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CASE NO.: Appeal (civil)  6700 of 2004

PETITIONER: Shri Vishwa Nath Sharma

RESPONDENT: Shyam Shanker Goela & Anr

DATE OF JUDGMENT: 26/02/2007

BENCH: Dr. ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

Dr. ARIJIT PASAYAT, J.

Challenge in this appeal is to the judgment rendered by a  Division Bench of the Delhi High Court dismissing the First  Appeal filed by the appellants who were defendants in the suit  filed by the respondents. The regular first appeal under  Section 96 of the Code of Civil Procedure, 1908 (in short ’the  Code’) was directed against the judgment and decree passed  by the Additional District Judge, Delhi, in Civil Suit no.  129/80. The trial court had decreed the suit of the plaintiff for  specific performance of the agreement to sale directing the  defendant-appellant to execute necessary sale-deed within a  particular period.  Defendants were asked to take necessary  steps for completing necessary formalities towards execution  of the sale-deed.

Background facts in a nutshell are as follows:

On 12.12.1979 plaintiff filed the suit claiming decree for  specific performance of agreement to sell dated 24th March,   inter alia, alleging that Delhi Development Authority had  granted a lease of a big plot of land in favour of New Friends  Cooperative House Building Society and the Society had  granted sub lease in favour of its members. Durga Nath  Sharma, defendant No.1 being one of the members of the  Society was granted a sub lease with respect to plot No. 334  measuring 524 Sq. yards under sub lease dated 2.7.1974. The  said defendant with a view to sell the said plot entered into an  agreement with the plaintiff on 24.3.1978 at a fixed price of  Rs.85,000/-. A sum of Rs.8,500/- was received by him  towards part payment of the price, the balance was payable  within 15 days after receipt of approval of building plan by  Delhi Development Authority. The said defendant also agreed  to execute necessary documents in favour of the plaintiff such  as, (a) construction agreement (b) General and Special Power  of Attorney, (c) Will, (d) Agreement to Sell and (e) any other  necessary document. These documents were to be executed by  the defendant no.1 in order to avoid possibility of complication  in transfer of the plot to the plaintiff, although the intention of  the defendant no.1 was to sell the plot to the plaintiff for which  the necessary deal was struck. The plaintiff further alleged  that he got a building plan prepared from an architect to suit  his requirements, which was sent alongwith draft of the other  documents with a covering letter dated 17.5.1978 to the  defendant no.1. More documents were sent with another letter

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of the same date for signatures of defendant No.1. Both the  letters were sent under registered cover and were duly received  by the defendant no.1 but no reply was received. On  17.8.1978 another letter under registered cover was sent to  the defendant no.1, which though received was not replied to  by the said defendant. The plaintiff further alleged that the  defendant no.1 appears to have changed his mind later on and  in an attempt to wriggle out of the deal had fraudulently  transferred the plot by way of gift in favour of his son  (defendant No.2)/ appellant No.2 which the plaintiff alleged  was not binding on him and for that reason appellant No.2  was impleaded in the suit. It is further alleged that on  29.8.1978 defendant no.1 wrote a letter to the plaintiff  cancelling the agreement to sell and returned the amount of  Rs.8,510/- by cheque which included bank collection charges.  Since defendant No.1 could not have unilaterally cancelled the  agreement which still subsisted, the plaintiff declined to  accept the cheque and did not encash it. The plaintiff had  always been ready and willing to perform his part of the  contract and is still ready and willing to purchase the plot on  payment of the balance price but defendant No.1 had  unilaterally backed out. Therefore, plaintiff was left with no  option except to send a notice on 17.8.1978 calling upon  defendants to execute necessary sale deed. No steps were  taken by the defendants and, therefore, the suit was filed.

The defendants contested the suit by filing a joint written  statement alleging that the suit was false and frivolous based  upon incorrect allegations. Defendant No.1 never agreed to sell  his plot to the plaintiff. The plot was not saleable and even if  there was an agreement to sell, the same was void since there  was no contract to sell the said plot, transfer of which was  prohibited under Clause II Sub Clause (6)(a) and (6)(b) of the  lease deed executed between President of India and the New  Friends Cooperative House Building Society and of the sub  lease executed between the Society and the defendant no.1.  The defendant no.1 gave his own explanation about the receipt  of the amount and of the nature of transaction with the  plaintiff stating that at one point of time the defendant no.1  was interested in sale of the plot, if he could get a reasonable  price and in case there was no legal implication, for which  purpose he contacted Pandit Brothers Estate Agency, Lajpat  Nagar, a broker. When on his visit from Jamshedpur to Delhi,  he consulted the Society officials and was informed that he  could not sell, transfer or mortgage the plot, at that time, the  defendant no.1 thought of constructing a house on the plot.  Since he was residing at Jamshedpur the said broker informed  him that he could get the services of a building contractor,  who could construct the building. The plaintiff agreed to  construct a house on the plot according to the plan sanctioned  by the authorities in favour of defendant No.1. The plaintiff  asked defendant No.1 to execute an agreement for building  construction. The plaintiff also deposited with defendant No.1  a sum of Rs.8.500/- as part security for carrying out the  construction, as per the desire of the defendant no.1 within  the stipulated time. The plaintiff promised to send draft of the  agreement. Some rough drafts were sent by the plaintiff in  May, 1978, which were not acceptable to defendant no.1.  Therefore, he wrote back to the plaintiff that he was not  prepared to accept the same. Defendant No.1 further alleged  that he came to Delhi with a draft of Rs.8500/-. The plaintiff  refused to accept the same. It was specifically pleaded that the  defendant no.1 never agreed to sell or transfer or convey the  plot. There was a complete prohibition in a sub lease to  transfer the plot to anybody who was not a member of the

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Society. Therefore, the suit was liable to be dismissed. The  defendant no.1 denied the allegations of plaintiff that there  was an agreement to sell or that he ever agreed to sell the plot.  He stated that bona fide and in good faith he made an  application to Delhi Development Authority for permission to  gift the plot to his son, defendant No.2 and accordingly, after  obtaining necessary permission gift deed dated 18.7.1978 was  executed, which was accepted by the donee and possession of  the plot had also been handed over to defendant No.2.

The plaintiff filed replication denying the defendants’  version. Learned trial court framed the following issues :- 1. Whether defendant No.1 on 24.3.78 agreed to sell the  plot in dispute to the plaintiff at Rs. 85.000/-.  2. If issue No.1 is proved, whether this agreement of sale  is void being not permissible by law? OPD 3. If issue No.2 is not proved, in favour of the defendant  whether the plaintiff was ready and willing to perform his  part of the contract? 4. Whether Rs.8500/- was received by defendant No.1 as  security for carrying out the construction on the plot in  dispute by the plaintiff on behalf of defendant No.1 as  alleged in para 4 of the written statement ? OPD 5. Whether defendant No.2 is not bound by any  agreement to sell in between the plaintiff and defendant  No.1 if issue No.1 is proved? OPD-2 6.      Relief.

Considering the evidence led, the Trial Court held that  the plaintiff must succeed. In appeal, the High Court after  considering the rival submissions came to hold that there were  several documents which tend to suggest that defendant no.1  was aware of the fact that there was an embargo in the lease  deed that transfer could not take place without permission. It  appears that he was also aware of the fact that permission, if  accorded, by the Delhi Development Authority for affecting  transfer, would be subject to payment of unearned increase  and for that reason alone, in one of the letters defendant no.1  had specifically informed the property dealer that while  making offers that aspect was to be kept in view i.e. 50% of the  unearned increase should be paid by the transferee.  The High  Court made reference to the lease deed dated 2.7.1974  (Exhibit P-4), letter dated 27.9.77 addressed by defendant no.1  to the property dealer indicating his intention to sell if the  value would be reasonable and there was no implication in  future; Exhibit P-5, i.e. letter dated 16.10.1977 by which the  defendant no.1 asked the property dealer that buyer shall  have to pay 50% of the difference between original cost and  the market value; Exhibit P-6 i.e the letter dated 10.1.78  exchanged by defendant no.1 and the property dealer to show  that the amount which the prospective buyer was willing to  pay was less according to defendant no.1; Exhibit P-7 i.e.  letter dated 1.2.78 by defendant no.1 with reference to  previous letter asking for more amount from the prospective  purchaser.  Similar was the situation in several other letters  addressed by defendant no.1 to the property dealer.  The High  Court was of the view that instead of performing his part of the  agreement, defendant no.1 being conscious of the fact that  property prices were rising resiled from his commitment and  transferred by way of gift in favour of his son after obtaining  the permission for transfer. The High Court also noticed that  the plaintiff was ready and willing to perform his part of the  contract.   

The High Court did not accept the contention that since

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there was some restriction on transfer, that disentitled the  plaintiff from obtaining a decree for specific performance of the  contract.

The appeal was dismissed observing, inter alia, as  follows: "Consequently, we find no force in the  appeal which is hereby dismissed with costs.   We make it clear that the learned trial court  rightly directed the defendants/appellants to  apply for necessary permissions within the  period specified therein.  In case permissions  are not applied for, it will be permissible for  the plaintiff to make such an application and  in case requisite permission is accorded, on  receipt thereof, the plaintiff will call upon the  defendants/appellants to execute requisite  sale deed in accordance with law and on  failure to do so execution and resignation of  the sale deed will be as per law."     

Learned counsel for the appellants submitted that the  trial Court and the High Court failed to appreciate that there  was an impediment on the transfer.  There could not have a  valid agreement.  In the background noticed by the Trial Court  and the High Court if the transfer was prohibited by DDA,  agreement could not have been enforced by a decree in a suit  for specific performance.  

Learned counsel for the respondent on the other hand  submitted that the lack of permission, if any, cannot act as  absolute bar on a decree being passed.  The decree may not be  executable.  As noticed by the High Court it was submitted  that the price rise is not a ground to deny specific  performance.

In this case the trial Court as well as the High Court have  categorically found that the plaintiff was ready and willing to  perform his part of the arrangement.  In fact, if DDA refused to  grant permission a suit for damages can be filed.   

The plea of hardship which is presently being raised was  never raised before the Courts below and was not also  pleaded. The conditions 6A and 6B to the reference has been  made by learned counsel for the appellant does not create an  absolute bar.  The plea that the plaintiff was merely a  contractor was also not accepted and it was found that the  finding of fact that the plaintiff was not a contractor as  claimed by the appellant.

The Privy council in Motilal v. Nanhelal, AIR 1930 P.C.  287, laid down that if the vendor had agreed to sell the  property which can be transferred only with the sanction of  some government authority, the court has jurisdiction to order  the vendor to apply to the authority within a specified period,  and if the sanction is forthcoming, to convey to the purchaser  within a certain time. This proposition of law was followed in  Mrs. Chandnee Widya Wati Madden v. C.L.  Katial, (AIR 1964  SC 978), and R.C. Chandiok v. Chuni Lal Sabharwal (AIR  1971 SC 1238). The Privy Council in Motilal’s case (supra) also  laid down that there is always an implied covenant on the part  of the vendor to do all things necessary to effect transfer of the  property regarding which he has agreed to sell the same to the  Vendee.  Permission from the Land and Development Officer is  not a condition precedent for grant of decree for specific

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performance. High Court relied upon its decision in Mrs.  Chandnee Widya Madden v. Dr. C.L. Katil (supra) and Maharo  Saheb Shri Bhim Singhji v. Union of India (AIR 1961 SC 234)  to substantiate the conclusive. In Mrs. Chandnee Widya  (supra) this Court confirmed the decision of the Punjab and  Haryana High Court holding that if the Chief Commissioner  ultimately refused to grant the sanction to the sale, the  plaintiff may not be able to enforce the decree for specific  performance of the contract but that was not a bar to the  Court passing a decree for that relief.  The same is the position  in the recent case.  If after the grant of the decree of specific  performance of the contract, the Land and Development  Officer refused to grant permission for sale the decree holder  may not be in a position to enforce the decree but it cannot be  held that such a permission is a condition precedent for  passing a decree for specific performance of the contract.

In Ramesh Chandra Chandiok and Anr. v. Chuni Lal  Sabharwal (dead) by his legal representatives and Ors. (AIR  1971 SC 1238) it was held that proper form of decree in a case  like the instant one would be to direct specific performance of  the contract between defendant and the plaintiff and to direct  the subsequent transferee to join in the conveyance so as to  pass on the title residing in him.  This is because defendant  no.2 son of defendant no.1 cannot take the stand that he was  a transferee without notice.  Admittedly, he is son of defendant  no.1.  The view in Ramesh Chandra’s case (supra) was a  reiteration of earlier view, in Durga Prasad and Anr. v. Deep  Chand and Ors. (AIR 1954 SC 75). This Court has repeatedly  held that the decree can be passed and the sanction can be  obtained for transfer of immovable property and the decree in  such would be in the way the High Court has directed. ( See:  Motilal Jain v. Ramsai Devi (Smt.) and Ors. (2000 (6) SCC  420), Nirmala Anand v. Advent Corporation (P) Ltd. and Ors.  (2002 (5) SCC 481), (2004 (6) SCC 537), Aniglase Yohanna v.  Ramlatha and Ors. (2005 (7) SCC 534)].

Above being the position we find no merit in this appeal.   However, considering the long passage of time it was  suggested to respondent no.1 that he could pay an additional  sum to the appellant. Learned counsel for the respondent left  the quantum to be decided by this Court.  To a similar effect  was the suggestion of learned counsel for the appellant.   Considering the background facts, we direct that as a matter  of good gesture, let the respondent pay a sum of rupees five  lakhs to the appellant within a period of four months from  today.

The appeal is dismissed subject to the aforesaid  observations.