Human Care Medical Charitable ... vs Delhi Development Authority
2012 Latest Caselaw 55 Del

           *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Date of decision: 4th January, 2012

+                          W.P.(C) No. 9816/2009

HUMAN CARE MEDICAL CHARITABLE TRUST          ..... Petitioner
                Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
                         Anurag Jain, Adv.

                                   Versus

DELHI DEVELOPMENT AUTHORITY                  ..... Respondent
                Through: Ms. Shobhana Takiar, Adv.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
                               JUDGEMENT

RAJIV SAHAI ENDLAW, J.

1. The petition impugns the letter dated 02.06.2009 of the respondent

DDA to the petitioner cancelling the allotment (earlier made in favour of the

petitioner) of land ad-measuring 9950 sq. mtrs. at Sector-6, Pappan Kalan,

Dwarka, Delhi, for the reason of violation by the petitioner of the terms and

conditions of allotment.

2. Notice of the petition was issued and vide order dated 06.07.2009

which has continued to be in force, the operation of the letter / order dated

02.06.2009 stayed. Pleadings have been completed. On further application,

being CM No.5738/2010 of the petitioner, vide order dated 25.05.2010

directions were issued to the respondent DDA to, without prejudice to its

rights and contentions and subject to payment of composition charges, issue

a No Objection Certificate (NOC) to construction over the plot and grant

permission to the petitioner to mortgage the said plot/land subject to order of

the Court being brought to the knowledge of the mortgagee bank. The

counsels have been heard.

3. The land aforesaid was allotted by the President of India acting

through the respondent DDA to the petitioner vide Perpetual Lease Deed

dated 11.06.1996. The cancellation thereof has been effected on two

grounds i.e. (i) for the reason of the petitioner being required to construct the

building as per the sanctioned plan on the allotted land within two years of

being put into physical possession thereof and having not constructed the

building even after 13 years from the date of taking over physical possession

of the land; and, (ii) the land having been allotted on concessional rates and

having been sold in a clandestine manner to earn profit; it is the case of the

respondent DDA that all the original members of the petitioner Society at

the time of allotment of the land have been replaced by new set of members.

4. The petitioner ofcourse controverts both the aforesaid grounds of

cancellation and hence this writ petition.

5. The Perpetual Lease of land between the parties, in Clause VI thereof

provides for reference of any question, dispute or difference arising under

the lease or in connection therewith to the sole arbitration of the Lieutenant

Governor or any other person appointed by him. It is one of the arguments

of the counsel for the respondent DDA that the present petition is not

maintainable for the reason of availability of the remedy of arbitration. The

senior counsel for the petitioner has in rejoinder contended that if it was the

case of the respondent DDA that any arbitrable dispute had arisen between

the parties, it was for the respondent DDA to have referred the same to

arbitration; however, the respondent DDA instead chose to issue a show

cause notice and notwithstanding the reply thereto of the petitioner

controverting that the petitioner was in violation of any of the terms of the

Lease Deed chose to, without referring the dispute to arbitration, cancel the

lease and cannot now be heard to oust the petitioner from the remedy of writ

against the said action of the respondent DDA.

6. I am satisfied with the aforesaid response of the petitioner to the

objection aforesaid of the respondent DDA. The respondent DDA, from the

reply of the petitioner to the show cause notice, was aware of the disputes

which had arisen. The respondent DDA however instead of referring the

same to arbitration in terms of the arbitration Clause in the Lease Deed

chose to exercise its right as the lessor of the land. In the circumstances, the

respondent DDA cannot be heard to now rely on the arbitration clause.

Even otherwise it has been held by this Court in Chandana Kedia Vs. UOI

2010 II AD (Del) 757 that writ jurisdiction is not ousted by the mere

existence of arbitration clause in the contract.

7. It is also the contention of the counsel for the respondent DDA that

the writ remedy is not maintainable for the reason of dispute between the

parties being contractual and entailing disputed questions.

8. As far as the objection of writ being not maintainable for the reason of

the controversy agitated being contractual in nature is concerned, it cannot

be lost sight of that the land aforesaid was allotted by the respondent DDA

to the petitioner in exercise of powers under the statute and the statutory

rules viz. the Delhi Development Act, 1957 and the Delhi Development

Authority (Disposal of Developed Nazul Land) Rules, 1981. The Apex

Court in ABL International Ltd. Vs. Export Credit Guarantee Corporation

of India Ltd. (2004) 3 SCC 533 has held that the rule of writ remedy being

not available in contractual matters is not an absolute rule. Mention may

also be made of DDA Vs. Nehru Place Hotels Ltd. AIR 1984 Delhi 61

where a Division Bench of this Court held that even if alternative remedy by

way of a civil suit or arbitration is available, if the action of statutory body

like DDA is clearly arbitrary and violative of Article 14 of the Constitution,

it will be inequitable to force the petitioner to take recourse to alternative

remedy. Thus it is deemed expedient to consider the nature of the

controversy between the parties. It is felt that only if this Court on appraisal

of the material finds that the disputes require factual adjudication possible

only with examination and cross examination of witnesses, will it decline to

exercise the writ jurisdiction and refer the parties to arbitration; however, if

the controversy is not found to be entailing any such factual controversy,

this Court will proceed to adjudicate the matter.

9. That brings me to the grounds of cancellation of the lease. I will first

take up the aspect of sale by the petitioner of the subject land in a

clandestine manner to earn profit.

10. Significantly, the respondent DDA in the letter / order dated

02.06.2009 of cancellation has not cited any term/clause of the Perpetual

Lease Deed in violation whereof the sale is alleged to have been effected. It

is also significant that the letter / order dated 02.06.2009 is addressed to Sh.

Naresh Chandra, President of Human Care Medical Charitable Trust

(HCMCT) in whose favour the Perpetual Lease also was granted. It is not

the case of the respondent DDA that the said HCMCT has sold the land to

some other person / party. The respondent DDA in its counter affidavit, in

support of its action of cancellation of lease on the said ground, has pleaded

adversarial claims being made by Sh. Naresh Chandra aforesaid and certain

other persons with respect to the said land and referred to the complaints

made by Sh. Naresh Chandra to the respondent DDA of certain persons

misrepresenting as office bearers of the petitioner Society and to the

communications received by the respondent DDA of the change in the

management of the Society; it has also referred to the complaints received

by it from certain other persons of sale, for premium of over `2 crores, of

the land aforesaid which was allotted for hospital purposes; it has further

referred to the total change in the management of the Society. The case of

the respondent DDA is of sale by change in the membership of HCMCT

which is registered as a Society. Thus what falls for consideration is,

whether there was any such bar on change of members. The letter / order

dated 02.06.2009 also does not state as to who were the members of the

petitioner at the time of grant of Perpetual Lease and who were the members

at the time when the cancellation was effected.

11. The Perpetual Lease Deed describes the lessee as "Human Care

Medical Charitable Trust through its President / Secretary, Sh. Naresh

Chandra, registered under the Societies Registration Act XXI of 1860 and

having its registered office at E-152,Saket, N. Delhi-110 017." Clause X of

the Perpetual Lease Deed provides that the expression lessee "shall mean the

Human Care Medical Charitable Trust". The Lease nowhere provides as to

who are the members / office bearers of the petitioner save mentioning the

name of Sh. Naresh Chandra as the President / Secretary of the petitioner.

Of course, Sh. Naresh Chandra while signing the Lease Deed has described

himself as the President of the petitioner. The Lease does not prohibit the

petitioner from changing its members and does not provide that such change

of membership shall be construed as sale / transfer of the land.

12. Clause II (5)(a) of the Lease Deed does prohibit the lessee from

selling, transferring, assigning or otherwise parting with possession of the

whole or any part of the land or building thereon except with the previous

consent in writing of the lessor i.e. the President of India and which the

lessor in its absolute discretion is entitled to refuse. Clause III entitles the

President of India as the lessor to, on breach by the petitioner as lessee of

any of the covenant or conditions contained, determine the lease. Thus

though the lessor acting through respondent DDA, for sale, transfer and

assignment of the land or building thereon, is entitled to determine the lease

but the question is whether there has been any such sale, transfer or

assignment. In the face of the admitted position that there is no sale, transfer

or assignment by the petitioner to any other person, the only question which

remains for adjudication is whether change of membership even if any of the

petitioner can be said to be within the meaning of "otherwise part with

possession" of the land / building constructed thereon.

13. The lessee in the present case is a Society. Bhagwati, J. in Satyavart

Sidhantalankar Vs. The Arya Samaj, Bombay AIR 1946 Bombay 516 held

that members and Governing Body of a Society are a fluctuating body but

the identity of a Society under the Societies Registration Act, 1860 is a

continuing one; the identity of the original members and their successors is

one; the properties of the Society continue to vest in the Governing Body

irrespective of the fact that the members of the Society for the time being are

not the same as they were before, nor will be the same thereafter. It was

further held that once the Society is registered, it enjoys the status of a legal

entity apart from its members.

14. A five judge Bench of the Supreme Court in Board of Trustees,

Ayurvedic and Unani Tibbia College v. State of Delhi AIR 1962 SC 458

had occasion to consider the status of a Society and also noticed the

judgment supra of the Bombay High Court and though did not hold the said

judgment of the Bombay High Court to be wrong, held a registered Society

to be, though having characteristics which are analogous to some of the

characteristics of a corporation, yet to be not incorporated and remaining an

unincorporated Society. One of the Hon‟ble Judges namely Mudholkar, J. in

his separate opinion held a registered Society to be a quasi-corporation or a

near-corporation and being a legal entity at least for some purposes and not

merely made up of its constituents. Though Mudholkar, J. also observed

that a registered Society cannot hold property and it was so held

subsequently in Church of North India v. Lavajibhai Ratanjibhai (2005)

10 SCC 760 and Tata Memorial Hospital Workers Union v. Tata Memorial

Centre (2010) 8 SCC 480 also but for the reason of Section 5 of the

Societies Registration Act providing for vesting of the property belonging to

a Society in the Governing Body for the time being of such society.

Significantly, Section 5 uses the expression "property.........belonging to a

Society" and vests the same in the Governing Body "for the time being".

The same shows that property can "belong" to a Society and is only vested

in the Governing Body of the Society. It thus cannot be said that a property

cannot belong to a Society. "Belong" is explained in the Black‟s Law

Dictionary, VI th Edition, inter alia as "to own". The use of the expression

"belong" in juxtaposition to the expression "vest" is indicative of the

ownership of the property being of the Society while the management

thereof is of the Governing Body of the Society for the time being, just like

the land underneath the roads, berms and pathways in a city though

belonging to the Union of India vest in the municipality for management

thereof. If a Society were to be incapable of owning a property, Section 5

would not have used the expression "property belonging to a society".

Section 16 of the Act defines the Governing Body of a Society as a body to

whom by Rules and Regulations of the Society, the management of its

affairs is entrusted. Section 4 provides for holding of the Annual General

Meeting of the Society and filing annually of the particulars inter alia of the

Governing Body then entrusted with the management of the affairs of the

Society. That means that the persons constituting the Governing Body of

the society may change from year to year. A conjoint reading of Section 5

with Sections 16 and 4 of the Societies Registration Act thus shows that

though a Society may own the property but the same is held for the purposes

of management thereof by the Governing Body for the time being.

However, the person in whom the property is vested for management cannot

become the owner thereof.

15. The Registered Lease Deed executed by the respondent DDA of the

subject land in the present case is in favour of the petitioner Society. It is

not in favour of the then Governing Body or the members of the Society. In

fact, neither in the Lease Deed nor otherwise with the DDA exist the

particulars of the Governing Body or the members of the petitioner Society

at the time of execution of the Lease Deed. Thus, the only conclusion is that

as far as respondent DDA is concerned, rights by way of perpetual lease in

the subject land were created in favour of the petitioner Society, irrespective

of, in whomsoever from time to time the management of the said land may

vest by virtue of being in the Governing Body of the Society. It may also be

mentioned that Rule 20 of the DDA (Disposal of Developed Nazul Land)

Rules, 1981 permits allotment in favour of a society registered under

Societies Registration Act.

16. I may notice that the Supreme Court in New Okhla Industrial

Development Authority (NOIDA) v. Army Welfare Housing Organization

(2010) 9 SCC 354 where also the document of title was in the name of the

Society, after noticing Board of Trustees, Ayurvedic & Unani Tibbia

College (supra) held that the Society being a quasi-corporation would be

deemed to be a separate legal entity from its members and was entitled to

hold property. The same is the position here.

17. Thus when the Perpetual Lease is executed by the respondent DDA in

favour of the Society and it is the Society which is prohibited from selling,

transferring, assigning the land / building constructed thereon, a change in

the membership or the Governing Body of the Society cannot fall within the

meaning of "otherwise part with possession of the property". The case made

out by the respondent DDA is of the members of the petitioner Society as on

the date of the Perpetual Lease having parted with possession of the land to

the new members of the Society. However, the respondent DDA forgets that

its privity under the Perpetual Lease aforesaid was with the Society and not

with the then members of the Society. As aforesaid, no particulars even of

the then members of the Society are to be found in the Perpetual Lease. The

only mention therein is of Sh. Naresh Chandra as the President of the

Society. The words "otherwise part with possession" in Clause II(5)(a) have

to be read ejusdem generis to sale, transfer, assignment by the petitioner

Society to another entity and cannot be read as prohibiting a change in

membership. It was so held in Indudyog Co. Ltd. v. GNCTD

MANU/DE/1422/2003. It cannot also be lost sight of, that the respondent

DDA in leases of certain other properties where the lease is granted in the

name of the company has imposed restriction on change of Directors or

shareholders of a company. However, the respondent DDA did not choose

to impose any such restriction in the subject Perpetual Lease in favour of the

petitioner Society. The respondent DDA cannot now contend to the

contrary.

18. The counsel for the respondent DDA has relied upon M/s Rajandheer

(India) Pvt. Ltd. Vs. DDA AIR 2004 Delhi 208 where the expression

"otherwise part with the possession" in the Perpetual Lease was held to be

not confined to sale, transfer or assignment only and held to include

subletting as well. However, in the said judgment itself the lease expressly

prohibited transfer to a person not a member of the lessee. The said

judgment thus cannot be of any assistance to the respondent DDA.

19. This Court in J.C. Khosla Vs. Khosla Medical Institute & Research

Society 1996 III AD (Delhi) 109 held that where the property, a hospital in

that case too, continues to be owned and run by the Society, change in

control of management of the Society cannot amount to creation of third

party interest in or transfer of property of Society. It was held that the same

does not amount to creation of any rights in the property of Society in favour

of changed management inasmuch as the assets continue to be enjoyed by

the Society and the new management does not acquire any personal interest

in the said assets.

20. In view of the legal position aforesaid of the Society which is the

lessee being distinct from its members, notwithstanding any change in the

membership and/or in the office bearers of the Society, no case of violation

of any terms of the lease can be made out. It will also be seen that qua this

ground no factual controversy requiring adjudication exists. Thus,

notwithstanding the change in membership, the Society continues and will

continue to hold the land as the lessee. This Court thus has no hesitation in

holding the cancellation of the Perpetual lease on the said ground at least to

be arbitrary, illegal and in contravention of the Perpetual lease stated to have

been executed in exercise of powers under the Government Grants Act,

1895.

21. I now deal with the second ground of cancellation of the Perpetual

Lease i.e. of failure of the petitioner to raise construction on the plot. Clause

II(4) of the Perpetual Lease no doubt mandates the lessee to, within a period

of two years from 23.04.1996 and which time is provided to be the essence

of the contract and after obtaining sanction of the building plan etc.,

complete in a substantial and workmanlike manner a building for hospital on

the said land. Clause III while empowering the respondent DDA as lessor to

determine the lease for breach of any of the terms thereof, expressly

empowers the DDA to exercise the said power notwithstanding any waiver

in the past. The proviso to the said clause however again entitles the

respondent DDA to without prejudice to its right of re-entry, waive or

condone the breaches temporarily on receipt of such amount and on such

terms and conditions as may be determined by the lessor DDA from time to

time. Clause IV prohibits any re-entry without issuing a show cause notice

if the breach is capable of remedy and if the lessee is capable of remedying

the breach. It is also not in dispute that neither at the time of filing of the

petition nor till date the hospital building is ready and complete; though

informed to be substantially complete.

22. It is also the undisputed position that the time for construction which

in the Lease Deed was provided as two years from 23.04.1996 was on the

application of the petitioner to the respondent DDA extended from time to

time on payment of composition charges by the petitioner and till

24.04.2007. It is the case of the petitioner that the delay in construction is

not attributable to the petitioner alone but also to the respondent DDA which

has on being approached by the petitioner each time taken considerable time

for granting necessary sanction; it is further the case of the petitioner that

there was some other unavoidable delay owing to inter se disputes in the

Society and for the reason of requirement of obtaining permissions from

various other agencies involved in construction. The petitioner has however

during the course of hearing handed over a Certificate dated 30.04.2011 of

M/s Kothari Associates Pvt. Ltd., Architects to the effect that the structure of

three Basements + Ground + Nine Floors + Mumty / Machine Room is

complete and the brick work for three floors is complete and the remaining

brick work is in progress, all at a cost of approximately `42 crores. The

petitioner to substantiate the same has also handed over the photographs of

the construction as presently existing. The senior counsel for the petitioner

has also referred to judgment dated 22.11.2004 of this Court in W.P.(C)

No.7372/2002 titled Hamdard (Wakf) Laboratories (India) Vs. DDA and

which judgment in para 12 thereof refers to a Policy of the respondent DDA

for condoning delay in construction on payment of prescribed rate of

composition fee, upto 25 years and in para 18 refers to the Policy of

03.07.1997 permitting construction on institutional plots upto 15 years.

23. The senior counsel for the petitioner has also placed reliance on:

(i) Thukral Mechanical Works Vs. P.M. Diesels Pvt. Ltd. AIR

2009 SC 1443 interpreting Section 46(1)(b) of the Trade and

Merchandise Marks Act, 1958 and holding that the right of a

registered trademark is not lost automatically on expiry of five

years and one month and the said provision is not a "sunset

law" and it has to be adjudicated upon. It is thus contended that

on expiry of two years or extension thereof, the Lease did not

automatically come to an end;

(ii) Gobardhan Banerjee Vs. Sukhamoy AIR1951 Calcutta 481 on

interpretation of Section 28 of the Limitation Act, 1908;

(iii) Mekaster Trading Corporation Vs. UOI 106 (2003) DLT 573

on the duty to give reasons to contend that the letter / order

dated 02.06.2009 in the present case is without any reasons and

without dealing with the reply furnished by the petitioner to the

notice to show cause and thus illegal;

(iv) State Bank of India Vs. Mula Sahakari Sakhar Karkhana Ltd.

(2006) 6 SCC 293 on interpretation of documents.

24. A perusal of the reply by the petitioner to the notice to show cause

dated 09.04.2009 issued prior to the letter/order dated 02.06.2009 shows that

the petitioner therein had set out in detail the reasons for the delay in

construction. Undoubtedly, the letter/order dated 02.06.2009 does not state

as to why the said reasons/explanation are not acceptable. The obligation to

issue a notice to show cause before taking any action for determination of

lease is not to be an empty exercise. The requirement to comply with the

principles of natural justice cannot be paid merely a lip service. A Division

Bench of this Court in Cycle Equipments Pvt. Ltd Vs. MCD AIR 1993 Del

94 held that the principle of natural justice requires that there should be a

fair determination of the question by quasi judicial authorities; that the

process does not end by making known to a person the proposal against him

and giving him a chance to explain; it extends further to consideration of the

representation and the materials and a fair determination of the question

involved; that necessitates giving of reasons justifying the action

contemplated against the affected person. The entire purpose of giving an

opportunity of hearing would be lost if the hearing is not effective and is

with a closed mind. The purpose of hearing is to enable the deciding

authority to consider the cause shown by the noticee and if dissatisfied with

the same, to give reasons therefor. The respondent DDA in the present case

has not given any reasons whatsoever. The only inference which can be

drawn therefrom is that the respondent DDA was not in a position to rebut

the reasoning given by the petitioner for the delay in construction.

Moreover, once the respondent DDA itself had extended the time for

construction till 24.04.2007, it leads to the inference that the respondent

DDA was satisfied with the reasons for the delay till then. The respondent

DDA thus in the letter / order dated 02.06.2009 could not have held the

delay to be of 13 years. The respondent DDA was then only required to

consider whether the delay beyond 24.04.2007 was such as to invite

cancellation of lease.

25. The cancellation of lease for non construction is liable to be set aside

on this ground alone. It will also be seen that the said aspect also does not

entail any factual controversy requiring adjudication.

26. There is another aspect of the matter. A structure comprising of three

storey basement and nine floors above ground is standing on the site. The

plot is meant for the hospital for the benefit of the residents of the locality

which in the recent years has seen a large influx of population from the

neighbouring cities/towns. It is felt that if the disputes between the petitioner

and the respondent DDA are allowed to linger on, the same would further

delay the hospital becoming operational and to the prejudice of the residents

of the locality. It is therefore deemed expedient that the remaining

construction is completed at the earliest and the hospital becomes

functional/operational. The powers of this Court while exercising

jurisdiction under Article 226 are wide. This Court, to do substantial justice

between the parties, can decline relief even where entitlement in law is made

out (see Chandra Singh Vs. State of Rajasthan (2003) 6 SCC 545 and

ONGC Ltd. Vs. Sendhabhai Vastram Patel (2005) 6 SCC 454) and

similarly grant relief inspite technical violation as aforesaid. Similarly, in

Taherakhatoon Vs. Salambin Mohammad (1999) 2 SCC 635 even at the

time of the dealing with the appeal after grant of special leave, it was held

that the Court was not bound to go into the merits and even if entering into

the merits and finding an error, was not bound to interfere if the justice of

the case on facts does not require interference or if the relief could be

moulded in a different fashion. This Court has echoed the same views in

Filmistan Exhibitors Ltd. v. N.C.T., thr. Secy. Labour 131 (2006) DLT 648

by holding that even if there is a violation of law, this Court is not bound to

exercise discretionary jurisdiction and in Babu Ram Sagar Vs. Presiding

Officer, Labour Court MANU/DE/9235/2006 by refusing to interfere in

exercise of discretionary powers inspite of holding the reasons given by the

Labour Court to be not convincing. The present appears to be a fit case to

exercise such discretionary powers under Article 226 of the Constitution of

India rather than setting aside cancellation owing to non construction on

technical grounds aforesaid and which may lead to further disputes and

consequent delays in the Hospital becoming operational.

27. Considering that the land has been earmarked and allotted for hospital

purpose and which allocation is deemed to have been done keeping in mind

the density of population in the colony of Dwarka, it is found to be in the

interest of all concerned to now ensure that the hospital becomes functional

immediately.

28. In the circumstances, the petition succeeds. The letter/order dated

02.06.2009 of the respondent DDA cancelling the lease of the land in the

name of the petitioner is set aside/quashed. However, this Court is

nevertheless pained by the considerable delay for whatsoever reason, in the

hospital not being completed till now. In the circumstances, this Court

issues the following further directions:

(i) The respondent DDA to within eight weeks hereof inspect the

construction existing at the site and to in consultation with

petitioner arrive at a reasonable estimate of the further time

required for completing the same and to extend the time for the

petitioner to complete the construction till the said date, on

payment of composition charges etc. by the petitioner in

accordance with the Policy of the respondent DDA;

(ii) The petitioner to pay the said composition charges and to ensure

completion of construction within the time so fixed by the

respondent DDA;

(iii) For the undoubted delay occasioned in completion of the hospital

project and which is to the prejudice of public at large, the

petitioner, in addition to composition charges supra is directed to

within four weeks contribute a sum of `15,00,000/- to the Prime

Minister's National Relief Fund and furnish proof thereof to DDA;

(iv) The petitioner is warned that if it does not complete the

construction within the time to be so fixed by the respondent

DDA, no further leniency shall be shown and in accordance with

the earlier order dated 25.05.2010 (supra) in these proceedings, no

equities shall then flow in favour of the petitioner for the reason of

having raised the construction on the property.

The petition is disposed of.

RAJIV SAHAI ENDLAW (JUDGE)

JANUARY 4, 2012 „gsr‟