DELHI DEVELOPMENT AUTHORITYversusS.G.G. TOWERS (P) LTD. & ORS.

                  [2025] 3 S.C.R. 779 : 2025 INSC 337

                      Delhi Development Authority
                                   v.
                      S.G.G. Towers (P) Ltd. & Ors.
                        (Civil Appeal No. 1972 of 2011)
                                 07 March 2025
                [Abhay S. Oka* and Ujjal Bhuyan, JJ.]


                            Issue for Consideration
       Appellant-DDA executed an agreement to lease in respect of a plot
       in favour of M/s Mehta Constructions, which executed a registered
       sale deed cum Assignment in favour of second respondent. The
       second respondent went into liquidation, and the plot was sold
       to first respondent in the auction in liquidation proceedings. The
       auction sale was confirmed by a Single Judge and Division Bench
       of the High Court, hence, the present appeal by DDA.

                                    Headnotes†
       Auction – Agreement to lease executed by Appellant in respect
       of a plot in favour of M/s Mehta Constructions – However, lease
       in terms of such agreement was never executed – Subsequent
       sale deed executed by M/s Mehta Constructions in favour of
       second respondent – Second respondent went into liquidation,
       and the plot was sold to first respondent in the auction in
       liquidation proceedings on “as it is basis” – Whether first
       respondent entitled to any right in respect of the plot:
       Held: It is an accepted position that the lease was never executed
       by the appellant in favour of M/s Mehta Constructions, and no rights,
       title, and interest were created in favour of M/s Mehta Constructions
       in respect of the said plot – Therefore, at the highest, the second
       respondent, by virtue of the sale deed dated 15th February 1985,
       executed by M/s Mehta Constructions, can claim benefits under
       the lease agreement, provided in law, the second respondent is
       entitled to it in accordance with law – As far as auction conducted
       in 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” – Moreover, the order dated 19th October


* Author
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       2001 of the Company Judge makes sale absolute in favour of
       the first respondent – Therefore, the first respondent will get only
       those rights which M/s Mehta Constructions had under the lease
       agreement, provided the rights can be claimed at this stage – The
       first respondent is not entitled to either ownership or leasehold
       rights in respect of the said plot – The first respondent 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 – If the first respondent desires to get
       the transaction regularised, it is for the first respondent to apply to
       the appellant to accept unearned income or any other amount – If
       such a request is made, the appellant will consider the same in
       accordance with the law. [Paras 11, 12, 14, 15]

                                 Case Law Cited
       Delhi Development Authority v. Vijaya C. Gurshaney & Anr. [2003]
       Supp. 2 SCR 1010 : (2003) 7 SCC 301; Food Corporation of India
       & Ors. v. Babulal Agrawal [2004] 1 SCR 129 : (2004) 2 SCC 712;
       Delhi Development Authority v. Anant Raj Agencies Pvt. Ltd. [2016]
       1 SCR 787 : (2016) 11 SCC 406; State of Rajasthan & Ors. v.
       Gotan Lime Stone Khanij Udyog Pvt. Ltd. and Anr. [2016] 1 SCR
       216 : (2016) 4 SCC 469; Delhi Development Authority v. Nalwa
       Sons Investment Ltd. & Anr. [2019] 6 SCR 783 : (2020) 17 SCC
       782 – referred to.

                                List of Keywords
       Agreement to Lease; Leasehold Rights; Lease Deed; Delhi
       Development Authority; Sale Deed; Auction; Liquidation
       Proceedings; Absolute Sale; As it is basis; Ownership; Lessee;
       Unearned Income; Creditors.

                               Case Arising From
       CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1972 of 2011
       From the Judgment and Order dated 21.01.2010 of the High Court
       of Punjab & Haryana at Chandigarh in CA No. 5 of 2002
[2025] 3 S.C.R.                                                         781

     Delhi Development Authority v. S.G.G. Towers (P) Ltd. & Ors.


                        Appearances for Parties
     Advs. for the Appellant:
     Abhinav Mukerji, Sr. Adv., Nitin Mishra, Ms. Mitali Gupta, Ishaan
     Sharma.
     Advs. for the Respondents:
     Harish Malhotra, Sr. Adv., Anand Sukumar, S. Sukumaran, Bhupesh
     Kumar Pathak, Kshitis Mittal, Ms. Ruche A, Dhruv Kapur, Baldev,
     Vidit Agarwal, Ms. Ritika Sethi, Satish Kumar.

                Judgment / Order of the Supreme Court

                               Judgment

     Abhay S. Oka, J.

     FACTUAL ASPECTS

1.   The appellant, Delhi Development Authority (formerly known as
     the Delhi Improvement Trust), executed an agreement of lease (for
     short, “the lease agreement”) dated 17th July 1957 in respect of plot
     no.3 (for short “the said Plot”), measuring 2044.4 sq. yards, situated
     in Industrial Area Scheme, Najafgarh Road, New Delhi in favour of
     M/s Mehta Constructions and Industrial Corporation Private Limited
     (for short, “M/s Mehta Constructions”). On 25th November 1972, M/s
     Mehta Constructions entered into an agreement to sell with M/s
     Pure Drinks Private Limited, the second respondent. A registered
     sale deed cum Assignment dated 15th February 1985 was executed
     by M/s Mehta Constructions in favour of the second respondent. In
     Execution Proceedings, i.e. Co Ex 8 of 1981, the Company Judge of
     the Delhi High Court passed an order on 4th February 1985. Pursuant
     to the said order, the Registrar of the High Court lodged the sale
     deed for registration in the office of the Sub-Registrar, Delhi.
2.   Even the second respondent went into liquidation, and the plot was
     sold to the first respondent in the auction on 24th August 2000 in
     liquidation proceedings before the Delhi High Court. The auction
     was held pursuant to the notice of proclamation of sale issued by
     the High Court of Punjab and Haryana on 9th June 2000.
3.   On 7th December 2000, the first respondent applied for confirmation
     of the sale made in the auction. The appellant appeared in the said
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       proceedings and filed a reply. The appellant contended that at no
       point of time had M/s Mehta Constructions acquired any interest
       in the plot, and therefore, the plot could not have been sold in the
       auction. By the order 19th October 2001, the learned Single Judge
       allowed the application filed by the first respondent and confirmed
       the auction sale. Aggrieved by the said order, the present appellant
       preferred an appeal before the Division Bench. By the impugned
       judgment dated 21st January 2010, the appeal was dismissed.

       SUBMISSIONS
4.     The learned senior counsel appearing for the appellant urged that what
       was executed on 17th July 1957 in favour of M/s Mehta Constructions
       was only an agreement to lease. The agreement provided that the
       lease deed was to be executed only upon certain compliances being
       made by M/s Mehta Constructions. As no such compliance was made,
       the lease deed was not executed, and therefore, leasehold rights
       were never acquired by M/s Mehta Constructions with respect to the
       said plot. He relied upon Clause 24 of the lease agreement, which
       clearly provided that unless the lease is executed, the agreement
       will not create any right, title or interest in respect of the said plot in
       favour of M/s Mehta Constructions.
5.     The learned senior counsel submitted that the plot is Nazul land,
       which belongs to the Union of India and is in the care and custody
       of the appellant. He submitted that a Nazul land can be sold only in
       accordance with Section 22 of the Delhi Development Act, 1957 (for
       short, “the said Act”) and the Delhi Development Authority (Disposal
       of Developed Nazul Land) Rules, 1981 (for short, ‘the 1981 Rules’).
       The learned counsel submitted that though no right, title or interest
       was created in favour of M/s Mehta Constructions, it purported to
       execute an agreement for sale in favour of the second respondent.
       It appears that in Company Application pending before the learned
       Single Judge, M/s Mehta Constructions was represented by one
       Shri R.P. Dutt, its Managing Director who stated that an absolute
       irrevocable authority has been conferred upon Shri S. Daljit Singh
       and Shri S.Charanjit Singh of the second respondent to take steps
       to get the title of M/s Mehta Constructions perfected. An order
       was passed by the learned Company Judge of the High Court on
       4th February 1985, directing the Registrar of the High Court to appear
       before the Sub-Registrar of Assurances and to admit execution of a
[2025] 3 S.C.R.                                                        783

      Delhi Development Authority v. S.G.G. Towers (P) Ltd. & Ors.


      sale deed in favour of the second respondent. Accordingly, the deed
      of Conveyance and Assignment dated 15th February 1985 executed
      by and between M/s Mehta Constructions and the second respondent
      was registered. He pointed out that the Company Court was not made
      aware that even leasehold rights regarding the said plot were not
      available with M/s Mehta Constructions. He submitted that that is how,
      in the liquidation proceedings of the second respondent, the plot was
      put to public auction and sold to the first respondent. He submitted
      that under Rule 43 of the 1981 Rules, the lessor’s prior consent was
      required to transfer the said plot. Placing reliance on a decision of
      this Court in the case of Delhi Development Authority v. Vijaya C.
      Gurshaney & Anr.,1 he submitted that the sale in favour of the first
      respondent was illegal. The learned senior counsel also relied upon
      the decisions of this Court in the cases of Food Corporation of India
      & Ors. v. Babulal Agrawal2, Delhi Development Authority v. Anant
      Raj Agencies Pvt.Ltd.3, State of Rajasthan & Ors. v. Gotan Lime
      Stone Khanij Udyog Pvt. Ltd. and Anr.4 and Delhi Development
      Authority v. Nalwa Sons Investment Ltd. & Anr.5
6.    The learned counsel appearing for the respondents submitted
      that until the first respondent applied for confirmation of sale, the
      appellant never filed any proceedings to challenge the transactions
      between M/s Mehta Constructions and the second respondent.
      It was submitted that the appellant never challenged the auction
      process. It was submitted that no interference is called for with the
      impugned judgment.

      CONSIDERATION OF SUBMISSIONS
7.    There is no dispute that the Delhi Improvement Trust executed an
      agreement to lease dated 17th July 1957 in favour of M/s Mehta
      Constructions regarding the said plot. Various terms and conditions
      were included in the said agreement. The agreement provided for the
      execution of the lease deed in favour of M/s Mehta Constructions.
      Clause 24 of the agreement is relevant which reads thus:


1    (2003) 7 SCC 301
2    (2004) 2 SCC 712
3    (2016) 11 SCC 406
4    (2016) 4 SCC 469
5    (2020) 17 SCC 782
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            “24. Nothing in these presents contained shall be considered
            as a demise at law of the said piece of land hereby agreed
            to be demised or any part thereof so as to give the said
            intended lessee any right, title or interest therein other
            than as may be conferred by these presents until the said
            lease shall have been executed and registered.”
8.     Admittedly, a lease in terms of the lease agreement was never
       executed. On 25th November 1972, M/s Mehta Constructions executed
       an agreement for sale in favour of the second respondent for a
       consideration of Rs.3,06,700/-. It appears that on 15th February 1985,
       M/s Mehta Constructions executed a sale deed in favour of the second
       respondent in respect of the said plot. As per the order dated 4th
       February 1985 passed by the learned Single Judge of the High Court,
       the High Court Registrar presented the sale deed for registration
       before the sub-Registrar of Assurances at Delhi. On 9th June 2000,
       a notice for Proclamation of Sale was published by the High Court
       of Punjab and Haryana of the said plot. Accordingly, in the auction
       sale, the highest bid of the first respondent was accepted by the
       High Court. The auction sale was confirmed by the learned Single
       Judge. The order of the learned Single Judge had been confirmed
       by the impugned order of the Division Bench.
9.     An order dated 4th October 2023 passed by this Court read thus:
            “After arguments were heard for some time of the learned
            counsel appearing for the appellant, the learned senior
            counsel appearing for the first respondent and the learned
            counsel appearing for the second respondent, this Court
            noticed that the first respondent while filing an application
            bearing Company Application No.744 of 2000, showed
            willingness to pay the unearned income in terms of the
            Resolution No.S/2(31)(57) of the Delhi Development
            Authority in respect of a transaction of auction. Therefore,
            we posed a query to the learned senior counsel appearing
            for the first respondent about the payment of unearned
            income based on the first transaction of transfer between
            M/s. Mehta Construction and Industrial Corporation and
            M/s. Pure Drinks Limited. The learned senior counsel
            appearing for the first respondent seeks time to take
            instructions from the first respondent.
[2025] 3 S.C.R.                                                         785

     Delhi Development Authority v. S.G.G. Towers (P) Ltd. & Ors.


           We permit the appellant to implead Mr. Prashant Baliyan,
           Provisional Liquidator, Office of the Official Liquidator,
           Ministry of Corporate Affairs, Corporate Bhawan, Plot
           No.4B, Second Floor, Sector 27B, Madhya Marg,
           Chandigarh-160019, as party respondent.
           The amended cause title be filed within three days from
           today.
           Issue notice to the newly added respondent.
           Mr. Prashant Baliyan, Provisional Liquidator, will have to
           make a statement about the availability of the amount
           deposited by the first respondent pursuant to the auction
           and, if such amount is available, whether it has been
           invested in a fixed deposit.
           As the service of notice will take time, we direct the
           appellant to inform Mr. Prashant Baliyan to appear before
           this Court on the next date of hearing by forwarding a copy
           of this order to him.
           We also direct the appellant to communicate to the learned
           counsel for the first respondent the amount payable in
           respect of both the transactions.
           List on 18th October, 2023, as part-heard matter at the
           top of the Cause List.”
10. An affidavit was filed by the Provisional Liquidator of the second
    respondent in terms of the order. The Provisional Liquidator relied
    upon the orders passed by the Company Court. The Provisional
    Liquidator pointed out that as per letter dated 7th November 2023
    addressed to the Provisional Liquidator by the Registrar General
    of Punjab and Haryana High Court, out of the amount deposited
    by the first respondent towards confirmation of sale, amounts of
    Rs.70,49,036/- and Rs.14,00,579/- have been invested in fixed
    deposits. The Registrar General pointed out that the maturity value
    of the fixed deposits was Rs.2,14,06,677/- and Rs.51,43,324/-,
    respectively. It is true that the aforesaid amounts which are invested
    in fixed deposits are available. However, the liquidation proceedings
    are still pending. In the report, the liquidator stated that a number of
    parties had made claims against the second respondent, including
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       the Income Tax Department. The total claims are of Rs.60.66 crores
       or more. The total amount available is approximately Rs.10 crores.
       The amount available will be governed by the orders passed by
       the Company Court. When the High Court is seized of liquidation
       proceedings, and as there are other creditors of the second
       respondent, it will not be appropriate to direct that a part of the
       amount paid towards consideration by the first respondent should
       be appropriated towards unearned income payable to the appellant.
11. It is an accepted position that the lease was never executed by the
    appellant in favour of M/s Mehta Constructions, and no rights, title,
    and interest were created in favour of M/s Mehta Constructions
    in respect of the said plot. Therefore, at the highest, the second
    respondent, by virtue of the sale deed dated 15th February 1985,
    executed by M/s Mehta Constructions, can claim benefits under the
    lease agreement, provided in law, the second respondent is entitled
    to it in accordance with law.
12. We may note here that 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”. Moreover, the order dated 19th October 2001
    of the Company Judge making sale absolute in favour of the first
    respondent reads thus:
            “From the record, it transpires and it stands proved that
            the property in question which is in the shape of the
            land is the property of DDA which entered into a wrong
            agreement of lease dated 17.7.57 in favour of M/s Mehta
            Construction and in pursuance of that agreement the
            possession was delivered to M/s Mehta Construction and
            Industrial Corporation Ltd., which was a limited company.
            Unfortunately, M/s Mehta Construction could not discharge
            its liability as a result of which it went into liquidation and
            its lessee rights virtually were sold in public auction which
            were purchased by M/s Pure Drinks (New Delhi) Ltd., vide
            a deed of conveyance dated 15.2.1985. This auction was
            conducted under the direction of Hon’ble Delhi High Court.
            Meaning thereby, that M/s Pure Drinks (New Delhi) Ltd.,
            was substituted in place of M/s Mehta Construction. It also
            ran into financial difficulty running into financial deficiency
[2025] 3 S.C.R.                                                         787

     Delhi Development Authority v. S.G.G. Towers (P) Ltd. & Ors.


           and company petition for winding up was filed in this
           Court which was ordered to be admitted vide· order dated
           28.8.1997. The publication has been affected under the
           orders of this court. The lessee rights which were given
           to M/s Mehta Construction and which were assigned to
           M/s Pure Drinks (New Delhi) Ltd., under the orders of
           the High Court were auctioned and purchased by the
           applicant. In this manner, it can be safely held that the
           present applicant has acquired whatever the lessee
           rights were acquired either by Mehta Construction or
           by Pure Drinks (New Delhi) Ltd.”
                                                    (emphasis added)

     Therefore, the first respondent will get only those rights which
     M/s Mehta Constructions 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.
13. 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.
14. Thus, the scenario which emerges is that the first respondent is not
    entitled to either ownership or leasehold rights in respect of the said
    plot. The first respondent 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.
15. If the first respondent desires to get the transaction regularised, it is
    for the first respondent to apply to the appellant to accept unearned
    income or any other amount. If such a request is made, the appellant
    will consider the same in accordance with the law.
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16. Subject to the findings recorded as above, there is no reason to
    interfere with the impugned judgments. Accordingly, the appeal stands
    dismissed in the light of the findings recorded as above.

       Result of the case: Appeal dismissed.




       †
           Headnotes prepared by: Bibhuti Bhushan Bose