M/S Ashoka Estate Pvt Ltd & Ors vs M/S Dewan Chand Builders Pvt Ltd ...
2009 Latest Caselaw 1422 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                     IA.No.13284/2006 in CS(OS) 1702/2001

%16.04.2009                          Date of decision:16th April,2009

M/S ASHOKA ESTATE PVT LTD & ORS .......                                 Plaintiffs
                              Through: Mr. Harish Uppal, Advocate

                                     Versus

M/S DEWAN CHAND BUILDERS PVT LTD
AND OTHERS                    ....... Defendants
                              Through: Ms Amrita Sanghi and Mr Devendra
                              Singh, Advocates for Defendants 1, 3 and 4.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

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

2.     To be referred to the reporter or not?        YES

3.     Whether the judgment should be reported
       in the Digest?                                      YES


RAJIV SAHAI ENDLAW, J.

1. The plaintiffs in this suit for recovery of Rs 40 lacs as principal

amount, Rs 3,51,250/- as interest @ 15% p.a. till the date of

institution of suit and for pendente lite interest and costs, claim

decree under Order 12 Rule 6 of the CPC.

2. It is not in dispute that an agreement dated 1st March, 1972

was entered into between the plaintiffs 2 to 17 on the one hand and

the defendant No.1 on the other hand. Under the said agreement,

the plaintiffs 2 to 17 as the owners of property No.24, Barakhamba

Road, New Delhi comprising of land admeasuring 0.956 acres or

4628 sq yds and a residential bungalow constructed thereon

permitted/allowed the defendant No.1 company to demolish the

residential bungalow existing on the said property and to, at the

costs and expense of the defendant No.1, raise construction of a

multi storeyed building for commercial use on the said property,

after obtaining sanction of the Government and local authorities for

such development, again at the costs and expense of the defendant

No.1 and with no financial commitment or liability in completing the

said project on the plaintiffs 2 to 17 except as provided in the said

agreement. The defendant No.1, in consideration of its expense and

effort in doing the aforesaid works was to be entitled to transfer and

dispose of offices, showrooms and garages covered or uncovered

pertaining to 70% share in the proposed multi-storeyed building plus

3000 sq.ft. on the second floor and to appropriate the receipts

therefor unto itself. Such agreements in common parlance are

known as "Collaboration Agreement". The remaining 30% of the

built up in the proposed building was to be of the shares of the

plaintiffs 2 to 17 or the plaintiff No.1 company got incorporated by

the plaintiffs 2 to 17 in terms of the said agreement.

3. Under clause 26 of the aforesaid agreement, the defendant

No.1 was to be responsible to pay the commercialization charges or

such other charges under any other name to the authorities

concerned, as and when demanded by the authorities. Besides this,

the defendant No.1 also agreed to indemnify the plaintiffs 2 to 17

against any demand with regard to liability for commercialization

charges until the entire commercialization charges had been paid by

the defendant No.1 to the concerned authorities, together with any

interest or penalty levied by the said authorities in that behalf. It

was also agreed that the defendant No.1 shall furnish such

guarantee as may be mutually agreed to upon between the plaintiffs

2 to 17, to ensure payment of the said dues to the authorities

concerned.

4. It is also not in dispute that the predecessor-in-interest of the

defendants No.2 to 4, namely, Shri Dewan Chand and the defendants

2 and 3 also executed a surety bond dated 29th April, 1972 in favour

of the plaintiffs 2 to 17 who were jointly described therein as

beneficiaries. The said surety bond was executed in compliance of

clause 26 aforesaid of the agreement aforesaid whereunder the

defendant No.1 had undertaken to secure the beneficiaries against

all losses, claims and demands with regard to the responsibility for

the commercialization charges, penalty and interest detailed as

aforesaid. The said Shri Dewan Chand and the defendants 2 and 3,

being the persons behind the defendant No.1, undertook to

indemnify the beneficiaries against all losses, claims and demands in

case the defendant No.1 did not fulfill the terms and conditions of

clause 26 aforesaid. Under the said surety bond, the said Shri

Dewan Chand and defendants 2 and 3 agreed that all claims and

demands of concerned authorities in connection with the payment of

any commercialization charges or any other like charges under any

other name as demanded by the authorities concerned together with

all liability for interest and penalty in respect thereof shall be

discharged by the defendant No.1 on demand of the same, either as

a lump sum or by instalments as allowed by the concerned

authorities and it was further provided that in case the defendant

No.1 fails to meet the said charges in full or in part then Shri Dewan

Chand and defendants 2 and 3, as surety, shall be liable to meet the

same as if they were the principal debtor in respect thereof, qua the

beneficiaries mentioned therein. Shri Dewan Chand and defendants

2 and 3 made themselves jointly and severally liable to pay the

aforesaid commercialization charges.

5. It may be clarified that the lease of the land underneath the

property aforesaid was originally for residential purposes. However,

with the change in the master plan, multi sotreyed commercial

building had been permitted in the area where the property

aforesaid was situated. However, the multi storeyed commercial

building could be constructed on the said property only subject to

payment to commercialization charges to the lessor of the land i.e.,

the L&DO. The L&DO had till then not determined the

commercialization charges and hence the need arose to provide as

aforesaid.

6. It is also not in dispute that the construction of the multi-

storeyed building aforesaid was completed in or about 1976-77.

7. A notice dated 11th July, 1973 was issued by the L&DO to show

cause as to why the lease of the land underneath the property be not

re-entered. The plaintiffs alongwith the defendant No.1 filed a writ

petition in this court being No.909/1973 challenging the said notice

dated 11th July, 1973 of the L&DO.

8. Not only did Shri Dewan Chand and defendants 2 and 3

execute the surety bond as aforesaid, a bank guarantee was also

arranged by the defendant No.1 from the then Laxmi Commercial

Bank Limited. Under the said bank guarantee the bank undertook to

pay unequivocally within 48 hours on demand in writing from the

L&DO or any other officer authorized and competent in this behalf

and addressed to the owners, namely, the plaintiff No.1 herein or to

any other person having title for the time being, upto Rs 12 lacs

towards commercialization charges i.e., premium on account of

conversion charges for change of user from residential to

commercial purposes in respect of the said property and on behalf of

the defendant No.1 who had by the time of furnishing of the bank

guarantee developed the property into a multi-storeyed building. It

appears that till the time of completion of construction of multi-

storeyed building on the property aforesaid, the L&DO had not

notified the commercialization charges and since on completion of

construction the plaintiff and the defendant No.1 were to take

charge/possession of their respective shares/portions of built up area

in the property, it was expedient to furnish the bank guarantee

aforesaid. It is also the case of the plaintiffs that the defendants

were of the view that the commercialization charges were not

payable to the L&DO.

9. It is the case of the plaintiffs that the defendant No.1, Builder,

after taking possession of its portion of the built up area of the

property and/or after disposing of the same, lost any interest in the

property and stopped pursuing the writ petition aforesaid and also

did not renew the bank guarantee aforesaid.

10. The plaintiffs in the year 1980 instituted a suit, inter alia, for

direction to the defendants to renew the bank guarantee.

11. The plaintiffs claim to have received a communication from

L&DO in April, 1999 demanding commercialization charges plus

penalty totaling to nearly Rs 5 crores. The plaintiffs claim to have

learnt that the defendant No.1 stopped pursuing the writ petition

aforesaid which was dismissed in default. Similar writ petitions had

been filed with respect to other multi-storeyed buildings in the

Connaught place area. The said writ petitions were decided by a

Division Bench of this court, according to the plaintiffs laying down

the manner of computation of commercialization charges. The

plaintiffs realizing that the earlier writ petition had been dismissed,

plead that they had no option but to institute another writ petition in

this court challenging the computation of commercialization charges.

In the said writ petition being CW.No.6742/2000, the plaintiffs also

sought stay of recovery of nearly Rs 4 crores demanded by the

L&DO. Vide order dated 10th November, 2000 in the said writ

petition, the stay of demand of the L&DO was granted subject to

deposit of a sum of Rs 40 lacs by the plaintiffs. The plaintiffs claim

to have deposited the said amounts and thereafter instituted the

present suit for recovery of the said Rs 40 lacs from the defendant

No.1 as well as the legal heirs of Shri Dewan Chand aforesaid. The

plaintiffs also claim interest @ 15% per annum till the date of

institution of the suit, making the aggregate sum of Rs 43,51,250/-

due till the date of institution of the suit. The plaintiffs have also

claimed future interest at 18% per annum.

12. The defendants filed a joint written statement. The material

contents aforesaid have not been disputed / controverted by the

defendants though generally denying their liability for any amount

whatsoever to the plaintiffs. The defence of the defendants and on

the basis whereof the application under Order 12 Rule 6 of the CPC

is also contested can be summarized as under:

(i) that the collaboration agreement contemplated the

registration of Ashoka Estate Maintenance Society by the

plaintiffs and the defendants and which would have charged

from the owners /occupiers a monthly maintenance charges

for the facilities to be provided by the said society. The

benefits of such earnings were to be thus shared between the

plaintiffs and the defendants. It is the averment of the

defendants that the plaintiffs failed to share the earnings from

the said multi-storeyed building including car parking

charges, maintenance charges, monies charged on account of

facility of generator set with the defendant No.1, thereby

depriving the defendants of a perpetual income from the said

multi-storeyed building. The defendants claimed that on

taking account a sum of Rs 4,93,72,000/- would be found due

from the plaintiffs to the defendants on said account.

(ii) that the promise/agreement of the defendants to pay

commercialization charges was based on various obligations

to be fulfilled by the plaintiffs and which they had failed to

fulfil.

(iii) the defendants claimed a sum of Rs 1,49,87,311/- to be due

from the plaintiffs to them under various heads till December,

1998 and a further sum of Rs 3,25,15,175/- to be due for the

period January 1991 to December, 2001. The said amounts

are claimed as towards 70% shares of the defendants in the

rents of car parking in the building and towards charges

incurred by the defendants allegedly on behalf of the plaintiffs

towards electric connection, erection of sub-station by NDMC,

penalty for revalidation of plans, ground rent, security deposit

of Rs 4 lacs not released by the plaintiffs to the defendants in

terms of the collaboration agreement, transfer charges

realized by the plaintiffs and on a maintenance charges and on

view other heads.

(iv) it is further contended that the defendant had agreed to pay

the commercialization charges only if found to be legal,

leviable and payable by the defendants. Since the challenge

to the commercialization charges was stated to have been

made by the plaintiffs in the writ petition filed by them, it was

stated that the legality and validity of commercialization

charges was subject to adjudication of the said petition and till

the same were held legal and valid, the plaintiffs could not

demand the amounts from the defendants. The defendant

claims to have paid a sum of Rs 1 lac towards

commercialization charges to the L&DO in March, 1995.

(v) that it was the case of the plaintiffs themselves in the writ

petition that while the commercialization charges in terms of

the earlier judgment of the division bench could not be beyond

Rs 600/- per sq yards i.e., maximum Rs 28 lacs, the plaintiffs

were illegally claiming Rs 40 lacs from the defendants. It was

contended that the demand of the L&DO which was stayed by

this court subject to deposit of Rs 40 lacs contained several

other demands besides of commercialization charges at the

rate of Rs 2400/- per sq yrds. It was stated that the

defendants were liable for the other demands which included

for unauthorized construction in the 30% portion of the

plaintiffs under the collaboration agreement.

(vi) it was pleaded that the defendants having monetary claims

against the plaintiffs were entitled to mutual adjustment.

13. The plaintiffs filed a replication denying that any amounts were

due from the plaintiffs to the defendants or of there was any

agreement between the parties of sharing of earnings from the

building in perpetuity in the ratio of 70:30. It was denied that

Ashoka Estate Maintenance Society had been agreed to be

constituted under the agreement. It was further pleaded that even if

such a society was to be constituted, it was to run on no loss no

profit basis and there could be no question of sharing of any profits

from the maintenance charges of the building. It was further pleaded

that false, vexatious pleas had been taken by the defendant in the

written statement when the defendants had not even paid any court

fees on their claims and that the claims of the defendants were in

any case barred by time.

14. Not much progress was made in the suit for the reason of the

substitution of legal representatives. After about 5 years of the

institution of the suit and in which issues have not been framed as

yet, the application under consideration was filed. The reply of the

defendants to the application further states that there is no clear,

unequivocal and unconditional admission and in fact the written

statement of the defendants disputed the liability of the defendants

and the admissions, if any, therein were conditional and the parties

were to be necessarily put to trial. It was argued that the admissions

by the defendants of execution of the collaboration agreement,

clause 26 thereof, of the execution of surety bond and of furnishing

the bank guarantee could not be read in isolation and have to be

read subject to the other pleas in the written statement and as per

which huge amounts were due from the plaintiffs to the defendants.

15. The counsel for the defendants has also filed written

submissions and had during the hearing as well as in written

submissions relied upon (a) Dudh Nath Pandey Vs Suresh

Chandra Bhattasali AIR 1986 SC 1509 on the proposition that the

admission has to be taken as a whole and it is not permissible for the

court to rely on a part of the admission, ignoring the other. (b)

Western Coalfields Ltd Vs Swati Industries AIR 2003 Bombay

369 in support of the proposition that if the admission is conditional,

it is not unequivocal to enable the court to pass a decree under

Order 12 Rule 6 of the CPC. (c) State Bank of India Vs M/s

Midland Industries AIR 1988 Delhi 153 in support of the

proposition that where the defendants raised objections going to the

root of the matter, it is not proper to exercise the discretion under

Order 12 Rule 6 of the CPC, and lastly (d) Chikkam Koteswara

Rao Vs Chikkam Subbarao AIR 1971 SC 1542 to canvas that

before the right of a party can be considered to have been defeated

on the basis of the alleged admission by him, implication of the

statement made by him must be clear and conclusive.

16. Per contra, the counsel for the plaintiffs relied upon Uttam

Singh Duggal & Co. Ltd Vs United Bank of India (2000) 7 SCC

120 and on Sudershan Sinha Vs Kuldeep Singh 133(2006) DLT

183 and lastly Rajiv Saluja Vs M/s Bhartia Industries Ltd 98

(2002) DLT 720.

17. The plaintiffs have also filed before this court, inter alia, the

collaboration agreement, surety bond, bank guarantee, the letters

dated 24th April, 2000 and 31st July, 2000 of the L&DO, the copy of

the order dated 10th November, 2000 in Civil Writ No.6742/2000

instituted by the plaintiffs and the receipts showing payment of Rs

40 lacs by the plaintiffs.

18. The suit instituted by the plaintiffs upon the failure of the

defendants to have the bank guarantee renewed was on change of

pecuniary jurisdiction transferred to the District Court and has since

been decided but since the appeal where against preferred by the

defendant is pending, no reference thereto is being made.

19. The present suit is for recovery of commercialization charges

which under the agreement between the parties, the defendants had

undertaken to pay. To this extent there is no dispute.

20. The defendants even now state that commercialization charges

are not payable. However, the fact remains that a demand therefor

had been issued by the L&DO and non compliance thereof would

have had the effect of the lease of the land underneath the property

being re-entered and/or proceedings under the Public Premises Act

being initiated/continued. The said lease is in the name of the

plaintiffs. The liability for payment to the L&DO is of the plaintiffs

only. It is for this reason that the agreement provided for the

defendants indemnifying the plaintiffs with respect thereto. The

denial by the defendants of the entitlement of the L&DO to claim or

recover commercialization charges is meaningless. The defendants

did not do anything about it. The defendants who had undertaken to

pay the said commercialization charges and who had agreed to keep

the plaintiffs indemnified against all demands with respect thereto, if

of the opinion that the commercialization charges were not payable

or due, ought to have challenged the same. The defendants did not

do to. It is common knowledge that the builders such as the

defendants, immediately upon the completion of construction or even

prior thereto sell their entire share/portion/entitlement in the

building. However, owners generally retain whole or part of their

entitlement of built up area. It is thus the owners such as the

plaintiffs who are affected by non-payment. The defendants have

nothing to lose. If the commercialization charges are not paid and

the lease of the land is re-entered and the proceedings for eviction

taken under the Public Premises Act, the defendants have nothing to

suffer, having already sold their entitlement of built up area and

having realized the sale proceeds thereof. Similarly, the demand

being not in the name of the defendants, the L&DO cannot recover

the said amounts from the defendants. The plaintiffs on the basis of

their agreement with the defendants cannot ask the L&DO to

recover the said amounts from the defendants with whom L&DO has

no privity.

21. I have considered, that since the contention of the counsel for

the plaintiffs also in the writ petition was that the commercialization

charges were payable at the rate of Rs 600/- per sq yrds instead of at

the rate of Rs 2400/- per sq yrds as claimed by the L&DO, should the

claim of the plaintiffs against the defendants who also have taken the

same stand, be restricted to Rs 28 lacs only. On further

consideration, I find, that would not be the right approach. On the

basis of claim of commercialization charges at the rate of Rs 2400/-

per sq yrds, the demand therefor would be of Rs 1,11,07,200/- lacs.

The plaintiffs have, however, been made to deposit Rs 40 lacs only.

Since the defendants have undertaken to pay the said monies within

48 hours of demand in writing of the L&DO and further since the

defendants had agreed to keep the plaintiffs indemnified in this

regard, there is no reason for not making the defendants liable for

the entire sum of Rs 40 lacs, subject of course to the right of the

refund, if any, also being of the defendants only. Since the plaintiffs

as of today are out of pocket for a sum of Rs 40 lacs on account of

demand of L&DO of commercialization charges and which, as per

their agreement with the defendants, the defendants were to bear,

there is no reason to keep the plaintiffs out of pocket for the amount

in excess of Rs 28 lacs, during the interregnum also till when the

writ petition aforesaid is decided.

22. The contention of the defendants of demand being sub-judice

also does not find favour. Even if it is to be presumed that no

commercialization charges are payable, the risk therefor was of the

defendants. It is the defendants who have to pay the said amounts

and if they succeed in persuading the court or the L&DO to hold that

no commercialization charges are payable, it is the defendants who

will benefit. However, pending the same no burden which under the

agreement was to be borne by the defendants can be imposed on the

plaintiffs.

23. Though the defendants have made claims of over Rs 20 crores

against the plaintiffs and have used the words of set off / adjustment/

claims therein but neither any counter claim has been preferred nor

any court fees on set off paid. In the absence thereof, there is no

such plea of the defendants for consideration before this court.

24. Even otherwise, I find that the construction of the building was

completed in or about 1976. There is neither any pleading nor any

document to show that the defendants have at any time asserted any

rights or made any claims on the basis whereof now the admitted

liabilities to the plaintiffs are being sought to be denied/contested.

The present suit itself has been pending for the last over 7 years.

The claims against which the dues to the plaintiffs are sought to be

set off or adjusted would be now barred by time and no set off or

adjustment against time barred claims even, if any, is permissible.

25. The plaintiffs have denied the said claims of the defendants

against the plaintiffs. The plaintiffs have not claimed any

adjudication thereof. In the face of the denial and the failure of the

defendants to seek adjudication thereof, again as of today there are

no claims or demands against which the admitted dues of the

plaintiffs can be adjusted or set off.

26. The plaintiffs if otherwise found entitled to a decree on

admissions, cannot be deprived thereof by astute drafting of the

written statement and/or by taking pleas therein which have no legs

to stand upon. This court is to read the pleadings of the parties

meaningfully. Issues are to be framed on material and not all

propositions of law and fact. A plea, which on the face of it is found

by the court to be untenable, does not require the framing of any

issue. The pleas of the defendants in the present case are found by

me to be such, without calling for any trial whatsoever. If the said

pleas of the defendants on the basis whereof the admitted liability of

the defendants is sought to be defeated, are found to be untenable,

naturally the impediment to the passing off a decree on the basis of

admissions disappear. The apex court in T. Arvindam Vs. T.V.

Satyapal AIR 1977 SC 2421 has held that if on a meaningful-not

formal-reading, claim is manifestly vexatious and meritless in the

sense of not disclosing a clear right to sue, the trial court should

ensure that bogus litigation is shot down at the earliest stage.

Again, in Liverpool & London S.P. & I Association Ltd. Vs. M.V.

Sea Success I & Another (2004) 9 SCC 512 it was held that when

no cause of action is disclosed, the courts will not unnecessarily

protract the hearing of suit; the court should interpret the provisions

in such a manner so as to save expenses, achieve expedition and

avoid the courts resources being used up in cases which will serve

no useful purpose. It was further held that a litigation which in the

opinion of the court is doomed to fail should not further be allowed

to be used as a device to harass. The said propositions equally apply

to written statements/defence to the claim also.

27. The bulk of the claims of the defendants against the plaintiff

pleaded in the written statement are on account of the profits from

operating the maintenance services in the multi-storeyed building.

Not only is there no clause in the admitted agreement between the

parties in this regard but even otherwise I find the Delhi Apartment

Ownership Act, 1986 to have intervened in between and which would

override the agreement, if any, between the plaintiffs as owners of

the land and the defendant No.1 as the builder. There can be no

doubt that the said Act would be applicable to the building in

question. Under the said Act the maintenance of common areas and

facilities and which as per the definition in the Act would include the

car parking spaces also, vests in an association of apartment owners.

This court in Sagar Apartment Flat Owners Society (Registered)

Vs Sequoia Construction P Ltd 1993 RLR 446 has held that the

Apartment Act is in force and the rights of the parties agreed under

the said Act have to be taken into consideration and the purchasers

of the apartments must get protection and the court has to ensure

that the legislative intent is fulfilled rather than allow it to be

flouted. This court, whenever approached has been enforcing the

rights of the apartment owners. The judgments of this court in Star

Estate Management P Ltd Vs Neo Securities Ltd FAO(OS)

390/1996 decided on 31.10.1996, in Ganesh Prasad Seth Vs

Karam Chand Thapar 1998 IV ADD 657, Om Prakash Charaya Vs

Ashok Kamal Capital Builders P Ltd 2000 VII ADD 67, Municipal

Corporation of Delhi Vs A.M. Khanwilkar 2002 65 DRJ 38, R.L.

Bhardwaj Vs Shivalik Co-operative Group Housing Society Ltd

56 1994 DLT 600 and Dhawan Deep Residential Welfare

Association Vs Star Estate Management Ltd IA 8139/2006 in CS

(OS) 1474/2006 decided on 20th September, 2007 can be cited in this

regard.

28. I have in M/s DCM LTD Vs R.K. Tower India P Ltd Arb.P

415/2006 and OMP 362/2006 decided on 22nd August, 2008 held that

claim of the builder for appointment of an arbitrator to adjudicate

the disputes between the builder and the owner of the land qua

maintenance, to be not maintainable for the reason of the said Act.

29. Thus it will be seen that the claim of the defendants for

maintenance charges, not only is not found in terms of the

agreement but is also contrary to law. Thus, the said claims on the

basis whereof the admitted dues to the plaintiffs are sought to be

adjusted are found to be not tenable at all.

30. I may notice that besides order 12 Rule 6 of the CPC, Order 15

of the CPC also empowers the court to, where it appears that the

parties are not at issue on any question of law or fact, pronounce

judgment at once.

31. I find the present case to be such. The plaintiffs have

therefore become entitle to recover the sum of Rs 40 lacs admittedly

paid by them to the L&DO towards commercialization charges, from

the defendants who had undertaken the said liability and who failed

to discharge the same leaving the plaintiffs with no option but to

save their property and deposit the same as directed by the court.

32. The next question is as to the rate of interest. The plaintiffs

have claimed interest till the date of institution of the suit at 15% per

annum. That was in consonance with the rate of interest prevailing

then. However, since then there has been a fall in the rate of

interest. The plaintiffs are thus entitled to interest on the principal

amount from the date of institution of the suit and till the date of

payment @ 10% per annum. The plaintiffs are also found entitled to

costs of the suit against the defendants. Counsels fee assessed at Rs

50,000/-. The decree sheet be drawn up.

RAJIV SAHAI ENDLAW (JUDGE) April 16, 2009 M