Full Text
HIGH COURT OF DELHI
Date of Decision: 01st JULY, 2026 IN THE MATTER OF:
IN
MRS. NANDITA MAJUMDAR .....Plaintiff
Through: Mr. Naresh K. Daksh, Advocate
Through: Mr. Gaurav Bahl and Mr Gokul Sharma, Advs for Applicant.
NANDITA MAJUMDAR .....Decree Holder
Through: Mr. Naresh K. Daksh, Advocate
Through: Mr. Amit Goel, Advocate for LRs of Defendant No. 2 and LRs of JD.
Mr. Gaurav Bahl and Mr Gokul Sharma, Advs for Objector.
15.59.14
JUDGMENT
1. I.A. 22003/2025 has been filed by the Applicants for setting aside of the Settlement Decree passed by this Court vide Order dated 31.05.2019 in CS(COMM) 255/2019.
2. I.A. 22004/2025 has been filed by the Applicants under Section 151 of CPC seeking stay of the Order dated 31.05.2019 passed by this Court in CS(COMM) 255/2019.
3. The Plaintiff had filed the present Suit against the Defendant seeking recovery of sum of Rs.3,94,02,465/- along with interest @ 18% per annum along with alternate reliefs as, according to the Plaintiff, the Defendant failed to discharge his obligations and also entered the property bearing B- 366, Chittaranjan Park, New Delhi – 110019 [“Suit Property”] illegally and unauthorizedly. The husband of the Plaintiff Sh. P.C. Majumdar was the owner of the Suit Property and after his death, all legal heirs executed a Relinquishment Deed in favour of the Plaintiff whereby the Plaintiff became the exclusive and lawful owner of the Suit Property.
4. The Plaintiff entered into a collaboration Agreement dated 01.05.2017 with the Defendant whereby Defendant agreed to construct a new building comprising of basement, stilt, ground floor, first floor, second floor and third floor after demolishing of old house on his own expense within a period of 12 months from the date of commencement of the construction. It was further agreed that the Plaintiff shall retain the entire ground floor, one servant quarter and stilt parking and one car parking space in the stilt parking besides the common staircase, lift etc. While the Defendant shall take basement, first floor, second floor and third floor along with parking and stilt area after paying the consideration amount of Rs.4,15,00,000/- to 15.59.14 the Plaintiff. Out of the said amount, Rs.15,00,000/- was to be paid at the time of applying for freehold, Rs.3,00,00,000/- on the completion of structure and Rs.1,00,00,000/- were to be paid at the time of handing over possession of the ground floor to the Plaintiff. Subsequent to the said collaboration Agreement in December, 2017, after executing all the necessary documents, the Defendant started the construction of the new building over the Suit Property. It was the case of the Plaintiff that the Defendant failed to comply with the collaboration agreement qua fittings and fixtures and handing over the possession of the ground floor and agreed upon the fittings and fixtures within the agreed time. The Defendant after a delay of one month, in January 2019, handed over the possession of the ground floor to the Plaintiff without completing fittings and fixtures as per the collaboration agreement. It was the contention of the Plaintiff that the Defendant failed to provide agreed upon fixtures and other necessary items. It was stated by the Plaintiff that at the time of handing over possession, the Defendant paid a sum of Rs.45,00,000/- to the Plaintiff out of Rs.4,15,00,000/- and, therefore, the Defendant was required to pay the balance consideration of Rs.3.70 crores. The Plaintiff further stated that the Defendant even without discharging his liability of paying the balance consideration, entered the first floor of the Suit Property without any authorization from the Plaintiff. Thereafter, the Plaintiff requested the Defendant to comply with the collaboration agreement by paying the balance amount of Rs.3.70 crores, completing the construction, providing fittings and fixtures on the ground floor and other necessary works. It was the contention of the Plaintiff that the Plaintiff has suffered substantial financial losses and also rights and interests were affected severely by the 15.59.14 breach of the agreement on the part of the Defendant. It was further averred that a demand notice dated 16.04.2019 was issued by the Plaintiff calling upon the Defendant to pay the outstanding amount, completion of the pending construction, provide fittings and fixtures on the ground floor along with other necessary works. However, the Defendant failed to respond to the said demand notice and also did not perform his obligations as agreed by him under the collaboration agreement.
5. Summons was issued in the Suit on 14.05.2019 and interim stay was also granted in favour of the Plaintiff vide the said Order by restraining the Defendant from creating any third-party interest in respect of any of the floors of the Suit Property, without first paying to the Plaintiff the outstanding sum of Rs.3,70,00,000/-.
6. On 28.05.2019, the learned Counsel for the Defendant entered appearance and the parties were referred to mediation.
7. During the pendency of the dispute, the Parties entered into a settlement vide a Settlement Agreement 30.05.2019 and this Court vide Order dated 31.05.2019 decreed the Suit in terms of the Settlement Agreement.
8. Now, I.A. 22003/2025 has been filed by the Applicants under Order XXIII Rule 3 of CPC for setting aside of the Settlement Decree passed by this Court vide Order dated 31.05.2019 in CS(COMM) 255/2019 on the ground that the said decree was obtained on the basis of fraud.
9. It is the case of the Applicants that the Plaintiff and the Defendant had prayed fraud upon this Court by entering into the Settlement Agreement 30.05.2019 wherein it was not disclosed that the present Applicants’ rights existed at the time of filing of the Suit by the Plaintiff against the Defendant 15.59.14 regarding the Suit Property. It is the case of the Applicants that on 24.02.2018, the Applicants entered into an Agreement to Sell with the Defendant in respect of the entire first floor of the Suit Property along with proportionate, undivided, indivisible, impartible ownership rights along with one car parking and one utility area with common W.C. for total consideration of Rs.1.81 crores. It is further stated by the Applicants that the if the time of entering into the Settlement Agreement 30.05.2019, the Defendant failed to inform the Court that they have already entered into an Agreement to Sell with the Applicants in respect of the first floor of the Suit Property and, therefore, the said decree was obtained by fraud. It is the case of the Applicants that the Agreement to Sell dated 23/24.02.2018 was witnessed by the Plaintiff along with one V.S. Jolly. It is further stated that the Plaintiff and the Defendant were at all time aware of the execution of the Agreement to Sell, however, they deliberately failed to disclose the same to this Court and also did not take into account at the time of entering into the Settlement Agreement 30.05.2019. It is further stated that this Court, in an execution petition being EX.P. 68/2019, vide Order dated 06.08.2019 directed the Judgment Debtor that he shall not create any third party interest on the first floor of the Suit Property. It the case of the Applicants that substantial rights of the Applicants have prejudiced as the Plaintiff and the Defendant failed to disclose the true and correct facts from the date of filing of the Suit till date of filing of execution petition. It is further stated that the Plaintiff and the Defendant have orchestrated the proceedings in such a manner that substantial loss be done to the Applicants. It is further stated by the Applicants that the Settlement Agreement 30.05.2019 is unlawful in nature and be declared as void in terms of Order XXIII Rule 3 of CPC. 15.59.14
10. It is further stated that the Applicants had paid Rs.45,00,000/- to the Defendant in performance of the Agreement to Sell, however, the Defendant avoided the performance of his part of obligation in terms of the Agreement to Sell by not giving the possession of the first floor of the Suit Property to the Applicants. It is further stated that neither the Plaintiff nor the Defendant impleaded the Applicants in the Suit or in execution proceedings who by virtue of the Agreement to Sell had a vested interest in the Suit Property and, therefore, becomes the necessary and property party in the matter. It is also the contention of the Applicants that the Applicants became aware about the execution proceedings in December 2019 and thereafter, immediately moved an appropriate application being EX.APPL.(OS) 146/2020 under Order XXI Rule 26 read with 150 of CPC. It is further stated that since the Settlement Agreement was executed by the Plaintiff and the Defendant by not impleading the Applicants herein and the decree dated 31.05.2019 was obtained on the basis of fraud, therefore, the Applicants have filed the present application seeking recall of the decree dated 31.05.2019 and further to declare the said Settlement Agreement 30.05.2019 as null and void.
11. Learned Counsel for the Applicant has argued that it is a settled law that where consent/compromise decree is obtained by fraud, a recall application is maintainable before the same Court which passed the decree and in support relied on the judgment of the Supreme Court in Pushpa Devi Bhagat (Dead) through LR Sadhna Rai (Smt.) v. Rajinder Singh and Others, (2006) 5 SCC 566, wherein the Supreme Court held that the only remedy available to a party to a consent decree is to approach the same Court which recorded the compromise and establish that there was no compromise, in which event Court will itself consider and decide the question as to whether 15.59.14 there was a valid compromise or not. Reliance was also placed on the judgment of the Supreme Court in Banwari Lal v. Chando Devi (Smt.) (Through LRs.) and Another, (1993) 1 SCC 581, wherein the Supreme Court held that the Court before which it is alleged by one of the parties to the alleged compromise that no such compromise had been entered, has to decide whether the agreement or compromise was lawful and not void or voidable under the Indian Contract Act, 1872 and if it is found to be fraudulent, then it shall be deemed to be void within the meaning of explanation to the Proviso to Rule 3 Order 23 CPC and as such not lawful.
12. In the reply filed on behalf of the legal heirs of the deceased Plaintiff, it is stated that the present Application under Order 23 Rule 3 CPC is not maintainable as the Applicant, being a third party to the Suit, are not covered under Order 23 Rule 3 as the same is available only to the parties to the compromise or the Suit. It is further stated that the Applicants are not a party to the Settlement Agreement dated 30.05.2019 executed between the Plaintiff and the Defendant and further that the purported signature on the Agreement to Sell are not of the Plaintiff, therefore, the Plaintiff is not bound by the said agreement. It is also stated that the Plaintiff is not a party to the Agreement to Sell and the Applicants have no right against the Plaintiff, therefore, there is no cause of action against the Plaintiff. It is further stated that the Defendant was entitled to the First Floor of the Suit property only upon the completion of the construction of the Suit property strictly in accordance with the Collaboration Agreement, however, the Defendant failed to perform his obligations agreed under Collaboration Agreement, therefore, the Defendant did not have any right to sell or enter into any agreement regarding the Suit property. It is further stated that 15.59.14 neither the Collaboration Agreement nor the Agreement to Sell on the basis of which the Applicants are asserting their right in the Suit property are registered under Section 17(1A) of the Registration Act and,moreover, no stamp duty has been paid qua such documents. It is further stated that the said documents have no legal validity and are not enforceable in terms of law. It is also stated that the present application has been filed after huge delay despite of being aware about the position of the Defendant that he has been in occupation of the first floor at the time of the filing of the Suit even after entering into the alleged Agreement to Sell with the Applicant herein.
13. The LR’s of the Defendant has also filed a reply wherein it is stated that the Defendant and the Applicant entered into an Agreement to Sell dated 23/24.02.2018 qua First Floor of the property bearing No. B-366, Chittaranjan Park, New Delhi along with proportionate ownership rights, car parking and utility area for a total consideration of Rs. 1,81,00,000/-. It is further stated that the Plaintiff Mrs. Nandita Majumdar was a witness to the said Agreement and also the signature on the Agreement are of her only. It is further stated that the in furtherance of the said Agreement, the Applicant had Rs. 45,00,000/- to the Defendant as a part performance of the Agreement to Sell qua the First Floor of the Suit property. It is further stated that the Defendants failed to disclose the rights of the Applicant arising out of the Agreement to Sell dated 31.05.2019. However, in para-wise reply to the Application, the Defendant has taken a stand that even though the Defendant entered into an Agreement to Sell with the Applicant, however, the said agreement does not create ownership and further that the Applicant were aware about the fact that the Defendant’s rights are conditional in nature as the same was dependent upon the performance of the 15.59.14 Collaboration Agreement. It is further stated that the Applicant’s failed to obtain a registered sale deed and as such the Applicant’s claim against the Settlement Agreement does not survives. It is further stated that the Applicant is not a party to the Collaboration Agreement and the Suit itself therefore the Applicant does not have any standing in the litigation and therefore, the present applicant is not maintainable under law. It is contention of the Applicant that the compromise was lawful in nature and,therefore, the present application is misconceived.
14. Heard Learned Counsels for the parties and perused the material on record.
15. The claim of the Applicant qua the Suit the property and recalling and setting aside of the Settlement Agreement dated 30.05.2019 and the judgment and decree dated 31.05.2019 is on the basis of the unregistered Agreement to Sell dated 23/24.02.2018 executed between the Applicant and the Defendant. The question that has to be decided herein is the effect of such agreement on the case of the Applicant herein.
16. To decide the said question, it is necessary to reproduce Section 54 of the Transfer of Property Act, 1882. The same is reproduced below:
17. Plain reading of the Section indicates that an Agreement to Sell of immovable properties does not, of itself, create any interest in or charge of such immovable property. The said principle has been constantly upheld by the Apex Court in Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra, (2004) 8 SCC 614. The relevant portion of the said judgment reads as under: “13. The agreement to sell does not create an interest of the proposed vendee in the suit property. As per Section 54 of the Act, the title in immovable property valued at more than Rs 100 can be conveyed only by executing a registered sale deed. Section 54 specifically provides that a contract for sale of immovable property is a contract evidencing the fact that the sale of such property shall take place on the terms settled between the parties, but does not, of itself, create any interest in or charge on such property. It is not disputed before us that the suit land sought to be conveyed is of the value of more than Rs 100. Therefore, unless there was a registered document of sale in favour of Pishorrilal (the proposed transferee) 15.59.14 the title of the suit land continued to vest in Narayan Bapuji Dhotra (original plaintiff) and remain in his ownership. This point was examined in detail by this Court in State of U.P. v. District Judge [(1997) 1 SCC 496] and it was held thus: (SCC pp. 499-500, para 7) “7. Having given our anxious consideration to the rival contentions we find that the High Court with respect had patently erred in taking the view that because of Section 53-A of the Transfer of Property Act the proposed transferees of the land had acquired an interest in the lands which would result in exclusion of these lands from the computation of the holding of the tenure-holder transferor on the appointed day. It is obvious that an agreement to sell creates no interest in land. As per Section 54 of the Transfer of Property Act, the property in the land gets conveyed only by registered sale deed. It is not in dispute that the lands sought to be covered were having value of more than Rs 100. Therefore, unless there was a registered document of sale in favour of the proposed transferee agreement-holders, the title of the lands would not get divested from the vendor and would remain in his ownership. There is no dispute on this aspect. However, strong reliance was placed by learned counsel for Respondent 3 on Section 53-A of the Transfer of Property Act. We fail to appreciate how that section can at all be relevant against the third party like the appellant State. That section provides for a shield of protection to the proposed transferee to remain in possession against the original owner who has agreed to sell these lands to the transferee if the proposed transferee satisfies other conditions of Section 53-A. That protection is available as a shield only against the transferor, the proposed vendor, and would disentitle him from disturbing the possession of the proposed transferees who are put in possession pursuant to such an agreement. But that has nothing 15.59.14 to do with the ownership of the proposed transferor who remains full owner of the said lands till they are legally conveyed by sale deed to the proposed transferees. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party like the appellant State when it seeks to enforce the provisions of the Act against the tenure-holder, proposed transferor of these lands.” (emphasis supplied) There was no agreement between the appellant and the respondent in connection with the suit land. The doctrine of part-performance could have been availed of by Pishorrilal against his proposed vendor subject, of course, to the fulfilment of the conditions mentioned above. It could not be availed of by the appellant against the respondent with whom he has no privity of contract. The appellant has been put in possession of the suit land on the basis of an agreement of sale not by the respondent but by Pishorrilal, therefore, the privity of contract is between Pishorrilal and the appellant and not between the appellant and the respondent. The doctrine of part-performance as contemplated in Section 53-A can be availed of by the proposed transferee against his transferor or any person claiming under him and not against a third person with whom he does not have a privity of contract.”
18. The Apex Court in Suraj Lamp & Industries (P) Ltd. (2) v. State of Haryana, (2012) 1 SCC 656 has observed as under: “16. Section 54 of the TP Act makes it clear that a contract of sale, that is, an agreement of sale does not, of itself, create any interest in or charge on such property. This Court in Narandas Karsondas v. S.A. 15.59.14 Kamtam [(1977) 3 SCC 247] observed: (SCC pp. 254- 55, paras 32-33 & 37) “32. A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in Section 54 of the Transfer of Property Act. (See Ram Baran Prasad v. Ram Mohit Hazra [AIR 1967 SC 744: (1967) 1 SCR 293].) The fiduciary character of the personal obligation created by a contract for sale is recognised in Section 3 of the Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein.
33. In India, the word „transfer‟ is defined with reference to the word „convey‟. … The word „conveys‟ in Section 5 of the Transfer of Property Act is used in the wider sense of conveying ownership. ***
37. … that only on execution of conveyance, ownership passes from one party to another….”
17. In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [(2004) 8 SCC 614] this Court held: (SCC p. 619, para 10) “10. Protection provided under Section 53-A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the 15.59.14 property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed into service against a third party.”
18. It is thus clear that a transfer of immovable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred.
19. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of the TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53- A of the TP Act). According to the TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the TP Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject-matter.”
19. The Apex Court in Cosmos Coop. Bank Ltd. v. Central Bank of India, 2025 SCC OnLine SC 352 has observed as under: “25. The observations made by this Court in Suraj Lamp (supra) in paras 16 and 19 are also relevant. The paras 16 and 19 respectively read thus:— “Scope of an agreement of sale
16. Section 54 of the TP Act makes it clear that a contract of sale, that is, an agreement of sale does not, 15.59.14 of itself, create any interest in or charge on such property. This Court in Narandas Karsondas v. S.A. Kamtam [(1977) 3 SCC 247] observed: (SCC pp. 254- 55, paras 32-33 & 37) “32. A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in Section 54 of the Transfer of Property Act. (See Ram Baran Prasad v. Ram Mohit Hazra [AIR 1967 SC 744: (1967) 1 SCR 293].) The fiduciary character of the personal obligation created by a contract for sale is recognised in Section 3 of the Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein.
33. In India, the word „transfer‟ is defined with reference to the word „convey‟. … The word „conveys‟ in Section 5 of the Transfer of Property Act is used in the wider sense of conveying ownership. ***
37. … that only on execution of conveyance, ownership passes from one party to another….” xxx xxx xxx
19. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of Sections 54 and 55 of the TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the TP Act). According to the TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the TP Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does 15.59.14 not create any interest or charge on its subjectmatter.” (Emphasis supplied)
26. Suraj Lamp (supra) later came to be referred to and relied upon by this Court in Shakeel Ahmed v. Syed Akhlaq Hussain, 2023 SCC OnLine SC 1526 wherein the Court after referring to its earlier judgment held that the person relying upon the customary documents cannot claim to be the owner of the immovable property and consequently not maintain any claims against a third-party. The relevant paras read as under:— “10. Having considered the submissions at the outset, it is to be emphasized that irrespective of what was decided in the case of Suraj Lamps and Industries (supra) the fact remains that no title could be transferred with respect to immovable properties on the basis of an unregistered Agreement to Sell or on the basis of an unregistered General Power of Attorney. The Registration Act, 1908 clearly provides that a document which requires compulsory registration under the Act, would not confer any right, much less a legally enforceable right to approach a Court of Law on its basis. Even if these documents i.e. the Agreement to Sell and the Power of Attorney were registered, still it could not be said that the respondent would have acquired title over the property in question. At best, on the basis of the registered agreement to sell, he could have claimed relief of specific performance in appropriate proceedings. In this regard, reference may be made to sections 17 and 49 of the Registration Act and section 54 of the Transfer of Property Act, 1882. 15.59.14
11. Law is well settled that no right, title or interest in immovable property can be conferred without a registered document. Even the judgment of this Court in the case of Suraj Lamps & Industries (supra) lays down the same proposition. Reference may also be made to the following judgments of this Court: (i). Ameer Minhaj v. Deirdre Elizabeth (Wright) Issar (2018) 7 SCC 639 (ii). Balram Singh v. Kelo Devi Civil Appeal NO. 6733 of 2022 (iii). Paul Rubber Industries Private Limited v. Amit Chand Mitra SLP(C) No. 15774 of 2022.
12. The embargo put on registration of documents would not override the statutory provision so as to confer title on the basis of unregistered documents with respect to immovable property. Once this is the settled position, the respondent could not have maintained the suit for possession and mesne profits against the appellant, who was admittedly in possession of the property in question whether as an owner or a licensee.
13. The argument advanced on behalf of the respondent that the judgment in Suraj Lamps & Industries (supra) would be prospective is also misplaced. The requirement of compulsory registration and effect on non-registration emanates from the statutes, in particular the Registration Act and the Transfer of Property Act. The ratio in Suraj Lamps & Industries (supra) only approves the provisions in the two enactments. Earlier judgments of this Court have taken the same view.”
20. On applying the above legal principles and case laws to the facts and circumstances of the present case, the claim of the Applicant suffers from 15.59.14 fatal defects. It is a well settled law the Agreement to Sell does not create or confer any right on the proposed buyer/purchaser of under the Agreement. Therefore, until the owner of such immovable property executes a sale deed in favour of the purchaser, any right regarding such immovable property shall vests with the owner only. The contention of the Applicant that the due to the Agreement to Sell, he has a vested interest in the Suit property and therefore non-disclosure of the existence of the Agreement to Sell at the time of the Settlement amounts to fraud does not stand in terms of the provisions and law laid down by the Apex Court.
21. In view of the fact that the Applicants have no right, title or interest in the Suit Property, the Applicants have no locus to challenge the Settlement Decree passed under Order XXIII Rule 3 of the CPC.
22. In view of the foregoing, I.A. 22003/2025 is dismissed.
23. In view of the fact that I.A. 22003/2025 stands dismissed, the I.A. 22004/2025 has become infructuous and is disposed of as such. EX.P. 68/2019, CRL.M.A. 14397/2020, EX.APPL.(OS) 369/2019, EX.APPL.(OS) 818/2019, EX.APPL.(OS) 146/2020, EX.APPL.(OS) 1034-1035/2020, EX.APPL.(OS) 2813/2022, EX.APPL.(OS) 172/2023 List on 09.09.2026.
SUBRAMONIUM PRASAD, J JULY 01, 2026 KG/S. Zakir