Case: DLF Universal Ltd. and Anr Vs. The Director General [Investigation and Registration] and Anr

2. Briefly stated the facts giving rise to the filing of the present appeal are as follows:-M/s DLF Universal Limited is a public limited company registered and incorporated under the Indian Companies Act, 1956. It purchased free hold lands at Gurgaon in the State of Haryana for setting up a colony known as `DLF Qutab Enclave Complex. It applied for and was granted licence in terms of the provisions of the Haryana Development and Regulation of Urban Areas Act, 1975 [for short `the State Act]. M/s DLF Universal Limited and other group of companies created DLF Qutab Enclave Complex Educational Charitable Trust Where for a large number of sites were earmarked for construction of schools/community buildings in the complex. In response to the advertisement issued by the appellants in November, 1991 Raj Kamal, complainant-second respondent applied for and was allotted Nursery School site No. 3136 admeasuring 0.20 acre in DLF Qutab Enclave, Gurgaon. Later on, this site was substituted by another site/plot no. 3101 admeasuring 0.35 acre after charging of extra amount for additional land allotted to him. The complainant-second respondent filed a complaint on 20.6.1997 before the Commission which was referred to the Director General of Investigation and Registration [for short `the DG] –first respondent herein. A Preliminary Investigation Report [PIR] was submitted by DG-first respondent on 27th March, 1998 in which it was reported that the appellants have indulged in restrictive and unfair trade practices within the meaning of Section 2(o)(i) and Section 36A of the MRTP Act. Taking cognizance of the PIR on 4.6.1998, the Commission issued notice of enquiry to the appellants. The allegations made in the complaint by the Complainant - second respondent were that the appellants had not handed over the possession of the alternate plot to him on the plea that the Government of Haryana was not recognizing the fourth party rights. During the preliminary investigation, it came to light that at the time of advertisement by the appellants in November, 1991, the title of the sites including the site/plot allotted to the complainant - second respondent was already transferred by the first appellant to the second appellant on 27.11.1990. The first appellant was required to construct at its own cost or get constructed by any other institution or individual at its cost, schools/community buildings etc. on the land transferred to them by the Government of Haryana under Section 3(a)(iv) of the State Act. 25 different sites having a total area of 29,358 acres were earmarked for the purposes of providing educational facilities which were transferred to the second appellant trust for a sum of Rs. 1,05,000/- It was also provided that in case the appellants were unable to construct the said site within the stipulated period, the same would automatically be reverted to the State Government. In the PIR, the following unfair/restrictive trade practices on the part of the appellants have been alleged in this transaction based on theThe appellants (respondents before the Commission] despite not having the title of the impugned sites issued advertisement in November, 1991 inviting applications for allotment which is a deceptive and unfair trade practice within the meaning of Section 36A of the MRTP Act.(ii) The Trust i.e. appellant No. 2 had leased out the sites to the fourth parties after 7.8.1991 as per statement furnished during investigation by the second appellant to the DG. It is also alleged that the second appellant was not allowed to create fourth party right at the time of issuance of impugned advertisement in November, 1991. This tantamounts to unfair trade practices within the meaning of Section 36A of the MRTP Act.(iii) Second Appellant created fourth party rights after 7.8.91 for a total consideration of over Rs. 1.85 crore as against the nominal cost of Rs. 1,05,000/- paid by them to the first appellant at the time of transfer. The allegation was that in terms of the guidelines issued by the Director, Town and Country Planning, Haryana, Gurgaon [for short `the DTCP] vide their letter dated 25.10.1994 this difference of money was to be utilised for the purpose of providing better amenities to the colony and for the benefit of residents therein. It has been alleged in the PIR that the appellants have, therefore, manipulated the prices as well as conditions of delivery of the impugned community sites for the purpose of benefiting the Trust wherein the Directors of the appellant companies were interested. The creation of the fourth party rights in the impugned sites contrary to the guidelines issued by the DTCP is a restrictive trade practice which imposed unjustified cost on the parties to whom fourth party rights has been created by the Trust in connivance with the first appellant. Further, since the Trust have created fourth party rights after 7.8.1991 the said trade practice constitutes deceptive and unfair trade practices within the meaning of Section 36A of the Act.(iv) The transfer deed entered into by the first appellant with the second appellant did not make obligatory on the part of the second appellant to utilize the amount collected as such for the purpose of providing better amenities to the residents of DLF Qutab Enclave. Second Appellant was having a surplus of Rs. 5,489,223.86p. and Rs. 5,729,723.49p. Respectively at the end of 31st March, 1996 and 31st March, 1997 respectively. It has, therefore, been alleged that the Trust has manipulated the prices and conditions of delivery of impugned sites for its personal gain which is a restrictive trade practice.(v) Originally site No. 3136 measuring 0.20 acre was allotted to the complainant/informant on consideration of Rs. 4 lakhs and also a lease agreement dated 1.12.92 was entered into for constructing and providing educational facilities by the lessee. Subsequently, however, the appellants offered to the complainant/informant an alternate site measuring 0.35 acre after receiving an additional payment of Rs. 2,96,204/- which tantamount to unfair trade practice since the complainant/informant was not informed that the previous site No. 3136 was subject to the revision of lay out plan.(vi) The appellants raised maintenance bills for the nursery school plot No. 3136 for the period from December, 92 to September, 93 though this plot was omitted in the revised layout plan which is unfair trade practice.(vii) Similarly, appellant-Trust collected lease amount from the complainant/informant for the period from December, 92 to March, 94 in advance without handing over the plot in question to the lessee.The appellants in their counter reply to the complaint of the complainant - second respondent inter alia denied the allegations stated in the complaint and maintained that the notice of inquiry and the PIR do not set out the specific and precise allegations of unfair/restrictive trade practices against them. It was also submitted that the appellants had filed writ petition in the High Court of Punjab and Haryana inter alia challenging the letter dated 9.2.1994 issued by the DTCP, whereby the appellants have been restrained from creating and recognizing any fourth party rights and the said letter was given retrospective effect from 7.8.1991. The appellants then stated that they are not in a position to handover the possession and the site/plot in the absence of the sanction of the building plans by the authorities. It is also provided under the lease deed entered into between the second appellant - Trust and the allottees that the possession of the site/plot can be given only upon sanction of building plans by appropriate authorities i.e. DTCP. They also stated that the agreement was entered into between the second appellant - Trust and the complainant - second respondent and not by the first appellant. Therefore, there was no privity of contract between first appellant and the complainant-second respondent. On these premises, the appellants submitted that they have not indulged in any sort of unfair trade practices as alleged in the complaint.4. On the controversial pleadings of the parties, the Commission framed the following issues:-(i) Whether the appellants (respondents before the Commission) have been indulging in restrictive and unfair trade practices as alleged in the Notice of Enquiry?(ii) Whether the alleged restrictive trade practices are not prejudicial to public interest?(iii) Whether the alleged unfair trade practices are prejudicial to the interest of consumer/ consumers generally?5. It appears from the order of the Commission that on 21.08.2001 the learned advocates appearing for both the parties stated that the question which arose for consideration in the complaint filed by complainant - second respondent has been decided by the Division Bench of the High Court of Punjab and Haryana in CWP No. 7245/1997 on 07.03.2001 and against the said judgment, special leave petition had been filed in this Court. In this view of the matter, the Commission found that no purpose would be served to continue with the present complaint and, accordingly, the matter was disposed of.6. Later on, an application was filed by the complainant - second respondent seeking to review the order of the Commission. On 04.07.2003, the complainant – second respondent stated before the Commission that the possession of the site/plot to which he was entitled to in terms of the agreement executed between the parties has still not been handed over to him. Learned counsel appearing on behalf of the appellants before the Commission in response to the review application stated that the appellants were willing to hand over the possession of the site/plot to the complainant - second respondent which was held up in view of the order passed by the High Court of Punjab and Haryana and since the order of the High Court of Punjab and Haryana has been set aside by this Court in Civil Appeal No. 4908/2002 along with Civil Appeal Nos. 4909-11/2002 titled DLF Qutab Enclave Complex Educational Charitable Trust v. State of Haryana & Ors. reported in [(2003) 5 SCC 622] , therefore, now the appellants are ready and willing to hand over the possession of the site/plot to the complainant-second respondent within six weeks in terms of the agreement dated 01.12.1992. Again on 16.01.2004, the appellants informed the Commission that they will execute a fresh lease deed in favour of the complainant - second respondent provided the commercial terms as contained in the first lease deed dated 1.12.1992 shall not be ordered to be modified or altered or deviated and the appellants will indicate the amount of lease rent which shall be paid by the complainant-second respondent within one week and thereafter the appellants shall sign the modified lease deed and thereafter the possession of the site/plot shall be handed over to the complainant-second respondent. On the basis of the pleadings of the parties, the earlier order dated 21.08.2001 came to be modified accordingly by the Commission. Again, the complainant-second respondent filed miscellaneous application seeking incorporation of some proposed clauses in the new lease deed. The appellants submitted their comments to the proposed amendments suggested in the draft lease deed to be executed by the parties. The parties did not choose to examine any witness but they filed their written submissions.7. In the backdrop of the facts enumerated hereinabove, limited question before the Commission was with regard to handing over the site/plot of the land to the complainant – second respondent on a fresh lease deed supplied to him in place of the earlier lease deed executed between the parties in December, 1992 and any deviation from the earlier lease deed could be construed as unfair trade practices. The dispute was with regard to certain provisions in the draft lease deed, which read and are discussed by the Commission in its impugned order as under:-(a) The complainant/informant has insisted on the insertion of clause 1.3 in the draft lease deed with regard to "No Objection Certificate" (NOC) particularly that NOC is being issued in pursuance of the agreement to lease entered into with you by the Trust on 1st day of December, 1992 and does not confer on you any lien, right, title or ownership to the aforesaid plot in question of the Trust till such time you make full payment of the price of the plot along with other dues payable by you and the lease deed is executed in your favour". It also seeks to provide that "during the interim period i.e. till the lease deed is executed in your favour, you shall not transfer, sub- lease, mortgage or otherwise either encumber the aforesaid plot or part with it without the prior approval in writing of the Trust". The respondents have stated that the NOC in terms of the agreement dated 1.12.1992 was issued to enable the proposed lessee to submit building plans to the authorities as well as the lessor for approval. This was only required for interim period till the lease is granted, so that there was no delay in getting the plans approved. Since NOC had already been given to the complainant/informant, there were no requirements to give it again and no provision for this need be made in the new lease deed. The purpose of NOC was clearly indicated there whereas in the proposed amendment new implications are being sought to be brought in which were not contemplated in the agreement dated 1.12.92. It is, however, seen from the agreement dated 1.12.92 that the said NOC was issued for the purpose of enabling the complainant/informant for getting the plans and specifications approved. It is also on record that the NOC was issued in favour of the complainant/informant by the respondents and since now the final deed is being proposed to be executed between the parties, there should not be neither any need nor any justification for incorporating this in the draft lease deed in the manner indicated by the complainant/informant. This "No Objection Certificate" was issued on 1.12.92 with regard to plot No. 3136 measuring 0.20 acres. It is, however, seen from the record that this "No Objection Certificate" issued on 1.12.92 by the respondents was relating to plot No. 3136 measuring 0.20 acres. The Commission noted that subsequently this plot was changed to plot No. 3101 measuring 0.35 acres after charging extra amount from the complainant/informant. Therefore, technically the NOC issued on 1.12.92 does not relate to the plot which is proposed to be transferred to the complainant/ informant. In view of this, we are unable to agree with the respondents that there is no requirement to give "No Objection Certificate" for the plot proposed to be transferred to the complainant/informant now and therefore, no provision is required in the draft lease deed. The respondents are, therefore, directed that in order to enable the complainant/informant to get the NOC for the new plot, the provisions of issue of NOC as incorporated in clause 5(i) and 5(ii) of the agreement dated 1.12.92 may be incorporated in the lease agreement to be executed now.(b) The second issue is with regard to the amendment in clause 2.3 of the draft agreement in which it has been suggested by the complainant/informant that the lessor shall pay to the lessee, the value of the said plot along with building and fixtures at the date of determination of the lease, such value to be determined by a sole arbitrator agreed upon by both the parties or by two arbitrators one by each party. The provision of Arbitration Act, 1940 amended from time to time will be referred to at such occasion, if arises. The respondents have argued that Clause 17 of the agreement dated 1.12.92 provides that on determination of the lease, the lessee shall hand over the plot and the building constructed thereon to the lessor. The complainant/informant is seeking through the amendment introduction of an arbitration clause and handing over the plot along with the building and fixtures after payment of the value which was not envisaged in the agreement dated 1.12.92. Since Clause 17 of the agreement dated 1.12.92 did not envisage payment to be made to the lessee for the constructed building on the plot, no question of valuation arose. The dispute resolution has been provided in clause 15 of the draft agreement and therefore, there is no justification for an arbitration clause in this behalf. We have gone through the agreement dated 1.12.92 and we find that in clause 25 of that agreement, the dispute resolution is provided arbitration mechanism and not in the manner provided in clause 15 of the draft agreement but at the same time it is also clear that clause 17 of the agreement dated 1.12.92 does not envisage any payment for the constructed building on the plot on resumption which is covered under clause 11 of the agreement dated 1.12.92. Therefore, we hold that there is no justification in introducing the amendment to clause 2.3 in the manner suggested by the complainant/informant but at the same time, clause 15 of the draft agreement need to provide for the Arbitration clause as existing in the agreement dated 1.12.92 and it is directed accordingly.(c) The complainant has also suggested amendments to clause 4 of the draft agreement in line with clause 11(a)(b) (i) and (ii) as appearing in the lease deed agreement dated 1.12.92 which relates to the period for the completion of the construction of the building and in the event of its failure to construct the school and other ancillary building, the lessor will have the right to terminate the agreement to the lease. In the written arguments, the respondents have stated that in clause 11 of the agreement dated 1.12.92, the proposed lessee was required to complete the construction within a stipulated period which has already expired and no request has been made for extension of time. The proposed lessee has not submitted any building plans to the authority and no copy thereof has been sent to the lessor and as such he is not entitled to any extension of time. The case of the respondent, therefore, is that since the agreement dated 1.12.92 has already become terminable; no further rights can be given to the lessee by including this as appearing in the earlier agreement. It has also been stated that if the lessee does not agree to the clauses suggested now in the draft agreement i.e. clauses 4.1, 4.2 and 4.3, the respondents would be at liberty to take action for non- compliance. From the perusal of records before us is clear that clause 4 of the agreement is not on the lines of the agreement dated 1.12.92. The arguments of the respondents that the period of 24 months is already over and no request was made for extension of time thereby making the agreement dated 1.12.92 is terminable is not convincing because the respondents themselves have stated that they could not hand over the possession of the land to the lessee due to the litigation in this matter. It has also come on record that the appropriate authority of the Haryana Government has not sanctioned building plan on the ground of the respondents having created the third party or fourth party rights, a matter which has now been settled by the judgment of the Apex Court. There is no reason therefore, in our opinion for respondents for not agreeing to this amendment in clause 4, which should be carried out in the draft lease deed and it is ordered accordingly. (d) Another amendment which has been suggested to the draft lease deed by the complainant/informant is with regard to clause 5.1 of the draft lease deed by which the lessee undertakes "it shall not use the demised plot or building constructed thereon for any purpose other than the activities incidental or ancillary to the said activities such as residence of teachers, staff and other persons employed in connection with the running of the school". The respondents have opposed this amendment on the ground that the existing clause 5.1 of the draft lease deed is based on the decision of the Honble Supreme Court order dated 17.2.2003 in terms of the law laid down. We notice that under clause 5.1, the use of the land has been specifically indicated and it has been provided that the lessee shall use that land strictly in accordance with the terms and conditions of the layout plan, building plans, sanctions, approvals etc. granted by the concerned authorities including but not limited to Director, Town and Country Planning, Haryana, Chandigarh". Keeping in view the ratio of the judgment of the Honble Supreme Court in which it has been clearly laid down that the transferees will also be bound by the terms and conditions of the licence and the right of control of the State and other regulatory measures will continue, we find no justification in the amendment as suggested by the complainant/informant in this clause and it is directed accordingly."8. The Commission finally directed the appellants to modify the draft lease deed as indicated in Para 7(a) to (d) above and furnish the final lease deed to the complainant – second respondent within two weeks and hand over the possession of the plot for the purpose it was leased out to him within two weeks of the execution of the draft lease deed by the complainant - second respondent. The appellants were also directed to file the affidavit of compliance within eight weeks.9. Hence, the appellants by way of this statutory appeal have challenged the correctness and validity of the impugned order of the Commission.

Court's reasoning:
15. It is not in dispute that DLF is a colonizer. It is further not in dispute that licences had been granted to it for the construction of a colony. It also stands admitted that the schools, hospitals, community centres and other community buildings were required to be constructed in the colony in terms of the licences granted under the State Act.It was the admitted case of the parties before the Commission that agreement to lease of land bearing site/plot No. 3136 admeasuring 0.20 acres for starting a Nursery School for a consideration of Rs. 4 lakhs was entered into between the appellants and second respondent on 01.12.1992. The appellants later on issued a letter dated 19.5.1994 making allotment of 0.35 acres of alternate land bearing site/plot no. 3103 in place of plot No. 3136 to the complainant-respondent on payment of additional charges to the tune of Rs. 2,96,204 on account of increase in area. The order of the Commission reveals that some instructions were issued by the Government of Haryana on 25.10.1994 and 13.2.1996 regarding transferring of community sites to third and fourth parties under the following three heads:-(i) Where the community sites are still in the ownership of the colonizer.(ii) Sites where colonizers have created third party rights before 7.8.1991.(iii) Cases where the licences have created fourth pay right on community sites.The case of the complainant - second respondent before the Commission was that he has furnished necessary, effective and valid suggestions which are to be incorporated in the fresh lease because of delay in handing over the possession of the alternate site/plot to him. It is the admitted case that the appellants have not challenged the order of the Commission dated 16.01.2004 by which the parties were directed that the commercial terms as contained in the earlier lease deed dated 01.12.1992 shall not be modified and altered and shall remain the same in framing of the new lease deed which shall be executed between the parties.26. Section 13A empowers the Commission to cause investigation to find out whether or not orders made by it under this Act have been complied with or any obligation imposed upon any person by or under any order made by the Commission under this Act, authorizes the Director General or any officer of the Commission to make investigation into the matter and the Director General or the officer so authorized, may, for the purpose of making such investigation, exercise all or any of the powers conferred on the Director General by Section 11. In terms of sub-section (2), the Director General , or, as the case may be, the officer so authorized, shall submit to the Commission a report of the investigation to enable the Commission to take such action in the matter as it may think fit.In the backdrop of the facts of the present case, once the appellants have accepted the earlier order of the Commission dated 16.01.2004 which has attained finality, the appellants are left with no other option but to execute a fresh lease deed with the complainant - second respondent on modified terms suggested by him. The order of the Commission impugned in this appeal does not suffer from any manifest error or perversity or invalidity.