Case: K. Narendra Vs. Riviera Apartments (P) Ltd

2. The property in suit consists of a plot of Nazul Land known as 6, Tolstoy Marg, New Delhi whereind rights were vested by the President of India in favour of M/s. Shiv Ram, Mahashaya Krishna and K. Narendra (the appellant herein) in terms of a perpetual lease commencing from 29th May, 1956. The relevant and material terms of the lease are extracted andII (5) The Lessee will not without the previous consent in writing of the lessor or of such officer or body as the Lessor may authorise in this behalf make any alterations in or additions to the buildings erected on the said demised premises so as to effect any of the architectural or structural features thereof or erector suffer to be erected on any part of the said demised premises any buildings other than and except the buildings erected thereon at the date of these presents.  (6) The Lessee shall not without the written consent of the Lessor or such officer or body as he may authorise in this behalf construct any well of any description, or instal any private system or supplying water whether for irrigation or for drinking.  (7) The Lessee will not without such consent as aforesaid carry on or permit to be carried on the said premises any trade or business whatsoever or use the same or permit the same to be used for any purpose other than that of single storey residential building for a private dwelling house for one or two families in all or do or suffer to be done thereon any act or thing whatsoever which in the opinion of the Lessor or such officer as he may authorise in this behalf may be an annoyance or disturbance to the President of India or his tenants in the new Capital of Delhi.  xxx xxx xxx  (13) The Lessee shall before any assignment or transfer of the said premises hereby demised or any part thereof obtain from the Lessor or such officer or body as the Lessor may authorise in this behalf approval in writing of the said assignment or transfer and all such assignees and transferees and the heirs of the Lessee shall be bound by all covenants and conditions herein contained and be answerable in all respects therefor.  (IV) If there shall at any time have been in the option of the Lessor or such officer as may be authorised by him in this behalf whose decision shall be final, any breach by the Lessee or by any person claiming through or under him of any of the covenants or conditions contained ins (5), (9) and (10) of Clause III and if the said Lessee shall neglect or fail to remedy any such breach to the satisfaction of the Lessor or such officer as may be authorised by him in this behalf within seven days from the receipt of a notice signed by the Lessor or such officer as may be authorised by him in this behalf requiring him to remedy such breach it shall be lawful for the officers and workmen acting under the authority and direction of the Lessor to enter upon the premises hereby demised, and (a) to remove or demolish any alterations in or additions to the buildings erected on the said premises, (b) to remove or demolish any buildings erected on the said premises without the previous consent in writing of the Lessor or duly authorised officer, (c) to fill any excavation or carry out any repairs that maybe necessary and all such moneys and expenses as may be laid out and Incurred by the Lessor or by his order shall be paid by the said Lessee; and it is hereby expressly declared that the liberty hereinbefore given is not to prejudice in anyway the power given to the President of India by Clauses V and VI hereofxxx xxx xxx  3. On 5th July, 1972 the appellant entered into an agreement to sell, transfer and assign all his rights, title and interest in the said property along with all structures, outhouses, plants etc. in favour of the respondents in consideration of a sum of Rs. 8,97,740 for the purpose of constructing ad building by the respondents on the said property. In terms of the agreement a sum of Rs.50,000 was to be paid at the execution of the agreement vide demand draft dated 25th July, 1972 which was done. Another sum of Rs. 2,75,000 was to be paid by ad cheque dated 25th January, 1973 which was to be encashed by the appellant after the plans ofd building as submitted by the respondents were passed and cleared for construction by N.D.M.C. and L & D.O. or earlier by mutual agreement and the balance amount of Rs. 5,72,740 was to be paid after the completion of the saidd building. There are a few relevant clauses of the agreement, material for the purpose of these appeals which are extracted and(3) That the purchaser shall get the permission for such a conveyance from the Land Development Officer and shall pay all the charges and expenses whatsoever, for execution and registration of the, its stamping and the charges to the Land & Development Office on account of unearned increase payable by the seller for getting the necessary permission as provided in the perpetual lease dated 11th September, 1961.  (4) That the purchaser shall have the building planned in their absolute discretion and after having the plans duly sanctioned construct and sell flats in the said building as per their terms and conditions without any let or hindrances from the seller of any sort whatsoever.  xxx xxx xxx.  (6) That only after the payment of the consideration in full to the seller the purchasers shall be entitled to convey, sell ortransfer the flats and the plot of land bearing No. 6, Tolstoy Marg. New Delhi.  (7) That the vacant physical possession of the premises is hereby given to the purchaser who will now forth be in actual possession of the premises.  (8) That the purchasers shall be at liberty to store their construction materials, make storage, sheds, keep chowkidars and make room for them in the rear of the Bungalow No. 6, Tolstoy Marg, New Delhi at their own cost without any let or hindrance from the seller or anyone claiming through or under him provided as specifically agreed that in case thed cheque for Rs. 2,75,000 stated above, is not honoured by the Bankers, the possession shall immediately be returned to the seller.  (9) That the seller shall executes an irrevocable Power of Attorney in favour of the purchasers authorizing them to do all and every act for constructing the said building on this land  xxx xxx xxx  (13) That in the event the Government of India acquire or requisitions whole or part of the property or prohibits the transfer of the said property under any Urban Property Ceiling Law enforced the said property before the date of the sanction of the plans for the construction of the proposedd building, then in such event the sellers shall refund the amount paid by the purchasers and the purchasers shall simultaneously hand over vacant and peaceful possession of the premises to the sellers.  xxx xxx xxx  (16) The purchaser undertakes to complete the construction of the said building within a period of two to three years from the date the plans for the said buildings are sanctioned and released by the appropriate authorities subject to strike, war, natural calamity and force major and civil commotion.  (17) That on possession of the said plot and the building thereon being given to the purchaser by the seller, the former shall be entitled to dismantle the buildings now standing on the said plot of land and utilise the debris thereof for such purpose as the purchaser may decide and the seller shall not claim any compensation for the same.  xxx xxx xxx4. On 26th July 1972, the parties entered into an agreement supplementary to the agreement dated 25.7.1972 and to some extent modified the terms and conditions of the original agreement. According to the supplementary agreement, the parties agreed that instead of the balance consideration of Rs. 5,72,740 being paid in cash, the respondent would give to the appellant flats on 2nd,3rd and 4th floors measuring 8,182 sq. ft. at the rate of Rs. 70 per sq. ft. valued at Rs.5,72,740. The area of 8,182 sq. ft could be reduced or increased by 5 to 6 percent at the discretion of the respondents.  5. An amount of Rs. 50,000 was paid by the respondents to the appellant on 25.7.1972 simultaneously with the execution of the agreement. Ad cheque for a sum of Rs. 2,75,000 was also delivered by the respondents to the appellant. Though this cheque was to be encashed by the appellant in terms of the agreement only after sanction of the building plans of the proposedd building by the local authority i.e. N.D.M.C. and the Land and Development Office, however, the cheque for the said amount of Rs. 2,75,000 was encashed by the appellant though the building plans had not been sanctioned by the NDMC and L & DO.  6. As agreed, the appellant also executed an irrevocable Power of Attorney which was duly registered with the, Delhi on 26th July, 1972 in favour of Shri Inder P. Choudhary, Managing Director and Ms. Minakshi Choudhary, Director of the respondent company authorizing them to represent the appellant before the NDMC and L & D.O., the office of the local Government and any other Government Department or authority in connection with the affairs connected with and pertaining to the construction ofd building to be constructed on the said property.  7. On 7/11.9.1972 the respondent submitted to the N.D.M.C. building plans for bringing up a Group Housing Project by the name of Girnar on the said property. The plans were for the construction of a Housing Project consisting of an 8 storeyed building and 2 blocks of 5 storeyed building comprising 18 flats of three bed rooms and 23 flats of two bed rooms each apart from incidental/lancillary constructions such as power, pump house, lifts etc. On 6.11.1972 the plans were rejected mainly on the ground that plot in question formed a part of the zone marked ast area as per the zonal plan. This was in exercise of the power conferred by section 193(2) of the Punjab Municipalities Act.  8. On 9.11.1972 the respondent requested the NDMC to keep the building plans pending and put them up for sanction after certain clarification awaited from Delhi Development Authority was received.  9. On 31.10.1972 the Government of India served a notice on the appellant calling upon him to show cause as to why the lease be not cancelled followed byy upon the premises by the lessor in view of the appellant having sold the property to the respondents without obtaining prior approval of the lessor and thereby having committed a breach of Clause 11(13) of the lease deed.  10. On 9.11.1972 the respondents gave a reply to the L & D.O. to the letter dated 31.10.1972 sent to the appellant which apparently was passed on by the appellant to the respondents for the needful further action. The respondents submitted that there was no breach of Clause II (13) of the lease deed inasmuch as there was only an agreement to sell entered into by the appellant authorising the respondents to build on that property but there was no sale as such. It appears, that the respondents had raised certain structures on the property which were objectionable. The respondents stated that the objectionable structures as pointed out by the L & D.O. had been removed.  11. On 22.11.1973 the N.D.M.C. once again informed the respondents that the case for sanction of the building plans was considered by the NDMC on 21.9.1973 and the plans were rejected for the reasons annexed with the letter, The principal of the reasons was that the area was earmarked ast area in the master /zonal plan and furtherbecause the size of the plot was less than one acre whereas minimum size of the plot of group housing was required to be one acre. The master/zonal plan referred to by the NDMC was one approved by the Central Government under Section 9(2) of the Delhi Development Act and hence having a statutory effect. Efforts were repeated for the sanction of the building plans but as is borne out from the communications dated 12.8.1985 and 19.11.1990 by the NDMC, building plans were not sanctioned and were only rejected.  12. Sanction has however been granted on 4.6.1991 valid upto 29.4.1993 which is subject to about 13 conditions and provides that the sanction will be void ab initio if any of the auxiliary conditions mentioned therein were not complied with. The correspondence with the NDMC indicates that the NDMC was persuaded to grant such permission on account of the suit having been decreed on 15.12.1990 by the Trial Court and the decree containing a direction to the appellant to obtain all necessary permission from all authorities including Revenue, local or Central Authorities so as to effectuate the agreement,  13: Before we may proceed to notice the facts relevant to initiation of litigation between parties, we may also notice certain facts relevant to the Urban Land Ceiling & Regulation Act, 1976 (hereinafter ULCRA for short).

Court's reasoning:
34. In our opinion, there has been a default on the part of the respondents in performing their obligations under the contract. The period lost between 25.7.1972 (the date of the agreement) and the years 1979 and 1980 when the litigation commenced, cannot be termed a reasonable period for which the appellant could have waited awaiting performance by the respondents though there was not a definedt for performance laid down by the agreement. The agreement contemplated several sanctions and clearances which were certainly not within the power of the parties and both the parties knew it well that they were the respondents who were being depended on for securing such sanctions/clearances. Part of the land formingr of the agreement was an excess land within the meaning of ULCRA and hence could not have been sold. Part of the land has been acquired by the State and to that extent the agreement has been rendered incapable of performance. The feasibility of ad complex as is proposed and planned by the respondents appears to be an impracticality. If the respondents would not be able to construct and deliver to the appellant some of the flats and contemplated by the novated agreement how and in what manner the remaining part of consideration shall be offered/paid by the respondents to the appellant is a question that defies answer on the material available on record. Added to all this is the factum of astronomical rise in the value of the land which none of the parties would have fore contemplated at the time of entering into the agreement. We are not in the least holding that the consideration agreed upon between the parties was inadequate on the date of the agreement. We are only noticing the subsequent event. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequently at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents have neither pleaded nor brought material on record to hold that they have acted in such a way as to render inequitable the denial of specific performance and to hold that theirs would be a case of greater hardship over the hardship of the appellant. Upon an evaluation of the totality ofthe circumstances, we are of the opinion that the performance of the contract would involve such hardship on the appellant as he did not foresee while the nonperformance would not involve such hardship on the respondents. The contract though valid at the time when it was entered, is engrossed into such circumstances that the performance thereof cannot be secured with precision. The present one is a case where the discretionary jurisdiction to decree the specific performance ought not to be exercised in favour of the respondents. During the course of hearing the learned Senior Counsel for the respondents time and again emphasized and appealed to the Court that respondents were builders of repute and in the event of the specific performance being denied, they run a grave risk of loosing their reputation as their proposed building plan Girnar would not materialise and they will not be able to show their face to their prospective flat buyers. This is hardly a consideration which can weigh against the several circum stances which we have setout hereinabove. If ad complex cannot come up on the suit property, the respondents plans are going to fail in any case35. We have already held that until the repeal ofthe ULCRA in the year 1999 the property agreed to be transferred was incapable of being transferred for failure of the requisite permission under the ULCRA which situation continued to prevail for a period of about 16 years from the date of agreement until the repeal of ULCRA. In the facts and circumstances of the case we do not think it appropriate to extend the benefit of the subsequent event of repeal of ULCRA in favour of thes after a lapse of 16years from the date of the contract. Permission for constructing ad complex on the premises was refused time and again by the NDMC until the suit for specific performance came to be decreed by the Trial Court. On none of the two events either of the parties had any control. We are clearly of the opinion that at one point of time the contract had stood frustrated by reference to Section 56 of the Contract Act. We do not think that the subsequent events can be pressed into service for so reviving the contract as to decree its specific performance36.The learned Counsel for the respondents submitted that in spite of a part area of the property agreed to be transferred having been rendered inalienable by the owner on account of its having been acquired by the State and part of the property having been found to be inalienable on account of being in excess of the ceiling limit provided by ULCRA, the respondents were prepared to have a sale deed executed of such remaining part of the property as is available to be transferred without insisting on a corresponding reduction in the price agreed to be paid. The learned Counsel for the respondents also submitted that the ULCRA having been repealed by the Urban Land Ceiling and Regulation (Repeal) Act, 1999, the hurdle of the land being in excess of the ceiling has been removed and this aspect of the matter has lost its relevance. We are not impressed by the submission. Though the respondents may on their part, in the changedbe agreeable to have even lesser property being transferred to them, but in our opinion that is not permissible. The case oft except with variation is statutorily covered by Section 18 of the Specific Relief Act, 1963. When the defendant sets up a variation then the plaintiff may have the contract specifically performed subject to the variation so set up only in cases of fraud, mistake of fact or misrepresentation or where the contract has failed to produce a certain legal result which the contract was intended to do or where the parties have subsequent to the execution of the contract varied its terms. Obviously, the case at hand is not covered by any of the situations contemplated by Section 18 abovesaid37. However, in our opinion the present one is a fit case where the respondents should be awarded some compensation in spite of its specific performance being refused. Section 21 of the Specific Relief Act provides for award of compensation either in addition to or in substitution of such performance. The explanation appended to the section expressly enacts that the Court is not precluded from exercising jurisdiction to award compensation even in a case where the contract has been rendered incapable of specific performance. Compensation to some extent is a matter of. An amount of Rs. 3,25,000, equivalent to the amount which was paid by the respondents to the appellant would be a reasonable amount of compensation in the facts and circumstances of the case which in our opinion deserves to be paid by the appellant to the respondents in substitution of the decree for specific performance. The respondents have also in their plaint claimed the relief of compensation in addition to other reliefs.