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Tuesday, February 14, 2017

Not only the conduct of Mesco was unfair, third party rights had also intervened. Lawful method had been exercised for resumption of land and cancellation of letter of handing over the possession.=The High Court has totally misdirected itself in directing to lease out the balance land. The High Court has also ignored that certain intervening events have taken place and there was total failure on the part of Mesco to carry out its obligations. The High Court could not have issued the direction more so in the changed situation and in view of the defaults committed by Mesco. As a matter of fact, Mesco was never inclined to abide by the terms of the letter dated 4.7.2003. When resumption was made on 25.7.2003, a representation was submitted on 20.8.2003 by Mesco. In that, an attempt was made to dictate its own terms in the garb of prayer for payment. As a matter of fact, it is apparent from the conduct of Mesco that it had no justification at any point of time not to execute the lease deed. It was delaying the same for the reasons best known to it which was wholly impermissible conduct, particularly after taking possession. The breach was not remedied for several years much less for three months in which it was to be remedied. Thus, High Court misadventured into holding the action of IDCO of resumption of land to be illegal. There was no equitable or legal consideration in favour of the respondent herein and a writ is not issued to perpetuate an illegality. Not only the conduct of Mesco was unfair, third party rights had also intervened. Lawful method had been exercised for resumption of land and cancellation of letter of handing over the possession. Resultantly, the impugned order passed by the High Court is hereby set aside. The appeals are allowed. The writ petition stands dismissed. Cost of Rs.5 lakhs is directed to be paid by Mesco to IDCO within a period of two months from today.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 2545  OF 2017
                   [Arising out of SLP [C] No.23563/2007]


Orissa Industrial Infrastructure
Development Corporation                                  … Appellant

Vs.

M/s. MESCO Kalinga Steel Ltd. & Ors.                     … Respondents


With CA No. 2546 /2017 (@ SLP (C) No. 23759/2007 and CA No.2547/2017 (@  SLP
(C) No.2683/2008).


                               J U D G M E N T

ARUN MISHRA, J.

1.    Leave granted.

2.    The appeals have been preferred by  Orissa  Industrial  Infrastructure
Development Corporation (in short ‘IDCO’) and also by Jindal Stainless  Ltd.
aggrieved by the impugned judgment and order dated 30.10.2007 passed by  the
High Court of Orissa, thereby directing IDCO to lease out  825.68  acres  of
land and to enter into a lease agreement with M/s. Mesco Kalinga Steel Ltd.

3.    The factual matrix discloses that Mesco Kalinga Steel Ltd.  (in  short
‘Mesco’)  had applied to IDCO  for  allotment  of  2500  acres  of  land  on
30.6.1994 and IDCO in turn, requested the  Government  of  Orissa  to  issue
necessary  orders  to  process  the  allotment.  On  28.10.1994  the   State
Government conveyed in principle approval for allotment  of  2500  acres  of
land on the terms and conditions laid down in the  policy  decision  of  the
State Government as revised on 25.1.1995 for establishment of steel plant.

4.    Initially the State Government had agreed for equity participation  of
Rs.25 crores towards the cost of land.  This  offer  was  withdrawn  by  the
State Government on 2.2.1995 and was communicated to  Mesco.  IDCO  wrote  a
letter on 21.3.1995 to Mesco to deposit the land cost in twenty  half-yearly
equal instalments and further requested to deposit  Rs.1.25  crores  towards
the first instalment and Rs. 13.08  lakhs  towards  ground  rent  and  cess.
Mesco deposited Rs.1.25 crores with IDCO  on  3.4.1995.  On  13.6.1996  IDCO
requested Mesco to take over possession of 1756.29  acres  of  land  in  the
first phase and to submit the draft lease deed  for  execution.  Mesco  took
over possession of the land  on  18.6.1996.  However,  lease  deed  was  not
executed. Thereafter, on 13.10.1997,  the  State  Government  intimated  the
proceedings of the meeting held on 26.9.1997 to  IDCO  and  required  it  to
execute the  lease  deed  in  favour  of  Mesco  and  also  to  realize  the
instalments due.

5.    On 27.10.1997, IDCO requested Mesco to  submit  draft  deed  of  lease
agreement for execution within 15 days, failing which steps  will  be  taken
for cancellation of allotment and resumption of land. IDCO  again  requested
on 26.11.1997 to submit the draft deed of agreement for  execution.  However
Mesco kept quiet and failed to get the lease deed executed. Thereafter,  for
more than 5 ½ years nothing happened. No steps were taken by  Mesco  to  get
the lease deed executed. Thereafter, IDCO gave  final  notice  to  Mesco  on
4.7.2003 to deposit the balance defaulted amount of  Rs.22.44  crores  along
with statutory dues and to execute  the  lease  deed  by  19.7.2003  failing
which it was intimated that the said land shall be  resumed  at  their  cost
and the amount paid shall be  adjusted  towards  compensation  for  use  and
occupation of the land; apart from that, Mesco  shall  also  be  liable  for
damages. Ultimately on 25.7.2003 on failure to get the lease deed  executed,
land was resumed  and  possession  letter  of  1756.29  acres  of  land  was
cancelled by IDCO. The amount of  Rs.1.25  crores  deposited  by  Mesco  was
forfeited and adjusted towards compensation for use and  occupation  of  the
land and damages.

6.    After resumption of the land, IDCO allotted 209.59 acres of  land  out
of the land in question to  Visa  Industries  Ltd.  on  7.11.2003  and  also
allotted 71.20 acres out of the  disputed  land  to  Jindal  Stainless  Ltd.
Possession of the land was handed over to Visa Industries Ltd. on  30.8.2004
and to Jindal Stainless Ltd. on  28.2.2005.  IDCO  further  allotted  533.52
acres of disputed land to Jindal Stainless Ltd. and  another  120  acres  of
land out of the disputed land  to  Visa  Industries  Ltd.  and  handed  over
possession to Jindal and Visa on  11.11.2005  and  17.11.2005  respectively.
The lease deed etc. have been executed between the aforesaid parties.

7.    A representation was  submitted  by  Mesco  on  20.8.2003  questioning
resumption in which  Mesco  submitted  its  own  terms  and  conditions  for
payment. The said representation was rejected  on  26.9.2003  by  IDCO.  The
first round of litigation in the form of W.P. (C)  No.12857/2003  was  filed
by Mesco questioning the cancellation  and  resumption  of  land.  The  High
Court disposed of the said writ petition  on  15.1.2004.  Pursuant  thereto,
representation dated 20.1.2004  submitted  to  IDCO  had  been  rejected  on
25.2.2004.  Thereafter,  in  the  second  round  of  litigation,  W.P.   (C)
No.2453/2005,  during   its   pendency,   Mesco   came   up   with   another
representation dated 22.8.2005 to IDCO which was rejected  on  7.10.2005  on
the ground that it was highly unsatisfactory,  unconvincing  and  completely
unacceptable. Mesco amended the writ  petition  to  question  the  rejection
order dated 7.10.2005. On 11.4.2007 and  12.4.2007,  the  High  Court  again
asked IDCO whether it was willing to lease out the remaining land to  Mesco.
As IDCO was unable to do so, the High Court allowed the writ application  to
lease out 825.68 acres  of  land.  Aggrieved  thereby,  the  appellants  are
before us.

8.    The High Court has held that since IDCO has not complied  with  clause
18 contained in the policy decision dated 25.1.1995 in as much as 3  months’
notice has not been  given,  it  was  not  open  to  resume  the  possession
otherwise than in due course of law. Since Mesco had confined its prayer  to
the available land to the  aforesaid  extent,  the  High  Court  had  issued
directions to lease out 825.68 acres of land.

9.     It  was  submitted  by  learned  senior  counsel  on  behalf  of  the
appellants that the High Court has erred in law in setting aside  the  order
of resumption of land as there was failure on the part of Mesco to  get  the
lease deed executed despite repeated reminders made by  IDCO  in  the  years
1996 and  1997  and  thereafter  for  several  years  there  was  lull,  and
ultimately after issuance of notice, resumption of land was made  which  has
been subsequently allotted to other industries and the  remaining  land  was
required for their future expansion. The land for mining  purposes  is  also
not available at present. The instalments were also not  deposited.  In  the
absence of execution of lease deed, the relationship of  lessor  and  lessee
never came into being, as such the 3 months’ notice for resumption  of  land
was not required. Three months’ notice is  required  to  terminate  a  lease
deed. The order of resumption was passed and  pursuant  thereto,  possession
has rightly been taken as Mesco was not vested  with  any  right  to  retain
possession having failed to pay the instalments and execute the lease  deed.
The order passed by IDCO for forfeiture of the amount deposited to the  tune
of Rs.1.25 crores was fully justified in the facts and circumstances of  the
case. No development had been made by Mesco on the land in  question.  Thus,
the impugned order may be  set aside.

10.   Learned senior counsel appearing on behalf  of  the  respondent  urged
that  the  order  of  the  High  Court  is  appropriate  and  no  case   for
interference in the appeal is made out. Setting up of the steel plant  would
be in the interest of the State and the public  at  large.  Due  to  certain
legal proceedings etc, Mesco could not get the lease deed executed.  It  was
necessary to serve 3 months’ notice to resume the land which  has  not  been
done. On a specific query being posed about the development over  the  land,
it was stated that the boundary  wall  had  been  constructed.  However,  no
plant  etc.  could  be  established   before   resumption   of   the   land.


11.   Before dilating upon the rival submissions, it is appropriate to  take
note of certain facts. The Government  of  Orissa,  Department  of  Steel  &
Mines had conveyed its in principle approval for allotment of 2500 acres  of
land for establishment of 2 million tons steel plant with ultimate  capacity
of 3 million tons per annum. The offer for equity participation  of  Rs.  25
crores was withdrawn by the State  Government  vide  letter  dated  5.1.1995
before direction for allotment was issued and IDCO was advised to hand  over
2500 acres of land on long term lease basis  on  the  terms  and  conditions
stipulated in the revised terms and conditions issued by the  Government  on
25.1.1995. They were required to deposit Rs.1.25 crores  towards  the  first
instalment and Rs.13,08,842/- towards ground rent and cess as  reflected  in
the letter dated 21.3.1995. The amount of Rs.1.25 crores  was  deposited  on
3.5.1995. Vide communication dated 13.6.1996 of IDCO, possession of  1756.29
acres of land was required to be taken and Mesco  was  further  required  to
submit a draft deed of agreement in duplicate. It appears that on  18.6.1996
advance possession of 1756 acres of land had been handed over to  Mesco  but
the draft deed of agreement for execution of lease deed  was  not  submitted
by it, hence a letter was written on 27.10.1997 by IDCO to resume  the  land
and to cancel allotment. In communication dated 26.11.1997, IDCO wrote  that
it had sent draft lease deed to Mesco on 20.1.1996 and required  the  latter
to submit the draft of lease agreement for execution  immediately.  Thus  it
is apparent that though the possession had been taken by Mesco but,  at  the
same time, there was inexplicable neglect on its part to execute  the  lease
deed. Due to the contumacious default on  the  part  of  Mesco  for  several
years, lease deed could not be executed. Ultimately IDCO had  served  notice
dated 4.7.2003 to Mesco  regarding  resumption  of  land  referring  to  its
earlier communications dated 27.10.1997 and 26.11.1997 to execute the  lease
deed or to face resumption of land. The amount of instalments had  also  not
been deposited except the initial amount of Rs.1.25 crores. Thus  Mesco  was
required  by  notice  to   deposit   the   balance   defaulted   amount   of
Rs.22,84,48,890/- and to execute the lease deed by 19.7.2003  failing  which
land shall be resumed and  the  amount  paid  by  Mesco  shall  be  adjusted
towards compensation for use and occupation of the land and there  shall  be
future liability of damages and costs thereupon.  As  nothing  was  done  by
Mesco, vide  communication  dated  25.7.2003,  IDCO  resumed  the  land  and
cancelled delivery  of  deed  of  possession  dated  18.6.1996.  The  amount
deposited was forfeited.

12.    The  memorandum  of  understanding  (MOU)  was  reached  between  the
Government of Orissa and Mesco Group of Industries  on  4.5.1994.  According
to the same, Government of Orissa  had  undertaken  to  recommend  leasehold
rights for mining at suitable mining locations. The MOU was required  to  be
converted into agreement in due course of time. As  per  the  general  terms
and  conditions  framed  by  the  Government  of  Orissa  on  25.1.1995  for
allotment of land for steel plants, the cost  of  land  was  Rs.1  lakh  per
acre. The amount was to be paid in instalments as provided with a  right  to
hold the demised property for 90  years.  Condition  No.18  of  the  general
terms and conditions to be inserted in lease deed provided that  the  lessee
had to remedy the breach within three months after notice. Clause 18 of  the
general terms and conditions is extracted hereunder :
“18.  If the dues of the Lessor hereby reserved or any  part  thereof  shall
at any time being arrears and unpaid  for three months next after  the  date
on which the same shall have become due, whether the same  shall  have  been
lawfully demanded or not, or if there is a breach or non-observance  by  the
Lessee of any of the  conditions  and  covenant  herein  contained  and  the
lessee fails to remedy the breach within  three  months  of  the  notice  in
writing given  by  the  lessor  or  becomes  insolvent  or  enters  into  an
agreement with his creditors for composition of  the  said  business.   This
agreement will be  deemed  to  have  been  terminated  and  the  Lessee  may
notwithstanding the waiver of any previous causes of  action  or  rights  or
remedy of re enter and without prejudice to any such rights,  or  remedy  of
the lessor for recovery of dues under the  lease,  enter  upon  the  demised
property and repossess the same as if this demised  property  had  not  been
leased out.  In such a case the lessee shall pay to the Lessor  such  amount
by way of damages or such other charges as may be determined by the  Lessor.
   The amount of damages or other dues recoverable from the Lessee  will  be
adjusted against the amount already paid  by  the  Lessee.   If  after  such
adjustment there remains surplus, the same shall be returned to  the  lessee
without any interest.  If after such adjustment  there  shall  remains  some
dues recoverable from the lessee and if lessee fails to pay  the  same,  the
lessor shall be free to take any legal action as it deems for  realization.”
                               (emphasis supplied)

       Aforesaid  condition  No.18  never  came  into  force  and   remained
inoperative in the facts of the instant case as lease deed  itself  had  not
been executed. Even otherwise, more than three months’  time  was  given  to
Mesco to remedy the breach inasmuch as  notice for resumption was  initially
given in 1997 and for more than 5½ years  till  resumption  in  July,  2003,
breach was not remedied. In  spite  of  receiving  the  advance  possession,
there was failure on the part of Mesco to  execute  the  lease  deed  though
draft lease deed was  sent  to  it  in  January,  1996  for  execution.  The
relationship of lessor and lessee never came into being, in the  absence  of
execution of lease deed. The execution of lease deed was  necessary  as  the
State Government had only accorded in principle approval  and  advised  IDCO
to allot the land that could only be done by execution of lease deed.  As  a
matter of fact, IDCO ought not to have handed  over  advance  possession  of
the land to Mesco without execution of lease deed. However, for the  reasons
best known to IDCO, advance  possession  was  given.  The  allotment  letter
itself  contemplated  the  execution  of  the  lease  deed  as  a  condition
precedent.  As  provided  in   section   33   of   the   Orissa   Industrial
Infrastructure Development Corporation Act, 1980 (for short ‘the Act’),  the
Corporation can dispose of the land  subject  to  directions  given  by  the
State Government in such a manner and subject to such terms  and  conditions
as may be necessary. The condition precedent was that of execution of  lease
deed, and as it was so directed by State Government also, in our  considered
opinion, no concluded contract came into being and  the  transaction  became
void due to failure on the part of Mesco to execute a formal lease deed.

13.   Section 33 of the Act is extracted hereunder:
“Section 33.   Disposal of land by the Corporation. -  (1)  Subject  to  any
directions given by the State Government the Corporation may dispose of –

Any land acquired by the State Government and  transferred  to  it,  without
undertaking or carrying out any development thereon; or

Any such land after undertake or carrying out such development as it  thinks
fit,

to such person in such manner and subject to such terms and  conditions,  as
it considers expedient for securing the purposes of this Act.

(2)   The powers of the Corporation with respect to  the  disposal  of  land
under sub-S. (1) shall be so exercised as to secure, so far as  practicable,
that –

where the Corporation proposes to dispose of by sale any such land which  is
surplus to its requirement, the Corporation shall  offer  the  land  in  the
first instance to the persons from whom it was acquired, if they  desire  to
purchase it, subject to such requirements as to its development and  use  as
the Corporation may think fit to impose.

persons who are residing or carrying on business or other activities on  any
such land shall, if they desire to obtain accommodation  on  land  belonging
to the Corporation and are willing to comply with any  requirements  of  the
Corporation as to its development and use  have  an  opportunity  to  obtain
thereon accommodation suitable to their  reasonable  requirements  on  terms
settled with due regard to the  price  at  which  any  such  land  has  been
acquired from them.

(3)   Nothing in this Act shall be construed as enabling the Corporation  to
dispose of land by way of gift, but subject as aforesaid; reference in  this
Act to the disposal of land shall be construed as reference to the  disposal
thereof in any manner whether by way of sale, mortgage, exchange,  or  lease
or by the creation, of  any easement, right or privilege or otherwise.”

      It is apparent from section 33(1) and 33(3) that it was  necessary  to
execute the lease deed as the Corporation could dispose of the land only  in
the manner as provided in law and otherwise also it  was  so  stipulated  in
the Government order itself. Thus, due to neglect of Mesco  the  transaction
became void and it was not  necessary  to  serve  three  months’  notice  to
remedy the breach. However, in the facts of the case for several  years  the
breach was not remedied after  communication  dated  27.10.1997  till  July,
2003.

14.   In the instant case it is apparent that possession  had  been  enjoyed
by Mesco without execution of the lease deed. The conduct of IDCO  was  also
not diligent. Notice  was  served  in  the  year  1997  for  resumption  but
thereafter up to July, 2003 nothing was done by either IDCO  or  Mesco.  Not
even a single communication has been placed on record  by  Mesco  containing
its proposal to remedy breach and on a specific  query  being  made  to  the
learned counsel appearing for Mesco, they were unable to explain as to  what
transpired between 1997 and 2003 except a vague submission was made that  it
was mired in certain litigations which  fact  has  not  been  even  pleaded.
Thus, no explanation, good, bad or otherwise has been placed on  record  for
inaction on the part of Mesco. The transaction became void, due  to  Mesco’s
own lapse and negligence, and it has forfeited the right to  get  the  lease
deed executed. After taking possession, it could  not  have  waited  for  so
many years. What was required to be performed by Mesco  was  not  done.   It
also failed to make any development of worth on the land. We find  no  force
in the submission that they have spent a sum of Rs.22 crores  as  they  were
unable to explain how they spent the said amount, and only a bald  statement
was made that they have  constructed  a  boundary  wall.  It  has  not  been
established that a sum of Rs.22 crores had been spent by Mesco.  Apart  from
that, having failed to execute the lease deed, they were to invest at  their
own peril. In case they have  invested  some  amount,  on  that  basis  they
cannot claim any legal or equitable right.

15.   IDCO is a statutory authority and it can act  only  on  the  basis  of
written lease deed. The execution of lease deed is necessary and  it  is  in
public interest to prevent unauthorized  leasing  out  of  property  on  its
behalf.  Lease is required to be executed in  a  prescribed  format  in  the
shape of formal document which is sine qua non. In the absence  thereof,  it
would not be permissible to hold that  relationship  of  lessor  and  lessee
came into being. A situation arose under section 175(3)  of  the  Government
of India Act, 1935 a formal document  was  required  to  be  executed  which
provision was pari materia to Article 299 of the  Constitution,  this  Court
held in Bhikraj Jaipuria v. Union of India  AIR  1962  SC  113  that  for  a
contract between Government and  private  individuals,  formal  document  is
necessary and where it is required  that  a  thing  shall  be  done  in  the
prescribed manner or form but does not set  out  the  consequences  of  non-
compliance, the question whether the provision was  mandatory  or  directory
has to be judged in the  light  of  the  intention  of  the  legislature  as
disclosed by the object. If the provisions of  statute  are  mandatory,  the
thing done not in the manner or  form  prescribed  can  have  no  effect  or
validity. This Court also observed that it is in the interest of the  public
that the question whether a binding  contract  has  been  made  between  the
State  and  a  private  individual  should  not  be  left  to  dispute   and
litigation.

      It is apparent that there is a manner  of  executing  the  lease  deed
with the Corporation.  Prescribed form of draft lease deed had been sent  by
IDCO to Mesco but it failed to execute  it.  Thus,  there  was  no  contract
which could have been enforced and it became void due to inaction  of  Mesco
itself.

16.   Forfeiture of amount of Rs.1.25 crores was also appropriate. In  State
of West Bengal v. M/s. B.K. Mondal and Sons AIR  1962  SC  779,  this  Court
held that the provision of section 175(3) is  mandatory  and  non-compliance
makes the contract invalid and section  70  of  the  Contract  Act  prevents
unjust enrichment. It applies as much to individuals as to corporations  and
Government. Section 70 of the Contract Act deals  with  the  cases  where  a
person does a thing not intending to act  gratuitously  and  others  enjoyed
it. In such a situation compensation can be claimed  under  section  70  and
this Court has held that section 175(3) of the Government of  India  Act  is
not in conflict with the principles  enunciated  under  section  70  of  the
Contract Act. Thus, we find no force in the submission on the part of  Mesco
with respect  to the forfeiture of amount of Rs.1.25  crores.  In  addition,
they would be liable to pay as  compensation  for  retaining  possession  so
long.  In New Marine Coal Co. (Bengal) Private Ltd. v. The  Union  of  India
AIR 1964 SC 152 also, this Court has held that when a contract is  found  to
be void due to the provisions of section 175(3) of the Government  of  India
Act it  becomes  unenforceable  but  in  case  a  party  had  performed  its
obligation, section 70 is attracted in order to recover compensation.

17.   In Laliteshwar Prasad Sahi v. Bateshwar Prasad and Ors.  AIR  1968  SC
580 where mere agreement was entered into in contravention  of  Article  299
of the Constitution and was not ratified by the Government, it was held  not
to be a contract as it was void  and  unenforceable.  Similar  is  the  view
taken in Karamshi Jethabhai Somayya v. State  of  Bombay  (now  Maharashtra)
AIR 1964 SC 1714. It is true that the said provisions are not  attracted  in
the instant case but statutory corporation has also to act as per  the  mode
prescribed by law.

18.   There is no question of estoppel or ratification  in  such  cases.  In
Mulamchand v. State of Madhya Pradesh AIR 1968 SC 1218, this Court  observed
thus :
“6.  ….. The principle is that the  provisions  of  Section  175(3)  of  the
Government of India Act, 1935 or the  corresponding  provisions  of  Article
299(1) of the Constitution of India  are  mandatory  in  character  and  the
contravention of these provisions nullifies the  contracts  and  makes  them
void. There is no question of estoppel or ratification in such a  case.  The
reason is that the provisions of Section 175(3) of the Government  of  India
Act and the corresponding provisions of Article 299(1) of  the  Constitution
have not been enacted for the sake of mere form but they have  been  enacted
for  safeguarding  the  Government  against  unauthorised   contracts.   The
provisions are embodied in Section 175(3) of the  Government  of  India  Act
and Article 299(1) of the Constitution on the ground of public policy  —  on
the ground of protection of general public —and these formalities cannot  be
waived or dispensed with. If the plea of the respondent  regarding  estoppel
or ratification is admitted, that would mean in  effect  the  repeal  of  an
important constitutional  provision  intended  for  the  protection  of  the
general public. That is why the plea of estoppel or ratification  cannot  be
permitted in such a case. But if money is deposited and goods  are  supplied
or if services are rendered in terms of the void  contract,  the  provisions
of Section 70 of the Indian Contract Act may be applicable. In  other  words
if the conditions imposed by Section 70  of  the  Indian  Contract  Act  are
satisfied then the  provisions  of  that  section  can  be  invoked  by  the
aggrieved party to the void contract. The first condition is that  a  person
should lawfully do something for another  person  or  deliver  something  to
him; the second condition is that in doing the said thing or delivering  the
said thing he must not intend to act gratuitously; and the  third  condition
is that the other person for whom something is done or to whom something  is
delivered  must  enjoy  the  benefit  thereof.  If  these   conditions   are
satisfied, Section 70 imposes upon the latter person the liability  to  make
compensation to the former in respect of, or to restore, the thing  so  done
or delivered. The important point to notice is that in a case falling  under
Section 70 the person doing something for another  or  delivering  something
to another cannot sue for the specific performance of the contract, nor  ask
for damages for the breach of the  contract,  for  the  simple  reason  that
there is no contract between him and the  other  person  for  whom  he  does
something  or  to  whom  he  delivers  something.  So  where  a  claim   for
compensation is made by one person against another under Section  70  it  is
not on the basis of any subsisting contract between the  parties  but  on  a
different kind of obligation. The juristic basis of the obligation  in  such
a case is not founded upon any contract or tort but upon  a  third  category
of law, namely, quasi-contract or  restitution.  In  Bibrosa  v.  Fairbairn,
1943 AC 32 Lord Wright has stated the legal position as follows:
“... any civilised system of law is bound to provide remedies for  cases  of
what has been called unjust  enrichment  or  unjust  benefit,  that  is,  to
prevent a man from retaining the money of, or  some  benefit  derived  from,
another which it is against conscience that he should  keep.  Such  remedies
in English Law are generically different from remedies  in  contract  or  in
tort, and are now recognised to fall within a third category of  the  common
law which has been called quasi-contract or restitution”.


      In the light of aforesaid  decision,  when  we  consider  the  overall
conduct of Mesco in the instant case, we are fully satisfied that  the  High
Court has adventured into an avoidable illegality while directing  execution
of lease deed. It is a settled law that equity follows the  rule  of  common
law in respect of such contracts. Renewal of lease is a privilege and  if  a
tenant wishes to claim the privilege, he must  do  so  strictly  within  the
time limited  for  the  purpose.  This  Court  has  further  considered  the
question where there is no time limit, an application may be made  within  a
reasonable time. If delay is on the part of lessee for renewal  arising  out
of mere neglect on his part and which could have been avoided by  reasonable
diligence, would not  entitle  him  to  claim  renewal.  Applying  the  same
principle to the instant case, it is apparent that the conduct of Mesco  was
unfair and unpardonable.  The conduct  disentitled  it  from  indulgence  by
Court in any manner. We are constrained to observe that a  number  of  times
the High Court had unnecessarily directed the matter to be reconsidered  and
on each and every occasion there was rejection of the representation by  the
concerned authorities. Thus, no equitable consideration was  available  with
Mesco to invoke  the  writ  jurisdiction  for  the  reliefs  sought.  Relief
granted is not permissible as per law.

19.   Mesco had no enforceable  right  for  grant  of  any  relief  by  mere
handing over of possession. The question came up before this Court in  Khela
Banerjee & Anr. v. City Montessori School & Ors. (2012) 7 SCC 261  when  bid
was cancelled and was  not  accepted  but  the  Manager  of  the  respondent
convinced  the  Governor  to  pass  individual  order  of   possession   and
acceptance of the balance amount in ten six-monthly instalments;  thereafter
instalments were not  paid.  This  Court  held  that  no  enforceable  right
accrued in favour of the respondent notwithstanding  the  execution  of  the
agreement dated 12.1.1996 and the offer made by the respondent to  make  the
payment of the balance price was rightly rejected. This Court has held  thus
:
“29.  The  first  question  which  merits  consideration  is   whether   the
conclusion recorded by the High Court on the issue of enforceability of  the
agreement dated 12-1-1996 is correct and Respondent 1’s prayer for issue  of
a direction to LDA to accept the balance price was rightly rejected.  It  is
an admitted position that in response   to   tender  notice   dated   20-12-
1994, Respondent 1 gave bids for four plots including Plot  No.  92-A/C  and
paid 25% of the price offered by it but  did  not  pay  the  balance  amount
necessitating cancellation of the bid,    about   which     intimation   was
given vide letter dated  14-6-1995.  Respondent  1  did  not  challenge  the
cancellation of bids by availing appropriate legal remedy  but  its  Manager
succeeded in convincing the Governor of the State to pass an  unusual  order
for handing over possession of the  plots  and  acceptance  of  the  balance
amount in six-monthly instalments. The reasons which prompted  the  Governor
to act in violation of the Rules of Business and ordain restoration  of  the
plots in favour of Respondent 1 albeit without setting  aside  the  decision
of LDA to cancel the bids are  not  borne  out  from  the  records  produced
before this Court. Therefore, we hold that the order passed by the  Governor
and the  consequential  actions  taken  by  the  State  Government  and  LDA
including the execution of agreement  dated  12-1-1996  did  not  create  an
enforceable right in favour of Respondent  1  and  the  High  Court  rightly
declined to issue a mandamus to LDA to accept the offer made on  its  behalf
for payment of the balance price.

30. It is significant  to   note  that    the   agreement   dated  12-1-1996
contained an unequivocal stipulation that if Respondent 1 fails to  pay  the
instalments of balance price  within  the  prescribed  time-limit  then  the
agreement would become void and LDA will be free to sell  the  plot  to  any
other person. Admittedly, Respondent  1  did  not  pay  the  instalments  of
balance price. Therefore, the agreement stood automatically  terminated  and
LDA became entitled to dispose  of  the  plot  by  adopting  an  appropriate
mechanism consistent with the doctrine of equality enshrined in  Article  14
of the Constitution. It is rather intriguing as to why the functionaries  of
LDA remained silent for more than 13 years and did not  repossess  the  plot
in question. This was perhaps due to the pressure brought by the Manager  of
Respondent 1 from different quarters, administrative as well as political.
xxx   xxx        xxx
32. We have carefully gone through the provisions of the 2009 Act  and  find
that they do not even remotely deal with the issue of allotment of  land  to
the educational institutions. Therefore, the  Division  Bench  of  the  High
Court was not  at  all  justified  in  ordering  transfer  of  the  plot  to
Respondent 1 and that  too  by  ignoring  its  own  finding  that  the  said
respondent was a ranked defaulter and the writ petition was  filed  after  a
time gap of 13 years without any tangible explanation.”
                                                                   (emphasis
added by us)


20.   Mesco was required to do several acts in this case as per the  general
terms and conditions subject to which the lease was to be  granted.  Nothing
has been performed including payment of  instalments  etc.  and  in  such  a
situation no relief is permissible to be given as held by this Court in  Raj
Kishore (Dead) by LRs. v. Prem Singh & Ors. (2011) 1 SCC 657 in  which  this
Court has referred to Halsbury’s Laws of England thus  :
“33. This Court  also  quoted  with  approval  the  following  passage  from
Halsbury’s Laws of England, Vol. 14, IIIrd Edn., p. 622, Para 1151:

“1151. Conditions must as a general rule be strictly  observed.—Where  under
a contract, conveyance, or will a beneficial right  is  to  arise  upon  the
performance by the beneficiary of some act in  a  stated  manner,  or  at  a
stated time, the act must be performed accordingly in order  to  obtain  the
enjoyment of the right, and in the absence of fraud, accident  or  surprise,
equity will not relieve against a breach of the terms.””

      It is apparent that when several acts are  to  be  done  in  a  stated
manner and in stipulated time and none of them has  been  performed,  as  in
the instant case, such gross breach became  irremediable  and  no  equitable
principle could have come to the rescue of Mesco as it  has  utterly  failed
to fulfil its obligations.

21.   It was submitted on behalf of Mesco that IDCO is bound  by  promissory
estoppel. We find the submission to be wholly unworthy of acceptance. It  is
not the case of Mesco that there was any assurance given to it on the  basis
of which it has acted upon. The State Government had withdrawn  its  initial
offer of equity participation of Rs.25  crores  well  before  the  order  of
allotment was issued.  It was  made  clear  in  the  order  that  the  State
Government had directed  IDCO  to  allot  2500  acres  of  land  subject  to
execution of lease deed. In such a situation there is no room  to  entertain
the plea of promissory estoppel and it is not  the  case  that  any  of  the
authorized persons had at any point of  time,  without  execution  of  lease
deed, asked Mesco to do anything. Any such assurance even  if  it  had  been
given, would  be  of  no  consequence  as  held  by  this  Court  in  Mumbai
International Airport Private Ltd. v. Golden Chariot Airport &  Anr.  (2010)
10 SCC 422. Therein a question arose that the Airports  Authority  of  India
being a statutory  body    constituted  under  section  3  of  the  Airports
Authority of India Act, 1944 was required  to  execute  the  contract  in  a
particular form as provided under the Act and the Regulations.  As  such  it
was held that even if oral assurance of  execution  of  licence  is  proved,
such assurance cannot bind the statutory body. In the facts of  the  instant
case, the principle of promissory estoppel is not attracted  at  all.   IDCO
is a statutory body and can act only in the mode prescribed  and  Mesco  was
informed of the lease deed to be executed in  prescribed  format.  Thus  the
High Court could not have issued the impugned direction.

22.   In the writ petition, a prayer had been made for grant of relief of  a
declaration that Mesco has acquired full  title  to  hold  the  property  in
question for a period of 99 years from the date of possession and  IDCO  has
lost its title to the said land and has the remedy to  recover  the  balance
amount by filing a suit. The prayer was wholly misconceived. In the  instant
case, on the basis of MOU or allotment  letter,  no  right  has  accrued  to
Mesco, and it having failed to perform its  mandatory  part,  the  MOU/offer
became void and unenforceable.  IDCO was fully  justified  in  resuming  the
land.

23.   The High Court has totally misdirected itself in  directing  to  lease
out the  balance  land.  The  High  Court  has  also  ignored  that  certain
intervening events have taken place and there was total failure on the  part
of Mesco to carry out its obligations. The High Court could not have  issued
the direction more so in the changed situation and in view of  the  defaults
committed by Mesco.  As a matter of fact, Mesco was never inclined to  abide
by the terms of the letter dated  4.7.2003.  When  resumption  was  made  on
25.7.2003, a representation was submitted on 20.8.2003 by  Mesco.  In  that,
an attempt was made to dictate its own terms  in  the  garb  of  prayer  for
payment. As a matter of fact, it is apparent from the conduct of Mesco  that
it had no justification at any point of time not to execute the lease  deed.
It was delaying the same for the reasons best known to it which  was  wholly
impermissible conduct, particularly after taking possession. The breach  was
not remedied for several years much less for three months in  which  it  was
to be remedied. Thus, High Court misadventured into holding  the  action  of
IDCO of resumption of land to be illegal.  There was no equitable  or  legal
consideration in favour of the respondent herein and a writ  is  not  issued
to perpetuate an illegality. Not only  the  conduct  of  Mesco  was  unfair,
third party rights had also intervened. Lawful  method  had  been  exercised
for resumption of land and cancellation  of  letter  of   handing  over  the
possession.

24.   Resultantly, the impugned order passed by the  High  Court  is  hereby
set aside. The appeals are allowed.  The  writ  petition  stands  dismissed.
Cost of Rs.5 lakhs is directed to be paid by Mesco to IDCO within  a  period
of two months from today.



                                                   ………………………J.
                                                   (Arun Mishra)



New Delhi;                                         ……………………..J.
February 14, 2017.                                       (Amitava Roy)






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