No Acts & Articles mentioned in this case
1
A.F.R.
Court No. - 03
Reserved on: 21.04.2022
Delivered on: 27.05.2022
IN THE HIGH COURT OF ALLAHABAD
CIVIL MISC. WRIT (C ) PETITION No. - 10123 of
2021
Palika Towns LLP Vs. State Of U P And 2
Others
Counsel for Petitioner :- Manu Khare
Counsel for Respondent :- C.S.C.,Anjali
Upadhya,Ramendra Pratap Singh
Contents
EPILOGUE………………………………...…………..2
ARGUMENT OF THE PETITIONER……………..14
ARGUMENT OF RESPONDENTS…………...…..17
REPLICATION ON BEHALF OF PETITIONER..19
QUESTION OF DETERMINATION……………….19
SYMPOSIUM……………………………………….…..20
SUMMATION…………………………………………..73
CONCLUSION……………………………………..…..75
Hon’ble Surya Prakash Kesarwani ,J.
Hon'ble Vikas Budhwar,J.
(Per Hon’ble Vikas Budhwar,J.)
1.Heard Sri Navin Sinha, learned Senior Counsel assisted by Sri
Manu Khare, learned counsel for the petitioner, Sri Ramendra Pratap
Singh, learned counsel for the respondent no. 2 (Greater Noida
2
Industrial Development Authority) and Smt. Subhash Rathi, learned
Standing Counsel who appears for the State.
EPILOGUE
“The extent and the scope of judicial intervention in writ jurisdiction in the
matter of contractual obligation embodied in the commercial contract is a
subject matter of present petition.”
2.Factual matrix of the case as worded in the present petition are
that the petitioner claims itself to be a Partnership firm registered u/s
12 (I) of Limited Liability Partnership Act 2008 with Government of
India Ministry of Corporate Affairs having its registered office at
D.S.C.- 319 DLF South Court Saket New Delhi 110017. As per the
pleadings set forth in the petition one Moser Baer India Private Ltd.
(hereinafter referred as Corporate Debtor) was allotted a commercial
plot no. 66 admeasuring 2,70,201 square meters at Udyog Vihar
Greater NOIDA, District Gautam Budh Nagar by the respondent no. 2
Greater NOIDA Industrial Development Authority (hereinafter
referred as GNIDA) for a period 90 years. Record further reveals that
initially the lease deed was executed on 26.06.2001 between GNIDA
on one part and Corporate Debtor on the other part setting out the
terms and the conditions (covenants) of the leased land in question. It
is further pleaded in the petition that an application purported to be u/
s 7 of the Insolvency and Bankruptcy Code 2016 (hereinafter referred
to as IBC Code) was instituted by a Financial Creditor being M/s
Alchemist Assets Reconstruction Company Limited bearing no.
I.B.378 (P.B.) 2017 for initiating Insolvency Resolution Process
against Carporate Debtor. The said application was admitted on
14.11.2017 by National Company Law Tribunal (NCLT) and one Mr.
Debendra Singh was appointed as Interim Resolution Professional
(hereinafter referred to as IRP).
3
3.Eventually, NCLT by virtue of its order dated 20.09.2018
allowed the application preferred by IRP u/s 33(2) IBC Code while
orderding Liquidation of Coroprate Debtor. In furthrance thereof the
Liquidator made a public announcement on 24.09.2018 under
Regulation 12 of the Insolvency and Bankruptcy (Lilquidation
Process) Regulation 2016 (hereinafter referred as to 2016 Regulation)
inviting claims owed and due to Corporate Debtor giving details and
description of the assets of Corporate Debtor such as location of the
land and buildings so constructed thereon along with the plant and
machinery embodied thereon. An advertisement/sale notice of the
assets of the Corporate Debtor was published on 08.03.2019 by the
Liquidator wherein not only details and description of the assets
including the land and the buildings was mentioned which was put to
auction but reserve price of auction being bieng 145.67 crores and the
earnest money to be deposited being 14.57 crores was also reflected.
The petitioner as per its own showing, participated in the auction so
conducted and the bid of the petitioner was found to be commensurate
to the expectation of the Liquidator. Consequently, the NCLT
accepted the offer of the petitioner on 16.07.2019 and the petitioner
thereafter received the acceptance letter dated 16.07.2019 of the
Liquidator. According to the petitioner, full and final payment of Rs.
145.75 crores was made by it and on 11.09.2019 and a Certificate of
Sale under Regulation 33 of 2016 Regulation was issued in favour of
the petitioner. Consequent to the issuence of the sale certificate on
11.09.2019 the petitioner approached GNIDA on 30.01.2020
followed on 11.09.2020 for issuance of Transfer Memorandum. It has
come on record that on 11.09.2020 GNIDA corresponded with the
Liquidator claming arrears of past lease rentals of Rs. 4,71,40,620/- as
principal dues and interest towards lease rentals of Rs. 6,26,86,769/-.
Record further reveals that the liquidator replied to the said letter on
08.10.2020 coming with the stand that as the demised land had
4
already been subject matter of public auction as per the IBC Code-
2016, objections were invited to file claims for getting registered by
the creditors and as GNIDA did not get registered its claim so, the
auction proceedings were concluded and the same was also confirmed
by NCLT hence the request so acceded by the GNIDA cannot be
accepted. It has been further averred in para 14 of the writ petition
that the petitioner wanted to start with its project and thus under
extreme pressure of the GNIDA, the petitioner deposited the arrears
of lease rent and interest thereon beng Rs. 5,80,28,025/- for issuance
of Transfer Memorandum on 27.10.2020 under protest. In support of
the said contention petitioner has appended as annexure- 10 a letter
sent by it addressed to GNIDA which is being termed as protest letter
along with details of the deposits so sought to be made by it.
4.According to the petitioner finally the Transfer Memorandum
was issued by GNIDA on 24.12.2020, a copy whereof has been
appended at page 79 of the writ petition.
5.Lamenting quiescent demeanor in non refund of the amount
which has been deposited under protest the petitoner is before this
court by means of the present writ petiton seeking following reliefs:-
“I. issue a writ, order or direction in the nature of mandamus
directing the respondent no. 2 to refund the amount of Rs.
5,80,28,025/- along with intrest @ 18% per annum from the
date of deposition till date of refund.
II. issue any other writ, order or direction, which this
Hon’ble Court may deem fit and proper in the facts and
circumstances of the present case.
III. Award cost of the petition to the petitioner.”
6.Contesting the claim of the petitioner, a counter affidavit has
been filed on behalf of GNIDA sworn by respondent no. 3 on
5
13.06.2021 wherein following averments have been made in
paragraph nos. 12, 13, 14, 15 which are quoted as under:-
“12. That the contents of para 10 of the writ petition are not
admitted hence specifically denied. The petitioner has not
annexed the lease deed which was executed between Greater
Noida Authority and M/s Moser Bear. Without prior
permission of the Greater Noida Autority M/s Moser Baer
cannot sale the leae property. The M/s Moser Baer should
have informed the Aurthority that they have become bankrupt
and they cannot pay the lease rent of the plot allotted to
them. No information has been given to the Greater Noida
Authority by the M/s Moser Baer. Moreover lease rent has
not been paid and the Greater Noida Authority will charge
transfer charges as per policy of the Greater Noida Authority
from the petitioner company, then only name of the company
can be recorded in the Authority’s record.
13. That the contents of para 11, 12 and 13 of the writ
petition are not admitted hence specifically denied. As per
the liquidation of the company of M/s Moser Baer and
petitioner compoany that was between them and not with the
Greater Noida Authority. In case, any amount due against
the plot, the Greater Noida Authority is liable to realize it
from the lesee/allottee/purchaser. The Greater Noida
Authority has nothing to do with the letter dated 30.09.2020.
The company has to pay the transfer charges and all the dues
including lease rent of the plot. It is further stated that the
dues which are pending against, the Greater Noida Authority
is laible to realize from the allottee/purchaser. Moreover, the
petitioner company and M/s Moser Baer have flouted the
terms and condition of the lease deed.
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14. That the contents of para 14 and 15 of the writ petition
are not admitted hence specifically denied. The petitionr
company was require to deposit lease rent and transfer
charges of the polot. The Greater Noida Authority has
transfer the plot in the name of the petitioner company by
issuing the transfer memorandum dated 24.12.2020. 11
conditions have been given in the transfer memorandum.
15. That the contents of para 16, 17, 18, 19 and 20 of the writ
petition are not admitted hence specifically denied. The M/s
Moser Baer shojld have taken prior permission from the
Greater Noida Authority and they should have informed that
the company has becomebankrupt and they are going to
insolvency. Since the petitioner company purchased the plot
should have also inquire from the Authority what are the
dues are pending agianst the plot. Since the petitioner
compay has entered in the shoes of M/s Moser Baer, hence
they have to clear all the deus. It is specifically denied that
petitioner is not entitle for any refund of the amount of Rs.
5,80,33,025/-.”
7.In nutshell, the stand taken by the GNIDA in their counter
affidavit is that GNIDA was at no point of time apprised of the fact
that Corporate Debtor lessee became bankrupt and proceedings were
drawn under IBC Code- 2016 against it culminating into auction of
the demised land and transfer of the same, therefore, auction in favour
of the petitioner is illegal. It has been further alleged in the counter
affidavit that once the petitioner stepped into the shoes of the
Corporate Debtor lessee then as per the covenant contained in lease
deed so executed from time to time and Transfer Memorandum the
petitioner is liable to make good the arrears of the lease rentals and
interest thereon.
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8.Rejoiner affidavit has also been filed by the petitioner in reply
to the counter affidvit so filed by the GNIDA retereating their stand in
the writ petition.
9.A supplementary counter affidavit has been filed by GNIDA
on 10.11.2021 sworn by respondent no. 3 annexing copy of the lease
deed dated 26.06.2001 so executed between GNIDA on one part and
the Corporate Debtor on the other part.
10.A supplementary rejoinder affidavit has been filed in reply of
the supplementary counter affidavit. An impleadment application has
been filed by the petitioner on 10.2.2022 seeking impleadment on M/s
Moser Baer India Private Limited Company in Liquadation for
making him as a party respondent no. 4. A supplementary affidavit
and compilation of judgments have been filed by petitioner.
RELEVANT EXTRACT OF DOCUMENTS AND INSTRUMENTS
EXECUTED BETWEEN THE PARTIES:-
11.THE LEASE DEED MADE on the 26
th
day of June in the year
TWO THOUSAND ONE between Greater Noida Industrial
Development Authority, a body corporate constituted under Section 3
read with Section 2(d) of the U.P. Industrial Area Development Act,
1976 (U.P. Act 6 of 1976) (hereinafter called the ‘Lessor which
expression shall, unless the context does not so admit, include its
successor and assigns) of the one part AND
1.Sri………………………….aged……………..Years………………
……..
S/o………………………………………………...R/
o……………………..
2.
Sri………………………….aged……………..Years…………………
…..
S/o………………………………………………...R/
o……………………..
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3.
Sri………………………….aged……………..Years…………………
…..
S/o………………………………………………...R/
o……………………..
4.Sri………………………….aged……………..Years………………
……..
S/o………………………………………………...R/
o……………………..
5.Sri………………………….aged……………..Years………………
……..
S/o………………………………………………...R/
o……………………..
hereinafter called the lessee which expression shall unless the context
does not admit, include his/her/their/it’s heirs, executors,
administrators, representatives and permitted assigns/it’s successors
and permitted assigns of the other part.
A. Partnership Firm /Proprietorship Firm/Company functioning in the
name of M/s. Moser Baer Indi Ltd.- Having its Registered Office
Situated at 63, Ring Rutid. Through its Director Sri N.K. Chaudhary
aged.48 years S/O Sri Raj Mangal Chaudhary I-11 Sector 27 Noida he
reinafter called the lessee which expression shall, unless the context
does not admit, include his/he:/their/it's heirs, executors,
administrators, representatives and permitted assigns/it's successors
and permitted assigns) of the other part.
II (a)……...
Provided that the interest shall be computed at the rate
mentioned above on the total amount of the balance outstanding from
time to time from the date of allotment and shall be payable half
yearly (As per payment plan enclosed with allotment latter) on the
schedule mentioned above. Provided that if the installments together
with the interest accruing thereon are not paid by tor on the due date.
Interest at the rate of 15% compounded at six monthly shall be
charged for delayed payment for delayed period.
9
(b) The payments made by the Lessee shall be first adjusted towards
the interest due. If any, and thereafter towards the premium. If any,
and the balance. If any, shall be appropriated towards the lease rent
not withstanding any directions/request of the lessee to the countrary.
(c) If Lessee makes default in payment of premium and interest for
two consecutive installments the Lessor shall have a right to
determine the Lease and to resume possession.
(9) (i) That the lessee, may transfer, relinquish, mortgage or assign its
interest in the demised premises or the building constructed thereon or
both provided that no transfer shall be allowed/permitted in respect of
a unit where a functional certificate has not been obtained.
Provided also that the lessee may with the previous permission
in writing of the lessor (whose decision shall be binding on the lessee
and which permission shall not be unreasonably withheld) relinquish
mortgage or assign its interest in the demised premises or the building
constructed thereon or both.
(ii) Every transfer, assignment, relinquishment, mortgage or
subletting as referred to above shall be subject to and the beneficiary
thereof shall be bound by all the covenants and conditions contained
in this deed and be answerable to the lessor in all respect in the same
manner as the original lessee.
10 (a) Whenever the title of the Lessee in the demised premises is
transferred in any manner whatsoever the transferor and the transferee
shall within one month of such transfer, give notice of such transfer in
writing to the Lessor.
(b) In the event of the death of the Lessee the person on whom the
titles of the deceased devolves shall within three months of such
devolution give notice of such devolution to the Lessor.
(c) The transferee or the person on whom the titles devolves as the
case may be shall supply to the Lessor certified copies or the
document evidencing the transfer or devolution.
15……….
The Lessor may require the successor in interest of the Lessee
to abide by and faithful carry out the terms, conditions, stipulations
provisions and agreements herein contained.
10
IV. AND IT IS HEREBY FURTHER AGREED AND DECLARED
BY AND BETWEEN THE PARTIES TO THESE PRESENTS AS
FOLLOWS
(A) Upon the happening of any one or more of the under mentioned
contingencies.
(a) If the lessee or any other person(s) claiming through or under such
lessee commits breach of any of the covenants or conditions
contained in this Deed and such breach is not remedied following
receipt of a written notice from the lessor specifying the nature of
breach and providing the lessee reasonable opportunity to remedy the
breach:
(b) If the lessee or any other person(s) claiming through or under such
lessee fails and/or neglects to observe punctuality and/or perform any
of their/its/his/her obligations stipulated under this Deed:
(c) If the lessee or any other person(s) claiming through or under such
lessee whether actually or purportedly transfers, creates, alienates,
extinguishes, relinquishes, mortgages or assigns the whole or any part
of his right, title or interest whether in whole or any part thereof,
except in the manner stipulated in this Lease Deed.
(3) (a) That the Lessor and the Lessee hereby agree that all sums due
under this deed from the Lessee on account of premium rent, interest
or damages for use and occupation or any other account whatsoever
shall on the certificate of the Lessor which shall be final, conclusive
and binding on the Lessee be recoverable as arrears of land revenue.
(b) That the lessor shall have first charge upon the demised
premises for the amount of unpaid lease rent and interest thereon and
other dues of Authority.
SALE CERTIFICATE DATED 30.07.2021
AND WHEREAS the official Liquidator within his ambit and powers
conferred under Insolvency and Bankruptcy Board of India
(Liquidation Process) Regulations, 2016, In view of NCLT's order
dated 16-07-2019, has sold the leasehold rights of plot no 66
admeasuring 270201.16 sqm, Greater Noida, Distt Gautam Budh
Nagar, UP along with buildings constructed (Map Enclosed)
thereupon (hereinafter referred to as "PROPERTY") as per terms
11
contained in e-auction process document dated 08-03-2019.and as per
order of Honble NCLT order dated 16-07-2019. The Liquidator
issued the sale certificate dated 11-09-2019 in respect of the captioned
property which is an integral part of this document and is also
attached herewith. Consequently, the Transferor has transferred the
fease hold rights for the said Property unto) the TRANSFEREE by
virtue of the aforesaid sale certificate and the TRANSFEREE has also
agreed to acquire the same for the sale consideration of Rs.
1,45,75,00,000/-(Rupees One Hundred Forty Five Crores and Seventy
Five Lakh Only).
AND WHEREAS the Transferor has already applied and obtained the
TRANSFER MEMORANDUM from the Greater Noida Industrial
Development Authority, vide TRANSFER MEMORANDUM No.
GNIDA/2020/1750dated 24-12-2020 in favour of the Transferee, in
respect of the lease hold rights for the said property l.e. Plot No. 66,
Greater Noida, U.P. having total area admeasuring 2,70,201 Sq. Mtrs.
4. That the Transferor has assured and undertakes the Transferee that
the said property is free from all sorts of encumbrances such as
mortgage, sale, gift, lien, agreement, dispute, tigation injunctions,
banks or private loans, securities, guarantees, attachment with any
decree of any Hon'ble court of law from lower to higher jurisdiction
in the all over India or abroad being sale as per the provisions of the
IBC Codeand NCLT Orders.
7. That the Transferee shall be bound by the terms and conditions of
the earlier Lease Deeds executed between the Transferor and the
Greater Noida specifically the original lease deeds in respect of the
said property and the supplementary lease deed dated 28
th
November
2007 subject to the changes mentioned in the transfer memorandum
and otherwise from time to time.
11. That if the Transferee does not abide by the terms and conditions
of allotment/leases and building regulation and direction or any other
rules framedby the authority, the lease may be cancelled by the
GNIDA and possession of the demised premises may be taken over
by the GNIDA and the Transfereein such an event will not be entitled
to claim any compensation in respect thereof.
12
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स प्राधिकरण ैक्टर- Ecotech-II,
अंतरक विकास प्राधिकरण क विकास प्राधिकरण े पक्ष में
M/s. Moser Baer
India Ltd
अंतगिरक विकास प्राधिकरण ी क विकास प्राधिकरण े पक्ष में
M/s. Palika
Towns LLP
authorised- Anil Kohli
गिपता औद्योगिक विकास प्राधिकरण /
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- Ramesh
Chandra Kohli
अंतरक विकास प्राधिकरण क विकास प्राधिकरण ा औद्योगिक विकास प्राधिकरण पता औद्योगिक विकास प्राधिकरण
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G. Marg Cannaught place New
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authorised -Ashish Jain
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Jain
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Ghaziabad
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अनुमन्य होगा औद्योगिक विकास प्राधिकरण । बन्धक पाये
9.
इक विकास प्राधिकरण ा औद्योगिक विकास प्राधिकरण ई देयता द्वा औद्योगिक विकास प्राधिकरण रा औद्योगिक विकास प्राधिकरण उक्त भूD,8 h9 7hcl9u sRe23y4 ec9 h29 CSP9 1P9 GL<
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होगा औद्योगिक विकास प्राधिकरण । बन्धक पाये
10.
अंतगिरक विकास प्राधिकरण ी द्वा औद्योगिक विकास प्राधिकरण रा औद्योगिक विकास प्राधिकरण उक्त औद्योगिगक विकास प्राधिकरण भूD,8 h9 KrP61 0.6C1h P6e59
h3 fyP r 2:Csu C5Pc C5SL5C h3 f5li92 5 h253 hR S59 c4 /aN45
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ChP9 e9 2G9 GL Ch r 29Cmh2n B682 hR waRhृगित क विकास प्राधिकरण ी
14
11.
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ARGUMENT OF PETITIONER
12.Sri Navin Sinha, learned Senior Counsel assisted by Sri Manu
Khare, learned counsels for the petitioner have made manifolds
submissions namely:-
(a). The petitioner being a bonafide auction purchaser, purchased
immovable asscets consequent to the auction/sale held in pursuance
of the orders of NCLT after paying the bid amount cannot be fastened
with any monetory liability which was attached with Corporare
Debtor under Liquidation.
(b). Once under the provisions of the IBC Code- 2016 claims were
invited by Resolution Professional and GNIDA did not get his claim
registered then it is estopped to claim the said amount as the same is
hit by the doctrine of waiver and acquiescence.
(c). Even otherwise, the petitioner is liable to pay lease rentals and
interest thereon and honour the contractual obligation and
commitments so set out in the lease deed only from the date of the
issuance of acceptance letter confirming the auction/execution of the
Transfer Memorandum dated 24.12.2020 and not from a date anterior
to it.
(d). Deposit of an amount of Rs. 5,80,28,025 was under protest and
thus, the petitioner is entitled to refund of the same and the GNIDA
being the instrumentality of the said State cannot withhold the said
amount on the pretext that though the amount is not liable to be paid
but was paid under protest.
13.Elaborating the said submissions, learned Senior Counsel has
argued that the status of the petitioner is of a bonafide purchaser as
15
the petitioner has participated in the bid which was conducted
pursuant to the order passed by NCLT on 20.09.2018 wherey
Corporate Debtor was declared as insolvant and the petitioner under
bonafide belief that there was neither any latent or patent defect in the
immovable property, which was to be put to auction participated in
the same and thus once the petitioners bid had been approved and it
had deposited the entire amount, then the petitioner is not liable to
clear the arrears of the lease rentals and the interest thereon which is
being claimed by the GNIDA. Sri Sinha, has further invited the
attention towards correspondence of the Liquidator to the GNIDA
wherein it has been recited that despite due publication of invitation
of the claims relatable to the dues owed to the Corporate Debtor,
GNIDA did not either lodge or got registered its claim and thus,
according to learned Senior Counsel GNIDA has forgone its right to
claim the said amount as once the proceedings under the Code came
to an end and the Corporate Debtor got liquidated then the dues so
sought to be claimed by the GNIDA is not only unjustified besides
being not backed by any of the provision of law.
14.Sri Navin Sinha, learned Senior Counsel in order to buttress his
submission has relied to and referred to the several judgments so as to
contened that the condition mentioned in the Certificate of Sale dated
11.09.2019 being “AS IS WHERE IS”, ”AS IS WHAT IS”,
“WHATEVER THERE IS” AND “NO RECOURSE” cannot be
stretched so far as to include within its encompass a situation that the
petitioner is liable to pay past dues of the company in liquidation.
According to the learned Senior Counsel who appears for the
petitioner harmonious interpretation is to be given so as to give literal
meaning while personifying that only those dues which are legal and
payable, are to be included and not those dues and liabilities which
are not to be paid or discharged particularly when there was latent and
16
patent defects in the property which is being put to auction and the
liabilies so attached to it, was at no point of time apprised or
confornted to the petitioner who is a bonafide auction purchaser.
Learned Senior Counsel in support of the said submission has relied
upon the following judgments:-
“1. Al Champdandy Industries Limited vs. Official Liquidator and
Another reported in (2009) 4 SCC 486
2. Rana Girders Limited vs. Union of India and Others reported in
(2013) 10 SCC 746
3. Haryana State Electricity Board vs. Hanuman Rice Mills Dhanauri
and Others reported in (2010) 9 SCC 145
4. State of Karnataka and Another vs. Shreyas Papers (P) Ltd. and
Others reported in (2006) 1 SCC 615
5. Telangana State Southern Power Distribution Company Limited
and Another vs. Srigdhaa Beverages reported in (2020) 6 SCC 404
6. Raman Roadways Private Limited vs. State of Maharashtra and
Others 2021 SCC Online Bom 534
7. Sales Tax Officer, Banaras and Others vs. Kanhaiya Lal Makund
Lal Saraf AIR 1959 SC 135”
15.Learned Senior Counsel has further argued that the petitioner is
not shying away from discharging the contractual obligation as
engrafted in the lease deed so executed between the GNIDA on one
part and Corporate Debtor on other part as though the petitioner has
stepped into the shoes of the Corporate Debtor in pursuance of the
Transfer Memorandum dated 24.12.2020 but the conditions are to be
tailored in such a manner so as to give logical meaning as the
petitioner is bound to honour the commitment so made either from the
17
date of acceptance of auction or from the date of execution of
Transfer Memorandum.
16.Sri Sinha has invited the attention of the Court towards
paragraph no. 14 of the writ petition so as to further contend that not
only specific averments about deposit of past lease rentals along with
interests under protest were made but the letter dated 27.10.2020 was
also annexed giving details of the paymens made by it under protest.
According to learned Senior Counsel even if assuming that the
amount in question has been deposited voluntarily then to GNIDA
being the instrumentality of the State, had no occassion or
justification to retain the said amont on the guise that the petitioner
has deposited the said amount for executation of Transfer
Memorandum. The argument of the learned Senior Counsel is that
once the amount is not liable to be paid and the GNIDA has received
the same without any legal justification then in that contingency the
amount is liable to paid back to the person who had extended the
same.
ARGUMENT OF RESPONDENTS (ANSWERERS)
17.Sri Ramendra Pratap Singh, who appears for GNIDA has
countered the submission of learned Senior Counsel while arguing
that the petitioner is not entitled to any relief particularly in view of
the fact that, might be the petitioner claims itself to be a bonafide
auction purchaser but in view of the fact that the present case relates
to auction of an immovable property being a lease land of which the
GNIDA is the lessor then without there being any communication
about the bankruptcy of the Creditor Debtor and the fact that
insolvency proceeding got initiated culminating into passing of an
order of 20.09.2018, the GNIDA is not only necessary party but also
has substantial interest therein as according to the term and covenant
18
contained in the lease deed not only the lease rentals has to be paid
but also in case of subletting or assigning of the lease in favor of the
third person concurrence and approval of GNIDA is/was necessary.
Sri Singh in order to buttress his contention has sought to argue that
the petitioner being auction purchaser and claiming interest over the
lease land premises is liable to make the payment of the past lease
rentals and interest of late payment and also honour the commitments
so engrafted in the lease deed and Transfer Memorandum and
petitioner cannot wriggle out from the contractual obligation and the
dues so attached with the lease deed as the petitioner herein has
stepped into the shoes of Corporate Debtor. It has been further argued
that contractual obligation cannot be a subject matter of adjudication
in the present proceedings particularly when the present petition is
being sought to be filed for getting a judicial seal in resiling and
wriggling from contractual obligation. Sri Singh further argued that in
view of the contractual obligation set out in the lease deed in question
executed with Corporate Debtor and by virtue of the Transfer
Memorandum dated 24.12.2020 now the petitioner is bound by the
covenants of lease deed of erstwhile lessee and thus, the petitioner
cannot evade payment of arrears of lease rentals as well as of the
interest thereon.
18.Smt. Shubhash Rathi, learned Additional Chief Standing
Counsel who appears for respondent no. 1 has though not filed any
counter affidavit but according to her the main contesting party is the
respondent nos. 2, 3 and thus according to her she is adopting the
argument of the counsel for the respondent nos. 2 and 3 and she has
nothing to add except the fact that the writ petition so preferred by the
petitioner is not maintainable as it tantamount to insisting the Court to
give it a licence to wriggle out from the contractual obligation.
19
REPLICATION OF THE PETITIONER (SUITOR)
19.The learned counsel for the petitioner in rejoinder affidavit had
reiterated the argument, which he had made at the first instance while
arguing the writ petition. However, the same is not being repeated, as
the same is nothing but repetition of the argument, made at the time of
arguing the petition.
QUESTION OF DETERMINATION
“(i) Whether under the the facts and circumstances of the
case, the petitioner has any lawful right to claim refund of
Rs. 05,80,28,025/- along with interest @ 18% per annum,
deposited by him to get the lease of the disputed plot
transferred in its name as per Transfer Memorandum dated
24.12.2020?
(ii) Whether payment of the dues attached to the disputed
property can be questioned by the petitioner when as per sale
certificate dated 11.09.2012, the disputed plot was sold on
"AS IS WHERE IS", "AS IS WHAT IS", "WHATEVER
THERE IS", AND "NO RECOURSE" basis and accepting the
conditions, and the petitioner deposited the amount to get the
lease transferred in its name?
(iii) Whether the claim of refund of the disputed amount is hit
by the principle of approbate and reprobate?
(iv) Whether under the IBC, the petitioner as an auction
purchaser of lease hold rights of the disputed plot, has
protection under the IBC from payment of lease rent and
other dues attached to the property, particularly when the
right of the liquidated company in the disputed property was
purchased by the petitioner on "AS IS WHERE IS", "AS IS
WHAT IS", "WHATEVER THERE IS", AND "NO
RECOURSE" basis?”
20
SYMPOSIUM
20.We have heard the submissions of learned counsel for the
parties and perused the record.
21.Undisputedly, the petitioner herein is an auction purchaser who
had purchased the lease hold rights of the Creditor Debtor through
public bidding pursuant to a judicial order passed by NCLT in
liquidation proceedings purported to be under IBC Code-2016. It is
further not in dispute that GNIDA is the lessor and Creditor Debtor is/
was a lessee. None of the parties have disputed the fact that the
Creditor Debtor was in-dues with respect to lease rentals which also
exposed it to penal interest. The only question which is to be decided
in the present proceeding is as to whether the petitioner being the
auction purchaser is liable to pay the arrears of rentals and interest
thereon from a date anterior to the acceptance and confirming of bid
by the NCLT/Execution of Transfer Memorandum on 24.12.2020.
These questions are to be answered in the light of the question so
framed by this Court for determination of the issue as extracted
hereinabove. Ancillary and Incidental questions are to be answered
which are interwoven with each other which are relatable to the
import and the impact of the Transfer Memorandum dated 24.12.2020
viz a viz conduct of the petitioner and the scope of the writ petition in
altering the covenants of the lease deed and the Transfer
Memorandum in question.
22.To begin with the answer of question no. (ii) is to be first
analyzed.
23.As per the lease deed so executed on 26.06.2001 between the
GNIDA one part and the Corporate Debtor on the other part, the word
lessee has been defined in such a manner that the expression shall
unless the context does not admit include his/her/their/its heirs,
executors, administrator, representative and permitted assignees.
21
Further the lease deed itself provides that the same is for 90 years and
the lessee has to pay 50% of the premium of the plot at the time of
execution of the lease deed and residue 50% of the premium of the
plot for the period from 30.12.2001 to 30.06.2006 and further
nonpayment thereof within the stipulated period attracts interest @
15% compounded six monthly.
24.Sub-clause (I) of Clause 9 itself provides that the lessee may
transfer, relinquish, mortgage or assign its interest in the demise
premises or building constructed thereon or both, however, the same
is subject to prior permission/concurrence to be given by lessor by
GNIDA. Clause 15 itself stipulates that the GNIDA being the lessor
may require successor in the interest of the lessee to abide by and
faithfully carry out the terms and conditions, stipulation, provisions
and agreements therein contained.
25.Clause (a),(b) of Clause 3 under heading no. (IV) commencing
with the word “AND IT IS HERE BY FURTHER AGREED AND
DECLARED BY AND BETWEEN THE PARTIES TO THESE
PRESENTS AND FOLLOWS” itself stipulates that lessee agrees that
the sums dues under the deed on account of premium, rent interest or
damage for use and occupation shall be paid by the lessee and the
lessor shall have first charge upon the demise premises for the amount
of unpaid lease rent and interest. Conjoint reading of the said
covenants itself shows that the expression lessee itself encompasses to
it the legal heirs, assignee, representative etc and the land being the
lease land can only be transferred with prior permission to be
accorded by the lessor for transfer. Nonetheless, by virtue of the lease
deed the lessee is under obligation to pay the unpaid rentals and in
case of delay the lessee gets automatically exposed to penal interest.
Learned counsel for the parties have not disputed the fact that the
lease deed dated 26.06.2001 executed between GNIDA and Corporate
22
Debtor is in existence though subsequently other lease deeds were
executed on 22.03.2002, 05.09.2002 and supplementary lease deed on
28.11.2007 wherein the terms and the conditions so mentioned in the
lease deed dated 26.06.2001 stood intact and applicable.
26.Now the question arises how the words “AS IS WHERE IS”,
“AS IS WHAT IS”, “WHATEVER THERE IS”, AND “NO
RECOURSE” as stipulated in certificate of sale issued by Liquidator
on 11.09.2019 is to be interpreted. It is further not in dispute that the
petitioner itself approached the GNIDA for grant of Transfer
Memorandum and when the GNIDA insisted for payment of past
rentals and interest thereon the same was paid by the petitioner under
protest (though disputed by GNIDA) and eventually, on 24.12.2020
Transfer Memorandum was executed wherein in Clause 4 of the same
the petitioner accepted the fact that he is bound by the terms and
condition (covenant) as contained in the lease deed dated 26.06.2001
and further in Clause 7 of the same the fact that after transfer of the
demise land in favour of the petitioner if there are any dues like
premium/lease/additional possession then the petitioner being a lessee
is bound by it. Under Clause 11 the petitioner has also accepted the
condition that in case of the Resolution of the Board, any liability
with respect to interest on lease rent is being fastened then the
petitioner is bound to pay it. Notably, the conditions mentioned in the
Transfer Memorandum dated 24.12.2020 became the part and parcel
of the Sale Certificate so executed and registered on 30.07.2021 in
between Creditor Debtor (Transferor) and the petitioner (Transferee)
wherein not only the reference of the lease deed so executed between
GNIDA and the Creditor Debtor was taken into account but also the
Transfer Memorandum dated 24.12.2020 issued by GNIDA in favour
of the petitioner was also taken note of and was made basis for
issuance of the sale certificate as apparent from internal page 3 of the
23
sale certificate dated 30.07.2021. Clause 4 of the sale certificate dated
30.07.2021 itself reveals that the transferor being the Corporate
Debtor has assured and undertook that the demised land is free from
all sorts of encumbrances land as mortgage, sale, gift, lien, agreement,
dispute, litigation, injunctions, banks or private loans, securities,
guarantees, attachment with any decree of court of law.
27.In the light of the abovenoted instrument so executed from time
to time, the present case is to be decided. The words “as is where is
basis” has been subject matter of interpretation and consideration
before the Hon’ble Apex Court umpty number of times in following
decision:-
28.The Hon’ble Apex Court in the case of U.T. Chandigarh
Administration And Another Vs. Amarjeet Singh And Others
reported in 2009 (4) SCC 660 in paragraph nos. 19 and 20 observed
as under:-
“19. In Lucknow Development Authority, it was held that where a
developer carries on the activity of development of land and invites
applications for allotment of sites in a developed layout, it will
amount to `service', that when possession of the allotted site is not
delivered within the stipulated period, the delay may amount to a
deficiency or denial of service, and that any claim in regard to such
delay is not in regard to the immovable property but in regard to
the deficiency in rendering service of a particular standard, quality
or grade. The activity of a developer, that is development of land
into layout of sites, inviting applications for allotment by assuring
formation of a lay out with amenities and delivery of the allotted
sites within a stipulated time at a particular price, is completely
different from the auction of existing sites either on sale or lease. In
a scheme for development and allotment, the allottee has no choice
of the site allotted. He has no choice in regard to the price to be
paid. The development authority decides which site should be
allotted to him. The development authority fixes the uniform price
with reference to the size of plots. In most development schemes,
the applications are invited and allotments are made long before
the actual development of the lay out or formation of sites. Further
the development scheme casts an obligation on the development
authority to provide specified amenities. Alternatively the
24
developer represents that he would provide certain amenities, in
the Brochure or advertisement. In a public auction of sites, the
position is completely different. A person interested can inspect the
sites offered and choose the site which he wants to acquire and
participate in the auction only in regard to such site. Before
bidding in the auction, he knows or is in a position to ascertain, the
condition and situation of the site. He knows about the existence or
lack of amenities. The auction is on `as is where is basis'. With
such knowledge, he participates in the auction and offers a
particular bid. There is no compulsion that he should offer a
particular price. When the sites auctioned are existing sites,
without any assurance/representation relating to amenities, there is
no question of deficiency of service or denial of service. Where the
bidder has a choice and option in regard to the site and price and
when there is no assurance of any facility or amenity, the question
of the owner of the site becoming a service provider, does not arise
even by applying the tests laid down in Lucknow Development
Authority or Balbir Singh.
20. Where there is a public auction without assuring any specific or
particular amenities, and the prospective purchaser/lessee
participates in the auction after having an opportunity of examining
the site, the bid in the auction is made keeping in view the existing
situation, position and condition of the site. If all amenities are
available, he would offer a higher amount. If there are no amenities,
or if the site suffers from any disadvantages, he would offer a lesser
amount, or may not participate in the auction. Once with open eyes,
a person participates in an auction, he cannot thereafter be heard to
say that he would not pay the balance of the price/premium or the
stipulated interest on the delayed payment, or the ground rent, on
the ground that the site suffers from certain disadvantages or on the
ground that amenities are not provided.”
29.Following the said judgment the Hon’be Apex Court in the
case of Punjab Urban Planning and Development Authority And
Others Vs. Raghu Nath Gupta And Others reported in 2012 (8) SCC
197 in para 14 observed as under:-
“14. We notice that the respondents had accepted the commercial
plots with the open eyes, subject to the above mentioned conditions.
Evidently, the commercial plots were allotted on “as is where is”
basis. The allottees would have ascertained the facilities available
at the time of auction and after having accepted the commercial
plots on “as is where is” basis, they cannot be heard to contend that
PUDA had not provided the basic amenities like parking, lights,
roads, water, sewerage etc. If the allottees were not interested in
25
taking the commercial plots on “as is where is” basis, they should
not have accepted the allotment and after having accepted the
allotment on “as is where is” basis, they are estopped from
contending that the basic amenities like parking, lights, roads,
water, sewerage etc. were not provided by PUDA when the plots
were allotted. Over and above, the facts would clearly indicate that
there was not much delay on the part of PUDA to provide those
facilities as well. As noted, the electrical works and health works
were completed by 24.12.2002 and 22.11.2002 respectively and all
the facilities like parking, lights, roads, water, sewerage etc. were
also provided.”
30.Yet in the case of Rajasthan State Industrial Development And
Investment Corporation And Another Vs. Diamond & Gem
Development Corporation Limited And Another reported in 2013 (5)
SCC 470 in para 30 has observed as under:-
“The terms and conditions incorporated in the lease deed reveal
that, the allotment was made on “as-is- where-is” basis. The same
was accepted by the respondent-company without any protest,
whatsoever. The lease deed further enabled the appellant to collect
charges, in case it decided to provide the approach road.
Otherwise, it would be the responsibility of the respondent-company
to use its own means to develop such road, and there was absolutely
no obligation placed upon the appellant to provide to the
respondent the access road. As the respondent-company was
responsible for the creation of its own infrastructure, it has no legal
right to maintain the writ petition, and courts cannot grant relief on
the basis of an implied obligation. The order of the High Court is in
contravention of clause 2(g) of the lease deed.”
31.Apparently the words “AS IS WHERE IS” finds its root in the
common law doctrine of “Caveat Emptor” which means ‘let the buyer
beware’. This doctrine puts the duty on the purchaser to carry out all
necessary inspection of the property before entering into an
agreement. If the purchaser fails to conduct such an inspection, then
later, on identification of defects in the property may not be a ground
to revoke or claim damages under the contract. In such cases it is
presumed that the purchaser had the notice of defects, if any.
26
32.Section 3 of the Transfer of Property Act 1882 incorporates the
doctrine of constructive notice under Section 3 which is read as
under:-
“A person is said to have notice” of a fact when he actually
knows that fact, or when, but for willful abstention from an
enquiry or search which he ought to have made, or gross
negligence, he would have know it.
Explanation II: Any person acquiring any immovable property or
any share or interest in any such property shall be deemed to
have notice of the title, if any, of any person who is for the time
being in actual possession thereof.”
33.Nonetheless the Transfer of Property Act, 1882, also envisages
the duty of the seller 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. This is, however, subject to the presence of contract to
contrary between the parties.
34.Now, another facet needs to be examined as to what are the
types of defects which a buyer is expected to inquire into before
purchasing the property. There are two types of defects namely latent
defects and patent defects. Latent defects are such type of defects
which are unlikely to be discovered by a purchaser during
investigation. On the other hand, the second category is patent defects
which are discoverable if the buyer would have carried out inspection.
Here in the present case the defects falls under the second category,
being patent defects as Court finds that on 24.09.2018 the public
announcement was made by Liquidator inviting claims due from the
Corporate Debtor wherein in item no. 5 the details of the demised
premises in question was given. Further the sale notice for assets of
the Corporate Debtor was also published which is annexure- 4 at page
no. 45 wherein again description of the land was given. It is a matter
of common knowledge that whenever a property is being sought to be
27
sold through auction and the reserve price runs into crores of rupees
(which in the present case is 145.67 crores) then it is clearly expected
that purchaser might have got carried out inspection of the title deed
as well as of the liabilities attached to it. The petitioner herein is a
registered liability partnership company duly registered with
Government of India Ministry of Corporate Affairs and thus, it
becomes highly implorable and inconceivable that the petitioner was
not having knowledge about the liability of the Corporate Debtor. The
present case can also be analyzed from another point of angle that the
petitioner is not a illiterate person but the presumption is that legal
option is freely accessible to it. It is not a case wherein the demised
premises which is being put to auction is in remote part of the country
or there is no via media of getting internal details of the Corporate
Debtor and its liabilities particularly when it is a matter of common
knowledge that once the demised land is leasehold then obviously an
intending party would approach the lessor to get the details with
respect to title and position of lease rentals. In other words, this Court
cannot peep into mind of the petitioner so as to perceive as to whether
any investigation was conducted at the level of intending party or to
what extent.
35.This Court further finds that the defect, if any, falls under the
category of patent defect which could have been easily discovered in
case proper investigation of the property in question would have been
done at the end of the petitioner. Moreover, an additional fact to be
noticed at the stage is that the petitioner on 24.12.2020 itself became a
signatory to the Transfer Memorandum clearly accepting the terms
and conditions/covenant of lease deed in question which was
executed on 26.06.2021 along with subsequent lease deeds and also
the supplementary lease deed executed between the GNIDA and
Corporate Debtor while stepping into the shoes of the Corporate
28
Debtor. Transfer Memorandum dated 24.12.2020 as discussed above
in particular clause 4, 5, 7 and 11 itself depicts that the petitioner is
liable to pay the arrears of lease rentals and interest thereon. The
terms and conditions of the Transfer Memorandum dated 24.12.2020
itself became a basis of the sale certificate executed between
corporate debtor and the petitioner on 30.07.2021 as internal page 3
itself shows that the sale certificate was being issued in pursuance of
the Transfer Memorandum dated 24.12.2020. Moreover, clause 4 of
the sale certificate dated 30.07.2021 which is internal page 4 shows
that after execution of the transfer memorandum dated 24.12.2020 the
transferee being the corporate debtor has assured and undertaken that
the demise premises in question is free from all encumbrance
meaning thereby that even in fact the liabilities and the obligation so
contained in the lease deed dated 26.06.2021 followed by subsequent
lease deed so executed there on between the GNIDA and the
Corporate Debtor was accepted by the petitioner while undertaking to
comply with the terms and conditions and the obligations set out
therein and the same became the basis of the sale certificate.
36.This Court finds that the words so employed in the sale
certificate being “AS IS WHERE IS”, ”AS IS WHAT IS”,
“WHATEVER THERE IS” AND “NO RECOURSE” are to be
interpreted in such a manner so as to give with a logical conclusion in
the light of the instrument so executed between the parties while
bounding the petitioner to clear the unpaid arrears of lease rentals as
well as interest on delayed payment.
37.Answering to the question no. (iv) this Court has to bear in the
mind the fact that the demise premise in question which has been put
to auction is a lease land as already discussed earlier and the
contractual obligation so set out and settled between the GNIDA and
the Corporate Debtor which has not been disputed by any of the
29
parties. More so, the petitioner being an auction purchaser by virtue
of Transfer Memorandum dated 24.12.2020 coupled with the sale
certificate dated 30.07.2021 got itself bound with the contractual
obligation as set out in the lease deed. The IBC Code-2016 may grant
protection to the petitioner with respect to the purchase and the
transfer of the demised land through auction, however, so far as the
contractual obligations are concerned, they are governed by the
underline agreements which are in the shape of lease deed so
executed from time to time. The view of the Court further stands
amplified from the execution of the Transfer Memorandum dated
24.12.2020 wherein the petitioner not only stepped into the shoes of
the Corporate Debtor but also agreed to comply with the terms and
conditions and covenant contained in the lease deed.
38.Nonetheless, the sale certificate dated 30.07.2021 itself pressed
into service the contractual obligation as set out in the lease deed and
Transfer Memorandum as these are the instruments which not only
delivered the possession of the lease land but also created relationship
of lessor and lessee. In the opinion of the Court the IBC Code 2016
only grants limited protection to the petitioner to be inducted by mode
of stepping into the shoes of Corporate Debtor, however, in order to
be a lessee the conditions so provided in the lease deed and the
Transfer Memorandum are to be adhered to. This Court has also to
bear in mind the fact that the petitioner rights as a lessee has not been
created by any fiction of law, however, the same is to be governed by
the obligation so contained in the lease deed. Thus, this Court is of the
firm opinion that IBC Code-2016 does not grant any protection to the
petitioner for possessing the status of an auction purchaser in such a
manner so as to wriggle out from the contractual obligation of
nonpayment of lease rents in the light of doctrine of “AS IS WHERE
30
IS”, ”AS IS WHAT IS”, “WHATEVER THERE IS” AND “NO
RECOURSE”
39.The Hon’ble Apex Court in the case of Union Bank Of India
Vs. Official Liquidator and Others reported in 1994 (1) SCC 575 had
the occasion to consider the aspect relating to the guarantee or
warranty of the official liquidator with regard to the title and
encumbrances of the immovable property which are put to auction.
The Hon’ble Apex Court in paragraph no. 14 has held as under:-
“14.When the Official Liquidator sells the property and
assets of a companyin liquidation under the orders of the
Court he cannot and does not hold out any guarantee or
warranty in respect thereof. This is because he must proceed
upon the basis of what the records of the company in
liquidation show. It is for the intending purchaser to satisfy
himself in all respects as to the title, encumbrances and so
forth of the immovable property that he proposes to
purchase. He cannot after having purchased the property on
such terms then claim diminution in the price on the ground
of defect in title or description of the property. The case of
the Official Liquidator selling the property of a company in
liquidation under the orders of the Court is altogether
different from the case of an individual selling immovable
property belonging to himself. There is, therefore, no merit in
the application made on behalf of Triputi that there should
be a diminution in price or that it should not be made liable
to pay interest on the sum of Rs 1 crore 98 lakhs. ”
40.The right of the lessor over the land leased out which is being
put to liquidation, has also been matter of consideration before the
Hon’ble Apex Court in the case of Phatu Rochiram Mulchandani Vs.
Karnataka Industrial Area reported in 2015 (5) SCC 244 wherein the
31
Hon’ble Apex Court in paragraph nos. 31, 32, 33, 34, 35, 36, 37, 38
has observed as under:-
“31. As the Company had gone into liquidation and there was an
order of winding up when the notice of cancelling the lease was
given, the next question is as to whether prior permission of the
Company Court was necessary before terminating the lease. Case
of the appellant is that such prior permission is required under
Section 537 of the Companies Act and the appellant has relied
upon the judgment of Karnataka High Court in the case of
Karnataka State Electronics Development Corporation Ltd. v. The
Official Liquidator OSA No. 31 of 2004, decided on 21.06.2005.
On the other hand, respondent stated that before terminating the
lease no prior permission under the aforesaid provision of the
Companies Act was needed and it was only for resuming the land
that such a permission was required which led the Board to file an
application for this very purpose. The respondents have relied
upon the judgment of the Karnataka High Court in the case of
Hanuman Silks Vs. Karnataka Industrial Areas Development
Board, AIR 1997 Kar 134. It, therefore, becomes necessary to
discuss these two judgments in the first instance.
32. In Karnataka State Electronics Development Corpn. Ltd. v.
Official Liquidator OSA No. 31 of 2004, decided on 21.06.2005
(KAR) there was an allotment of industrial plot in favour of Anco
by the Karnataka State Electronics Development Corporation
(Corporation) on lease-cum-sale basis for which an agreement
was executed. As per the said agreement, the Company was to
establish its manufacturing unit within two years from the date of
allotment of the Industrial Plot. In the meantime, the said Anco
went into liquidation and winding up orders dated 8.6.2000 were
passed. Much after the winding up orders, the corporation
cancelled the lease-cum- sale deed on 28.6.2003 and took “paper
possession” of the industrial plot. Thereafter, the Corporation
filed the application in the Company Petition requesting the
Company Judge to declare the Cancellation Order passed by the
Corporation to be valid and direct the O.L. not to interfere with its
paper possession. The Company Judge rejected the said
application keeping in view the language employed in Section 537
of the Companies Act. The Corporation filed appeal which came
to be dismissed by the Division Bench. The Division Bench was
32
not impressed with the arguments that the Corporation was not
aware of the winding up proceedings and for this reason it had
resumed the possession of the industrial plot, after cancellation
thereof, without obtaining the leave of the Court. Once the plea of
ignorance was denounced, the court addressed the question as to
whether the Corporation could have cancelled the allotment of
industrial plot made in favour of the Company in liquidation and
answered the same in the negative with the following
observations:-
“11. Now the only question before us is, whether
after an order was made by this Court in winding up
the respondent Company (Company in liquidation),
the applicant Corporation could have ventured to
cancel the allotment of industrial plot made in
favour of the Company in liquidation? This could be
answered only after noticing the provisions of Sec.
537 of the Act.
12. Section 537 of the Act, provides for avoidance
of certain attachments, executions, etc. in winding
up by or subject to supervision of Court. The
winding up proceedings would commence from the
date of presentation of the petition before this
Court for winding up of the Company as envisaged
under Section 433 of the Act and other similar
provisions under the Act. Once such proceedings
are initiated, any assets of the Company cannot be
meddled without the leave of the Court. This settled
legal proceedings, time and again is stated by
various High Courts and also the highest Court. An
elaboration of this settled legal principle, in our
view, is wholly unnecessary.
In the present case, an order of cancellation of the
lease- cum-sale agreement is passed by the
applicant Corporation, after presentation of the
Company Petition and after passing the winding up
order, but without the leave of the Court, and in our
opinion, any such action is void. A void order
cannot be regularised and, therefore, rightly the
learned Company Judge has not acceded to the
request made by the applicant Corporation. We do
not see any error in the order passed by the learned
Company Judge and, therefore, no interference with
the said order is called for. Accordingly, appeal
33
requires to be rejected and is rejected. No order as
to costs. Ordered accordingly.”
33. Though the aforesaid observations give the impression that
there cannot even be a cancellation of the allotment of industrial
plot in respect of a Company in liquidation without the prior
permission of the Company court, we are of the view that these
observations are to be read in the factual context of the aforesaid
case. As noted above, the Corporation had not only cancelled the
lease but had even resumed the land by taking “paper
possession”. Further, in the application filed before the Company
Court, it did not pray for permission to take possession. On the
contrary, the Corporation took up the stand that it already had the
possession which should be declared as validly taken and the
prayer made was to direct the Official Liquidator not to interfere
with the possession. It is in this context that the High Court held
that same could not be done without the leave of the court. We are
of the opinion that the observations are to be read giving
restricted meaning that possession could not be taken without the
prior leave of the court. It may not be correct to hold that the law
requires that prior permission of the Company Judge is mandated
even for cancellation of the lease. In fact, question of resumption
of land or taking possession thereof could have arisen only after
the cancellation of the lease. We will dilate on this aspect further
after discussing the judgment in M/s. Hanuman Silks
10.
34. In M/s. Hanuman Silks v. Karnataka Industrial Areas
Development Board, AIR 1997 Kar 134 the said Company was
allotted plots by the Board for which lease-cum-sale agreements
were entered into on 18.8.1993 and 19.8.1993. The Company was
to erect the factory within 12 months and to commence the
production within 24 months (same conditions as in the instant
case). The Company failed to commence the civil construction
work and did not complete the construction nor commenced
production by these stipulated dates. Show cause notices were
given by the Board and after that the plots allotted to the Company
were resumed on 25.7.1995. The Company filed the petitions for
quashing of the letters of resumption. The High Court formulated
two questions which arose for consideration. We are concerned
only with the first question which was couched in the following
terms:- (AIR p. 137, para 10)
“10. (a) Whether the Board can take possession of
the plots in the possession of its lessees, without
having recourse to a civil suit for possession or to
an eviction proceedings under the provisions of the
Karnataka Public Premises (Eviction of
unauthorized occupants Act), 1974”.
34
35. After taking note of various provisions of the Act and
discussing case law cited by both the parties, the Court concluded
that no where does the Act provide for the Board taking back
possession of leased plots from the lessee, without recourse to
eviction proceedings, whatever be the circumstances. On the other
hand, the Act contains a specific provision (Section 25) providing
for application of Public Premises Act to premises leased by the
Board. The absence of any provision enabling the Board to take
possession from lessees and the express provision for making
Public Premises Act applicable to the premises leased by the
Board, leads to inescapable conclusion that termination of leases
and eviction of lessees are left to be governed by contract and
general law. Therefore, any act of forcible dispossession of a
lessee by the Board will be an act otherwise than in accordance
with law. The court further held that the power of re-entry and
'resumption' that is reserved by the Board in the lease-cum-sale
agreement, does not authorize the Board to directly or forcibly
resume possession of the leased land, on termination of the lease.
It only authorizes the Board to take possession of the leased land
in accordance with law. It could be either by having recourse to
the provisions of the Public Premises Act or by filing a Civil Suit
for possession and not otherwise.
36. It, thus, becomes clear that even though order of re-entry or
resumption can be passed by the Board, but for taking possession
the Board is supposed to have recourse to legal proceedings act in
accordance with law. However, this was a case where the
Company had not gone into liquidation and, therefore, the
question of applicability of Section 537 of the Companies Act
could not arise.
37. In the present case, we are confronted with a situation where
Company is in liquidation. Thereafter, we have to understand the
implication of the provisions of Section 537, which reads as under:
“537. Avoidance of certain attachments,
executions, etc., in winding up by Tribunal.
(i) Where any Company is being wound up by
Tribunal-
(a) any attachment, distress or execution put in
force, without leave of the Tribunal against the
estate or effects of the Company, after the
commencement of the winding up; or
35
(b) any sale held, without leave of the Tribunal of
any of the properties or effects of the Company
after such commencement shall be void.
(2) Nothing in this Section applies to any
proceedings for the recovery of any tax or impost
or any dues payable to the Government.
38. It is clear from the above that prior permission of the Court is
required in respect of any attachment, distress or execution put in
force or for sale of the properties or effects of the Company. We
are of the opinion that the serving of cancellation notice
simplicitor would not come within the mischief of this section as
that by itself does not amount to attachment, distress or execution
etc. No doubt, after the commencement of the winding up,
possession of the land could not be taken without the leave of the
Court. Precisely for this reason the Board had filed the
application seeking permission. But according to us no such prior
permission was required before cancelling the lease. In fact, it is
only after the cancellation of the leases that the Board would
become entitled to file such an application under Section 537 of
the Act. Had the Board gone ahead further and taken the
possession, after the cancellation and then approached the
Company Judge, the situation which occurred in Karnataka State
Electronics Development Corpn.Ltd. v. Official Liquidator OSA
No. 31 of 2004, decided on 21.06.2005 (KAR) would have
prevailed. On the other hand, it would have been premature on the
part of the Board to approach the Company Judge for permission
to resume the land without cancelling the lease in the first
instance. ”
41.The judgment in the case of Phatu Rochiram (Supra) has been
followed recently in the case of Stressed Assets Stabilization Fund
Vs. West Bengal Small Industries Development Corporation reported
in 2019 (10) SCC 148 in paragraph nos. 12 and 13 has observed as
under:-
“12. This Court is of the opinion that the reasoning and
conclusion of the High Court do not call for interference. The
finding that since the exercise by the lessor (WBSIDC) of its right
to determine the lease attained finality. the mortgagee
(represented by the appellant) could not claim rights superior to
that of the lessee, is in consonance with settled law.
36
13. There can be no dispute, nor was it contended that a donee or
a grantee (as the status of the lessee company in liquidation as in
this case) can have no rights in excess of that possessed by the
donor or the grantor. The mortgagee (whose shoes SASF has
stepped into) of the lessee (Wellman) can have no right greater or
better than that of the lessee in terms of the deed of lease. The
observations in Phatu Rochiram Mulchandani³ apply to the facts
of this case. The appeal, therefore fails and is dismissed, without
order as to costs.”
42.The Hon’ble Apex Court in case of State of Uttar Pradesh Vs.
Union Bank of India reported in 2016 (2) SCC 757 in paragraph no.
23 has observed as under:-
“23. It is pertinent to mention here that the land in dispute being a
Government property, the appellant-Bank cannot get any right
over it. Moreover, neither the appellant-Bank is a lessee of the
land in question nor any lease has ever been sanctioned by the
Govt, of U.P. in its favour. Hence, the appellant is not entitled to
get any right or to keep possession of the properties in question
situated at 19, Clive Road and 10, Edmoston Road.”
43.Applying the above judgments in the facts of the present case
an inescapable conclusion stands drawn that lessor has a paramount
interest over the property so sought to be leased to the lessee as there
is a marked difference between leasehold and freehold as in the case
of former only possession is transferred and not the ownership or title,
however, in the later ownership and possession stands transferred.
44.Recently in the case of Delhi Development Authority Vs.
Karam Department of Finance Investment (India) Private Limited and
Others reported in 2020 (4) SCC 136 the Hon’ble Apex Court in
paragraph no. 13, 14, 15, 16, 20, 21, 22, 23, 24 and 25 has observed
as under:-
37
“13. In Perpetual Lease, granted to Shri Trilochan Singh Rana
and Mrs. Rani Rana, one of the conditions provided that lessor
may impose conditions to claim and recover a portion of the
unearned increase in the value (i.e. the difference between the
premium paid and the market value) of the residential plot at the
time of sale, transfer, assignment or parting with the possession,
the amount to be recovered being percent of the unearned
increase. The relevant clause (4)(a) of the Perpetual Lease is as
follows:-
“(4)(a) The Lessee shall not sell, transfer assign or
otherwise part with the possession of the whole or
any part of the residential plot except with the
previous consent in writing of the Lessor which he
shall be entitled to refuse in his absolute direction.
Provided that such consent shall not be given for a
period of ten years, from the commencement of the
Lease unless, in the opinion of the Lessor,
exceptional circumstances exist for the grant of such
consent.
Provided further that in the event of the consent
being given, the Lessor may impose such terms and
conditions as he thinks fit and the Lessor shall be
entitled to claim and recover a portion of the
unearned increase in the value (i.e. the difference
between the premium paid and the market value) of
the residential plot at the time of sale, transfer,
assignment or parting with the possession, the
amount to be recovered being fifty percent of the
unearned increase and the decision of the Lessor in
respect of the market value shall be final binding.”
14. We have already noticed above that original lessee Trilochan
Singh Rana entered into agreement of sale with M/s. Ocean
Construction Industries Pvt. Ltd. dated 29.09.1988 to transfer the
rights for a of Rs.76,00,000/-. Exercising power under Section
269UD of Income Tax Act, 1961, appropriate authority passed a
purchase order dated 13.12.1988 of the property in question. After
the aforesaid purchase order an amount of Rs.17,86,240/- towards
payment of unearned increase was paid to the DDA by Income
Tax Department. After the aforesaid purchase order, auction
38
notice dated 20.03.1989 was issued giving details of the
properties, which included the property in question.
15. In pursuance of the auction notice, the writ petitioner gave
highest bid and was declared auction purchaser for an amount of
Rs.1,08,05,000/-. The writ petitioner paid the full amount and was
delivered the possession on 25.04.1989. Sale Deed was also
executed in favour of writ petitioner on 25.09.1997. The petitioner
made an application to the DDA for grant of freehold rights and
also deposited amount of Rs.3,45,729/-. While processing the
application for conversion of leasehold rights to free hold rights,
DDA made a demand of Rs.1,43,90,348/- towards unearned
increase, which was challenged by the writ petitioner. Whether writ
petitioner was liable to pay unearned increase payment is the
question to be answered.
16. We have already noticed the clause (4)(a) of the Perpetual
Lease Deed dated 18.03.1970, which provided that in event sanction
is given by lessor to the lessee for sale, transfer or assignment,
lessor shall be entitled to claim and recover a portion of the
unearned increase in the value. The unearned increase being the
difference between the premium paid and the market value. The
object behind the said clause was that a lessee when is permitted to
transfer the leasehold rights, the lessor should not be deprived of
the difference between the premium paid and the market value. The
clause was inserted in the Perpetual Lease to compensate the lessor.
The present is not a case where lessee is making any transfer or
seeking any permission from the lessor to give his consent.
20. Learned counsel for the petitioner has relied on Clauses 1 and 2
of the Sale Deed, which are to the following effect:-
“1. That in pursuance of the said auction and
consideration of the sum of Rs. 1,08,05,000/- (Rs.
One Crore Eight Lakh and Five Thousand only)
already paid by the Vendor/Auction Purchaser to
the Vendor as aforesaid, the receipt of which the
Vendor hereby acknowledged, the Vendor hereby
transfers, conveys and sells to the Auction
Purchaser, the Vendee, by way of sale of that plot of
land measuring 725 sq. yds. bearing No. 14 in Block
A-2 in the lay out plan of Safdarjung Development
Scheme, Ring Road, South Delhi (Villages
Mohammadpur Munirka and Humayunpur Revenue
Estate, together with all rights, titles, interests,
appurtenances, easements, privileges in and
pertaining to the aforesaid property in favour of the
Vendee absolutely and forever, with the provisions
of Section 269UE(1) of the Income Tax Act, 1961
39
and all the powers rights and interests vested in the
Vendor with regard to the sale, transfer and
conveyances of the aforesaid property to the Vendee
hereto.
2. That on the execution of this sale deed, the
Vendee has become the absolute and exclusive
owner of the property hereby sold, conveyed and
transferred to it and that the Vendee shall have
absolute rights and title to the same and to deal with
the property in any manner it likes. It is made clear
that the Vendor has no right and is left with no
interest, claim or title of any nature whatsoever into
on upon the aforesaid property.”
21. A plain reading of the above clauses does give impression that
what was sold to the writ petitioner was all rights, titles, interests
and appurtenances but when we read Clause 3 of the same Sale
Deed, the said clause gives a different impression. Clause 3 of the
Sale Deed is as follows:-
“3. That the Vendor hereby represents and assures
to the Vendee that his right in the property hereby
sold, transferred and conveyed is in terms of
agreement for transfer dated 29-9-1988 between
Mr. Trilochan Singh Rana and Mis, Rani Rana
transferor and M/s. Ocean Construction Industries
Pvt. Ltd. (through its Director Shri Jugal Kishore
Malhan) transferee.”
22. The principles of construction of documents are well settled.
While construing the documents/intention of the parties have to be
ascertained. In this context, reference is made to judgment of this
Court in Sahebzada Mohammad Kamgarh Shah Vs. Jagdish
Chandra Deo Dhabal Deb and Others, AIR 1960 SC 953. In
Paragraph Nos. 12 and 13, following was laid down:-
“12. In his attempt to establish that by this later
lease the lessor granted a lease even of these
minerals which had been excluded specifically by
Clause 16 of the earlier lease, Mr Jha has arrayed
in his several well established principles of
construction. The first of these is that the intention
of the parties to a document of grant must be
ascertained first and foremost from the words used
in the disposition clause, understanding the words
used in their strict, natural grammatical sense and
that once the intention can be clearly understood
from the words in the disposition clause thus
40
interpreted it is no business of the courts to examine
what the parties may have said in other portions of
the document. Next it is urged that if it does appear
that the later clauses of the document purport to
restrict or cut down in any way the effect of the
earlier clause disposing of property the earlier
clause must prevail. Thirdly it is said that if there be
any ambiguity in the disposition clause taken by
itself, the benefit of that ambiguity must be given to
the grantee, the rule being that all documents of
grants must be interpreted strictly as against the
grantor. Lastly it was urged that where the
operative portion of the document can be
interpreted without the aid of the preamble, the
preamble ought not and must not be looked into.
13. The correctness of these principles is too well
established by authorities to justify any detailed
discussion. The task being to ascertain the intention
of the parties, the cases have laid down that that
intention has to be gathered by the words used by
the parties themselves. In doing so the parties must
be presumed to have used the words in their strict
grammatical sense. If and when the parties have
first expressed themselves in one way and then go
on saying something, which is irreconcilable with
what has gone before, the courts have evolved the
principle on the theory that what once had been
granted next be taken away, that the clear
disposition by an earlier clause will not be allowed
to be cut down by a later clause. Where there is
ambiguity it is the duty of the Court to look at all the
parts of the document to ascertain what was really
intended by the parties. But even here the rule has to
be borne in mind that the document being the
grantor’s document it has to be interpreted strictly
against him and in favour of the grantee.”
23. This Court further in Paragraph No.14 has held that in cases
of ambiguity, several parts of the document have to be examined
to find out what was really intended by the parties. In Paragraph
No. 14, following was laid down:-
“14. ………In cases of ambiguity it is necessary
and proper that the court whose task is to construe
the document should examine the several parts of
the document in order to ascertain what was really
intended by the parties. In this much assistance can
41
be derived from the fourth condition of the
conditions which were imposed by the lease as
regards the grant of sub-leases. This condition
provided inter alia that all such under- leases to be
granted by the lessee shall be subject to the
provisions of Clause 16 of the principal lease”
24. Before we construe the document, we need to first notice the
auction notice by which the property was to auction. Auction
notice, which has been brought on the record as Annexure-R1
indicate that details of four properties were given in the auction
notice. It is useful to look into the details given as follows:-
Details of Properties Reserve
Price
1.Property No. B-6, Friends Colony Mathura Road, New
Delhi. This is a lease hold residential plot measuring
195.097 sq. Mt. together with buildings and structure
thereon and fixtures and fitting therein
34.20
lacs
2.Property No. 14, Block A-2, Safdarjung Development
Area, New Delhi.
This is a lease hold residential plot measuring (725 sq.
yds.) with a double storeyed building. The Ground Floor
consists of drawing dining bed room, kitchen and a
garage. The First Floor consists of 3 bed rooms, 3 bath
rooms, store and a lobby over the garage. There are 2
floors each having a servant room W.O. and a cocking
verandah.
1.08
crores
3.Property No. A-8/23, Vasant Vihar, New Delhi.
This is a lease hold residential plot N. 23 in Street No. A-
8 in the lay out plan of Vasant Vihar of the Servants
Cooperative. House Building Society Ltd., and measuring
150 Sq. yds alongwith the super structure build thereon.
(Covered area 1350 Sq. Ft).
36.60
Lacs
4.Property bearing House No. E- 444 (Ground Floor),
Greater Kailash Part-II, New Delhi- 110048.
All rights, titles and Interests in the dwelling unit on
ground floor, and mazanine floor of House No. E-444,
Greater Kailash, Part-II, New Delhi, together with
undivided. Indivisible and impartible ownership right of
35% in the land underneath of the said building and
25.60
lacs
42
including the followings :-
1. One drawing-cum-dining hall, three bed rooms
with attached bath rooms, balcony, kitchen, storage space
(servants Quarters) and servant's bath rooms on ground
floor.
2. Front lawn and back courtyard on the ground
floor.
Parking space for a Maruti Car in the Driveway.
Ingress and Egress from the main gate to the dwelling
unit.
25. A perusal of the details of the properties indicate that property
in question is included as Item No. 2, which is mentioned as “This
is a lease hold residential plot”. It is to be noticed that in so far as
properties at Sl. Nos. 1, 2 and 3, the words mentioned are
“leasehold residential plots” whereas with regard to property
details given at Sl. No.4, it has been mentioned that “all rights,
titles and interests in the dwelling unit”, which, if contrasted with
details of properties given at Sl. Nos. 1, 2 and 3 contains the
intendment. Thus, there cannot be any doubt that property in
question, which was put in auction was a property as lease hold
rights residential plots. When property is auctioned, the terms and
conditions of auction are binding on both the parties. When
petitioner submitted his bid in pursuance of the auction notice, he
was bidding for lease hold residential plot with a double storied
building. While interpreting the Sale Deed, the auction notice has
to be looked into to find out the nature of transaction. The Sale
Deed cannot be read divorced to the auction notice or to auction
notice. Auction of a leasehold residential plot and auction of
freehold residential plot carries different connotations. Leasehold
rights are limited rights, which are subservient to freehold rights
of a property. In giving bid for leasehold rights and freehold
rights, different considerations are there. Clause 3 as noted above
indicate that the property sold and transferred is in terms of the
agreement dated 29.09.1988 between Trilochan Singh Rana and
Mrs. Rani Rana to M/s. Ocean Construction Industries Pvt. Ltd.
Trilochan Singh Rana and Mrs. Rani Rana were only lease
holders. Thus, they could best transfer their right, which was
conferred to them by the Indenture dated 18.03.1970.”
45.Another aspect which needs to be considered is with respect to
the fact that whether the claim so set up by the GNIDA can be
negated on the ground that it had not lodged and got registered its
43
claim in the proceeding under IBC Code. It has come on record that
GNIDA did not get registered its claims in the proceedings purported
to be under IBC Code-2016, however, this Court finds that merely
because the claim has not been registered by GNIDA under IBC Code
cannot be a ground to negate their claim particularly when the
demised premises in question is leasehold and one of the condition for
recognizing the petitioner being an auction purchaser as a lessee is
making good the deficiency in the payment of lease rentals along with
interest thereon. Learned Senior Counsel could not point out any of
the provisions so as to fortify the legal submission that mere non-
registration of the claim before the competent authority under IBC
Code coupled with the fact that Transfer Memorandum and sale
certificate has been executed therein denuded the GNIDA from
claiming the arrears and interest thereon.
46.Nonetheless, Section 55 1 (g) of the Transfer of Property Act,
1882 reads as under:-
“(g) to pay all public charges and rent accrued due in
respect of the property up to the date of the sale, the interest
on all encumbrances on such property due on such date, and,
except where the property is sold subject to encumbrances, to
discharge all encumbrances on the property then existing.”
47.According to Section 55 1 (g) of the Transfer of Property Act,
1882 in absence of a contract to the contrary the buyer and the seller
of immovable property respectively are subject to liabilities, and have
the rights and the seller is bound to pay all public charges and rent
accrued due in respect of the property up to the date of the sale, the
interest on all encumbrances on such property due on such date, and,
except where the property is sold subject to encumbrances, to
discharge all encumbrances on the property then existing. The
determining factors are the words employed in Section 55 of the
44
Transfer of Property Act being “ in absence of a contract to the
contrary”.
48.Applying the said provision in the facts of the present case, this
Court finds that there exist not only lease deed but also a Transfer
Memorandum and sale certificate which excludes the general
principle as enshrined in section 55 1(g) of the Transfer of Property
Act.
49.The High Court of Madras in the case of K. Madhu and Ors.
Vs. Dugar Finance India Ltd. and Ors. reported in (2008) 145
CompCase 277 (Mad) in paragraph no. 33 has observed as under:-
“23. A reading of the above judgments clearly shows that
Section 55 (1) (g) of the Transfer of Property Act is absolute
in its character, where there exists a covenant guaranteeing
the non-existence of encumbrances irrespective of the fact
that the same was discovered after the sale, the liability is
that of the seller only. The purchaser making the payment on
behalf of the vendor is entitled to the recoupment of the
same. However, where there existed no such covenant to the
contrary, there could arise no automatic invoking of Section
55(1)(g), to the benefit of the purchaser that there existed an
implied condition that there was no encumbrance.”
50.Learned Senior Counsel in support of the argument relatable to
the question nos. (ii) and (iv) had relied upon the judgment in the case
of A.I. Champdany (supra) so as to contend that the petitioner is not
liable to pay lease rentals and interest thereon despite the stipulation
contained “AS IS WHERE IS”, ”AS IS WHAT IS”, “WHATEVER
THERE IS” AND “NO RECOURSE”. The said judgment is not of
any aid or help as the said judgment relates to dues of the
municipality which the Hon’ble Apex Court found not having charge
over the property put to auction as even otherwise it did not come
45
within the purview of the Crown Debt. The Hon’ble Apex Court in
paragraph no. 27, 29 has observed as under:-
“27. Once the property is sold, the assets of the company are
required to be distributed to the creditors in order of
preference. As the respondent- Municipality was not a
secured creditor, the impugned Judgment cannot be
sustained.
29. Dues of the Municipality would also not even otherwise
come within the purview of the crown debt. Even a crown
debt could be discharged only after the secured creditors
stand discharged. ”
51.Sri Sinha next relied upon the judgment in the case of Rana
Girders Limited (supra) in order to contend that the excise duty dues
are not liable to be paid by the auction purchaser of the erstwhile
company which was put to auction. The Hon’ble Apex Court in
paragraph no. 23 observed as under:-
“23. We may notice that in the first instance it was
mentioned not only in the public notice but there is a specific
clause inserted in the Sale Deed/Agreement as well, to the
effect that the properties in question are being sold free from
all encumbrances. At the same time, there is also a
stipulation that “all these statutory liabilities arising out of
the land shall be borne by purchaser in the sale deed” and
“all these statutory liabilities arising out of the said
properties shall be borne by the vendee and vendor shall not
be held responsible in the Agreement of Sale.” As per the
High Court, these statutory liabilities would include excise
dues. We find that the High Court has missed the true intent
and purport of this clause. The expressions in the Sale Deed
as well as in the Agreement for purchase of plant and
machinery talks of statutory liabilities “arising out of the
46
land” or statutory liabilities “arising out of the said
properties” (i.e. the machinery). Thus, it is only that
statutory liability which arises out of the land and building
or out of plant and machinery which is to be discharged by
the purchaser. Excise dues are not the statutory liabilities
which arise out of the land and building or the plant and
machinery. Statutory liabilities arising out of the land and
building could be in the form of the property tax or other
types of cess relating to property etc. Likewise, statutory
liability arising out of the plant and machinery could be the
sales tax etc. payable on the said machinery. As far as dues
of the Central Excise are concerned, they were not related to
the said plant and machinery or the land and building and
thus did not arise out of those properties. Dues of the Excise
Department became payable on the manufacturing of
excisable items by the erstwhile owner, therefore, these
statutory dues are in respect of those items produced and not
the plant and machinery which was used for the purposes of
manufacture. This fine distinction is not taken note at all by
the High Court. ”
52.The afore noted judgment is clearly distinguishable as the
Excise dues does not create charge upon the property put to auction.
53.The next judgment as sought to be relied to and referred to by
the learned Senior Counsel who appears for the petitioner is the case
of Haryana State Electricity Board Vs. (supra) The said judgment is
also of no assistance to the petitioner in view of the fact that the
Hon’ble Apex Court had held that electricity arrears do not constitute
a charge over the property and that is why a transferee of the premise
cannot be made liable for payment of dues of the previous
owner/occupier. The relevant extract of the judgment in paragraph
nos. 10, 11, 12, 13 are quoted hereinunder:-
47
"10. The appellant relies on the subsequent decision of this
court in Paramount Polymers (supra) to distinguish the
decision in Isha Marbles. In Paramount Polymers (supra),
the terms and conditions of supply contained a provision
(clause 21A) providing that reconnection or new connection
shall not be given to any premises where there are arrears on
any account, unless the arrears are cleared. In view of the
said express provision, this Court distinguished Isha Marbles
on the following reasoning:
“15...This Court in Hyderabad
Vanaspati Ltd. v. A.P. SEB [1998] 2 SCR 620 has
held that the Terms and Conditions for Supply of
Electricity notified by the Electricity Board under
Section 49 of the Electricity (Supply) Act are
statutory and the fact that an individual agreement
is entered into by the Board with each consumer
does not make the terms and conditions for supply
contractual. This Court has also held that though
the Electricity Board is not a commercial entity, it
is entitled to regulate its tariff in such a way that a
reasonable profit is left with it so as to enable it to
undertake the activities necessary. If in that
process in respect of recovery of dues in respect of
a premises to which supply had been made, a
condition is inserted for its recovery from a
transferee of the undertaking, it cannot ex facie be
said to be unauthorized or unreasonable. Of
course, still a court may be able to strike it down as
being violative of the fundamental rights enshrined
in the Constitution of India. But that is a different
matter. In this case, the High Court has not
undertaken that exercise.
16. The position obtaining in Isha
Marbles (supra) was akin to the position that was
available in the case on hand in view of the
Haryana Government Electrical Undertakings
(Dues Recovery) Act, 1970. There was no insertion
of a clause like Clause 21A as in the present case,
in the Terms and Conditions of Supply involved in
that case. The decision proceeded on the basis that
the contract for supply was only with the previous
consumer and the obligation or liability was
enforceable only against that consumer and since
there was no contractual relationship with the
48
subsequent purchaser and he was not a consumer
within the meaning of the Electricity Act, the dues
of the previous consumer could not be recovered
from the purchaser. This Court had no occasion to
consider the effect of clause like Clause 21A in the
Terms and Conditions of Supply. We are therefore
of the view that the decision in Isha Marbles
(supra) cannot be applied to strike down the
condition imposed and the first respondent has to
make out a case independent on the ratio of Isha
Marbles (supra), though it can rely on its ratio if it
is helpful, for attacking the insertion of such a
condition for supply of electrical energy. This
Court was essentially dealing with the construction
of Section 24 of the Electricity Act in arriving at its
conclusion. The question of correctness or
otherwise of the decision in Isha Marbles (supra)
therefore does not arise in this case especially in
view of the fact that the High Court has not
considered the question whether Clause 21A of the
terms and conditions incorporated is invalid for
any reason."
11. In Paschimanchal Vidyut Vitran Nigam Ltd. v. DVS
Steels & Alloys Pvt.Ltd. [2009 (1) SCC 210] this court held,
while reiterating the principle that the electricity dues did not
constitute a charge on the premises, that where the
applicable rules requires such payment, the same will be
binding on the purchaser. This court held:
"11...A transferee of the premises or a subsequent
occupant of a premises with whom the supplier has
no privity of contract cannot obviously be asked to
pay the dues of his predecessor in title or
possession, as the amount payable towards supply
of electricity does not constitute a `charge' on the
premises. A purchaser of a premises, cannot be
foisted with the electricity dues of any previous
occupant, merely because he happens to be the
current owner of the premises....
12….When the purchaser of a premises approaches
the distributor seeking a fresh electricity
connection to its premises for supply of electricity,
the distributor can stipulate the terms subject to
which it would supply electricity. It can stipulate as
one of the conditions for supply, that the arrears
49
due in regard to the supply of electricity made to
the premises when it was in the occupation of the
previous owner/occupant, should be cleared before
the electricity supply is restored to the premises or
a fresh connection is provided to the premises. If
any statutory rules govern the conditions relating
to sanction of a connection or supply of electricity,
the distributor can insist upon fulfillment of the
requirements of such rules and regulations. If the
rules are silent, it can stipulate such terms and
conditions as it deems fit and proper, to regulate its
transactions and dealings. So long as such rules
and regulations or the terms and conditions are not
arbitrary and unreasonable, courts will not
interfere with them.
13...A stipulation by the distributor that the dues in
regard to the electricity supplied to the premises
should be cleared before electricity supply is
restored or a new connection is given to a
premises, cannot be termed as unreasonable or
arbitrary. In the absence of such a stipulation, an
unscrupulous consumer may commit defaults with
impunity, and when the electricity supply is
disconnected for non-payment, may sell away the
property and move on to another property, thereby
making it difficult, if not impossible for the
distributor to recover the dues. Provisions similar
to Clause 4.3(g) and (h) of Electricity Supply Code
are necessary to safeguard the interests of the
distributor."
12. The position therefore can may be summarized thus :
(i) Electricity arrears do not constitute a charge over
the property. Therefore in general law, a transferee of
a premises cannot be made liable for the dues of the
previous owner/occupier.
(ii) Where the statutory rules or terms and conditions
of supply which are statutory in character, authorize
the supplier of electricity, to demand from the
purchaser of a property claiming re-connection or
fresh connection of electricity, the arrears due by the
previous owner/occupier in regard to supply of
electricity to such premises, the supplier can recover
the arrears from a purchaser.
50
Position in this case
13. The appellant did not plead in its defence that any
statutory rule or terms and conditions of supply, authorized it
to demand the dues of previous owner, from the first
respondent. Though the appellant contended in the written
statement that the dues of Durga Rice Mills were transferred
to the account of the first respondent, the appellant did not
specify the statutory provision which enabled it to make such
a claim. The decision in Paramount Polymers shows that
such an enabling term was introduced in the terms and
conditions of electricity supply in Haryana, only in the year
2001.”
54.Another judgment so cited is the case of Shreyas Papers (P)
Ltd. (supra), however, the said judgment is of no help to the petitioner
as in the said case there was only transfer of individual assets of the
defaulting company rather than the defaulting company being sold as
a going concern and the Hon’ble Apex Court while interpreting
Section 15 (1) of the Karnataka Sales Tax Act (1957) in paragraph
nos. 17 and 22 observed as under:-
“17. In the present case, since it is not a matter of dispute
that there was only the transfer of individual assets of the
Defaulting Company, rather than the Defaulting Company
being sold as a going concern, in light of our expressed
views, Section 15 of the KST Act is not attracted. The first
limb of Mr. Hegde's arguments must, therefore, fail.
22. In the present case, firstly, no provision of law has been
cited before us that exempts the requirement of notice of the
charge for its enforcement against a transferee who had no
notice of the same. It remains to be seen, therefore, if in the
facts of the present case, the First Respondent had
noticeactual or constructiveof the charge. At the outset, in
the advertisement/notice dated 17.3.1992 issued by the
Corporation, mention is only made of the sale of the
Defaulting Company's assets and there is no indication,
51
whatsoever, of any sales tax arrears. Further, the bid offer
made on behalf of the First Respondent on 5.6.1992
specifically excludes any statutory liabilities, including sales
tax. This offer was accepted by the Corporation on
15.7.1992. Even at that stage, there was no mention of any
sales tax arrears. The sale of the assets took place pursuant
to the agreement dated 12.8.1992 in which a specific clause
was inserted that the First Respondent would be liable to pay
all property taxes, other taxes, electricity bills, water taxes
and rents from the date of the agreement (i.e. 12.8.1992). For
the first time, by letter dated 8.1.1993 of the Second
Appellant to the Mandal Panchayath, Aloor Taluk, the issue
of sales tax dues of the Defaulting Company was brought to
the surface. This is further borne out by the correspondence
between the First Respondent and the Corporation. Thus, it
is evident that the First Respondent had no actual notice of
the charge prior to the transfer. As to whether the First
Respondent had constructive notice of the charge, no
substantive argument on this issue was made, either before
the High Court or at any rate before us. Hence, we cannot
hold that the First Appellant had constructive notice of the
charge. ”
55.Similarly, so far as the case of Telangana State Southern Power
Distribution Company Ltd. (supra) the Hon’ble Apex Court in
paragraph nos. 16, 16.1, 16.2 has observed as under:-
“16. We have gone into the aforesaid judgments as it was
urged before us that there is some ambiguity on the aspect of
liability of dues of the past owners who had obtained the
connection. There have been some differences in facts but, in
our view, there is a clear judicial thinking which emerges,
which needs to be emphasized:
16.1 . That electricity dues, where they are statutory in
character under the Electricity Act and as per the terms &
conditions of supply, cannot be waived in view of the
52
provisions of the Act itself more specifically Section 56 of the
Electricity Act, 2003 (in pari materia with Section 24 of the
Electricity Act, 1910), and cannot partake the character of
dues of purely contractual nature.
16.2 . Where, as in cases of the E-auction notice in question,
the existence of electricity dues, whether quantified or not,
has been specifically mentioned as a liability of the
purchaser and the sale is on “AS IS WHERE IS, WHATEVER
THERE IS AND WITHOUT RECOURSE BASIS”, there can
be no doubt that the liability to pay electricity dues exists on
the respondent (purchaser).”
56.Perusal of the above noted paragraphs itself shows that the
Hon’ble Apex Court has held that electricity dues are statutory in
nature and as per terms and the condition of supply the same cannot
be waved of. Infact the said judgment goes against the petitioner.
57.The next judgment cited is the case of Raman Roadways
Private Limited (supra) the said judgment no where supports the case
of the petitioner as the said judgment holds that property tax was
merely a statutory dues without creating any encumbrances over the
property and the same is not liable to be paid.
58.The judgments so cited by the learned Senior Counsel as
referred to above are clearly distinguishable and do not apply in the
present facts of the case particularly when there already exists specific
Clause 3(b) under Chapter No. (IV) of the lease deed dated
26.06.2001 providing that the lessor shall have first charge upon the
demise premises for the amount of unpaid lease rents and interest
thereon and other dues of authority. Moreover, as discussed above the
petitioner herein has accepted the terms and covenant contained in the
lease deed and also signatory to the Transfer Memorandum date
24.12.2020 which even in fact became the basis of the sale certificate
dated 30.07.2021.
53
59.Addressing the question of refund of the amount so paid by the
petitioner being (i) and (iii) they are interlinked and they are decided
compositely.
60.In order to be entitled to be refunded the amount so deposited
under protest the petitioner has to place relevant facts before the court
as to how and by which manner it had been pressurized to deposit the
amount and it deposited the same under protest. The Court finds that
the petitioner himself was a signatory of Transfer Memorandum dated
24.12.2020 and the same became a basis of issuance of sale certificate
on 30.07.2021. Further the petitioner stepped into the shoes of the
Creditor Debtor and also got itself bound to honor the contractual
obligation. Barring the allegations made in paragraph no. 14 of the
writ petition and a letter so appended marked to the GNIDA dated
27.10.2020, there is nothing on record to show that any
challenge/protest was made to the Transfer Memorandum dated
24.12.2020. As already noticed the petitioner was bound to honor the
commitments as laid down in the lease deed and the petitioner paid
the arrears of lease rentals and interest and thereafter, it became the
lessee. More so, the conduct of the petitioner itself shows that it
approbated and reprobated at the same time as though it on the basis
of the Transfer Memorandum dated 24.12.2020 it, became a lessee
while holding interest over the leased land but the petitioner is
avoiding performance of contractual obligation while playing hot and
cold at the same time.
61.The Hon’ble Apex Court in the case of R.N. Gosain vs.
Yashpal Dhir reported in (1992) 4 SCC 683 has observed as under:-
“10. Law does not permit a person to both approbate and reprobate.
This principle is based on the doctrine of election which postulates
that no party can accept and reject the same instrument and that "a
person cannot say at one time that a transaction is valid any thereby
obtain some advantage, to which he could only be entitled on the
footing that it is valid, and then turn round and say it is void for the
54
purpose of securing some other advantage". [See: Verschures
Creameries Ltd. v. Hull and Netherlands Steamship Co. Ltd., (1921)
2 R.B. 608, at p.612, Scrutton, L.J]. According to Halsbury's Laws of
England, 4th Edn.,Vol. 16, "after taking an advantage under an
order (for example for the payment of costs) a party may be
precluded from saying that it is invalid and asking to set it aside".
(para 1508).”
62.The Hon’ble Apex Court in the case of Shyam Telelink
Limited vs. Union of India, reported in (2010) 10 SCC 165 has
observed as under:
“23. The maxim qui approbat non reprobat (one who approbates
cannot reprobate) is firmly embodied in English Common Law and
often applied by Courts in this country. It is akin to the doctrine of
benefits and burdens which at its most basic level provides that a
person taking advantage under an instrument which both grants a
benefit and imposes a burden cannot take the former without
complying with the latter. A person cannot approbate and reprobate
or accept and reject the same instrument.”
63.The Hon’ble Apex Court in the case of Cauvery Coffee
Traders, Mangalore vs. Hornor Resources (International) Company
Limited , reported in (2011) 10 SCC 420 has held as under:
“34. A party cannot be permitted to "blow hot and cold", "fast and
loose" or "approbate and reprobate". Where one knowingly accepts
the benefits of a contract or conveyance or an order, is estopped to
deny the validity or binding effect on him of such contract or
conveyance or order. This rule is applied to do equity, however, it
must not be applied in a manner as to violate the principles of right
and good conscience. (Vide: Nagubai Ammal & Ors. v. B. Shama
Rao & Ors., AIR 1956 SC 593; C.I.T. Vs. MR. P. Firm Maur, AIR
1965 SC 1216; Maharashtra State Road Transport Corporation v.
Balwant Regular Motor Service, Amravati & Ors., AIR 1969 SC
329; P.R.
Deshpande v. Maruti Balaram Haibatti, AIR 1998 SC 2979; Babu
Ram v. Indrapal Singh, AIR 1998 SC 3021; Chairman and MD,
NTPC Ltd. v. Reshmi Constructions, Builders & Contractors,
AIR 2004 SC 1330; Ramesh Chandra Sankla & Ors. v. Vikram
Cement & Ors., AIR 2009 SC 713; and Pradeep Oil Corporation v.
Municipal Corporation of Delhi & Anr., (2011) 5 SCC 270).
35. Thus, it is evident that the doctrine of election is based on the
rule of estoppel- the principle that one cannot approbate and
reprobate inheres in it. The doctrine of estoppel by election is one of
the species of estoppels in pais (or equitable estoppel), which is a
rule in equity. By that law, a person may be precluded by his actions
or conduct or silence when it is his duty to speak, from asserting a
right which he otherwise would have had.”
55
64.The Hon’ble Apex Court in the case of Sri Gangai Vinayagar
Temple and another vs. Meenakshi Ammal and others, reported in
(2015) 3 SCC 624 has observed as under:
“16.2. Secondly, on a proper perusal of the plaint, it ought to have
been palpably evident that the Plaintiff/Tenant in O.S.5/78 feared
dispossession from the demised premises because of what they
considered to be an illegal transfer; but since all the Defendants
had averred in their Written Statement that they had no intention of
doing so, the suit ought not to have been dismissed but ought to
have been decreed without more ado solely so far as the prayer of
injunction was concerned. But, in the Trial Court the title to the
leased land had become the fulcrum of the fight, owing to the
pleadings of the Tenant in which it had repeatedly and steadfastly
challenged the title of the Trust as well as the Transferees. The
Tenant should not be permitted to approbate and reprobate, as per
its whim or convenience, by disowning or abandoning a controversy
it has sought to have adjudicated.”
65.Proposition of law as culled out by the Hon’ble Supreme Court
in the above noted decisions draws irresistible conclusion that a party
cannot approbate and reprobate at the same time as once it becomes
beneficiaries of certain documents/instruments then the said party
cannot elect to honor the commitments of certain parts which are
beneficial to it and wriggle out of those conditions which puts liability
upon it.
66.Nevertheless, Transfer Memorandum was executed on
24.12.2020 and the petitioner signed the same and in absence of the
any challenge to the same the petitioner is bound by it and it has to
comply with the contractual obligation in-toto. The Hon’ble Apex
Court in the case of R. K. Mittal and Others vs. State of U.P. and
Others reported in 2012 (2) SCC 232 in paragraph no. 53 has
observed as under:-
“53. Reverting to the case in hand, we may notice that the
lease deed executed in favour of the predecessor-in-interest
of R.K. Mittal and the other appellants had contained
specific stipulations that the lessee will obey and submit to
all directions issued, existing or thereafter to exist, as obeyed
by the lessor. The erection of the structure was also to be in
accordance with the approved plans. Clause (h) of the lease
deed specifically provides that the constructed building shall
be used only for the purpose of residential, residential-cum-
or surgical clinic and for no other purpose, that too subject
to such terms as are imposed by the lessor. The transfer deed
56
which was executed in favour of the present appellants, with
the approval of the Development Authority, also contained
similar clauses and also provided that the terms and
conditions imposed by Development Authority from time to
time shall be binding on the transferee. Clause 15 of the
transfer deed stipulated that the transferee shall put the
property to use exclusively for residential purpose and shall
not use it for any purpose other than residential. After
raising the construction on the plot in question, admittedly,
the appellants have put the property to a different use other
than residential. The property was rented out to two different
commercial undertakings, i.e., Andhra Bank and a company
by the name `Akariti Infotech'. It is not even the case of the
appellants before us that the Development Authority had
granted any specific permission to them to use the property
for any purpose other than residential.”
67.Perusal of the above noted paragraph of the judgment itself
shows that the transfer deed is an instrument which is normally
executed in case of transfer of lease land in favour of any third party
which sets out with the terms and conditions of the transfer. Applying
the said judgment this Court finds that the petitioner being a
beneficiary of a transfer is bound to honor the contractual obligation
as contained in the Transfer Memorandum.
68.Admittedly, the petitioner is seeking refunds of certain amount
which he claims to have deposited under protest for discharge the
contractual obligation. Now the question arises as to whether this
Court can in exercise of the jurisdiction under Article 226 of the
Constitution of India by virtue of judicial fiat grant relief to the
petitioner which tantamount to resiling and wriggling away from a
contractual obligation.
69.The Hon’ble Apex Court in the case of Har Shankar and Others
vs. The Dy. Excise and Taxation Commercial and Others reported in
1975 (1) SCC 737 in paragraph no. 22 observed as under:-
“The writ jurisdiction of High Courts under Article 226 of
the Constitution is not intended to facilitate avoidance of
obligations voluntarily incurred.”
57
70.In the Case of M/s Radhakrishna Agarwal and Others vs. State
of Bihar and Others reported in 1977 (3) SCC 457 in paragraph nos.
12, 13, 14 and 15 observed as under:-
“12. The Patna High Court had, very rightly divided the
types of cases 'in which breaches of alleged obligation by the
State units agents can be set up into three types. These were
stated as follows :--
"(i) Where a petitioner makes a grievance of
breach of promise on the part of the State in cases
where an assurance or promise made by the State
he has acted to his prejudice and predicament, but
the agree- ment is short of a contract within the
meaning of article 299 of the Constitution;
(ii) Where the contract entered into between the
person aggrieved and the State is in exercise of a
statutory power under certain Act or Rules framed
thereunder and the petitioner alleges a breach on
the pan of State; and
(iii) Where the contract entered into between the
State, and the person aggrieved is non-statutory
and purely contractual and the rights and liabilities
of the parties are governed by the terms of the
contract, and the petitioner complains about
breach of such contract by the State."
13. It rightly held that the cases such as Union of India v. M/
s. AngloAfghan Agencies,(1) and Century Spinning & Manu-
facturing Co. Ltd. v. Ulhasnagar Municipal Council(2); and
Robertson v. Minister of Pensions,(3) belong to the first
category where it could be held that public bodies or the
State are as much bound as private individual are to carry
out obligations incurred by them because parties seeking to
bind the authorities have altered their position to their
disadvantage or have acted to their detriment on the strength
of the representations made by these authorities. The High
Court thought that in such cases the obligation could
sometimes be appropriately enforced on a Writ Petition even
though the obligation was equitable only. We do not propose
to express an opinion here on the question whether such an
obligation could be enforced in proceedings under Article
58
226 of the Constitution now. It. is enough to observe that the
cases before us do not belong to this category.
14. The Patna High Court also distinguished cases which
belong to the second category, such as K.N. Guruswami v.
The State of Mysore;(4) ' D.F. South Kheri v. Ram Sanehi
Singh;(5) and M/s. Shree Krishna Gyanoday Sugar Ltd. v.
The State of Bihar,(6) where the breach complained of was of
a statutory obligation. It correctly pointed out that the cases
before us do not belong to this class either.
15. It then, very rightly, held that the cases now before us
should be placed in the third category where questions of
pure alleged breaches of contract are involved. It held, upon
the strength of Umakant Saran v. The State of Bihar;(7) and
Lekhrai Sathram Das v.N.M. Shah;(8) and B.K. Sinha v.
State of Bihar(9) that no writ order can issue under Article
226 of the Constitution in such cases "to compel the
authorities to remedy are a breach of contract pure and
simple".”
71.The Hon’ble Apex Court in Premji Bhai Parmar and Others vs.
Delhi Development Authority and Others reported in 1980 (2) SCC
129 in paragraph no. 8 observed as under:-
“8. Though we are not inclined to reject the petitions on this
preliminary objection as we have heard them on merits it is
undeniable that camouflage of Art. 14 cannot conceal the
real purpose motivating these petitions, namely, to get back a
part of the purchase price of flats paid by the petitioners with
wide open eyes after flats have been securely obtained and
petition to this Court under Art. 32 is not a proper remedy
nor is this Court a proper forum for re-opening the
concluded contracts with a view to getting back a part of the
purchase price paid and the benefit taken. The undisputed
facts are that petitioners offered themselves for registration
for allotment of flats that may be constructed by the,
Authority for MIG scheme. After the registration and when
the flats were constructed and ready for occupation
brochures were issued by the Authority. One such brochure
for ', allotment of MIG flats in Lawrence Road residential
scheme is Annexure R-1. This brochure specifies the terms
and conditions including price on which flat will be offered.
It also reserved the right to surrender or cancel the
59
registration, the mode and method of paying the price and
handing over the possession. There is an application form
annexed to the brochure. Annexure 'A' to the brochure sets
out the price of flat on the ground floor, first floor and
second floor respectively. It sets out the premium amount
payable for land as also the total cost in respect of the flats
on the ground floor, first floor and second floor. The
statement also shows the earnest money deposited at the time
of the registration and the balance payable. It is on the basis
of these brochures that the applicants applied for the flats in
Lawrence Road and other MIG schemes. They knew and are
presumed to know the contents of the brochure and
particularly the price payable. They offered to purchase the
flats at the price on which the Authority offered to sell the
same. After the lots were drawn and they were lucky enough
to be found eligible for allotment of flats, each one of them
paid the price set out in the brochure and took possession of
the flat, and thus sale became complete. There is no
suggestion that there was a mis-statement or incorrect
statement or any fraudulent concealment in the information
supplied in the brochure published by the Authority on the
strength of which they applied and obtained flats. How the
seller works out his price is a matter of his own choice unless
it is subject to statutory control. Price of property is in the
realm of contract between a seller and buyer. There is no
obligation on the purchaser to purchase the flat at the price
offered. Even afar registration the registered applicants may
opt for other schemes. His light to enter into-other scheme
opting out of present offer is not thereby jeopardised or
negatived and applicants so outnumbered the available flats
that lots had to be drawn. With this background the
petitioners now contend that the Authority has collected
surcharge as component of price which the Authority was not
authorised or entitled to collect. Even if there may be any
merit in this contention, though there is none, such a relief of
refund cannot be the subject-matter of a petition under Art.
32. And Art. 14 cannot camouflage the real bone of
contention. Conceding for this submission that the Authority
has the trappings of a State or would be comprehended in
'other authority' for the purpose of Art. 12, while determining
price of flats constructed by it, it acts purely in its executive
capacity and "is bound by the obligations which dealings of
the State with the individual citizens import into every
60
transacting entered into the exercise of its constitutional
powers But after the State or its agents have entered into the
field of ordinary contract, the relations are no longer
governed by the Constitutional provisions but by the legally
valid contract which determines rights and obligations of the
parties inter se. No question arises of violation of Art. 14 or
of any other constitutional provision when the State or its
agents, purporting to act within this field, perform any act. In
this sphere, they can only claim rights conferred upon them
by contract and are bound by the. terms of the contract only
unless some statute steps in and confers some special
statutory power or obligation on the State in the contractual
field which is apart from contract" (see Radhakrishna
Agarwal & Ors. v. State of Bihar & Ors.) Petitioners were
under no obligation to seek allotment of flats even after they
had registered themselves. They looked at the price and flats
and applied for the flats. This they did voluntarily. hey were
advised by the brochures to look at the flats before going in
for the same. They were lucky enough to get allotment when
the lots were drawn. Each one of them was allotted a flat and
he paid the price voluntarily. They are now trying to wriggle
out by an invidious method so as to get back a part of the
purchase price not offering to return the benefit under the
contract, namely, surrender of flat. I The Authority in its
affidavit in reply in terms stated that it is. willing to take back
the fiats and to repay them the full price. The transaction is
complete, viz., possession of the flat is taken and price is
paid. At a later stage when they are secure in possession with
title, petitioners are trying to get back a part of the purchase
price and thus trying to re-open and wriggle out of a
concluded contract only partially. In a similar and identical
situation a Constitution Bench of this Court in Har Shankar
& ors. etc. etc. v. The Dy. Excise & Taxation Commr. & ors.
has observed that those who contract with open eyes must
accept the burdens of the contract along with its benefits.
Reciprocal rights and obligations arising out of contract do
not depend for their enforceability upon whether a
contracting party finds it prudent to abide by the terms of the
contract. By such a test no contract would ever have a
binding force. The jurisdiction of this Court under Art. 32 of
the Constitution is not intended to facilitate avoidance of
obligations voluntarily incurred. It would thus appear that
petitions ought not to have been entertained. However, as the
61
petitions were heard on merits, the contentions canvassed on
behalf of the petitioners may as well be examined.”
72.In the case of Divisional Forest Officer vs. Bishwanath Tea Co.
Ltd. reported in 1981 (3) SCC 238 the Hon’ble Apex Court in
paragraph nos. 8 and 9 has observed as under:-
“8. It is undoubtedly true that High Court can entertain in its
extraordinary jurisdiction a petition to issue any of the
prerogative writs for any other purpose. But such writ can be
issued where there is executive action unsupported by law or
even in respect of a Corporation where there is a denial of
equality before law or equal protection of law. The
Corporation can also file a writ petition for enforcement of a
right under a statute. As pointed out earlier, the respondent
(Company) was merely trying to enforce a contractual
obligation. To clear the ground let it be stated that obligation
to pay royalty for timber cut and felled and removed is
prescribed by the relevant regulations. The validity of
regulations is not challenged. Therefore, the demand for
royalty is unsupported by law. What the respondent claims is
an exception that in view of a certain term in the indenture of
lease, to wit, Clause 2, the appellant is not entitled to
demand and collect royalty from the respondent. This is
nothing but enforcement of a term of a contract of lease.
Hence, the question whether such contractual obligation can
be enforced by the High Court in its writ jurisdiction.
9. Ordinarily, where a breach of contract is complained of, a
party complaining of such breach may sue for specific
performance of the contract, if contract is capable of being
specifically performed, or the party may sue for damages.
Such a suit would ordinarily be cognizable by the Civil
Court. The High Court in its extraordinary jurisdiction
would not entertain a petition either for specific performance
of contract or for recovering damages. A right to relief
flowing from a contract has to be claimed in a civil court
where a suit for specific performance of contract or for
damages could be filed. This is so well settled that no
authority is needed. However, we may refer to a recent
decision bearing on the subject. In Har Shankar and Ors. etc.
etc. v. The Deputy Excise and Taxation Commissioner and
Ors., the petitioners offered their bids in the auctions held for
granting licences for the sale of liquor. Subsequently, the
62
petitioners moved to invalidate the auctions challenging the
power of the Financial Commissioner to grant liquor licence.
Rejecting this contention, Chandrachud J., as he than was
speaking for the Constitution Bench at page 263 observed as
under:
"Those who contract with open eyes must accept
the burdens of the contract along with its
benefits. The powers of the Financial
Commissioner to grant liquor licences by
auction and to collect licence fees through the
medium of auctions cannot by writ petitions be
questioned by those who, had their venture
succeeded, would have relied upon those very
powers to found a legal claim. Reciprocal rights
and obligations arising out of contract do not
depend for their enforceability upon whether a
contracting party finds it prudent to abide by the
terms of the contract. By such a test no contract
could ever have a binding force."
Again at page 265 there is a pertinent
observation which may be extracted.
Analysing the situation here, a concluded
contract must be held to have come into
existence between the parties. The appellants
have displayed ingenuity in their search for
invalidating circumstances but a writ petition is
not an appropriate remedy for impeaching
contractual obligations."
This apart, it also appears that in a later decision, the Assam
High Court itself took an exactly opposite view in almost
identical circumstances. In Woodcrafts Assam v. Chief
Conservator of Forests, Assam, a writ petition was filed
challenging the revision of rates of royalty for two different
periods. Rejecting this petition as not maintainable, a
Division Bench of the High Court held that the complaint of
the petitioner is that there is violation of his rights under the
contract and that such violation of contractual obligation
cannot be remedied by a writ petition. That exactly is the
position in the case before us. Therefore, the High Court was
in error in entertaining the writ petition and it should have
been dismissed at the threshold.”
63
73.In the case of Barielly Development Authority and Another vs.
Ajay Pal Singh and Others reported in 1989 (2) SCC 116 the Hon’ble
Apex Court in paragraph nos. 20, 21 and 22 observed as under:-
“20. Thus the factual position in this case clearly and
unambiguously reveals that the respondents after voluntarily
accepting the conditions imposed by the BDA have entered
into the realm of concluded contract pure and simple with
the BDA and hence the respondents can only claim the right
conferred upon them by the said contract and are bound by
the terms of the contract unless some statute steps in and
confers some special statutory obligations on the part of the
BDA in the contractual field. In the case before us, the
contract between the respondents and the BDA does not con-
tain any statutory terms and/or conditions. When the factual
position is so, the High Court placing reliance on the
decision in Ramana Dayaram Shetty case (AIR 1979 SC
1628) has erroneously held:
"It has not been disputed that the contesting
opposite party is included within the term 'other
authority' mentioned under Article 12 of the
Constitution. Therefore, the contesting opposite
parties cannot be permitted to act arbitrarily with
the principle which meets the test of reason and
relevance. Where an author- ity appears acting
unreasonably this Court is not powerless and a
writ of mandamus can be issued for performing its
duty free from arbitrariness or unreasonableness."
21. This finding, in our view, is not correct in the light of the
facts and circumstances of this case because in Ramana
Dayaram Shetty case there was no concluded contract as in
this case. Even conceding that the BDA has the trap- pings of
a State or would be comprehended in 'other authori- ty' for
the purpose of Article 12 of the Constitution, while
determining price of the houses/flats constructed by it and
the rate of monthly instalments to be paid, the 'authority' or
its agent after entering into the field of ordinary contract acts
purely in its executive capacity. Thereafter the relations are
no longer governed by the constitutional provisions but by
the legally valid contract which determines the rights and
obligations of the parties inter-se. In this sphere, they can
only claim rights conferred upon them by the contract in the
64
absence of any statutory obligations on the part of the
authority (i.e. B.D.A. in this case) in the said contractual
field.
22. There is a line of decisions where the contract entered
into between the State and the persons aggrieved is non-
statutory and purely contractual and the rights are governed
only by the terms of the contract, no writ or order can be
issued under Article 226 of the Constitution of India so as to
compel the authorities to remedy a breach of contract pure
and simple Radhakrishna Agarwal & Ors. v. State of Bihar
& Ors., [1977] 3 SCR 249; Premji Bhai Parmar & Ors. etc.
v. Delhi Development Authority & Ors, [1980] 2 SCR 704
and D.F.O. v. Biswanath Tea Company Ltd., [1981] 3 SCR
662.”
74.In Noida Entrepreneur Association vs. U.P. Financial
Corporation and Another reported in 1994 Supp (2) SCC 108 the
Hon’ble Apex Court in paragraph nos. 2, 3 and 4 has observed as
under:-
“2. The Association filed a writ petition before the Allahabad
High Court seeking a direction to the Corporation to adhere
to the guidelines laid down by the IDBI in respect of interest
and the penal interest. The High Court dismissed the writ
petition. This appeal by the Association is against the
judgment of the High Court.
3. According to the Association the Corporation is charging
from them the interest at higher rate than the ceiling
provided under the guidelines issued by the IDBI. It is further
alleged that the penal interest in the event of default in
repayment, provided in the agreement was also over and
above the norms laid down by the IDBI.
4. WE have heard learned counsel for the appellant. He has
taken us through the judgment of the High Court and the
other material on record. The High Court declined to
exercise its jurisdiction under Article 226 of the Constitution
of lndia on the short ground that the appellant-petitioner was
disputing the contractual obligations entered into by the
parties under the ordinary law of contract. While dismissing
the writ petition the High Court observed as under:
"We feel on the facts and circumstances of this case
that since only the petitioner has come before us,
65
the proper remedy for the petitioner even otherwise
is to go to the civil court and get the matter
adjudicated in the suit. This is, nowever, without
prejudice to the right of the petitioner to approach
the IDBI by means of representation if they really
have power to take action they can take necessary
action if it is so desirable under that power against
respondent 1."
75.In the Case of Improvement Trust Ropar Through Its Chairman
vs. Tejinder Singh Gujral And Others reported in 1995 Supp (4) SCC
577 the Hon’ble Apex Court in paragraph no. 3 has observed as
under:-
“3. No writ petition can lie for recovery of an amount under
a contract The High Court was clearly wrong in entertaining
and allowing the petition There is no separate law for the
advocates”
76.Yet in the case of State of Orissa vs. Narain Prasad and Others
reported in AIR 1997 S.C. 1493 the Hon’ble Apex Court in paragraph
no. 35 observed as under:-
“35. Lastly we may also invoke the holding in Har Shankar
and Jageram that the writ petitioners, having entered into
agreements voluntarily,containing the conditions aforesaid
and having done the business under the licences obtained by
them, cannot be allowed to either wriggle out of the
agreements nor can they be allowed to challenge the validity
of the Rules which constitute the terms of the contract. The
High Court should not have exercised its extra-ordinary
discretionary jurisdiction under Article 226 of the
Constitution in aid of such licencees.”
77.Orissa State Financial Corporation vs. Narsingh Ch. Nayak
And Others reported in 2003 (10) SCC 261 the Hon’ble Apex Court
in paragraph no. 6 has observed as under:-
“6. The said order is under challenge in this appeal. On a
plain reading of the impugned order it is manifest that the
High Court, while considering the writ petition filed by the
owner of the vehicle for quashing of the notice of auction
sale and for other consequential reliefs, has passed order
drawing up a fresh contract between the parties and has
issued certain further directions in the matter; the
corporation has been directed to advance a fresh loan to the
66
writ petitioner to enable him to purchase a new truck; to
enter into agreement for realization of the balance loan
amount in accordance with law; to write off the remaining
amount of Rs. 16,500/-and to order waiving of the interest till
date etc. The order to say the least, was beyond the scope of
the writ petition which was being considered by the High
Court and beyond the jurisdiction of the court in a
contractual matter. No doubt, while exercising its
extraordinary jurisdiction under Article 226 of the
Constitution, the High Court has wide power to pass
appropriate order and issue proper direction as necessary in
the facts and circumstances of the case and in the interest of
justice. But that is not to say that the High Court can ignore
the scope of the writ petition and nature of the dispute and
enter the field pertaining to contractual obligations between
the parties and issue such directions annulling the existing
contract and introducing a fresh contract in its place.”
78.Yet in the case of Rajasthan State Industrial Development (supra)
the Hon’ble Apex Court in paragraph nos. 19, 20, 21, 22, 23, 24 has
observed as under:-
“19. There can be no dispute to the settled legal proposition
that matters/disputes relating to contract cannot be agitated
nor terms of the contract can be enforced through writ
jurisdiction under Article 226 of the Constitution. Thus, writ
court cannot be a forum to seek any relief based on terms
and conditions incorporated in the agreement by the parties.
(Vide: Bareilly Development Authority & Anr. v. Ajay Pal
Singh & Ors., AIR 1989 SC 1076; and State of U.P. & Ors. v.
Bridge & Roof Co. (India) Ltd., AIR 1996 SC 3515).
20. In Kerala State Electricity Board & Anr. v. Kurien E.
Kalathil & Ors., AIR 2000 SC 2573, this Court held that a
writ cannot lie to resolve a disputed question of fact,
particularly to interpret the disputed terms of a contract
observing as under: (SCC pp. 298-99, paras 10-11)
“10…..The interpretation and implementation
of a clause in a contract cannot be the subject-
matter of a writ petition. ….If a term of a
contract is violated, ordinarily the remedy is
not the writ petition under Article 226. We are
also unable to agree with the observations of
67
the High Court that the contractor was seeking
enforcement of a statutory contract…..
11…….The contract between the parties is in
the realm of private law. It is not a statutory
contract. The disputes relating to interpretation
of the terms and conditions of such a contract
could not have been agitated in a petition
under Article 226 of the Constitution of India.
That is a matter for adjudication by a civil
court or in arbitration if provided for in the
contract…. The contractor should have
relegated to other remedies.”
21. It is evident from the above, that generally the court
should not exercise its writ jurisdiction to enforce the
contractual obligation. The primary purpose of a writ of
mandamus, is to protect and establish rights and to impose a
corresponding imperative duty existing in law. It is designed
to promote justice (ex debito justiceiae). The grant or refusal
of the writ is at the discretion of the court. The writ cannot be
granted unless it is established that there is an existing legal
right of the applicant, or an existing duty of the respondent.
Thus, the writ does not lie to create or to establish a legal
right, but to enforce one that is already established. While
dealing with a writ petition, the court must exercise
discretion, taking into consideration a wide variety of
circumstances, inter-alia, the facts of the case, the exigency
that warrants such exercise of discretion, the consequences
of grant or refusal of the writ, and the nature and extent of
injury that is likely to ensue by such grant or refusal.
22. Hence, discretion must be exercised by the court on
grounds of public policy, public interest and public good.
The writ is equitable in nature and thus, its issuance is
governed by equitable principles. Refusal of relief must be
for reasons which would lead to injustice. The prime
consideration for the issuance of the said writ is, whether or
not substantial justice will be promoted. Furthermore, while
granting such a writ, the court must make every effort to
ensure from the averments of the writ petition, whether there
exist proper pleadings. In order to maintain the writ of
mandamus, the first and foremost requirement is that the
petition must not be frivolous, and must be filed in good faith.
68
Additionally, the applicant must make a demand which is
clear, plain and unambiguous. It must be made to an officer
having the requisite authority to perform the act demanded.
Furthermore, the authority against whom mandamus is
issued, should have rejected the demand earlier. Therefore, a
demand and its subsequent refusal, either by words, or by
conduct, are necessary to satisfy the court that the opposite
party is determined to ignore the demand of the applicant
with respect to the enforcement of his legal right. However, a
demand may not be necessary when the same is manifest
from the facts of the case, that is, when it is an empty
formality, or when it is obvious that the opposite party would
not consider the demand.
IV. Interpretation of terms of contract
23. A party cannot claim anything more than what is covered
by the terms of contract, for the reason that contract is a
transaction between the two parties and has been entered
into with open eyes and understanding the nature of contract.
Thus, contract being a creature of an agreement between two
or more parties, has to be interpreted giving literal meanings
unless, there is some ambiguity therein. The contract is to be
interpreted giving the actual meaning to the words contained
in the contract and it is not permissible for the court to make
a new contract, however is reasonable, if the parties have not
made it themselves. It is to be interpreted in such a way that
its terms may not be varied. The contract has to be
interpreted without giving any outside aid. The terms of the
contract have to be construed strictly without altering the
nature of the contract, as it may affect the interest of either of
the parties adversely. (Vide: United India Insurance Co. Ltd.
v. Harchand Rai Chandan Lal, AIR 2004 SC 4794; Polymat
India P. Ltd. & Anr. v. National Insurance Co. Ltd. & Ors.,
AIR 2005 SC 286).
24. In DLF Universal Ltd. & Anr. v. Director, T. and C.
Planning Department Haryana & Ors., AIR 2011 SC 1463,
this court held:
“It is a settled principle in law that a contract
is interpreted according to its purpose. The
purpose of a contract is the interests,
objectives, values, policy that the contract is
designed to actualise. ?It comprises joint intent
69
of the parties. Every such contract expresses
the autonomy of the contractual parties’
private will. It creates reasonable, legally
protected expectations between the parties and
reliance on its results. Consistent with the
character of purposive interpretation, the court
is required to determine the ultimate purpose of
a contract primarily by the joint intent of the
parties at the time the contract so formed. It is
not the intent of a single party; it is the joint
intent of both parties and the joint intent of the
parties is to be discovered from the entirety of
the contract and the circumstances
surrounding its formation. As is stated in
Anson's Law of Contract, "a basic principle of
the Common Law of Contract is that the parties
are free to determine for themselves what
primary obligations they will accept...Today,
the position is seen in a different light.
Freedom of contract is generally regarded as a
reasonable, social, ideal only to the extent that
equality of bargaining power between the
contracting parties can be assumed and no
injury is done to the interests of the community
at large."
The Court assumes "that the parties to the
contract are reasonable persons who seek to
achieve reasonable results, fairness and
efficiency...In a contract between the joint
intent of the parties and the intent of the
reasonable person, joint intent trumps, and the
Judge should interpret the contract
accordingly.”
79.Applying the said judgments in the present case this Court
finds that the petitioner is seeking a judicial intervention for resiling
and wriggling from contractual obligations which are not within the
realm of the present proceedings.
80.Another issue which needs to be taken note of is the fact as to
whether a writ petition under Article 226 of the Constitution would lie
seeking mandamus for only refund of money when the same is
70
disputed. The said issue is no more res integra as in the case of
Suganmal Vs. State of Madhya Pradesh reported in AIR 1965
Supreme Court page 1740 wherein the Hon’ble Apex Court observed
as under:-
“6. On the first point, we are of opinion that though the High
Court have power to pass any appropriate order in the
exercise of the powers conferred under article 226 of the
Constitution, such a petition solely praying for the issue of a
writ of mandamus directing the State to refund the money is
not ordinarily maintainable for the simple reason that a
claim for such a refund can always be made in a suit against
the authority which had illegally collected the money as a
tax. We have been referred to cases in which orders had been
issued directing the state to refund taxes illegally collected,
but all such had been those in which the petitions challenged
the validity of the assessment and for consequential relief for
the return of the tax illgally collected. We have not been
referred to any case in which the courts were moved by a
petition under article 226 simply for the purpose of obtaining
refund of money due from the State on account of its having
made illegal exactions. We do not consider it proper to
extend the principle justifying the consequential order
directing the refund of amounts illegally realised, when the
order under which the amounts had been collected has been
set aside, to cases in which only orders for the refund of
money are sought. The parties had the right to question the
illegal assessment orders on the ground of their illegality or
unconstitutionality and, therefore, could take action under
Art. 226 for the protection of their fundamental right and the
Courts, on setting aside the assessment orders exercised their
jurisdiction in proper circumstances to order the
consequential relief for the refund of the tax illegally
realised. We do not find any good reason to extend this
principle and, therefore, hold that no petition for the issue of
a writ of mandamus will be normally entertained for the
purpose of merely ordering a refund of money to the return
of which the petitioner claims a right. ”
81.The judgment in the case of Suganmal (supra) was followed in
the case of Salonah Tea Company Ltd. And Others vs. Superintendent
of Taxes Nowgong And Others reported in 1988 (1) SCC 401
71
wherein in paragraph no. 6 and 7 the Hon’ble Apex Court has
observed as under:-
“6. In this case indisputably it appears that tax was collected
without the authority of law. Indeed the appellant had to pay
the tax in view of the notices which were without jurisdiction.
It appears that the assessment was made under section 9(3)
of the Act. Therefore, it was with out jurisdiction. In the
premises it is manifest that the respondents had no authority
to retain the money collected without the authority of law
and as such the money was liable to refund. The only
question that falls for consideration here is whether in an
application under Article 226 of the Constitution the Court
should have directed refund. It is the case of the appellant
that it was after the judgment in the case of Loong Soong Tea
Estate the cause of action arose. That judgment was passed
in July 1973. It appears thus that the High Court was in
error in coming to the conclusion that it was possible for the
appellant to know about the legality of the tax sought to be
imposed as early as 1963, when the Act in question was
declared ultra vires as mentioned hereinbefore. Thereafter
the taxes were paid in 1968. Therefore the claim in
November, 1973 was belated. We are unable to agree with
this conclusion. As mentioned hereinbefore the question that
arises in this case is whether the Court should direct refund
of the amount in question. Courts have made a distinction
between those cases where a claimant approaches a High
Court seeking relief of obtaining refund only and those where
refund is sought as a consequential relief after striking down
of the order of assessment etc. Normally speaking in a
society governed by rule of law taxes should be paid by
citizens as soon as they are due in accordance with law.
Equally, as a corollary of the said statement of law it follows
that taxes collected without the authority of law as in this
case from a citizen should be refunded because no State has
the right to receive or to retain taxes or monies realised from
citizens without the authority of law.
7. In Suganmal v. State of Madhya Pradesh and others, AIR
1965 SC 1740, this Court held that the High Courts have
power to pass any appropriate order in the exercise of the
powers conferred on them under Article 226 of the
Constitution. A petition solely praying for the issue of a writ
of mandamus directing the State to refund the money alleged
72
to have been illegally collected by the State as tax was not
ordinarily maintainable for the simple reason that a claim
for such refund can always be made in a suit against the
authority which had illegally collected the money as a tax
and in such a suit it was open to the State to raise all
possible defences to the claim, defences which cannot in most
cases,, be appropriately raised and considered in the
exercise of writ jurisdiction. It appears that Section 23 of the
Act deals with refund. In the facts of this case, the case did
not come within section 23 of the Act. But in the instant
appeal, it is clear as the High Court found in our opinion
rightly that the claim for refund was a consequential relief.”
82.In the case in hand the Court finds that only a solitary relief has
been sought in the nature of mandamus directing the GNIDA to
refund the amount so deposited by the petitioner along with 18% per
annum. The judgment in the case of Suganmal and Salonah Tea
Company Ltd. (supra) are squarely applicable in the facts of the
present case particularly when refund is being sought on the basis of
certain deposits so made by the petitioner for discharging the
contractual obligation. This Court is of the firm opinion that the
present writ petition so instituted, seeking the solitary relief of
mandamus without assailing any order, is not maintainable.
83.Learned Senior Counsel for the petitioner has lastly argued that
the amount in dispute was deposited under protest and thus, the
GNIDA is under legal obligation to refund the same. Sri Ramendra
Pratap Singh, who appears for GNIDA has argued that for discharge
of the contractual obligations the petitioner has deposited the said
amount and the same cannot be refunded. The Court notices the fact
that there is a marked difference between the deposit of amount under
protest and protest against the very instruments which occasioned
deposit of the said amount. In the present case in hand, the entire
pleadings centers around the deposit of amount under protest but there
has been no attempt made by the petitioner to raise protest or
challenge the Transfer Memorandum dated 24.12.2020, which
became instrumental in deposit of the lease rentals and interest
thereon. Hence, in the firm opinion of the Court, the interpretation so
sought to be suggested by the petitioner that since the amount was
deposited under protest, the petitioner is entitled to refund of the same
is out of context besides being misconceived and misplaced.
73
84.Meticulously, analyzing the facts of the case in hand from the
four corners of law this Court cannot subscribe to the argument of the
learned Senior Counsel who appears for the petitioner as the
controversy sought to raked up by the petitioner devolves around
factual issues relating to the contractual obligation so embodied in the
underline instruments be that the lease deed so executed from time to
time or the Transfer Memorandum so executed between the parties.
More so, the sale certificate itself has been issued after noticing the
fact that the petitioner transferee (auction purchaser) is bound by the
covenants contained in the lease deed as well as the Transfer
Memorandum. Writ jurisdiction cannot be expanded in an elastic
manner so as to stretch it to such a position which tantamounts to
giving its judicial seal while delving into the factual issue as to
whether pressure/coercion so adopted was practiced upon the
petitioner. Nonetheless, to put the nail in the coffin the above noted
instruments being sale deed certificate, Transfer Memorandum had
not been put to challenge before any Court of law. More so, the
conduct of the petitioner itself explicitly makes it clear that the
petitioner has approbated and reprobated at the same time just in
order to get the benefits and to wriggle out from obligations.
85.An impleadment application for impleading M/s Moser Baer
India Private Limited Company in Liquadation for making it as fourth
respondent, is not required to be allowed in view of the
judgment/order so passed today.
SUMMATION
86.In summation of the discussion made herein above, we hold: -
(a). Merely because the petitioner is a bonafide auction purchaser who
had purchased assets Corporate Debtor through auction/bidding so
conducted by orders of NCLT, will not absolve it from paying arrears
of lease rental and interest thereon.
(b). The Insolvency Bankruptcy Code- 2016 grants limited protection
to the petitioner (auction purchaser) while allowing it to step into the
shoes of the Corporate Debtor but in order to the lessee of the
principle lessor (GNIDA) the petitioner has to honor the
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commitments and discharge its contractual obligation as embodied in
the lease deeds, Transfer Memorandum and Sale Certificate.
(c). The conduct of the petitioner also dis-entitles it to be granted
relief under the equitable jurisdiction as the petitioner has approbated
and reprobated at the same time as on one hand it seeks to become a
lessee while being put in possession for enjoying the immovable
assets of Corporate Debtor but on the other hand it wriggles and
resiles from the contractual obligation.
(d). The words so employed in the Certificate of Sale Deed dated
11.09.2019 being “AS IS WHERE IS”, ”AS IS WHAT IS”,
“WHATEVER THERE IS” AND “NO RECOURSE” read with the
Transfer Memorandum dated 24.12.2020 so executed between the
petitioner (auction purchaser) and GNIDA as well as the Sale
Certificate dated 30.07.2021 itself creates contractual obligation upon
the petitioner to honor the commitments and to discharge the
obligations so embodied in the lease deed dated 26.06.2021 and the
subsequent lease deeds for the payment of past lease rentals and
interest thereon.
(e). GNIDA being the principal lessor has paramount interest over the
demised land put to auction and it has legal as well as contractual
right to raise demand of out standing arrears of lease rentals and
interest thereon.
(f). High Court under Article 226 of the Constitution of India cannot
by a judicial fiat creates a podium to facilitate avoidance of
agreements while wriggling out from contractual obligations so
embodied therein.
(g). A writ petition containing solitary relief of refund of the amount
deposited for fulfilling contractual obligation, is not maintainable.
(h). Even otherwise, in absence of any challenge being made to the
covenants of the Transfer Memorandum dated 24.12.2020 and the
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Sale Certificate dated 30.07.2021, the petitioner is not entitled to
refund of the amount so deposited by him claiming it to be under
protest.
CONCLUSION
87.In view of the forgoing discussions, the writ petition is devoid
of merit and thus, liable to be dismissed. It is, therefore, dismissed.
88.All pending applications stands disposed of.
89.Interim order, if any, stands vacated.
90.No order as to costs.
Order Date:- 27.05.2022
Nisha
Legal Notes
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