Himachal Pradesh High Court Quashes HIMUDA Order Withholding Land Payment; Shortfall In Land Area Not A Defect In Title
Isabella Mariam
The High Court of Himachal Pradesh, Single Bench of Justice Ajay Mohan Goel quashed a communication issued by the Himachal Pradesh Housing and Urban Development Authority that had withheld payment to landowners, holding that a shortfall in the extent of land sold could not be regarded as a defect in title under the sale deed. The dispute arose after the authority declined to release the remaining sale consideration, citing a shortage in land area. Justice Goel observed that a “defect in title of land cannot be confused with the alleged shortfall in the total land sold by the petitioners to the respondent.” The Court accordingly set aside the communication and directed that consequential steps be taken in compliance with its order.
The case concerned a dispute between a group of landowners and the Himachal Pradesh Housing and Urban Development Authority (HIMUDA) over the non-payment of the full sale consideration for agricultural land sold to the Authority. The petitioners had executed a registered sale deed on 29 August 2017, transferring 570 bighas of land situated in Mauza Sohala, Up-Sampda Kathala Uprla, and Up-Sampda Nichla Kathla, Sub-Tehsil Narag, District Sirmour, Himachal Pradesh, in favour of HIMUDA for the consideration amount stated in the document.
After the transaction, the Authority issued a communication dated 14 January 2020, withholding the balance sale amount on the ground that a shortfall of approximately sixty to seventy bighas was found on demarcation of the land. The Authority treated this shortfall as a “defect in title” within the meaning of Clauses 4 and 5 of the sale deed, which required the sellers to indemnify the purchaser in case of defective title.
The petitioners contended that the balance consideration was payable because the sale deed had been executed, possession of the entire land had been acknowledged by the respondent, and demarcation reports were already on record. They argued that a shortfall in area did not amount to a defect in title. The respondent submitted that under the terms of the deed, the petitioners were responsible for accurate demarcation and that the discovered shortfall justified withholding payment under the indemnity provisions. The dispute thus turned on the interpretation of the sale deed clauses and whether the shortfall constituted a defect in title.
Justice Ajay Mohan Goel examined the contents of the sale deed, the impugned communication, and the parties’ submissions. The Court “found that there is perversity writ large on the face of it as far as the impugned order is concerned.” It “is not in dispute that the sale deed has been executed between the petitioners and the respondent,” and that the Authority withheld certain payments on the basis of Clauses 4 and 5 of the deed.
Quoting those clauses, the Court recorded, “That if there will be any defect in title of land of the SELLERs in that event the SELLERs shall make all loss good suffered by the Purchaser,” and “That the SELLERS hereby undertake to indemnify the PURCHASER in case any defect of title is found in the said land.”
The Court observed, “This Court is of the considered view that defect in title of land cannot be confused with the alleged shortfall in the total land sold by the petitioners to the respondent.” It further stated that a defect in title would arise only if the sellers lacked a clear right to transfer ownership or had misrepresented their title.
Referring to Clause 1 of the sale deed, the Court noted, “In terms of Clause-1, at the time of the execution of the sale deed, the seller had delivered the vacant and peaceful possession of 570 bighas of land to the purchaser on the spot,” which meant that the respondent had acknowledged receipt of possession. On this basis, the Court held that the communication treating the shortfall as a title defect had no foundation under the deed’s provisions.
The Court stated: “Accordingly, in light of the above discussions, this petition is allowed. Annexure P-1 is quashed and set aside. Consequences to ensue. Pending miscellaneous applications, if any, also stand disposed of.”
Advocates Representing the Parties:
For the Petitioners: Mr. Suneet Goel, Senior Advocate, with Mr. Vivek Negi, Advocate.
For the Respondents: Mr. Roop Lal Sharma, Advocate, vice Mr. Jeevesh Sharma, Advocate.
Case Title: Sachin Shridhar and Others v. Himachal Pradesh Housing and Urban Development Authority
Neutral Citation: 2025:HHC:35535
Case Number: CWP No.1262 of 2020
Bench: Justice Ajay Mohan Goel
