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2006 DIGILAW 1387 (DEL)

LEELA GOEL v. PREM SAGAR SHARMA

2006-08-21

PRADEEP NANDRAJOG

body2006
PRADEEP NANDRAJOG, J. ( 1 ) VIDE order dated 9. 9. 1983 in Suit No. 509-A/1981 Smt. Leela Goyal and Anr. Vs. Shri Prem Sagar Sharma, disputes between Leela Goyal and her son ashok Goyal as one party and Shri Prem Sagar Sharma as the other party were referred to the sole arbitration of Shri Lokeshwar Prasad, son of Shri Bulati dass. As per the order of reference learned Arbitrator was to decide 7 issues which were listed in the order of reference :- ( 2 ) ON the issues, the award is as under :-"disputes AWARD a) That as to what is the nature The real transaction of the real transaction between the between the parties is parties. Is it an agreement of sale of that of sale of plot No. the plot of land bearing No. C-697, C-697, New Friends new Friends Colony, New Delhi,or is Colony, New Delhi. it an agreement to construct simplicitor. b) As to whether the petitioners are No. liable to pay to the respondent anything in respect of the concerned matters respecting the said plot of land. c) As to whether the respondent is No. The question of entitled to take back possession of the any terms does not plot of land bearing No. C-697, New arise. Friends Colony, New Delhi or the building constructed thereon, complete or incomplete. If so, on what terms d) Whether the respondent is liable No. to execute powers of attorney in favour of any person nominated by the petitioners, for the purpose of substituting for Shri S. K. Goyal, the deceased husband of the petitioner No. 1. e) Is the respondent entitled to cancel the No. agreement in question. f) Is the respondent entitled to cancel No. and revoke the WILL executed by him. g) Is the respondent entitled to revoke, or No. cancel the declaration/promise made by him in this affidavit dated 21. 5. 1979, sworn on 6. 6. 79. h) Whether the agreement dated 21. 5. 1979 The Agreement between the parties is valid or not is valid. " ( 3 ) VIDE IA No. 6798/1986 Prem Sagar Sharma has filed objections to the award, inter alia, alleging that there was no valid agreement between the parties and since the arbitration clause was contained in the agreement, the arbitration clause also perished. 5. 1979 The Agreement between the parties is valid or not is valid. " ( 3 ) VIDE IA No. 6798/1986 Prem Sagar Sharma has filed objections to the award, inter alia, alleging that there was no valid agreement between the parties and since the arbitration clause was contained in the agreement, the arbitration clause also perished. As a limb of this objection, it is urged that the agreement dated 21st May, 1979 is void. Next objection urged is that Ashok goyal, son of Leela Goyal was a minor when agreement dated 21st May, 1979 was entered into and therefore, on said count also, agreement is void. The next objection taken is that the learned Arbitrator misconducted the proceedings in as much as he travelled beyond the scope of the reference. The last objection was that the award required registration in as much as the same created interest in immovable property in favour of Leela Goyal and her son and extinguished the right of Prem Sagar Sharma in respect of immovable property. ( 4 ) BRIEFLY stated, relevant facts, necessary for decision are that on 21st May, 1979, Leela Goyal and her minor son Ashok Goyal entered into an agreement with the objector Shri Prem Sagar Sharma. The agreement is titled as 'the AGREEMENT TO CONSTRUCT THE DWELLING HOUSE'. The said agreement states that Prem Sagar Sharma is the perpetual sub-lessee of a residential plot bearing no. C-697, New Friends Colony. That Leela Goyal and her minor son have agreed to construct a residential plot on this plot. That the estimated cost of construction per square foot is Rs. 130/ -. That Leela Goyal and her minor son have deposited a sum of Rs. 1,05,000/- with Prem Sagar Sharma as security for performing their obligations under the agreement. That Prem Sagar Sharma has handed over the original sub-lease to Leela Goyal and her minor son as also delivered effective physical possession of the plot. That on completion of the building Leela Goyal and her minor son shall intimate to Prem Sagar Sharma the fact of completion of the building. That Prem Sagar Sharma has handed over the original sub-lease to Leela Goyal and her minor son as also delivered effective physical possession of the plot. That on completion of the building Leela Goyal and her minor son shall intimate to Prem Sagar Sharma the fact of completion of the building. The cost of construction together with the security deposit would be paid by Prem Sagar Sharma to Leela Goyal and her minor son within 15 days and if he fails, the mother and son would be entitled to have sale deed executed in their favour to be executed by Prem Sagar Sharma transferring the land and the building to them. Security deposit would be retained by Prem Sagar Sharma. ( 5 ) SIMULTANEOUSLY with the execution of the agreement dated 21st may, 1979 an irrevocable power of attorney was executed by Prem Sagar Sharma in favour of Shri S. K. Goyal, husband of Leela Goyal and father of Ashok Goyal. ( 6 ) PREM Sagar Sharma also executed a will of even date bequeathing his right, title and interest in the property in favour of Leela Goyal and master Ashok Goyal. He even executed an affidavit of same date indicating that he would transfer his right, title and interest in the property in favour of leela Goyal and Master Ashok Goyal and for which he would obtain permission from the authorities. ( 7 ) CLAUSES 2, 3, 7 and 10 of the agreement dated 21st May, 1979 are important. They read as under :-"2. The Sub-lessee has handed over the originals of the said sub lease to the contractor and has given the effective physical possession of the said plot to the contractor on execution of this agreement. 3. The Contractor shall either himself or through his delegates, agents or servants, construct a residential building on the aforesaid plot of land according to the proposed plans, after obtaining the necessary sanction thereof from the competent authorities, with such modifications and changes as may be necessary or desired in order to obtain the sanction of the said plans, and/or as may be though expedient or desirable by the Contractor during the actual construction thereof. The estimated costs of construction Rs. 130/- per ft. (Rs. One hundred and thirty per sq. ft. The estimated costs of construction Rs. 130/- per ft. (Rs. One hundred and thirty per sq. ft. only) has been scrutinized and accepted by the Sub-lessee, and the Sub-lessee hereby binds himself to accept the total cost so incurred in the construction which may be in excess of the estimated cost, alongwith 35% of the total actual cost of the construction, not below the aforesaid sum of 130/- per sq. ft. The sub lessee will be bound to pay the actual cost of construction, @ rs. 130/- per sq. ft. plus 35% as the profit of the same to the contractors, and also refund the security money deposited as mentioned above. 7. That the Sub lessee shall be bound to pay the cost of the building as aforesaid in the contract in a lump sum amount within 15 days from the date of obtaining completion certificate, time being the essence of this part of the agreement, on which payment, the Contractor shall restore the possession, of land and building to the sub lessee. Should the Sub Lessee fail to make the payment of the entire cost and to make a refund of the security within the stipulated in strict conformity with the above, the sub lessee shall convey to the Contractor all rights held by the Sub lessee in the said plot of land together with all rights and privileges appurtenant thereto in consideration of the security money claiming any further compensation. In such an event the Sub lessee hereby undertakes that he shall be bound to execute the sale deed in respect of the said land and/or to get the same transferred effectually and completely to the CONTRACTOR of his nominee, after obtaining the requisite permission from the appropriate authorities as may be provided for in the perpetual sub lease and to get the same duly registered within 30 days of the execution there of and the contractor in these circumstances shall not be entitled to any refund of the security money. The cost of stamp fee including ground appreciation and other DDA dues, charges expenses, profits, etc. as per clause No. 6 (b) the Sub lease as well as further demands from DDA and other authorities which may levy and any such charges expenses, profits as per the above aforesaid clause, shall be borne by the CONTRACTOR. The cost of stamp fee including ground appreciation and other DDA dues, charges expenses, profits, etc. as per clause No. 6 (b) the Sub lease as well as further demands from DDA and other authorities which may levy and any such charges expenses, profits as per the above aforesaid clause, shall be borne by the CONTRACTOR. The Sub Lessee further given the right to the Contractor to have a Deed of Conveyance in respect of the said plot of land duly executed and registered through a court of law by filing a suit of specific performance against the Sub Lessee and/or by taking any other steps as he may be advised to effect the said transfer, and the cost of such proceedings shall be borne by the Sub Lessee. The structure having been raised by the Contractor himself at his own expenses, and not having been paid for by the Sub lessee, will remain the property of the Contractor. 10. That the contractor under taken to pay all future rates, taxes levy or other assessments payable or to become payable here after in respect of the land comprised in the lease after the date of the execution of this deed of agreement. Likewise all taxes, rates, levy, charges etc. to be constructed shall also be paid by the Contractor so long as the Contractor remains in actual possession of the premises. " ( 8 ) IN the affidavit deposed by Prem Sagar Sharma on 21st May, 1979, in paras 5 and 6 he has recorded as under :-"5. I hereby undertake that I shall transfer all my rights, title or interest in the said property in favour of Shrimati Leela Goyle and Master Ashok goyal on receipt of the permission from the authorities concerned. 6. The possession of the aforesaid plot of land has been this 21st day of may 1979 handed over to Shrimati Leela Goyal and Master Ashok Goyal. I hereby affirm that the building to be constructed on the said plot of land shall belong exclusively to Shrimati Leela Goyal and Master Ashok Goyal as per terms and conditions mentioned in the Agreement to Construct. " ( 9 ) SOON after 21st May, 1979, Prem Sagar Sharma wanted to regain possession of the plot. I hereby affirm that the building to be constructed on the said plot of land shall belong exclusively to Shrimati Leela Goyal and Master Ashok Goyal as per terms and conditions mentioned in the Agreement to Construct. " ( 9 ) SOON after 21st May, 1979, Prem Sagar Sharma wanted to regain possession of the plot. Since agreement between the parties contained an arbitration clause and in fact had named an arbitrator namely Lokeshwar Prasad, leela Goyal and her minor son filed a petition under Section 20 of the arbitration Act, 1949 registered as Suit No. 509-A/1981. They sought reference of the dispute to the named Arbitrator. As noted above, vide order dated 9. 9. 1983 disputes were referred to the named Arbitrator and 8 issues were framed while making the reference. ( 10 ) AWARD is a non-speaking award. Decision of the learned arbitrator on each issues is as noted in para 2 above. ( 11 ) IT is settled law that mere heading or title of a document cannot deprive the document of its real nature. It is the substance and not the form which has to be seen. ( AIR 1976 SC 640 CIT, Punjab Vs. Panipat W and G mills ). ( 12 ) THOUGH agreement dated 21st May, 1979 is titled as an Agreement to Construct a Dwelling House but its terms show that for all intent and purposes beneficial ownership in the plot has been parted with by Prem Sagar sharma in favour of Leela Goyal and her minor son. This is culled out from clauses 2, 3, 7 and 10 of the Agreement. ( 13 ) WHY should Prem Sagar Sharma hand over the original sub lease executed in his favour to Leela Goyal and her minor son" If their status was that of a contractor, I see no reason why original title deeds were handed over. Only when title is transferred does the transferor hand over his title documents to the transferee. ( 14 ) VIDE Clause 3, Leela Goyal and her son were empowered to effect changes and make modifications in the proposed building plans. A contractor would never give such a right. Clause 3 of the agreement shows that since Leela goyal and her minor son were to be the owners of the house, they were free to construct the house in whatever manner they chose. A contractor would never give such a right. Clause 3 of the agreement shows that since Leela goyal and her minor son were to be the owners of the house, they were free to construct the house in whatever manner they chose. Further, while fixing the cost of construction at Rs. 130/- per square foot, no specifications of the construction have been specified. Could, Leela Goyal and her minor son raise a mud structure and claim @ Rs. 130/- per square foot" By not specifying the type of construction, it is obvious that the intent is not to reclaim any money for the construction, ownership whereof was to be that of Leela Goyal and her minor son. ( 15 ) CLAUSE 7 mandated Prem Sagar Sharma to convey to Leela Goyal and her minor son right, title and interest in the plot after paying necessary dues to DDA as per clause 6 (b) of the sub-lease. ( 16 ) UNDER Clause 10, Leela Goyal and her minor son were liable to pay property taxes in respect of the plot effective from the date of agreement i. e. , 21. 5. 1979. ( 17 ) A contractor is never liable to property taxes in respect of the plot on which the contractor has agreed to construct a building. ( 18 ) READ meaningfully, aforenoted clauses clearly bring out that the transaction between the parties was an outright sale with further obligation of Prem Sagar Sharma to obtain necessary permissions from DDA after paying necessary charges as per Clause 6 (b) of the perpetual sub lease executed in his favour and thereafter execute a conveyance deed in favour of Leela Goyal and her minor son transferring to them his right, title and interest in the plot. ( 19 ) IF status of Leela Goyal and her minor son was that of a contractor, where was the requirement of executing an irrevocable power of attorney in favour of husband of Leela Goyal. ( 20 ) VIDE clause 9 of the irrevocable power of attorney, S. K. Goyal has been empowered to sell, mortgage and encumber the property. Further, the will dated 21st May, 1979 also lends credence to the fact that the transaction was nothing but a sale. ( 21 ) FURTHER, clauses 5 and 6 of the affidavit dated 21. 5. ( 20 ) VIDE clause 9 of the irrevocable power of attorney, S. K. Goyal has been empowered to sell, mortgage and encumber the property. Further, the will dated 21st May, 1979 also lends credence to the fact that the transaction was nothing but a sale. ( 21 ) FURTHER, clauses 5 and 6 of the affidavit dated 21. 5. 1979, contents noted in para 8 above, record affirmation by Prem Sagar Sharma that he would transfer his right, title and interest in the plot in favour of Leela goyal and her minor son after receiving sale permissions from the authorities and that the building to be constructed on the plot shall belong exclusively to leela Goyal and Ashok Goyal. ( 22 ) CLAUSES 5 and 6 of the agreement record disclaimer by Prem sagar Sharma and an obligation to transfer his interest in the plot. Further, sum of Rs. 1,05,000/- to be retained by Prem Sagar Sharma in lieu of plot shows that the amount was but a sale consideration. ( 23 ) IT is true that the law relating to transfer of immovable property, where value of the property is more than Rs. 100/-, requires transfer by way of a registered sale deed, but in Delhi and for that matter all over india transfers by and under power of attorney have been recognized in judicial decisions and in fact even the Government has recognized such transfers by notifying a conversion policy in the year 1993 under which purchasers through agreement to sell and power of attorney have been made eligible for direct conversion of leasehold tenure to freehold tenure in their favour after paying the conversion charges + 33. 33% of the conversion charges. ( 24 ) IN the reports published as 1977 RLR 487 , Harbans Singh Vs. Shanti Dev, 1991 RLR 20 , Kuldeep Singh Vs. Surender Singh, 1986 RLR 30 Globe finance through OL Vs. Radha Krishnan and 1991 RLR 223 Usha Malhotra Vs. G. S. Uppal, transfers by way of agreement to sell with simultaneous execution of general power of attorney and agreement of construction of the kind as has been executed in the present case were judicially recognized as capable of transferring interest. Surender Singh, 1986 RLR 30 Globe finance through OL Vs. Radha Krishnan and 1991 RLR 223 Usha Malhotra Vs. G. S. Uppal, transfers by way of agreement to sell with simultaneous execution of general power of attorney and agreement of construction of the kind as has been executed in the present case were judicially recognized as capable of transferring interest. ( 25 ) SECTION 202 of the Contract Act was noted which mandates that where the agent has an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of the express contract be terminated to the prejudice of the such interest. ( 26 ) THE word 'interest' means an advantage or a benefit. In para 10 of the decision in Harbans Singh's case (Supra) it was observed as under :-"10. For the purpose of the Law of Contract, therefore, it would not be useful to restrict the meaning of the word "interest" by the narrow compass in which the word is used at times in relation to immovable property. For instance, the last sentence of Section 54 of the Transfer of Property Act states that a contract of sale of itself does not create interest or charge on immovable property. Similarly, Section 17 (1) (b) of the Registration Act makes only those documents compulsorily registrable which create, declare, assign, limit or extinguish any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards to or in immovable property. Since an agreement for sale does not create such right, title of interest, it may not be compulsorily registrable. But in the context of the Contract Act, it cannot be said that a person who is the beneficiary of an agreement of sale has no right or interest in the subject matter of the sale. He has a legally enforceable right and interest in enforcing the contract of sale by the execution of a sale deed and in getting possession of the property agreed to be sold under the provisions of the Specific Relief Act. In the English Common law, the specific performance of contracts was a part of the law of contract. This is why Chapter IV of the Contract Act deals with the performance of contracts relating to immovable property also. In the English Common law, the specific performance of contracts was a part of the law of contract. This is why Chapter IV of the Contract Act deals with the performance of contracts relating to immovable property also. In fact, Section 4 of the transfer of Property Act says that the Chapters and sections of that Act which relate to Contracts shall be taken as part of the Indian Contract Act, 1872. Therefore, the respondent in whose favour the appellant had executed an agreement for sale of an immovable property had an interest in the subject matter of the contract namely, the shop, for the purpose of Section 202 of the contract Act if not for the purposes of the Transfer of Property and the registration Act. " ( 27 ) IN the decision in Globe Finance Case (Supra) a near identically worded construction agreement was held as conveying an irrevocable interest to the so called builder. ( 28 ) IN the teeth of the authorities noted above, no useful purpose would be served in dealing with the plethora of authorities cited by learned counsel for the objector as to how sale has to be effected. ( 29 ) IT may also be relevant to note that where grant in favour of the transferor requires him to obtain prior permissions before he sells the property, a sale agreement entered into without obtaining prior permissions is legal and valid. He can be compelled to obtain the necessary permissions and sanctions. ( AIR 1964 SC 978 Mrs. Chandnee Vidhyawati Vs. Dr. C. L. Katial ). ( 30 ) IN the decisions reported as AIR 1965 SC 1856 Scahattanatcha karayanar Vs. Central Bank of India (2001) 5 SCC 101 Her Highness Maharani shanti Devi P. Gaikwad Vs. Sabjibhai Haribhai Patel, it was held that when various documents, forming part and parcel of the same transactions, are executed by the parties, all documents have to be read together to ascertain the true intention of the parties. ( 31 ) I need not delve deeper on the issue, for the reason I am dealing with objections to an award. It is settled law that if 2 views are possible and the Arbitrator takes a particular view, this court would not sit as a court of appeal and re-appreciate the evidence considered by the Arbitrator. ( 31 ) I need not delve deeper on the issue, for the reason I am dealing with objections to an award. It is settled law that if 2 views are possible and the Arbitrator takes a particular view, this court would not sit as a court of appeal and re-appreciate the evidence considered by the Arbitrator. View taken by the Arbitrator pertaining to the agreement in question has been judicially recognized and is a possible view. Therefore, objections relating to the nature of the agreement and that it is void are rejected. ( 32 ) PERTAINING to the objection that Master Ashok Goyal was a minor when agreement dated 21st May, 1979 was entered into and that a contract entered into by a minor is void needs to be noted and repelled for 2 reasons. Firstly, as learned Arbitrator has held, a view recognized in various judicial decisions noted above, the transaction was an outright sale. ( 33 ) A sale deed does not require the signatures of the purchasers. Thus, execution by Prem Sagar Sharma alone was sufficient. Secondly, a minor can be the beneficiary under a contract. There are various decisions which hold that a minor can seek enforcement of a contract which was for his benefit and is entitled to receive property which was conveyed to him under such contract (see air 1915 Allahabad 479 Munni Koer Vs. Madan Gopal, AIR 1937 Sind 310, Nihal chand Mewaram Vs. Meerjan Mohd. and AIR 1936 Patna 153 Rai Satyadev Narayan sinha Vs. Tirbeni Prasad ). ( 34 ) THE award in question is a non-speaking award. The award was passed under the Arbitration Act, 1940. The Arbitrator was thus empowered to publish a non-speaking award. This court cannot probe the mental process by which the Arbitrator has reached the conclusions. Questions of law and fact decided by an Arbitrator are final and binding on the parties. ( 35 ) SAVE and except make a submission that the learned Arbitrator has travelled beyond the scope of reference, learned counsel for the objector failed to show as to in what manner, learned Arbitrator has travelled beyond the scope of reference. ( 36 ) IN the decisions reported as (2000) 8 SCC 343 National fertilizer Corporation Ltd. Vs. Puran Chand Nangia (2001) 6 SCC 347 Ispat engineering and Foundry Works Vs. ( 36 ) IN the decisions reported as (2000) 8 SCC 343 National fertilizer Corporation Ltd. Vs. Puran Chand Nangia (2001) 6 SCC 347 Ispat engineering and Foundry Works Vs. Steel Authority of India it was held that qua a non-speaking award, mental process of the Arbitrator cannot be probed and, error to be shown must be apparent on the face of the award. ( 37 ) A vague plea was urged that the award is contrary to public policy, in that, has permitted violation of the perpetual sub-lease executed by dda in favour of Prem Sagar Sharma. It was sought to be urged that without paying the unearned increase to DDA by permitting transfer of title in the plot, public injury has been occasioned. ( 38 ) THE argument has to be noted and rejected for the reason, such kind of transactions have been judicially recognized and since 1993 even the lessor recognized such transactions in the past and permitted direct conversion of leasehold tenure to freehold tenure in favour of the purchaser. ( 39 ) THE last objection that the award required registration also needs to be noted and rejected for the reason learned Arbitrator has held that the transaction evidenced through the medium of various documents executed was to convey interest. The award is not creating any right, title or interest and is neither extinguishing any. The award is akin to a declaratory award, in that, it declares the true intent of the parties when they executed the various documents. ( 40 ) LOOKED at from any angle, objections merit dismissal. IA 6798/1986 is dismissed. Award dated 9. 9. 1983 published by shri Lokeshwar Prasad is made a rule of the court. No costs.