Ms. Sarla Mehra vs Mr. Praleen Chopra & Ors.
2009 Latest Caselaw 1585 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

 +IA No. 11716/2008 (of the plaintiff u/O 39 R 1 & 2 CPC) and
 IA No. 12847/2008(of the defendant No. 3 u/O 39 R 4 CPC) in
                   CS(OS) No. 2017/2008



%                                          Date of decision: 22.04.2009

MS. SARLA MEHRA                                           .......Plaintiff
                     Through: Mr. S.P. Aggarwal, Sr. Advocate with
                                    Mr. Jagjit Singh Advocate


                                      Versus

MR. PRALEEN CHOPRA & ORS.                                 ....Defendants

                     Through:        Mr. S. Santanam Swaminathan and
                                    Mr. Kirtiman Singh, Advocates for D-1.
                                    Mr. Dinesh Garg, Advocate for D-3.



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. (ORAL)

1. The applications of the plaintiff for interim relief and of the

defendant No. 3 for vacation of the ex parte ad interim injunction and

a relief claimed in suit with respect whereto no evidence is required

are for consideration.

2. The plaintiff has instituted this suit inter alia on the pleas that

she is the owner of property No. B-43, Sarvodaya Enclave, New

Delhi; that she had entered into an agreement dated 23rd June, 2006

with the defendant No. 1 and which agreement in common parlance

is known as a Collaboration Agreement whereunder the defendant

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 1of 15 No. 1 had at his own costs and risk agreed to demolish the existing

structure on the said property of the plaintiff and to reconstruct a

modern new building comprising of a basement, ground, first and

second floor on the said property; that in consideration of the

expenses and effort to be incurred by the defendant No. 1 in carrying

out the said work, it was agreed that out of the newly constructed

building, the basement, ground and first floor shall belong to the

plaintiff and the second floor and the terrace above to the defendant

No. 1; the defendant No. 1 was entitled to sell the said second floor

and terrace and realize sale consideration thereof and/or to retain

the same for himself; that a registered General Power of Attorney

was also executed by the plaintiff with respect to the said second

floor and terrace above in favour of the defendant No. 2 as nominee

of the defendant No. 1.

3. The plaintiff approached this Court with a case that the

defendant No. 1 had failed to complete the work of construction

within the agreed time and also as per the agreement and had failed

to even hand over the plaintiff's entitlement of the newly constructed

building to the plaintiff, compelling the plaintiff to because of her

circumstances, herself occupy her portion of the property; the

defendants No. 1 and 2 were in contravention of the agreement

allowing the defendant No. 3 to occupy the second floor of the

property. The plaintiff has in this suit claimed the reliefs of

mandatory injunction directing the defendant No. 1 to complete the

remaining works, recovery of Rs. 35,50,000/- (rupees thirty five lacs

fifty thousand only) towards damages till filing of this suit and cost of

completion of the remaining work in the portions falling to the share

of the plaintiff, of permanent injunction restraining the defendants

No. 1 & 2 from handing over possession of the second floor and

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 2of 15 terrace above to the defendant No. 3 and a decree for permanent

injunction restraining the defendants No. 1 to 3 from getting any

plans sanctioned from the MCD for raising construction of the third

floor of the property. A decree for future mesne profits at Rs. 75,000/-

per month has also been claimed.

4. Vide ex parte order dated 23rd September, 2008, finding a

clause in the Collaboration Agreement whereunder the defendant No.

1 had agreed to deliver possession of the second floor and terrace to

the purchaser only after putting the plaintiff into possession of her

portion of the property and on the plea of the plaintiff that the

defendants were attempting to illegally construct the third floor

without plans therefor having been sanctioned by the MCD, the

defendant No. 1 was restrained from handing over possession of the

second floor and terrace to any person and the defendant No. 3 was

restrained from occupying the second floor and terrace thereon. The

defendants were also restrained form raising any construction above

the second floor and from selling, alienating, encumbering or

creating their party interest with respect to the second and third

floors of the property.

5. After service of the defendants, the defendant No. 1 had

expressed willingness to complete the works and to fill up the lacuna

and deficiencies as pointed by the plaintiff. The matter was as such

adjourned from time to time for enabling the defendant No. 1 to

complete the works. Vide order dated 18th February, 2009, the ex

parte order was also modified to enable the defendant No. 3 to carry

out the works of interiors on the second floor also, inasmuch as it was

found that a large number of defects and deficiencies pointed out by

the plaintiff had by then be repaired/made up by the defendant No. 1.

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 3of 15

6. The senior counsel for the plaintiff has now urged that there

are still three deficiencies remaining. It is stated that there is

seepage in the basement, the servant quarter on the terrace above

the second floor has not been constructed and the elevator agreed to

be provided in the building is not operational. On the contrary, it is

informed by the counsel for the defendant No. 1 that the elevator has

been installed and the three phase electrical connection therefor has

also since been obtained and the license with respect thereto is

expected in a day or two and whereupon, the elevator would be

functional. It is not disputed by the senior counsel for the plaintiff

also that the elevator has been installed.

7. As far as the seepage in the basement is concerned, though the

defendant No. 1 assures that whatever can be done to repair the

same and/or to prevent the same, even if the same remains, in my

view, the plaintiff would have a monetary claim against the defendant

No. 1 for the same and for the said reason, it cannot be said that the

defendant No. 3 who has paid valuable consideration to the

defendant No. 1 for purchase of the second floor and terrace above

and sale deed in whose favour has been executed and registered

prior to the institution of the suit can be deprived of using the

property or from exercising rights with respect thereto.

8. The agreement between the plaintiff and defendant No.1

provides that if the defendant No.1 does not construct the building as

agreed, the plaintiff will have the right to carry out the said works at

the cost and expense of defendant No.1. Otherwise, the defendant

No.1 was entitled under the agreement to sell/transfer/convey and

assign his portion to any prospective buyer and to receive sale

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 4of 15 proceeds "during or after the completion of the construction without

any objection or hindrance" from the plaintiff. The only restriction

was that the defendant No.1 shall first handover the actual

possession of the plaintiff's allocation to the plaintiff and thereafter

handover the actual possession of the defendant No.1's portion to the

buyer. It is not in dispute that the plaintiff is now in actual

possession of her portion. The plaintiff having permitted the

defendant No.1 to sell his portion even during construction i.e. before

the plaintiff could have satisfied herself of the defendant No.1 having

carried out the works as per the agreement, and the defendants No.1

& 2 having so sold to defendant No.3, the inter se dispute of plaintiff

& defendant No.1 as to quality of construction/nature of

workmanship cannot affect the title of defendant No.3 and the

plaintiff can only claim damages/costs for which also agreement

provided as aforesaid, only, from the defendant No.1. The plaintiff

cannot restrain the defendant No.3 from occupying the property or

exercising ownership rights with respect thereto.

9. The plaintiff today seeks relief (i) with respect to direction for

construction of servant quarter above the second floor and for

continuance of the injunction already granted till then and (ii) of

restraining the defendants from raising construction of the third floor

of the property.

10. As far as the servant quarter is concerned, during arguments it

transpires that the construction thereof has not taken place as yet

owing to the parties being at variance as to the location thereof on

the terrace above the second floor. While the defendant No. 3 who is

now the owner of the second floor and terrace above has offered for

the servant quarter to be provided at the rear end of the terrace with

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 5of 15 access thereof from proposed spiral stair case from the rear open

space in the ground floor, the plaintiff is not agreeable to the same. It

has now been agreed in Court between the parties that the servant

quarter shall be constructed adjacent to the existing stair hall and

the access thereto shall be from the stair case providing access to the

first floor, second floor and terrace above the property.

11. The main controversy between the parties is with respect to the

construction of the third floor by the defendant No. 3.

12. Following Clause in the Collaboration Agreement dated 23rd

June, 2006 pertains to the construction above the second floor:-

"That the Builder shall have the exclusive ownership and usage rights of the Entire Terrace over and above the Entire Second Floor of the said property, including rights of further construction only if permitted by MCD. However in that event the servant quarters and the overhead water tanks so provided to the owners/occupants of the building shall be shifted by them, on the newly build top terrace at the cost and expenses of the owner of the Second Floor."

13. The General Power of Attorney dated 8th August, 2006

registered on 7th September, 2006 executed by the plaintiff in terms

of Collaboration Agreement in favour of the defendant No. 2 also

empowers the defendant No. 2 to sell or lease out the entire second

floor, entire terrace over and above the entire second floor, etc. along

with 30% undivided share in the property. The said Power of

Attorney also empowers the defendant No. 2 to get the plan

sanctioned from the MCD or other authorities and to get the requisite

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 6of 15 permission therefor. It is significant that in this regard, no limit has

been put on the power of the defendant No. 2. It is not as if the

defendant No. 2 was empowered to obtain sanction for construction

only up to the second floor.

14. A Sale Deed dated 7th March, 2008 and registered on 10th

March, 2008 was executed by the defendant No. 2 as attorney of the

plaintiff in favour of the defendant No. 3 with respect to the said

second floor and the terrace, for a consideration of Rs.80 lacs. A

perusal thereof shows the payments having commenced from 8th

September, 2006. The defendant No.3 thereunder has a right of

construction on the terrace subject to shifting the servant quarter to

the top terrace.

15. The plaintiff has relied upon an affidavit attested on 14 th

August, 2006 of the defendant No. 1. However, the stamp paper

thereof was purchased on 4th August, 2006. The paragraphs of the

said affidavit relevant for the present purposes are as under:-

"That we hereby undertake and declare that we shall not construct the Third Floor of the said property, until and unless and the same is permitted by the MCD in future and other concerned authorities, during or after the completion of the building.

That we further undertake and declare that before starting the construction of the third floor, we shall take written consent from the said Mrs. Sarla Mehra, regarding the matter.

That no illegal construction shall be carried out on the Third Floor except for servant quarter.

That the terms of Affidavit shall remain binding upon all future prospective purchaser (s) of the Second Floor and above."

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 7of 15

16. The counsel for the defendant No. 1 has not denied the

execution of the said affidavit. The counsel for the defendant No. 3

also states that for the present purposes he is not disputing the

execution of the said affidavit. The senior counsel for the plaintiff

states that in these circumstances, the effect of the aforesaid affidavit

qua the right of defendant No.3 of construction of the third floor does

not require any evidence and on the interpretation of aforesaid

documents that aspect can be finally dealt with in this order. Thus

this order/judgment deals with prayer (e) in the prayer paragraph of

the plaint. It is contended by senior counsel for plaintiff that in view

of the affidavit aforesaid whereunder the defendant No.1 has

undertaken to before starting construction of 3rd floor, take written

consent of plaintiff, the defendant No.3 claiming rights through

defendant No.1 cannot construct 3rd floor, even if permitted by MCD,

without written consent of plaintiff and is liable to be permanently

injuncted therefrom.

17. After hearing arguments on 18th April, 2009, the matter was

adjourned for today to enable the parties to mutually resolve the said

controversy but the parties have been unable to do so.

18. The senior counsel for the plaintiff has contended that the

plaintiff is not accepting the sale deed also in favour of the defendant

No. 1. It is further contended that the sale deed does not refer to the

collaboration agreement and thus, the defendant No.3 cannot have

any benefit of the rights of the defendant No.1 under the

collaboration agreement. However, the said pleas are now not

tenable. It is not disputed that the defendant No.1 was authorized to

sell. The defendant No.1 admits sale to defendant No.3. The certified

copy of registered sale deed is on record. It is not the case that it is

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 8of 15 not in accordance with terms/authorization in GPA, exercising powers

whereunder it has been executed. Non mentioning of collaboration

agreement therein is of no avail. The GPA was given in consideration

of collaboration agreement and is in terms thereof. The GPA is for

consideration. Of course if it is held that the defendant No.1 himself

was disentitled from constructing 3rd floor without consent in writing

of plaintiff, the defendant No. 3 cannot have a better right,

notwithstanding non reference to affidavit (supra) in the sale deed.

19. Under the Collaboration Agreement, in lieu of the plaintiff

contributing the land for the construction of the proposed building on

the property, the defendant No. 1 paid to the plaintiff a non-

refundable sum of Rs. 36 lacs. There is no dispute that this amount

stands paid to the plaintiff. In consideration of the said payment and

further consideration of the entire expense in demolition/construction

of the new building being incurred by the defendant No. 1, the

allocation of the plaintiff and the defendant No. 1 in the proposed

new building is described in the collaboration agreement. The

allocation of the defendant No. 1 is described as entire second floor,

entire terrace over and above the entire second floor, one servant

quarter with common W.C. on the top terrace, use of common areas,

facilities and services, 30% undivided, indivisible and impartible

ownership rights in the plot of land underneath.

20. I have enquired from the senior counsel for the plaintiff as to

what was the consideration, if any, for the defendant No. 1 to, in the

affidavit give up valuable right of construction of the third floor save

with the permission of the plaintiff, if that is the interpretation

thereof by the plaintiff. The senior counsel for the plaintiff has

answered that the affidavit is in modification of the earlier agreement

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 9of 15 and hence no consideration was required therefor.

21. This court in Ansal Properties & Industries Pvt. Ltd. Vs. Dr.

Anand Nath MANU/DE/0824/1991 (and which judgment

unfortunately does not appear to be reported in any of the journals

having large circulation) has adjudicated nature of such collaboration

agreements and even specific enforceability thereof. It was held that

such collaboration agreements are agreements to transfer immovable

property as distinct from agreements of construction of immovable

property. It was further held that such agreement contemplates

exchange between the owner of the land and the owner of the

building constructed thereon, after the building has come into

existence. The argument that a suit for specific performance of such

agreement lies only after the building comes into existence was

negatived. It was further held that on construction of building, one is

the owner of land and other of the building and at that point of time,

a deed of transfer or exchange is contemplated - At that time, the

properties belonging to both are in existence, so clearly exchange of

each other's property will then be simultaneous. It was further held

that merely because of ownership of land, building constructed

thereon by builder under contract with owner of land, will not belong

to the owner on the principle of accretion; the building having come

into existence in accordance with terms of the contract and with

investment of the builder, belongs to the builder. A portion of the

building belonging to the builder is then transferred/exchanged

to/with the owner of land in consideration of owner transferring an

undivided share in land underneath to the builder.

22. On such understanding of collaboration agreements, the courts

have been issuing interim orders in disputes arising therefrom.

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 10of 15 Reference must be made to one such order of Justice H.L. Anand of

this court in Kailash Nath & Associates Vs Shri Badri Prasad in

suit No.221/1981, disposing of interim applications on 14th

September, 1981.

23. Seen in this light, the plaintiff herein in consideration of Rs 36

lacs and of being put into possession as owner of basement, ground,

first floors of newly constructed building, agreed to transfer 30%

undivided share in plot of land owned by her, to the defendant No.1

or his nominee and with right to construct second floor and above, as

owner thereof. To effectuate the agreement to transfer, GPA was

given to defendant No.2, again for consideration. The entire

consideration due to the plaintiff has been paid/delivered and the

transfer effected by execution of sale deed in favour of defendant

No.3.

24. The immovable property comprising of the terrace rights above

the second floor agreed to be transferred for consideration thus could

not have been dealt with in the manner of the affidavit aforesaid. The

same belonged to the defendant No. 1 and/or was agreed to be

transferred to his nominee and had the agreement between the

parties been that any rights therein (i.e. of refusal of permission to

construct thereon) were being created in favour of the plaintiff, the

parties would have entered into a proper agreement and would have

provided consideration for creation of such rights in the terrace

rights by the defendant No. 1 in favour of the plaintiff.

25. From the circumstances in which the affidavit and Power of

Attorney were executed, it appears that the plaintiff after receiving

Rs. 36 lacs was not willing to execute the Power of Attorney as

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 11of 15 agreed without the said affidavit being executed. The language of the

said affidavit also does not suggest that the defendant No. 1 had

agreed to give up his right of raising construction on the terrace

above the second floor to the plaintiff. There is no negative covenant

in the affidavit that the defendant No.1 or his nominee shall not

construct the 3rd floor as earlier agreed. The language suggests that

the plaintiff expressed apprehensions of inconvenience to her as

resident of lower floor in the event of 3rd floor being constructed, or

of entire construction including of her portion being delayed if 3rd

floor was to be also constructed at that time only. The said written

consent of the plaintiff cannot be an absolute denial by the plaintiff

for construction thereof or a demand for consideration by the plaintiff

for giving the consent. The said written consent has to be confined to

the plaintiff assuring herself that by construction of the said third

floor no inconvenience shall be caused to the plaintiff and if any,

adjustment with respect to timing of construction is required, the

same is done. The affidavit cannot be read to mean a negation of the

rights with respect to the terrace rights in favour of the defendant.

26. The principles of Section 11 of the Transfer of Property Act can

also be invoked with advantage in this regard. Section 11 is as

under:

"11. Restriction repugnant to interest created. - Where, on a transfer of property, an interest therein is created absolutely in favour of any person, but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.

[Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, nothing in this section shall be deemed to affect any right

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 12of 15 which the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof.]"

The object and principle behind Section 11 is that the

transferors should not be allowed to put a clog or restriction on the

right of a vendee so as to be repugnant to the property sold. The

main provision in a transfer is to be given effect and the repugnant

one discarded. Here it is clear that the main object of the plaintiff as

transferor was to, for consideration already received, make an

absolute transfer of 30% undivided share in land with right to

construct second floor and above; the inconsistent provisions as now

pleaded of construction of third floor being not allowed inspite of

being permissible in law, for the reason of plaintiff not consenting

thereto in writing, cannot be given effect to. This is a principle of

universal application, even de hors Section 11 (supra). The clause in

the affidavit, if interpreted as contended by senior counsel for

plaintiff, would be void and unenforceable. There can be no absolute

restraint on construction of 3rd floor, at the sweet will and discretion

of plaintiff. The plaintiff cannot be permitted to so cut down or

defeat the estate created.

27. In the plaint also in para 30 which alone deals with the

construction above the terrace floor, the plaintiff has not stated any

reason as to why if the plans for construction are sanctioned of the

third floor, the same should not be allowed to be constructed in terms

of the Collaboration Agreement.

28. The plaintiff had claimed ex parte ad interim relief on the plea

that the construction above the second floor was sought to be carried

out without obtaining sanction. In fact, in the plaint as filed the

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 13of 15 plaintiff has in para 5 admitted that the defendant No. 2 was

authorized to sell the terrace rights to any third party and for

sanction of plan etc. Had the parties intended to novate the

Collaboration Agreement with respect to the terrace rights, the

plaintiff in the General Power of Attorney which was as aforesaid

registered after the affidavit, would have put a rider on the

construction rights with respect to the said terrace. The plaintiff did

not choose to do so. The defendant No.3 has dealt with defendants

No. 1 and 2 on the basis of collaboration agreement and GPA and the

plaintiff cannot now be permitted to arm twist the defendant No.3 to

pay consideration to the plaintiff for consent in writing to construct

the third floor.

29. I, therefore, find that the defendants if obtain the sanction for

construction of the third floor are entitled to carry out the said

construction and the plaintiff is not entitled to injunct the defendants

from carrying out the same for the reason of having not given the

consent in writing. The plaintiff is at best entitled to ensure that one

servant quarter on the said terrace is provided by the defendants

elsewhere, in terms of the Collaboration Agreement and the affidavit.

30. In the aforesaid circumstances, these applications and the suit

qua relief (e) are disposed of with the following directions:-

(i) The defendant No. 1 shall to the best of his ability remove

the seepage and carry out the other work for the

prevention of the same within thirty days hereof. If the

plaintiff is not satisfied with the said works and/or if the

seepage persists, the plaintiff shall be entitled, in

accordance with the agreement to carry out the work and

to make monetary claim with respect thereto against the

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 14of 15 defendant No. 1.

(ii) The defendant No. 1 shall ensure that the license for

operation of the elevator in the building is obtained

within ten days herefrom failing which the plaintiff shall

have a monitory claim against the defendant No. 1 for the

same also.

(iii) The earlier order restraining the defendant No. 3 from

occupying the second floor and the terrace and further

restraining, the defendant No. 3 from selling, alienating

or encumbering the same are vacated.

(iv) The defendant No. 1 shall construct the servant quarter

with common toilet as agreed aforesaid within four weeks

herefrom failing which the plaintiff shall be entitled to

construct the same at her own costs and to make a claim

with respect thereto against the defendant No.1. The

plaintiff shall not obstruct the defendant No. 1 in any

manner from carrying out construction of servant quarter

within 4 weeks as aforesaid.

(v) The plaintiff is not found entitled to any injunction

restraining the defendants from raising construction

above the second floor in accordance with the

Collaboration Agreement for the reason of the plaintiff

having not consented to the same in writing. The suit

claim in terms of paragraph (e) of the prayer paragraph

in the plaint is dismissed.

Decree sheet be drawn.

RAJIV SAHAI ENDLAW,J April 22, 2009 rb

IA No. 11716/2008 & 12847/2008 in CS(OS) No.2017/2008 Page 15of 15