2025 INSC 337
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1972 OF 2011
Delhi Development Authority … Appellant
Versus
S.G.G. Towers (P) Ltd. & Ors. … Respondents
JUDGMENT
ABHAY S. OKA, J.
FACTUAL ASPECTS
1. The appellant, Delhi Development Authority
(formerly known as the Delhi Improvement Trust),
executed an agreement of lease (for short, “the lease
agreement”) dated 17th July 1957 in respect of plot no.3
(for short “the said Plot”), measuring 2044.4 sq. yards,
situated in Industrial Area Scheme, Najafgarh Road, New
Delhi in favour of M/s Mehta Constructions and Industrial
Corporation Private Limited (for short, “M/s Mehta
Constructions”). On 25th November 1972, M/s Mehta
Constructions entered into an agreement to sell with M/s
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2025.03.07
[Link] IST
Reason: Pure Drinks Private Limited, the second respondent. A
Civil Appeal No.1972 of 2011 Page 1 of 13
registered sale deed cum Assignment dated 15th February
1985 was executed by M/s Mehta Constructions in favour
of the second respondent. In Execution Proceedings, i.e.
Co Ex 8 of 1981, the Company Judge of the Delhi High
Court passed an order on 4th February 1985. Pursuant to
the said order, the Registrar of the High Court lodged the
sale deed for registration in the office of the Sub-Registrar,
Delhi.
2. Even the second respondent went into liquidation,
and the plot was sold to the first respondent in the auction
on 24th August 2000 in liquidation proceedings before the
Delhi High Court. The auction was held pursuant to the
notice of proclamation of sale issued by the High Court of
Punjab and Haryana on 9th June 2000.
3. On 7th December 2000, the first respondent applied
for confirmation of the sale made in the auction. The
appellant appeared in the said proceedings and filed a
reply. The appellant contended that at no point of time
had M/s Mehta Constructions acquired any interest in the
plot, and therefore, the plot could not have been sold in
the auction. By the order 19th October 2001, the learned
Single Judge allowed the application filed by the first
respondent and confirmed the auction sale. Aggrieved by
the said order, the present appellant preferred an appeal
Civil Appeal No.1972 of 2011 Page 2 of 13
before the Division Bench. By the impugned judgment
dated 21st January 2010, the appeal was dismissed.
SUBMISSIONS
4. The learned senior counsel appearing for the
appellant urged that what was executed on 17th July 1957
in favour of M/s Mehta Constructions was only an
agreement to lease. The agreement provided that the lease
deed was to be executed only upon certain compliances
being made by M/s Mehta Constructions. As no such
compliance was made, the lease deed was not executed,
and therefore, leasehold rights were never acquired by M/s
Mehta Constructions with respect to the said plot. He
relied upon Clause 24 of the lease agreement, which
clearly provided that unless the lease is executed, the
agreement will not create any right, title or interest in
respect of the said plot in favour of M/s Mehta
Constructions.
5. The learned senior counsel submitted that the plot is
Nazul land, which belongs to the Union of India and is in
the care and custody of the appellant. He submitted that
a Nazul land can be sold only in accordance with Section
22 of the Delhi Development Act, 1957 (for short, “the said
Act”) and the Delhi Development Authority (Disposal of
Developed Nazul Land) Rules, 1981 (for short, ‘the 1981
Rules’). The learned counsel submitted that though no
Civil Appeal No.1972 of 2011 Page 3 of 13
right, title or interest was created in favour of M/s Mehta
Constructions, it purported to execute an agreement for
sale in favour of the second respondent. It appears that in
Company Application pending before the learned Single
Judge, M/s Mehta Constructions was represented by one
Shri R.P. Dutt, its Managing Director who stated that an
absolute irrevocable authority has been conferred upon
Shri [Link] Singh and Shri [Link] Singh of the
second respondent to take steps to get the title of M/s
Mehta Constructions perfected. An order was passed by
the learned Company Judge of the High Court on 4th
February 1985, directing the Registrar of the High Court
to appear before the Sub-Registrar of Assurances and to
admit execution of a sale deed in favour of the second
respondent. Accordingly, the deed of Conveyance and
Assignment dated 15th February 1985 executed by and
between M/s Mehta Constructions and the second
respondent was registered. He pointed out that the
Company Court was not made aware that even leasehold
rights regarding the said plot were not available with M/s
Mehta Constructions. He submitted that that is how, in
the liquidation proceedings of the second respondent, the
plot was put to public auction and sold to the first
respondent. He submitted that under Rule 43 of the 1981
Rules, the lessor's prior consent was required to transfer
the said plot. Placing reliance on a decision of this Court
Civil Appeal No.1972 of 2011 Page 4 of 13
in the case of Delhi Development Authority v. Vijaya C.
Gurshaney & Anr.,1 he submitted that the sale in favour
of the first respondent was illegal. The learned senior
counsel also relied upon the decisions of this Court in the
cases of Food Corporation of India & Ors. v. Babulal
Agrawal2, Delhi Development Authority v. Anant Raj
Agencies [Link].3, State of Rajasthan & Ors. v. Gotan
Lime Stone Khanij Udyog Pvt. Ltd. and Anr.4 and Delhi
Development Authority v. Nalwa Sons Investment Ltd.
& Anr.5
6. The learned counsel appearing for the respondents
submitted that until the first respondent applied for
confirmation of sale, the appellant never filed any
proceedings to challenge the transactions between M/s
Mehta Constructions and the second respondent. It was
submitted that the appellant never challenged the auction
process. It was submitted that no interference is called for
with the impugned judgment.
CONSIDERATION OF SUBMISSIONS
7. There is no dispute that the Delhi Improvement Trust
executed an agreement to lease dated 17th July 1957 in
favour of M/s Mehta Constructions regarding the said plot.
1
(2003) 7 SCC 301
2 (2004) 2 SCC 712
3 (2016) 11 SCC 406
4 (2016) 4 SCC 469
5 (2020) 17 SCC 782
Civil Appeal No.1972 of 2011 Page 5 of 13
Various terms and conditions were included in the said
agreement. The agreement provided for the execution of
the lease deed in favour of M/s Mehta Constructions.
Clause 24 of the agreement is relevant which reads thus:
“24. Nothing in these presents
contained shall be considered as a
demise at law of the said piece of land
hereby agreed to be demised or any
part thereof so as to give the said
intended lessee any right, title or
interest therein other than as may be
conferred by these presents until the
said lease shall have been executed
and registered.”
8. Admittedly, a lease in terms of the lease agreement
was never executed. On 25th November 1972, M/s Mehta
Constructions executed an agreement for sale in favour of
the second respondent for a consideration of
Rs.3,06,700/-. It appears that on 15th February 1985,
M/s Mehta Constructions executed a sale deed in favour
of the second respondent in respect of the said plot. As
per the order dated 4th February 1985 passed by the
learned Single Judge of the High Court, the High Court
Registrar presented the sale deed for registration before
the sub-Registrar of Assurances at Delhi. On 9th June
2000, a notice for Proclamation of Sale was published by
the High Court of Punjab and Haryana of the said plot.
Accordingly, in the auction sale, the highest bid of the first
respondent was accepted by the High Court. The auction
Civil Appeal No.1972 of 2011 Page 6 of 13
sale was confirmed by the learned Single Judge. The order
of the learned Single Judge had been confirmed by the
impugned order of the Division Bench.
9. An order dated 4th October 2023 passed by this
Court read thus:
“After arguments were heard for some
time of the learned counsel appearing
for the appellant, the learned senior
counsel appearing for the first
respondent and the learned counsel
appearing for the second respondent,
this Court noticed that the first
respondent while filing an application
bearing Company Application No.744 of
2000, showed willingness to pay the
unearned income in terms of the
Resolution No.S/2(31)(57) of the Delhi
Development Authority in respect of a
transaction of auction. Therefore, we
posed a query to the learned senior
counsel appearing for the first
respondent about the payment of
unearned income based on the first
transaction of transfer between M/s.
Mehta Construction and Industrial
Corporation and M/s. Pure Drinks
Limited. The learned senior counsel
appearing for the first respondent seeks
time to take instructions from the first
respondent.
We permit the appellant to implead Mr.
Prashant Baliyan, Provisional
Liquidator, Office of the Official
Liquidator, Ministry of Corporate
Civil Appeal No.1972 of 2011 Page 7 of 13
Affairs, Corporate Bhawan, Plot No.4B,
Second Floor, Sector 27B, Madhya
Marg, Chandigarh-160019, as party
respondent.
The amended cause title be filed within
three days from today.
Issue notice to the newly added
respondent.
Mr. Prashant Baliyan, Provisional
Liquidator, will have to make a
statement about the availability of the
amount deposited by the first
respondent pursuant to the auction
and, if such amount is available,
whether it has been invested in a fixed
deposit.
As the service of notice will take time,
we direct the appellant to inform Mr.
Prashant Baliyan to appear before this
Court on the next date of hearing by
forwarding a copy of this order to him.
We also direct the appellant to
communicate to the learned counsel for
the first respondent the amount payable
in respect of both the transactions.
List on 18th October, 2023, as part-
heard matter at the top of the Cause
List.”
10. An affidavit was filed by the Provisional Liquidator of
the second respondent in terms of the order. The
Civil Appeal No.1972 of 2011 Page 8 of 13
Provisional Liquidator relied upon the orders passed by the
Company Court. The Provisional Liquidator pointed out
that as per letter dated 7th November 2023 addressed to
the Provisional Liquidator by the Registrar General of
Punjab and Haryana High Court, out of the amount
deposited by the first respondent towards confirmation of
sale, amounts of Rs.70,49,036/- and Rs.14,00,579/- have
been invested in fixed deposits. The Registrar General
pointed out that the maturity value of the fixed deposits
was Rs.2,14,06,677/- and Rs.51,43,324/-, respectively. It
is true that the aforesaid amounts which are invested in
fixed deposits are available. However, the liquidation
proceedings are still pending. In the report, the liquidator
stated that a number of parties had made claims against
the second respondent, including the Income Tax
Department. The total claims are of Rs.60.66 crores or
more. The total amount available is approximately Rs.10
crores. The amount available will be governed by the
orders passed by the Company Court. When the High
Court is seized of liquidation proceedings, and as there are
other creditors of the second respondent, it will not be
appropriate to direct that a part of the amount paid
towards consideration by the first respondent should be
appropriated towards unearned income payable to the
appellant.
Civil Appeal No.1972 of 2011 Page 9 of 13
11. It is an accepted position that the lease was never
executed by the appellant in favour of M/s Mehta
Constructions, and no rights, title, and interest were
created in favour of M/s Mehta Constructions in respect of
the said plot. Therefore, at the highest, the second
respondent, by virtue of the sale deed dated 15th February
1985, executed by M/s Mehta Constructions, can claim
benefits under the lease agreement, provided in law, the
second respondent is entitled to it in accordance with law.
12. We may note here that as far as the auction
conducted in the liquidation proceedings of the second
respondent is concerned, the notice of proclamation itself
records that the sale of the said plot was on “as it is basis”.
Moreover, the order dated 19th October 2001 of the
Company Judge making sale absolute in favour of the first
respondent reads thus:
“From the record, it transpires and it
stands proved that the property in
question which is in the shape of the
land is the property of DDA which
entered into a wrong agreement of lease
dated 17.7.57 in favour of M/s Mehta
Construction and in pursuance of that
agreement the possession was delivered
to M/s Mehta Construction and
Industrial Corporation Ltd., which was
a limited company. Unfortunately, M/s
Mehta Construction could not
discharge its liability as a result of
Civil Appeal No.1972 of 2011 Page 10 of 13
which it went into liquidation and its
lessee rights virtually were sold in
public auction which were purchased
by M/s Pure Drinks (New Delhi) Ltd.,
vide a deed of conveyance dated
15.2.1985. This auction was conducted
under the direction of Hon'ble Delhi
High Court. Meaning thereby, that M/s
Pure Drinks (New Delhi) Ltd., was
substituted in place of M/s Mehta
Construction. It also ran into financial
difficulty running into financial
deficiency and company petition for
winding up was filed in this Court which
was ordered to be admitted vide· order
dated 28.8.1997. The publication has
been affected under the orders of this
court. The lessee rights which were
given to M/s Mehta Construction and
which were assigned to M/s Pure
Drinks (New Delhi) Ltd., under the
orders of the High Court were auctioned
and purchased by the applicant. In this
manner, it can be safely held that the
present applicant has acquired
whatever the lessee rights were
acquired either by Mehta
Construction or by Pure Drinks (New
Delhi) Ltd.”
(emphasis added)
Therefore, the first respondent will get only those rights
which M/s Mehta Constructions had under the lease
agreement, provided the rights can be claimed at this
stage. In fact, in the impugned judgment, the Division
Bench of the High Court had observed that the auction
Civil Appeal No.1972 of 2011 Page 11 of 13
would not amount to sale of the said plot. The impugned
judgment leaves the remedy of the appellant open to
proceed against the concerned parties. These findings
have been accepted by the first respondent.
13. As regards the unearned income, the Division Bench
was right in not passing any order on that behalf. We
cannot direct the funds available in liquidation
proceedings for payment of the unearned income as large
number of claims have been submitted.
14. Thus, the scenario which emerges is that the first
respondent is not entitled to either ownership or leasehold
rights in respect of the said plot. The first respondent
cannot claim to be a lessee as the lease in terms of the
lease agreement was never executed. At the same time, if
according to the case of the appellant, M/s Mehta
Constructions had committed breach of the lease
agreement, notwithstanding the impugned orders, it will
be always open for the appellant to adopt appropriate
remedy for recovery of possession and/or recovery of
unearned income against the first respondent.
15. If the first respondent desires to get the transaction
regularised, it is for the first respondent to apply to the
appellant to accept unearned income or any other amount.
Civil Appeal No.1972 of 2011 Page 12 of 13
If such a request is made, the appellant will consider the
same in accordance with the law.
16. Subject to the findings recorded as above, there is no
reason to interfere with the impugned judgments.
Accordingly, the appeal stands dismissed in the light of the
findings recorded as above.
.…………………………….J.
(Abhay S Oka)
…………………………….J.
(Ujjal Bhuyan)
New Delhi;
March 07, 2025.
Civil Appeal No.1972 of 2011 Page 13 of 13
