Full Judgment Text
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PETITIONER:
INDU KAKKAR
Vs.
RESPONDENT:
HARYANA STATE INDUSTRRAL DEVELOPMENTCORPORATION LTD. & ANR.
DATE OF JUDGMENT: 02/12/1998
BENCH:
S.B.MAJMUDAR, K.T.THOMAS
ACT:
HEADNOTE:
JUDGMENT:
JUDGMENT
Petitioner who virtually purchased a litigation has
now reached the Supreme Court seeking special leave to
appeal against a judgment by which the High Court of Punjab
and Haryana has dismissed a Second Appeal, The suit was
filed by M/s York Printers and during its pendency the
present petitioner bought the rights which the original
plaintiff had in the subjeict-matterof the suit for a
consideration of rupees forty thousand. Petitioner got
himself Impleaded as additional plaintiff and from then on
It was the petitioner who fought the litigation, as the
original plaintiff has vacated from the scene.
M/s York Printers filed the suit on the following
facts: On 28.7.1997 a plot of land admeasuring
approximately 450 Sq. metres has been allotted to M/s York
Printers ( which will hereinafter be referred to as the
allottee) as per a letter of allotment issued by Haryana
State Industrial Development Corporation United Corporation"
for short). The said plot is situated within the industrial
complex at Dundahera in Gurgaon District (Haryana). The
price for such allotment was tentatively fixed as
Rs.l3,455/- and the allottee was put in possession thereof.
On completion of remittance of the entire amount payable by
the allottee a registered Deed of Conveyance was executed on
10.12.1982 by the Corporation in favour of the allottee. In
fact the said plot was transferred by Haryana Urban
Development Authority (MUDA its acronym) in favour of the
Corporation for facilitating the objects and purposes of
Haryana Urban Development (Disposal of Land and Bulldings)
Regulation 1978.
As the allottee falled to establish the industrial
unit till the end of 1983 a notice was issued by the
Corporation on 6,1,1984 calling upon the allottee to show
cause why the plot should not be resumed. In the reply
which allottee sent to the Corporation certain reasons were
highlighted for showing why It could not complete
construction of the building for the proposed industrial
unit. But the Corporation was not satisfied with the reply
and hence on 16.3.1984 the Corporation resumed the plot,
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The allottee thereafter made representation to the
Corporation for revocation of the resumption order.
According to the allottee the construction work was actually
commenced but Its progress was hampered on account of power
supply not being made available by Haryana State Electricity
Board for more than two years, besides the difficulty
regarding availability of water. However, the Corporation
was unwilling to revoke the resumption order and hence the
representations made by the allottee were rejected.
On 3.8.1985 the allottee filed the civil suit for a
declaration that the order of resumption is illegal and void
and also for certain other consequential reliefs. During
pendency of the suit the petitioner got a registered sale
deed from the Allottee on 27.12.1989 of his rights in
respect of the plot in question and got herself impleaded as
second plaintiff in the suit.
Trial court decreed the suit and declared the
resumption order as "manifestly illegal and beyond
jurisdiction". But the first appellate court revised the
decree and dismissed the suit holding that the Corporation
was well within its power to resume end that the resumption
was made in accordance with the terms of allotment. The
first appellate court further found that the petitioner has
no focus stanch’ as the sale in her favour was. hit by
Section 52 or the Transfer of property Act.
In the Second Appeal petitioner assailed the said
findings before the High Court. Learned Single Judge who
heard the appeal agreed with the contention of the
petitioner that Section 52 of the Transfer of Property Act
is not a bar against transferring property pendente lite.
However, learned judge has observed the following:
"The question in this case is not in regard to
validity of the Sale of plot to second plaintiff
by the allottee, but the question is whether
second plaintiff has any locus standi to question
the order of resumption which had been passed
against the allottee, in my view second plaintiff
has no locus standi to question the validity of
order resuming the plot. There have been no
privity of contract between second plaintiff and
HSIDC. Contract was between allottee and HSIDC
and the same was subject to fulfillment: of
’certain terms and conditions by the allottee.
Since the allottee failed to abide by the terms
and conditions of allotment, plot was rightly
resumed by HSIDC. On resumption of plot, it
became the absolute property of HSIDC and
allottee had been left with no right, title or
interest in the property which he could transfer
to second plaintiff."
The High Court further noted that the plot which
could fetch only a bid amount of Rs.l0,000/- per square
meter has subsequently registered an escalation reaching its
price up to Rupees forty five lakhs. Accordingly the High
Court held that petitioner purchased the plot for
speculative purposes and whence, "no indulgence of any kind
can be shown by the court to a claim which Is not bona fide,
nor can the court come to the aid of a person trying to
resile from the express obligation undertaken by him With
the State or Its agencies".
Learned counsel for the respondent did not make any
endeavour to show that Section 52 of the Transfer of
Property Act (for short T.P. Act) Is a bar to the
petitioner to purchase the subject-matter of the suit,
presumably because the bar contained therein Is Intended not
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to affect the rights of any other party thereto under any
decree or order which maybe made therein, except under the
authority of the court and on such terms as it may impose.
fced counsel for the petitioner contended that the
Corporation has no power of resumption inasmuch as the
Corporation has failed to prove that there Is any binding
clause In the Deed of Conveyance which empowers the
Corporation to do so. Alternatively, It was contended that
the allottee cannot be said to have controverted any
condition regarding construction of building on the plot
since the allottee has already commenced constructing an
edifice thereon. A further argument advanced Is that
inability of the allottee to establish the Industrial unit
was due to causes beyond his control and, therefore, the
Corporation was duty bound to grant more time to the
allottee.
The prefatory portion of the Deed of Conveyance
which was executed on 10.12.1982 between the Corporation and
the allottee contains the following statements:
"Whereas the site hereinafter described and intended
to be hereby conveyed is owner by the vendor in full
proprietary rights.
Whereas the vendor has sanctioned the sale of the
said site to the transferee in pursuance of its
application dated 17^ January, 1977.
The said site situated in the industrial area was to
be used for the purpose of industry only, the terms
and conditions relating to the said sale were
settled in the agreement to sell. This agreement
was executed on 6"" August, 1979 between the
parties."
The proforma of the agreement is produced
as Annexure P42. Petitioner cannot escape from
the position that he is to abide by the terms and
conditions of the agreement admitted to have been
executed between the parties. If that agreement
was not in accordance with the proforma it is for
the petitioner to show that there was some other
agreement which is different from it. However,
petitioner has not even chosen to adduce any
evidence in that line. Hence, we have no
difficulty to believe that the agreement was
executed In the said proforma. Clause 7 of the
aforesaid agreement reads thus:
"That the allottee shall start on the said site
construction of the building for setting up the
aforesaid Industry within a period of 6 months and
complete the construction thereof within two years
from the date of Issue of the allotment letter, the
plans of which shall be In accordance with the rules
made and with the directions given from time to time
by the Town and Country Planning and Urban Estates
Department in respect and approved by the Director,
Town Country Planning Department or any other office
duly authorized by him In this behalf. Further the
allottee shall complete the erection and
Installation of machinery and commence production
within a period of 3 years from the date of
allotment of plot falling which the plot be Iiable
to be resumed by the corporation.
Provided that the time under this clause may be
extended by the M.D., HSIDC Ltd. In case the
failure to complete the building and commencement or
production by the stipulated date was due to reasons
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beyond the control of the allottee.
The Corporation shall also have the right to call
for periodical reports every six months from the
allottee starting from one year after the date of
delivery about the progress In implementation of the
project and If after hearing the allottee In the
opinion of the M.D. the progress, Is found to be
unsatisfactory he may order the plot resumed."
On 6.1.1^84 the Corporation Issued a notice to the
allottee calling upon him to show cause why the plot should
not be resumed as per clause 7 of the agreement. It Is
useful to extend the contents of the said notice as under:
"You wire allotted plot no.70 in the Industrial
complex at Udyog Vlhar Phase-1 on 28.7.77. It is
Indeed disheartening to note that you have not taken
any step towards the Implementation of your proposed
industrial unit thereby defeating the basic purpose
of allotment 1 your favour. Retaining an Industrial
plot without any firm programme Is against the
tenets of Industrialisation. Your Inaction deprives
a genuine entrepreneurs of an opportunity to set up
his unit. We are, therefore, constrained, to issue
a show cause notice to you as to why your plot
should not be resumed under clause 7 of our
agreement. Your explanation should reach this
office positively within 30 days of the date of
Issue of their letter falling which your plot would
stand automatically resumed and no further
correspondence will be entertained on this subject
Allottee who received notice sent a reply to It In
which a plea was made for helping the allottee to set up the
Industrial plant. The allottee has practically admitted
that It had to abandon the scheme for establishment of a
plant A reproduction of the reply will show the clear stand
of the allottee.
"We thankfully acknowledge the receipt of your
letter No.6218 dated 6.1.1984 and wish to inform you
that even after our repeated efforts the power
connection Is not Installed In our constructed
premises. We had to abandon our scheme of shifting
our workers and plants to Delhi since no drinking
water supplies are provided In the area. However,
we have managed the total investments from our
sources in land, buildings, machines, etc. and
functioning of our unit shall depend on supplies of
power and water. Will you please help us in the
setting up of the plant. We have met your Shri R.K.
Kaushik and Mr. B.S. Ojha high-lighting the
problems of water and power. He assured us for
prompt action. Please advise us what to do and what
are you going to do for us. Please acknowledge the
receipt considering the fact that we have already
obtained the Conveyance Deed of the said plot."
It is, therefore, clear from the said reply that
allottee did not dispute that It has not taken any steps
towards implementation of the proposed Industrial unit. So
the petitioner who Is only a transferee of the allottee
cannot claim any other right which even the allottee did not
have.
However, the allottee has contended before the trial
court that clause 7 of the Agreement Is unenforceable In
view of Section II of the TP Act. But that contention was
repelled according tons rightly, because the Deed of
Conveyance had not created any absolute interest In favour
of the allottee In respect of the plot conveyed. For a
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transferee to deal with interest in the property transferred
as if there were no such direction" regarding the particular
manner of enjoyment of the property, the Instrument of
transfer should evidence that an absolute Interest In favour
of the transferee has been created. This Is clearly
discernible from Section II of the TP Act. The Section
rests on a principle that any condition which is repugnant
to the interest created Is void and when property Is
transferred absolutely it must be done with all its legal
Incidents. That apart, Section 31 of the TP Act Is enough
to meet the aforesaid contention. The Section provides that
on a transfer of property an interest therein may be created
with the condition superadded that It shall cease to exist
In case a specified uncertain event shall happen, or in case
a specified uncertain event shll not happen, or in case
specified uncertain event shall not happen. Illustration
(b) to the Section makes the position clear, and It reads:
"A transfers a farm to B, provided that. If B shall
not go to England within three years after the date
of the transfer, his interest in the farm shall
cease. B does not go to England within the term
prescribed. His Interest in the farm ceases."
All that Section 32 of the Transfer of Property Act
provides is that in order that a condition that an interest
shall cease to exist may be valid, It Is necessary, that the
event to which It relates be one which could legally
constitute the condition of the creation of an Interest^ If
the condition is invalid It cannot be set up as a condition
precedent for crystallization of the interest created . The
condition that the Industrial unit shall be established
within a specified period falling which the Interest shall
cease. is a valid condition. Clause 7 of the Agreement
According to the High Court, the petitioner, who
claims to be the assignee of the allottee, has no locus
standi to question the validity of the order of resumption.
Learned counsel for the petitioner has seriously assailed
the said view of the high Court. He contended that having
found that Section 52 of the TP Act Is not a bar the High
Court should have further found that there Is no other bar
against assignment of the plot in favour of the petitioner
and hence the petitioner could step Into the shoes of the
allottee and claim whatever that the allottee could have
claimed.
In fact, the question is not whether there is any
legal bar for the allottee to make assignment; of tne plot
The real question is whether the assignee has a legal right
to claim performance of any part from the allottor. Answer
of the said question depends upon the terms of allotment.
Assignment by act of parties may cause assignment of rights
or of liabilities under a contract. As a rule a party to a
contract cannot transfer his labilities under the contract
without consent of the other party. This rule applies both
at the Common Law and In Equity (vide para 337 of Halsburys
Laws of England , fourth Edition , part 9). Where a
contract involves mutual rights and obligations an assignee
of a right cannot enforce that right without fulfilling the
co-relative obligations. The aforesaid principle has been
recognized by a Constitution Bench of this Court In Kkardab
Company Ltd. vs. Raymon and Co. India (Pvt) Ltd [AIR 1962
SC 1810]. T.L. Venkataramlah J. who spoke for the Bench
has observed thus:
"The law on the subject is well settled and might be stated
In simple terms. An assignment of a contract might result
by transfer either of the rights or of the obligations
thereunder. But there Is a wellrecognised derctfen
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he-tweanr these two classes of assignments. As a rule
obligations under a contract: cannot be assigned except
with the consent of the promisee, and when such consent Is
given, it is ready a novation resulting in substitution of
liabilities. On the other hand rights under a contract are
assignable unless the contract is personal In its nature or
the rights are incapable of assignment wither under the law
or under an agreement between the parties."
Here the Agreement was entered into between the
Corporation and the allottee as a sequel to the request made
by the allottee to give him an industrial plot for the
purpose of setting up an industry. Corporation reclprocated
to the request on being satisfied that the allottee was able
to carry out the obligations so as to accomplish the purpose
of allotment. The assurance given by of the allottee that
he shall start construction of the building for setting up
the industry within a period of six months and complete the
construction thereof within two years from the date of issue
of allotment letter was verified and found acceptable to the
corporation and then only the Corporation has chosen to
enter into the agreement with the allottee. It is a matter
of confidence which the Corporation acquired in the promise
made by the allottee that the latter would perform such
obligations. If the allottee Graduates from the scene after
inducting someone else into the plot without consent of the
Corporation it is not legally permissible for the inductee
to compell the Corporation to recognize him as the allottee.
Viewing the assignment from the aforesaid angle we
are in agreement with the conclusion of the High Court that
petitioner has no locus standi to question the validity of
the order of resumption. Hence, the impugned judgment is
unassailable as from that angle also.
The Special Leave Petition is accordingly dismissed.