Can’t Direct Funds In Liquidation Proceedings For Payment Of Unearned Income Due To Large Number Of Claims: Supreme Court Dismisses DDA’s Plea
The Supreme Court dismissed a Civil Appeal of the Delhi Development Authority (DDA) against the Division Bench's Judgment in a lease case.
The Supreme Court dismissed a Civil Appeal of the Delhi Development Authority (DDA), saying that it cannot direct the funds available in liquidation proceedings for payment of the unearned income due to large number of claims.
The Appeal before the Court arose from the Judgment of the Division Bench of the Delhi High Court in a lease case.
The two-Judge Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan said, “As regards the unearned income, the Division Bench was right in not passing any order on that behalf. We cannot direct the funds available in liquidation proceedings for payment of the unearned income as large number of claims have been submitted.”
Senior Advocate Abhinav Mukerji represented the Appellant while Senior Advocate Harish Malhotra represented the Respondents.
Case Background
The Appellant-DDA executed an agreement of lease in 1957 in respect of a plot in favour of a private company. In 1972, the said company entered into an agreement to sell with another company i.e., the Second Respondent. A registered Sale Deed cum Assignment was executed in 1985 in its favour. In execution proceedings, the Company Judge of the Delhi High Court passed an Order and the Registrar lodged the Sale Deed for registration in the office of the Sub-Registrar. Even the Second Respondent went into the liquidation and the plot was sold to the First Respondent in the auction in liquidation proceedings in the year 2000.
The auction was held pursuant to the notice of proclamation of sale issued by the Punjab and Haryana High Court. Thereafter, the First Respondent applied for confirmation of the sale made in auction and the DDA appeared in the said proceedings. The DDA contended that at no point of time had the said private company acquired any interest in the plot, and therefore, the plot could not have been sold in the auction. The Single Judge allowed the Respondent’s Application and confirmed the auction sale. Resultantly, the DDA filed an Appeal and the Division Bench dismissed the same. Hence, DDA was before the Apex Court.
Reasoning
The Supreme Court in the above regard, observed, “… as far as the auction conducted in the liquidation proceedings of the second respondent is concerned, the notice of proclamation itself records that the sale of the said plot was on “as it is basis.”
The Court noted that the First Respondent will get only those rights which the private company had under the lease agreement, provided the rights can be claimed at this stage.
“In fact, in the impugned judgment, the Division Bench of the High Court had observed that the auction would not amount to sale of the said plot. The impugned judgment leaves the remedy of the appellant open to proceed against the concerned parties. These findings have been accepted by the first respondent”, it added.
The Court further remarked that the scenario which emerges is that the First Respondent is not entitled to either ownership or leasehold rights in respect of the said plot and it cannot claim to be a lessee as the lease in terms of the lease agreement was never executed.
“At the same time, if according to the case of the appellant, M/s Mehta Constructions had committed breach of the lease agreement, notwithstanding the impugned orders, it will be always open for the appellant to adopt appropriate remedy for recovery of possession and/or recovery of unearned income against the first respondent”, it also clarified.
The Court concluded that if the First Respondent desires to get the transaction regularised, it has to apply to the Appellant-DDA to accept unearned income or any other amount, and if such a request is made, the DDA will consider the same in accordance with the law.
Accordingly, the Apex Court dismissed the Appeal and refused to interfere with the impugned Judgments.
Cause Title- Delhi Development Authority v. S.G.G. Towers (P) Ltd. & Ors. (Neutral Citation: 2025 INSC 337)
Appearance:
Appellant: Senior Advocate Abhinav Mukerji, AOR Nitin Mishra, Advocates Mitali Gupta, and Ishaan Sharma.
Respondents: Senior Advocate Harish Malhotra, AORs Anand Sukumar, Ritika Sethi, Satish Kumar, Advocates Dhruv Kapur, Maharshi Kaler, Shruti Goyal, Hitesh Malik, Jitesh Malik, Anisha Dahiya, Jatin Hooda, B C Bhatt, and N D Kaushik.
