Delhi High Court

Lt. Col. Lalit Chawla (Retd.) vs Sh. Ashok Chawla & Anr. on 2 July, 2009

Author: Manmohan Singh

*             HIGH COURT OF DELHI : NEW DELHI

+          I.A. Nos.9244, 9741 and 9742/08 in CS(OS) No.3153/1996

%                      Judgment reserved on :         15th April, 2009

                       Judgment pronounced on :          2nd July, 2009

Lt. Col. Lalit Chawla (Retd.)                       ...Plaintiff
                      Through : Mr. Manish Gambhir, Adv.

                       Versus

Sh. Ashok Chawla & Anr.                            ....Respondents
                   Through : Mr. Rajeeve Mehra, Sr. Adv. with Ms. Payal
                             Chawla Singh, Mr. M.S. Ananth,
                             Mr. Maneesh Gumber, Mr. J. Lal and
                             Ms. Yamini Tarapore, Advs. for
                             Respondents
                             Mr. G.L. Rawal, Sr. Adv. with
                             Ms. Jyoti Mendiratta and Mr. Sugam
                             Seth, Advs. for applicants in
                             IA Nos.9242/2008 & 9244/08
                             Mr. Chetan Sharma, Sr. Adv. with
                             Mr. Pawan Kawrani, Advs. for
                             Purchaser/applicants in IA No.9741/08

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

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

2. To be referred to Reporter or not?                              Yes

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

MANMOHAN SINGH, J.

1. By this order, I propose to decide three applications being

I.A.Nos.9244/08, 9741/08 and 9742/08.

2. The brief facts are that the Plaintiff and Defendants No.1 and

2 are the sons of Late Sh. G.C.Chawla, an eminent medical practitioner

who died on 20th December, 1996. The wife of late Dr. G.C.Chawla

Mrs. Shanti Chawla had pre-deceased him in January 1991.

3. At the time of his death late Dr. G.C.Chawla was of the age

of 93 years. He was bed ridden and not mentally fit in the years

preceding his death due to old age and infirmity. According to the

plaintiff, at the time of his death, he left behind the following assets:-

i) Property No.D-240, Defence Colony, New Delhi.

ii) Inheritable tenancy rights in property No.A-31 and

A-32, Connaught Place, New Delhi.

iii) Negligible moveable assets in bank accounts.

4. As averred by the plaintiff, late Sh. G.C.Chawla had

executed a registered Will in 1975 giving the aforesaid three properties

to all his three heirs, namely, the plaintiff and defendant No.1 and 2.

According to the said Will late Mrs.Shanti Chawla had 1/4th share in the

property at Defence Colony but Mrs.Shanti Chawla pre-deceased the

plaintiff‟s father.

5. According to the plaintiff subsequently late Sh. G.C.Chawla

had also executed another Will in the year 1979 whereby his entire

estate was left to plaintiff and defendant No.2 to the total exclusion of

defendant No.1 as he was unhappy and discontent with the conduct of

defendant No.1 for the past many years and therefore, he wanted to

disinherit him from the inheritance/share of his estate. However, the

plaintiff states that he has no intention to usurp the property and wishes

to share the property with the defendants equally according to the Will

dated 15th March, 1975.

6. The plaintiff sought a decree in the suit filed for permanent

injunction and partition holding that the plaintiff is 1/3 rd owner of the

suit properties and to divide the property by preliminary decree of

partition. By order dated 23rd December, 1996 an ex parte order was

passed against the defendants restraining them from letting, sub letting

or creating any other third party interest in the properties mentioned in

Schedule "A".

7. By order dated 6th April, 2004 passed by this court, a

preliminary decree was passed for partition in respect of the properties

mentioned in Para 5 of the plaint. Sh. Sikandar, Advocate was

appointed as Local Commissioner for suggesting the mode of partition

of suit property at D-240, Defence Colony, New Delhi.

8. This order was passed on the parties‟ statement informing the

court that plaintiff and defendant No.1 are the only legal heirs of

deceased Sh. G.C.Chawla and as such are entitled to divide the property

in equal shares. Sh.Anil Chawla, defendant No.2, brother of plaintiff

and defendant No.1 has already died and as he was unmarried he did not

leave behind any legal heir. On the basis of the said statement, a decree

for partition as well as for rendition of accounts was duly passed.

9. By another order dated 24th May, 2007 passed by this court it

is mentioned that the defendant has no objection to the factual matrix

placed by the Local commissioner to the effect that the existing structure

cannot be divided into two equal shares in terms of the preliminary

decree dated 6th April, 2004 and the court has observed that the property

under these circumstances cannot be partitioned by metes and bounds,

therefore, the plaintiff and defendant are entitled to their share of the

property or equivalent value thereof as per the fair market value. The

court by this order appointed Mr.Raman Kapoor, Advocate as the Local

commissioner who was given the authority to ascertain the market price

of the property bearing No.D-240, Defence Colony, New Delhi.

10. It was directed that the Court Commissioner shall also settle

the terms of proclamation and effectuate the sale by public auction

which would be conducted after due publicity in the press and the right

was given to the parties to submit bids and participate in the sale in

accordance with law.

11. The defendant No.1 also challenged the order dated 24 th

May, 2007 before the Division Bench of this court by filing an appeal

being FAO(OS) No.349/07 which was dismissed, by order dated 20th

September, 2007.

12. When the matter was listed before the court on 8th May, 2008

it was reported that the Local commissioner had filed his report on 2nd

May, 2008 and as per the said report, it was stated that the sales

proclamation in respect of the suit property was published in the

newspaper on 7th April, 2008 wherein it was indicated that the auction

of the suit property shall be held on 26 th April, 2008. Pursuant to the

auction held on the said date, M/s. Oceanic Homes Pvt. Ltd. (hereinafter

referred to as „Purchaser‟) was declared as the highest bidder at

Rs.19.15 crores. A Pay Order of 10% of the bid amount received from

the other bidders was returned back to them. It is mentioned that the

highest bidder has deposited Pay order of Rs.3,70,07,000/- with the

Court Commissioner and a sum of Rs.1,08,68,000/- being 10% of the

bid amount deposited earlier with the Local commissioner, thus totaling

to Rs.4,78,75,000/- for this property.

13. According to the terms of sale, the balance 75% of the bid

amount was to be paid within 90 days from the date of auction i.e. on or

before 26th July, 2008 to complete the confirmation of sale. As per the

said order, the said amount was deposited with the Registrar General of

this court in a Fixed Deposit Account and the direction was issued in

this regard.

14. The Purchaser subsequently filed an application being

I.A.No.8283/08 for enlargement of time granted to the Purchaser against

which the parties have raised no objection and purchaser has to deposit

the balance sale consideration in this court by 18th August, 2008.

15. However, before the next date an application being

I.A.No.9244/08 was filed by one M/s. Buildmore India Ltd. (hereinafter

refered to as „Builder‟) under Order 21 Rule 54 CPC read with Sections

47 and 151 CPC for adjudication of the claim of the said party. The

prayer in this application was made to the extent that this court should

allow the claim of the applicant i.e. M/s.Buildmore India Ltd in respect

of 1/3rd undivided share of the deceased ( defendant No.2) in the

property bearing No.D-240, Defence Conony, New Delhi and prayer

was also made to keep aside the 1/3 rd share of the sale proceeds out of

the sale of the said property.

16. Another application being I.A. No. 9742/08 was filed by the

Builder under Order XXI Rule 59 read with Order XXI Rule 92 CPC

with the prayer that stay of confirmation of sale in favour of the

Purchaser be stayed pending adjudication of the claim of the Builder

made in I.A. No.9244/08 and alternatively keep aside 1/3 rd amount of

the sale proceeds out of the total sale consideration of property bearing

No. D-240, Defence Colony, New Delhi.

17. The prayer made in the abovementioned two applications

filed by Builder are based upon on the following averments :

(i) That Builder/applicant has come to know that the

property in question was put to public auction through court

auction in the present proceedings.

(ii) The Builder has a claim in the property in question

and is entitled to receive part of the sale proceeds. It was

alleged in the application that the Builder had entered into an

agreement to sell dated 30th August, 1997 with original

defendant No.2 Mr. Anil Chawla (since deceased in the suit

herein) in respect of 1/3rd undivided share in the property in

question for a total consideration of Rs.45 lacs which he

inherited on demise of his father.

(iii) The Builder had paid Rs.1,75,000/- to Mr.Anil

Chawla as advance earnest money and part sale consideration

i.e. Rs.21,000/- in cash on 30th August, 1997 and

Rs.1,54,000/- by two cheques for Rs.50,000/- dated 30th

August, 1997 and another for Rs.1,04,000/- dated 15th

September, 1997 and both the cheques were encashed by

Mr.Anil Chawla and the money was appropriated towards part

payment of the sale consideration. Copies of the agreement

dated 30th August, 1997 and receipts alongwith copies of the

cheques were annexed with the said application.

(iv) It is also mentioned in the application that the

balance consideration was to be paid by the Builder within 30

days from the date of registration of the conveyance deed for

freehold conversion of the property in question and handing

over possession of the property equivalent to 1/3 rd undivided

share. However, in September, 1997 when the Builder was

waiting for the division of the property in question amongst

the three brothers, i.e. Mr. Anil Chawla (Defendant No.2) and

his brothers i.e. plaintiff and defendant No.1, Mr.Anil

Chawla informed the builder about the institution of the

present suit by the plaintiff. It is the case of the Builder that

Mr. Anil Chawla was informed about the passing of the order

dated 23rd December, 1996 restraining the parties hereto from

creating any third party interest in the property in question and

taking possession thereof. However, Mr.Anil Chawla assured

the Builder that there was no cause for concern and

represented that he had informed his brothers of the

agreement to sell and assured the Builder of its 1/3rd

undivided share in the property in question.

18. In the last week of May, 2008, the Director of the Builder

was informed by one Mr. Sanjay Sharma that the property in question

has been put to auction by this court in the present proceedings. The

Director, therefore, approached his counsel and also got inspected the

record of the present case and petition was prepared which was filed on

28th May, 2008.

19. On inspection, it was transpired that the plaintiff herein had

filed an application under Order 39 Rule 2-A being I.A.No.1047/98 on

4th February, 1998 against defendant No.2 Mr.Anil Chawla and

Mrs.Manmohan Kaur, the Director of the applicant alleging that

Mr.Anil Chawla had entered into an agreement to sell dated 30 th August,

1997 with the applicant in collusion with defendant No.2 despite order

dated 23rd December, 1996 passed by this court. A copy of the

agreement to sell dated 30th August, 1997 was also placed on record.

20. It appears from the record that the notice of the said

application was issued to defendants on 5th February, 1998.

21. Vide order dated 19.2.2002, the plaintiff‟s application under

Order XXI Rule 4 CPC for substitution of legal representatives of

deceased defendant No.2 was disposed of by this Court on the ground of

averments that after the demise of Mr.Anil Chawla and as per the

representation of the plaintiff and defendant No.1 herein, they were the

only surviving legal heirs and legal representatives of the deceased who

was bachelor and died issueless at the time of death i.e. on 29.9.1990.

The name of Mr.Anil Chawla was deleted from the array of defendants.

22. The Builder submits that on the basis of the statement of the

plaintiff and defendant No.1 before this court about the death of Mr.Anil

Chawla who was unmarried and had no legal heirs, this court passed a

preliminary decree for partition on 6th April, 2004 in respect of the suit

properties and I.A.No.1047/98 under Order XXXIX Rule 2 A filed

earlier was allowed to be disposed of on the said date by the parties.

23. In the light of the abovesaid facts and circumstances, the

allegations of the Builder are that the parties to the suit i.e. plaintiff

and defendant No.1 have fraudulently wriggled out of the obligations

undertaken by their brother under the agreement to sell dated 30 th

August, 1997 and have tried to usurp the suit property by over-reaching

the rights of the Builder since the Builder is not a party to the present

suit for partition and thus had no means to know of the proceedings

and the orders passed herein.

24. It is mentioned that the applicant has always been ready and

willing to abide by the terms and conditions of the said agreement. It is

stated in the application that even in the proclamation of sale published

on 7th April, 2008 the plaintiff and defendant did not disclose the

encumbrances on the property in question. In the light of the above, it

is prayed that the confirmation of sale be stayed in favour of the

Purchaser pending adjudication of the claim of the Builder or

alternatively keep aside 1/3rd of the sale proceeds.

25. The matter did not rest here as the Purchaser on 13.8.2008

also filed an application being I.A. No.9741/08 under Section 151 CPC

for cancellation of the proclamation of sale of property and return all the

earnest money to him who had deposited 25% of the bid amount of

Rs.4,78,75,000/- before the learned Registrar General of this court and

also to grant damages in view of the concealment of execution of the

agreement to sell by the plaintiff herein as well as late Sh.Anil Chawla,

defendant No.2.

26. Besides the averment already mentioned by the Builder in

the two applications filed, the Purchaser has stated in the application

that after depositing 25% of the total sale consideration, it came to his

knowledge that the parties herein are not in possession of the original

title deeds of the property and therefore, they are not in a position to

transfer the property in his favour although the directions were issued

by this court on 28th July 2008 to procure the copies of the said title

deeds from the appropriate authorities.

27. It is stated in the application that the plaintiff and defendant

have made false statement before the Purchaser that the suit property is

free from encumbrances and as it has come to the knowledge of the

Purchaser that M/s. Buildmore India Ltd/Builder moved two

applications in the present suit claiming that they are in possession of

an agreement to sell which was executed by Mr.Anil Chawla who was

earlier defendant No.2 before passing of the preliminary decree.

28. These facts were very much in the knowledge of the plaintiff

and defendant herein as the plaintiff himself filed an application under

Order 39Rule 2-A being I.A.No.1048/08 for contempt proceedings

against Mr. Anil Chawla and the builder and in view thereof, now it

is clear that parties to the suit have concealed these facts from the

court. It has not been disclosed that the third party has a right in the

property. It is further mentioned in the application that the aforesaid

facts were not enough as the plaintiff also entered into an agreement to

sell dated 19th July, 2004 with one Sh.Sanjiv Anand whereby the

plaintiff had stated that he is 50% owner of the suit property by way of

compromise decree passed by this court and thus sold 50% share of the

property to one Mr.Sanjiv Anand for total consideration of Rs. 30 lakhs

vide registered agreement to sell dated 19 th July, 2008. This fact has

also come to the knowledge of the Purchaser later on, from different

people.

29. According to the Purchaser he came to know from various

persons that the plaintiff and defendant have executed several

agreements to sell for the said property. The contention of the Purchaser

is that in view of the concealment of execution of the aforesaid

agreement to sell by the plaintiff and late defendant No.2 he cannot get

the property transferred to its name nor he is expected to get clear title

of the property in question and thus the amount deposited by the

Purchaser herein before the Registrar General of this court be released

in favour of the Purchaser and the plaintiff and defendant herein be

made liable to pay damages and interest on the amount deposited by the

Purchaser. In addition, there must also be a direction issued to Delhi

Police to lodge an FIR against the plaintiff and defendant as they have

committed fraud upon the Purchaser herein as well as this court.

30. The replies to these three applications being I.A. Nos. 9244,

9741 and 9742 of 2008 have been filed by the plaintiff as well as

defendant. In the nutshell, the execution of the alleged agreement dated

30th August 1997 between Mr. Anil Chawla and the builder has been

denied. It is stated that the alleged claim of the builder is patently time

barred and the alleged agreement without consideration is void in law.

The alleged agreement with Mr. Anil Chawla whose mind was not

developed and who was unable to comprehend himself is not valid in

law. It is alleged that the Builder took advantage of the mental

condition of Mr. Anil Chawla and when the agreement was entered into,

the present suit had already been filed in which a restraint order was

issued by this court not to create an third party interest in the suit

property.

31. It is further submitted that the Builder was aware that the

property can only be converted into freehold on the application of all the

three co-owners and if the Builder was serious about the same, he would

have also approached the other co-owners. The question of division of

properties amongst the parties did not arise as long as the property was

leasehold with the office of L & DO.

32. It is also not denied that I.A.No.1047/94 was disposed of in

view of the death of Mr. Anil Chawla. It is also not denied that a notice

was issued to Mr. Anil Chawla who never appeared as service may not

have been effected upon him. It is denied that any false statement has

been made or any fact has been suppressed from this court or any fraud

has been committed as mentioned in the three applications. It is

submitted that the plaintiff has full right to dispose of the property as per

existing law.

33. It is admitted that inter-se arrangement between the plaintiff

and one Mr.Sanjiv Anand is in existence. In terms of the said

arrangement Mr.Sanjiv Anand is entitled to certain money from the sale

proceeds of the suit property in question which is to be received by the

plaintiff. The arrangement in no manner impedes the transfer of the

rights, title and interest in the property situate at D-240, Defence

Colony, New Delhi by the plaintiff to the Purchaser.

34. It is further stated that the Purchaser has knowledge about

the said arrangement and is now using the said fact as a ploy to wriggle

out from paying the balance amount of money due and payable by the

Purchaser.

35. I have heard learned counsel for the respective parties at

considerable length and have gone through the relevant pleadings and

documents placed on record. It is not in dispute that the Purchaser has

already deposited 25% of the total sale consideration amounting to

Rs.4,78,75,000/- as per the terms and conditions of the sale proceedings.

It is the admitted position that by order dated 27 th July, 2008 passed in

I.A.No.8283/08 filed by the Purchaser, no objection was raised by the

parties for enlargement of time to deposit the balance sale consideration

in court till the next date of hearing i..e. 18 th August, 2008 and the

present application has been filed on 13.8.2008 by the Purchaser for

refund of amount inter alia mainly on the ground of creating the

alleged third party interest in the property i.e. Builder. After having

come to know about the facts stated in the two applications by the

Builder, the Purchaser apprehends that he does not have any hope to

get the clear title of the suit property and prays for refund of money

and damages. Prima facie, it appears that there is no fault of the

Purchaser under the present circumstances. The Purchaser has rightly

made the following grievances:-

(i) that the parties are not in possession of title

deeds.

(ii) That Sh.Anil Chawla had entered into an

agreement to sell with Builder and created a third

party interest before passing the preliminary decree.

(iii) That the plaintiff has also entered into an

agreement dated 19th July, 2004 with Mr.Sanjiv

Anand claiming 50% owner of the property by

virtue of compromise decree passed by this court.

36. The contention of the learned counsel for the plaintiff and the

defendant is that the mind of Mr.Anil Chawla was not developed and he

could not comprehend himself as he was unable to continue his studies

and therefore, the agreement dated 30.08.1997 between Mr.Anil

Chawla and the Builder is not valid in law and has no force. I accept the

submission of Mr.G L Rawal, learned Senior counsel appearing for the

Builder, that this stand was not taken in the plaint nor were the said facts

mentioned by the parties at the time of passing of the preliminary

decree, therefore, the said stand is not tenable at this stage.

37. The next submission of the learned counsel for the plaintiff is

that the agreement dated 30.08.1997 between Mr.Anil Chawla and the

Builder is in violation of the ex parte ad interim orders passed by this

court on 23.12.1996. Mr.Rawal has argued that Mr. Anil Chawla was

aware about the ex parte orders passed by this court on 23.12.1996 and

he informed the Builder that his brothers have been informed about

this agreement to sell. Mr. Rawal has further argued that the main fact

of the matter is that when the preliminary decree was passed by this

court on 06.04.2004, the plaintiff did not inform about the factum of the

execution of the agreement between Mr.Anil Chawla [defendant no.2]

and the Builder. On the date of passing of the preliminary decree, the

parties were fully aware about the said facts as the plaintiff himself had

filed an application for violation of ex parte ad interim orders under

Order 39 Rule 2-A CPC being IA no.1047/1998 against Mr.Anil Chawla

and Mrs.Manmohan Kaur, one of the Directors of the Builder.

38. Another leg of the argument of the learned counsel for the

parties to the suit and the defendant is that the application filed by the

Builder is hopelessly barred by time as the alleged agreement to sell was

executed on 30.08.1997 and the application was filed in the year 1998.

Mr.Rawal has given the explanation in this regard to the effect that the

application is not barred by time due to the reason that as per the

agreement, 1/3rd possession was required to be given to the Builder and

secondly, the property was to be made free-hold by the parties but as of

today, the said requirements have not been fulfilled and therefore, the

application is not barred by time. He has further argued that the plaintiff

was aware about the execution of the agreement in the year 1997,

therefore, the plaintiff has filed the application being IA no.1047/1998

under Order XXXIX Rule 2-A CPC on 4th February, 1998 and notice

of the same was also issued to the defendants and both the parties were

supposed to apprise the court of these facts when the preliminary

decree was passed on 06.04.2004.

39. Since this court is not deciding any rights or title of the

Building in these applications, therefore, the question of delay and

limitation is left open, which can be considered at the appropriate stage

if any remedy is availed by the Builder in future. At this stage, the court

is concerned as to whether at the time of passing of decree or on the date

of proclamation, the parties have placed the correct facts before the

Court not.

40. The plaintiff as well as the defendant have cited various

judgments in support of their submissions that the preliminary decree

which will be executed, would be the final decree and not the

preliminary decree and that the agreement to sell does not confer any

right and it is only a right to litigate and is not an encumbrance and the

grant of relief of specific performance with respect to immovable

property is not automatic. In my view, these judgments do not help the

case of the parties at this stage as the prayer in the present applications

is for cancellation of the proclamation issued by this court and it is to be

seen as to whether the Purchaser has made out any case for the relief

claimed in the light of the averment made in these applications.

41. Mr.Chetan Sharma, Senior Advocate appearing on behalf of

Purchaser has argued that the plaintiff and defendant were fully aware

about the factum of the said alleged agreement between defendant No.2

and Builder as the plaintiff himself has moved an application before this

court under Order XXXIX Rule 2-A being I.A.No.1047/98. The said

fact has not been disclosed by the parties while passing of the

preliminary decree on 6th April 2004, and on 24th May, 2007 when the

Local commissioner was appointed to sell the property in question and

they have made an incorrect statement before the Court at the time of

obtaining the preliminary decree as an impression was given to the court

that both the parties are entitled to share the suit property in equal share.

42. Prima facie, this Court is in agreement with the submissions

of Mr. Chetan Sharma, learned Senior Counsel for the Purchaser. It

appears from various orders that the court has passed the preliminary

decree for partition in favour of the plaintiff and defendant in equal

share on the basis of the statement made before this court on 6 th April,

2004 and 24th May, 2007 for sale of the property by appointing the

Local commissioner. At no point of time, it was informed to the court

that there was an agreement (rightly or wrongly) between Mr.Anil

Chawla (earlier defendant No.2) and the Builder otherwise the court

ought not to have passed the preliminary decree on 6 th April, 2004 and

would have asked the parties to the suit for its satisfaction on this

aspect. Mr. Chetan Sharma, Senior counsel has referred to the

provisions of Order XXI Rule 66(c) of CPC and has argued that the

said sale is contrary to this provisions and questioned as to why the

Purchaser would purchase the property when its title is under cloud by

paying the full market value. He has argued that had the Purchaser

been aware about these facts stated in the applications, he ought not to

have gone for the bid to purchase the suit property. Mr. Chetan Sharma,

learned Senior counsel has also referred a decision passed by the Apex

Court in S P Chengalvaraya Naidu [dead] by L.Rs. V. Jagannath

[dead] by L.Rs. [1993] 6 JT [SC] 331, which is as under :-

"In this case Jagannath had obtained preliminary decree for partition by suppressing and not disclosing all the material facts and by misrepresenting the facts obtained a preliminary decree of partition. An application for final decree was opposed on the ground that the preliminary decree was obtained by playing fraud upon the Court. The trial Court had dismissed the application but High Court reversed the findings of the trial Court. The Apex Court in appeal set aside the judgment of the High Court and restored that of the trial Court. The Apex Court held as under [para 8] :

A litigant, who approaches the Court, is bound to produce all documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side, then he would be guilty of playing fraud on the Court as well as on the opposite party."

43. Lastly, he argued that in fact the plaintiff and defendant have

misled the court and the Local commissioner has issued the notice of

proclamation in the newspaper wherein incorrect terms and conditions

and details of the property are referred. I agree with the submission of

Mr. Chetan Sharma, learned Senior counsel and I consider the

Purchaser has made a strong grounds for cancellation of proclamation of

sale of property bearing No.D-240, Defence Colony, New Delhi and in

view of the facts and circumstances the Purchaser‟s application being IA

No.9741/2008 is allowed and the purchaser is entitled to receive the

refund.

44. In view of the above, it is directed that the Registrar General

of this court would refund the 25% of the bid amount i.e.