Introduction:

In a landmark decision, the Punjab & Haryana High Court has ruled that a property sold through a registered sale deed cannot be subject to resumption proceedings. This judgment, rendered by Justice Sureshwar Thakur and Justice Vikas Suri, was in response to a case where the petitioner, M/s Penguin Enterprises Pvt. Ltd., challenged the unlawful resumption of an industrial shed in Gurgaon by state authorities. The petitioner had been allotted the shed in 1997 and had obtained a registered conveyance deed in 2006. The property was later resumed by the authorities, despite the petitioner having full ownership rights granted through the registered sale deed. The court observed that such actions violated the fundamental right to property as enshrined in Article 300-A of the Constitution, emphasising that resumption could only occur through proper legal channels, particularly civil courts.

Arguments of the Petitioner:

M/s Penguin Enterprises Pvt. Ltd. argued that the resumption of their property was illegal as it occurred without following due process or natural justice. The petitioner highlighted that the notices of resumption were not properly served on them, neither at the registered office nor the stated address, thus making the entire procedure arbitrary. The petitioner contended that such resumption was not by the law, and the State had no jurisdiction to revoke the registered sale deed. They further argued that any dispute arising from the sale deed should be addressed through a civil court, not through administrative proceedings or resumption actions initiated by the authorities.

Arguments of the Respondents:

On the other hand, the State of Haryana defended the resumption proceedings, claiming that the power to resume the property was vested in them due to certain breach conditions in the agreement to sell. The respondent authorities argued that the terms of the sale agreement allowed them to resume the property, as they claimed there were violations related to the management and operational status of the petitioner’s company. However, the state failed to prove that the notices were served correctly or that the resumption was justified under the applicable legal framework.

Court’s Judgment:

After hearing the arguments from both sides, the Punjab & Haryana High Court ruled in favour of M/s Penguin Enterprises Pvt. Ltd. The court stated that once a registered sale deed had been executed, it could not be undone by invoking resumption proceedings. The bench held that such actions would violate the petitioner’s right to property under Article 300-A of the Constitution, as the property had been legally conveyed to the petitioner. The court further emphasised that only a competent civil court had the authority to cancel or rescind a registered deed of conveyance. The court also pointed out that arbitration, even if available, did not provide the power of resumption, and disputes between parties to a sale deed should be resolved through civil suits, not administrative powers.

In a significant part of the ruling, the court observed that the actions of the state were arbitrary and amounted to an overreach of its powers. The bench reiterated that the property right is a fundamental right and that any violation of this right, such as the wrongful resumption of property, must be strictly scrutinised and prevented. The court also awarded exemplary compensation to the petitioner for the hardship caused by the illegal resumption, amounting to Rs. 5 lakh.