Vishwa Nath Sharma Vs. Shyam Shanker Goela & Anr  Insc 213 (26 February
Dr. ARIJIT PASAYAT & TARUN CHATTERJEE
Dr. ARIJIT PASAYAT, J.
Challenge in this appeal is to the judgment rendered by a Division Bench of
the Delhi High Court dismissing the First Appeal filed by the appellants who
were defendants in the suit filed by the respondents. The regular first appeal
under Section 96 of the Code of Civil Procedure, 1908 (in short 'the Code') was
directed against the judgment and decree passed by the Additional District
Judge, Delhi, in Civil Suit no.
129/80. The trial court had decreed the suit of the plaintiff for specific
performance of the agreement to sale directing the defendant-appellant to
execute necessary sale-deed within a particular period. Defendants were asked
to take necessary steps for completing necessary formalities towards execution
of the sale-deed.
Background facts in a nutshell are as follows:
On 12.12.1979 plaintiff filed the suit claiming decree for specific
performance of agreement to sell dated 24th March, inter alia, alleging that
Delhi Development Authority had granted a lease of a big plot of land in favour
of New Friends Cooperative House Building Society and the Society had granted
sub lease in favour of its members. Durga Nath Sharma, defendant No.1 being one
of the members of the Society was granted a sub lease with respect to plot No.
334 measuring 524 Sq. yards under sub lease dated 2.7.1974. The said defendant
with a view to sell the said plot entered into an agreement with the plaintiff
on 24.3.1978 at a fixed price of Rs.85,000/-. A sum of Rs.8,500/- was received
by him towards part payment of the price, the balance was payable within 15
days after receipt of approval of building plan by Delhi Development Authority.
The said defendant also agreed to execute necessary documents in favour of the
plaintiff such as, (a) construction agreement (b) General and Special Power of
Attorney, (c) Will, (d) Agreement to Sell and (e) any other necessary document.
These documents were to be executed by the defendant no.1 in order to avoid
possibility of complication in transfer of the plot to the plaintiff, although
the intention of the defendant no.1 was to sell the plot to the plaintiff for
which the necessary deal was struck. The plaintiff further alleged that he got
a building plan prepared from an architect to suit his requirements, which was
sent alongwith draft of the other documents with a covering letter dated
17.5.1978 to the defendant no.1. More documents were sent with another letter
of the same date for signatures of defendant No.1. Both the letters were sent
under registered cover and were duly received by the defendant no.1 but no
reply was received. On 17.8.1978 another letter under registered cover was sent
to the defendant no.1, which though received was not replied to by the said
defendant. The plaintiff further alleged that the defendant no.1 appears to
have changed his mind later on and in an attempt to wriggle out of the deal had
fraudulently transferred the plot by way of gift in favour of his son
(defendant No.2)/ appellant No.2 which the plaintiff alleged was not binding on
him and for that reason appellant No.2 was impleaded in the suit. It is further
alleged that on 29.8.1978 defendant no.1 wrote a letter to the plaintiff
cancelling the agreement to sell and returned the amount of Rs.8,510/- by
cheque which included bank collection charges.
Since defendant No.1 could not have unilaterally cancelled the agreement
which still subsisted, the plaintiff declined to accept the cheque and did not
encash it. The plaintiff had always been ready and willing to perform his part
of the contract and is still ready and willing to purchase the plot on payment
of the balance price but defendant No.1 had unilaterally backed out. Therefore,
plaintiff was left with no option except to send a notice on 17.8.1978 calling
upon defendants to execute necessary sale deed. No steps were taken by the
defendants and, therefore, the suit was filed.
The defendants contested the suit by filing a joint written statement
alleging that the suit was false and frivolous based upon incorrect
allegations. Defendant No.1 never agreed to sell his plot to the plaintiff. The
plot was not saleable and even if there was an agreement to sell, the same was
void since there was no contract to sell the said plot, transfer of which was
prohibited under Clause II Sub Clause (6)(a) and (6)(b) of the lease deed
executed between President of India and the New Friends Cooperative House
Building Society and of the sub lease executed between the Society and the
The defendant no.1 gave his own explanation about the receipt of the amount
and of the nature of transaction with the plaintiff stating that at one point
of time the defendant no.1 was interested in sale of the plot, if he could get
a reasonable price and in case there was no legal implication, for which
purpose he contacted Pandit Brothers Estate Agency, Lajpat Nagar, a broker.
When on his visit from Jamshedpur to Delhi, he consulted the Society officials
and was informed that he could not sell, transfer or mortgage the plot, at that
time, the defendant no.1 thought of constructing a house on the plot.
Since he was residing at Jamshedpur the said broker informed him that he
could get the services of a building contractor, who could construct the
building. The plaintiff agreed to construct a house on the plot according to
the plan sanctioned by the authorities in favour of defendant No.1. The
plaintiff asked defendant No.1 to execute an agreement for building
construction. The plaintiff also deposited with defendant No.1 a sum of
Rs.8.500/- as part security for carrying out the construction, as per the
desire of the defendant no.1 within the stipulated time. The plaintiff promised
to send draft of the agreement. Some rough drafts were sent by the plaintiff in
May, 1978, which were not acceptable to defendant no.1.
Therefore, he wrote back to the plaintiff that he was not prepared to accept
the same. Defendant No.1 further alleged that he came to Delhi with a draft of
Rs.8500/-. The plaintiff refused to accept the same. It was specifically
pleaded that the defendant no.1 never agreed to sell or transfer or convey the
plot. There was a complete prohibition in a sub lease to transfer the plot to
anybody who was not a member of the Society. Therefore, the suit was liable to
be dismissed. The defendant no.1 denied the allegations of plaintiff that there
was an agreement to sell or that he ever agreed to sell the plot.
He stated that bona fide and in good faith he made an application to Delhi
Development Authority for permission to gift the plot to his son, defendant
No.2 and accordingly, after obtaining necessary permission gift deed dated
18.7.1978 was executed, which was accepted by the donee and possession of the
plot had also been handed over to defendant No.2.
The plaintiff filed replication denying the defendants' version. Learned
trial court framed the following issues :-
Whether defendant No.1 on 24.3.78 agreed to sell the plot in dispute to
the plaintiff at Rs. 85.000/-.
If issue No.1 is proved, whether this agreement of sale is void being not
permissible by law? OPD
If issue No.2 is not proved, in favour of the defendant whether the
plaintiff was ready and willing to perform his part of the contract?
Whether Rs.8500/- was received by defendant No.1 as security for carrying
out the construction on the plot in dispute by the plaintiff on behalf of
defendant No.1 as alleged in para 4 of the written statement ? OPD
Whether defendant No.2 is not bound
by any agreement to sell in between the plaintiff and defendant No.1 if issue
No.1 is proved? OPD-2 6. Relief.
Considering the evidence led, the Trial Court held that the plaintiff must
succeed. In appeal, the High Court after considering the rival submissions came
to hold that there were several documents which tend to suggest that defendant
no.1 was aware of the fact that there was an embargo in the lease deed that
transfer could not take place without permission. It appears that he was also
aware of the fact that permission, if accorded, by the Delhi Development
Authority for affecting transfer, would be subject to payment of unearned
increase and for that reason alone, in one of the letters defendant no.1 had
specifically informed the property dealer that while making offers that aspect
was to be kept in view i.e. 50% of the unearned increase should be paid by the
transferee. The High Court made reference to the lease deed dated 2.7.1974
(Exhibit P-4), letter dated 27.9.77 addressed by defendant no.1 to the property
dealer indicating his intention to sell if the value would be reasonable and
there was no implication in future; Exhibit P-5, i.e. letter dated 16.10.1977
by which the defendant no.1 asked the property dealer that buyer shall have to
pay 50% of the difference between original cost and the market value; Exhibit
P-6 i.e the letter dated 10.1.78 exchanged by defendant no.1 and the property
dealer to show that the amount which the prospective buyer was willing to pay
was less according to defendant no.1; Exhibit P-7 i.e.
letter dated 1.2.78 by defendant no.1 with reference to previous letter
asking for more amount from the prospective purchaser. Similar was the
situation in several other letters addressed by defendant no.1 to the property
dealer. The High Court was of the view that instead of performing his part of
the agreement, defendant no.1 being conscious of the fact that property prices
were rising resiled from his commitment and transferred by way of gift in favour
of his son after obtaining the permission for transfer. The High Court also
noticed that the plaintiff was ready and willing to perform his part of the
The High Court did not accept the contention that since there was some
restriction on transfer, that disentitled the plaintiff from obtaining a decree
for specific performance of the contract.
The appeal was dismissed observing, inter alia, as follows:
"Consequently, we find no force in the appeal which is hereby dismissed
We make it clear that the learned trial court rightly directed the
defendants/appellants to apply for necessary permissions within the period
specified therein. In case permissions are not applied for, it will be
permissible for the plaintiff to make such an application and in case requisite
permission is accorded, on receipt thereof, the plaintiff will call upon the
defendants/appellants to execute requisite sale deed in accordance with law and
on failure to do so execution and resignation of the sale deed will be as per
Learned counsel for the appellants submitted that the trial Court and the
High Court failed to appreciate that there was an impediment on the transfer.
There could not have a valid agreement. In the background noticed by the Trial
Court and the High Court if the transfer was prohibited by DDA, agreement could
not have been enforced by a decree in a suit for specific performance.
Learned counsel for the respondent on the other hand submitted that the lack
of permission, if any, cannot act as absolute bar on a decree being passed. The
decree may not be executable. As noticed by the High Court it was submitted
that the price rise is not a ground to deny specific performance.
In this case the trial Court as well as the High Court have categorically
found that the plaintiff was ready and willing to perform his part of the
arrangement. In fact, if DDA refused to grant permission a suit for damages can
The plea of hardship which is presently being raised was never raised before
the Courts below and was not also pleaded. The conditions 6A and 6B to the
reference has been made by learned counsel for the appellant does not create an
absolute bar. The plea that the plaintiff was merely a contractor was also not
accepted and it was found that the finding of fact that the plaintiff was not a
contractor as claimed by the appellant.
The Privy council in Motilal v. Nanhelal, AIR 1930 P.C.
287, laid down that if the vendor had agreed to sell the property which can
be transferred only with the sanction of some government authority, the court
has jurisdiction to order the vendor to apply to the authority within a
specified period, and if the sanction is forthcoming, to convey to the
purchaser within a certain time. This proposition of law was followed in Mrs.
Chandnee Widya Wati Madden v. C.L. Katial, (AIR 1964 SC 978), and R.C. Chandiok
v. Chuni Lal Sabharwal (AIR 1971 SC 1238). The Privy Council in Motilal's case
(supra) also laid down that there is always an implied covenant on the part of
the vendor to do all things necessary to effect transfer of the property
regarding which he has agreed to sell the same to the Vendee. Permission from
the Land and Development Officer is not a condition precedent for grant of
decree for specific performance. High Court relied upon its decision in Mrs.
Chandnee Widya Madden v. Dr. C.L. Katil (supra) and Maharo Saheb Shri Bhim
Singhji v. Union of India (AIR 1961 SC 234) to substantiate the conclusive. In
Mrs. Chandnee Widya (supra) this Court confirmed the decision of the Punjab and
Haryana High Court holding that if the Chief Commissioner ultimately refused to
grant the sanction to the sale, the plaintiff may not be able to enforce the
decree for specific performance of the contract but that was not a bar to the
Court passing a decree for that relief. The same is the position in the recent
case. If after the grant of the decree of specific performance of the contract,
the Land and Development Officer refused to grant permission for sale the
decree holder may not be in a position to enforce the decree but it cannot be
held that such a permission is a condition precedent for passing a decree for
specific performance of the contract.
In Ramesh Chandra Chandiok and Anr. v. Chuni Lal Sabharwal (dead) by his
legal representatives and Ors. (AIR 1971 SC 1238) it was held that proper form
of decree in a case like the instant one would be to direct specific
performance of the contract between defendant and the plaintiff and to direct
the subsequent transferee to join in the conveyance so as to pass on the title
residing in him. This is because defendant no.2 son of defendant no.1 cannot
take the stand that he was a transferee without notice. Admittedly, he is son
of defendant no.1. The view in Ramesh Chandra's case (supra) was a reiteration
of earlier view, in Durga Prasad and Anr. v. Deep Chand and Ors. (AIR 1954 SC
75). This Court has repeatedly held that the decree can be passed and the
sanction can be obtained for transfer of immovable property and the decree in
such would be in the way the High Court has directed. ( See:
Motilal Jain v. Ramsai Devi (Smt.) and Ors. (2000 (6) SCC 420), Nirmala
Anand v. Advent Corporation (P) Ltd. and Ors.
(2002 (5) SCC 481), (2004 (6) SCC 537), Aniglase Yohanna v.
Ramlatha and Ors. (2005 (7) SCC 534)].
Above being the position we find no merit in this appeal.
However, considering the long passage of time it was suggested to respondent
no.1 that he could pay an additional sum to the appellant. Learned counsel for
the respondent left the quantum to be decided by this Court. To a similar
effect was the suggestion of learned counsel for the appellant.
Considering the background facts, we direct that as a matter of good
gesture, let the respondent pay a sum of rupees five lakhs to the appellant within
a period of four months from today.
The appeal is dismissed subject to the aforesaid observations.