TaxTMI 
TaxTMI 
2016 (2) TMI 1264
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....ing relevant, it would be apposite to note following clauses in the lease-deed dated June 11, 1996:- "II. The Lessee for himself, successor and assignees covenants with the Lessor in the manner following that is to say; (4) The Lessee, shall within a period of two years from 23rd day of April one thousand nine hundred and Ninety Six (and the time so specified shall be of essence of the contract) after obtaining sanction to the building plan, with necessary designs, plans and specifica-land and complete in a substantial and workmanlike manner a building for Hospital with the requisite and proper walls, sewers and drain and other conveniences in accordance with the sanctioned building plan and to the satisfaction of such municipal or other authorities. (5) (a) The Lessee shall not sell, transfer, assign or otherwise part with possession of the whole or any part of the said land or any building thereon except with the previous consent in writing of the Lessor which he shall be entitled to refuse in his absolute discretion. PROVIDED that such consent shall not be given for a period of ten years from the commencement of this Lease unless, in the opinion of the Lessor, exceptiona....
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....nbsp; General Secretary (v) Mr.Tarun Jain .... Secretary (vi) Mr.Rajeshwar Dayal .... Member (vii) Ms.Pushpa Gautam .... Member 5. The society could not construct the hospital within the stipulated period i.e. within two years from April 23, 1996. From time to time DDA kept on granting extension(s) to the society to construct the hospital. (We need not bother ourselves with this aspect of the matter inasmuch as construction of hospital on the land in question is not an issue in the present appeal). 6. On April 09, 2009, DDA issued a notice to the society to show cause as to why the lease-deed dated June 11, 1996 be not cancelled alleging breach of a condition....
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....ety to enable it to construct the hospital. c) In the year 2004 the said persons (NRIs) returned from the United States of America and learnt that Mr.Naresh Chandra and his associates had misused the funds of the society meant for constructing a hospital and therefore Mr.Sanjay Khurana made a complaint to the police resulting in registration of FIR No.367/2005 for offences punishable under Sections 341/420/409/506 IPC at PS Dwarka against Naresh Chandra and his associates. d) In the year 2002 most of the members holding various posts in the Governing Body of society at the time of execution of the lease-deed dated June 11, 1996 resigned from the posts held by them and new members were elected/appointed on said posts in their place. As on February 10, 2005 Governing Body of the society consisted of following persons/members:- i) Dr.Nirmal Kumar .... President ii) Ms.Archana Khurana .... &nbs....
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....ciety and/or any of its office-bearers. 9. The reply furnished by society did not cut ice with DDA and vide order dated June 02, 2009, DDA cancelled the allotment of land in favour of the society, the relevant portion whereof reads as under:- "WHEREAS by virtue of allotment letter dated 15.5.96 and lease deed executed on 11.6.96 you were the lessee of the plot allotted at Sector-6, Dwarka of land measuring 9950 Sq. M and were required to use the plot and building constructed thereon exclusively for Hospital. AND WHEREAS as per clause 5(a) of the lease deed the lessee shall not sell, transfer, assign or otherwise part with possession of the whole or any part of the said land or any building thereon except with the previous consent in writing of the Lessor which he shall be entitled to refuse in his absolute discretion. AND WHEREAS it has been seen from the documents submitted by you and Sh. Sanjay Khurana it is clear case of sale of the Institutional Property allotted on concessional rates in the utter violation of the terms of allotment. The sale of DDA property in a clandestine manner is to earn profit. It has also been seen that all the original members have been replaced ....
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.... breach of contract, violation of allotment terms and conditions laid down in the lease deed. It is also noted that under the garb of philanthropy, a business deals appears to have been struck. 12. That in the light of versions of founder president of the Hospital and present President, the respondent DDA came to the conclusion that it was a case of change of hands of monetary considerations, in a collusive manner to get over the proper permission of the DDA. The version of founder president clearly shows acceptance of money by cheques for a sum of above two crores, though the same has been explained has philanthropic donation for help. The version of present president speaks of misappropriation of loan or funds by M/s Nidhi Builders in the capacity of construction contractor, after their resignation as members. The capacity of contractor/builder is subsequent to monetary considerations passed in 2002, though construction agreement came in 2003. 13. That in the facts and circumstances of this case, no other view is possible, it being a clear case of sale of DDA property in clandestine manner to earn profits out of concessional allotment obtained in the name of trust by private ....
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.... view of the fact that the lease-deed dated June 11, 1996 executed by DDA in favour of the society does not prohibit the society from inducting new members or filling up membership upon resignation of existing members. Change of membership would not amount to a sale of land. b) A conjoint reading of Sections 4, 5 and 16 of the Societies Registration Act, 1860 brings out that though a society may own a property but the same is held for the purposes of management thereof in the Governing Body. But, the person in whom the property is vested for management cannot become the owner thereof. c) The lease-deed dated June 11, 1996 executed by DDA is in favour of the society and not in favour of the then Governing Body or the members of society. Further, the particulars of the Governing Body or members of society have also not been stated in the lease-deed dated June 11, 1996. Thus, the only conclusion which emerges is that DDA has created rights by way of a perpetual lease in the land in question in favour of the society, irrespective of who is in the management of the society and who are the members of the society. d) In view of the settled legal position that the society is a quasi-....
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....e time when the lease-deed dated June 11, 1996 was executed. To put it pithily, learned counsel argued that a minute analysis of the documents filed by the society, particularly its balance sheets, shows that consideration (money) for sale of land in question had flown into the coffers of Mr.Naresh Chandra, the President of society at the time of execution of the lease-deed dated June 11, 1996. 18. To support the above submission, learned senior counsel highlighted that an analysis of the balance sheets of the society for the years ending March 31, 2002 till March 31, 2005 brings out that contribution(s) made by newly inducted members of the society and amount spent by the society towards construction of the hospital in a given year, are as follows:- S. No. Year ending Contribution made by new member Amount spent by society on construction of hospital 1. March 31, 2002 Rs. 11,52,966/- Rs. 14,21,954.81 2. March 31, 2003 Rs. 64,59,989.97 Rs. 9,00,000/- 3. March 31, 2004 Rs. 6,00,51,300.46 Rs. 5,07,64,526.50 4. March 31, 2005 Rs. 2,24,03,547/- Rs. 2,46,87,818/- Total Rs. 9,00,67,803.43 Rs. 7,77,74,299.31 19. Counsel highlighted that aforesaid chart/tab....
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....t character. If he pays it over to another person, then it may be followed into that other person's hands. If, of course, that other person shows that it has come to him bona fide for valuable consideration, and without notice, then it may lose its character as trust money and cannot be recovered. But if it is handed over merely as a gift, it does not matter whether there is notice or not. IV Where money or notes are paid bona fide, and upon a valuable consideration, they shall never be brought back by the true owner; but where they come mala fide into a person's hands, they are in the nature of specific property; and if their identity can be traced and ascertained, the party has a right to recover. V It is well established that a legal owner is entitled to trace his property into its product, provided that the latter is indeed identifiable as the product of his property. 'Tracing' or 'following' property into its product involves a decision by the owner of the original property to assert his title to the product in place of his original property. VI Change of position is a valid defence to avoid restitution but the change of position must be in good f....