M/S Arya Shamlal Jaipalmal Pvt. ... vs The Delhi Development Authority
2012 Latest Caselaw 3809 Del

*               IN THE HIGH COURT OF DELHI AT NEW DELHI

+                               CS (OS) No.572/1991

%                                                                      2nd July, 2012

M/S ARYA SHAMLAL JAIPALMAL PVT. LTD. AND ORS. .... Plaintiffs
                 Through: Mr. Om Parkash Sharma, Advocate.

                                VERSUS

THE DELHI DEVELOPMENT AUTHORITY             ...... Defendant
                 Through: Mr. Rajiv Bansal, Advocate with Mr.
                          Rahul Bhandari, Advocate.

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)

1.

The plaintiffs have filed this suit for recovery of ` 35 lacs

alongwith pendente lite and future interest @ 24% per annum. The break-up

of this amount of ` 35 lacs is given in para 31 of the plaint as under:-

"31. That the plaintiffs are entitled to the following amounts:

i) Refund of penalty ` 8,25,000/-

ii) Interest on ` 8,25,000/- ` 14,00,000/-

from the date of payment till the date of the suit.

iii) Loss of earnings and damages caused ` 45,00,000/-

on account of high cost of construction on account of delay in delivery of possession The plaintiffs are thus entitled to a total sum of over ` 67 lakhs but confine their claim to ` 35 lakhs (rupees thirty-five lakhs only)."

2. The plaintiff Nos.1 to 3 were the successful bidders in an

auction conducted by the defendant/Delhi Development Authority (DDA) on

5.2.1981. The bid was given with respect to plot No.13, L.S.C., „J‟ Block

Saket, New Delhi admeasuring 205-30 sq. yds. The bid price was `

16,50,000/-. The plaintiff Nos.1 to 3 at the fall of the hammer deposited `

4,12,500/- being 25% of the bid amount. The balance amount as per terms

and conditions of the auction [clause 2(vi)] was payable on the Vice

Chairman of the defendant accepting the bid and this being so informed to

the plaintiffs. I may state that the plaintiff No.4 is a company which was

proposed to be incorporated after the submission of the bid by the plaintiff

Nos.1 to 3. As per the plaintiffs, they never received the letter dated

13.4.1981 of the defendant (Ex.RW1/1) with respect to acceptance of the bid

after approval of the Vice Chairman. The plaintiffs claimed that they came

to know of the acceptance of the bid for the first time when defendant

informed them by the letter dated 30.6.1981 (Ex.P2), by inviting reference to

the letter dated 13.4.1981, and stating that since the balance amount was not

deposited, the bid stood cancelled. There is a chain of correspondence

thereafter from 1981 to 1987 between the parties, and details of all of which

need not be given, however, the position which emerged is that the

defendant refused to relent. Firstly, the defendant issued its letter of

restoration of cancellation subject to payment of penalty/restoration charges

as also interest charges and then subsequently for cancellation. The letter of

the defendant stating that the plot would be restored only subject to payment

of restoration and interest charge is the letter dated 26.11.1985 (Ex. P13),

and the letter dated 3.9.1987 (Ex.P18) of the defendant to the plaintiffs is the

letter that in view of the non-payment by the plaintiffs of the

restoration/penalty charges, the bid stood cancelled and the earnest money

stood forfeited. The plaintiffs thereafter sent to the defendant their letter

dated 14.10.1987 (Ex.PW1/29) in para 7 whereof it was stated that when the

Commissioner (Lands) on 19/20.4.1987 informed verbally that penalty

cannot be reduced at that stage, thus, the plaintiffs deposited the penalty

amount of ` 6.60 lacs on 21.4.1987 vide challan No.20214 dated 21.4.1987.

There is no dispute that at the time of deposit of this amount there was no

covering letter that this amount is being deposited under protest or without

prejudice or any other language signifying that the issue has been left alive.

Even thereafter the plaintiffs however continued to correspond seeking

refund of the penalty, however, nothing came out of it. In fact, the plaintiffs

in furtherance of the deposit took possession of the plot on 10.11.1987, after

the defendant wrote its letter dated 9.11.1987 to the plaintiffs that possession

of the plot in question be taken. The plaintiffs however continued to

correspond with the defendant seeking refund of the penalty/restoration

amount, and, on account of failure of the defendant to do so, the subject suit

ultimately came to be filed.

3. The following issues were framed in this case on 7.2.1997:-

"1. Whether the plaint has been signed and verified by a duly authorized person?

2. Whether Notice Under Section 53-A of Delhi Development Act was not served upon the defendant? If so, what is its effect?

3. Whether the plaintiffs are stopped from filing the instant suit in view of the fact that plaintiff had made payments towards the penalty, interest etc.?

4. Whether the imposition of restoration penalty by the defendant was legal?

5. Whether the defendant was entitled to charge interest from the plaintiff on the restoration penalty and other charges?

6. Whether the plaintiff suffered damages on account of delay on the part of the defendant? If so, to what extent and upto what period?

7. Whether the plaintiff is entitled to claim interest on the amount paid to the defendant on account of restoration penalty and interest and at what rate?

8. Relief."

Issue No.1

4. Counsel for the defendant does not press this issue. This issue

is therefore answered in favour of the plaintiffs.

Issue No.2

5. Counsel for the defendant also does not press this issue and

therefore this issue is also answered in favour of the plaintiffs.

6. All these issues can be taken up and disposed of together for the

reason that if the defendant succeeds in establishing that the plaintiffs have

accepted the penalty amount without any protest, by unconditionally making

such payment, and in fact have taken benefit by receiving possession

thereafter, the plaintiffs would be estopped from filing the instant suit. In

fact, in my opinion, the issue besides being one of estoppel, is also one of

acquiescence and the novation of the contract between the parties.

7. At the outset, I would dispose of issue No.5 inasmuch as though

this issue has been framed, there is no such cause of action laid out in the

plaint that the defendant has illegally claimed interest on the

restoration/penalty charges. In fact, I may note that even in the

correspondence which is entered into prior to the filing of the suit, the

plaintiffs had stressed only with respect to the illegality of the

penalty/restoration charges and there is no correspondence which could be

pointed out to the Court by which the plaintiffs had raised a grievance that

the defendant was wrongly claiming interest on the penalty/restoration

charges. This issue is therefore answered in favour of the defendant

inasmuch as no amount of evidence can be looked into once there is no such

pleadings. In any case, I may state that this issue will also be answered in

accordance with the decision of issue No.3, being the principal issue and

which requires consideration, and which I will now take up.

8. So far as issue No.3 is concerned, the following undisputed

facts emerge from the record:-

(i) The plaintiffs never challenged the cancellation of the plot by

the defendant and the forfeiture of the earnest money and as informed to the

plaintiffs vide the defendant‟s letter dated 3.9.1987 (Ex.P18). In case, the

plaintiffs had any grievance they were entitled to approach a Court of law,

initiate appropriate proceedings, whether the same be a suit or a writ

petition, however, at no point of time the cancellation intimated vide letter

dated 3.9.1987 (Ex.P18) was ever challenged.

(ii) The amount of penalty charges on the contrary were in fact

deposited by the plaintiffs on 21.4.1987, and admittedly this deposit was not

accompanied by any letter stating that the amount deposited was under

protest or was without prejudice to the rights of the plaintiffs to challenge

the claim towards penalty charges or the interest charges.

(iii) No doubt remains of the plaintiffs not seeking to challenge the

action of the defendant inasmuch as the plaintiffs vide their letter dated

14.10.1987 (para 7) have categorically accepted the factum of defendant‟s

decision that penalty amount cannot be waived.

(iv) Unconditional benefit of deposit of the penalty charges was

taken when possession was taken by the plaintiffs on 10.11.1987 pursuant to

the defendant‟s letter dated 9.11.1987 (Ex.P20), and, even at this stage the

plaintiffs did not take up the stand that they are accepting the possession

under protest and without prejudice to their rights to recover the penalty

amount and the interest paid thereon.

9. In view of the aforesaid undisputed position which has emerged

on record, I have no hesitation to come to the conclusion that though

plaintiffs had tried to cause the defendant to withdraw the penalty charges,

however, they were not successful and consequently they deposited the

disputed penalty charges. That this deposit was an unconditional deposit

becomes clear from the letter of the plaintiffs to the defendant dated

14.10.1987 (Ex.PW1/29), and para 7 of which reads as under:-

"7.When no reply was received, another letter dated 1.4.87 was addressed by Shri Deep Chand Sharma to the Commissioner (L). When we met the Commissioner (L) on 19/20.4.87 he informed verbally that he had examined the case and penalty cannot be reduced at this stage. We immediately arranged the amount which was amounting to ` 6.60 lakhs, and deposited the same on 21.4.87 vide challan No.20214 dated 21.4.87." (underlining added) A reference to this aforesaid para in the letter dated 14.10.1987

clearly shows that the plaintiffs, for whatever reasons, gave up their

challenge and accepted their liability to pay the penalty charges. This para

specifically refers to the fact that the Commissioner (Lands) of the defendant

had on reconsideration of the case found that penalty charges could not be

reduced and therefore the plaintiffs deposited the penalty charges.

In my opinion, the aforesaid shows clear cut acquiescence, and

if not acquiescence, surely at least an estoppel preventing any challenge by

the plaintiffs to the claim of the penalty charges by the defendant. In fact, in

my opinion, the actions of the plaintiffs show that there is in fact a novation

of contract inasmuch as the plaintiffs by making payment of the penalty

charges without protest thus agreed to take the plot in question at a higher

price. Once the contract is novated it is not permissible for the parties to

contend otherwise. I therefore hold issue No.3 in favour of the defendant

and against the plaintiffs.

10. So far as issue No.4 is concerned, this issue becomes irrelevant

because even assuming that the claim of restoration charges against the

plaintiffs by the defendant was illegal, it is not open to the plaintiffs now to

claim and urge refund of such penalty inasmuch as when the amount was

deposited there was never any issue raised that the amount is being

deposited under protest or without prejudice. In fact, I have already

reproduced para 7 of the Ex.PW1/29 dated 14.10.1987 which shows a clear

cut acceptance on behalf of the plaintiffs to the penalty charges imposed by

the defendant.

11. Once it is held that the plaintiffs acquiesced to the additional

price i.e. penalty charges and the interest claimed, there does not arise an

issue of the plaintiffs having been caused loss by delay in handing over

possession of the subject plot. As already stated above, the penalty charges

were deposited on 21.4.1987, and thereafter, the plaintiffs themselves acted

by taking benefit of the amount deposited as they came forward and took

take possession of the plot. Therefore, I do not find that there is any delay in

handing over possession by the defendant to the plaintiffs, more so even as

late as on 14.10.1987 (Ex.PW1/29) plaintiffs were corresponding on the

issues in question.

12. A resume of the above facts shows that though the defendant

failed to prove the sending of letter Ex. RW1/1, possibly, the plaintiffs knew

that they had either received the letter or in any case they wanted to give

quietus to the dispute inasmuch as they wanted to take benefit of the

possession of the plot for making construction thereon. One more reason

could also be that the plot would have become much more valuable than the

original bid amount plus the restoration and the interest charges, and

therefore the plaintiffs possibly realizing this and wanting a quietus, agreed

to pay the additional amount which was claimed by the defendant. Having

thus taken benefit of payments made by them including by taking possession

of the plot and making construction thereon, the plaintiffs now cannot turn

turtle and allege that the defendant wrongly claimed the penalty amount.

13. Once there is no cause of action of the plaintiffs to claim back

the restoration/penalty charges, obviously there does not arise the issue of

payment of interest to the plaintiffs.

14. In view of the aforesaid, issue Nos. 3 to 7 are answered against

the plaintiffs and in favour of the defendant.

15. Learned counsel for the plaintiffs sought to place reliance upon

a decision of a Division Bench of this Court in the case of Indian Instt. of

Public Opinion Pvt. Ltd. Vs. Life Insurance Corporation of India in LPA

No.9/2012 decided on 11.5.2012 for the proposition that defendant cannot

claim an amount against their own policy. In my opinion, this judgment has

no application in the facts of the present case because the issue in the present

case turns more on the aspects of acquiescence, estoppel and novation of the

contract inasmuch as if the claim of the defendant was illegal the plaintiffs

could have challenged such an alleged illegal claim, but having failed to do

so, they cannot now contend that the claim of restoration/penalty charges on

behalf of the defendant was illegal being against their policies. Reasoning

on issue No.4 given above in para 10 deals and rejects this argument raised

by the plaintiffs.

Relief

16. In view of the aforesaid discussion, the suit of the plaintiffs is

dismissed leaving the parties to bear their own costs.

JULY 02, 2012                                     VALMIKI J. MEHTA, J.
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