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High Court Of Delhi|02 July, 2012


HON’BLE MR. JUSTICE VALMIKI J.MEHTA To be referred to the Reporter or not?
1. The plaintiffs have filed this suit for recovery of ` 35 lacs alongwith pendente lite and future interest @ 24% per annum. The break-up of this amount of ` 35 lacs is given in para 31 of the plaint as under:-
“31. That the plaintiffs are entitled to the following amounts:
i) Refund of penalty ` 8,25,000/-
ii) Interest on ` 8,25,000/- ` 14,00,000/- from the date of payment till the date of the suit.
iii) Loss of earnings and damages caused ` 45,00,000/-
on account of high cost of construction on account of delay in delivery of possession The plaintiffs are thus entitled to a total sum of over ` 67 lakhs but confine their claim to ` 35 lakhs (rupees thirty-five lakhs only).”
2. The plaintiff Nos.1 to 3 were the successful bidders in an auction conducted by the defendant/Delhi Development Authority (DDA) on 5.2.1981. The bid was given with respect to plot No.13, L.S.C., „J‟ Block Saket, New Delhi admeasuring 205-30 sq. yds. The bid price was ` 16,50,000/-. The plaintiff Nos.1 to 3 at the fall of the hammer deposited ` 4,12,500/- being 25% of the bid amount. The balance amount as per terms and conditions of the auction [clause 2(vi)] was payable on the Vice Chairman of the defendant accepting the bid and this being so informed to the plaintiffs. I may state that the plaintiff No.4 is a company which was proposed to be incorporated after the submission of the bid by the plaintiff Nos.1 to 3. As per the plaintiffs, they never received the letter dated 13.4.1981 of the defendant (Ex.RW1/1) with respect to acceptance of the bid after approval of the Vice Chairman. The plaintiffs claimed that they came to know of the acceptance of the bid for the first time when defendant informed them by the letter dated 30.6.1981 (Ex.P2), by inviting reference to the letter dated 13.4.1981, and stating that since the balance amount was not deposited, the bid stood cancelled. There is a chain of correspondence thereafter from 1981 to 1987 between the parties, and details of all of which need not be given, however, the position which emerged is that the defendant refused to relent. Firstly, the defendant issued its letter of restoration of cancellation subject to payment of penalty/restoration charges as also interest charges and then subsequently for cancellation. The letter of the defendant stating that the plot would be restored only subject to payment of restoration and interest charge is the letter dated 26.11.1985 (Ex. P13), and the letter dated 3.9.1987 (Ex.P18) of the defendant to the plaintiffs is the letter that in view of the non-payment by the plaintiffs of the restoration/penalty charges, the bid stood cancelled and the earnest money stood forfeited. The plaintiffs thereafter sent to the defendant their letter dated 14.10.1987 (Ex.PW1/29) in para 7 whereof it was stated that when the Commissioner (Lands) on 19/20.4.1987 informed verbally that penalty cannot be reduced at that stage, thus, the plaintiffs deposited the penalty amount of ` 6.60 lacs on 21.4.1987 vide challan No.20214 dated 21.4.1987.
There is no dispute that at the time of deposit of this amount there was no covering letter that this amount is being deposited under protest or without prejudice or any other language signifying that the issue has been left alive. Even thereafter the plaintiffs however continued to correspond seeking refund of the penalty, however, nothing came out of it. In fact, the plaintiffs in furtherance of the deposit took possession of the plot on 10.11.1987, after the defendant wrote its letter dated 9.11.1987 to the plaintiffs that possession of the plot in question be taken. The plaintiffs however continued to correspond with the defendant seeking refund of the penalty/restoration amount, and, on account of failure of the defendant to do so, the subject suit ultimately came to be filed.
3. The following issues were framed in this case on 7.2.1997:-
“1. Whether the plaint has been signed and verified by a duly authorized person?
2. Whether Notice Under Section 53-A of Delhi Development Act was not served upon the defendant? If so, what is its effect?
3. Whether the plaintiffs are stopped from filing the instant suit in view of the fact that plaintiff had made payments towards the penalty, interest etc.?
4. Whether the imposition of restoration penalty by the defendant was legal?
5. Whether the defendant was entitled to charge interest from the plaintiff on the restoration penalty and other charges?
6. Whether the plaintiff suffered damages on account of delay on the part of the defendant? If so, to what extent and upto what period?
7. Whether the plaintiff is entitled to claim interest on the amount paid to the defendant on account of restoration penalty and interest and at what rate?
8. Relief.”
Issue No.1
4. Counsel for the defendant does not press this issue. This issue is therefore answered in favour of the plaintiffs.
Issue No.2
5. Counsel for the defendant also does not press this issue and therefore this issue is also answered in favour of the plaintiffs.
Issue Nos.3 to 7
6. All these issues can be taken up and disposed of together for the reason that if the defendant succeeds in establishing that the plaintiffs have accepted the penalty amount without any protest, by unconditionally making such payment, and in fact have taken benefit by receiving possession thereafter, the plaintiffs would be estopped from filing the instant suit. In fact, in my opinion, the issue besides being one of estoppel, is also one of acquiescence and the novation of the contract between the parties.
7. At the outset, I would dispose of issue No.5 inasmuch as though this issue has been framed, there is no such cause of action laid out in the plaint that the defendant has illegally claimed interest on the restoration/penalty charges. In fact, I may note that even in the correspondence which is entered into prior to the filing of the suit, the plaintiffs had stressed only with respect to the illegality of the penalty/restoration charges and there is no correspondence which could be pointed out to the Court by which the plaintiffs had raised a grievance that the defendant was wrongly claiming interest on the penalty/restoration charges. This issue is therefore answered in favour of the defendant inasmuch as no amount of evidence can be looked into once there is no such pleadings. In any case, I may state that this issue will also be answered in accordance with the decision of issue No.3, being the principal issue and which requires consideration, and which I will now take up.
8. So far as issue No.3 is concerned, the following undisputed facts emerge from the record:-
(i) The plaintiffs never challenged the cancellation of the plot by the defendant and the forfeiture of the earnest money and as informed to the plaintiffs vide the defendant‟s letter dated 3.9.1987 (Ex.P18). In case, the plaintiffs had any grievance they were entitled to approach a Court of law, initiate appropriate proceedings, whether the same be a suit or a writ petition, however, at no point of time the cancellation intimated vide letter dated 3.9.1987 (Ex.P18) was ever challenged.
(ii) The amount of penalty charges on the contrary were in fact deposited by the plaintiffs on 21.4.1987, and admittedly this deposit was not accompanied by any letter stating that the amount deposited was under protest or was without prejudice to the rights of the plaintiffs to challenge the claim towards penalty charges or the interest charges.
(iii) No doubt remains of the plaintiffs not seeking to challenge the action of the defendant inasmuch as the plaintiffs vide their letter dated 14.10.1987 (para 7) have categorically accepted the factum of defendant‟s decision that penalty amount cannot be waived.
(iv) Unconditional benefit of deposit of the penalty charges was taken when possession was taken by the plaintiffs on 10.11.1987 pursuant to the defendant‟s letter dated 9.11.1987 (Ex.P20), and, even at this stage the plaintiffs did not take up the stand that they are accepting the possession under protest and without prejudice to their rights to recover the penalty amount and the interest paid thereon.
9. In view of the aforesaid undisputed position which has emerged on record, I have no hesitation to come to the conclusion that though plaintiffs had tried to cause the defendant to withdraw the penalty charges, however, they were not successful and consequently they deposited the disputed penalty charges. That this deposit was an unconditional deposit becomes clear from the letter of the plaintiffs to the defendant dated 14.10.1987 (Ex.PW1/29), and para 7 of which reads as under:-
“7.When no reply was received, another letter dated 1.4.87 was addressed by Shri Deep Chand Sharma to the Commissioner (L). When we met the Commissioner (L) on 19/20.4.87 he informed verbally that he had examined the case and penalty cannot be reduced at this stage. We immediately arranged the amount which was amounting to ` 6.60 lakhs, and deposited the same on 21.4.87 vide challan No.20214 dated 21.4.87.” (underlining added) A reference to this aforesaid para in the letter dated 14.10.1987 clearly shows that the plaintiffs, for whatever reasons, gave up their challenge and accepted their liability to pay the penalty charges. This para specifically refers to the fact that the Commissioner (Lands) of the defendant had on reconsideration of the case found that penalty charges could not be reduced and therefore the plaintiffs deposited the penalty charges.
In my opinion, the aforesaid shows clear cut acquiescence, and if not acquiescence, surely at least an estoppel preventing any challenge by the plaintiffs to the claim of the penalty charges by the defendant. In fact, in my opinion, the actions of the plaintiffs show that there is in fact a novation of contract inasmuch as the plaintiffs by making payment of the penalty charges without protest thus agreed to take the plot in question at a higher price. Once the contract is novated it is not permissible for the parties to contend otherwise. I therefore hold issue No.3 in favour of the defendant and against the plaintiffs.
10. So far as issue No.4 is concerned, this issue becomes irrelevant because even assuming that the claim of restoration charges against the plaintiffs by the defendant was illegal, it is not open to the plaintiffs now to claim and urge refund of such penalty inasmuch as when the amount was deposited there was never any issue raised that the amount is being deposited under protest or without prejudice. In fact, I have already reproduced para 7 of the Ex.PW1/29 dated 14.10.1987 which shows a clear cut acceptance on behalf of the plaintiffs to the penalty charges imposed by the defendant.
11. Once it is held that the plaintiffs acquiesced to the additional price i.e. penalty charges and the interest claimed, there does not arise an issue of the plaintiffs having been caused loss by delay in handing over possession of the subject plot. As already stated above, the penalty charges were deposited on 21.4.1987, and thereafter, the plaintiffs themselves acted by taking benefit of the amount deposited as they came forward and took take possession of the plot. Therefore, I do not find that there is any delay in handing over possession by the defendant to the plaintiffs, more so even as late as on 14.10.1987 (Ex.PW1/29) plaintiffs were corresponding on the issues in question.
12. A resume of the above facts shows that though the defendant failed to prove the sending of letter Ex. RW1/1, possibly, the plaintiffs knew that they had either received the letter or in any case they wanted to give quietus to the dispute inasmuch as they wanted to take benefit of the possession of the plot for making construction thereon. One more reason could also be that the plot would have become much more valuable than the original bid amount plus the restoration and the interest charges, and therefore the plaintiffs possibly realizing this and wanting a quietus, agreed to pay the additional amount which was claimed by the defendant. Having thus taken benefit of payments made by them including by taking possession of the plot and making construction thereon, the plaintiffs now cannot turn turtle and allege that the defendant wrongly claimed the penalty amount.
13. Once there is no cause of action of the plaintiffs to claim back the restoration/penalty charges, obviously there does not arise the issue of payment of interest to the plaintiffs.
14. In view of the aforesaid, issue Nos. 3 to 7 are answered against the plaintiffs and in favour of the defendant.
15. Learned counsel for the plaintiffs sought to place reliance upon a decision of a Division Bench of this Court in the case of Indian Instt. of Public Opinion Pvt. Ltd. Vs. Life Insurance Corporation of India in LPA No.9/2012 decided on 11.5.2012 for the proposition that defendant cannot claim an amount against their own policy. In my opinion, this judgment has no application in the facts of the present case because the issue in the present case turns more on the aspects of acquiescence, estoppel and novation of the contract inasmuch as if the claim of the defendant was illegal the plaintiffs could have challenged such an alleged illegal claim, but having failed to do so, they cannot now contend that the claim of restoration/penalty charges on behalf of the defendant was illegal being against their policies. Reasoning on issue No.4 given above in para 10 deals and rejects this argument raised by the plaintiffs.
16. In view of the aforesaid discussion, the suit of the plaintiffs is dismissed leaving the parties to bear their own costs.
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High Court Of Delhi

02 July, 2012
  • Valmiki