PRAN NATH CHADHA & ORS. vs CHETANYA BUILD CON INDIA PRIVATE LIMITED

$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 1st May, 2024
+ CS(OS) 150/2021 & I.As. 3565/2021, 703/2022

PRAN NATH CHADHA & ORS. ….. Plaintiffs
Through: Mr. Praval Arora & Mr. Abhilash Verma, Advs. for P-1,4 & 5 along with Plaintiff in person. (M: 8949371862)
Mr. Joydeep Sarma, Mr. Rajiv Tiwari and Mr. Kaushal Kapoor, Advs. for P-2 & 3. (M: 8887653137)

versus

CHETANYA BUILD CON INDIA PRIVATE
LIMITED ….. Defendant
Through: Ms. Akanksha Kaul, Mr. Shivang Rawat and Mr. Abhishek Gupta, Advs. along with Mr. Vinod Saluja.
CORAM:
JUSTICE PRATHIBA M. SINGH

Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.
I.As. 3565/2021 (u/O. XXXIX Rule 1&2), 703/2022 (u/O. XXXIX Rule 1&2)
2. The present suit filed by the Plaintiffs relates to a prime property situated in Connaught Place, admeasuring 1233 sq. yards bearing ‘Plot No. 11 (Part) (Known as 11A) Block No. 127, commonly known as 27, Hanuman Road, Connaught Place, New Delhi- 110001’ (hereinafter, ‘suit property’).
3. The Plaintiffs have filed the present suit against the Defendant – M/s. Chetanya Buildcon India Pvt. Ltd. It is admitted that the Plaintiffs, collectively known as the Chadha family, are the owners of the suit property. The suit property was originally owned by the forefathers of the Plaintiffs since the 1930s, and the ownership of the respective shares of the suit property was agreed upon. The suit property is now mutated in favor of the Plaintiffs in the following shares:
Name
Plaintiff No.
Age
Ownership Share
Mr. Pran Nath Chadha
Plaintiff No.1
79
1/3rd
Mrs. Bina Chadha
Plaintiff No.2
65
1/6th
Mr. Manish Chadha
Plaintiff No.3
44
1/6th
Mrs. Rita Chadha
Plaintiff No.4
70
1/6th
Mr. Sumeet Chadha
Plaintiff No.5
47
1/6th
4. According to the Plaintiffs, an agency by the name M/s. Cushman and Wakefield India Private Limited, introduced the Plaintiffs to the Defendant, Company run by Mr. Vinod Saluja and Mr. Ankush Saluja. According to the plaint, the Plaintiffs, initially, entered into a Fee Agreement dated 29th December, 2017 with M/s Cushman and Wakefield India Private Limited and two Subsequent Agreements dated 13th March, 2018 and 20th April, 2018 was also entered into between the parties. A total of Rs.15,19,000/- is claimed to have been paid by the Plaintiffs in terms of the said Fee Agreement as brokerage to M/s Cushman and Wakefield India Private Limited.
5. A Property Development Agreement dated 22nd March, 2017 (hereinafter, ‘PDA’) was entered into between the Plaintiffs and the Defendant. According to the said PDA, the Defendant’s obligations were to develop the suit property within a period of 18 months. Further to the said PDA, two addenda were also executed on 22nd August, 2017, and 7th May, 2019. Under the PDA, and the two addenda, the overall obligations of the Defendant included:
Clause 2 of the PDA
The Defendant was obligated to demolish the existing structure on the specified plot of land i.e. suit property, and, at its own cost and expense, develop a new building. All development activities were to be carried out after obtaining the necessary building plans sanctioned and any other statutory approvals required by the relevant authorities.
Clause 3 of the PDA
This clause required the Defendant to develop, construct and complete the proposed building at its own costs and expenses.
Clause 7 of the PDA
According to this clause, the Defendant is responsible for all costs and expenses related to the construction of the proposed building and bears the full cost of construction for the owners without any charges.
Additionally, the Defendant agreed to pay the owners (i.e. the Plaintiffs) a sum of ?6,40,00,000/- as monetary consideration for the transfer of property rights to the Defendant upon completion of the building. A sum of Rs. 75 lakhs was paid by the Defendant by way of several P.O.s dated 10th March, 2017.
Clause 8 of the PDA
This clause provided the manner in which the remaining amount of Rs. 5.65 crore was to be paid by the Defendant to the Plaintiffs in three instalments.
As per Clause 8(ii)(a), If the Defendant fails to make the scheduled payment on time as outlined in Clause 8(i), the PDA would terminate automatically. Consequently, the Defendant loses two-thirds of the payments already made, and ought to return possession of the suit property to the Plaintiffs, without causing any obstacles.
As per Clause 8(ii)(b), If the Defendant does not begin construction of the proposed building (beyond mere demolition of the existing structure) within 6 months from receiving vacant possession of the property, the agreement would automatically terminate. Similar to the above, 2/3 of the monetary consideration paid would be forfeited. The remaining balance, once paid by the Defendant, leads to the reversion of the property’s possession to the Plaintiffs, without any obstruction from the Defendant or related parties.
Clause 11 of the PDA
This clause mandates the Defendants to hire architects at its own expense to prepare and obtain the necessary approvals for the building plans from the appropriate authorities, specifically the New Delhi Municipal Council or others as applicable.
The Defendant ought to also present these plans to the Plaintiffs for their review and approval before proceeding. After obtaining the Plaintiffs’ consent, the Defendant may officially submit the plans for approval.
Clause 12 of the PDA
As per this Clause, the Defendant is solely responsible for all costs related to the construction and development of the proposed building. Further, the Plaintiffs, on their part, would not incur any costs or expenses, ensuring that the financial responsibilities for the development are entirely handled by the Defendant.
Clause 14 of the PDA
This Clause provides that the Defendant is solely responsible for any claims or liabilities—whether civil or criminal—that may arise from any agreements to sell or transactions with third parties concerning the Defendant’s allocated share in the project/PDA.
Clause 17 of the PDA
According to this Clause, the Defendant has agreed that once the proposed building is completed, the Plaintiffs would be entitled to specific allocations of areas within the building according to the terms of the PDA:
– Basement: The Plaintiffs shall jointly hold the right-side portion/unit of the entire basement, which constitutes 50% of the entire basement space.
– Ground Floor: Similarly, the Plaintiffs shall jointly own 50% of the right-side portion/unit of the entire ground floor.
– First Floor: This floor includes two dwelling units, with the right-side unit jointly held by the Plaintiffs and the left-side unit solely and exclusively owned by the Plaintiff No. 1-Pran Nath Chadha.
– Second Floor: This floor also comprises two dwelling units. The left-side unit shall be jointly and exclusively owned by Plaintiff No.2-Bina Chadha and Plaintiff No. 3-Manish Chadha, while the right-side unit shall be jointly and exclusively held by Plaintiff No.4-Rita Chadha and Plaintiff No. 5-Sumeet Chadha.
– Stilt Area/Driveway: The Plaintiffs are allocated specific portions of the stilt area/driveway for car parking and utilities, marked in red in the plans.
– Additionally, the Plaintiffs shall have proportionate undivided, indivisible, and impartible leasehold/ownership rights in the plot of land measuring 1,233 square yards. They shall also have access to common areas, facilities, and services as part of their ownership rights in the new development.
Clause 18 of the PDA
The clause details the entitlements of the Defendant regarding the building project. In return for constructing the building, bearing all construction and related costs, and paying the monetary amounts specified in previous clauses, the Defendant was granted exclusive ownership and rights to several parts of the building:
– 50% of the left side portion of the entire basement area.
– 50% of the entire left side portion of the ground floor.
– The entirety of the third floor.
– The entire terrace area above the third floor.
– A designated portion of the stilt area/driveway for car parking and utilities, as indicated in green on the annexed plan.
– Access to common areas and facilities.
– Proportionate, undivided, indivisible, and impartible leasehold ownership rights in the plot of land, which measures 1233 square yards.
Clause 30 of the PDA
Clause 30 stipulates that the Defendant ought to complete the construction of the proposed building within 18 months from either the date they receive the sanctioned plan from the relevant authorities or the date they get vacant possession from the Plaintiffs, whichever is later. The said clause also provides exceptions for force majeure conditions.
The clause also stipulates that the Defendant shall hand over the completed units, including basement sections and servant quarters, as per the Plaintiffs’ allocation, within the said 18-month period without any additional grace period.
Clause 31 of the PDA
This Clause provides that Defendant has agreed that in case it fails to complete the proposed building within the above time-line, then it shall be liable to pay to the Plaintiffs’ a penalty calculated @ Rs.5,00,000/- per month.
Clause 3 of the Second Addendum
This clause specifies that the structure, including all floors and the roof terrace, is to be completed by 29th October, 2019.
Furthermore, the entire proposed building is to be finished according to agreed specifications by 29th October, 2020. By this date, the possession of Plaintiffs’ allocated share of the property, as defined in the PDA, and its subsequent addenda, shall be handed over by the Defendant to the Plaintiffs.
Clause 5 of Second Addendum
As per this clause, due to a delay in the completion of the building, which is now scheduled for 29th April, 2020, the Defendant agreed to compensate the Plaintiffs for the cost of alternative accommodation.
The said compensation amounts of ?1,80,000 per month, starting from 1st October, 2019, until the revised completion date of 29th October, 2020, for a period of 13 months. The total compensation agreed upon is ?23,40,000/-.
Clause 6 of Second Addendum
In this Clause, the Defendant committed to paying additional penalties if the completion of the building is delayed beyond 29th October, 2020.
Clause 8 of Second Addendum
According to this Clause, if the structure of the building (specifically, the casting of all slabs/roofs) is not completed by 29th October, 2019, the Defendant shall be liable to pay a penalty of ?10,00,000/- per month to the Plaintiffs.
6. The Plaintiffs’ stand is that the the Plaintiffs to relocate from the said building to rental premises and the entire building situated on the suit property has been demolished by the Defendant. However, no construction has commenced, though so many years have gone by.
7. All parties are present today. It is seen that Mr. Pran Nath Chadha, who is over 80 years old, is hard of hearing. Mrs. Rita Chadha currently resides in Patel Nagar, Mr. Manish Chadha lives in Singapore, and Mr. Sumeet Chadha resides with his mother in Patel Nagar. All the Plaintiffs have been displaced from their respective portions of the suit property. The redevelopment has not taken place till date, despite two addenda having been executed and additional time till 29th October, 2020 being granted.
8. According to the Defendant, the sanction plan for the development of the suit property was approved, and some pillars were constructed; however, a perusal of the photographs on record shows that the building has been razed to the ground. Further photographs have also been submitted as part of I.A. 703/2022, which show that the situation remains unchanged. Some photographs are as follows:

9. Since the initial PDA entered into the Plaintiffs and the Defendant in 2017, seven years have elapsed, and the Plaintiffs have faced enormous difficulties due to the Defendant’s non-adherence to the construction schedule. Repeated legal notices dated 30th March, 2019 and 4th August, 2020, have been sent by the Plaintiffs to the Defendant, with copies of these notices placed on record. Correspondence between the parties has also been documented. Vide letter dated 4th August, 2020, the said PDA, along with the two addenda was terminated by the Plaintiffs. The relevant portion of the said legal notice reads as follows:
“Thus, in light of the abovementioned detailed numerous violations of the said Agreement read with the First Addendum and Second Addendum, on your part, Addressee No.1 and in accordance with, inter alia, Note No. (ii) a & b of clause 8 of the said Agreement, we on behalf of our Clients hereby issue the present Legal Notice to terminate the said Agreement read with First Addendum and Second Addendum between you and our Clients. Such termination for cause shall be effective immediately upon the receipt of the present Notice. Accordingly. in terms of the said clause, you are hereby further requested to handover the vacant and peaceful possession of the said Property back to its rightful owners on an “as is where is” basis within a period of 15 days, beyond which the said Property shall automatically be deemed to be reverted back from you, Addressee No. 1 to our clients.”

10. Thus, the present suit was filed, wherein application being I.A. 3565/2021 inter alia seeks an ex-parte ad-interim injunction restraining Respondent, and anyone acting on their behalf from acting upon the following instruments:
(i) PDA, read with First and Second Addendum;
(ii) the Wills dated 13th March, 2018;
(iii) the General Power of Attorney dated 14th March, 2018;
and from interfering the peaceful possession of the Plaintiffs over the suit.
11. Further, I.A. 703/2022 has been filed by Plaintiff Nos. 2 and 3 restraining the Defendant from carrying out any construction in the suit property, and maintain status-quo in respect of the suit property;
12. On the last date, 15th January, 2024, the Court recorded the following:
“2. The present suit for declaration and permanent injunction relates to property situated at ‘Plot No.11 (Part) (Known as 11A) Block No. 127, commonly known as 27, Hanuman Road, Connaught Place, New Delhi- 110001’ (hereinafter, ‘suit property’).

3. As per the plaint, a Property Development Agreement was entered into between the Plaintiffs-Pran Nath Chadha & Ors. and the Defendant-Chetanya Build Con India Pvt. Ltd. along with two Addenda dated 2nd August, 2017 and 7th May, 2019.

4. As per the Property Development Agreement and the Addenda, the Defendant was to develop the suit property within a period of 18 months. However, there was a delay by the Defendant in completing the development of the suit property. In terms of both the agreements, it is stated that a total sum of Rs.3.75 crores has been paid by the Defendant to the Plaintiffs.

5. Vide order dated 8th March, 2021, there is restraint on alienation, sale and transfer of possession of the suit property to any third party till further orders. A further order restraining construction was passed on 14th January, 2022.

6. Clearly, there is a stalemate between the parties, as, on date, the entire suit property has been demolished. Further, the Defendant requests that the parties be sent for mediation under the aegis of the Delhi High Court Mediation and Conciliation Centre. Today, due to the stalemate between the parties, neither the Plaintiffs are enjoying the property nor the Defendant is able to construct on the same. Thus, clearly, there is a need for finding a solution.

7. Let parties remain in Court on the next date of hearing. Parties may join virtually or physically on the next date.

8. List on 13th March, 2024.”

13. As per the above order, parties were directed to be present today.
14. On behalf of the Plaintiffs, Plaintiff Nos. 1 to 5 are present. Plaintiff No.3 has joined virtually. Mr. Vinod Saluja is also physically present on behalf of the Defendant.
15. On behalf of the Defendant, Ms. Kaul, ld. Counsel, submits that her client – Mr. Vinod Saluja is willing to deposit a sum of Rs. 5 crores and also undertakes to complete the construction of the suit property within two years from the date of approval of the sanctioned plan. It is further submitted by the Defendant that certain third-party interests have been created, and a sum of Rs. 5 crores have been collected in respect of the floors which were to fall in the Defendant’s share. Ld. Counsel for the Defendant also places reliance on Clause 29 of the PDA to support the argument that the said PDA permitted the Defendant to sell the portion of the suit property that fell within the Defendant’s share to third parties.
16. Per contra, as per the Plaintiffs, the fact that third party interest has been created, has not been disclosed even in the written statement.
17. Upon a query from the Court as to why the construction of the suit property took such a long time to commence, ld. Counsel for the Defendant submits that the construction was delayed due to COVID-19 pandemic.
18. All the Plaintiffs unanimously agree that they have lost their trust and faith in the Defendant’s capability in completing the construction of the suit property. They have already faced enormous difficulties due to the delays that have occurred over the last seven years. They do not wish for the Defendant to continue acting as the ‘developer’ of the suit property. As the admitted owners, the Plaintiffs want complete freedom to deal with the suit property as they wish, without any interference from the Defendant.
19. It is not in dispute that the owners, i.e., the Plaintiffs, have received a sum of approximately Rs. 5 crores from the Defendant. Further, according to submissions made today, the Defendant has, by selling some floors of the suit property to third parties, even before the commencement of development of the suit property, admittedly received more than Rs. 5 crores. The Plaintiffs were further entitled to monthly payments due to delay in construction.
20. It is also undisputed that the Plaintiffs are currently living in rented accommodations. According to the PDA, the Defendant was to pay the rent for the alternative property that the Plaintiffs are occupying. According to the Plaintiffs, more than Rs. 5 crores are still due from the Defendant. As per the plaint, the Plaintiffs also seek payment in terms of the penalty clause of the PDA, along with the two addenda, since the construction has not been completed.
21. Considering the unanimous position that the Plaintiffs have taken today, and the fact that the Defendants does not enjoy the confidence of the Plaintiffs, this Court is of the opinion that the Plaintiffs cannot be forced to continue their relationship with the Defendant. The Plaintiffs have completely lost faith in the Defendant’s ability to complete the said project. They have unanimously rejected the Defendant’s pleas to send the present matter for mediation, and they are unwilling to accept any further payments from the Defendant to complete the project. Repeated opportunities have been granted to the Defendant to finish the project and to hand over peaceful possession of the suit property to the Plaintiffs. The two addenda, entered into after the PDA, demonstrate the Plaintiffs’ intention to witness the redevelopment of the suit property, but to no avail. Deadlines were repeatedly missed. Thus, this Court is of the opinion that no useful purpose would be served if the Plaintiffs are forced to enforce the obligations under the PDA, and the other agreements.
22. This Court is of the opinion that having failed to fulfil its obligations under the PDA and the subsequent agreements, the Defendant cannot now seek to restrain the Plaintiffs from enforcing the provisions of the PDA, entitling them to terminate the PDA, and proceed with the redevelopment through a different builder.
23. The decision of the Bombay High Court in Swashray Co-op. Housing Society v. Shanti Enterprises (2023: BHC-OS:13075) involved a similar situation. The said decision concerned a redevelopment project dispute between Swashray Co-operative Housing Society Ltd. and Shanti Enterprises in Mumbai. The said Society had initially engaged Shanti Enterprises for the redevelopment of a property in Borivali (West), Mumbai. Initially, the Society and the Developer entered into a Memorandum of Understanding, which required the Developer to procure conveyance and register the Society’s name in the property register. The conveyance was procured, but complications arose after a demolition notice from the Municipal Corporation of Greater Mumbai in 2017. Subsequently, the Developer’s progress on the redevelopment stalled, despite assurances and the execution of a development agreement in 2018. The Society alleged that the Developer defaulted on their obligations, including providing a bank guarantee and obtaining necessary permits and certifications.
24. Thereafter, as the Developer failed to meet the agreed terms and further defaults occurred even after a Supplementary Development Agreement in 2019, the Society lost trust in the Developer’s capability to complete the project. The conduct of the Developer led to the termination of the development and other related agreements, prompting the Society to seek reliefs under the Arbitration and Conciliation Act, 1996 for mandatory reliefs to prevent further suffering for its members.
25. Considering the above factual scenario, the Bombay High Court observed that non-payment of transit rent and other such monetary benefits to the members of the Society, while committing delay in completion of the redevelopment project, is a substantial breach warranting issuance of appropriate orders in favour of the society. The relevant portions of the said decision are as follows:
“22. Heard learned Counsel for the parties in the backdrop of the material placed on record. The nature of reliefs claimed by the Petitioner – Society and the Respondent – Developer in these two petitions, shows that granting relief in one petition would result in rejection of the other. Before considering the rival contentions in the light of the documents and material placed on record, it would be appropriate to refer to the position of law governing such disputes. This Court is frequently called upon to decide such disputes, as there are rampant cases of members of Co-operative Housing Societies suffering due to gross delay in execution of the redevelopment projects, as such members are deprived of their existing tenements, with no hope of redeveloped premises being handed over to them. The suffering is compounded due to failure on the part of developers to pay transit rents and other monetary compensation, while repeated defaults are committed. While dealing with such situations and contentions raised on behalf of the developers that the society and its members cannot be permitted to terminate Development Agreement and seek self-redevelopment or redevelopment through other contractors, this Court has analyzed the aspect of lack of trust and faith in the concerned developers.
…
29. The material brought to the notice of this Court shows that the members of the Petitioner – Society agreed to give repeated chances to the Respondent – Developer to abide by the obligations cast upon the Respondent – Developer under the Development Agreement, as also the Supplementary Development Agreement. This is evident from the fact that the Petitioner – Society agreed for a lien or charge on a particular flat, instead of furnishing of bank guarantee by the Respondent – Developer, as mandated under the Development Agreement. The Respondent – Developer failed to agree create such a registered lien or charge and even the said clause was breached. Even after passing a resolution on 30th August, 2020, to terminate the Development Agreement, the Petitioner – Society agreed to the requests made by the Respondent – Developer not to take any adverse step in the matter, on the promise that the Respondent – Developer would pay entire arrears of rent and that the redevelopment project would be expeditiously completed. The members of the Petitioner – Society agreed for execution of PAAAs, which also specified the manner in which the Respondent – Developer would pay transit rent, brokerage charges, transportation charges and hardship compensation, with a promise to complete the project within the period of 24 months. Shrikant Malani Page 21 of 27 CARBPL.10432.2023.doc

30. The material on record would show that even after the Petitioner – Society agreed on such terms, the Respondent – Developer again repeatedly defaulted. At this stage, it is relevant to note that such defaults were after the Covid period and therefore, the excuse of covid-19 pandemic sought to be raised on behalf of the Respondent – Developer cannot be accepted. When the Respondent Developer repeatedly defaulted and started raising dispute with the Petitioner – Society as regards additional FSI available under the DCPR 2034, the Petitioner – Society had no other alternative in March, 2023, but to finally terminate the Development Agreement, as also other documents executed in favour of the Respondent – Developer.

31. The Respondent – Developer has not been able to dispute the amounts claimed by the Petitioner – Society before this Court as regards the arrears of rent and other monetary components. Even before this Court, while filing its own petition under Section 9 of the said Act or during hearing of the petitions, the Respondent – Developer was not forthcoming at all about taking any remedial measures, even at this stage as regards the glaring defaults in respect of the redevelopment project.

32. Thus, the Petitioner – Society has clearly made out a strong prima facie case in it favour as regards termination of the development agreement and the necessity to take steps for working out the redevelopment project through other means. There is sufficient material on record to show that the Petitioner – Society has completely lost faith and trust in the Respondent – Developer about completion of the redevelopment project. The Petitioner – Society is not expected to be at the mercy of the Respondent – Developer. The Petitioner – Society cannot be shackled with a Development Agreement in which the Respondent – Developer indulges in repeated defaults, without any hope of the redevelopment project actually being completed. The members of the Petitioner – Society have been out of possession since the year 2017 and none of the timelines specified in the Development Agreement or the Supplementary Development Agreement or even PAAAs have been honored by the Respondent – Developer. There is nothing to show that the Petitioner – Society in any manner obstructed the Respondent – Developer in executing the project. Thus, the factual position in the present case is akin to cases in which this Court while exercising power under Section 9 of the said Act has granted directions that amount to mandatory injunctions at interim stage. The position of law expounded and confirmed by this Court repeatedly in the aforementioned judgments, inures to the benefit of the Petitioner – Society in the present case. Therefore, a clear case is made out by the Petitioner – Society for granting reliefs as claimed in its petition filed under Section 9 of the said Act. For the same reasons, the reliefs sought by the Respondent – Developer deserve to be rejected. This Court is of the opinion that holding otherwise would grant a premium to a defaulting developer like the Respondent before this Court and the Petitioner – Society and its members would continue to suffer for no fault on their part. Even today the Respondent – Developer is liable to pay monetary benefits to the members of the Petitioner – Society under the documents executed between the parties. The Respondent – Developer was not forthcoming at any stage during pendency of the present petitions about making good such payments to the members of the Petitioner – Society.”

26. In another decision, Justice Gautam Patel in Rajawadi Arunodaya Co-op Hsg. v. Value Projects Pvt. Ltd. (2021 SCC OnLine Bom. 9572) observed that development agreements are in the nature of an entrustment, and involve detailed processes including notices, meetings, consultant appointments, and so on. Such meticulous approach is necessary because the society is entrusting a significant asset—its very land and the homes of its members—to an external developer. The said land/property is not just any land for profit, but it is a place where members live. The relevant observation of the ld. Single Judge in said decision are extracted below:
“65. I mention this (and some of this may indeed be speculation) because when one speaks of the ‘balance of convenience’, another umbrella term, one must attempt to give it some life and colour and actual societal context. This speaks of the comparative mischief or hardship to be weighed when granting or refusing relief. But there is nothing here but imbalance. The defaults by the Developer have undoubtedly caused immense prejudice and harm to the members of the Society. The hardship to the members is real and immediate; the so-called hardship to the Developers is notional. When it spent in the project, this was no altruism or charity. It was an investment toward great profit. Every investment involves risk. The Developer gambled on the project. Receiving monthly rent is not a sop, not a matter of ‘convenience’. It is a matter of survival. Therefore, the non-payment of dues, the delays in project completion, and not paying transit rent for months together speaks to an inherent, and constantly growing, social injustice. It should not be allowed to continue. Therefore, apart from the exceptionally strong prima facie case that the Society makes out, the ‘balance of convenience’ is decidedly in its favour.

66. These development agreements are, above all, in the nature of an entrustment. They are not entered into blindly. There is a long and laborious process of society notices, general body meetings, the appointment of a consultant as an advisor, calling for tenders, scrutinizing the bids, ensuring compliance with laws and regulations, looking at the proposals and so on to the end of the chapter. This is as it must be. For what is it that is actually happening here? The society is entrusting an outsider with the one single asset that justifies the society’s existence, that actually defines the society: the society’s property. This is not the entrustment of some other land on which to build so that the society can make handsome profits; no, this is the entrustment of the actual property being used by the society and its members, the very homes in which they live. The society’s members agree to this upheaval, to move out altogether, to separate from each other while their new homes are built. The promise to them is that they will be looked after and provided for while their new homes are being built. Days, weeks, months and years pass; the members do not receive the promised rent. Thus begins the downward slide. The promised homes are delayed, then delayed further, and then delayed even further. This cuts at the root of the initial entrustment. A development project for a society demands commitment, fidelity, respect and honesty. When these begin to disappear, the contractual relationship collapses. Where there was anticipation and confidence, there is now just bitterness, disappointment and despair. There is a breakdown of confidence, and there is only distrust. Loss of faith and confidence on account of contractual violations and breaches by a developer are sufficient grounds to find for the society and against the developer.14 Indeed, I would go a step further. There is urgency for the society. Therefore, the slightest delay in project completion, unless specifically accepted by the society, and even one single default in payment of transit rent or other dues is actually sufficient to warrant a termination. There is no such thing in these matters as ‘substantial compliance’. That is not the principle of obligations in the realm of private law.

67. If we, therefore, approach these two matters from this perspective, I do not believe it is even remotely possible to suggest that this Developer, persistently in default, persistently delaying, and never able to come up with actual money to make good the vast accumulated arrears of financial obligations should now be able to tell the society, “You will not be able to eject us from this project. When we will complete your homes, we cannot and will not say. When we will pay your dues, we cannot say. How we will raise finances is unclear. We have none with us now. When you will finally get what you are contractually due, we also cannot say. Even so, we are entitled to be here until we make our profits.

68. What is it that the society says on the other hand? In whatever manner the prayers are worded all that the Society says is, “Give back to us that which was ours. Allow us to get back our homes, and restore our lives.”

69. That is an application that, in these circumstances, is impossible to resist.”

27. Furthermore, the Defendant places reliance upon Clause 29 of the PDA, which reads as under:
“29. That the OWNERS shall during or on the completion of the proposed building execute or join in the execution of all documents necessary for giving the flat(s)/portion(s) to buyers of DEVELOPER’s portions/ Units legal title to DEVELOPER’s respective portions/ Units including DEVELOPER’s undivided share in the land underneath, without asking for any further payment. That the DEVELOPER has specifically agreed with the OWNERS that the OWNERS shall not be responsible for any liability/ claim of any nature, whatsoever, to any third party with whom the DEVELOPER has entered into any agreement for sale of its share/ portion/ unit and it shall be the exclusive liability of the DEVELOPER to settle any such liability/ claim with any such third party.”

28. Clearly, the clause on which the Defendant relies upon begins with the phrase “during or on the completion of the proposed building”. In the present case, the project undertaken by the Defendant has not been completed, as evidenced from the photographs placed on record; thus, the Defendant cannot invoke Clause 29 of the PDA to create third-party interests in the suit property, even in relation of his own share in the proposed building.
29. Moreover, this Court also notices that there are a large number of disputes pending before this Court involving this very Defendant/Developer qua various other properties, which also show that the Defendant is not in a good financial position1.
30. The Plaintiffs being the admitted owners of the property cannot be left at the whimsical choice of the developer and remain captive to his decision-making. Delays of this nature, has severe repercussions for the owners who in their old age are not able to live in their own home and enjoy the peace of their homes. Thus, this Court is of the opinion that there exists a prima facie case in favour of the Plaintiffs. Further, the balance of convenience also lies in favour of the Plaintiffs. The Plaintiffs would also suffer irreparable harm, if relief, as sought, is not granted in their favour.
31. Accordingly, in terms of the relief prayed in the applications under Order XXXIX Rule 1 and 2 CPC, the Defendant shall stand restrained from in any manner dealing with any portion of the suit property ‘Plot No. 11 (Part) (Known as 11A) Block No. 127, commonly known as 27, Hanuman Road, Connaught Place, New Delhi- 110001’ under the PDA dated 22nd March, 2017, First Addendum dated 22nd August, 2017, the Second Addendum dated 7th May, 2019, the Wills dated 13th March, 2018 and the GPA dated 14th March, 2018 or any other related documents.
32. The Defendant shall also stand restrained from interfering with the peaceful possession of the Plaintiffs over the suit property. The Plaintiffs are permitted to deal with the said property in the manner as they so wish. The pendency of this suit shall not in any manner act as a deterrent or an embargo against the Plaintiffs in dealing with the said property in the manner as they wish to.
33. The monetary claims in respect of the amounts due, would however be adjudicated in the present suit.
34. If any third-party claims are raised, in terms of the PDA and the subsequent agreements, the Defendant shall be exclusively liable under such agreements.
35. Both the applications I.As. 3565/2021 & 703/2022 are disposed of in these terms. The earlier status quo order dated 8th March, 2021 shall stand modified in these terms.
36. List before the Joint Registrar for completion of admission/denial on 12th July, 2024.
37. List before Court on 2nd September, 2024.

PRATHIBA M. SINGH
JUDGE
MAY 1, 2024
dj/dn
1 Chetanya Buildcon Pvt. Ltd. v. Harpal Singh & Ors.(2024:DHC:3337); Dhurva Goel v. Chetanya Buildcon Pvt. Ltd. (2024:DHC:2783), Surpal Cycles Pvt. Ltd. v. Chetanya Buildcon Pvt. Ltd. (O.M.P.(I) (COMM.) 33/2024, order dated 26th April, 2024).
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CS(OS) 150/2021 Page 2 of 2