Dr Fresh Assets Ltd vs Dda And Anr
2015 Latest Caselaw 5390 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                      CS(OS) 1936/2014

                                      Reserved on:      03.07.2015
                                      Date of decision: 29.07.2015
IN THE MATTER OF:
M/S DR FRESH ASSETS LTD                            ..... Plaintiff
                    Through: Mr. Anil K. Khaware, Advocate

                       versus
DDA & ANR                                          ..... Defendants
                       Through: Mr. Dhanesh Relan, Advocate with
                       Mr. Arush Bhandari, Advocate for D-1/DDA.
                       Mr. Dev P. Bhardwaj, CGSC for D-2/UOI.

CORAM
HON'BLE MS.JUSTICE HIMA KOHLI

HIMA KOHLI, J.

I.A. 24684/2014 (by D-1/DDA under Order VII Rule 11 CPC)

1. The present application has been filed by the defendant

No.1/DDA praying inter alia that the suit instituted by the plaintiff/

company for recovery of a sum of `46,85,671/- towards interest on

the principal amount of `63,12,500/- retained by the DDA between

07.12.2008 till 29.01.2013, alongwith future interest @18% per

annum thereon, is liable to be rejected, being barred under Section

53B of the Delhi Development Act, 1957 (hereinafter referred to as

„the Act‟).

2. The relevant facts for determining the controversy raised in the

present application are that in the year 2008, the defendant No.1/DDA

had issued an advertisement for auctioning a plot bearing No.4, near

plot No.A-373, Defence Colony, New Delhi, measuring 91 sq. meters.

The plaintiff/company had participated in the auction held for the

subject plot on 17.12.2008. The reserve price of the subject plot was

fixed by the defendant no. 1/DDA as `1,29,90,614/-. The

plaintiff/company was declared as the highest bidder at `2,52,50,000/,

whereafter between the period 07.12.2008 to 17.12.2008, it had

deposited a sum of `63,12,500/- with the defendant No.1/DDA

towards the earnest money.

3. Early in the year 2009, one Shri Rajesh Kumar Sethi and some

other residents of Defence Colony had filed a writ petition, registered

as W.P.(C) 123/2009, challenging the action of the defendant

No.1/DDA of auctioning the subject plot on the ground that in the

event construction activities are undertaken on the said plot, the width

of the surrounding road would be narrowed down and the access of the

petitioners to air and light in the adjoining properties would be

impeded. Initially, the defendant No.1/DDA had filed a counter

affidavit in opposition to the aforesaid petition, but later on it had

agreed to cancel the auction of the subject plot. Pertinently, the

plaintiff/company had filed an application for impleadment in the

aforesaid writ petition and vide order dated 15.03.2011, it was

impleaded as respondent No.4. During the pendency of the aforesaid

petition, the plaintiff/company claims to have made repeated

representations to the defendant No.1/DDA for early culmination of the

auction vide letters dated 14.02.2008, 18.12.2008, 22.12.2008,

29.12.2008, 25.02.2009, 27.08.2009 and 07.08.2010. Finally, vide

order dated 26.04.2012 passed in the captioned petition, having

regard to the additional affidavit filed by the DDA, the relief prayed for

by the petitioners therein and on the DDA‟s counsel conveying to the

Court that steps were being taken to cancel the auction of the subject

plot, the writ petition was disposed of while granting eight weeks‟ time

to the DDA to take steps for cancellation of the plot.

4. After passage of four years and four months from the date of

deposit of the earnest money, the defendant No.1/DDA returned the

principal amount of `63,12,500/- to the plaintiff on 29.01.2013.

Aggrieved by the action of the defendant No.1/DDA in failing to return

the principal amount to the plaintiff/company alongwith interest for the

period w.e.f. 17.12.2008 to 29.01.2013, in July, 2013, the

plaintiff/company had filed an interim application in the aforecited writ

petition (CM APPL. 10781/2013). However, vide order dated

29.07.2013, the said application was withdrawn by the

plaintiff/company with liberty to file appropriate proceedings against

the DDA in accordance with law. Thereafter, in August, 2013, the

plaintiff/company had filed a separate petition, registered as W.P.(C)

5483/2013, praying inter alia for directions to the DDA to pay interest

@18% per annum on the principal amount of `63,12,500/- w.e.f.

17.12.2008 to 29.01.2013. Vide order dated 10.09.2013, the said writ

petition was dismissed by the High Court by relying on a decision of

the Supreme Court in the case of Suganmal vs. State of Madhya

Pradesh reported as AIR 1965 SC 1740, wherein it was held that

normally, a writ petition asking for mandamus for the sole relief of

refund of money against the State ought not to be entertained.

However, liberty was granted to the plaintiff/company to institute a

suit against the DDA for recovery of money.

5. Within a month of the dismissal of the aforesaid writ petition, the

plaintiff/company had served a legal notice dated 15.10.2013 on the

defendant No.1/DDA and the defendant No.2/GNCTD under Section 80

of the CPC read with Section 53B of the Act, calling upon the

addressees to pay a sum of `46,85,671/- towards the interest

calculated @18% per annum, as accrued on the principal sum of

`63,12,500/- with future interest. The aforesaid legal notice was

dispatched by the plaintiff/company to the defendants by speed post

with AD card. As per the documents filed by the plaintiff, the original

speed post with AD card bears an endorsement of receipt by the DDA

on 06.12.2013. When the plaintiff/company failed to receive any

response from the DDA, it instituted the accompanying suit for

recovery of the interest component on 30.06.2014.

6. Summons were issued in the suit on 07.07.2014, returnable on

03.12.2014. As the defendants failed to file their written statements

within the prescribed timeline, the plaintiff/company filed an

application under Order VIII Rule 10 CPC, registered as I.A.

23244/2014 that was listed on 25.11.2014 and directed to be placed

before the Joint Registrar on 03.12.2014. On 03.12.2014, the

defendant No.1/DDA proceeded to file the present application praying

inter alia for rejection of the plaint on the ground that the suit is

barred under the provisions of Section 53B of the Act.

7. Mr. Relan, learned counsel for the defendant No.1/DDA had

submitted that Section 53B of the Act prescribes that any person filing

a suit against the DDA is required to serve a legal/demand notice

giving two months‟ notice to the DDA and the aggrieved party is

required to institute a suit against the DDA within six months from the

date of the cause of the action arising. He urged that the last cause of

action had arisen in favour of the plaintiff/company and against the

defendant No.1/DDA on 29.01.2013, the date when the principal

amount was released in favour of the plaintiff/company and if

reckoned from the said date, the plaintiff/company ought to have

instituted the suit against the DDA latest by 28.07.2013, whereas the

present suit was instituted after one year, in July, 2014, which makes

it barred under the provisions of Section 53B of the Act. Learned

counsel had argued that the provisions of Section 53B of the Act are

mandatory in nature and have to be strictly complied with and the

plaintiff/company having failed to institute the suit within the timeline

stipulated under the aforesaid provisions, the same ought to be

dismissed outright. In support of his submission, he had placed

reliance on the decision of a Single Judge of this court in the case of

Lucky Star Estates vs. DDA reported at 1987 RLR 148.

8. A reply in opposition to the present application was filed by the

plaintiff/company. It has been stated that the Delhi Development Act,

1957 is applicable only if any relief is sought within the prescription of

the said Act and the present suit having been filed for recovery of

amounts based on DDA‟s failure to carry out the auction despite

declaring the plaintiff/company as the highest bidder and receiving the

earnest money within the prescribed timeline, does not fall within the

purview of the Act.

9. Mr. Khaware, learned counsel for the plaintiff/company had also

referred to para 20 of the plaint, wherein it has been averred that the

Act does not have any application in the present case which is based

on the wrongful retention of the interest on the amount deposited with

the DDA, pursuant to the advertisement of the proposed auction.

Without prejudice to the aforesaid argument, in the alternative, it was

urged on behalf of the plaintiff/company that even if the submission of

the other side to the effect that the prescription contained in Section

53B of the Act would apply to the facts of the present case is upheld,

as per the said section, the cause of action to institute the suit would

commence after two months from the date of issuance of the statutory

notice. In the present case, the statutory notice was issued on

15.10.2013 and the period of two months reckoned therefrom would

end on 15.12.2013 and further, the prescribed period of six months

reckoned from 15.12.2013 would have expired on 15.06.2014.

Learned counsel had pointed out that the High Court being closed for

summer vacations in the month of June, the suit was filed in the

Registry on 30.6.2014, after the Court had reopened and in this

background, it cannot be contended that the suit is barred by

limitation prescribed under the Act.

10. In support of the aforesaid submission, learned counsel for the

plaintiff/company had referred to the decision of the Division Bench of

this Court in the case of M/s Lucky Star Estates (India) Pvt. Ltd. Vs.

DDA reported at 113 (2004) DLT 802 (DB), whereunder the

decision of the Single Judge relied upon by the counsel for the

defendant No.1/DDA in the case of Lucky Star Estates (supra) was set

aside in appeal and the issue of application of Section 53B of the Act

for the purpose of calculating the period of limitation in the facts of the

said case was decided against the defendant No.1/DDA and in favour

of the private party. Learned counsel for the plaintiff/company had

contended that the said decision applies on all fours to the facts of the

present case.

11. The Court has perused the averments made in the application,

examined the documents placed on record and has carefully

considered the arguments advanced by the counsels for the parties in

the light of the decisions cited by them.

12. Before proceeding to consider the respective contentions of the

parties, it is necessary to refer to the provisions of Section 53B of the

Act, which is reproduced hereinbelow for ready reference:-

"53B. Notice to be given of suits - (1) No suit shall be instituted against the Authority, or any member thereof, or any of its officers or other employees, or any person acting under the directions of the Authority or any member or any officer or other employee of the Authority in respect of any act done or purporting to have been done in pursuance of this Act or any rule or regulation made thereunder until the expiration of two months after notice in writing has been, in the case of the Authority, left at its office, and in any other case, delivered to, or left at the office or place of abode of, the person to be sued and unless such notice states explicitly the cause of action, the nature of relief sought, the amount of compensation claimed and the name and place of residence of the intending plaintiff and unless the plaintiff contains a statement that such notice has been so left or delivered.

(2) No suit such as is described in sub-section (1) shall, unless it is a suit for recovery of immovable property or for a declaration of title thereto, be instituted after the expiry of six months from the date on which the cause of action arises.

(3) Nothing contained in sub-section (1) shall be deemed to apply to a suit in which the only relief claimed is an injunction of which the object would be defeated by the giving of the notice or the postponement of the institution of the suit."

13. The plaintiff/company had instituted the accompanying suit for

recovery of interest on the principal amount deposited by it with the

defendant No.1/DDA, pursuant to the auction of the subject plot

conducted on 17.12.2008. The same was filed on 30.6.2014.

Ordinarily, under the law of limitation, a suit for recovery of money can

be filed within a period of three years from the date of the cause of

action arising. The relevant Article of the Limitation Act, 1963, i.e.,

Article 25 which is applicable in this case, is as below :

            Description of suit       Period of Time      from
                                      limitation which period
                                                 begins      to
                                                 run
      25.   For money payable for Three          When       the
            interest upon money due years        interest
            from the defendant to the            become due
            plaintiff.

14. In the instant case, the defendant No.1/DDA had refunded the

earnest money to the plaintiff/company through RTGS on 29.01.2013.

Therefore, the cause of action had last arisen on the said date, when

the payment was released to the plaintiff/company. Under the

Limitation Act, the period of three years reckoned from 30.1.2013,

would expire on 29.1.2016. The plaintiff/ company had however

served a legal notice dated 15.10.2013 on the defendant No.1/DDA

under Section 80 of the CPC read with Section 53B of the Act, for

seeking recovery of the interest component and the notice was

dispatched by speed post. The speed post acknowledgement card

bears an acknowledgement from the office of the DDA, dated

06.12.2013. If the period of two months as stipulated under Section

53B of the Act is reckoned from the date of issuing the legal notice,

i.e., from 15.10.2013, the same would have expired on 15.12.2013

and the period of six months reckoned from 15.12.2013, would have

expired on 15.06.2014. The legal notice dated 15.10.2013 was,

however, received by the defendant No.1/DDA only on 06.12.2013 and

resultantly, the period of two months calculated from the date of

service would have expired on 05.2.2014 and the period of six months

reckoned from 05.2.2014, would have expired on 04.8.2014, whereas

the present suit was instituted on 30.6.2014.

15. On the assumption that the present case falls within the ambit of

Section 53B of the Act as urged on behalf of the defendant no.1 / DDA,

at the earliest, the period of limitation would have expired on

15.6.2014, and latest by 04.8.2014. The plaintiff/company having

instituted the present suit on 30.06.2014, which happened to be the

first day after the Court had re-opened at the end of the summer

vacations, it cannot be urged by learned counsel for the defendant

No.1/DDA that the same is barred by limitation. Nor can it be argued

that the period of limitation had started to run from 29.1.2013, the

date when the principal amount had been refunded to the

plaintiff/company for the reason that the sequence of events reveal

that till 10.9.2013, it had been diligently and in good faith pursuing its

legal remedies, first by filing an application in W.P.(C) 123/2009 for

directions to the DDA to pay the interest component and then by filing

a separate petition for the same relief, which were both turned down.

16. Proceeding next to the argument advanced by the counsel for

the plaintiff/company on the non-application of the prescription laid in

Section 53B of the Act to a suit for recovery of interest on the principal

amount against the defendant No.1/DDA, the facts of the instant case

clearly reveal that the plaintiff/company was in no way to be blamed

for the non-compliance of the terms and conditions of the auction

stipulated by the defendant No.1/DDA. Admittedly, the

plaintiff/company was the successful bidder of the auction held for the

subject plot and it had taken steps to deposit the earnest money of

`63,12,500/- with the DDA within the prescribed timeline, i.e.,

between 07.12.2008 to 17.12.2008. But thereafter, some residents of

the area had filed a writ petition for setting aside the said auction, that

had stalled the entire process of finalizing the auction. In the course

of the said proceedings, the defendant No.1/DDA had finally conceded

that it would cancel the auction. In this duration, the plaintiff/company

claims to have made several written representations to the defendant

No.1/DDA for early culmination of the auction, but to no avail. It had

also sought impleadment as a co-respondent in the petition, which was

duly allowed. It was only on 06.08.2012, that the defendant No.1/DDA

had informed the writ court that it had decided to cancel the auction

and this had brought the said proceedings to a closure on 06.08.2012.

However, the principal amount deposited by the plaintiff/company was

retained by the defendant No.1/DDA in all this duration and was

refunded on 29.1.2013, after a lapse of almost four years and four

months.

17. Aggrieved by the failure on the part of the defendant No.1/DDA

to pay any interest on the principal amount retained by it, the

plaintiff/company had approached the writ court for issuing directions

to the DDA by filing an application that came to be dismissed as

withdrawn vide order dated 29.07.2013 with liberty granted to it to

seek appropriate legal proceedings. This was followed by the

plaintiff/company filing an independent writ petition against the DDA

for recovery of interest in August, 2013, which was dismissed as

withdrawn vide order dated 10.09.2013 with liberty granted to it to

institute a civil suit.

18. In this background, the contention of the learned counsel for the

defendant No.1/DDA that as the plot of land in question was a Nazul

land, the DDA was authorized to auction the same and the said auction

was held in due discharge of its functions under the Act and would

consequently be covered by Section 53-A of the Act that prescribes

that statutory notice be issued before institution of a suit within the

fixed timeline and failure to adhere to the fixed timeline would result in

such a suit being barred by limitation, is found to be devoid of merits

for the simple reason that auction of Nazul land by the DDA cannot be

treated as an act undertaken by the authority in due discharge of its

functions under the Act or any rules or regulations framed thereunder.

As a result, there cannot be any reduction of the period of limitation

for instituting a suit for recovery of monies arising out of the

cancellation of an auction held by the DDA.

19. It may be noted that the aforesaid issue is no longer res integra

and was examined at some length by a Division Bench of this Court in

the case of M/s Lucky Star Estates (India) Pvt. Ltd. (supra), where an

appeal preferred by the plaintiff in Suit No.857/1976, that was

dismissed by the Single Judge vide judgment dated 01.12.1986

reported as 1987 RLR 148, was allowed. Counsel for the defendant

No.1/DDA had relied on the decision of the Single Judge to urge that

the present suit has been instituted by the plaintiff/company beyond

the period of limitation prescribed under the provisions of Section 53B

of the Act and it was liable to be dismissed being barred by limitation.

But the said view does not hold good in the light of the decision of the

Appellate Court in the very same case, reported at 113 (2004) DLT

802 (DB). Pertinently, the decision of the Division Bench was

challenged by the DDA before the Supreme Court in SLP (Civil)

8482/2006, that was dismissed on 05.05.2008.

20. In the case of M/s Lucky Star Estates (India) Pvt. Ltd. (supra),

the Division Bench had held that the rejection of the highest bid of the

appellant after a lapse of one year four months and failure on the part

of the DDA to return the earnest money deposited by the appellant for

about four months after the rejection of his bid, cannot be construed

as an act done or purported to be done in pursuance to the provisions

of the Delhi Development Act, 1957 or any rule or regulation framed

thereunder, so as to attract the provisions of Section 53B(2) of the

Act. To fortify its view, the Division Bench had referred to the following

decisions rendered on the same lines:-

(i) Vishwanath Sadashiv Nathu and Anr. vs. Municipal Corporation of Bombay reported at AIR 1938 Bombay 410

(ii) S.V. Mandlik vs. Borough Municipality of Jalgaon reported at AIR (31) 1944 Bombay 97

(iii) Municipal Borough of Ahmedabad vs. Jayantlal Chhotalal Patel reported at AIR (35) 1948 Bombay 98

(iv) Durga Chand Kaushik vs. Union of India reported at ILR (1971) II Delhi 350

(v) Delux Estates (P) Ltd. Vs. DDA reported at 105 (2003) DLT 829.

21. In the case of Vishwanath Sadashiv Nathu (supra), the Division

Bench of Bombay High Court had held that the act of Municipal

Corporation of Bombay in issuing debentures containing option of

renewal and giving effect to that option were not acts required to be

undertaken under the Municipal Corporation of Bombay Act and

therefore, protection under Section 527 was unavailable. In the case

of S.V. Mandlik (supra), the Division Bench of the Bombay High Court

had held that a deliberate breach of the contract cannot be treated as

an act done in pursuance of the statute and therefore a notice under

Section 206 of the Act was not necessary before instituting a suit

based on a contract.

22. In the case of Jayantlal Chhotalal Patel (supra), a Full Bench of

Bombay High Court held that the provision of Section 206 of the Act

contains a restriction on the ordinary rights of the litigants and

therefore, it ought to be construed strictly and applied only to such

suits that fall within the ambit of the Section, which are in respect of

anything done or purported to have been done by the Municipality in

pursuance to the Act. In the case of Durga Chand Kaushik (supra),

where a suit was instituted for recovery of amounts purportedly

charged by the DDA in excess of what was due under the lease, it was

held that collection of excess amount could not be treated as an act

that falls within the scope of the Delhi Development Act and

consequently, it could not be urged that there can be a reduction of

the period of limitation, as envisaged under Section 53B(2) of the Act.

It was particularly observed that such a provision, which restricts the

larger period of limitation prescribed under the Limitation Act, ought to

be construed strictly and in this context, the Division Bench had made

the following pertinent observations :-

"Since the second defendant was not authorized to collect what was not legally due under the lease deed the collection of the excess amount was not an act falling within the scope of the Delhi Development Act and there could not be any reduction of any period of limitation in respect of it. Consequently, the period of limitation of three years which was available to the plaintiff under the Limitation Act to bring a suit for recovering the amount recovered from him in excess of what as legally due under the said lease deed could not be reduced by Section 53B(2). The expression employed in section 53B(1), "in respect of any act done or purporting to have been done in pursuance of the Act or any rules or regulations made there under", does not warrant the contention put forward by Mr. Keshav Dayal that the act in the present case, namely, demanding and recovering an amount in excess of what was due under the lease deed was something done in pursuance of this Act. The said provision being one which restricts the larger period of limitation allowed by the Limitation Act has to be strictly construed. Hence we find no merit in the plea of imitation." (emphasis added)

23. In a suit for recovery of the amount paid by the bidder to the

DDA on the ground that the bid had been cancelled, though on account

of some lapse on the part of the bidder, it was observed in the case of

Delux Estates (supra) that where the refund was belated, the act of

the authority that was not done pursuant to any provision of the DDA

Act or rules and regulations framed thereunder, would not attract the

provisions of limitation prescribed under the Act and instead, the

limitation ordinarily applicable under the Limitation Act would apply for

instituting a suit for recovery of amounts.

24. Given the facts of the present case, it is an undisputed position

that after cancellation of the auction, the defendant No.1/DDA had

retained the amount paid by the plaintiff/company in December, 2008,

till 29.01.2013. The plaintiff/company had issued the statutory notice

to the DDA under Section 80 of the CPC read with Section 53B of the

Act on 15.10.2013, wherein it had clearly stated that it proposed to file

a suit for recovery of interest on the principal amount against the DDA

and the same did not pertain to any relief arising under the Act. The

same fact has been reiterated by the plaintiff/company in para 20 of

the plaint.

25. In view of the law laid down hereinabove, the submission made

by learned counsel for the plaintiff/company to the effect that the

prescriptions laid down under Section 53B of the Act does not have

any application to the nature of relief sought by the plaintiff/company

in the accompanying suit, is found to be justified and is upheld. The

facts of the instant case do not warrant the restriction of the larger

period of limitation prescribed under the Article 25 of the Limitation

Act to the whittled down period under Section 53B of the Act. Even

otherwise, this Court is of the opinion that if the provisions of Section

53B of the Act were to apply to the facts of the present case, it cannot

be argued that the cause of action for instituting the suit had arisen on

29.01.2013, the date when the payment of the principal amount had

been released by the DDA in favour of the plaintiff/company. As noted

above, the plaintiff/company had taken legal recourse by first filing an

application in W.P.(C) 123/2009, for issuing directions to the DDA to

pay it interest on the principal amount, which was dismissed as

withdrawn on 29.07.2013, with liberty to seek its legal recourse in

accordance with law. This was followed by the plaintiff/company filing

a writ petition against the DDA in August, 2013, which was also

dismissed as withdrawn vide order dated 10.09.2013, again, with

liberty granted to it to institute a civil suit. Within a month therefrom,

the plaintiff/company had issued a statutory notice dated 15.10.2013

to the DDA under Section 80 of the CPC read with Section 53B of the

Act. If at all the case would fall within the ambit of Section 53B of the

Act, which argument has been negated by this court, the said date

would have to be treated as the correct date for calculating the period

of two months prescribed thereunder. Calculated from 15.10.2013, the

period of two months would have expired on 14.12.2013 and the

period of six months prescribed under Section 53B of the Act for

instituting a civil suit, would have expired on 13.06.2014, i.e. during

the summer vacations when the court was closed. The

plaintiff/company having instituted the suit on 30.06.2014, i.e.,

immediately upon the High Court re-opening after the end of the

summer vacations, it has to be held that either ways, the present suit

has been filed within the period of limitation and is maintainable.

26. In view of the aforesaid facts and circumstances, the present

application is found to be devoid of merits and is accordingly dismissed

while leaving the parties to bear their own expenses.

                                                        (HIMA KOHLI)
JULY 29, 2015                                              JUDGE
rkb/sk/ap