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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 7252-7253 OF 2003
The Rajasthan State Industrial Development …Appellants
and Investment Corporation & Anr.
Versus
Diamond and Gem Development Corporation Ltd. …Respondents
& Anr.
WITH
CIVIL APPEAL NOS. 8222-8223 OF 2003
J U D G M E N T
Dr. B. S. CHAUHAN, J.
1. These appeals have been preferred against the impugned
judgment and order dated 30.7.2002 passed by the High Court of
Rajasthan (Jaipur Bench) in Civil Writ Petition Nos. 5481/1994 and
105/1997, by which the High Court has allowed the writ petitionsPage 2
filed by the respondent-Diamond and Gem Development Corporation
Ltd. (hereinafter referred to as the ‘Company’), for quashing the order
of cancellation of allotment of land and directing the appellants for
providing the approach/access road.
2. As these appeals have been preferred against the common
impugned judgment, for the sake of convenience, Civil Appeal Nos.
7252-53/2003 are to be taken to be the leading case. The facts and
circumstances giving rise to these appeals are :
A. That a huge area of land admeasuring 607 Bighas and 5 Biswas
situate in the revenue estate of villages Durgapura, Jhalan Chod,
Sanganer and Dhol-ka-Bad in District Jaipur, stood notified under
Section 4(1) of the Rajasthan Land Acquisition Act, 1953 (hereinafter
referred to as the `Act’) on 18.7.1979, for a public purpose i.e.
industrial development, to be executed by the appellant Rajasthan
State Industrial Development and Investment Corporation (in short
‘RIICO’).
B. Declaration under Section 6 of the Act was made on 22.6.1982
for the land admeasuring 591 Bighas and 17 Biswas. After meeting all
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requisite statutory requirements contained in the Act, possession of
the land, was taken over by the Government and was subsequently
handed over to appellant-RIICO, on 18.10.1982 and 17.11.1983. The
Land Acquisition Collector assessed the market value of the land and
made an award on 14.5.1984. RIICO made allotment of land
admeasuring 105 acres vide allotment letter dated 10.3.1988 to the
respondent no.1 company, to facilitate the establishment of a Gem
Industrial Estate for the manufacturing of Gem stones.
C. In pursuance of the aforesaid allotment letter, a lease deed was
executed between the appellant and respondent-company on
22.5.1989, with a clear stipulation that the land was allotted on an “as
is-where-is”, and that the respondent-company must complete the said
project within a period of 5 years, and further that, in the event that
the terms and conditions of the lease agreement were not complied
with, the appellant would be entitled to recover its possession in
addition to which, various other conditions were also incorporated
therein.
D. After possession was taken by the respondent-company,
construction could be carried only on a portion of the land allotted to
it. As the development work was being carried out at an extremely
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slow pace, the appellant issued various notices from time to time,
reminding the respondent-company that it was under an obligation to
complete the project within a specified period, owing to which, it
must accelerate work. Additionally, there also arose some difficulty
with respect to the respondent-company’s attempts to sub-lease the
said premises, or parts thereof, and in view of this, an amendment
dated 4.11.1991 was inserted in Rule 11-A of the Rajasthan Land
Revenue (Industrial area Allotment) Rules, 1959 (hereinafter referred
to as the ‘Rules 1959’), enabling the company to sub-lease the said
land.
E. The appellant vide notice dated 4.7.1992, informed the
respondent-company, that as per clause 2(n) of the lease deed, all
construction had to be completed within a stipulated time period of 5
years. The respondent-company began asking the appellant to provide
it accessibility via road, from the Jaipur Tonk main road and, as the
same was not provided, the respondent-company filed Writ Petition
No. 5481 of 1994 before the High Court, seeking the issuance of a
direction to the appellant to provide to it, the aforesaid road.
F. During the pendency of the aforesaid writ petition, the appellant
expressing its dis-satisfaction with regard to the progress of the
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development of the said land by the respondent-company, filed a reply
to the said writ petition before the High Court stating that it was not
under any obligation to provide to the respondent-company the
aforementioned approach road, as the lease deed had been executed
between them, on the basis of an “as-is-where is” agreement. Further,
the appellant issued a show cause notice dated 29.8.1996, to
determine the lease in light of the lease agreement, in lieu of the fact
that the respondent-company had not made any progress regarding the
completion of the project, and even after the expiry of a period of 5
years, only 10% of the total construction stood completed. In
pursuance thereof, the lease deed was cancelled vide order dated
1.10.1996, and possession of the land in dispute was taken back by the
appellant on 3.10.1996.
G. The respondent-company filed another Writ Petition No. 105 of
1997, challenging the cancellation order dated 1.10.1996 and the
taking over of possession by the appellant on 3.10.1996. The appellant
contested the said writ petition on the grounds that it was entitled to
restoration of possession, as the respondent-company had failed to
ensure compliance with the terms and conditions incorporated in the
lease deed, according to which, the company was required to complete
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the said project within a period of 5 years. However, presently, the
extent of development completed by it stood at 10%. Therefore, in
light of the aforementioned circumstances, the appellant had no choice
but to cancel the lease deed and take back possession.
H. The High Court vide its impugned judgment and order, allowed
both the writ petitions quashing the order of cancellation, and directed
the restoration of possession of the aforesaid land to the respondentcompany, and further, also directed the appellant to provide to the
respondent-company, the approach/access road demanded by it.
Hence, these appeals.
3. Shri Dhruv Mehta, learned senior counsel appearing on behalf
of the appellant-RIICO, and Shri Manish Singhvi, learned Additional
Advocate General for the State of Rajasthan have submitted that, as
the allotment of the land had been made to the respondent-company
on an ‘as-is-where-is” basis, there was no obligation on the part of
RIICO to provide to it, the said access road. The terms of the contract
must be interpreted by court, taking into consideration the intention of
the parties and not on the basis of equitable grounds. Moreover, the
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cancellation of the deed was in accordance with the terms and
conditions incorporated in the lease deed, and therefore, in light of
the facts and circumstance of the case, the High Court has committed
an error, by quashing the order of cancellation and, in issuing a
direction for the restoration of possession and for the provision of the
access road.
The High Court has mis-interpreted the amendment to Rule 11-
A of the Rules 1959, and has thus held that the appellant had no
jurisdiction to cancel the said lease, as the respondent-company by
virtue of the operation of the amended provision, had become a direct
lessee of the State. In such a fact-situation, there was no obligation on
the part of the appellant to provide the approach road as it was not the
lessor of the respondent-company. In case by virtue of the amendment
in Rule 11-A of the Rules 1959, the State Government became the
lessor, the appellant-RIICO lost the title/interest over the property
which had been acquired by it on making payment of the huge money
and that too, without getting any refund. Such an interpretation leads
to absurdity. Thus, the appeals deserve to be allowed.
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4. Per contra, Shri P.S. Patwalia, learned senior counsel appearing
for the respondent-company, has submitted that the judgment and
order of the High Court does not require any interference whatsoever,
for the reason that the respondent-company had been invited to
establish and develop the Gem Stone industrial park at Jaipur. In view
of the fact, that the amendment to Rule 11-A of the Rules 1959 was
made exclusively to facilitate the respondent-company to sub-lease a
part of the developed premises, the High Court has rightly held that
the State Government became the lessor and that, RIICO had no
concern whatsoever in relation to the said matter, owing to which, it
had no competence to cancel the lease. In the light of the fact that
RIICO was in possession of other lands surrounding the land in
question, the High Court has directed it to provide to the respondentcompany, an access road on equitable grounds, taking into
consideration the fact that, in the event that the respondent-company’s
area remained land locked, it would be impossible for it to develop the
project, and has stated that not providing the access road was in fact,
the basic reason for delay in development. Thus, the appeals lack
merit and, are liable to be dismissed.
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5. We have considered the rival submissions made by learned
counsel for the parties and perused the record.
Before proceeding further, it may be pertinent to refer to the
relevant statutory provisions, and certain terms of the lease deed.
Rule 11-A of the Rules 1959 read :
“………………….
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Clause (iv) of Rule 11-A.- The Rajasthan State Industrial
Development and Investment Corporation Ltd. may sublease the leased land or part thereof for industrial
purpose; including essential welfare and supporting
services. Provided that in the case of Diamond and Gem
Development Corporation to whom the land has already
been leased out by RIICO for 99 years, the sub-lessee i.e.
DGDC may further sublet and the terms and conditions
and other provisions contained in the rules in so far as
they relate to RIICO shall mutatis mutandis apply to
DGDC also as if the land in question has been let out to
them by State Government under Rule 11-A.”
(Emphasis added)
6. There has been further amendment to Rule 11-A of the Rules
1959 w.e.f. 12.10.2000, and the relevant part thereof reads as under:
“In Rule 11-A of the said rules, after
condition (iv) and before condition (v), the
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following new condition (iv-a) shall be
inserted; namely:-
(iv-a) The sub lessee of the Rajasthan State
Industrial Development and Investment
Corporation Limited may further sub-lease
the sub-leased land or part thereof on such
terms and conditions as may be mutually
agreed between such sub-lessee and
subsequent sub-lessee. The terms and
conditions applicable to sub-lessee shall
also mutatis mutandis apply to such
subsequent sub-lessee”.
7. Rajasthan State Industrial & Investment Corporation Limited
(Disposal of Land) Rules, 1979 (hereinafter referred to as `Rules
1979’), deals with the allotment of land by RIICO to entrepreneurs.
Relevant rules thereof read as under:
“16. The allottee shall not except with the written consent
of the Corporation, be allowed to sublet the constructed
premises for industrial purpose only which can be
considered on following conditions:
(i) The sub-letting of vacant and/or unutilized land in
the industrial areas of the Corporation shall not be
allowed.
(ii) That consent of the Managing Director be given to
the allottee of the plot (owner) to sublet the whole or part
of the constructed premises after the allottee has cleared
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all the outstanding dues of the Corporation and started
the production at the allotted plot on the following
conditions:
(iii) xx xx xx
(iv) Permission for transfer of surplus/unutilized land
with the units which have come into commercial
production shall be granted on payment of premium as
may be decided by the Corporation from time to time
which is presently equal to 50% rate of development
charges at the time of such transfer of difference amount
between the prevailing rates of development charges and
the rates of development charges on which the allotment
was made whichever is higher.
24. Cancellation- The Corporation shall have the right
to cancel the allotment after issuing 30 days show cause
notice to the allottee by the concerned Senior Regional
Manager/Regional Manager on any breach of any of
these rules, condition of allotment letter and terms of
lease agreement.”
8. It may also be pertinent to refer the relevant terms and
conditions of lease deed dated 22.5.1989, which read as under:
“AND WHEREAS the lessor has agreed to demise and
the lessor has agreed to take on lease, the piece of land
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known as plot no. SP-1 Indusrial Area, Sanganer, PhaseII on “as is where is basis”:
xx xx xx
2(b) That the lessee will bear, pay and discharge all
service charges as may be decided by the lessor from
time to time which for the present would be @ Rs.10.10
(Ten paisa per sq.mtrs.) per year from the date, the
lessor provided as pucca links road in this area.
xx xx xx
(d) That the lessee will erect on the demised premises
…..and will commence such construction within the
period of 6 months and will completely finish the same fit
for use and start production within the period of 60
months from the date of these presents or within such the
case of these presents, or within such the date of these
presents or within such extended period of time as may
be allowed by the lessor in writing at its discretion.
xx xx xx
(g) That the lessee will provide and maintain in good
repair a properly constructed approached road or path
alongwith the event across drain to the satisfaction of the
lessor/local Municipal Authority leading from the
public/cooperation road to the building to be erected on
the demises premises.
xx xx xx
(i) The lessee will not without the general prior
consent in writing of the lessor transfer, sublet,
relinquish, mortgage or assign his interest in the demised
premises……..
xx xx xx
(m) ………That lessee shall construct and complete the
said building and put the demised premises with the
buildings constructed thereon to use hereinabove
mentioned within 54 calendar months from the date of
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possession of the said land is handed over to him and in
any case within 60 calendar months from the date of this
agreement provided that the lessor may at his discretion
extend the time hereinbefore provided if in his opinion
the delay is caused for reasons beyond the control of the
lessee. Provided that utilized land of the allotted plot of
land shall revert to the Corporation on the expiry of the
prescribed/extended period for starting production/
expansion of the unit.
xx xx xx
(r) The lessee will in each year within 2 months from
the expiry of the account in year supply to the lessor a
copy of his profit and loss account pertaining to the
accounting year and the business run by him in the
demised premises.
3(a) Notwithstanding anything hereinbefore contained
if there shall have been in opinion of the lessor any
breach by the lessor…. or if the lessee fails to commence
and complete the buildings in time and manner it shall
be lawful for the lessor ….to reenter without taking
recourse to the Court of law up on the demised premises
or any part there of his name of whole and there on this
demise shall absolutely cease and determine and the
money paid by the Lessee by virtue of these preset shall
stand forfeited to the lessor without prejudice to rights of
the lessor here under with interest thereon at @19% per
annum and the Lessee shall not be entitled to any
compensation whatsoever.
xx xx xx
3(h) Every dispute, difference or question touching or
arising out or in respect of this agreement to the subject
matter shall be referred to the sole arbitrator, the
Collector of the District wherein the leased plot is
situated or a, person appointed by him. The decision of
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such arbitrator shall be final and binding on the
parties.”
Before entering into merits of the case, it is required to deal
with the legal issues involved herein:
I. Approbate and Reprobate
9. A party cannot be permitted to “blow hot-blow cold”, “fast and
loose” or “approbate and reprobate”. Where one knowingly accepts
the benefits of a contract, or conveyance, or of an order, he is
estopped from denying the validity of, or the binding effect of such
contract, or conveyance, or order upon himself. This rule is applied to
ensure equity, however, it must not be applied in such a manner, so as
to violate the principles of, what is right and, of good conscience.
(Vide: Nagubai Ammal & Ors. v. B. Shama Rao & Ors., AIR
1956 SC 593; C.I.T. Madras v. Mr. P. Firm Muar, AIR 1965 SC
1216; Ramesh Chandra Sankla etc. v. Vikram Cement etc., AIR
2009 SC 713; Pradeep Oil Corporation v. Municipal Corporation
of Delhi & Anr., AIR 2011 SC 1869; Cauvery Coffee Traders,
Mangalore v. Hornor Resources (International) Company
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Limited, (2011) 10 SCC 420; and V. Chandrasekaran & Anr. v.
The Administrative Officer & Ors., JT 2012 (9) SC 260).
10. Thus, it is evident that the doctrine of election is based on the
rule of estoppel- the principle that one cannot approbate and reprobate
is inherent in it. The doctrine of estoppel by election is one among the
species of estoppels in pais (or equitable estoppel), which is a rule of
equity. By this law, a person may be precluded, by way of his actions,
or conduct, or silence when it is his duty to speak, from asserting a
right which he would have otherwise had.
II. Mutatis Mutandis - means
11. In M/s. Ashok Service Centre & Anr. etc. v. State of Orissa,
AIR 1983 SC 394, this court held as under:
“Earl Jowitt's 'The Dictionary of English
Law 1959)' defines 'mutatis mutandis' as
'with the necessary changes in points of
detail'. Black's Law Dictionary (Revised 4th
Edn.1968) defines 'mutatis mutandis' as
'with the necessary changes in points of
detail, meaning that matters or things are
generally the same, but to be altered when
necessary, as to names, offices, and the
like…’Extension of an earlier Act mutatis
mutandis to a later Act, brings in the idea of
adaptation, but so far only as it is necessary
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for the purpose, making a change without
altering the essential nature of the things
changed, subject of course to express
provisions made in the later Act….In the
circumstances the conclusion reached by
the High Court that the two Acts were
independent of each other was wrong. We
are of the view that, it is necessary to read
and to construe the two Acts together as if
the two Acts are one, and while doing so to
give effect to the provisions of the Act which
is a later one in preference to the provisions
of the Principal Act wherever the Act has
manifested an intention to modify the
Principal Act…”
Similarly, in Prahlad Sharma v. State of U.P. & Ors., (2004)
4 SCC 113, the phrase ‘mutatis mutandis’ has been explained as
under:
“The expression “mutatis mutandis” itself
implies applicability of any provision with
necessary changes in points of detail….”
(See also: Mariyappa & Ors. v. State of Karnataka & Ors., AIR
1998 SC 1334; and Janba (dead) thr. Lrs. v. Gopikabai (Smt.), AIR
2000 SC 1771).
Thus, the phrase “mutatis mutandis” implies that a provision
contained in other part of the statute or other statutes would have
application as it is with certain changes in points of detail.
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III. Contractual disputes and writ jurisdiction
12. There can be no dispute to the settled legal proposition that
matters/disputes relating to contract cannot be agitated nor terms of
the contract can be enforced through writ jurisdiction under Article
226 of the Constitution. Thus, writ court cannot be a forum to seek
any relief based on terms and conditions incorporated in the
agreement by the parties. (Vide: Bareilly Development Authority &
Anr. v. Ajay Pal Singh & Ors., AIR 1989 SC 1076; and State of
U.P. & Ors. v. Bridge & Roof Co. (India) Ltd., AIR 1996 SC
3515).
13. In Kerala State Electricity Board & Anr. v. Kurien E.
Kalathil & Ors., AIR 2000 SC 2573, this Court held that a writ
cannot lie to resolve a disputed question of fact, particularly to
interpret the disputed terms of a contract observing as under:
“The interpretation and implementation of a
clause in a contract cannot be the subjectmatter of a writ petition. ….If a term of a
contract is violated, ordinarily the remedy is
not the writ petition under Article 226. We
are also unable to agree with the
observations of the High Court that the
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contractor was seeking enforcement of a
statutory contract…..The contract between
the parties is in the realm of private law. It
is not a statutory contract. The disputes
relating to interpretation of the terms and
conditions of such a contract could not have
been agitated in a petition under Article 226
of the Constitution of India. That is a matter
for adjudication by a civil court or in
arbitration if provided for in the contract….
The contractor should have relegated to
other remedies.”
14. It is evident from the above, that generally the court should not
exercise its writ jurisdiction to enforce the contractual obligation. The
primary purpose of a writ of mandamus, is to protect and establish
rights and to impose a corresponding imperative duty existing in law.
It is designed to promote justice (ex debito justiceiae). The grant or
refusal of the writ is at the discretion of the court. The writ cannot be
granted unless it is established that there is an existing legal right of
the applicant, or an existing duty of the respondent. Thus, the writ
does not lie to create or to establish a legal right, but to enforce one
that is already established. While dealing with a writ petition, the
court must exercise discretion, taking into consideration a wide
variety of circumstances, inter-alia, the facts of the case, the exigency
that warrants such exercise of discretion, the consequences of grant or
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refusal of the writ, and the nature and extent of injury that is likely to
ensue by such grant or refusal.
15. Hence, discretion must be exercised by the court on grounds of
public policy, public interest and public good. The writ is equitable in
nature and thus, its issuance is governed by equitable principles.
Refusal of relief must be for reasons which would lead to injustice.
The prime consideration for the issuance of the said writ is, whether
or not substantial justice will be promoted. Furthermore, while
granting such a writ, the court must make every effort to ensure from
the averments of the writ petition, whether there exist proper
pleadings. In order to maintain the writ of mandamus, the first and
foremost requirement is that the petition must not be frivolous, and
must be filed in good faith. Additionally, the applicant must make a
demand which is clear, plain and unambiguous. It must be made to an
officer having the requisite authority to perform the act demanded.
Furthermore, the authority against whom mandamus is issued, should
have rejected the demand earlier. Therefore, a demand and its
subsequent refusal, either by words, or by conduct, are necessary to
satisfy the court that the opposite party is determined to ignore the
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demand of the applicant with respect to the enforcement of his legal
right. However, a demand may not be necessary when the same is
manifest from the facts of the case, that is, when it is an empty
formality, or when it is obvious that the opposite party would not
consider the demand.
IV. Interpretation of terms of contract
16. A party cannot claim anything more than what is covered by the
terms of contract, for the reason that contract is a transaction between
the two parties and has been entered into with open eyes and
understanding the nature of contract. Thus, contract being a creature
of an agreement between two or more parties, has to be interpreted
giving literal meanings unless, there is some ambiguity therein. The
contract is to be interpreted giving the actual meaning to the words
contained in the contract and it is not permissible for the court to
make a new contract, however is reasonable, if the parties have not
made it themselves. It is to be interpreted in such a way that its terms
may not be varied. The contract has to be interpreted without giving
any outside aid. The terms of the contract have to be construed strictly
without altering the nature of the contract, as it may affect the interest
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of either of the parties adversely. (Vide: United India Insurance Co.
Ltd. v. Harchand Rai Chandan Lal, AIR 2004 SC 4794; Polymat
India P. Ltd. & Anr. v. National Insurance Co. Ltd. & Ors., AIR
2005 SC 286).
17. In DLF Universal Ltd. & Anr. v. Director, T. and C.
Planning Department Haryana & Ors., AIR 2011 SC 1463, this
court held:
“It is a settled principle in law that a contract
is interpreted according to its purpose. The
purpose of a contract is the interests,
objectives, values, policy that the contract is
designed to actualise. It comprises joint intent
of the parties. Every such contract expresses
the autonomy of the contractual parties’
private will. It creates reasonable, legally
protected expectations between the parties
and reliance on its results. Consistent with
the character of purposive interpretation, the
court is required to determine the ultimate
purpose of a contract primarily by the joint
intent of the parties at the time the contract so
formed. It is not the intent of a single party; it
is the joint intent of both parties and the joint
intent of the parties is to be discovered from
the entirety of the contract and the
circumstances surrounding its formation. As
is stated in Anson's Law of Contract, "a basic
principle of the Common Law of Contract is
that the parties are free to determine for
themselves what primary obligations they will
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accept...Today, the position is seen in a
different light. Freedom of contract is
generally regarded as a reasonable, social,
ideal only to the extent that equality of
bargaining power between the contracting
parties can be assumed and no injury is done
to the interests of the community at large."
The Court assumes "that the parties to the
contract are reasonable persons who seek to
achieve reasonable results, fairness and
efficiency...In a contract between the joint
intent of the parties and the intent of the
reasonable person, joint intent trumps, and
the Judge should interpret the contract
accordingly.”
V. “As-is-where-is” – means
18. The phrase, “as is-where-is”, has been explained by this Court
in Punjab Urban Planning & Development Authority & Ors. v.
Raghu Nath Gupta & Ors., (2012) 8 SCC 197, holding as under:
“We notice that the respondents had
accepted the commercial plots with open
eyes, subject to the abovementioned
conditions. Evidently, the commercial plots
were allotted on “as-is-where-is” basis. The
allottees would have ascertained the
facilities available at the time of auction
and after having accepted the commercial
plots on “as-is-where-is” basis, they cannot
be heard to contend that PUDA had not
provided the basic amenities like parking,
lights, roads, water, sewerage, etc. If the
allottees were not interested in taking the
commercial plots on “as-is-where-is” basis,
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they should not have accepted the allotment
and after having accepted the allotment on
“as-is-where-is” basis, they are estopped
from contending that the basic amenities
like parking, lights, roads, water, sewerage,
etc. were not provided by PUDA when the
plots were allotted…”
(See also: UT Chandigarh Admn. & Anr. v. Amarjeet Singh &
Ors., (2009) 4 SCC 660).
VI. “As if” – means
19. The expression “as if”, is used to make one applicable in
respect of the other. The words "as if" create a legal fiction. By it,
when a person is "deemed to be" something, the only meaning
possible is that, while in reality he is not that something, but for the
purposes of the Act of legislature he is required to be treated that
something, and not otherwise. It is a well settled rule of interpretation
that, in construing the scope of a legal fiction, it would be proper and
even necessary, to assume all those facts on the basis of which alone,
such fiction can operate. The words “as if”, in fact show the
distinction between two things and, such words must be used only for
a limited purpose. They further show that a legal fiction must be
limited to the purpose for which it was created. (Vide:
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Radhakissen Chamria & Ors. v. Durga Prasad Chamria & Anr.,
AIR 1940 PC 167; Commr. of Income-tax, Delhi v. S. Teja Singh,
AIR 1959 SC 352; Ram Kishore Sen & Ors. v. Union of India &
Ors., AIR 1966 SC 644; Sher Singh v. Union of India & Ors., AIR
1984 SC 200; State of Maharashtra v. Laljit Rajshi Shah & Ors,
AIR 2000 SC 937; Paramjeet Singh Patheja v. ICDS Ltd. AIR
2007 SC 168; and Commissioner of Income Tax v. Willamson
Financial Services & Ors. (2008) 2 SCC 202).
20. In East End Dwelling Co. Ltd. v. Finsbury Borough
Council, 1952 AC 109, this Court approved the approach which stood
adopted and followed persistently. It set out as under:
“The statute says that you must imagine a
certain state of affairs; it does not say that
having done so, you must cause or permit
your imagination to boggle when it comes to
the inevitable corollaries of that state of
affairs".
21. In Industrial Supplies Pvt. Ltd. & Anr. v. Union of India &
Ors., AIR 1980 SC 1858, this Court observed as follows:-
"It is now axiomatic that when a legal fiction is
incorporated in a statute, the court has to
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ascertain for what purpose the fiction is created.
After ascertaining the purpose, full effect must be
given to the statutory fiction and it should be
carried to its logical conclusion. The court has to
assume all the facts and consequences which are
incidental or inevitable corollaries to giving effect
to the fiction. The legal effect of the words 'as if he
were' in the definition of owner in Section 3(n) of
the Nationalisation Act read with Section 2(1) of
the Mines Act is that although the petitioners were
not the owners, they being the contractors for the
working of the mine in question, were to be treated
as such though, in fact, they were not so."
(Emphasis
added)
22. The instant case is required to be decided in the light of the
aforesaid settled legal propositions.
The terms and conditions incorporated in the lease deed reveal
that, the allotment was made on “as-is- where-is” basis. The same was
accepted by the respondent-company without any protest, whatsoever.
The lease deed further enabled the appellant to collect charges, in case
it decided to provide the approach road. Otherwise, it would be the
responsibility of the respondent-company to use its own means to
develop such road, and there was absolutely no obligation placed
upon the appellant to provide to the respondent the access road. As the
respondent-company was responsible for the creation of its own
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infrastructure, it has no legal right to maintain the writ petition, and
courts cannot grant relief on the basis of an implied obligation. The
order of the High Court is in contravention of clause 2(g) of the lease
deed.
23. The State of Rajasthan had acquired the land in exercise of its
eminent domain and transferred the same to the appellant-RIICO after
receiving the consideration amount and executed the lease deed in its
favour. The State exercised its power in transferring the land to
RIICO under the Rules 1959. However, further allotment by RIICO to
the respondent-company was under the Rules 1979. Therefore, the
High Court committed an error treating that the whole case was
governed only under the Rules 1959, and that Rules 1979 had no
application at all.
24. The High Court recorded a finding, as regards the submission
made on behalf of the appellant-RIICO, stating that the audit
conducted by it showing various irregularities and pointing out the
mis-appropriation of public funds by the respondent-company, was a
matter entirely unrelated to the allotment and development of the said
26Page 27
land. Rule 11-A of the Rules 1959, as amended created a legal fiction
by which the respondent-company had become a lessee and the State
of Rajasthan, the lessor and therefore the order passed by the
appellant-RIICO, was wholly without jurisdiction, as after 4.11.1991,
RIICO had no authority whatsoever, to cancel the allotment of land
made in favour of the respondent-company, since it was only the State
of Rajasthan that had the authority to cancel the said allotment; by not
providing for an access road, the purpose for which allotment was
made by RIICO stood defeated, and this was what had resulted in the
delay of the development of the said land, and in such a fact-situation,
cancellation of land was not permissible; there was a constructive
obligation on the part of the appellant-RIICO to provide an approach
road with respect to the land which was allotted; and that RIICO had
failed to co-operate with the respondent-company to accomplish the
task it had undertaken, and that the order of cancellation was liable to
be set aside for lack of jurisdiction and for want of competence.
25. The aforesaid reasons given by the High Court are mutually
inconsistent. When the High Court came to the conclusion that the
appellant-RIICO had no competence to deal with the land and to
27Page 28
cancel the allotment made in favour of the respondent-company, there
was no justification to hold RIICO responsible for providing the
approach road. Such a finding could be permissible only if the
appellant-RIICO had competence to deal with the land in dispute.
26. The High Court also erred in holding that the provision of
providing the access road was an obligation on the part of the
appellant-RIICO, deciding this on equitable grounds. The terms of the
lease deed clearly stipulated that in case the appellant-RIICO provides
the access road, it will be vested with the right to collect the charges
incurred by it from the respondent-company, therein, and in the
alternative, it would be the obligation of the respondent-company to
develop its own infrastructure, and the same would include
development of the access road. Therefore, the appellant-RIICO was
not under any obligation to provide the said access road.
27. The interpretation given to the amended Rule 11-A of the Rules
1959 by the High Court, takes away the vested right of the appellantRIICO in the title as well as in the interest that it had acquired in the
28Page 29
property, as it had paid the entire amount for the land to the State
when possession of land was handed over to it.
Rule 11-A of the Rules 1959 was amended only to facilitate the
respondent-company to grant further sub-lease and not to divest
RIICO from its rights and title. It was found necessary in wake of
difficulties faced by the respondent-company as it was not permissible
for it to grant further sub-lease. Thus, the rule provided a deeming
clause/fiction that for the purpose of sub-lease by the respondentcompany to further allottees, it would be deemed that the State
Government had executed the lease in favour of the respondentcompany. The terms “mutatis mutandis”, and “as if”, used in the
amended provisions of Rule 11-A of the Rules 1959 simply facilitated
the sub-letting of a part of the premises by the respondent-company,
and did not take away the title and rights that the appellant-RIICO had
over the land.
The Rule 11-A of the Rules 1959 has further been amended on
12.10.2000 enabling all the allottees of RIICO to sub-lease further.
Thus, if the interpretation given by the High Court is accepted, the
appellant RIICO looses all its lands and properties and rendered the
29Page 30
development authority existing on papers only, without any
status/authority.
28. The ultra activist view articulated by the High Court on the
basis of supposed intention and imaginative purpose to the
amendment act, is uncalled for and ought to have been avoided. It
rendered the appellant-RIICO totally insignificant and irrelevant
without realising that the appellant-RIICO had autonomous
functioning, and the interpretation given by the High Court has
devastating effect underlying its status, authority and autonomous
functioning. In fact, by interpretation the High Court had conferred an
authoritarian role to the State, taking away the right of appellantRIICO on its property without realising that the amendment to Rule
11-A of the Rules 1959 had specifically been engrafted therein only,
for the purpose of facilitating the respondent-company to grant further
sub-lease. Thus, it is evident that the High Court decided the case on
speculative and hypothetical reasons.
29. The terms incorporated in the lease deed itself provide for
timely completion of construction and also for the commencement of
production within a stipulated period. Records however, reveal that
30Page 31
only 10% of total construction work stood completed by the
respondent-company. No proper application was ever filed for seeking
extension of time by the respondent-company, as per the Rules. We
have been taken through the record.
While providing justification for the non-completion of
construction and commencement of production, in very vague terms,
it was submitted by the respondent-company that extension of time
was sought from statutory authorities. However, the said application
did not specify how much more time the company was seeking, and
that too, without meeting any requirements provided in the statutory
rules.
30. According to clause 2(d) of the lease deed the entire project was
to be completed within a period of five years i.e. by 25.5.1994. But it
is evident from the material on record that construction was just made
on the fraction of the entire land. Clause 2 (i) contemplated that, the
lessee will not transfer nor sub-let nor relinquish rights without prior
permission from the appellant-RIICO. However, it is evident from the
record that the respondent-company had negotiated with a third party
for development of the land.
31Page 32
31. The cancellation of allotment was made by appellant- RIICO
in exercise of its power under Rule 24 of the Rules 1979 read with the
terms of the lease agreement. Such an order of cancellation could have
been challenged by filing a review application before the competent
authority under Rule 24 (aa) and, in the alternative, the respondentcompany could have preferred an appeal under Rule 24(bb)(ii) before
Infrastructure Development Committee of the Board. The respondentcompany ought to have resorted to the arbitration clause provided in
the lease deed in the event of a dispute, and the District Collector,
Jaipur would have then, decided the case. However, the respondentcompany did not resort to either of the statutory remedy, rather
preferred a writ petition which could not have been entertained by the
High Court. It is a settled law that writ does not lie merely because it
is lawful to do so. A person may be asked to exhaust the
statutory/alternative remedy available to him in law.
32. In view of the above, the appeals deserve to be allowed. Thus,
the appeals are allowed. Judgment and order impugned are set aside
and the order of cancellation of allotment in favour of the respondent-
32Page 33
company by the appellant is restored. However, in the facts and
circumstances of the case, there shall be no order as to costs.
………………………J.
(Dr. B.S. CHAUHAN)
………………………J.
(V. GOPALA
GOWDA)
New Delhi,
February 12, 2013
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