M/S Dlf Home Developers vs Vibes Developers Pvt. Ltd. & Anr.
2009 Latest Caselaw 2402 Del

             * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                   Date of Reserve: 26.5.2009
                                                                   Date of Order: July 01, 2009

OMP No. 471/2008
%                                                                                01.07.2009

        M/s DLF Home Developers                     ... Petitioner
                      Through: Mr. Sanjay Suri, Sr. Advocate with
                      Mr. Sonal Sinha, Advocate

                   Versus


        VIBES Developers Pvt. Ltd. & Anr.           ... Respondents
                      Through: Mr. J.P.Sengh, Sr. Advocate with
                      Mr. Gaurav Bahl, Advocate


JUSTICE SHIV NARAYAN DHINGRA

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

This application/petition has been made under Section 9 of the

Arbitration & Conciliation Act, 1996 by the petitioner alleging that the petitioner

had given an amount of Rs.20 crore to the respondent no.1, a Private Limited

Company registered under the Companies Act, in terms of an agreement dated

9.11.2006 entered into between the parties. Under the agreement, the

respondent no.1 in the first stage was to look for around 320 bighas (± 15%) of

contiguous land located approximately 4 kms from DPS and on the same side of

Jaipur-Ajmer Highway in Village Sarangpura, Govindpura, Ramchandpura, Tehsil

Sanganer Fagodiawala, Jaichandpura, jaibhawanipura, Thikarya, Govindpura

and Bichpudi Tehsil, District Jaipur with minimum two frontages of 700 feet and

700 m each and abutting/along/adjacent to the main Jaipur-Ajmer National

Highway. After identifying this land, the petitioner was to purchase this land from

the rightful owners at an average price per bigha (1.6 bigha = 4840 sq. yards = 1

acre) as given in the agreement. The respondent was to get consolidation fees

of a sum equivalent to 4% of the average value of the land. The petitioner in

terms of this transaction gave a sum of Rs.20 crore as advance to the

respondent company. Out of this advance, the respondent company was to pay

to the different farmers/land owners a part of the sale consideration and was also

to adjust the expenses. It was agreed that after such deduction of advances as

made by the respondent out of this amount to the land owners, the petitioner was

to pay the balance consideration to the land owners and execute the transfer

deeds. The respondent was to provide to the petitioner a statement of land

owners with the shareholding and the amount already paid and payable along

with all necessary land registry record as may be required to ascertain the status

of ownership of the land sought to be conveyed. The respondent company in

order to secure the interest of the petitioner had issued two post dated cheques

of Rs.10 crore each to the petitioner after receiving advance of Rs.20 crore from

the petitioner. It is submitted by petitioner that this amount of Rs. 20 crore was

deposited by respondent company in its account. The petitioner when checked

the account of the respondent found that out of the amount of Rs.20 crore

received by respondent company from the petitioner the respondent deposited

Rs.15 crore with the Registrar General of this Court towards purchase of a

property in Golf Links viz. 208, Golf Links, New Delhi through Court auction

instead of spending this amount for the purpose for which it was given.

Remaining Rs.5 crore was also not spent by the respondent in discharge of its

liability under the agreement. In support of this contention, the petitioner has

placed on record the auditor's report, balance sheets and other accounts of the

respondent company as obtained from the Registrar of Companies. The

petitioner's contention is that the respondent miserably failed in discharge of its

liability as per clause 4 b) of the agreement, wherein it was provided that the time

was essence of this agreement. The First Party (respondent) had assured the

Second Party (petitioner) that it would arrange the entire procurement of subject

land within a period not exceeding 150 days from date of this agreement. Stage

I would be completed within 100 days and Stage II will be completed in 125 days

and Stage III was to be completed within overall maximum period of 150 days of

the agreement. He submitted that in view of the fact that respondent had

violated the terms of the agreement and had in fact utilized the money, which

was given for assimilation of land, towards other heads, the respondent should

be asked to give security and the bank account of the respondent wherein the

respondent had received back a part of Rs.15 crore be attached. It is argued by

the petitioner that it had learnt that one of the owners had already refunded an

amount of approximately Rs.7.5 crore, which is lying in the account of the

respondent company. The petitioner's case in nutshell is that funds given by the

petitioner to the respondent no.1 were diverted by the respondent no. 2 for his

own purposes instead of procuring the land for the petitioner.

2. The learned Counsel for the respondents on the other hand

submitted that the respondents had acted sincerely in discharge of the

agreement. He submitted that respondents had paid huge sums to various land

owners for their lands on Jaipur-Ajmer Highway in accordance with the

agreement, but it was the petitioner who failed to enter into transfer documents

with the land owners. He alleged that after the petitioner was given information

by the respondent about different land owners, the petitioner directly contacted

the land owners in order to bypass the respondents and tried to enter into sale

deeds with them directly. The petitioner was not even having funds to purchase

the entire land as was sought to be procured with the help of the respondent.

The petitioner had also filed a company petition before the Company Court for

winding up of the respondent company and before the Company Court the

respondent had filed around 10,000 documents showing that the respondent had

paid advances to different land owners and had acted in compliance of the

agreement.

3. The respondent no.1 in this case is a private limited company

having obligation under law to maintain proper accounts and to show all

expenses and revenue in its books of accounts. The plea taken by the

respondent that it had spent crores of rupees in terms of the agreement is not

supported by the accounts of the company. When the learned Counsel for the

respondent was confronted with the accounts of the company, the learned

Counsel stated that the respondent had got white money from the petitioner and

used this white money for purchase of a property through Court auction and in

lieu thereof respondent no.2 spent from his own pocket to pay the farmers/land

owners to identify the land in terms of the agreement and to verify the title

documents and to pay advances to the land owners. The respondent had failed

to place on record any accounts either of the respondent no.1 or of respondent

no.2 showing that any amount was spent by respondent no.1 out of the funds

made available to it by the petitioner for the purpose of the agreement. The

petitioner had not advanced funds to the respondents to enter into illegal

transactions in the name of its Director. The petitioner had entered into a lawful

agreement with the respondent whereunder the respondent no.1, a private

limited company was to pay the land owners a part of the consideration amount

on behalf of petitioner and respondent no.1 was to receive lawful

commission/profits out of the transaction. It was not agreed by the petitioner and

the respondents that the funds made available by the petitioner would be used by

the respondent no.2 as white money for his own transaction and he shall induct

some black money and would pay the farmers in his own name. All agreements

with the farmers were to be entered into for the benefit of the petitioner and the

agreements entered with the farmers were to reflect this. I consider that the plea

taken by the respondent no.2 that he had spent black money/unaccounted

money from his own pocket in order to procure/fulfill the terms of the agreement

cannot be entertained by the Court. If such a plea is entertained that would

amount to Court legalizing the illegal acts and transactions entered into by

respondent no.2 and shall also put a stamp of validity of using unaccounted

money by the respondent. If such a plea is entertained the Court shall in fact be

acting as a money launderer. I consider that such a plea cannot be entertained.

All transactions were to be done by the respondent no.1 lawfully out of the

money provided to it for the purpose.

4. The balance sheet of respondent no.1 company shows that the

respondent no.1 had in fact diverted the funds provided by the petitioner from the

very beginning and the intention of the respondents had been just to take the

petitioner for a ride.

5. In view of circumstances explained above, the petition of the

petitioner is allowed to the following extent:

1. Respondents No. 1 & 2 are restrained from operating their bank

account bearing no. 051-405918-001 at HSBC Limited Branch at 24,

Ashok Estate, Barakhamba Road, New Delhi.

2. The respondents are directed to furnish a security of immovable

property to the Registrar General of this Court worth Rs.20 crore within

30 days by submitting title deeds of immovable property. In alternate,

the respondents are directed to furnish a bank guarantee to the tune of

Rs.20 crore in favour of the petitioner to the Registrar General of this

Court which shall be forwarded to the Arbitrator once the arbitration

proceedings start. After, the bank guarantee/security of immovable

property is furnished, the respondents would be at liberty to operate

the aforesaid bank account.

With these directions, the petition stands disposed of.

July 01, 2009                                      SHIV NARAYAN DHINGRA, J.
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