MUKESH SAINI vs MADAN LAL SAINI (SINCE DECEASED) THROUGH HIS LRS. AND OTHERS.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) 122/2023 & CM APPLs. 59542-43/2023
MUKESH SAINI ….. Appellant
Through: Mr. Pramod Dayal, Mr. Rakesh Kumar and Mr. Dalip Singh, Advocates
versus
MADAN LAL SAINI (SINCE DECEASED) THROUGH HIS LRS. AND OTHERS. ….. Respondents
Through: None
% Date of Decision: 18th January, 2024
CORAM:
HON’BLE THE ACTING CHIEF JUSTICE
HON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
J U D G M E N T(ORAL)
1. This appeal filed under Section 10 of the Delhi High Court Act, 1966 impugns the order dated 17.10.2023 passed in I.A. No. 8173/2019 filed in CS (OS) 1169/2014, titled as Mukesh Saini v. Madan Lal Saini (since deceased) & Ors. whereby the learned Single Judge dismissed the Appellants application (i.e., I.A. No. 8173/2019) seeking permission to purchase the shares of Respondent Nos. 1.1 to 1.3 in the immoveable property bearing no. 36, Sham Nagar, Kalkaji, New Delhi (suit property) for the same consideration, at which the said property is being sold to third parties i.e., Respondent Nos. 2 and 3 (prospective purchasers). The learned Single Judge further, observed that in view of dismissal of I.A. No. 8173/2019, the directions issued to Respondent Nos. 2 and 3 on 26th July, 2022 in the said suit for execution of sale deed in favour of the prospective purchasers stands restored.
2. The Appellant is the plaintiff and the Respondent Nos. 1.1 to 1.3 are defendant nos. 2 to 4 respectively. The suit has been filed, inter alia, seeking partition of the suit property and permanent injunction.
3. At the outset, learned counsel for the Appellant states that the mediation proceedings initiated in pursuance of the directions issued vide impugned order have failed.
3.1. He states that the Appellant is ready and willing to purchase the shares of Respondent Nos. 1.1 to 1.3 in the suit property at the same consideration, which was agreed to be paid by the prospective purchasers as per the Agreement to Sell (ATS) dated 25th July, 2014.
3.2. He states that the learned Single Judge erred in restoring the order dated 26th July, 2022, as the same stood recalled on 11th July, 2023. He states that prospective purchasers have failed to pay the balance consideration as per the directions issued by the learned Single Judge vide orders dated 10th July, 2018, 28th May, 2019 and 26th July, 2022. He states that therefore, the said purchasers are not entitled to the relief granted vide order dated 10th July, 2018 as well as the subsequent orders.
3.3. He states that the prospective purchasers were handed over the possession of the suit property in the year 2014 on payment of a token amount of ? 50 Lacs as against the agreed sale consideration of ? 2.40 Crores. He states that the Respondents have carried out unauthorised construction in the suit property and therefore, there is no equity in their favour.
4. This Court has considered the submissions of the learned counsel for the Appellant and perused the record.
5. It is a matter of record that prior to the filing of the suit, the father of the Appellant, late Shri Madan Lal Saini, had entered into an ATS dated 25th July, 2014 with the prospective purchasers for sale of the suit property for a sum of ? 2.40 Crore. Late Shri Madan Lal Saini accepted a sum of ? 50 Lacs as advance and handed over the physical possession of the suit property to the said purchasers.
5.1. The learned Single Judge vide order dated 10th July, 2018, in an application filed by the Appellant herein under Order XXXIX Rule 1 and 2 Code of Civil Procedure, 1908 (CPC) permitted the defendants to execute the sale deed in favour of Respondent Nos. 5 and 6 and secured the interest of the Appellant by directing the prospective purchaser to deposit a sum of ? 48 Lacs towards the Appellants share, with the Court. The said order was upheld by the Division Bench in FAO (OS) 120/2018 vide order dated 7th March, 2019. The said orders were thereafter, challenged by the Appellant in SLP (C) No. 10935/2019, which was dismissed by the Supreme Court on 7th May, 2019, observing that no interference is merited with the order dated 7th March, 2019. Therefore, the order dated 10th July, 2018, has attained finality.
5.2. The Supreme Court, however, in its order dated 7th May, 2019, reserved liberty to the Appellant to make an offer for purchase of the shares of the other co-sharers in suit property, which may be decided by learned Single Judge, in accordance with law. The Appellant in pursuance of the liberty reserved, filed the subject application i.e., I.A. No. 8173/2019 praying that he be permitted to purchase the shares of the Respondent Nos. 1, 1.1 to 1.3. However, the Appellant in his application made an offer to purchase the shares of the co-sharers at the sale price reserved under the ATS dated 27th July, 2014. The said application was opposed by the Respondents and remained pending until it was taken up for hearing on 17th October, 2023.
6. The learned Single Judge vide impugned order has dismissed the said application after holding that the Appellant can exercise the right to purchase the shares of the other co-sharers only in accordance with Section 3 of the Partition Act, 1893 (Partition Act) and therefore, he must make an offer to buy out the shares of defendants in the suit property on the existing market value and not the value reserved in the year 2014.
It is matter of record that the Appellant is unwilling to purchase the shares of the other co-sharers at the current market value. Even before this Court, the Appellant has expressed his unwillingness to offer the market value. It is also evident from the pleadings in IA No. 8173/2019 that the Appellant does not have the financial wherewithal to purchase the shares of the other co-sharers.
7. The Supreme Court in Malati Ramchandra Raut (Mrs.) and Ors. v. Mahadevo Vasudeo Joshi and Ors.1 has held that in terms of provisions of Partition Act, the valuation of property has to be made with reference to the time at which the right arose. The relevant extract of said judgment reads as under:
9. It is the duty of the court to order the valuation of the shares of the party asking for a sale of the property under Section 2 and to offer to sell the shares of such party to the shareholders applying for leave to buy them in terms of Section 3 at the price determined upon such valuation. As soon as a request for sale is made by a shareholder under Section 2, any other shareholder becomes immediately entitled to make an application under Section 3 for leave to buy the shares of the former. The right to buy having thus arisen and become crystallised, the date with reference to which valuation of the shares in question has to be made is the date on which the right arose.
11. Accordingly, the valuation, though made subsequently, has to be made with reference to the time at which the right arose which, in the present case, as found by the learned Single Judge, was on July 5, 1972 when the defendants filed their affidavit seeking leave to buy, or, at any rate, on October 9, 1972 when they filed their written statement reiterating that request. In a case such as this, where the extent of shares held by the plaintiffs and the defendants is not disputed, the fact that the proceedings continued by reason of the appeal filed by the plaintiffs against the order refusing to allow them to amend their plaint, or for any other reason, was not relevant to the time of accrual of a right arising under Section 3. The fact that a preliminary decree may have to be passed before passing a final decree and that no such decree has yet been made is again not relevant, on the facts of this case, to the question as to the time of accrual of a right under Section 3.
12. In the circumstances, whenever the shares in question in the properties come to be sold to the persons entitled to buy them under Section 3, the price of those shares will have to be determined on the basis of the valuation made with reference to the time of accrual of the right. This, as found by the learned Single Judge, was the price prevailing in July 1972.
(Emphasis Supplied)
8. Therefore, in view of the aforesaid, we are of the considered opinion that the impugned order directing the Appellant to offer current market value is correct and in consonance with the provisions of Section 3 of the Partition Act. The liberty granted by the Supreme Court clearly records that the offer made by the Appellant has to be considered in accordance with law. Therefore, the offer made by the Appellant in the year 2023 to purchase the suit property at the price reserved in year 2014 is contrary to law. The right of Respondent Nos. 1.1 to 1.3 to sell the suit property to the prospective purchasers has attained finality in view of the order dated 10th July, 2018. The offer of the Appellant to purchase the shares of the co-sharers at the price reserved in 2014 lacks bona fide.
9. As is evident from the subsequent order dated 26th July, 2022 passed by the learned Single Judge, it is the Appellant, who has circumvented the implementation of the order dated 10th July, 2018 by writing letters to the Sub-Registrar opposing registration of the sale deed.
10. The order dated 26th July, 2022 was recalled by the learned Single Judge on 11th July, 2023 in view of the pendency of IA No. 8173/2019. However, with the dismissal of IA No. 8173/2019, the learned Single Judge has rightly restored the order dated 26th July, 2022. This Court therefore finds no merit in the contention of the Appellant that the restoration of the said order by the learned Single Judge was erroneous.
11. In view of the aforesaid observations, we do not find any merit in this appeal and the same is accordingly dismissed alongwith pending applications.
ACTING CHIEF JUSTICE
MANMEET PRITAM SINGH ARORA, J
JANUARY 18, 2024/rhc/aa
1 1991 Supp (1) SCC 321
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FAO(OS) 122/2023 Page 2 of 2