Holding

The development agreement was frustrated under Section 56 of the Indian Contract Act, obligating DDA to refund the builder’s deposit with interest at 6% per annum.

Summary

The Delhi Development Authority (DDA) auctioned a 14.3‑hectare parcel of land for residential development on an "as is where is" basis, and Kenneth Builders & Developers Ltd. (the builder) paid the full bid amount and obtained possession. The development agreement required the builder to secure all statutory clearances, including a "consent to establish" from the Delhi Pollution Control Committee (DPCC). Subsequent objections by the Department of Forests that the land fell within the Delhi Ridge, and the DPCC’s refusal to grant consent without a ridge demarcation report, created an impasse that prevented any construction. The Supreme Court held that these supervening circumstances rendered performance of the contract impracticable, invoking Section 56 of the Indian Contract Act, and therefore the contract was frustrated. Consequently, DDA was ordered to refund the builder’s deposit with interest at 6% per annum from the date of deposit. The Court dismissed DDA’s appeal and left open the question of final authority on ridge land use for future consideration.

Issues considered

The contract between DDA and the builder is frustrated under Section 56 of the Indian Contract Act due to supervening impossibility.
Whether DDA is liable to refund the entire amount deposited by the builder with interest.
Whether the writ petition under Article 226 is maintainable in a contractual dispute.
Whether DDA is the final authority to determine land use, particularly concerning the Delhi Ridge.
The proper interpretation of the term "impossible" in Section 56 of the Contract Act.

Legislation cited

Subjects

contract frustrationSection 56impossible performancepublic‑private partnershipenvironmental clearanceDelhi Ridgeas is where isrefund of depositinterestDelhi Development Authority

Judgment

[2016] 3 S.C.R. 1126

A DELHI DEVELOPMENT AUTHORITY
v.
KENNETH BUILDERS & DEVELOPERS LTD. & ORS.
(Civil Appeal No . 53 70of2016)
B
JUNE 29, 2016
( MADAN B. LOKUR AND N.V. RAMANA, JJ. )
Contract Act, 1872 - s. 56 - Contract impossible of
performance ~Auction of 'residential' land by DDA on 'as is where
c is' basis - For construction of houses - Bid of the respondent-builder
accepted - Project land allotted and possession thereofgiven to
builder - Development agreement between DDA and the builder -
As per agreement various approvals and clearances from the
appropriate authorities including environmental age11cies was o

responsibility of the builder - The development work on project
D land objected to by Department of Forests of Government of National
Capital Territory (GNCTD) on the ground that the land fell in the
Ridge and hence construction without consent of Ridge Management
Board and permission of the Supreme Court not allowed - Ministry
of Environment and Forest, Government of India gave environment
E clearance subject to condition that Delhi Pollution Control
Committee (DPCC) gave "consent to establish" - However, DPCC
refused to give "consent to establish" in absence of "ridge
demarcation report" - Builder also could not obtain "ridge
demarcation report" - Builders writ petition under Art. 226 of
Constitution for setting aside of auction, for declaration that project
F was incapable of performance and sought refund of the amount
paid to DDA - High Court held that if DPCC did not permit
construction activity, the builder was entitled to refund of the entire
amount deposited witli'DDA - Even after the judgment of High
Court, DPCC refused to grant "consent to establish" - Appeal by
G DDA and also by GNCTD and DPCC - Held: Despite the fact that
builder took all the necessary steps to commence the construction
activity, it co_uld not proceed the development activity due to the
impasse created_ by the Government agencies - Thus the development
agreement between DDA and the builder was frustraied having
become impossible of performance within meani111g of s.56, due to
H
1126
DELHI DEVELOPMENT AUTHORITY v. KENNETH 1127
BUILDERS & DEVELOPERS LTD. & ORS.

the intervening circumstances not contemplated by either party - A
DDA directed to refimd the deposit made by the builder with interest
@6%.
Dismissing the appeal filed by DDA, the Court
HELD: 1. The objection to the maintainability of the writ
petition, having not been raised by the DDA before the High 8
Court or even in the petition filed in this Court, cannot be
entertained. The submission has been advanced by the DDA for
the first_ time during the final hearing of these appeals. It is too
late in the day to raise such an objection. [Para 27) [1146-D]
2.1 The respondent-builder did take all necessary steps to
commence the construction activity on the project land but due
c
to the impasse created by the governmental agencies, it could
not proceed in the development activity. Under these
circumstances, the provisions of Section 56 of the Contract Act,
1872 would be attracted to the facts of the case. [Para 32) [1147-
F-G) D
2.2 The word "impossible" used in Section 56 of the
Contract Act has not been used in the sense of physical or literal
impossibility. It ought to be interpreted as impracticable and
useless from the poiµt of view of the object and purpose that the
parties had in view when they entered -into the contract. This
impracticability or uselessness could arise due to some E
intervening or supervening circumstance which the parties had
not contemplated. However, if the intervening circumstance was
contemplated by the parties, then the contract would stand despite
the occurrence of such circumstance. In the present case, the
DDA certainly did not contemplate a prohibition on construction F
activity on the project land which would fall within the Ridge or
had morphological similarity to the Ridge. It is this circumstance
that frustrated the performance of the contract in the. sense of
making it impracticable of performance. [Paras 33 and 34) [1148=
D-E; 1150-A-B)
Satyabrata Ghose v. Mugneeram Bangur & Co. (1954) G
SCR 310 - relied on.
2.3 It is true that the Government of India had notified the
project land as "Residential" and that the project land was shown
as "Residential" in the MPD-2001 and MPD-2021. But that fact
alone would not change the position at law. The exact boundaries H
1128 SUPREME COURT REPORTS [2016] 3 S.C.R.

A of the Ridge do not appear to have been demarcated and in the
absence of demarcation, it could not be said with any degree of
certainty by the DDA that merely because of the two notifications
issued by the Ministry of Urban Development the project land
could be used for residential purposes even if it fell within the
Ridge. This would be ignoring the position at law and would be
B
stretching the argument a little too far. The DDA was unaware
that even if the project land did not fall within the Ridge yet any
development activity thereon would require permission from the
Ridge Management Board as well as from this Court since there
was morphological similarity between the Ridge and the project
c land. It is this intervening circumstance which eventually
frustrated the implementation of the contract. [Para 35] [1150-B-
D]
2.4 When the DDA informed the builder that the project
land was available on an "as is where is basis" and that it was the
responsibility of the developer to obtain all clearances, the
D
conditions related only to physical issues pertaining to the project
land and ancillary or peripheral legal issues pertaining to the actual
construction activity, such as compliance with the building bye-
laws, environmental clearances etc. The terms and conditions of
"as is where is" or environmental clearances certainly did not
E extend to commencement of construction activity prohibited by
law except after obtaining permission of the Ridge Management
Board and this Court. On the contrary, it was the obligation of
the DDA to ensure that the initial path for commencement of
construction was clear, the rest being the responsibility of the
developer. The failure of the DDA to provide a clear passage due
F to an intervening circumstance beyond its contemplation went to
the foundation of implementation of the contract with the builder
and that is what frustrated its implementation. [Para 37] (1150-
G-H; 1151-A-B]
Punjab Urban Planning & Development Authority v.
G Raghu Nath Gupta 2012 (8) SCR 118 : 2012 (8 ) SCC
197 -relied on.
2.5 The certain circumstances had intervened, making it
impracticable for the builders to commence the construction
activity on the project land and thus, the contract between the
DDA and the builder was impossible of performance within the
H
DELHI DEVELOPMENT AUTHORITY v. KENNETH 1129
BUILDERS & DEVELOPERS LTD. & ORS.

meaning of that word in Section 56 of the Contract Act. Therefore, A
it cannot be said that the contract between the DDA and the
respondent-builders was not frustrated. [Para 39) (1151-G-H;
1152-A-B]
3. DDA is directed to refund the deposit made by the
respondent-builder with interest at 6% per annum calculated from
B
11th September, 2006 (the date on which entire amount was
deposited by the builder with DDA) till realization. (Para 40)
(1152-C)
4. The question raised by Government of National Capital
Territory and Delhi Pollution Control Committee, as to whether
DDA was the final authority in the matter of determining the land c
use particularly when it related to the Ridge . is left open for
consideration in an appropriate case. (Paras 41, 42) (1152-D, FJ
Kenneth Builders and Developers Ltd. v. Union of India
and others, MANU/DE/1815/2010 ; IN. Godavarman
v. Union of India (2013) 8 SCC 198 - referred to. D
Case Law Reference
MANU/DE/1815/2010 referred to para 2
(2013) 8 sec 198 referred to para 25
(1954) SCR 310 relied on· ·para 33
E
2012 (8) SCR 118 relied on · para 38
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5370
of2016.
From the Judgment and Order dated 30.07.2010 of the High Court
of Delhi at New Delhi in Writ Petition (Civil) No. I 0.647 of2009 F
WITH
C. A. No. 5371 of2016.
A. Sharan, Parag Tripathi, Sr. Advs., Vishnu B. Saharya, Viresh
B. Saharya, Shrehan Siddhartha, M/s. Saharya & Co., Sum it Pushkarma,
Alok Gupta, Advs. for the Appellant. G
Kapil Siba1, Sanjiv Sen, Ashok Panda, Sr. Advs., Mahesh Agarwal, Ankur
Saigal, Rishabh Parikh, Raghav Dwivedi, E. C. Agrawala, D. N.
Goburdhan, Ms. Pallavi Chopra, Lal Ramtiamma, Mohan Prasad Gupta,
Shadman Ali, Gaurav Sharma, D.S. Mahra, Ms. s'ushma Suri, Advs. for
the Respondents. H
1130 SUPREME COURT REPORTS [2016] 3 S.C.R .

A . The Judgment of the Court was delivered by
MADAN B. LOKUR, J. I. Delay condoned. Leave granted
in both petitions.
2. The appellant (Delhi Development Authority or the DDA) in
the first appeal is aggrieved by the judgment and order dated 30th July,
B 20 l 0 passed by a Division Bench of the High Court of Delhi in W.P.(C)
No. 10647 of2009.' The grievance of the DDA is that even though the
Hig11 Court held that the project land that we arc concerned with was
'"Residential" as contended by the DDA, yet the High Court held that in
. the event construction activity thereon is not permitted by the Delhi
Pollution Control Committee (or the DPCC) the developer (Kenneth
c Builders) would be entitled to a refund of the entire amount deposited
with the DOA pursuant to the acceptance of the developer's bid in an
auction, along with interest thereon. ·
3. Jn the connected appeal. the appellants (Government of the
National Capital Territory of Delhi or the GNCTD and its Department
D of Forests) are aggrieved by the same judgment and order to the extent
that it has been held that the ODA is the final authority to determine land
use, even though its determination pertains to the Ridge in the National
Capital Territory ofDdhi.
4. Before referring to the facts of the case, which we have taken
frcim the appeal filed and argued by the ODA, we \VOLiid like to mention
E
that there has been protracted correspondence between the ODA.
Kenneth Buildt:rs and the Secretary (Environment) cum Chairman of
the Delhi Pollution Control Committee of the GNCTD. However, we
are of opinion that it is not necessary to detail the contents of every
letter between them and we propose not to burden this judgment with
F · avoidable details, as long as the narrative does not suffer.
5. The principal question that arises for our decision is whether
the development agreement between the DDA and the developer
Kenneth Builders was frustrated within the meaning of Section 56 of
the Indian Contract Act. 1872 due to some intervening circumstances
not contemplated by either party. Our answer to the question is in the
G
affimiative.
The facts of the case
6. The DDA proposed a public-private partnership project for the
development of an area of 14.3 hectares of prime land at Tehkhand in
1K1:11i1e1h fluildcr' a11,J Developers Ltd. v. Union of India and others. MANU/Ofj
H 1315/2010
DELHf DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & 1131
DEVELOPERS LTD. &ORS. [MADAN 8. LOKUR,J.]

South Delhi for the construction of750 premium residential flats in a self A
contained community to be sold by private real estate development on
free sale basis. Jn addition to the premium residential flats, the developer
wou Id have to construct 3 500 resettlement houses for the economically
weaker sections of society with each house having a super area of 26
sq. metres. These resettlement houses and the developed common
B
facilities relating thereto would be handed over to the DDA for allotment.
7. According to the DDA (and there is no dispute about this) the
project land was notified on I st August, 1990 for "Recreation" (District
Park) in the Master Plan for Delhi - 200 l (MPD-200 I). According to
the DOA (and again there is no dispute in this regard) two notifications
were issued by the Ministry of Urban Developmeut of the Government
c
of India on 8th January, 2002 and 23rd February, 2006 converting the
project land from "Recreation" (District Park) to "Residential".
8. On 20th March, 2006 the DDA issued an advertisement for
involving the private sector in Delhi's development and for the development
of the project land for the construction of750 residential flats and 3500 D
resettlement houses. Pursuant to the advertisement, an auction was
held by the DDA in terms of the Delhi Development Authority (Disposal
of Developed Nazul Land) Rules, 1981 on an ·'as is where is basis" and
as per the terms and conditions prescribed for the auction.
9. The terms and conditions for the auction specifically mentioned E
that the bid would be for the amount of premium offered for the project
land to execute the project and that the project was being offered on an
"as is where is basis''. It was stated that the presumption is that the
intending purchaser has inspected the site and has familiarized himself
with the prevalent conditions in all respects including status of F
infrastructure facilities available etc. before giving its bid. It was stated
that on acceptance of the bid, the highest bidder would be required to
deposit 25% of the bid amount as earnest money and the balance 75%
of the bid amount was required to be deposited with 90 days of the
issuance of the allotment-cum-demand letter. It was also stated that
possession of the project land would be handed over on payment of the G
entire bid amount and on execution of the development agreement, except
an area of approximately 4 hectares on which there is a JJ cluster. The
terms and conditions also required the developer to comply with all the
statutory requirements and rules and regulations of all public bodies
including payment of fees and taxes etc.
H
1132 SUPREME COURT REPORTS . [2016] 3 S.C.R.

A I 0. Kenneth Builders was the highest bidder in the auction held
on 26th April, 2006 and its bid was accepted. On 15th June, 2006 a
demand-cum-allotment letter was issued to it requiring payment of
balance 75% of the bid amount. It is not in dispute that Kenneth Builders
deposited the entire bid amount-0fRs. 450.01 crores with the ODA on
11th September, 2006.
B
11. Pursuant to the deposit.of the entire bid amount by Kenneth
Builders, a ho objection certificate' was issued by the DOA on 6th
November, 2006 for submission of building plans for the project to the
Planning Department of the DOA. )hereafter, on 4th December, 2006
possession of I I .70 hectares of the project land was handed over to
c Kenneth Builders but an area of approximately 2.60 hectares covered
by the JJ cluster was left out and possession thereof was not given.
12. On 5th September, 2007 a Developmen.t Agreement was
signed between the DOA and Kenneth Builders whereby it was agreed,
inter alia, that Kenneth Builders would construct 3500 houses for the
D resettlement of slum dwellers and 750 free sale flats which Kenneth
Builders would be entitled to dispose of. Kenneth Builders would also
develop roads and peripheral services for the entire project.
13. In terms of the development agreement it was the responsibility
of Kenneth Builders to obtain various approvals and clearances from
the appropriate authorities including environmental agencies of the State
E
and the Central Government. Clause 6 of the Development Agreement
is important in this regard and this reads as follows:
"6. Responsibility of Developer to get various approvals and
clearances

F 6.1 The Developer shall be responsible for approval of drawings
and for obtaining other "No Objection Certificate; from the
appropriate authorities and Deptts not limited to MCD, Delhi Jal
Board, Electric supplying agency concerned, Delhi Fire Services,
DUAC, the environmental agencies of the State and Central
Government. Authority or its authorized officers who are duly
G authorized to give approval 011 behalf of the Authority. (sic)
6.2 The delayin submission ofapplications, drawings, construction
plans and compliance of the observation: shall be the responsibility
of the Developer, and any delay in grant of approvals by the
aforesaid Government bodies shall not relieve the Developer of
H any ofits responsibilities under the Contract."
DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & I I 33
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

14. Kenneth Builders was also deemed to have inspected the site A
and its surroundings and checked the info1111ation available in connection
therewith including the sub-surface conditions, the hydrological and
climatic conditions etc. It was also deemed to have satisfied itself of the
correctness and sufficiency ofall the material and all its obligations under
the contract, including dealing with concerned authorities such as B
environmental agencies of the State and Central Government. Clause
I 1.1 of the Development Agreement in this regard is important and this
reads as follows:
"11.1 Sufficiency oflnformation
The Developer shall be deemed to have satisfied itself of the c
correctness and sufficiency of all the material and all its obligations
under the Contract, including dealing with the concerned authorities
not limited to MCD, Delhi Jal Board, Electric supplying agency
concerned, Delhi Fire Services, DUAC, the environmental
agencies of the State and Central Government, Authority or its
authorized officers who are duly authorized to give approval on D
behalf of the Authority at its own cost and expense, as well as all
the contingencies and all matters and things necessary for the
proper execution and completion of the project and the remedying
of any defects therein, before submitting the tender. The Developer
has agreed and understood that no request for change in the terms
E
and conditions of the Contract shall be entertained at any stage
on any ground whatsoever."
15, The problems for Keirneth Builders began when, pursuant to
the Development Agreement, it attempted to establish infrastructure
facilities on the project land such as its site office, DOA office, sample
F
flat for the economically weaker sections etc. sometime in February/
March 2008. It was then that the Department of Forests of the GNCTD
-raised objections to carrying out such activities on the ground that the
project land falls in the Ridge and hence all activities were required to be
suspended.
16. The objection of the DepartmentofForests compelled Kenneth G
Builders to ~op all building activity on the project land and that resulted
in an exchange of letters for the next several months between the ODA,
the GNCTD and Kenneth Builders. To cut a long story short, the DOA
insisted that the project land was "Residential" and that the project could
be undertaken thereon. The GNCTD was equally clear that the project H
1134 SUPREME COURT REPORTS [2016] 3 S.C.R.

A land falls within the Ridge and no construction activity could be carried
out without the consent of the Ridge Management Board and the
permission of this Court. On its part, the Ministry of Environment and
Forest, Government of India (or the MoEF) kept aloof from the
controversy and gave environmental clearance for the project on 15th
July, 2008 subject to the condition that a "consent to establish" shall be
B
obtained by Kenneth Builders from the DPCC under the Water
(Prevention and Control of Pollution) Act, 1974 (for short the Water
Act) and the Air (Prevention and Control of Pollution) Act, 1981 (for
short the Air Act) and a copy submitted to the said Ministry before the
start of any construction work at the site. The relevant extract of the
c environmental clearance given by the MoEF reads as follows:
"Subject: Construction of residential housing project atTehkhand
New Delhi by Mis Kenneth Builders & Developers Pvt. Ltd.
Environmental Clearance - Reg.
Dear Sirs,
D
This has reference to your application No. nil, dated 15.01.2008
and subsequent letters dated 23.04.2008 and 23.05.2008 seeking
prior Environmental Clearance for the above project under the
EIA Notification, 2006. The proposal has been appraised as per
prescribed procedure in the light of provisions under the EIA
E Notification, 2006 on the basis of the mandatory documents
enclosed with the application viz., the Questionnaire, EIA. EMP
and the additional clarifications furnished in r$!sponse to the
observations of the Expert Appraisal Committee constituted by
the competent authority in its meetings held on 13th 14th March
F 2008, I st & 3rd May 2008 and 26th May, 2008 and awarded
"Silver" grading to the project.
2. xxx xxx xxx
3. The Expe1i Committee after due considerations of the relevant
documents submitted by the project proponent and additional
G clarifications furnished in response to its observation have accorded
environmental clearance as per the provisions of Environmental
Jmpact Assessment Notification - 2006 an·d its subsequent
amendments, subject to strict compliance of the terms and
conditions as follows:
H
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 1135
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

PART A - SPECIFIC CONDITIONS A
I. Construction Phase.
(i) "Consent for Establishment" shall be obtained from Delhi
Pollution Control Committee under Air and Water Act and a copy
shall be submitted to the Ministry before start of any construction
B
work at the site.
(ii) to (xxvi) xxxxxxxxx
II. Operation Phase
xxxxxxxxx
c
PART B - GENERAL CONDITIONS:
xxxxxxxxx
4. and 5. xxx xxx xxx
6. The Ministry reserves the right to add additional safeguard
measures subsequently, if found necessary and to take action D
included revoking of the environment clearance under the
provisions of the Environmental (Protection) Act, 1986, to ensure
effective implementation of the suggested safeguard measures in
a time bound and satisfactory manner.
7. All other statutory clearances such as the approvals for Storage E
of diesel from Chief Controller of Explosives, Fire Department,
Civil Aviation Department. Forest Conservation Act 1980 and
Wildlife (Protection) Act, 1972 etc. shall be obtained, as applicable
by project proponents from the respective competent authorities.
8. These stipulations would be enforced among others under the F
provisions of Water (Prevention and Control of Pollution) Act,
1974, the Air (Prevention and control of Pollution) Act 1981, the
Environment (Protection) Act, 1986 the Public Liability (Insurance)
Act, 1991 and EIA Notification, 2006.
9. Environmental clearance is subject to final order of the Hon 'ble G
Supreme Court oflndia in the matterofGoa Foundation v. Union
oflndia in Writ Petition (Civil) No.460 of2004 as may be applicable
to this project.
I 0. xxx xxx"
H
1136 SUPREME COURT REPORTS [2016] 3 S.C.R.

A 17. In view of the above, Kenneth Builders applied to the DPCC
for "consent to establish" on 4th November, 2008. In response, the DPCC
required Kenneth Builders to submit a "ridge demarcation report" at the
earliest. Despite its asking by Kenneth Builders, the ODA did not give
any such report to Kenneth Builders on the ground that the issue had
already been clarified to the GNCTD in a letter dated 17th October,
B
2008. The letter dated 17th October, 2008 is a little ambiguous inasmuch
as it mentions that the boundaries of the Ridge have been delineated, but
they have not been identified at the site. The letter dated 17th October,
2008 reads as follows:
"Subject: Regarding Residential housing Project at Tehkhand, New
c Delhi by Mis Kenneth Builders & Developers Pvt. Ltd.
Sir,
This has reference to letter No. DPCC/MClll/3154: dated 6th
August, 2008, enclosing the copy of the letter of Secretary
D (Environment) cum Chairman, Delhi Pollution Control Committee,
Government ofNational Capital Territory of Delhi dated 13th June,
2008. In the Master Plan for Delhi-2001, Ridge has been defined
in an area of7777 hectares which is to be preserved in its pristine
glory. In the Preamble of the said Master Plan for Delhi-200 I,
one conceptual sketch indicating the ridge has been shown as one::
E of the eight concepts only, whereas the land use Plan is the legal
documents/plan showing the details which are to be referred for
the purpose of establishing the area/land use, in this case for the
ridge/regional park.
Delhi Government through its notification dated 24.05.1994 has
F delineated the boundaries of the ridge but the same has not been
identified on the site. This notification is under Section 4 for the
areas to be earmarked as reserved forests under the Delhi Forest
Act.
The land pocket where ODA has proposed residential development,
G was clearly shown under District Part in-MPD-2001, and the land
use of the same has already been changed from Recreational
Use (District Park) to residential vide Gazette oflndia notification
Nos.A-13011/30/1995-DDIB dated 08.01.2002 and 23 .02.2006
(copies enclosed). The said notifications were issued following
the due process of law and taking relevant factors into
H
DELHIDEVELOPMENTAUTHORITYv. KENNETH BUILDERS& 1137
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

consideration. No objection in respect of the land use of the Project A
land were raised by any departments including the Forest
Department at that stage.
The Ministry of Environment & Forest, after considering and taking
on record the representation from both Delhi Pollution Control
Committee and ODA (Letter No.F.3(60)MP/D. l l 6 dated 30.6.08) B
with respect to land use of the Project land, has accorded the
Environment Clearance to our project on 15th July, 2008, copy of
the same is attached herewith.
All the facts, documents and detailed plans have been shared and
discussed in detail between the two departments, in meeting. In c
the light of facts been legally converted from recreational use
(District Park) to residential.
In view of the facts, it is requested that the "Consent to Establish"
from Delhi Pollution Control Committee under Air & Water Act
be granted to the applicant at the earliest." D
18. Faced with this impasse and unable to obtain the ridge
demarcation report and therefore the "consent to establish" from the
DPCC, Kenneth Builders approached the Delhi High Court by way of a
writ petition on I st August, 2009 resulting in the impugned judgment and
order. In the writ petition, Kenneth Builders prayed, inter alia, for setting E
aside of the tender/auction notice dated 20th March, 2006 as also the
allotment letter dated 15th June, 2006 and a declaration that the project
was incapable of performance. It was further prayed that the auction
had become void and that Kenneth Builders was entitled to a refund of
the amount paid to the DOA along with interest at 18% per annum till
realization. F
Decision of the High Court
19. The High Court has elaborately discussed the various letters
exchanged between the concerned parties and has thereafter very
succinctly put the controversy in focus in paragraphs 26 and 27 of the
G
impugned judgment and order. These paragraphs read as follows:
"26. The foregoing demonstrates the controversy between the
parties. The petitioner's stand is that it had made the bid for the
project and had aid the entire amount of Rs.450.0 I crores on the
clear understanding that the project site was residential. This
H
1138 SUPREME COURT REPORTS [201613 S.C.R.

A understanding, according to the petitioner, was based on the
representation made by the ODA as the detailed facts referred to
above would reveal. In fact, the DOA has maintained and
continues to maintain its stand that the project site is not within
the ridge area and the land use of the same has been clearly
shown as residential. According to the ODA, the land in question
8
was earlier earmarked for recreational (District Park) purposes.
However, that was subsequently altered by the two notifications
dated 08.01.2002 and 26.02.2006 by carrying out modifications in
the Master Plan (MPD-2001 ). The stand of the ODA is also this
that the land use of any particular area is to be determined under
c the Master Plan and the authority which does such determination
is the DOA and not any other authority, such as the DPCC. The
clear stand of the DOA is that the DPCC has no right or business
to raise any objection with regard to the land use and that is solely
within the domain and powers of the DOA. The stand of the
ODA is, however, not accepted either by the DPCC or the
D
Department of Forests, Government of NCT of Delhi. In fact,
both the DPCC and the Department of Forests (respondents 2
and 4 herein) along with the Government of NCT of Delhi
(respondent No.3) have taken a unified stand that the land in
question falls within the ridge and more so because the Department
E of Forests has found the said land to be part of Khasra Nos. 444
and 445 of village Tehkhand which, in the revenue record, has
been shown as "gair mum kin pahar". Thus, according to the said
respondents, no construction activity can be carried out in the
land in question inasmuch as, according to them it falls within the
ridge area. Consequently, the DPCC has refrained from issuing
F
the "consent to establish" under Water and Air Acts, which was a
requirement and a condition of the clearance given by the Ministry
of Environment and Forests, Government of India.
27. It is in this backdrop that the petitioner felt that there is virtually
no chance of the project going ahead in view of the stalemate
G between the ODA and the various governmental depaiiments. It
is on the basis of this situation that the petitioner has sought the
setting aside of the tender/auction as also the allotment letter dated
15.06.2006 in its favour and has sought the return of the money
paid by it along with interest thereon."
H
DELHI DEVELOPMENT AUTHORITY v. KENN°ETH BUILDERS & 1139
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

20. By the impugned judgment and order, the High Court held A
that Kenneth Builders was not entitled to have the tender/auction in
which it had participated and in which it was a highest bidder set aside.
Kenneth Builders was also not entitled to have the letter of allotment
issued to it pursuant to the acceptance of its bid in the.auction conducted
by the ODA set aside or to the return of money paid by it to the ODA.
B
However, it was held that Kenneth Builders would be entitled to have
the DPCC examine its application forthe grant of"cqnsent to establish"
from the stand point of the Water Act and theAir Act within two months
for carrying out the projec.t which was the subject matter of the writ
petition. It was also 11eld that in the event the DPCC does not give its
"consent to establish" and the project cannot be carried out then Kenneth c
Builders would be entitled to a return of the entire amount (with interest
at the rate of 6% till realization) paid by it to the ODA since the project
would stand frustrated and would be incapable of performance.
21. For arriving at the above conclusions, the High Court held
that once the Master Plan for Delhi prepared by the DDA earmarks D
land for a particular use, then no other authority can challenge the same.
As far as the project land was concerned, the DOA had earmarked it
for residential use and this could not be challenged. The High Court also
held that after the MoEF had given the environmental clearance, the
role of the DPCC was limited to the grant of "consent to establish"
u'nder the Air Act and the Water Act. It was not open to the GNCTD, E
the Department of forests or the DPCC to question the land use of the
project land as determined by the DOA on the ground that it was within
the Ridge.
22. At this stage, it is necessary to mention that during the
pendency of the writ petition in the High Court, it came out that during a F
meeting convened by the Lieutenant Governor on 23rd June, 2009 on
some other issue, the case of Kenneth Builders came up, perhaps for an
informal discussion. Nevertheless, it was decided in that meeting that
the question of the status of the project land should be referred to.the
MoEF (even though it had already granted environmental clearance) G
and that the decision of the MoEF would be accepted asJinal. These
facts were putto the learned Additional Solicitor General appearing in
the matter and he sought time to take instructions. Eventually, the
following response dated 3rd December, 2009 was sent by the MoEF to
the learned Additional Solicitor General:
H
1140 SUPREME COURT REPORTS [2016) 3 S.C.R.

A "Sub: Opinion of the Ministry of Environment and Forest in regard
to WP (C) No. 0647/2009
Ref.: Secretary, Environment, NCT's D.0. No. F.11 (105/PN
CF/Part/09/4582 dated 27 .11.2009).
Sir,
8
This is with regard to Writ Petition (C) I 0647/2009 of Kenneth
Builders and Developers Ltd. v. UOI & Ors. in the High Court of
Delhi. An opinion was sought from Ministry of Environment and
Forests to the effect that the land in the subject matter of the Writ
Petition mentioned under subject is a part of Ridge or not. The
c opinion of Ministry of Environment and Forests in this regard is as
follows:
"Keeping in view the purely legalistic position taken by ODA
and exercise undertaken for identification ofridge, based upon
one or more criterion decided by NCT of Delhi, as relevant for
D classification ofany land as "ridge" in Delhi, the said piece of
land measuring 14.3 ha falling in Khasra No.444 and 445
reflected as "Gai Mumkin Pahar" in revenue land, needs to be
considered as ridge in accordance to the spirit of various orders
ofHon'ble Supreme Court in WP (C) 467711985, morphological
E features and revenue records. The Hon 'ble Apex Court is still
looking into various aspects of protection & conservation of
Delhi ridge, in WP (Civil) No. 467711985 from time to time.
However, the. Hon'ble High Court of Delhi, if deemed
appropriate, the opinion of Central Empowered Committee, set
up by Hon'ble Supreme Court may be taken".
F
It is requested to intimate the Hon'ble Court about the opinion of
the Ministry of Environment and Forests when the case will come
up on 4th December, 2009."
It will be seen from the above that the MoEF had taken a virtual
volte face and had opined that the project land needs to be considered
G
as Ridge, but if deemed appropriate the opinion ofthe Central Empowered
Committee might be taken. This was apparently not brought to the notice
of the High Court.
23. Be that as it may, the DOA has challengeo the order of the
Delhi High Court which has effectively directed the ODA to refund the
H
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 1141
DEVELOPERS LTD. & ORS. [MADAN B. LOKUR, J.)

tender amount to Kenneth Builders since "consent to establish" and A
continue with the project had not been granted by the DPCC. The GNCTD
as well as the Department of Forests also filed a Petition for Special
Leave to Appeal being SLP (C) No. 13146of2011 challenging the decision
of the Delhi High Court to the effect that the DOA is the competent
authority to decide the land use.
B
Subsequent events
24. After the decision of the Delhi High Court, Kenneth Builders
requested the DPCC on 3rd August, 2010 in terms of the order of the
Delhi High Court, for "consent to establish". By its letter of 28th October,
20 I 0 the DPCC made it quite clear that since Kenneth Builders did not c
have any clearance to carry out any construction on the project land
from the Ridge Management Board or from this Court or from the
Department of Forests, "consent to establish" under the Air Act and
Water Act could not be given. It was also mentioned that the Department
of Forests would be challenging the orderofthe Delhi High Court in this
Com1. The letter dated 28th October, 2010 reads as follows: D

"Sub: - Refusal of Consent under Water (Prevention & Control
of Pollution) Act, 1974 and (Prevention & Control of Pollution)
Act, 1981 as amended to date.
Whereas, you Mis KENNETH BUILDERS & DEVELOPERS E
PVT. LTD., MAA ANANDMAYI MARG, TEHKHAND,
DELHI (hereinafter referred as addressee) have applied for
Consent to Estab. (Orange Category) on 30.05.08 vide I.D.
No.2589I under section 21 of Air (Prevention & Control of
Pollution) Act, 1981 and u/s 25/26 of the Water (Prevention &
Control of Pollution) Act, 1974 for activity of Residential F
Construction Project.
And whereas, a letter dt. 27.03.08 addressed to the Commissioner
(L.M.), DOA was received from Deputy ConservatQr of Forest,
South to provide a copy of Environmental Clearance w.r.t. large
scale earth work undertaken by you (the addressee) G
And whereas, a copy of letter dt. 04.04.08 addressed to the
Commissioner (L.M.) DDA was received from the Deputy
Conservator of Forest, South to stop all.construction activity on
the said land until the permission for the same is accorded by the
Ridge Management Board. H
1142 SUPREME COURT REPORTS [2016) 3 S.C.R.

A And whereas, as decided by the Consent Management Committee
(Orange) in its meeting held 03.06.08, a letter was issued to the
Deputy Conservator of Forest, South, on 13.06.08 regarding status
of Forest Clearance w.r.t. the said project.
And whereas, a 0.0. letter issued by the Chairman, DPCC on
B 13.06.08 to the Vice Chairman, ODA regarding immediate
cessation of all construction work on the _project site till the
clearance from the same obtained from the Competent Authorities
including the Ridge Management Board & the Hon'ble Supreme
Court.
And whereas, a letter dt. 23.06.08 has been received from the
c Deputy Consen'.ator of Forest Dept. informing that the clearance
from the Ridge Management Board & the Hon'ble Supreme Court
has not been communicated by DOA so far.
And whereas a letter was issued to the Deputy Conservator of
Forest, South on 19.02.09 to confirm whether any forest clearance
D and ridge demarcation report to the said project has been granted
or not.
And whereas, a reply was received from the Deputy Conservator
of Forest, South on 17.03.09 informing that no forest clearance
has been accorded so far.
E And whereas, a letter was issued to the Deputy Conservator of
Forest, South on 16.04.09 along with the site plans of the project
to inform the status of the area as per the ridge demarcation report.
And whereas, the Hon'ble High Court vide its judgment dt.
30.07.10 directed the DPCC to examine the application of the
F petitioner for grant of"Consent to Establish" from the standpoint
of the Water & Air Acts alone within two months fro,m the date
ofjudgment.
And whereas, after examination, as decided by the Consent
Management Committee (Orange) in its meeting held on 22.09 .10,
G a letter was issued to the Forest Deptt. on 01.10.10 to send the
opinion on the judgment at the earliest as the issue pertains the
Forest Department.
And whereas, the case was again taken up by the Consent
Management Committee (Orange) in it meeting held on I. JO. I 0
H & it was decided:
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 1143
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

"Forest department is going for appeal, therefore, consent be A
refused."
Now, therefore, as decided by the said Committee aforementioned
consent to establish application under Air & Water Acts to the
addressee unit is hereby refused with immediate effect.
Please note that the activity of Residential Construction Project B
without having valid consent under the Air & Water Acts is a
punishable offence and attracts penal action under the provisions
of the said Act."
25. In view of the categorical response, broadly speaking, the
controversy remains whether the project land is a part of the Ridge or c
not and whether the contract between the DDA and Kenneth Builders
has been frustrated due to supervening factors or not. To resolve the
first controversy, this Court passed an order on 6th October, 2015 for
c,,.-ascertaining whether the project land falls within the Ridge or not. This
was in view of the uncertainty in the status of the project land as well as D
the view expressed by the MoEF in the letter dated 3rd December, 2009
addressed to the learned Additional Solicitor General appearing in the
High Court that the issue cou Id be best resolved (if deemed appropriate)
by a reference to the Central Empowered Committee set up by this
Court. Accordingly, we referred this issue to the Central Empowered
Committee (CEC) set up in T.N.Gotlavarma11 v. U11io11 of l11tlia1 • E

26·. Pursuant to the order of 6th October, 20fi the CEC submitted
its Report dated 18th November, 2015 in which it was concluded that
non-forestry use of land falling in the Ridge was permitted enly after a
development project was cleared or recommended by the Ridge
Management Board and permitted by this Court. However, a decision F
was rendered by the Delhi High Court in a case filed by Ashok Kumar
Tanwar [W.P. (C) No. 3339 of 2011 decided on 30th November, 2011]
to the effect that a development project on land outside the notified
Ridge area but having morphological features conforming to the Ridge
would also require clearance froin the. Ridge Management Board and G
this Court. Therefore, as far as the present case is -concerned though
the project land falls outside the Ridge but has morphological features
conforming to the Ridge bringing it within the extended Ridge, the project
of the DDA involving n6n-forestry use of the land could be permitted
'(2013) s sec 198 H
1144 SUPREME COURT REPORTS (2016] 3 SC R.

A only after obtaining clearance from the Ridge Management Board and
after obtaining the permission of this Court. The CEC in its Report
stated in this regard as follows:
"6. The non-forestry use of land falling in Delhi Ridge for
implementation of the various development projects are being
B permitted only after the proposal is cleared/recommended by the
Ridge Management Board and permitted by this Hon'ble Court.
Such permissions have been granted by this Hon'ble Court subject
to deposit of 5% of the estimated project cost with the Ridge
Management Board Fund for conservation and development of
Delhi Ridge and compensatory afforestation over equivalent non-
c forest land/Ridge land at project cost.
7. Earlier, the clearance from the Delhi Ridge Management Board
and the permission of this Hon'ble Court was being insisted upon
only in n;spect of the notified Ridge areas. One Shri Ashok Kumar
Tanwar filed Writ Petition (Civil) No.3339 of 2011 before the
D
Hon 'ble High Court of Delhi against the construction of buildings
and other infrastructure facilities being done by the Directorate
General, Border Road Organisation in 2.25 acres ofland belonging
to Ministry of Defence at Naraina. Delhi Cantonment on the
ground that the said land falls in the Central Ridge and wherein
E pursuant to the directions of this Hon'ble Court the non-forestry
uses are prohibited. Tht: Government of NCT of Delhi after
considering fhe view of the Delhi Ridge Management Board filed
before the Hon'ble High Cou1i of Delhi an affidavit dated 30th
November. 2011 wherein it was stated that the land in question is
situated outside the notified ridge areas but is having morphological
F features conforming to the Ridge. The Hon'ble High Court of
Delhi by order dated 30th November, 2011 disposed of the said
Writ Petition with.the directions that the Border Road Organisation
is restrained from c:mying out any further construction works on
the land till it obtains necessary clearance from the Delhi Ridge
G Management Board or (and) this Hon'ble Comi through the CEC.
A copy of the said order of the Hon 'ble High Court of Delhi is
enclosed at ANNEXURE-R-2 to this Report. Since then, non-
forestry use of any land having morphological features conforn1i11g
to the Ridge but falling outside the notified ridge areas (commonly
referred to as ·'extended ridge areas") is also being permitted
H
DELHI DEVELOPMENT i\UTHORITYv. KLNNETH BUILDERS & 1145
DEVELOPERS LTD. & ORS. [MADAN 13. LOK UR. J]

only after obtaining clearance from the Delhi Ridge Management A
Board and permission of"this Hon'ble Court.
8. The said project of the Border Road Organisation was
subsequently cleared/recommended by the Delhi Ridge
Management Board, recommended by the CEC and thereafter
this Hon'ble Court by order dated 2nd November, 2012 granted B
permission for implementation of the project on 2.25 acre of land
falling on the ·'extended ridge areas". This Hon'ble Cou11 by
another order dated 21.10.2013 has granted permission for
implementation of a project by Delhi Metro Rail Corporation
(DMRC) involving use of lands falling in ·'extended ridge area''.
The copies of the abovcsaid orders of the Hon'ble Cou11 dated
c
2nd November. 2012 and 21st October. 2013 arc enclosed at
ANNEXURE-R-3 and ANNEXURE-R-4 respectively to this
Report.
9. In the present case the Delhi Forest Department has found
that the project area falls in '"extended ridge area'' i.e. outside the D
areas identified as Ridge area in the MPD 2001/MPD 2021 but
having morphological features conforming to the ridge and that a
large extent of areas in and around the project site are recorded
as "Gair Mumkin Pahar" in the revenue records. The stand taken
by the Forest Department has been verified by the CEC during E
the site visit. Copies of the photographs of the project site taken
during the site visit of the CEC are collectively enclosed at
ANNEXURE-R-5 to this Report. A copy of the sketch map
prepared by the Forest Department showing the details of Gair
Mumkin Pahar areas in and around project site is enclosed at
ANN EXURE-R-6 to this Repo11. A copy of the satellite imagery F
made available by the DOA showing the project area in question
and the adjoining areas is enclosed at ANNEXURE-R-7 to this
Report.
10. From the above it may be seen that in the present case the
land falls in the "extended Ridge area" i.e. outside the Ridge areas G
identified in MPD 2001/MPD2021 having morphological feature~
conforming to Ridge. Implementation of all the similarly placed
cases i.e. the pr~jects involving non-forestry use of the areas falling
in "extended ridge areas" have been permitted only after obtaining
clearance from the Ridge Management Board and permission of H
1146 SUPREME COURT REPORTS [2016] 3 S.C .R.

A this Hon'ble Court. In two similarly placed projects of the Border
Road Urganisation and DMRC this Hon 'ble Coutt by orders dated
2nd November, 2012 and 21st October, 2013 respectively has
granted permission from the non-forestry use of the lands falling
in the "extended Ridge area".
B 11. In the above background the CEC is of the considered view
that in the present case the proposed construction of buildings
can be unde1taken only after obtaining clearance from the Ridge
Management Board and permission of this Hon'ble Court."
Discussion
C 27. The first submission of learned coui1sel forthe DOA was that
a writ petition under Article 226 of the Constitution was not maintainable
for the reliefs claimed by Kenneth Builders. The reliefs arise out of a
contractual dispute and the High Court ought not to have entertained the
writ petition. We are not inclined to consider this submission for the
o reason that no such objection was raised by the DOA before the High
Cou1t or even in the petition filed in this Court. The submission has been
advanced by learned counsel for the ODA for the first time during the
final hearing of these appeals. It is too late in the day for learned
counsel to raise such an objection and we are not inclined to entertain it.
E , 28. On merits, it was submitted that in view of the terms and
conditions of the auction and the development agreement between the
. DOA and Kenneth Builders, it was the duty and responsibility of the
developer to obtain all necessary clearances including environmental
clearance and consent from the DPCC for completing the project. It
was pointed out that the MoEF had given environmental clearance for
F the project on 15th July, 2008 subject to the developer obtaining "consent
to establish" from the DPCC under the Air Act and the Water Act. It
was therefore the obligation of Kenneth Builders to approach the DPCC
and obtain the necessary consent which it failed to do.
29. What has been overlooked by learned counsel is that the
G fresh view of the MoEF is that the project land needs to be considered
as Ridge. Consequently, no construction activity is permissible on the
project land. That apart, Kenneth Builders did apply to the DPCC for
"consent to establish" for starting construction activity on the project
land. For considering the request, the DPCC required a ridge demarcation
report which was not given by the DOA to Kenneth Builders or to the
H
DELHI DEVELOPMENT AUTHORITY v. KENN ETH BUILDERS & 1147
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J]

DPCC. Therefore, the DPCC was not inclined to give its consent in the A
absence of the ridge demarcation report. Even after judgment was
delivered by the High Court, Kenneth Builders applied to the DPCC for
"consent to establish" but to no effect in the absence of a ridge
demarcation report and forest clearance.
30. It does appear from the record that the exact boundaries of B
the Ridge had not been identified by anybody and this is apparent from a
letter dated 13th June, 2008 sent by the Secretary (Environment) of the
GNCTD to the DDA ..yherein it was pointed out that there is some
discrepancy between the areas notified by the Ministry of Urban
Development of the Government oflndia in the notifications dated 8th
January, 2002 and 23rd February, 2006 and the boundaries of the Ridge.
c
It was further pointed out that the process of identification had been
initiated by the Department of Forests of the GNCTD but it appears that
the demarcation was not completed by the time the writ petition was
filed by Kenneth Builders. According to the DDA the letter was based
on an incorrect appreciation of facts, but that does not concern us. A 11 D
that is relevant is that the GNCTD believed that the construction could
not go on in the project land since it fell within the boundaries of the
Ridge.
3 r. In this context, it must not be forgotten that even after having
given environmental clearance to Kenneth Builders, the MoEF had second E
thoughts regarding the status of the project land. This led the MoEF to
send the letter dated 3rd December, 2009 referred to above. In other
words, the status of the project land was generally 'unclear' at least to
the GNCTD and the MoEF.
32. Be that as it may, it appears to us that Kenneth Builders did F
take all necessary steps to commence the constn!ction activity on the
project land but due to the impasse created by the governmental agencies,
it could not proceed in the development activity. We agree with learned
counsel for Kenneth Builders that under these circumstances, the
provisions of Section 56 of the Indian Contract Act, 1872 (the Contract
Act) would be attracted to the facts of the case. Section 56 of the G
Contract Act reads as follows:
"56. Agreement to do impossible act - An agreement to do an
act impossible in itself is void.
Contract to do act afterwards becoming impossible or
1-1
1148 SUPREME COURT REPORTS [2016) 3 S.C.R.

/I. unlawful - A contract to do an act which. after the contract is
made, becomes impossible. or. by reason of some event which
the promisor could not prevent, unlawful, becomes void when the
act become;, impossible or unlawful.
Compensation for loss through non-performance of act
B known to be impossible or unlawful - Where one person has
promised to do something which he knew, or, with reasonable
diligence, might have known, and which the promisee did not know,
to be impossible or unlawful, such promisor must make
compensation to such promisee for any loss which such promisee
sustains through the non-performance of the promise.''
(
33. The interpretation of Section 56 of the Contract Act came up
for consideration in Sa(rttbrata Gltose 11. M11g11eera111 Bangur & Co. 3
It was held by this Court that the word "impossible" used in Section 56
of the Contract Act has not been used in the sense of physical or literal
impossibility. It ought to be interpreted as impracticable and useless from
D the point of view of the object and purpose that the parties had in view
when they entered into the contract. This impracticability or uselessness
could arise due to some intervening or supervening circumstance which
the parties had not contemplated. However, if the intervening
circumstance was contemplated by the pa11ies, then the contract would
stand despite the occurrence of such circumstance. In such an event,
"there can be no case of frustration because the basis of the contract
being to demand performance despite the happening of a particular event,
it cannot disappear \\hen that event happens." This is what this Court
had to say:
~ "The first paragraph of the section lays down the law in the same
way as in England. lt speaks of something which is impossible
inherently or by its ve1y nature, and no one can obviously be directed
to perform such an act. The second paragraph enunciates the
law relating to discharge of contract by reason of supervening
impossibility or illegality of the act agreed to be done. The wording
· G of this paragraph is quite general, and though the illustrations
attached to it are not at all happy, they cannot derogate from the
general words used in the enactment. This much is clear that the
word ''impossible" has not been used here in the sense of physical
or literal impossibility. The performance of an act may not be
H '(195~) SCR 310
DELHI DEVELOPMENTAUTHORITYv. KENNETH BUILDERS & I 149
DEVELOPERS LTD & ORS. [MADAN B. LOK UR, J.]

literally impossible but it may be impracticable and useless from A
the point of view of the object and purpose which the parties had
in view; and if an untoward event or change of circumstances
totally upsets the very foundation upon which the parties rested
their bargain, it can very well be said that the promissor finds it
impossible to do the act which he promised to do.
B
Although various theories have been propounded by the Judges
and jurists in England regarding the juridical basis of the doctrine
of frustration, yet the essential idea upon which the doctrine is
based is that of impossibility of performance of the contract: in
fact impossibility and frustration are often used as interchangeable
expressions. The changed circumstances. it is said. make the c
performance of the contract impossible and the parties are absolved
from the further performance of it as they did not promise to
perform an impossibility. The parties shall be excused. as Lord
Loreburn says'
"If substantially the whole contract becomes impossible of D
performance or in other words impracticable by some cause
for which neither was responsible."
xxxxxxxxx
It must be pointed out here that if the parties do contemplate the
possibility of an intervening circumstance which might affect the E
performance of the contract. but expressly stipulate that the
contract would stand despite such circumstance. there can be no
case of frustration because the basis of the contract being to
demand performance despite the happening of a particular event,
it cannot disappear when that event happens. As Lord Atkinson F
said in Matthey v. Curling5 .. a person who expressly contracts
absolutely to do a thing not naturally impossible is not excused for
non-performance because of being prevented by the act of God
or the King's enemies ... or vis lll(Jior''. This being the legal
position, a contention in the extreme form that the doctrine of
frustration as recognised in English law does not come at all within G
the purview of Section 56 of the Indian Contract Act cannot be
accepted."
'Tamplin Steam Ship Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd., (1916)
2 AC 397. 403
' (I 922) 2 AC I 80 at 234
H
1150 SUPREME COURT REPORTS [2016] 3 S.C.R.

A 34. In so far as the present case is concerned, the DOA certainly
did not contemplate a prohibition on construction activity on the project
land which would fall within the Ridge or had morphological similarity to
the Ridge. It is this circumstance that frustrated the performance of the
contract in the sense of making it impracticable of performance.
B 35. It is true that the Government oflndia had notified the project
land as "Residential" and that the project land was shown as
"Residential" in the MPD-200 I and MPD-2021. But that fact alone
would not change the position at law. The exact boundaries of the Ridge
do not appear to have been demarcated and in the absence of
demarcation, it could not be said with any degree of certainty by the
c DOA that merely because of the two notifications issued by the Ministry
of Urban Development the project land could be used for residential
purposes even if it fell within the Ridge. This would be ignoring the
position at law and would be stretching the argument a little too far. The
DOA was unaware that even ifthe project land did not fall within the
D Ridge yet any development activity thereon would require permission
from the Ridge Management Board as well as from this Court since
there was morphological similarity between the Ridge and the project
land. It is this intervening circumstance which eventually frustrated the
implementation of the contract.

E 36. It is one thing for the DOA to now contend before us that
Kenneth Builders could have applied to the Ridge Management Board
for permission to carry out development activity and also approached
this Court for necessary permission but it is another thing to say that
these requirements were not within the contemplation of the DOA and
certainly not within the contemplation of Kenneth Builders. For a statutory
F body like the DOA to contend that in the face of the legal position (with
which the ODA obviously does not agree), Kenneth Builders ought to
have persisted and perhaps initiated or invited litigation cannot be
appreciated. '
37. When the DDA informed Kenneth Builders that the project
G land was available on an "as is where is basis" and that it was the
responsibility of the developer to obtain all clearances, the conditions
related only to physical issues pertaining to the project land and ancillary
or peripheral legal issues pertaining to the actual construction activity,
such as compliance with the building bye-laws, environmental clearances
etc. The tenns and conditions of "as is where is" or environmental
H
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 1151
DEVELOPERS LTD. & ORS. [MADAN B. LOKUR, J.]

clearances emphasized by learned counsel for the DOA certainly did A
not extend to commencement of construction activity prohibited by law
except after obtaining permission of the Ridge Management Board and
this Court. On the contrary, it was the obligation of the DOA to ensure
that the initial path for commencement of construction was clear, the
rest being the responsibility of the developer. The failure of the DDA to
B
provide a clear passage due to an intervening circumstance beyond its
contemplation went to the foundation of implementation of the contract
with Kenneth Builders and that is what frustrated its implementation.
38. Reliance by learned counsel forthe DDA on the "as is where
is" concept as well as clauses 6 and 11 of the Development Agreement
in this context is misplaced. As mentioned above, this primarily pertains
c
to physical issues at site. This is clear from the following passage referred
to by learned counsel from Pun}ab Urban Planni11f( & Deve/opme11t
Authority v. Raf(lllt Naill Gupta•:
"Evidently, the commercial plots were allotted on "as-is-where-
is" basis. The allottees wou~d have ascertained the facilities D
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" E
basis, they shol.lld 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. Over and above, the facts would clearly indicate
that there was not much delay on the pa11 of PUDA to provide F
those facilities as well. As noted, the electrical works and health
works were completed by 24-12-2002 and 22-11-2002 respectively
and all the facilities like parking, lights, roads, water, sewerage,
etc. were also provided."
39. On a conspectus of the facts and the law placed before us, G
we are satisfied that certain circumstances had intervened, making it
impracticable for Kenneth Builders to commence the construction activity .
on the project land. Since arriving at some clarity on the issue had taken
a couple of years and that clarity was eventually and unambiguously
'·(2012)8sec197 H
1152 SUPREME COURT REPORTS (2016] 3 S.C.R.

A provided by the report of the CEC, it could certainly be said that the
contract between the ODA and Kenneth Builders was impossible of
performance within the meaning of that word in Section 56 of the Contract
Act. Therefore, we reject the contention of the ODA that the contract
between the DOA and Kenneth Builders was not frustrated.
B 40. Learned counsel for Kenneth Builders urged that the amount
deposited with the DOA ought to be returned with interest at 12% per
annum and not 6% per annum as directed by the High Court. We are not
inclined to accede to this request. Kenneth Builders had prayed for interest
at 18% per annum in the High Court but that was declined and only 6%
per annum was awarded. Kenneth Builders is not in appeal before us on
c this issue. However, we make it clear that the calculation of interest on
the amount deposited would be with effect from I Ith September, 2006
when the entire amount of Rs. 450.01 crores was deposited by Kenneth
Builders with the DOA.
41. The GNCTD and the DPCC raised an issue before us that
D the ODA was not the final authority in the matter of determining the
land use particularly when it related to the Ridge. In the view that we
have taken, it is not necessary to go into this question.
Conclusion
E 42. The appeal filed by the DOA is dismissed. The DOA should
now refund the deposit made by Kenneth Builders with interest at 6%
per annum calculated from 11th September, 2006 till realization. The
question raised in the connected appeal filed by the GNCTD and the
Department of Forests of the GNCTD is left open for consideration in
an appropriate case.
F
43. There will be no order as to costs.

Kalpana K. Tripathy Appeal dismissed.