Delhi High Court
Usha Aggarwal vs The Punjabi Bagh Co-Operative Housing ... on 9 May, 2018
Equivalent citations: AIRONLINE 2018 DEL 3324
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 9th May, 2018
+ CS(OS) No.634/2004
USHA AGGARWAL ..... Plaintiff
Through: Ms. Babita, Adv.
Versus
THE PUNJABI BAGH CO-OPERATIVE
HOUSING SOCIETY LTD. AND ANR. ..... Defendants
Through: Mr. P.D. Gupta, Sr. Adv. with
Mr. Atul Gupta, Adv.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The plaintiff instituted this suit, on 26th May, 2004, for specific
performance of an agreement of sale of plot no.50, Road No.78 ad
measuring 1733 sq. mtrs., East Punjabi Bagh, New Delhi and in the
alternative to recover damages for breach of contract in the sum of
Rs.4.50 crores, pleading (i) that the defendant no.1, on 14th June, 1950
was registered in the name of Refugee Cooperative Housing Society
Ltd. under the provisions of the Bombay Act VII of 1925 as then
extended to Delhi; (ii) that at the time of registration of the defendant
no.1, very few people were enrolled as its members and majority of
the present members of the defendant no.1 were enrolled
subsequently; (iii) that the bye-laws adopted by the defendant no.1
under the Delhi Co-operative Societies Act, 1972 are contrary to the
bye-laws framed at the time of registration of defendant no.1 and are
not applicable to the defendant no.1 which was formed in 1950 and
thus the bye-laws adopted by defendant no.1 under the Delhi Co-
operative Societies Act are not enforceable; (iv) that however the bye-
CS(OS) No.634/2004 Page 1 of 26
laws adopted by the defendant no.1 in the year 1950 are not available
to the plaintiff and must be available with the defendant no.1 and the
defendant no.2 who is the Secretary of the defendant no.1; (v) that the
defendant no.1, after coming into existence in the year 1950, acquired
freehold land and developed it into plots and transferred the said plots
to its members, by executing sale deeds of freehold rights in the said
plots; (vi) that as distinct from aforesaid, under the Delhi Co-operative
Societies Act, 1972, land is allotted by the land owing agency by
executing leasehold rights in favour of the society and subsequently
the society executing sub-lease hold rights in favour of its members;
(vii) that the defendant no.1, by way of inviting proposals, either by
way of publication in newspaper or issuing circulars or affixing upon
notice boards of the defendant no.1, has sold various plots of land to
its members and outsiders also who were subsequently enrolled as
members of the defendant no.1; (viii) that various persons including
the office bearers of the defendant no.1 have purchased more than one
plot and are in occupation of the same; (ix) that plot no.50, Road
No.78 ad-measuring 1733 sq. mtrs., East Punjabi Bagh, was a "spare
plot"; (x) in April / May, 2003, the defendant no.1 invited offers from
the public at large for purchase of the said plot; (xi) the plaintiff, vide
her letter dated 16th June, 2003, made an offer for purchase of the said
plot for a consideration of Rs.4.50 crores and paid a sum of
Rs.10,00,000/- by way of earnest money; (xii) the defendant no.1, vide
its letter dated 22nd July, 2003, communicated to the plaintiff the
acceptance by the members of the Managing Committee of the
defendant no.1, in the meeting held on 22nd July, 2003, of the offer of
CS(OS) No.634/2004 Page 2 of 26
the plaintiff and of "little hitch for getting clearance from the office of
the Registrar Co-operative Societies" and further informed the
plaintiff that "in case there is some reservation from the Registrar‟s
office" the defendant no. 1 will "not be able to enter into this deal"
and will return the amount of Rs.10,00,000/- to the plaintiff; (xiii) that
thus, there has been a concluded contract for sale of plot in question
and the clearance from the office of Registrar, Co-operative Societies
„is more here as stipulated in the terms of the contract"; (xiv) that the
plaintiff performed all her obligations by depositing Rs.10,00,000/-
and the defendant no.1 had to obtain necessary clearance from the
Registrar, Co-operative Societies and the plaintiff was to be informed
thereafter; the plaintiff had to pay the balance amount of Rs.4.40
crores but the defendant no.1 failed to take necessary steps to obtain
clearance from the Office of Registrar, Co-operative Societies; (xv)
the defendant no.1, vide letter dated 27th September, 2003, „cancelled
the offer of the plaintiff‟ „owing to the failure of the plaintiff to
procure the clearance from the Registrar Co-operative Societies‟ and
called upon the plaintiff to obtain refund of Rs.10,00,000/-; (xvi) that
the defendant no.1 could not have cancelled the offer, after acceptance
thereof and whereupon binding agreement had come into existence
between the plaintiff and the defendant no.1; (xvii) the clearance from
the office of the Registrar Co-operative Societies was to be obtained
by the defendant no.1 and the plaintiff could not have contacted the
office of the Registrar Co-operative Societies because she had no
locus standi; (xviii) the plaintiff, vide her letter dated 7th October,
2003 requested the defendant no.1 to obtain necessary permission /
CS(OS) No.634/2004 Page 3 of 26
clearance and informed of her readiness and willingness to pay the
balance sale consideration of Rs.4.40 crores; (xix) that the defendants
became dishonest since the prices of the property had gone up and
without following due process as adopted earlier of advertisements
and issuing tender, accepted Rs.51 lacs as earnest money from Sh.
Sanjay Jain and agreed to sell him the plot in question for a
consideration of Rs.5.91 crores; (xx) that the defendant no.2, being the
Secretary of the defendant no.1, was not even authorised and
empowered to cancel the offer of the plaintiff which had been
accepted by the members of the Managing Committee of the
defendant no.1; (xxi) that the defendant no.1 did not perform its part
of the agreement despite legal notice dated 26th March, 2004 got
issued by the plaintiff; and, (xxii) the plaintiff also got sent a notice to
the Registrar Co-operative Societies but to no avail.
2. The suit was entertained and summons thereof issued though no
ex parte stay sought granted. Vide order dated 29th November, 2004, it
was ordered that in case the defendant no.1 intended to dispose of the
plot, it will inform the Court.
3. The defendant no.1 contested the suit by filing a written
statement pleading that (i) the suit was barred by Section 90 of the
Delhi Co-operative Societies Act, 1972 for non-issuance of the
statutory 90 days notice; (ii) the plaintiff and her husband owned
residential properties in Punjabi Bagh and in West Punjabi Bagh and
were not entitled to purchase any other residential plot and / or to
become a member of any Co-operative Society in Delhi, as laid down
in Rule 25 (1) (c) (i) of the Delhi Co-operative Societies Rules, 1973;
CS(OS) No.634/2004 Page 4 of 26
(iii) that the defendant no.2 is neither a necessary nor a proper party to
the suit; the defendant no.2 was an employee / paid secretary of
defendant no.1 and had on 3rd October, 2004 resigned from the
employment of the defendant no.1 and had joined the services of the
husband of the plaintiff and Sh. Mohan Lal Gupta, Estate Agent; (iv)
no concluded contract had come into existence between the parties; (v)
that the cheque submitted by the plaintiff for Rs.10,00,000/- was never
encashed by the defendant no.1 and the plaintiff was called upon to
collect the same; (vi) the plaintiff has concealed the contents of the
advertisement published by the defendant no.1 inviting offers for the
plot; (vii) that the offer dated 16th June, 2003 of the plaintiff was not in
response to the advertisement but as a consequence of verbal
discussion with the President of the Society; (viii) that the land of the
Co-operative Housing Society cannot be sold by such verbal
discussion; (ix) that the very foundation of the offer made by Sh.
Mohan Lal Gupta was outside the Resolution passed by the SGM of
defendant no.1 and therefore illegal and void ab initio; (x) that the
defendant no.1 was registered on 14th June, 1950 under the provisions
of the Bombay Act VII of 1925 as extended to Delhi and had the
requisite membership as required under the said Act; (xi) denying that
the then existing bye-laws adopted by the defendant no.1 at the time of
its registration were contrary to the now existing bye-laws of the
defendant no.1 or that the then existing bye-laws are not applicable to
the defendant no.1; (xii) that as per the then existing bye-laws, the
reference to the Act was to the Delhi Co-operative Societies Act, 1972
and the reference to the Rules was to the Delhi Co-operative Societies
CS(OS) No.634/2004 Page 5 of 26
Rules, 1973 and bye-law 63 of the then existing bye-law provided that
all matters not specifically provided for were to be decided in
accordance with the Co-operative Societies Act and the Rules Framed
thereunder; (xiii) that Section 92 of the Delhi Co-operative Societies
Act also provides that every society, whether existing or under the
Bombay Co-operative Societies Act, shall be deemed to be registered
under the corresponding provisions of the Delhi Co-operative
Societies Act and with its bye-laws, so far as the same were not
inconsistent with the express provisions of the Act shall continue to be
in force until altered or rescinded; (xiv) that the defendant no.1 had
already submitted before this Court its bye-laws as then existing; (xv)
denying that under the Delhi Co-operative Societies Act, land is to be
only allotted on leasehold basis or that the society can grant only sub-
lease hold rights; (xvi) that the disposal of property of the defendant
no.1 can only be in accordance with Sections 15, 28 and 52 of the
1972 Act; (xvii) that no residential plot had ever been sold by
defendant no.1 to any of its members nor can it be so allotted/sold if
such person is a member of any another house/building/society or if he
/ his wife / husband or any of his / her dependents owns a plot or a
dwelling house in Delhi; (xviii) that the defendant no.1 had never sold
plots, reference of which was given in the plaint; (xix) that a piece of
land measuring 579 acres was acquired by the Commissioner of Delhi
in the year 1950 to rehabilitate displaced persons who migrated from
Pakistan; the plaintiff is neither a displaced person nor has migrated
from Pakistan; (xx) that bye-law 5(i)(e) of the defendant no.1 makes
eligible only such person who or whose spouse or any of whose
CS(OS) No.634/2004 Page 6 of 26
dependents do not own a plot or dwelling house in Delhi for
membership of the defendant no.1; (xxi) that the advertisement of the
defendant no.1 had invited offers for residential plot measuring 2072
sq. yds. / 1733 sq. metres without mentioning the plot number or the
road number and in the colony of West Punjabi Bagh and not in the
colony of East Punjabi Bagh as alleged by the plaintiff; (xxii) the
plaintiff did not submit her offer by the stipulated date and did not
submit the fee to accompany the offer; (xxiii) moreover the offer
referred to by the plaintiff was of one Mohan Lal Gupta and not of the
plaintiff; (xxiv) because the offer was not accepted, the cheque was
not encashed; (xxv) the letter dated 22nd July, 2003 did not constitute
acceptance of the offer and did not bring about any concluded
contract; (xxvi) clearance from the Registrar Co-operative Societies
was not to be obtained by the defendant no.1 and defendant no.1 had
not made any representation to plaintiff; (xxvii) that the mandatory
ingredients for specific performance do not exist in the alleged
agreement; neither of the letters dated 16th June, 2003 or 22nd July,
2003 is to or by the plaintiff; no time limit was prescribed for payment
of balance amount; there was no recital in regard to the consequences
of default; there was no certainty as to the other terms relating to costs
of conveyance; there was no consideration for the alleged agreement;
(xxviii) the Registrar of Co-operative Societies, Government of NCT
of Delhi vide its letter dated 10th July, 2003 raised certain questions
with respect to the advertisement issued by the defendant no.1; and,
(xxix) denying that defendant no.1 had accepted any earnest money
from Sanjay Jain; the said money was accepted with specific condition
CS(OS) No.634/2004 Page 7 of 26
that Sh. Sanjay Jain will get any clearance from Registrar, Co-
operative Societies for allotment of plot No.50, Road No.78, ad-
measuring 1733 sq. mtrs., East Punjabi Bagh, New Delhi within a
period of two months; however Sh. Sanjay Jain failed to obtain
necessary approval and the sum of Rs.50 lacs had already been funded
to him.
4. The plaintiff filed a replication denying owning properties in
Punjabi Bagh as pleaded by the defendant no.1.
5. On the pleading of the parties, the following issues were framed
on 12th August, 2008:-
―1. Whether the plaintiff is entitled to specific
performance of agreements dated 16.6.2003 and
22.7.2003, as prayed for in prayer (a) of the
plaint? OPP
2. In the alternative, whether the plaintiff is entitled
to a decree of Rs.4.50 crores against the
defendants for breach of contract? OPP
3. Whether the plaintiff was ready and willing to
perform his obligations under the two alleged
agreements to sell? OPP
4. Whether there is no concluded contract between
the plaintiff and the defendant No.1? OPD
5. Whether the plaintiff is debarred from claiming
membership of the defendant No.1 society under
the provisions of Bye-Law 5(1)(e) of the Bye-Laws
of the defendant No.1 read with Rule 25(1)(c)(i)
of the Delhi Cooperative Societies Rules 1973?
OPD
CS(OS) No.634/2004 Page 8 of 26
6. Whether the defendant No.1 has not received
token money of Rs.10.00 lacs from the plaintiff
and, if so, effect thereof? OPD
7. Whether the suit is barred under the provision of
Section 90 of the Cooperative Societies Act, 1972?
OPD
8. Whether the suit suffers from mis-joinder/non-
joinder of parties? OPD
9. Relief.‖
6. Vide order, also of 12th August, 2008, the interim order dated
29th November, 2004 was made absolute till the decision of the suit.
7. The plaintiff, in her evidence examined her husband Naresh
Aggarwal as PW1. The plaintiff, despite repeated opportunity, failed
to examine any other witness and vide order dated 14th September,
2016, observing that "a plaintiff in a suit for specific performance
cannot continue with recording of evidence for eight years as has been
done" and that "that alone speaks volumes of the readiness and
willingness of the plaintiff", the evidence of the plaintiff was closed.
8. The defendant no.1, in its evidence examined Sushil Kumar
Gupta, Member of the Managing Committee of the defendant no.1 and
who was cross-examined by the counsel for the plaintiff and closed its
evidence.
9. The senior counsel for the defendant no.1 was heard on 20th
December, 2016, when granting liberty to the plaintiff to, if so desires,
file written arguments, judgment was reserved.
CS(OS) No.634/2004 Page 9 of 26
10. The counsel for the plaintiff, on 10th January, 2017, was
permitted to address oral arguments as well and during which it was
enquired from the counsel for the plaintiff as to how there could be an
estoppel against the law and whether a Co-operative Housing Society
was entitled to sell part of its land.
11. The counsel for the plaintiff as well as the counsel for the
defendant no.1 have submitted their written arguments and which have
been perused by me.
12. Shri Naresh Aggarwal, appearing as attorney of the plaintiff, in
his affidavit (Ex-PW1/A) by way of examination-in-chief has deposed
(i) that it was the plaintiff who was dealing and negotiating with the
defendant no.1 through Mohan Lal Gupta who was acting as the agent
of the plaintiff; (ii) that at the contemporaneous time, none for the
defendant no.1 informed the plaintiff of the requirement for obtaining
permission from the office of the Registrar of Co-operative Societies;
and, (iii) that the plaintiff was always ready and willing. In cross-
examination, he, while admitting ownership of the plaintiff / her
husband of residential houses in East Punjabi Bagh and West Punjabi
Bagh, deposed that the said houses were not by way of allotment but
by way of purchase on re-sale.
13. Shri Sushil Kumar Gupta, Member of the Managing Committee
of the defendant no.1 in his examination-in-chief inter alia deposed
that neither the plaintiff nor her husband nor Mohan Lal Gupta have
visited the office of the defendant no.1 and thus there was no occasion
for the defendant no.1 to mete out any assurances to the plaintiff.
CS(OS) No.634/2004 Page 10 of 26
14. Though the plaintiff filed affidavit by way of examination-in-
chief of Mohan Lal Gupta but inspite of repeated opportunities failed
to produce him as a witness.
15. I now proceed issue-wise.
16. It is deemed appropriate to first take up issue no.4.
―Whether there is no concluded contract between
the plaintiff and the defendant no.1? OPD‖
17. The public advertisement in response whereto the plaintiff
claims to have made the offer, proved as Ex-D1, is as under:-
18. The letter dated 16th June, 2003 of Mohan Lal Gupta to the
President of the defendant no.1 proved as Ex-D2 is as under:-
―To,
The President
The Punjabi Bagh Cooperative Housing Society Ltd.
CS(OS) No.634/2004 Page 11 of 26
East Punjabi Bagh, New Delhi-110026
FOR KIND ATTENTION MR. S.K. SACHDEVA
REG: Plot No.50/78, Punjabi Bagh, New Delhi.
Dear Sir,
With reference to our verbal discussion with
yourself, we have been able to arrange a buyer for
the above mentioned Plot. Our offer is Rs.4.50
Crore (Rupees Four Crores Fifty Lakhs Only) and
our service charges will be 2%. We are enclosing a
cheque, under No.884891, drawn on State Bank
Bikaner & Jaipur for Rs. Ten Lakhs, as token
money subject to your approval.
Awaiting your confirmation.
Thanking you.
Yours faithfully,
Sd.
16/6/03
(MOHAN LAL GUPTA)‖
19. The letter dated 22nd July, 2003 of the defendant no.1, proved as
Ex-D4, is as under:-
―Shri Mohan Lal Gupta
1/13, Punjabi Bagh,
NEW DELHI - 110026
Dear Sir,
With reference to your letter dt. 16.06.2003 giving
an offer for Plot No.50/78. The Members of the
Managing Committee in the meeting held on
22.07.2003 were pleased to approve your offer of
Rs.4.50 Crores (Rupees Four Crores & Fifty Lakhs
Only) except service charges for which our
CS(OS) No.634/2004 Page 12 of 26
President was authorized to negotiate with you. We
have to bring to your kind notice that there is little
hitch for getting clearance from Office of the
Registrar Coop. Societies. Received token money of
Rs. Ten Lakhs vide Cheque No.884891, drawn on
State Bank of Bikaner & Jaipur on behalf of Mrs.
Usha Aggarwal, resident of 15/17, East Punjabi
Bagh.
I have to inform you that in case there is some
reservation from Registrar's Office, we will not be
able to enter into this deal with no fault of ours and
your token money of Rs.10 Lakhs will be returned.
Thanking you,
Yours faithfully,
FOR THE PUNJABI BAGH COOP. HOUSING
SOCIETY LTD.
Sd/-
(ANAND VERMA)
SECRETARY‖
20. The letter dated 27th September, 2003 of the defendant CHS,
proved as Ex-D5, is as under:-
―Shri Mohan Lal Gupta
1/13, Punjabi Bagh,
NEW DELHI - 110026
Reg: Your Offer for purchase of Plot No.50,
Road No.78, Punjabi Bagh, New
Delhi.
Dear Sir,
We have to remind you that since you have failed to
procure the clearance from Registrar Coop.
Societies, Delhi, your offer stands cancelled, this
may please be noted. The cheque can be collected
CS(OS) No.634/2004 Page 13 of 26
from Secretary's Office on any working day except
FRIDAY, between 10.00 A.M. to 5.00 P.M.
Thanking you,
Yours truly,
For The Punjabi Bagh Coop. Housing Society Ltd.
Sd/-
(ANAND VERMA)
SECRETARY‖
21. In view of the aforesaid admitted documentary evidence, need
to refer to any oral evidence is not felt. Moreover, the husband of the
plaintiff appearing as the sole witness on behalf of the plaintiff also in
his evidence did not claim that the plaintiff or he himself had dealt
with the defendant no.1 or its officials and maintained that the alleged
Agreement to have been entered into on behalf of the plaintiff by Sh.
Mohan Lal Gupta as agent of the plaintiff.
22. Per Section 2(a) of the Contract Act, 1872, when one person
signifies to another his willingness to do anything with a view to
obtaining the assent of that other to such act, he is said to make a
proposal. Section 2(b) provides that when the person to whom the
proposal is made signifies his assent thereto, the proposal is said to be
accepted and a proposal when accepted becomes a promise. Section
2(e) provides that every promise and every set of promises, forming
the consideration for each other, is an agreement. Section 2(h)
provides that an agreement enforceable by law is a contract.
23. No merit is found in the contention of the counsel for the
defendant no.1 of there being no concluded contract between the
CS(OS) No.634/2004 Page 14 of 26
parties for the reason of the contract if any being between defendant
no.1 and Mohan Lal Gupta. Though undoubtedly the letter dated 16th
June, 2003 to the defendant no.1 was written by Mohan Lal Gupta but
it was clearly mentioned therein that the said Mohan Lal Gupta had
been „able to arrange a buyer‟. It was thus clear that the letter dated
16th June, 2003 was not of Mohan Lal Gupta in his personal individual
capacity but on behalf of the buyer arranged by him, though
undoubtedly the said buyer in the said letter was not disclosed to be
the plaintiff. Similarly, undoubtedly the letter dated 22 nd July, 2003
aforesaid of the defendant no.1 was addressed to Mohan Lal Gupta but
again, from the language thereof it is evident that the defendant no.1
was aware of the plaintiff being a buyer arranged by Mohan Lal Gupta
as the name of the plaintiff is mentioned in the said letter. Thus, the
transaction contained in the said two correspondence aforesaid
whatsoever its nature may be, was undoubtedly between the plaintiff
and the defendant no.1 and not between Mohan Lal Gupta and the
defendant no.1.
24. The plaintiff has pleaded and the counsel for the plaintiff during
the hearing did not controvert that the letter dated 16 th June, 2003 of
the plaintiff was a proposal within the meaning of Section 2(a) of the
Contract Act. The counsel for the defendant no.1 has not controverted
that the response dated 22nd July, 2003 of the defendant no.1 was to
the proposal contained in the letter dated 16th June, 2003. What needs
to be determined is, whether the letter dated 22nd July, 2003 constitutes
an acceptance of the proposal within the meaning of Section 2(b) of
the Contract Act so as to constitute a promise.
CS(OS) No.634/2004 Page 15 of 26
25. Though at the time of hearing it had appeared that the letter
dated 22nd July, 2003 was of acceptance of the proposal contained in
the letter dated 16th June, 2003 and a concluded contract had come
into existence between the parties, though a contingent one and it was
so informed to the counsels also and their comments thereon elicited
but on further consideration I find Section 7 of the Contract Act to be
as under:-
"7. Acceptance must be absolute.--In order to
convert a proposal into a promise, the acceptance
must-- (1) be absolute and unqualified; (2) be
expressed in some usual and reasonable manner,
unless the proposal prescribes the manner in which
it is to be accepted. If the proposal prescribes a
manner in which it is to be accepted, and the
acceptance is not made in such manner, the
proposer may, within a reasonable time after the
acceptance is communicated to him, insist that his
proposal shall be accepted in the prescribed
manner, and not otherwise; but if he fails to do so,
he accepts the acceptance.‖
(emphasis added)
26. I have wondered, whether notwithstanding the defendant no.1
in the letter dated 22nd July, 2003 having unequivocally informed
Mohan Lal Gupta as agent of the plaintiff that the Managing
Committee of the defendant no.1 has approved the proposal contained
in the letter dated 16th June, 2003 the acceptance was not absolute and
unqualified for the reason of (i) the said acceptance being with the
exception of service charges for which the President of the defendant
no.1 was informed to have been authorized to negotiate with Mohan
Lal Gupta; or, (ii) for the reason of the agent of the plaintiff also being
CS(OS) No.634/2004 Page 16 of 26
informed "that there is a little hitch for getting clearance from the
office of the Registrar Co-operative Societies"; or, (iii) for the reason
of the agent of the plaintiff also being informed that "in case there is
some reservation from the Registrar‟s office" the defendant no.1
would not be able to enter into the deal.
27. Neither of the counsels have addressed on the said aspect nor
covered the same in their written arguments.
28. As far as the first of the aforesaid reasons is concerned, though
the agent of the plaintiff in his letter dated 16th June, 2003 had also
proposed that his service charges will be 2% and the defendant no. 1
in its letter dated 22nd July, 2003 did not convey acceptance of the said
proposal and instead conveyed that it has authorized its President to
negotiate with the agent of the plaintiff but it is not the plea of the
defendant no.1 that no agreement could be reached on the said aspect
or that no contract came into existence for the said reason. Thus it is
not as if for the reason of non-acceptance of the proposal qua service
charges, that the agreement can be said to have not come into
existence.
29. As far as the other two grounds noted in para 26 hereinabove
are concerned, before determining whether the same prevented the
letter dated 22nd July, 2003 from being called absolute and
unqualified, it is deemed appropriate to notice the law as is evolved on
the said aspect.
30. Supreme Court, in Mayawanti Vs. Kaushalya Devi (1990) 3
SCC 1, has held (i) that the jurisdiction to order specific performance
of a contract is based on the existence of a valid and enforceable
CS(OS) No.634/2004 Page 17 of 26
contract; where a valid and enforceable contract has not been made,
the Court will not make a contract for the parties; it is therefore
necessary first to see whether there has been a valid and enforceable
contract and then to see the nature and obligation arising out of it; it is
settled law that if a contract is to be made, the intention of the offeree
to accept the offer must be expressed without leaving room for doubt
as to the fact of acceptance or to the coincidence of the terms of
acceptance with those of the offer; (ii) the rule is that the acceptance
must be absolute and must correspond with the terms of the offer; if
the two minds were not ad idem in respect of the property to be sold,
there cannot be said to have been a contract for specific performance;
if the parties themselves were not ad idem the Court cannot order
specific performance; (iii) specific performance of a contract is the
actual execution of the contract according to its stipulations and terms
and the Courts direct the party in default to do the very thing which he
contracted to do; the stipulations and terms of the contract have
therefore to be certain and the parties must have been consensus ad
idem; if the stipulations and terms are uncertain and the parties are not
ad idem, there can be no specific performance for there was no
contract at all; and, (iv) Section 9 of the Specific Relief Act says that
except as otherwise provided in that Act, where any relief is claimed
under Chapter II of the Act in respect of a contract, the person against
whom the relief is claimed may plead by way of defence any ground
which is available to him under any law relating to contracts; the
defence of there having not been a contract for lack of consensus ad
idem is thus available to the defendant.
CS(OS) No.634/2004 Page 18 of 26
31. Supreme Court in Nathulal Vs. Phoolchand 1969 (3) SCC 120,
held that where by statute, property is not transferable without the
permission of the authority, an agreement to transfer the property must
be deemed to be subject to the implied condition that the transferor
will obtain the sanction of the authority concerned.
32. The Division Bench of this Court in Eldee Velvet & Silk Mills
Pvt. Ltd. Vs. Anant Ram Whig ILR (1971) II Delhi 249 held that so
far as the seller and the buyer are concerned, once an agreement for
sale is completed, the fact that the Sale Deed is to be executed after
permission is granted by the Government for the transfer does not
render the contract any the less a complete contract and if the buyer is
otherwise entitled to specific performance of the agreement, he could
not be refused specific performance on the ground that the permission
of the Government had yet to be obtained.
33. Though from the law as aforesaid enunciated by the Supreme
Court and by the Division Bench of this Court it appears the mere fact
of the permission being required from the office of the Registrar of
Co-operative Societies would not lead to the situation of the
acceptance vide letter dated 22nd July, 2003 being not absolute and
unqualified, but there is a peculiar fact in the present case. The agent
of the plaintiff, in the proposal contained in the letter dated 16 th June,
2003, did not mention about the defendant no.1 being required to
obtain any permission from the Registrar of Co-operative Societies.
The defendant no.1, in its letter dated 22nd July, 2003 for the first time
mentioned about the hitch of getting clearance from the office of
Registrar of Co-operative Societies and of the consequences of the
CS(OS) No.634/2004 Page 19 of 26
said office not granting the permission. There is no plea of the
plaintiff, of the plaintiff or her agent having agreed to the aforesaid
new term introduced by the defendant no.1 in its letter dated 22 nd July,
2003; rather it is the plea of the plaintiff in the plaint that no
permission was infact required. However the plaintiff did not send any
response to the letter dated 22nd July, 2003 aforesaid contending so
and have said so for the first time in the plaint in this suit and the
counsel for the plaintiff during the hearing also has insisted that no
permission is required. The situation which emerges as per the said
stand of the plaintiff is, that the defendant no.1 without any need for
obtaining permission/clearance from the office of the Registrar of Co-
operative Societies for sale of the plot aforesaid to the plaintiff, in the
letter dated 22nd July, 2003 stated so. Not only so, the defendant no.1
in the said letter nowhere stated that it would be applying for or would
obtain such permission. It is also not the stand of the plaintiff that the
defendant no.1, after the letter dated 22nd July, 2003, applied for any
such permission. The question which thus arises is that when a letter
in response to a proposal, though purporting to accept a proposal,
informs the person making the proposal of certain
permissions/clearance required which according to the person making
the proposal are otherwise not required in law, whether it can be said
that the acceptance is absolute and unqualified. In my view, no. The
very fact that the person to whom the proposal is made, though
purporting to accept the proposal is informing the person making the
proposal of the difficulty and does not agree to overcome the said
difficulty and which difficulty according to the person making the
CS(OS) No.634/2004 Page 20 of 26
proposal did not exist, it is clear as daylight that there is no absolute
and unqualified intent to accept the proposal.
34. As aforesaid, I had during the hearing observed that though a
contract had come into existence but the same was a contingent one.
Chapter-III of the Contract Act tilted "Of Contingent Contracts" in
Sections 31 and 32 thereof provide as under:-
31. "Contingent contract" defined.--A
―contingent contract is a contract to do or not to do
something, if some event, collateral to such contract,
does or does not happen.
Illustration
A contracts to pay B Rs. 10,000 if B‟s house is
burnt. This is a contingent contract.
32. Enforcement of contracts contingent on an
event happening.--Contingent contracts to do or not
to do anything if an uncertain future event happens
cannot be enforced by law unless and until that event
has happened. If the event becomes impossible, such
contracts become void.
35. The question of a contract being contingent would arise only if
first there is a contract. Existence of the contract as aforesaid requires
the consensus ad idem or a meeting of the minds and which meeting
of the minds has been found to be missing in the correspondence
between the agent of the plaintiff and the defendants. Thus, the
question of the contract being contingent would not arise.
36. I thus decide issue no.4 aforesaid against the plaintiff and in
favour of the defendants and hold that there is no concluded contract
between the plaintiff and the defendant no.1.
CS(OS) No.634/2004 Page 21 of 26
37. Though in the light of above, the plaintiff is not entitled to any
relief and the suit is liable to be dismissed but for the sake of
completeness all the other issues have to be decided.
38. It is deemed appropriate to next take up issue no.5 as under:-
"5. Whether the plaintiff is debarred from
claiming membership of the defendant No.1
society under the provisions of Bye-Law 5(1)(e) of
the Bye-Laws of the defendant No.1 read with
Rule 25(1)(c)(i) of the Delhi Cooperative Societies
Rules 1973? OPD‖
39. According to the defendant no.1, the plaintiff was / is not
qualified to purchase the plot aforesaid owing to Bye-Law 5(i)(e) of
the defendant no.1 which makes ineligible a person who or whose
spouse or whose dependants own a plot or dwelling house in Delhi
from becoming a member of the defendant no.1 and thus from
acquiring any plot aforesaid from the defendant no.1. Though the
plaintiff in replication denied ownership of other properties, but the
husband of plaintiff in his cross-examination admitted the same.
Though the said Bye-Laws have not been proved but the plaintiff
otherwise has admitted the same and has contended that the same do
not come in the way of the plaintiff because the defendant no.1 was
incorporated under the Bombay Co-operative Societies Act, 2005.
Though it is also suggested that the earlier Bye-Laws of the defendant
no.1 did not contain any such restriction but the plaintiff in the plaint
itself has admitted to be not in possession thereof and the said Bye-
Laws have otherwise not been proved. The plaintiff has also given detailed
CS(OS) No.634/2004 Page 22 of 26
reasons in the plaint as recorded above, for the said Bye-Law to not
come in the way of the plaintiff. The counsel for the plaintiff has
relied on Navjivan Cooperative House-Building Society Ltd. Vs.
Delhi Cooperative Tribunal ILR (1987) II Delhi 323 but it is found
to be of no relevance to the controversy at hand.
40. However admittedly the Bye-Laws of the defendant no.1 even if
originally not containing any such restrictions as now contained in
Bye-Law 5(i)(e), were amended long prior to the letters dated 16 th
June, 2003 and 22nd July, 2003 of which specific performance is
claimed and the Bye-Laws in force on the date of the said letters
contained such restriction. The plaintiff has also not sought any relief
of quashing of the Bye-Law 5(i)(e) and which relief could not have
been claimed in the absence of the Registrar Co-operative Societies
and /or the Government of NCT of Delhi. The plaintiff, as a
prospective purchaser, cannot in my view while seeking the relief of
specific performance of Agreement of Sale be permitted to urge
invalidity of the Bye-Law of the defendant no.1. Thus, though the
defendant no.1 in its written statement has controverted the said pleas
of the plaintiff but the need to adjudicate the same is not felt. As per
the Bye-Laws existing on the date when the plaintiff claims an
Agreement to Sell, the plaintiff was ineligible to become a member of
the defendant no.1 and the defendant no.1cannot be directed by a
decree of specific performance from selling to the plaintiff in
contravention of its own Bye-Laws.
41. Thus Issue no.5 is decided against the plaintiff and in favour of
the defendant no.1.
CS(OS) No.634/2004 Page 23 of 26
42. I next take up issues no.1,2,3,6&7 together.
―1. Whether the plaintiff is entitled to specific
performance of agreements dated 16.6.2003 and
22.7.2003, as prayed for in prayer (a) of the
plaint? OPP
2. In the alternative, whether the plaintiff is entitled
to a decree of Rs.4.50 crores against the
defendants for breach of contract? OPP
3. Whether the plaintiff was ready and willing to
perform his obligations under the two alleged
agreements to sell? OPP
6. Whether the defendant No.1 has not received
token money of Rs.10.00 lacs from the plaintiff
and, if so, effect thereof? OPD
7. Whether the suit is barred under the provision of
Section 90 of the Cooperative Societies Act, 1972?
OPD
43. Since Issues no.4&5 have been decided against the plaintiff, the
question of the plaintiff being entitled to the reliefs of specific
performance and damages does not arise and there is no need to
determine whether the plaintiff was ready and willing.
44. Thus Issues no.1,2&3 are thus decided against the plaintiff and
in favour of the defendant no.1.
45. As far as Issue no.6 is concerned, though the said issue has been
framed but in fact there was no need therefor. It is nobody‟s case that
the cheque enclosed to the letter dated 16th June, 2003 was encashed.
In fact the said cheque has been filed by the defendant no.1 before this
CS(OS) No.634/2004 Page 24 of 26
Court and in original is on the record of this Court. The defendant
no.1 vide its letter dated 22nd July, 2003 had asked the plaintiff to take
back the said cheque.
46. Thus Issue no.6 is decided by holding that though the plaintiff
had tendered the cheque for Rs.10,00,000/- to the defendant no.1 and
the said cheque was received by the defendant no.1 from the plaintiff
but the defendant no.1 did not encash the same.
47. That brings me to Issue no.7 with respect to the bar of the
provisions of Section 90 of the Delhi Co-operative Societies Act,
1972.
48. I may mention that the present suit was instituted on 26th May,
2004 and by which date the Delhi Co-operative Societies Act, 1972
stood superseded by the Delhi Co-operative Societies Act, 2003 w.e.f.
1st April, 2004. Section 90 of the 1972 Act prohibited institution of
suit against a Co-operative Society or its officers in respect of any act
touching the business of the Society until the expiration of three
months next after notice in writing has been delivered to the Registrar
or left at the office stating the cause of action, the name, description
and place of residence of the plaintiff and the relief which he claims
and required the plaint to contain a statement that such a notice had
been so delivered or left. Section 129 of the 2003 Act is to the same
effect.
49. I am of the view that now since the present suit has been
pending for the last over 14 years and has been fought on merits, the
said question has become irrelevant. Accordingly Issue no.7 is
CS(OS) No.634/2004 Page 25 of 26
decided in favour of the plaintiff and against the defendant no.1 by
holding the suit to be not so barred.
50. The only issue remaining is Issue no.8 as under:-
―8. Whether the suit suffers from mis-joinder/non-
joinder of parties? OPD‖
51. The defendant no.2 was indeed not found to be a necessary
party to the present suit and the name of the defendant no.2 is ordered
to be deleted from array of defendants. It cannot be said that the suit is
bad for non-joinder of Mohan Lal Gupta inasmuch as it stands
established that he was merely acting as the agent of the plaintiff. The
suit thus cannot be said to be bad for non-joinder of the said Mohan
Lal Gupta.
52. Issue no.8 is thus decided in favour of the plaintiff and against
the defendant no.1
53. Resultantly the suit fails and is dismissed.
54. In the facts and circumstances aforesaid and having gone
through the proceedings in the suit, it is not deemed appropriate to
burden the plaintiff with costs of the suit incurred by the defendant
no.1 because the dispute raised is found to be otherwise bona fide.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW, J.
MAY 09, 2018 „pp/gsr‟..
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