IN THE HIGH COURT OF DELHI AT NEW DELHI SUBJECT : CANCELLATION OF ALLOTMENT Date of decision: 4th January, 2012 W.P.(C) No. 9816/2009 HUMAN CARE MEDICAL CHARITABLE TRUST... Petitioner Through: Mr. Sandeep Sethi, Sr. Adv. with Mr. Anurag Jain, Adv. Versus DELHI DEVELOPMENT AUTHORITY Through: Ms. Shobhana Takiar, Adv.... Respondent CORAM :- HON BLE MR. JUSTICE RAJIV SAHAI ENDLAW JUDGEMENT RAJIV SAHAI ENDLAW, J. 1. The petition impugns the letter dated 02.06.2009 of the respondent DDA to the petitioner cancelling the allotment (earlier made in favour of the petitioner) of land ad-measuring 9950 sq. mtrs. at Sector-6, Pappan Kalan, Dwarka, Delhi, for the reason of violation by the petitioner of the terms and conditions of allotment. 2. Notice of the petition was issued and vide order dated 06.07.2009 which has continued to be in force, the operation of the letter / order dated 02.06.2009 stayed. Pleadings have been completed. On further application, being CM No.5738/2010 of the petitioner, vide order dated 25.05.2010 directions were issued to the respondent DDA to, without prejudice to its rights and contentions and subject to payment of composition charges, issue a No Objection Certificate (NOC) to construction over the plot and grant permission to the petitioner to mortgage the said plot/land subject to order of the Court being brought to the knowledge of the mortgagee bank. The counsels have been heard.
3. The land aforesaid was allotted by the President of India acting through the respondent DDA to the petitioner vide Perpetual Lease Deed dated 11.06.1996. The cancellation thereof has been effected on two grounds i.e. (i) for the reason of the petitioner being required to construct the building as per the sanctioned plan on the allotted land within two years of being put into physical possession thereof and having not constructed the building even after 13 years from the date of taking over physical possession of the land; and, (ii) the land having been allotted on concessional rates and having been sold in a clandestine manner to earn profit; it is the case of the respondent DDA that all the original members of the petitioner Society at the time of allotment of the land have been replaced by new set of members. 4. The petitioner of course controverts both the aforesaid grounds of cancellation and hence this writ petition. 5. The Perpetual Lease of land between the parties, in Clause VI thereof provides for reference of any question, dispute or difference arising under the lease or in connection therewith to the sole arbitration of the Lieutenant Governor or any other person appointed by him. It is one of the arguments of the counsel for the respondent DDA that the present petition is not maintainable for the reason of availability of the remedy of arbitration. The senior counsel for the petitioner has in rejoinder contended that if it was the case of the respondent DDA that any arbitrable dispute had arisen between the parties, it was for the respondent DDA to have referred the same to arbitration; however, the respondent DDA instead chose to issue a show cause notice and notwithstanding the reply thereto of the petitioner controverting that the petitioner was in violation of any of the terms of the Lease Deed chose to, without referring the dispute to arbitration, cancel the lease and cannot now be heard to oust the petitioner from the remedy of writ against the said action of the respondent DDA. 6. I am satisfied with the aforesaid response of the petitioner to the objection aforesaid of the respondent DDA. The respondent DDA, from the reply of the petitioner to the show cause notice, was aware of the disputes which had arisen. The respondent DDA however instead of referring the same to arbitration in terms of the arbitration Clause in the Lease Deed chose to exercise its right as the lessor of the land. In the circumstances, the respondent DDA cannot be heard to now rely on the arbitration clause. Even otherwise it has been held by this Court in Chandana Kedia Vs. UOI
2010 II AD (Del) 757 that writ jurisdiction is not ousted by the mere existence of arbitration clause in the contract. 7. It is also the contention of the counsel for the respondent DDA that the writ remedy is not maintainable for the reason of dispute between the parties being contractual and entailing disputed questions. 8. As far as the objection of writ being not maintainable for the reason of the controversy agitated being contractual in nature is concerned, it cannot be lost sight of that the land aforesaid was allotted by the respondent DDA to the petitioner in exercise of powers under the statute and the statutory rules viz. the Delhi Development Act, 1957 and the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981. The Apex Court in ABL International Ltd. Vs. Export Credit Guarantee Corporation of India Ltd. (2004) 3 SCC 533 has held that the rule of writ remedy being not available in contractual matters is not an absolute rule. Mention may also be made of DDA Vs. Nehru Place Hotels Ltd. AIR 1984 Delhi 61 where a Division Bench of this Court held that even if alternative remedy by way of a civil suit or arbitration is available, if the action of statutory body like DDA is clearly arbitrary and violative of Article 14 of the Constitution, it will be inequitable to force the petitioner to take recourse to alternative remedy. Thus it is deemed expedient to consider the nature of the controversy between the parties. It is felt that only if this Court on appraisal of the material finds that the disputes require factual adjudication possible only with examination and cross examination of witnesses, will it decline to exercise the writ jurisdiction and refer the parties to arbitration; however, if the controversy is not found to be entailing any such factual controversy, this Court will proceed to adjudicate the matter. 9. That brings me to the grounds of cancellation of the lease. I will first take up the aspect of sale by the petitioner of the subject land in a clandestine manner to earn profit. 10. Significantly, the respondent DDA in the letter / order dated 02.06.2009 of cancellation has not cited any term/clause of the Perpetual Lease Deed in violation whereof the sale is alleged to have been effected. It is also significant that the letter / order dated 02.06.2009 is addressed to Sh. Naresh Chandra, President of Human Care Medical Charitable Trust (HCMCT) in whose favour the Perpetual Lease also was granted. It is not the case of the respondent DDA that the said HCMCT has sold the land to
some other person / party. The respondent DDA in its counter affidavit, in support of its action of cancellation of lease on the said ground, has pleaded adversarial claims being made by Sh. Naresh Chandra aforesaid and certain other persons with respect to the said land and referred to the complaints made by Sh. Naresh Chandra to the respondent DDA of certain persons misrepresenting as office bearers of the petitioner Society and to the communications received by the respondent DDA of the change in the management of the Society; it has also referred to the complaints received by it from certain other persons of sale, for premium of over `2 crores, of the land aforesaid which was allotted for hospital purposes; it has further referred to the total change in the management of the Society. The case of the respondent DDA is of sale by change in the membership of HCMCT which is registered as a Society. Thus what falls for consideration is, whether there was any such bar on change of members. The letter / order dated 02.06.2009 also does not state as to who were the members of the petitioner at the time of grant of Perpetual Lease and who were the members at the time when the cancellation was effected. 11. The Perpetual Lease Deed describes the lessee as Human Care Medical Charitable Trust through its President / Secretary, Sh. Naresh Chandra, registered under the Societies Registration Act XXI of 1860 and having its registered office at E-152,Saket, N. Delhi-110 017. Clause X of the Perpetual Lease Deed provides that the expression lessee shall mean the Human Care Medical Charitable Trust. The Lease nowhere provides as to who are the members / office bearers of the petitioner save mentioning the name of Sh. Naresh Chandra as the President / Secretary of the petitioner. Of course, Sh. Naresh Chandra while signing the Lease Deed has described himself as the President of the petitioner. The Lease does not prohibit the petitioner from changing its members and does not provide that such change of membership shall be construed as sale / transfer of the land. 12. Clause II (5)(a) of the Lease Deed does prohibit the lessee from selling, transferring, assigning or otherwise parting with possession of the whole or any part of the land or building thereon except with the previous consent in writing of the lessor i.e. the President of India and which the lessor in its absolute discretion is entitled to refuse. Clause III entitles the President of India as the lessor to, on breach by the petitioner as lessee of any of the covenant or conditions contained, determine the lease. Thus though the lessor acting through respondent DDA, for sale, transfer and assignment of the land or building thereon, is entitled to determine the lease
but the question is whether there has been any such sale, transfer or assignment. In the face of the admitted position that there is no sale, transfer or assignment by the petitioner to any other person, the only question which remains for adjudication is whether change of membership even if any of the petitioner can be said to be within the meaning of otherwise part with possession of the land / building constructed thereon. 13. The lessee in the present case is a Society. Bhagwati, J. in Satyavart Sidhantalankar Vs. The Arya Samaj, Bombay AIR 1946 Bombay 516 held that members and Governing Body of a Society are a fluctuating body but the identity of a Society under the Societies Registration Act, 1860 is a continuing one; the identity of the original members and their successors is one; the properties of the Society continue to vest in the Governing Body irrespective of the fact that the members of the Society for the time being are not the same as they were before, nor will be the same thereafter. It was further held that once the Society is registered, it enjoys the status of a legal entity apart from its members. 14. A five judge Bench of the Supreme Court in Board of Trustees, Ayurvedic and Unani Tibbia College v. State of Delhi AIR 1962 SC 458 had occasion to consider the status of a Society and also noticed the judgment supra of the Bombay High Court and though did not hold the said judgment of the Bombay High Court to be wrong, held a registered Society to be, though having characteristics which are analogous to some of the characteristics of a corporation, yet to be not incorporated and remaining an unincorporated Society. One of the Hon ble Judges namely Mudholkar, J. in his separate opinion held a registered Society to be a quasi-corporation or a near-corporation and being a legal entity at least for some purposes and not merely made up of its constituents. Though Mudholkar, J. also observed that a registered Society cannot hold property and it was so held subsequently in Church of North India v. Lavajibhai Ratanjibhai (2005) 10 SCC 760 and Tata Memorial Hospital Workers Union v. Tata Memorial Centre (2010) 8 SCC 480 also but for the reason of Section 5 of the Societies Registration Act providing for vesting of the property belonging to a Society in the Governing Body for the time being of such society. Significantly, Section 5 uses the expression property belonging to a Society and vests the same in the Governing Body for the time being. The same shows that property can belong to a Society and is only vested in the Governing Body of the Society. It thus cannot be said that a property cannot belong to a Society. Belong is explained in the Black s Law Dictionary, VI th
Edition, inter alia as to own. The use of the expression belong in juxtaposition to the expression vest is indicative of the ownership of the property being of the Society while the management thereof is of the Governing Body of the Society for the time being, just like the land underneath the roads, berms and pathways in a city though belonging to the Union of India vest in the municipality for management thereof. If a Society were to be incapable of owning a property, Section 5 would not have used the expression property belonging to a society. Section 16 of the Act defines the Governing Body of a Society as a body to whom by Rules and Regulations of the Society, the management of its affairs is entrusted. Section 4 provides for holding of the Annual General Meeting of the Society and filing annually of the particulars inter alia of the Governing Body then entrusted with the management of the affairs of the Society. That means that the persons constituting the Governing Body of the society may change from year to year. A conjoint reading of Section 5 with Sections 16 and 4 of the Societies Registration Act thus shows that though a Society may own the property but the same is held for the purposes of management thereof by the Governing Body for the time being. However, the person in whom the property is vested for management cannot become the owner thereof. 15. The Registered Lease Deed executed by the respondent DDA of the subject land in the present case is in favour of the petitioner Society. It is not in favour of the then Governing Body or the members of the Society. In fact, neither in the Lease Deed nor otherwise with the DDA exist the particulars of the Governing Body or the members of the petitioner Society at the time of execution of the Lease Deed. Thus, the only conclusion is that as far as respondent DDA is concerned, rights by way of perpetual lease in the subject land were created in favour of the petitioner Society, irrespective of, in whomsoever from time to time the management of the said land may vest by virtue of being in the Governing Body of the Society. It may also be mentioned that Rule 20 of the DDA (Disposal of Developed Nazul Land) Rules, 1981 permits allotment in favour of a society registered under Societies Registration Act. 16. I may notice that the Supreme Court in New Okhla Industrial Development Authority (NOIDA) v. Army Welfare Housing Organization (2010) 9 SCC 354 where also the document of title was in the name of the Society, after noticing Board of Trustees, Ayurvedic & Unani Tibbia College (supra) held that the Society being a quasi-corporation would be
deemed to be a separate legal entity from its members and was entitled to hold property. The same is the position here. 17. Thus when the Perpetual Lease is executed by the respondent DDA in favour of the Society and it is the Society which is prohibited from selling, transferring, assigning the land / building constructed thereon, a change in the membership or the Governing Body of the Society cannot fall within the meaning of otherwise part with possession of the property. The case made out by the respondent DDA is of the members of the petitioner Society as on the date of the Perpetual Lease having parted with possession of the land to the new members of the Society. However, the respondent DDA forgets that its privity under the Perpetual Lease aforesaid was with the Society and not with the then members of the Society. As aforesaid, no particulars even of the then members of the Society are to be found in the Perpetual Lease. The only mention therein is of Sh. Naresh Chandra as the President of the Society. The words otherwise part with possession in Clause II(5)(a) have to be read ejusdem generis to sale, transfer, assignment by the petitioner Society to another entity and cannot be read as prohibiting a change in membership. It was so held in Indudyog Co. Ltd. v. GNCTD MANU/DE/1422/2003. It cannot also be lost sight of, that the respondent DDA in leases of certain other properties where the lease is granted in the name of the company has imposed restriction on change of Directors or shareholders of a company. However, the respondent DDA did not choose to impose any such restriction in the subject Perpetual Lease in favour of the petitioner Society. The respondent DDA cannot now contend to the contrary. 18. The counsel for the respondent DDA has relied upon M/s Rajandheer (India) Pvt. Ltd. Vs. DDA AIR 2004 Delhi 208 where the expression otherwise part with the possession in the Perpetual Lease was held to be not confined to sale, transfer or assignment only and held to include subletting as well. However, in the said judgment itself the lease expressly prohibited transfer to a person not a member of the lessee. The said judgment thus cannot be of any assistance to the respondent DDA. 19. This Court in J.C. Khosla Vs. Khosla Medical Institute & Research Society 1996 III AD (Delhi) 109 held that where the property, a hospital in that case too, continues to be owned and run by the Society, change in control of management of the Society cannot amount to creation of third party interest in or transfer of property of Society. It was held that the same
does not amount to creation of any rights in the property of Society in favour of changed management inasmuch as the assets continue to be enjoyed by the Society and the new management does not acquire any personal interest in the said assets. 20. In view of the legal position aforesaid of the Society which is the lessee being distinct from its members, notwithstanding any change in the membership and/or in the office bearers of the Society, no case of violation of any terms of the lease can be made out. It will also be seen that qua this ground no factual controversy requiring adjudication exists. Thus, notwithstanding the change in membership, the Society continues and will continue to hold the land as the lessee. This Court thus has no hesitation in holding the cancellation of the Perpetual lease on the said ground at least to be arbitrary, illegal and in contravention of the Perpetual lease stated to have been executed in exercise of powers under the Government Grants Act, 1895. 21. I now deal with the second ground of cancellation of the Perpetual Lease i.e. of failure of the petitioner to raise construction on the plot. Clause II(4) of the Perpetual Lease no doubt mandates the lessee to, within a period of two years from 23.04.1996 and which time is provided to be the essence of the contract and after obtaining sanction of the building plan etc., complete in a substantial and workmanlike manner a building for hospital on the said land. Clause III while empowering the respondent DDA as lessor to determine the lease for breach of any of the terms thereof, expressly empowers the DDA to exercise the said power notwithstanding any waiver in the past. The proviso to the said clause however again entitles the respondent DDA to without prejudice to its right of re-entry, waive or condone the breaches temporarily on receipt of such amount and on such terms and conditions as may be determined by the lessor DDA from time to time. Clause IV prohibits any re-entry without issuing a show cause notice if the breach is capable of remedy and if the lessee is capable of remedying the breach. It is also not in dispute that neither at the time of filing of the petition nor till date the hospital building is ready and complete; though informed to be substantially complete. 22. It is also the undisputed position that the time for construction which in the Lease Deed was provided as two years from 23.04.1996 was on the application of the petitioner to the respondent DDA extended from time to time on payment of composition charges by the petitioner and till
24.04.2007. It is the case of the petitioner that the delay in construction is not attributable to the petitioner alone but also to the respondent DDA which has on being approached by the petitioner each time taken considerable time for granting necessary sanction; it is further the case of the petitioner that there was some other unavoidable delay owing to inter se disputes in the Society and for the reason of requirement of obtaining permissions from various other agencies involved in construction. The petitioner has however during the course of hearing handed over a Certificate dated 30.04.2011 of M/s Kothari Associates Pvt. Ltd., Architects to the effect that the structure of three Basements + Ground + Nine Floors + Mumty / Machine Room is complete and the brick work for three floors is complete and the remaining brick work is in progress, all at a cost of approximately `42 crores. The petitioner to substantiate the same has also handed over the photographs of the construction as presently existing. The senior counsel for the petitioner has also referred to judgment dated 22.11.2004 of this Court in W.P.(C) No.7372/2002 titled Hamdard (Wakf) Laboratories (India) Vs. DDA and which judgment in para 12 thereof refers to a Policy of the respondent DDA for condoning delay in construction on payment of prescribed rate of composition fee, upto 25 years and in para 18 refers to the Policy of 03.07.1997 permitting construction on institutional plots upto 15 years. 23. The senior counsel for the petitioner has also placed reliance on: (i) Thukral Mechanical Works Vs. P.M. Diesels Pvt. Ltd. AIR 2009 SC 1443 interpreting Section 46(1)(b) of the Trade and Merchandise Marks Act, 1958 and holding that the right of a registered trademark is not lost automatically on expiry of five years and one month and the said provision is not a sunset law and it has to be adjudicated upon. It is thus contended that on expiry of two years or extension thereof, the Lease did not automatically come to an end; (ii) Gobardhan Banerjee Vs. Sukhamoy AIR1951 Calcutta 481 on interpretation of Section 28 of the Limitation Act, 1908; (iii) Mekaster Trading Corporation Vs. UOI 106 (2003) DLT 573 on the duty to give reasons to contend that the letter / order dated 02.06.2009 in the present case is without any reasons and without dealing with the reply furnished by the petitioner to the notice to show cause and thus illegal; (iv) State Bank of India Vs. Mula Sahakari Sakhar Karkhana Ltd. (2006) 6 SCC 293 on interpretation of documents. 24. A perusal of the reply by the petitioner to the notice to show cause dated 09.04.2009 issued prior to the letter/order dated 02.06.2009 shows that
the petitioner therein had set out in detail the reasons for the delay in construction. Undoubtedly, the letter/order dated 02.06.2009 does not state as to why the said reasons/explanation are not acceptable. The obligation to issue a notice to show cause before taking any action for determination of lease is not to be an empty exercise. The requirement to comply with the principles of natural justice cannot be paid merely a lip service. A Division Bench of this Court in Cycle Equipments Pvt. Ltd Vs. MCD AIR 1993 Del 94 held that the principle of natural justice requires that there should be a fair determination of the question by quasi judicial authorities; that the process does not end by making known to a person the proposal against him and giving him a chance to explain; it extends further to consideration of the representation and the materials and a fair determination of the question involved; that necessitates giving of reasons justifying the action contemplated against the affected person. The entire purpose of giving an opportunity of hearing would be lost if the hearing is not effective and is with a closed mind. The purpose of hearing is to enable the deciding authority to consider the cause shown by the noticee and if dissatisfied with the same, to give reasons therefor. The respondent DDA in the present case has not given any reasons whatsoever. The only inference which can be drawn therefrom is that the respondent DDA was not in a position to rebut the reasoning given by the petitioner for the delay in construction. Moreover, once the respondent DDA itself had extended the time for construction till 24.04.2007, it leads to the inference that the respondent DDA was satisfied with the reasons for the delay till then. The respondent DDA thus in the letter / order dated 02.06.2009 could not have held the delay to be of 13 years. The respondent DDA was then only required to consider whether the delay beyond 24.04.2007 was such as to invite cancellation of lease. 25. The cancellation of lease for non construction is liable to be set aside on this ground alone. It will also be seen that the said aspect also does not entail any factual controversy requiring adjudication. 26. There is another aspect of the matter. A structure comprising of three storey basement and nine floors above ground is standing on the site. The plot is meant for the hospital for the benefit of the residents of the locality which in the recent years has seen a large influx of population from the neighbouring cities/towns. It is felt that if the disputes between the petitioner and the respondent DDA are allowed to linger on, the same would further delay the hospital becoming operational and to the prejudice of the residents
of the locality. It is therefore deemed expedient that the remaining construction is completed at the earliest and the hospital becomes functional/operational. The powers of this Court while exercising jurisdiction under Article 226 are wide. This Court, to do substantial justice between the parties, can decline relief even where entitlement in law is made out (see Chandra Singh Vs. State of Rajasthan (2003) 6 SCC 545 and ONGC Ltd. Vs. Sendhabhai Vastram Patel (2005) 6 SCC 454) and similarly grant relief inspite technical violation as aforesaid. Similarly, in Taherakhatoon Vs. Salambin Mohammad (1999) 2 SCC 635 even at the time of the dealing with the appeal after grant of special leave, it was held that the Court was not bound to go into the merits and even if entering into the merits and finding an error, was not bound to interfere if the justice of the case on facts does not require interference or if the relief could be moulded in a different fashion. This Court has echoed the same views in Filmistan Exhibitors Ltd. v. N.C.T., thr. Secy. Labour 131 (2006) DLT 648 by holding that even if there is a violation of law, this Court is not bound to exercise discretionary jurisdiction and in Babu Ram Sagar Vs. Presiding Officer, Labour Court MANU/DE/9235/2006 by refusing to interfere in exercise of discretionary powers inspite of holding the reasons given by the Labour Court to be not convincing. The present appears to be a fit case to exercise such discretionary powers under Article 226 of the Constitution of India rather than setting aside cancellation owing to non construction on technical grounds aforesaid and which may lead to further disputes and consequent delays in the Hospital becoming operational. 27. Considering that the land has been earmarked and allotted for hospital purpose and which allocation is deemed to have been done keeping in mind the density of population in the colony of Dwarka, it is found to be in the interest of all concerned to now ensure that the hospital becomes functional immediately. 28. In the circumstances, the petition succeeds. The letter/order dated 02.06.2009 of the respondent DDA cancelling the lease of the land in the name of the petitioner is set aside/quashed. However, this Court is nevertheless pained by the considerable delay for whatsoever reason, in the hospital not being completed till now. In the circumstances, this Court issues the following further directions: (i) The respondent DDA to within eight weeks hereof inspect the construction existing at the site and to in consultation with petitioner arrive at a reasonable estimate of the further time required for completing the same
and to extend the time for the petitioner to complete the construction till the said date, on payment of composition charges etc. by the petitioner in accordance with the Policy of the respondent DDA; (ii) The petitioner to pay the said composition charges and to ensure completion of construction within the time so fixed by the respondent DDA; (iii) For the undoubted delay occasioned in completion of the hospital project and which is to the prejudice of public at large, the petitioner, in addition to composition charges supra is directed to within four weeks contribute a sum of `15,00,000/- to the Prime Minister's National Relief Fund and furnish proof thereof to DDA; (iv) The petitioner is warned that if it does not complete the construction within the time to be so fixed by the respondent DDA, no further leniency shall be shown and in accordance with the earlier order dated 25.05.2010 (supra) in these proceedings, no equities shall then flow in favour of the petitioner for the reason of having raised the construction on the property. The petition is disposed of. Sd/- RAJIV SAHAI ENDLAW (JUDGE)