IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. R.S.A. No.3752 of 2003 Date of Decision: 17.5.2010 Groheven Tradex Private Ltd., Gandhidham. .......Appellant through Shri Birja Mahapatra, Advocate with Shri Kuljeet Singh, Advocate. Versus Haryana State Industrial Development Corp.Ltd. ....... Respondent through Shri Puneet Gupta, Advocate. CORAM: HON'BLE MR.JUSTICE MAHESH GROVER .... 1. Whether Reporters of Local Newspapers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? .... Mahesh Grover,J. This Regular Second Appeal has been directed against judgments and decrees dated 4.1.2002 and 15.5.2003 passed respectively by the Civil Judge (Junior Division), Chandigarh (hereinafter described as `the trial Court') and the Additional District Judge, Chandigarh (referred to hereinafter as `the first appellate Court') whereby the suit and the appeal of the plaintiff-appellant were dismissed. A suit for declaration and recovery of Rs.51,58,263/- along with pendente lite and future interest was filed by the plaintiff against the R.S.A.No.3752 of 2003 -2- .... defendant-respondent. It was pleaded that the defendant had conducted an auction for sale of industrial plots in Udyog Vihar, Gurgaon on 9.8.1996 in which the plaintiff had participated; that the bids of the plaintiff for three plots bearing nos. 633-C, 633-D and 633-E, being highest ones, were accepted; that the offers of allotment were made to the plaintiff and a sum of Rs.4 lacs each was paid by the plaintiff as part payment of the total sale consideration on acceptance of the bids; that on 11.9.1996, the defendant sent a letter to the plaintiff vide which it was required to pay 15% of the total price of the plots; that simultaneously, the defendant emphasized that the plots were to be used for software development only and that the allotment letters will be issued after receipt of the demanded money; that the plaintiff remitted the required money by way of bank drafts along with its letter dated 10.10.1996, which were received by the defendant on 14.10.1996; that the plaintiff also reiterated that the plots will be used for software development project; that the plaintiff also sought transfer of allotments in respect of plot no.633-D in favour of Astra Engineering Pvt. Ltd. And that of plot no.633-E in favour of Consortium Hotels Pvt.Ltd.; that thereafter a letter of allotment was issued in favour of the plaintiff in respect of plot no.633-C whereas it was informed that the matter of transfer of other two plots will be placed before the Board of Directors for appropriate decision; that the plaintiff also called upon the defendant through letters and requests on telephone that necessary permission as required under Chapter XX C of the Income Tax Act,1961 (for short, `Act') be also obtained as no transfer of immovable property was permissible where the value of R.S.A.No.3752 of 2003 -3- .... transaction exceeded Rs.20 lacs in the city of Gurgaon; that the defendant refused to take such permission and sent a letter dated 28.7.1998 in this regard; that ultimately the plaintiff terminated the allotment on account of the repeated refusal on the part of the defendant to obtain statutory permission under Section 269 UC of the Act and sought the refund of the amounts deposited by it. Since the defendant failed to refund the amount deposited by the plaintiff, it filed the suit for declaration that auction in respect of the aforesaid plots was null & void and also prayed that a decree for recovery of Rs.51,58,263/- with pendente lite and future interest at the rate of 22% per annum may also be passed. The defendant contested the suit and pleaded that the agreement dated 24.2.1997 was executed by the plaintiff which contained an arbitration clause for resolution of any dispute and that the Court had no territorial jurisdiction to try the same. It was averred that the plaintiff had deposited 15% of the cost of the plots as demanded by the defendant; that the plaintiff had requested for transfer of plot nos. 633-D and 633-E in the names of M/S Astra Engg. Pvt. Ltd. and M/S Consortium Hotels Pvt.Ltd. whereupon the plaintiff was asked to submit certain documents vide letters dated 3.6.1997, 27.6.1997, 19.8.1997, 29.10.1997 and 3.12.1997; that the plaintiff failed to furnish the requisite information and, therefore, regular letters of allotment were issued in favour of the plaintiff in respect of all the three plots on 30.7.1998 and 18.12.1998; that the plaintiff was further required to remit balance 75% of the cost of plots as per the time schedule mentioned in th eletters of offer dated 11.9.1996 and the agreement dated R.S.A.No.3752 of 2003 -4- .... 24.2.1997; that the plaintiff never remitted the balance 75% cost of the plots; that since the defendant is an instrumentality of the State engaged in the allotment of industrial plots which is based on certain terms and conditions and in the eventuality of non-compliance thereof, the plots are liable to be resumed and it also results in forfeiture of the money and that provisions of Section 269UC of the Act are not applicable in case of allotment of industrial plots by the defendant. The parties went to trial on the following issues:- 1. Whether the plaintiff is a private limited company incorporated under the Companies Act,1956 and the present suit has been filed through Sh.Prem Parkash Grover duly authorised and competent to file the present suit on behalf of the plaintiff?OPP 2. Whether the plaintiffs are entitled for the relief of declaration as prayed for?OPP 3. Whether the plaintiff is entitled for recovery of suit amount as prayed for?OPP 4. Whether the suit filed by the plaintiff is not maintainable in view of the agreement dt. 24.7.97?OPD 5. Whether this Court has got no territorial jurisdiction to try the present suit?OPD 6. Whether the plaintiff has violated the terms and conditions of the allotment of the building in question and as such, he is not entitled for the relief?OPD R.S.A.No.3752 of 2003 -5- .... 7. Relief. After appraisal of the evidence on record, the trial Court dismissed the suit and the first appellate Court dismissed the appeal of the plaintiff giving rise to the instant appeal. Learned counsel for the plaintiff-appellant referred to the provisions of Section 269 UC of the Act and contended that since the defendant failed to comply with the same, no transfer of the plots could have been effected and on its part, the plaintiff could not go ahead with any proceeding in view of the fact that it would have attracted the penal action. For ready reference, Section 269 UC of the Act is extracted below:- “269UC. (1) Notwithstanding anything contained in the Transfer of Property Act,1882 ( 4 of 1882), or in any other law for the time being in force, no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be prescribed, shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (hereinafter referred to as the transferee) in accordance with the provisions of sub-section (2) at least four months before the intended date of transfer. (2) The agreement referred to in sub-section (1) shall be reduced to writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer R.S.A.No.3752 of 2003 -6- .... acting on behalf of himself and on behalf of the other parties. (3) Every statement referred to in sub-section (2) shall, - (i)be in the prescribed form; (ii) set forth such particulars as may be prescribed; and (iii) be verified in the prescribed manner, and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed, by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties. (4) Where it is found that the statement referred to in sub- section (2) is defective, the appropriate authority may intimate the defect to the parties concerned and give them an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the appropriate authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days, or as the case may be, the further period so allowed, then notwithstanding anything contained in any other provision of this Chapter, the statement shall be deemed never to have been furnished.” Learned counsel for the plaintiff-appellant further referred to the fact that in the written statement, the applicability of this provision was denied and contended that it was because of this attitude of the defendant R.S.A.No.3752 of 2003 -7- .... that the transaction could not go through and hence, prayed that the suit be decreed and the amount which has been paid by the plaintiff be ordered to be refunded. On the other hand, learned counsel for the defendant- respondent contended that there is no justifiable reason for refund as the plaintiff was a speculator, who gave bids for industrial plots and which is also evident from the record. He further contended that in response to the letters of the plaintiff, its representative was informed that that was not the appropriate stage to obtain clearance under Section 269UC of the Act and that the balance 75% cost of the plots be deposited as per schedule already intimated, but it failed to do so. Learned counsel for the defendant submitted that since the plaintiff had violated the terms of the agreement dated 24.2.1997, it was not entitled to any refund. He supported the findings recorded by the Courts below and prayed for dismissal of the appeal. I have heard the learned counsel for the parties and have perused the impugned judgments, as also the record. In my opinion, the appeal is totally without any merit. The essential question that is to be determined is that at the stage when the plaintiff was required to deposited only 15% of the cost of the plots for which it had given bids and which were offered to be allotted to it, the status of the transactions was merely an offer from the side of the defendant. It is evident from letters dated 11.9.1996 (Exhibits P2 to P4) issued by the defendant. Clause 3 of one of these letters qua plot no.633-C reads as under:- R.S.A.No.3752 of 2003 -8- .... “3. You are requested to remit 15% of the bid amount (Rs.5,80,000/-) within 35 days from the date of issue of this letter of offer failing which the offer shall stand withdrawn and amount paid by you shall be forfeited.” This letter further went to stipulate in clauses 5 and 6 that on deposit of 15% amount, the letter of allotment will be issued and the balance 75% of the cost was to be deposited in lump-sum within 30 days thereof without interest and within a period of six months from the date of issue of letter of allotment in two consecutive quarterly equal instaments with 22% interest. By clause 7 of this letter, the plaintiff was required to execute an agreement within 30 days of the issue of letter of allotment. It was also mentioned in this clause that non-execution of the agreement and non-payment of bid amount within stipulated period as well as violation of any of the terms & conditions of allotment shall entail cancellation of bid/ offer/ allotment, as the case may be and forfeiture of the entire amount paid by the bidder/ allottee. Pursuant to the aforesaid offer, the plaintiff had executed agreements on 12.11.1997 and one such agreement qua plot no.633-C is on record as Exhibit-D5 and also deposited 15% as required. Clause 1 of the agreement detailed that the plaintiff had paid total 25% of the cost of the plot and that the balance 75% cost shall be paid within a period of six months in two equal instalments along with interest at the rate of 22% per annum, whereas Clause 3 of the agreement specified that the allottee shall take possession of plot within 45 days after full payment of the cost R.S.A.No.3752 of 2003 -9- .... thereof. Further, clause 4 of the agreement envisaged that on receipt of full and final payment of the cost of the plots, the defendant will execute the deed of conveyance. Thereafter, the letters of allotment qua all the three plots were issued and the plaintiff was instructed to deposit remaining 75% of the cost of the plots. The defendant is also said to have apprised the plaintiff in response to its communications for compliance of the provisions of Section 269-UC of the Act that it was irrelevant at that stage and the said provisions related to the transfer of immovable property which was not the situation in its case and that the process only pertained to the allotment of plot and did not involve transfer of property. The whole transaction, therefore, appears to have been segregated into three stages. The first one was the offer of allotment being made to the plaintiff, the second being issuance of allotment letters on payment of 25% of the cost of plots and the third being the execution of the conveyance deed subject to deposit of entire amount by the plaintiff. The transfer of the property was to have been the logical outcome of the conveyance deed to be executed in favour of the plaintiff, but since it failed to deposit balance 75% of the cost, its plea that the provisions of Section 269UC of the Act should have been complied with in the first instance by the defendant and only then, it was required to pay the balance price of the plots, is meaningless and cannot be appreciated. That apart, the plaintiff was clearly in the knowledge of the conditions of offer of allotment, according to which it was required to make R.S.A.No.3752 of 2003 -10- .... the payment as per the schedule agreed to by it. It could not, therefore, scuttle the entire process by saying that the defendant should comply with the particular provision of law before the payment of balance cost of the plots was to be made. Learned counsel for the plaintiff-appellant very strenuously submitted the fact that a writ petition was filed for directing the defendant to comply with the provisions of Section 269-UC of the Act in which also, the stand taken by the defendant was that it was not required to comply with those provisions and ultimately, the stand of the plaintiff was vindicated when the functionaries of the defendant concluded that in all such transactions, the requirement of compliance of the aforesaid provisions was essential. I am afraid, this submission does not affect the case of the plaintiff in view of what has been stated above. There is, indeed, no doubt that the provisions of the Act have to be complied with, but it is to be seen at what stage. It is imperative to understand for the reason that the case of the plaintiff stems from the grievance that the defendant failed to discharge its obligation by non-compliance of the provisions of Section 269UC of the Act. As mentioned above, only offer of allotment was made to the plaintiff and the transfer of property was subject to payment of full and final payment of the cost and, therefore, the appropriate stage for compliance of the provisions of Section 269UC of the Act did not reach and the defendant was entitled to forfeit the amount deposited by the R.S.A.No.3752 of 2003 -11- .... plaintiff on violation of the terms and conditions of the agreement/ offer of allotment. Till the payment of the full cost of the plots, the defendant had every right to have full control over the plots as a right was reserved to cancel the offer of allotment in case of violation of any of the terms and conditions of the agreement. On the basis of the above discussion, it is concluded that the impugned judgments do not warrant any interference and the findings contained therein deserve to be upheld. Accordingly, this appeal fails and is dismissed. May 17,2010 ( Mahesh Grover ) “SCM” Judge