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Vijay Building Apartment Owners ... vs Ardee Housing Pvt Ltd & Anr.

on 23 July, 2019

Delhi High Court

Vijay Building Apartment Owners ... vs Ardee Housing Pvt Ltd & Anr. on 23 July, 2019
Reserved on: 23rd May, 2019
Date of Decision: 23rd July, 2019
+ CS (OS) 1261/2015
Through Mr. Sandeep Aggarwal, Sr. Advocate
with Mr. Rama Shankar, Advocates
(M. No.9811214465)

ARDEE HOUSING PVT LTD & ANR. ..... Defendants

Through Mr. T. K. Ganju, Sr. Advocate with
Mr. B. Shekhar, Advocate (M.

Prathiba M. Singh, J.

IA Nos. 9496/2015 (Stay) and 1196/2019 (for clarification of order dated 18.12.2018)

1. The present suit is in respect of VIJAYA Building, 17, Barakhamba Road, New Delhi-110001
(hereinafter building). The Plaintiff - VIJAYA Building Apartment Owners Association (hereinafter
Association), is an association formed by various apartment/flat owners of the building. The
Association was registered on 9th November, 2012. It has filed the present suit against M/s. Ardee
Housing Pvt. Ltd. (hereinafter Ardee) and M/s. Gujaral Estates Pvt. Ltd. (hereinafter Builder)
seeking declaration, permanent and mandatory injunction.

Brief Facts

2. The case of the Plaintiff Association is that the Builder had entered into a collaboration agreement
dated 6th January, 1978 (hereinafter Collaboration Agreement) with Dr. Ms. Vimla V. Gujral and
her daughters (`Owners) for raising construction of multi-storied commercial building. The broad
terms of the said collaboration agreement are:-

The Builder had to demolish the existing super-structure and after obtaining
requisite permissions and approvals construct a multi- storied commercial building
by the name VIJAYA Building at its own cost and expenses.

All the charges and expenses for the construction were to be borne by the Builder.

That upon completion of the building, the owners were to retain their share of the

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building as per the plan annexed to the agreement; That the Builder could transfer
the balance space to any third party and the owners were to cooperate;

That for the space falling in the share of the owners, the owners were only to pay
conversion charges and maintenance charges to the Builder;

That a society or a company was to be formed with the owners and the Builder as
members thereof;

That any person, who purchases or derives any rights from either the owners or from
the Builder, would also be bound to become a member of such society/company;

That any assignee of the Builder would also be bound by the terms of the
collaboration agreement;

That until a society/company was formed, the responsibility of running the common
facilities, services and maintenance of the building was to be discharged by the
Builder on usual terms and conditions.

3. The building was completed and there were various disputes including as to whether it was
constructed as per the sanctioned plans, etc. The authorities had alleged that there were various
irregularities and they had taken steps to seal some part of the building, which was challenged by
the Plaintiff-Association and the matter is stated to be pending before the MCD Appellate Tribunal.

4. The fact that a society/company was also to be formed, for the welfare of the flat owners, is clear
from the flat buyer agreement, which the Builder executed with various flat buyers. The clauses of
this flat buyer agreement provide:

That the L&DO charges, house tax and other municipal taxes were to be borne by the
flat buyers;

That the flat buyers were to abide by all the rules and regulations, laws and bye-laws
of the various governmental authorities; That the flat buyer was to permit access to
the Builder/society for the purposes of repairs (clause 22);

That the maintenance charges, as fixed by the Builder/society, would have to be paid

That the payment of the maintenance charges was to be made to the Builder/society -
failure of which would result in the Builder/society to taking possession of the flat;

That the flat buyer was also to contribute to the replacements fund, which is meant
for replacement for capital/maintenance equipment or for carrying out repairs of a
capital nature; That the payment was to be made to the Builder/society; That the

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Builder/society would have the right to restrict the entry of any undesirable persons
into the building; As per Clause 32, the flat buyer had to become a member of the
cooperative society or a company or any other appropriate body, which would be
formed for safeguarding the interest of the Builder and/or of other flat buyers;

That the expense for formation of the said society/company/entity was to be divided
amongst the flat buyers proportionately: That the voting rights were to be as per
Clause 34 of the agreement i.e. one vote for every square meter of space.

5. Thus, the Builder, charged various sums under the flat buyer agreement including for formation
of the society, security deposit, maintenance charges, sinking charges, lease money, air conditioning
charges, electricity meter, MCB charges, special finishing charges, electric sub-station charges,
charges for fire fighting equipment, escalation charges and L&DO charges etc. All the payments
were made by the Buyers to the Builder.

6. The Builder, however, did not either form the association/society of flat buyers and continued to
charge all the above amounts from the flat owners/occupiers.

7. Several of the flat owners had grievances against the Builder, who had started carrying out the
maintenance through Defendant No.1 - Ardee. Both Ardee and the Builder are under a common

8. According to the Plaintiff, the Builder had also collected various sums for the purposes of repairs,
replacements etc. which run into crores of rupees. The maintenance charges, lift charges etc. were
all fixed arbitrarily without consulting the apartment owners. Only a temporary occupation
certificate was given by the authorities in 1996 and till date the building does not have a completion

9. Thus, the case of the Plaintiff-Association is that despite there being an obligation to form a
society/company/association, the Builder took no steps to get the same formed. The flat buyers were
raising their voice against the Builder and its agency as they were left at the mercy of both these
entities. Finally, a large number of flat buyers got together and formed the Plaintiff-Association on
9th November, 2012. The said association was registered with the Registrar of Societies under
registration number - S/154/2012. It is the Plaintiffs case that more than 80% of the flat buyers are
members of the association - which is disputed by the Defendants. The original owners i.e. Mrs.
Gujral and her daughters are also the members of the Plaintiff-Association. According to the
Plaintiff-Association, the owners share is approximately 60,000 sq. ft., which forms a majority share
in the building itself. Since the Builder and its maintenance agency did not cooperate with the
Plaintiff-Association despite a majority of the flat buyers being its members, the association
addressed notice dated 27 th December, 2012 and called upon the Defendants to hand over the
maintenance and all other related services of VIJAYA Building to the Plaintiff-Association.

Vide the said notice, the association also called upon the Defendants to hand over the entire
accounts and other relevant documents relating to the building. Since there was no response, the

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governing council of the association had a meeting and resolved that with effect from 1 st January,
2013, all the flat buyers would pay the maintenance charges to the Plaintiff- Association. Again,
there was no response and a reminder was also issued on 9th June, 2014. On 25th November, 2014,
the association called upon Defendant No.1 to cooperate with the Association as, by then, 85% of the
flat buyers had become its members. It was also brought to the notice of Defendant No.1 that there
were several crisis situations owing to the fact that there was no completion certificate, various
portions of the building were sealed by the NDMC and because the Defendants were not giving
accounts running into crores of rupees, which had been collected from the flat buyers. Reliance was
also placed on the Delhi Apartment Ownership Act, 1986.

10. On 1st December, 2014, the Plaintiff-Association informed Defendant No.1 that it has taken over
the administration, management and maintenance of VIJAYA Building with effect from 10th
November, 2014. Thus, a tussle had ensued between the parties. By that time, Defendant No.1 is
alleged to have not allowed for smooth transition and had also disconnected electricity backup and
air conditioning to some of the floors. This also resulted in the association complaining to the police.
Further letters were written on 5th February, 2015 and 20th March, 2015 calling upon the
Defendants to transfer all the funds, which were collected by them and to also remove all the gensets
and other equipment kept by Defendant No.1 and hand over all the records. The total amount
demanded by the Association to be transferred to it, which was allegedly collected by Defendant
No.1 was more than Rs.11 crores.

11. Vide letter dated 27th March, 2015, Defendant No.1 replied to the Plaintiff. In the said letter,
Defendant No.1 took the following stand:-

"The companies M/s Ardee Housing Pvt. Ltd. and M/s. Gujral Estates Pvt. Ltd. are
the companies incorporated under the Companies Act and are also owners of about
3-1/2 floors in the Vijaya Building and as per the Flat Buyer Agreement and the
Maintenance agreement duly signed by all the respective owners, tenants and
occupiers, M/s. Gujral Estates Pvt. Ltd. and Ardee Housing Pvt. Ltd. have been
providing maintenance, power back up, parking etc. in the building. The company
owns generators and other equipment like power back up, lifts etc. and have been
successfully providing the maintenance and even today, despite the so called
Association having been constituted, are providing all facilities, maintenance etc. to
majority of the owners/tenants/occupiers. We may inform you that the company has
never stopped you from providing maintenance to any of the
occupants/owners/tenants. However, on constitution of the purported Association,
you cannot stop the company continuing maintenance in respect of floors owned by
us as well as the other owners/occupants. The threat which is being given for
removing the generators and or removing out men from the common areas, we would
like to clarify that as per agreement, the generator sets are installed by us and are
owned by us and we have full right on the common passage and common spaces and
open areas, parking etc. In case of any of your executive, agent or employee interferes
and or forcibly tries to remove the same from any portion of the building, the same
will tantamount to decoity and theft. In such an event will be constrained to initiate

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criminal proceedings against the executive of the association and or others

responsible for such criminal acts. Since the company is still providing maintenance
as per the agreement with the flat owners, we are not legally obliged and bound to
handover any records to you.

We once again wish to inform you that any interference in providing maintenance by
us shall not be tolerated and apart from the criminal actions, other actions in
accordance with law will be taken by us against all concerned.

We, therefore, once again called upon you not to interfere in the maintenance work
being provided by us are stated above and you may also do the same in respect of
your own members."

12. Thus, Ardee threatened the Plaintiff with criminal action. As per the above letter, it was claimed
that the Defendants are the owners of three and a half floors of VIJAYA Building and that the
Association cannot stop the Defendants from continuing the maintenance of the floors, which are
owned by it and the other owners/occupants. It claimed that it has agreements with the occupiers
and is hence providing maintenance as per the said agreements and that the Association could
provide maintenance in respect of its own members.

13. Vide letter dated 1st April, 2015 the Association responded and informed the Defendants that the
Defendants owned only 26,500 square feet out of the total super area of 1,88,000 square feet. Thus,
the Defendants have no right to challenge the Plaintiffs standing. Along with this letter, the
complete list of members of the association, running into 102 flat owners including the original
owners, was sent to the Defendants.

14. The Defendants, on the other hand, claimed that they are the owners of spaces on the ground,
third, eighth, tenth, eleventh, fifteenth floors, basement number 2, basement number 3, courtyard
and compound. Apart from this, the Defendants state that the Association has no right to take over
the maintenance of the multi-storied building. The Defendants claim that the Delhi Apartment
Ownership Act, 1986 has not come into effect due to non- constitution of the Authority under the
said Act. It is further claimed by the Defendants that since the apartment deed i.e. flat buyer
agreement is not registered under the Delhi Apartment Ownership Act, the Association has no right
under the said Act. Apart from relying upon the provisions of the Act, it is also claimed that all the
contributions made by the apartment owners have been used for maintenance, development,
repairs, installation of lift services etc. The case of the Defendants primarily is that since several of
the occupiers - i.e., tenants and lessees (`Occupiers) etc., have agreements with the Defendants, they
are entitled to render services of maintenance and carry on the same without any interruption. The
further case of the Defendants is that even as of 11th April, 2015, since the Plaintiff-Association is
asking the Defendants to hand over the entire maintenance operations of the building, the case
made out in the plaint that the Plaintiffs are maintaining portions of the building, is false.

15. Accordingly, the Plaintiff Association filed the present suit seeking the following reliefs.

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"1. That a decree of declaration may kindly be passed in favour of the plaintiff and
against the defendants, thereby declaring that the maintenance, common areas and
common services, administration, management of Vijaya Building, 17 Barakhamba
Road, New Delhi vest in the plaintiff association with effect from November 2014 and
the defendants have no right title or interest whatsoever to interfere in day to day
affairs of the maintenance of the building.

2. That a decree for permanent injunction may kindly be passed in favour of the
plaintiff and against the defendants, thereby restraining the defendants, their agents,
servants, officers, directors, employees assignees from interfering, disturbing,
creating hindrance, nuisance and obstructing the office bearers, servants, employees,
agents of the plaintiff association from looking after, taking care of maintenance of
building and common area, common services including parking area and also from
installing gen- set, power backup or any other equipment, machines, air conditioning
units in the building in the common areas for the purpose of smooth maintenance of
Vijaya Building, 17, Barakhamba Road, New Delhi in terms of Delhi Apartment
Ownership Act 1986.

3. That a decree of mandatory injunction may kindly be passed in favour of the

plaintiff and against the defendants, thereby directing them to hand over the records,
books of accounts, equipments and machines pertaining to the common maintenance
in Vijaya Building, 17, Barakhamba Road, New Delhi.

4. That a decree for a sum of Rs. 4,49,76,200/- may kindly be passed in favour of the
plaintiff and against the defendants.

5. That a decree for rendition of account may kindly be passed in favour of the
plaintiff and against the defendants thereby directing the defendants, its officers to
render the accounts of the building since the year 1989 and rendition of account the
decree for the said amount may kindly be passed in favour of the plaintiff."

16. When the suit was initially filed, the matter was partly heard on a few occasions. Even during the
said period, the Court was constrained to pass orders that the power backup would be provided to
one of the tenants. Vide order dated 25th July, 2016, certain suggestions were considered for a
working solution. Vide order dated 7th September, 2016, a Local Commissioner was appointed to
verify various aspects.

17. The said Local Commissioner submitted his report. Thereafter, on 13th September, 2018, after
hearing some arguments, this Court was of the opinion that the wishes of all the flat owners ought to
be ascertained. Accordingly, another Local Commissioner was appointed and the following
directions were passed:-

"2. The suit has been listed from time to time and various orders have been passed
including appointment of a Local Commissioner on an earlier occasion. The

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submission of the Defendants is that they have arrangements with various occupants
currently and they are rendering services under agreements with the said occupants
and they cannot be asked to terminate their agreements.

3. The Defendants have placed on record a list of occupants/list of owners of the said
building which is at pages 87 to 102. Before proceeding further, to pass any orders in
this matter, it is deemed appropriate to ascertain the wishes of all these owners who
own various commercial spaces within 17, Barakhamba Road, New Delhi-110001 as
to whether they wish to continue the services of Defendant No. 1.

4. Accordingly, Mr. Neeraj Chaudhari, Advocate (M:9811198023), -who is present in

Court; is appointed as a Local Commissioner in this matter to visit the premises 17,
Barakhamba Road, New Delhi-l 10001 on 6th October, 2018 at 11.30 a.m. at a
convenient place-within the building itself.

5. All the owners of the various commercial spaces would assemble in the said
building October, 2018 at 11.30 a.m., before the Local Commissioner and express
their consent, in writing, for continuation or discontinuation or change of Defendant
No.1 as the maintenance agency. The owners, obviously, would be at liberty to
ascertain the wishes of their tenants. A notice be published by the Local
Commissioner, the draft of which may be drawn up by the Local Commissioner, in
consultation with both the parties within a week from today. The notice containing
the date, time, venue of the meeting be also pasted outside the said building so that
all the owners may be informed about the said meeting.

6. The Local Commissioner, may, prepare a standard form consent letter wherein the
owners may be given an option to continue or discontinue with Defendant no.1 and
submit the same after signing on spot at the meeting. The Local Commissioner may
meet with all the owners and after ascertaining their, wishes may submit their report
to this Court. If the draft notice and standard form of the consent are not getting
finalised between the local commissioner and the parties, the Local Commissioner, is
permitted to apply before this Court."

18. This order was challenged in appeal in FAO (OS) 149/2018. The said appeal was dismissed as
withdrawn on 3rd October, 2018. The Second Local Commissioner executed the commission and
has filed his report. The Defendants have filed objections to the said report. On 18th December,
2018 the following order was passed:-

"Report of the Local Commissioner has been received. Commissioner's report, in

paragraph 28, records as under:

"28. That subsequently the consent forms were tallied, a list was compiled and the
following was the result:

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Consent forms accepted and considered for voting (Envelop-A {Part-1, Part-2 &
Part-3}) Options As per Super As per No. of Area sq. ft.) Consent forms Building
Apartment Owner's Association (Plaintiff) Housing Pvt. Ltd.

(Defendant No. 1) Consent forms not considered for voting (Envelop - B) Options As
per Super As per No. of Area sq. ft.) Consent forms Building Apartment Owner's
Association (Plaintiff) Housing Pvt. Ltd.

(Defendant No. 1) Mr. T. K. Ganju, learned Senior Counsel for the Defendants has
filed objections to this report of the Commissioner. He relies on the documents filed
with the Objections to submit that a majority of the flat owners wish to continue the
Defendant agency for maintenance. However, the Ld. Sr. Counsel for the Plaintiff
refutes this fact.

The Plaintiff shall identify the areas, which constitute 1,21,650 Sq. Feet, forming part
of the building, who support the Plaintiff association, by mentioning flat numbers
and the specific floors in which these persons own the space. The Defendants are
directed to file a chart of the flat numbers and the space, whose owners they claim to
be supporting them as the maintenance agency. On the next date, the said two charts
shall be considered and appropriate interim directions shall be passed.

List on 25th January, 2019."

19. Again, an amicable resolution was explored, however, since there was no resolution, arguments
were heard in I.A. 9496/2015 for interim injunction and I.A. 1196/2019 for clarification of order
dated 18th December, 2018 and judgment was reserved.

20. In I.A. 1196/2019, the Defendants seek clarification to the following extent.

"In view of the above and in the interest of justice, it is therefore, most respectfully
prayed that the order dated 18.12.2018 may be clarified to the extent that the
majority of Occupiers who are actually using and paying for maintenance services are
supporting the Defendants."

Submissions of the Parties

21. Mr. Aggarwal, ld. Sr. counsel appearing for the Plaintiff-Association submits that the Association
has been put to enormous harassment and frustration as the flat owners have been left to the mercy
of the Builder and its agency. Right from the initial collaboration, it was clear that the
society/company/other entity would be formed for taking care of all the aspects of the building.
However, the Builder illegally retained the maintenance to itself and continues to hold the flat
owners to ransom. It is further submitted that the Defendants have collected huge sums of money
running into crores of rupees under the garb of various charges and have not accounted for the
same. In fact, some of the fees were for formation of the association, which the Defendants failed to

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do, even till date. The Builder miserably failed in carrying out its obligations as it has not even
obtained the completion certificate thereby prejudicing the interest of the flat owners.

Since no completion certificate was even obtained, the question of registering the flat buyer
agreement under the Act, did not ever arise. All the activities i.e. handing over of the possession,
maintenance etc. are being carried out on an ad-hoc basis. Even when portions of the building were
sealed, it was the Association, which had to approach the Tribunal for stay. As on date, all the
bonafide flat owners are members of the said Plaintiff - Association/society. Despite repeated efforts
being made by the Association and despite notices being given, the Defendants have not
co-operated. It is further submitted by Mr. Aggarwal that under the Act, the Association has all the
powers to carry out the maintenance activities of the building and the entire purpose of the
enactment of the Act has been defeated in the present case by the Builder and its agency. He places
reliance on the findings of both the Local Commissioners, who were appointed by this Court. He
further relies on the following judgments:-

Bangalore Development Authority and Ors. vs. The State of Karnataka and Ors.,
(2018) 9 SCC 122 Anjali Sawhney vs. Anjali Trust and Ors., 94 (2001) DLT 132 UCO
Bank vs. Saumyendra Roy Chaudhary, (2014) 3 CALLT 510 (HC) Hindustan
Development Corporation vs. Modiluft Limited and Ors., 2005 (4) CHN 14 Zenit
Mataplast P. Ltd. vs. State of Maharashtra and Ors., (2009) 10 SCC 388

22. Ld. counsel for the Plaintiff further submits that non-constitution of the authority under the Act
cannot be treated as a free permit for the Builder to continue in the building. He relies upon the
judgment titled O. S. Bajpai vs. The Administrator (Lt. Governor of Delhi) and Ors., 172 (2010) DLT
442 of a ld. Division Bench of this Court wherein various directions were passed by the Court
including in respect of registration of agreements and what should be the procedure to be adopted
during the time when the amendments are yet to be effected. The Plaintiff further relies upon an
order dated 26th May, 2015 passed in CS (OS) 845/2014 titled Kundan House Flat Owners Welfare
Association (Regd.) vs. Gurucharan Singh Bhasin & Anr.

23. On the other hand, Mr. Ganju, ld. Senior Counsel appearing for the Defendants submits that the
prayer in the application is for a negative injunction. However, since the Association is not currently
maintaining any portion of the property, the nature of the relief is actually a mandatory injunction,
which cannot be granted at an interim stage. A mandatory injunction can only be granted at the
interim stage to restore status quo ante and not a fresh mandatory injunction. It is also submitted
that the Defendants are agreeable for the trial being expedited but at this stage the interim relief
cannot be moulded in favour of the Plaintiff-Association. He relies on the following judgments.

Bachhaj Nahar vs. Nilima Mandal and Anr., (2008) 17 SCC 491 Samir Narain Bhojwani vs. M/s.
Aurora Properties and Investments and Anr., [Civil Appeal No.7079/2018 decided on 21st August,
2018] Kashi Math Samsthan & Anr. vs. Srimad Sudhindra Thirtha Swamy & Anr. [Civil Appeal
Nos.7966-7967/2009 decided on 2nd December, 2009] Nandan Pictures Ltd. vs. Art Pictures Ltd. &
Ors., AIR 1956 Cal

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24. On merits, Mr. Ganju submits that the Defendants are looking after the property for the last
three decades without any complaint from any quarter. The occupiers are happy with the
Defendants. The Second Local Commissioners report does not reflect the majority of the owners,
who want maintenance to rest with the Plaintiff-Association. Despite the letter written by Defendant
No.1, that the notice which was put up was defective, the Local Commissioner went ahead with the
commission. Even the consent form sought by the Commissioner was defective. He relies on the
prima facie observations in the order dated 25th July, 2016. He thus submits that the report of the
Local commissioner ought not to be accepted and the suit ought to be sent for trial.

Analysis and Findings

25. The present suit filed by the Plaintiff-Association of flat owners of VIJAYA Building shows the
apathy which flat owners have to face at the hand of builders. The collaboration agreement in this
case dates back to 1978 and even the temporary occupancy certificate was obtained by the Builder
only in 1996. Various flat owners have purchased space in the building - literally to their own peril.
They are unable to, till date, exercise control over their own building. They/their occupiers/tenants
are being forced to pay maintenance charges to the Builder/its agency as they have left no stone
unturned in holding on to the building. When the Association wrote notices to the Defendants, it
was threatened with criminal action.

26. It was this very malaise that was sought to be cured by the Delhi Apartment Ownership Act,
1986. Though the said Act was passed more than 30 years ago, the same has still not been given
complete effect to. A Division Bench of this Court made scathing observations against the
government in the case of O.S. Bajpai (supra) in the following terms:-

"14. The upshot of the aforesaid discussions leads us to the situation where various
infirmities pointed out by the petitioner in the present enactment are acknowledged
by the respondents as well. They recognize that there is a complete absence of
remedial/penal provisions in the present enactment, which enables the builders of
these multi-storeyed buildings to commit breach as minutes has no consequences
flow from the said breach. So much so, the respondent also recognize that in order to
provide adequate provisions and plug a loophole, it is not even feasible to carry out a
large number of amendments and the proper remedy would be to pass new
legislation incorporating all such provisions. The Government had itself realized this
shortcomings in the existing legislation way back in the year 2001 when Delhi
Apartment Bill was introduced in the Parliament. However, with the dissolution of
13th Lok Sabha, said bill lapsed. Thereafter, no exercise is done to either introduce
any bill on the same line or in a modified form subsequently. Even in the meeting
held between the Ministry of Urban Development and Government of NCT of Delhi
as recent as on 01.02.2008, that the need for new legislation is acknowledged. It is
also stated that "a Draft Cabinet Note has been prepared and is under-consideration
of the Competent Authority for approval", but hand are washed off by further stating
in the said meeting that "since enactment of a new legislation rests with the
Parliament, it was felt that it may not be possible to indicate any timeframe for

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enactment of the new Act". What happened to the Draft Cabinet Note, which was
under-consideration of the Competent Authority is not brought on record thereafter.
It appears that the matter is swept under the carpet and the file is gathering
underserved dust. It shows the apathy and non-action on the part of the Government
in taking appropriate action by bringing another bill in the Lok Sabha even when
need for the same is felt, for the reasons best known to the concerned authorities. No
doubt, it is not the province of this Court, even in exercise of its extra- ordinary
jurisdiction under Article 226 of the Constitution of India to direct passing of a
particular legislation. Again, no doubt, that is the prerogative of the Parliament.
However, at the same time, good governance demands that when the Government
itself realizes the shortcomings in the present legislation and feels the immediate and
emergent necessity to bring out new legislation with all suitable provisions, inaction
on the part of the Government by sitting over the matter and not processing the
matter further is not an act of good governance. Citizens of this country would have
aspirations from the Government of the day to act promptly in this direction by
taking suitable measures. When that is not done, expectations of citizens are belied.

15. Though we cannot give positive directions to the respondents to bring out a
suitable legislation, influenced by the aforesaid consideration, we can exhort the
respondents to proceed further in the direction. They have already moved on their
own. Draft Cabinet Note, which was prepared and submitted to the Competent
Authority for approval should be considered by the competent authority without
further delay and if found feasible afresh Delhi Apartment Ownership Bill be
introduced in the Parliament so that the Parliament in its collective wisdom is above
to take a decision on passing suitable legislation on those lines. We hope and are
confident that the issue would not remain dormant any longer an the Competent
Authority spring into action at the earliest.

16. The matter should not be put to rest at that. Till the time new legislation comes up
(if at all it happens), some means are to be found for effective implementation of the
present legislation, as far as possible. After all, when a particular legislation is passed
by the Parliament with benevolent object and contained in its object and reason as
well as preamble and provisions are also made giving certain rights to the apartment
owners, if the builders of multi- storeyed apartments do not adhere to these
provisions, some mechanism is to be found to ensure that apartment owners are in
fact bestowed the rights granted in the aforesaid legislation."

27. The Court accordingly directed that the government should bring out amendments in the
legislation owing to various shortcomings, so that the expectations of citizens are not belied.
However, till the time the amendments are brought in the said Act, the Court felt that a mechanism
ought to be laid down to ensure that apartment/flat owners are able to enjoy the benefits of the said
legislation. Accordingly, directions were given as under:

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1) The government was directed to appoint a competent authority within 30 days of

the order. The said competent authority was to keep the records of the flat buyers

2) However, if the Builder/promoter failed to provide the transfer deeds, the flat
buyer was to be treated as the owner of the apartment for the purposes of availing
benefits under the Act.

3) Apartment owners associations were directed to be formed within six months and
the existing maintenance companies were to transfer the management of the
multi-storied buildings to such associations.

4) Thereafter, the transfer of management and all the records were to be handed over
by the maintenance agency to the concerned association.

28. Paragraph 18 of the said judgment reads as under:

"18. Governed by the aforesaid consideration and the role of the Court, which it is
supposed to perform in such circumstance, we have considered the matter. The
petitioner had also given certain suggestions for proper and effective implementation
of the Act in the present form. After due deliberation thereupon, we feel that the
following steps can be taken by the respondent seven within the existing law, which
may go a long way to curb the menace:

a) Appointment of Competent Authority:

i) That the competent authorities may be appointed/nominated area-wise or building

wise, so that these authorities are able to effectively discharge their functions. This
should be done in accordance with the definition of competent authority as given in
Section 2(k) of the Act.

ii) The competent authority may authorize for this purpose as many officers of the
rank of the Deputy Commissioner or Joint Commissioner as may be necessary for the

The aforesaid action be taken within 30 days of this order.

Registration of Deed of Apartment:

i) The promoter/builder shall in all cases where the transfer has taken place under
the sale deed/lease deed/transfer by endorsement, prior to the date of the order,
which may be passed by this Court, execute the deed of apartment in the proformas
as may be approved and issued by the competent authority keeping in view the
provisions of Section 13(1) of the Act. This should be done within two months from

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the date of constituting the competent authorities.

ii) For future, the deed of apartment may be registered within one month of its
execution by the owner and the promoter/builder.

iii) That in the case of existing owners, the deed of apartment shall be prepared by the
existing owners and the promoters/builders in the proformas as mentioned in para
(i) above enclosing their original Title deed (sale deed/lease deed/transfer by
endorsement) and the same will be presented before the sub-registrar for
registration. It will be the responsibility of the promoter/builder to do so as provided
in Section 13(2) of the Act and also to deliver a certified copy of the registered deed to
the owner of the apartment after it is registered.

iv) In the case of leaseholder land, the deed of apartment be entered into between
three parties, i.e., promoter, apartment owner and Land Development Officer (L &
DO) on behalf of the President of India as confirming party.

v) In the case of freehold land; the deed of apartment should be entered into between
the promoter/builder and the apartment owner.

vi) The competent authority constituted in the aforesaid manner shall give notice to
the promoters/builders of all the multi-storeyed apartments in Delhi directing them
to execute sale deed/lease deed/transfer by endorsement in favour of the buyers for
which time bound period would be prescribed. The competent authority shall prepare
necessary proformas for this purpose and issue directions to execute the deed of
apartments in the said proformas, keeping in view the provisions of Section 13(1) of
the Act.

vii) General instructions shall also be issued for future, viz., the deed of apartment
would be registered within one month of its execution by the promoters/builders and
the owner.

viii) The terms of deed of apartment shall, inter alia, include conveyance of exclusive
ownership and possession of (a) apartment owned by the respective owner; (b) title
to such percentage of undivided interest in the common areas and facilities including
land as may be specified in each deed of apartment computed on the basis of
proportionate value of the apartment to the total value thereof. The terms of the deed
should also make the right and interest in the property described as clause (v) above
inheritable and transferable.

ix) Since it is the obligation of the promoters/builders on the one hand and owner on
the other hand to execute and register such a deed of apartment, in the event of
failure to execute, this non-action can be treated as evading payment of necessary
stamp duty and registration charges, necessary penalty can be imposed by the

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Registrar under the Indian Stamp Act, the Registration Act and action for recovery of
necessary charges can also be initiated.

x) If it is proved that failure and inaction on the part of promoters/builders in

executing and registering sale deed of an apartment, the buyer be treated as the
owner of the apartment for the purpose of getting benefits under the Act.

b) Apartment Owners Association:

The competent authority shall send specific notice to all multi-storeyed apartments
informing the owners of apartments that it is their right to form owners- association
in accordance with the bye-laws as per the Explanation B of Chapter 1 of the said
bye-laws under Section 15 (2) of the Act. The officials from the office of the
competent authority shall be deputed to visit all these multi-storeyed buildings, who
would ensure formation of owners association. They would be authorized to call for
the meeting of the owners and supervise the formation of the association, so as to
ensure smooth formation of the association. This exercise in respect of
multi-storeyed buildings shall be completed within six months and the existing
maintenance companies shall transfer the management of the multi-storeyed
buildings to such associations.

c) Transfer of Management, Books of Account, etc. Once the apartment owners

association is formed, it shall takeover the management from the promoter/builder.
All the books of account, bank account and other documents shall be handed over by
the promoter/builder to the apartment owners association so formed and all
functions relating to the management of the building, common area, collection of
maintenance charges, expenditure to be incurred on maintenance, employment of
manpower, legal compliance, etc. will be performed by the association."

29. Thus, the ld. Division Bench had clearly laid down the scheme that was to be followed during the
pendency of amendments to the Act.

30. Vide order dated 16th August, 2018, notice was issued to the Standing Counsel, GNCTD to
inform as to whether the authority under the Real Estate (Regulation and Development) Act, 2016,
which was recently enacted in place of the Delhi Apartment Ownership Act, 1986, was constituted or
not. However, none has appeared for the GNCTD, Delhi. Neither party has placed before the Court
any amendment or statute which has rectified the position that prevailed when O.S. Bajpai (supra)
was pronounced. It is unclear if the competent authority has even been established as there are
conflicting reports about the same.

31. During the entire period, the Plaintiff-Association continues to be subject to the whims and
fancies of the Defendants.

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32. There is no manner of doubt that in the 1978 collaboration agreement, the Builder was to
continue the maintenance of VIJAYA Building only till the Association was formed. Clauses 20, 21,
22, 23 are relevant and set out herein below:

"20. That the Owner and the Builders agree and undertake to become members of a
co-operative Society or the share-holders of a company incorporated under the
Companies Act or an association of persons or a firm or any other body which may be
formed by any appropriate legislation that may come into force in that behalf and for
the purposes of allotment of flats and space as has been agreed to be allotted to the
Owners in this agreement. This term will be binding on the purchasers who derive
right from the Owner in respects of the flats and space which have to be allotted to
the Owner in terms of this agreement. Similarly purchasers from the Builders will
also be bound.

21. That the Builders shall have the rights of assigning their rights under this
agreement in favour of any person, firm, company or association subject only to the
limitation that the transferee or assignee shall be bound by all the terms and
conditions contained therein.

22. That the Owners shall not revoke or cancel this agreement in any circumstances
whatsoever. If by any act or omission on the part of the Owner, the promoters are
prevented or obstructed from carrying out the purpose of this agreement or the work
of development and construction of the proposed multistoreyed building, then the
Owner shall be responsible for indemnifying completely the Builders against all
expenses, charges and damages whatsoever. Any act of the government, any local
authority or God is however excepted.

23. That till a co operative society, limited company or any other appropriate body is
formed in respect of the building and the flat owners, the responsibility for running
common facilities and services, maintenance of the building etc. in respect of the
entire building shall be discharged by the Builders on the usual terms and charges."

33. Clause 23 categorically provides that `till a cooperative society limited company or the body is
formed, the maintenance of the building, shall be discharged by the builders. The above clause
brooks no ambiguity. The Builder was a party to this agreement and had a bounden obligation to
form a society, which it has failed to do for almost four decades. The Builder has used the expression
the builder/society in various clauses. It is, thus, clear, that the Builder was conscious all along of its
obligation to form a society and there was no doubt in that regard.

34. The documents placed on record also show that the Builder has been charging various sums
under different heads such as:

" Final Bill

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1) Name of the space buyer and address:-

2) .... (5)

6) Escalation charges

7) Total cost of the space including Escalation charges

8) Total L & D.O. Charges

9) Charges towards fire fighting equipment

10) Charges towards electric station

11) Charges towards special finishing

12) Electric Meter and miniature circuit-brakers charges

13) Contribution for formation of Society

14) Security deposit payable to Society

15) ....

16) Sinking charges

17) ....

18) Air-conditioning charges."

35. Thus, over the years the Builder has collected large sums from the owners/occupiers. Amounts
collected includes for formation of a Society which remained in an embryonic state. The
Plaintiff-Association has been formed since 2012 and has addressed multiple notices to the
Defendants - only to fall on deaf ears.

36. This Court has, from time to time, attempted to resolve the disputes amicably, however, the
Defendants have not yielded. The first Local Commissioner, appointed vide order dated 7th
September, 2016 which directed the Local Commissioner to report on the following aspects:

"4. It is, however, agreed by both the sides that a Local Commissioner (LC) could be
appointed by this Court to verify the following aspects:

(i) Whether each of the grievances listed out at Sl. Nos. 11 to 19, 21 and 22 of the list
handed over to the Court by the Plaintiff as noted by the Court in its order dated 9th

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August 2016 has in fact been addressed by the Defendants as claimed by them in
their response submitted today in Court?

(ii) Whether the maintenance is being additionally provided, as claimed by the

Plaintiff, by persons engaged by the Plaintiff as security personnel, sweepers etc.?

(iii) Whether the maintenance services are being provided exclusively by the persons
engaged by the Defendants, as claimed by the Defendants?"

37. The Local Commissioner then visited the Building and reported as under:

That the flat owners do not have any access to the terraces, both from the security
viewpoint and for the purpose of maintenance; That the boundary wall/steel
railing/grills were not of sufficient height and may lead to accidental falls;

That the CCTV coverage is not adequate; That several window panes were found to be
broken and required immediate safeguarding with grills and bars; That vacant flats
were lying unlocked; That the renovation and repairs were being carried out in some
flats without any supervision;

That access to the fire exit was not smooth; That there was no checking of vehicles;
That there was inadequate lighting in several areas.

38. The said Local Commissioner had also taken the assistance of the Office of the Chief Fire Officer,
Delhi Fire Service to carry out the inspection of the premises, who had given a satisfactory report.
The NDMC and electricity inspectors had also given a satisfactory report.

39. The other observations of the Commissioner were that on most of the floors, cables and wires
were loosely hanging, the fire exit was locked on various floors, there were naked electrical
connections, sockets etc., various parts of the property were sealed by NDMC, the middle basement
was not being maintained, the third basement had severe water logging, the air conditioning plant
was outdated and was in a damaged condition. It is significant to note that the Defendants did not
produce any records in respect of the amounts collected by them from the various flat owners. The
conclusion of the Local Commissioner was as under:

"No Flat owners are involved in fixing the Maintenance and other charges. The same
are being decided by the Defendants unilaterally."

40. The said Local Commissioner has also annexed photographs which showed that several parts of
the building were not being adequately maintained and there was huge seepage in the building as
also to demonstrate that there were loose hanging wires and cables. The Commissioner also verified
records of the Plaintiff to show that between the period from 7th December, 2012 to 6th September,
2016, the Gujral family had paid maintenance and repair charges to the Defendants. The
Commissioner also reported that security guards and house keeping workers were deputed by the

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Plaintiff (13 persons) and electricians, lift operators housekeeping workers and fire and security
personal were deputed by the Defendants (30 persons). The extract from the said report in respect
of the man power deputed by the parties is set out herein below:



Defendants : Total number of skilled and un-skilled persons deployed : 30 Nos.

Consisting of Electricians, Lift Operators, Housekeeping workers, Fire & Security

Personnel etc. Plaintiffs : Total number of skilled and un-skilled persons deployed :
13 Nos.

Consisting of 12 Nos. of Security Guards and 01 number of Housekeeping worker.

Thus, in response to Para 4 (ii) and (iii) of the order dtd 07.09.2016, it is submitted
that maintenance is being additionally provided by the Plaintiff also, by persons
engaged by them as security personnel, sweepers etc and the claim made by the
Defendants that maintenance services are being provided by them exclusively, is not

Thus, the Local Commissioner reported that the Plaintiff was carrying out some part of the
maintenance and had also engaged some personnel who were providing services in the Building.

41. The second Local Commissioner - Mr. Neeraj Choudhari, who was appointed to ascertain the
wishes of the flat/apartment owners vide order dated 13th September, 2018 also submitted his
report dated 24th October, 2018. As per the said report, the Commissioner was to execute the
commission on 6th October, 2018. After attempting to contact the counsels for the Defendants, he
sent a draft public notice, which he intended to put up at various places in the building. After
receiving the inputs of both the sides, the final draft notice was issued by the Commissioner for
being published in the newspaper and was also put up in various places in the building itself. The
said public notice reads as under:

"It is hereby notified to all concerned/flat/space owners of VIJAYA BUILDING, 17,

Barakhamba Road, New Delhi - 110 001, that the Hon'ble High Court of Delhi vide its
Order dated 13.09.2018, passed in C.S.

(O.S.) No.1261/2015, titled "Vijay Building Apartment Owners' Association V/s.

Aardee Housing (P) Ltd. & Anr." appointed the undersigned as Local Commissioner
to visit the premises Vijaya Building, 17, Barakhamba Road New Delhi - 110 001 on
06.10.2018 at 11.30 A.M. to receive the consent in writing from flat/space owners of
the building, whether they want to continue or discontinue or change of Aardee
Housing (P) Ltd. (Defendant No.1) as Maintenance Agency or with the plaintiff
Association. All the concerned persons shall bring their title documents, containing

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the measurement, I.D. Proof and letter of consent in writing. The flat/space owners
shall assemble at the lobby of the Ground Floor on 06.10.2018 from 11.30 A.M to
02.30 PM. The letters from the flat/space owners shall also be accepted through their
Agents with proper authorization alongwith copy of the owners identity proof."

42. The notice was also published in the Hindustan Times dated 4th October, 2018. Photographs of
the various places where the notice was affixed in the building, have also been filed by the Local
Commissioner. As per the notice, the flat/apartment owners were to assemble on the ground floor of
the building on 6th October, 2018. The Defendants raised objections to the consent form, which the
Local Commissioner had proposed. The Commissioner has placed on record several photographs,
which showed the manner in which the meeting on 6th October, 2018 was carried out. The
Commissioner collected a total of 149 consent forms and a list was prepared and was supplied to
both the parties. Some suggestions made by the Defendants were also incorporated by the
Commissioner. In respect of each of the floors, the Commissioner tabulated the space. Finally, the
Commissioner concluded as under:

Consent forms accepted and considered for voting (Envelop - A {Part-1, Part-2 &
Part-3}) Options As per Super Area As per No. of (sq. ft.) consent forms Building
Apartment Owners Association (Plaintiff) Housing Pvt. Ltd.

(Defendant No.1)

Consent forms not considered for voting

Options As per Super As per No. of
Area sq. ft.) Consent forms
Supporting Vijaya 1,168,60 5
Building Apartment

Housing Pvt. Ltd.

(Defendant No. 1)

43. The Commissioner has attached therewith a complete bundle of consent forms
obtained, in four volumes, which is part of the record.

44. Objections were filed by the Defendants to the said report. The broad objections are as under:-

the opinion and the view of the occupiers were not taken; the defaulters and even
persons who had not paid maintenance were permitted to vote;

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the occupiers have agreements with the Defendants; that there were some occupants
who were receiving maintenance despite not paying the charges to the Defendants;
Various such other objections.

45. Broadly this Court has considered the reports and objections to both the Local Commissioners
reports. A perusal of the reports shows prima facie that the Builder has committed several defaults.
The Builder had an obligation to form the association/society/company, which it failed to do. The
Court has, at the prima facie stage, ascertained the wishes of the flat owners. The fact that the
occupiers may have maintenance agreements with the Defendants, out of compulsion, does not vest
any rights with the Defendants, inasmuch as, if the Association starts providing the maintenance,
the occupiers who are only either tenants or lessees of the owners, can avail of the same from the
Association. As per the second Local Commissioners report, the clear conclusion is that out of the
total of approximately 1,59,437 square feet super area, owners of 1,21,650 square feet area have
supported the Plaintiff-Association. The Defendants may be owning some parts of the building and
would be entitled to become members of the Association and enjoy voting power as contained in the
collaboration agreement i.e. one vote for every square meter. The wishes of the majority cannot be
ignored by the Court. Further, the intention behind the legislations such as the Delhi Apartment
Ownership Act, 1986; Real Estate (Regulation and Development) Act, 2016 and other recent reforms
in the real estate sector, cannot be ignored.

46. At the time when the suit was filed and even during the execution of the first local commission,
the Plaintiff-Association was carrying out some maintenance and other works in the building. The
Plaintiff-Association is severely affected as the Defendants are not cooperating with the Plaintiff and
are working against the interests of the Plaintiff-Association and its members. Paragraph 21 of the
plaint reads as under:

"21. That as the defendants were not responding to the letters and consequent thereof
the association on 10.11.2014 had taken over administration, management and
maintenance of the building and deputed its employees, security guards and
sweepers for the same purpose and the flat owners as well as the other occupants as
tenant in the building were duly informed that the possession has been taken over."

47. The submission of the Defendants, that no mandatory injunction can be granted and only status
quo ante can be restored, is an observation made by the Supreme Court in different fact situations.
The present case does not result in passing of a mandatory injunction but in actually ensuring that
the Defendants abide by their obligations under the collaboration agreement and the flat buyer
agreements. The Defendants have no rights to be challenging the binding obligations in agreements
executed by them and claim a right to continue to violate the same with impunity. None of the
judgments cited by the Defendants are applicable in the present factual matrix. However, this Court
is persuaded to follow the judgment of a ld. Single Judge in Kundan Housing (supra) where, after
referring to the Ld. Division Benchs judgement in O. S. Bajpai, the Court passed the following

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"10. Keeping in view the legal position as stated above by the Division Bench of this
court and the conditions of the common areas as elaborated by the Local
Commissioner, in my opinion, it is appropriate that the essential services in the
building in the common areas like electricity, water, cleanliness and lifts are taken
over and handled by the plaintiff association forthwith. This would be in accordance
with the judgment of the Division Bench of this High Court. It would also break the
impasse which is there whereby defendant No.1 is unable to take steps for
maintenance of the common areas. I direct accordingly and permit the plaintiff to
take over the above noted services without hindrance by the defendant.

11. The plaintiff shall abide by the terms and conditions as stipulated by the Division
Bench in the case of O.S.Bajpai vs. The Administrator (Lt. Governor of Delhi) & Ors.
(supra) and statutory provisions while carrying out maintenance of the common

48. On a broad conspectus of the facts narrated above it is clear that the Builder had a binding
obligation to form a society to represent the interests of the flat buyers. This obligation was
contained in the initial collaboration agreement as also in each of the flat buyers agreements. This
obligation was clearly violated by the Builder. To make things worse, the Builder created a
maintenance agency, under the same management for giving maintenance and collected huge sums
of moneys both from the flat owners and the occupiers - without accounting for the same. The
Plaintiff association came to be formed after many years and despite repeated notices, the Builder
did not cooperate. The maintenance agency Ardee has no right at all whatsoever as it is just an agent
of the Builder. Some of the occupiers may have been forced to agree for maintenance being provided
by the Builder and its maintenance agency. However, this does not constitute a legal right to claim
that the defendants can continue to provide maintenance against the wishes of the Plaintiff which
represents the majority of the flat owners. Whenever the Association or the owners have taken any
drastic steps, they have faced harassment in enjoying the basic facilities such as electricity back up
and air conditioning - in a building located in the centre of the capital city. This has led to police
interventions and orders by the Court. The court cannot ignore these happenings.

49. The Local Commissioners have both reported the situation of the building on ground and the
arbitrariness with which the Builder is unilaterally collecting the fees/monies under various heads
from the residents/owners and or occupiers. The wishes of the flat owners have been totally ignored.
Repeated notices by the Plaintiff association have elicited no reasonable reply by the Builder. The
Association has a right to prevent the Builder and its maintenance agency from continuing to
interfere in providing maintenance and other services to the building.

50. Under these circumstances, the Defendants are restrained from preventing the
Plaintiff-Association from carrying out the maintenance of Vijaya Building, 17, Barakhamba Road,
New Delhi-110001 and are further restrained from interfering, disturbing or obstructing the
Plaintiff- Association and/or its employees/their agents from looking after, taking care of the
maintenance of the building, common areas, common services, parking areas including the genset,
power backup, fire services, etc. The Defendants are further restrained from causing any harassment

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to the flat owners/occupiers for a period of 30 days by disconnecting any of the maintenance
services including electricity, water, gensets, power backup, lift services, air conditioning etc.,
During the said period, the Plaintiff can make whatever arrangements it needs to make for ensuring
that all the services are duly provided by it to the flat owners and the occupiers of the building. I.A.
9496/2015 is disposed of accordingly.

51. Insofar as I.A. 1196/2019 is concerned, the question raised is that many of the occupiers are
supporting the Defendants and hence the order dated 18th December 2018 deserves to be clarified.
The Defendants have tried to produce some satisfactory maintenance letters from different
occupiers along with their written submissions after the judgment was reserved on 23rd May, 2019.
The same cannot be gone into at this stage. The Defendants can prove the same in accordance with
law. No clarification of the order dated 18th December, 2018 is called for as the occupiers who are
not owners cannot have any independent right to opt for a maintenance agency when a majority of
the owners are members of the Plaintiff association.

52. I.A. 1196/2019 is accordingly dismissed.

PRATHIBA M. SINGH JUDGE JULY 23, 2019/dk/Agastya

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