Judgment:
Manmohan Singh, J.
1. By this order, I propose to decide three applications being I.A.Nos.9244/08, 9741/08 and 9742/08.
2. The brief facts are that the Plaintiff and Defendants No. 1 and 2 are the sons of Late Sh. G.C. Chawla, an eminent medical practitioner who died on 20th December, 1996. The wife of late Dr. G.C. Chawla Mrs. Shanti Chawla had pre-deceased him in January 1991.
3. At the time of his death late Dr. G.C.Chawla was of the age of 93 years. He was bed ridden and not mentally fit in the years preceding his death due to old age and infirmity. According to the plaintiff, at the time of his death, he left behind the following assets:
i) Property No. D-240, Defence Colony, New Delhi.
ii) Inheritable tenancy rights in property No. A-31 and A-32, Connaught Place, New Delhi. iii) Negligible moveable assets in bank accounts.
4. As averred by the plaintiff, late Sh. G.C.Chawla had executed a registered Will in 1975 giving the aforesaid three properties to all his three heirs, namely, the plaintiff and defendant No. 1 and 2. According to the said Will late Mrs. Shanti Chawla had 1/4th share in the property at Defence Colony but Mrs. Shanti Chawla pre-deceased the plaintiff.s father.
5. According to the plaintiff subsequently late Sh. G.C. Chawla had also executed another Will in the year 1979 whereby his entire estate was left to plaintiff and defendant No. 2 to the total exclusion of defendant No. 1 as he was unhappy and discontent with the conduct of defendant No. 1 for the past many years and therefore, he wanted to disinherit him from the inheritance/share of his estate. However, the plaintiff states that he has no intention to usurp the property and wishes to share the property with the defendants equally according to the Will dated 15th March, 1975.
6. The plaintiff sought a decree in the suit filed for permanent injunction and partition holding that the plaintiff is 1/3rd owner of the suit properties and to divide the property by preliminary decree of partition. By order dated 23rd December, 1996 an ex parte order was passed against the defendants restraining them from letting, sub letting or creating any other third party interest in the properties mentioned in Schedule A.
7. By order dated 6th April, 2004 passed by this Court, a preliminary decree was passed for partition in respect of the properties mentioned in Para 5 of the plaint. Sh. Sikandar, Advocate was appointed as Local Commissioner for suggesting the mode of partition of suit property at D-240, Defence Colony, New Delhi. 8. This order was passed on the parties. statement informing the court that plaintiff and defendant No. 1 are the only legal heirs of deceased Sh. G.C. Chawla and as such are entitled to divide the property in equal shares. Sh.Anil Chawla, defendant No. 2, brother of plaintiff and defendant No. 1 has already died and as he was unmarried he did not leave behind any legal heir. On the basis of the said statement, a decree for partition as well as for rendition of accounts was duly passed.
9. By another order dated 24th May, 2007 passed by this Court it is mentioned that the defendant has no objection to the factual matrix placed by the Local commissioner to the effect that the existing structure cannot be divided into two equal shares in terms of the preliminary decree dated 6th April, 2004 and the court has observed that the property under these circumstances cannot be partitioned by metes and bounds, therefore, the plaintiff and defendant are entitled to their share of the property or equivalent value thereof as per the fair market value. The court by this order appointed Mr. Raman Kapoor, Advocate as the Local commissioner who was given the authority to ascertain the market price of the property bearing No. D-240, Defence Colony, New Delhi.
10. It was directed that the Court Commissioner shall also settle the terms of proclamation and effectuate the sale by public auction which would be conducted after due publicity in the press and the right was given to the parties to submit bids and participate in the sale in accordance with law.
11. The defendant No. 1 also challenged the order dated 24th May, 2007 before the Division Bench of this Court by filing an appeal being FAO(OS) No. 349/07 which was dismissed, by order dated 20th September, 2007.
12. When the matter was listed before the court on 8th May, 2008 it was reported that the Local commissioner had filed his report on 2nd May, 2008 and as per the said report, it was stated that the sales proclamation in respect of the suit property was published in the newspaper on 7th April, 2008 wherein it was indicated that the auction of the suit property shall be held on 26th April, 2008. Pursuant to the auction held on the said date, M/s. Oceanic Homes Pvt. Ltd. (hereinafter referred to as Purchaser.) was declared as the highest bidder at Rs. 19.15 crores. A Pay Order of 10% of the bid amount received from the other bidders was returned back to them. It is mentioned that the highest bidder has deposited Pay order of Rs. 3,70,07,000/- with the Court Commissioner and a sum of Rs. 1,08,68,000/- being 10% of the bid amount deposited earlier with the Local commissioner, thus totaling to Rs. 4,78,75,000/- for this property.
13. According to the terms of sale, the balance 75% of the bid amount was to be paid within 90 days from the date of auction i.e. on or before 26th July, 2008 to complete the confirmation of sale. As per the said order, the said amount was deposited with the Registrar General of this Court in a Fixed Deposit Account and the direction was issued in this regard.
14. The Purchaser subsequently filed an application being I.A. No. 8283/08 for enlargement of time granted to the Purchaser against which the parties have raised no objection and purchaser has to deposit the balance sale consideration in this Court by 18th August, 2008.
15. However, before the next date an application being I.A. No. 9244/08 was filed by one M/s. Buildmore India Ltd. (hereinafter refered to as Builder.) under Order 21 Rule 54 CPC read with Sections 47 and 151 CPC for adjudication of the claim of the said party. The prayer in this application was made to the extent that this Court should allow the claim of the applicant i.e. M/s.Buildmore India Ltd in respect of 1/3rd undivided share of the deceased ( defendant No. 2) in the property bearing No. D-240, Defence Conony, New Delhi and prayer was also made to keep aside the 1/3rd share of the sale proceeds out of the sale of the said property.
16. Another application being I.A. No. 9742/08 was filed by the Builder under Order XXI Rule 59 read with Order XXI Rule 92 CPC with the prayer that stay of confirmation of sale in favour of the Purchaser be stayed pending adjudication of the claim of the Builder made in I.A. No. 9244/08 and alternatively keep aside 1/3rd amount of the sale proceeds out of the total sale consideration of property bearing No. D-240, Defence Colony, New Delhi.
17. The prayer made in the abovementioned two applications filed by Builder are based upon on the following averments:
(i) That Builder/applicant has come to know that the property in question was put to public auction through court auction in the present proceedings.
(ii) The Builder has a claim in the property in question and is entitled to receive part of the sale proceeds. It was alleged in the application that the Builder had entered into an agreement to sell dated 30th August, 1997 with original defendant No. 2 Mr. Anil Chawla (since deceased in the suit herein) in respect of 1/3rd undivided share in the property in question for a total consideration of Rs. 45 lacs which he inherited on demise of his father.
(iii) The Builder had paid Rs. 1,75,000/- to Mr. Anil Chawla as advance earnest money and part sale consideration i.e. Rs. 21,000/- in cash on 30th August, 1997 and Rs. 1,54,000/- by two cheques for Rs. 50,000/- dated 30th August, 1997 and another for Rs. 1,04,000/- dated 15th September, 1997 and both the cheques were encashed by Mr. Anil Chawla and the money was appropriated towards part payment of the sale consideration. Copies of the agreement dated 30th August, 1997 and receipts alongwith copies of the cheques were annexed with the said application.
(iv) It is also mentioned in the application that the balance consideration was to be paid by the Builder within 30 days from the date of registration of the conveyance deed for freehold conversion of the property in question and handing over possession of the property equivalent to 1/3rd undivided share. However, in September, 1997 when the Builder was waiting for the division of the property in question amongst the three brothers, i.e. Mr. Anil Chawla (Defendant No. 2) and his brothers i.e. plaintiff and defendant No. 1, Mr. Anil Chawla informed the builder about the institution of the present suit by the plaintiff. It is the case of the Builder that Mr. Anil Chawla was informed about the passing of the order dated 23rd December, 1996 restraining the parties hereto from creating any third party interest in the property in question and taking possession thereof. However, Mr. Anil Chawla assured the Builder that there was no cause for concern and represented that he had informed his brothers of the agreement to sell and assured the Builder of its 1/3rd undivided share in the property in question.
18. In the last week of May, 2008, the Director of the Builder was informed by one Mr. Sanjay Sharma that the property in question has been put to auction by this Court in the present proceedings. The Director, therefore, approached his counsel and also got inspected the record of the present case and petition was prepared which was filed on 28th May, 2008.
19. On inspection, it was transpired that the plaintiff herein had filed an application under Order 39 Rule 2A being I.A. No. 1047/98 on 4th February, 1998 against defendant No. 2 Mr. Anil Chawla and Mrs.Manmohan Kaur, the Director of the applicant alleging that Mr. Anil Chawla had entered into an agreement to sell dated 30th August, 1997 with the applicant in collusion with defendant No. 2 despite order dated 23rd December, 1996 passed by this Court. A copy of the agreement to sell dated 30th August, 1997 was also placed on record.
20. It appears from the record that the notice of the said application was issued to defendants on 5th February, 1998.
21. Vide order dated 19.2.2002, the plaintiff.s application under Order XXI Rule 4 CPC for substitution of legal representatives of deceased defendant No. 2 was disposed of by this Court on the ground of averments that after the demise of Mr. Anil Chawla and as per the representation of the plaintiff and defendant No. 1 herein, they were the only surviving legal heirs and legal representatives of the deceased who was bachelor and died issueless at the time of death i.e. on 29.9.1990. The name of Mr. Anil Chawla was deleted from the array of defendants.
22. The Builder submits that on the basis of the statement of the plaintiff and defendant No. 1 before this Court about the death of Mr. Anil Chawla who was unmarried and had no legal heirs, this Court passed a preliminary decree for partition on 6th April, 2004 in respect of the suit properties and I.A. No. 1047/98 under Order XXXIX Rule 2A filed earlier was allowed to be disposed of on the said date by the parties.
23. In the light of the abovesaid facts and circumstances, the allegations of the Builder are that the parties to the suit i.e. plaintiff and defendant No. 1 have fraudulently wriggled out of the obligations undertaken by their brother under the agreement to sell dated 30th August, 1997 and have tried to usurp the suit property by over-reaching the rights of the Builder since the Builder is not a party to the present suit for partition and thus had no means to know of the proceedings and the orders passed herein.
24. It is mentioned that the applicant has always been ready and willing to abide by the terms and conditions of the said agreement. It is stated in the application that even in the proclamation of sale published on 7th April, 2008 the plaintiff and defendant did not disclose the encumbrances on the property in question. In the light of the above, it is prayed that the confirmation of sale be stayed in favour of the Purchaser pending adjudication of the claim of the Builder or alternatively keep aside 1/3rd of the sale proceeds.
25. The matter did not rest here as the Purchaser on 13.8.2008 also filed an application being I.A. No. 9741/08 under Section 151 CPC for cancellation of the proclamation of sale of property and return all the earnest money to him who had deposited 25% of the bid amount of Rs. 4,78,75,000/- before the learned Registrar General of this Court and also to grant damages in view of the concealment of execution of the agreement to sell by the plaintiff herein as well as late Sh. Anil Chawla, defendant No. 2.
26. Besides the averment already mentioned by the Builder in the two applications filed, the Purchaser has stated in the application that after depositing 25% of the total sale consideration, it came to his knowledge that the parties herein are not in possession of the original title deeds of the property and therefore, they are not in a position to transfer the property in his favour although the directions were issued by this Court on 28th July 2008 to procure the copies of the said title deeds from the appropriate authorities.
27. It is stated in the application that the plaintiff and defendant have made false statement before the Purchaser that the suit property is free from encumbrances and as it has come to the knowledge of the Purchaser that M/s. Buildmore India Ltd/Builder moved two applications in the present suit claiming that they are in possession of an agreement to sell which was executed by Mr. Anil Chawla who was earlier defendant No. 2 before passing of the preliminary decree.
28. These facts were very much in the knowledge of the plaintiff and defendant herein as the plaintiff himself filed an application under Order 39 Rule 2A being I.A. No. 1048/08 for contempt proceedings against Mr. Anil Chawla and the builder and in view thereof, now it is clear that parties to the suit have concealed these facts from the court. It has not been disclosed that the third party has a right in the property. It is further mentioned in the application that the aforesaid facts were not enough as the plaintiff also entered into an agreement to sell dated 19th July, 2004 with one Sh. Sanjiv Anand whereby the plaintiff had stated that he is 50% owner of the suit property by way of compromise decree passed by this Court and thus sold 50% share of the property to one Mr. Sanjiv Anand for total consideration of Rs. 30 lakhs vide registered agreement to sell dated 19th July, 2008. This fact has also come to the knowledge of the Purchaser later on, from different people.
29. According to the Purchaser he came to know from various persons that the plaintiff and defendant have executed several agreements to sell for the said property. The contention of the Purchaser is that in view of the concealment of execution of the aforesaid agreement to sell by the plaintiff and late defendant No. 2 he cannot get the property transferred to its name nor he is expected to get clear title of the property in question and thus the amount deposited by the Purchaser herein before the Registrar General of this Court be released in favour of the Purchaser and the plaintiff and defendant herein be made liable to pay damages and interest on the amount deposited by the Purchaser. In addition, there must also be a direction issued to Delhi Police to lodge an FIR against the plaintiff and defendant as they have committed fraud upon the Purchaser herein as well as this Court.
30. The replies to these three applications being I.A. Nos. 9244, 9741 and 9742 of 2008 have been filed by the plaintiff as well as defendant. In the nutshell, the execution of the alleged agreement dated 30th August 1997 between Mr. Anil Chawla and the builder has been denied. It is stated that the alleged claim of the builder is patently time barred and the alleged agreement without consideration is void in law. The alleged agreement with Mr. Anil Chawla whose mind was not developed and who was unable to comprehend himself is not valid in law. It is alleged that the Builder took advantage of the mental condition of Mr. Anil Chawla and when the agreement was entered into, the present suit had already been filed in which a restraint order was issued by this Court not to create an third party interest in the suit property.
31. It is further submitted that the Builder was aware that the property can only be converted into freehold on the application of all the three co-owners and if the Builder was serious about the same, he would have also approached the other co-owners. The question of division of properties amongst the parties did not arise as long as the property was leasehold with the office of L & DO.
32. It is also not denied that I.A. No. 1047/94 was disposed of in view of the death of Mr. Anil Chawla. It is also not denied that a notice was issued to Mr. Anil Chawla who never appeared as service may not have been effected upon him. It is denied that any false statement has been made or any fact has been suppressed from this Court or any fraud has been committed as mentioned in the three applications. It is submitted that the plaintiff has full right to dispose of the property as per existing law.
33. It is admitted that inter-se arrangement between the plaintiff and one Mr. Sanjiv Anand is in existence. In terms of the said arrangement Mr. Sanjiv Anand is entitled to certain money from the sale proceeds of the suit property in question which is to be received by the plaintiff. The arrangement in no manner impedes the transfer of the rights, title and interest in the property situate at D-240, Defence Colony, New Delhi by the plaintiff to the Purchaser.
34. It is further stated that the Purchaser has knowledge about the said arrangement and is now using the said fact as a ploy to wriggle out from paying the balance amount of money due and payable by the Purchaser.
35. I have heard learned Counsel for the respective parties at considerable length and have gone through the relevant pleadings and documents placed on record. It is not in dispute that the Purchaser has already deposited 25% of the total sale consideration amounting to Rs. 4,78,75,000/- as per the terms and conditions of the sale proceedings. It is the admitted position that by order dated 27th July, 2008 passed in I.A. No. 8283/08 filed by the Purchaser, no objection was raised by the parties for enlargement of time to deposit the balance sale consideration in court till the next date of hearing i..e. 18th August, 2008 and the present application has been filed on 13.8.2008 by the Purchaser for refund of amount inter alia mainly on the ground of creating the alleged third party interest in the property i.e. Builder. After having come to know about the facts stated in the two applications by the Builder, the Purchaser apprehends that he does not have any hope to get the clear title of the suit property and prays for refund of money and damages. Prima facie, it appears that there is no fault of the Purchaser under the present circumstances. The Purchaser has rightly made the following grievances:
(i) that the parties are not in possession of title deeds.
(ii) That Sh.Anil Chawla had entered into an agreement to sell with Builder and created a third party interest before passing the preliminary decree.
(iii) That the plaintiff has also entered into an agreement dated 19th July, 2004 with Mr. Sanjiv Anand claiming 50% owner of the property by virtue of compromise decree passed by this Court.
36. The contention of the learned Counsel for the plaintiff and the defendant is that the mind of Mr. Anil Chawla was not developed and he could not comprehend himself as he was unable to continue his studies and therefore, the agreement dated 30.08.1997 between Mr. Anil Chawla and the Builder is not valid in law and has no force. I accept the submission of Mr. G L Rawal, learned Senior counsel appearing for the Builder, that this stand was not taken in the plaint nor were the said facts mentioned by the parties at the time of passing of the preliminary decree, therefore, the said stand is not tenable at this stage.
37. The next submission of the learned Counsel for the plaintiff is that the agreement dated 30.08.1997 between Mr. Anil Chawla and the Builder is in violation of the ex parte ad interim orders passed by this Court on 23.12.1996. Mr. Rawal has argued that Mr. Anil Chawla was aware about the ex parte orders passed by this Court on 23.12.1996 and he informed the Builder that his brothers have been informed about this agreement to sell. Mr. Rawal has further argued that the main fact of the matter is that when the preliminary decree was passed by this Court on 06.04.2004, the plaintiff did not inform about the factum of the execution of the agreement between Mr. Anil Chawla [defendant No. 2] and the Builder. On the date of passing of the preliminary decree, the parties were fully aware about the said facts as the plaintiff himself had filed an application for violation of ex parte ad interim orders under Order 39 Rule 2-A CPC being IA No. 1047/1998 against Mr. Anil Chawla and Mrs.Manmohan Kaur, one of the Directors of the Builder.
38. Another leg of the argument of the learned Counsel for the parties to the suit and the defendant is that the application filed by the Builder is hopelessly barred by time as the alleged agreement to sell was executed on 30.08.1997 and the application was filed in the year 1998. Mr. Rawal has given the explanation in this regard to the effect that the application is not barred by time due to the reason that as per the agreement, 1/3rd possession was required to be given to the Builder and secondly, the property was to be made free-hold by the parties but as of today, the said requirements have not been fulfilled and therefore, the application is not barred by time. He has further argued that the plaintiff was aware about the execution of the agreement in the year 1997, therefore, the plaintiff has filed the application being IA No. 1047/1998 under Order XXXIX Rule 2-A CPC on 4th February, 1998 and notice of the same was also issued to the defendants and both the parties were supposed to apprise the court of these facts when the preliminary decree was passed on 06.04.2004.
39. Since this Court is not deciding any rights or title of the Building in these applications, therefore, the question of delay and limitation is left open, which can be considered at the appropriate stage if any remedy is availed by the Builder in future. At this stage, the court is concerned as to whether at the time of passing of decree or on the date of proclamation, the parties have placed the correct facts before the Court not.
40. The plaintiff as well as the defendant have cited various judgments in support of their submissions that the preliminary decree which will be executed, would be the final decree and not the preliminary decree and that the agreement to sell does not confer any right and it is only a right to litigate and is not an encumbrance and the grant of relief of specific performance with respect to immovable property is not automatic. In my view, these judgments do not help the case of the parties at this stage as the prayer in the present applications is for cancellation of the proclamation issued by this Court and it is to be seen as to whether the Purchaser has made out any case for the relief claimed in the light of the averment made in these applications.
41. Mr. Chetan Sharma, Senior Advocate appearing on behalf of Purchaser has argued that the plaintiff and defendant were fully aware about the factum of the said alleged agreement between defendant No. 2 and Builder as the plaintiff himself has moved an application before this Court under Order XXXIX Rule 2-A being I.A. No. 1047/98. The said fact has not been disclosed by the parties while passing of the preliminary decree on 6th April 2004, and on 24th May, 2007 when the Local commissioner was appointed to sell the property in question and they have made an incorrect statement before the Court at the time of obtaining the preliminary decree as an impression was given to the court that both the parties are entitled to share the suit property in equal share.
42. Prima facie, this Court is in agreement with the submissions of Mr. Chetan Sharma, learned Senior Counsel for the Purchaser. It appears from various orders that the court has passed the preliminary decree for partition in favour of the plaintiff and defendant in equal share on the basis of the statement made before this Court on 6th April, 2004 and 24th May, 2007 for sale of the property by appointing the Local commissioner. At no point of time, it was informed to the court that there was an agreement (rightly or wrongly) between Mr. Anil Chawla (earlier defendant No. 2) and the Builder otherwise the court ought not to have passed the preliminary decree on 6th April, 2004 and would have asked the parties to the suit for its satisfaction on this aspect. Mr. Chetan Sharma, Senior counsel has referred to the provisions of Order XXI Rule 66(c) of CPC and has argued that the said sale is contrary to this provisions and questioned as to why the Purchaser would purchase the property when its title is under cloud by paying the full market value. He has argued that had the Purchaser been aware about these facts stated in the applications, he ought not to have gone for the bid to purchase the suit property. Mr. Chetan Sharma, learned Senior counsel has also referred a decision passed by the Apex Court in S P Chengalvaraya Naidu [dead] by L.Rs. v. Jagannath [dead] by L.Rs. : AIR1994SC853 , which is as under:
In this case Jagannath had obtained preliminary decree for partition by suppressing and not disclosing all the material facts and by misrepresenting the facts obtained a preliminary decree of partition. An application for final decree was opposed on the ground that the preliminary decree was obtained by playing fraud upon the Court. The trial Court had dismissed the application but High Court reversed the findings of the trial Court. The Apex Court in appeal set aside the judgment of the High Court and restored that of the trial Court. The Apex Court held as under [para 8]:
A litigant, who approaches the Court, is bound to produce all documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side, then he would be guilty of playing fraud on the Court as well as on the opposite party.
43. Lastly, he argued that in fact the plaintiff and defendant have misled the court and the Local commissioner has issued the notice of proclamation in the newspaper wherein incorrect terms and conditions and details of the property are referred. I agree with the submission of Mr. Chetan Sharma, learned Senior counsel and I consider the Purchaser has made a strong grounds for cancellation of proclamation of sale of property bearing No. D-240, Defence Colony, New Delhi and in view of the facts and circumstances the Purchaser.s application being IA No. 9741/2008 is allowed and the purchaser is entitled to receive the refund.
44. In view of the above, it is directed that the Registrar General of this Court would refund the 25% of the bid amount i.e. Rs. 4,78,75,000/- lying in FDR along with interest accrued thereon to the purchaser M/s. Oceanic Homes Pvt. Ltd within 10 days. As regards the claim of damages by the Purchaser is concerned, he may take the appropriate remedy by separately proceeding in accordance with law if so advised. Therefore, the other prayers made in IA No. 9741/2008 are refused.
45. As regards I.A. No. 9244/2008 and 9742/08 are concerned, the said applications are disposed of in view of the facts stated above and the order passed in I.A. No. 9741/08.
46. List this matter on 10th September, 2009 for further proceeding.