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Judgment
Jaishree Thakur, J.—This order shall dispose of two writ petitions i.e. CWP Nos. 21239 of 2013 and 19569 of 2014 as common questions of law arise in both the cases. For convenience, facts are being taken from CWP No. 21239 of 2013. The challenge in the present writ petition is to the clause 12 incorporated in the conveyance deed executed by the respondent Corporation in favour of the petitioner contemplating that the petitioner seeks specific written approval from Haryana State Infrastructure and Industrial Development Corporation (''HSIIDC'' for Short) before creating any charge or mortgaging the freehold land or building as illegal, arbitrary, unjust, discriminatory and unconstitutional.
The petitioner company applied for and was allotted a freehold industrial plot in HSIIDC, Industrial Estate, Rai, District Sonepat, when a regular Letter of Allotment was issued on 11.4.2007. Later, a conveyance deed dated 9.10.2009 was executed in favour of the petitioner. The petitioner wanted to mortgage this industrial plot to raise loan from Indusind Bank Ltd. being advanced on better terms on 20.6.2013. The petitioner sought permission from HSIIDC to mortgage plot even though permission had been earlier granted to mortgage the plot with Union Bank on 25.11.2011. This was followed by a reminder on 10.9.2013. Since there was no response from the respondent corporation HSIIDC, the petitioner was compelled to file the present writ petition inter-alia contending that the term and condition No. 12 of the Conveyance Deed was contrary to the Clause No. 13 of the Regular Letter of Allotment.
In reply filed on behalf of the respondent HSIIDC, it is averred that a conveyance deed was executed by the corporation in favour of the petitioner on 9.10.2009. The terms of the conveyance deed including seeking permission to mortgage has been accepted by the petitioner, therefore, the petitioner cannot be permitted to challenge the terms of the conveyance deed at this point of time.
Learned counsel for the petitioner has relied upon a judgment rendered by this Court in Amritpal Singh v. Chandigarh Administration and others, (2012-3)167 P.L.R. 467 to contend that the requirement of seeking "No Objection Certificate" in the absence of any rule framed in the exercise of statutory powers, is illegal and unwarranted. Relying upon the said judgment, counsel for the petitioner has contended that once the entire payment has been made against the said plot, HSIIDC no longer remains the owner. The allottee has all rights to transfer the land and/or building standing thereon without having to get written approval from HSIIDC. It has also been contended by the counsel for the petitioner that such a clause is violative of Article 300A of the Constitution of India as the petitioner company is being deprived of its right to use the property.
On the other hand, learned counsel for the respondent has relied upon a judgment reported as Indu Kakkar Vs. Haryana State Industrial Development Corporation Ltd. and Another, , to submit that as per Section 31 of the Transfer of Property Act, 1882, the Corporation continues to have an interest and charge over the property till such time as all its dues are cleared like enhancement of price of the plot and other dues. It was contended that once an agreement i.e. conveyance deed has been executed, the terms and conditions of such agreement are binding and cannot be avoided. A conveyance deed was executed by the corporation in favour of the petitioner on 9.10.2009, the clauses have been accepted by the petitioner at the time of execution of the said deed and as such, there can be no challenge subsequently.
We have heard the counsel for the parties and also perused the Clauses as enumerated in the regular Letter of Allotment and the Conveyance deed. Clause No. 13 in the Regular Letter of allotment provides that the plot/shed shall continue to belong to HSIIDC until and unless the full price of the plot together with interest and other amount, if any, is due. It was further specified that the allottee shall have no right to transfer the land, building standing thereon without specific written approval from HSIIDC. The relevant clauses from the Regular Letter of Allotment read as under:
"The plot/shed shall continue to belong to HSIIDC until and unless the full price of the plot/sheds together with interest and other amount if any due to HSIIDC is paid by the allottee. Allottee shall have no right to transfer the land and building standing thereon by way of sale or gift, mortgage, lease or any other way without specific written approval from the transferor.
That on payment of total price of the plot/shed, the HSIIDC would execute a deed of conveyance, containing the terms and conditions in consonance with those contained in this agreement as well as IP and EMP, in favour of the allottee. The charges on registration & stamp duty will be paid by the allottee."
The Conveyance deed executed in terms of the letter of allotment is that the transferee shall have no right to transfer the land without specific written approval from the transferor. The relevant clauses from the conveyance deed read as under:
"12. That the transferee shall have no right to transfer the land and building standing thereon by way of sale or gift, mortgage, lease or any other way without specific written approval from the transferor."
The Clause 12 of the Conveyance deed is in terms of the Clause 13 of the Regular Letter of Allotment. Such clauses are in two parts, one is that the plot/shed shall continue to belong to HSIIDC until full price along with other amounts are not paid by the allottee and the second component of the Clause is that the allottee shall have no right to transfer the land, building etc. without specific written approval. Clause No. 14 of the Regular Letter of Allotment stipulates that a deed of conveyance will be executed containing the terms and conditions in consonance with those contained in this agreement as well as the Estate Management Policy. Clause 12 of the Conveyance deed states that transferee shall have no right to transfer the land without specific written approval from the transferor. Both the said Clauses lay stress on the fact that transfer cannot be affected without prior permission of HSIIDC.
The judgment rendered in Indu Kakkar''s case (Supra) relied upon by the respondent is fully applicable to the facts of the present case in relation the present respondent itself. The Hon''ble Supreme Court was seized of a similar Conveyance deed as executed by HSIIDC. It was held that the Conveyance deed does not create an absolute interest in favor of the allottee. The relevant extract read as under:-
"16. However, the allottee has contended before the trial court that clause 7 of the agreement is unenforceable in view of Section 11 of the TP Act. But that contention was repelled, according to us, rightly because the deed of conveyance had not created any absolute interest in favour of the allottee in respect of the plot conveyed. For a transferee to deal with interest in the property transferred "as if there were no such direction" regarding the particular manner of enjoyment of the property, the instrument of transfer should evidence that an absolute interest in favour of the transferee has been created. This is clearly discernible from Section 11 of the TP Act. The section rests on a principle that any condition which is repugnant to the interest created is void and when property is transferred absolutely, it must be done with all its legal incidents. That apart, Section 31 of the TP Act is enough to meet the aforesaid contention. The section provides that "on a transfer of property an interest therein may be created with the condition super added that it shall cease to exist in case a specified uncertain event shall happen, or in case a specified uncertain event shall not happen". Illustration (b) to the section makes the position clear, and it reads:
"(b) A transfers a farm to B, provided that, if B shall not go to England within three years after the date of the transfer, his interest in the farm shall cease. B does not go to England within the term prescribed. His interest in the farm ceases."
All that Section 32 of the Transfer of Property Act provides is that "in order that a condition that an interest shall cease to exist may be valid, it is necessary, that the event to which it relates be one which could legally constitute the condition of the creation of an interest". If the condition is invalid, it cannot be set up as a condition precedent for crystallization of the interest created. The condition that the industrial unit shall be established within a specified period failing which the interest shall cease, is a valid condition. Clause 7 of the agreement between the parties is, therefore, valid and is binding on the parties thereto."
Undoubtedly once a conveyance deed has been executed, the terms and conditions therein are binding upon the parties. The HSIIDC has not given up its interest unequivocally in the plot allotted to the petitioner as it is subject to claim enhanced compensation and also charges against the said plot. Therefore, Section 31 of the Transfer of Property Act comes into operation. HSIIDC has to safe guard its interest to ensure that the allottee/transferee complies with the Clauses of the allotment like raising of construction within specified time, completion of the project for which the Industrial Plot was allotted, making of the entire payments including the payment towards enhanced compensation and other dues that may arise in relation to the plot. In the event of default by an allottee, the corporation should have right to recover the amount from the secured creditor as well. In the absence of the permission, the charge or interest of the Corporation against the plot allotted cannot be enforced. Thus it cannot be said that the said condition imposed by HSIIDC is illegal and not in consonance with the terms and Conditions of the Regular Letter of Allotment or that it is unconstitutional and illegal.
The judgment relied upon by the petitioner in Amritpal''s case (supra) is not applicable as it is dealing with another set of Statutory Rules. It was a case of transfer of ownership having paid all the dues. There was no such condition either in the conveyance deed or in the rules. Therefore, such judgment is not helpful to the arguments raised.
The counsel for the petitioner further argued that Clause No. 12 as inserted in the conveyance deed violates Article 300-A of the Constitution of India as it deprives the petitioner to transfer its rights without prior permission. Article 300-A reads as under:-
"300-A. Persons not to be deprived of property save by authority of law.- No Person shall be deprived of his property save by authority of law."
This argument, as raised by the petitioner, is wholly fallacious, as the petitioner has not been deprived of its property. The property continues to remain with the petitioner subject to a regulatory condition that as and when the petitioner proposes to transfer/mortgage the property, it shall obtained approval from the respondents. The respondents are justified to ensure that all dues are paid and in the event of default, the dues can be recovered from the plot allotted. Only a restriction has been placed upon the transfer of any property allotted to safeguard the interest of the respondent corporation HSIIDC which is legally permissible in terms of Section 31 of the Transfer of Property Act. The question of deprivation of property does not arise at all.
It is noted that during the pendency of the present writ petition vide interim orders dated 3.10.2013, the respondents were directed to grant permission to the petitioner to mortgage the property in question for getting loan from Indus Bank. This permission was granted vide letter dated 9.10.2013. A copy thereof was handed over in court during the present proceedings. A perusal of the said letter shows that permission to mortgage has been allowed subject to the following conditions:
"2. That HSIIDC shall have the first charge on the Plot against any outstanding recoverable dues i.e. in lieu of enhanced compensation, maintenance, water/sewage charges etc. of HSIIDC against the said plot.
That in the event of the M/s Indusind Bank taking over the assets of the allottee on account of any default in repayment of loan/financial assistance of any sort and selling the same, the M/S Indusind Bank, shall pay the HSIIDC its dues as a first charge."
A perusal of the permission would show that the respondent Corporation only seeks to protect its interest in so far as recovering any outstanding recoverable on account of enhanced compensation, maintenance, water/sewage charges etc.
In view of the above, it is held that Clause No. 12 of the regular letter of allotment and Clause No. 13 of the conveyance deed are not invalid or illegal, since the said clauses are inserted to protect the interest of HSIIDC to enable it to recover any outstanding against the said plot.
But we find merit in the argument raised that the allottees suffer great deal of harassment and delay in obtained loan from the financial institutions and the Schedule Banks as the respondents take months to process the permissions to mortgage. To avoid undue harassment to the transferee in future, we hereby direct HSIIDC to incorporate a condition in the Regular Letter of Allotment and in the Conveyance deed that the allottees shall have right to mortgage the plot in favour of the Schedule Banks etc. but such right to mortgage is subject to the rights of the HSIIDC to recover the enhanced compensation, water and sewage charges etc as charge upon the plot. The HSIIDC shall issue a circular to this effect in respect of the existing plot holders as well so to stream line the process of issuance of "NO Objection Certificate" for the purposes of availing loan. With these directions as mentioned above, both the above noted writ petition stand disposed of.