest;
(b) where the concurrence of other persons is necessary for validating the title, and they are bound to concur at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such concurrence, and when a conveyance by other persons is necessary to validate the title and they are bound to convey at the request of the vendor or lessor, the purchaser or lessee may compel him to procure such conveyance;
(c) where the vendor professes to sell unencumbered property, but the property is mortgaged for an amount not exceeding the purchase money and the vendor has in fact only a right to redeem it, the purchaser may compel him to redeem the mortgage and to obtain a valid discharge, and, where necessary, also a conveyance from the mortgagee;
(d) where the vendor or lessor sues for specific performance of the contract and the suit is dismissed on the ground of his want of title or imperfect title, the defendant has a right to a return of his deposit, if any, with interest thereon, to his costs of the suit, and to a lien for such deposit, interest and costs on the interest, if any, of the vendor or lessor in the property which is the subject-matter of the contract. (2) The provisions of sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable property." [emphasis supplied]
19. The said provision specifically provides that where a vendor professes to sell unencumbered property but the property is actually mortgaged, the purchaser can compel the vendor to redeem the mortgage and to obtain a valid discharge, and where necessary, also a conveyance from the mortgagee. This suggests that the contract for the sale of the encumbered property is not void ab initio as contended by the Defendant. The sale of encumbered property would be subservient to prior charge.
Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 6 of 10 Signing Date:22.03.2022 20:09:3720. It must also be borne in mind that the HDFC Bank or the Mortgagee has not initiated any action against the seller to question or avoid the transfer. It must be remembered that a fraudulent transfer is not void ab initio and is, at best, voidable on part of whom the fraud has been played (i.e., the bank). Furthermore, under Section 53, which deals with fraudulent transfers, the rights of a transferee in good faith and consideration are not impaired. The said provision reads as under:
"53. Fraudulent transfer.--
(1) Every transfer of immoveable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. Nothing in this sub-section shall impair the rights of a transferee in good faith and for consideration. Nothing in this sub-section shall affect any law for the time being in force relating to insolvency. A suit instituted by a creditor (which term includes a decree-holder whether he has or has not applied for execution of his decree) to avoid a transfer on the ground that it has been made with intent to defeat or delay the creditors of the transferor shall be instituted on behalf of, or for the benefit of, all the creditors. (2) Every transfer of immoveable property made without consideration with intent to defraud a subsequent transferee shall be voidable at the option of such transferee. For the purposes of this sub-section, no transfer made without consideration shall be deemed to have been made with intent to defraud by reason only that a subsequent transfer for consideration was made."
21. The Plaintiff, as the transferee, has paid lawful sale consideration to Mr. Malwani and acted in good faith and the sale deed is not being avoided by any party. In such circumstances, Plaintiff's title cannot be denied by his co-owner.
22. Further, it be useful to note the obligations of the buyer under Section 55(5)(b) of the Transfer of Property Act, 1882, which inter-alia reads as under:
"(5) The buyer is bound--
(a) ...
(b) to pay or tender, at the time and place of completing the sale, the purchase-
money to the seller or such person as he directs: provided that, where the property is sold free from encumbrances, the buyer may retain out of the Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 7 of 10 Signing Date:22.03.2022 20:09:37 purchase-money the amount of any encumbrances on the property existing at the date of the sale, and shall pay the amount so retained to the persons entitled thereto;
(c) ..."
23. This indicates to the Court that even in circumstance where a property is encumbered, the purchaser has the right to seek redemption of the charge in order to seek a perfection of this title.
24. In the instant case, pertinently, as on date, there is no blot on the Sale Deed in question. The embargo or the financial burden on transferability, which limited free transfer, stands lifted. The mortgage of the Suit Property stands redeemed, a fact not in dispute before the Court. Neither the mortgagee (i.e. HDFC Bank) nor the seller, has raised any dispute or questioned the Sale Deed. Thus, the encumbrance on the Suit Property which may have existed on the Sale Deed and impaired or clouded seller's right to transfer the Suit Property at the time of execution of the Sale Deed, does not exist anymore. The sale presently is valid and proper in law.
25. In any event, what is striking in the instant case is that the Defendant is denying his own title. According to the Defendant, no transfer interest in the Suit Property has been vested in his favour, therefore, he is not the owner of the Suit Property and the Sale Deed is invalid. The Defendant is free to take such a stand in case the same is available in law, however, such a stand cannot bind the Plaintiff or impair his ownership rights as a bonafide transferee.
26. For the foregoing reasons, the Plaintiff certainly has a right to seek a partition of the Suit Property, as the Sale Deed which is valid in the eyes of law, clearly defines the share of both the Plaintiff and Defendant to be 50% each.
Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 8 of 10 Signing Date:22.03.2022 20:09:3727. In view of the foregoing, no valid objection of the Defendant is found. A preliminary decree be passed, declaring that the Plaintiff has 50% share in each of the two plots constituting the Suit Property.
28. Application is allowed.
CS(OS) 169/2021
29. Counsel for the Plaintiff has pointed out that the Suit Property is in exclusive possession of the Plaintiff and submits that the same can be partitioned by metes and bounds, which is disputed by Mr. Mehta.
30. In view thereof, an endeavour should be made to ascertain whether the Suit Property can be partitioned by metes and bounds.
31. Since the parties are at variance on this issue, the only way forward is to appoint a Local Commissioner to verify the fact.
32. Accordingly, the Court appoints Mr. Dhruv Pande, Advocate, [Contact No. 9910165010] as the Local Commissioner, who is directed to visit the Suit Property bearing plot no. 42 & 43, admeasuring 87.6 Sq. mtrs (each), situated at Transport Centre, Azadpur Mandi, Delhi-110033 and submit a report to the Court suggesting - whether the same can be partitioned by metes and bounds amongst the parties to the suit in equal share. The Local Commissioner will visit the Suit Property, after giving due notice to the counsel for the parties and will suggest ways and means to partition the same by metes and bounds. In case exact division is not possible, then the Local Commissioner will suggest ways and means to offset any extra area/ portion for and against any of the parties. Counsel for the parties shall lend full assistance to the Local Commissioner in carrying out the inspection and provide all necessary documents, site plan, etc., as Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 9 of 10 Signing Date:22.03.2022 20:09:37 may be requested by the Local Commissioner. The Commissioner shall also be at liberty to take assistance from an Architect for preparing the site plan of the Suit Property, if so required. The fee of the Local Commissioner is fixed as Rs. 1,00,000/-, which shall be borne by the Plaintiff. The out of pocket expenses for preparing the site plan shall also be borne by the Plaintiff.
33. Let a copy of this order be given to the Local Commissioner by the counsel for the parties. The Local Commissioner will endeavour to complete commission proceedings as expeditiously as possible.
34. The copy of the Commissioner's Report shall also be filed in court, and also furnished to all counsels for the parties, before the next date of hearing. The parties shall then be at liberty to file their objections thereto, if any.
35. List before Court for consideration of Local Commissioner's Report on 18th May, 2022.
SANJEEV NARULA, J MARCH 16, 2022 d.negi Signature Not Verified Digitally Signed By:SAPNA SETHI CS(OS) 169/2021 Page 10 of 10 Signing Date:22.03.2022 20:09:37