Shri Rajender Jain And Jaina ... vs Delhi Development Authority
2003 Latest Caselaw 205 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. These two writ petitions are filed by the aggrieved petitioners whose successful bid for plots in the Transport Nagar, Rohtak Road in the auction held on 4.5.1987 has been cancelled on the ground that they had advertised for selling space and had thus violated the terms and conditions of allotment.

2. CWP No. 2408/87 is in respect of plot No. 116 while CWP No. 2431/1987 is in respect of plots No. 113, 118, 119, 120, 125, 126 and 127. The factual matrix is more or less common since the auction was held on the same day of 4.5.1987 and the petitioners were the successful bidders and deposited 25% of the amount on the fall of the hammer. On 19.5.1987 the formal acceptance was communicated to the petitioners and demand was raised for balance 75% of the amount to be deposited within 90 days of the communication of the acceptance (i.e., on or before 10.8.1987).

3. An advertisement appeared in the newspaper in the following terms :-

ORIGINAL BOOKING

OPENS TODAY

With Attractive Special Discount Only for Two Days

From 9.30 A.M.-5.00 P.M. FOR

RAJENDRAS' AUTO COMPLEX

ROHTAK ROAD, TRANSPORT CENTRE

Near Punjabi Bagh

Investment 50,000/- - 10,00,000/-

Initial 10%. Balance in 23 Installments

GUARANTEED APPRECIATION

Contact with cheque & Rs.2,000/- cash at Rajendras'

N-52A, Connaught Place, New Delhi

Phones: 3313355, 3314411, 3312925

4. Various complaints were apparently received by the respondents about this mode of advertisement and booking sought.

5. A show cause notice was issued on 11.6.1987 in the following terms:

"SHOW CAUSE NOTICE

WHEREAS you are the bidder/allottee of plot No. 116 measuring 464.5 sq. mts. At Transport Centre Rohtak Road, Delhi.

AND WHEREAS the said plot of land has been permitted to be used as Godown/Warehouse and the floor space to be constructed thereon, is not saleable under the terms and conditions of the auction.

AND WHEREAS it has been noticed that you are selling parting with the floor space which is contrary to the said terms and conditions of the auction.

You are, therefore, called upon to show cause within 15 days from the date of issue of this notice as to why the bid/allotment of the said plot of land may not be cancelled for violation of the terms and conditions of auction and earnest money forfeited."

6. The petitioners replied to the same in the following terms :-

1) That we are astonished to receive your Show Cause Notice, since the allegations contained in the said Notice is absolutely baseless and false.

2) That we have neither cold/transferred/assigned or otherwise parted with the possession of whole or any part of the plot before or after the erection of the building.

3) That it is absolutely wrong that we are selling any part of the floor space to any person whatsoever.

4) That we are only trying to reserve the floor space, on rent basis or license basis, which is definitely allowed as per the terms and conditions of the auction.

We hope that the above reply satisfies your all queries and therefore, we request you to please withdraw your Show Cause Notice immediately under intimation to us.

However, should you have any further query, we shall be pleased to reply the same. If we do not receive any of your communication within a week of the date of receipt of this letter, we shall consider that our replies have satisfied you and the show Cause Notice is treated to be cancelled."

7. The allotment was thereafter cancelled in terms of letter dated 6.7.1987 in CW 2408/1987 and dated 22/23.7.87 in CW 2431/87, the contents of which are common to the following effect:-

"WHEREAS you are the bidder/allotee of Plot No. 116 measuring 464.5 sq. mtrs. at Transport Centre Rohtak Road, New Delhi.

AND WHEREAS the said plot of land has been permitted to be used as Godowns/Warehouse and the floor space to be constructed thereon, is not saleable under the terms and conditions of auction.

AND WHEREAS you are not entitled to sell/transfer, assign or otherwise part with the possession of the whole or any part of the plot before or after the erection of the building without previous consent in writing of the Lesser under the said terms & conditions of auction.

AND WHEREAS it has been noticed that you are selling/parting with the floor space which is contrary to the said terms & conditions of the auction.

AND WHEREAS a show cause notice dated 11-6-87 was served upon you calling upon you to show cause as to why the bid in respect of the above plot of land may not be cancelled for violation of the terms & conditions on auction and the earnest money forfeited.

AND WHEREAS you could not give a satisfactory reply to the above show cause notice.

Therefore, the bid in respect of the above plot of land has been cancelled by the Vice-Chairman, DDA and the amount of earnest money deposited by you at the time of auction of the plot, has been forfeited, accordingly."

8. The petitions were filed impugning the said decision and in terms of the interim orders passed re-auctioning of the plots was stayed. The petitioners have sought quashing of the cancellation order or in the alternative refund of the earnest money deposited with interest.

9. The petitioners had relied upon the terms and conditions of auction. It is their contention that space can be sold by the petitioners. In this behalf two formats of terms and conditions of auction were produced which have the following clause:-

"6. OTHER CONDITIONS:

The allottee may subject the whole or part of the building that may be erected upon the plot for the purpose specified in the terms and conditions of the original lease. The allottee may also, with previous consent of the DDA in writing, sell or transfer the floor space constructed on the plot. The written consent will be granted on payment of Rs.100/- for each case of sale/transfer provided such a transaction does not violate the said terms and conditions of the lease deed. For sale/transfer subsequent to the first sale of the floor space units, the consent of the D.D.A. Shall be required which will be given on such terms & conditions as may be prescribed by the D.D.A. in its absolute discretion and after charging 50% unearned increase on the proportionate land attributable to the floor space.

The lessee shall also be responsible, after transferring/selling the floor space to ensure that the transferee/buyer does not violate these terms and conditions. The lessee will make such arrangements as are necessary for the maintenance of the building and common services.

"4. OTHER CONDITIONS:

The lessee may sell or transfer the floor space constructed on the plot, subject to the permission of the Lesser in writing. The Lesser may in his absolute discretion and on payment of Rs.100/- by lessee for each case of sale or transfer and on payment of proportionate 50% of the 'unearned increase' towards the portion of the land, and subject to such other terms and conditions as may be imposed by him, grant permission to the lessee for such sale/transfer. The Lesser may further allow the sale/transfer to such transferees of the floor space to be transferred and on payment of proportionate 50% of the 'Unearned increase' towards portion of land i.e. the difference between the premium already paid by the purchaser transferor and market price at the time of sale/transfer. This will be further subject to such terms & conditions as the Lesser may in his absolute discretion may impose."

10. The original records were produced before this court in respect of the plots in question and the terms and conditions signed by the petitioner therein did not contain the aforesaid clause but are different. The relevant terms in the signed terms and conditions are as under:-

"2. Bidding at Auction and Submission of Application:

... ... ... ...

(viii) A person who fails to pay the balance amount of his bid to the Authority within 90 days of issue of demand-cum-allotment letter or within such period as may have specified otherwise in accordance with the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981, shall forfeit the earnest money and it shall be competent for the Vice-Chairman to re-auction the plot.

3. Execution of lease deed, payment of ground rent and other main conditions of lease:

... ... ... ...

(ix) The allottee shall not be entitled to sell, transfer, assign or otherwise part with possession of the whole or any part of the plot, before or after the erection of the building without the previous consent in writing of the Lesser.

In the event of the consent being given, the Lesser may impose such terms & conditions as he thinks fit and shall also be entitled to claim and recover a portion being 50% of the unearned increase in the value of the land (i.e. Difference between the premium paid and the market value of the plot at the time of sale, transfer, assignment or parting with the possession. Provided that the Lesser shall have pre-emptive right to purchase the property after deducting 50% of the unearned increase as aforesaid.

3(xii) The allottee shall not, however, sublet the whole or any part of the plot or the building that may be erected thereupon for the purpose other than as specified in the architectural control referred to above.

3.xv)If it is discovered that the lease of the plot has been obtained by suppressing of any fact or mis-statement or mis-representation or fraud or if there is any breach of the conditions of the lease, the lease will be forfeited and the possession of the plot and the building thereon taken over by the Lesser and the allottee will not be entitled to any compensation whatsoever nor to return or any premium paid by him.

11. The terms and conditions also specifically provide that the premises to be erected and completed are for purposes of godown and warehouses.

12. The file in respect of a different case was also produced in respect of which perpetual lease deed has been executed which was also auctioned on the same date for the same purpose. The said terms are also as per the terms and conditions of the auction. It may further be noted that the printed form of the lease contained a restriction that the consent for sale, transfer would not be given for a period of 10 years from the commencement of the lease other than in exceptional circumstances but the same has been scored out. Similarly, the clause which is in terms of the aforesaid general conditions in the formats reproduced above has also been scored out.

13. The aforesaid facts thus show that the 'Other Conditions' as mentioned above does not form part of the lease and terms and conditions in such cases.

14. Learned counsel for the petitioner contended that the only restriction provided for is for sale transfer or mortgage without prior permission and payment of unearned increase and there is not even a time lag provided for the same. It is thus submitted that there is no sale or transfer taking place by merely inviting bookings. A reference is also being made to the reply sent to the show cause notice to contend that it was clearly stated in the same that floor space was only being reserved on rent or license basis which was permitted by the terms and conditions. The respondents did not call upon to produce other documents in case they were not satisfied.

15. Learned counsel for the petitioner contended that the said advertisement was only an attempt to elicit the booking and the breach would only take place in case such a transfer took place. Since there is no case of transfer merely by issuing an advertisement for booking it cannot be stated to be in breach of any terms and conditions. It is submitted that as happens in all such cases agreement to sell has to be entered into for sale or transfer and then only the same has to be filed with the respondent authorities who verify and intimate the unearned increase. Thus it is contended that even entering into agreement is permitted.

16. Learned counsel further contended that there is no transfer of plot for the present case but only transfer of space at best and that can take place only after construction. The construction was yet to commence.

17. Learned counsel for the petitioner also contends that no notice was served to stop the breach but straightway the notice was served for termination which cannot be permitted.

18. In so far as the alternative plea is concerned, learned counsel for the petitioner contend that there cannot be any case made out for forfeiture since the same can only take place as per the terms and conditions. The only clause relevant for the same is stated to be clause 3(xv) and it is submitted that the case of the petitioner does not fall within it. The said clause arises on execution of lease. In the present case the terms and conditions of bidding at auction would apply since lease was yet to be executed in which case the only clause applicable would be 2(viii). Since there was no failure to pay the amount such time period for the same had not yet expired. It is submitted that there cannot be any forfeiture.

19. Learned counsel for the respondent, on the other hand, contends that booking had started even before payment of the balance 75% amount and thus a fraud was sought to be played on public since the rights in favor of the petitioners had not matured in the absence of payment of the balance amount.

20. Learned counsel for the respondent further submits that the plea raised in the reply dated 11.6.1987 that only floor space was being booked on rent basis is totally unsustainable since that goes contrary to the booking as advertised. The booking is in reference to sale or transfer.

21. Learned counsel for the respondent further contended that since there was an attempt to sell or transfer and bookings were invited for the same, the same was in breach of terms and conditions which prohibits the same without prior permission of Lesser.

22. I have considered the submissions advanced by the learned counsel for the parties.

23. A perusal of the original record clearly shows that the clause under the heading of 'Other Conditions', which was sought to be relied upon by the learned counsel for the petitioners, does not form a part of the terms and conditions of the plots in question. There is also apparently a reason for the same. The said clause applies in cases where buildings have to be constructed and space have to be sold. This is not so in the present cases. What was auctioned were the plots on which construction had to be carried out limited to the purpose of a godown and warehouse. In fact, the copy of the perpetual lease deed shown for similar plot auctioned on the same date for another case makes this abundantly clear as a similar clause as 'Other Conditions' has been struck out. Thus, in the present cases, there is no question of construction and sale of space.

24. The petitioners took out the advertisement for booking of space stating that the original booking was open. This advertisement was taken out even before the balance demand of 75% was paid by the petitioners. The rights in favor of the petitioners would have matured only on payment of balance amount and by mere payment of earnest money, the petitioners had not acquired any right in the plot in question since the same was subject to the payment. There was, thus, no occasion for the petitioners to advertise the said booking. The plea raised by the petitioners in reply to the show-cause notice stating that they had tried to reserve the floor space on rent basis or license basis was clearly an after thought. The advertisement does not say so. Booking, as is understood in normal course, means sale or transfer of rights in the space.

25. In my considered view, the petitioners had no right to issue the advertisement when they so issued the same. The show-cause notice was, thus, rightly issued to the petitioners on the ground that they were advertising the sale of the space. I am, thus, unable to accept the contention of the learned counsel for the petitioners that inviting of the booking would not have breached the terms of the lease to be executed in favor of the petitioners.

26. There is also another aspect of the matter. The respondent is a public body and must ensure that the public at large is not misled in any manner. The advertisement issued by the petitioners for inviting booking clearly made a representation to the public that the space to be constructed was for sale. This representation was not correct. Not only this, the purpose for which the property could be used was only for godown or warehouse. Thus, the advertisement seems to suggest that the space could be sold in terms of the buildings to be constructed as is a practice in commercial buildings where the terms and conditions incorporate 'Other Conditions'. The petitioners, in fact, had no right to make the advertisement, as even the rights in favor of the petitioners had not matured since the petitioners had paid only the earnest money.

27. In view of the aforesaid, I am of the considered view that the respondent was well within its rights to have cancelled a successful bid of the auction of the petitioners at that stage and not recover the balance 75% amount.

28. The matter, however, does not rest at this. The alternative plea advanced in the writ petition is for refund of the earnest money, which was forfeited as also for payment of interest thereon. The reading of the terms and conditions of auction would show that clause 3 relating to 'Execution of the Lease Deed, Payment of Ground Rent and Other Main Conditions' do not arise as only the bid had been accepted and the earnest money was yet to be paid. The reason for forfeiting the earnest money is stated only in clause 2(viii) in such a case which would be the failure of the successful allottee in making payment within the stipulated period of time. The occasion for the petitioners to make the said payment did not arise as before the date of expiry for making payment, the show-cause notice had been issued to the petitioners, which resulted in cancellation of the successful bid of the petitioners. In my considered view, thus, the respondent could not have forfeited the amount and should have refunded the bid amount after cancelling the bid.

29. In view of the aforesaid, I am of the considered view that the petitioners are entitled to the alternative relief of refund of the earnest money forfeited by the respondent and a Writ of Mandamus is, thus, issued directing the respondents to refund the same. The petitioners shall also be entitled to interest @ 9% per annum from one month after the date of the letter of cancellation of the bid of the petitioners till the date of judgment. The said amount should be calculated and refunded to the petitioners within a period of 8 weeks from today. In case of failure of the respondent to refund the said amount within the aforesaid period of time, apart from other remedy, the petitioners shall be entitled to interest @ 15% per annum from the date of judgment till the date of receipt of payment. Interim orders stand vacated.

30. These writ petitions are allowed in the aforesaid terms leaving the parties to bear their own costs.