Seema Nayyar vs M.C.D. & Ors
2013 Latest Caselaw 814 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+     LPA 1163/2007
      SEEMA NAYYAR                              ..... Appellant

                         Versus

      M.C.D. & ORS.                              .... Respondents


                                    AND
+     LPA 1164/2007
      RAGHU NAYYAR                              ..... Appellant

                         Versus

      M.C.D. & ORS.                              .... Respondents

                                    AND

+     LPA 1171/2007 & CM No. 15074/2007
      M.C.D.                                    ..... Appellant

                         Versus

      RAGHU NAYYAR                               .... Respondent

                                    AND

+     LPA 1172/2007 & CM Nos. 11684/2007 & 10053/2008
      M.C.D.                                    ..... Appellant

                         Versus

LPA 1163-64/2007 and 1171-72/2007                 Page 1 of 17
       SEEMA NAYYAR                                    .... Respondent
      Present: The appellant Raghu Nayyar in person and for
               Mrs Seema Nayyar
               Ms Amita Gupta, Adv for MCD
               Ms Avnish Ahlawat for GNCT
               Mr B.B. Jain for respondent No. 2 in LPA No.1163/2007
               and 1164/2007

      CORAM:
      HON'BLE THE CHIEF JUSTICE
      HON'BLE MR. JUSTICE V.K. JAIN
                ORDER

% 19.02.2013

The appellant in LPA No.1164/2007 Shri Raghu Nayyar entered into

an agreement dated 22.08.1997 to purchase Flat No. A-45, Retreat

Cooperative Group Housing Society Complex, constructed on Plat No. 20,

I.P. Extension, New Delhi for a consideration of Rs 7,90,000/-. The

appellant in LPA 1163/2007 Smt. Seema Nayyar entered into an agreement

with one Shri J.S. Pal dated 17.08.1998 to purchase Flat No. A-41 in the

aforesaid complex for a consideration of Rs 9,50,000/-. The vendors

executed separate documents such as Power of Attorney in favour of these

appellants. No sale deed was executed by either of the vendors. On

15.01.2000, they applied to Delhi Development Authority for conversion of

the aforesaid flats from leasehold to freehold. DDA executed Conveyance

Deed in favour of these appellants, which was duly registered and the

requisite stamp duty on the consideration paid to DDA was also deposited.

2. Disputes arose between the private appellants and MCD with regard

to assessment of property tax in respect of the aforesaid flats and mutation of

those flats in the name of the appellants. Municipal Corporation of Delhi,

which is the respondent in the appeals filed by Shri Raghu Nayyar and Smt.

Seema Nayyar and appellant in LPA No.1171/2007 and 1172/2007,

demanded transfer duty from Shri Raghu Nayyar as a pre-condition for

mutation of the flats in their respective names. Writ petitions were filed by

Shri Raghu Nayyar and Smt. Seema Nayyar raising grievance with regard to

assessment of property tax as well as the demand of transfer duty as a pre-

condition for mutation of the aforesaid floats in their respective names.

They also sought compensation from MCD as well as its officers for mental

agony, caused to them by raising unjustified demands.

3. During pendency of the writ petitions, the issue of ratable value of the

aforesaid flats came to be settled in view of rectification order dated

24.02.2007 passed by MCD under Section 116(A)(2) of DMC Act, applying

the age factor of 0.8 and, therefore, no further directions in this regard was

sought by the appellants.

4. The learned Single Judge vide impugned order dated 06.07.2007

which was common to both the writ petitions, held as under:-

"38. To summarise the findings and directions:

(i)The stamp duty and transfer duty were rightly assessed and collected by the Collector of Stamps from the petitioners on the basis of the value of Rs. 10,000/- indicated in the conveyance deeds dated 25.6.2001.

(ii)Once the transfer duty stood rightly assessed by and paid to the Collector of Stamps, the MCD was not justified, in terms of the unamended Section 147 DMC Act, in seeking to collect transfer duty from the petitioners as evidenced by its demand dated 11.3.2004 Accordingly the said demand is quashed.

(iii)Since the payment of such transfer duty was made a pre-condition by the MCD for grant of mutation in favor of the petitioners, a direction is issued to the MCD in each of the two writ petitions to carry out mutation of the flats in the petitioner's respective names within a period of four weeks from today and in any event not later than 6.8.2007.

(iv)This Court is not inclined to grant the relief of compensation as claimed by the petitioners. However, this Court leaves it open to the petitioners to approach the civil court for their claim for damages, if any, payable by all or any of the Respondents.

(v)This Court directs that the MCD will pay to each of

the petitioners, within a period of four weeks from today, and in any event not later than 6.8.2007 costs in the sum of Rs. 25,000.

5. Being aggrieved on account of compensation not being granted to

them, Shri Raghu Nayyar and Smt. Seema Nayyar have challenged the

aforesaid order on the limitation issue, whereas being aggrieved from

findings number (i), (ii) and (iii), MCD is before us by way of LPA Nos.

1171/2007 and 1172/2007.

6. Transfer Duty

The learned counsel for the MCD submits that in view of the

provisions contained in Section 147 of DMC Act, MCD is entitled to

transfer duty in respect of the flats subject matter of the documents executed

in favour of Shri Raghu Nayyar and Smt. Seema Nayyar. Section 147 of

DMC Act reads as under:-

"147. Duty on transfer of property and method of assessment thereto.--(1) Save as otherwise provided in this Act, the Corporation shall levy a duty on transfers of immovable property situated within the limits of Delhi in accordance with the provisions hereafter in this section contained. (2) The said duty shall be levied--

(a) in the form of a surcharge on the duty imposed by the Indian Stamp Act, 1899 (2 of 1899) as in

force for the time being in the Union territory of Delhi, on every instrument of the description specified below, and

(b) at such rate as may be determined by the Corporation not exceeding five per cent., on the amount specified below against such instruments--

Description of instrument Amount on which duty should be levied

(i) Sale of immovable The amount or value of the property consideration for the sale, as set forth in the instrument.

(ii) Exchange of immovable The value of the property of the property greater value, as set forth in the instrument.

       (iii)Gift   of    immovable The value of the property, as set
       property                    forth in the instrument.

(iv)Mortgage with possession The amount secured by the of immovable property mortgage as set forth in the instrument.

(v) Lease in perpetuity of The amount equal to one-sixth immovable property of the whole amount or value of the rent which would be paid or delivered in respect of the first fifty years of the lease as set forth in the instrument.

[(vi) Contract for transfer of Ninety per cent of the value of immovable property the consideration for the transfer as set out in the contract.]"

It would be seen from the perusal of the aforesaid provision that

transfer duty was payable only on the instruments of (a) Sale; (b) Exchange

(c) Gift (d) Mortgage and (e) Lease in perpetuity, of immovable property.

As regards transfer duty on contract for transfer of immovable property,

since clause (vi) in Section 147 of MCD Act was admittedly inserted only

with effect from 01.08.2003, the aforesaid provision would not apply to the

documents executed in favour of Shri Raghu Nayyar and Smt. Seema

Nayyar, the said documents having been executed in the years 1997 and

1998.

7. Admittedly, no document for exchange, gift or mortgage of an

immovable property was executed by the erstwhile owners in favour of the

appellants Shri Raghu Nayyar and Smt.Seema Nayyar. Therefore, clause

(ii), (iii) and (iv) of Section 147 of DMC Act do not apply. Admittedly, no

perpetual lease in respect of the flats in question was executed in favour of

the appellants. Therefore, clause (v) of the aforesaid Section also does not

apply.

8. The next question which comes up for consideration is as to whether

an instrument of sale of immovable property was executed by the erstwhile

owners, in favour of Shri Raghu Nayyar and Smt. Seema Nayyar or not.

Admittedly, no sale deed in favour of these appellants was executed. The

documents executed in their favour were Power of Attorney, Agreement to

Sell, etc. The question for consideration, therefore, would be whether the

documents such as Agreement to Sell, Power of Attorney, either

individually or collectively, can be said to be an instrument of sale of

immovable property or not. The power of attorney, whereby a person

authorizes another person to do certain acts and deeds on his behalf is

certainly not an instrument of transfer of immovable property since even if

the Power of Attorney relates to an immovable property the ownership of

that immovable property continues to vest in the principal and is not

transferred to the attorney. This issue was considered by Supreme Court in

Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana and Anr. 2012(1)

SCC 656 and the following view was taken:-

"13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him

(see Section 1A and Section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee. In State of Rajasthan v. Basant Nehata: 2005 (12) SCC 77 this Court held:

A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favor of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience.

Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers- of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the done to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The done in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the

donor and the done."

9. As regards Agreement to Sell, Section 54 of Transfer of Property Act

makes it clear that a contract of sale, i.e., an agreement of sale does not of

itself create any right, title or interest in the immovable property subject

matter of such agreement. This legal proposition was approved by Supreme

Court in Narandas Karsondas v. S.A. Kamtam and Anr (1977) 3 SCC 247.

In MCD vs. Pramod Kumar Gupta AIR (1991) SC 401, Supreme

Court, inter alia, held as under:-

"The expression „instrument‟ in Section 147 of the Act has the same connotation as the word has under the Stamp Act, the reference to which has been expressly made. Clause2 of Section 2 of the Stamp Act gives an inclusive definition of the expression. The expression.... The expression „instrument of sale of immovable property‟ under Section 147 of the Act must, therefore, mean a document effecting transfer. The title to the property concerned has to be conveyed under the document. The document has to be a vehicle for the transfer of the right, title and interest. A document merely stating as a fact that the transfer has already taken place cannot be included within this expression. A paper which is recording a fact or attempting to furnish evidence of an already concluded transaction under which title has already passed cannot be treated to be such an instrument. It is manifest that the title passes under the

auction-sale by force of law and the transfer becomes final when an order under Rule 92 confirming it is made. By the Certificate issued under Rule 94, the Court is formally declaring the effect of the same and is not extinguishing or creating title. The object of issuance of such a Certificate is to avoid any controversy with respect to the identity of the property sold, and of the purchaser thereof, as also the date when the sale becomes absolute....The Certificate, therefore, cannot be termed to be an instrument of sale so as to attract Section 147 of the DMC Act."

In Suraj Lamp and Industries Pvt. Ltd. (supra), Supreme Court had

an occasion to consider the legal effect of documents such as General Power

of Attorney (GPA), Agreement to Sell and Will which normally were being

executed in Delhi to evidence transactions affecting immovable properties

and are popularly known as „GPA Sales‟. After considering the legal

provisions and case law on the subject, the following view was taken by the

Apex Court:-

"15. Therefore, a SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank: 94 (2001) DLT 841 that the "concept of power of attorney sales have been recognized as a mode of transaction" when dealing with transactions by

way of SA/GPA/WILL are unwarranted and not justified, unintended misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.

16. We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transactions of the nature of 'GPA sales' or 'SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of Section 53A of the Transfer of Property Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sales."

However, when it was pointed out to the Apex Court that making

declarations such transfers are not legally valid modes of transfer, was

likely to create hardship to a large number of persons who had entered into

such transactions, they should be given sufficient time to regularize the

transaction by obtaining deeds of conveyance and the decision should be

made applicable prospectively to avoid hardship, it was directed that if

such transactions were entered before the date of judgment, they could be

relied upon for the regularization of leases by the development authorities.

It was made clear that if the documents relating to such transactions had

been acted upon by DDA or other authorities, they need not be disturbed

merely on account of the said decision. In view of the authoritative

pronouncement of the Supreme Court directly on the issue involved in this

appeal, we have no hesitation in concluding that the documents which

were executed in favour of Shri Raghu Nayyar and Smt. Seema Nayyar

not being instruments of transfer of sale of immovable property, did not

attract payment of transfer of duty under Section 147 of DMC Act.

9. Compensation:-

The learned Single Judge, on consideration of the pleadings with

respect to award of compensation for harassment and mental agony LPA

alleged to have been caused to Shri Raghu Nayyar and Smt. Seema

Nayyar, on account of action of the officers of the MCD, found that these

were disputed questions of facts which were required to be decided on the

basis of evidence in a civil suit. He further observed that precise role

played by each of the respondents and whether they were acting

unreasonably and arbitrarily in the performance of their statutory duties

would be required to be determined in those proceedings before the

question of fastening the liability for payment of compensation is taken up

for consideration. The learned Single Judge was of the view that these

questions could not be decided in proceedings under Article 226 of the

Constitution and accordingly he left it open to these appellants to approach

the Civil Court for adjudication of their claim for compensation, if any,

payable by all or any of the respondents in the writ petition. He also

observed that these appellants would be able to invoke Section 14 of

Limitation Act to explain the delay in approaching the Civil Court.

Admittedly, there were no allegations of mala fide against the

officers of MCD. Therefore, the question of payment of compensation, if

any, to the appellant, would depend upon whether the action taken by the

officers of MCD was so perverse, arbitrary and capacious as to warrant

awarding of compensation against them or was a bona fide, though wrong

in law, decision taken by them, in their respective wisdom, in the interest

of the employer they were serving. We are in agreement with the learned

Single Judge that such questions, cannot be gone into a writ petition since

they require adjudication on the basis of evidence to be led by both the

parties, which exercise can be undertaken only in a civil suit. During the

course of arguments, we specifically asked the appellants as to how this

Court would determine the quantum of compensation in the event of its

coming to the conclusion that the action taken by the officers of MCD in

this case was so unreasonable, arbitrary and perverse as to warrant award

of compensation. The answer given by the appellants was that the Court

could award any suitable amount as compensation to them. We, however,

cannot agree. The quantum of compensation in the event of the Court

holding that the appellants are entitled to such a compensation, cannot be

fixed arbitrarily and has to be based upon facts and circumstances, which,

in our view, can be ascertained only during the full-fledged trial before a

Civil Court. Even after determining the quantum of compensation, if any,

payable to these appellants, the Court would be further required to

apportion the amount of compensation amongst various respondents and

for that purpose, it will have to go into the role played by each of them.

Such an exercise cannot be undertaken in a writ petition. Therefore, we

find no reason to interfere with the view taken by the learned Single Judge

in this regard, particularly when it is open to these appellants in the event

their approaching a Civil Court for awarding of compensation to plead that

the benefit of Section 14 of Limitation Act should be granted to him.

The appellant Shri Raghu Nayyar has relied upon the decision of

Supreme Court in Century Spinning & Manufacturing Company Ltd.

and Anr vs. The Ulhasnagar Municipal Council and Anr. (1970) 3 SCR

858, where the Court, inter alia, held that a party claiming to be aggrieved

by the action of a public body or authority on the plea that the action is

unlawful, high-handed, arbitrary or unjust, is entitled to a hearing of its

petition on the merits. In the case before Supreme Court, the petition filed

by the appellant company did not raise any complicated questions of fact

for determination and the Apex Court was of the view that the claim of the

appellant could not be characterized as frivolous, vexatious or unjust.

Noticing that the High Court had given no reason for dismissing the

petition in limine and on consideration of the averments made in the

petition and the material placed before it, the Court was of the view that

the appellants were entitled to have its grievance tried. However, in the

case before us since such disputed questions of fact are involved, which

cannot be decided without recording of evidence, an exercise which cannot

be undertaken by a Writ Court, the Civil Court, in our opinion, is the only

appropriate forum for adjudication on the claim for grant of compensation.

For the reasons stated hereinabove, we find no merit in the appeals

and all the appeals are hereby dismissed. There shall be no order as to

costs.

CHIEF JUSTICE

V.K. JAIN, J FEBRUARY 19, 2013 BG