Delhi High Court

Smt. Lajya Wanti vs Sh. Deva Ram (Deceased) Thr. Lrs on 4 November, 2008

Author: Pradeep Nandrajog

*                         IN THE HIGH COURT OF DELHI

                        Judgment reserved on : October 15, 2008
%                      Judgment delivered on : November 04, 2008

+                              RFA 303/1997

SMT. LAJYA WANTI                                ..... Appellant

                   Through:    Mr. J.K.Seth, Sr. Adv. with
                               Mr. M.L.Bhargava, Adv.

                               VERSUS

SH. DEVA RAM (DECEASED)THR. LRs                 ..... Respondents

                   Through:    Mr. Kavin Gulati, Adv. and
                               Mr. Meedanshu Tripathi, Adv.
CORAM:

Hon'ble Mr.Justice Pradeep Nandrajog
Hon'ble Mr.Justice J.R. Midha

1. Whether reporters of local papers may be allowed
   to see the judgment?

2. To be referred to the Reporter or not?

3. Whether judgment should be reported in Digest?

: PRADEEP NANDRAJOG, J.

1. Late Deva Ram, the predecessor-in-interest of the

respondents, entered into an agreement to sell, Ex.PW-1/A in

favour of Lajya Wanti. The agreement to sell is recorded in an

undated receipt admittedly executed somewhere in the month

of June 1978. The subject matter of the sale is a plot of land ad-

measuring 300 sq. yds. bearing No.D-874, New Friends Colony.

The sale consideration recorded is Rs.63,500/- out of which

Rs.5,000/- stand acknowledged as having been received.

Balance sum of Rs.58,500/- was payable at the time of execution

of the sale documents. The receipt records that formal

registration of the plot of land has not been effected in the name

of Deva Ram but physical possession was with him. Date fixed

for execution of the formal sale deed and receipt of balance sale

consideration is 22 days after Deva Ram obtained a perpetual

lease in his name.

2. It may be recorded here that the plot of land was

allotted to Deva Ram being member of the New Friends

Cooperative House Building Society and formal title would have

been conveyed to him when a perpetual lease deed was

executed in his favour by DDA and the cooperative society.

3. The perpetual lease deed, certified copy proved as

Ex.P/X was executed in favour of Deva Ram on 22.1.1979.

4. Admittedly, he never informed Lajya Wanti within 22

days reckoned with effect from 22.1.1979 that he had obtained

the perpetual lease deed in his favour requiring Lajya Wanti to

tender to him the balance sale consideration and in turn obtain

title documents from him.

5. On 12.3.1979, vide Ex.PW-1/B, Lajya Wanti caused a

legal notice to be served upon Deva Ram informing that she has

learnt on 2.3.1979 that he had obtained a perpetual lease deed

in his favour. She called upon him to receive the balance sale

consideration and execute the necessary conveyance in her

name.

6. Deva Ram having not abided by the requirement of

Ex.PW-1/B, Lajya Wanti filed a suit for specific performance of

the agreement in question. The suit was filed on 8.1.1980 i.e.

after nearly 9 months of serving Ex.PW-1/B upon Deva Ram.

Deva Ram did not dispute the execution of the receipt in

question but urged that the same was not enforceable because

the plot of land was carved out on a parcel of land given to the

New Friends Cooperative House Building Society by DDA and it

was a term that no person other than a member of the

cooperative society can own any plot of land carved out by the

society. It was additionally pleaded that under the perpetual

lease Ex.P/X, vide clause 6-a he was not competent to sell the

plot save and except with the prior permission of DDA. He

pleaded having been induced into an unfair bargain and blamed

one Sh.T.R.Kassa the son-in-law of Lajya Wanti to have made

him execute the receipt. He denied that Lajya Wanti was

possessed of sufficient funds when she served the legal notice

Ex.PW-1/B upon him.

7. As per the pleadings of the parties issues were

settled on 13.1.1983. Needless to state the two main issues

were whether the agreement was void and unforceable on

account of the reasons pleaded in the written statement, and as

noted above, and whether the plaintiff was ready and willing to

perform her part of the contract.

8. By the impugned judgment and decree dated

30.8.1997, the suit for specific performance has been dismissed

but decree in sum of Rs.10,000/- has been passed with interest

@ 15% per annum from the date of suit till realization.

9. The rationale for awarding Rs.10,000/- is a term in

the receipt that in case Deva Ram failed to abide by his

obligation under the contract he would recompense Lajya Wanti

double the amount. Since Deva Ram had received Rs.5,000/- as

advance sale consideration he conceded to pay Rs.10,000/- to

Lajya Wanti. Reason for declining specific performance by the

learned Trial Judge is that clause 6-a of the perpetual lease

deed, Ex.P/X, prohibited a transfer of the plot without prior

sanction of DDA and that vide a proviso to the clause, if DDA

gave the permission it was entitled to 50% of the unearned

increase. It has also been held that the plot of land could not

have been transferred to a person who was not a member of the

New Friends Cooperative House Building Society.

10. On the twin reasoning afore-noted the learned Trial

Judge has held that the agreement was hit by Section 23 of the

Contract Act.

11. The issue whether the agreement in question is hit by

Section 23 of the Contract Act is no longer res integra. In the

decision reported as 2007 (10) SCC 595 Vishwa Nath Sharma Vs.

Shyam Shanker Goela & Anr. it has been held that where sale

permissions or transfer permissions are required, an agreement

to sell qua said land is legal and valid and that the decree for

specific performance can hedge a direction that the sale deed

would be executed if the requisite permissions are granted.

12. Incidentally, it would be interesting to note that the

decision in Vishwa Nath Sharma's case pertains to an agreement

to sell dated 12.12.1979 pertaining to a plot of land bearing

No.334, New Friends Colony i.e. the land which was developed

by the New Friends Cooperative House Building Society.

13. Thus, on the reasoning of the learned Trial Judge the

appeal has to succeed for the reason the impugned judgment

cannot be sustained in light of the decision of the Hon'ble

Supreme Court in Vishwa Nath Sharma's case.

14. But, the appellant would not be entitled to a decree

for specific performance for the reason under Section 20 of the

Specific Relief Act 1963 it is the discretion of the Court to grant

specific performance or not.

15. A discretion has to be exercised not on the ipxi dixit

of a Judge. It has to be informed by reason and guided by past

precedents.

16. Equitable considerations are a good ground to

exercise or not to exercise a discretion.

17. The agreement to sell relates to a vacant plot of land.

It has been so recorded in Ex.PW-1/A.

18. The terms of the perpetual sub-lease Ex.P/X mandate

that Deva Ram would construct a building on the plot within 2

years under pains of forfeiture. Since the suit could not be

disposed of within 2 years, to save the plot of land, Deva Ram

constructed a building thereon which was extensively renovated

pursuant to a permission granted in appeal on 22.11.2006. No

doubt said order records that the reconstruction would not

create any equities in favour of the legal heirs of Deva Ram. It

be noted that Deva Ram died during the pendency of the suit

and his legal heirs were brought on record before the learned

Trial Judge.

19. In a somewhat similar situation where the plot would

have been forfeited if construction was not effected within a

specified time and the proposed seller had constructed the

building after entering into an agreement to sell qua the vacant

plot, in the decision reported as 1989 SUPP 2 SCC 409 M/s Eldee

Velvet & Silk Mills Pvt. Ltd. Vs. Anand Ram Whigh Hon'ble

Supreme Court observed as under:-

"1. We heard Shri Salve, learned counsel for the appellant at quite some length. The appeal arises out of a suit for specific performance brought by the appellant as the plaintiff on July 21, 1958 in the Court of the First Commercial Sub-Judge, First Class, Delhi of an agreement dated April 5, 1956 entered into between the appellant and the late A.R.Whigh, the predecessor- in-title, whereby he agreed to sell his leasehold rights in plot No.4, block No.10, Golf Links, New Delhi for a sum of Rs.55,000, or in the alternative, for damages for alleged breach of contract. The plaintiff's suit has been dismissed both by the learned Sub-Judge and the High Court on various grounds. The learned counsel has mainly advanced two contentions, namely: (1) There was no hardship which the defendant could not foresee, particularly when he was put to notice by the plaintiff and therefore the High Court was not justified in

disallowing the plaintiff's claim for specific performance on the ground that the case fell within Section 22 of the Specific Relief Act, 1877 (2) In any event, the High Court having held that the defendant was in breach, should have decreed the alternative claim for damages. We find no merit in either of these contentions.

2. As to the first, we are in agreement with the High Court that the change in the circumstances brought out in this case were such that if would cause great hardship to the defendant if a decree for specific performance were to be passed inasmuch as the defendant at considerable cost had constructed a massive residential building on the plot under a compelling necessity and this was not a fit case for grant of the discretionary relief for specific performance. The fact is undisputed that the allotment of the plot to the defendant by the Government of India, Ministry of Rehabilitation was subject to the condition that he was to construct the building within a period of two years of the handing over of the possession. It cannot be doubted that that period was fast running out and there was no alternative for the defendant but to start construction of the building to save the property from forfeiture. The mere fact that the plaintiff sent a notice while the work of construction was in progress does not alter the legal position. As regards the comparative hardship, the plaintiff would be put to no loss if the relief of specific performance was not granted. Apart from payment of a sum of Rs.5,000/- by way of earnest money, it took no further steps for getting the conveyance executed and did nothing beyond sending a lawyer's notice. We are inclined to think that the High Court was not justified in disturbing the finding of the learned Sub-Judge that the plaintiff was disentitled by his conduct from claiming specific performance by reason of his standing by. The suit was not brought till July 21, 1958 by which time the defendant had already put up a substantial portion of the residential building at considerable cost. As to the claim for damages, both the learned Sub-Judge as well as the High Court have rightly held that the plaintiff has failed to substantiate its claim for damages. There is no evidence to show that the plaintiff was put to any loss."

20. At the hearing held on 15.10.2008, learned counsel

for the respondents made a statement which stands recorded in

the said order that in lieu of specific performance his clients are

prepared to compensate appellant Rs.10,00,000/- (Rupees Ten

Lacs).

21. Following the precedent in Eldee Velvet's case we

dispose of the appeal affirming the impugned decree which has

declined specific performance, but for different reasons.

22. In view of the concession made by learned counsel

for the respondents, apart from the sum already decreed by the

learned Trial Judge, we pass a further decree in favour of the

appellant and against the respondents in sum of Rs.10,00,000/-