Bharat Bhushan and Others vs Delhi Development Authority

Sanjay Kishan Kaul, J.—A person by the name of Om Prakash registered himself under the NPRS, 1979 scheme but subsequently requested for transfer to the Rohini Scheme in 1980. Though the said transfer was effected, his name still continued to be under the category of NPRS Scheme apparently by mistake. A draw of lots was held on 13.3.1981 in respect of the NPRS scheme and MIG flat bearing No. 45-a Pocket GG-1, Vikas Puri, New Delhi was allotted to Shri Om Prakash on a hire-purchase basis. After payment of the initial amount, the possession was taken over.

The deceased petitioner Shri Bharat Bhushan in October 1982 purchased the said flat at a premium of Rs. 91,000/- on a power of attorney basis with the normal agreement to sell, GPA, SPA and will executed in his favour.

It appears that the payment and the taking over of the possession of the flat was done fraudulently from the DDA by someone claiming to be Om Prakash. Om Prakash thus filed a writ petition before this Court bearing civil writ petition 721/1985 which was disposed of on 11.12.1985. Shri Om Prakash was not granted any relief since he had already got a flat in the Rohini scheme and could not have been eligible for both the flats. The Division Bench however noted with concern the fraud which had taken place. It was noticed that it was a scandalous state of affairs in the DDA whereby not only was Om Prakash included in the draw of lots but a flat was allotted to him and someone took possession posing to be Om Prakash. Shri Bharat Bhushan in fact intervened in the said matter and informed the court about the purchase of the flat by him on power of attorney basis. It is further noticed that the fraud would not have come out but for the writ petition filed and with the then Commissioner (Housing) taking up this matter. The court directed that Mr. Bharat Bhushan would give necessary assistance and he was further permitted to file a complete and detailed representation in view of the fact that he was now in possession of the flat that he had purchased on a power of attorney basis. It was further directed that a detailed enquiry may be necessary to uncover what had happened.

The petitioner accordingly made a representation on 13.12.1985 and inter alia prayed that the transfer should be regularised in his favour or in favour of his son in view of the fact that he had been in possession since 1982 and was paying the installment amounts and was willing to pay the balance amount. Thereafter, certain proceedings were held before the respondent authority. In the letter dated 5.12.1988 of the petitioner, it is noted that the Commissioner (Housing) had directed the Department to work out the amount payable by Shri Bharat Bhushan including any unearned increase. A request for expedition was made.

Shri Bharat Bhushan received a letter dated 6.6.1989 of the DDA requesting the petitioner to submit the copies of the challans of payment made by him till date. The petitioner did the needful and thereafter the letter dated 11.5.1990 was issued by the DDA stating that the petitioner was short of payment by 17 monthly installments. The petitioner in response to the said letter vide a letter received on 10.10.1990 informed that he had deposited the said amount of balance payment vide two challans and enclosed the copy of the challangs. There was silence thereafter on the part of the respondent till a letter dated 17.1.1992 was issued stating that installments were due from January, 1989 to June, 1989. The subject matter of this letter is "issue of No Due Certificate in respect of 45-A/GG-1, Vikas Puri". This was followed up by a reminder dated 25.2.1992. The petitioner replied vide letter received by the DDA on 2.7.1992 stating that all the amounts have been deposited and enclosing the copies of the relevant challans.

In the meantime, the DDA came up with the scheme of conversion into freehold and thus the petitioner addressed a letter dated 6.2.1995 to the respondent stating that he was applying for conversion into freehold of the flat from leasehold and was willing to pay relevant charges. The petitioner made a further representation on 25.5.1995 but vide impugned letter dated 7.10.1996, the petitioner was informed that he was an unauthorized occupant of the flat in view of Shri Om Prakash being wrongly allotted a flat and the possession of the flat being handed over to someone impersonating as Om Prakash.

The petitioner impugned the said letter in the present proceedings and interim relief was granted in favour of the petitioner at the initial stage itself. Despite various opportunities, counter affidavit was not filed and finally on 24.7.2000 rule was issued in the matter on account of failure of the respondent to file the counter affidavit and the interim orders were made absolute. Even till date, neither counter-affidavit has been filed nor any record is available.

I have considered the submissions advanced by learned Counsel for the parties on the basis of the pleadings on record.

It may be noted that it is not even known as to what enquiry was made and the result thereof in pursuance to the directions passed by the Division Bench in the order dated 11.12.1985. Possibily, the officer would have gone unpunished and that appears to be the reason for not filing the counter affidavit. In terms of the same order of the Division Bench, the petitioner was permitted to make the representation which was duly made by the petitioner on 13.12.1985 itself. The letter dated 5.12.1988 of the petitioner gives an impression that the amount payable by the petitioner was being worked out. This is fortified by the letter dated 6.6.1989 of the DDA asking the petitioner to submit the challans. After the petitioner had submitted the challans, the petitioner was called upon vide letter dated 11.5.1990 to pay the outstanding balance of the hire-purchase installments which were duly paid by the petitioner. Not only this, further demands were raised vide letter dated 17.1.1992 about some installments remaining unpaid which were also paid.

The natural consequence of all this would be that there would be presumption that everything would have got regularised and the representation of the petitioner was accepted. The respondent authority, however, woke up only when the petitioner applied for conversion into freehold and issued the impugned letter dated 7.10.1996. Learned Counsel for the petitioner referred to the provisions of Section 19 of the Indian Contract Act, 1872 which are as under:

Voidability of agreements without free consent.-When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.

A party to contract, whose consent was caused by fraud or misrepresentation may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.

Exception.-If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.

Learned Counsel thus submitted that at best the contract between Shri Om Prakash and the respondent could be said to be voidable as a result of the fraud played by someone claiming to be Shri Om Prakash. The petitioner stepped into the shoes of the said person having purchased the flat on power of attorney basis.

Learned Counsel for the petitioner also referred to the observations of the Supreme Court in Ningawwa Vs. Byrappa and Others, where it was observed in para 4 as under:

(4) ...... It is well established that a contract or other transaction induced or tainted by fraud is not void, but only voidable at the option of the party defrauded. Until it is avoided, the transaction is valid, so that third parties without notice of the fraud may in the meantime acquire rights and interests in the matter which they may enforce against the party defrauded.

The fact that the contract has been induced by fraud does not make the contract void or prevent the property from passing, but merely gives the party defrauded a right on discovering the fraud to elect whether he shall continue to treat the contract as binding or disaffirm the contract and resume the property. If it can be shown that "the party defrauded" has at any time after knowledge of the fraud either by express words or by unequivocal acts affirmed the contract, "his" election is determined for ever The party defrauded may keep the question open so long as he does nothing to affirm the contract." Clough v. L and N.W. Ry., (1871) LR 7 Ex 26 at p. 34.

There is thus force in the contention of the learned Counsel for the petitioner that even if a contract was tainted by fraud, the same is not void but was voidable at the option of the party defrauded. The reference to the party defrauded would be bound to by the DDA. The DDA knowing all the facts and circumstances asked the petitioner to make the balance payment of installments and in pursuance thereof, the petitioner did make payment of the balance installments. Thus, the DDA in fact affirmed the arrangement with the petitioner.

It is also to be appreciated that the petitioner came into possession in 1982 and but for the filing of the petition by the real Om Prakash, the fraud which had been played would not even have come to light. The original non-deletion of the name of Om Prakash from the list of registrants of the NPRS Scheme was also a mistake of the DDA. These conducts of the DDA clearly lead to a conclusion that the same cannot be to the prejudice of the petitioner who bona fide purchased the flat on power of attorney basis not knowing about the fraud which had taken place. As observed by the Division Bench, such a fraud would not have been possible but for the collusion of the officers of the DDA.

The respondents further kept silent on the whole issue right till 1995 and continued to accept payments. The conduct of the respondent clearly shows that it legalised the arrangement between the petitioner and the respondent. Shri Bharat Bhushan has since passed away and his widow and children are prosecuting the present petition on his behalf as his legal heirs.

It is also to be noticed that in terms of the scheme for conversion into freehold, the respondent has itself recognized the concept of transfer on power of attorney basis and is converting such flats into freehold on payment of 33% surcharge. Thus, the very sanctity to the restriction against the sale or transfer of the flat has been given a go by and only an extra premium in the form of surcharge is now levied for conversion into freehold.

In view of the aforesaid, I am of the considered view that the impugned letter dated 7.10.1996 cannot be sustained and is hereby quashed. It is always open to the petitioner to apply for conversion into freehold, if not already done, and the application of the petitioners would be processed for such conversion on payment of normal premium plus surcharge as in other cases of power of attorney transactions. This is so since the petitioner is liable to be treated as owner of the flat on power of attorney basis having derived rights from a valid allottee.

Needless to say that if some of the legal heirs give a no objection in respect of the other legal heirs, it is always open to any of the legal heirs to apply for such conversion to the exclusion of the other legal heirs who have given their no objection. The writ petition is allowed in the aforesaid terms leaving the parties to bear their own costs.