The Delhi High Court allowed the appeal and has set aside the judgment passed by the District Judge and Additional Sessions Judge, ARCT holding that the Trial Court has failed to appreciate the intention of the legislature and the spirit of the provision under Section 53B of the Delhi Development Act, 1957.

The Court, while dealing with the cancellation of a lease deed between the Delhi Development Authority and the appellant, Khosla Medical Institute, held as follows:-

"It is travesty of justice that an institution contributing for noble cause being that of running a charitable hospital on a public land and providing for sound research and treatment facilities has been made to suffer the rigors of cancellation of the Lease Deed and vacation of the property. Law that should be an instrument for ensuring welfare is being reduced to a tool of atrocity in the instant case. Being a constitutional court and the conscience-keeper of the democracy, this Court cannot lend a blind eye when the ends of justice are being bulldozed in broad daylight. The institution is imparting the state‟s welfare functions and should otherwise be done by the instrumentalities of state. Even in such a case, undue harassment being caused to the appellant will lead to an anathema of the rule of law",

The bench of Justice Chandra Dhari Singh observed that the prior knowledge of the Authority that a suit has been filed or a claim has been raised against it, would not invoke the bar to maintainability under Section 53B of the DD Act and further said that "The interpretation as made by the predecessors of this Court, including the Coordinate Benches as well as the Division Bench clarify the position with respect to notice under Section 53B of DD Act and provides that the intention and object of the provision is to intimate the Authority and bring to its knowledge that a suit may be filed against it so that if remediable, the matter does not see the day of light in the Court of law and is resolved/settled at the pre-litigation stage."

In this case, the Appellant had filed the appeal under Section 96 read with Order XLI of the Code of Civil Procedure, 1908 challenging the judgment passed by the District Judge and Additional Sessions Judge, ARCT wherein the suit of the appellant seeking an injunction and restraining the respondents and their agents, officers, servants, a representative from disturbing the actual and constructive possession of the appellant on the land in question was dismissed.

Senior Advocate Arvind Varma appeared on behalf of the appellant and submitted that the Trial Court has failed to appreciate that the basic objective of Section 53B of the DD Act is to settle the matter at a pre-litigation stage, however, once a matter reaches any forum or Court of law, a dismissal on a mere technical ground is erroneous. It was also submitted that induction of new members to run the new Ayurveda wing does not amount to the transfer of rights and title in the favour of a third party and that there was no conveyance deed or other document to show that the subject land was transferred.

Shobhana Takiar, Standing Counsel for DDA submitted that Section 53B of the DD Act is mandatory and must be observed and complied with while filing a suit against the DDA. It was also submitted that the Management of M/s Maharishi Ayurvedic Products gave a sum of ₹4.5 crores to the appellant for becoming a member of the Board of Directors and constituted more than 2/3rd of the total constitution of the Board of Directors of the appellant Institute. Thus, the transfer of management was established.

The issues dealt with by this Court were-

1. Whether the suit before the Trial Court was liable to be dismissed for the want of notice under Section 53B of the DD Act.

2. Whether any substantive and conclusive evidence was placed before the Trial Court to show that there was a transfer of the suit property in favour of a third party, thereby leading to the violation of condition II(5)(a) of the Lease Deed.

3. Whether there is any other illegality, perversity, or error in the impugned judgment.

With regard to Issue 1, the Court observed that once the suit had been instituted, reached the Court of law, and argued on merits comprehensively for over a decade then the notice under Section 53B of the DD Act is rendered insignificant and irrelevant and that the service of notice of two months would have changed the entire course of the proceedings between the parties and would have even defeated the purpose of the suit.

With regard to Issue 2, which wholly related to the merits of the case, the Court observed that the Trial Court also failed to consider that there was no conclusive evidence or document on record to establish that the title and ownership of the appellant Institute was transferred to a third party and noted that the Trial Court relied upon the affidavit of Subhash Gupta (property agent) but neither the contents of the affidavit were verified nor the legitimacy/competency of the witness was verified.

As far as the advertisement issued for the sale of the appellant land was considered, the Court relied upon the principle laid down in Carlill vs. Carbolic Smoke Ball Company, [1893] 1 QB 256 and observed that "there is no dispute to the fact that a mere offer to sale does not imply a sale of the property and its transfer to a third party thereof. ...that an advertisement, is an invitation to offer and not implied sale and mere advertisement did not conclusively prove that the transfer was actually completed in favour of a third party. "

With regard to Issue 3, the Court observed that the principal ground for cancellation of the Lease deed was that the property in question was transferred to a third party, but the findings of the Trial Court qua the transfer of property were erroneous and not in accordance with the principles of law as well as the facts and circumstances of the case. Therefore, when the sole ground invoked has already been negated by this Court, the question of violation of terms of the Lease Deed is not held to be proved and remained unsubstantiated.

Accordingly, the appeal was allowed and the judgment dated November 14, 2022, passed by the Court of District Judge and Additional Sessions Judge, ARCT, Delhi was set aside.

Cause Title- Khosla Medical institute v. Delhi Development Authority (Neutral Citation No.- 2022/DHC/005237)

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