TMI Blog1991 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... 35% of the saleable area on all the floors was to be allotted to the owner. The balance area could be sold by Competent Builders. Both the parties to the agreement were free to sell their respective shares and clause 24 of the said agreement provided that the owner had to execute an irrevocable power of attorney in favour of the builder to de all necessary acts and things required for approaching the public and all Government and local authorities for sanction of the plans, etc., and also "for execution of sale agreements in favour of the purchasers of the flats or their assigns or nominees and to do all necessary acts, and things on behalf of the owners." One Navneet Sethi, brother of the petitioner, applied for allotment of a flat. On December 1, 1979, a letter of allotment was issued in favour of Navneet Sethi whereby flat No. 308 was allotted to him. The approximate covered area of this was 1,050 sq. ft. and, in the recital of the letter of allotment, it was stated that Competent Builders had entered into an agreement dated September 4, 1979, with the owner and it was by virtue of this agreement and the general power of attorney executed by the owner which had empowered Compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the liability to refund the amount collected from various flat buyers by Competent Builders was to be that of the owner, Smt. Satyawati Dhawan. Competent Builders agreed to keep the owner indemnified against any loss or damages other than loss or damages which may be suffered by the owner as a result of allotment of flats to the various allottees. The result of this was that the liability to pay the allottees was taken over by the owner. It seems that though the liability to pay to the allottees was that of the owner, the said agreement in clause 13 provided that Ansals were to pay a sum not exceeding Rs. 43,32,627 to the owner which was the sum to be refunded by the owner to the various allottees. This clause further stated that, on the request of the owner, the actual refund would be made to the buyers directly by Ansals on behalf of the owner. There are other clauses in the agreement which are not very material except that it says that the market price of flats as on that date when the tripartite agreement was entered into was Rs. 1,500 per sq. ft. because it is at this rate that the owner had agreed to transfer an area of 8,000 sq. ft. in favour of Ansals. The last mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of the following paragraphs in respect of the previous buyers of flats." According to the supplement, 30% of Rs. 850 per sq. ft. was to be paid in two instalments. The first instalment was to be paid on or before October 15, 1990, and the second instalment on or before November 30, 1990. There were a number of other clauses in the said supplementary letter and it is not necessary to reproduce them in any great detail except to note that it was specifically provided therein that these clauses in the supplement "will be applicable only to the original previous buyers of flats or where the flats have been transferred to immediate relatives as defined above". On October 26, 1990, the petitioner, being advised that the consideration of the flat may exceed Rs. 10 lakhs, applied for permission in Form No. 37-I to the appropriate authority. On December 20, 1990, respondent No. 2 passed an order under section 269UD(1) ordering the purchase of the flat by the Central Government for a total apparent consideration of Rs. 11,39,500. This sum was arrived at by calculating the price at Rs. 850 per sq. ft. and included the price of the flat plus the price of car parking space plus th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the buyers and Competent Builders had come to an end and there was a fresh agreement which had been entered into between the buyers and the Ansals when the letters of allotment were issued in 1990. Shri Rajendra further submits that, in the fresh letter of allotment which has been issued, there is no reference to the earlier agreement which had been entered into with Competent Builders nor were the earlier agreements registered under the provisions of rule 48L of the Income-tax Rules. He further submitted that, in any case, the petitioner, Sanjeev Sethi, was not a party to the original agreement of 1979 and, therefore, he cannot be regarded as being one of the original allottees'/ buyers' and his case, in any case, will be covered by the provisions of Chapter XX-C. We have, therefore, to essentially see, in the present case, whether there is a fresh agreement which has come into existence with the issuance of the letters of allotment in 1990 or whether it is a case of continuation of the earlier agreement which had been entered into in 1979. Looking at the totality of the circumstances and after taking the various clauses of the different agreements into consideration, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilders by Ansals. The rights of Smt. Satyawati Dhawan contained in the earlier agreement with Competent Builders were retained. The flat buyers were not a party to this tripartite agreement. It is no doubt true that this tripartite agreement did not postulate that Ansals would honour the commitment towards the flat-buyers. This agreement provided that it is the owner, Smt. Satyawati Dhawan, who would be responsible to pay the money of over Rs. 43 lakhs to the flat-buyers. She, of course, had to be financed by Ansals for the payment of money, but, inter alia, the tripartite agreement took note of the fact that it was the responsibility of the owner to refund the money to the flat-buyers. This is also clear evidence of the fact that the original allotment in a way had indeed created rights and liabilities between the flat allottees and Mrs. Satyawati Dhawan. Possibly realising that the commitment in favour of the flat-owners had to be honoured, a memorandum of understanding was entered into between Smt. Satyawati Dhawan and Ansals. According to this memorandum of understanding, Ansals agreed that the original flat-buyers will be sold flats at an enhanced rate of Rs. 850 per sq. ft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the right of the original buyers stood extinguished. The right to allotment of flats continued to exist not with standing the walking out of the project by Competent Builders and stepping into their shoes by Ansals. Any tripartite agreement amongst the owner, Competent Builders and the Ansals could not adversely affect the rights of the flat-buyers. It is precisely for this reason that the memorandum of understanding was entered into. It is difficult to imagine that an experienced builder like Ansals would have agreed to sell large areas of built up property at a rate of Rs. 850 per sq. ft. unless and until it was advised and, in our opinion, rightly so, that the flat buyers had a right to the allotment of flats in their favour and that Smt. Satyawati Dhawan could not defeat their right by changing the builder. We are unable to agree with Shri Rajendra that Competent Builders or Ansals were not the agents of Smt. Satyawati Dhawan. The two builders, apart from being financiers, had powers of attorney executed in their favour and a power of attorney is always regarded as an agent of the principal. The attorney is empowered to have dealings with third parties but such dealings are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dated September 4, 1979, it was, inter alia, provided that the power of attorney would be executed in favour of Competent Builders so as to enable Competent Builders to execute "sale agreements in favour of the purchasers of the flats or their assigns or nominees and . . ." (emphasis added). The said clause clearly provides that the purchasers could have their nominees or assigns and they would necessarily step into the shoes of the purchasers. This is precisely what has happened here. Sanjeev Sethi has stepped into the shoes of his brother, Navneet Sethi, who was the original allottee. It is for this reason that no transfer charges were demanded by unpaid to Ansals, even though the agreement postulates that, in case of any transfer, such charges will have to be paid. With regard to the applicability of rule 48L, the conclusion is very simple. The said rule will apply only if Chapter XX-C applies. For the view that we have taken, on the facts of the present case, Chapter XX-C does not apply. Therefore, the question of the said rule becoming applicable does not arise. Furthermore, at the time when the rule came into operation, viz., October 1, 1986, the price which had been a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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