PETITIONER: DELHI DEVELOPMENT AUTHORITY Vs. RESPONDENT: SKIPPER CONSTRUCTION AND ANR. DATE OF JUDGMENT25/01/1995 BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. MOHAN, S. (J) JEEVAN REDDY, B.P. (J) CITATION: 1995 SCC Supl. (2) 160 JT 1995 (1) 571 1995 SCALE (1)734 ACT: HEADNOTE: JUDGMENT:
ORDER
1. The facts leading to this interlocutory application are
as under:
On 8.10.1980, an auction was held by the Delhi Development
Authority
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(hereinafter referred to as the ‘DDA’) of the Commercial
Tower Plot, Jhandewalan, Block E, New Delhi ad measuring
about 540 sq. mtrs. The first respondent, M/s. Skipper
Construction Co. (P) Ltd. (hereinafter referred to as the
‘Skipper’) was the highest bidder, its bid being Rs. 9.82
crores. As per the conditions of the auction, Skipper
deposited 25% of the bid amount. The said bid was confirmed
by the DDA on 14.10.1980. Skipper was called upon to make
the balance of payment of 75% of the bid amount within 90
days as per the conditions of the auction.
2.The Government of India issued directions to the DDA
accepting the request of Skipper and granting an indulgence
to it by directing the DDA to reschedule the recovery of 75%
of the bid amount with interest from the Skipper.
Consequent to this, DDA called upon the Skipper to enter
into fresh agreement, licence agreement and furnish bank
guarantees in compliance with the directions of the Central
Government.
3.On 11.8.1987, Skipper entered into a licence agreement,
paid 50% of the original bid and secured payment of the bal-
ance 50% of the bid and interest at the rate of 18% per
annum thereon by submitting bank guarantees for Rs.9.82
crores, in terms of which a sum of approximately 1.944
crores was required to be paid as each instalment. A total
of 5 instalments was payable every six months, the first be-
ing due on 15.9.1987 and the last on or about 15.9.1989.
4. Against the first instalment of Rs.1.944 crores
failing due on 15.9.1987, DDA recovered about Rs.88.76 lakhs
by encashment of the bank guarantee on 7.12.1987.Thereafter
the first respondent did not pay in terms of the agreement.
5. On 4.10.1988, the Lt.Governor issued a direction at the
request of Skippe, deferring recovery from Skipper of the
2nd instalment as per the agreement dated 11.8.1987 till one
month after the sanctioning of the building plans.
6. In August, 1989, the first respondent filed writ
petition in the High Court of Delhi, being CWP No.2371 of
1989. The principal relief sought in the writ petition
related to sanctioning of building plans and permission for
construction. An interim order was passed directing the
Skipper to furnish fresh bank guarantee since the bank
guarantee furnished earlier had lapsed. The DDA did not
encash the fresh bank guarantee which was defective. Time
and again the DDA represented to the Court that the monies
were outstanding from the Skipper and no indulgence ought to
be shown to them till the payment of the outstanding amount
of over Rs. 3 crores under the principal sum itself was
deferred from time to time.
7. On 16.2.1990, the Lt.Governor revoked the order dated
4.10.1988 deferring the payment of instalments. As a result
the entire sum because payable in one lump sum. However,
this order of the Lt. Governor was stayed by the Court.
Thus, it became necessary for the DDA to grant conditional
and provisional sanction to plans of the building subject to
the payment of monies due to the DDA.
8. On 19.3.1990, an interim order was passed by the Delhi
High Court by which Skipper was permitted to commence con-
struction without first depositing the dues
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of the DDA. Against this order an appeal was preferred.
The Division Bench directed the payment of a token sum of
Rs.5 lacs which was offered by the Skipper as a gesture of
goodwill within 2 days; a sum of Rs.15 lacs within 15 days
and Rs.1.944 crores within one month to the DDA. It was
further directed that the quantum of monies and the mode of
payment will be decided at the time of final disposal of the
writ petition.
9.Even this order was not complied with. Notwithstanding
this, the Skipper approached the Court once again for exten-
sion of time to make payment and for direction to construct.
The Court extended the time by one month on 16.4.1990, af-
fording liberty to the DDA to encash the bank guarantee.
The bank guarantee could not be encashed because A was
conditional By then the entire monies had fallen due. Those
amounts had not been paid. The DDA filed SLP (C) Nos. 6338-
6339 of 1990 against the interim orders dated 19.3.1990 and
16.4.1990 passed by the High Court of Delhi. By an order
dated 3.5 A 990 Ohs Court stayed further construction and
made it conditional upon payment of Rs. 1. 1944 crores.
10 Suit No. 1875 of 1990 was files by the Skipper for a
direction that the DDA ought not to insist upon payment by
cash or draft and ought to be directed to encash bank
guarantee. The learned Vacation Judge issued orders
directing the DDA to invoke the bank guarantee. however, the
suit was ultimately dismissed.
11. On 21.12.1990, a division Bench of the Delhi High Court
dismissed CWP.No.2371 of 1989 directing Skipper to pay to
the DDA by cash or demand draft a sum of Rs. 8,12,68,789/-
within 30 days; to stop construction till payment is made;
and in the event of non-payment by the Skipper, DDA would be
entitled to enter upon the property and forfeit the monies
received by the DDA.
12. On 14.1.1991, detailed reasons for its operative order
came to be rendered by the Division Bench of the Delhi High
Court with further direction giving effect to clause 15 of
the licence agreement dated 11. 8.1987 that in the event of
non-compliance of the payment by the Skipper the property
shall stand vested in the DDA, free from all encumbrances,
in addition to the forfeiture of the monies.
13. Against the dismissal of CWP No.2371 of 1989 Skipper
filed SLP (C) No. 186 of 1991 before this Court.
14. On 29.1.1991, a Division Bench of this Court passed an
interim order (in which one of us, P.B. Sawant,J., was
party). It inter alia reads as under:
“(1) That the petitioners herein shall deposit
a sum of Rs.2.5 crores (Rupees two crores and
fifty lacs only) in cash/ bank draft with the
Delhi Development Authority within one month
from today and the petitioners will further
deposit similar amount by cash/bank draft by
8th April 1991.
(ii) That be petitioners shall be permitted
to resume the construction of the building in
question only after making the first deposit
as stated in clause (i) above
(iii) That if be petitions to do posit the
amounts as aforesaid the Delhi Development
Authority will be free to act in accordance
with the impugned order dated 21st December,
1990 of High Court in CWP No.2371 of 1980.
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(iv) ‘Mat the petitioners shall not induct
any person in the building or create any right
in favour of any third party.
(v) That the matter be listed for further
orders before this Court on 9th April, 1991.”
15. On 4.2.1991, in violation of the agreement and in gross
contempt of the above order, the Skipper issued adver-
tisement in the leading newspapers seeking to create 3rd
party rights.
16. On 25.1.1993, SLP(C) No. 186 of 1991 was dismissed by
this Court. By virtue of the above order, the DDA on
10.2.1993 re-entered and took physical possession of the
said property, free from all encumbrances; monies paid by
the Skipper were forfeited.
17. Notwithstanding all these, Skipper filed yet another
suit on the original side of the High Court of Delhi, being
Suit No.770 of 1993 for the relief of:
(i) permanent injuction restraining the DDA from
interferring with the title and possession of the property;
(ii) for mandatory injuction directing the DDA to recompute
the principal amount and interest payable by Skipper;
(iii) for a declaration that the present calculations
are wrong;
(iv) for a declaration that re-entry/ re-possession and
determination of the rights of Skipper are bad in law and
nonset;
(v) for a declaration that all dues have been paid by
Skipper to the DDA;
and
(vi) a declaration that clause 15 of the Licence Agreement
dated 11. 8.1987 is non-est and in bad in law.
18. On service of notice, DDA filed application, I.A.No.8500
of 1993 in Suit No.770 of 1993, for rejection of the plaint
as all the issues raised by Skipper were resjudicata and
even otherwise the plaint was barred by law. The said
application is pending disposal.
19. On 8.11.93, DDA issued notices for auction of the said
property. The 2nd respondent sought to implead itself in
the suit and on 1.12.1993 filed an application for stay of
auction which was opposed by the DDA.
20. On 9.101993, a learned single Judge of the Delhi High
Court allowed the auction to proceed with and restrained the
DDA from accepting or confirming the bid at the auction
scheduled for 10. 12.1993. Aggrieved by this order DDA filed
SLP(C) No. 21000 of 1993 against the interim order of the
Delhi High Court. Besides the above proceedings, the
Allahabad High Court in a writ petition stayed the notice of
auction by the DDA. The City Civil (Munsif) Court at
Ghaziabad (UP) passed orders of status qua in respect of a
flat in the said building in November 1993. Thus, the
auction to be held on 10. 12.1993 was disrupted. Once again
the attempt of DDA to auction the flats could not fructify.
Since the method of auction as not yielding results DDA
decided to invite tenders for the sale of the said property
as an alternative method. Accordingly, notice inviting
tenders was published in the leading newspapers on
31.1.1994. There was only one tender that too was
conditional. Therefore,
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the same was rejected.
21. On 28.9.1994, the DDA once again caused publication of
notice inviting tenders. The DDA received three tenders.
The highest acceptable tender was of M/s. Banganga
Investments Pvt.Ltd. It is under these circumstances, I.A.
No. 9 of 1994 was filed to accord permission to confirm the
bid for the grant of lease hold rights in favour of M/s
Banganga Investments Pvt.Ltd.
23. Mr.Arun Jaitely, learned senior counsel for the
petitioner urges that the first respondent (Skipper) has
indulged in abuse of process of law more than once. The
order of the Division Bench of the Delhi High Court dated
21.12.90 reported in (1991) DLT 636 at page 647 clearly
enables the DDA to take over plot along with the buildings
thereon free from all encumbrances and forfeit the entire
amount paid by the first respondent in the event of the
payment, as stated in the order of the High Court dated
21.10.1990 was not forthcoming. SLP(C) No. 186 of 1991
filed against that order was dismissed. To challenge the
order of the Division Bench as confirmed by this Court is a
gross abuse of the process of court.
24. The sale of space to various flat owners is in violation
of law and judicial directions. That can confer no right
upon the Hat owners. In view of the categorical direction
of the Delhi High Court that the flat shall vest in DDA free
of all encumbrances, such a sale is also in violation of the
agreement between DDA and Skipper entered into August, 1987.
The order of this Court made on 21.9.1992 clearly indicts
Skipper for inducting any person in building or creating any
right in favour of the third party. The alleged creation of
third party right, is also vitiated by fraud for the
following reasons:
(i) The judgment of the Delhi High Court (1991) DLT 636 at
page 647 notes that the counsel for the Skipper Construction
has contended that the interest of 870 buyers of space will
suffer.
(ii)The association of flat owners claim to have 1200
members.
(iii)M/s. Skipper Construction in their SLP(C)No. 186 of
1991 stated that there are 815flat owners in the property.
(iv)Delhi High Court directed M/s Skipper Construction to
furnish a list of flat owners and on 17.11.93 M/s Skipper
Construction claimed that they have 2700 flat owners.
25. It is obvious that bulk of the interests created is
clearly vitiated by fraudulent acts of the alleged flat
owners and/or the Skipper. In any case, the DDA has no
liability qua the said flat owners who have entered into
alleged transactions on their own risk and consequences.
26. A perusal of Application I.A.No.3 of 1994 will clearly
show that the agreements filed by Mrs. Anjana Khosla are
dated 26.11.1992. That itself will clearly show how the
order dated 29.1.1991 has been violated. Having regard to
the sanctioned space of 20,000 sq.meters there cannot be
2,700 flat purchasers, as worked out on that basis each
purchaser will get 66 sq.ft. approximately.
27. Because of the attempt of the flat owners to disrupt
the auction, DDA had
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no other option than to invite tenders. Fortunately, the
second tender offered is made by M/s Banganga Investments
Pvt.Ltd. for Rs.70 crores and 10 lacs. That is in keeping
with the market rate. Hence, it is prayed that the offer
may be accepted and Skipper may be debt with for abuse of
process of court.
28. The learned counsel for the Skipper made an attempt to
justify the filing of the second suit but later gave up that
argument. By then Mr. G. Ramaswamy, learned senior counsel
came and put forth a plea that as a last chance if Skipper
is granted time it will pay off-the entire dues.
29. We passed the operative order on 3.1.95 stating that
the reasons will be furnished later.
30. The reasons for the said operative order are
furnished below:
From the above narration it is clear that the Skipper has
time and again indulged in abuse of process of court. Cal-
culated attempts have been made to circumvent even the
orders of this Court.
31. This Court by its order dated 29.1.1991 specifically
directed the Skipper in no uncertain terms to make the pay-
ment of Rs. 5 crores with a specified time. There was also
a further restrain on Skipper from creating any rights in
the property. It is most surprising that inspite of this
specific order, the Skipper would issue an advertisement on
4.2.1991 to the following effect:
SKIPPER
GROUP OF COMPANIES
[ANNOUNCES]
ISSUE of Commercial Flats for retired/
Retiring Personal/Professionals/Self
employed & other persons in our
BAU MAKAHAN SINGH HOUSE
JHANDEWALAN TOWER,
JHANDEWALAN EXTN.
at highly concessional rates
it is once in a lifetime opportunity to own a commercial
property of your own in Bau Makhan Singh House”
A prime project in the middle of high business environment.
The location of tower is as rare as the offer itself
[SALIENT FEATURES]
* Ultra modem multi storeyed commercial complex (Shopping
cum office complex)
* Ground to 3rd Floor centrally air conditioned with
escalators.
* Excellent quality of construction.
* Interest free payment schedule linked with construction.
* Excellent investment returns.).
32. Special Leave Petition (Civil) No. 186 of 1991 as
dismissed by this Court on 25.1.1993. Therefore, the matter
should have normally rested at this stage. But, yet the
Skipper would file Suit No. 770 of 1993 for various reliefs
for which CWP No.2371 of 1989 was preferred before the Delhi
High Court which writ petition came to be dismissed on
21.12.1990 by an operative order giving detailed reasons on
14.1.1990
33. Then again, Writ Petition before the Allahabad High
Court and one more suit before the City Civil (Munsif) Court
at
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Ghaziabad were filed. These were nothing but attempts to
set at naught the orders of this Court. No doubt, the writ
petition before the Allahabad High Court and the suit before
the City Civil (Munsif) Court at Ghaziabad may be third
parties, yet the complicity of Skipper cannot be ruled out.
The Skipper issued an advertisement to the following effect
on 26.5.1992 inviting offers for confirmed booking of
commercial flats within a stone throw of Connaught Place in
relation to the property conforming with the subject matter
in this case:
“SKIPPER GROUP
OFFERS CONFIRMED BOOKING OF
COMMERCIAL
FLATS WITHIN A STONES THROW
OF CONNAUGHT PLACE
Sale of Commercial Flats
BAU MAKHAN SINGH HOUSE, DEWALAN TOWER,
JHANDEWALAN EXTENSION,
At highly concessional rates
——————————–
This offers is only for confirmed bookings, on first cum
first served basis.
TOTAL COST OF FLAT: Rs. 1,00,000
BOOKING AMOUNT: Rs. 50,000/
Balance in easy construction & time linked instalments.
ONLY 50 FLAT AVAILABLE
——————————–
34. The creation of rights in favour in third parties
during the pendency of the proceeding is nothing but an
attempt to over-reach or circumvent the orders of this
Court.
35. On a persual of the records, it is also clear that
there are several individuals who have entered into the
agreement to purchase the premises before and after
29.1.1991. It is most unfortunate that guiltless and
innocent purchasers have been brought to this sorry
situation by this crafty builder. This could have been
avoided, had the D.D.A not handed over the possession of the
suit land to Skipper even before receiving the amount in
full in accordance with the agreement or at least in accor-
dance with the orders of this Court. Truly, it has obliged
the Skipper to further the evil designs of the Skipper.
36. The order dated 4.10.1988 passed by then Ex-Chairman of
the D.D.A (the then Lt. Governor of Delhi) runs to the
following effect:
“No. F.4 (1) 80/Impl.
From: Director (C.L.)
DELHI DEVELOPMENT
AUTHORITY
New Delhi 4/10/1988
M/s. Skipper Constn. Co. (P) Ltd.
23,Barakhanaba Road,
New Delhi.
Sub: Request for deferment of IInd instalment in
respect of Jhandewalan Tower Plot, Block-B,
Jhandewalan, N.Delhi.
Sir,
Please refer to your request on the subject
noted above. It is to inform you that L.G. has
been pleased to consider your request for the
deferment of IInd instalment which was due on
15.3.1988 for one month from the date of approval
of the building plans subject to payment of
interest changes 18% per annum. It may, however,
please be noted that the offer will be withdrawn if
any delay/non
579
co-operation for getting the building plans
finalised is noticed from your side.
Yours faithfully,
Sd/
DIRECTOR (C.L.).”
37. It caused dismay to as to how the orders came to be
passed by exercise of powers under Section 41 of the Delhi
Development Authority Act. Where was the need to defer
recovery of the second instalment from Skipper when it was
admittedly in default ? When the matter has hardly contested
before the Court, the D.D.A. adopted a passive attitude and
remained a bystander or an on-looker. If only it had taken
proper steps at the appropriate time, the money of the
unwary purchasers would not have fallen into the trap of the
Skipper. Therefore, the conduct of the officials of D.D.A.
including its ex-Chairman prima facie appears to be
questionable This can be established only by a probe into
the conduct of the affairs of the D.D.A.
38. Turning to the role placed by then New Bank of India
which has now merged in Punjab National Bank, prima facie it
appears to us that they have been ‘far too so generous’ with
public money. The Bank has to establish that it has acted
as a prudent banker. The liberality in advancement of loans
and bank guarantees creates an impression that ‘there is
something rotten’. How, bank guarantee came to be furnished
for the huge sum of the first instalment of Rs. 1,944 crores
is enigmatic. Again, in September, 1989 how a fresh bank
guarantee was advanced is equally enigmatic. Since, we have
directed an enquiry into this, all that we are constrained
to observe is that caution and care in advancement of loans-
bank guarantee to Skipper Construction appear to have been
thrown to winds.
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