Delhi High Court

M/S Ashima Securities Pvt. Ltd. vs Municipal Corporation Of Delhi on 27 January, 2010

Author: Reva Khetrapal

                                  REPORTED
*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                            DATE OF RESERVE: December 11, 2009

                             DATE OF DECISION: January 27, 2010

+                            CS(OS) 1713/2007

      M/S. ASHIMA SECURITIES PVT. LTD.          ..... Plaintiff
                     Through: Mr. A.S. Chandhiok, Sr. Advocate
                              with Mr. B.L. Wali, Ms. Geetika,
                              Mr. Rajesh Gupta, Mr. Harpreet
                              Singh and Mr. Deepak Arora,
                              Advocates.

                        Versus

      MUNICIPAL CORPORATION OF DELHI              ..... Defendant
                    Through: Mr. Sanjay Jain, Sr. Advocate with
                             Ms. Maninder Acharya, Mr.Amit
                             K.Paul and Mr. Sarfaraz Ahmad,
                             Advocates.

      CORAM:
      HON'BLE MS. JUSTICE REVA KHETRAPAL
1.    Whether reporters of local papers may be allowed
      to see the judgment?
2.    To be referred to the Reporter or not?
3.    Whether judgment should be reported in Digest?

:     REVA KHETRAPAL, J.

IA Nos.10668/2007 (under Order XXXIX Rules 1 and 2 CPC filed by the plaintiff) and 14630/2007 (under Order XXXIX Rule 4 CPC filed by the defendant)

1. By this order, it is proposed to decide IA No.10668/2007 under

Order XXXIX Rules 1 and 2 CPC filed by the plaintiff and IA

No.14630/2007 under order XXXIX Rule 4 CPC filed by the defendant.

2. The background facts are that tenders were invited in the year

2001 by the defendant for allotment on licence/lease basis of various

properties including the property commonly known as Open Air

Restaurant, Minto Bridge, Minto Road, New Delhi. The plaintiff was

declared a successful bidder by the defendant and the bid of the plaintiff

was accepted by the defendant vide letter dated 11.10.2001 and by the

same communication the defendant directed the plaintiff to deposit a

sum of Rs.30,66,707/- as licence fee for the first six months and one

month's licence fee payable in advance and to execute a deed of licence

in the form approved by the Commissioner, MCD. The terms and

conditions of the licence were also supplied to the plaintiff. The

plaintiff deposited the aforesaid amount as demanded by the defendant

and an agreement was executed between the parties on 08.01.2002.

Clause 22 of the said agreement reads as under:-

"Clause 22: The period of licence will be five years or on termination of the licence whichever is earlier from the date taking over the premises and the extension of allotment may be allowed for further period of five years after 50% increase in licence fee."

3. Pursuant to the execution of the aforesaid agreement, according

to the plaintiff, the possession of the Open Air Restaurant, Minto Road,

Delhi was handed over by the defendant to the plaintiff on 28.02.2002

and the plaintiff started running its business from the said place under

the name and style of "Cup-n-Saucer Open Air Restaurant" with the

land appurtenant thereto. Thus, the licence of the plaintiff was to

expire on 28.02.2007. The plaintiff, however, asserts in the plaint that

the last payment towards the licence fee was made on 04.06.2007,

amounting to Rs.35,04,808/-, which was acknowledged by the

defendant vide receipt No.262094 dated 04.06.2007.

4. The further case of the plaintiff is that the policy of the

Government of India, which was binding on the defendant/MCD and

which it was bound to follow qua its properties, being a statutory body

in the Union Territory, was to confer freehold property rights to the

occupiers/allottees in the markets. The plaintiff asserts that initially it

was meant for rehabilitation markets and thereafter extended to others

from time to time. Ownership rights in these markets were conferred

after charging the percentage between 50% to 80% of the premium of

land at the predetermined commercial rates notified and existing on the

date of transfer for the locality/area where the shop/property was

located, plus the replacement cost of the land premises on the relevant

day minus depreciation. Besides this, the annual rent at the rate of 2.5%

of the premium/cost of the land calculated at the existing land rates

became payable. In the year 2000, the Central Cabinet in modification

of its earlier policy agreed to convert the said properties into freehold

properties in the hands of the allottees/lessees/occupiers on payment of

100% premium of commercial land rates.

5. It is further the case of the plaintiff that the defendant/MCD

adopted the aforesaid policy of the Ministry of Urban Development and

Poverty Alleviation (Directorate of Estates) to confer freehold rights.

The Standing Committee of the defendant vide its Resolution No.336

dated 26.10.2005 approved the proposal of the Commissioner as

contained in his letter dated 25.10.2005. Another Resolution No.494

dated 21.11.2005 was also passed by the MCD regarding conversion of

markets and colonies from licence fee basis to leasehold basis and then

freehold basis. The plaintiff accordingly applied for conversion of the

suit property from licence basis to leasehold basis by its application

dated 16.03.2007 to the Commissioner of MCD. In response to the

aforesaid communication of the plaintiff, the defendant vide letter dated

22.03.2007 intimated the plaintiff that the cost of the land on which

"Cup-n-Saucer Open Air Restaurant" was constructed had been

calculated at Rs.14,490/- per sq. meter, which had been worked out on

the total area on which the aforesaid restaurant was constructed. The

plaintiff was required to deposit a sum of Rs.2,31,30,919/- along with an

affidavit regarding payment of arrears of licence fee/enhanced land cost,

if any, demanded by the MCD in future. The plaintiff was further

informed that the Land and Estate Department had no objection if the

property was mortgaged as per the terms and conditions of the

Corporation's Resolution No.894 dated 05.03.2007.

6. The plaintiff accepted the aforesaid offer by a letter dated nil

addressed to the ADC (Land and Estate Department), MCD and

received by the MCD on 30.07.2007. By another letter dated nil

addressed to the DC (Land and Estate Department), which was received

by the MCD on 30.07.2007, the plaintiff requested the defendant to

execute the lease deed of the aforesaid property. The plaintiff also

informed about fulfilling the requirement of deposit of the necessary

amount along with the affidavit undertaking to deposit any future

amount in respect of conversion from licence to leasehold. Thereupon

the MCD vide letter dated 02.08.2007 informed the plaintiff that all the

records pertaining to the suit property had been transferred back to the

R.P. Cell, i.e., the Remunerative Projects Cell and that the reference

letter of the plaintiff had also been forwarded to the said department for

further action.

7. On 30th August, 2007, the plaintiff alleged that some persons

claiming to be the officials of the defendant visited the property in

question and started preparing details of the property and inventory of

the articles for auction, claiming the same to be licensed premises. On

the same date, i.e., on 30.08.2007, the plaintiff wrote to the defendant

bringing to the notice of the defendant that it had made the requisite

amount of payment coming to Rs.2,31,30,919/- and had also tendered

an affidavit as demanded by the defendant. It was also stated in the

letter that the plaintiff had availed a loan facility from the ICICI Bank

in order to make the aforesaid payment and the repayment of the same

had also commenced through EMIs. The defendant was finally

requested to execute the necessary documents for conversion of the

property from licence to leasehold. On 14.09.2007, however, the

officials of the defendant informed the plaintiff that the property was

intended to be auctioned afresh. Hence the present suit filed by the

plaintiff praying for a decree of specific performance in favour of the

plaintiff and against the defendant directing the defendant to execute the

necessary conveyance deed in favour of the plaintiff after conversion of

the suit property on freehold basis and for a decree of permanent

injunction in favour of the plaintiff and against the defendant

restraining the defendant from creating any third party rights in respect

of the suit property and from dispossessing the plaintiff.

8. By an ex parte order dated September 17, 2007, a learned Single

Judge of this Court having regard to the averments contained in the

application under Order XXXIX Rules 1 and 2 CPC filed by the

plaintiff, being IA No.10668/2007, directed the defendant to maintain

status quo in relation to title and possession of the suit property. The

defendant thereupon moved an application under Order XXXIX Rule 4

CPC for vacating the said interim order passed by this Court on

17.09.2007. It is upon these two applications that the learned counsel

for the parties have made their respective submissions, which I now

proceed to consider.

9. Mr. A.S. Chandhiok, the learned senior counsel for the plaintiff

with a view to buttress the case of the plaintiff that the plaintiff is

covered by Resolution No.494 and entitled to the benefit of the

conversion policy submitted that uptill now, the plaintiff has only

prayed for conversion from licence to leasehold basis, that the decision

of the MCD to adopt the L & DO policy allowing conversion was taken

during the currency of the plaintiff's licence, and that the policy covers

all markets and is not restricted to rehabilitation colonies alone.

Reliance is placed by Mr. Chandhiok on Resolution No.856 dated

17.02.2004 (which incidentally has not been mentioned in the plaint at

all). The said resolution, Mr. Chandhiok submitted, was passed for the

limited purpose of conversion of all licensed properties of the MCD into

leasehold property on the basis of the market rates of L & DO/DDA or

on the basis of the rates fixed by the Reserve Price Fixation Committee

to be constituted by the Commissioner, MCD. However, for effecting

power to further convert from leasehold to freehold basis, another

resolution, being Resolution No.494 dated 21.11.2005, was passed. The

submission of Mr. Chandhiok is that Resolution No.494 covers all

properties of the MCD, only excluding from its purview a certain

category of property as stated in Clause 11, as per which, the resolution

"will not apply on Tehbazari holders/Damage sites and for

occupants on public area like roads, footpath, parks, open ground

and such area where layout plan is not approved".

10. Reliance is also placed by Mr. Chandhiok on behalf of the

plaintiff on Resolution No.894 dated 05.03.2007, which Mr. Chandhiok

submitted approves and adopts in totality the L & DO policy pertaining

to conversion from licence to leasehold and from leasehold to freehold

basis, and noticeably, contains the conversion rates with respect to the

properties, including the properties in the locality of Minto Road and

also additionally allows for creation of mortgage. On the basis of the

aforesaid resolution, it is submitted by Mr. Chandhiok that the earlier

anomaly as to how conversion is to take place and in what manner rate

are to be fixed (Resolution No.494 contemplated the creation of MCD

Price Fixation Committee) no more exists, for, as per resolution No.894,

which is the latest in point of time, the detailed policy of the L & DO is

to apply in toto including the rates prescribed therein.

11. In order to rebut the aforesaid contentions of Mr. Chandhiok, Mr.

Sanjay Jain, the learned senior counsel for the MCD made the following

submissions.

12. Resolution No.494 does not apply to the suit property being

meant only for municipal markets and colonies and does not cover stand

alone properties or remunerative sites. In this context, Mr.Jain referred

to and relied upon the Background Note of the aforesaid resolution,

which reads as follows:-

"Ministry of Urban Development & Poverty Alleviation (Directorate of Estates) had conferred ownership rights to 4 Rehabilitation Markets in 1978 out of 35 markets which were under control

and management of Directorate of Estates. Subsequently, the Cabinet, in its meeting held on 20-10-1989 decided to confer ownership rights to 10 more markets. Ownership of these markets was offered after charging a percentage ranging between 50% to 80% of the premium for land, at the predetermined commercial rates notified and existing on the date of transfer for the locality/area where the shop is located, plus the present day replacement cost for the shop, minus depreciation. Besides this, they are to be charged annual ground rent @ 2.5% of premium/cost of the land calculated at the existing land rates.

In the year 2000, the Central Cabinet approved the request of free hold rights for 14 Central Govt. Markets on payment of 100% premium of commercial land rates (copy of order of Government of India is enclosed). Present allottees in various markets under the control of MCD fall into following four categories:-

      (i)     Original allottees.
      (ii)    Allottees in whose names the shops have
              been regularized with the consent of
              original allottees.

(iii) Occupants (with or without consent of the original allottees).

(iv) Occupants who have taken over the property on the basis of hire-

purchase/exchange basis/mutual understanding basis with or without prior consent of the MCD. However, in case prior approval of the MCD is not taken requisite/existing transfer fee has to be paid by the applicant.

The terms & conditions proposed to be offered for grant of ownership:-

1. It is proposed to charge 100% land premium of the commercial/residential (whatever the case may be) land rates notified as on the date of actual

transfer/conversion.

2. .............................................................

3. .............................................................

4. .............................................................

5. .............................................................

6. .............................................................

7. .............................................................

8. This free hold will enable MCD to recover the value of the land and structure and also enable the occupants to raise loans to invest in the property by way of sale, addition, alteration etc. as per the existing laws.

9. As far as licences for residences is concerned the procedure/rates of grant of free hold rights would be as per Annexure 'E'.

10. As far as licences for commercial/residential cases is concerned the procedure/rates for grant of free hold shall be as per Annexure 'F'.

11. This will not apply on Tehbazari holders/Damage sites and for occupants on public areas like roads, footpath, parks, open ground & such areas where the layout plan is not approved.

FA has seen and approved the proposal. The proposal is based on the policy adopted by Ministry of Urban Development and Poverty Alleviations (Directorate of Estates) in the year 2000 which was later approved by the Cabinet (photocopies placed opposite).

The licensed/rented property will be first converted into lease hold and then into free hold. For the purpose of Free Hold of Commercial Properties a separate preamble has also been moved. Licensed/rented properties, which will be converted into lease hold, will be converted into free hold as per policy of conversion from lease hold to free hold.

Proposal:

In the light of the above stated facts and circumstances the proposal for conversion of markets and colonies from License Fee basis to Lease Hold basis and then Free Hold basis of commercial/industrial built up plots and shops from lease hold to free hold may kindly be put up before the Standing Committee/Corporation, MCD for approval."

13. It is urged by Mr. Jain that a bare perusal of the aforesaid

proposal is sufficient to show that it was a general proposal, addressing

certain specified categories of properties and was not at all applicable to

remunerative properties, let alone any specific property. The resolution

in fact was omnibus in nature for the categories specified in its text and

paragraph 1 of the Background Note of the resolution clearly showed

that the proposal addresses itself only to shops existing in the approved

markets and has no application to the properties which are not shops.

The resolution was structured on the similar policy decision of the

Union of India, based on which many resolutions had been passed by

the Ministry of Urban Development from time to time.

14. Mr. Jain next contended that the suit of the plaintiff itself is not

maintainable, as according to the plaintiff's own showing the plaintiff

had entered the suit property as a licensee, which licence has since

expired. The occupation of the suit property by the plaintiff as on date

is unauthorised and without any sanction of the defendant. The instant

case is in fact a case of a glaring fraud perpetrated upon the defendant

by the plaintiff apparently in connivance with some of its officials with

the aim of grabbing one of the defendant's prime remunerative

properties. The modus operandi of the plaintiff was to convert his fixed

term "licence of use" in respect of the suit property into a lease under

the colour of a resolution of the Corporation, which is inapplicable to

the said property. A wilful misrepresentation of facts was made by the

plaintiff in his proposal dated 16.03.2007, knowing fully well that the

resolution in question did not refer to the suit property, and the plaintiff

got issued a demand letter from an officer not authorised to take

decision on the issue specifying the demand on behalf of the defendant

for the said illegal conversion. The illegal acts of the plaintiff did not

end here. The plaintiff proceeded to mortgage that very property

belonging to the defendant to raise a home loan from a financial

institution and from the said amount proceeded to deposit the charges

for the illegal conversion sought for by the plaintiff. The defendant

being a statutory body and governed by a specific statute, a person

dealing with the defendant must be presumed to know that the decision

of the defendant for transfer of the defendant's property could not have

been taken by an officer of the rank of Administrative Officer. Yet, the

plaintiff seeks to rely upon the order dated 22nd March, 2007 issued by

the Administrative Officer purporting to raise a demand on the plaintiff

for conversion of the property from licence to leasehold. In short, Mr.

Jain's contention is that the letter dated 16.03.2007 seeking conversion

of the suit property from licence to leasehold was unauthorisedly

entertained and the resultant demand letter dated 22.03.207 was issued

by an officer of MCD without any approval from the competent

authority, in connivance with the plaintiff, and thus the same has no

legal sanctity. In this context, Mr. Jain relied upon the provisions of

Sections 200 to 203 of the Delhi Municipal Corporation Act to contend

that under the aforesaid Sections any contract with respect to disposal of

the property belonging to the Corporation by sale, lease or otherwise,

can be executed only by the Commissioner, pursuant to the sanction of

the Standing Committee.

15. Rebutting the contention of the learned senior counsel for the

plaintiff that the MCD was obligated to execute a lease deed in favour

of the plaintiff, having accepted and retained consideration which was

paid as per its own demand, Mr. Jain contended that the plaintiff had no

vested right to demand conversion from licence to leasehold, either on

the basis of an inapplicable resolution or on the basis of a

correspondence exchanged between the plaintiff and the MCD officials,

against whom the CBI had already registered a case vide RC

No.31/A/2008-DLI dated 04.07.2008. In the present case, it was

strenuously urged, even the licence had not been extended. Apart from

this, there was no contractual right as claimed by the plaintiff for the

reason that a communication emanating from a person incompetent to

enter into a contract on behalf of the MCD cannot give rise to any

contractual obligation. Merely because the Standing Committee of

MCD passed a resolution in respect of certain properties, the resolution

does not become binding unless the Commissioner, in exercise of his

discretion, decided to act upon the same.

16. With regard to the Resolution No.894 passed on 5th March, 2007,

the learned senior counsel for the defendant submitted that the said

resolution had no application to the instant case as it applies only to

leasehold properties, that too after the lessee had sought proper

permission for the same, and in the instant case it is the admitted

position that no lease deed is executed as yet and the suit itself is to seek

a direction for the execution of a lease deed.

17. In support of his contention that fraud vitiates all acts, Mr. Jain

relied upon the judgments of the Supreme Court in S.P. Chengal

Varaya Naidu vs. Jagannath, AIR 1994 SC 853 wherein it was

observed that "fraud avoids all judicial acts", and Ram Chandra Singh

vs. Savitri Devi & Ors., (2003) 8 SCC 319 and, in particular, referred to

paragraphs 15 and 16 of the decision in the Ram Chandra case (supra),

which reads as follows:-

" Commission of fraud on court and suppression of material facts are the core issues involved in these matters. Fraud as is well-known vitiates every solemn act. Fraud and justice never dwell together.

Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of former either by word or letter."

18. In State of A.P. vs. T. Surya Chandra Rao (2005) 6 SCC 149,

what constitutes fraud was described thus:-

"According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Indian Contract Act, 1872 defines "fraud" as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact, which he knows to be untrue yet he succeeds in misleading the represented by making him believe it to be true. The representation to become fraudulent must be

of fact with knowledge that it was false. In a leading English case i.e. Perry and Ors. v. Peek (1886) All ER 1 what constitutes "Fraud" was described thus: (All ER p. 22 B-C) "fraud" is proved when it is shown that a false representation has been made (i) knowingly, or

(ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false". But "fraud" in public law is not the same as "fraud" in private law. Nor can the ingredients, which establish "fraud" in commercial transaction, be of assistance in determining fraud in Administrative Law."

19. Relying upon the doctrine of ex-turpi causa defence as

enunciated by the House of Lords in Euro-Diam Ltd. vs. Bathurst

(1988) 2 All ER 23, Mr. Jain submitted that the claim of the plaintiff in

the instant case is founded on fraud and the grant of relief in such a case

to the plaintiff would enable him to benefit from his own criminal

conduct. In Euro-Diam case (supra), it was held as under:-

"The ex turpi causa defence ultimately rests on a principle of public policy that the courts will not assist a plaintiff who has been guilty of illegal (or immoral) conduct of which the courts should take notice. It applies if, in all the circumstances, it would be an affront to the public conscience to grant the plaintiff the relief which he seeks because the court would thereby appear to assist or encourage the plaintiff in his illegal conduct or to encourage others in similar acts;

The problem is not only to apply this principle, but also to respect its limits, in relation to the facts of particular cases in the light of the authorities.

(2) The authorities show that in a number of situations the ex turpi causa defence will prima facie succeed. The main ones are as follows.

(i) Where the plaintiff seeks to, or is forced to, found his claim on an illegal contract or to plead its illegality in order to support his claim ................. For that purpose it makes no difference whether the illegality is raised in the plaintiff's claim or by way of reply to a ground of defence ...

(ii) Where the grant of relief to the plaintiff would enable him to benefit from his criminal conduct ...

(iii) Where, even though neither (i) nor (ii) is applicable to the plaintiff's claim, the situation is nevertheless residually covered by the general principle summarised in (i) above..."

20. Referring to the system of checks and balances as incorporated in

the relevant statute, i.e., the DMC Act, the learned senior counsel for the

defendant placed reliance upon decisions rendered in B.S. Khurana &

Ors. vs. MCD & Ors. 87 (2000) DLT 557 (SC) and Nirmal Kumar

Jain & Ors. vs. MCD & Anr. 39 (1989) DLT 517. In B.S. Khurana's

case (supra), the Supreme Court while examining the scheme of the Act

and the checks and balances for disposal of immovable property

contemplated thereunder held as follows:-

"16. The scheme of the aforesaid Sections makes it abundantly clear that the entire executive power for the purpose of carrying out the provisions of the Municipal Corporation Act vests in the Commissioner. His functions and duties are statutorily prescribed. His appointment is also to be made by the Central Government by

notification in the Official Gazette. Similarly, the functions of the Standing Committee and other committees are also prescribed. In the light of the aforesaid statutory provisions, we have to consider the scheme of Section 200 which empowers the Commissioner to dispose of the moveable property or grant lease of any immovable property or to sell the same subject to the conditions provided thereunder. On the condition of obtaining sanction of the Corporation, the power to transfer immovable property, the value of which exceeds fifty thousand rupees vests in the Commissioner. Result is the Commissioner can transfer such immovable property only after obtaining sanction of the Corporation. Obtaining of sanction by the Commissioner is mandatory. The effect of the non-observance of the statutory prescription would vitiate the transfer. This would also mean that the power to dispose of the property would vest in the Commissioner and not in the Corporation. No specific power is conferred upon the Corporation for such transfer. The scheme envisages checks and balances for disposal of immovable property on the power of the Commissioner. In the light of the aforesaid interpretation of Section 200, it is not necessary for us to deal with other contentions raised and dealt with by the High Court. In the facts and circumstances of the case, at no point of time, Municipal Commissioner has decided or agreed to transfer the Municipal quarters in favour of its employees/allottees. There is no legal right to claim ownership on the basis of the resolutions passed by the Corporation as the said resolutions are without any power or authority. Hence, there is no substance in these petitions."

21. In Nirmal Kumar Jain's case (supra), this Court while

examining the scheme of the Act envisaged the distinct, separate and

significant roles played by the Corporation, the Standing Committee and

the Commissioner as assigned to them by the legislature in its wisdom.

The relevant portion of the judgment in the Nirmal Kumar Jain case

(supra) reads as follows:-

"(13) Whereas with regard to acquisition of immovable property decision in respect thereof can be taken by the Corporation alone, under Section 198 of the Act, immovable property can only be disposed of with the concurrence of two entities, one of which must be the Commissioner. While the assent of the Commissioner is not necessary for exercise of power under Section 198 of the Act, Section 200, on the other hand, does not contemplate immovable property being sold without the concurrence or agreement of the Commissioner. In fact the use of the words in Section 200(c) that "the Commissioner may, with the sanction of the Corporation, lease, sell .........." give the indication that the initiative or the proposal for the sale of the property should ordinarily arise from the Commissioner. Even if this be not so, Section 200(c) makes it quite clear that sale of immovable property cannot take place without the concurrence of the Commissioner of the Corporation.

(14) The Legislature, in its wisdom, perhaps thought that there should be a greater safeguard provided in the Act with regard to holding or selling of the property belonging to the Corporation, it is, perhaps, for this reason that power to sell the immovable property was not given exclusively either to the Corporation or to the Standing Committee or to the Commissioner. Furthermore, Section 200 does not contemplate a

joint decision to sell the immovable property being taken by the Corporation and the Standing Committee. The Commissioner, in regard to the sale of immovable property, cannot be by-passed. Immovable property can be sold only by the Commissioner either with the consent of the Standing Committee or, under Section 200(c), with the consent of the Corporation. (32) It may also be noted that under Section 200 of the Act the authority, who is empowered to sell immovable property is the Commissioner after having obtained sanction of the Standing Committee or the Corporation. No representation for the sale of the property had, any time been made by the Commissioner to any of the petitioners. In other words the alleged representation for sale of the immovable property to the petitioner was not made by the proper authority, namely, the Commissioner. The Principles of promissory estoppel can, therefore, not apply in the instant case for this reason as well."

22. In order to buttress his contention that notings on a file or any

communication by a Government official do not acquire the character of

a decision, unless such decision is taken by the Competent Authority (in

this case, under Sections 59, 200 to 203 of the DMC Act) and is

expressed under the seal of the appropriate authority (in this case, the

Commissioner of MCD), Mr. Jain relied upon a Division Bench

judgment of this Court in 2003 (69) DRJ 751 (DB) titled Union of

India vs. Parshadi & Ors., wherein after referring to three authoritative

pronouncements of the Supreme Court on the subject, the Division

Bench concluded that unless a particular decision is taken by a

Competent Authority and is expressed under the seal of the said

Authority, it cannot be regarded as binding on the said Authority.

Paragraphs 51 to 53 of the said judgment, which are apposite, read as

follows:-

"51. He submitted that it was not being suggested that judicial review was barred in such circumstances. According to him, the question to be determined was whether any legal binding and conclusive decision at all, which could be subjected to judicial review, was taken. He submitted that such a 'noting' in the file did not give any enforceable right to the respondents herein. In support of this submission, he heavily relied upon the Constitutional Bench judgment of the Supreme Court in the case of Bachittar Singh v. State of Punjab, MANU/SC/0366/1962 : AIR 1963 SC 395 wherein the Supreme Court held:

"Before something amounts to an order of the State Government, two things are necessary. The order has to be expressed in the name of the Governor as required by Clause (1) of Article 166 of the Constitution and then it also has to be communicated. The Constitution requires that the action must be taken by the authority concerned in the name of the Governor. It is not till this formality is observed that the action can be regarded as that of the State. Constitutionally speaking, the Minister is no more than an advisor and that the head of the State, the Governor is to act with the aid and advise of the Council of Ministers, therefore, until such advise is accepted by the

Governor whatever the Minister or the Council of Ministers may say in regard to a particular matter does not become the action of the State until the advice of the Council of Ministers is accepted or deemed to be accepted." "Indeed it is possible that after expressing one opinion about a particular matter at a particular stage a Minister of the Council of Ministers may express quite a different opinion, one which may be completely opposed to the earlier opinion."

52. He also referred to another judgment of the Supreme Court in the case of Gulabrao Keshavrao Patil v. State of Gujarat, MANU/SC/1069/1996 : (1996) 2 SCC 26 wherein the Supreme Court took the following view:

"Before the action or the decision is expressed in the name of the Governor in the manner prescribed under the business rules and communicated to the party concerned it would always be open by necessary implication to the Chief Minister to send for the file and above it examined by himself and to take a decision though the subject was allotted to a particular Minister for convenient transaction of the business of the Government. The subject, though exclusively allotted to the Minister, by reason of the responsibility of the Chief Minister to the Governor and accountability to the people, has implied power to call for the file relating to a decision taken by a Minister. The object of allotment of the subject to a Minister is for the convenient transaction of the business at various levels through designated officers. The ultimate object is to secure an impartial pure and efficient

administration as propounded by Dr. Ambedkar in the Constituent Assembly vide Constituent Assembly Debates, Vol.III page 546."

53. He also referred to the decision of the Supreme Court in the case of State of Bihar v. Kripalu Shankar MANU/SC/0166/1987 : 1987 Cri LJ 1860 wherein it was held:

"Notings in a notes file, not only of officers but even that of a Minister will not constitute an order to affect others unless it is done in accordance with Article 166(1) and (2), and communicated to the person concerned. The notings in a file get culminated into an order of affecting right of parties only when it reaches the head of the department and is expressed in the name of the Governor, authenticated in the manner provided in Article 166(2)."

23. In rejoinder, Mr. A.S. Chandhiok, the learned senior counsel for

the plaintiff, with regard to the assertion of the defendant's counsel that

Resolution No.494 had application only to markets/colonies and not the

suit property, which is a stand alone property, relied upon the definition

of "market" in the MCD Act as set out in sub-section (26) of Section 2

of the said Act. The term "market" as defined thereunder is as follows:-

"(26) "market" includes any place where persons assemble for the sale of, or for the purpose of exposing for sale, meat, fish, fruits, vegetables, animals intended for human food or any other articles of human food whatsoever, with or without the consent of the owner of such place notwithstanding that there may be no common

regulation for the concourse of buyers and sellers and whether or not any control is exercised over the business of, or the person frequenting, the market by the owner of the place or by any other person."

24. Mr. Chandhiok contended that running a restaurant was a

commercial activity and thus included within the definition of market.

In any case, the said definition, he submitted, was not exhaustive but

merely illustrative and, therefore, must be given a wide interpretation.

25. The learned senior counsel for the plaintiff also contended that

the suit property is part of a developed commercial area and, therefore,

giving a restricted meaning to the resolution in question would defeat

the entire beneficial purpose of the same. Even otherwise, for the

reason that "stand alone" property is not excluded from the purview of

the applicability of the aforesaid resolution, the question of inferring its

exclusion does not arise. The assertion that the policy of the MCD or

for that matter the policy of the L & DO does not cover highly

remunerative project/sites is ex facie incorrect as no such exclusion is

evident on a reading of the resolution. Rather, the intent of the policy is

to generate huge revenue by allowing conversion of property from

licence to leasehold and thereafter to freehold on payment of notified

market rates and, therefore, to suggest that the policy does not cover

conversion of highly remunerative sites would be contrary to the intent

of the policy. It is contended that Resolution No.494 was recommended

by the Remunerative Project Cell itself and, therefore, the defendant

cannot resile from the same.

26. On the issue that no executive orders had been passed by the

Commissioner to effectuate Resolution No.494 nor the MCD had

authorised any officer to enter into any lease agreement, Mr. Chandhiok

contended that any resolution passed by the Corporation has statutory

force and the Commissioner is bound to execute the same. Reliance in

this context was placed by him upon the judgment of this Court in O.P.

Bhalotra and Ors. vs. MCD and Ors. reported in 1988 LAB. I.C. 634

and in particular on paragraphs 17 to 19 of the said decision, which read

as follows (P-637):-

"17. By virtue of the provisions of S.78 of the Act, all matters which are required to be decided by the Corporation, have to be decided by majority of vote of the members present and voting. Voting takes place on the resolution, which is either carried or lost on the basis of the majority of votes cast. By virtue of S.78(4) of the Act, the result of voting shall be deemed to be the resolution of the Corporation at its meeting.

18. It is, therefore, clear that the resolutions that are passed by the Corporation at its meetings, are statutory. They are the decisions of the Corporation arrived at by a majority of votes cast at a meeting of the Corporation. S.78 of the Act,

therefore, gives a finality to the resolutions passed by the Corporation at its meetings.

19. The resolutions of the Standing Committee, however, do not have this statutory force. The Standing Committee's resolution being a resolution of its committee, would only be recommendatory, which may or may not become the decision of the Corporation. The recommendatory resolution of the Standing Committee would become resolution of the Corporation upon it being resolved by a vote as postulated by S.78 of the Act."

27. On the basis of Bhalotra's case, Mr. Chandhiok contended that

Section 59 of the MCD Act vests only executive power with the

Commissioner and it is, therefore, not open to the Commissioner to

overrule the resolutions of the Corporation or to act contrary thereto.

He further submitted that while Resolution No.856 dated 17.02.2004 is

passed by the Standing Committee, Resolution No.494 dated

21.11.2005 is mooted/proposed by the Commissioner by his letter dated

25.10.2005 and thereafter the resolution is passed by the Standing

Committee. The proposal of the Commissioner as contained in the

letter dated 25.10.2005 was approved and that too without any changes

by the Standing Committee and further by the Full House of the

Corporation. Thereafter, there is no further requirement of any assent

of the Commissioner. The MCD Act and the Rules framed thereunder

do not contemplate any order to be passed by the Commissioner before

any resolution duly passed by the Standing Committee of the MCD can

be effected.

28. Reference was also made by the learned senior counsel for the

plaintiff to the following observations made in the case of NDMC vs.

Inder Narain & Ors. ILR (1970) II Delhi 306 (at page-322):-

"The citizens in their dealings with public bodies like Municipal Committees are bound to act on the faith of their resolutions and it would be a sad day in the administration of those bodies if they decide to go back on their resolutions. In any case, the Courts would be averse to allowing those public bodies to go back on their resolutions after the citizens have acted upon those resolutions."

29. Reliance was also placed in the aforesaid context by Mr.

Chandhiok on a decision of a three Judge Bench of the Supreme Court

in The Union of India and Ors. vs. M/s. Anglo Afghan Agencies etc.

AIR 1968 SC 718 to contend that it is always open to a party who has

acted on a representation made by the Government to claim that the

Government shall be bound to carry out the promise made by it, even

though the promise is not recorded in the form of a formal contract as

required by Article 299 of the Constitution.

30. The aforesaid principle, it is submitted, was reiterated in the case

of U.P. Power Corporation Ltd. and Anr. vs. Sant Steels & Alloys (P)

Ltd. and Ors. (2008) 2 SCC 777, wherein after noting the observations

made by the Court in the M/s. Anglo Afghan Agencies case (supra),

the Supreme Court made the following observations in the penultimate

paragraph of the judgment (At page-803, para 35):-

"35. ................................................................ in order to keep the faith and maintain good governance it is necessary that whatever representation is made by the Government or its instrumentality which induces the other party to act, the Government should not be permitted to withdraw from that. This is a matter of faith."

31. On the issue of fraud alleged by the defendant, Mr. Chandhiok,

the learned senior counsel for the plaintiff relied upon a series of

decisions of this Court and of the Supreme Court, including those

reported in Chagan Lal Tiwari vs. Ganga Apartments (P) Ltd. 75

(1998) DLT 605, Bishnudeo vs. Seogeni Rai AIR 1951 SC 280, Bakshi

Lochan Singh vs. Jatendar Santokh Singh 1971 (1) ILR Del 615 and

LIC Housing Finance vs. Pearl Developers 2006 (1) AD Del 499, to

contend that the law relating to pleadings as laid down in the Civil

Procedure Code is that when fraud is pleaded it must be pleaded

specifically and full details of the fraud have to be set out in the

pleading itself. He urged that general allegations were insufficient to

amount to an averment of fraud of which any Court ought to take notice.

Even otherwise, he submitted that the issue of fraud as held in the case

of Dalpat Kumar vs. Prahlad Singh reported in 1992 (1) SCC 719 is a

question of trial to be gone into after the parties have adduced their

evidence.

32. It was also contended on behalf of the plaintiff that the position

in law is settled that if an official act is proved to be done, then it will be

presumed to be regularly done unless the same is rebutted by cogent and

conclusive evidence. The presumption under Section 114(e) of the

Indian Evidence Act will come to the aid of the party if the party proves

that the official act has been done or performed. It was so held in

Vinod Kumar Gupta vs. Commissioner of Customs 124 (2005) DLT

602, and in Kartar Singh vs. D.D.A. 83 (2000) DLT 529 (DB), it was

reiterated that an official act is presumed to be correct unless by cogent

evidence disproved. No such cogent evidence having been brought to

light in the instant case to even prima facie dislodge the case of the

plaintiff, the contention of the defendant's counsel that the letter dated

22nd March, 2007 was unauthorisedly issued was wholly untenable. All

allegations of fraud, collusion and connivance were baseless and

unsupported by any documentary evidence as such.

33. Likewise, it was contended on behalf of the plaintiff vis-a-vis the

CBI enquiry pending against the officials of the Municipal Corporation

of Delhi that the same does not have the effect of non-suiting the

plaintiff as held by this Court in the case of International

Pharmaceuticals vs. UOI 1998 (74) DLT 593 and Highbrow vs. Lt.

Governor 2007 VI AD (Delhi) 181 and, in any case, the fraud alleged

can only be established by way of trial and since no documents in

support have been filed a case for vacation of the order of stay is not

made out. This apart, it was stated, one out of the three suspended

officials of the Corporation had been since reinstated.

34. Mr. Chandhiok, the learned senior counsel for the plaintiff also

pressed into service the Doctrine of Promissory Estoppel and in this

context relied upon the judgments of this Court in Jallo Subsidiary

Industries vs. DDA 1993 RLR 122 and Major General Pradeep Kumar

vs. DDA 2005 (III) AD Delhi 261 to contend that the said doctrine was

attracted in the instant case where an amount had been demanded by the

defendant which had been deposited by the plaintiff and the defendant

must now be held to be bound by the resolutions passed by it. The

learned senior counsel also contended that the defendant having retained

the money of the plaintiff ever since the time of its deposit, the plaintiff

was justified in entertaining a legitimate expectation that the defendant

would carry out its part of the obligation. All State action, it was

contended, must be informed with reason and fair dealing as held by the

Supreme Court in Navjyoti Coo-Group Housing Society etc. vs. Union

of India and Ors. AIR 1993 SC 155, wherein it was observed as

follows:-

"16. It may be indicated here that the doctrine of 'legitimate expectation' imposes in essence a duty on public authority to act fairly by taking into consideration all relevant factors relating to such 'legitimate expectation'. Within the conspectus of fair dealing in case of 'legitimate expectation', the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent past policy, come in. ........................................................"

35. Relying upon the judgment in Ashok Caterers vs. Municipal

Corporation of Greater Bombay (Best Undertaking) (1997) 9 SCC

220, it was further contended that the law is settled that no person can

be dispossessed except in accordance with law or contract. In paragraph

4 of the said decision, it was held as follows:-

"4. ........................occupation of Corporation premises without authority for such occupation is an unauthorised occupation. Such occupation includes continuance in occupation by a person after the authority under which he occupied the premises has "expired" or it has been "duly determined". The definition thus includes not only a trespasser whose initial and continued occupation has never been under any valid authority, but it also includes in equal measure a person whose occupation at its commencement

was under authority, but such authority has since expired, or, has been duly determined - which means validly determined. The expiry of authority to occupy occurs by reason of the terms or conditions of occupation. On the other hand, the determination of authority to occupy to be due or valid must be founded on one of the grounds specified by the statute. Any order of eviction on the ground of either "expiry" or "due determination" has to be made in accordance with the procedure prescribed by the statute".

36. Having heard the learned senior counsel for the parties and

examined the legal and factual position, I am of the view that the

plaintiff has failed to make out a prima facie case for the continuance of

the status quo order granted by this Court for the following reasons.

37. A bare perusal of Resolution 494 shows that there is no mention

in the said resolution to any specific proposal for converting the

property in suit from licence to lease as claimed by the plaintiff. The

said resolution only deals with conversion of markets and colonies

under the control of MCD from licence fee basis to leasehold and

thereafter to freehold. The suit property does not form a part of any of

these markets and colonies. It is not the case of the plaintiff that its

Open Air Restaurant is located in a market place, and there does not

appear to be any logical reason to disagree with the submission of the

defendant's counsel that the suit property is a stand alone property and

that too a property at a highly remunerative site. The sites auctioned by

the defendant for being run as parking lots, restaurants, banquet halls,

etc. on licence basis constitute remunerative project sites and do not fall

within the ambit of Resolution 494 as these remunerative project sites

are not located within municipal markets. In fact, the case of the

plaintiff itself is that the resolution in question mentions that the policy

of the Union Government was to convey ownership rights to allottees of

shops in rehabilitation markets. The licencees of remunerative project

sites can by no stretch of imagination, in my view, be equated with shop

allottees in rehabilitation markets or even shop allottees in other

municipal markets.

38. There is also no manner of doubt that the licence of the plaintiff

has since expired, and the occupation of the suit property by the

plaintiff as on date is unauthorised and without any sanction of the

defendant. The plaintiff seeks to justify its unauthorised occupation of

property by a wholly misplaced reliance on Resolution 494 and an even

more misplaced reliance on Resolution 894 dated 05.03.2007. There is

every reason to believe that the letter issued by the Administrative

Officer dated 22.03.2007, which forms the fulcrum of the plaintiff's

case, was unauthorisedly issued by the said Administrative Officer in

connivance with the plaintiff and is, therefore, vitiated by fraud. The

policy of the Government, even according to the plaintiff, was to confer

leasehold rights and then ownership rights initially to the shops in

rehabilitation markets and then to shops in municipal markets and

colonies. The suit property is not located in a market place or in a

colony and is a highly remunerative project site to the knowledge of the

plaintiff. In such circumstances, to hold that a demand letter obtained

by the plaintiff from an Administrative Officer of the Corporation by

collusion and connivance confers a vested right in the plaintiff to

occupy and retain the property, the licence of which has long expired,

would be to allow the plaintiff to take advantage of its own wrongful

acts.

39. Even otherwise, in my view, the defendant is governed by the

DMC Act, 1957, Section 59 whereof provides that all executive powers

for carrying out the provisions of the Act vest with the Commissioner.

Disposal of immovable property under the Act is dealt with under

Section 200 of the said Act and requires the Commissioner to obtain

prior sanction of the Corporation before exercising his discretion with

regard to the same. Sections 201 and 202 of the Act further provide that

the Corporation is competent to contract in respect of immovable

property and every such contract on its behalf shall be entered into by

the Commissioner. Section 203 stipulates that no contract, contrary to

the provisions of the statute, shall be binding on the Corporation.

Significantly, sub-section (b) of Section 202 specifically provides that

the Commissioner cannot enter into any contract to do anything which

otherwise requires the sanction of the Corporation. The said sub-section

read along with sub-section (c) of Section 200 mandatorily require the

Commissioner to obtain the sanction of the Corporation. Thus, the

power to dispose of the property of the Corporation exclusively vests

with the Commissioner but the said power can be exercised by him only

after obtaining sanction of the Corporation. In the instant case, the

power was never exercised by the Commissioner nor any orders passed

for conversion of the suit property from licence to leasehold basis. No

executive orders having been issued to effectuate resolution No.494 and

the alleged agreement having been made by the plaintiff fraudulently

with an officer not authorised to enter into such an agreement by by-

passing the statute, the question of any promissory estoppel or

legitimate expectation of the plaintiff does not arise.

40. Further, the reliance placed by the plaintiff on Resolution

No.894 dated 05.03.2007 is clearly misplaced. A perusal of the said

resolution reveals that the same relates to mortgage permission from

L & DO and CPWD as well as the existing municipal markets and the

suit property does not fall in any of the aforesaid categories. Even for

cases covered by the said resolution, mortgage of only leasehold

property is permitted and that too only for the specific purposes

enumerated therein. Admittedly, the suit property is not leasehold

property and is, therefore, not covered by Resolution 894. Further, the

said resolution nowhere contemplates giving mortgage permission for

converting a licence property into a leasehold property. This is evident

from a perusal of the resolution itself and in particular the provisions

relating to "Mortgage Permission" and "Purpose of Mortgage", which

read as follows:-

"MORTGAGE PERMISSION:

Mortgage is a transfer of an interest in an immovable property for securing loans. Therefore, in restricted leases, i.e. where the lease deed provides for prior permission of the lessor for transfer or assignment of leasehold rights, it shall be obligatory for the lessee to obtain prior permission of the lessor before mortgaging the premises. Failure to do so shall amount to breach of lease terms of which the property can be re- entered."

"PURPOSE OF MORTGAGE:

A lessee or a duly authorized agent can seek mortgage permission for the following purposes:-

(i) for raising loan for construction of additions and alterations to the building; or

(ii) for raising for some other purposes like business."

41. Then again, a tripartite agreement is required in case of mortgage

permission in favour of LIC or banks, etc. The said provision reads as

follows:-

"TRIPARTITE AGREEMENT:

A tripartite agreement shall be required in case of mortgage permission in favour of LIC or banks etc. The tripartite agreement shall be prepared by the Land & Estate Department in quadruplicate and send to the applicant for execution both by himself or herself and the mortgagee. The lessee shall, after execution both by himself and the mortgage, return all the four copies to the Land & Estate Department for execution by the Authorized Officer, i.e. Assistant Commissioner/Addl. Dy. Commissioner of Land & Estate Department on behalf of the lessor. After execution by the Authorized Officer, a formal letter of grant of mortgage permission shall be issued by the Land & Estate Department and the three copies of the tripartite agreement duly executed shall be returned to the applicant.

The lessee shall then proceed to execute the mortgage deed with the mortgagee, have it registered with the Sub-Registrar and furnish a copy of the deed to the Land & Estate Department within one month of the date of its execution and registration.

It shall not be necessary to execute a tripartite agreement in a case of a mortgage with a Department of the Government of India or Delhi Administration or where a property leased by the Regional Settlement Commissioner is still in the hands of the original lessee. In such cases mortgage permission shall be issued in the

prescribed format immediately after the plans are sanctioned under the lease and the outstanding dues are recovered."

42. Thus, it emerges that the plaintiff who is in occupation of prime

public property after the expiry of its term of licence, has under the

guise of an alleged agreement for converting its licence into a lease

(which, in effect, is a mere private arrangement unauthorisedly entered

into between the plaintiff and some officers of the defendant) mortgaged

the property of the Corporation with the bank. The plaintiff purports to

have paid a sum of Rs.2,31,30,919/- for the conversion of the licensed

property into a leasehold property to the Corporation. There is,

however, no executive order in this regard nor, in fact, the plaintiff has

paid the said amount from its own coffers. The plaintiff admits that it

has mortgaged the licensed property to raise the said amount. As

noticed above, the said mortgage could not have been made by the

plaintiff. Resolution No.894 has no application to licenced properties

and the permission for mortgage was in any case circumscribed by the

said resolution to permit mortgage of "leasehold properties" only and

that too for the specific purpose of "raising loan for construction of

additions and alterations to the building" or for "some other purposes

like business". It is not at all understandable as to how the defendant's

property was mortgaged by the plaintiff for the purpose of converting

the same from licence to leasehold.

43. Adverting to the plaintiff's contention that the plaintiff cannot be

dispossessed from the suit property other than in accordance with law

and the reliance placed by the learned senior counsel for the plaintiff on

the judgment of the Supreme Court in the Ashok Caterers case (supra),

I am of the view that the judgment of the Supreme Court in the said case

has no application to the facts of the present case. In the Ashok

Caterers case (supra), the Supreme Court was dealing with the eviction

of a lessee under the Bombay Municipal Corporation Act, 1888. In this

context, the Supreme Court after referring to the definition of

"unauthorised occupant" under Section 105-B(1)(b) of the said Act held

that an order of eviction on the ground of either "expiry" or "due

determination" has to be made in accordance with the procedure

prescribed by the statute. It was in fact held by the Supreme Court that

the High Court had not committed any error of law in coming to the

conclusion that the petitioner was an "unauthorised occupant" and,

therefore, confirming the eviction order passed in summary proceedings

under Section 105-B(1) of the Act in consonance with the other

provisions of the Act. The Supreme Court however observed that a

lease, unlike a licence, creates interest in an immovable property which

could be put an end to by determination in accordance with law or

contract. It deserves to be kept in mind that the instant case is not one

of lease but of licence which has expired by the efflux of time and

accordingly the judgment in Ashok Caterers case (supra) cannot come

to the aid of the plaintiff, more so as there was admittedly no renewal or

extension of licence in the instant case.

44. Before concluding, it may be mentioned that the defendant was

called upon by this Court by order dated 20th May, 2009 to file an

affidavit, stating on oath the number of cases of similarly situate

properties where the licence had been converted into lease during the

preceding five years, i.e., during the period from 2002 to 2007. In

compliance with the said order, an affidavit dated 15th July, 2009 was

filed by the Deputy Commissioner, Municipal Corporation of Delhi to

state that as per the records available in the Licensing Department (City

Zone), there was no such case. It was further stated that the matter was

taken up with the office of the Additional Deputy Commissioner

(Remunerative Project Cell) and Land and Estate Department of MCD

to report in terms of the order dated 20th May, 2009 and it was reiterated

by them that during the period 2002 to 2007, no such property allotted

on licence fee basis had been converted into leasehold basis. In

response to the aforesaid affidavit, one of the Directors of the plaintiff,

Mr. Sanjay Jain, filed an affidavit to state that apart from the case of the

plaintiff, the Administrative Officer, Land and Estate Department,

Municipal Corporation of Delhi by letter dated 2nd April, 2007

addressed to one Smt. Asha Chitkara, Hall No.2, MCD Market,

Municipal Market, Karol Bagh had requested her to make payment of

Rs.30,28,410/- along with an affidavit regarding payment of arrears of

licence fee/enhanced land cost, if any, demanded by the MCD in future.

On perusal of the said affidavit of the plaintiff, however, this Court is of

the view that the said affidavit is of no avail to the plaintiff, inasmuch

as, admittedly the property licensed to Smt. Asha Chitkara was in the

municipal market in Karol Bagh.

45. Before concluding it also deserves to be mentioned that an

application, being IA No.10801/2009 under Section 151 CPC was also

filed by the plaintiff to bring on record certain documents, which was

allowed by this Court on the statement made by the counsel for the

defendant that without prejudice to the rights and contentions of the

defendant to challenge the veracity and relevancy of the said documents,

the defendant had no objection to the prayer being allowed. The said

documents were with regard to resolution Nos.68 and 69, both dated

02.07.2009, of the Standing Committee of the MCD. An opportunity

was granted to the defendant MCD to file an affidavit of the

Commissioner, MCD. In compliance with the said order, an affidavit

dated 27.08.2009 was filed, which is apposite. The relevant portion of

the said affidavit reads as follows:-

"2. That the deponent submits that in compliance to the order dated 24.08.2008 passed by this Hon'ble Court, it is stated that notice of resolution moved by Shri Mahak Singh vide item No.69 of the Standing Committee on the subject "Conversion from Licence Fee status to leasehold status basis and then to Free hold basis of Open Air Restaurant, Minto Road Bridge, New Delhi was referred by the Standing Committee to the Commissioner, MCD for report vide resolution No.145 dated 2-7-2009. Copy of the said resolution is annexed herewith as Annexure-D-1.

3. That the matter was examined and placed before the Commissioner, MCD. Upon consideration of the matter, Commissioner, MCD vide order dated 18.08.2009 has rejected the notice of resolution of Sh. Mahak Singh routed through Standing Committee in view of the reasons as explained in the annexed preamble dated 27.08.2009 which is annexed herewith as Annexure D-2.

4. That as is evident from the plaint itself, the entire case of the plaintiff before this Hon'ble Court was that the property in question was covered by Resolution 494 under which it could be converted from license to lease hold and Resolution 894 under which it could be mortgaged. It is submitted that the Notice of

Resolution numbered as 69 tabled by a private member Shri Mahak Singh in the meeting of the Standing Committee dated 2nd July 2009 completely falsifies the case of the plaintiff and in effect constitutes an admission on its part that its case was not covered in the previous resolutions thereby necessitating a private member to give notice for a specific resolution for the property in question. It is submitted that from the said notice of resolutions it is evident that the entire case of the plaintiff is premature and without any cause of action as admittedly the resolution dealing with the property has been tabled only on 2/7/9 which too has been rejected by the Commissioner. The mere fact that a notice of resolution is pending consideration or seeking report does not give any vested right in favour of the plaintiff. It is reiterated that no such like property has been converted from Licence Fee to Lease hold during the period 2002-2007."

46. The relevant portion of the order of the Commissioner, MCD

dated 18th August, 2009 rejecting the notice of resolution routed through

the Standing Committee in view of the reasons explained in the annexed

preamble dated 27.08.2009 annexed as Annexure D-2 reads as under:-

"WHEREAS, Shri Mahak Singh has moved the resolution before the Standing Committee on the above subject inter alia recommending to the Standing Committee to request the Corporation that necessary formalities from License Fee basis to Lease Hold basis and then Freehold basis of Cup and Saucer Open Air Restaurant, Minto Bridge, New Delhi in favour of M/s. Ashima Securities be completed without any delay by making reliance of Section 200(c), (d) & (e) of the DMC Act, 1957; Corporation Resolution No.494

dated 21.11.2005 and Resolution No.894 dated 05.03.2007 and having deposited some amounts towards the conversion from License to Free hold as reflected in the aforesaid item No.69 and the same was listed before the Standing Committee for consideration on 02/07/2009.

AND WHEREAS, upon consideration of the records maintained in the MCD, it is submitted that the aforesaid matter may not be considered at this stage as there are gross violations noticed by the higher authorities in relation to the matter under reference. The matter has been referred to Central Bureau of Investigation which is registered as RC No.31/A/2008-DLI dated 30.06.2008 (Copy enclosed) against personnel's of MCD and occupier to unearth the racket of unauthorized issuance of letter of conversion at the level of Administrative Officer (Land & Estate Department) without seeking the approval of the Commissioner, MCD as required under Section 59 of the DMC Act, 1957 and in contravention of the provisions as contained in Section 200 of the DMC Act, 1957. Furthermore, the Vigilance Enquiry is also going on against Smt. Sangeeta Bansal, then ADC/L&E, Shri B.K. Garg (Retd. Asstt. Commissioner), Smt. Maya Banerjee (UDC) and Shri K. Vatsan, Administrative Officer (Retd.) in Vigilance Department for having committed irregularities in connivance with the licencee under Rule 3(I)(i)(ii)&(iii) of the CCS Rules in 1964 as made applicable to the employees of the MCD. It is pertinent to mention that M/s.Ashima Securities Pvt. Ltd. has filed Suit No.1713/2007 titled "Ashima Securities Vs. MCD" in the Hon'ble High Court of Delhi and obtained status quo in relation to the suit property vide order dated 29.08.2007 which is now fixed for hearing on 01.09.2009.

The irregularities pointed out by the

departmental investigation before referring the matter to the CBI and Vigilance department are enumerated as under:-

As regards to fraudulent conversion of prime property of MCD i.e. Cup and Saucer Open Air restaurant at Minto Road, Delhi from license fee basis to lease hold basis with intention of causing the huge wrongful loss of crores of Rupees to the M.C.D. and wrongful gain for themselves. The Remunerative Project Cell (R.P. Cell) of the M.C.D. Control various municipal properties/sites i.e. parking, kiosks, shops, restaurants, municipal markets etc. with a view to generate municipal revenue. These properties are given to general public through notice inviting tender on licence fee basis for a fixed period on certain terms and conditions. These properties (except parking sites etc.) are given to the highest bidder usually for a period of 5 years subject to terms and conditions.

Cup & Saucer Open Air Restaurant at Minto Road is one such prime remunerative project property. One N.I.T. by the Remunerative Project Cell of the M.C.D. was floated in the newspaper on 11.9.01 requesting for sealed tenders for allotment of Cup and Saucer Restaurant at Minto Road, Delhi with an area of approximately 1393 sq. mtrs. on License Fee basis as is where is basis for a period of 5 years. The possession of this property was handed over to M/s. Ashima Securities Pvt. Ltd. Through its Director, Shri Sanjay Jain @ Rs.4,38,101/- P.M. on license fee basis.

After completion of 5 years, the aforesaid licensee in criminal conspiracy with the personnel's of M.C.D. willfully misinterpreted the two resolutions 494 and 894 of the M.C.D. thereby giving conversion rights from license fee basis to leasehold basis in favour of Ashima Securities Pvt. Ltd. in respect of Open Air Restaurant (Cup &

Saucer), Minto road, New Delhi without getting proper approval from Competent Authority i.e. Commissioner, M.C.D. Resolution 494 covers only Markets under the control of M.C.D. for the purpose of converting the Licence Hold to Lease Hold. This property is not covered under the purview of the above Resolution. Moreover, any Resolution i.e. passed by the house of the Corporation does not get effectuated on its own. The concerned department has to frame the necessary procedure and guidelines regarding implementation of any policy passed in the house and then have to get it approved from Commissioner, MCD. Then only it gets effectuated. Both resolutions 494 and 894 are yet to be effectuated by the Commissioner, M.C.D.

The officials of L&E Deptt. who processed the application for conversion were fully aware of the rules and procedures laid down in the DMC Act in relation to the conversion from license hold to freehold and therefore, ought to have rejected the application of M/s. Ashima Securities Pvt. Ltd. instead of processing the same and issuing a demand letter for making payments unauthorisedly. The company M/s.Ashima Securities Pvt. Ltd. is most likely a fictitious entity since most of the demand letters sent on the official address of the company between the period 2001 to 2005 by the R.P.Cell could not be delivered and returned back by the police office.

It is pertinent to mention that the officials of M.C.D. have further colluded with Mr.Sanjay Jain of M/s. Ashima Securities Pvt. Ltd. And Sh. Anil Sharma and got issued the demand letter dated 22.3.07 permitting M/s. Ashima Securities Pvt. Ltd. for mortgaging the M.C.D. properties illegally and unauthorisedly as per Resolution No.894 dated 5.3.07 for obtaining loan amount for the payment of alleged conversion charges. The resolution No.894 is not applicable to this

property as it only covers markets transferred from L&DO, CPWD and existing MCD markets only. Furthermore, only properties where lease deeds have only been executed with the MCD are eligible for seeking mortgage permission under Resolution 894. Moreover, there is a procedure laid down for seeking mortgage permission which includes an application from the lessee in prescribed form and a tripartite agreement has to be executed between the department, the lessee and the bank. This issue of demand letter in question for renewal of licence and conversion of licence to leasehold in any case was to be placed for approval from the Competent Authority i.e. Commissioner, MCD as per Section 200 of the DMC Act, 1957, which was deliberately not done. However, the lease deed could not be signed and M/s. Ashima Securities Pvt. Ltd. has approached the Hon'ble High Court for getting the same executed. The possession of the property lies with M/s. Ashima Securities Pvt. Ltd. due to a status quo order from Hon'ble High Court which is still in force.

Moreover, the market value of the property in question is somewhere between Rs.1 lakh to 4 lakh per sq. mtr. which comes out to be in the region of Rs.13.93 crores to 55.72 crores. However, only Rs.2.31 crores were received. It also needs to be mentioned that as per the schedule of market rates applicable for conversion as on 31.05.2003 as mentioned in the resolution No.894, rate is Rs.57,960/- per sq. mtr. for Minto Road while in this case the alleged payment was made @ 14490/- per sq. mtr. Thus, wrongful loss of crores of rupees to the MCD has been attempted and there is wrongful gain to the occupier.

In view of the above, the proposal may not be considered and moreover, the matter is pending with Hon'ble High Court/CBI/Vigilance

Deptt. Hence, the proposal may be rejected. The matter may be placed before Standing Committee."

47. The aforesaid, in my view, prima facie shows that the documents

filed and relied upon by the plaintiff falsify the entire case of the

plaintiff. The suit filed by the plaintiff on the plaintiff's own showing is

premature to say the least. Apparently, for this reason, at the time of

further submissions, the learned senior counsel for the plaintiff

Mr.Chandhiok chose not to rely upon the said documents. The

documents, however, have been referred to by me for the sole purpose

of showing that the plaintiff is very well aware of the baseless nature of

the averments made by it in the plaint and the injunction application.

48. In view of the aforesaid, in my view, the status quo order passed

by this Court in respect of the suit property deserves to be vacated and is

accordingly vacated.