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An amount of Rs. 50,000/- was paid by the respondents to the appellant on 25.7.72 simultaneously with the execution of the agreement. A post-dated cheque for a sum of Rs. 2,75,000/- was also delivered by the respondents to the appellant. Though this cheque was to be encashed by the appellant in terms of the agreement only after sanction of the building plans of the proposed multi-storeyed building by the local authority i.e. N.D.M.C. and the Land and Development Office, however, the cheque for the said amount of Rs. 2,75,000/- was encashed by the appellant though the building plans had not been sanctioned by the NDMC and L & DO.

On 7/11-9-72 the respondent submitted to the N.D.M.C. building plans for bringing up a Group Housing Project by the name of "Girnar" on the said property. The plans were for the construction of a Housing Project consisting of an 8 storeyed building and 2 blocks of 5-storeyed building comprising of 18 flats of three bed rooms and 23 flats of two bed rooms each apart from incidental/ancillary constructions such as power sub-station, pump house, lifts etc. On 6.11.1972 the plans were rejected mainly on the ground that plot in question formed a part of the zone marked as re-development area as per the zonal plan D-3. This was in exercise of the power conferred by section 193 (2) of the Punjab Municipalities Act.

On 9.11.72 the respondent requested the NDMC to keep the building plans pending and put them up for sanction after certain clarification awaited from Delhi Development Authority was received.

On 31.10.72 the Government of India served a notice on the appellant calling upon him to show cause as to why the lease be not cancelled followed by re-entry upon the premises by the lessor in view of the appellant having sold the property to the respondents without obtaining prior approval of the lessor and thereby having committed a breach of clause II (13) of the lease deed.

On 9.11.72 the respondents gave a reply to the L & D.O. to the letter dated 31.10.72 sent to the appellant which apparently was passed on by the appellant to the respondents for the needful further action. The respondents submitted that there was no breach of clause II (13) of the lease deed inasmuch as there was only an agreement to sell entered into by the appellant authorising the respondents to build on that property but there was no sale as such. It appears, that the respondents had raised certain structures on the property which were objectionable. The respondents stated that the objectionable structures as pointed out by the L & D.O. had been removed. On 22.11.73 the N.D.M.C. once again informed the respondents that the case for sanction of the building plans was considered by the NDMC on 21.9.1973 and the plans were rejected for the reasons annexed with the letter. The principal of the reasons was that the area was earmarked as re-development area in the master/zonal plan and further because the size of the plot was less than one acre whereas minimum size of the plot of group housing was required to be one acre. The master/zonal plan referred to by the NDMC was one approved by the Central Government under Section 9 (2) of the Delhi Development Act and hence having a statutory effect. Efforts were repeated for the sanction of the building plans but as is borne out from the communications dated 12.8.85 and 19.11.90 by the NDMC, building plans were not sanctioned and were only rejected.