Delhi High Court
Anuj Chopra And Ors. vs Vaneeta Khanna And Ors. on 25 May, 2016
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 04.05.2016
Pronounced on: 25.05.2016
+ RFA (OS) 117/2015, C.M. APPL.26171/2015
ANUJ CHOPRA AND ORS. ............Appellants
Through: Sh. Arvind Nigam, Sr. Advocate with Sh.
Kartik Nagarkatti, Sh. Abhinav Malhotra, Sh.
Manish Sangwan and Ms. Deeksha Rao,
Advocates.
Versus
VANEETA KHANNA AND ORS. ........Respondents
Through: Sh. B. Mohan with Sh. Gyan Sharma and
Ms. Harshlata, Advocates, for Respondent Nos. 1
and 2.
Ms. Sonia. A. Menon, Advocate, for Respondent
No.4.
+ RFA (OS) 21/2016, C.M. APPL.8731-8732/2016
RAJEEV GUPTA ............Appellant
Through: Sh. Aseem Mehrotra with Sh. Rajat
Gupta, Advocates, for the appellant.
Versus
VANEETA KHANNA AND ORS. ........Respondents
Through: Sh. B. Mohan with Sh. Gyan Sharma and
Ms. Harshlata, Advocates, for Respondent Nos. 1
and 2.
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 1
Ms. Sonia. A. Menon, Advocate, for Respondent
No.3.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA
MR. JUSTICE S. RAVINDRA BHAT
%
1. The appellants in these two proceedings are aggrieved by a judgment
of a learned Single Judge decreeing the respondents' suit. The appellants in
RFA 117/2015 were arrayed as Defendant Nos. 3 to 6 (hereafter referred to
as "Chopras"). They appeal the judgment and decree of a learned Single
Judge, allowing a suit for declaration and possession, filed by the first two
respondents (hereafter variously "the plaintiffs" or "the Khannas"). The first
defendant ("Rajiv" hereafter) is arrayed as the third respondent; the fourth
respondent was the second defendant, (referred to hereafter as "Judge
Chawla"). Rajiv, in RFA 21/2016, appeals the same decree, to the extent it
directs him to pay mesne profits.
2. The Khannas had filed a suit before the Additional District Judge
under Sections 5 and 6 of Specific Relief Act contending that in furtherance
to a sale transaction with Judge Chawla, (a General Power of Attorney
holder of Rajiv), they became owners of property No. 8/289, Sunder Vihar,
Paschim Vihar, New Delhi ("suit property") after payment of full sale
consideration and execution of Agreement to Sell, General Power of
Attorney (GPA) and Special Power of Attorney (SPA) by Judge Chawla in
their favour. The vacant physical possession of suit property was, according
to the suit, delivered to the plaintiffs on 12.05.2004 and after taking
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 2
possession the plaintiffs had placed their locks over the suit property. It was
contended that after entering into the sale transactions and handing over
possession, the first and second defendants trespassed the suit property and
colluded with each other along with sisters of Rajiv, to deprive the plaintiffs
of the property so purchased. trespassed the property. The Khannas
discovered this trespass when they visited the property on 24.07.2004 and
filed a suit with a claim for directing defendants to vacate the suit property
and to restore possession of the suit property to the plaintiffs.
Simultaneously, a decree for specific performance of the Agreement to Sell
dated 12.05.2004 was also sought, on the ground that the sale consideration
has been paid to the defendants. Mesne profits @ 15,000/-per month for
unauthorized use and occupation of the property by the defendants was
sought. A decree of permanent injunction restraining defendants and their
agents, family members from selling, alienating or parting with the
possession of the property was made.
3. This suit [Suit No.393/2004] (hereafter "the first suit") instituted by
the Khannas was dismissed at the initial stage on an application of
defendants made under Order VII Rule 11, Code of Civil Procedure (CPC),
by the Additional District Judge (ADJ), who held that the plaintiffs had not
disclosed to the Court about execution of a Collaboration Agreement dated
18.05.2004 between Rajiv and the plaintiff. The plaintiffs' statement was
recorded by the learned ADJ under Order X, CPC. The plaintiffs had stated
that the signatures on the Collaboration Agreement dated 18.05.2004
appeared to be his, but he was unaware how the defendant obtained his
signatures on the documents. The ADJ observed that by non-disclosure and
non-production of the Collaboration Agreement, the plaintiffs had tried to
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 3
overreach the Court and were guilty of withholding the information of this
document and thus played fraud on the Court. The plaint in the first suit was
rejected.
4. Aggrieved, the Khannas appealed to this Court (RFA 631/2004). This
Court considered the appeal on merits and held that Khannas had approached
the trial Court with unclean hands and suppressed material and relevant facts
and dismissed the appeal. The Khannas preferred a special leave petition to
the Supreme Court, aggrieved by the dismissal of their appeal. The Supreme
Court disposed of the petition, and stated as follows:
"The petitioners herein had filed a Suit purported to be under the
provisions of Sections 5 and 6 of the Specific Relief Act.
However, in the said Suit the petitioners had prayed for grant of
permanent injunction or in the alternative recovery of possession
or in the further alternative a decree for specific performance of
contract. Such a Suit was not maintainable in law. However, the
learned Judge had dismissed the Suit purported to be in terms of
Order 7 Rule 11 of the Code of Civil Procedure on the ground
that the plaintiff has played a fraud by withholding the relevant
agreement and material in the matter. In view of the fact that the
plaintiff can file an appropriate Suit, we do not think it to be a fit
case for us to exercise our discretionary jurisdiction under
Article 136 of the Constitution. The Special Leave Petition is
dismissed accordingly."
5. It is in these circumstances that the Khannas filed a new suit, CS (OS)
1200/2006 ("the second suit") on the file of this Court which led to the
impugned judgment. The case set up by the Khannas was that the first
plaintiff acquired rights in the suit property in terms of the documents
executed on 12.05.2004 (Agreement to Sell, GPA, registered Will,
possession letter, receipt and affidavit). The power of attorney executed in
favour of the second plaintiff by Judge Chawla was registered before the
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 4
Sub-Registrar. The Will too was registered on 12.05.2004; it favours the first
plaintiff and was executed by Judge Chawla. The other documents relied on
were unregistered documents. The second suit also alleged that a sum of ` 5
lakhs by a crossed cheque was paid to Judge Chawla. The suit also alleged
that the Agreement to Sell executed on 12.05.2004 was not registered due to
deficiency in stamp duty and, therefore, after making up the deficiency of
stamp duty, a fresh Agreement to Sell was executed and registered on
16.06.2004. This agreement was in favour of first plaintiff and executed by
the second plaintiff acting under the registered Power of Attorney dated
12.05.2004 executed by Judge Chawla.
6. The second suit alleged that the plaintiffs were given possession of the
suit property pursuant to the said documents and also that because it was to
be converted from leasehold to freehold, at the request of Judge Chawla, the
first plaintiff, in trust gave some blank signed papers to him so that necessary
papers could be prepared and filed for conversion before the Delhi
Development Authority (DDA). It was alleged that Judge Chawla misused
the blank papers and instead created/fabricated a Collaboration Agreement
with respect to rights in his favour by the second plaintiff, with regard to the
second floor and above of the suit property. According to the plaintiffs, this
was because at the time the first plaintiff purchased it, the suit property
comprised only of the ground floor and the first floor portion. It was alleged
that Judge Chawla had fraudulent intent because he realized that he could
take advantage, by colluding with Rajiv inasmuch as the documents executed
in the plaintiff's favour with respect to the suit property contained the ground
floor and first floor. It was alleged that when the Khannas visited the suit
property on 24.07.2004, it transpired that Rajiv had broken the locks, which
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 5
they had placed on the suit property on execution of the title documents. The
Plaintiffs, shocked by Rajiv's action of trespass lodged a complaint with the
local police station on 24.07.2004. When called by the police, Rajiv
informed that his sisters had filed a suit for partition against him and in that
civil suit a status quo order was passed by the Civil Court on 06.09.2000
restraining him (Rajiv) from transferring the suit property.
7. Plaintiffs were shocked to learn about the pendency of the suit filed by
the sisters and the plaintiffs realized that Defendant Nos.1 and 2 were
cheating them. It was alleged that Rajiv's sisters had already executed a
registered Relinquishment Deed on 20.05.2002 and in fact on
17/18.12.2002,Rajiv's name was mutated in the records of the DDA as the
sole owner of the suit property. The Khannas alleged that the first two
defendants later illegally and fraudulently executed documents dated
17.08.2004, 19.08.2004 and 09.09.2004 whereby Judge Chawla claimed that
he had no rights in the suit property and Rajiv alone was owner of the suit
property. The Khannas referred to a First Information Report (FIR
No.938/2004) registered with the police station with respect to their
fraudulent dispossession from the suit property and the illegality of the
documents executed by Judge Chawla in favour of Rajiv and the subsequent
documents executed by Rajiv favouring the Chopras.
8. Judge Chawla appeared and filed his written statement. He later failed
to appear and was proceeded against ex parte; the ex parte proceedings were
thereafter set-aside and he was allowed to lead evidence. Rajiv did not file a
written statement but appeared and cross-examined the plaintiff's witnesses.
Chopras were the main contesting defendants in the suit; they claimed to be
bona fide purchasers of the suit property in terms of documents dated
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 6
14.09.2004. The Chopras alleged that they purchased rights in the suit
property from Rajiv in terms of the documents dated 14.09.2004, this was
preceded by other documents dated 17.08.2004, 19.08.2004 and 09.09.2004.
In these, Judge Chawla firstly cancelled the GPA in favour of the second
plaintiff and declared that Rajiv was the owner of the suit property and was
entitled to deal with it. It is averred by the Chopras, in their written
statement, that Rajiv had executed the Agreement to Sell dated 14.09.2004 in
their favor.
9. In their written statement the Chopras urged that the second suit was
barred by the principle of res judicata and that it was improperly valued for
the purposes of court fees and jurisdiction. They further alleged that the
Khannas did not approach the Court with clean hands. They denied the
validity of the documents executed in favour of the Khannas by Judge
Chawla.
The impugned judgment
10. The learned Single Judge was of opinion that Section 48 of the
Transfer of Property Act was applicable to the facts of this case. He held that
by virtue of Section 53A of the said Act and the doctrine of part
performance, once it was established that a valid Agreement to Sell was
executed, the vendor could thereafter convey only what he owned. Thus, the
later Agreement to Sell, relied upon by the Chopras to claim rightful interest
in the property, was of no avail. It was also held that:
"Once the Agreement to Sell dated 16.6.2004 is duly stamped
and registered, plaintiff no.1 will under Section 53A of the
Transfer of Property Act, 1882 have rights in the suit property
and better rights than those created under any subsequent date
documents which are executed with respect to the suit property
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 7
by either the defendant no.1 or defendant no.2 or defendant nos.1
and 2 jointly. Also, it is relevant to note that at the time of
executing of the registered Agreement to Sell dated 16.6.2004 by
the plaintiff no.2 in favour of plaintiff no.1, plaintiff no.2 was
acting under the valid and subsisting registered Power of
Attorney executed on 12.5.2004 by the defendant no.2 in favour
of the plaintiff no.2 as such Power of Attorney was not cancelled
when the Agreement to Sell dated 16.6.2004 was executed by the
plaintiff no.2 in favour of the plaintiff no.1. Transferring of
possession to plaintiffs is mentioned in the Agreements to Sell
dated 12.05.2004 and 16.6.2004. Also, in the written statement of
the defendant no.2 there is no dispute that defendant no.2
executed the documents dated 12.05.2004 and the defence is only
that these documents were executed as security and which
documents alleged were given up in the Collaboration
Agreement dated 18.05.2004 being executed between the plaintiff
no.2 and the defendant no.2. As will be discussed below, the
defendant no.2 has failed to prove any Collaboration Agreement
dated 18.05.2004. In my opinion, therefore plaintiff no.1 did get
valid title rights in the suit property in terms of the
documentation dated 12.5.2004 read with the registered
Agreement to Sell dated 16.6.2004."
11. The Chopras' reliance on the documents executed in their favour on
22.03.2004 was held to be insubstantial; their objections to the reliance, by
the Khannas, on the documents dated 12.05.2004 and 16.06.2004 on the
ground that they were insufficiently stamped too, were overruled. The
learned Single Judge also ruled that the second suit was not barred, by the
principle of res judicata. It was further held that the Chopras could not claim
to be bona fide purchasers:
"(ii) It is noted that in the written statement of the defendant nos.
3 to 5 they have not even whispered about their purchase of
rights as being bona fide and that they purchased the rights in
the suit property without notice of the earlier title in favour of the
plaintiff no.1. Not only there is no pleading but even in the
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 8
evidence led on behalf of defendant nos. 3 to 6 there is not even a
whisper that defendant nos. 3 to 6 have purchased rights in the
suit property without having notice of the title created in favour
of plaintiff no.1 by the documentation dated 12.5.2004 and
16.6.2004. It is also seen that once the Agreement to Sell dated
16.6.2004 in favour of the plaintiff no.1 was a registered
document, defendant nos. 3 to 6 are deemed to have notice of this
agreement by virtue of Explanation I to Section 3 of the Transfer
of Property Act which provides that registration of a document
operates as a notice. Therefore, neither there is any pleading nor
any evidence that defendant nos.3 to 6 have purchased the rights
in the suit property without notice of the prior title in favour of
the plaintiff no.1 and which pleading the defendant nos. 3 to 6
cannot legally take up in view of Explanation I to Section 3 of the
Transfer of Property Act.
(iii) Though learned counsel for the defendant nos. 3 to 6 argued
that in the affidavit by way of evidence filed on behalf of
defendant nos. 3 to 6, they have used the expression 'bona fide',
however, not only no amount of evidence can be looked into on
the plea of bona fide action of the defendant nos. 3 to 6 which is
not pleaded in the written statement, but also that even assuming
there is a plea of bona fides, the same is not sufficient because
the same had to be accompanied by pleadings and proof of
defendant nos. 3 to 6 having purchased rights in the suit property
without having notice of the title of plaintiff no.1, and which the
defendant nos. 3 to 6 have miserably failed to plead and prove as
so discussed above."
Contentions of the parties
12. The Chopras, in their appeal, urge that the learned Single Judge fell
into error in holding that the documents relied on by the Khannas -
especially the registered documents, dated 12.05.2004 and 16.06.2004- had
legal and binding effect. It was urged that the said documents were
inadmissible; the Agreement to Sell, dated 12.05.2004 was unregistered and
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 9
understamped and fell foul of Section 17 (1)(a) of the Registration Act,
1908. It could not have had any effect or create binding rights in view of
Section 54 of the Transfer of Property Act. Furthermore, under Section 49 of
the Registration Act, it could not have been received in evidence. Learned
counsel submitted that being understamped, the document was in
contravention to Section 35 of the Stamp Act; it had to be impounded under
Section 33. Counsel relied on Avinash Kumar Chauhan v Vijay Krishna
Mishra 2009 (2) SCC 532. It was urged that the Agreement to Sell dated
16.06.2004 relied on by the Khannas could not have validly conveyed title or
any interest to them, because it was pursuant to a Power of Attorney in
favour of the second plaintiff (i.e. one of the Khannas). The original owner,
Rajiv is supposed to have executed that power of Attorney on 12.05.2004 in
favour of Judge Chawla, with no right to further sub-delegate the power (to
sell). This meant that no Power of Attorney could be transferred by Judge
Chawla in favour of the second plaintiff to execute or enter into any
transaction nor could the latter transact with the first plaintiff to transfer any
interest in the suit property. In other words, since the second plaintiff had no
legal right to transfer the suit property, he could not have conveyed any such
interest to the first plaintiff, his wife. Crucially, submitted Mr. Nigam,
learned Senior Counsel for the Chopras, this document (dated 16.06.2004)
was not disclosed by the Khannas in the first suit; they were precluded from
basing their claim on it in the second suit.
13. It was urged by Mr. Nigam that the learned Single Judge overlooked
documentary evidence led during the trial, which clearly established that
Rajiv did not possess any legally binding authority to enter into binding
arrangement for conveyance of the property. It was submitted that L.R.
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 10
Gupta, Rajiv's father and predecessor, had three children, i.e. Rajiv, Usha
Sharma and Anita Ranjan. The latter two, i.e. Rajiv's sisters had filed a suit,
on the file of this Court, claiming partition, since they were equal owners of
the suit property, after the intestate demise of their parents (L.R. Gupta, on
21.09.1991 and his wife, on 09.10.1991). The property was self-acquired; it
consequently devolved equally on all the children, i.e Rajiv and his sisters.
14. After completion of pleadings and other proceedings, seven issues
were framed. The parties went to trial and led their evidence. The Khannas
relied upon the registered General Power of Attorney (GPA) dated
12.05.2004 executed by Sh. Rajiv in favor of Sh. Judge Chawla (Ex.PW-
1/1); Agreement to Sell in favor of the first plaintiff by Sh. Judge Chawla
(again dated 12.05.2004) [Ex.PW-1/2]; registered GPA executed by Sh.
Judge Chalwa in favor of the second plaintiff, (Ex.PW-1/6); Receipt issued
by Sh. Judge Chawla dated 12.05.2004 in favor of the first plaintiff (Ex.PW-
1/3); an affidavit by Sh. Judge Chawla favoring the first plaintiff dated
12.05.2004 (Ex.PW-1/4); registered Will dated 12.05.2004 by Sh. Judge
Chawla favoring the first plaintiff (Ex.PW-1/5) and registered Agreement to
Sell dated 16.06.2004 executed by the second plaintiff in favor of the first
plaintiff. In this, the second plaintiff acted as Power of Attorney (PoA)
holder of Sh. Judge Chawla; the Agreement to Sell was in favor of his wife,
the first plaintiff (Ex.PW-1/8). The plaintiff also relied upon a police
complaint regarding their continuous possession dated 24.07.2004 (Ex.PW-
1/9).
15. The contesting defendants, i.e. Chopras relied upon a registered Power
of Attorney executed by Sh. Rajiv in their favor (Ex.D-1) dated 22.03.2004;
a registered Will of the same day executed in favor of Chopras (Ex.D-2);
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 11
registered Agreement to Sell dated 14.09.2004 - executed by Rajiv in favor
of the Chopras (Ex.D3-W1/6); Receipt of the same date in favor of the
Chopras (Ex. D3W1/10); the previous judgment of the District Court
rejecting the first suit.
16. Rajiv's two sisters filed a suit [CS(OS) 1961/2000] before this Court,
claiming partition. It is a matter of record that on 04.09.2000, an order
directing maintenance of status quo was made - which enjoined all the
parties not to sell, transfer or create any other rights in respect of the suit
property. It is submitted that in the written statement this fact was clearly
mentioned; the order of 06.09.2000 in CS (OS) 1961/2000 have been
averred. Such being the case, during the pendency of status quo, there was no
question of Rajiv conveying title, much less a valid title to the Khannas
through Judge Chawla. Not being the sole and absolute owner of the suit
property, Rajiv could not have transferred title to the Khannas either through
the documents dated 12.05.2004 or the Agreement to Sell dated 16.06.2004.
The Khannas could not have, on the basis of a bare allegation that Rajiv's
two sisters had relinquished their shares on 20.05.2002, without proving it,
succeed in securing a decree. In other words, in the absence of proof of
relinquishment or giving up of interest or title in the property by Rajiv's two
sisters in his favor, he could not have entered into a valid and binding
arrangement to convey the property. To the extent he did so through the
documents relied upon by the Khannas, they were contrary to law and void.
Learned counsel relied upon Vidur Impex and Traders (P) Ltd. v. Tosh
Apartments (P) Ltd. 2012 (8) SCC 384 and Jehal Tanti v. Nageshwar Singh
2013 (14) SCC 689.
17. Learned counsel relied upon the documents (Ex.PW-3W/4); the
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 12
judgment of the Court, which recorded their statements; the relinquishment
deed dated 03.09.2004 whereby Rajiv's sisters gave up their rights, title and
interest in his favor [registered relinquishment deed (Ex.PW-1/5)]; a
registered Agreement to Sell dated 04.09.2004 by Rajiv in favor of
appellants, i.e. Chopras (Ex.D-3/1/4) and other documents such as the Will
(Ex.DD-1/7) and GPA (Ex.D3W-1/8). Furthermore, emphasized learned
counsel, all original documents of title pertaining to the suit property along
with registered lease deed (Ex.DW-1/7) and House Tax receipts were handed
over. The Chopras secured possession of the property from Rajiv and
thereafter proceeded to demolish the existing structure after which the
Khannas instituted the first suit. It was pointed out that the findings rendered
by the learned Single Judge that a Collaboration Agreement dated
18.05.2004 existed between Rajiv, the second plaintiff and Judge Chawla
which had been relied upon in the first suit, was a forged and fabricated
document. It is urged that this finding is contrary to the binding judgment of
the Division Bench of this Court in RFA 631/2004 filed by the Khannas. The
Division Bench had clearly held that the original Agreement to Sell dated
12.05.2004 was unenforceable in view of the so-called Collaboration
Agreement dated 18.05.2004. Thus, the findings in the first suit regarding the
invalidity and unenforceability of the document dated 12.05.2004 on account
of the Collaboration Agreement dated 18.05.2004 had become final and
operated as res judicata between the parties. Reliance was placed on Pawan
Kumar Gupta v.. Rochiram Nagdeo(1999) 4 SCC 243. Learned counsel
relied upon Raja Kumari v. P.Subbarama Naidu &Anr. (2004) 8 SCC 74 to
submit that in the circumstances of this case, the observations of the Supreme
Court did not amount to a permission to the Khannas to reagitate the matter
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 13
which had been settled and attained finality in the previous proceedings.
Learned counsel also urged that the provisions of Order II Rule 2 CPC
estopped Khannas from claiming any rights in respect of the document dated
12.05.2004. Furthermore, the omission to mention the so called registered
Agreement to Sell dated 16.06.2004 in their first suit precluded the plaintiff,
i.e. Khannas from relying upon it.
18. Learned counsel highlighted that the findings of the learned Single
Judge resulting in a decree for possession are plainly erroneous. It was
submitted that having claimed title under these decisions and other
documents, and having failed in a suit for recovering of possession, the
Khannas could not have asserted that they were real owners and that they
were dispossessed. In other words, learned counsel elaborated his
submissions by stating that in the first suit, the Khannas had sought relief of
possession and specific performance. However, in the second suit, they
claimed declaration that in fact they were owners and a decree for possession
was sought. Once they sought to rest their title on this basis, having regard to
the findings in the previous suit, there is no question of other reliefs being
granted. It was urged that the law relating to part-performance under Section
53A of the Transfer of Property Act protects only possession of a transferee
who has obtained possession under a contract for sale; it cannot clothe him
with right to assert title - much less against the true owner. Furthermore,
Section 53A could not have been invoked by Khannas since it was a matter
of record that Chopras were in continuous possession of suit property since
14.09.2004. Lastly, it was urged that the learned Single Judge completely
overlooked material circumstances that were both pleaded and urged by the
Chopras. It was submitted in this regard that firstly the observations of the
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 14
learned Single Judge, with regard to the issue of Chopras being bona fide
purchasers for value, as not having been pleaded was contrary to the record.
In fact the Chopras had in their written statement clearly averred so.
Furthermore, it was averred that Chopras' rights were superior to those of
Khannas as was borne from an overall consideration of the record. The
transaction by which the Chopras acquired rights over the suit property
commenced by the execution of the set of documents in their favor by
27.03.2004 and handed on 14.09.2004 when the Agreement to Sell was
executed. The subsisting impediment by way of status quo order in the suit
filed by Rajiv's sisters was vacated on 02.09.2004; the very next day, they
executed a registered relinquishment deed, which was proved. In these
circumstances, the only valid and binding document was the Agreement to
Sell conveying rights, title and interest in respect of the suit property by the
registered agreement dated 2004 executed by Rajiv in favor of Chopras - all
these documents had been proved. By including them, the learned Single
Judge fell into error.
19. On behalf of the Khannas, Sh. B. Mohan, learned counsel urged that
the findings of the learned Single Judge are in error. It was argued that the
suit was not barred by the principle of res judicata. Learned counsel relied
upon the observations of the Supreme Court and submitted that once liberty
was granted to institute a suit, the order of this Court as well as that of the
Division Bench merged with that of the Supreme Court. Reliance was placed
on Kunhayammed & Ors v. State of Kerala & Anr. 2000 (6) SCC
359. Furthermore, it was submitted that the earlier decision of the learned
Single Judge, declining reliefs under Sections 5 and 6 of the Specific Relief
Act were not based on merits but in the course of deciding an application
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 15
under Order VII Rule 11 CPC.
20. It was argued that in the absence of any defense by Rajiv, the
undoubted owner of the property who did not even file a written statement,
the claim of the Chopras to be owners of the suit property could not be
sustained. The documents placed on the record in the form of registered
irrevocable GPA favoring Arun Khanna; the Agreement to Sell dated
12.05.2004; the receipt; the registered Will and the decision - all favoring
Vaneeta, and the subsequent Agreement to Sell dated 16.06.2004 executed
on behalf of Judge Chawla by Arun Khanna transferring interest on suit
property for ` 5 lakhs clearly established that Khannas were the original
owners of property and who had conveyed possession. It was submitted that
the findings of the learned Single Judge that the registered documents having
been executed on 12.05.2004 had to prevail over the subsequent documents
(registered Agreement to Sell dated 14.09.2004) relied upon by Chopras by
virtue of Section 48 of the Transfer of Property Act. It was submitted that
neither the Collaboration Agreement dated 18.05.2004 entered into with the
Khannas nor the Agreement to Sell dated 16.06.2004 favoring Vanita
Khanna were disputed. It was also highlighted that Judge Chawla attempted
to execute all the documents relied upon by Khannas. Those proved flow of
title in favor of Khannas. Learned counsel relied upon the affidavit evidence
of Judge Chawla (Ex. DW-1/8).
21. Learned counsel also highlighted that when the third defendant (one of
Chopras) was examined as witness, his attention was drawn to the pleadings
on a query as to whether he had prior knowledge of the Agreement to Sell
dated 16.06.2004, he did not deny such knowledge. Furthermore, he did not
produce the Agreement to Sell relied upon by him (dated 15.03.2004).
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 16
Learned counsel relied upon the judgment in Thomson Press (India) Ltd. v.
Nanak Builders and Investors P. Ltd. AIR 2013 SC 2389that a bona fide
purchaser can only pursue such defenses as are available and are taken by the
original defendants and none others. Since Rajiv did not file any written
statement and having regard to the fact that it was Judge Chawla who filed a
written statement and admitted the title documents favoring Khannas, the
learned Single Judge's findings were sound and could not have been faulted.
22. It was urged that the Khannas' title (to the suit property) could not be
questioned or shaken for the reason that there is no dispute about the fact that
Rajiv was shown in the records of DDA as owner of suit property. Learned
counsel relied upon the mutation extract which was placed on record of suit
dated 17-18.12.2002. On the basis of these, Khannas were entitled to state
successfully that they, to the exclusion of Chopras, were entitled to be treated
as owners having overriding right, title and interest with respect to the suit
property. Learned counsel submitted that the observations of the learned
Single Judge with respect to the validity of the PoA/transactions cannot be
faulted. He relied upon the decision reported as Suraj Lamp and Industries P.
Ltd. v. Govt. of Haryana 2012 (1) SCC 656 and DDA v. Gaurav Kukreja
[Civil Appeal No.3124/2015]. Learned counsel lastly highlighted that the
findings of the learned Single Judge, by virtue of the Section 3 of the
Transfer of Property Act, which stipulates that registration of documents
operates as notice, is conclusive and precludes the claim by Chopras that any
rights accrued in their favor after the Agreement to Sell dated 16.06.2004,
which was executed in favor of the Khannas.
Analysis and Findings
23. The following main questions arise for consideration:
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 17
(1) Whether the second suit was barred by reason of res judicata and
whether the Khannas were precluded from relying on the registered
Agreement to Sell dated 16.06.2004;
(2) Whether the learned Single Judge's findings regarding the documents
(dated 12.05.2004) produced by the Khannas, on rejecting the Chopras'
submission that they were not registered and were insufficiently stamped
is correct;
(3) Whether the Khannas can be said to have acquired valid and legally
binding title or interest in respect of the suit property.
24. The first suit had claimed that the Khannas had acquired rights over
the suit property; Rajiv and Judge Chawla were impleaded as parties. A
reading of the pleadings in the first suit would reveal that the Khannas
claimed rights over the suit property by virtue of the documents dated
12.05.2004; and mutation extract dated 17/18.12.2002 and that on
24.07.2004, they discovered trespass into the property when the locks placed
on the door were removed. The Khannas also stated that they lodged a
police complaint, pursuant to which Rajiv had denied having transferred or
created any rights in their favour. The Khannas also mentioned about
becoming aware of the status quo order in the suit filed by Rajiv's sister
against him CS (OS) 1961/2000 (Usha Sharma v. Rajiv Gupta). In these
circumstances, they claim to be bona fide purchasers and sought a decree for
possession against the defendant. During the course of the proceedings, the
Chopras were impleaded as party/respondent. Judge Chawla - who was also
impleaded as second defendant - in the written statement, alleged
suppression of facts by the Khannas inasmuch as they had entered into
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 18
Collaboration Agreement dated 18.05.2004 with him for construction of the
property and no absolute title was transferred to them. Judge Chawla's
written statement also mentioned that the property was handed over through
a valid transaction to the Chopras on 14.09.2004.
25. The Trial Court which considered an application for rejection of the
plaint, took into consideration the statement of Arun Khanna, recorded on
28.09.2004. The statement recorded in Court was as follows: -
"I have seen collaboration agreement dated 18.05.2004 running
into four pages and the signatures at point 'A' thereon appeared
to be mine. I am not aware as to how defendant no.2 obtained
my signatures thereon. It is for him to explain."
26. After considering the submissions of the parties, the Trial Court held
that the Collaboration Agreement dated 18.05.2004 marked as Ex.C-1 was
an undenied document and that the said agreement itself disclosed that the
Khanna was builder. It revealed that `5 lakhs was paid to Judge Chawla on
12.05.2004 and was shown as non-refundable security. The Trial Court
thereafter held that since the said Collaboration Agreement of 18.05.2004
(Ex.C-1) was executed after the General Power of Attorney dated
12.05.2004, the question of ownership did not arise.
27. In the appeal, the Division Bench of this Court by a judgment dated
02.03.2006 confirmed the findings of the Trial Court and held that the
document of 12.05.2004 were substituted by the subsequent contract of
collaboration and that consequently the original Agreement to Sell etc.
became inoperative and unenforceable with the execution of the subsequent
Collaboration Agreement on the basis of the principle of law laid down by
the Division Bench of this Court in M/s. Dadri Cement Co. & Anr. v. M/s.
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 19
Bird & Co. Pvt. Ltd., AIR 1974 Del 223.
28. The first suit had sought a decree for possession and injunction - and
was based upon title to the property - as is evident from a clear reference to
Section 5 of the Specific Relief Act. In the present case, the second suit
makes more or less the same averments except that for the first time the
Khannas rely upon the transaction embodied in the Agreement to Sell dated
16.06.2004. Interestingly, this agreement never saw the light of the day
when they did file the earlier suit (sometime in 2004 i.e. CS (OS) 393/2004,
dated 16.09.2004). Each of the documents relied upon to show a flow of
title are traceable to the documents that were held to be ineffective in the
first suit - Ex.PW-1/1 (Power of Attorney by Rajiv in favour of Judge
Chawla); Ex.PW-1/2 (unregistered Agreement to Sell between Judge
Chawla and the first plaintiff Vinita Khanna); Ex.PW-1/5 (Will by Judge
Chawla in favour of Vinita Khanna); and Ex.PW-1/6 (General Power of
Attorney of Judge Chawla in favour of Arun Khanna, i.e., the second
plaintiff). All these documents were held to be ineffective and of no
consequence due to the Collaboration Agreement dated 18.05.2004 proved
in the previous proceedings (as Ex.C-1). Significantly, the plaintiffs - i.e.
Khannas despite knowledge of existence of that document, which stands in
their way (and assuming that they had a right to file the present suit) did not
claim that the said document was not binding, or had to be cancelled, or was
fraudulent and could not be construed as undermining their rights. The
assumption that such Collaboration Agreement was fraudulent or of no
effect has virtually been endorsed by the learned Single Judge.
29. In these circumstances, this Court is of the opinion that the learned
Single Judge's findings that the nature of the reliefs claimed in the two
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 20
proceedings were different and consequently the second suit was
maintainable, is erroneous.
30. This Court is also of the opinion that the previous suit was a
composite one which claims possession based on assertion of title as well as
on the basis that the plaintiff had been unlawfully dispossessed. A plain
reading of the suit itself reveals that it was both under Sections 5 and 6 of the
Specific Relief Act. The basis in the claim was the same as in the present
case - the document dated 12.05.2004. For a moment arguendo if the
Khannas' plea with respect to the Agreement to Sell dated 16.06.2004 was to
be accepted, nevertheless, the fact remains that that document itself is based
upon the previous power of attorney executed by Judge Chawla in favour of
Arun Khanna (Ex.PW-1/6). In these circumstances, there can be no manner
of doubt that all the requisites of Section 11 CPC, i.e., the parties being the
same, the Court being entitled to decide the issues which it did (claim for
possession based on title and on alleged unlawful dispossession) on the
strength of same documents which are sought to be pressed into service by
the Khannas and between the same parties i.e., Khannas, Chopras, Rajiv and
Judge Chawla, are fulfilled.
31. It is noteworthy that in para 20 of the second suit, the Khannas
mentioned about the Collaboration Agreement (marked Ex.C-1 in the first
suit) and also alleged, "needless to add, the said dismissal was without trial
and without enabling the plaintiffs to set-up their defence with respect to the
false documents." Thereafter, the Khannas mentioned about the dismissal of
their appeal and the order of the Supreme Court; they also mentioned about
the deed of declaration and the cancellation of the previous documents in
their favour and in para 30 stated that the second plaintiff, i.e. Arun Khanna
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 21
did not execute any Collaboration Agreement in favour of Judge Chawla and
that the said Collaboration Agreement:
"set up by the second defendant is forged, fabricated and a false
document. The second plaintiff was never ad idem nor had any
intent, i.e. the second plaintiff never agreed to the terms set in the
Collaboration Agreement set up by the second defendant. The
second defendant has deceived second plaintiff to affix signatures
on blank papers which the second defendant set up as documents
for conversion to freehold."
However, in the relief clause, Khannas sought for: (i) a decree of declaration
that they were exclusive owners and that none of the defendants had right,
title or interest (ii) a decree for possession and (iii) consequently decree for
mesne profits/damages. Further, they sought a decree for injunction against
the defendants and most importantly, decree seeking declaration that the
deeds of cancellation dated 17.08.2004 to be null and void; decree for
declaration in respect of deed of cancellation dated 19.08.2004 (executed by
Rajiv); declaration of deed dated 09.09.2004 (executed by Judge Chawla)
and declaration that the documents set as registered agreement dated
14.09.2004 favoring the Khannas were void and inoperative, were sought.
However, significantly, the Khannas did not seek a declaration that the
Collaboration Agreement was void or consequent to a fraud or was a
fabrication or forgery. More importantly, they did not seek cancellation of
that agreement.
32. In the affidavit evidence by the sole witness on behalf of the plaintiff,
i.e. Arun Khanna (in affidavit evidence PW-2, marked as Ex. PW-2/A) in
para 22, the allegation in the plaint is not verified. On the contrary, the
second plaintiff Arun Khanna stated that the case set up by Judge Chawla
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 22
with respect to the Collaboration Agreement "is totally false because there
was no question of deponent having signed the alleged Collaboration
Agreement since he did not have any right, title or interest in the property
because the right, title and interest in the suit property belonged to his wife,
who became sole owner by virtue of the documents executed by the second
defendant on 12.05.2004." Arun Khanna did not assert that the said
document, Ex. C-1 was a forgery nor was any independent evidence led to
show that the said document was a forgery. He thus accepted the
genuineness of the document; his evidence in the first suit was equivocal.
33. In the light of the above discussion, it is quite evident that in the
second suit, the Khannas did not seek any relief as to the Collaboration
Agreement dated 18.05.2004. The said agreement was a matter of record and
had been the basis for rejection of the plaint in the first suit. Section 31 of
the Specific Relief Act provides for the relief of cancellation of instruments.
It stipulates that anyone against whom, "a written instrument is void or
voidable and who has reasonable apprehension that the instrument if left
outstanding may cause him serious injury" can have it adjudged void or
voidable. The omission of the plaintiff to seek relief of cancellation of
Collaboration Agreement, and to assume that the assertions they made in the
suit as to forgery and fabrication "without proof" of all those allegations by
way of evidence was fatal to the suit. This is because the Collaboration
Agreement on 18.05.2004 formed the basis of the rejection of the first suit. It
was, therefore, of paramount importance that the Khannas sought an
appropriate relief against the said document. None- even in the form of a
declaration was sought. Furthermore, the findings in the first suit were
premised on the legality of the said document, which according to the
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 23
Khannas, was set up against them and created without their knowledge.
Their claim to right and title, i.e. through GPA, the Agreement to Sell,
receipt, will etc., all dated 12.05.2004 were also held finally to have been
effaced by the Collaboration Agreement.
34. Furthermore, the assertions of the plaintiffs/Khannas directly
contradict the stand they took on first occasion when they had to challenge
the Collaboration Agreement, i.e. doubt its veracity in the appeal preferred
by them to this Court. However, in RFA 631/2004 (filed by the Khannas
against the dismissal of their first suit), they did not doubt or question the
Collaboration Agreement dated 18.05.2014 and on the contrary admitted it
as well as explained its legal effect. According to the Khannas, the set of
documents dated 12.05.2004 were admitted documents and had the effect of
conferring title or creating interest in their favour. In para 17 of RFA
631/2004, filed in the list of documents produced along with the second suit
(at S.No.46 of the list of documents filed with the plaint), the Khannas stated
as follows:
"In view of the aforesaid admissions on behalf of Respondent
Nos. 1 and 2, it is evident that the case of appellant is admitted
by clear, clean and unambiguous admissions. The only position
of the respondents before the Trial Court is that the
Collaboration Agreement dated 18.05.2004 describes
Respondent No.1 as owner of the property. In other words, the
Collaboration Agreement has been imposed/thrust before the
Trial Court. It has been mainly made out that in case the
documents of sale dated 12.05.2004 and Collaboration
Agreement dated 18.05.20014 are read together being part of
one transaction, which clearly reveals a sale transaction by
Respondent No.2 to appellants/plaintiff."
In Ground C, the existence and correctness and legal effect of the
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 24
Collaboration Agreement dated 18.05.2004 was explained and the argument
is that read with the previous documents, support or strengthen the interest
and title of Khannas.
35. It is thus evident that the basis for the first suit - which claimed
possession on the basis of entitlement (Section 5) as well as on the basis of
wrongful dispossession (Section 6) were the same facts, i.e. the acquisition
of rights through the said documents (Ex. PW-1/1, PW-1/2, PW-1/5 and
PW-1/6) as in the present case, i.e the second suit. It was on the basis of
these documents that the further registered Agreement to Sell dated
16.06.2004 was executed. The Collaboration Agreement dated 18.05.2004
stood as a barrier on the one hand and the finding that it had effaced the
previous documents dated 12.05.2004 had not been set aside;they attained
finality. On the other hand, even if the second suit were to be based entirely
on the subsequent Agreement to Sell (dated 16.06.2004) (Ex.PW-1/8), that
document never saw the light of the day in the first suit. The facts and
averments forming the basis of the issues in both the suits, i.e. entitlement to
the relief claim - declaration, decree for possession, both under Sections 5
and 6 on the basis of interest and prior possession on the one hand and relief
of declaration and possession, again on the basis of entitlement and right to
the property were identical. The omission to rely upon registered sale deed,
the findings as to the ineffectiveness to the said documents dated 12.05.2004
(Ex.PW-1/2) attained finality. They were not confined to the Khannas' claim
in the previous suit under Section 6 but also extended to the legal effect of
the Collaboration Agreement dated 18.05.2004 and it has the effect of
effacing of rights under the documents dated 12.05.2004. As long as these
findings were final, the Khannas could not have sought for a declaration and
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 25
possession in respect of the suit property, as the same was without seeking
cancellation of Collaboration Agreement dated 18.05.2004. Also, the
Khannas were precluded from setting up title or interest on the basis of Ex.
PW-1/8, the registered Agreement to Sell dated 16.06.2004, because that
was never put in issue nor did they ever claim rights under it though it was
open for them to do so. Consequently, the principle of constructive res
judicata applied.
36. For the above reasons, it is held that the findings of learned Single
Judge that the principles of res judicata under Section 11 did not preclude
the maintainability of the second suit are erroneous. They are set aside.
Point No.2
37. The Khannas' claim for rights over the suit property in the second suit
is based on PW-1/1 (a registered PoA) executed by Rajiv in favour of Judge
Chawla in respect of the suit property. This conferred the right to contest
and initiate legal proceedings, enter into binding transactions and also sell
the property to any person for consideration. The second document was Ex.
PW-1/2 - signed by Judge Chawla favouring Vaneeta Khanna, the first
plaintiff; this was an Agreement to Sell on `20 stamp paper and had
recorded that, "actual physical possession of the property had been
delivered to the second party." The Agreement to Sell is not registered. The
third document is a receipt (Ex.PW-1/3), which evidences payment of `5
lakhs through a cheque by Vaneeta Khanna to Judge Chawla. The fourth
document is an affidavit by Judge Chawla (Ex.PW-1/4), declaring that
possession has been handed over to Vaneeta Khanna of the suit property.
The fifth document (Ex.PW-1/5) is a Will "bequeathing and declaring that
upon the demise of Judge Chawla, the suit property would devolve upon
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 26
Vaneeta Khanna." The seventh document is a registered GPA (Ex.PW-1/6)
conferring upon Arun Khanna the right to apply for conversion of the suit
property from leasehold to freehold and also to sell it and receive
consideration. This document - the GPA is a registered one. All these
documents/exhibits are dated 12.05.2004.
38. Section 17(1A) of the Registration Act provides as follows:
"17. Documents of which registration is compulsory
(1) The
following documents shall be registered, if the property to which
they relate is situate in a district in which, and if they have been
executed on or after the date on which, Act No. XVI of 1864, or
the Indian Registration Act, 1866, or the Indian Registration Act,
1871, or the Indian Registration Act, 1877 or this Act came or
comes into force, namely:-
instruments of gift of immovable property;
****** ******** *****
(1A) The documents containing contracts to transfer for
consideration, any immovable property for the purpose of section
53A of the Transfer of Property Act, 1882 (4 of 1882 ) shall be
registered if they have been executed on or after the
commencement of the Registration and Other Related Laws
(Amendment) Act, 2001 and if such documents are not registered
on or after such commencement, then, they shall have no effect
for the purposes of the said section 53A
****** ******** *****
49. Effect of non-registration of documents required to be
registered.-- No document required by Section 17 or by any
provision of the Transfer of Property Act, 1882 to be registered
shall-
(a) affect any immovable property comprised therein,
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such
property or conferring such power; unless it has been registered:
Provided that an unregistered document affecting immovable
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 27
property and required by this Act or the Transfer of Property Act
1882, to be registered may be received as evidence of a contract
in a suit for specific performance under Chapter II of the Specific
Relief Act, 1877, or as evidence of part performance of a
contract for the purposes of Section 53A of the Transfer of
Property or as evidence of any collateral transaction not
required to be effected by registered instrument."
Section 53A of the Transfer of Property Act, 1882 reads as follows:
"53A. Part performance.--Where any person contracts to
transfer for consideration any immoveable property by writing
signed by him or on his behalf from which the terms necessary to
constitute the transfer can be ascertained with reasonable
certainty, and the transferee has, in part performance of the
contract, taken possession of the property or any part thereof, or
the transferee, being already in possession, continues in
possession in part performance of the contract and has done
some act in furtherance of the contract, and the transferee has
performed or is willing to perform his part of the contract, then,
notwithstanding that 2[***] where there is an instrument of
transfer, that the transfer has not been completed in the manner
prescribed therefor by the law for the time being in force, the
transferor or any person claiming under him shall be debarred
from enforcing against the transferee and persons claiming
under him any right in respect of the property of which the
transferee has taken or continued in possession, other than a
right expressly provided by the terms of the contract: Provided
that nothing in this section shall affect the rights of a transferee
for consideration who has no notice of the contract or of the part
performance thereof."
39. The judgment in Som Dev v. Rati Ram AIR 2006 SC 788 holds that
after the coming into force of the Registration and Other Related Laws
(Amendment) Act, 2001, all documents, "containing contracts to transfer
for consideration in immovable property for the purpose of Section 53A of
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 28
the Transfer of Property Act shall be registered if they have been created
after commencement of sub-section 1A (of Section 17) of the Transfer of
Property Act. (sic)" The effect of this amendment - on a joint reading of
Section 17 (1A), Section 49 of the Registration Act and Section 53A of the
Transfer of Property Act-is that the claim to title on the basis of part
performance - under Section 53A of the Transfer of Property Act is
untenable if the Agreement to Sell is unregistered.1 In the present case, the
Agreement to Sell executed by Judge Chawla in favour of Vaneeta Khanna,
first plaintiff clearly did not create any legal right and could not have been
even considered; in any event it created no rights under Section 53A and
could not have been brought on record by virtue of Section 49 of the
Registration Act.
40. The second aspect, which the appellant/Chopras had highlighted, was
as to the inadmissibility of the Agreement to Sell. It was contended that the
proper stamp duty on the Agreement to Sell had not been paid and
consequently, the instrument could not have been received in evidence and
had to be impounded. The appellant, i.e. Chopras relied upon Avinash
Kumar Chouhan v. Vijay Krishna Mishra 2009 (2) SCC 532. This Court is
of the opinion that though substantially, the error if any on this aspect is not
so important as to altogether rule out documents. Moreover, the
inadmissibility on ground of inadequate stamp does not appear to have been
urged. As a result, it is held that even though the Agreement to Sell (Ex.DW-
1) might have been insufficiently stamped, its receipt in evidence was at best
irregular and due to the appellant's omission to object to this aspect, the
A view supported by the decisions of the Punjab and Haryana High Court inRam Kishan&Anr v
Bijender Mann alias Vijender Mann & Ors (2013) 1 PLR 195
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 29
impugned judgment cannot be faulted on this score. However, in view of the
finding with regard to the legal status of the Agreement to Sell and that it
could not have conferred any interest by virtue of a combined reading of
Section 17(1)(A) and Section 49 of the Registration Act, the claim to right,
title and interest under Section 53A of the Khannas had to fail. In view of the
above discussion, it is held that the findings of the learned Single Judge with
respect to ownership and interest in the suit property on account of Khannas
being put in possession in part performance of the Agreement to Sell dated
12.05.2004 are erroneous and cannot be sustained. The said Agreement to
Sell could not have created any rights in view of the Section 17(1A) of the
Registration Act and Section 53 A of the Transfer of Property Act.
Therefore, the claim for title, based upon that document was legally
unenforceable.
Point No.3
41. This issue is in one sense at the core of the entire dispute. On the one
hand, the Khannas claim to be original owners and, therefore, entitled to the
reliefs of declaration and consequently directions such as injunction, decree
for possession etc. On the other hand, the Chopras (subsequent transferees)
claim to have better right by virtue of being in possession pursuant to part
performance of Agreement to Sell dated 14.09.2004. They also say that they
were bona fide purchasers without notice of previous transactions and,
therefore, are entitled to continue in possession as against the Khannas.
42. It would be seen from the factual discussion that the Khannas' interest
emanated from a series of documents executed on 12.05.2004. One of these
was a registered GPA (Ex.PW-1/6) executed by Judge Chawla in favour of
Arun Khanna authorizing him to manage the suit property, institute
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 30
proceedings for ejectment of unauthorized occupants, sign, execute and
institute proceedings, obtain sanctions and sell the property to anyone for
consideration. The case set up by Judge Chawla now is that by virtue of
exercise of GPA conferred by Judge Chawla, Arun Khanna executed a
registered Agreement to Sell in favour of his wife Vaneeta Khanna. This
Agreement to Sell is registered and in the latter part stated unequivocally
that the first party, i.e. Arun Khanna is not left with any right, title or
interest. As observed earlier, the Agreement to Sell in favour of Vaneeta
Khanna - executed by Judge Chawla himself, was hit by Section 17(1A) of
the Registration Act and could not have conferred any rights. The question,
therefore, is whether the registered PoA in favour of Arun Khanna - by
Judge Chawla, could have conferred on the former, i.e. Arun Khanna the
right to create binding interest as against all, in respect of the suit property
by virtue of Ex.PW-1/8 (Agreement to Sell of 16.06.2004). For this, the
parties would necessarily have to bank upon the GPA executed by Rajiv in
favour of Judge Chawla (Ex.PW-1/1) dated 12.05.2004.
43. In both suits, i.e. in the first as well as in the second suit, the Khannas
clearly stated that a status quo order had been made in the suit filed by the
two sisters of Rajiv against him claiming partition. To recapitulate the facts
here briefly, Rajiv was one of the heirs of late L.R. Gupta. The other two
heirs were Smt. Usha Sharma and Smt. Anita Ranjan. That suit (CS(OS)
1961/2000) was not premised upon the existence of an HUF but that all
parties were co-owners having 1/3rd share each in the suit property. The
plaintiffs, i.e. Usha Sharma and Anita Ranjan, had claimed their share on the
basis of their status as heirs to their fathers' properties. On the strength of the
averments, a status quo order was made on 06.09.2000. The first suit, i.e.
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 31
CS(OS) 393/2004 filed by Khannas as well as the second suit, i.e. CS(OS)
1200/2006 clearly revealed the awareness of the Khannas with respect to the
suit as well as the status quo order.
44. The submission of the Chopras is that during the subsistence of such a
status quo order Rajiv could not have validly conveyed any right to anyone.
They rely upon the decision of the Supreme Court in Vidur Impex and
Trader (P) Ltd. v. Tosh Apartments 2012 (8) SCC 384. In that decision, the
Supreme Court, after considering its previous ruling in Surjit Singh v.
Harbans Singh 1995 (6) SCC 50; Sarvinder Singh v. Dalip Singh 1996 (5)
SCC 539 and Bibi Zubaida Khatoon v. Nabi Hassan Saheb 2004(1) SCC
191 held that the principle underlining Section 52 of the Transfer of property
Act, i.e. that alienation or creation of any interest in respect of a property
which is subject matter of a pending proceeding, without leave of the Court,
cannot result in interest "so as to affect rights of any party thereto under a
decree or order which may be made therein" Similarly, the observations of
the Court in Jehal Tanti v. Nageshwar Singh 2013 (14) SCC 689 are
categorical that alienations or transfers of properties which are subject matter
of litigation and interim orders are unenforceable.
45. The above considerations do not appear to have been taken into
account at all by the learned Single Judge although the plaints in both the
suits were a matter of record. Equally, this is evident from paras 10 and 11
of the affidavit of the defendant, Praveen Chopra. Even the averments of the
Khannas substantiate that the deed was in subsistence on 12.05.2004 and had
not been varied. It is evident, therefore, from the above discussion that firstly
the status quo order subsisted and bound the parties, by reason of Section 52
of the Transfer of Property Act. Any transfer, alienation or creation of any
RFA (OS) 117/2015 & RFA (OS) 21/2016 Page 32
right, title or interest in respect of the suit property could have been made by
Rajiv alone either with the consent of the other party or with the approval of
the Court. Secondly and more fundamentally, there is no controversy about
the fact that upon the death of late L.R. Gupta, by virtue of Section 8 of the
Hindu Succession Act, the suit property devolved through intestate
succession upon his LRs, i.e. Rajiv and his two sisters Anita and Usha. They
had sought for a partition and separate possession of their shares.
Independently of the pendency of the proceedings, Rajiv - without any
authority from his two sisters could not have conveyed title over the entire
property or created interest in respect of the entire property. In other words,
the creation of any rights through the registered PoA by Rajiv either in
favour of Judge Chawla or in favour of Khannas or in favour of Khanna
through Judge Chawla was not valid and legally binding, Therefore, the
creation of the document relied upon in the second suit, Ex.PW-1/8
(Agreement to Sell dated 16.06.2004) had no legal binding effect inasmuch
as it could not have created any interest. If Judge Chawla could not have
been conferred the right by Rajiv, equally, he could not have, therefore, -
created any rights in favour of Arun Khanna and likewise Arun Khanna
could not have conveyed title or interest or any binding alienations through
Ex.PW-1/8.
46. As far as Chopras are concerned, they premise their claim firstly upon
a set of documents dated 22.03.2004 between Rajiv and Chopras. They also
rely upon a GPA in favour of Anuj Chopra dated 22.03.2004. These
documents, in the opinion of the Court, cannot be looked into for the same
reasons as mentioned above, i.e. that the GPA is unregistered and more
fundamentally Rajiv could not have created valid or binding interest during
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the subsistence of status quo order or without the participation of other co-
owners. However, the matter does not end there. Inter se disputes between
Rajiv and his two sisters Anita and Usha were apparently resolved. On the
basis of these, direct payments were made by Chopra to the said two sisters,
through cheques which were marked in evidence as Ex.D3W/18 and
D3W/16 along with receipt of these amounts. Usha and Anita moved
applications in the pending suit CS(OS) 1961/2000 which were subsequently
transferred to District Court Delhi. Their statements were recorded under
Order XXIII Rule 3 on 02.09.2004 (Ex. D3W/D). Pursuant to these terms
and after receiving the amount from the Chopras, Usha and Anita executed a
relinquishment deed whereby all rights, title and interest in the suit property
were relinquished to Rajiv. This document was registered on 03.09.2004 and
was marked as Ex.D3W-1/5. It was after these events, i.e. once Rajiv
acquired full right, title and interest in the suit property that he executed a
registered Agreement to Sell in respect of Chopra Ex.B-3/1/6 and other
documents, including PoA in respect of suit property, Ex.D3W1/8. The
original documents of title too were handed over in respect of the suit
property (Ex.D3W1/11).
47. The learned Single Judge returned a finding that the Chopras could
not be considered bona fide purchasers without notice, for valuable
consideration because they did not plead so in their written statement and
that they are deemed to have constructive notice of the registered document
Ex. PW-1/8 (Registered Agreement to Sell, dated 16.06.2004). This Court is
of opinion that the impugned judgment is in error- the error is egregious for
the simple reason that the record itself is to the contrary. The Chopras'
written statement clearly avers in Para 2 (in the reply on merits) that they
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were bona fide purchasers for valuable consideration without notice of the
previous transaction. As far as registration of the document constituting
constructive notice is concerned, this court has held that the said document
could not have created any legally binding right in respect of the suit
property.
48. The above discussion would show that whereas on the one hand Rajiv
could not have for two compelling reasons conveyed any valid interest over
the property to Khannas, he could and did after resolution of the disputes i.e.
after the execution of the relinquishment deed on 03.09.2004 in his favour
by his sisters, the co-owners of property. As a result, the registered
Agreement to Sell - which was also preceded by payment and handing over
of original title deeds and possession, created a valid clear and binding right
and interest in the suit property in favour of Chopras.
49. It is, therefore, held that the findings of the learned Single Judge with
respect to Chopras not possessing any legally enforceable interest in the suit
property are erroneous. Equally erroneous are the findings that the Khannas
had any legally enforceable title or interest in the suit property.
50. In RFA(OS) 21/16, the grievance of Rajiv is with respect to direction
to pay mesne profits for three months, in favour of Chopras. The finding of
the learned Single Judge is that Khannas had become owners, based on his
finding that the dispute arose on account of wrongful action by Rajiv, which
entitled them to claim 15% per month as mesne profits/damages along with
9% interest. In view of the Court's finding that Khannas were not entitled to
any interest, their claim for possession was also unenforceable. Therefore,
Rajiv's appeal has to succeed only on this ground.
51. In view of the above discussion, the impugned judgment and decree of
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the learned Single Judge in CS(OS) 1200/2006 is hereby set aside. The
appeals are allowed in the above terms without any order as to costs.
S. RAVINDRA BHAT
(JUDGE)
DEEPA SHARMA
(JUDGE)
MAY 25, 2016
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