Delhi High Court
M/S Sentinel Consultants Pvt. Ltd. vs Shri Sudhir Malhotra on 21 October, 2011
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: October 18, 2011
Judgment Pronounced on: October 21, 2011
+ CS(OS) 1571/1998
M/S. SENTINEL CONSULTANTS PVT. LTD. ..... Plaintiff
Through: Mr. Suresh Singh, Adv.
versus
SHRI SUDHIR MALHOTRA ..... Defendant
Through: Mr. Vikas Sharma, Adv. for
the contemnor.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported Yes
in Digest?
V.K. JAIN, J
1. This is a suit for specific performance of the
Agreement to Sell dated 27 th March, 1997, recovery of Rs.25
lac as damages and for mandatory and perpetual
injunction. The plaintiff Company was a tenant under
defendant No.1 in respect of the ground floor of property
No.A-249, Defence Colony, New Delhi. Defendant No.1
entered into a collaboration agreement with defendant No.2
CS(OS)No.1571/1998 Page 1 of 35
whereunder the existing structure on property No. A-249,
Defence Colony, New Delhi, was to be demolished and
replaced by a new building having basement, ground floor,
first floor and second floor. Under the collaboration
agreement, basement, ground floor and terrace floor were to
be given to defendant No.1 whereas the first floor and
second floor were to go to defendant No.2. A tripartite
agreement dated 27.03.1997 was entered into between the
plaintiff and defendants whereby defendant No.1 agreed to
sell all his rights, title and interest including property rights
in the basement to be constructed by defendant No.2 on the
aforesaid property of the plaintiff-company. It was also
agreed that the basement would be for the maximum
permissible covered area and will comprise a hall toilet and
a pantry. The defendants also agreed to give right of user of
common toilet to be constructed on the second floor, to the
plaintiff, in addition to the right to install TV antenna,
wireless and communication antenna on the roofs and free
ingress and egress to use common passages, staircase and
lift etc. The total consideration for the sale of the basement
floor was fixed at Rs.12,25,000/- out of which a sum of
Rs.25,000/- was paid by the plaintiff to defendant No.1 at
CS(OS)No.1571/1998 Page 2 of 35
the time of the execution of the agreement. Out of the
balance sale consideration of Rs.12 lac, Rs.2 lac were
payable to defendant No.1 on completion of the basement as
per terms of the agreement or on the plaintiff company
coming into possession after expiry of eight months (which
was the period fixed for construction of the basement),
whichever be earlier. A sum of Rs.10 lac, agreed to be paid
to the plaintiff for relinquishment of subsisting tenancy
rights in the ground floor and that amount was to be
adjusted against balance sale consideration for the
basement, at the time of giving its possession to the plaintiff
company. The plaintiff company vacated the ground floor of
the property in terms of the agreement between the parties.
The defendants, however, failed to complete the basement
within eight months from the date the possession of the
ground floor was handed over by the plaintiff. It is alleged
that in first week of May, 1998, an official of the plaintiff
company visited the suit property which was under
construction at that time and found that a highly truncated
and abridged basement had been constructed. The plaintiff
has now sought a decree for specific performance of the
Agreement to Sell dated 27th March, 1997 by directing the
CS(OS)No.1571/1998 Page 3 of 35
defendants to sell the basement floor of the suit property to
it, along with a decree for possession of the basement floor.
The plaintiff has also sought recovery of Rs.25 lac from
defendant No.1, being the liquidated damages for not
handing over possession of the property agreed to be sold
within the stipulated period of eight months. The plaintiff
has also sought an injunction directing the defendants to
construct basement to the extent maximum permissible
covered area and complete the interior finish.
2. The defendants filed written statement contesting
the suit. They denied authority of Shri Kuldeep Singh to file
the present suit on behalf of plaintiff and also claimed that
the agreement between the parties is illegal and enforceable
in law. It was also alleged that after completion of the
building, necessary ‗C' and ‗D' form was obtained by the
builder on 7th November, 1997 and the plaintiff was notified
to take possession of the basement. The plaintiff, however,
failed to come forward to take possession of the basement
and, therefore, committed breach of the agreement between
the parties. The defendants also took the plea that the suit
as framed is not maintainable and the agreement dated 27 th
March, 1997 has expired by efflux of time on 27 th November,
CS(OS)No.1571/1998 Page 4 of 35
1997. On merits, the defendants have admitted execution
of the tripartite agreement to sell dated 27th March, 1997.
They have also admitted that the plaintiff was a tenant
under defendant No. 1 in respect of the ground floor of
property No. A-249, Defence Colony, New Delhi. It is also
alleged that maximum permissible area for construction of
basement about 251 square feet and basement was
constructed accordingly.
3. On the pleadings of the parties, following issue
were framed:-
1. Whether the suit as framed is not
maintainable.OPD.
2. Whether suit is bad for
mis-joinder of parties? OPD.
3. Whether the suit is not properly
valued for the purposes of court fee and
jurisdiction? OPD.
4. Whether the suit has been filed
by duly authorized person on behalf of the
plaintiff? OPP.
5. Whether Agreement to Sell dated
27 March, 1997 is not legally enforceable
th
and has come to an end by efflux of time
on 27th November, 1997? OPD.
6. Whether the plaintiff was and has
been ready and willing to perform its part
of contract? OPP.
CS(OS)No.1571/1998 Page 5 of 35
7. Whether defendants were and
have been ready and willing to perform
their part of contract? OPD.
8. Whether the plaintiff is entitled to
the decree of specific performance and
possession as prayed in the suit? OPP.
9. Whether the plaintiff is entitled to
decree for recovery of Rs.25 lac quantified
as liquidated damages under Agreement
to Sell dated 27th March, 1997 along with
interest @ 18% per annum from the date
of the suit till payment? OPP.
10. Relief.
4. Vide interim order dated 3rd August, 1998, this
Court directed the parties to maintain status quo in respect
of the ground floor and first floor of the property No. A-249,
Defence Colony, New Delhi. This order was modified on
November 10, 1998 by directing that the parties shall
maintain status quo with respect to basement only. On that
date, the defendants had submitted before this Court that
the basement was complete and even a completion
certificate had been obtained in this regard and the
defendants were ready to hand over the vacant possession
over the basement to the plaintiff.
5. IA 5530/2004 was filed by the plaintiff on July 12,
2004 seeking action under Order 39 Rule 2A of CPC on the
CS(OS)No.1571/1998 Page 6 of 35
ground that despite orders of this Court dated 3 rd August,
1997 and 10th November, 1998, defendant No.1 delivered
the possession of the basement of the suit property to
M/s.ESSEMM Realtors. Notice of the application was also
issued to M/s.ESSEMM Realtors through Mr. Sanjay
Sharma and Mr. Manoj Kain.
6. Reply to the application was filed only by
M/s.ESSEMM Realtors. It has been claimed in the reply
that M/s.ESSEMM Realtors was not aware of the Agreement
to Sell dated 27th March, 1997 executed between the parties
to the suit. It is further alleged in the reply that
M/s.ESSEMM Realtors had taken a portion of the basement
measuring 340 square feet, on rent, from defendant No.1 -
Sudhir Malhotra vide lease deed dated 14th March, 1997 for
the period of three years. Vide sale deed dated 28 th
January, 2003, the tenancy premises was sold by defendant
No.1 to Mr. Manoj Kain and Sanjay Sharma who was
running this business under the name and style of
ESSEMM REALTERS.
Issue No.1
7. The written statement does not indicate why and
how the suit as framed is not maintainable. Admittedly, an
CS(OS)No.1571/1998 Page 7 of 35
Agreement to Sell the basement to be constructed on
property No. A-249, Defence Colony, New Delhi, was
executed between the parties on 27th March, 1997. The
plaintiff is seeking specific performance of that agreement in
addition to damages which it claims to be payable to it on
account of failure of the defendants to construct basement
in terms of the agreement between the parties and deliver
its possession to the plaintiff. Since the case of the plaintiff
is that basement to the maximum permissible extent was
not constructed in terms of the agreement between the
parties, when this suit was filed. The suit for mandatory
injunction directing the defendants to construct basement
to the maximum permissible extent is also maintainable.
The issue, therefore, is decided against the defendants and
in favour of the plaintiff.
Issue No.2
8. Admittedly both the defendants are party to the
agreement dated 27th March, 1997. Hence, neither of them
is an unnecessary party to the suit. The issue is decided
against the defendants and in favour of the plaintiff.
Issue No.3
9. The plaintiff has valued for the purpose of court fee
CS(OS)No.1571/1998 Page 8 of 35
and jurisdiction at Rs.37,25,500/-. For the purpose of relief
of specific performance, the suit is valued at Rs.12,25,000/-
which was the sale consideration agreed between the parties
and for the purpose of recovery of damages, the plaintiff has
valued the suit at Rs.25 lac which is the quantum of
damages claimed by it. For the purpose of injunctions, the
plaintiff has valued the suit at Rs.200/- each. The suit,
therefore, is properly valued for the purpose of court fee.
The suit is decided against the defendants and in favour of
the plaintiff.
Issue No. 4
10. Ex.PW-1/2 is the copy of the resolution passed by
the Board of Directors of the plaintiff company on 10 th
October, 1993, authorizing its Managing Director Shri
Kuldeep Singh to institute any civil suit on the part of the
company and to sign and verify the pleadings. There is no
evidence in rebuttal. I, therefore, hold that Shri Kuldeep
Singh was competent to institute the suit and sign and
verify the pleadings on behalf of the plaintiff company. The
issue is decided against the defendants and in favour of the
plaintiff.
CS(OS)No.1571/1998 Page 9 of 35
Issues No.5 to 10
11. These issues are inter-connected and can be
conveniently decided together.
It is an admitted case of the parties to the suit that
the plaintiff company was a tenant under defendant No.1 in
respect of the ground floor of property No. A-249, Defence
Colony, New Delhi. Execution of tripartite agreement dated
27th March, 1997 is also an admitted fact.
Ex.PW-1/10 is the agreement to sell between the
parties to the suit, namely, the plaintiff M/s Sentinel
Consultants, defendant No. 1 Mr Sudhir Malhotra and
defendant No. 2 Buildmore India Ltd. The relevant portions
of the agreement read as under:-
―AND FURTHER WHEREAS the Vendor,
vendee and the Confirming Party have
agreed that, the Vendee shall vacate
possession of ground floor premises and
deliver the same to Confirming Party and
also that, on terms and conditions agreed
and stipulated hereinafter, the Vendor
shall sell all rights, title and interest,
including all possessory rights in the
basement to be constructed by the
Confirming Party to the Vendee and the
Confirming Party hereby accepts and
confirms the said arrangement and has
no objection whatsoever thereto.
AND WHEREAS the Vendor, Vendee and
Confirming Party have further agreed
CS(OS)No.1571/1998 Page 10 of 35
that, the complete basement to be
constructed by Confirming Party in
accordance with maximum permissible
covered area and to be sold by the Vendor
to the Vendee shall inter-alia comprise of
an hall, having one toilet & a pantry
together with rights to use the common
toilet constructed on the second floor,
and rights to install and erect TC
antennas, wireless and communication
antenna(s) on the roof, with all rights of
free ingress and agress to an from the
demised premises, right to use common
passages, stair cases, lift etc., subject to
Clause-20 with proportionate undivided
impartible share in the land contained in
plot No.A-249, Defence Colony, New
Delhi, hereinafter referred to as the
"demised premises''.
That in pursuance of the said Agreement
and in consideration of a sum of
Rs.12,25,000/- (Rupees twelve lac
twenty-five thousand only), being paid by
Vendee to the Vendor, the Vendor doth
hereby agree to sell, convey, transfer and
assign all his rights, title, interest and
possession in the demised premises
alongwith all rights in the fixtures,
fittings etc.etc. unto the Vendee,
absolutely and forever together with
undivided impartible proportionate share
in the land in plot No.A-249, Defence
Colony, New Delhi.‖
12. It would thus been seen that defendant No. 2 was
to construct basement to the extent of maximum
permissible covered area and that basement was agreed to
be sold to the plaintiff for a total consideration of Rs 12.25
CS(OS)No.1571/1998 Page 11 of 35
lac. The extent of permissible basement has been
prescribed in Building Bye Laws 1983. The relevant Bye
Laws read as under:
―(b) Plot coverage--The plot coverage shall be as follows:
(i) (b) Above 100 sq. yds. (83.61 sq. mtr.), but
not exceeding 300 sq. yds. (250.83 sq. mts.)
(iv) Basement:
(b) Basement area shall not exceed the
ground floor coverage and shall be below the
ground floor. Basement area may however be
extended below the internal courtyard and shaft.
Admittedly, property No. 249, Defence Colony, New
Delhi is constructed on a plot measuring 217 sq. yards. The
maximum coverage on this plot, therefore, comes to about
130 sq. yards which would mean about 1172 sq. ft. Thus,
basement, measuring up to 1172 sq. ft was permissible to
be constructed on Property No. A-249, Defence Colony, New
Delhi. Since the parties specifically agreed that defendant
No. 1 was to construct basement to the extent of maximum
permissible covered area and agreed to sell that much to the
plaintiff for a consideration of Rs 12.25 lac, defendant No. 2
was required to construct and defendant No. 1 was required
CS(OS)No.1571/1998 Page 12 of 35
to sell, basement measuring 1172 sq. feet to the plaintiff in
terms of the agreement to sell dated 27th March, 1997. The
case of the defendants in the written statement is that the
maximum permissible basement on Property No. 249,
Defence Colony was 251.25 sq. ft which is patently
incorrect. No material has been placed by the defendants
on record to show that maximum permissible area for the
basement was 251.25 sq. ft and not about 1172 sq. ft. I,
therefore, have no hesitation in holding that the maximum
permissible area for construction of basement on the suit
property was about 1172 sq. ft.
13. The case of the defendants in the written statement
is that they had constructed basement measuring 251.25
sq. ft. Ex.CW-2/PX-1 is the sale deed executed by
defendant No. 1 in favour of Mr Manoj Kumar Kain and Mr
Sanjay Sharma of M/s ESSEMM Realtors on 28 th January,
2003. The relevant portion of this sale deed read as under:
―AND WHEREAS in according with
Building Plan that were sanctioned by the
M.C.D. at that time the Vendor was
allowed to construct a basement
measuring 290 sq. feet under the front
half of the plinth area of the ground floor
(Front Basement).
AND WHEREAS the Vendor has re-
CS(OS)No.1571/1998 Page 13 of 35
constructed the said property including
the said Front Basement. The re-
construction was carried out in such a
manner so as to enable the construction
of the balance basement under the rear
half of the ground floor in case, in future,
the construction thereof became
permissible.
AND WHEREAS subsequently,
sanction/permission of the M.C.D.
necessary to excavate and/or regularize
the balance basement under the rear half
of the ground floor in the said property
because of change in the building bye-
laws permitting regularization thereof
was obtained and the Vendor has
accordingly constructed a basement
measuring approx. 600 sq. feet in covered
area under the rear half of the ground
floor and behind the Front Basement with
its own independent entrance.
AND WHEREAS the Vendor, for his
bonafide needs and requirements, has
agreed to sell the Front Portion of
Basement Floor with front open area and
the space under the staircase, measuring
approx. 450 sq. feet, with right to use
common toilet on the terrace, with super-
structure standing therein, fittings &
fixtures, with electric connection therein,
of the Property bearing No.A-249, Defence
Colony, New Delhi, measuring 217 sq.
yards, together with proportionate,
undivided, undivisible and impartible
share of ownership rights in the land
underneath (hereinafter referred to as
―the said Portion‖), unto the Vendees, for
a total sum of Rs.1,00,000/- (Rupees one
lac only) and the Vendees has agreed to
purchase the same from the Vendor, for
the same amount.‖
CS(OS)No.1571/1998 Page 14 of 35
It would thus be seen that as per this document,
the basement constructed initially on Property No. A-249,
Defence Colony was 290 sq. ft., which is contrary to the plea
taken in the written statement, where the constructed area
of basement is stated to be 251.25 sq. ft. This sale deed
clearly shows that as on 20th January, 2003, as much as
890 sq. ft. of the basement had been constructed on
Property No. 249, Defence Colony, out of which area
measuring 450 sq. ft. was sold by defendant No. 1 to Mr.
Sanjay Sharma and Mr. Manoj Kain for a consideration of
Rs 1 lac. Since under the agreement dated 27 th March,
1997, the defendants had to construct basement to the
extent of maximum permissible coverage which would mean
about 1172 sq. ft., it is difficult to dispute that the plaintiff
is entitled to specific performance of the agreement dated
27th March, 1997 at least to the extent of the whole of the
basement which presently stands constructed on Property
No. A-249, Defence Colony. Even if only 251.25 or 290 sq.
ft of the basement was constructed initially and the rest was
constructed later as stated in the sale deed Ex.CW-2/PX-1,
that would make no difference to the case of the plaintiff
CS(OS)No.1571/1998 Page 15 of 35
since it is entitled to the whole of the basement which could
have been legally constructed on this property. It would be
pertinent to note here that it is the Building Byelaws. 1983
which were in force at the time the agreement to sell was
executed and the permissible area of the basement under
those byelaws comes to about 1172 sq. ft.
14. The main plea taken by the defendants is that they
had constructed basement measuring about 251.25 and
offered that basement to the plaintiff which failed to take its
possession. However, there is no documentary evidence of
the defendants having offered possession of any part of the
basement of Property No. 249, Defence Colony to the
plaintiff. The agreement between the parties for
construction and sale of the basement was a written
agreement. The plaintiff-company surrendered the
possession of the ground floor of the suit property and in
consideration of the defendants agreeing to construct and
sell the basement floor to it. The plaintiff-company had to
pay only Rs 2 lac to the defendants, since Rs 10 lac which
were to be paid to it as the compensation for surrender of
tenancy rights in the ground floor, were to be adjusted
towards payment of the balance sale consideration for the
CS(OS)No.1571/1998 Page 16 of 35
basement floor and a sum of Rs 25,000/- was paid by it at
the time of the execution of the agreement. It is extremely
difficult to accept that the plaintiff-company was not willing
to purchase the whole of the basement floor even if it had to
pay only a rather paltry sum of Rs 2 lac as the sale
consideration.
15. Defendant No. 1 knew that he had entered into a
written tripartite agreement for sale of the basement floor to
the plaintiff. Had the plaintiff been reluctant or unwilling to
take the basement from him, as is claimed by the
defendants, he would at least have given a written notice to
the plaintiff-company requiring it to pay the balance
amount, take possession of the basement and get the sale
deed executed in its favour. In any case, defendant No. 1
has not bothered even to come in the witness box to
controvert the evidence produced by the plaintiff in this
regard. PW-1 Ms. Nisha Mahendru, Executive Director of
the plaintiff-company, on the other hand, has specifically
stated that the defendant had failed to complete the
basement as per agreement between the parties. She has
further stated that in the first week of December, 1997, the
Managing Director of the plaintiff company had contacted
CS(OS)No.1571/1998 Page 17 of 35
defendants No. 1 and 2 and requested them to hand over
physical possession of the basement to the plaintiff
company. They, however, expressed their inability to do so
on the plea that the work was far behind schedule. She has
further stated that he plaintiff has always been ready and
willing at all material times to perform its part of the
contract and it were the defendants who failed to construct
the basement and deliver vacant and physical possession in
terms of the agreement dated 27 th March, 1997. Dishonesty
on the part of defendant No. 1 in this regard is evident from
the fact that as against permissible basement about 1172 sq
ft., he constructed a basement measuring only about
251.25/290 sq. ft.
16. Dishonesty on the part of both the defendants
becomes more explicit from the agreement dated 23 rd July,
1997 whereby defendant No.1 agreed to sell the entire
ground floor and entire basement floor of the suit property
to defendant No.2 for a consideration of Rs.13 lac. The
basement was to be constructed and its possession was to
be delivered to the plaintiff within 08 months from the
agreement dated 27th March, 1997 which would mean - by
the end of November, 1997. The conduct of the defendants
CS(OS)No.1571/1998 Page 18 of 35
in entering into agreement dated 23rd July, 1997 (Exh. CW-
1/PA) therefore clearly shows that they never intended to
deliver the possession of the basement to the plaintiff, in
terms of agreement to sell dated 27 th March, 1997, which is
a document filed by none other than defendant No.2. Mr.
Prabhjit Singh, who is the only witness produced by
defendant No.2 has admitted in his cross examination that
they had not obtained completion certificate of the suit
building. This is yet another proof that the defendants
never intended to transfer the basement to the plaintiff and
that is why they did not bother even to apply for issue of
completion certificate to MCD. Mr. Prabhjit Singh has
contradicted himself even with respect to the month in
which the construction of the basement was completed by
them. In his affidavit by way of evidence, he stated that
defendant No.2 completed construction of the basement as
per sanctioned plan in November, 1997 whereas in his cross
examination he stated that they had completed construction
of the basement in all respects sometime in May/June,
1997.
17. One of the objections taken in the Written
Statement is that since the agreement to sell provided for
CS(OS)No.1571/1998 Page 19 of 35
payment of Rs.10 lac to the plaintiff for surrender of the
tenancy rights in the ground floor portion and adjustment of
that amount towards payment of sale consideration of the
basement floor, the consideration being unlawful in terms of
Section 23 of the Indian Contract Act, the agreement is void
and unenforceable in law. Section 23 of the Indian Contract
Act, 1872, to the extent it is relevant, provides that the
consideration or object of an agreement is lawful, unless it
is forbidden by law or is of such a nature, if permitted, it
would defeat the provisions of any law. Section 24 of the
Indian Contract Act, to the extent it is relevant, provides
that if any part of a single consideration for one or more
objects, or any one or any part of any one of several
considerations for a single object is unlawful, the agreement
is void. When questioned in this regard, the learned
Counsel for the plaintiff stated that the rent of the ground
floor premises which defendant No.1 had let out to the
plaintiff and which it had vacated pursuant to the
agreement to sell dated 27 th March, 1997 was Rs.6,000/-
p.m. Section 5(3) of Delhi Rent Control Act provides that it
shall not be lawful for the tenant to receive any payment in
consideration of the relinquishment of tenancy of any
CS(OS)No.1571/1998 Page 20 of 35
premises. Therefore, if the provisions of Delhi Rent Control
Act apply to the Ground Floor which was let out to the
plaintiff and was vacated by it pursuant to the agreement to
sell dated 27th March, 1997, the part of the consideration
may be held unlawful and consequently the agreement may
be void. Section 3 (c) of Delhi Rent Control Act, to the extent
it is relevant provides, that nothing in the Act shall apply to
any premises whether residential or not, whose monthly
rent exceeds Rs.3500/-. Hence, the provisions of Delhi Rent
Control Act including Section 5 thereof do not apply to the
ground floor premises which defendant No.1 had let out to
the plaintiff and which was surrendered by the plaintiff
company pursuant to the agreement to sell dated 27 th
March, 1997. No other provision of law, prohibiting
payment of compensation to a tenant for surrendering the
tenancy rights has been brought to my notice. I, therefore
hold that the consideration or object of the agreement to sell
dated 27th March, 1997 cannot be said to be unlawful.
18. It has come in evidence that during pendency of
this suit basement measuring about 450 sq. feet has been
sold by defendant No.1 to Mr. Manoj Kain and Mr. Sanjay
Sharma who are carrying business under the name and
CS(OS)No.1571/1998 Page 21 of 35
style of M/s.ESSEMM Realtors, vide sale deed dated 28th
January, 2003. Hence a legal question arises in this case,
as to whether the plaintiff can obtain specific performance
of the agreement dated 27 th March, 1997 and possession of
the whole of the basement constructed in the suit property
without seeking cancellation of the sale deed dated 28 th
January, 2003 executed by defendant No.1 in favour of Mr.
Sanjay Sharma and Mr. Manoj Kain. As noted earlier, vide
order dated 3rd August, 1998 this Court had directed the
parties to maintain status quo in respect of ground floor
and basement floor of property No.A-249, Defence Colony,
New Delhi. Vide subsequent order dated 10th November,
1998, the injunction was restricted to the basement floor
alone. The injunction order to the extent it pertained to the
basement floor of the suit property has never been vacated
by this Court. According to Mr. Sanjay Sharma and Mr.
Manoj Kain, they had initially taken the basement portion
on rent vide lease deed dated 19th March, 2002 and later on
they purchased the same vide sale deed dated 28 th January,
2003. In view of the injunction order passed by this Court
on 3rd August, 1998, the defendants could not have let out
the basement portion to Mr. Sanjay Sharma and Mr. Manoj
CS(OS)No.1571/1998 Page 22 of 35
Kain and they could not have sold it to them vide sale deed
dated 28th January, 2003. The lease created as well as the
sale deed executed in their favour being in violation of the
injunction order passed by this Court are void ab initio and
non est in law, which the Court is required to ignore from
consideration. If a person who has been granted an
injunction in his favour and who is not a party to such a
transaction is made to seek cancellation of the documents
evidencing such a transaction, this would only encourage
unscrupulous litigants to circumvent the process of law and
violate the orders of the Courts with impunity, which will
not be conducive to public policy and would undermine the
process of law and its institutions and that to at the cost of
a bona fide litigant who comes to the Court for redressal of
his genuine grievances. It is settled proposition of law that
when the Court passes such an order, it not only directes
but also presumes that the position which existsed at the
time of passing the order, continues to exist. Any other
construction of law on the subject would be contrary to
public interest and subvert the cause of justice.
19. In Surjit Singh & Ors. v. Harbans Singh & Ors.
AIR 1996 SC 135, the Court, in a suit for partition and
CS(OS)No.1571/1998 Page 23 of 35
possession of properties, passed an order restraining the
parties to the suit from alienating or otherwise transferring
any part of the suit property. One Pritam Singh however,
assigned his rights under the preliminary decree by a
registered deed partly in favour of his lawyers and partly in
favour of others despite restraint order which the trial Court
had passed. The assignees sought impleadment as parties
to the proceedings. Their application was allowed by the
trial Court and the appeal against that order was rejected by
the first Appellate Court as well as by the High Court.
Supreme Court however, did not agree with the view taken
by the Courts below and while allowing the appeal, inter alia
observed as under:
In defiance of the restraint order, the
alienation/assignment was made. If we
were to let it go as such, it would defeat
the ends of justice and the prevalent
public policy. When the Court intends a
particular state of affairs to exist while it
is in seisin of a lis, that state of affairs is
not only required to be maintained, but it
is presumed to exist till the Court orders
otherwise. The Court, in these
circumstances has the duty, as also the
right, to treat the alienation/assignment
as having not taken place at all for its
purposes.
In Delhi Development Authority v. Skipper
CS(OS)No.1571/1998 Page 24 of 35
Construction Co.(P) Ltd. & Anr. (1996) 4 SSC 622, while
dealing with the question as to whether the contemnor
should be allowed to enjoy and retain the fruits of his
contempt, Supreme Court was of the view that a contemnor
ought not to be permitted to enjoy and/or to keep the fruits
of his contempt. In this regard the Court inter alia observed
as under:
To the same effect are the decisions of the
Madras and Calcutta High Courts in
Century Floor Mills Ltd. v. S.Suppiah and
Sujit Pal v. Prabir Kumar Sun. In Century
Flour Mills Ltd. it was held by a Full
Bench of the Madras High Court that
where an act is done in violation of an
order of stay or injunction, it is the duty of
the Court, as a policy, to set the wrong
right and not allow the perpetuation of the
wrongdoing. The inherent power of the
court, it was held, is not only available in
such a case, but it is bound to exercise it
to undo the wrong in the interest of justice.
That was a case where a meeting was
held contrary to an order of injunction.
The Court refused to recognize that the
holding of the meeting is a legal one. It
put back the parties in the same position
as they stood immediately prior to the
service of the interim order.
In Sujit Pal a Division Bench of the
Calcutta High Court has taken the same
view. There, the defendant forcibly
dispossessed the plaintiff in violation of
the order of injunction and took possession
of the property. The Court directed the
restoration of possession to the plaintiff
with the aid of police. The Court observed
CS(OS)No.1571/1998 Page 25 of 35
that no technicality can prevent the Court
from doing justice in exercise of its
inherent powers. It held that the object of
Rule 2-A of Order 39 will be fulfilled only
where such mandatory direction is given
for restoration of possession to the
aggrieved party. This was necessary, it
observed, to prevent the abuse of process
of law.
In Mulraj v. Murti Raghonathji Maharaj AIR 1967
SC 1386, Supreme Court considered the effect of action
taken subsequent to passing of an interim order in its
disobedience and held that an action taken in disobedience
of the order passed by the Courts would be illegal and a
nullity.
In Arjan Singh v. Punit Ahluwalia & Ors. (2008) 8
SSC 348 Supreme Court inter alia observed as under:
We must also take notice of the fact that
even a court in exercise of its inherent
jurisdiction under Section 151 of the Code
of Civil Procedure, in the event of coming to
the conclusion that a breach to an order of
restraint had taken place, may bring back
the parties to the same position as if the
order of injunction has not been violated.
(Gurunath Manohar Pavaskar v. Nagesh
Siddappa Navalgund).
Thus, the lease deed and the sale deed executed by
defendant No.1 in favour of Mr. Sanjay Sharma and Mr.
Manoj Kain being in violation of the injunction order passed
CS(OS)No.1571/1998 Page 26 of 35
by this Court have to be treated as a nullity and non est in
the eyes of law. The plaintiff therefore needs not seek
cancellation of these documents in order to claim specific
performance of the agreement to sell dated 27 th March,
1997.
20. Clause 16(c) of the agreement to sell dated 27 th
March, 1997 reads as under:
If for any reason whatsoever, the demised
premises are constructed but are not
delivered to the Vendee in consonance
with present agreement, without prejudice
to the aforegoing rights of the Vendee to
seek specific performance of the
agreement, the Vendor shall be liable to
pay to the Vendee liquidated damages
which are agreed and quantified at Rs.25
lac (Rupees Twenty Five Lac Only).
Since, defendant No.1 constructed/got constructed
the basement in property No. A-249, Defence Colony but did
not deliver its possession to the plaintiff, he is liable to pay
the aforesaid sum of Rs.25 lac as liquidated damages to the
plaintiff company. Since the right given to the plaintiff
company to recover the aforesaid sum of Rs.25 lac as
liquidated damages was without prejudice to its right to
seek specific performance of the agreement, execution of the
sale deed in favour of the plaintiff company and delivery of
CS(OS)No.1571/1998 Page 27 of 35
the possession of the basement floor to it also, will not
absolve him of his contractual liability to pay the aforesaid
amount to the plaintiff company. Moreover, it can hardly be
disputed that the plaintiff company needs to be
compensated for being deprived of the possession of the
basement for about 14 years which have passed since the
last date stipulated for completion of construction of the
basement. The plaintiff company got the advantage of
retaining Rs.2 lac which it would have paid to defendant
No.1 had it been given the possession of basement floor to it
in terms of the agreement to sell dated 27th March, 1997
but, this is a rather insignificant benefit as compared to the
loss in the form of deprivation of the basement floor for
almost 14 years.
The issues are decided in favour of the plaintiff and
against the defendants.
ORDER
In view of my findings on the issues, a decree for specific performance of the agreement to sell dated 27 th March, 1997 and for recovery of Rs.25 lac with proportionate costs is hereby passed in favour of the plaintiff and against both the defendants. A decree for CS(OS)No.1571/1998 Page 28 of 35 possession of the whole of the basement floor of property No. A-249, Defence Colony, New Delhi is also passed in favour of the plaintiff and against the defendants. Defendant No.1 is directed to execute an appropriate sale deed in favour of the plaintiff company in respect of the whole of the basement floor of property No.A-249 Defence Colony, New Delhi within 08 weeks from today after obtaining permissions, if any, required for this purpose. The plaintiff is directed to deposit the balance sale consideration of Rs.2 lac in this Court by way of a Demand Draft/Pay Order in the name of Registrar General of this Court within two weeks from today. In case of failure of the plaintiff to deposit the aforesaid amount, it will not be entitled to decree for specific performance of the agreement to sell dated 27th March, 1997 and to this extent the suit shall stand dismissed without any further orders.
Decree sheet be drawn accordingly.
IA No. 5530/2004 (O. 39 R. 2A CPC) The grievance of the petitioner is that in violation of the injunction order passed by this Court defendant No.1 first created the lease of a part of the basement floor and then sold 400 sq. feet area out of it to Mr. Sanjay Sharma CS(OS)No.1571/1998 Page 29 of 35 and Mr. Manoj Kain. In the application, the plaintiff sought appropriate action only against the defendants for breach of the interim injunction granted by this Court. The other prayers made in the application were for attachment of the ground floor of the suit property and appointment of a receiver in respect of the ground floor. In this application the plaintiff made no prayer for punishing Mr. Sanjay Sharma and Mr. Manoj Kain. There was no averment in this application that Mr. Sanjay Sharma and Mr. Manoj Kain were aware of the interim orders passed by this Court on 3rd August, 1998 and 10th November, 1998 and that they took the basement portion on rent and later purchased it despite knowledge of the interim orders passed in the suit. In its reply, filed through Mr. Manoj Kain M/s ESSEMM Realtors has claimed that it was not aware of the present suit and had not violated any order passed by the Court. It is also alleged that the applicants took the basement portion on rent vide registered lease deed dated 14th March, 2002 and later purchased it vide sale deed dated 28th January, 2003. Notice of this application was issued by the Court initially to defendant No.1 but could not be served on him. Later, the notice was issued to ESSEMM Realtors. The CS(OS)No.1571/1998 Page 30 of 35 application has however been contested by Mr. Sanjay Sharma and Mr. Manoj Kain.
21. It was pointed out by the learned Counsel for the plaintiff that the defendants had agreed to sell the basement to be constructed in the suit property to the plaintiff for Rs.12.25 lac whereas Mr. Sanjay Sharma and Mr. Manoj Kain claim to have purchased area measuring 450 sq. feet for a paltry sum of Rs.1 lac which shows that they are not the bona fide purchasers. No doubt the sale consideration as indicated in the sale deed Exh. CW-2/PX1 is grossly inadequate for basement area measuring 450 sq. feet when the plaintiff had agreed to purchase basement area which could be about 1172 sq. feet for a consideration of Rs.12.25 lac. Moreover, the agreement to sell in favour of the plaintiff was executed on 27th March, 1997, which is about 6 years before the sale deed in favour of Mr. Sanjay Sharma and Mr. Manoj Kain was executed. Therefore, there is a possibility that these persons knew of the injunction order passed by this Court and that is why they took a calculated risk by taking possession of the basement portion measuring about 450 sq. feet for a meager consideration of Rs.1 lac. However, yet another possibility in the matter is that the CS(OS)No.1571/1998 Page 31 of 35 entire sale consideration paid by Mr. Sanjay Sharma and Mr. Manoj Kain to defendant No.1 was not reflected in the sale deed. I would like to add here that this is not the case of Mr. Sanjay Sharma and Mr. Manoj Kain that they had paid more than Rs.1 lac for purchase of the basement floor, but, underreporting of the sale consideration is rather frequent in our country, in the transactions relating to sale and purchase of immovable properties.
22. It was contended by the learned Counsel for the plaintiff that Mr. Sanjay Sharma and Mr. Manoj Kain did not make any inquiry from defendant No.2 despite the fact that one of them i.e. Mr. Sanjay Sharma was a witness to the collaboration agreement between defendants No. 1 & 2. This, to my mind, cannot be held against Mr. Sanjay Sharma and Mr. Manoj Kain in case they were not aware of the agreement to sell executed by defendants No. 1 & 2 in favour of plaintiff on 27th March, 1997. It is true that Mr. Sanjay Sharma and Mr. Manoj Kain are real estate agents and the directors and staff of defendant No.2 was known to Mr. Sanjay Sharma as admitted by him in his cross examination, but, even that would not indicate that they were aware of the interim orders passed by the Court in this CS(OS)No.1571/1998 Page 32 of 35 suit. If they had no knowledge of the agreement executed by the defendants in favour of the plaintiff they had no occasion to make any such inquiry from the Directors or staff members of the defendant No.2. They being real estate agents would not mean that they would necessarily be aware of the injunction order passed by the Court in the suit. To my mind, the only circumstance which can be held against Mr. Sanjay Sharma and Mr. Manoj Kain in this regard is the amount of the sale consideration which they claim to have paid to defendant No.1 for purchase of basement portion measuring about 450 sq. feet.
23. The next question which comes up for consideration is as to what order, if any, the Court should pass against Mr. Sanjay Sharma and Mr. Manoj Kain in this application. The learned Counsel for Mr. Sanjay Sharma and Mr. Manoj Kain has relied upon the decision of Orissa High Court in Prafulla Kumar Mohapatra v. Jaya Krushna Mohapatra & Ors. AIR 1994 Orissa 173 where it was held that ordinarily the persons who are not parties to the suit are not to be proceeded against for disobeying the injunction, the exception being, where it is alleged and proved that the person who violated the order was an agent CS(OS)No.1571/1998 Page 33 of 35 or servant or workman of the person against whom the order of injunction was passed. It was further alleged that if a person who is not a party to the suit is sought to be proceeded against for disobedience of the order passed by the Court it has to be proved by sufficient and unimpeachable evidence that he was guilty of abetting the violation of the injunction. Of Course, if Mr. Sanjay Sharma and Mr. Manoj Kain were aware of the injunction orders passed by this Court in the suit they would be guilty of abetment since in that case by agreeing to purchase the basement portion they encouraged defendant No.1 to disobey the order of the Court.
In my view considering all the facts and circumstances of the case, the ends of justice in this case would be adequately met if Mr. Sanjay Sharma and Mr. Manoj Kain are directed to deliver possession of the basement floor occupied by them in property No.A-249 Defence Colony to the plaintiff without demur or protest, within 04 weeks from the date of this order. Even otherwise, the basement portion having been purchased by them in violation of the injunction order, the sale in their favour is non est and nullity in the eyes of law and it confers CS(OS)No.1571/1998 Page 34 of 35 no right, title or interest on them in respect of the basement portion purchased by them and they are liable to be evicted therefrom. Mr. Sanjay Sharma and Mr. Manoj Kain are accordingly directed to deliver peaceful and vacant possession of the basement portion occupied by them in Property No. A-249 Defence Colony to the plaintiff without demur or protest within 04 weeks from today. The application stands disposed of in terms of this order.
(V.K. JAIN) JUDGE OCTOBER 21, 2011 'sn'/bg/vn CS(OS)No.1571/1998 Page 35 of 35