SUPREME COURT OF INDIA
Shri Vishwa Nath Sharma
Vs.
Shyam Shankar Goela & Anr.
C.A.No.6700 of 2007
(Arijit Pasayat and Tarun Chatterjee,JJ.,)
26.02.2007
JUDGMENT
Arijit Pasayat, J.
1. 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 Sun 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.
2. Background facts in a nutshell are as follows:
3. 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 documents. 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 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.4. 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. 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
Jamshedupur 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, a 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 the came of 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 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.2.5. 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.
“7. 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 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.
7. The High Court did not accept the contention that since there was some restriction on transfer, that disentitled the plaintiff from obtaining a decree for specific performance of the contract.
8. 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 and
resignation of the sale deed will be as per law."
9. 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.
10. 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.
11. 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.
12. 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 doe snot
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.13. The Privy council in Motilal
v. Nanhelal,1 , 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,2, and R.C. Chandiok v. Chuni Lal Subharwal 3.
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 performance. High Court
ralied upon its decision in Mrs. Chandnee Widya Madden v. Dr. C.L. Katil
(supra) and Maharo Saheb Shri Bhim Singhji v. Union of India4 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.
14. In Ramesh Chandra Chandiok and Anr. v. Chuni Lal Sabharwal (dead)3 by
his legal representatives and Ors. Â 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 Ors5.
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 was directed. (See: Motil Jain v. Ramsai Devi
(Smt.) and Ors6., Nirmala
Anand v. Advent Corporation (P) Ltd. and Ors.7,
 , Aniglase Yohanna v. Ramlatha and Ors.8
15. 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.
16. The appeal is dismissed subject to the aforesaid observations
Judgment Referred.
1(1930) All (PC) 0287
2AIR 1964 SC 0978
3AIR 1971 SC 1238
4AR 1961 SC 0234
5AIR 1954 SC 0075
6(2000) 6 SCC 0420
7(2002) 5 SCC 0048
8(2005) 7 SCC 0534