Research › Search › Judgment

Himachal Pradesh High Court · body

2002 DIGILAW 223 (HP)

ASHOK MADAN v. STATE OF H. P.

2002-08-12

S.S.NEGI

body2002
ORDER S.S. Negi, IAS, FC. - This revision petition preferred by Sh. Ashok Madan, petitioner, is directed against the order dated 24.6.1996 in Revenue Appeal No. 223/95 passed by the Commissioner Shimla Division whereby the appeal filed by the present petitioner against the order of Distt. Collector Shimla dated 21.12.1995 was dismissed. 2. The facts of the case in brief are that the Assistant Collector 1st Grade Shimla (Rural), reported on 8.7.1994 to the Distt. Collector Shimla that the present petitioner Sh. Ashok Madan had acquired 0-14 Biswas of land comprising Khasra No. 2429/2148/302 situated in Mauza Patti Rihana Tehsil Shimla from one Sh. Tara Chand, the present respondent No. 2 through the General Power of Attorney dated 27.7.1992, collaboration agreement dated 29.6.1992 and partnership deed dated 1.4.1993 and sale deed dated 21.12.1993, and had constructed 8 stored building in the name of Firm called M/s. A.K. t Madan Enterprises on the land illegally in violation of Section 118(1) of I H.P. Tenancy and Land Reforms Act, 1972, as the said Firm was not I agriculturist, within the State of H.P. 3. The learned District Collector Shimla after proceeding in the matter, hearing the parties and examination of record held that the present petitioner Shri Ashok Madan had acquired the land in violation of the provisions of Section 118(1) of the Tenancy and Land Reforms Act, 1972, and accordingly ordered vestment of the land in the State of H.P. free from all encumbrances together with structures building or other attachments if any, vide order dated 21.11.1995. 4. Against this order of the District Collector Shimla dated 21.11.1995, the present petitioner filed an appeal before the Commissioner Shimla Division on the grounds that the order of the District Collector Shimla was a premature and without jurisdiction because of the fact that the matter was under inquiry with the! Commission on Environment Protection and Benami Transaction. 4. Against this order of the District Collector Shimla dated 21.11.1995, the present petitioner filed an appeal before the Commissioner Shimla Division on the grounds that the order of the District Collector Shimla was a premature and without jurisdiction because of the fact that the matter was under inquiry with the! Commission on Environment Protection and Benami Transaction. It was also pointed out that venders of 24 flats in the building were necessary parties, and had not been implead as parties in the case and that the repot of the Tehsildar which was not based on facts should not have been accepted and that the present petitioner had only made the partnership deed and collaboration agreement to carry out the construction as a contractor and builder, which did not warrant an inference that the sale of land to non-agriculturist in violation of Section 118 of the Act had taken place. 5. The learned Commissioner Shimla Division after hearing both the parties and going through the case records dismissed the appeal vide order dated 24.6.1996, and upheld the orders of the District Collector Shimla. Hence the present revision petition. 6. The records were summoned and the parties were afforded sufficient opportunity to address their arguments in this Court. 7. The learned Counsel for petitioner and respondent No. 2 contended that the impugned orders are against law and facts as the various purchasers of the apartments built on the land in question have not been associated with the proceedings and thus they have been condemned unheard. 8. The learned District Attorney (Revenue) argued that this contention of the petitioners lacks any force as the transactions that have taken place subsequently will not affect the merit of the original transaction which is vitiated as being violative of Section 118 of the Act. 9. The plea of the petitioner to implead the purchasers of the flats as party to these proceedings appears to have been taken only to prolong the proceedings. The petitioner cannot object the proceedings by espousing the cause of a third party. The transfer of apartment to third parties by petitioner or respondent No. 2 is a subsequent transaction which has no bearing on the validity of the first transaction impugned in these proceedings and the purchasers are either indemnified by implied contract and caveat emptor. Therefore, the plea of the petitioner is without merit. 10. The transfer of apartment to third parties by petitioner or respondent No. 2 is a subsequent transaction which has no bearing on the validity of the first transaction impugned in these proceedings and the purchasers are either indemnified by implied contract and caveat emptor. Therefore, the plea of the petitioner is without merit. 10. Another point, pressed by the learned Counsel for petitioner impinges upon the crux of controversy. According to learned Counsel, there is no transfer of land in the name of the petitioner and respondent No. 2 remains the owner of land, de facto and de jure. The petitioner is a developer, builder and contractor, who in terms of collaboration agreement and partnership deed carried out constructions and got his remuneration in proportion to his share in the firm. The petitioner does not have any concern with the remaining property in his individual capacity. It was also averred that the contribution of respondent No. 2 in the partnership firm was in the form of land whereas the petitioners contribution was in terms of technical expertise and necessary funding of the enterprise. It was accordingly submitted that there was no transfer of land to the petitioner or to the firm and the floor purchased by the petitioner was only a slab for which he was entitled to purchase as the same is not land within the meaning of the Act. The learned Counsel urged that in view of this position, the proceedings need to be dropped and the impugned orders be set aside. 11. The learned Distt. Attorney (Rev.) urged that the transaction in, question has taken place within the meaning of Section 118 of the Act as non-agriculturist has been put in possession of the land who has built apartments on the land and has sold to various parties for profit and transferred some of the apartment/built up portion in the name of the petitioner and his wife who also happen to be one of the major partners and beneficiaries in the firm. The learned Distt. Attorney relied on various documents that have been executed in order to circumvent the law and be specifically pointed towards collaboration agreement, the general power of Attorney and partnership deed executed between the parties that have all the ingredients of a Benami transaction. The learned Distt. Attorney relied on various documents that have been executed in order to circumvent the law and be specifically pointed towards collaboration agreement, the general power of Attorney and partnership deed executed between the parties that have all the ingredients of a Benami transaction. He submitted that there is a provision in the agreement for entire funding of the project by the petitioner alone and that the respondent No. 2 Tara Chand shall not change the ownership of land and shall not object to any sale etc. and the petitioner shall execute sale deeds etc., or may even appoint another person to execute any such acts as he himself was empowered. The learned Attorney accordingly submitted that since the share of petitioner in the so-called construction company was 80%, therefore the entire enterprise was the creatures of the petitioner and he was the real owner and violation of Section 18 of the Act had taken place. 12. Before appreciating the arguments advanced on behalf of both the sides, it will be profitable to take note of some of the provisions made in various documents executed between the parties. 13. The Collaboration Agreement dated 29.6.1992 executed between Tara Chand and M/s. A.K. Madan Enterprises contain inter alia the following. 14. The A.K. Enterprises agree to carry out construction of flats/building on the land by investing its money. (a).in para I it is stated that "the plan of the proposed building shall be prepared by an architect to be appointed by the Developers and the Developers shall be responsible for development and construction of any structure or building on the said land. (b) In para 4 it is stated that 80% of the net profits earned after sale of the flats will be paid to Developer as remuneration and only.20% of the profits shall go to said Shri Tara Chand. (c) In para 7 it is stated that ownership with respect to the land shall remain in the name of the owner First Party. However, the owner First Party shall execute all documents of conveyance, transfer, sale, lease agreement,” declaration etc., in respect of the building or the flats to be seld to the prospective buyers in favour of such prospective buyers who are eligible to buy the same as per law without any objection whatsoever at the cost and expenses of the . Buyers on execution of such documents. Buyers on execution of such documents. The registration charges are to be paid by such prospective buyers. The owner first party shall also execute such declaration, .documents papers under any law for the time being in force as the developers may reasonably require the first party to do in terms of other prevailing conventions and practices in the market in this behalf, in favour of the buyers/customers. It is further specifically stipulated and made clear that the intention of the parties is not to transfer the land in favour of Ashok Madan v. State of H.P. & Anr.133 the developers but to enter into a collaboration agreement for the purposes of constructing building/flats and for development of the land in question. It is further clarified that the owner first party shall be bound to execute documents of transfer/lease/sale/conveyance in respect of flats/spaces in the proposed building as and when the same may be required to be executed and registered by the developer in favour.of the prospective purchaser after the completion of all aspects of the project as per terms of this agreement. The intentions of the parties hereto is to convey the ownership in the various flats/spaces to various persons who buy/or agree to buy such flats/spaces in the proposed building or in the superstructure. (d) in para 13 it is stated that with a view to allow the developers to develop the said plot of land and carry out its construction activities thereon and for the purposes of enabling the developers to effectively represent the ownership party in his absence in the Government Offices, the owners first party-hereby agree to execute and register a general power of attorney in favour of Sh. Ashok Madan Partner of the Developer Firm authorizing him to enter into agreements with prospective buyers in the absence of the owner and also to represent the owner before all concerned authorities and government offices for any purpose and in connection with the construction of proposed building/flats. 15. General Power of Attorney executed by Tara Chand on 27.7.1992 in favour of Ashok Madan empowers him to sell transfer and convey or charge all or any part of land to any person(s) and for that purpose to enter into any agreement of sale and to get the sale deeds of transfer/sale/charge registered before the sub-registrar concerned. 15. General Power of Attorney executed by Tara Chand on 27.7.1992 in favour of Ashok Madan empowers him to sell transfer and convey or charge all or any part of land to any person(s) and for that purpose to enter into any agreement of sale and to get the sale deeds of transfer/sale/charge registered before the sub-registrar concerned. To sign Sale deeds/Mortgage deeds in respect of the said land on his behalf, to present the same for registration, to admit execution thereof and issue receipts in respect of the same. The specific provisions are as under: To apply any get the income Tax clearance certificate for the sale of said property from the office of competent I.T.O. concerned and to do all acts, deeds and things which are necessary for the same. To pay house tax of the said property to M.C. Shimla. To execute a proper sale deed of the said property in favour of the said purchaser to present the same for registration in the office of Sub Registrar Shimla to receive consideration and admit the same and get the same and get the property transferred. To enter into an agreement for the sale of the said property with any person/persons. To appoint any other person or persons to do, execute or perform or cause to be done, executed or performed all or any of the acts, deeds, thing which my said attorney may do himself by virtue of this Power of Attorney. 16. Partnership Deed was executed on 1.4.1993 between Ashok Kumar Madan, Anju Kumar, Namrita Mandana and Tara Chand. Tara Chand was made a partner in M/s. A.K. Madan Enterprises for development of flats on Tara Chands land. As per the deed all funds were to be contributed by the other 3 partners (and not Tara Chand). The deed specifically states:- And Whereas the party of 4th part (Tara Chand) is desirous of developing this plot of land and for this purpose he has called upon the parties of 1st to 3rd parts to join him as partners for developing the said plot, because they have necessary expertise, financial recourses to develop the said land and make construction thereon by investing the money in the same. And Whereas the party of 1st part has also called upon the parties of 2nd to 4th parts to join him as partner in the contract business which he was previously carrying on with old partners. And whereas the parties to this deed have joined together to carry on the business of contractor ship and developer of flats on the above said land and terms and conditions of partnership have been mutually agreed and settled upon. 17. As per sale deed dated 21.12.1993, the 4th floor of the constructed building was purchased by M/s. A.K. Madan Enterprises for a consideration of Rs.1.4 lakhs. Para 7 of the deed, states that:- "That the property hereby sold is on apartment basis as such provision embodied in H.P. Apartment Ownership Act, 1978 share all to the Purchaser as well as to the other person who may purchase other portions of the said building from the seller/firm. In para 8 it is further stated that: That the Purchaser shall have a right to prenimial (sic) support from the ground and undivided interest and rights in the land underneath the said structure. 18. Perusal of salient provisions of the collaboration agreement executed between Tara Chand, Ashok Madan on 29.6.1992 are that:- (i) The petitioner developer and his construction company shall be responsible for development, construction and creating other facilities at the land at its own discretion. (ii) The entire funding of the project would be borne by the developer. (iii) Tara Chand shall have no power to raise any loan or create any charge or liability on the land and no encumbrance shall be created on the right, title of the land. (iv) Ownership of land shall not be changed by Tara Chand and the development party. The petitioner and his wife shall receive 80% of the net profit of the sales of flats and only 20% will be paid to said Tara Chand. (v) Tara Chand shall not object to any sale. (vi) The firm will determine what is to be constructed (vii) The agreement also provides that Tara Chand will execute a Power of Attorney in favour of petitioner Ashok Madan to enable him to enter into agreements for sales with prospective buyers. (v) Tara Chand shall not object to any sale. (vi) The firm will determine what is to be constructed (vii) The agreement also provides that Tara Chand will execute a Power of Attorney in favour of petitioner Ashok Madan to enable him to enter into agreements for sales with prospective buyers. (viii) The General Power of Attorney executed by Tara Chand in favour of Ashok Madan empowers him to raise any type of structures, construction on the land, get clearances for the sale of the property, pay in-come tax, execute sale deeds and even appoint another attorney to do any or all of the aforesaid acts (ix) In the partnership deed executed between the parties on 1.4.1993, Tara Chand has been made a partner to the extent of 20% in the firm without any investment, (x) The General Power of Attorney empowers the Developers, builders even to do all other necessary acts, even if they are not covered in the said Attorney. 19. Combined perusal of the entire provisions of the aforesaid Collaboration Agreement, General Power of Attorney and the Partnership Deed, bring forth the fact that the enterprise by the name and style A.K. Enterprises is the sole creation of the petitioner as the name also suggest. The entire capital investment was to be made by the partners other than Tara Chand and the petitioner and his wife was to appropriate 60% of the entire profits and 20% of the profits goes to one partner namely Anuj Kumar, who has not been party in any court, neither is he agitating the proceedings. Only 20% of the profits go to said Tara Chand. The entire capital investment and appropriation of bulk of the profits flowing from the enterprise goes to the petitioner and his wife and the absolute restrictions imposed on the landowner Tara Chand for not encumbering or creating any charge on the land and that he cannot sell the land to any one, have all the ingredients of transfer of land to a person not otherwise eligible to acquire land within the State of H.P. Other provisions of the agreement and partnership such as that the petitioner and his firm only will decide as to what is to be built and to whom to sell the structures/flats also smack of transfer of land to petitioner and Benami transaction having been taken place. The various documents executed between the parties as referred above have been executed to subterfuge the provisions of Section 118 of the Act. The transfer of part of built-up portion in the name of petitioner and his wife vide registered sale deeds by Tara Chand has been done to acquire permanent title by the petitioner and his wife as they could not have acquired land with in the State of H.P. being non-agriculturist. The argument of the petitioner that the firm could acquire land as a part of capital investment by one of the partners in the firm is without any merit as the firm is a separate legal person which cannot acquire the status of agriculturist even if some or all of the members constituting the firm are agriculturists and thus cannot acquire the land within the State of H.P. 20. The learned Counsel for the petitioner also argued that the transaction cannot be regarded as Benami as no registered deed qua the land in question has been executed in favour of the petitioner by the said Tara Chand. The argument lacks substance since no deed could have been registered in the name of the petitioner and his wife as they are non-agriculturists within the State of H.P. within the meaning of Section 118 of the Act. That is why; the petitioner adopted the mode of acquiring the land by the Collaboration Agreement, General Power of Attorney and Partnership Deed. The acts, deeds and conduct of the petitioner show that the transaction suffers from the vice of being Benami so much so that Tara Chand has in the General Power of Attorney empowered the petitioner to do all acts considered necessary even if not covered with in the said Power of Attorney. There would hardly be any straight and clear cut evidence available in a transaction like Benami transaction which has to be deduced from the facts, circumstances, acts, deeds and conduct of the parties. The conduct of the petitioner and material on record as discussed here-in-above show that the transaction is vitiated being Benami in its colour through and through and the documents purporting to be Collaboration Agreement, Power of Attorney and Partnership Deed have been executed by the petitioner with others as convenient tools to circumvent the rigours of Section 118 of H.P. Tenancy and Land Reforms Act. 21. 21. In view of the discussion, the revision petition being devoid of any merit is dismissed and the orders passed by Collector Shimla and Commissioner Shimla are maintained. 22. This order also disposes of another revision petition No. 192/99 filed by aforesaid Tara Chand which arises out of the same order dated 24.6.1996 passed by the Commissioner Shimla Division in Revenue appeal No. 223/95 as the parties to the petition are same and the grounds taken therein are also identical. 23. Orders be communicated to the parties and the case file of this Court be consigned to the record room after due completion.