Mrs. Manjit Kohli vs Mrs. Sudha Ramchandani
2001 Latest Caselaw 721 Del

ORDER

J.D. Kapoor, J.

1. This is a suit for specific performance and injunction.

2. The defendant along with her husband entered into an agreement to sell with the plaintiff of the complete first floor of the building S-133., Greater Kailash-II, New Delhi including garage and a servant quarter on the ground floor for a consideration of Rs.9,00,000/- with the proportionate right in the land underneath. The stamp papers for the agreement were purchased on 7th November, 1988. The total consideration money of the sale of the said flat was paid on 8th November, 1988 by as many as four cheques and by way of one FDR of Rs. one lac. This FDR was kept in abeyance out of the consideration money as a security towards the amounts if any payable towards tax and to her charges. Besides the agreements to sell the defendant and her husband executed an indemnity bond in favor of the plaintiff and special power of attorney in favor of one Shri Charan Pal Singh to execute all the relevant papers.

3. The possession of the property was delivered to the plaintiff on the date of the receipt of the consideration money i.e. 8th November, 1988 by way of a letter of possession duly signed by the defendant and her late husband. One of the terms of the agreement to sell was that the defendant and her husband were to obtain an income tax clearance certificate of the said of the said property form the office of the Income Tax Officer concerned under Section 230(a) of the Indian Income Tax Act within 60 days from the date of the request.

4. Notice dated 12th March, 1999 was sent to the defendant for execution of the sale deed at her Nigeria address as well as at Bombay address. However in the intervening time the house tax amounting to Rs.76,477/- after the year 1988-89 and 1989-90 which was the liability of the defendant that she had no property tax to the date of the purchase till the date of the agreement.

5. As per clause 6 of the agreement the obligation to obtain Income Tax Clearance Certificate was upon the defendant as it was stipulated that the intended sellers would take the permission from the Income Tax Department within 60 days from the date of request by the intended purchasers. The intending sellers were to execute the sale deed in favor of the deponent within one months from date of demand.

6. Summons of the suit were served upon the defendant. In the written statement filed by the defendant legal objection as to the validity of the agreement was that the property could not have been sold without specific permission having been obtained under the Foreign Exchange Regulations Act as the defendants were NIRs and had been settled abroad. Another objection was that since all the legal heirs of co-owner late Shri Daulat Hira Nand Ramchandani have not been imp leaded, the suit is bad for non-joinder of necessary parties. According to the defendant it was agreed that the plaintiff will not be the lessee in the property and would not claim nay ownership rights therein and the proposed sale was to take place only on obtaining appropriate sanctions and permissions under the Foreign Exchange Regulation Act as without these sanctions no foreigner or non-resident Indian settled abroad can dispose off his or her property.

7. The defendant has also alleged that by making the incorrect representation the plaintiff managed to withhold a sum of Rs. one lac and did not release it despite the fact that nothing was due and payable by way of taxes.

8. However the aforesaid averments were refuted by the plaintiff in the replication and those made in the plaint were reiterated. The defendant was proceeded ex parte as he did not pursue the proceedings after filing the written statement.

9. In support of her claims the plaintiff has proved the following documents by way of affidavit :-

(i) Exhibit PW-1/1 is the Agreement to Sell.

(ii) Exhibit PW-1/2 is the Indemnity Bond

(iii) Exhibit PW-1/3 is the receipt of consideration of Rs.8 lacs.

(iv) Exhibit PW-1/4 is the Special Power of Attorney in favor of Mr. Charanpal Singh.

(v) Exhibit PW-1/5 is the letter of possession.

(vi) Exhibit PW-1/6 is the Mutation letter issued by MCD.

(vii) Exhibit PW-1/7 is the notice dated 12th March, 1991 Along with receipts, A.D. cards annexed as Exhibits PW-1/8 to Exhibit PW--1/10.

(ix) Exhibit PW-1/11 is the site plan of the suit property.

10. The objection that in the absence of specific permission under Section 31 of the FERA Act, the agreement to sell the property by the NRI is not valid was answered by the Division Bench of this Court in Ajit Prashad Jain Vs. N.K. Widhani and others wherein the scope and effect of Section 31 of the FERA was discussed and dealt with na it was held that Section 31 does not place restriction on foreign citizen entering into agreement to sale, transfer etc. in respect of immovable property situated in India and since this bar under Section 31 is also not absolute such agreement will not by itself become void.

11. Though in the instant case there is no such evidence produced by the defendant in support of this plea as the defendant allowed himself to be proceeded ex parte after filing the written statement, yet the view taken by this Court in ajit Prashad Jain's case (supra) shows that the objection taken by the defendant in this regard has no legal force and is groundless.

12. The second objection taken by the defendant was that in the absence of impleadment of all the legal heirs of the defendants the suit is bad for non-joinder of necessary parties. The learned counsel for referred to the order dated 18th October, 1995 passed by this Court where in observations were made that the Estate of late Shri Daulat Hira Nand Ramchandani is sufficiently enjoyed by the widow of the deceased and therefore whatever decree is passed in the suit is binding on the other legal heirs also. In view of these observations made in this order this objection is also not sustainable.

13. As regards the objection that in the absence of Income Tax Clearance Certificate as required under Section 269 of the Income Tax Act the suit cannot be decreed, the learned counsel has placed reliance upon Shri Rajesh Aggarwal Vs. Balbir Singh and another where a view was taken that failure to obtain Income Tax Clearance,e cannot non-suit the plaintiff transferee on the ground that the agreement to sell was no enforceable without Income Tax Clearance. It was held that agreement to sell is merely an agreement signifying the intention of the transferor to sell the property in question for a specified consideration on some specified date or on the happening of certain acts to be performed by the transferor or the transferee. By the agreement to sell nothing is transferred or sold. At best it can be called a memorandum of understanding recorded in relation to sale which could be given effect to after conditions of the memorandum of understanding has been fulfillled and parties have performed their obligations under such agreement. In such a suit the Court is empowered to give suitable directions regarding obtaining of permission from the appropriate authority.

14. This view was fortified in Surider Grover Vs. Sheela and others wherein it was held that stage of invoking or applying Section 769 UC of the Income Tax Act would be prior to the entering into the transfer i.e. entering into a regular sale deed and not at the stage of entering into an agreement to sell since the agreement to sell is merely an agreement to sell or transfer the property and not the agreement whereby the property is transferred as no property can be transferred by mere agreement to sell; it merely gives a right to purchase the property and nothing more.

15. As is apparent from the ratio of the aforesaid authorities, in the absence of 'no objection certificate' from Income Tax Authorities, plaintiff cannot be non-suited. The suit for specific performance can be decreed but subject to the compliance of the provisions of Section 269 of the Income Tax Act. These provisions are attracted only when the sale of the property takes place and not merely when an agreement to sell is entered by the parties.

16. Thus non-compliance of the provisions of the Section 31 of the FERA or Section 269 of the Income Tax Act does not render the agreement to sell either void or illegal. Since the plaintiff was proved her claim the suit is decreed but subject to compliance of the provisions of the Income Tax Act. However House Tax liability as well as Income Tax Liability if any shall be paid through Fixed Deposit Receipt.

17. The suit is decreed as per prayer clause(a) with costs. Decree sheet be drawn accordingly.