Jaishree Industries Ltd. vs Delhi Devlopment Authority And Anr.
- Court
- Delhi High Court
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 13.05.2026
Judgment pronounced on: 08 .09.2026
+ W.P.(C) 10860/2017
JAISHREE INDUSTRIES LTD. .....Petitioner
Through: Mr. Ravinder Sethi, Sr. Adv. with
Mr. Rajiv Kumar Ghawna, Mr.
Ashish Kumar, Mr. Vikalp
Chandela, Advs.
versus
DELHI DEVLOPMENT AUTHORITY AND ANR.
....Respondents
Through: Mr. Sanjay Katyal (Standing
Counsel for DDA) with Mr Nitish
kumar Danda, Advs. for R-1.
Mr. Brijesh k Tamber, Mr.
Chanchala Kumari, Mr. Prateek
Kushwaha, Advs. for R-2.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
J U D G M E N T
1. By way of this writ petition, the petitioner has approached this Court
seeking directions against the respondent No. 1 along with the
respondent No. 2, to execute conveyance deeds with respect to plots
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bearing Nos. 43, 44, 45, and 46 situated at block No. A-1, WHS, Kirti
Nagar, New Delhi, and direction against the respondent No. 2 to pay
all the penalties and levies which are to be imposed by respondent No.
1 at the time of execution of the said conveyance deeds or in the
alternative seeking refund of the auction amount paid by the petitioner
along with interest and other incidental charges. The prayers of the
petition read as under:
―a) issue writ, order or direction in the nature of writ of
mandamus whereby directing the respondent no.l DDA to
execute conveyance deeds together with respondent no.2 in
respect of plots bearing plot no.43 (admeasuring 250 sq.
yards.), plot no.44 (admeasuring 250 sq. yards.), plot no. 45
(admeasuring 250 sq. yards.) and plot no.46 (admeasuring
250 sq. yards) situated at block no. A-1, WHS, Kirti Nagar,
New Delhi-110015 in favour of the petitioner; and
b) direct the respondent no.2 to pay all the penalties and
levies including the unearned increased charges,
composition charges etc. proposed to be levied by DDA at
the time of execution of conveyance deeds in favour of the
petitioner in respect of the plots bearing plot no.43
(admeasuring 250 sq. yards.), plot no.44 (admeasuring 250
sq. yards.), plot no. 45 (admeasuring 250 sq. yards.) and
plot no.46 (admeasuring 250 sq. yards) situated at block no.
A-1, WHS, Kirti Nagar, New Delhi-110015 for the transfer
effected by respondent no.2 bank in favour of petitioner ;
and
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In the alternative
c) issue order or direction whereby directing the respondent
no.2 bank to refund the auction amount of Rs.8.01 crore,
paid by the petitioner towards the purchase of the aforesaid
plots, in the auction held on 28.12.2009, along with interest
@ 18% per annum and also direct respondent no.2 to pay
other incidental charges including stamp duty, registration
charges etc. to the tune of Rs.74,07,000/-. …‖
FACTUAL BACKGROUND AS PER THE PETITIONER
2. The petitioner namely, Jaishree Industries Ltd. is a private limited
company having its registered office at D-12, Rajouri Garden, New
Delhi-110027 and undertaking the business of production and selling of
granite and other stones used for building and construction purposes.
3. The respondent No. 2 i.e., Indian Bank, is a financial institution also
having its registered office at Richmond Circle, Bangalore and its
Zonal Office at UGF, World Trade Centre, New Delhi.
4. In 1989, respondent No. 2 Bank in continuation of its financial
activities extended a loan facility to M/s Saket India Ltd. (“Saket
India”) upon mortgage of industrial plots situated at Block No. A-1,
WHS, Kirti Nagar, New Delhi- 110015 and bearing Nos. 43
(admeasuring 250 Sq. yards.), 44 (admeasuring 250 Sq. yards.), 45
(admeasuring 250 Sq. yards.) and 46 (admeasuring 250 Sq. Yards)
(“Subject Properties”).
5. The subject properties were allotted in the name of M/s Saket Tiles Pvt.
Ltd. (subsidiary of M/s Saket India Ltd.) (“Saket Tiles”) by the
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respondent No. 1 namely, Delhi Development Authority (“DDA”) ,
which was the principal lessor of the Subject Properties.
6. On default by Saket India, proceedings were initiated by the respondent
No. 2 Bank under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest (“SARFAESI”) Act,
2002, which culminated in auctioning of the Subject Properties by
auction dated 28.12.2009.
7. The petitioner participated in the aforesaid auction and purchased the
Subject Properties for a sum of Rs. 8.01 crores.
8. The entire auction amount extending to Rs. 8.01 crores were duly paid
by the petitioner to the respondent No. 2 Bank by March 2010 and sale
certificates were also duly issued in favour of the petitioner.
9. On the basis of the sale certificates issued by the respondent No. 2
Bank (duly registered with sub-registrar on 25.10.2013), the petitioner
applied to DDA for conversion of the Subject Properties from leasehold
to freehold.
10. In response to the said request of the petitioner, DDA informed that as
per the policy of DDA, unearned increase (“UEI”) of 50% of the value
of plot is payable by the lessee or the beneficiary. An explanation was
also sought to explain the relationship between Saket India and the
Saket Tiles because as per the records of DDA, the Subject Properties
were allotted to Saket Tiles.
11. Pursuant thereto, the petitioner addressed letters dated 31.07.2010 and
03.06.2011 to the respondent No. 2 Bank, requesting payment of the
UEI of Rs. 2.25 crores but to no avail.
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12. Meanwhile, DDA vide its letter dated 28.07.2011 requested the
petitioner to submit multiple documents namely, complete documents
regarding sale, consent to pay UEI, details of the shareholding patterns
of Saket Tiles up to the date of mortgage of the property to the
respondent No. 2 Bank, and also a request letter for mutation in favour
of the petitioner.
13. Since, these documents were not available with the petitioner, it
requested the respondent No. 2 Bank to provide the same and also
requested DDA for extension of time to deposit the requisite
documents.
14. Subsequently, the requisite documents were submitted to DDA vide
letter dated 19.09.2014.
15. In response to the same, DDA addressed multiple letters informing the
petitioner that the Subject Properties were allotted to Saket Tiles via an
open auction through its 4 shareholders and accordingly lease was
executed on 12.06.1984 in the shareholders‟ favour. Subsequently,
mortgage permission was granted vide letter dated 05.10.1990 in favour
of respondent No. 2 Bank.
16. However, the name of Saket India (as it existed in the sale certificate)
did not appear in records of DDA and consequently DDA asked the
petitioner to submit Saket India‟s details.
17. The petitioner again requested documents from the respondent No. 2
Bank, in response to which copies of mortgage documents by Saket
Tiles were provided to the petitioner. The said documents however
were found deficient and the authorized representative of the petitioner
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was given a hearing by Asst. Director (Industrial), DDA, wherein the
petitioner explained the entire factual position.
18. The petitioner again addressed a communication to DDA dated
26.05.2015, wherein execution of conveyance deeds and extension of
time for construction was sought.
19. DDA again vide letter dated 21.04.2016 sought documentary proof qua
the date of possession of the Subject Properties and the proof from
Registrar of Companies establishing the fact that Saket Tiles is a
subsidiary of Saket India.
20. Thereafter, the petitioner actively took steps to seek the requisite
clarification from respondent No. 2 Bank that DDA required qua the
status of Saket India. However, the respondent No. 2 Bank failed to
provide any document.
21. The petitioner was compelled to raise a demand against the respondent
No. 2 Bank vide letter dated 31.07.2017, either to make available the
requisite documents or to refund the auction amount with up-to-date
interest and incidental charges.
22. The petitioner‟s request to respondent No. 2 Bank for clearance of
various dues with respect to the Subject Properties was not acceded to.
Consequently, the petitioner despite being a bona fide auction
purchaser has been deprived from enjoyment of the Subject Properties
to its fullest extent. Hence, the present writ petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER
23. At the outset, Mr. Sethi, learned senior counsel for the petitioner, states
that the issue arising in the present petition stands squarely covered by
a catena of judicial pronouncements of the Hon‟ble Supreme Court and
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this Court. Reliance is placed on the Order dated 15.09.2023 of
Hon‟ble Madras High Court in the case titled Indian Bank v. The Sub
1 2
Registrar , Monoflex India (P) Ltd. v. CIT , Kalyani (India) (P) Ltd. v.
3
Punjab National Bank , Rajesh Gems and Jewels Pvt. Ltd. v. India
4 5
Overseas Bank , DDA v. Corporation Bank , Capital Hotel v. Delhi
6 7
Development Authority , and Royal Star Trading Co. v. IFCI Ltd.
24. He also submits that the respondent No. 2 Bank has blatantly failed to
convey a marketable title and has conducted the auction dated
28.12.2009 by withholding the knowledge of material facts/defects in
the title of the Subject Properties. The Subject Properties stood in the
name of Saket Tiles and not Saket India, and this fact was known to the
respondent No. 2, but not disclosed. This non-disclosure is in violation
of Section 13(4) of the SARFAESI Act, proviso to Rule 8(6), and
8(7)(a) of the Security interest (enforcement) rules, 2002 (“2002
rules”) .
25. Rule 9(9) of the 2002 rules casts a duty to deliver the property free
from all sorts of encumbrances. Reliance is also placed on Rule 9(10)
and S.K. Bakshi (Supra).
26. Also, when the sale notice, auction notice and terms and conditions of
the auction are completely silent on liability of the purchaser to pay
UEI, the same cannot be imposed on the purchaser (petitioner).
1
W.P. No. 10594/2023, Madras High Court.
2
2003 SCC OnLine Del 760.
3
2023 SCC OnLine Del 8563.
4
2017 SCC OnLine 10679.
5
2025 SCC OnLine SC 2071.
6
W.P. (C) 1513/1999, Delhi High Court.
7
2014 SCC OnLine Del 4671.
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27. The failure of the respondent No. 2 bank to furnish documentation for
proving the relationship of Saket India and Saket Tiles has rendered the
statutory vesting of title under Section 13(6) of the SARFAESI Act,
illusory, as it provides that all rights in or in relation to the asset
transferred will vest in the transferee as if the transfer has been made
by the owner.
28. The Secured Creditor (respondent No. 2 bank) is required to act in a
fiduciary capacity but the respondent No. 2 Bank by retaining Rs. 8.01
Crores for over 16 years while failing to perfect the title of the auction
purchaser has breached its fiduciary obligation. Reliance is placed on
Section 13(7) and 35 of the SARFAESI Act, and the judgment of
8
Mathew Varghese v. M. Amritha Kumar , J. Rajiv Subramaniyan v.
9
Pandiyas .
29. It is also stated that the statutory obligations of disclosure, due
diligence, and delivery of the asset free from encumbrances, cast upon
the Secured Creditor (respondent No. 2 Bank) are not displaced by the
terms of the Contract i.e., “as is where is and as is what is” clause.
30. The permission granted by DDA vide letter dated 05.10.1990 itself
represented, recorded and acknowledged the corporate relationship
between Saket India and Saket Tiles.
31. The concept of Caveat Venditor superseding the requirement of Caveat
Emptor , and now the “as is where is and as is what is” based Clauses is
now well known. Reliance is placed on decision of Hon‟ble Allahabad
8
(2014) 5 SCC 610.
9
(2014) 5 SCC 651.
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10
High Court in Rekha Sahu v. UCO Bank , and of Hon‟ble High Court
of Telangana and Andhra Pradesh in Mandava Krishna Chaitanya v.
11
UCO Bank
32. Section 55(1)(a) of the Transfer of Property Act, 1882, imposes a duty
upon the seller to disclose to the buyer any material facts/defects in the
property or in the seller‟s title that are within the knowledge of seller
but not buyer. Section 55 declares such non-disclosure as fraudulent.
Reliance is also placed on the judgment of a Coordinate Bench of this
Court in the case of Capital Hotel (Supra).
33. The respondent No. 2 Bank was very well aware of the factual situation
that the Subject Properties stood in the name of Saket Tiles and not in
the name of Saket India, Clause 7 of the lease deed prohibited transfer
without DDA‟s permission and DDA would demand proof of
relationship and also impose UEI before executing conveyance. These
substantial complexities are material facts/defects and the reliance on
“as is where is” clause cannot protect the respondent No. 2 bank from
its duty of disclosure. Reliance is placed on Haryana Financial Corpn.
12
v. Rajesh Gupta , Royal Star Trading Co. (Supra) and Llovegeet
13
Dhuria v. State Bank of India .
34. The liability qua payment of UEI cannot be fastened upon the
petitioner as the Public Notice dated 28.12.2009, the Sale Notice dated
25.11.2009, the terms and conditions of auction, and the Sale
Certificate do not contain stipulation to the effect that the auction
10
2013 SCC OnLine All 13203.
11
2018 SCC OnLine Hyd 196.
12
(2010) 1 SCC 655.
13
2022 SCC OnLine P&H 2363.
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purchaser (petitioner) would be liable for payment of UEI or any other
levy. Reliance is placed on a decision of Coordinate Bench of this
14
Court in Monoflex India (Supra) and Sujan Singh Oberoi v. CIT .
35. Qua the alternative prayer of refund of the auction amount of Rs. 8.01
crores with 18% interest and other charges, it is stated that the failure of
the respondent No. 2 bank to disclose the material facts/defects and to
transfer a marketable title, annuls the transaction itself. In this
backdrop, the continued retention constitutes unjust enrichment for
respondent No. 2. Reliance is placed on Capital Hotel (Supra), Jaswant
15
Rai v. Abnash Kaur , Coporation Bank (Supra), and M/s Kalyani
(India) Pvt. Ltd. (Supra).
Maintainability of the Petition
36. Mr. Sethi, learned senior counsel, submits that the present petition is
maintainable before this Court exercising writ jurisdiction because the
respondent No. 2 Bank has acted in violation of the provisions of
SARFAESI Act.
37. Remedy stipulated under Section 17 of the SARFAESI Act is available
only to the “borrower” and not to auction purchasers aggrieved by
failure of secured creditors to pass on a perfect title.
38. The Debt Recovery Tribunal in any case will not have the relevant
competent jurisdiction to adjudicate and decide the issue of payment of
UEI which is also a principal issue under consideration in the present
16
petition. Reliance is placed on S.K. Bakshi v. Punjab National Bank to
14
2003 SCC OnLine Del 1273.
15
1973 SCC OnLine Del 212.
16
2022 SCC OnLine J&K 1075.
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state that the Hon‟ble Jammu and Kashmir High Court has held that the
auction purchaser‟s grievance arising after sale is a post-sale failure of
delivery and not a section 13(4) measure to attract application of
Section 17.
39. Reliance is also placed on Llovegeet Dhuria (Supra) and Mandava
Krishna Chaitanya (Supra).
40. Qua the objection of delay and laches, it is stated that there is no delay
on its part as the petitioner soon after the DDA issued a letter
demanding UEI and within 6 months of refusal of DDA to execute
conveyance deeds by letter dated 13.06.2017, the petitioner preferred
the present petition on 04.12.2017.
41. The petitioner has always been actively seeking the necessary
information sought for resolving the controversy with DDA, any sort of
delay, is only attributable to the respondent No. 2 bank as firstly the
issuance of sale certificate was delayed and later the information
regarding the nexus of Saket India and Saket Tiles was not provided in
time.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 1
42. At the outset, Mr. Katyal, learned standing counsel for DDA states that
the preset petition in addition to lacking a cause of action is also barred
by delay and latches.
43. By way of present petition, the petitioner has raised highly disputed
questions of fact which cannot be adjudicated by a Court in its exercise
of writ jurisdiction.
44. It is also stated that DDA vide letter dated 28.07.2011 has already
sought certain relevant documents, which have not been furnished to
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DDA, rather the petitioner has been continuously seeking extension of
time for submission of these documents.
45. The petitioner was duly intimated vide letters dated 30.07.2014 and
16.09.2014 by DDA to submit documents for mutation and upon
submission of the same, it was communicated to the petitioner that the
Subject Properties were allotted to Saket Tiles through an open auction.
The Subject Properties were sold for the dues of Saket India but as per
records of DDA, it was Saket Tiles, which was the original lessee.
46. The respondent No. 1 repeatedly sought proof of relationship between
Saket India and Saket Tiles, which was not provided.
47. He also states that in view of this failure of the petitioner to submit
requisite documents, the conveyance deeds cannot be executed in
favour of the petitioner i.e., relief in terms of prayer „A‟ cannot be
granted.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 2
48. Mr. Tamber, learned counsel for the respondent No. 2, submits that the
present petition is barred by presence of alternate equally efficacious
remedy as the jurisdiction to entertain the present dispute lies with
Debts Recovery Tribunal (“DRT”) under Section 17 of the SARFAESI
Act and not with this Court under its writ jurisdiction. Reliance to
bolster this submission is placed on Agarwal Tracom (P) Ltd. v. Punjab
17 18
National Bank , United Bank of India v. Satyawati Tondon , CIT v.
19
Chhabil Dass Agarwal , Phoenix ARC (P) Ltd. v. Vishwa Bharati
17
(2018) 1 SCC 626.
18
(2010) 8 SCC 110.
19
(2014) 1 SCC 603.
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20 21
Vidya Mandir , Varimadugu Obi Reddy v. B. Sreenivasulu . , Celir
22
LLP v. Bafna Motors (Mumbai) (P) Ltd . , and P. Mohaideen Abdul
23
Khathar and Anr. v The Chief Manager Bank of Baroda and Ors.
49. At the threshold itself, the prayer „A‟ is not maintainable against the
respondent No. 2 Bank and if the petitioner is willing to seek refund of
the sale consideration, then the same must be sought by way of seeking
cancellation of sale certificate before the DRT.
50. The leasehold Subject Properties were mortgaged by Saket Tiles for
securing the credit facilities extended to Saket India. Saket Tiles was a
group company of Saket India and the Subject Properties were
mortgaged after permission of DDA.
51. When account of Saket India turned a non-performing asset,
proceedings under SARFAESI Act were initiated and consequently a
notice of intended auction sale of the Subject Properties dated
25.11.2009 was issued, which clearly specified the offer of selling the
properties on “as is where is and as is what is” basis and also
mentioned that Subject Properties are owned in the name of Saket
Tiles. The auction was conducted and sale certificates were accordingly
issued in pursuance of the said notice.
52. The issued sale certificates were not collected by the petitioner due to
its inability to arrange funds for its registration. Thereafter, fresh sale
certificates were issued on 23.03.2012, 20.11.2012 and finally on
19.08.2013, they were registered.
20
(2022) 5 SCC 345.
21
(2023) 2 SCC 168.
22
2023 SCC OnLine SC 1209.
23
judgment dated 21.12.2022 in W.P. (MD) No. 2116/2021, Madras High Court.
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53. The petitioner has participated in the auction process of its own volition
after conducting independent due diligence and checking all the
relevant documents including the perpetual lease deed. Thus, the
petitioner had knowledge of all the relevant clauses of the perpetual
lease deed including the one providing for imposition of UEI.
54. He also submits that the Subject Properties were sold by the respondent
No. 2 Bank in enforcement of its security interest and clearly on “as is
where is and as is what is” basis, and the respondent No. 2 Bank cannot
be compelled to pay any charges.
55. It is also stated that the respondent No. 2 Bank has no objection to
refund the auction amount but the sale certificate needs to be cancelled
by way of appropriate proceedings before the appropriate forum and
the same cannot be sought in the present writ petition. The petitioner
has sought inconsistent reliefs in the present petition.
56. Reliance is placed on a decision of Hon‟ble Madras High Court titled
P. Mohaideen Abdul Khatar (Supra) to state that the relief of refund of
auction amount was denied by the High Court holding that auction
purchaser falls within the expression “any person aggrieved” under
Section 17(1).
57. In this backdrop, directions must be given to the petitioner to approach
DRT in accordance with law.
ANALYSIS AND FINDINGS
58. I have heard the learned counsels for the parties and perused the
documents placed on record. Even though there is an alternative prayer
for refund of the auction amount, Mr. Sethi, learned senior counsel, has
only pressed and argued prayer „A‟ and „B‟ and does not press prayer „C‟.
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MAINTAINABILITY OF THE PETITION
Delay and Laches
59. At the outset, Mr. Tamber, learned counsel for the respondent No. 2,
submits that the present petition is liable to be dismissed for the reason
of being barred by delay and laches on the ground of inordinate delay
in preferring the present petition.
60. He submits that the sale of the Subject Properties concluded in the year
2010, thereafter the petitioner approached DDA for execution of
conveyance deeds and the said request was rejected. It was from this
time the petitioner was aware of the position of the Subject Properties
and the same is also evident from a letter dated 31.07.2010 addressed
by petitioner to the respondent No. 2. The letter dated 31.07.2010 is
important and reads as under:
Date: 31/07/2010
The Deputy General Manager,
Indian Bank, (Circle Office),
Richmond Circle,
Raheja Tower,
Bangalore.
Kind Attn: Mr. Hegde Ji (DGM, Richmond Circle, Indian
Bank).
Ref: Registration of agreement to sell. (Saket Tiles Pvt. Ltd., Plot
Nos. 43, 44, 45 and 46 situated at Block A-1, WHS, Kirti Nagar,
New Delhi).
Dear Sir,
In above said reference we would like to draw your kind
attention that above said properties we purchased in auction held
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on 28.12.2009 at your circle office, New Delhi. As now we had
already paid entire amount to you, please make arrangement to
Register Agreement to Sell and General Power of Attorney as
these documents are in trend in Delhi Development Authority's
properties, as lease hold properties can not be sold without
paying unearned increase and according to DDA this unearned
increase is around 2.25 Crores and has to be paid by the
beneficiary i.e. seller of the property.
As per the terms of "permission to mortgage" accorded by DDA
vide letter No. 9 (8)/LSB (I)/85/4528 dated 05/10/1990 as
aforesaid:-
― In the event of sale or for closure of the mortgage or charged
property, the lessor ( President of India) shall be entitled to
claim and recover fifty per cent of the unearned increase in the
value of the industrial plot as aforesaid and the amount of the
Lessor's share of the said unearned increase shall be the first
charge, having priority over the said mortgage or charge, the
decision of the Lessor in respect of the market value of the said
industrial plot shall be final and binding on all the parties
concerned, provided that the Lessor shall have the pre-emptive
rights to purchase the mortgage or unearned increase as
aforesaid.‖
Also, we have been informed by DDA that as an alternative Bank
officials may execute an agreement to sell (which will be got
registered at our cost) and based on it, we shall be able to get the
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property converted into freehold property and we undertake to
bear the cost of same.
In view of above, we request you to please issue the Agreement to
sell in our favour.
Thanks and Regards,
For JAISHREE GRANITES PRIVATE LIMITED
Shyam Sunder Maheshwari
Director
Enclosure: Above mentioned DDA letter No. 9 (8)/LSB
(I)/85/4528 dated 05/10/1990 is enclosed.
Copy to: Mr. P. N. Swarup (Chief Manager) Circle Office, UGF,
WTC, Babar Road, New Delhi-110001.‖
61. In this backdrop, since, the petitioner was aware of the issue of
imposition of UEI, it should have approached the Court of Law
promptly and without any inordinate delay.
62. Qua this submission, It is stated by Mr. Sethi, learned senior counsel,
that the DDA after the date of the letter as reproduced above has
refused to act upon the suggestions made earlier and has consistently
demanded documents from the respondent No. 2 Bank pertaining to the
corporate relationship between Saket India and Saket Tiles.
63. The law relating to delay and laches has been explained by the Hon‟ble
24
Supreme Court in the case of Mrinmoy Maity v. Chhanda Koley and
the relevant paragraphs of the same read as under:
24
(2024) 15 SCC 215.
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―9. Having heard rival contentions raised and on perusal of
the facts obtained in the present case, we are of the
considered view that the writ petitioner ought to have been
non-suited or in other words the writ petition ought to have
been dismissed on the ground of delay and laches itself. An
applicant who approaches the court belatedly or in other
words sleeps over his rights for a considerable period of
time, wakes up from his deep slumber ought not to be
granted the extraordinary relief by the writ courts. This
Court time and again has held that delay defeats equity.
Delay or laches is one of the factors which should be borne
in mind by the High Court while exercising discretionary
powers under Article 226 of the Constitution of India. In a
given case, the High Court may refuse to invoke its
extraordinary powers if laxity on the part of the applicant to
assert his right has allowed the cause of action to drift away
and attempts are made subsequently to rekindle the lapsed
cause of action.
10. The discretion to be exercised would be with care and
caution. If the delay which has occasioned in approaching
the writ court is explained which would appeal to the
conscience of the court, in such circumstances it cannot be
gainsaid by the contesting party that for all times to come
the delay is not to be condoned. There may be myriad
circumstances which gives rise to the invoking of the
extraordinary jurisdiction and it all depends on facts and
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circumstances of each case, same cannot be described in a
straitjacket formula with mathematical precision. The
ultimate discretion to be exercised by the writ court depends
upon the facts that it has to travel or the terrain in which the
facts have travelled.
11. For filing of a writ petition, there is no doubt that no
fixed period of limitation is prescribed. However, when the
extraordinary jurisdiction of the writ court is invoked, it has
to be seen as to whether within a reasonable time same has
been invoked and even submitting of memorials would not
revive the dead cause of action or resurrect the cause of
action which has had a natural death. In such
circumstances on the ground of delay and laches alone, the
appeal ought to be dismissed or the applicant ought to be
non-suited. If it is found that the writ petitioner is guilty of
delay and laches, the High Court ought to dismiss the
petition on that sole ground itself, inasmuch as the writ
courts are not to indulge in permitting such indolent litigant
to take advantage of his own wrong. It is true that there
cannot be any waiver of fundamental right but while
exercising discretionary jurisdiction under Article 226, the
High Court will have to necessarily take into consideration
the delay and laches on the part of the applicant in
approaching a writ court.
…
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SRIVASTAVA
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14. Reiterating the aspect of delay and laches would
disentitle the discretionary relief being granted, this Court
in Chennai Metropolitan Water Supply & Sewerage
Board v. T.T. Murali Babu [Chennai Metropolitan Water
Supply & Sewerage Board v. T.T. Murali Babu, (2014) 4
SCC 108 : (2014) 1 SCC (L&S) 38] has held: (SCC p. 117,
para 16)
―16. Thus, the doctrine of delay and laches should
not be lightly brushed aside. A writ court is required
to weigh the explanation offered and the
acceptability of the same. The court should bear in
mind that it is exercising an extraordinary and
equitable jurisdiction. As a constitutional court it
has a duty to protect the rights of the citizens but
simultaneously it is to keep itself alive to the primary
principle that when an aggrieved person, without
adequate reason, approaches the court at his own
leisure or pleasure, the court would be under legal
obligation to scrutinise whether the lis at a belated
stage should be entertained or not. Be it noted, delay
comes in the way of equity. In certain circumstances
delay and laches may not be fatal but in most
circumstances inordinate delay would only invite
disaster for the litigant who knocks at the doors of
the court. Delay reflects inactivity and inaction on
the part of a litigant — a litigant who has forgotten
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SRIVASTAVA
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the basic norms, namely, ―procrastination is the
greatest thief of time‖ and second, law does not
permit one to sleep and rise like a phoenix. Delay
does bring in hazard and causes injury to the lis.‖
64. From a conspectus of the aforesaid, it is clear that the Courts while
exercising its extraordinary writ jurisdiction are required to keep in
mind the delay and laches, if any, on part of the petitioner in
approaching the Court seeking constitutional remedy. In case of
inordinate and unexplainable delays attributable to the petitioner, the
Court is not bound to entertain the case of the petitioner. However,
when the delay is sufficiently explained to the satisfaction of Court,
then the Court must exercise this extraordinary jurisdiction as it
concerns the rights of a person.
65. In this backdrop, I am unable to agree with the argument of the
respondent No. 2. In the present case, the dispute with regards to the
status of original lessee and the corporate nexus between Saket India
and Saket Tiles was itself in question. The petitioner was fully
conscious of this issue, was exercising its rights and was continuously
requesting the respondent No. 2 Bank to provide the document
explaining the relation between the Saket India and Saket Tiles in order
to satisfy the queries of the DDA. There has been a series of
communication between the petitioner and DDA, which to my mind,
sufficiently explains the case of the petitioner that there is no inordinate
and unexplainable delay.
66. After a series of communication exchanged between the petitioner and
DDA, the petitioner received a letter from DDA dated 21.04.2016
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which raised further requirement of documents regarding date of
possession and corporate relationship between Saket India and Saket
Tiles. The same requirement was further reiterated by DDA vide letter
dated 13.06.2017. The communications dated 21.04.2016 and
13.06.2017 addressed by DDA to the petitioner are relevant and read as
under:
―DELHI DEVELOPMENT AUTHORITY
LAND SALES BRANCH (INDUSTRIAL)
A-Block, Vikas Sadan, INA,
New Delhi-110023.
No. F.9(8)85/LSB(I)/DDA/ 884 Dated: 21/4/16
To,
M/s. Jaishree Industries Limited,
D-12, Rajouri Garden, Ring Road,
New Delhi-110027.
Sub.: Regarding Plot No. A-1/43, A-1/44, A-1/45 & A-1/46, Kirti
Nagar WHS, New Delhi-110015.....
Sir(s),
With reference to your extension of time and mutation request
dated 12.3.2015 on the above cited subject. In this connection, I
am directed to inform you to submit the followings:
1. Date of possession of the premises referred to above from
Indian Bank with documentary evidences.
2. The submission dated 6.1.2015 made by Indian Bank that M/s.
Saket Tiles Pvt. Ltd., a subsidiary Company of M/s. Saket India
Ltd. needs to be ascertained from the Registrar of Companies.
Signed By:ANSH
SRIVASTAVA
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You are therefore requested to submit the above said documents
within 15 days from the issue of this letter so that your extension
of time and mutation request can be processed further.
Asstt. Director (Indl.)‖
Reminder
―DELHI DEVELOPMENT AUTHORITY
LAND SALES BRANCH (INDUSTRIAL)
No. F. 9(8)85/LSB(I)/DDA/ 3400 Dated:- 13/06/17
To
M/s Jaishree Industries Limited,
D-12, Rajouri Garden, Ring Road,
New Delhi-110027.
Sub: Regarding Plot No. A-1/43,A-1/44,A-1/45 & A-1/46 WHS
Kirti Nagar, New Delhi.
Sir,
Kindly refer to this office letter dated 21.04.2016 vide which you
were requested to submit the following documents:
1. Date of possession of the premises referred to above from
Indian Bank with documentary evidences.
2. The submission dated 06.01.2015 made by Indian Bank that
M/s Saket Tiles Pvt. Ltd., a subsidiary Company of M/s Saket
India Ltd. needs to be ascertained from the Registrar of
Companies.
The requisite information is still awaited. Therefore, you are
once again requested to submit the same so that your request for
extension of time and mutation can be processed further.
Signed By:ANSH
SRIVASTAVA
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Yours faithfully
Asstt. Director (Indl.)‖
67. Since, the respondent No. 2 did not provide the required necessary
documents, the petitioner vide letter dated 31.07.2017 was constrained
to seek refund of the money. The letter dated 31.07.2017 is relevant
and reads as under:
― JAISHREE INDUSTRIES LIMITED
Formerly Jaishree Granites (P) Ltd.
AN ISO 9001 : 2008 COMPANY
Exporter, Mines Owner & Processors of all
Colours of Granite Slabs & Tiles
D-12, RAJOURI GARDEN, (RING ROAD) NEW
DELHI- 110027
To, Dated: 31.07.2017
The Authorized Officer
Indian Bank
A/c Saketh India Limited
Circle Office, UGF, WTC
Babar Road, New Delhi – 110001.
Ref:- Plot No. A-1/43, A-1/44, A-1/45 and WHS, Kirti Nagar, New
Delhi.
Sir,
The aforesaid plots were purchased by the applicant company in an
open auction carried out by Indian Bank on 28.5.2009. The
aforesaid plots were auctioned by the bank against the loan facility
made available to M/s Saket India Ltd. During the course of seeking
to have the conveyance deed executated in favour of the applicant
company from DDA it transpired that the plots were actually alloted
to M/s Saket Tiles Pvt. Ltd. In order to execute the conveyance deed
in favaour of applicant company various documents were sought by
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SRIVASTAVA
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the DDA and majority of which have not been made available to the
applicant company by the bank. The last demand of this series by
DDA was vide letter dated 21.4.2016 wherein the DDA had asked
the applicant company to submit the followings:-
1. Date of possession of the premises referred above from Indian
Bank with documentary evidences.
2. The submission dated 6.1.2015 made by Indian Bank that M/s
Saket Tiles Pvt. Ltd., a subsidiary Company of M/s Saket India
Ltd. Needs to be ascertained from the Registrar of Companies.
Despite repeated reminders you failed to make available the
aforesaid documents as a result DDA has refused to execute
conveyance deed in respect of the aforesaid plots in favour of the
applicant company. As you have failed to convey a clear title in
respect of the aforesaid plots to the applicant company and neither
you are in a position to provide a clear title in respect of the
aforesaid plots in favour of the applicant company.
Therefore you have become liable in law to not only refund the
amount deposited with you with interest as also damages sustained
by us. Therefore, you are requested to please furnish the requisite
information relating to the requisitions made by DDA & in
particular about the date of possession with documents thereof as
also all the records with the Bank establishing M/s Saket Tiles Pvt.
Ltd. to be a subsidiary of M/s Saket India Ltd.. and in failure thereof
please refund the auction amount of Rs. 8.01 crores along with
interest @ 18% per annum w.e.f. 28.5.2009, till the date of payment
alongwith other incidental expenses incurred by the applicant
company.
This is for your information and necessary action.
Thanking you,
For JAISHREE INDUSTRIES LTD.”
Signed By:ANSH
SRIVASTAVA
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Managing Director
68. For the aforesaid reasons, the petitioner cannot be said to be sleeping
over its rights so as to be disentitle it for relief from this Court
exercising writ jurisdiction.
Alternate efficacious remedy
69. Another preliminary objection raised against the maintainability of the
present petition is the availability of an alternative efficacious remedy
with the petitioner under Section 17 of the SARFAESI Act.
70. This objection, to my mind, is unfounded and has been only fleetingly
raised. The factual matrix of the present case, the relief claimed by way
of present petition against DDA in Prayer „A‟ and the relief claimed
against the respondent No. 2 Bank in Prayer „B‟ are intertwined in such
a way that the disputes need to be comprehensively adjudicated for
final and proper disposal of the controversy.
71. Alternate remedy by way of Section 17 of SARFAESI before the DRT
could not possibly resolve/satisfy the dispute between the parties,
which is of complex nature involving issues concerning not only the
petitioner and the respondent No. 2 bank but also the respondent No.
1/DDA. The DRT cannot exercise its jurisdiction or issue directions
against the respondent No. 1/DDA with respect to which there is prayer
„A‟ in the present petition seeking namely direction against the
respondent No. 1/DDA to execute conveyance deeds together with
respondent No. 2 in respect of subject properties in favour of the
petitioner.
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SRIVASTAVA
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72. Thus, keeping in view the complexity of the matter, the intertwined
nature of the relief claimed and the need of proper and final disposal,
the objection based on alternative efficacious remedy regarding
maintainability of the present petition is rejected.
LIABILITY OF RESPONDENT NO.2 BANK
73. The entire case of the petitioner is premised on three-fold arguments:
i. The respondent No. 2 Bank despite being fully aware of the fact
that the lease was in favour of Saket Tiles, failed to disclose the
same.
ii. No document pertaining to the sale like public notice, sale
notice, terms and conditions of auction, sale certificate,
provided for any stipulation as to the liability of the
petitioner to pay/discharge the liability qua charges or other
levies imposed like UEI. In absence of any such stipulation,
such liability cannot be fastened upon the petitioner.
iii. The respondent No. 2 Bank has continuously retained the
entire auction money without perfecting the title/ conveying
a marketable title in favour of the petitioner, by relying on
the “as is where is and as is what is” clause and now cannot
absolve itself from the liability of failure to disclose material
fact/defect which has vitiated the entire auction.
74. Per Contra, the main argument of the respondent No. 2 Bank qua its
liability to pay UEI and other charges is that the Subject properties
were sold in enforcement of its security interest clearly with an express
stipulation attached to it, that the same is being sold on an “as is where
is and as is what is” basis. The petitioner having participated in the
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auction procedure of its own volition with full knowledge, now cannot
dispute the same and take a contrary stand in stating that the bank is
under obligation to discharge the liabilities not assumed by it.
75. The respondent No. 2 Bank also vehemently opposes the contention of
the petitioner that the description of the property was not disclosed
prior to the auction. It is stated that the petitioner has conducted due
diligence and checked all relevant documents including the lease deed.
Hence, all the relevant terms, conditions and clauses were within its
knowledge. The notice of intended sale dated 25.11.2009 issued under
Rule 6(2) and 8(6) of the 2002 Rules is important and reads as under:
―INDIAN BANK
Circle Office, UGF, World Trade Centre, Babar Road,
New Delhi-110001
PUBLICATION SALE NOTICE
Notice of intended sale under Rule 6 (2) & 8 (6) of the Security
Interest (Enforcement) Rules, 2002 under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002.
1. M/s Saketh India Ltd. (a) Regd. Office 11/12, Plot No. 2,
Phase No. 2, Sector-2, Nerul, New Mumbai-400708 (b) Head
st
Office No. 113, 1 Main Road, Seshadripuram, Bangalore-
560020.
2. Sri S.L. Sharma, S/o Devakinandana Sharma, Chairman, M/s
Saketh India Ltd. No. 69, Saketh, Meerut, Uttar Pradesh.
3. Sri R.L. Sharma, S/o Late Devakinandana Sharma, Managing
th
Director, M/s Saketh India Ltd. No. 892, 38 Cross, 4th T Block,
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SRIVASTAVA
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Jayanagar, Bangalore-560041.
4. Sri K.S. Rao, S/o Sri K.V. Krishna Rao, Executive Director,
M/s Saketh India Ltd. No. 2968, 16th Cross, Krishna Rajendra
Road, Banashankari, II Stage, Bangalore-580070.
5. Sri Pramod Kumar Kaushik, Executive Director, M/s Saketh
India Ltd., since deceased represented by his legal heirs who
have been brought into Suit Records.
i. Smt. Nirmala Devi, W/o Late Pramod Kumar Kaushik.
ii. Sri Nutal, S/o Late Pramod Kumar Kaushik.
iii. Sri Gaurav, S/o Late Pramod Kumar Kaushik.
All residing at No. 131, Sector 6-A, Faridabad, Haryana.
6. Sri C.B. Vishwanathan, S/o Late C.V. Balappa, Director, M/s
Saketh India Ltd., No. 9-85, Lakshminagar Colony, Kothapet,
Ranga Reddy Dist., A.P.
7. M/s Saketh Marble Udyog Ltd., (Owned by M/s Saketh India
Ltd.) No. 466/377, Borowar Village, Makrana, Nagour-Dt.,
Rajasthan.
8. Mrs. Saketh Tiles Pvt. Ltd. (Owned by M/s Saketh India Ltd.)
No. 45/46, Block No. A-1, Kirthi Nagar, W.H.S. New Delhi
110015.
Sub: Loan account M/s Saketh India Ltd. with Indian Bank,
Richmond Circle branch, Bangalore.
M/s Saketh India Ltd., availed facilities from Indian Bank,
Richmond Circle Branch, Bangalore. The repayment of which
are secured by mortgage of schedule mentioned properties
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SRIVASTAVA
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hereinafter referred to as ―the properties‖. M/s Saketh India Ltd.
failed to pay the outstanding to the bank. Therefore, a Demand
Notice dated 12.05.2005 under Sec. 13 (2) of Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, (for short called as ―The Act‖) was issued by
the undersigned calling upon M/s Saketh India Ltd. and others
liable to the Bank to pay the amount due to the tune of Rs.
3,96,65,38,560.76 (Rupees Three Hundred Ninety Six Crores
Sixty Five Lakhs Thirty Eight Thousand Five Hundred Sixty and
Paise Seventy Six only (as on 31.03.2005) with further interest
and other charges thereon.
M/s Saketh India Ltd. failed to make payment despite Demand
Notice and therefore, the undersigned took possession of the
schedule mentioned properties under the Act on 24.09.2005 after
complying with all legal
formalities.
The sale is intended to be conducted by way of Tender cum
Auction Method. Sealed Tenders are invited from public. The
Tender/bid Form with all the applicable terms and conditions
can be had from the undersigned at Indian Bank, Circle Office,
New Delhi against written request. The last date for submitting
tenders/bids complying with all necessary terms along with EMD
to the undersigned in the above mentioned address is 28.12.2009
upto 11:00 a.m. The tenders shall be opened on 25.12.09 at
11:30 a.m. at the same address. Inspection of scheduled
properties by the intending tenderers can be done at their
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SRIVASTAVA
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expense.
In the case of immovable properties, the sale shall be conferred
on the person making highest offer/tender/bid. 25% of the sale
price shall be paid immediately on the date of sale by way of
DD/BPO and the balance price shall be paid within 15 days of
confirmation of sale by the Bank, which can be extended in
writing from time to time, on request from the purchaser, at the
discretion of the Bank.
The undersigned reserves the right to accept or reject the
tender/bid/offer without assigning any reason therefor.
The sale is on ―As is where is and As is What is‖ basis Bidding
for individual plot is also permitted.‘
This Notice is without prejudice to any other remedy available to
the Bank and without prejudice to Bank‘s right to proceed with
the proceedings pending. If any, before DRT/RO of
DRT/DRAT/Court and proceed with the execution of
order/decree obtained/to be obtained.
SCHEDULE
Detailed description of the Mortgaged Assets Item-wise.
All that part and parcel of the property bearing Plot No. 43, 44,
45 and 46 situated at Block No. A-1, WHS, Kirti Nagar, New
Delhi owned by the subsidiary of the Company, M/s Saket Tiles
Pvt. Ltd. The extent of land is 1000 Sq. Yds and bounded on the
East by Road, West by other property, North by other property
and South by Road.
Reserve Price: Rs. 600.00 lakhs EMD: Rs. 50.00 lakhs
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SRIVASTAVA
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Place: New Delhi Authorised Officer
Date: 25.11.2009
Statesman dt. 25.11.09‖
76. A perusal of the aforesaid notice of intended sale dated 25.11.2009,
clearly shows that the the properties in question were sold on “as is
where is and as is what is” basis. The other important aspect in this
notice reproduced hereinabove, is the clear declaration that the Subject
Properties are owned by a subsidiary of Saket India namely M/s Saket
Tiles Ltd.
77. Even though prima facie the argument of respondent No. 2 Bank seems
attractive that the petitioner should have verified and acted with due
diligence qua the title documents and should have been aware of the
liability to pay unearned increase in accordance with the relevant clause
of the perpetual lease deed, a closer scrutiny of the argument shows
that the same needs to be tested on the touchstone of relationship
between “as is where is” stipulation and SARFAESI proceedings.
78. At this stage, I find it pertinent to discuss the position of law qua “as is
where is and as is what is” read together with the SARFAESI Act,
which has been explained by the Hon‟ble Division Bench of this Court
in its recent judgment in the case of Bank of Maharashtra v. Jai
25
Kumar Bansal , wherein this Court while allowing an appeal and
setting aside the judgment of Commercial Court holding the bank liable
25
2026 SCC OnLine Del 667.
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to pay dues, discussed the law relating to “as is where is and as is what
is” clause in the following words:
―10. To adjudicate this controversy, it is necessary to
examine the interplay between the ―as is‖ nature of
SARFAESI auctions and the statutory obligations of a
secured creditor. The legal position governing auction sales
of secured assets is well-settled. While such a transfer is
prima facie one where the buyer takes the property in its
existing condition, the protection afforded to the seller by
an “as is where is” clause is not absolute.
11. Under Section 55(1)(a) of the Transfer of Property Act,
1882, a seller is bound to disclose to the buyer any material
defect in the property or in the seller's title thereto of which
the seller is, and the buyer is not, aware, and which the
buyer could not with ordinary care discover. Within the
specific framework of the SARFAESI Rules, Rule 8(6)(a)
and (f) of the Security Interest (Enforcement) Rules, 2002,
mandates that the authorized officer shall serve a notice of
sale to the borrower containing, inter alia, the description
of the immovable property and ―any other thing which the
authorised officer considers it material for a purchaser to
know in order to judge the nature and value of the
property.‖
12. The jurisprudence on this point, notably the decision of
1
the Allahabad High Court in Rekha Sahu v. UCO Bank ,
clarifies that although a SARFAESI sale is on an ―as is‖
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basis, the authorized officer is not absolved of the duty to
disclose known encumbrances. The Court held that the
immunity provided by ―as is where is‖ terms cannot be used
to shield the non-disclosure of material facts that are within
the Bank's knowledge. Similarly, the Supreme Court
in Punjab National Bank v. Mithilanchal Industries Pvt.
2
Ltd. and more recently in Delhi Development
3
Authority v. Corporation Bank has emphasized that a
secured creditor must act with transparency. In the Delhi
Development Authority case, the Supreme Court held that
the non-disclosure of the DDA's ‗unearned increase‘ charge
- a statutory claim, violated the requirement to inform
bidders of material encumbrances, leading to the quashing
of the auction.
13. However, the force of these precedents must be weighed
against the specific facts and contractual stipulations of the
present case. The efficacy of an ―as is‖ clause depends on
whether the seller acted bona fide or actively concealed
4
facts. In Kalyani (India) Pvt. Ltd. v. Punjab National Bank ,
this Court observed that while a seller cannot ―shed away‖
responsibilities through active concealment, the purchaser
is equally bound by the terms of the notice if they are clear
and unambiguous.
14. In the present Appeal, the Appellant Bank has
demonstrated a consistent and transparent disclosure of the
sale terms. The public notice dated 28.11.2018 contained an
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explicit and wide-ranging indemnity clause. Specifically,
Clause 12 of the said notice warned:
―…if any dues or penalty or any charges are
due/levied on the property by any authority then it will
also be borne by the purchaser in addition to sale
price.‖
…
17. Furthermore, the Respondent's reliance on Rule 9(10) of
the SARFAESI Rules is misplaced. Rule 9(10) requires the
sale certificate to mention whether the property is sold free
from encumbrances. The Sale Certificates issued on
29.12.2018 explicitly stated they were on an “as is where
is” and “what is where is” basis and free from
encumbrances known to the Bank. The Respondent
accepted these certificates unconditionally and took
physical possession on 01.01.2019 without any protest or
reservation regarding the title or pending dues.
18. The principle of caveat emptor (buyer beware) finds
strong application here. The dues claimed by UPSIDA (a
public authority) were matters of public record and
pertained to the leasehold nature of the property. A simple
inquiry with UPSIDA, as the lessor, would have revealed
the status of the dues. By signing the acceptance and the
sale certificate, the Respondent entered a binding contract
to assume all ―unknown‖ liabilities. As held in Royal Star
6
Trading Co. v. IFCI Ltd. , an auction purchaser cannot
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renege on a confirmed bid or seek modifications to the price
(by way of reimbursement of dues) simply because of a
subsequent discovery of liabilities that they had already
contractually agreed to bear.
19. The Commercial Court failed to appreciate that the “as
is” clause in the present case was supplemented by a
specific warning regarding statutory dues. The court below
erroneously applied the standard of an absolute warranty of
title, which does not exist in SARFAESI auctions unless
specifically promised. In the absence of fraud or active
misrepresentation, neither of which has been proved by the
Respondent, the contractual terms must be enforced.‖
(Emphasis Supplied)
79. From a perusal of the aforesaid judgment, it is clear that the auction
seller is bound to disclose all the material facts as well as the defects in
the property which is to be auctioned.
80. The clause “as is where is and as is what is” cannot be used as a shield
to conceal the hidden charges which are in the knowledge of the
auction seller. The judgment of Jai Kumar Bansal (Supra) also deals
with most of the contentions raised by the petitioner in the present
petition regarding statutory finality under Section 13(6) of the
SARFAESI Act, application of Rule 9(10) of 2002 rules and the
application of the principle of caveat emptor , the same is binding upon
this Court.
81. With the aforesaid principle of law, I shall now deal with the factual
matrix of the present case.
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82. In the present case, admittedly, at the time of mortgage, the respondent
No. 2 Bank was in possession of the title documents including the lease
deed of the mortgagor. The respondent No. 2 Bank was fully conscious
of the terms and conditions of the lease including the right of DDA to
charge unearned increase, and that permission of DDA is required
before dealing with the subject properties. The same is evident from the
letter dated 05.10.1990 written by the DDA to Saket Tiles, permitting
mortgage of the subject properties. It is on the basis of this letter that
the subject properties were mortgaged to the respondent No. 2 Bank.
The letter dated 05.10.1990 is reproduced as under:
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SRIVASTAVA
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TRUE TYPED COPY
DELHI DEVELOPMENT AUTHORITY
(LAND SALES BRANCH) INDUSTRIAL
No. 9 (8)/LSB(I)/85/4528
Dt. 5/10/90
To,
M/s Saket Tiles (Pvt) Ltd.
A-I/43, Kirti Nagar WHS,
New Delhi-15.
Sub: Permission to mortgage Industrial Plot No. 43 Block No. A-
I in Kirti Nagar WHS.
Dear Sir/Madam,
With reference to your letter dated 16-7-90 on the above noted
subject, I am directed to say that under Clause II(4)(B) of the
Perpetual Lease Deed executed with you on 12-6-89. Lt.
Governor, Delhi is pleased to permit you to mortgage the
industrial plot No. 43, Block No. A-I situated at Kirti Nagar WHS
with the Indian Bank, Richmond Circle, Bangalore for the
purpose of raising loan for the construction of an industrial
building on the said plot and for purchase of machinery working
capital loan subject to the condition that in the mortgage deed,
the following clause will be included:-
―In the event of sale or for closure of the Mortgage or charged
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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W.P.(C) 10860/2017 Page 39 of 49
property, the lessor (President of India) shall be entitled to claim
and recover fifty per cent of the unearned increase in the value of
the industrial plot as aforesaid and the amount of the Lessor's
share of the said unearned increase shall be the first charge,
having priority over the said mortgage or charge the decision of
the Lessor in respect of the market value of the said industrial
plot shall be final and binding on all the parties concerned,
provided that the Lessor shall have the pre-emptive rights to
purchase the mortgage or unearned increase as aforesaid‖.
2. Please note that the mortgage permission must be utilised
within one year from the issue of this letter. In the event of your
failure to utilise, the mortgage permission herein given will be
treated as having lapsed.
3. Notice under section 26(1) and (2) of the Urban Land (Ceiling
& Regulation), Act, 1976 have been received.
4. Permission under Section 27(2) of the Urban Land (Ceiling &
Regulation) Act, 1976 is hereby granted.
Yours faithfully,
DEPUTY DIRECTOR (INDUSTRIAL)
DELHI DEVELOPMENT AUTHORITY.
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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W.P.(C) 10860/2017 Page 40 of 49
83. To my mind, the said condition of the lease deed is a material condition
having substantial bearing on the decision of the petitioner to
participate in the auction and on the sale consideration of the Subject
Properties, and accordingly the same was required to be brought to the
notice of the petitioner by way of an express stipulation.
84. If the imposition UEI had been disclosed by the respondent No. 2 Bank
in the auction notice, then the same would have resulted in price
difference or a difference in the bid of the petitioner, as the petitioner
would have factored that cost in its assessment of a reasonable bid.
85. However, there was no express stipulation in the intended sale notice as
reproduced above, so as to clarify the position with respect to the
encumbrances (UEI) upon the Subject Properties.
86. Even though the sale certificate contains a stipulation that the Subject
Properties are being sold free from all known encumbrances, it cannot
substantiate the case of the respondent No. 2 because as held above in
Jai Kumar Bansal (supra), the presence/absence of such a clause in
the sale certificate can only be used as a supplementary aspect to the
requirement of disclosure.
87. Reliance is also well placed by the petitioner on the judgment of
Monoflex India (Supra) relevant paragraphs of the same read as under:
―12. The petitioner has claimed in the petition that the
terms of auction had clearly stated that the property was
free from all encumbrances and there was no provision
prescribed therein for payment of unearned increase. It is,
thus, stated that in case the liability had to be put on the
purchasers for unearned increase, there should have been a
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
18:43
W.P.(C) 10860/2017 Page 41 of 49
specific clause in the public auction. This is more so in view
of the fact that even as per the terms and conditions of the
perpetual sub-lease, the liability is not of the purchasers. It
is further submitted that it is the duty of respondent No. 1 to
have got the property mutated in faovur of the petitioner by
clearing whatever dues, if any, payable to respondent No. 2.
15. In the counter affidavit filed by respondent No. 2 DDA,
reliance has been placed on the terms and conditions of the
perpetual sub-lease deed. It has, thus, been stated that the
unearned increase is liable to be paid in terms of Clause
11(6) and even in such cases as the present case where the
property is sold in pursuance to the attachment carried out
by the tax authorities, there is no exemption from payment
of unearned increase in view of Clause 11(7).
27. It is, thus, the contention of learned Counsel for
respondent No. 1 that the liability towards unearned
increase can be either of the petitioner or the DDA should
recover the same from the original perpetual lessee, but
respondent No. 1 cannot be burdened with this liability as it
only stepped into the shoes of the original sub-lessee when it
attached the property and issued the proclamation of sale.
37. In view of the aforesaid emerging facts, I am inclined to
follow the path adopted in Sujan Singh Oberoi's
case (supra). It would not make a difference that in the said
case there was a specific provision for payment to be made
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
18:43
W.P.(C) 10860/2017 Page 42 of 49
by the Vendor in case demanded by DDA. This is so since
the absence of any stipulation to fix the liability on the
purchasers in the auction notice would also result in a
consequence where the liability cannot be fasten on the
purchasers.
39. In view of the aforesaid, I consider it appropriate that
respondent No. 1 shall deposit the amount of unearned
increase of Rs. 6,12,852.04 with respondent No. 2 within a
period of 6 weeks from today without prejudice to the rights
of respondent No. 1 to impugn the same in accordance with
law against respondent No. 2. Respondent No. 2 will also
have a right to claim interest on the unearned increase from
respondent No. 1, in case so advised, by initiating
appropriate legal proceedings. The case of the purchasers
will be processed by respondent No. 2 for issuance of NOC
within a period of 2 weeks thereafter and on such NOC
being submitted and formalities being completed, the sale
certificate shall be registered by the Registering Authority
within a maximum period of 1 month thereafter. The
purchasers shall on registration of the sale certificate file
the same with respondent No. 2 for mutation and complete
the necessary formalities and respondent No. 2 shall mutate
the property in the name of the purchasers within a
maximum period of 1 month thereafter. Respondent No. 2
shall also issue NOC to the purchasers for sanction of
building plans simultaneously on the mutation being carried
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
18:43
W.P.(C) 10860/2017 Page 43 of 49
out in order to enable construction on the plot in question.
In view of the fact that the matter has got delayed as a
consequence of the differences between the two respondents,
who are Government and Government Authority, the time
period for completing construction in respect of the plot in
question shall be extended for a period of 2 years from the
date of grant of NOC for sanction of building plans.‖
88. In the present case, the judgment of Monoflex (Supra) is squarely
applicable to the facts of the present case.
89. From the facts as narrated above, it is clear that:
A. The public notice, sale notice, terms and conditions of auction, and
sale certificate did not indicate any hidden costs such as UEI for a
perfect title.
B. In fact, the auction notice only stated that Saket Tiles is the owner of
the Subject Properties (thereby clearly giving the impression that
there were no conditions attached for use and absolute enjoyment of
the Subject Properties)
C. The terms of the lease clearly mentioned that the lessee would be
liable to pay UEI (once the respondent No. 2 stepped into the shoes
of the lessee i.e., Saket Tiles, the liability to pay UEI was that of the
respondent No. 2 Bank).
D. In any case, the petitioner cannot be burdened with the payment of
UEI as the same would, in fact, result in altering of the bid amount
by requiring the petitioner to pay at least 25% higher than the bid
amount.
90. Additionally, the judgment of Jai Kumar Bansal (Supra), wherein the
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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W.P.(C) 10860/2017 Page 44 of 49
Hon‟ble Division Bench set aside the Commercial Court‟s judgment
holding the Bank liable, is distinguishable on facts from the present
case as in that case there was sufficient notice/specific warning
regarding statutory dues/penalties/charges to the auction purchaser
categorically stating that he will be liable to pay the same, which is not
the case in the present factual matrix as no notice/warning exists. The
relevant paragraphs of Jai Kumar Bansal (Supra) read as under:
―14. In the present Appeal, the Appellant Bank has
demonstrated a consistent and transparent disclosure of the
sale terms. The public notice dated 28.11.2018 contained an
explicit and wide-ranging indemnity clause. Specifically,
Clause 12 of the said notice warned:
―…if any dues or penalty or any charges are
due/levied on the property by any authority then it will
also be borne by the purchaser in addition to sale
price.‖
15. This was not a vague ―as is‖ clause but a specific
contractual allocation of risk regarding statutory dues. This
condition was further reinforced in the Bank's
communication dated 14.12.2018 (Letter of Acceptance),
where Clause 8 explicitly advised the Respondent that any
charges or taxes pending on the property were to be borne
by him. The Respondent, having participated in a high-
stakes auction with a bid of over Rs. 6.07 Crores is
presumed to be a sophisticated commercial entity. Such a
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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W.P.(C) 10860/2017 Page 45 of 49
purchaser is expected to exercise due diligence
commensurate with the value of the transaction.‖
91. The same is also required by virtue of a holistic reading of Section
13(6) of the SARFAESI Act as well as Rule 8(7)(a), 8(7)(f), 9(9) and
Rule 9(10) of the 2002 Rules and the relevant provisions read as under:
“Section 13(6) of SARFAESI Act
13. Enforcement of security interest.— (1)…
…
(6) Any transfer of secured asset after taking possession
thereof or take over of management under sub-section (4),
by the secured creditor or by the manager on behalf of the
secured creditor shall vest in the transferee all rights in, or
in relation to, the secured asset transferred as if the transfer
had been made by the owner of such secured asset.
Rule 8 (7) (a) and 8 (7) (f) of the 2002 Rules
8. Sale of immovable secured assets.—(1)…
…
(7) every notice of sale shall be affixed on the conspicuous
part of the immovable property and the authorised officer
shall upload the detailed terms and conditions of the sale,
on the website of the secured creditor, which shall include;
(a) the description of the immovable property to be sold,
including the details of the encumbrances known to the
secured creditor;
…
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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W.P.(C) 10860/2017 Page 46 of 49
(f) any other terms and conditions, which the Authorised
officer considers it necessary for a purchaser to know the
nature and value of the property.
Rule 9 (9) and 9 (10) of the 2002 Rules
9. Time of sale, Issue of Sale Certificate and delivery of
possession, etc.— (1)…
…
(9) The authorised officer shall deliver the property to the
purchaser free from encumbrances known to the secured
creditor on deposit of money as specified in sub-rule (7)
above.
(10) The certificate of sale issued under sub-rule (6) shall
specifically mention that whether the purchaser has
purchased the immovable secured asset free from any
encumbrances known to the secured creditor or not.‖
92. A perusal of the aforesaid statutory scheme shows that once the
property is sold in enforcement of a security interest under the
SARFAESI Act, the same needs to be sold free of all encumbrances
and any information regarding any encumbrance (even in the form of
dues/charges) qua the property and in the knowledge of Secured
Creditor (respondent No. 2) needs to be categorically brought to the
notice of the auction purchaser (petitioner).
93. From the perusal of the factual matrix of the case, admittedly, the same
has not been so done and there is no such absolute clause in the
intended public sale notice which can, in effect, entail protection to the
respondent No. 2 Bank (Secured Creditor).
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
18:43
W.P.(C) 10860/2017 Page 47 of 49
94. In this view of the matter, I find it necessary to state that the argument
of the respondent No. 2 Bank that it bears no liability to pay the
dues/charges imposed by DDA by virtue of the “as is where is and as is
what is” basis clause, cannot be countenanced and is liable to be
rejected.
95. Moreover, the respondent No. 2 Bank cannot be allowed to unjustly
enrich itself by failing to perfect the title of the property sold by way of
auction to the auction purchaser.
96. I am inclined to follow the approach adopted by the learned Single
judge in Monoflex (Supra), which was affirmed by the Hon‟ble
26
Division Bench in the LPA filed against it.
97. In this view of the matter, when the liability qua UEI if not disclosed to
the petitioner/auction purchaser, the same cannot be fastened upon the
petitioner.
CONCLUSION
98. For the aforesaid reasons, and having found that the settled law does
not absolve the respondent No. 2 Bank (auction seller) from its liability
to pay the UEI. The writ petition is allowed and mandamus is issued
with the following directions:
i. The respondent No. 1/DDA shall make a demand from the
respondent No. 2 Bank towards the UEI to execute conveyance
deeds in favour of the petitioner.
ii. The respondent No. 2 Bank shall make payment of the requisite
amount within 4 weeks of the demand.
26
LPA No. 842/2003.
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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W.P.(C) 10860/2017 Page 48 of 49
iii. Upon payment and completion of other formalities, the
respondent No. 1/DDA along with the respondent No. 2 Bank
shall execute conveyance deeds in favour of the petitioner
within 4 weeks thereafter.
iv. The respondent No. 2 Bank is also at liberty to take appropriate
legal actions in accordance with law.
99. Accordingly, the petition is disposed of with the aforesaid directions.
JASMEET SINGH, J
th
SEPTEMBER 08 , 2026/SS
Signed By:ANSH
SRIVASTAVA
Signing Date:08.09.2026
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