Delhi Development Authority vs M/S Videocon Industries Ltd. & Anr
2011 Latest Caselaw 5443 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

                                     Date of decision: 14th November, 2011

+                        LPA No. 411/2007

%     DELHI DEVELOPMENT AUTHORITY                 ...Appellant
                       Through: Mr. Rajiv Bansal, Adv.

                                   Versus

      M/S VIDEOCON INDUSTRIES LTD. & ANR. ..... Respondents
                        Through: Mr. B.S. Nagar, Adv.

CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.    Whether reporters of Local papers may       YES
      be allowed to see the judgment?

2.    To be referred to the reporter or not?            YES

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

RAJIV SAHAI ENDLAW, J.

1. The appellant DDA impugns the order dated 29.01.2007 of the

learned Single Judge partly allowing the W.P.(C) No.14961-62/2004 filed

by the respondent and, while upholding the claim of DDA for unearned

increase, quashing the demand of `15,09,31,495/- on account thereof and

directing the appellant DDA to charge unearned increase at the rate of

`100/- per floor / flat and at which rate the demand for unearned increase

stands reduced to approximately `1,500/- only.

2. The demand aforesaid for the unearned increase was with respect to

commercial plot admeasuring 2548 sq. mtrs. bearing No.E-1, Jhandewalan

Extension, New Delhi. The said plot was in the year 1980 put to auction and

the bid of M/s Skipper Construction Co. (Pvt.) Ltd. accepted. However,

upon the bid amount being not paid, the said transaction did not materialize

and the plot was re-auctioned by the appellant DDA.

3. This time, the bid of M/s Banganga Investments Pvt. Ltd. (BIPL)

being the highest was accepted and in whose favour, in the year 1995, a

Perpetual Lease Deed with respect to the said plot of land came to be

executed. BIPL raised construction of a multi-storeyed building on the said

plot of land and Completion Certificate with respect whereto was issued on

08.03.1999.

4. BIPL initiated proceedings for merger / amalgamation with the

respondent No.1 M/s Videocon Industries Ltd. and in which proceedings

vide order dated 10.05.1999 merger / amalgamation was allowed. Upon

intimation thereof being given to the appellant DDA, appellant DDA raised

the demand inter alia of the unearned increase of `15,09,31,495/- and

impugning which the W.P.(C) No. 14961-62/2004 was preferred by the

respondent.

5. The provisions in the Perpetual Lease Deed aforesaid with respect to

the unearned increase are contained in Clause 6 thereof and which is as

under:

"6) a) The Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the commercial plot except with the previous consent in writing of the Lessor which he shall be entitled to refuse in his absolute discretion. Provided that in the event of the consent being given, the Lessor may impose such terms and conditions as he thinks fit and the Lessor shall be entitled to claim and recover a portion of the unearned increase in the value (i.e., the difference between the premium paid and the market value) of the commercial plot at the time of sale, transfer, assignment, or parting with the possession, the amount to be recovered being fifty percent of the unearned increase and the decision of the Lessor in respect of the market value shall be final and binding.

PROVIDED FURTHER that the Lessor shall have the pre- emptive right to purchase the whole property or any part thereof that may be subject of sale, transfer, assignment or otherwise parting with the possession as the case may be after deducting

fifty percent of the unearned increase as aforesaid. PROVIDED FURTHER that notwithstanding the limitations and conditions as mentioned in sub-clause 6(a) the Lessee may sell or transfer the floor space constructed on the plot subject to the permission of the Lessor in writing on payment of `100/- for each flat/floor space for the first sale/transfer. For subsequent sale/transfer the Lessor may on payment of proportionate 50% of the unearned increase (i.e. the difference between the premium already paid by the purchaser/transferor and the market price at the time of sale/transfer towards the portion of the land) grant permission to the sub-Lessee/ transferor for such subsequent sale / transfer of the floor space to be transferred. Prior permission of the Lessor for such second and subsequent sale/transfer of floor space shall be subject to the conditions of getting the Deed of apartment and the sub-lease (as defined under the Delhi Apartment Ownership Act, 1986) executed by the Lessee in favour of such floor space buyers / transferee.

PROVIDED FURTHER that the Lessee shall be required to intimate the first list of the floor space buyer/transferees giving full details of the name, address and quantum of floor space to the Lessor, simultaneously with the grant of the completion certificate. However, completion certificate shall be issued only on furnishing the valid list of the first purchasers of floor space along with copies of deed of apartment duly executed with each one of them.

The grant of permission by the Lessor to the Lessee for transfer of floor space or subsequent transfer of floor space to another person, shall not absolve the Lessee from the responsibility for violation of the terms and conditions of the Lease. The Lessee shall also be responsible for making all arrangements as are necessary for the fire fighting system and the common services.

b) Notwithstanding anything contained in sub-clause (a) above, the Lessee/sub-Lessee/floor space buyer may with the previous consent in writing of the Vice Chairman of DDA (hereinafter called the Vice Chairman) mortgage or charge the said commercial plot/space to such person as may be approved by the Vice Chairman in his absolute discretion. PROVIDED THAT first mortgage permission shall be or deemed to have been granted, on handing over the possession of the plot and on execution/registration of the lease deed for the purpose of construction of the building in favour of the Scheduled/Nationalized Banks and Govt. Institutions which allow loan against mortgage permission issued by DDA to the Lessee.

PROVIDED further that in the event of the sale or foreclosure of the mortgaged or charged property the Lessor shall be entitled to claim and recover the fifty percent of the unearned increase in the value of the commercial plot/apartment as aforesaid and the amount of the Lessor‟s share of the said unearned increase shall be first charge, having priority over the said mortgage or charge. The decision of the Lessor in respect of the market value of the said commercial plot/apartment shall be final and binding on all parties concerned. PROVIDED FURTHER that the Lessor shall have the pre- emptive right to purchase the mortgaged or charged property after deducting fifty percent of the unearned increase as aforesaid.

c) The Lessor‟s right to the recovery of fifty percent of the unearned increase and the pre-emptive right to purchase the property as mentioned hereinabove shall apply equally to an involuntary sale or transfer whether it be by or through an executing or insolvency Court."

6. The learned Single Judge in the judgment impugned in this appeal,

relying on Indian Shaving Products Ltd. Vs. DDA 95 (2002) DLT 87 has

held that merger/amalgamation of BIPL, which was the Lessee under the

Perpetual Lease aforesaid, with the respondent amounted to transfer by BIPL

of the plot aforesaid to the respondent. The said finding of the learned Single

Judge is not assailed by the respondent also. We may notice that the

respondent has filed written notes of submissions in appeal and no challenge

to the said finding is made therein also. The counsel for the respondent has

also during the hearing admitted that the said finding is not challenged. We

may notice that in General Radio & Appliances Co. Ltd. Vs. M.A. Khader

AIR 1986 SC 1812, Cox & Kings Vs. Chander Malhotra (1997) 2 SCC

687, Parasram Harnand Rao Vs. S.N. Jain AIR 1980 SC 1655 & Singer

India Ltd. Vs. Chander Mohan Chadha AIR 2004 SC 5039 are also

judgments on the proposition that such amalgamation/merger amounts to

transfer.

7. The question therefore before us for consideration is only as to the

amount of the unearned increase.

8. The learned Single Judge has held that though the measure of

unearned increase under the Perpetual Lease Deed, as provided in the first

proviso of Clause 6(a) thereof is the difference between the premium paid by

the Lessee and the market value on the date of the transfer but under the

third proviso of Clause 6(a) the unearned increase payable for the first sale/

transfer was only `100/- for each flat/floor space. The learned Single Judge

accordingly held DDA entitled to unearned increase at the rate of `100/- per

floor/flat only and as per which direction only approximately `1,500/-

instead of `15,09,31,495/- would be due.

9. Though it appears that before the Single Judge there was also some

controversy as to whether the transfer from BIPL to the respondent was the

first or the second transfer, with it being contended that the first transfer was

from M/s Skipper Construction Co. (Pvt.) Ltd. to BIPL and the transfer from

BIPL to the respondent could thus not be the first transfer but we are clearly

of the view that there is no scope of any ambiguity in this regard. The title of

the said plot at no time stood transferred in favour of M/s Skipper

Construction Co. (Pvt.) Ltd. (which had failed to pay the bid amount) for it

to be said that the title in favour of BIPL flowed from M/s Skipper

Construction Co. (Pvt.) Ltd. The plot was accordingly re-auctioned by the

appellant DDA and pursuant whereto Perpetual Lease Deed with respect

thereto stood executed by DDA in favour of BIPL. The transfer aforesaid by

BIPL in favour of the respondent was thus a case of first transfer / sale.

10. We are however unable to sustain the finding of the learned Single

Judge of the third Proviso providing for unearned increase of `100/- for each

flat / floor space for first sale / transfer being attracted. The said proviso was

applicable to cases of the Lessee of the plot of land selling the floor space

constructed on the plot to another. Even though as on the date of transfer by

BIPL to respondent No.1, construction stood completed and Completion

Certificate with respect thereto issued but the transfer from BIPL to the

respondent was not a case of sale of floor space and for which situation only,

in the cases of first sale / transfer, the unearned increase was limited to

`100/- per flat / floor. The present was a case where the Lessee i.e. BIPL

transferred its leasehold rights in the plot of land as well as the multi-

storeyed building constructed thereon, lock, stock and barrel to the

respondent. We are clearly of the view that the proviso applied by the

learned Single Judge had no application to the transfer in question.

11. The counsel for the respondent has contended that the third proviso is

applicable since on the date of transfer the multi-storeyed building existed

on the plot of land and the transfer was of the plot including the building. It

is contended that even though the third proviso does not refer to transfer of

plot and mentions only transfer of flats/floor space but there could in law be

no sale or transfer of the floor space without sale/transfer of proportionate

rights in the plot of land. Reliance in this regard is placed on the Delhi

Apartment Ownership Act, 1986.

12. We are unable to agree for the following reasons:

A. Clause 6(a) supra of the Perpetual Lease Deed prohibits sale, transfer,

assignment or parting with possession of the plot or any part thereof

except with the previous consent in writing of the lessor DDA. The

first proviso empowers the lessor DDA to while granting consent for

transfer of plot claim unearned increase in value thereof to the extent

of 50%;

B. the third proviso commences with the non-obstante clause (noticed by

the learned Single Judge also). The purport of the said non-obstante

clause is to exclude from the purview of the prohibition aforesaid first

sale/transfer of "floor space constructed on the plot" as distinct from

the plot of land or part thereof. Thus, the flats/floor space constructed

on the plot of land could in the first instance be sold/transferred by

the lessee of the plot of the land and who was under obligation to also

raise construction thereon without requiring any prior consent of the

DDA and on payment, instead of unearned increase @ 50%, at the

rate of only `100 for each flat/floor space;

C. the plot of land aforesaid was intended for construction of a

commercial tower. What Clause 6 of the Perpetual Lease Deed

discloses is that the lessee of the plot of land after constructing the

commercial tower could sell flats/floor space therein without

complying with the rigours otherwise contained in the Perpetual

Lease Deed on transfer. The use of the word "each" before the words

"flat/floor space" in the third proviso is indicative of the same being

applicable to sale by the lessee as the developer of the multi-storeyed

commercial tower of flats/commercial spaces therein to different

persons. The same cannot be applied where the plot of land and the

entire building are sold lock, stock and barrel as in the present case;

D. the third proviso itself provides for the unearned increase of 50% in

the case of second sale/transfer of the said flats/floor spaces. While

doing so, mention is made of the transfer of "portion of the land" also

alongwith the flat/floor space. It thus cannot be said that the parties to

the Perpetual Lease were unaware that the transfer of the flats/floor

space would also entail transfer of proportionate rights in land. Rather

the third proviso contemplates execution of a Deed of Apartment

under the Apartment Act in favour of such subsequent purchasers /

transferees of flats/floor space;

E. the fact that the first proviso was not intended to apply to transfer

lock, stock and barrel of the plot of land as well as the building

constructed thereon is also borne out from the fourth proviso of

Clause 6(a) supra which envisages the lessee as an entity different

from the first space buyers; the same requires the lessee to furnish to

the DDA the list of first space buyers/transferees. This is also

reiterated by the last part of Clause 6(a) supra which provides that the

permission granted in the third proviso to the lessee to sell the flats /

floor space would not absolve the lessee from liabilities/obligations

under the Lease Deed. This is also indicative of the state of affairs in

which the third proviso will apply being of the sale by the lessee of

the flats/floor spaces. The third proviso can thus obviously have no

application to a state of affairs where the leasehold rights in the plot

of land itself stand transferred to the buyer of the entire built up

space;

F. the position is further fortified from:

(a) Clause 7 of the Perpetual Lease which provides that

notwithstanding Clause 6(a) the buyers of flats/floor spaces shall be

entitled to their floor spaces only on tenancy under the prevalent law.

(b) Clause 8 binding the transferee of the plot of land from the

lessee and not the space buyers with the covenants in the Lease Deed;

G. reading the Perpetual Lease in the manner done by the learned Single

Judge will make the first proviso of Clause 6(a) and portions of other

covenants in the Perpetual Lease otiose. It is a settled principle of

law that an attempt has to be made in the first instance to read all

clauses of a contract harmoniously so as to give effect to each of them

and to avoid an interpretation which would render some of the

clauses/covenants redundant;

H. the interpretation aforesaid is according to us not only the literal

interpretation of the Perpetual Lease but also a harmonious

construction of all clauses thereof; and,

I. though undoubtedly under the Apartment Act, sale of an apartment

(as flats/floor spaces in multi-storeyed buildings are) is accompanied

with entitlement to a proportionate share in common areas and

facilities which includes the land underneath the building but the right

to deal with the common areas and facilities under Section 4(8) of the

Apartment Act even is of the Association of the Apartment Owners

and not of individual apartment owners. It thus cannot be said that

the purchaser of an apartment steps into the shoes of a lessee of land.

Section 8 of the Apartment Act also envisages execution of separate

deeds of sub-lease by the lessee of the land underneath the multi-

storeyed building in favour of each apartment owner, again indicating

that the lessee does not extinguish on sale of apartment.

There is thus no merit in the argument of the counsel for the respondent.

13. The counsel for the respondent has next contended that the respondent

is also impugning the market price assumed by the appellant DDA while

computing the unearned increase as `15,09,31,495/-. It is contended that the

market price cannot be anything more than the rates declared by the Delhi

Government from time to time.

14. The counsel for the appellant DDA has in this regard invited attention

to the additional affidavit dated 26.04.2011 filed in this regard to the effect

that the appellant DDA from time to time publishes market price for the

purposes of unearned increase. The appellant DDA has along with the said

affidavit filed a copy of the Circular dated 25.05.1999 and has contended

that the unearned increase has been computed as per the prices notified on

the date of transfer.

15. In the absence of any challenge to the said Circular of the appellant

DDA, appellant DDA cannot be held bound to compute the market price on

the basis of the prices declared by any other agency.

16. We therefore allow the appeal and set aside the order of the learned

Single Judge insofar as limiting the claim of the appellant DDA for unearned

increase at the rate of `100/- per flat / floor space and the demand of the

appellant DDA for unearned increase is upheld.

No order as to costs.

RAJIV SAHAI ENDLAW, J.

ACTING CHIEF JUSTICE

NOVEMBER 14, 2011 „gsr.‟