http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: INDU KAKKAR

       Vs.

RESPONDENT: HARYANA STATE INDUSTRRAL DEVELOPMENTCorporation Ltd. & Anr.

DATE OF JUDGMENT:       02/12/1998

BENCH: S.B.Majmudar, K.T.Thomas

JUDGMENT:

       Petitioner  who virtually purchased a litigation has now reached the  Supreme  Court  seeking  special  leave  to appeal  against a judgment by which the High Court of Punjab and Haryana has dismissed a  Second  Appeal,  The  suit  was filed  by  M/s  York  Printers  and  during its pendency the present petitioner bought  the  rights  which  the  original plaintiff  had  in  the  subjeict-matterof  the  suit  for a consideration of rupees  forty  thousand.    Petitioner  got himself  Impleaded  as additional plaintiff and from then on It was the petitioner who  fought  the  litigation,  as  the original plaintiff has vacated from the scene.

       M/s  York  Printers  filed the suit on the following facts:   On   28.7.1997   a   plot   of   land   admeasuring approximately 450  Sq.  metres has been allotted to M/s York Printers ( which will hereinafter  be  referred  to  as  the allottee)  as  per  a  letter of allotment issued by Haryana State Industrial Development Corporation United Corporation" for short).  The said plot is situated within the industrial complex at Dundahera in Gurgaon  District  (Haryana).    The price   for   such   allotment   was  tentatively  fixed  as Rs.l3,455/- and the allottee was put in possession  thereof. On  completion of remittance of the entire amount payable by the allottee a registered Deed of Conveyance was executed on 10.12.1982 by the Corporation in favour of the allottee.  In fact  the  said  plot  was  transferred  by  Haryana   Urban Development  Authority  (MUDA  its acronym) in favour of the Corporation for facilitating the  objects  and  purposes  of Haryana  Urban  Development (Disposal of Land and Bulldings) Regulation 1978.

       As the allottee falled to establish  the  industrial unit  till  the  end  of  1983  a  notice  was issued by the Corporation on 6,1,1984 calling upon the  allottee  to  show cause why  the  plot  should  not  be resumed.  In the reply which allottee sent to the Corporation certain reasons  were highlighted   for   showing   why   It  could  not  complete construction of the building  for  the  proposed  industrial unit.   But the Corporation was not satisfied with the reply and hence on 16.3.1984 the Corporation resumed the plot,

       The allottee thereafter made representation  to  the Corporation   for   revocation   of  the  resumption  order. According to the allottee the construction work was actually commenced but Its progress was hampered on account of  power

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

supply not being made available by Haryana State Electricity Board  for  more  than  two  years,  besides  the difficulty regarding availability of water.  However,  the  Corporation was  unwilling  to revoke the resumption order and hence the representations made by the allottee were rejected.

       On  3.8.1985 the allottee filed the civil suit for a declaration that the order of resumption is illegal and void and also for certain other consequential  reliefs.    During pendency  of  the  suit the petitioner got a registered sale deed from the  Allottee  on  27.12.1989  of  his  rights  in respect of the plot in question and got herself impleaded as second plaintiff in the suit.

       Trial  court  decreed  the  suit  and  declared  the resumption  order  as   "manifestly   illegal   and   beyond jurisdiction".   But  the  first appellate court revised the decree and dismissed the suit holding that  the  Corporation was  well within its power to resume end that the resumption was made in accordance with the terms  of  allotment.    The first  appellate court further found that the petitioner has no focus stanch’ as the sale in her  favour  was.    hit  by Section 52 or the Transfer of property Act.

       In the Second Appeal petitioner  assailed  the  said findings before  the  High  Court.  Learned Single Judge who heard  the  appeal  agreed  with  the  contention   of   the petitioner  that  Section 52 of the Transfer of Property Act is not a bar against transferring  property  pendente  lite. However, learned judge has observed the following:

          "The  question  in  this case is not in regard to            validity of the Sale of plot to second  plaintiff            by  the  allottee,  but  the  question is whether            second plaintiff has any locus standi to question            the order of resumption  which  had  been  passed            against the allottee, in my view second plaintiff            has  no  locus standi to question the validity of            order resuming the plot.    There  have  been  no            privity  of contract between second plaintiff and            HSIDC.  Contract was between allottee  and  HSIDC            and the  same  was  subject to fulfillment:  of            ’certain terms and conditions  by  the  allottee.            Since  the  allottee failed to abide by the terms            and conditions of  allotment,  plot  was  rightly            resumed by  HSIDC.    On  resumption  of plot, it            became  the  absolute  property  of   HSIDC   and            allottee  had  been  left with no right, title or            interest in the property which he could  transfer            to second plaintiff."

       The  High  Court  further  noted that the plot which could fetch only a bid  amount  of  Rs.l0,000/-  per  square meter has subsequently registered an escalation reaching its price up  to  Rupees forty five lakhs.  Accordingly the High Court  held  that  petitioner   purchased   the   plot   for speculative  purposes and whence, "no indulgence of any kind can be shown by the court to a claim which Is not bona fide, nor can the court come to the aid  of  a  person  trying  to resile  from  the  express obligation undertaken by him With the State or Its agencies".

       Learned counsel for the respondent did not make  any endeavour  to  show  that  Section  52  of  the  Transfer of Property Act  (for  short  T.P.    Act)  Is  a  bar  to  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

petitioner  to  purchase  the  subject-matter  of  the suit, presumably because the bar contained therein Is Intended not to affect the rights of any other party  thereto  under  any decree  or  order which maybe made therein, except under the authority of the court and  on such terms as it may impose.

       fced  counsel  for the petitioner contended that the Corporation has no  power  of  resumption  inasmuch  as  the Corporation  has  failed  to prove that there Is any binding clause  In  the  Deed  of  Conveyance  which  empowers   the Corporation to  do so.  Alternatively, It was contended that the  allottee  cannot  be  said  to  have  controverted  any condition  regarding  construction  of  building on the plot since the allottee has  already  commenced  constructing  an edifice thereon.    A  further  argument  advanced  Is  that inability of the allottee to establish the  Industrial  unit was  due  to  causes  beyond his control and, therefore, the Corporation was  duty  bound  to  grant  more  time  to  the allottee.

       The  prefatory  portion  of  the  Deed of Conveyance which was executed on 10.12.1982 between the Corporation and the allottee contains the following statements:

       "Whereas the site hereinafter described and intended         to be hereby conveyed is owner by the vendor in full         proprietary rights.

       Whereas  the  vendor  has sanctioned the sale of the         said site to the  transferee  in  pursuance  of  its         application dated 17^ January, 1977.

       The said site situated in the industrial area was to         be used for the purpose of industry only, the  terms         and  conditions  relating  to  the  said  sale  were         settled in the agreement to sell.    This  agreement         was   executed  on  6""  August,  1979  between  the         parties."

               The proforma of the agreement is produced            as Annexure P42.  Petitioner cannot  escape  from            the position that he is to abide by the terms and            conditions of the agreement admitted to have been            executed between  the parties.  If that agreement            was not in accordance with the proforma it is for            the petitioner to show that there was some  other            agreement which  is  different from it.  However,            petitioner has not  even  chosen  to  adduce  any            evidence in   that  line.    Hence,  we  have  no            difficulty to  believe  that  the  agreement  was            executed In  the  said proforma.  Clause 7 of the            aforesaid agreement reads thus:

       "That the allottee shall  start  on  the  said  site         construction  of  the  building  for  setting up the         aforesaid Industry within a period of 6  months  and         complete  the  construction thereof within two years         from the date of Issue of the allotment letter,  the         plans of which shall be In accordance with the rules         made and with the directions given from time to time         by  the  Town and Country Planning and Urban Estates         Department in respect and approved by the  Director,         Town Country Planning Department or any other office         duly authorized  by him In this behalf.  Further the         allottee   shall   complete   the    erection    and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

       Installation  of  machinery  and commence production         within  a  period  of  3  years  from  the  date  of         allotment  of  plot falling which the plot be Iiable         to be resumed by the corporation.

       Provided  that  the  time  under  this clause may be         extended by the  M.D.,  HSIDC  Ltd.    In  case  the         failure to complete the building and commencement or         production by the stipulated date was due to reasons         beyond the control of the allottee.

       The  Corporation  shall  also have the right to call         for periodical reports every  six  months  from  the         allottee  starting  from  one year after the date of         delivery about the progress In implementation of the         project and If after hearing  the  allottee  In  the         opinion of  the  M.D.   the progress, Is found to be         unsatisfactory he may order the plot resumed."

       On 6.1.1^84 the Corporation Issued a notice  to  the allottee  calling upon him to show cause why the plot should not be resumed as per clause 7 of  the  agreement.    It  Is useful to extend the contents of the said notice as under:

       "You  wire  allotted  plot  no.70  in the Industrial         complex at Udyog Vlhar Phase-1 on 28.7.77.    It  is         Indeed disheartening to note that you have not taken         any step towards the Implementation of your proposed

       industrial unit thereby defeating the basic  purpose         of allotment 1 your favour.  Retaining an Industrial         plot  without  any  firm  programme  Is  against the         tenets of Industrialisation.  Your Inaction deprives         a genuine entrepreneurs of an opportunity to set  up         his unit.   We are, therefore, constrained, to issue         a show cause notice to  you  as  to  why  your  plot         should   not  be  resumed  under  clause  7  of  our         agreement.   Your  explanation  should  reach   this         office  positively  within  30  days  of the date of         Issue of their letter falling which your plot  would         stand   automatically   resumed   and   no   further         correspondence will be entertained on this subject

       Allottee who received notice sent a reply to  It  In which a plea was made for helping the allottee to set up the Industrial plant.    The  allottee  has practically admitted that It had to abandon the scheme  for  establishment  of  a plant  A reproduction of the reply will show the clear stand of the allottee.

       "We  thankfully  acknowledge  the  receipt  of  your         letter No.6218 dated 6.1.1984 and wish to inform you         that  even  after  our  repeated  efforts  the power         connection  Is  not  Installed  In  our  constructed         premises.   We had to abandon our scheme of shifting         our workers and plants to Delhi  since  no  drinking         water supplies  are  provided In the area.  However,         we have  managed  the  total  investments  from  our         sources in  land,  buildings,  machines,  etc.   and         functioning of our unit shall depend on supplies  of         power and  water.    Will  you please help us in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

       setting up of the plant.  We have met your Shri R.K.         Kaushik and Mr.    B.S.    Ojha  high-lighting   the         problems of  water  and  power.    He assured us for         prompt action.  Please advise us what to do and what         are you going to do for us.  Please acknowledge  the         receipt  considering  the  fact that we have already         obtained the Conveyance Deed of the said plot."

       It  is,  therefore,  clear  from the said reply that allottee did not dispute that It has  not  taken  any  steps towards implementation  of the proposed Industrial unit.  So the petitioner who Is only  a  transferee  of  the  allottee cannot claim any other right which even the allottee did not have.

       However, the allottee has contended before the trial court  that  clause  7  of the Agreement Is unenforceable In view of Section II of the TP Act.  But that  contention  was repelled   according  tons  rightly,  because  the  Deed  of Conveyance had not created any absolute interest  In  favour of the  allottee  In  respect  of  the plot conveyed.  For a transferee to deal with interest in the property transferred as if there were no such direction" regarding the particular manner of enjoyment  of  the  property,  the  Instrument  of transfer should evidence that an absolute Interest In favour of the  transferee  has  been  created.    This  Is  clearly discernible from Section II of the  TP  Act.    The  Section rests  on  a principle that any condition which is repugnant to the  interest  created  Is  void  and  when  property  Is transferred  absolutely  it  must be done with all its legal Incidents.  That apart, Section 31 of the TP Act  Is  enough to meet the aforesaid contention.  The Section provides that on a transfer of property an interest therein may be created with  the  condition superadded that It shall cease to exist In case a specified uncertain event shall happen, or in case a specified uncertain event shll  not  happen,  or  in  case specified uncertain  event  shall  not happen.  Illustration (b) to the Section makes the position clear, and It reads:

       "A transfers a farm to B, provided that.  If B shall         not  go to England within three years after the date         of the transfer, his  interest  in  the  farm  shall         cease.   B  does  not  go to England within the term         prescribed.  His Interest in the farm ceases."

       All that Section 32 of the Transfer of Property  Act provides  is that in order that a condition that an interest shall cease to exist may be valid, It Is necessary, that the event to  which  It  relates  be  one  which  could  legally constitute  the condition of the creation of an Interest^ If the condition is invalid It cannot be set up as a  condition precedent for crystallization of the interest created .  The condition  that  the  Industrial  unit  shall be established within a specified period falling which the  Interest  shall cease.  is a valid condition.  Clause 7 of the Agreement

       According to the High  Court,  the  petitioner,  who claims  to  be  the  assignee  of the allottee, has no locus standi to question the validity of the order of  resumption. Learned  counsel  for  the petitioner has seriously assailed the said view of the high Court.  He contended  that  having found  that  Section  52 of the TP Act Is not a bar the High Court should have further found that there Is no  other  bar against  assignment  of the plot in favour of the petitioner

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

and hence the petitioner could step Into the  shoes  of  the allottee  and  claim  whatever  that the allottee could have claimed.

       In  fact,  the  question is not whether there is any legal bar for the allottee to make assignment; of  tne  plot The  real question is whether the assignee has a legal right to claim performance of any part from the allottor.   Answer of  the  said  question depends upon the terms of allotment. Assignment by act of parties may cause assignment of  rights or of  liabilities under a contract.  As a rule a party to a contract cannot transfer his labilities under  the  contract without consent  of the other party.  This rule applies both at the Common Law and In Equity (vide para 337 of  Halsburys Laws of  England  ,  fourth  Edition  ,  part  9).   Where a contract involves mutual rights and obligations an  assignee of  a right cannot enforce that right without fulfilling the co-relative obligations.  The aforesaid principle  has  been recognized  by a Constitution Bench of this Court In Kkardab Company Ltd.  vs.  Raymon and Co.  India (Pvt) Ltd [AIR 1962 SC 1810].  T.L.  Venkataramlah J.  who spoke for  the  Bench has observed thus:

"The law on the subject is well settled and might be  stated In simple  terms.   An assignment of a contract might result by transfer either of  the  rights  or  of  the  obligations thereunder.    But   there   Is  a  wellrecognised  derctfen he-tweanr these two classes  of  assignments.    As  a  rule obligations under  a  contract:    cannot be assigned except with the consent of the promisee, and when such  consent  Is given,  it  is ready a novation resulting in substitution of liabilities.  On the other hand rights under a contract  are assignable  unless the contract is personal In its nature or the rights are incapable of assignment wither under the  law or under an agreement between the parties."

       Here the Agreement  was  entered  into  between  the Corporation and the allottee as a sequel to the request made by  the  allottee  to  give  him  an industrial plot for the purpose of setting up an industry.  Corporation reclprocated to the request on being satisfied that the allottee was able to carry out the obligations so as to accomplish the purpose of allotment.  The assurance given by of the  allottee  that he  shall  start construction of the building for setting up the industry within a period of six months and complete  the construction thereof within two years from the date of issue of allotment letter was verified and found acceptable to the corporation  and  then  only  the  Corporation has chosen to enter into the agreement with the allottee.  It is a  matter of  confidence which the Corporation acquired in the promise made by the allottee that  the  latter  would  perform  such obligations.  If the allottee Graduates from the scene after inducting  someone else into the plot without consent of the Corporation it is not legally permissible for  the  inductee to compell the Corporation to recognize him as the allottee.         Viewing the assignment from the aforesaid  angle  we are  in agreement with the conclusion of the High Court that petitioner has no locus standi to question the  validity  of the  order  of  resumption.  Hence, the impugned judgment is unassailable as from that angle also.         The Special Leave Petition is accordingly dismissed.