Saraswati Kunj Welfare Society vs M/S L.N.Gadodia & Son Ltd. & Ors.
2008 Latest Caselaw 2014 Del

                                            REPORTED
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      I.A.No.7752/2008 in CS(OS) 508/2008

                            DATE OF RESERVE:            September 25, 2008

                            DATE OF DECISION:           November 17, 2008

       SARASWATI KUNJ WELFARE SOCIETY                   ..... Plaintiff
                         Through: Mr.Harish Malhotra, Sr. Advocate with
                                  Mr.N.K.Kantawala and Mr.Priyank
                                  Sharma, Advocates.
                  versus
       M/S L.N. GADODIA & SON LTD. & ORS           EC+ ..... Defendants
                         Through: Mr.Sandeep Sethi, Sr. Advocate with
                                  Ms.Ruchi Kohli, Advocate for D-3 & 4.
                                  Mr.Sanjay Jain, Sr.Advocate with
                                  Mr.Jayant Tripathi, Advocate for D-5.
       CORAM:
       HON'BLE MS. JUSTICE REVA KHETRAPAL

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?

       JUDGMENT

: REVA KHETRAPAL, J.

This order shall dispose of the application filed by the defendants No.3

and 4 for rejection of the plaint on the ground that the suit as filed by the

plaintiff is barred by limitation; that no cause of action has ever arisen or

subsists in favour of the plaintiff; that the plaintiff has no locus standi to file

the present suit and that the suit has been grossly under valued by the plaintiff

Page No. 1 of 26 CS(OS) 508/2008 for the purposes of court fees and jurisdiction.

2. The factual matrix as it emerges from a reading of the plaint needs to be

set out to appreciate the rival submissions of the parties. The plaintiff is a

Society registered with the Registrar of Societies, Delhi vide registration No.

S11442 of 1981. The defendant No.1 is a company registered under the

Companies Act, 1913. The defendant No.1 M/s. L.N.Gadodia & Sons Ltd.

purchased a bungalow together with the land appurtenant thereto, measuring

approx. 1.9 acres, situate at 8, Alipur Road, Civil Lines, Delhi vide registered

sale deed dated 16.10.1948. After purchase of the said land, the defendant No.1

with an intention to develop a Group Housing Scheme at the aforesaid land,

made an application with the defendant No.6, Municipal Corporation of Delhi,

for the approval of the lay out plan. The Standing Committee of the Municipal

Corporation of Delhi vide its Resolution No.593 dated 16.11.1972 approved

and passed the lay out plan of the aforesaid Group Housing Scheme. Under

the said scheme, 13 houses were provided, each comprising of one duplex type

dwelling unit on the ground and first floor and one dwelling unit on the second

floor. Thus, in the whole of the Group Housing Scheme, the Corporation

approved 13 houses comprising 26 dwelling units. The defendant No.1

constructed the aforesaid dwelling units and houses in the said Group Housing

Scheme in a phased manner. Thus, the defendant No.1 constructed and sold 7

houses bearing Nos.8/1, 8/2, 8/7, 8/8, 8/11, 8/12 and 8/13 after getting the

Page No. 2 of 26 CS(OS) 508/2008 building plans sanctioned from the defendant No.6 in the first phase. The

defendant No.1 then constructed houses bearing Nos.8/9 and 8/10 after getting

the building plans approved from the defendant No.6 in the second phase.

Thereafter, in the last and final phase, the defendant No.1 constructed and sold

four houses bearing Nos. 8/3, 8/4, 8/5 and 8/6. At the time of and as a pre-

condition for the sanction of building plans for the last and final phase, late

Shri Ram Gopal Gadodia, father of Tej Pal Gadodia and a Director of the

defendant No.1 company, gave an undertaking to the defendant No.6/MCD in

the form of an affidavit dated 25th February, 1978 to the effect that "No

portion of the land will be sold". Thereafter, the defendant No.1, being the

owner of house Nos.8/9 and 8/10 and the then owners of various houses,

formed and got registered the plaintiff society on 05.01.1981.

3. In all the eleven sale deeds of house Nos.8/1, 8/2, 8/3, 8/4, 8/5, 8/6, 8/7,

8/8, 8/11, 8/12 and 8/13, the defendant No.1 agreed with each individual

purchaser of the house to lease out the entire land under the Group Housing

Scheme to the Society or Association or Co-operative or Company to be

formed in the name and style of "Gadodia Group Housing Society" or any

other name that may be acceptable to all the purchasers of the 26 dwelling

units by perpetual lease deed. A draft of the then proposed perpetual lease

deed was annexed to each sale deed and was signed in token of acceptance and

approval by the purchaser of each house. Thus, the draft of the then proposed

Page No. 3 of 26 CS(OS) 508/2008 perpetual lease deed is part and parcel of the registered sale deed of every

house.

4. The property bearing No.8/1, Alipur Road, Civil Lines, Delhi was

initially purchased by late Shri Rishi Ram Gupta vide registered sale deed

dated 30.07.1974 from the defendant No.1 and thereafter the said property was

purchased in two parts, one part by the defendants No.2 and the second part by

the defendant Nos.3 and 4 vide separate sale deeds on 21.04.2005 from the

said Shri Rishi Ram Gupta and the same were duly registered with the office of

Sub-Registrar. It is the case of the plaintiff society that along with the sale deed

dated 30.07.1974 of Rishi Ram Gupta, a draft copy of a lease deed was also

annexed to be entered into between the defendant No.1 and the plaintiff

society, wherein it was stipulated that the entire land in the said Group

Housing Scheme was to be leased out to the Group Housing Society to be

formed. In the present suit, the plaintiff society is, inter alia, seeking

cancellation of the registered sale deeds dated 21.04.2005 in favour of the

defendant No.2 and the defendants No.3 and 4 to the extent the same records

the sale of land therein, and a declaration declaring that the land situate at 8,

Alipur Road vests with the plaintiff-society by virtue of the Lease Deed

allegedly entered into between the defendant No.1 and the plaintiff-society,

and a decree of mandatory injunction directing the defendant No.1 to execute

the relevant transfer documents, i.e., the sale deed/perpetual lease deed in

Page No. 4 of 26 CS(OS) 508/2008 favour of the plaintiff-society.

5. The defendants 3 and 4 through this application pray for the dismissal of

the suit at the threshold on the twin grounds that (i) the suit is barred by the

law of limitation and that (ii) no right has accrued to the plaintiff for the filing

of the present suit. It is submitted that the plaintiff has no locus standi, in that,

it neither has any right nor entitlement to the suit property, and since it has no

legal right, the plaintiff cannot seek any remedy against the defendants.

Needless to state, the prayer for dismissal of the plaint is stoutly contested by

the plaintiff.

6. The submission of the learned senior counsel for the defendants No.3

and 4 (the applicants herein), Mr.Sandeep Sethi is that the fountainhead of the

claim of the plaintiff is the document dated 26.11.1981, which purports to be

the lease deed executed by the defendant No.1 in favour of the plaintiff M/s.

Saraswati Kunj Welfare Society, whereby and whereunder the lessor (the

defendant No.1) demised upon the lessee all the impartible land and

appertenances pertaining thereto in respect of the dwelling units erected on the

said land, admeasuring 1.744 acres (8441 sq. yds) or there about, for Group

Housing Scheme, as specifically mentioned in the lay out plan, situate at 8,

Alipur Road, Civil Lines, Delhi, in perpetuity, on a yearly rent of Rs.264/- to

be paid in advance on or before the 15th of October of each year at the office of

the lessor. Mr.Sethi submitted that the said lease deed, being an unregistered

Page No. 5 of 26 CS(OS) 508/2008 document, failed to confer any right, title or interest in the suit property in

favour of the plaintiff-society. He contended that an immovable property

cannot be transferred by a mere intention to transfer, that there has to be in

existence an instrument, a document recognized by law which would confer

right, title and interest in an immovable property in favour of the transferee,

and that Section 17(d) of the Registration Act, 1908 postulates that any lease

pertaining to immovable property for a term exceeding one year must

mandatorily be registered in order to confer right, title and interest upon the

lessee. In the present case, the effect of the non-registration of the lease deed

was that the right, title and interest in the suit property stand vested in the

respective owners of the properties by virtue of the registered sale deeds.

Moreover, the lease deed as annexed with the plaint and also otherwise is

merely a draft and it confers no right, title and interest whatsoever in favour of

the plaintiff society. Further, he urged that Section 107 of the Transfer of

Property Act also explicitly stipulates in the first part thereof that a lease of

immovable property from year to year, or, for any term exceeding one year, or,

reserving yearly rent can be made only by a registered instrument. In the

present case, the alleged lease deed which is "in perpetuity" ought to have

been registered in accordance with the provisions of Section 17(d) of the

Registration Act. The lease deed not being registered, the plaintiff-society has

no locus standi to file the present suit seeking cancellation of the sale deeds of

Page No. 6 of 26 CS(OS) 508/2008 the defendants/applicants, which are duly registered. No cause of action as is

being alleged has ever arisen and the plaintiff being an absolute stranger, the

plaint as framed is not maintainable.

7. Mr.Sethi further contended that the date of the alleged lease deed being

26.11.1981, the suit is in any case grossly barred by time. He also submitted

that the order of Urban Land Ceiling Authority refusing grant of permission

having been passed on 03.03.1989 also shows that the present suit is wholly

barred by time.

8. Relying upon the decision of the Hon'ble Supreme Court in

N.V.Srinivasa Murthy & Ors. V. Mariyamma (dead) by Proposed L.Rs &

Ors. JT (2005) 6 SC 1, Mr.Sethi urged that by clever drafting of the plaint, a

civil suit, which is hopelessly barred, cannot be salvaged. In the said case, the

Trial Court had dismissed the suit as being time barred. The High Court

rejected the plaint on the ground of non-disclosure of cause of action. On

appeal, the Supreme Court affirmed that the suit was clearly barred by

limitation and the trial court was correct in dismissing the same on the ground

of limitation, holding that: "A suit merely for declaration that the plaintiffs are

absolute owners of the suit lands, could not have been claimed without seeking

declaration that the registered sale deed dated 5.5.1953 was a loan

transaction and not a real sale". Reckoning the cause of action from

25.3.1987, the Supreme Court held that the suit filed on 26.08.1996 was

Page No. 7 of 26 CS(OS) 508/2008 hopelessly barred by time.

9. Emphasizing that the plaintiff must have interest in the suit property,

and that an injunction cannot be issued against the true owner if no interest is

shown to be in existence in favour of the plaintiff, Mr. Sethi next placed

reliance on the following dicta laid down in paragraph 4 of the judgment of the

Supreme Court in Premji Ratansey Shah and Ors. vs. Union of India and

Ors. (1994) 5 SCC 547 at page 550:-

"Thus Defendants 3 and 4 had no ghost of right, title or interest in the lands acquired from the original owner Maibai. The said sale is a void sale and the petitioners, therefore, cannot derive any interest under the agreement of sale to resist the possession of the lawful owner nor could the declaration sought for be given. The question, therefore, is whether an injunction can be issued against the true owner. Issuance of an order of injunction is absolutely a discretionary and equitable relief. In a given set of facts, injunction may be given to protect the possession of the owner or person in lawful possession. It is not mandatory that for mere asking such relief should be given. Injunction is a personal right under Section 41(j) of the Specific Relief Act, 1963; the plaintiff must have personal interest in the matter. The interest of right not shown to be in existence, cannot be protected by injunction."

10. Referring to Section 31 of the Specific Relief Act, 1963, learned

counsel strenuously urged that the said section, which appears in Chapter V of

the Act, titled CANCELLATION OF INSTRUMENTS, can only be pressed

into service for the cancellation of void or voidable agreements, and that an

agreement can be void or voidable only between two contracting parties. A

Page No. 8 of 26 CS(OS) 508/2008 person who has no interest in the property, learned counsel contended, cannot

seek cancellation of an instrument, as in the instant case, where the

unregistered lease deed dated 26th November, 1981 confers no right on the

plaintiff.

11. First, a look at Section 31 of the Specific Relief Act, 1963 and at

Sections 19, 19A, 20, 23, 24 and 25 of the Contract Act, which were relied on

by the learned counsel to buttress his contention that only contracting parties

could seek the cancellation of an instrument. Section 31 of the Specific Relief

Act reads as under:-

"31. When cancellation may be ordered.-(1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

(2) If the instrument has been registered under the Indian Registration Act, 1908, the court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation."

12. The relevant sections of the Contract Act dealing with void and

voidable agreements are reproduced hereunder for ready reference:-

"19. Voidability of agreements without free consent.- When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

Page No. 9 of 26 CS(OS) 508/2008 A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.

Exception.-If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Explanation.-A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practiced, or to whom such misrepresentation was made, does not render a contract voidable.

19A. Power to set aside contract induced by undue influence.-When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.

Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefits thereunder, upon such terms and conditions as to the Court may seem just.

20. Agreement void where both parties are under mistake as to matter of fact.-Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.

Explanation.-An erroneous opinion as to the value of the thing which forms the subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact.

23. What considerations and objects are lawful, and what not.-The consideration or object of an agreement is lawful, unless-

It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property

Page No. 10 of 26 CS(OS) 508/2008 of another; or the Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

24. Agreement void, if considerations and objects unlawful in part.-If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.

25. Agreement without consideration, void, uncles it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.-An agreement made without consideration is void, unless-

(1) it is expressed in writing and registered under the law for the time being in force for the registration of documents, and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.

In any of these cases, such an agreement is a contract.

Explanation 1.-Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.

Explanation 2.-An Agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate; but the inadequacy of the

Page No. 11 of 26 CS(OS) 508/2008 consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given."

13. Mr. Sethi, contending that in the garb of a declaration, a rank outsider

could not seek cancellation of the sale deeds executed between the defendant

No.1 and the defendants No.3 and 4, next placed reliance upon a judgment of

this Court in Ajay Goel vs. K.K. Bhandari & Ors. reported in 1999 (48) DRJ

292. In the said case, the plaintiff had sought cancellation of documents of

sale of property. Rejecting the plaint under the provisions of Order VII Rule

11 of the Code of Civil Procedure, the Court held that in the absence of any

challenge to the cancellation of the lease of the plaintiff by the lessor, the Lt.

Governor of Delhi, resulting in extinguishment of the right, title and interest of

the plaintiff in respect of the suit property, the plaintiff could not seek relief

under Section 31 of the Specific Relief Act and the plaint was liable to be

rejected.

14. Per contra, Mr.Harish Malhotra, the learned senior counsel for the

plaintiff-society submitted at the outset that the sale deeds, the cancellation of

which was sought by the plaintiff society, were executed on 21.04.2005 and

07.08.2006, while the date of the filing of the present suit was 13.03.2008. The

period of limitation under Article 54 of the Limitation Act, 1963 in respect of

specific performance of a contract was three years from the date fixed for the

performance, or, if no such date is fixed, when the plaintiff has notice that

Page No. 12 of 26 CS(OS) 508/2008 performance is refused. According to him, clearly, therefore, the present suit

was not hit by the law of limitation. Reliance was placed by him, in this

context, upon the decision of the Supreme Court in Gunwantbhai Mulchand

Shah & Ors. Vs. Anton Elis Farel & Ors. JT 2006 (3) SC 212 to urge that

when the case is not covered by the first limb of Article 54 of the Limitation

Act, the question of limitation has to be decided only on the basis of the second

limb, and that can be dealt with only after evidence is taken and not as a

preliminary issue. In the said case, the suit had been filed almost 29 years

after the sale agreement and the plea of the defendant was that the suit was

barred by limitation. The trial court dismissed the suit as being barred by

limitation. The lower appellate court as well as the High Court affirmed the

decision and dismissed the appeal from the judgment of the trial court. The

Hon'ble Supreme Court, allowing the appeal, held that the suit could not be

dismissed on the ground of limitation. In Paragraph-12 of its judgment, the

Supreme Court held that insofar as the second part of Article 54 of the

Limitation Act was concerned, the question of limitation could be dealt with

only after evidence had been recorded. The said paragraph reads as under:

"12. The question as to how long a plaintiff, even if he had performed the whole of his obligations under an agreement for sale, in which a time for performance is not fixed, could keep alive his right to specific performance and to come to court after 29 years seeking to enforce the agreement, may have also to be considered by the court especially in the context of the fact that the relief of specific performance is discretionary and

Page No. 13 of 26 CS(OS) 508/2008 is governed by the relevant provisions of the Specific Relief Act. But again, these questions cannot be decided as preliminary issues and they are not questions on the basis of which the suit could be dismissed as barred by limitation. The question of limitation has to be decided only on the basis of Article 54 of the Limitation Act and when the case is not covered by the first limb of that Article, normally, the question of limitation could be dealt with only after evidence is taken and not as a preliminary issue unless, of course, it is admitted in the plaint that the plaintiffs had notice that performance was refused by the defendants and it is seen that the plaintiffs approached the court beyond three years of the date of notice. Such is not the case here."

15. Next, Mr.Malhotra urged that this was not a case where the plaintiff had

made an averment in the plaint that the defendants had refused to execute the

lease deed. In any event, he submitted, that a perusal of the prayer clause in

the plaint makes it abundantly clear that a number of prayers had been sought

for by the plaintiff society and even if the plaintiff is entitled to any one of the

said six reliefs prayed for, the suit cannot be dismissed, it being a settled

principle of law that a plaint can be rejected as a whole and not in parts. In this

regard, reliance was placed by counsel upon the decision of the Hon'ble

Supreme Court in Popat and Kotecha Property Vs. State Bank of India Staff

Association reported in 2005(7) Scale 3. In the said case, the appellant and the

respondent had entered into an agreement on 19.01.1983, whereby the

appellant had agreed to build and develop the property owned by the

respondent/association. A detailed agreement was executed on the said date.

Paragraph-13 of the said agreement stipulated that after construction of the

Page No. 14 of 26 CS(OS) 508/2008 entire building and issuance of the completion certificate, the appellant shall by

a notice to the respondent/association call upon it to execute the registered sale

deed in its favour. The building was completed in the year 1984. The appellant

claimed to have written a letter dated 04.11.1984 calling upon the respondent

to execute the lease deed in its favour. Admittedly, no lease deed was

executed. A suit for declaration was filed in July, 1990, inter alia, praying for

declaration that the plaintiff alone was entitled to lease out the premises. An

application under Order VII Rule 11 of C.P.C. praying for rejection of the

plaint was filed by the defendant on the ground that the suit was barred by

limitation. A Division Bench of the High Court held that as the suit was filed

in 1999 and the execution of the lease deed was to be made sometime in 1985,

the suit was clearly barred by limitation. On appeal, however, the Supreme

Court, allowing the appeal, observed as under:-

"24. When the averments in the plaint are considered in the background of the principles set out in Sopan Sukhdeo's case (supra), the inevitable conclusion is that the Division Bench was not right in holding that Order VII Rule 11 CPC was applicable to the facts of the case. Diverse claims were made and the Division Bench was wrong in proceeding with the assumption that only the non-execution of lease deed was the basic issue. Even if it is accepted that the other claims were relatable to it they have independent existence. Whether the collection of amounts by the respondent was for a period beyond 51 years need evidence to be adduced. It is not a case where the suit from statement in the plaint can be said to be barred by law. The statement in the plaint without addition or subtraction must show that is barred by any

Page No. 15 of 26 CS(OS) 508/2008 law to attract application of Order VII Rule 11. This is not so in the present case.

25. We do not intend to go into various claims in detail as disputed questions in relation to the issue of limitation are involved."

16. Adverting next to the contention of Mr.Sandeep Sethi that the plaintiff

society has no locus standi in the instant case, Mr.Malhotra submitted that far

from being a stranger, the plaintiff-society is the guardian and protector of the

rights of its members. The plea that the society has no locus is meaningless as

it was incumbent upon every purchaser to become a member of the society,

and this is borne out by the following recital contained in the sale deeds:

"AND WHEREAS the land underneath the house agreed to be purchased being indivisible, the entire land under the Group Housing Scheme will be leased out to the Society to be formed under the name and style of "GADODIA GROUP HOUSING SOCIETY", or any other name that may be acceptable to all the purchasers of 26 dwelling units to be constructed in accordance with the said Scheme, by perpetual lease deed, a draft whereof marked Annexure 'A' hereto has been seen and approved by the Purchasers, who have affixed their signatures thereon in token of their acceptance"

17. Mr.Malhotra, the learned senior counsel for the plaintiff society further

contended that a bare glance at the subsequent sale deeds, in regard to which

prayer for cancellation is made in juxtaposition to the earlier sale deeds , shows

that what the defendant No.1, M/s. L.N.Gadodia and Sons Pvt. Ltd., sold was

the house bearing No.8/1 together with the rights to use the common area,

roads, parks etc. of the society to Mr.Rishi Ram Gupta vide sale deed duly

Page No. 16 of 26 CS(OS) 508/2008 registered with the concerned Sub Registrar (Clause 4 of the Sale Deed),

whereas what was sold in favour of the defendants 3 and 4 was a portion of the

freehold land, as evidenced by Clause-5 of the sale deed.

18. Reliance was also placed by Mr.Malhotra, the learned senior counsel for

the plaintiff on the judgment of the Supreme Court rendered in the case of

V.B.Dharmyat (Deceased) through LRs Vs. Shree Jagadguru Tontadrya and

Others (1999) 6 SCC 15, to urge that, as held by the Supreme Court in the

said case, an agreement to execute a lease does not require registration under

Section 17(1) (c), as it is not a document which affects an actual demise. Thus,

a suit for specific performance could be based on an unregistered document

containing a promise to execute the lease deed and hand over the possession of

the plot after it was vacated by a third party. Paragraph-10 of the aforesaid

judgment is apposite, which reads as under:-

"10. Applying the aforesaid ratio to the present case we find that the document in question was not intended to, nor did it in fact result in a demise in present in favour of the appellant. This agreement was nothing more than a promise to do something in future, namely, to execute a lease deed and hand over possession of the plot in question to the appellant after the same was vacated by the municipality. The document, in other words, was a sort of undertaking or a promise given by Respondent 1 to the appellant that on the municipality vacating the plot, the same would be given on 99 years' lease to the appellant and the lease deed would be registered with the Sub-Registrar. Under no circumstances, in our opinion, did this document amount to a memorandum of a demise in the present time."

Page No. 17 of 26 CS(OS) 508/2008

19. Finally, it is contended by the learned senior counsel for the plaintiff

that in any event the rent of the premises being Rs.264/- per year (Rs.24/- per

month), the provisions of the Delhi Rent Control Act would not be applicable

to the aforesaid premises, in view of the provisions of Section 3 (c) of the said

Act, as amended in the year 1988, though there can be no manner of doubt that

the premises in question fall within the definition of premises as set out in

Section 2(i) of the said Act.

20. Having heard the learned counsel for the parties, the question which

arises for consideration is what is the effect of non-registration of the lease

deed dated 26.11.1981. It is not in dispute that in the sale deeds it was agreed

that no portion of the premises can be sold. Reference in this regard may be

made to the Sale Deed dated 02.05.1979 between the defendant No.1 on the

one hand, and one of the purchasers viz. Smt. Vandna Saraf on the other, and

in particular to the following portion of the said Sale Deed.

"And whereas the land underneath the house agreed to be purchased being indivisible, the entire land in the Group Housing Scheme will be leased out to the society to be formed in the name and style of "Gadodia Group Housing Society" or any other name that may be acceptable to the Purchasers of 26 dwelling units to be constructed in accordance with the said scheme, by perpetual lease deed, a draft whereof is marked as Annexure-A herein, has been seen and approved by the Purchaser, who has affixed her signature thereon in token of her acceptance......"

21. Reference may also be made to paragraph-3 of the said Sale Deed

Page No. 18 of 26 CS(OS) 508/2008 executed by the defendant No.1 in favour of the aforesaid Purchaser which

reads as under:-

"3. The Purchaser along with the purchasers of the other houses under the said Group Housing Scheme will form a society and the Purchaser agrees to join such society. This Sale Deed shall be treated as an application and the consent to become a member of the Society, which consent shall not be revocable."

22. Clauses 4, 5, 6 and 7 of the said Sale Deed are also apposite, which are

being reproduced hereunder:-

"4. The purchaser agrees to bind herself to pay to the Society to be constituted as stated above, her share of the rates and taxes, water charges, insurance premium and maintenance of roads, drains, sewer, water mains, car parks, street lighting and common services like Chowkidars, Sweepers, etc. incidental to the management and maintenance of the dwelling units constructed and to be constructed under the said Group Housing Scheme.

5. The Purchaser will not do or suffer to do any act which may be a source of annoyance or nuisance to the occupiers of the neighbouring apartments.

6. The Purchaser shall be bound to sign and execute all such papers and documents and do all other things and acts as the Vendors or the Society to be formed may require her to do from time to time in this behalf inter alia for safeguarding the interest of the parties hereto and other dwelling unit holders in the said Group Housing Scheme.

7. The Purchaser agrees to maintain the land around and appurtenant to the house purchased by her in all admeasuring 312.26 Sq. Mts. (373.33 Sq. Yds.) or thereabout inclusive of covered area and keep the open space and lawns in a good shape so as to create healthy environment for themselves and for the occupants of the other dwelling units

Page No. 19 of 26 CS(OS) 508/2008 under the said Group Housing Scheme, which open space and lawns for greater clearness have been delineated on the plan referred to above and shown therein with its boundaries in colour Green.

23. A perusal of the plaint and the documents on record clearly bring out

the following facts:

(i) The defendant No.1 made an application for development of a

Group Housing Society at Bungalow No.8, Alipur Road, Civil Lines in

the year 1972, which was approved by the Standing Committee of the

Municipal Corporation vide resolution dated 16.11.1972.

(ii) At the time of and as a pre-condition for the sanction of building

plans by the defendant No.6/Municipal Corporation of Delhi, the

defendant No.1 gave an undertaking to the defendant No.6 in the form

of an affidavit dated 25.02.1978 that "no portion of the land will be

sold......".

(iii) In all the eleven sale deeds of houses bearing Nos.8/1, 8/2, 8/3,

8/4, 8/5, 8/6, 8/7, 8/8, 8/11, 8/12 and 8/13, the defendant No.1 stated

that as the land of the entire Group Housing Scheme was not divisible,

the entire land under the Group Housing Scheme will be leased out to

the Society to be formed.

(iv) In all the eleven sale deeds executed between the years 1975 to

1979, a draft of the then proposed perpetual lease deed was annexed to

Page No. 20 of 26 CS(OS) 508/2008 each sale deed and was signed in token of acceptance and approval by

the purchaser of each house. The draft of the then proposed perpetual

lease deed was thus part of each registered sale deed of every house.

(v) After detailed deliberations, the defendant No.1 being the owner

of the house Nos.8/9 and 8/10 and the then owners of various houses,

formed and got registered the plaintiff society on 05.01.1981.

(vi) On 16.11.1981, complying with the terms of the sale deeds of its

members, the plaintiff society paid the premium of Rs.2,640/- to the

defendant No.1 and the defendant No.1 executed a perpetual lease deed

in favour of the plaintiff society on 26.11.1981. The said perpetual lease

deed could not be registered as the Authority under the Urban Land

Ceiling did not grant the necessary permission on the ground that there

was no vacant land and all houses had already been built, and by

necessary implication had said that no permission was necessary to the

defendant No.1 at the time of the registration of the perpetual lease

deed. However, this fact, according to the plaintiff, was kept concealed

from the plaintiff society and its members by the defendant No.1, who

received the original communication from the then Authority under the

Urban Land Ceiling Act.

(vii) On 21.04.2005, a sale deed was executed by the defendant No.1

of the property No.8/1, Alipur Road in favour of the defendant No.2

Page No. 21 of 26 CS(OS) 508/2008 Sangeeta Kotahwala. Another sale deed of the same date was executed

in favour of the defendants No.3 and 4, Mrs.Lalita Garg and Mrs.Ritu

Garg. On 07.08.2006, yet another sale deed was executed in favour of

the defendant No.5 Smt.Reena Singhal in respect of property No.8/9

and 10 by the defendant No.1. In all the three sale-deeds aforesaid the

land belonging to the plaintiff society was sold to the said defendants by

the defendant No.1, ignoring the fact that the entire land of the Group

Housing Scheme vests in the plaintiff society, and only the built-up

structure could have been sold by the aforesaid sale deeds.

(viii) On 21.01.2007, the plaintiff was constrained to call upon the

defendant No.1 to take all necessary steps and execute all such

necessary documents for vesting the title of the land in favour of the

plaintiff society, to which no reply has been received till date.

24. In the aforesaid background, in my view, it is difficult to uphold the

contention of the learned counsel for the applicants/defendants that the plaint

does not disclose any cause of action as a rank outsider cannot be allowed to

seek cancellation of the sale deeds executed in favour of the defendants No.3

and 4 in the garb of a declaration, nor it is possible to uphold the legal

contention sought to be advanced that Section 31 of the Specific Relief Act

cannot come to the aid of the plaintiff. As a matter of fact, the words used in

Section 31 of the Act are:

Page No. 22 of 26 CS(OS) 508/2008 "Any person against whom a written instrument is void or voidable ................ may sue to have it adjudged void or voidable..........................."

The use of the words "any person" in contradistinction to any party to

a contract and the subsequent use of the words "written instrument" in

contradistinction to the words written contract are significant and clearly show

that the legislative intent was that even a person who is not a "party" to the

written instrument may sue to have the instrument cancelled, if he has

reasonable apprehension that such instrument, if left outstanding, may cause

serious injury to him. The beneficial provisions of the said Section cannot,

therefore, be held to be confined to persons who are parties to the written

instrument alone. I am fortified in coming to the aforesaid conclusion from the

decision rendered in Manick Lal Vs. Shiva Jute Bailing reported in 52 CWN

889, in which the view was taken that Section 39 of the Specific Relief Act

(now Section 31 of the said Act) was not limited to a suit for cancellation of a

written contract only. It covered the case of all other written instruments, e.g a

deed of sale or a deed of trust, and it was clear from the illustrations to the said

Section that a person who was not a party to the instrument, may sue to have it

adjudged void or voidable against him and the provisions of the Contract Act

cannot apply to him, a stranger to the contract. The relevant portion of the

judgment which is at page 392 reads as under:

"The fallacy of this argument appears to be that it overlooks the

Page No. 23 of 26 CS(OS) 508/2008 very important words "written instrument" in Section 39. That section is not limited to a suit for cancellation of a written contract only. It covers a case where a person against whom a written instrument, be it a contract or a deed of sale, or a deed of trust or any other kind of written instrument, is void or voidable, seeks to have it adjudged void or voidable and cancelled. Where the party seeking cancellation of the instrument is a party thereto he may have to show that the instrument is void or voidable against him under one or other of the sections of the Contract Act. But the party seeking to have an instrument cancelled need not be a party to it and if he is not a party to it the provisions of the Contract Act do not come into play at all. The illustrations to Section 39 clearly show that a person may sue to have an instrument adjudged void and cancelled although he is not a party to it provided he can show that it is void or voidable against him and if left outstanding is likely to cause him serious injuries. See also the cases of Kaluram v. Babulal (5) and Suraj Kelprosad v. Chandra Mull (6) where a stranger to an instrument seeks to have it adjudged void and cancelled the principles of the Contract Act referred to by Mr.Mukharji cannot apply. In such a case the word "void" must be read in the larger sense of not binding on him. In the case before me the Plaintiff's case is that there was no contract at all and he was not a party to the written instrument which is being sought to be set up against him as a contract. There being no contract and the Plaintiff being no party to it there can be no question of its being void or voidable against him under one or other of sec. 19 to 30 of the Contract Act. Those provisions of the Contract Act are applicable after the question of validity of the contract arises between the parties to the contract. They can have no application to a case where a stranger seeks to have an instrument adjudged void."

25. The aforesaid decision, in my view, squarely meets the contention of the

learned senior counsel appearing for the applicants/defendants that the plaintiff

has no locus standi to file the present suit for cancellation of the sale deeds

executed by the defendant No.1 in favour of the defendants No.3 and 4.

Page No. 24 of 26 CS(OS) 508/2008

26. A Full Bench of the Orissa High Court in Keshab Chandra Nayak v.

Laxmidhar Nayak and Others AIR 1993 Orissa 1, which was a case dealing

in benami transactions, taking the same view that Section 31 of the Specific

Relief Act could be called into aid by a person who was not a party to the

agreement, held that in certain circumstances, "even a sham transaction can

also be treated as voidable at the instance of some persons and these persons

may approach the appropriate authority for getting it so adjudged and for

its cancellation, as permitted by Section 31 of the Specific Relief Act, 1963."

27. The contention of Mr.Sethi, the learned senior counsel for the

applicants/defendants, that the suit is barred by limitation, also cannot come to

the aid of the defendants at this stage, in view of the law laid down by the

Hon'ble Supreme Court in Gunwantbhai Mulchand Shah & Ors. (supra).

Whether the suit is barred by the law of limitation or not can be decided only

after taking evidence and recording a finding as to the date on which the

plaintiff had notice that performance was refused. In the present case, it is

averred by the plaintiff in the plaint that the performance was sought by the

plaintiff on 21.01.2007, to which no response was received. For the purposes

of the present application, the aforesaid averment made in the plaint must be

taken to be correct. Assuming the same to be correct, the suit instituted by the

plaintiff cannot be held to be barred by limitation.

28. In view of the aforesaid, in my opinion, there is no merit in the present

Page No. 25 of 26 CS(OS) 508/2008 application and the same is accordingly dismissed with the clarification that all

observations made in the present order are tentative in nature and will have no

binding effect when the case is considered on its merits after the parties have

adduced their respective evidence.

I.A.No.7752/2008 stands disposed of accordingly.

CS(OS) 508/2008

List before the learned Joint Registrar for further proceedings on 15th

December, 2008.

REVA KHETRAPAL, J.

NOVEMBER 17, 2008
dc




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