RFA 96/2002. Page 1 of 36 * IN THE HIGH COURT OF DELHI AT NEW DELHI + RFA No.96/2002 % Reserved on: 28th September, 2011 Pronounced on: 5th October, 2011 COL. A.B.SINGH(THROUGH L.RS) ...... Appellants Through: Mr. Sanjeev Kumar Saxena, and Mr. Mukesh Kumar, Advocates VERSUS SHRI CHUNNILAL SAWHNEY & OTHERS ...... Respondents Through: Ms. Mala Goel, and Mr. Yashpal Singh, Advocates CORAM: HON’BLE MR. JUSTICE VALMIKI J.MEHTA 1. Whether the Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes VALMIKI J. MEHTA, J 1. The challenge by means of this Regular First Appeal, is to the impugned judgment of the trial court dated 9.1.2002, and by which judgment, the court below has decreed the suit for specific performance of the plaintiffs, and who are now represented by the respondents no.1 to 9 - the legal heirs of the original plaintiffs. 2. The reference in this judgment to the appellants will include and mean reference to the defendant no.1-seller. The reference to the respondents RFA 96/2002. Page 2 of 36 would mean reference to the plaintiffs. This is for the sake of convenience inasmuch as not only both the original plaintiffs (the original respondents no.1 and 2 in this appeal) have expired during the pendency of the present appeal, even the original appellant, and who was the defendant no.1 in the trial court, has also expired during the pendency of the appeal. The legal heirs of the original appellant/defendant no.1 and the original respondent nos. 1 and 2/plaintiffs are on record. For completeness on this aspect, it may be stated that in the present appeal Delhi Development Authority (DDA) in the original memo of parties in this appeal was the respondent no.3, and which was sued as the defendant no.2 in the suit. DDA was made a party in the suit because the subject plot was a leasehold plot given on lease by the DDA. This respondent in the present judgment is referred to as DDA. 3. The facts of the case are that the plaintiffs/respondents as proposed buyers, entered into an Agreement to Sell dated 13.7.1977 (Ex.P-3) with the defendant no.1, as proposed seller, for the subject/suit plot admeasuring 209.032 sq. mts. having municipal number D-211, Malviya Nagar Extension, now known as Saket, New Delhi for a total sale consideration of Rs.1,60,000/-. The plaintiffs/respondents paid to the defendant no.1 a sum of Rs.90,000/- by way of four cheques as part sale consideration at the time of entering into the Agreement to Sell. The Agreement to Sell was got registered before the Sub-Registrar two days later on 15.7.1977, and on which date the possession of the suit property was delivered to the RFA 96/2002. Page 3 of 36 plaintiffs/respondents by the defendant no.1. The balance price of Rs.70,000/- was to be paid by the plaintiffs at the time of execution and registration of the sale deed before the Sub-Registrar, Delhi. The defendant no.1 as per the agreement had undertaken the responsibility to obtain all the necessary permissions from the concerned authorities including the DDA for conveying the suit property to the respondents. As per the Clause 6 of the Agreement to Sell, after obtaining the necessary permissions for execution of the sale deed from the Income Tax Authority and the Local Authority i.e. the DDA, the defendant no.1 was to intimate the respondents of having obtained such permissions. Thereafter within a period of 30 days of receipt of such intimation by registered post AD, the respondents/plaintiffs were to get the sale deed executed and registered in the office of the Sub-Registrar, New Delhi and make payment of the balance sale consideration. It was the case of the respondents/plaintiffs that the defendant no.1 applied to the DDA for obtaining the permission, but the defendant no.1 failed to get the necessary permission, and hence the sale deed could not be executed and registered. It was the case of the plaintiffs that they were always ready and willing and continued to be ready and willing to perform their part of contract for making of payment of balance consideration of Rs.70,000/-. Ultimately, on the failure of the defendant no.1 to execute the sale deed, a legal notice dated 18.2.1985 was served, which proved futile, and hence the subject suit for specific performance was filed. RFA 96/2002. Page 4 of 36 4. The defendant no.1 contested the suit by contending that the Agreement to Sell was violative of Section 23 of the Indian Contract Act, 1872 inasmuch as, as per the perpetual lease deed executed by the DDA in favour of the defendant no.1, the property could only have been transferred after 10 years of 20.1.1972 and therefore, the Agreement to sell entered into on 13.7.1977 was against public policy being against the terms of the perpetual lease. It was also pleaded that no notice was served upon the DDA prior to filing of the suit and consequently the suit was barred under Section 53-B of the Delhi Development Act, 1957. It was further pleaded that the suit was barred by limitation. It was also pleaded that the plaintiffs were not ready and willing to perform their part of the contract and they were guilty of breach of contract. Finally, it was pleaded that the relief of specific performance should be denied because the same is a discretionary relief and on account of delay, the defendant no.1 has lost out on receiving of the balance consideration which ought to have been received in the year 1977 itself thereby making it unjust and inequitable to grant specific performance. 5. After the pleadings were complete, the trial court framed the following issues:- ISSUES: “1. Whether the suit of the plaintiff is within time? 2. Whether the agreement date: 13.7.77 is illegal, void and unenforceable?OPD RFA 96/2002. Page 5 of 36 3. Whether the defendant had applied to the DDA seeking permission to transfer the property in question in terms of the agreement dated : 13.7.1977?OPD. 4. Whether the defendant/DDA had refused to grant the permission as stated in para 1 of the preliminary objections of defendant no.1 and the plaintiff was duly informed? 5. Whether the plaintiff had been willing to perform his part of the contract? OPP. 6. Whether the plaintiff is entitled to a decree of specific performance? 7. Relief.” ADDITIONAL ISSUES: “1. Whether the agreement to sell was contrary to the terms of perpetual lease deed and is hit by Section 23/24 of the Indian Contract Act?OPD 2. Whether the suit is barred by Section 53 B of D.D.Act?OPD 3. Whether the suit is barred under Article 54 of Limitation Act?OPD” 6. The main issues which were argued before this court, and also before the trial court were issues pertaining to the suit being barred by limitation, that the relief should not be granted because DDA had been impleaded only after filing of the suit, the Agreement to Sell was void as it was violative of Section 23 of the Contract Act, 1872, the suit being barred on account of failure to give requisite notice to the DDA under Section 53-B of the Delhi Development Act, 1957 and finally that the discretionary relief for specific performance ought not to be granted in the facts of the present case. RFA 96/2002. Page 6 of 36 7. Ordinarily, I would have referred to in detail the submissions made by the counsel for the appellants in this court with regard to each of these issues and the response thereto by the counsel for the respondents, however, since the impugned judgment exhaustively deals with each of these issues, arguments of the parties, giving thereafter the appropriate findings thereon, I would thus seek to reproduce the relevant paras of the impugned judgment, inasmuch as, I agree with the reasoning as contained in these paras. Wherever the additional reasoning is required to be given, I am adding such additional reasoning in the relevant portions of this judgment. Before reproducing the paras I note that there are some errors of grammar and syntax in certain portions of the impugned judgment and which be overlooked. 8. With respect to the issue of limitation, the court below has observed as under:- “10. Issue no.1 and Addl. Issue no.3: In the written statement, it is alleged that suit of the plaintiff is barred by time and merits dismissal on this ground alone. According to Article 54 of Limitation Act, the suit requires to be filed within the period of 3 years. Learned Counsel for the defendant has contended that the defendant was always ready and willing to perform his part of contract and in support of this contention he cited various letters issued by defendant no.1 to the office of DDA and other higher authorities. Letter Ex.D1W1/P-1 to Ex.D1W1/P-5 dated:9.8.77, 1.5.78, 26.9.78, 23.8.79 and 25.5.82 respectively were issued by Col. A.B.Singh requesting the office of DDA to grant permission to execute the sale deed. When no positive response was received, he wrote letters Ex.D1W1/P-6 dated: 31.8.81 to the Prime Minister RFA 96/2002. Page 7 of 36 of India, Ex.D1W1/P-8 dated: 14.2.84 to the Vice-Chairman of DDA. Some of the letters of Col. A.P.Singh were replied by DDA. The record was summoned from the office of DDA by issuing notice Ex.D1W1/3 dated: 16.9.2001 through postal receipts and AD cards Ex.D1W1/4 to D1W1/7. Some of the letters were produced and the same are Ex.D1/2 dated 4.4.78 Ex.D1W1/2 dated: 14.9.78 Ex.D1W1/1 dated 7.11.78 and Ex.D1W4/4 dated : 19.8.81. These letters were issued by DDA to Col. A.B.Singh and in all these 4 letters permission to sell was rejected by the DDA on the ground that 10 years have not passed since the execution of lease deed as per conditions of lease. Therefore, ld. counsel contended that the date of refusal are 4.4.78, 4.11.78 and 19.8.81, as above mentioned, the period of limitation of 3 years will commence from the last letter of refusal dated: 19.8.81. The present suit was filed much beyond the period of 3 years i.e. on 12.3.85 hence the suit of the plaintiff is liable to be dismissed on this ground alone. On the other hand, ld. counsel for the plaintiff has refused the above contention. He is relying upon para 14 of the written statement of DDA, in which DDA has submitted that defendant no.1 has never been refused the grant of sale permission. DDA still can allow the execution of conveyance lease only after the required formalities are completed and 50% of unearned increase in the value of plot is deposited. Besides the above pleadings in the written statement, ld. counsel has further gone to the extent that at the most, the time will commence from the letter dated: 16.1.85 written by Col. A.B.Singh in which he asked to vacate the premises. In reply of this, a letter dated: 18.2.85 was written by the plaintiffs asking the defendant no.1 to perform his part of agreement. Immediately, thereafter, the suit was filed on 18.2.85. Thus, it has been contended that suit is within the time. 11. From perusal of the agreement, that time is not the essence of the contract. Clause 6 of the agreement Ex.P-3 dated: 13.7.77 is reproduced as below: “That all the legal requirements relating to the execution of the Sale Deed such as taking permission to sell, income-tax clearance Certificate, from the local authorities shall be the obligation of the Vendor of the First Part at this RFA 96/2002. Page 8 of 36 own cost. After obtaining the sale permission he shall intimate the same to the Vendees of the Second Part and within a period of 30 days from the date of the Receipt of such intimation by Registered Post under A.D. the vendees of the second part shall get the Sale Deed executed and registered in the office of the Sub Registrar, New Delhi. 12. The above Clause states about the completion of formalities from the government department such as taking the permission to sell, income tax clearance certificate by the vendor and after obtaining the same he shall inform the vendee within 30 days by registered AD post for registration of sale deed. It further shows that as and when the permission is received, he shall inform to the vendee. Thus, the information of refusal to grant permission is not included in the agreement. In the first para of agreement it is stated that it is the vendor who has to act and the role of vendee comes later on. It appears from the correspondence Ex.P4,P5 & Ex.D1/5 to Ex.D1/22 from the side of plaintiff and Ex.D1W1/P1 to Ex.D1W1/P8 from the side of defendant, that both were eager to get the sale deed executed. But the main hurdle coming in the way was the completion of 10 years from the lease deed dated: 20.1.72 Ex.D2/1, Clause 4(a) of conditions of lease is reproduced as below: “The Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the Residential plot except with the previous consent in writing of the lessor which he shall be entitled to refuse in his absolute discretion. Provided that such consent shall not be given for a period of ten years from the commencement of this Lease unless, in the opinion of the Lessor, exceptional circumstances exist for the grant of such consent.” 13. Accordingly to the above clause, the parties are bound by the condition of completion of 10 years from the date of lease. No permission could be given before 10 RFA 96/2002. Page 9 of 36 years, provided there are exceptional circumstances. There was no exceptional circumstances accrued to the parties as per replies received by parties from the DDA. However, from reading of all the letters mentioned above, both the parties, without any exception, tried their utmost to get the sale permission from the DDA. It also appears from the letters of the defendant that he was in need of money during the initial period of this agreement and he was desperately interested to execute the sale deed prior to completion of 10 years from the date of lease. Similarly, the plaintiffs were also interested to get the sale permission from the DDA and that is why he mentioned in several letters to the plaintiffs to exert his influence for getting the work done. There are sequence of letters from both the parties conveying their intentions for the execution of sale deed. The defendant happens to be in active service in Army and most of the time he remained out of Delhi. Correspondence entered into between them about the progress of obtaining the permission of sale from the DDA. The plaintiffs being stationed in visited the office at Delhi on several occasions and apprised the position from time to time to the defendant, wherever he remained posted in the Army. The letters posted by the plaintiffs to the defendant are Ex.P4,P5, D1/5 to D1/22 and the same were filed by the defendant on record and admitted by the plaintiffs during the stage of admission denial of documents. The letters have been posted in the span of period from 29.9.77 to 1.4.84. Similarly, letters Ex.D1W1/P-1 to D1W/P-8 were written by Col. A.B.Singh to various concerned authorities relating to grant to sale permission and those authorities included income tax office, Vice-chairman of DDA, Lt. Governor of Delhi, Commissioner Land DDA, Prime Minister of India, President of India etc. These letters were posted in the above authorities with the request to expedite the sale permission and for waiving the payment of unearned increase. Although these letters were denied by the defendant during the stage of admission/denial of documents but the defendant could not escape from denying his signatures on all the letters. In fact these letters were written by the defendant no.1 and have been denied with ulterior motive. These letters are admitted in evidence. Despite, the aforesaid correspondence in between the parties and also with the govt. authorities, no RFA 96/2002. Page 10 of 36 permission to sell was received. Further, the letters were received from the DDA regarding the reply from DDA Ex.D1/2 dated : 4.4.78, Ex.D1W1/2 dated: 14.9.78, Ex.D1W1 dt: 7.11.78 and Ex.D1W4/A dated 19.8.81. From these letters it has been interpreted by learned counsel for the defendant that the refusal for grant of permission to sell was sent by DDA and has contended that the period of limitation will commence from these dates. In this respect learned counsel for the defendant is relied upon 1997 IV A.D. S.C. 380 IN VENKAPPA VS. KASAWWA and the relevant extract is reproduced as below: “Thus, it could be seen that the suit document itself was denied as early as in 1971. As a consequence mere issuance of notice dated: August 22, 1972 does not stop the running of limitation period. Once the same has began to run it runs its full course. Therefore, the suit having been filed after the expiry of 3 years from the date of the knowledge, of denial, by operation of Article 54 of this Schedule to the Limitation Act, 1963, the suit is hopelessly barred by limitation.” 14. In the above case, the denial was from the side of vendor whereas in the instant case, the denial of grant of permission was from the DDA and that too, due to non completion of period of 10 years from the date of execution of perpetual lease. The aforesaid letters issued by the DDA are not denial for obtaining permission to sell but these letters referred to the compliance of the provisions of terms and conditions of lease deed. The terms and conditions are that the period of 10 years must have expired after the issuance of perpetual lease deed and 50% of the unearned increase must be paid. The parties were initially interested to seek the said permission but because of aforesaid two conditions the matter was delayed. Otherwise any number of times the letters were written to DDA either by the plaintiffs or by the defendant, prior to completion of 10 years from the execution of perpetual lease, for the purpose of grant of permission to sell, the reply would have been always in negative. Therefore, the 4 aforesaid letters dated: 4.4.78 Ex.D1/2, dt:4.9.78 Ex.D1W1/2, dated: 7.11.78 Ex.D1W1/1 and dated: 19.8.81 Ex.D1W4/A cited by ld. counsel for the defendant no.1 would not be the dates from which the RFA 96/2002. Page 11 of 36 period of limitation would begin to run. Besides this, the agreement to sell does not provide any time limit for execution of sale deed as the time was not the essence of contract. Both were unable to get through with the conditions to sell i.e. 10 years were not completed by that time according to clause 4A of perpetual lease deed. Thus, the time passed and the circumstances changed with the passage of time. Nobody knows when the mind of a person may change. Defendant admittedly wrote the letter dated : 16.1.85 for taking back the possession of the premises in question. This is the time to be considered as the final words from the defendant that he did not want to continue with the agreement to sell and from this time the period of limitation will begin to run for the filing of suit within the period of 3 years under Article 54 of Limitation act. The present suit was filed on 12.3.85 immediately after the receipt of final letter dated: 16.1.85. Thus, the suit of the plaintiff is within the period of limitation under Article 54 of Limitation Act. (underlining added) 9. A reference to the aforesaid paras read with Article 54 of the Limitation Act, 1963 shows that the following conclusions have rightly been drawn by the court below:- (i) Time of performance was not the essence of the contract inasmuch as the sale deed was to be executed after uncertain events/dates of the permissions to sell being obtained by the defendant no.1 from DDA and the Income Tax Authority. After obtaining of the permissions such intimation was to be given to the plaintiffs by registered post AD and then within 30 days after receipt of this intimation by the plaintiffs that they were liable to get the sale deed executed and registered by payment of balance sale consideration. Accordingly in the facts of the case since a fixed/specified RFA 96/2002. Page 12 of 36 date for performance was not there, limitation hence would only commence when the plaintiffs had notice of refusal on part of the defendant no.1 to perform the contract. (ii) The defendant no.1 only on 16.1.1985 for the first time wrote a letter for taking back possession of the premises and the suit was thereafter immediately filed on 12.3.1985. The suit having been filed on 12.3.1989 was thus within limitation period of three years of refusal to perform the Agreement to Sell- the refusal coming into existence for the first time on the defendant no.1 writing the letter dated 16.1.1985. During the entire period from 1977 to 1985, no letter was ever written by the defendant no.1 terminating the contract or refusing to perform the contract and on the contrary repeated efforts were made to get the permission from the DDA for selling of the property. The contract was very much kept alive not only on behalf of the defendant no.1 but also by the plaintiffs. I therefore hold applying Article 54 of the Limitation Act that since there was no specified date for performing of the contract; and since the time of performance was not the essence of the contract on account of the fact that it was the duty of the defendant no.1 to obtain the necessary permissions and thereafter intimate by registered post AD to the plaintiffs; the cause of action to file the suit for specific performance could only have arisen on 16.1.1985 when the plaintiffs were put to notice that the defendant no.1 had refused to perform the Agreement to Sell. I do not agree with the RFA 96/2002. Page 13 of 36 argument as raised on behalf of the learned counsel for the appellant that since the DDA refused permission on 4.4.1978, on this date the limitation to file the suit for specific performance had arisen. The fact of the matter is that even after 4.4.1978, the defendant no.1 kept on trying to get the permission from DDA. A refusal by a third person, namely the DDA, to grant permission cannot be equated to a refusal by the defendant no.1 to perform the contract. As already stated, in fact the defendant no.1 himself had kept the contract alive for the entire period from 1977 to 1985. I therefore hold that the trial court has rightly held the suit not to be barred by limitation. 10. The second main issue which was argued before this court was the issue with respect to denial of relief of specific performance as the DDA ought to have been made a party since inception but it was made a party only much after filing of the suit. This aspect has been dealt with by the trial court in paras 15 and 16 of the impugned judgment and which read as under:- “15. The defendant has also raised preliminary objection in his written statement that the suit is barred by limitation by virtue of Article 21 of Limitation Act. 1963. It has been submitted that the plaintiff had move I.A. No.3644/85 in the suit before the Hon‟ble High Court of Delhi for impleading DDA in the suit. The Hon‟ble High Court vide its order dated 27.1.86 impleaded DDA as defendant no.2 in the suit. Therefore, order 1 Rule 10 (5) CPC steps into the matter. The suit becomes time barred because the alleged agreement of sale is dated 13.7.77 and the impleadment is made on 21.1.86. In replication the plaintiff has submitted that