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Ocean Investments & Finance (P) Ltd. v. Union Of India
Factual and Procedural Background
This application arises under Order 39 Rules 1 & 2 read with Section 151 of the Code of Civil Procedure in a suit seeking a perpetual injunction. The plaintiffs sought to restrain the defendants from interfering with or obstructing construction by the plaintiffs on plot No. J-1906, Chittaranjan Park, New Delhi, based on plans sanctioned by the Delhi Development Authority (DDA).
Defendant No. 4, Mr. S.M Roy, a displaced person from East Pakistan, was granted lessee rights to the plot. He constructed a single-storeyed house in 1971. In 1988, he entered into an agreement to sell the plot to Plaintiff No. 1 and filed a statement under Section 269 UC of the Income Tax Act, receiving a no objection certificate. The plaintiffs paid the balance money, and Defendant No. 4 appointed the plaintiff’s Director as attorney. The plan was sanctioned by the DDA on 8th December 1988, and construction began after demolishing the existing building.
A neighboring plaintiff, Defendant No. 5 Mr. S.N Mandal, obtained an ad-interim injunction from the Subordinate Court restricting certain construction activities. Subsequently, the DDA revoked the sanction of the plans on 1st May 1989 upon learning of the agreement to sell.
The plaintiffs filed the present suit for perpetual injunction challenging the revocation of the sanctioned plans on grounds including that the agreement to sell did not amount to a sale instrument, the revocation violated natural justice and was discriminatory, and that the plaintiffs did not violate the sanctioned building plan.
Defendant No. 3 challenged the plaintiffs’ rights, contending that the plaintiffs had no title or interest, that Defendant No. 4 violated the lease terms by attempting to sell and part with possession without presidential permission, and that the original sanction was obtained without disclosing the agreement to sell.
The DDA justified revoking the sanction due to non-compliance with mandatory setback requirements and potential damage to neighboring property.
Legal Issues Presented
- Whether an agreement to sell amounts to a valid instrument of sale conferring rights to the purchaser to carry out construction on leased land subject to restrictions.
- Whether the plaintiffs have locus standi to challenge the cancellation of the sanctioned building plans by the DDA.
- Whether the revocation of the sanctioned plans by the DDA was justified on grounds of violation of lease terms, building plan contravention, and public policy.
- Whether the cancellation of the sanctioned building plan was discriminatory or violative of principles of natural justice.
- Whether the plaintiffs are entitled to a temporary injunction restraining interference with their construction activities.
Arguments of the Parties
Plaintiffs' Arguments
- The agreement to sell does not amount to an instrument of sale, and therefore the revocation of sanctioned plans by the DDA is not legally sustainable.
- There was no violation of the sanctioned building plan during construction; the controversy regarding building plan violation no longer survives as construction had reached ground floor level.
- The plaintiffs have legal possession of the plot based on the agreement to sell and power of attorney, entitling them to carry out construction.
- The sanction granted by the DDA attaches to the land and not to the person, so the plaintiffs in possession have the right to challenge cancellation.
- The cancellation by the DDA is discriminatory and violative of natural justice.
- The plaintiffs offered to carry out construction at their own risk and cost, citing Salwan Education Trust v. Lt. Governor as supportive precedent for continuing construction despite cancellation.
Defendants' Arguments
- The plaintiffs have no right, title, or interest in the property; no privity of contract exists between plaintiffs and other defendants.
- Defendant No. 4 violated the lease deed by selling or parting possession without presidential permission, rendering the agreement to sell and possession delivery illegal and against public policy.
- The original sanction was obtained without disclosing the agreement to sell, misleading the DDA.
- The sanctioned plan required a mandatory five-foot setback which was not adhered to, risking damage to neighboring property.
- The DDA acted within its rights to revoke the sanctioned plan due to contravention of lease and building regulations.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Salwan Education Trust v. Lt. Governor (1986 RLR—N 2) | Consideration of locus standi and cause of action in construction disputes and cancellation of allotment. | The court distinguished this case on facts, noting the plaintiff there had legal possession by allotment from DDA unlike the present case. The ratio was held inapplicable to the present case under Order 39 Rules 1 & 2. |
| Chandu Lal v. Municipal Corporation of Delhi (AIR 1978 Del. 174(2)) | Principles for granting temporary injunction: prima facie case, balance of convenience, and irreparable loss. | The court applied these principles to find no prima facie case or balance of convenience in favor of the plaintiffs, and no risk of irreparable loss, thus justifying dismissal of the injunction application. |
Court's Reasoning and Analysis
The court analyzed the legal effect of the agreement to sell and the plaintiffs’ possession, emphasizing that the agreement to sell does not create any interest or charge in the land and does not amount to a sale under the terms of the lease deed. The lease deed expressly prohibited alienation or parting with possession without the President of India’s permission, which Defendant No. 4 violated.
The court found the plaintiffs’ possession and construction activities to be illegal and contrary to public policy. The power of attorney granted to the plaintiff’s director did not confer legal possession or rights to carry out construction.
The court upheld the DDA’s revocation of the sanctioned building plan on grounds of non-compliance with mandatory building regulations and the risk of damage to neighboring property.
The plaintiffs lacked locus standi as no right, title, or interest had been created in their favor by the agreement to sell, and only Defendant No. 4 could have challenged the DDA’s cancellation, which he did not do.
Applying the well-established principles for temporary injunctions, the court found no prima facie case, no balance of convenience, and no risk of irreparable harm to the plaintiffs. Granting injunction would have endorsed illegal acts and contravened public policy.
The court also rejected the claim of discrimination and found no violation of natural justice in the DDA’s action.
Holding and Implications
The application for temporary injunction is dismissed.
The direct effect of this decision is that the plaintiffs are restrained from continuing construction on the plot based on the impugned sanctioned plans which were lawfully revoked by the DDA. The court did not create any new precedent but reaffirmed the principle that an agreement to sell does not confer legal possession or title in contravention of lease restrictions, and that only persons with legal standing may challenge administrative cancellations. The ruling underscores adherence to lease conditions, public policy, and building regulations in property disputes.
P.N Nag, J.:— In this application under Order 39 Rules 1 & 2 read with section 151 of the code of civil procedure in a suit for perpetual injunction the plaintiffs have prayed to restrain the defendants from interfering with or in a suit for perpetual injunction the plaintiffs have prayed to restrain the defendants from interfering with or obstructing the construction being carried out by the plaintiffs on plot No. J-1906, Chittaranjan Park, New Delhi, in terms of the plans already sanctioned by the Delhi Development Authority (for short, the DDA)
2. The relevant facts which emerge out of the plaint are that Mr S.M Roy, Defendant No. 4, who is a displaced person from East Pakistan, was granted the lessee rights of a plot of land measuring 371.2 Sq. metres (444 sq. yards) bearing No. J-1906 in the colony known as Chittaranjan Park. This colony was planned by the then Ministry of Works & Housing in Consultation with the Ministry of Rehabilitation as a public policy in order to rehabilitate the persons who migrated from East Pakistan (now Bangladesh).
3. In 1971, Mr. S.M Roy, Defendant No. 4, after obtaining sanction carried out construction of a single storeyed residential house. It appears that Defendant No. 4 was desirous of selling the aforementioned plot and he accordingly entered into an agreement to sell dated 31-8-1988 with the plaintiff No. 1. A statement under Section 269 UC (in form 37-I) of the Income Tax Act was also filed before the authorities and no objection certificate was granted. Thereafter the balance money was stated to have been paid to the defendant No. 4 by the plaintiffs. The fourth defendant also after having undertaken to sell the property to plaintiff No. 1, appointed the Director of the plaintiff No. 1 Mr. Jugal Kishore Malhan (hereinafter referred to as the ‘the Director’), as attorney. Thereafter the plan was submitted for sanction to DDA and on 8th December, 1988 the DDA granted sanction for the construction. It appears that thereafter the plaintiffs started construction on the plot after demolishing the building already constructed by defendant No. 4. Defendant No. 5 Mr. S.N Mandal, who is a plaintiffs' neighbour, filed a suit in the Subordinate Court and got an ad-interim injunction order restraining the plaintiffs (defendants therein) from digging basement and from removing the wall adjoining plot No. J-1907 without taking adequate measures. Since at the relevant time, the basement had already been dug and no further digging was required, the wall adjoining plot No. J-1907 was raised without any demolition of the old wall so as to comply with the orders of the Court. It appears that Mr Mandal approached the DDA and disclosed the fact of agreement to sell by defendant No. 4 to the plaintiff No. 1. The DDA revoked the sanction of the plans vide letter dated 1st May. 1989 (Annexure G to the plaint).
4. This suit has been filed for perpetual injunction against the order dated 1st May, 1989 of the DDA revoking the original sanctioned plans of the building on various grounds, inter alia, that agreement to sell does not amount to an “instrument of sale” and on this account the plans cannot be revoked. Further the order is violative of principles of natural justice and is discriminatory and furthermore they have violated the sanctioned building plan during construction at site as alleged.
5.Defendant No. 3, in its written statement, has taken various objections inasmuch as the plaintiffs have no right, title or interest in the property in question; there is no privity of contract between the plaintiffs, defendants 1 & 2 and them and the suit is, therefore, liable to be dismissed. Further the plaintiffs and defendant No. 4 are contravening the terms of the original lease deed dated 24th July, 1974 executed in favour of defendant No. 4. According to defendant No. 3, defendant No. 4. According to defendant No. 3, defendant No. 4 not only cannot sell the property without the specific permission of the President, But also cannot part with possession of the property in question, in contravention of the terms of the perpetual lease. The original sanction taken from DDA was obtained by the defendant No. 4 without disclosing the execution of the agreement to sell and by giving the impression that Defendant No. 4 himself will carry out the construction.
6. Furthermore the plan was sanctioned with the specific condition that defendant No. 4 should leave a set back of five feet wide by the side of plot No. J-1907. However the mandatory set up for five feet has not been adhered to and the property of the neighbour, Mr. S.N Mondal, may be damaged in the process. As there is clear contravention of the mandatory requirement of the sanctioned plan, the DDA is within its right to see that construction is carried out according to the sanctioned plan and no damages caused to the neighbouring building. In these circumstances, the DDA has to cancel the sanctioned plan.
7. Mr. Arun Mohan, learned counsel for the plaintiffs, during the course of arguments in order to demonstrate that he has a prima facie case in his favour vehemently contended that both the grounds taken by the DDA vide letter dated 1st May, 1989 cannot be sustained in the eyes of law. The first ground that Mr. S.M Roy had sold the plot without taking permission from the lessee, L&DO, Ministry of Urban Development, New Delhi is apparently untenable as the agreement to sell does not amount to sale nor does itself create any interest or charge on the plot. The second ground that there has been violation of sanctioned building plan during construction at site is also not sustainable for the reason that in fact there has been no violation and at any rate this controversy no longer survives as the building has already come to the ground floor level. At this stage it is suffice to point out that the plaintiff has no locus standi to challenge the cancellation of the sanctioned building plans by the DDA and in case anybody was aggrieved against such cancellation, it was defendant No. 4 alone who could have challenged the same and who has elected not to do so as will be discussed hereinafter.
8. It was next contended by Mr. Arun Mohan, counsel for the plaintiffs, that no doubt the plaintiff No. 1 is the intended purchaser of the property and no sale deed has yet been executed in its favour and a title still vests in the original owner S.M Roy, defendant No. 4, but the possession of the plot which has been given to the plaintiffs on the basis of agreement to sell is legal possession. Further, Mr. Jugal Kishore Malhan, the Director, has been given power of attorney and, therefore the plaintiffs have every right to hold the possession of the plot and raise construction thereon behalf of defendant No. 4. I am afraid such a contention cannot be upheld. As already referred to, the agreement to sell does itself not create any interest or charge on the land plot and does not amount to sale. It may be relevant to highlight at this stage that the colony of Chittaranjan Park was established to rehabilitate the displaced persons from East Pakistan by the Government as a matter of policy. With this end in view the lease deed dated 24th July, 1974 was executed in favour of defendant No. 4, like other similarly situated persons with the President of India and restrictions were placed on the lessees that they cannot alienate or part with the possession of the property except with the permission of the President of India. Defendant No. 4 has however, violated the terms of the lease deed particularly Clause 1(viii). Defendant No. 4 accordingly not only cannot sell the property without specific permission of the President but also cannot part with the possession of the plot. In order to substantiate that the possession has rightly been delivered by defendant No. 4 to the plaintiff No. 1 as permission has been granted to defendant No. 4 to sell the property by Government of India under Chapter XXC of the Income Tax Act is wholly fallacious on the face of it as permission is a pre-requisite to ensure that the price fixed is fair so as to prevent evasion of capital gains tax and the stamp duty and has not relevance to the requirement of the sanction of the President of India as stipulated in the lease deed. The agreement to sell entered into between plaintiff No. 1 and defendant No. 4 and parting with possession of the land by defendant No. 4 in favour of the plaintiffs on the basis of power of attorney not only contravenes the terms of the lease deed referred to above but is against the public policy. Therefore, the delivery of possession of the plot by defendant No. 4 to the plaintiff No. 1 on the basis of agreement to sell and carrying on construction thereon as an attorney of defendant No. 4 by the Director is not legally permissible as the very transaction is void being violative of the terms and conditions of the lease deed and public policy. As such the court by allowing construction on the plot cannot put a premium on the illegal acts of the plaintiffs. Furthermore the DDA has come with a specific stand in this connection that the mandatory set back of 5 has not been adhered to and thereby the property of the neighbour. Shri S.N Mondal of J-1907 may be damaged in the process and, therefore, the DDA is duty bound to cancel the sanctioned building plan as the construction has been made in breach of the aforementioned plan.
9. The next argument advanced by counsel for the plaintiffs is that the sanction granted originally by the DDA attaches to the property and the land and not to the living persons. Anybody, may be a tenant or licensee contractor or attorney or intending purchaser or a purchaser under sale deed, is entitled to benefits of the sanction being the benefits attached to the land. Therefore, since the plaintiffs are in possession of the land in dispute they have a right to challenge the cancellation of the sanction originally granted by the DDA. As already point out earlier, the delivery of possession by defendant No. 4 to the plaintiff No. 1 is in contravention of the terms of the lease deed and against the public policy and the person in possession of such land cannot be permitted in law to challenge the cancellation of the sanction originally granted by the DDA as it would put a impremature of the illegal acts of the plaintiff.
10. Another contention of counsel for the plaintiffs that the cancellation of sanctioned building plan by DDA is discriminatory has also no force as no foundation has been laid down in the plaint for showing any indiscrimination nor any case has been made out for discrimination.
11. This takes me now to the last contention of counsel for the plaintiffs that the plaintiffs may be allowed to raise construction on the basis of undertaking which is reproduced below:
“The plaintiffs will be carrying out the construction in terms of the plan sanctioned by the DDA and this construction, the plaintiffs shall carry out at their own risk and cost.”
According to learned counsel, such a course will not cause prejudice to anybody. In support of his submission he cited Salwan Education Trust v. Lt. Governor (1986 RLR—N 2.). (1) Careful scrutiny of the facts of that case would reveal that case is distinguishable. In that case the issues of lack of locus standi and the lack of cause of action were not matters of consideration. Further the plaintiff in that case had got possession of the plot legally by allotment from DDA unlike in the present case. The question was whether the cancellation of allotment by Lt. Governor was correct. In these special circumstances the Supreme Court allowed construction at the risk of the plaintiff. There is no ratio applicable to Order 39 Rules 1 & 2 laid down in that case.
12. For invoking jurisdiction of the court to seek temporary injunction, a Full Bench of this Court in Chandu Lal v. Municipal Corporation of Delhi (AIR 1978 Del. 174(2) has laid down the following principles:
Temporary injunction can be treated if the case is covered by the three principles, namely, (1) on making out a prima facie case, (2) on showing balance of convenience in petitioners' favour, in that the refusal of the injunction would cause greater inconvenience to them and (3) whether on refusal of the injunction they would suffer irreparable loss. Granting an injunction is a matter of discretion and it its exercise the Court has to satisfy itself whether the petitioner have a triable case. Before invoking the jurisdiction of the Court to seek temporary injunction the petitioners are bound to show that they have a legal right and that there was an invasion of that right.”
In this case, as already referred to, the impugned action of DDA dated 1st May, 1989 cancelling the sanctioned building plan is directed against S.M Roy, defendant No. 4 whose plan was sanctioned. Defendant No. 4 has not filed the present suit and who alone could possible have any grievance against the cancellation of the sanctioned building plan by the DDA. The plaintiffs no where come into the picture. No right, title or interest has been created in favour of the plaintiffs by any agreement to sell. Therefore, no prima facie case is made out in favour of the plaintiff. Furthermore, the balance of convenience also does not lie in favour of the plaintiffs as allowing the plaintiffs to raise construction on the land would be putting a premium on the illegal acts of the plaintiff and such a situation is against the public policy. There is no question of irreparable loss or injury being caused to the plaintiffs in case temporary injunction, as prayed for, is not granted to them.
13. In the light of the above discussion, the application fails and is hereby dismissed.
A.T.G Application Dismissed
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