Shri Vishwa Nath Sharma vs Shyam Shanker Goela & Anr

Background facts in a nutshell are as follows:

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.

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 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 Jamshedpur 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, 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 he came to 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.

The appeal was dismissed observing, inter alia, as follows:

The appeal is dismissed subject to the aforesaid observations.