Delhi High Court
Shri Romi Garg vs Bdr Builders & Developers Pvt. Ltd. & Ors on 14 March, 2018
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 14th March, 2018
+ CS(OS) 14/2018
SHRI ROMI GARG .... Plaintiff
Through: Mr. Brij Bhushan Gupta, Sr. Advocate,
Ms. Nandni Sethi, Adv.
Versus
BDR BUILDERS & DEVELOPERS PVT. LTD. & ORS ...Defendants
Through: None
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA No. 3532/2018 (of the plaintiff under Section 151 of the CPC for
modification of the order dated 16th January, 2018).
1. The plaintiff has instituted CS(OS) No. 109/2017 against the
defendant No.2 Lalit Modi for specific performance of an Agreement to Sell
dated 9th July, 2012 as modified on 14th July, 2016 by the said defendant
No. 2 Lalit Modi of property No. 32, Vasant Vihar, New Delhi to the
plaintiff. Vide ex parte order dated 6th March, 2017 in the said suit, the
defendant No. 2 Lalit Modi has been directed to maintain status quo with
regard to title, status of construction and possession of the said property.
2. The plaintiff instituted this suit, pleading to have learnt (i) that the
defendant No. 2 Lalit Modi had executed an Agreement to Sell and Receipt,
both dated 24th June, 2014, in favour of defendant No. 1 BDR Builders and
Developers Private Limited; (ii) that the defendant No. 2 Lalit Modi had also
executed a registered GPA and Will both dated 10th February, 2016
CS(OS) No.14/2018 Page 1 of 10
registered on 12th February, 2017 in favour of defendant No.1; (iii) that in
accordance with the arbitration clause in the said Agreement to Sell, the
defendant No. 3 Naresh Gupta has rendered an Arbitral Award dated 12th
January, 2017; (iv) that a petition being OMP (I) No. 3/2017 has been filed
by the defendant No.1 BDR Builders and Developers Private Limited against
the defendant No. 2 Lalit Modi under Section 9 of the Arbitration and
Conciliation Act, 1996, in this Court. Pleading, that the Agreement to Sell,
GPA and Will with respect to the property, executed by the defendant No. 2
Lalit Modi in favour of defendant No.1 BDR Builders & Developers Pvt.
Ltd. are of a date subsequent to the Agreement to Sell dated 9 th July, 2012
modified on 14th July, 2016 by the defendant No. 2 Lalit Modi with respect
to the said property in favour of the plaintiff and are fabricated and bogus
and intended to prejudice the rights of the plaintiff, reliefs of (a) declaration
as null and void of the said Agreement to Sell, GPA and Will executed by
defendant No. 2 Lalit Modi in favour of defendant No.1 BDR Builders and
Developers Private Limited as well as the Arbitral Award dated 12th January,
2017; (b) declaration that the plaintiff continues to have rights in the said
property by virtue of Agreement to Sell dated 9 th July, 2012 as modified on
14th July, 2016 and the said rights of the plaintiff remain unaffected by the
documents subsequently executed by defendant No. 2 Lalit Modi in favour
of defendant No.1 BDR Builders and Developers Private Limited; (c)
cancellation of the Agreement to Sell, GPA, Will and Arbitral Award; and,
(d) permanent injunction restraining the defendants from acting in pursuance
to their design and from further dealing with the property, were claimed in
this suit.
CS(OS) No.14/2018 Page 2 of 10
3. The suit came up first before this Court on 16th January, 2018 when,
finding (a) that the gravamen of the case of the plaintiff was that the
defendant No. 2 Lalit Modi having entered into a prior Agreement to Sell
with the plaintiff, subsequent documents in favour of defendant No.1 BDR
Builders and Developers Private Limited are null and void; and, (b) that the
plaintiff had already instituted CS (OS) No.109/2017 for specific
performance of the Agreement to Sell in its favour, attention of the senior
counsel for the plaintiff was drawn to Lala Durga Prasad Vs. Lala Deep
Chand AIR 1954 SC 75 resolving the conflict of opinion existing between
the High Courts prior thereto by holding that the remedy of person claiming
prior agreement to sell is under Section 19(b) of the Specific Relief Act,
1963 and not by seeking declaration as null and void of the subsequent
documents and it was enquired as to how this suit was maintainable.
4. The senior counsel for the plaintiff, on instructions, on 16 th January,
2018 withdrew the suit and also sought refund of court fees and a certificate
entitling the plaintiff to refund of 50% of the court fees paid on the plaint,
was ordered to be issued.
5. The plaintiff has now filed IA No. 3532/2018 under Section 151 of the
CPC for modification of the order dated 16th January, 2018 and restoration of
this suit to its original number along with IA No. 3533/2018 for condonation
of delay of 19 days in filing IA No. 3532/2018.
6. The senior counsel for the plaintiff, at the outset, clarifies that the
Registry of this Court, in accordance with the direction for issuance of
certificate for refund of court fees, has prepared such certificate and
forwarded the same to the counsel for the plaintiff, but the same has not been
encashed.
CS(OS) No.14/2018 Page 3 of 10
7. In the application, it is pleaded (i) that the plaintiff had withdrawn the
suit on the understanding that the plaintiff will not be prejudiced thereby and
can claim the relief as sought in this suit in CS(OS) No. 109/2017 already
filed by the plaintiff for specific performance of the Agreement to Sell in
favour of the plaintiff; (ii) however, the same remained to be mentioned in
the order dated 16th January, 2018; (iii) that Lala Durga Prasad supra has no
application to the facts of the present case and is distinguishable; (iv) that if
this suit remains dismissed as withdrawn, it will cause extreme prejudice to
the plaintiff.
8. As far as the aspect of clarifying that the order dated 16th January,
2018 of dismissal of the suit as withdrawn will not prevent the plaintiff from
seeking remedies under Section 19(b) of the Specific Relief Act, 1963 is
concerned, the same flows from a reading of the order dated 16th January,
2018 and there is no difficulty in clarifying so.
9. However, the senior counsel for the plaintiff has today not sought such
clarification and on the contrary seeks restoration of the suit and issuance of
summons thereof to the defendants. It is argued that Lala Durga Prasad
supra is not applicable to the facts of the present case and Bharat Karsondas
Thakkar Vs. Kiran Construction Company (2008)13 SCC 658 comes in the
way of the plaintiff impleading the defendants No. 1 and 3 as parties in
CS(OS) 109/2017 filed by the plaintiff for specific performance of the
Agreement to Sell in favour of the plaintiff. It is further informed that the
plaintiff applied for impleadment in OMP(I) No. 3/2017 and which
application was also dismissed as the plaintiff is not a party to the arbitration
agreement.
CS(OS) No.14/2018 Page 4 of 10
10. I have perused Bharat Karsondas Thakkar supra. Supreme Court
therein was concerned with the question, whether in a suit for specific
performance of an Agreement to Sell of immovable property instituted by
the purchaser against the seller, a stranger or a third party to the agreement
who had acquired an interest in the same property, is either a necessary or
proper party to the suit. The question was framed, whether a person who had
acquired an independent right in the property by way of a separate decree,
but was not a party to the Agreement to Sell of which specific performance
was sought, could be added as a party to the suit for specific performance
and whether the decree passed in favour of such a person could be assailed in
the suit for specific performance. It was held, that (i) a suit for specific
performance of an agreement cannot be permitted to be converted into a suit
for declaration of title and possession; (ii) that the scope of a suit for specific
performance could not be enlarged and a third party or a stranger to the
contract could not be added as a party thereto, changing the nature and
character of the suit. Amendments sought to the said effect which had been
allowed by the Division Bench of the High Court were thus not allowed and
it was held that the proper course would be to claim the said reliefs not in the
suit for specific performance but in a separate suit for declaration. Though
Lala Durga Prasad supra was noticed, but it was held that it could not be
brought to the aid of the case pleaded by the plaintiff in the suit.
11. The senior counsel for the plaintiff contends that as per Bharat
Karsondas Thakkar supra, the present suit is maintainable notwithstanding
Lala Durga Prasad supra.
12. I have minutely gone through Bharat Karsondas Thakkar supra, a
dicta of two Hon'ble Judges of the Supreme Court vis-à-vis Lala Durga
CS(OS) No.14/2018 Page 5 of 10
Prasad supra, a dicta of three Hon'ble Judges of the Supreme Court. Bharat
Karsondas Thakkar supra does not hold Lala Durga Prasad supra to be not
good law and merely holds the same to be not applicable to the case of the
plaintiff therein. The question which thus arises is, whether to the facts of
this case, Lala Durga Prasad supra applies or Bharat Karsondas Thakkar
supra applies.
13. Section 19 of the Specific Relief Act is as under:-
"19. Relief against parties and persons claiming under them
by subsequent title. -Except as otherwise provided by this
Chapter, specific performance of a contract may be enforced
against-
(a) either party thereto;
(b) any other person claiming under him by a title arising
subsequently to the contract, except a transferee for value who
has paid his money in good faith and without notice of the
original contract;
(c) any person claiming under a title which, though prior to
the contract and known to the plaintiff, might have been
displaced by the defendant;
(d) when a company has entered into a contract and
subsequently becomes amalgamated with another company, the
new company which arises out of the amalgamation;
(e) when the promoters of a company have, before its
incorporation, entered into a contract for the purpose of the
company and such contract is warranted by the terms of the
incorporation, the company:
Provided that the company has accepted the contract and
communicated such acceptance to the other party to the
contract.
CS(OS) No.14/2018 Page 6 of 10
14. While under Clause (a), specific performance of a contract can be
enforced against a party to the contract only, under Clause (b), specific
performance of a contract can also be enforced against a stranger to the
contract if such stranger is claiming under a party to the contract by a title
arising subsequently to the contract. Clause (c) also permits specific
performance of the contract to be enforced against a stranger claiming under
a party to the contract, a title though prior to the contract and known to the
plaintiff but which could have been displaced by the party to the contract.
15. Thus, specific performance of a contract is enforceable against
strangers to the contract also falling in Clauses (b) and (c) of Section 19.
16. Lala Durga Prasad supra is a case of the title of the vendor in the
property, of the contract of sale of which specific performance was sought,
having, after the extension of contract of sale, vested in the custodian and
who was impleaded in the suit. Supreme Court, after holding the plaintiff/
agreement purchaser to be entitled to a decree of specific performance,
pondered the proper form of decree to be passed in such a situation. It was
noticed that the practice of the courts in India had not been uniform;
according to one point of view, the proper form of decree is to declare the
subsequent purchase void as against the plaintiff and direct conveyance by
the vendor alone; a second considers that both the vendor and vendee should
join while third would limit execution of the conveyance to the subsequent
purchaser alone. It was held (i) that the title to the property had validly
passed from the vendor to the subsequent transferee; the sale to him was not
void but only voidable at the option of the other party to the contract; (ii) that
since the title no longer vested with the vendor, it would be illogical to
compel him to convey title to the plaintiff unless steps are taken to re-vest
CS(OS) No.14/2018 Page 7 of 10
the title in him either by cancellation of subsequent sale or by a
reconveyance from the subsequent purchaser to him; (iii) that the proper
form of decree is to direct specific performance of the contract between the
vendor and the plaintiff and direct the subsequent transferee to join in the
conveyance so as to pass on the title which resides in him, to the plaintiff.
17. Per contra, in Bharat Karsondas Thakkar supra, the plaintiff in the
suit for specific performance of a subsequent Agreement to Sell was not
permitted to amend the plaint to challenge the decree in a suit pertaining to
the earlier Agreement to Sell and to which decree the vendor had consented.
Supreme Court, in para 23 of the judgment, noticed that Lala Durga Prasad
supra was a case of a suit for specific performance by a prior purchaser
against the vendor and a subsequent purchaser and in the said context held
that in a suit filed by the prior purchaser, the decree of the form laid down
had to be passed. It was further held in para 31 of the judgment that the
decision in Lala Durga Prasad supra could not be brought to the aid of the
case of the plaintiff in Bharat Karsondas Thakkar supra.
18. It would thus immediately be clear that the facts of the present case
match with that of Lala Durga Prasad supra and not with the facts of
Bharat Karsondas Thakkar supra. The plaintiff therein also claims the
Agreement to Sell in its favour to be of a date prior to the date of the
Agreement to Sell in favour of defendant No.1. Thus, the proper course for
the plaintiff in the present case is under Section 19(b) of the Specific Relief
Act only and not by way of the present suit.
19. The application for recall of the order dated 16th January, 2018,
irrespective of maintainability thereof, is not maintainable because the
plaintiff herself withdrew the suit, even if on a wrong premise.
CS(OS) No.14/2018 Page 8 of 10
20. Before parting with the matter, I may however notice that as per the
plaintiff, the title in the property has till now not vested in the defendant
No.1 BDR Builders and Developers Private Limited and which fact was not
recorded/noticed on 16th January, 2018. A question may still arise, whether
the plaintiff can invoke Section 19(b) of the Specific Relief Act.
21. I have also enquired from the senior counsel for the plaintiff/applicant
the prejudice, if any, to the plaintiff by the Agreement to Sell by the
defendant No. 2 in favour of the defendant No. 1 BDR Builders and
Developers Private Limited inasmuch as a mere Agreement to Sell does not
create any title in the property. If at all, at any time, the title in the property
is vested in the defendant No.1 BDR Builders and Developers Private
Limited, it is only then that the plaintiff can be said to be aggrieved.
22. The senior counsel for the plaintiff states that since, according to the
plaintiff, the defendants No. 1 and 2 are in collusion with each other, the title
to the property will ultimately be vested in favour of the defendant No.1
BDR Builders and Developers Private Limited.
23. I have further enquired from the senior counsel for the plaintiff, what
is the cause of action to the plaintiff and or locus of the plaintiff to challenge
the Agreement to Sell or the Arbitral Award between the defendants No.1
and 2 till the title in the property vests in the defendant No.1 BDR Builders
and Developers Private Limited. It has been held in Sunil Kapoor vs.
Himmat Singh ILR (2010) II Delhi 616 (SLP (C) No. 6010/2010 preferred
whereagainst was dismissed on 12th March, 2010) that even a decree for
specific performance of an Agreement to Sell does not vest any title in the
plaintiff purchaser till conveyance deed of the property in terms of the decree
of specific performance is executed in favour of the plaintiff purchaser.
CS(OS) No.14/2018 Page 9 of 10
24. Be that as it may, the said questions do not arise for consideration in
this proceeding and thus it is clarified that the observations in these
paragraphs are not to bind any of the parties in any other proceeding in
which the said enquiry may be necessary.
25. Resultantly, IA No. 3532/2018 for recall of the order dated 16 th
January, 2018 is dismissed.
RAJIV SAHAI ENDLAW, J.
MARCH 14, 2018 SRwt..
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