Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
RESERVED ON : AUGUST 29, 2017
DECIDED ON : OCTOBER 16, 2017
+ CS(OS) 2601/2008
WELLDONE ESTATE PROJECTS PRIVATE LTD
..... Plaintiff
Through : Mr.Vivek Kohli with Ms.Prerna Kohli,
Ms.Anubha Singh and Ms.Aishwarya
Kaushiq, Advocates.
versus
TODAY HOMES AND INFRASTRUCTURE PRIVATE LTD.
AND OTHERS
..... Defendants
Through : Mr.Vivek Sibal with Mr.Jitender Ratta,
Advocates for D-1 & 2.
Mr.Sahil Sagar, Sr.Advocate, with
Mr.S.Sagar, Advocates, for D-4.
CORAM:
HON'BLE MR. JUSTICE S.P.GARG
S.P GARG, J.
1. The present suit has been filed by Welldone Estate ‘projects’
Private Limited (hereinafter ‘the plaintiff’) against Today Homes and
Infrastructure Private Limited (hereinafter ‘defendant No.1’),
G.K.Gambhir (hereinafter ‘defendant No.2’), Rajesh Arora (hereinafter
‘defendant No.3’) and Ludhiana Improvement Trust (hereinafter
‘defendant No.4’) for recovery of ` 7,95,69,000/-.
CS(OS) 2601/2008 Page 1 of 15
2. Briefly stated the facts as reflected in the plaint are that the
plaintiff is a company, incorporated and registered under the Companies
Act, 1956. Bharat Halwasiya, authorized representative of the plaintiff
is authorized to institute the present suit. Defendant No.1 is a company
duly incorporated and registered under the provisions of a Companies
Act and is holding power of attorney in their favour executed by
defendant No.4 to take decisions on its behalf in respect of the
purported project, namely, Ludhiana City Centre (hereinafter ‘project’).
Defendant No.2, Director and authorized representative of defendant
No.1 company induced the plaintiff to invest ` 5,19,00,000/- into the
said ‘project’; personally assured and guaranteed repayment of the said
amount along with interest and as such is a necessary and proper party
in his individual capacity and also being the director of defendant No.1.
Defendant No.3 is the authorized representative and recognized broker
of defendant No.1 by virtue of a pre-existing understanding between
them. Defendant No.3 along with defendant No.2 had also induced the
plaintiff to part with money 5,19,00,000/- for investing into the said
`
‘project’ and had personally guaranteed its repayment. Defendant No.4,
is a government entity, claiming to have entered into a Joint Venture
Agreement dated 24.05.2005 with defendant No.1 for development and
construction of 25-26 acres multi-purpose development at Shaheed
Bhagat Singh Nagar, Ludhiana (Punjab) being Ludhana City Centre.
3. It is averred that the plaintiff made payment of ` 5,19,00,000/- in
the joint escrow account/designated bank account, namely, Today
Homes Infrastructure Pvt.Ltd-Citi Centre-LIT. The amount has been
CS(OS) 2601/2008 Page 2 of 15
duly received and utilized by defendants No.1 to 4. Defendant No.4 too
is jointly and severally liable to pay the suit amount.
4. It is further averred that in November, 2005, the defendant No.1
through its director and authorized representatives (defendant No.2 and
3) approached the plaintiff and induced him to make investment in their
‘project’ being developed at Shaheed Bhagat Singh Nagar, Ludhiana,
Punjab. It was represented by defendants No.1 to 3 that the Joint
Venture Agreement dated 24.05.2005 had already been entered into
with defendant No.4 for the purpose of development of the integrated
25-26 acres of land situated at Shaheed Bhagat Singh Nagar, Ludhiana,
Punjab. Defendants No.1 to 3 assured the plaintiff that the amount so
invested in the ‘project’ will be fully secured against the execution of
appropriate legal documents and in the event of failure of execution of
documents for any reason or failure of ‘project’, the amount paid shall
be returned by them along with interest @18% per annum. Being
persuaded and influenced by the aforesaid representations and
assurances, the plaintiff agreed to buy 1,50,000/- square feet area in the
said ‘project’ @ ` 3,800/- per square feet. The amount was to be
deposited in the joint escrow account and it was to be utilized for the
development of the said ‘project’. In terms of the said understanding,
the plaintiff had issued a cheque for the sum of ` 1,50,00,000/- bearing
No.005956 dated 9.12.2005 in favour of ‘Today Homes Infrastructure
Pvt.Ltd.-Citi Centre-LIT duly received by defendants No.1 to 3; receipt
dated 10.11.2005 recording the personal guarantee of repayment by
defendant Nos.2 and 3 was also issued.
CS(OS) 2601/2008 Page 3 of 15
5. Further, case of the plaintiff is that pursuant to the said agreement
he handed over two more cheques bearing No.005958 dated 12.12.2005
for the sum of ` 1,50,00,000/- and 005959 dated 14.12.2005 for the sum
of 1,00,00,000/- to defendant No.1 in the name of its designated bank
`
account. All the said cheques were duly received and encahsed by
defendants No.1 to 4.
6. It is urged that defendants No.1 to 3 instead of executing any
legal documents, kept on insisting to make further payments to them on
the pretext that preparation of the necessary documents was in progress.
On the said assurance, the plaintiff made further payment of
` 35,00,000/- vide cheque No.005981 dated 20.02.2006 and
84,00,000/- vide cheque No.005986 dated 2.3.2006 in favour of joint
`
escrow account/designated bank account of defendants No.1 to 4 and
handed over the said cheques to defendants No.2 and 3. The said
cheques were encashed by defendants No.1 to 4. The plaintiff paid a
sum of ` 5,19,00,000/- in all to the defendants.
7. The plaintiff’s grievance is that the defendants failed to perform
their obligation of executing the requisite legal documents in his favour
despite receipt of huge money. The plaintiff, thereafter, started
demanding repayment of the said amount along with interest which the
defendants failed to pay. A legal notice dated 17.03.2008 was served
upon defendants No.1 to 4 which was responded by defendant No.1 on
29.03.2008. It was informed by defendant No.1 that the ‘project’ was
not being progressed due to the circumstances beyond their control.
Again, the plaintiff issued letters dated 15.05.2008 and 13.06.2008.
CS(OS) 2601/2008 Page 4 of 15
Defendants No.1 and 3 accepted and admitted to have received the full
amount paid by the plaintiff and affirmed the understanding.
8. It is further averred that defendant No.1 in its reply dated
02.09.2008 took a contrary stand stating to have received only
` 3,19,00,000/- from the plaintiff.
9. Defendant No.3 in its reply dated 25.09.2008 took a different
stand of re-selling the space to a third party when admittedly no space
was ever allotted or earmarked to the plaintiff. The plaintiff was, thus,
cheated in a planned manner and was deprived of the huge amount of
` 5,19,00,000/- by defendants No.1 to 4. The plaintiff initiated criminal
proceedings against defendants No.2 and 3 by filing complaints before
Economic Offence Wing, Delhi.
10. Under Sections 433 and 434 of the Companies Act, 1956, the
plaintiff also initiated winding up proceedings against defendant No.1
by filing a winding up petition being CP No.380 of 2008 before this
Court. Since the defendants have failed to return the amount, hence the
present suit.
11. The suit is contested by the defendants. In the written statement
filed on behalf of defendant No.1 it is stated that the suit is bad for mis-
joinder and non-joinder of necessary parties. Defendant No.1 and
defendant No. 4 had entered into a concession agreement on 24.05.2005
in terms of which, defendant No.1 was to develop and market the
‘project’. Defendant No.4 is a statutory body incorporated under ‘The
Punjab Town Improvement Act, 1992 and is controlled by the
Government of Punjab. On 25.08.2005 a tripartite agreement was
executed with defendant No.4 and HDFC bank. The said agreement
CS(OS) 2601/2008 Page 5 of 15
stipulated that 30% of the proceeds collected by marketing the ‘project’
would be credited to defendant no.4 and 70% to defendant no.1 through
escrow account in HDFC bank. Defendant no.4 also executed a Power
of Attorney in favour of defendant No.1 to carry on the development
work and market and sell the ‘project’ for and on its behalf. After the
commencement of the work, the answering defendant engaged M/s
HOK, a globally renowned and leading Architectural firm. Defendant
no.4 approved the revised plans on 23.12.2005 vide Resolution No.204
and forwarded it for approval of the State Government on 26.12.2005.
The State Government vide letter dated 30.06.2006 informed defendant
No.4 that the Resolution dated 23.12.2005 stood approved by the
government.
12. It is further averred that the plaintiff was aware that Ludhiana
City Center ‘project’ was promoted by the Government of Punjab and
was not a private ‘project’ of the defendant No.1. The said ‘project’ was
widely published and the knowledge that defendant No.1 had bid for the
said ‘project’ and had been awarded the tender for development and
sale of the city centre ‘project’ was always in public domain.
13. Defendant No.1’s case is that defendant No.3 approached him for
and on behalf of plaintiff to purchase the commercial space in the said
‘project’. The plaintiff was never approached by defendant No.1 or
defendant No.2 and no inducement, whatsoever, was made to him. All
the payments were made by the plaintiff in the designated bank account,
he was always aware of the nature of the ‘project’ and only after due
diligence had invested the money in it. Certain payments were received
from the plaintiff through defendant No.3. Defendant No.1 had started
CS(OS) 2601/2008 Page 6 of 15
the construction of the ‘project’ and had made substantial investment to
the tune of ` 125 crores. In September, 2006 certain disputes arose
between defendant No.1 and defendant No.4 and the Government of
Punjab illegally revoked the power of attorney and cancelled the escrow
account as a result of which the construction of the ‘project’ came to a
complete halt and the work could not be completed in time. It is further
informed that defendant No.4 had actually withdrawn ` 23,48,28,128/-,
representing 30% share in the amount received in the escrow account.
Defendant No.1 instituted arbitration petition being Arbitration Case
No.76 of 2007 before the Hon’ble High Court of Punjab & Haryana.
Mr.Justice R.C.Lahoti (Retd.) was appointed as the sole arbitrator to
adjudicate upon all the disputes vide order dated 4.4.2008. The order
was challenged and the Hon’ble Supreme Court vide order dated
14.10.2008 remanded the matter to High Court to decide it.
14. It is claimed that defendant No.1 is not liable to pay any amount
to the plaintiff and responsibility in this respect was upon defendant
No.4 and the Government of Punjab.
15. Defendant no.2 in the written statement took almost the same
defence raised on behalf of defendant No.1. It was claimed that
defendant No.2 was not proper or necessary party in the present
proceedings. He had never personally induced the plaintiff to invest
` 5,19,00,000/- in the ‘project’. Although the amount equivalent to 70%
of the deposit so made was received, however, it was spent on the
‘project’ and defendant No.2 was not liable to pay any amount to the
plaintiff.
CS(OS) 2601/2008 Page 7 of 15
16. In the written statement on behalf of defendant No.3, it was
pleaded that no personal guarantee was ever given to the plaintiff by the
document dated 10.11.2005 termed by the plaintiff as ‘receipt’. It is
not a legal, valid or enforceable document/instrument. Defendant No.3
has no liability towards the plaintiff on the basis of the said alleged
guarantee dated 10.11.2005; its genuineness is suspect.
17. It is further averred that all the payments have been made by the
plaintiff on various dates by cheuqes and no cheque was drawn in his
favour; he is not a beneficiary in the transaction. The suit filed by the
plaintiff is barred by limitation; there is no privity of contract between
the plaintiff and defendant No.3.
18. Defendant no.4 in its written statement averred that there was no
privity of contract between the plaintiff and defendant No.4. This Court
has no territorial jurisdiction to entertain the suit against defendant
No.4. The suit has been instituted in violation of Section 98 of Punjab
Town Improvement Act, 1992 and no prior notice was served upon it.
It is further averred that M/s Today Homes & Infrastructure Pvt.Limited
(defendant No.1) and the then Chairman of Ludhiana Improvement
Trust in an illegal and unauthorized manner entered into an alleged
agreement dated May 24, 2005. The then Chairman of the Trust had
not obtained any prior approval of the Trust; he had also acted in total
violation and disregard to the instructions/directions given by the
Government of Punjab from time to time. The said agreement was not
binding upon the Trust. An enquiry was ordered vide memo dated
19.09.2006 by the Government of Punjab. It was found that the
agreement was invalid as the mandatory provisions of law were not
CS(OS) 2601/2008 Page 8 of 15
complied with. On the basis of the vigilance enquiry FIR No.5 dated
March 23, 2007 under Sections 409/420/467/468/467/468/471 and
120B IPC and Sections 7, 13(1)(c)(d) read with Section 13(2) and 14 of
the Prevention of Corruption Act, 1988 has been registered at Police
Station Vigilance Bureau, Ludhiana. Charge-sheet in the said case has
been filed where defendant No.1 is one of the accused besides others.
19. It is further informed that earlier defendant No.1 had sought
appointment of an Arbitrator to adjudicate the alleged disputes.
However, he did not succeed.
20. It is further pleaded that the amounts deposited in escrow account
which was opened pursuant to the alleged agreement itself was illegal
and invalid and signed by the Chairman in an unauthorized manner was
automatically transferred to the accounts of ‘Todays Homes &
Infrastructure Pvt.Ltd. and M/s Ludhiana Improvement Trust- City
Centre in the share of 70% and 30% respectively. The amount
automatically transferred in the account of M/s Ludhiana Improvement
Trust, is lying intact and has not been utilized at any point of time.
21. On the basis of the pleadings of the parties and the documents on
record, following issues were framed on 12.01.2011:-
(i) Whether the suit is liable to be rejected on ground of non-
joinder/mis-joinder of necessary parties? OPD 2 & 3
(ii) Whether there is any privity of contract between the plaintiff and
defendant Nos.2 and 3, if so, to what effect? OPD 2&3
(iii) Whether the suit is liable to be rejected under Order 7 Rule 11(a)
CPC? OPD-3
CS(OS) 2601/2008 Page 9 of 15
(iv) Whether the suit is liable to be rejected under Order 7 Rule 11 (d)
CPC on account of lack of notice under Section 80 CPC? OPD-4
(v) Whether the plaintiff is entitled to a decree for a sum of
` 7,95,69,000/- from the defendants, if so, from whom and to what
amount? OPP
(vi) If answer to issue No.5 is in affirmative, whether the plaintiff is
entitled to interest @18%, if so, at what rate and for what period? OPP
(vii) Relief.
22. The plaintiff was directed to adduce evidence in the first instance.
It is relevant to note that despite availing various opportunities, the
plaintiff was unable to examine any witness. The evidence of the
plaintiff came to be closed. Order-sheet reveals that there was non-
appearance on behalf of the plaintiff on various dates. Defendants also
opted not to lead any evidence.
23. I have heard the learned counsel for the parties and have
examined the file. Findings on issues are as under:
Issue Nos.5 and 6
24. Onus to prove both these issues was upon the plaintiff. As
observed above, the plaintiff did not produce any evidence to
substantiate the averments in the plaint.
25. Relying upon the judgments Mahendra Manilal Nanavati
vs.Sushila Mahendra Nanavati (1964) 7 SCR 267 and Raveesh Chand
Jain vs. Raj Rani Jain (2015) 8 SCC 428, learned counsel for the
plaintiff urged that non-examination of witnesses is inconsequence due
to specific admissions by the defendants regarding receipt of
` 5,19,00,000/- from the plaintiff. This amount was paid by way of
CS(OS) 2601/2008 Page 10 of 15
cheques in the escrow account and was withdrawn by defendants No.1
and 4 in the ratio 70% and 30% respectively. The plaintiff has neither
been given any plot/piece of land nor the money deposited by him has
been returned. The defendants cannot be permitted to retain the money
received by them from the plaintiff.
26. Learned counsel for the defendants urged that in the absence of
any evidence, the plaintiff cannot be provided any relief. No
categorical admission has been made by any of the defendants for
receipt of the amount for any specific purpose.
27. Since the onus to prove both the issues was on the plaintiff and
he miserably failed to produce any evidence despite availing number of
opportunities, in my view, the plaintiff has failed to prove the averments
made in the plaint. Adverse inference is to be drawn against the
plaintiff for not appearing in witness box and not producing any
credible evidence to substantiate the facts stated in the plaint. Mere
pleadings or allegations without proof have no substance. Settled
position is that when a party to the suit does not appear into the witness
box and offers for cross-examination by the other side, a presumption
would arise that the case set up by him is not correct. Averments in the
plaint have been denied and controverted by the defendants. There is no
categorical and specific admission if the amounts so deposited by the
plaintiff in the escrow account was to be refunded or returned to the
plaintiff. Defendants No.1 and 2 have specifically stated in their written
statements that the said amount was regarding investment and was
deposited by the plaintiff through defendant no.3 and there was no
privity of contract between them. It is further stated in the written
CS(OS) 2601/2008 Page 11 of 15
statements that the amount so withdrawn by defendant No.1 from the
escrow account has since been invested in the said ‘project’.
28. It is relevant to note that the plaintiff had filed
Co.Pet.Nos.380/2008, 8/2009 and 107/2009 which came to be disposed
of by this Court by a common order dated 13.12.2010. Para 4 of the
said order reads as under:
Co.Pet.380/2008
“In the present case, there is no written contract
between the petitioner and the respondent. We do not
know what was the exact nature of the transaction
between the two parties pursuant to which
` 5,19,00,000/- was paid by the petitioner to the
respondent. The amount paid is substantial but
strangely the petitioner did not feel that it was
necessary to enter into a written agreement. In the
absence of written contract it cannot be ascertained,
what was the exact nature of transaction between the
petitioner and the respondent and what is the effect of
inter-se disputes between the respondent and the
LIT/Government of Punjab and whether the oral
understanding between the parties had any condition or
precondition, disclaimer or clauses regarding the
transaction. We do not know what was agreed and
settled between the parties and whether there was a
clause/condition for refund. As parties are relying upon
oral understanding/agreement, rival contentions cannot
be examined and gone into in the summary proceedings
before the Company Court. Accordingly,
Co.Pet.No.380/2008 filed by M/s Welldone Estate
‘project’s Private Limited is dismissed. It is clarified
that this Court has not expressed any opinion on merits
as it is stated that a civil suit is already pending
between M/s Welldone Estate ‘project’s Private Limited
and Today Homes and Infrastructure Private Limited.
CS(OS) 2601/2008 Page 12 of 15
Observations made in the present order will not
influence the decision in the civil suit.
29. Defendant No.4 has denied to have withdrawn any amount from
the escrow account which was illegally and unauthorizedly
opened/maintained by the then Chairman of the Trust. It is pertinent to
note that criminal case has been registered against many individuals
regarding various transactions in question and defendant No.1 is also an
accused therein. Status of the said criminal proceedings has not been
informed. It is unclear if the cash lying intact in escrow account as
claimed by defendant No.4 is a case property in the said proceedings.
30. No materials are on record to infer as to on what terms and
conditions, the plaintiff had agreed to pay the huge amount of
` 5,19,00,000/- to defendant No.1. There is controversy as to in what
manner the amount was deposited by the plaintiff in the escrow
account. It is not clear if the plaintiff was approached or induced by
defendant No.2 or defendant No.3 to make investment in the ‘project’.
There is no agreement in writing between the parties whereby the terms
and conditions of the investment were reduced into writing. There is no
document on record to show if there was any promise by the defendant
No.1 to refund the amount with interest on any specific date or after
certain period. It is pertinent to note that no application under Order
XII Rule 6 CPC for judgment on ‘admission’ was moved by the
plaintiff during trial. The defendants have denied their liability to pay
any amount to the plaintiff on any count.
31. True, a judgment can be given on an ‘admission’ contained in
the written statement. But the admission should be categorical. It
CS(OS) 2601/2008 Page 13 of 15
should be a conscious and deliberate act of the party making it, showing
an intention to be bound by it.
32. In M/s Siemens Ltd. vs.M/s Nova Iron & Steel Ltd. 2012 SCC
OnLine Del 4912 decided on 18.09.2012 while deciding issues No.5
and 6, the court observed as under:
“In spite of repeated opportunities, plaintiff failed to lead
evidence. The evidence of the plaintiff was closed vide order
dated 27.04.2010. This order has become final as this order has
not been challenged thereafter. As the plaintiff did not lead
evidence, the counsel for the defendant also on the same date
i.e.27.04.2010 made a statement that defendant also does not
want to lead evidence. No doubt, as per the issues framed, onus
of issue Nos.2 to 4 is on the defendant, however, onus of issue
Nos.5 and 6 is on the plaintiff. The onus of these issues was on
the plaintiff inasmuch as it is clear from paras 6 and 10 of the
plaint, the plaintiff claims not the total amount of machinery and
equipments supplied but only an amount of ` 24,35,837.10/-.
Therefore, it is clear that as per the plaint various amounts were
paid to the plaintiff and plaintiff has only claimed the balance
due of ` 24,35,837.10/- out of amount of approximately ` 1.37
crores. The plaintiff therefore had to lead evidence to show how
the amount as claimed in para 10 of the plaint was due to the
plaintiff and which is the subject matter of issue No.5.
XXX XXX XXX XXX
In view of the fact that it was the plaintiff which had to lead
evidence and no evidence whatsoever has been led on behalf of
the plaintiff, the plaintiff has failed to prove its case and therefore
the suit of the plaintiff is dismissed by deciding issue Nos. 5 and 6
against the plaintiff.”
CS(OS) 2601/2008 Page 14 of 15
33. Since there is no evidence on record to substantiate the averments
this Court is of the view, the plaintiff has failed to prove both these
issues; these are decided against him and in favour of the defendants.
Issues No.1, 2, 3 and 4
34. These issues have not been pressed by the defendants. These are
disposed of as ‘not pressed’.
Relief
35. In view of the above findings, the suit filed by the plaintiff fails
and is dismissed.
36. Decree sheet be drawn accordingly.
S.P.GARG
(JUDGE)
OCTOBER 16, 2017/ sa
CS(OS) 2601/2008 Page 15 of 15