M/S Thy Neelkant Enterprises Pvt. ... vs Delhi Development Authority
2011 Latest Caselaw 598 Del

R-154 & R-15A
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                   Judgment Reserved on: 31.01.2011
                   Judgment Delivered on: 02.2.2011


+             RSA No.26/2004 & CM No.5863/2010


M/S THY NEELKANT ENTERPRISES PVT. LTD.
                                ...........Appellant
              Through: Mr.Raman Kapur, Advocate.

                    Versus

DELHI DEVELOPMENT AUTHORITY     ..........Respondent
             Through: Ms.Sangeeta Chandra, Advocate.

                                 AND

              RSA NO.74/2004, CM No.3692-93/2004


DELHI DEVELOPMENT AUTHORITY     ..........Appellant
             Through: Ms.Sangeeta Chandra, Advocate.

                    Versus

M/S THY NEELKANT ENTERPRISES PVT. LTD.
                                ...........Appellant
              Through: Mr.Raman Kapur, Advocate.



       CORAM:
       HON'BLE MS. JUSTICE INDERMEET KAUR

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

     2. To be referred to the Reporter or not?                Yes

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

INDERMEET KAUR, J.

1. These are cross appeals filed by the Delhi Development

Authority (hereinafter referred to as „the DDA‟) on the one hand

and M/s Neelkanth Enterprises (hereinafter referred to as „the

plaintiff‟) on the other. Both have impugned the judgment and

decree dated 6.10.2003. This judgment had modified the judgment

of the trial judge dated 25.9.2001. Vide judgment and decree

dated 25.9.2001 the suit filed by the plaintiff Neelkanth

Enterprises seeking perpetual injunction against the DDA

restraining them from cancelling his auction bid and not acting

upon the letter dated 7.6.1983 (which was against the interest of

the plaintiff) was decreed in his favour. Vide the impugned

judgment and decree the finding of the trial court was modified

and the plaintiff had been directed to pay interest on the sum of

Rs.1,09,20,000/- which had been deposited by him (admittedly

after the stipulated dates) till the date of actual payment; which

interest would be determined by the DDA.

2. The factual matrix is not in dispute. The plaintiff, a duly

incorporated company, had bid at the public auction held on

09.11.1982 by the DDA. The subject matter of the auction was a

cinema-cum-commercial plot measuring 1750 sq. metre, Wazirpur

Industrial Area. Plaintiff was the highest bidder; his bid was

accepted on the spot and he had paid initial earnest money of

Rs.27,30,000/- on the same date. His bid having been accepted he

was issued the allotment letter dated 14.12.1982. Plaintiff was

required to pay the balance amount of Rs.81,90,000/- by 14.3.1983.

Contention of the plaintiff was that since the land was not

developed; there being no sewerage, electricity or water

connection, the plaintiff would not be in a position to carry out the

construction at the site, which in terms of their auction bid

mandated that the plaintiff would construct the building at the site

within two years from the date of the acceptance of the bid.

Accordingly, the plaintiff made representations dated 21.2.1983

and 14.3.1983 pointing out these discrepancies. No reply was

given. On 7.6.1983 the defendant extended time to the plaintiff to

deposit his amounts along with interest @18% per annum, or else

his bid would be cancelled.

3. Present suit was accordingly filed. In the course of the suit

proceedings under orders of the Court the plaintiff had deposited

the next 25% of the bid amount which was Rs.27,40,000/- on

14.07.1992. On 27.12.1999, the balance 50% of the bid amount

was, again under the orders of the court, deposited.

4. The contention of the DDA is that the parties had entered

into a contract in terms of the terms and conditions of the bid

document (page 105 of the paper book). 25% of the payment was

deposited on the fall of hammer which was on the date of the

auction i.e. 09.11.1982. However, further payment had not been

made as per the stipulated dates which had expired on 14.3.1983;

thereafter extension of time also stood expired on 12.6.1983. The

defendant is not bound to honour this commitment as the plaintiff

willfully defaulted in making the payment as per the terms of the

contract. Clause 10 of the said terms and conditions of the

auction bid entitles the department to forfeit the earnest money. It

is pointed out that the department is not bound by the terms of the

contract. Counsel for the department has placed reliance upon

105 (2006) DLT 829 Deluxe Estates (P) ltd. Vs. DDA as also another

judgment of the Division Bench of this court reported in 69(1997)

DLT 716(DB) Aggarwal Associates (Promoters)Ltd Vs. DDA & Anr.

to support his submission that where the plaintiff himself had failed

to adhere to the schedule of payments, the DDA could not be

restrained from cancelling the auction bid; the earnest money is

also liable to be forfeited. For the same proposition reliance has

been placed upon 126(2006) DLT 475 (Division Bench) DDA Vs.

Prem Rani & Ors. as also 63(1996) DLT 467 (Division Bench)

K.Bhattacharjee Vs. DDA.

5. Arguments have been countered. Attention has been drawn

to the definition of "nazul land" as contained in Section 2(i) of the

DDA (Disposal of Developed Nazul Land) Rules 1981. Reference

has also been invited to Section 22 of the DDA Act. It is pointed

out that "nazul land" necessarily means developed land; in this

case both the fact finding courts have noted and observed that the

land in question was not developed; the impugned judgment had

recorded that the peripheral services were not available. It is

submitted that in the absence of essential services i.e. water,

electricity and sewerage not being available at the site it would not

have been possible for the plaintiff to complete the site within two

years of the auction bid; it was in these circumstances, that the

plaintiff was constrained to move representations seeking

extension of time which had arbitrarily been rejected. Counsel for

the appellant has placed reliance upon 2004 II AD Raj Kumar Vs.

DDA , 2002 V AD (Delhi) 592 Surender singh Oberio Vs. DDA and

1991 RLR (Note) 47 Reliable Lab (P) Ltd. Vs. DDA to support in

stand.

6. Record has been persued.

7. The dates as aforenoted are admitted. The bid document on

the basis of which, the plaintiff had bid laid down clear terms and

conditions. The terms and conditions were for the auction of a

commercial plot for a Cinema Hall at the Community Centre,

Wazirpur Industrial Area. Much emphasis has been laid on the

word „development‟ which finds mention in the title of the

document and which reads as follows:

„DELHI DEVELOPMENT AUTHORITY

TERMS AND CONDITIONS OF AUCTION OF CINEMA PLOT IN COMMUNITY CENTRE AT WAZIRPUR (INDUSTRIAL AREA) UNDER THE DELHI DEVELOPMENT AUTHORITY (DISPOSAL OF DEVELOPED NAZUL LAND) RULE 1981"

The word "developed"; has reference to the Nazul Land

Rules and the reference to the word "developed" is in this context

alone.

8. Clause 10 of this document stipulates as under:

"10. As person fails to pay the balance amount of his bad to the Authority within fifteen days of acceptance of the bid or within such period as may have been specified otherwise in accordance with the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981, shall forfeit the earnest money and it shall be competent for the Vice-Chairman to re-auction the plot."

9. Clause 18 reads as follows:

"Within a period of two years from the date of acceptance of the bid, the successful bidder shall, at his own expense construct building at the site for the purpose of a cinema with new and sound materials and shall complete the water, sanitary and electrical installations required for the said building."

10. Admittedly, the bid of the plaintiff was lowest; his bid had

been accepted; the agreed auction amount was of Rs.1,09,00,000/.

On 09.11.1982, the earnest money of Rs.27,30,000/- was deposited

by the plaintiff. The balance payments had not been made as per

the payment schedule. The contention of the plaintiff that he was

not liable to make the payment as the land had not been developed

and the bid document also making a reference to the developed

land which is also clear from the definition of nazul land under

Section 2(i) of the Delhi Development Authority (Disposal of

Developed Nazul Land) Rules as also Section 22 of the DDA Act,

1957 is an argument without any merit.

11. The two Courts below were the two fact findings Courts.

Seven issues had been framed by the trial judge. Oral and

documentary evidence had been adverted to. Trial judge was of

the view that since the land was not developed and the contract of

electricity, water and sewerage had been given only after the date

of auction, the plaintiff was entitled to the decree as prayed for by

him.

12. The impugned judgment had however held otherwise.

Para 15 is relevant; it reads as follows:

"15.The contention of the learned counsel for the appellant is that the plaintiff was well aware of the state of the land under auction as it was not reasonable that no inspection would have been carried out before bidding and that therefore it is not of much significance whether or not the land was developed or not, since the obligations of the parties rested on contract. If development is to be defined as provisions of peripheral services, then on the evidence on record, most certainly, on the date of auction, the land was not developed. However, the purpose of the auction was also to ensure development-as open vacant lands were to be utilized for the planned development of Delhi for use as per the Master Plan. Thus, commercial sites earmarked were auctioned also for development of the area as per specific land use to prevent the haphazard growth of the city. Nowhere in the invitation for bids, or in the contract was it mentioned that the DDA was auctioning the plots after having developed the peripheral services. Nor was such a promise held out that such services had already been provided or would be provided within a specific period. Moreoever, the auction bidder had every opportunity to inspect the site before bidding and having known the conditions and in the absence of any terms in the contract, it cannot be said that the

DDA was bound to provide these services before, any obligation could be enforced on the plaintiff. As rightly submitted by the learned counsel for the appellant, it was open to the plaintiff to not bid for the plot it if found that the plot was undeveloped. Having consciously entered into the contract, the plaintiff was bound to discharge its obligations under the contract. The state of development, or rather the lack of it, cannot be absolve the plaintiff from its duties under the contract."

13. The impugned judgment had rightly concluded that the

purpose of the auction was to ensure development; open

vacant lands were to be utilized for the planned development

of the Delhi as per the Master Plan. The bid document had

imposed no condition upon the DDA; the said terms and

conditions nowhere stated that it only after the provision of

electricity, water, sewerage and other facilities is made

available, will the bidder deposit the balance amounts. The

bid document is running into 28 Clauses. There is no such

mention. The specific dates of payment are however

contained therein. Clause 9 stipulated that after the

acceptance of the bid , the bidder will be informed of such

acceptance in writing and the bidder shall within 90 days

thereof pay to the DDA the balance amount of the bid in cash

or by bank draft. Admittedly this communication in writing

was the allotment letter dated 14.12.1982 issued by the

defendant to the plaintiff. The balance amounts were not

deposited by the plaintiff as per schedule. Clause 10

stipulated that in an eventuality where the bidder would not

make the payment of the balance amount of his bid within 15

days of his acceptance or such extended period as specified,

his earnest money shall be forfeited. Clause 11 stipulated

that the successful bidder will submit a dully filled in

application. This application had been submitted by the

plaintiff on 09.11.1982 itself (page-57 of the documents of

the respondent). Unequivocal undertaking signed by the

plaintiff inter alia reads as follows:

"I/We have read and understood the conditions of auction and those contained in the proforma of the perpetual lease deed and hereby unequivocally accept the same. I/we the intending purchaser(s) will pay the balance of the premium and other amounts and execute the lease deed in the prescribed form in accordance with the said conditions."

14. On 09.11.1982 when the plaintiff had deposited 25% of the

bid amount and had undertaken to pay the balance amount; he was

well aware of the terms and conditions stipulated in the said

undertaking. It is also difficult to conceive that a man would have

undertaken to invest a large amount of more than one crore in the

year 1982 for a 1750 sq. metre of plot without having inspected the

physical site of the premises. If the condition of the plot was not

suitable, nothing prevented the plaintiff from not making the bid; it

was obviously a fruitful commercial venture which the plaintiff had

entered into. There was no corresponding obligation on the DDA

to first develop the land and only then the balance payment would

be made by the plaintiff. The terms of the contract were clear and

unequivocal. There was no ambiguity. There being no such pre-

condition, the plaintiff had to necessarily adhere to the schedule of

payment which he admittedly did not do so. The last date of

payment as per the schedule was 14.3.1983; this was for the

balance payment of `81,90,000/-. Vide his letters dated 21.2.1983

Ex.PW-2/13 and the subsequent letter dated 14.3.1983 (Ex.PW-

2/14) the plaintiff addressed communications to the DDA stating

that it was not profitable to proceed with the venture as the land

was not developed. There was no justification on the part of the

plaintiff to have made such requests. Even otherwise vide Ex.DW-

1/3 the DDA had extended the time of payment up to 12.6.1983.

Even in this extended period of time the plaintiff did not make the

balance payment.

15. The impugned judgment had correctly returned all these

findings. It was however swayed by the fact that the plaintiff had

deposited the balance 75% of the amount under orders of the

court. It had proceeded on the assumption that since entire

auction amount stood deposited; the only controversy left is the

payment of interest, if any, to be made by the plaintiff. It had

illegally and erroneously presumed that the DDA has no other

grievance with the plaintiff; this is not the position as is evident

from the defence of the defendant available before the trial judge

and before the arguments propounded the first appellate Court.

16. On 14.7.1992, a sum of Rs.27,30,000/- was deposited by the

appellant; balance 50% was paid much later i.e. on 7.12.1999.

There is no finding by the court, not even a prima facie finding that

the deposit of this payment on the aforenoted dates would in any

manner advance the case of the plaintiff in his favour. The terms

of the bid document rightly entitled the department to forfeit the

earnest money after the plaintiff did not make the balance payment

in time.

17. Judgments relied upon by the learned counsel for the DDA

advance his case; once it is clear that the contract had not been

adhered to, the DDA is rightly entitled to forfeit the earnest money

which was also a specific term as contained in Clause 10 of the bid

document. The judgments relied upon by the appellant are all

distinct on facts. In the case of Raj Kumar (Supra), the question

was about the provision of amenities qua the allottees of houses;

i.e. the allotment of flats under the Expendable Housing Scheme of

1996; the challenge was to the right of the DDA to enhance the

price. The judgment of Surender Singh Oberoi (Supra) also related

to allotment of flats; basic amenities had admittedly not been

provided by the DDA; payment of 50% balance amount was

deferred till the amenities were provided. Facts are again distinct.

In the judgment of Reliable Lab (supra), balance amount had been

accepted by the DDA; some of the allottees were given possession;

it was held that such a discriminatory approach qua the petitioner

was illegal.

18. On all counts, this Court is of the view that the plaintiff has

no case. Admittedly the plaintiff had had not adhered to the

payment schedule in terms of their contract; he had committed a

flagrant violation of its terms. There was no plausible reason for

not doing so. Development of the land was not a pre-condition in

the making of balance payment by the plaintiff to the DDA. That

apart extension of time granted by DDA was not acceptable to the

plaintiff. The plaintiff presumably and understandably must have

inspected the site before his making the bid auction. It does not

now lie in his mouth that till the electricity, water and sewerage

facilities are granted to him he would not been in a position to

make the balance payment. In the case of Prem Rani (supra)

where the Single Judge of this Court had allowed refund of 50% of

forfeited amount to the party, the Division Bench had set aside the

said order and held that the Single Judge should not have

interfered in the terms and conditions laid down in the brochure of

the DDA which permitted the DDA to forfeit the earnest money in

terms of the contract between the parties.

19. In the instant case also the DDA is entitled to forfeit the

earnest money i.e. the sum of `27,30,000/-. This is in terms of their

admitted contract. The over and above balance amount which had

been deposited by the plaintiff is liable to be refunded back to him.

This excess amount of `27,30,000/- is lying deposited with the DDA

since 14.12.1992 and the other sum of `54,60,000/- is lying

deposited since 07.12.1999 which being over and above the

earnest money are liable to be refunded back to the plaintiff with

interest @ 9% per annum.

20. The appeal of the DDA is allowed. Appeal of M/s Neelkanth

Enterprises is dismissed. All pending applications are disposed of.

INDERMEET KAUR, J.

FEBRUARY 02, 2011 nandan