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PETITIONER: DELHI DEVELOPMENT AUTHORITY

       Vs.

RESPONDENT: SKIPPER CONSTRUCTION AND ANR.

DATE OF JUDGMENT25/01/1995

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. MOHAN, S. (J) JEEVAN REDDY, B.P. (J)

CITATION:  1995 SCC  Supl.  (2) 160 JT 1995 (1)   571  1995 SCALE  (1)734

ACT:

HEADNOTE:

JUDGMENT: ORDER 1.   The facts leading to this interlocutory application are as under: On  8.10.1980, an auction was held by the Delhi  Development Authority 573 (hereinafter  referred  to as the ’DDA’) of  the  Commercial Tower  Plot,  Jhandewalan, Block E, New Delhi  ad  measuring about  540  sq. mtrs.  The first respondent,  M/s.   Skipper Construction  Co. (P) Ltd. (hereinafter referred to  as  the ’Skipper’)  was the highest bidder, its bid being  Rs.  9.82 crores.   As  per  the conditions of  the  auction,  Skipper deposited 25% of the bid amount.  The said bid was confirmed by  the DDA on 14.10.1980. Skipper was called upon  to  make the  balance of payment of 75% of the bid amount  within  90 days as per the conditions of the auction. 2.The  Government  of  India issued directions  to  the  DDA accepting the request of Skipper and granting an  indulgence to it by directing the DDA to reschedule the recovery of 75% of   the  bid  amount  with  interest  from   the   Skipper. Consequent  to  this, DDA called upon the Skipper  to  enter into  fresh  agreement, licence agreement and  furnish  bank guarantees in compliance with the directions of the  Central Government. 3.On  11.8.1987, Skipper entered into a  licence  agreement, paid 50% of the original bid and secured payment of the bal- ance  50%  of the bid and interest at the rate  of  18%  per annum  thereon  by submitting bank  guarantees  for  Rs.9.82 crores,  in  terms  of which a sum  of  approximately  1.944 crores was required to be paid as each instalment.  A  total of 5 instalments was payable every six months, the first be- ing due on 15.9.1987 and the last on or about 15.9.1989. 4.   Against the first instalment of Rs.1.944     crores failing due on 15.9.1987, DDA recovered about Rs.88.76 lakhs

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by encashment of the bank guarantee on  7.12.1987.Thereafter the first respondent did not pay in terms of the agreement. 5.   On 4.10.1988, the Lt.Governor issued a direction at the request  of Skippe, deferring recovery from Skipper  of  the 2nd instalment as per the agreement dated 11.8.1987 till one month after the sanctioning of the building plans. 6.   In  August,  1989,  the  first  respondent  filed  writ petition  in the High Court of Delhi, being CWP  No.2371  of 1989.   The  principal relief sought in  the  writ  petition related to sanctioning of building plans and permission  for construction.   An  interim order was passed  directing  the Skipper  to  furnish  fresh bank guarantee  since  the  bank guarantee  furnished  earlier had lapsed.  The DDA  did  not encash  the fresh bank guarantee which was defective.   Time and  again the DDA represented to the Court that the  monies were outstanding from the Skipper and no indulgence ought to be shown to them till the payment of the outstanding  amount of  over  Rs. 3 crores under the principal  sum  itself  was deferred from time to time. 7.   On  16.2.1990, the Lt.Governor revoked the order  dated 4.10.1988 deferring the payment of instalments.  As a result the  entire sum because payable in one lump  sum.   However, this  order  of the Lt.  Governor was stayed by  the  Court. Thus,  it became necessary for the DDA to grant  conditional and provisional sanction to plans of the building subject to the payment of monies due to the DDA. 8.   On 19.3.1990, an interim order was passed by the  Delhi High  Court by which Skipper was permitted to commence  con- struction without first depositing the dues 574 of  the  DDA.  Against this order an appeal  was  preferred. The  Division Bench directed the payment of a token  sum  of Rs.5  lacs which was offered by the Skipper as a gesture  of goodwill  within 2 days; a sum of Rs.15 lacs within 15  days and  Rs.1.944  crores within one month to the DDA.   It  was further directed that the quantum of monies and the mode  of payment will be decided at the time of final disposal of the writ petition. 9.Even  this  order was not complied  with.  Notwithstanding this, the Skipper approached the Court once again for exten- sion of time to make payment and for direction to construct. The  Court extended the time by one month on 16.4.1990,  af- fording  liberty  to the DDA to encash the  bank  guarantee. The  bank  guarantee  could not be encashed  because  A  was conditional By then the entire monies had fallen due.  Those amounts had not been paid.  The DDA filed SLP (C) Nos. 6338- 6339 of 1990 against the interim orders dated 19.3.1990  and 16.4.1990  passed by the High Court of Delhi.  By  an  order dated  3.5 A 990 Ohs Court stayed further  construction  and made it conditional upon payment of Rs. 1. 1944 crores. 10   Suit  No. 1875 of 1990 was files by the Skipper  for  a direction  that the DDA ought not to insist upon payment  by cash  or  draft  and ought to be  directed  to  encash  bank guarantee.    The  learned  Vacation  Judge  issued   orders directing the DDA to invoke the bank guarantee. however, the suit was ultimately dismissed. 11.  On 21.12.1990, a division Bench of the Delhi High Court dismissed  CWP.No.2371 of 1989 directing Skipper to  pay  to the  DDA by cash or demand draft a sum of Rs.  8,12,68,789/- within  30 days; to stop construction till payment is  made; and in the event of non-payment by the Skipper, DDA would be entitled  to enter upon the property and forfeit the  monies received by the DDA. 12.  On 14.1.1991, detailed reasons for its operative  order came to be rendered by the Division Bench of the Delhi  High

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Court  with further direction giving effect to clause 15  of the licence agreement dated 11. 8.1987 that in the event  of non-compliance  of the payment by the Skipper  the  property shall  stand vested in the DDA, free from all  encumbrances, in addition to the forfeiture of the monies. 13.  Against  the dismissal of CWP No.2371 of  1989  Skipper filed SLP (C) No. 186 of 1991 before this Court. 14.  On 29.1.1991, a Division Bench of this Court passed  an interim  order  (in  which one of us,  P.B.  Sawant,J.,  was party).  It inter alia reads as under:               "(1) That the petitioners herein shall deposit               a sum of Rs.2.5 crores (Rupees two crores  and               fifty lacs only) in cash/ bank draft with  the               Delhi  Development Authority within one  month               from  today and the petitioners  will  further               deposit  similar amount by cash/bank draft  by               8th April 1991.               (ii)  That  be petitioners shall be  permitted               to resume the construction of the building  in               question  only after making the first  deposit               as stated in clause (i) above               (iii) That  if be petitions  to do  posit  the               amounts  as  aforesaid the  Delhi  Development               Authority  will be free to act  in  accordance               with  the impugned order dated 21st  December,               1990 of High Court in CWP No.2371 of 1980.               575               (iv)  ’Mat  the petitioners shall  not  induct               any person in the building or create any right               in favour of any third party.               (v)   That  the matter be listed  for  further               orders before this Court on 9th April, 1991." 15.  On 4.2.1991, in violation of the agreement and in gross contempt  of  the  above order, the  Skipper  issued  adver- tisement  in  the leading newspapers seeking to  create  3rd party rights. 16.  On  25.1.1993, SLP(C) No. 186 of 1991 was dismissed  by this  Court.   By  virtue of the above  order,  the  DDA  on 10.2.1993  re-entered  and took physical possession  of  the said  property, free from all encumbrances; monies  paid  by the Skipper were forfeited. 17.  Notwithstanding  all these, Skipper filed  yet  another suit on the original side of the High Court of Delhi,  being Suit No.770 of 1993 for the relief of: (i)  permanent   injuction   restraining   the   DDA    from interferring with the title and possession of the property; (ii) for mandatory injuction directing the DDA to  recompute the principal amount and interest payable by Skipper; (iii)     for  a declaration that the  present  calculations are wrong; (iv) for  a  declaration that  re-entry/  re-possession  and determination  of the rights of Skipper are bad in  law  and nonset; (v)  for  a  declaration  that all dues have  been  paid  by Skipper to the DDA; and (vi) a  declaration that clause 15 of the Licence  Agreement dated 11. 8.1987 is non-est and in bad in law. 18. On service of notice, DDA filed application, I.A.No.8500 of 1993 in Suit No.770 of 1993, for rejection of the  plaint as  all  the issues raised by Skipper were  resjudicata  and even  otherwise  the  plaint was barred by  law.   The  said application is pending disposal. 19.  On 8.11.93, DDA issued notices for auction of the  said property.   The 2nd respondent sought to implead  itself  in

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the  suit and on 1.12.1993 filed an application for stay  of auction which was opposed by the DDA. 20.  On  9.101993, a learned single Judge of the Delhi  High Court allowed the auction to proceed with and restrained the DDA  from  accepting or confirming the bid  at  the  auction scheduled for 10. 12.1993. Aggrieved by this order DDA filed SLP(C)  No. 21000 of 1993 against the interim order  of  the Delhi  High  Court.   Besides  the  above  proceedings,  the Allahabad High Court in a writ petition stayed the notice of auction  by  the  DDA.  The City  Civil  (Munsif)  Court  at Ghaziabad  (UP) passed orders of status qua in respect of  a flat  in  the  said building in November  1993.   Thus,  the auction to be held on 10. 12.1993 was disrupted.  Once again the attempt of DDA to auction the flats could not  fructify. Since  the  method of auction as not  yielding  results  DDA decided to invite tenders for the sale of the said  property as  an  alternative method.   Accordingly,  notice  inviting tenders   was  published  in  the  leading   newspapers   on 31.1.1994.   There  was  only  one  tender  that   too   was conditional.  Therefore, 576 the same was rejected. 21.  On 28.9.1994, the DDA once again caused publication  of notice  inviting tenders.  The DDA received  three  tenders. The   highest  acceptable  tender  was  of  M/s.    Banganga Investments  Pvt.Ltd. It is under these circumstances,  I.A. No. 9 of 1994 was filed to accord permission to confirm  the bid  for  the grant of lease hold rights in  favour  of  M/s Banganga Investments Pvt.Ltd. 23.   Mr.Arun  Jaitely,  learned  senior  counsel  for   the petitioner  urges  that the first respondent  (Skipper)  has indulged  in  abuse of process of law more than  once.   The order  of the Division Bench of the Delhi High  Court  dated 21.12.90  reported  in (1991) DLT 636 at  page  647  clearly enables  the DDA to take over plot along with the  buildings thereon  free from all encumbrances and forfeit  the  entire amount  paid  by the first respondent in the  event  of  the payment,  as  stated in the order of the  High  Court  dated 21.10.1990  was  not forthcoming.  SLP(C) No.  186  of  1991 filed  against that order was dismissed.  To  challenge  the order of the Division Bench as confirmed by this Court is  a gross abuse of the process of court. 24. The sale of space to various flat owners is in violation of  law and judicial directions.  That can confer  no  right upon  the Hat owners.  In view of the categorical  direction of the Delhi High Court that the flat shall vest in DDA free of all encumbrances, such a sale is also in violation of the agreement between DDA and Skipper entered into August, 1987. The  order of this Court made on 21.9.1992  clearly  indicts Skipper for inducting any person in building or creating any right in favour of the third party.  The alleged creation of third  party  right,  is  also vitiated  by  fraud  for  the following reasons: (i)  The judgment of the Delhi High Court (1991) DLT 636  at page 647 notes that the counsel for the Skipper Construction has contended that the interest of 870 buyers of space  will suffer. (ii)The  association  of  flat owners  claim  to  have  1200 members. (iii)M/s.   Skipper Construction in their SLP(C)No.  186  of 1991 stated that there are 815flat owners in the property. (iv)Delhi  High Court directed M/s Skipper  Construction  to furnish  a list of flat owners and on 17.11.93  M/s  Skipper Construction claimed that they have 2700 flat owners. 25.  It is obvious that bulk of the interests     created is

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clearly vitiated by fraudulent     acts of the alleged  flat owners  and/or  the Skipper.  In any case, the  DDA  has  no liability  qua  the said flat owners who have  entered  into alleged transactions on their own risk and consequences. 26.  A perusal of Application I.A.No.3 of 1994 will  clearly show  that  the agreements filed by Mrs. Anjana  Khosla  are dated  26.11.1992.  That itself will clearly  show  how  the order  dated 29.1.1991 has been violated.  Having regard  to the  sanctioned  space of 20,000 sq.meters there  cannot  be 2,700  flat  purchasers, as worked out on  that  basis  each purchaser will get 66 sq.ft. approximately. 27.  Because  of the attempt of the flat owners  to  disrupt the auction, DDA had 577 no  other option than to invite tenders.   Fortunately,  the second  tender offered is made by M/s  Banganga  Investments Pvt.Ltd.  for Rs.70 crores and 10 lacs.  That is in  keeping with  the market rate.  Hence, it is prayed that  the  offer may  be accepted and Skipper may be debt with for  abuse  of process of court. 28.  The learned counsel for the Skipper made an attempt  to justify the filing of the second suit but later gave up that argument.  By then Mr. G. Ramaswamy, learned senior  counsel came  and put forth a plea that as a last chance if  Skipper is granted time it will pay off-the entire dues. 29.  We passed the operative order on 3.1.95 stating    that the reasons will be furnished later. 30.  The reasons for the said operative order     are furnished below: From  the above narration it is clear that the  Skipper  has time and again indulged in abuse of process of court.   Cal- culated  attempts  have  been made to  circumvent  even  the orders of this Court. 31.  This  Court by its order dated  29.1.1991  specifically directed the Skipper in no uncertain terms to make the  pay- ment of Rs. 5 crores with a specified time.  There was  also a  further restrain on Skipper from creating any  rights  in the  property.  It is most surprising that inspite  of  this specific order, the Skipper would issue an advertisement  on 4.2.1991 to the following effect:                           SKIPPER                      GROUP OF COMPANIES                        [ANNOUNCES]           ISSUE of Commercial Flats for retired/             Retiring Personal/Professionals/Self              employed & other persons in our                BAU MAKAHAN  SINGH HOUSE                 JHANDEWALAN TOWER,                  JHANDEWALAN EXTN.             at highly concessional rates it  is  once in a lifetime opportunity to own  a  commercial property of your own in Bau Makhan Singh House" A prime project in the middle of high business  environment. The location of tower is as rare as the offer itself [SALIENT FEATURES] *   Ultra modem multi storeyed commercial complex  (Shopping cum office complex) *   Ground  to  3rd Floor  centrally  air  conditioned  with escalators. *  Excellent quality of construction. *  Interest free payment schedule linked with construction. *  Excellent investment returns.). 32.  Special  Leave  Petition  (Civil) No. 186  of  1991  as dismissed by this Court on 25.1.1993. Therefore, the  matter should  have  normally rested at this stage.  But,  yet  the

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Skipper would file Suit No. 770 of 1993 for various  reliefs for which CWP No.2371 of 1989 was preferred before the Delhi High  Court  which  writ petition came to  be  dismissed  on 21.12.1990 by an operative order giving detailed reasons  on 14.1.1990 33.  Then  again,  Writ Petition before the  Allahabad  High Court and one more suit before the City Civil (Munsif) Court at 578 Ghaziabad  were filed.  These were nothing but  attempts  to set at naught the orders of this Court.  No doubt, the  writ petition before the Allahabad High Court and the suit before the  City  Civil (Munsif) Court at Ghaziabad  may  be  third parties, yet the complicity of Skipper cannot be ruled  out. The Skipper issued an advertisement to the following  effect on  26.5.1992  inviting  offers  for  confirmed  booking  of commercial flats within a stone throw of Connaught Place  in relation to the property conforming with the subject  matter in this case:                        "SKIPPER GROUP                 OFFERS CONFIRMED BOOKING OF                          COMMERCIAL                 FLATS WITHIN A STONES THROW                      OF CONNAUGHT PLACE Sale of Commercial Flats BAU MAKHAN SINGH HOUSE, DEWALAN TOWER, JHANDEWALAN EXTENSION, At highly concessional rates -------------------------------- This  offers  is only for confirmed bookings, on  first  cum first served basis. TOTAL COST OF FLAT: Rs. 1,00,000 BOOKING AMOUNT: Rs. 50,000/ Balance in easy construction & time linked instalments. ONLY 50 FLAT AVAILABLE -------------------------------- 34.  The  creation  of  rights in favour  in  third  parties during  the  pendency of the proceeding is  nothing  but  an attempt  to  over-reach  or circumvent the  orders  of  this Court. 35.  On  a  persual of the records, it is  also  clear  that there  are  several individuals who have  entered  into  the agreement   to  purchase  the  premises  before  and   after 29.1.1991.  It  is  most  unfortunate  that  guiltless   and innocent   purchasers  have  been  brought  to  this   sorry situation  by  this crafty builder.  This  could  have  been avoided, had the D.D.A not handed over the possession of the suit  land  to Skipper even before receiving the  amount  in full in accordance with the agreement or at least in  accor- dance with the orders of this Court.  Truly, it has  obliged the Skipper to further the evil designs of the Skipper. 36.  The order dated 4.10.1988 passed by then Ex-Chairman of the  D.D.A  (the then Lt.  Governor of Delhi)  runs  to  the following effect:          "No.  F.4 (1) 80/Impl.          From: Director (C.L.)                    DELHI DEVELOPMENT                    AUTHORITY                    New Delhi 4/10/1988          M/s.  Skipper Constn.  Co. (P) Ltd.          23,Barakhanaba Road,          New Delhi.          Sub:  Request  for deferment of IInd instalment  in          respect   of  Jhandewalan  Tower   Plot,   Block-B,          Jhandewalan, N.Delhi.

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        Sir,               Please  refer to your request on  the  subject                   noted  above.   It is to inform you that  L.G.  has          been  pleased  to  consider your  request  for  the          deferment  of  IInd  instalment which  was  due  on          15.3.1988  for one month from the date of  approval          of  the  building  plans  subject  to  payment   of          interest  changes 18% per annum.  It may,  however,          please be noted that the offer will be withdrawn if          any delay/non          579          co-operation   for  getting  the   building   plans          finalised is noticed from your side.                             Yours faithfully,                                     Sd/                           DIRECTOR (C.L.)." 37.  It  caused  dismay to as to how the orders came  to  be passed  by exercise of powers under Section 41 of the  Delhi Development  Authority  Act.  Where was the  need  to  defer recovery  of the second instalment from Skipper when it  was admittedly in default ? When the matter has hardly contested before the Court, the D.D.A. adopted a passive attitude  and remained a bystander or an on-looker.  If only it had  taken proper  steps  at  the appropriate time, the  money  of  the unwary purchasers would not have fallen into the trap of the Skipper.  Therefore, the conduct of the officials of  D.D.A. including   its  ex-Chairman  prima  facie  appears  to   be questionable  This can be established only by a  probe  into the conduct of the affairs of the D.D.A. 38.  Turning  to the role placed by then New Bank  of  India which has now merged in Punjab National Bank, prima facie it appears to us that they have been ’far too so generous’ with public  money.  The Bank has to establish that it has  acted as a prudent banker.  The liberality in advancement of loans and  bank  guarantees creates an impression that  ’there  is something rotten’.  How, bank guarantee came to be furnished for the huge sum of the first instalment of Rs. 1,944 crores is  enigmatic.  Again, in September, 1989 how a  fresh  bank guarantee was advanced is equally enigmatic.  Since, we have directed  an enquiry into this, all that we are  constrained to observe is that caution and care in advancement of loans- bank  guarantee to Skipper Construction appear to have  been thrown to winds. 581