Capt. Suresh Gulati Vs. Shri Rajiv Chawla and ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/711404
SubjectContract;Property
CourtDelhi High Court
Decided OnOct-23-2009
Case NumberIA Nos. 13084/2008, 7566, 7906 and 9657/2009 in CS(OS) 2257/2008
Judge S. Ravindra Bhat, J.
Reported in165(2009)DLT108
AppellantCapt. Suresh Gulati
RespondentShri Rajiv Chawla and ors.
Appellant Advocate T.K. Ganju, Sr. Adv. and; I.D. Tyagi, Adv
Respondent Advocate Rajat Navet, Adv., ; Mohit Bakshi, Adv. for defendant no. 1, ;
Cases ReferredSumtibai and Ors. v. Paras Finance Co. Mankanwar
Excerpt:
- - in our opinion, the aforesaid decision is clearly distinguishable.s. ravindra bhat, j.1. the plaintiff, in this suit - which seeks decree for specific performance, seeks to implead a third party, (by i.a. no. 7566/2009) who, the defendant claims, is owner of the suit property; he also seeks amendment to the suit, to incorporate the claim for cancellation of the sale deed, executed in favour of the said third party respondents (hereafter called 'proposed defendant'). the plaintiff also seeks confirmation of the injunction granted earlier, (in i.a. no. 13084/2008) and for an order restraining the proposed defendants from transferring the suit property, or altering the status quo. (i.a. no. 7906/2009). the defendant also seeks vacation of the injunction granted in favour of the plaintiff by order dated 24-10-2008, (by i.a. no. 9657/2009).2. the facts, to the extent they are not disputed, are stated as follows. the plaintiff entered into an agreement to purchase property, from defendant no. 1 (hereafter 'the builder') on 23-2-2005. the said defendant was concededly not the owner of the property; he had entered into a 'collaboration agreement' with the then owners of the property, i.e. defendant nos. 2-4 ('owners') they are not parties to the said agreement to sell (executed in favour of the plaintiff). the said owners had entered into a collaboration agreement with the builder, whereby he was asked to construct on the property, and also authorized to negotiate and sell the suit property. the plaintiff says that the total consideration agreed to be paid was rs. 28 lakhs; according to him, rs. 18 lakhs was paid. the builder does not admit payment of rs. 18 lakhs, but concedes that rs. 14 lakhs was paid to him. it is not in dispute that the property was sealed by orders of the municipal corporation of delhi, on the allegation that the construction was not in accordance with the sanctioned plan.3. the plaintiff refers to a legal notice, issued to the builder, calling upon it to adhere to the terms of the agreement, and convey the property, since he was informed of the move to dispose of the property. the builder, through his counsel, replied, refuting the allegations. however, he did not, at that stage, mention that the suit property had been sold or transferred by its owners. the plaintiff therefore, filed the present suit, claiming specific performance and consequential relief.4. the defendants filed their written statements; the owners disclosed that the suit property had been sold to the proposed defendant, through a registered sale deed dated 30-4-2008, for a total consideration of rs. 54 lakhs; the purchasers were proposed defendants, sought to be impleaded in the suit. a reading of the written statement of the builder and the owners (i.e. defendant nos. 2-4) shows that according to them, the plaintiff interfered with the manner of construction of the property, which led to the sealing of the premises. it is alleged by the builder that the plaintiff was not interested in completing the transaction. the builder further argues that the owner had filed a suit, seeking declaration that the collaboration agreement was not lawful and binding; on being advised, the builder agreed not to interfere with the said owners' rights, as a result of which the suit was disposed of, by the trial court, on 28-4-2008. a copy of that order has been produced.5. the plaintiff submits that the defendants never revealed that the third party (proposed defendant) was ever sold the property, and that the agreement to sell entered into by him, was ever repudiated. it is submitted that the builder and owner colluded with each other to defeat the plaintiff's rights, deliberately, with the consciousness that he had paid valuable consideration, and agreed to purchase the property after it was duly constructed. the plaintiff refutes the defendants' submissions that he had interfered with the construction.6. the plaintiffs' senior counsel submits that the entire story about the builder abandoning his rights under the collaboration agreement, is unbelievable, and that the sale deed relied on for this purpose is not bona fide, but a sham transaction, for the purpose of defeating his (the plaintiffs') rights. it is emphasized that the owners had conferred rights under the collaboration agreement, which entitled the builder to construct on the property, and enter into binding transactions with third parties; pursuant to the power, he entered into the agreement to sell with the plaintiff, for rs. 29 lakhs in respect of only one floor. however, the sale deed now relied on discloses that only rs. 54 lakhs was paid for the entire property, by the impleading party and proposed defendant. reliance is placed on the judgments reported as kasturi v. iyyamperumal and ors. : (2005) 6 scc 733; ramesh hirachand kundanmal v. municipal corporation of greater bombay and ors. : 1992 (2) scc 524, and mrs. madhu puri v. moti lal puri 2005 (vii) ad 737, to say that the court should, in such circumstances, implead the third party to whom a vendor claims to have sold the property which is the subject matter of the civil suit.7. the owners and builder resist the applications. the owners claim that they had no privity of contract with the plaintiff. it is submitted by the builder that even though the agreement to sell was entered into with the plaintiff, the latter did not comply with its terms. the owners say that the said agreement to sell is sought to be based on a receipt cum agreement, which is both unstampted and unregistered. it is also stated that, besides, they have been left with no interest in the property after the proposed defendant purchased it, through registered sale deed, dated 30th april, 2008.8. the builder supports the owners' stand, and adds that the plaintiff started interfering with the construction, after entering into the agreement to sell, which led to mcd sealing the property. the builder states, in addition, that he is no longer left with any rights over the property, due to a decree in suit. no. 174/2008, by the additional district judge.9. the proposed defendant nos. 5 & 6 claim that they are neither necessary, nor proper parties to the proceeding. they claim to be innocent and bona fide purchasers of the property, by virtue of a registered sale deed, of 30-4-2008. they were unaware of any previous agreement to sell, by the plaintiffs, with the builder or the owners. in any case, say the said proposed defendants, such agreements to sell do not confer any right or interest in the property, and also do not amount to a lien. having acquired title for valuable consideration, they cannot be dragged into litigation over a cause of action to which they are admittedly not concerned.10. it is submitted that the plaintiff can no longer claim a decree for specific performance, in view of the subsequent event of the sale deed, which was executed prior to filing of the suit. in these circumstances, if the plaintiff is aggrieved, he should claim damages against the other defendants, and not attempt to cast a cloud over the title legitimately acquired by the proposed defendants, from the suit property's lawful owners. they also oppose the confirmation of injunction, and further resist the grant of any injunction restraining them from transferring, the suit property, or creating third party rights.11. the controversy here is whether the plaintiff can amend the suit and also implead third parties, based on the stand of the builder and the owners, that the suit property was sold to the proposed defendants, on 30-4-2008, and whether interim injunction should be granted.12. the builder does not dispute entering into an agreement to sell a portion of the property, (the first floor) to the plaintiff. the suit alleges that the builder was authorized, by a prior collaboration agreement and connected documents, to enter into such binding transactions; there is no serious dispute about the total consideration payable by the plaintiff. however, the builder denies the plaintiff's assertions about what was actually paid, and contends that rs. 14 lakhs were paid. the owners state that they were not parties to such arrangement with the plaintiff. however, their written statement states that the plaintiff interfered with the construction, which led to mcd sealing the property. the proposed defendants say that they are bona fide purchasers of the property, for valuable consideration, without notice, and ought not to be dragged into needless litigation.13. from the above discussion, it is apparent that the sale relied on by the defendants, and the subsequent purchasers (proposed defendants) took place before the present suit was filed. however, that itself cannot be conclusive of the present question. the materials on record also reveal that the plaintiff had caused a legal notice dated 5-8-2008, calling upon the builder to perform his part of the contract. this was replied to, by m/s indian law firm, on 18-9-2008, on behalf of the builder. the reply refuted the notice allegations, and leveled allegations about the plaintiff's interference with the course of construction, which led to sealing (of the property) by mcd. this reply, interestingly is silent about the builder having settled with the owner, in a suit filed by the latter. interestingly, m/s indian law firm, the builder's counsel (while replying to the plaintiff's notice) also acted as the owners' counsel, in the suit filed, sometime in april, 2008 (suit. no. 147/2008) before the additional district judge, where the relief claimed was inter alia, a declaration that the agreement with the builder was unenforceable, and a consequent injunction to restrain the builder from taking possession of the suit property. summons in the suit was issued, and on 28-4-2008 a statement was recorded on behalf of the builder, that the owner's 'peaceful possession' would not be interfered with and that they (the owners) were 'free to deal with the property bearing no. i-124, lajpat nagar-1, new delhi measuring 100 sq. yards in a way they so decide.'14. kasturi was a case where a non-party was sought to be impleaded, without the plaintiff's consent. the court held that there must be a right to the suit property for the same relief against a party relating to the same subject-matter involved in the proceedings for specific performance of contract for sale, and secondly, it would not be possible for the court to pass effective decree or order in the absence of such a party. kasturi was explained, in sumtibai and ors. v. paras finance co. mankanwar w/o parasmal chordia (d) and ors. : 2007 (10) scc 82, as follows:in our opinion, the aforesaid decision is clearly distinguishable. in our opinion, the aforesaid decision can only be understood to mean that a third party cannot be impleaded in a suit for specific performance if he has no semblance of title in the property in dispute. obviously, a busybody or interloper with no semblance of title cannot be impleaded in such a suit. that would unnecessarily protract or obstruct the proceedings in the suit. however, the aforesaid decision will have no application where a third party shows some semblance of title or interest in the property in dispute. in the present case, the registered sale deed dated 12.8.1960 by which the property was purchased shows that the shop in dispute was sold in favour of not only kapoor chand, but also his sons. thus prima facie it appears that the purchaser of the property in dispute was not only kapoor chand but also his sons. hence, it cannot be said that the sons of kapoor chand have no semblance of title and are mere busybodies or interlopers.15. this court is of the view that the facts appearing from the record are sufficient to show that the defendant nos. 1-4, prima facie, did not reveal all the facts to the plaintiff, at the relevant time. undoubtedly, the proposed defendant claims to be an innocent purchaser, for consideration, without notice. however, the plaintiffs' right to seek redress, in respect of the transaction, to which such purchaser is a party, cannot be precluded. whether the said party ultimately succeeds in establishing the bona fides of the transaction, cannot be gauged at this stage. however, the plaintiff's right to seek redress against that transaction, independently, cannot be precluded. if that is the correct position, the impleadment of the said proposed defendants would only avoid multiplicity of proceedings. so far as the other defendants are concerned, prima facie, the court is of opinion that an attempt to keep the plaintiff in the dark about the developments was made; he was not informed by the builder about his (the latter's) ceasing to have any interest in the property. the builder has also received substantial amounts from the plaintiff. the owners were prima facie, aware about the agreement to sell, yet they filed a suit without impleading the plaintiff in which the builder compromised with them.16. the court is of opinion that the plaintiff's request to implead the proposed defendants, and amend the suit has to be accepted. the proposed defendants are impleaded as defendant nos. 5 and 6. also, the overall conspectus of facts require that the subsisting injunction against the defendants 1-4 should be confirmed. as far as the newly added defendants are concerned, the court is of opinion that interests of justice require that they should not part with possession, or create any third party rights, in respect of the property, no. i-124, lajpat nagar-1, new delhi, till further orders. it is, however, clarified that the newly added defendants are free to take steps by moving the mcd to get the premises de-sealed, and for that purpose, carry out rectifications, to ensure that the building is brought in accordance with the building bye-laws. such rectifications shall however, be without prejudice to the plaintiff's rights in the suit, and the defendants shall not claim any equities in this regard.17. the applications, i.a. nos. 13084/2008, 7566/2009, 7906/2009 and 9657/2009 are disposed of, in the above terms.
Judgment:

S. Ravindra Bhat, J.

1. The plaintiff, in this suit - which seeks decree for specific performance, seeks to implead a third party, (by I.A. No. 7566/2009) who, the defendant claims, is owner of the suit property; he also seeks amendment to the suit, to incorporate the claim for cancellation of the sale deed, executed in favour of the said third party respondents (hereafter called 'proposed defendant'). The plaintiff also seeks confirmation of the injunction granted earlier, (in I.A. No. 13084/2008) and for an order restraining the proposed defendants from transferring the suit property, or altering the status quo. (I.A. No. 7906/2009). The defendant also seeks vacation of the injunction granted in favour of the plaintiff by order dated 24-10-2008, (by I.A. No. 9657/2009).

2. The facts, to the extent they are not disputed, are stated as follows. The plaintiff entered into an agreement to purchase property, from Defendant No. 1 (hereafter 'the builder') on 23-2-2005. The said defendant was concededly not the owner of the property; he had entered into a 'collaboration agreement' with the then owners of the property, i.e. Defendant Nos. 2-4 ('owners') they are not parties to the said agreement to sell (executed in favour of the plaintiff). The said owners had entered into a collaboration agreement with the builder, whereby he was asked to construct on the property, and also authorized to negotiate and sell the suit property. The plaintiff says that the total consideration agreed to be paid was Rs. 28 lakhs; according to him, Rs. 18 lakhs was paid. The builder does not admit payment of Rs. 18 lakhs, but concedes that Rs. 14 lakhs was paid to him. It is not in dispute that the property was sealed by orders of the Municipal Corporation of Delhi, on the allegation that the construction was not in accordance with the sanctioned plan.

3. The plaintiff refers to a legal notice, issued to the builder, calling upon it to adhere to the terms of the agreement, and convey the property, since he was informed of the move to dispose of the property. The builder, through his counsel, replied, refuting the allegations. However, he did not, at that stage, mention that the suit property had been sold or transferred by its owners. The plaintiff therefore, filed the present suit, claiming specific performance and consequential relief.

4. The defendants filed their written statements; the owners disclosed that the suit property had been sold to the proposed defendant, through a registered sale deed dated 30-4-2008, for a total consideration of Rs. 54 lakhs; the purchasers were proposed defendants, sought to be impleaded in the suit. A reading of the written statement of the builder and the owners (i.e. Defendant Nos. 2-4) shows that according to them, the plaintiff interfered with the manner of construction of the property, which led to the sealing of the premises. It is alleged by the builder that the plaintiff was not interested in completing the transaction. The builder further argues that the owner had filed a suit, seeking declaration that the collaboration agreement was not lawful and binding; on being advised, the builder agreed not to interfere with the said owners' rights, as a result of which the suit was disposed of, by the trial court, on 28-4-2008. A copy of that order has been produced.

5. The plaintiff submits that the defendants never revealed that the third party (proposed defendant) was ever sold the property, and that the agreement to sell entered into by him, was ever repudiated. It is submitted that the builder and owner colluded with each other to defeat the plaintiff's rights, deliberately, with the consciousness that he had paid valuable consideration, and agreed to purchase the property after it was duly constructed. The plaintiff refutes the defendants' submissions that he had interfered with the construction.

6. The plaintiffs' senior counsel submits that the entire story about the builder abandoning his rights under the collaboration agreement, is unbelievable, and that the sale deed relied on for this purpose is not bona fide, but a sham transaction, for the purpose of defeating his (the plaintiffs') rights. It is emphasized that the owners had conferred rights under the collaboration agreement, which entitled the builder to construct on the property, and enter into binding transactions with third parties; pursuant to the power, he entered into the agreement to sell with the plaintiff, for Rs. 29 lakhs in respect of only one floor. However, the sale deed now relied on discloses that only Rs. 54 lakhs was paid for the entire property, by the impleading party and proposed defendant. Reliance is placed on the judgments reported as Kasturi v. Iyyamperumal and Ors. : (2005) 6 SCC 733; Ramesh Hirachand Kundanmal v. Municipal Corporation of Greater Bombay and Ors. : 1992 (2) SCC 524, and Mrs. Madhu Puri v. Moti Lal Puri 2005 (VII) AD 737, to say that the court should, in such circumstances, implead the third party to whom a vendor claims to have sold the property which is the subject matter of the civil suit.

7. The owners and builder resist the applications. The owners claim that they had no privity of contract with the plaintiff. It is submitted by the builder that even though the agreement to sell was entered into with the plaintiff, the latter did not comply with its terms. The owners say that the said agreement to sell is sought to be based on a receipt cum agreement, which is both unstampted and unregistered. It is also stated that, besides, they have been left with no interest in the property after the proposed defendant purchased it, through registered sale deed, dated 30th April, 2008.

8. The builder supports the owners' stand, and adds that the plaintiff started interfering with the construction, after entering into the agreement to sell, which led to MCD sealing the property. The builder states, in addition, that he is no longer left with any rights over the property, due to a decree in Suit. No. 174/2008, by the Additional District Judge.

9. The proposed defendant Nos. 5 & 6 claim that they are neither necessary, nor proper parties to the proceeding. They claim to be innocent and bona fide purchasers of the property, by virtue of a registered sale deed, of 30-4-2008. They were unaware of any previous agreement to sell, by the plaintiffs, with the builder or the owners. In any case, say the said proposed defendants, such agreements to sell do not confer any right or interest in the property, and also do not amount to a lien. Having acquired title for valuable consideration, they cannot be dragged into litigation over a cause of action to which they are admittedly not concerned.

10. It is submitted that the plaintiff can no longer claim a decree for specific performance, in view of the subsequent event of the sale deed, which was executed prior to filing of the suit. In these circumstances, if the plaintiff is aggrieved, he should claim damages against the other defendants, and not attempt to cast a cloud over the title legitimately acquired by the proposed defendants, from the suit property's lawful owners. They also oppose the confirmation of injunction, and further resist the grant of any injunction restraining them from transferring, the suit property, or creating third party rights.

11. The controversy here is whether the plaintiff can amend the suit and also implead third parties, based on the stand of the builder and the owners, that the suit property was sold to the proposed defendants, on 30-4-2008, and whether interim injunction should be granted.

12. The builder does not dispute entering into an agreement to sell a portion of the property, (the first floor) to the plaintiff. The suit alleges that the builder was authorized, by a prior collaboration agreement and connected documents, to enter into such binding transactions; there is no serious dispute about the total consideration payable by the plaintiff. However, the builder denies the plaintiff's assertions about what was actually paid, and contends that Rs. 14 lakhs were paid. The owners state that they were not parties to such arrangement with the plaintiff. However, their written statement states that the plaintiff interfered with the construction, which led to MCD sealing the property. The proposed defendants say that they are bona fide purchasers of the property, for valuable consideration, without notice, and ought not to be dragged into needless litigation.

13. From the above discussion, it is apparent that the sale relied on by the defendants, and the subsequent purchasers (proposed defendants) took place before the present suit was filed. However, that itself cannot be conclusive of the present question. The materials on record also reveal that the plaintiff had caused a legal notice dated 5-8-2008, calling upon the builder to perform his part of the contract. This was replied to, by M/s Indian Law Firm, on 18-9-2008, on behalf of the builder. The reply refuted the notice allegations, and leveled allegations about the plaintiff's interference with the course of construction, which led to sealing (of the property) by MCD. This reply, interestingly is silent about the builder having settled with the owner, in a suit filed by the latter. Interestingly, M/s Indian Law Firm, the builder's counsel (while replying to the plaintiff's notice) also acted as the owners' counsel, in the suit filed, sometime in April, 2008 (Suit. No. 147/2008) before the Additional District Judge, where the relief claimed was inter alia, a declaration that the agreement with the builder was unenforceable, and a consequent injunction to restrain the builder from taking possession of the suit property. Summons in the suit was issued, and on 28-4-2008 a statement was recorded on behalf of the builder, that the owner's 'peaceful possession' would not be interfered with and that they (the owners) were 'free to deal with the property bearing No. I-124, Lajpat Nagar-1, New Delhi measuring 100 sq. yards in a way they so decide.'

14. Kasturi was a case where a non-party was sought to be impleaded, without the plaintiff's consent. The court held that there must be a right to the suit property for the same relief against a party relating to the same subject-matter involved in the proceedings for specific performance of contract for sale, and secondly, it would not be possible for the Court to pass effective decree or order in the absence of such a party. Kasturi was explained, in Sumtibai and Ors. v. Paras Finance Co. Mankanwar W/o Parasmal Chordia (D) and Ors. : 2007 (10) SCC 82, as follows:

In our opinion, the aforesaid decision is clearly distinguishable. In our opinion, the aforesaid decision can only be understood to mean that a third party cannot be impleaded in a suit for specific performance if he has no semblance of title in the property in dispute. Obviously, a busybody or interloper with no semblance of title cannot be impleaded in such a suit. That would unnecessarily protract or obstruct the proceedings in the suit. However, the aforesaid decision will have no application where a third party shows some semblance of title or interest in the property in dispute. In the present case, the registered sale deed dated 12.8.1960 by which the property was purchased shows that the shop in dispute was sold in favour of not only Kapoor Chand, but also his sons. Thus prima facie it appears that the purchaser of the property in dispute was not only Kapoor Chand but also his sons. Hence, it cannot be said that the sons of Kapoor Chand have no semblance of title and are mere busybodies or interlopers.

15. This Court is of the view that the facts appearing from the record are sufficient to show that the Defendant Nos. 1-4, prima facie, did not reveal all the facts to the plaintiff, at the relevant time. Undoubtedly, the proposed defendant claims to be an innocent purchaser, for consideration, without notice. However, the plaintiffs' right to seek redress, in respect of the transaction, to which such purchaser is a party, cannot be precluded. Whether the said party ultimately succeeds in establishing the bona fides of the transaction, cannot be gauged at this stage. However, the plaintiff's right to seek redress against that transaction, independently, cannot be precluded. If that is the correct position, the impleadment of the said proposed defendants would only avoid multiplicity of proceedings. So far as the other defendants are concerned, prima facie, the court is of opinion that an attempt to keep the plaintiff in the dark about the developments was made; he was not informed by the builder about his (the latter's) ceasing to have any interest in the property. The builder has also received substantial amounts from the plaintiff. The owners were prima facie, aware about the agreement to sell, yet they filed a suit without impleading the plaintiff in which the builder compromised with them.

16. The court is of opinion that the plaintiff's request to implead the proposed defendants, and amend the suit has to be accepted. The proposed defendants are impleaded as Defendant Nos. 5 and 6. Also, the overall conspectus of facts require that the subsisting injunction against the Defendants 1-4 should be confirmed. As far as the newly added defendants are concerned, the court is of opinion that interests of justice require that they should not part with possession, or create any third party rights, in respect of the property, No. I-124, Lajpat Nagar-1, New Delhi, till further orders. It is, however, clarified that the newly added defendants are free to take steps by moving the MCD to get the premises de-sealed, and for that purpose, carry out rectifications, to ensure that the building is brought in accordance with the building bye-laws. Such rectifications shall however, be without prejudice to the plaintiff's rights in the suit, and the defendants shall not claim any equities in this regard.

17. The applications, I.A. Nos. 13084/2008, 7566/2009, 7906/2009 and 9657/2009 are disposed of, in the above terms.