India Affordable Housing Solutions (Iahs) & Anr vs.konark Infra Developers Private Limited & Ors - Court Judgment

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI % Reserved on:

19. h March, 2018 Pronounced on:

03. d April, 2018 CS(OS) 82/2014 INDIA AFFORDABLE HOUSING SOLUTIONS (IAHS) & ANR ..... Plaintiffs Through: Ms.Sangeeta Tomar, Advocate. versus KONARK INFRA DEVELOPERS PRIVATE LIMITED & ORS ..... Defendants Through: Mr.Samdarshi Sanjay, Adv. for + defendants No.5 & 6. Col.Rajnish Soni/D-2 in person. CORAM: HON'BLE MR. JUSTICE YOGESH KHANNA YOGESH KHANNA, J.

IA No.10345/2014 1. This application is under Order 37 Rule 3 (5) of the Civil Procedure Code moved by defendants No.1 to 3 for leave to defend in a suit filed against the defendants for recovery of ₹3.00 Crore with pendentelite and future interest @ 18% pa with costs of the suit.

2. Before coming to the application, let me state the brief facts as under:-

"IA No.10345/2014 in CS (OS) No.82/2014 Page 1 of 13 a) The Government Officers Welfare Organisation (GOWO) is a registered trust and a non-profit organization which aim at providing low cost and affordable housing welfare measures and consultancy to retired/ retiring government officers and is headed by Cdr Kuldeepak Mittal (Retd) as chairman; b) the plaintiff with an aim and objective of providing affordable housing had entered into a memorandum of understanding (MOU) dated 30.07.2009 with GOWO to facilitate tie-ups with various companies to provide affordable low cost housing to the retired and retiring government officials; c) the defendants No.2 & 3 are the directors of the defendant No.1 and responsible for day to day affairs of the defendant No.1. The defendants No.2 & 3 are husband and wife. The defendant No.2 being an ex-Defence officer persuaded the chairman of GOWO to work together and claimed to have executed collaboration agreements with farmers in Sector-79, Gurugram and had applied for Letter of Intent (LOI) to- Haryana Urban Development Authority- HUDA, Haryana Government. It is alleged defendant No.2 made various promises at the time of taking money and promised to construct 500-700 houses, in his own handwriting in the MOU. He falsely alleged collaboration agreements with the farmers had been done before entering into the MOU dated 14.6.2010. An amount of 3.00 Crore was handed over to defendants No.1 to 3 to implement the MOU in which the defendants have stated that they have applied for LOI with HUDA; d) the defendants were actively engaged in the facilitation of the project at Sector-79, Gurugram and persuaded the plaintiff to enter into a IA No.10345/2014 in CS (OS) No.82/2014 Page 2 of 13 memorandum of understanding (MOU) to work on this joint project with the defendants and defendant No.2 took the sole responsibility on behalf of defendant no.1 to get all requisite sanctions from the State Government, to get the building plan, layout approved and to provide all kinds of legal assistance. He stated that all the farmers with whom the joint venture was being undertaken were fully cooperative and there was no obstacle in carrying out the said project; e) the plaintiff wrote a letter on 20.01.2010 specifically enquiring the defendant No.1 if there was any concrete proposal and defendant No.4 vide email dated 06.05.2010 apprised the plaintiff about the ongoing project at Sector – 79, Gurugram, Haryana and that they have already applied for LOI and the plaintiff should invest in the said project. The MOU dated 14.06.2010 was executed between the parties along with two annexures sent by the defendant No.2 to GOWO by email and further sent by GOWO to the plaintiff. The defendants assured the plaintiff that the agreements for 13 acres of land have already been executed with the farmers and they have applied for LOI and shall acquire further land from the farmers; defendant No.1 would get the licenses and approvals from HUDA; would get the loans approved from home loans and shall have all the responsibility for all legal liabilities towards the title, LOI, licenses, home loan etc; whereas the plaintiff would be responsible for the project management, promotional activities, to find buyers of the flats etc; f) as per the MOU, the plaintiff paid a sum of 3.00 crore to defendant No.1 viz 1.00 crore on 14.06.2010 and 2.00 crore on 01.07.2010 by cheque. However, the payment of cheque bearing No.495845 dated 01.07.2010 for 2.00 crore was got stopped as the IA No.10345/2014 in CS (OS) No.82/2014 Page 3 of 13 cheque was lost by the defendants and as such it was replaced by another cheque No.497454 dated 24.06.2010 for 2.00 crore. Further on 24.06.2010, an additional sum was given to the defendant No.1 company as loan vide cheque No.497455 dated 24.06.2010 to the tune of 1.00 Crore which was encashed on 25.06.2010. However, loan of 1.00 Crore which was taken on 24.06.2010 was returned to the plaintiff by defendants vide two cheques bearing Nos.21459 and 21469, dated 01.09.2010 and 20.09.2010 for 65.00 Lac and 35.00 Lac respectively. However, the amount of 3.00 Crore is still outstanding against the defendants. This amount was only to be used by the defendants for the development of the project in Sector – 79, Gurugram, Haryana and the defendants would offer 500-700 dwelling units in said project to the plaintiff. g) The salient features of the MOU are referred to in para No.21 of plaint:-

"“(a) Page 1 - Both companies have decided to do a project as per land acquired by Konark as per layout placed at Annexure 1. (b) Page 1 - Both Konark and IAHS do not represent each other in any manner other than what has been agreed to in this MOU. (c) The project is an exclusive effort to provide dwelling units to GOWO for officers/employees of central/State Government and excess capacity to the general public thereafter. (d) Both parties agree to honour this equal partnership in letter and spirit and shall not cause any breach of trust whatsoever. (e) Konark will get bank loan approved for home loans. IA No.10345/2014 in CS (OS) No.82/2014 Page 4 of 13 (f) All amounts released by IAHS to Konark, will be utilized only for the project in Sector 79 only. (g) IAHS and KIDPL do not represent each other in any capacity whatsoever other than what was stated in the MOU. (h) All four pages of the MOU have been signed by defendant No.2 on every page. The Annexures mentioned in the MOU were received on email through Cdr Neeraj Singla - Def No 4.”; h) the time limit for completion of the formalities/obligations which the defendants have imposed upon themselves vide MOU are in para No.22 of plaint as under:-

"Proposed/ Tentative date End August 2010 End October 2010 End February 2011 End March 2011 April 2011 Activity as promised by the defendant No.1 company Obtaining LOI from HUDA Obtaining HUDA License from All other clearances – viz Building Plans/AAI/Electricity/Water etc. Home Loan approval from bank Construction starts. 1 2 3 4 5 i) the copy of the LOI application dated 05.03.2010 was supplied by the defendant No.4 to the Director of Town Planning, Haryana for grant of licence for development of group housing area measuring 13 acres IA No.10345/2014 in CS (OS) No.82/2014 Page 5 of 13 falling in the revenue estate of Village Naurang Pur Sector-79, Gurugram at No.LC-2350 DS(R)-2010/943 along with the application, the defendants also submitted form LC-l collaboration with farmers, deed of undertaking, jamabandi of land, mutation, duly signed by Halka Patwari, memorandum of article which were submitted to the office of Directorate of Town and Planning, Haryana. The defendants concealed the fact that the application for grant of license was rejected by the concerned authority and the project could not be proceeded further but had an intention to usurp the hard earned money of the plaintiff; j) the plaintiff in the month October, 2010 demanded the money and defendants on 05.10.2010 issued six post dated cheques for 50.00 Lac each totaling to 3.00 Crore which were dishonoured for the reasons payment stopped by the drawer. The said cheques are annexed to plaint. The complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) and various police complaints were filed wherein ultimately a settlement agreement was executed. During investigations, it was revealed the amount of 3.00 Crore was deposited by the defendant in various Fixed Deposit Receipts and the defendants did not gave a single penny to the farmers for acquiring the land despite the fact the defendants was to construct/offer 500-700 flats and this amount was to be adjusted by the defendant No.1 against the cost of such flats. The FIR No.192/2011 was also registered under Sections
of the Indian Penal Code at police station Khekri Dhola, Gurugram, Haryana; k) The plaintiff issued a demand notice dated 10.12.2010 which was duly received by the defendants, but they failed to make the payment. The plaintiff also filed the complaint case under Section 138 NI Act for IA No.10345/2014 in CS (OS) No.82/2014 Page 6 of 13 the bounced cheques and a settlement was arrived at between the parties vide order dated 29.01.2015 in CC No.672/1/11 and 671/1/11 wherein the defendant No.2 Rajnish Soni agreed to make payments on his behalf as well as on behalf of the defendant No.1 a sum of 3.00 Crores in installments viz first installment of 50.00 Lac on 31.01.2015; second installment of 50.00 Lac on 30.11.2015; third installment of 1.00 Crore on 01.01.2016 and last installment of 1.00 Crore on 31.03.2016. l) Further, in its order dated 23.03.2015, this Court record as under:-

"“Learned counsel for plaintiffs and defendants No.1 to 3 state that the disputes between the parties have been settled. They both have handed over a copy of the order dated 29th January, 2015 passed by the Metropolitan Magistrate (South), Negotiable Instruments Act. The same is taken on record. Defendant No.4, who appears in person, states that no settlement has been executed by him. Both the learned counsel pray for an adjournment to await payments of installments in accordance with the order dated 29th January, 2015. At request, adjourned to 26th August, 2015.” 3. The defendants No.1 to 3 moved this leave to defend application mainly on the ground that it is the plaintiff who owes money to them and the application speaks about a cheque of 2.00 Crore given by the plaintiff as an advance payment for purchase of the land was dishonoured and the defendants got registered CC No.46
under Section 138 of the NI Act in the Court of Shri Amit Grover, JMIC, Gurugram. It is alleged that the defendants No.1 to 3 have advanced a loan to the plaintiff in two installments of 65.00 Lac and 35.00 Lac which was admitted IA No.10345/2014 in CS (OS) No.82/2014 Page 7 of 13 by the plaintiff and in that view no amount is due and payable by the defendants. Rather the defendants No.1 to 3 has to recover an amount of 4.00 Crore from the plaintiff.

4. The case of the defendants/applicant is:-

"i) the applicants came in contact with Mr. Kuldeepak Mittal in the year 2008, when he retired from the armed forces and he introduced himself as Vice President of Sainik Welfare Organization ("SWO”), which was running the Project in Manali, whereas, the defendant Nos.1 to 3 were running a project for Delhi Police and NTPC in Sector 49, Faridabad. The Plaintiff through Mr.Kuldeepak Mittal, who was Vice President of SWO showed his interest to carry the Project in Sector-37C, Gurgaon and in Faridabad and subsequently, applicants and Mr.Kuldeepak Mittal entered into an Agreement with respect to this Project. Subsequently, Mr.Kuldeepak Mittal started Government Officers Welfare Organization ("GOWO") and transferred SWO members to GOWO membership with respect to Sector 37 project. Subsequently, this Project was awarded to Private Builder by GOWO and applicants. In this Project, applicants incurred losses and were to get commission of 7.00 Crores from Mr.Kuldeepak Mittal, who represented to applicants that it could not be paid from GOWO account as it was no profit no loss NGO and thus assured the defendant that the loss and commission of 7.00 Crores shall be paid through another firm IAHS viz., the plaintiff herein and that they shall carry another Project and funds would be made available to the defendants, including 7.00 Crores, due from Mr. Kuldeepak Mittal IA No.10345/2014 in CS (OS) No.82/2014 Page 8 of 13 to the applicants. It was under this understanding the partnership Firm, IAHS came into being. ii) The plaintiff in order to compensate the applicants and per Mr.Kuldeepak Mittal's representation to the applicants that he wants to establish himself as builder, entered into a Memorandum of Understanding to start the Project of Sector 79 Gurugram and to pay the previous dues of the applicants, issued four cheques totaling to 6.00 Crores details whereof are as under: S.No.Cheque No.Dated Amount( ) Purposes 1 2 3 4 495844 14.06.2010 1 Crore 495845 01.07.2010 2 Crore MOU MOU49745 24.06.2010 2 Crore Part Payment of 7.00 Crore 497455 24.06.2010 1 Crore Part Payment of 7.00 Crore iii) The cheque bearing No.495845 dated 01.07.2010 bounced. The plaintiff took 6 Post Dated Cheques for 50 Lac each, which, are subject matter of this suit and were to be kept as security. The plaintiff however failed to fulfill its commitment under the MOU to provide funds to purchase the land as money of 3.00 Crores taken initially was given as advance to the farmers and it is for this reason, the plaintiff has not annexed with the MOU the -annexures thereto which provided for their obligations under it though original of the same is in possession of the plaintiff but the same was never handed over to the applicants. The project could not take off and applicants incurred losses and disputes arose; IA No.10345/2014 in CS (OS) No.82/2014 Page 9 of 13 iv) the plaintiff filed the criminal complaint before the Delhi Police regarding the 6 cheques of 50 Lac each issued by applicants as security, but no action was taken, it being a civil dispute of claim and counter claims. Thereafter, the plaintiff allegedly approached Gurugram Police for same cause of action and filed a criminal case against applicants and FIR was registered under Section 420 & 406 of the IPC. The Applicants filed petitions under Section 482 of the Criminal Procedure Code being Criminal Misc Nos.M-28272/2011 and M-16139/2012. The FIR was quashed qua the defendant No.3 and granted interim relief to defendant No.2. The copy of the order is annexed with the application; v) the averments made hereinabove establishes the claim of the plaintiff under Order 37 of the CPC is not maintainable as the same is a disputed facts which need to be tried and the same cannot be decided in summary procedure. No amount is due against the applicant. The Applicants submits that from the factual narration hereinabove, they have been able to raise triable issues which need adjudication by leading evidence.

5. Thus in substance the learned counsel for the defendants No.1 to 3 argued the defendants were to receive 7.00 Crores as above, in the year 2010-11, but is unable to answer if that was so then why did he entered into a settlement dated 29.01.2015 and/or why his counsel made a statement on 23.03.2015 before this Court that the dispute is settled. Of course he was referring to settlement dated 29.01.2015.

6. It appears the applicants are trying to mix two disputes into one which disputes are obviously distinct. It is a settled law, held in catena of IA No.10345/2014 in CS (OS) No.82/2014 Page 10 of 13 judgments including in Roop Kumar vs. Mohan Thedani 2003 (6) SCC595 Yash Chhabra vs. Maya Jain 2015 (151) DRJ316that an oral plea to contradict written agreement is not tenable in terms of Section 91 of the Indian Evidence Act, 1872. Since all the above pleas/ allegations qua claim of 7 crores of the defendants is against the MoU/settlement dated 29.01.2015, hence cannot be considered.

7. The criteria while considering the application under Order 37 of the CPC has been discussed by the Supreme Court in Mechelec Engineers And Others vs. M/s. Basic Equipment Corporation 1977 AIR577= 1977 SCR (1)1060 which noted:-

"“8. In Smt.Kiranmoyee Dassi & Anr. v. Dr. J.

Chatterjee(1), Das. J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 37 C.P.C. in the form of the following propositions (at p. 253): is entitled the Defendant (a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and to unconditional leave to defend. (b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend. (c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, IA No.10345/2014 in CS (OS) No.82/2014 Page 11 of 13 discretion practically moonshine although the affidavit does not positively and immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security. (d) If the Defendant has no defence or the defence set up is illusory or sham or then ordinarily the Plaintiff is entitled to leave the Defendant is not entitled to leave to defend. (e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed into Court or otherwise se- cured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence". to sign judgment and in its is paid 8. As the defence raised in their application for leave to defend is contrary to what they had taken in their case under Section 138 NI Act, so the defence of the defendants no.1 to 3 though appear to be illusionary IA No.10345/2014 in CS (OS) No.82/2014 Page 12 of 13 but they are allowed to proceed on their depositing the principal suit amount of `3.00 Crore with the Registrar General of this Court within four weeks from today. The amount so deposited shall be put in the fixed deposit for a period of one year. Alternately, they are also permitted to furnish the bank guarantee of any nationalised bank for the above sum.

9. The application stands disposed of in above terms. IA No.1007/2016 10. In view of above order passed on leave to defend application, this application of the plaintiff also stands disposed of. CS(OS) 82/2014 11. Upon complying with above directions, written statement be filed by the defendants within four weeks thereafter. Replication thereto, if any, be also filed by the plaintiff within two weeks of filing the written statement.

12. List for compliance and completion of pleadings before the Joint Registrar (Judicial) on 05th July, 2018.

13. Be listed in Court upon completion of pleadings. YOGESH KHANNA, J APRIL03 2018/M IA No.10345/2014 in CS (OS) No.82/2014 Page 13 of 13