NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

FIRST TRIMESTER PROJECT

DELHI DEVELOPMENTAL AUTHORITY

VERSUS

M/S. KARAMDEEP FINANCE & INVESTMENT (I) PVT. LTD. & ORS.

SUBMITTED BY: SUBMITTED TO

VIBHU PAHUJA Prof. (Dr.) Ghayur Alam

2019BALLB101 Asst. Professor Amit Pratap

SECTION-B

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 PREFACE

I feel great pleasure in presenting the project under study. I hope that the readers will find the
project interesting and that the project in its present from shall be well received by all. The
project contains a detailed case analysis of “Delhi Developmental Authority versus M/s
Karamdeep Finance and Investment (I) Pvt. Ltd. & Ors. Every effort is made to keep the project
error free. I would gratefully acknowledge any suggestions to improve the project to make it
more useful.

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 Table of Contents

Acknowledgments ………………………………………………………………….4

Certificate……………………………………………………………………………5

Name and Date of the judgment ……………………………………………………..6

Bench…………………………………………………………………………………6

Number of Opinions…………………………………………………………………..6

Type of Opinions……………………………………………………………………..6

Name of Judge(s) who delivered the opinion…………………………………………6

Concrete Facts of the Judgment……………………………………………………….7

Material Facts of the Judgment………………………………………………………8

Main points of Arguments by the Petitioner………………………………………….8

Main points of Arguments by the Respondent………………………………………..9

Main points of Arguments by the Intervenor(s)………………………………………10

Concrete Judgment or judgment in personam…………………………………………10

Ratio Decindi or judgment in rem………………………………………………………10

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 Acknowledgements

On completion of this Project it is my present privilege to acknowledge my profound gratitude

and indebtedness towards my teachers for their valuable suggestions and constructive criticism.
Their precious guidance and unrelenting support kept me on the right track throughout the
project. I gratefully acknowledge my deepest sense of gratitude to:

Prof. (Dr.) V. Vijayakumar, Vice Chancellor, National Law Institute University, Bhopal for
providing us with the infrastructure and the means to make this project;
Our Common Law Method Professor, Prof. (Dr.) Ghayur Alam, and Asst. Professor Amit Pratap
who provided me this wonderful opportunity and guided me throughout the project work;

I’m also thankful to the library and computer staffs of the University for helping us find and
select books from the University library.

Finally, I’m thankful to my family members and friends for the affection and encouragement
with which doing this project became a pleasure.

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 Certificate

This is to certify that the project which includes a detailed case analysis of “Delhi
Developmental Authority versus M/s Karamdeep Finance and Investment (I) Pvt. Ltd. & Ors.”
has been prepared and submitted by Vibhu Pahuja (2019BALLB101), who is currently pursuing
BA L.L.B. (Hons.) at National Law Institute University, Bhopal in fulfillment of “Common Law
Method” course. It is also certified that this is an original report and this has not been submitted
to any other university, nor published in any other journal.

Date:

Signature of the Student:

Signature of the Supervisor:

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 NAME AND DATE OF JUDGEMENT

DELHI DEVELOPMENTAL AUTHORITY

VERSUS

M/S. KARAMDEEP FINANCE & INVESTMENT (I) PVT. LTD. & ORS.

FEBRUARY 12, 2019

NAME OF JUDGES

JUSTICE ASHOK BHUSHAN

AND

JUSTICE K.M. JOSEPH

BENCH

DIVISION BENCH

NUMBER OF OPINIONS

The case has only one opinion

TYPES OF OPINIONS

This case has a unanimous opinion. There is no concurring or dissenting opinions in the given
case.

NAME OF JUDGE(S) WHO DELIVERED THE OPINION

The opinion, in the given case, was delivered by Justice Ashok Bhushan.

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 CONCRETE FACTS OF THE CASE

1. Delhi Developmental Authority, and as well as M/s. Karamdeep Finance and

Investment (I) Pvt. Ltd., the writ petitioner have filed these two separate appeals
challenging the same judgment.
2. On 18.03.1970, a Perpetual Lease Deed was made in favor of Shri Trilochan Singh
Rana, who purchased Plot 14, Block A-2, Safdarjung Development Area, New Delhi,
measuring 725 sq. yards in a public auction held by DDA.
3. Clause 4(a) of the Perpetual Lease Deed mentioned the obligations of the lessee,
wherein the lessee was not entitled to sell, transfer, assign, or otherwise part with the
possession of the whole or any part of the plot except with previous consent in
writing of the lessor, which, in the provided case, is the President of India. Thereafter,
in the event of consent being granted, the lessor was entitled to impose such terms
and conditions as he deems fit and by the virtue of which, lessee was placed under an
obligation to pay half the price of the unearned increase of the market value of the
plot during sale, assignment, transfer, or parting with possession.
4. Shri Tilochan Singh Rana and M/s Ocean Construction Industries Pvt. Ltd. entered
into a sale agreement of the aforementioned property on 29.09.1988 and the
application of the said property on 06.10.1988 seeking NOC from the Income Tax
Department and thereafter, an order was passed regarding the acquisition of the said
property on 13.12,1988 for a said price of Rs. 76,00,000.
5. Thereafter, the Delhi Developmental Authority required the Chief Commissioner of
Income Tax Department to pay of Rs. 17,88,114.55 in regard to the unearned increase
of the said property, for which the Delhi Developmental Authority issued a vide letter
dated 12.01.1989. Consequently, the Chief Commissioner of the Income Tax
Department paid a cheque worth Rs. 17,86,420/- in favor of the Delhi Developmental
Authority on 30.01.1989.
6. On 23.03.1989, the aforementioned property was put to auction and M/s. Karamdeep
Finance & Investment (I) Pvt. Ltd., i.e, the writ petitioner in the mentioned case, was
the highest bidder for an amount Rs. 1,08,05,000/-. Consequently, on 25.04.1989, the
property’s physical possession was transferred to the highest bidder (M/s. Karamdeep
Finance & Investment (I) Pvt. Ltd.) and consequently, on 25.09.1997, a registered
sale deed was executed in favor of the writ petitioner by the President of India.
7. The writ petitioner, in the provided case, moved to the Delhi Developmental
Authority with an application as for the conversion of the leasehold rights into the
freehold rights and for which, a sum of Rs. 3,45,729/- was deposited by M/s.
Karamdeep Finance & Investment (I) Pvt. Ltd.
8. In furtherance, the Delhi Developmental Authority computed the unearned increase
of the market value of the property in dispute and by the virtue of which, it was found
out that half the unearned increase of the market value of the property (as mentioned
in the clause in regards to transfer of leasehold rights) amounted to be Rs. 48,16,853/-

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 and thereby the total value of the property, as demanded by the Delhi Developmental
Authority, was raised at Rs. 1,43,90,348/-, which it demanded through a letter on
23.04.2000.
9. Thereafter, the writ petitioner filed a writ petition before the Delhi High Court on the
account of which, the demand raised by the Delhi Developmental Authority of Rs.
1,43,90,348/- was set aside as it was deemed illegal by the Delhi High Court and
consequently, the court also redirected the Delhi Developmental Authority to return
the conversion charges to the writ petitioner, the charges being of Rs. 3,45,729/-.
10. In response to the above judgment of the Delhi High Court, the Delhi Developmental
Authority filed a writ petition before the Delhi High court against the judgment order
passed by the Single Judge on 26.09.2013.

MATERIAL FACTS

1. The DDA (Delhi Developmental Authority) demanded the 50% of the unearned increase
in the rate of the aforesaid property and by that very virtue, the Delhi Developmental
Authority raised a demand of Rs. 1,43,90,348/- for the Writ Petitioner to be paid.
2. The Writ Petitioner paid the conversion charges of the property, amounting to Rs.
3,45,729/- in favor of Delhi Developmental Authority, in order to convert the status of
property from leasehold rights to freehold rights; However, it was laid down by the
Respondent party that the amount deposited was in a bona fide mistake and the writ
petitioner, therefore, was seeking a refund for the amount so deposited.

MAIN POINTS OF ARGUMENT BY THE PETITIONER

1. The property in question was leasehold property, leased out to Shri Trilochan Singh
Rana.
2. In the auction notice issued by the competent authority, which in furtherance was
conducted by the Delhi Developmental Authority, it was mentioned that it was the
leasehold rights of the property that were in auction; and therefore, the writ petitioner
could not have purchased anything more than the leasehold rights.
3. The writ petitioner deposited the conversion charges of the property, which clearly
indicates that the writ petitioner was of the knowledge and understanding that what they
had purchased in the auction was nothing but just the leasehold rights.
4. The liability to pay the unearned increase is fasten on all transfers and it was emphasized
that the decision of the Delhi High Court that the unearned increase is liable to be paid
only in the case of voluntary transfer is nothing but erroneous; and therefore, the writ

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 petitioner being the highest bidder of the auction, the liability falls upon him to pay the
unearned increase.
5. The value of the property had increased drastically over the specified period of time and
it would be erroneous to set aside the aspect of unearned increase of the property in
question and therefore, the unearned increase ought to have been paid by the highest
bidder of the auction
6. The Principle of merger would be inapplicable in the given situation due to the fact that
the necessary conditions of the same are not being fulfilled by the above parties. The
condition here, not being fulfilled is that the Income tax department which acquired the
property did not do so in the capacity of lessor, and therefore, the condition is not being
fulfilled.
7. As a matter of principle, the conveyance deed in the favour of writ petitioner has to be
construed as whole but however, Clause 11 and some other clauses mention terms such
as “ground rent”, etc, which is a clear indicative of the fact that there is no question of
absolute sale.
8. The Division Bench has rightly held that the writ petitioner is liable to pay only the
conversion charges.

MAIN POINTS OF ARGUMENT BY THE RESPONDENT

1. Supporting the judgment of the Delhi High Court wherein it was held that there was
no liability on the writ petitioner to pay unearned increase on the auction purchaser as
it was never mentioned in the auction notice that the liability to pay the unearned
increase falls upon the auction-purchaser.
2. Moreover, the unearned increase was already paid by the Department of Income Tax
in the conveyance deed itself, with the unearned increase being paid by the Income
Tax Department itself and therefore, the unearned increase shall not be paid again as
there is no specific occasion arising out for further payment by the auction purchaser.
3. The auction-purchaser was conveyed with absolute rights rather than leasehold rights
of the property and in furtherance by which, the auction-purchaser becoming the
absolute owner of the property, there did not arise any occasion for the auction-
purchaser to pay any conversion charge.
4. The writ petitioner deposited the conversion charges under bona fide mistake and
thereby, there was a filing of a writ petition regarding the refund of the conversion
charges, as they were deposited by a bona fide mistake
5. There is a merger of leasehold rights in the lessor, i.e. , the government (in the present
case); and now, the lesser having been merged in the higher right, the principle of
merger therefore becomes applicable and by the virtue of which it can be established
that what was sold to the writ petitioner was an absolute right. The lease, which was

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 in place, came to an end when the Income Tax Department acquired the above
mentioned property.

THERE WAS NO INTERVENER IN THIS CASE

CONCRETE JUDGEMENT (judgment in personam)

The Court held that in the given case, the writ petitioner is not entitled for the refund of
conversion charges, and thereby, the Court directed the Delhi Developmental Authority to
process the writ petitioner’s application for the conversion of leasehold rights into freehold
rights. The Court further upheld the order of the division bench, but however, with a direction
given to the Delhi Developmental Authority to process the application of conversion in
accordance with law.

RATIO DECINDI (judgment in rem)

If there is a sale/auction of a property on its valued selling price, it cannot be implied that the
purpose of holding the auction was for the transfer of leasehold rights but however, it is for the
freehold rights of the property. Furthermore, once it is implied that once there is a transfer of
property and there is a change in status quo of the same, there cannot be any refund for the
conversion charges of the same, if there is a transfer of rights in the property.

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