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Madhya Pradesh Road Transport Corporation (hereinafter referred to as “MPRTC – Indore Development Authority – leased the land of 10 acres for 30 years -BOT Scheme.- Govt. decided to wind up the MPRTC – Lease deed was cancelled – Writ by Highest Bidder for deliver of possession of land – Writ by MPRTC challenging the cancellation – High court directions to settle the matter between two Govt. Bodies – Not challenged – Doctrine of Self Frustration – Apex court held that Doctrine self frustration not applies to India Law – Lease terminated validly – Remedy is a civil suit but not writ – dismissed the SLP = Sri Ram Builders …Appellant VERSUS State of M.P. & Ors. …Respondents =2014 (April. Part)http://judis.nic.in/supremecourt/filename=41477

 Madhya Pradesh Road Transport Corporation  (hereinafter  referred   to   as   “MPRTC – Indore

  Development  Authority  – leased the land of 10 acres for 30 years –BOT  Scheme.- Govt. decided to wind up the MPRTC – Lease deed was cancelled – Writ by Highest Bidder for deliver of possession of land – Writ by MPRTC  challenging  the cancellation – High court directions to settle the matter between two Govt. Bodies – Not challenged – Doctrine of Self Frustration – Apex court held that Doctrine self frustration not applies to India Law – Lease terminated validly – Remedy is a civil suit but not writ – dismissed the SLP = 

 In 1979, Respondent No.2 / Madhya Pradesh Road Transport

              Corporation  (hereinafter  referred   to   as   “MPRTC”)

              proposed to  construct  a  bus  stand  at  Vijay  Nagar,

              Indore. To this end, an Agreement for  Lease  dated  2nd

              November, 1981 was entered into  between  the  Transport

              Corporation  and  Respondent   No.5/              Indore

              Development  Authority  (hereinafter  referred   to   as

              “IDA”), by which the land belonging to IDA,  admeasuring

              10 acres situated at Vijay  Nagar,  Indore  (hereinafter

              referred  to  as  “proposed  site”)  was  agreed  to  be

              allotted to the Transport Corporation, initially, for 30

              years. In pursuance of the Lease  Agreement,  possession

              of the proposed site was handed over to the MPRTC.=

 

     A  lease  deed  dated  2nd  November,  1981  was

              entered into between MPRTC and IDA.  The  possession  of

              the land was handed over to MPRTC on 22nd January, 1982.

              Initially, the lease was taken  by  the  MPRTC  for  the

              purpose of  a  bus  stand.  It  appears  that  no  final

              decision was taken till  8th  November,  2001  when  the

              Council of Ministers of the State Government  authorized

              the construction of a commercial  complex  on  the  land

              under  BOT  Scheme.  A  tender  notice  was  issued   on

              13th April, 2002. On 7th July,  2003,  the  bid  of  the

              appellant was found to be the  highest.  The  amount  as

              mentioned in Para  6  earlier,  was  duly  paid  by  the

              appellant. A separate agreement was entered into between

              MPRTC and the appellant on 4th February, 2004 which read

              alongwith the tender document provided as under:

                 “The successful promoters/builders will have the  right  to

                 market  the  saleable  space  made  available  to  him   on

                 different floors in the commercial complex, collect premium

                 on such allotment from prospective buyers.”  

On 25th May, 2004, MPRTC  deposited  the  lease  rental

              with IDA. A formal lease was executed on            26th

              May,  2004.  As  noticed  earlier,  the  lease  was  for

              30 years. The leased land (plot) was to be used only for

              the bus terminal. It was specifically provided that  the

              plot cannot be divided. The possession of the  plot  had

              been received on 22nd  January,  1982.  The  lease  also

              provided that the Rules published in the gazette on 16th

              December, 1977 shall be binding on the lessee.  Rule  40

              of the aforesaid Niyam/Rules read as under :

                 “The lessee may take possession of the  plot  on  the  date

                 fixed or notified to him for taking over possession of  the

                 plot and the lease of the plot shall commence from the date

                 irrespective of the fact  “whatsoever,  possession  of  the

                 plot has been taken or not and the  lessee  shall  pay  all

                 rates and taxes where leviable the owner or the lessee from

                 the date.”

 

 

          46. On 24th June, 2004, IDA gave its no  objection  for  bus

              terminal-cum-commercial complex to be constructed  under

              the BOT  Scheme.  On  18th  December,  2005,  the  State

              Government decided to wind up the MPRTC. The proposal of

              the State Government was not approved by the Ministry of

              Shipping and Road Transport,  Government  of  India.  On

              17th November, 2008, a letter was issued  informing  the

              State  Government  that  the  Ministry  of  Labour   had

              declined to grant permission for closure  under  Section

              25-O of  the  Industrial  Disputes  Act,  1947.  On  5th

              August, 2005, the directions were  issued  by  the  High

              Court in the writ petition filed by the  appellant.  SLP

              filed against these directions  was  dismissed  by  this

              Court on 7th October, 2005.  In  the  contempt  petition

              filed  by  the  appellant  for  non  compliance  of  the

              directions of the High Court  dated         5th  August,

              2005,  MPRTC  was  restrained  from  handing  over   the

              possession of the property  or  to  create  third  party

              interest/rights. On 2nd November, 2007,  the  lease  was

              cancelled by IDA on the ground that MPRTC  had  violated

              the prescribed conditions by handing over the possession

              to RTO. As noticed  earlier,  the  cancellation  of  the

              lease  was  challenged  by  MPRTC,  by  way  of  a  writ

              petition, which was disposed of by  the  High  Court  on

              11th December, 2007 by referring the entire issue to the

              Chief Secretary. The appellant  did  not  challenge  the

              order dated 2nd November,  2007  but  submitted  to  the

              jurisdiction  of  the  Chief  Secretary  by   filing   a

              comprehensive representation. Even in the writ  petition

              in  which  the  impugned  order  had  been  passed,  the

              appellant had only challenged Clauses III, IV and  V  of

              the order of the Chief Secretary.

 

 

 the lease has come  to

              an end by efflux of time.  This apart, MPRTC is  heavily

              indebted and had sought permission of the State and  the

              Union of India to wind up. Furthermore, there was also a

              breach of the terms and conditions of the lease  on  the

              basis of which it has been terminated in accordance with

              law.

 

 

          59. In any event,  these  are  issues  which  would  involve

              adjudication of disputed questions  of  fact  which  can

              only be  suitably  adjudicated  in  the  civil  suit  as

              directed by the High Court in the impugned judgment. The

              appellant shall be  at  liberty  to  seek  its  remedies

              against MPRTC for breach of  contract.   Our  conclusion

              that  the  High  Court  was  right  in   rejecting   the

              contentions of the Appellant herein is also supported by

              the law  laid  in  Rajasthan  Housing   Board  vs.  G.S.

              Investments (supra) which was relied upon by  Mr.  Cama.

              We may notice here the following excerpt:

 

 

                 “..the Court should exercise its discretionary power  under

                 Article 226 of the Constitution with great care and caution

                 and should  exercise  it  only  in  furtherance  of  public

                 interest. The Court should always keep  the  larger  public

                 interest in mind in  order  to  decide  whether  it  should

                 interfere with the decision of the authority.”         

For the aforesaid reasons, we see  no  merit  in  the

           appeals.  The civil appeals are, therefore, dismissed.

2014 (April. Part)http://judis.nic.in/supremecourt/filename=41477   
SURINDER SINGH NIJJAR, A.K. SIKRI

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4896 OF 2014
(Arising out of S.L.P. (C) No. 35001 of 2012)
Sri Ram Builders
…Appellant
VERSUS
State of M.P. & Ors.
…Respondents
WITH
CIVIL APPEAL NO. 4897 OF 2014
(Arising out of S.L.P. (C) No. 35017 of 2012)
WITH
CIVIL APPEAL NOS.4898-4899 OF 2014
(Arising out of S.L.P. (C) Nos. 35027-35028 of 2012)
WITH
CIVIL APPEAL NO. 4900 OF 2014
(Arising out of S.L.P. (C) No. 36887 of 2012)
J U D G M E N T
SURINDER SINGH NIJJAR, J.
1. Leave granted.
2. The Civil Appeal …………of 2014 arising out of S.L.P. (C)
No. 35001 of 2012 impugning the judgment of the M.P.
High Court at Jabalpur rendered in Writ Petition No.
2937 of 2009. The Writ Petition has been disposed of
along with Review Application MCC No. 99 of 2009 and MCC
No. 893 of 2008 as well as Contempt Petition No. 469 of
2008. The writ petition has been disposed of with
certain directions. Whereas the aforesaid Contempt
Petition and the two Review Petitions have been disposed
of in view of the order passed in Writ Petition No. 2937
of 2009.
3. The relevant facts leading to the filing of the
aforesaid SLP are as follows:-
4. In 1979, Respondent No.2 / Madhya Pradesh Road Transport
Corporation (hereinafter referred to as “MPRTC”)
proposed to construct a bus stand at Vijay Nagar,
Indore. To this end, an Agreement for Lease dated 2nd
November, 1981 was entered into between the Transport
Corporation and Respondent No.5/ Indore
Development Authority (hereinafter referred to as
“IDA”), by which the land belonging to IDA, admeasuring
10 acres situated at Vijay Nagar, Indore (hereinafter
referred to as “proposed site”) was agreed to be
allotted to the Transport Corporation, initially, for 30
years. In pursuance of the Lease Agreement, possession
of the proposed site was handed over to the MPRTC.
5. The Council of Ministers, State of Madhya Pradesh, vide
order dated 8th November, 2001, authorised the Transport
Corporation to construct a commercial complex on the
land owned by it or allotted to it on lease, under a
Build, Own-Operate and Transfer (“BOT”) Scheme through
open tenders. The revenue generated from the said
project(s) was to be used to discharge the liability of
the MPRTC. On 13th April, 2003, a notice inviting bids
for selection of a developer under the BOT Scheme was
issued and published in the leading newspapers. In
response to this notice, a total number of ten
applications were received; and out of those ten
applications, five were found to have satisfied the
eligibility criteria. Appellant was placed at Sr. No.1
in the list of the candidates satisfying the eligibility
criteria. Thereafter, a Special Committee was
constituted for the scrutiny of tenders received for
construction of the bus stand/commercial premises under
the B.O.T. Scheme. On 3rd July, 2003, the Special
Committee recommended that since the premium amount
offered by the bidders was less, further negotiations be
held with all the qualified bidders. Accordingly, the
Special Committee held negotiations with the qualified
bidders on 7th July, 2003, wherein the Appellant’s bid
for the B.O.T. Scheme was found to be the highest.
6. MPRTC, after scrutiny of the financial bid and the
proposal submitted by the Appellant for B.O.T. scheme,
approved its bid vide Acceptance Letter
dated 3rd October, 2003. In the Acceptance Letter,
the Appellant was directed to deposit 25 per cent amount
of the total premium amount of Rupees One Crore Sixteen
Lac Thirty Seven Thousand Seven Hundred and Fifty
(Rs.1,16,37,750/-) within 15 days of the issuance of the
Acceptance Letter. Accordingly, Appellant deposited the
first installment of Rs.1,16,37,750/-. The appellant
also have to pay a further sum of Rs.7,33,320/- demanded
by MPRTC as consultancy fees.
7. In pursuance of the Acceptance Letter, an Agreement
dated 4th February, 2004 was entered into between the
Appellant and the MPRTC. This agreement inter alia
provided that the tender document with scope of work
general conditions, special conditions, general
specifications, list of brands and offer price bid shall
form part of the agreement.
8. The MPRTC issued a work order dated 16th March, 2004 to
the Appellant for demolishing the existing structure on
the land; to be replaced by the commercial complex. On
11th May, 2004, the State Government issued a
notification, in exercise of powers under Sections 35(2)
and 35(3) of the Madhya Pradesh Nagar Tatha Gram Nivesh
Adhiniyam, 1973 (hereinafter referred to as
“Adhiniyam”), by which out of 10 acres of land at Vijay
Nagar which had been earmarked for the bus stand
(proposed site), 3.59 acres of land was permitted to be
used for commercial purposes.
9. On 14th May, 2004, the Appellant requested the MPRTC to
hand over the possession of the proposed site, so that
the structure existing thereon could be demolished and
new bus stand-cum-commercial complex could be
constructed, in accordance with the terms and conditions
of the tender/agreement.
10. On 27TH May, 2004, a lease deed was executed in favour
of MPRTC by the IDA upon payment of
Rs. 24,27,052/- by the Appellant. This payment was made
by the Appellant in order to let the Transport
Corporation pay its arrears to IDA. Subsequently
on 24th June, 2004, IDA gave a No Objection
Certificate (“NOC”) to the MPRTC for the proposed BOT
project. Also, the Deputy Director, Town and Country
Planning granted approval to the MPRTC for the
construction of the Bus Stand and Commercial Complex.
11. On 28th June, 2004, Writ Petition No. 801 of 2004 came
to be filed by one Suresh Seth, before the Indore Bench
of the High Court of Madhya Pradesh, assailing the
Notification dated 11th May, 2004. By this notification,
as observed earlier, reservation of land use of 3.59
acres was changed by the State Government. The High
Court, vide order dated 9th September, 2004, sought
reports from the State Government as well as the MPRTC
and IDA. In their respective reports, the State
Government, MPRTC and IDA stated that the said BOT
project was in public interest and justified the
Notification dated 11th May, 2004.
12. Meanwhile on 6th January, 2005, the Joint Director, Town
and Country Planning sanctioned the detailed site plan
of proposed BOT project. The Appellant also applied the
Municipal Corporation, Indore for sanction of the
building plan, but the same was not granted on the
ground that Writ Petition No. 801 of 2004 was pending
before the High Court.
13. On 23rd February, 2005, IDA issued a certificate
indicating therein that in respect of the proposed
B.O.T. Project, premium as well as 15 years’ lease rent
had already been deposited. On the basis of the above,
the IDA indicated that there shall be no objection, if
land in question is mortgaged with any bank, financial
institution or the Government.
14. In the meanwhile, there was a move by the State
Government for closure of the MPRTC. In this context,
the Government of India granted no objection to the
State Government on 23rd March, 2005, subject to the
condition that the State Government shall ensure and be
fully responsible for ensuring compliance of any
existing/future order(s) passed by various Courts,
including Tribunals, in any/all matters relating to
MPRTC.
15. The Appellant filed Writ Petition No. 636 of 2005 in the
High Court seeking a direction to the MPRTC to
immediately hand over possession of the land in question
to the Appellant and grant permission to demolish the
existing structure. On 5th August, 2005, the Writ
Petition No. 636 of 2005 was disposed of by the High
Court with the following directions:
i. “That petitioner shall deposit the entire balance amount
within a period of one month alongwith interest @ 18%
per annum, w.e.f. July 2004 when the 2nd installment
became due
ii. Upon depositing entire amount the respondent shall
handover the vacant possession to the petitioner, within
two weeks, with a permission, to demolish the structure
as per the agreement. Respondent shall also pursue the
matter with the Municipal Corporation to handover all
part of the premises, which is in their occupation.
iii. Respondent shall deposit the map for sanction before the
competent authorities immediately, if not submitted, so
far. In case the map has already been submitted the
respondent shall give the authority to the petitioner,
to pursue the matter before the competent authorities
for obtaining the permission and shall extend all the
assistance for the purpose of obtaining permission.
iv. After taking possession, the petitioner shall construct
and hand over the construction property to the
respondent as per terms of the tender notice/agreement.
v. The competent authorities shall consider the application
of the respondent for permission and shall grant the
permission in accordance with law.”
The Appellant deposited Rs.2,95,03,752/- towards
premium and a further sum of Rs.27,53,536/- towards
interest to the MPRTC, in terms of the aforesaid order.
Thereafter, again, the Appellant requested the Respondents
herein to hand over the possession of the proposed site to
the appellant. A Notice was issued by the appellant to the
MPRTC dated 12th September, 2005, requesting to hand over
possession of the land, in terms of the directions of the
High Court dated 5th August, 2005.
16. At that stage, the Principal Secretary, Transport
Department/Respondent No. 2 herein, recorded a note
dated 15th September, 2005, questioning the
justification for constructing bus stand and observed
that the construction was not in public interest
particularly when a decision had been taken by the State
Government to wind up the MPRTC. Soon thereafter, the
MPRTC filed Special Leave Petition No. 20038 of 2005
before this Court challenging the order dated 5th
August, 2005 passed by the High Court. This SLP was
dismissed by this Court vide order dated 7th October,
2005.
17. Possession of the proposed site still not having been
delivered, the Appellant filed Contempt Petition No. 466
of 2005 (renumbered as Contempt Petition No. 469 of
2008) before the High Court of Madhya Pradesh. In this
Contempt Petition, the Appellant moved an application
for injunction on 11th November, 2005 (I.A. No. 1060 of
2005) restraining the MPRTC from handing over the
possession of the proposed site to the State Government
for establishing the Regional Transport Office. The High
Court on 14th November, 2005, directed MPRTC to maintain
status quo and not to handover the possession of the
proposed site or to create any 3rd party interest. In
spite of the aforesaid order, the possession of the
proposed site was handed over by the MPRTC to the
Transport Department on 16th November, 2005, for opening
the R.T.O. A test centre for driving licences has been
established on the land meant for the commercial
complex.
18. In the meantime, State of Madhya Pradesh moved an
application, MCC No. 1072 of 2005, before the High
Court, seeking recall of the order dated 5th August,
2005 passed in Writ Petition No. 636 of 2005. The MPRTC
also filed MCC No. 5 of 2006, seeking identical relief,
i.e. recall of order dated 5th August, 2005. It was
claimed that a decision had been taken by the M.P. State
Government to wind up MPRTC. On 23rd March, 2005, MPRTC
had been issued a notice of demand for recovery of
Rs.2387/- crores as Tax dues. The property earmarked
for the commercial complex, was one of the properties
seized by the State Authorities on 19th July, 2005.
Since the possession was already taken by the State, no
direction for delivery of possession to the Appellant
could have been issued on 5th August, 2005. These facts
could not be placed before the High Court, as the State
was not impleaded as a party in Writ Petition No. 636 of
2005.
19. Thereafter, Appellant moved I.A. No. 7064 of 2006 in the
Contempt Petition before the High Court to implead the
Transport Department – Respondent No. 2 herein, as a
respondent in the Contempt Petition. This I.A. was
allowed by the High Court by order dated 6th October,
2006. During the course of hearing of this Contempt
Petition, Appellant moved another I.A. No. 6906 of 2007,
seeking a direction to the respondents to place on
record the following:
“1(a) On what date and which inward number the order of the
government directing the RTO, Indore to attach the MPSRTC
Property at Indore was received by RTO, Indore pursuant to
which the so called attachment dated 9.7.2005 was made.
1(b) On what date, by which letter number and under what
dispatch number the fact of attachment and acquisition of
property/land was sent by RTO, Indore to the State
Government (Original Letters, original dispatch register).
And on what date, by which the inward number this
information was received.”
According to the Appellant, the respondents could not
furnish the said information to the Court, despite having
sought a number of opportunities in that regard.
20. Meanwhile on 2nd November, 2007, the IDA cancelled the
lease of the MPRTC for violation of the lease terms by
running the RTO. Cancellation of the lease was
challenged by the MPRTC through Writ Petition No. 6770
of 2007 in the High Court of Madhya Pradesh. On
11th December, 2007, the High Court without issuing
notice to the Appellant, who was impleaded as Respondent
No.3, disposed of the Writ Petition with the following
observations:-
“When two instrumentalities of the State, such as in the
present case, choose to bring their disputes in open court,
the loss is of the general public. The public confidence
in the credibility of the State Govt. and its various
wings/functionaries and its instrumentalities comes at
stake.
In these circumstances, I do not find that this Court
should continue with the proceedings in the present
Petition. I deem it appropriate to request the Chief
Secretary, State of Madhya Pradesh, to take up the matter
at his level and after holding a meeting with the Principal
Secretary, Transport Department, Principal Secretary,
Housing and Environment Department and the Managing
Director of the M.P. Road Transport Corporation Ltd. take
such further action, as may be deemed appropriate, in the
facts and circumstances of the case. However, the Chief
Secretary shall ensure that the officers of the State
Government and various other instrumentalities of the State
Government are not allowed to bring out their inter se
disputes in public in future”.
21. On 17th November, 2008, the Central Government,
Department of Transport & Highways informed the State
Government of Madhya Pradesh that the request for
permission for closure of MPRTC under the provisions of
the Road Transport Corporation Act, for which earlier
no-objection had been given, was being declined keeping
in view the decision of Ministry of Labour & Employment,
and that it would now have to continue its current
operations.
22. The Appellant submitted representation
dated 20th February, 2009, wherein attention of the
Chief Secretary was drawn to the pendency of the review
petitions filed by the State of Madhya Pradesh and the
MPRTC; and the Contempt Petition filed by the Appellant
and the order passed therein, whereby status quo was
ordered to be maintained.
23. In spite of the aforesaid representation, Respondent No.
1 held the meeting on 4th March, 2009 as directed by the
High Court, wherein it was inter alia decided as under:
“I. Order dated 02.11.2007 and notice dated
30.06.07 for cancellation of lease of the land in
question of the Transport Corporation by the I.D.A.
be cancelled.
II. R.T.O. be ordered for releasing the land by the
Transport Department for attachment.
III. The M.P. Road Transport Corporation shall hand
over land in question to I.D.A.
IV. The amount which has been received by the Transport
Corporation from Sh. Ram Builders shall be returned
along with interest to Sh. Ram Builder.
V. Decision with respect to further use and management
of the land shall be taken by I.D.A.”
24. Aggrieved by Clause (III), (IV) and (V) of the aforesaid
decision, Appellant preferred Writ Petition No. 2937 of
2009 before the High Court of Madhya Pradesh. It was
inter alia contended that the directions in aforesaid
clauses were in violation of order dated 5th August,
2005 of the High Court and in violation of the
principles of natural justice.
25. The High Court disposed of the Writ Petition
on 27th September, 2012 with the following
observations:-
“15. The order dated 5.8.2005 passed in Writ Petition No.
636/2005 directing the corporation to deliver possession of
site to the petitioner cannot be implemented after the
lease deed was cancelled by the IDA. It is this
cancellation which became the subject matter of writ
petition No.6770/2007 and the writ petition was decided
vide order dated 11.12.2007 by another Single Judge Bench
directing the Chief Secretary for resolving the dispute.
As already mentioned above, the petitioner did not
challenge the order dated 11.12.2007 and submitted a
detailed representation dated 20.02.2009 to the Chief
Secretary. The impugned decision taken by the Chief
Secretary is in pursuance of the directions given by the
High Court in Writ petition No. 6770/2007 in which the
petitioner was also a party. There is, thus, no violation
of the principles of natural justice. The decision reached
by the Chief Secretary directs that the entire amount paid
by the petitioner be returned to it with interest. The
decision does not fix the rate of interest but we feel that
9% will be the proper interest having regard to all the
circumstances. In view of the direction to return the
amount with interest, as decided by us, there would be
apparently no loss to the petitioner. The respondents are
directed to return the amount with interest within four
months from today. If the petitioner still feels that
there has been a breach of contract, it can pursue the
remedy of specific performance or damages before a
competent civil court. We, therefore, decline to interfere
with the decision of the Chief Secretary except fixing the
rate of interest, as indicated above.”
26. In view of the aforesaid directions, the High Court also
disposed of the Contempt Petition No. 469 of 2008,
Review Application Nos. MCC No. 99 of 2009 and MCC No.
893 of 2008 without any further directions.
27. We have heard the learned counsel for the parties.
28. Mr. R.F. Nariman and Mr. P.S. Patwalia, learned senior
counsel, appearing for the appellant submitted that the
reasoning adopted by the High Court in Paragraph 15 of
the impugned judgment, which has been reproduced above,
was not even supported by the respondents. The first
reason given by the High Court is that the Order dated
5th August, 2005 in Writ Petition No. 636 of 2005 can
not be implemented after cancellation of lease deed by
the IDA. This, according to the learned senior counsel,
is without any basis as by the order dated 22nd
February, 2009, the Chief Secretary had cancelled the
lease deed. Therefore, the order dated 2nd
November, 2007 having been nullified, the lease in
favour of MPRTC revived. This would also revive the
application of MPRTC to cull the agreement with the
appellant. The second reason given by the High Court,
according to Mr. Nariman and Mr. Patwalia is that
the order dated 11th December, 2007 passed in Writ
Petition No. 6770 of 2007 was not challenged by the
appellant, can not be supported in law. It is pointed
out by the learned senior counsel that the aforesaid
writ petition was filed by MPRTC challenging the order
of cancelling the deed in its favour by the IDA. The
appellant was not at all involved in the aforesaid lis.
In any event, the High Court had not passed any order on
merits. It had merely left it for the Chief Secretary to
decide the issue. Therefore, no cause had arisen to the
appellant to challenge the order dated 11th December,
2007. It is further pointed out that the Chief
Secretary in fact decided the substance of the writ
petition. Substance of the grievance raised in the writ
petition was decided in favour of MPRTC by setting aside
the order of cancellation of the lease by the IDA. It
is pointed out by the learned senior counsel that IDA
has not challenged the order of the Chief Secretary
cancelling the direction of IDA with regard to the
cancellation of the lease.
29. Learned senior counsel further submitted that the Chief
Secretary was expected to take a decision in accordance
with law, i.e., in accordance with the order of the High
Court that has become final and binding and not contrary
to that. Furthermore, the order of the Chief Secretary
on directions (III), (IV) and (V), which affect the
rights of the appellant was challenged in the writ
petition in which the impugned judgment has been passed.
According to the appellant, the decision Nos. (I) and
(II) were correct and, therefore, there were no occasion
to challenge the same. The directions (III), (IV) and
(V) are contrary to Directions (I) and (II) and were
beyond the scope of the controversy raised in Writ
Petition No. 6770 of 2007, which had been referred to
the Chief Secretary by the High Court. The order of the
Secretary has been passed without issuing any notice to
the appellant, even though in the writ petition, the
appellant was impleaded as Respondent No. 3. It is
pointed out by the learned senior counsel that by way of
abundant caution, the appellant has challenged the order
dated 11th December, 2007, passed in
Writ Petition No. 6770 of 2007 in S.L.P.(C) No. 36887 of
2012.
30. Next it was submitted by the learned senior counsel that
the actions of Madhya Pradesh Road Transport Corporation
(Respondent No.3) are in gross contempt of the orders
dated 5th August, 2005, which have not been purged till
date. The aforesaid order has become final after the
dismissal of SLP (C) No. 20038 of 2005
on 7th October, 2005. It is submitted that the Review
Petition MCC No. 99 of 2009 filed on 2nd January, 2006
after dismissal of the aforesaid SLP on 7th October,
2005 is an abuse of process and not maintainable. In
support of this submission, learned senior counsel
relies on Meghmala & Ors. Vs. G. Narasimha Reddy &
Ors.[1] (Paras 25 and 26). Similarly, the Review
Petition MCC No. 893 of 2008 is not maintainable for the
same reason. In any event, the Review Petition was not
decided on merits, which was disposed of in view of the
impugned order passed in the Writ Petition with regard
to the cancellation of the lease.
31. Thereafter, very detailed submissions have been made on
the construction of the lease deed. However, it must be
noticed here that the manner in which these submissions
have been advanced before us bear no resemblance to the
manner in which these submissions were made before the
High Court.
32. Mr. R.F. Nariman has also submitted that the term of
lease has to be understood to have commenced from
26.05.2004, when the IDA executed a formal lease in
favour of MPRTC. Further, learned senior counsel
submitted that the possession of the site in terms of
the lease cannot be held to be given on 22.1.1982, when
the agreement to lease was executed. It was further
submitted that where a literal reading of the lease
leads to an absurdity, the court has the power to read
it reasonably. Such a reasonable reading, according to
Mr. Nariman, would support the aforesaid
submission, i.e. the lease commences from 26.05.2004. In
this context, learned senior counsel rely upon the
following cases: DDA vs. Durga Chand Kaushish[2];
Ramkishore Lal vs. Kamal Narian[3] and Sahebzada
Mohammad Kamgar Shah vs. Jagdish Chandra Deo Dabhal
Deo[4]. These cases reiterate the well established
principles of law relating to the construction of deeds,
which are as follows: first, that the intention of the
parties to a grant must be ascertained first and
foremost from the disposition clause. Second, clear
disposition by an earlier clause will not be allowed to
be cut down by a later clause; and third, that a deed,
being a grantor’s document, has to be interpreted
strictly against him and in the favour of the grantee.
33. Mr. Nariman also submitted that the Respondents cannot
rely upon Clause 5E of the Agreement to Lease, after the
execution of the Lease Deed. Substantiating this, it was
submitted that the Renewal Clause in the Agreement to
Lease stood superseded by the express terms of the Lease
Deed dated 26.05.2004. In this context, he relied upon
Provash Chandra Dalui vs. Biswanath Banerjee[5] and
State of U.P. vs. Lalji Tandon.[6]
34. Further according to Mr. Nariman, the terms of the
Agreement to Lease cannot be relied upon when a specific
provision has been provided in the Lease Deed itself,
which provides for extension of the lease. Clause (1) of
the Lease enables the IDA to extend the lease for which
neither the renewal nor permission of the State
Government is necessary.
35. The argument of the Respondents that the Agreement of
the MPRTC with the Appellant has been frustrated was
sought to be countered by Mr. Nariman. It was submitted
that self induced frustration cannot be a basis to
frustrate a valid agreement. In this context, it was
contended that the submission of the Respondents that
MPRTC is being wound up is not tenable since such
winding up is the result of an act of the Party itself.
Reliance placed upon Boothlinga Agencies vs. V.T.C.
Poriaswami Nadar[7], wherein it was inter alia held that
“the doctrine of frustration of contract cannot apply
where the event which is alleged to have frustrated the
contract arises from the act or election of a party.” It
was also contended that commercial exigencies can never
lead to frustration. Reliance was placed upon Pollock
and Mulla, 14th Ed. Pgs. 887-889.
36. Mr. Nariman also submitted that the submission of the
IDA that the Appellant has no privity of contract with
the Petitioner is not correct. Further, the submission
of the IDA that the Agreement to Lease was only for a
bus stand and no permission was granted by the IDA to
MPRTC for constructing a commercial project has been
submitted to be incorrect by Mr. Nariman. Another
factual submission advanced by the Appellant is that the
submission of the Respondents that MPRTC is being wound
up is not correct.
37. Lastly, Mr. Nariman contended that on the balance of
equity, the MPRTC ought to be directed to comply with
the directions of the High Court contained in order
dated 05.08.2005, and put the Appellant in possession of
the plot.
38. Mr. J.P. Cama, learned senior counsel appearing for the
5th Respondent – Indore Development Authority has
submitted that by an agreement dated 2nd November, 1981,
IDA entered into a lease in respect of 10 acres of his
property situated in its Scheme No. 54 at Indore in
favour of MPRTC. Possession of the land was handed over
on 22nd January, 1982. The first installment of the
premium and leased rent was deposited on
3rd October, 1980. The lease was to be for a period
of 30 years subject to renewal. The lease was to
subsist in the first instance upto 21st January, 2012
but was terminated on 2nd July, 2007, i.e., before the
expiry of the period of 30 years from the date of
possession. MPRTC had challenged the aforesaid decision
in Writ Petition No. 6770 of 2007. Since the appellant
had no privity of contract with IDA, it could not have
challenged the termination of the lease on 2nd July,
2007 and did not do so. Since the dispute was between
two Government organizations, the High Court rightly
remitted the matter to the Chief Secretary of the State
of Madhya Pradesh for resolution. Even though, the
appellant was not a party to the aforesaid writ petition
filed by MPRTC, it had submitted a representation on
22nd February, 2009. The directions issued by the Chief
Secretary were challenged in Writ Petition No. 2937 of
2009 in which the impugned judgment has been passed.
The submissions of Mr. Cama in brief
are:-
(i) That there was no privity of contract between
IDA and Sri Ram Builders, i.e., the appellant.
Therefore, the High court has rightly granted
liberty to the appellant to file a Civil Suit,
if so advised.
(ii) The cancellation of the lease by IDA has become
final. This has not been challenged by the
appellant. Therefore, no Mandamus can be
issued to IDA, to permit the appellant to
construct the Bus Stand and commercial-cum-
residential complex. Mr. Cama further
submitted that the lease commences
from 22nd January, 1982 when possession was
handed over and expired on 21st January, 2012
upon completion of 30 years period of the
lease. It is further submitted that MPRTC can
not claim automatic renewal of the lease. It
would be subject to the consent of IDA and the
State Government. No application had been
filed for such extension. In any event, the
lease has come to an end by the efflux of time.
Mr. Cama further submitted that IDA had given
a lease in favour of MPRTC. Under the said
lease, MPRTC had no authority to create further
third party rights. Wrongly, according to Mr.
Cama, MPRTC under the tender conditions /
contract entered into with the appellant had
given it the right to sell proposed commercial
premises, and to collect premium on such
allotment from prospective buyers. The MPRTC
had only been given NOC for completing the bus
stand and the commercial-cum-residential
complex on B.O.T. basis. MPRTC had no legal
right, being a sub-lessee higher than the
lessee. The next submission of Mr. Cama is
that MPRTC has completely wound up its
operations; they have sold all their buses.
Therefore, it can not be compelled to get the
bus stand constructed from the appellant.
Countering the submission of Mr.
Nariman and Mr. Patwalia, he submits that the
order of the High Court
dated 5th August, 2005 directing MPRTC to hand
over the possession to the appellant can not be
relied upon by the appellant, the said order
has not become final inasmuch as:-
(i) IDA was not a party in the said
proceedings;
(ii) The HC had not decided the matter in
relating to lease of the IDA
(iii) State Govt had filed recall application –
which was pending disposal before HC
(iv) Even MPRTC filed a recall application
wherein they pleaded that the entire order
was based on the statement made by their
counsel that they are not in a position to
pay Sri Ram builders, however they made a
statement, in recall application that they
are now willing to repay Sri Ram and hence
prayed for recall of order dated. 5.8.05 –
which was also pending;
(v) Where SLP is dismissed without giving
reasons, there is no merger of the
judgment of the HC with the order of SC.
Hence judgment of HC can be reviewed, even
after dismissal of SLP. Reliance was
placed upon Gangadhara Palo vs. The
Revenue Divisional Officer & Anr. [2011
(4) SCC 602]
39. It is submitted that construction of bus terminal on
B.O.T. basis was a commercial transaction between MPRTC
and the appellant. Even if the cancellation is not
legal, this Court will not interfere in this decision as
it was purely contractual in nature. He relies on the
judgments of this Court in the case of Rajasthan Housing
Board & Anr. vs. G.S. Investments & Anr.[8] and
Ramchandra Murarilal Bhattad & Ors. vs. State of
Maharashtra & Ors.[9]
40. It is submitted that the arguments of the appellant that
the lease, which was granted in the first instance for
30 years was intended to continue (automatically) for a
further period of 30 years in terms of clause 1 of the
aforesaid lease deed is untenable. Even otherwise the
submission can not be considered as there were no
pleadings to this effect either in the original petition
or in the grounds of SLP. In any event, according to
the respondents, the initial period of the lease was for
30 years. Furthermore, Paragraph/Clause 5(E) of
the agreement to lease makes it clear that after
termination of the lease period, it can be extended
after renewal; that too only with the consent of MPRTC
and IDA and further obtaining sanction of the State
Government. According to Mr. Cama, two short questions
would arise namely:-
(i) From what date, the period of 30 years is to be
counted?
(ii) Whether there is an automatic extension of
lease?
41. It is according to Mr. Cama, admittedly possession of
the property was given to MPRTC on 21st January, 1982.
This premium, as well as the first lease rent had been
deposited on 3rd October, 1980. It is also an admitted
position that the lease rent for the entire period of
1982 onwards has in fact been paid by deposit of premium
plus 15 years lease rent. It is reiterated by Mr. Cama
that admitted date of actual possession by the lesser is
22nd January, 1982. Therefore, the first period of
lease expired by efflux of time on 21st January, 2012.
With regard to the renewal of the lease, it is submitted
that even such renewal is on specific sanction of the
IDA and the State Government. He submits that the
concept of extension of the lease is distinguishable
from the concept of renewal. In support of this
submission, Mr. Cama relies on Hardesh Ores (P) Ltd. Vs.
Hede and Company[10] (Pages 627 & 628). He submitted
that the agreement of lease used both words extension
and renewal but extension is always made subject to
renewal. Mr. Cama further pointed out that Order dated
5th August, 2005 has not become final and
binding on all parties on the dismissal of the SLP filed
by the MPRTC. The aforesaid SLP was dismissed in
limine. Therefore, the judgment of the High Court can
not be said to have merged with the order of this Court.
In support of the submission, Mr. Cama relies on
Kunhayammed & Ors. vs. State of Kerala & Anr.[11] and
Gangadhara Palo vs. Revenue Divisional Officer &
Anr.[12]
42. With regard to the submission relating to the order
passed by the Chief Secretary, Mr. Cama submits that the
appellant has to either accept or challenge the order in
toto. If the complete order is accepted, the
termination of the lease is set aside, the property
would return to IDA with compensation to the appellant.
In the event, the order is completely set aside, the
termination of the lease remains in force and the
property returns to the IDA. In either case, the land
returns to the IDA. Mr. Cama submits that the order
passed by the Chief Secretary is a comprehensive order
and can not be permitted to be challenged in a truncated
manner.
43. We have considered the submissions made by the learned
counsel for the parties.
44. Before we proceed to examine the submission made by Mr.
Nariman, it would be appropriate to cull out the bare
essential facts for the determination of the controversy
herein. A lease deed dated 2nd November, 1981 was
entered into between MPRTC and IDA. The possession of
the land was handed over to MPRTC on 22nd January, 1982.
Initially, the lease was taken by the MPRTC for the
purpose of a bus stand. It appears that no final
decision was taken till 8th November, 2001 when the
Council of Ministers of the State Government authorized
the construction of a commercial complex on the land
under BOT Scheme. A tender notice was issued on
13th April, 2002. On 7th July, 2003, the bid of the
appellant was found to be the highest. The amount as
mentioned in Para 6 earlier, was duly paid by the
appellant. A separate agreement was entered into between
MPRTC and the appellant on 4th February, 2004 which read
alongwith the tender document provided as under:
“The successful promoters/builders will have the right to
market the saleable space made available to him on
different floors in the commercial complex, collect premium
on such allotment from prospective buyers.”
45. On 25th May, 2004, MPRTC deposited the lease rental
with IDA. A formal lease was executed on 26th
May, 2004. As noticed earlier, the lease was for
30 years. The leased land (plot) was to be used only for
the bus terminal. It was specifically provided that the
plot cannot be divided. The possession of the plot had
been received on 22nd January, 1982. The lease also
provided that the Rules published in the gazette on 16th
December, 1977 shall be binding on the lessee. Rule 40
of the aforesaid Niyam/Rules read as under :
“The lessee may take possession of the plot on the date
fixed or notified to him for taking over possession of the
plot and the lease of the plot shall commence from the date
irrespective of the fact “whatsoever, possession of the
plot has been taken or not and the lessee shall pay all
rates and taxes where leviable the owner or the lessee from
the date.”
46. On 24th June, 2004, IDA gave its no objection for bus
terminal-cum-commercial complex to be constructed under
the BOT Scheme. On 18th December, 2005, the State
Government decided to wind up the MPRTC. The proposal of
the State Government was not approved by the Ministry of
Shipping and Road Transport, Government of India. On
17th November, 2008, a letter was issued informing the
State Government that the Ministry of Labour had
declined to grant permission for closure under Section
25-O of the Industrial Disputes Act, 1947. On 5th
August, 2005, the directions were issued by the High
Court in the writ petition filed by the appellant. SLP
filed against these directions was dismissed by this
Court on 7th October, 2005. In the contempt petition
filed by the appellant for non compliance of the
directions of the High Court dated 5th August,
2005, MPRTC was restrained from handing over the
possession of the property or to create third party
interest/rights. On 2nd November, 2007, the lease was
cancelled by IDA on the ground that MPRTC had violated
the prescribed conditions by handing over the possession
to RTO. As noticed earlier, the cancellation of the
lease was challenged by MPRTC, by way of a writ
petition, which was disposed of by the High Court on
11th December, 2007 by referring the entire issue to the
Chief Secretary. The appellant did not challenge the
order dated 2nd November, 2007 but submitted to the
jurisdiction of the Chief Secretary by filing a
comprehensive representation. Even in the writ petition
in which the impugned order had been passed, the
appellant had only challenged Clauses III, IV and V of
the order of the Chief Secretary.
47. We shall now consider the submission of
Mr. Nariman, seriatim. Can the order dated
5th August, 2005 be implemented and should the
appellant be permitted to go ahead with the construction
of commercial complex-cum-bus stand. Undoubtedly, the
SLP filed by MPRTC against the order dated
5th August, 2005 in Writ Petition No.363 of 2005 has
been dismissed by this Court, but it was a dismissal in
limine without recording any reason. Therefore, the
judgment of the High Court cannot be said to have merged
with the order of this Court. In Kunhayammed (supra),
this Court considered the effect of the dismissal of the
SLP in limine. This Court reiterated the ratio laid down
by this Court in Indian Oil Corporation Ltd. vs. State
of Bihar & Ors.[13] which considered the impact of the
order dismissing the SLP with the following expression:
“The special leave petition is dismissed.”
Considering the aforesaid order of this Court in
Indian Oil Corporation Ltd. (supra), it has been observed
as follows:
“The effect of a non-speaking order of dismissal of a
special leave petition without anything more indicating the
grounds or reasons of its dismissal must, by necessary
implication, be taken to be that this Court had decided
only that it was not a fit case where special leave should
be granted. This conclusion may have been reached by this
Court due to several reasons. When the order passed by this
Court was not a speaking one, it is not correct to assume
that this Court had necessarily decided implicitly all the
questions in relation to the merits of the award, which was
under challenge before this Court in the special leave
petition. A writ proceeding is a wholly different and
distinct proceeding. Questions which can be said to have
been decided by this Court expressly, implicitly or even
constructively while dismissing the special leave petition
cannot, of course, be reopened in a subsequent writ
proceeding before the High Court. But neither on the
principle of res judicata nor on any principle of public
policy analogous thereto, would the order of this Court
dismissing the special leave petition operate to bar the
trial of identical issues in a separate proceeding namely,
the writ proceeding before the High Court merely on the
basis of an uncertain assumption that the issues must have
been decided by this Court at least by implication. It is
not correct or safe to extend the principle of res judicata
or constructive res judicata to such an extent so as to
found it on mere guesswork.

48. In reiterating the aforesaid observation, this Court in
Kunhayammed (supra) observed as follows:
“27. A petition for leave to appeal to this Court may be
dismissed by a non-speaking order or by a speaking order.
Whatever be the phraseology employed in the order of
dismissal, if it is a non-speaking order, i.e., it does not
assign reasons for dismissing the special leave petition,
it would neither attract the doctrine of merger so as to
stand substituted in place of the order put in issue before
it nor would it be a declaration of law by the Supreme
Court under Article 141 of the Constitution for there is no
law which has been declared.”
49. The aforesaid ratio in Kunhayamed (supra) is reiterated
by this Court in Gangadhara Palo (supra):
“7. The situation is totally different where a special
leave petition is dismissed without giving any reasons
whatsoever. It is well settled that special leave under
Article 136 of the Constitution of India is a discretionary
remedy, and hence a special leave petition can be dismissed
for a variety of reasons and not necessarily on merits. We
cannot say what was in the mind of the Court while
dismissing the special leave petition without giving any
reasons. Hence, when a special leave petition is dismissed
without giving any reasons, there is no merger of the
judgment of the High Court with the order of this Court.”

50. Even though the order of the High Court had not merged
with the order passed by this Court in dismissing the
SLP, can the appellant be deprived of the benefit of the
order passed by the High Court on 5th August, 2005? Mr.
Nariman has submitted that the order passed by the Chief
Secretary on 11th December, 2007 even though on
directions issued by the High Court in Writ Petition
No.6770 of 2007 cannot nullify the directions given by
the High Court earlier. The order passed by the Chief
Secretary in its executive capacity cannot have the
effect of nullifying the order passed by the High Court
on 5th August, 2005. On first blush, the
submission made by Mr. Nariman seems to be very
attractive, but factually it has to be noticed that much
more water has flown under the bridge since the passing
of the order dated 5th August, 2005. Subsequently,
the lease to MPRTC was cancelled on 2nd November, 2007
by the IDA. The appellant did not challenge the order
dated 2nd November, 2007 passed by
the IDA. The aforesaid order was challenged by MPRTC in
Writ Petition No.6770 of 2007. On 11th December, 2007,
the High Court without issuing notice to the appellant,
who was impleaded as respondent No.3, disposed of the
writ petition. The High Court noticed that two
instrumentalities of the State have chosen to bring
their disputes in open court. In such circumstances, the
High Court was of the opinion that the entire dispute
ought to be decided by the Chief Secretary of the State
of Madhya Pradesh by holding meetings between the
Principal Secretary of the Transport Department,
Principal Secretaries of Housing and Environment
Department and the Managing Director of the MPRTC. The
appellant accepted the aforesaid order passed by the
High Court and submitted a detailed representation
before the Chief Secretary on 20th February, 2009. The
Chief Secretary in the meeting held on 4th March, 2009
took a comprehensive decision on all the issues involved
in writ petition with regard to the cancellation of the
lease deed in favour of MPRTC by IDA. The Chief
Secretary revoked the order dated 2nd November, 2007 and
notice dated 30th June, 2007 cancelling the lease of
land in question granted to the MPRTC by IDA. RTO was
directed to release the leased land from attachment. It
is noteworthy that the appellant has not chosen to
challenge the aforesaid two directions. However, as
noticed earlier, the appellant challenged the directions
issued in Clauses III, IV and V in Writ Petition No.2937
of 2009 in the High Court of Madhya Pradesh. It was,
inter alia, contended that the directions in the
aforesaid clauses were in violation of the order dated
5th August, 2005. It is noteworthy that even in this
writ petition, challenging the direction Nos. III, IV
and V issued by the Chief Secretary, the appellant had
not challenged the competence of the Chief Secretary to
decide the issues. The appellant cannot now be permitted
to state that the aforesaid directions are without
jurisdiction. Under the orders of the Chief Secretary
dated 4th March, 2009, the possession of the land has
already been delivered to IDA. Therefore, it would not
be possible at this stage to direct that the mandamus
granted on 4th August, 2005 in Writ Petition No.636 of
2005 shall be enforced.

51. In the ultimate analysis, the whole controversy boils
down to a breach of contract by MPRTC entered into with
the appellant. The scope of judicial review is very
limited in contractual matters even where one of the
contracting parties is the State or an instrumentality
of the State. The parameters within which power of
judicial review can be exercised, has been
authoritatively laid down by this Court in a number of
cases.
In Tata Cellular vs. Union of India,[14] this court
upon detailed consideration of the parameters within which
judicial review could be exercised, has culled out the
following principles:
“70. It cannot be denied that the principles of judicial
review would apply to the exercise of contractual powers by
government bodies in order to prevent arbitrariness or
favouritism. However, it must be clearly stated that there
are inherent limitations in exercise of that power of
judicial review. The Government is the guardian of the
finances of the State. It is expected to protect the
financial interest of the State. The right to refuse the
lowest or any other tender is always available to the
Government. But, the principles laid down in Article 14 of
the Constitution have to be kept in view while accepting or
refusing a tender. There can be no question of infringement
of Article 14 if the Government tries to get the best
person or the best quotation. The right to choose cannot be
considered to be an arbitrary power. Of course, if the said
power is exercised for any collateral purpose the exercise
of that power will be struck down.
* * *
77. The duty of the court is to confine itself to the
question of legality. Its concern should be:
(1) Whether a decision-making authority exceeded its
powers?
(2) committed an error of law,
(3) committed a breach of the rules of natural justice,
(4) reached a decision which no reasonable tribunal would
have reached, or
(5) abused its powers.
Therefore, it is not for the court to determine whether a
particular policy or particular decision taken in the
fulfilment of that policy is fair. It is only concerned
with the manner in which those decisions have been taken.
The extent of the duty to act fairly will vary from case to
case. Shortly put, the grounds upon which an administrative
action is subject to control by judicial review can be
classified as under:
(i) Illegality: This means the decision-maker must
understand correctly the law that regulates his decision-
making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule
out addition of further grounds in course of time.”
52. In our opinion, the case put forward by the appellant
would not be covered by the aforesaid ratio of law laid
down by this Court. The High Court, in our opinion, has
rightly observed that the appellant can seek the
appropriate relief by way of a civil suit. The High
Court in exercise of its jurisdiction under Article 226
of the Constitution of India would not normally grant
the relief of specific performance of a contract. This
view is supported by Ramchandra Murarilal Bhattad vs.
State of Maharashtra.[15] This Court relying upon the
earlier decision in Noble Resources Limited vs. State of
Orissa[16] held as under:
“50. …this Court would not enforce specific performance of
contract where damages would be adequate remedy. It was
also held that conduct of the parties would also play an
important role.
51. The expansive role of courts in exercising its power of
judicial review is not in dispute. But as indicated
hereinbefore, each case must be decided on its own facts.”
53. At no stage, the appellant had any privity of contract
with IDA. MPRTC entered into a BOT contract with the
appellant contrary to the terms and conditions of the
lease which provided specifically that the land shall be
used for constructing a bus stand–cum commercial
complex. MPRTC had no legal right to create any further
right in favour of the appellant with regard to the
receiving of the premium on the constructed units sold
to third party(ies). Even otherwise, the appellant seems
to be flogging a dead horse. Admittedly, the possession
of the proposed site was delivered to MPRTC on 22nd
January, 1982. The maximum lease period was for 30
years. By efflux of time the aforesaid lease period
expired on 21st January, 2012. We do not accept the
submission of Mr. Nariman that as the entire rent had
been paid, MPRTC would be entitled to automatic renewal
of the lease for 90 years. The renewal clause in the
lease subsequently provides that the renewal shall be
with the consent of IDA. This consent by the IDA is not
a mere formality. We are, therefore, not inclined to
accept the submission of Mr. Nariman that the term of
the lease has to be understood to have commenced from
26.05.2004.
54. This apart, there is much substance in the submission of
Mr. Cama that no application has been filed even for
this formal renewal by MPRTC. In any event, MPRTC would
not be in a position to continue with the lease as it is
heavily indebted presently, to the tune of Rs. 3500
crores. The property of the corporation has been
attached by the various creditors. Even the proposed
site where the bus stand – cum – commercial complex was
to be constructed is under attachment. The claim made by
the appellant is in the nature of damages for breach of
contract and/or the relief of specific performance of
contract. So far as the breach of contract is concerned,
the appellant will have no cause of action against IDA
as there is no privity of contract
between the parties. So far as the specific performance
is concerned, it appears that the entire purpose of the
contract has been frustrated by subsequent events.
55. We are also not much impressed by the submission of Mr.
Nariman that the doctrine of frustration cannot be
applied here since it is a “self induced frustration”.
In the case of Boothalinga Agencies (supra), this Court
upon comparing and contrasting the English Law and the
statement of Indian Law contained in Section 56 of the
Indian Contract Act summed up the legal position with
regard to frustration of contract as follows:-
“The doctrine of frustration of contract is really an
aspect or part of the law of discharge of contract by
reason of supervening impossibility or illegality of the
act agreed to be done and hence comes within the purview of
Section 56 of the Indian Contract Act. It should be noticed
that Section 56 lays down a rule of positive law and does
not leave the matter to be determined according to the
intention of the parties.
In English law therefore the question of frustration of
contract has been treated by courts as a question of
construction depending upon the true intention of the
parties. In contrast, the statutory provisions contained in
Section 56 of the Indian Contract Act lay down a positive
rule of law and English authorities cannot therefore be of
direct assistance, though they have persuasive value in
showing how English courts have approached and
decided cases under similar circumstances.”
We fail to see how the aforesaid observations are of
any relevance in the facts and circumstances of this case.
56. We are also unable to accept the submission of
Mr. Nariman that the Doctrine of Frustration would
not apply in the facts of this case as it is a self
induced frustration. The aforesaid expression seems to
have been borrowed from certain observations made by the
Judicial Committee in the case of Maritime National
Fish, Limited vs. Ocean Trawlers, Limited[17]. The
facts of that case, as narrated in Boothalinga Agencies
(supra), would indicate that in that case, the
respondents chartered to the appellants a steam trawler
fitted with an otter trawl. Both the parties knew at the
time of the contract that it was illegal to use an otter
trawl without a licence from the Canadian government.
Some months later the appellants applied for licences
for five trawlers which they were operating, including
the respondent’s trawler. They were informed that only
three licences would be granted, and were requested to
state for which of the three trawlers they would like to
have the licences. They named three trawlers other than
the respondent’s trawler, and then claimed that they
would not be bound by the trawler of the respondent as
it was frustrated. It was held by the Judicial Committee
that the failure of the contract was the result of the
appellant’s own election, and, therefore, no frustration
of the contract.
57. This Court distinguished the aforesaid judgment and
observed as follows:-
“We think the principle of this case applies to the Indian
law and the provisions of Section 56 of the Indian Contract
Act cannot apply to a case of “self-induced frustration”.
In other words, the doctrine of frustration of contract
cannot apply where the event which is alleged to have
frustrated the contract arises from the act or election of
a party. “
58. In our opinion, these observations are of no assistance
to the appellant as in this case, the lease has come to
an end by efflux of time. This apart, MPRTC is heavily
indebted and had sought permission of the State and the
Union of India to wind up. Furthermore, there was also a
breach of the terms and conditions of the lease on the
basis of which it has been terminated in accordance with
law.
59. In any event, these are issues which would involve
adjudication of disputed questions of fact which can
only be suitably adjudicated in the civil suit as
directed by the High Court in the impugned judgment. The
appellant shall be at liberty to seek its remedies
against MPRTC for breach of contract. Our conclusion
that the High Court was right in rejecting the
contentions of the Appellant herein is also supported by
the law laid in Rajasthan Housing Board vs. G.S.
Investments (supra) which was relied upon by Mr. Cama.
We may notice here the following excerpt:
“..the Court should exercise its discretionary power under
Article 226 of the Constitution with great care and caution
and should exercise it only in furtherance of public
interest. The Court should always keep the larger public
interest in mind in order to decide whether it should
interfere with the decision of the authority.”
60. Also, we are not much impressed by the submission of Mr.
Nariman that the order passed by the High Court on 11th
December, 2007 has been challenged by the companion SLP
(C) No 36887 of 2012. The aforesaid SLP has been filed
merely to get over the earlier lapse of not challenging
the order of the High Court at the appropriate time.
Having submitted to the jurisdiction of the Chief
Secretary, it would not be open to the appellant to
challenge the order dated 11th December, 2007.
61. For the aforesaid reasons, we see no merit in the
appeals. The civil appeals are, therefore, dismissed.

……………………………….J.
[Surinder Singh Nijjar]

 
………………………………..J.
[A.K.Sikri]
New Delhi;
April 25, 2014.
———————–
[1] (2010) 8 SCC 383

[2] (1973) 2 SCC 825

[3] (1963) Supp (2) SCR 417

[4] (1960) 3 SCR 604

[5] (1989) Supp (1) SCC 487(Para14)

[6] (2004) 1 SCC 1 (Para 13).
[7] (1969) 1 SCR 65, at Page79

[8] (2007) 1 SCC 477

[9] (2007) 2 SCC 588

[10] (2007) 5 SCC 614

[11] (2000) 6 SCC 359

[12] (2011) 4 SCC 602(Para 7)

[13] (1986) 4 SCC 146

[14] (1994) 6 SCC 651

[15] (2007) 2 SCC 588

[16] (2006) 10 SCC 236

[17] (1935) A.C. 524

 

———————–
53

 

 

 

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