1999 (5) TMI 622 - SC - Indian Laws

Summary

Issues Involved:
1. Validity of the agreement to sell the property.
2. Compliance with the terms and conditions of the lease.
3. Breach of Clause II (13) of the lease deed.
4. Sanction of building plans by NDMC and L&DO.
5. Impact of Urban Land Ceiling & Regulation Act (ULCRA) on the agreement.
6. Possession of the property.
7. Entitlement to specific performance of the contract.
8. Award of compensation in lieu of specific performance.

Detailed Analysis:

1. Validity of the Agreement to Sell the Property:
The agreement dated 25th July 1972 involved the appellant agreeing to sell, transfer, and assign his rights, title, and interest in the property at 6, Tolstoy Marg, New Delhi, to the respondents for Rs. 8,97,740/-. The agreement included terms for payment, possession, and construction of a multi-storeyed building. A supplementary agreement modified the terms, including payment in the form of flats instead of cash.

2. Compliance with the Terms and Conditions of the Lease:
The lease deed contained specific covenants restricting alterations, constructions, and usage of the property without prior written consent from the lessor. The appellant was required to obtain approval from the lessor before any assignment or transfer of the property.

3. Breach of Clause II (13) of the Lease Deed:
The Government of India issued a notice on 31st October 1972, highlighting a breach of Clause II (13) due to the appellant's agreement to sell the property without prior approval. The respondents argued that there was no sale, only an agreement to sell, and they had removed objectionable structures.

4. Sanction of Building Plans by NDMC and L&DO:
The respondents submitted building plans for an 8-storeyed and two 5-storeyed buildings, which were rejected by NDMC due to zoning issues and plot size requirements. Despite repeated efforts, the plans were not sanctioned until a decree by the Trial Court in 1990 influenced NDMC to grant conditional approval in 1991.

5. Impact of Urban Land Ceiling & Regulation Act (ULCRA) on the Agreement:
The property included excess land as per ULCRA, making it ineligible for sale without exemption. Applications for exemption were repeatedly denied. An exemption granted in 1985 imposed stringent conditions, making the agreement impractical to honor.

6. Possession of the Property:
The agreement recited delivery of possession to the respondents, which was disputed. The Trial Court found that only a small area was handed over for storage, while the Division Bench held that legal possession was given. The appellant retained major possession.

7. Entitlement to Specific Performance of the Contract:
The Court held that the agreement was to be performed within a reasonable time, inferred from the terms and circumstances. The respondents failed to secure necessary sanctions and clearances within a reasonable period, and the contract's performance became impractical due to ULCRA and zoning restrictions. The Court found that the performance would cause undue hardship to the appellant and denied specific performance.

8. Award of Compensation in Lieu of Specific Performance:
The Court awarded compensation to the respondents instead of specific performance. The appellant was directed to return the consideration amount with interest and pay additional compensation of Rs. 3,25,000/- with interest from the date of the decree.

Conclusion:
The Supreme Court dismissed the suit for specific performance filed by the respondents, directed the appellant to return the consideration amount with interest, awarded additional compensation to the respondents, and ordered the respondents to vacate the portion of the property they occupied. The costs were to be borne by the parties as incurred.