Holding

The cancellation of the allotment was valid as the appellant failed to make timely payments, the later deposits were not accepted, and a fresh allotment to a third party precluded any relief.

Summary

Skyline Contractors and another applied for allotment of an 8,000 sq.m plot in NOIDA, paying an initial deposit of Rs.13.20 lakh. The allotment order required 25% of the premium within 60 days and the balance in ten half‑yearly instalments, with no extension unless expressly granted. The appellants failed to make any further payment for two and a half years; only after NOIDA sent a letter asking for proof of deposits did they start paying in September 2005. NOIDA cancelled the allotment on 21 June 2006, re‑allotting the plot to a third party, and the High Court upheld the cancellation. The appellants argued that the later deposits, once made, amounted to acceptance and estopped cancellation, relying on earlier Supreme Court decisions. The Supreme Court held that the delayed deposits were made unilaterally, were not accepted by NOIDA, and that a fresh allotment to a third party precluded any relief, thus affirming the High Court's order. Consequently, the appeal was dismissed and the appellants were allowed to withdraw the deposits they had made.

Issues considered

Whether the development authority can cancel an allotment when the allottee fails to make stipulated payments within the prescribed time.
Whether acceptance of delayed deposits by the authority estops it from cancelling the allotment.
Whether the presence of a third‑party interest and a fresh allotment bars relief to the original allottee.

Subjects

allotmentcancellationnon‑paymentestoppelthird‑party interestdevelopment authoritypublic contractproportionality

Judgment

[2008] 10 S.C.R. 589
-- ~

SKYLINE CONTRACTORS PVT. LTD. & ANR. A
v.
STATE OF U.P. & ORS.
CIVIL APPEAL NO. 4272 OF 2008
JULY 9, 2008
'B
[A.K. MATHUR AND. ALTAMAS KABIR, JJ.]

URBAN DEVELOPMENT
Cancellation of allotment of plot for non-payment by al-
lottee -Allottee not making deposits within the time stipulated c
in the allotment order -Deposits made after a gap of two and ,
half years - Development Authority canceling the allotment .
and making fresh allotment in favour of another person - High
Court upholding the cancellation - Held: Allottee having failed .
to make the payment within stipulated period and meanwhile . D
third party interests having intervened and a fresh allotment ,
order made in favour of another person, order of High Court,
needs no interference.
The appellants made an application for allotment of
a plot admea~uring 8,000 square meter and made an ini- E
tial deposit of Rs.13,20,000/-. On 17.4.2003, an order of al-'
lotment was issued in favour of the appellants requiring
them to deposit 25% of the premium amount with respon-
"• ~ dent-Development Authority within 60 days. It was further
mentioned in the order that if the required amount was F
not deposited within the specified period, applicants' ear-
nest money would be forfeited. The balance 75% of the
premium amount was required to be deposited in ten
equal half-yearly instalments. The appellants did not de-
posit any amount for a period of 2% years after receipt of G
' t 'i the allotment letters. On 3.5.2005, the respondent Devel-
opment Authority asked the appellant to produce receipt;s
of deposits, if any, made in pursuance of the allotmef'.lt
letter. Three months after receiving the said letter, the ap-
589 H
590 SUPREME COURT REPORTS [2008] 10 S.C.R.

A pellants started making deposits in September 2005. The ,
Development Authority cancelled the allotment by order '

dated 21.6.2006 on the ground that the appellant had failed
to make the deposits in accordance with the terms and
conditions of allotment. The appellants filed a writ peti-
8 tion before the High Court contending that the respon-
dent Development Authority having accepted the depos-
its was estopped from canceling the allotment. The stand
of the respondents was that since the appellant failed to
deposit any amount other than the initial deposit of
c Rs.1·3,20,000/- within the time stipulated in the allotment
order and unilaterally deposited the amounts two and half
years after the al'lotment order was made, the appellants
were not entitled to any relief; and that since third party
interests had intervened and fresh allotment of the plot
had been made in favour of respondent no.5, the reliefs
0
sought for by the appellants in the writ petition could not
been granted. The allottees having failed in the writ peti-
tion before the High Court, filed the instant appeal.
Dismissing the appeal, the Court
E HELD: The appellants did not make any deposits,
other than the initial deposit of R~.13,20,000/-, in terms of
the allotment order for a period of 2 % years from the said
•
order, and made deposits unilaterally only after a com-
munication was received from the respondent-Develop- >,- •./
.
F ment Authority asking for proof of deposits, if any, made.
The reason given for not making the deposits, as per the
allotment order, is not very convincing. Since the depos-
its subsequently made by the appellants were not ac-
cepted by the respondent-Development Authority and,
G particularly, when third party interests have intervened and
a fresh allotment order has been made in favour of re-
spondent No.5 and no prayer has been made in the writ
petition for setting aside such allotment, the appellants
are not entitled to the relief claimed. However, the appel-
H lants wiil be entitled to withdraw the deposits made by
SKYLINE CONTRACTORS PVT. LTD. & ANR v. STATE 591
OF U.P. & ORS. [ALTAMAS KABIR,J.]

-- ~ them towards the balance of the premium amount [para
17-19] [598-A,B,C,D,E]
A

R.K. Saxena v. Delhi Development Authority AIR 2002
SC 2340; and Teri Oat Estates(P) Limited v. U. T Chandigarh
and another 2004 (2) sec 130 - held inapplicable.
B
-+ CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4272
of 2008
From the final Judgment and Order dated 18/4/2007 of
the High Court of Judicature at Allahabad in C.M.W.P. No. 51537/
2006 0
Shail Kr. Dwivedi, A.AG. Arun Bhardawaj, Dr. AM. Singhvi,
Ratnakar Dash, Mahesh Agarwal, Rishi Agarwal, Arvind Kumar,
Gaurav Goel, E.C. Agrawala, Manu Nair, Mark D' Souza, S.N.
Purohit (for Mis. Suresh A. Shroff & Co.), D.K. Goswami, Anuvrat '
D
Sharma and Ravindra Kumar for the appearing parties.
~
'
The Judgment of the Court was delivered by
ALTAMAS KABIR,J. 1. Leave granted.
2. The appellants herein filed a writ petition before the E!
Allahabad High Court for quashing an order dated 21.6.2006
issued on behalf of the New Okhla Industrial Development Au-
thority (hereinafter referred to as 'NOIDA')cancelling the allot-
ment of Plot no.A-28 in Sector 62 made in favour of the appel-
!ant. F
.~

""" 3. Admittedly, the appellant made an application for allot-
ment of the aforesaid plot measuring 8000 square meters pur-
suant to an advertisement published on behalf of the NOIDA
inviting such applications and made an initial deposit of
Rs.13,20,000/- while submitting the application. On 17.4.2003 G
an order of allotment was issued in favour of the appellant
• "f
whereby the petitioner was required to deposit 25 per cent of
the premium amount in cash or by a bank draft in favour of NOIDA
within 60 days of such allotment. It was categorically stipulated
that if the said amount was not deposited within the time speci- H
592 SUPREME COURT REPORTS [2008] 10 S.C.R.

A fied the depositor's earnest money would be forfeited and no
extension of time would be granted for deposit of the said
amount under any circumstances. The balance 75% of the pre-
mium amount was required to be deposited by the allottee in
10 equal half-yearly instalments along with interest at the. rate of
s 14% per annum on outstanding premium. Here also, it was t-
categorically stipulated that no extension for payment of
instalments would be granted and if the allottee failed to pay the
instalments within due dates the allotment would be cancelled
and the amount equivalent to 25% of the premium would be
c forfeited in favour of the NOIDA. In exceptional circumstances.
however, the Chief Executive Officer of NOi DA was vested with
the discretion to extend the time for making deposits, which
would be subject to payment of interest@ 17% per annum com-
pounded every half yearly on the defaulted amount for the de-
D faulted period.
4. As has been noticed by the High Court in its judgment t-
impugned in this appeal, the appellants did not deposit any
amount for a period of two and a half years after receipt of the
allotment letter. The Authority wrote to the appellant on 3.5.2005
E requesting the appellant to produce receipts of deposits, if any,
made in pursuance of the allotment letter. Three months after
receiving the said letter the appellant started making deposits
in September 2005 and on 16.12.2005 wrote to the NOIDA
asking for details with regard to the deposit of stamp duty, etc.
F for execution of the lease deed pursuant to the allotment made
in its favour. Despite the said letter, the NOIDA cancelled the ~
allotment made in favour of the appellants by its order dated
21.6.2006 on the ground that the appellant had failed to make
the deposits as per clause 2(iv) of the Terms and Conditions for
G allotment. As stated herein before, the writ petition was filed chal-
lenging such cancellation.
5. On considering the submissions made on behalf of the >r -..
parties the High Court rejected the plea of the appellants that
although the appellants had failed to deposit the premium
H amount in keeping with the terms and conditions of the allot-
SKYLINE CONTRACTORS PVT. LTD. & ANR. v. STATE 593
OF U.P. & ORS. [ALTAMAS KABIR,J.]
~-+

ment, the said amount subsequently deposited by the appel- A
lants had been duly accepted by the NOIDA which had accord-
ingly waived such terms and conditions and the allotment made
in the appellant's favour could not have been cancelled on the
ground that the same had not been deposited in time. The High
---+ Court also rejected the other submission made on behalf of the B
appellants that the NOIDA had acted wrongly in re-allotting the
plot in question to the Respondent No.5 at a much cheaper rate
than was demanded from the appellants. The High Court held
that having failed to make the 9eposits within the time stipu-
lated in the allotment letter the voluntary deposits subsequently c
made two and half years after the issuance of the allotment let-
ter, without the approval of the NOIDA, could not be accepted
as valid deposit and the appellants were not, therefore, entitled
to any relief. Certain judgments of this Court which have been
., relied upon before us by the appellants had also been consid-
D
-+ ered by the High Court which came to the conclusion that the
same were not applicable to the facts and circumstances of the
instant case. The High Court, therefore, held the writ petition to
be completely misconceived and dismissed the san:ie.
6. The same arguments as was advanced before the High E
Court have also been advanced before us with special empha-
sis on the letter dated 15.5.2003 written on behalf of the appel-
lant to the NOIDA with reference to the allotment letter of
17.4.2003. Referring to the said letter, learned counsel for the
' -f. appellant submitted that it had been mentioned therein that a
modified allotment letter would be issued to the appellants along
F

with a statement of account of the balance amount payable on
account of typographical discrepancy in the allotment letter, but
that neither had such modified letter been given to the appellant
nor had any statement of account been issued as promised. It
G
was also sought to be highlighted that in the letter it had been
t "I specifically mentioned that the officials of NOIDA had refused
to accept the payment on account of some internal inquiry and/
or procedural changes being effected by NOIDA.

7. It was urged that since no reply was received to the said H
)
594 SUPREME COURT REPORTS [2008] 10 S.C.R.

A letter no further payments were made in terms of the allotment
letter till the appellants received the letter written on behalf of
.. the NOIDAon 3.5.2005 asking the appellants to produce proof
of deposit of the allotment amount which was required to be
deposited by 16.2.03. It was urged that once the said letter was
B received, deposits were made on 6.12.2005 making up a total
sum of Rs.3,80,20,000/- after giving credit for deposit of the
initial amount of Rs.13,20,000/-. It was reiterated by counsel
that having accepted the aforesaid deposits, the NOIDA was
estopped from cancell!ng the allotment by its order dated
c 21'~6.2006.'

8. In support of his submission learned senior counsel re-
ferred to several decisions of this Court regarding the manner
in which public authorities should conduct themselves while ex-
tending benefits to private individuals by way of contracts and
D agreements.
9. Learned counsel firstly referred to the decision of this
Court in R.K. Saxenav. Delhi Development Authority (AIR 2002
SC 2340) where a similar set of facts were under consider-
ation. In the said case, after making the initial deposit of 25 per
E cent of the auctioned price, the auetion purchaser prayed for
extension of time to deposit the balance of 75 per cent which
was required to be paid within 60 days from the date of issu-
ance of the demand letter. In the said case also the Chairman,
D.elhi Development Authority, was vested with discretion to ex-
F · tend the time for such payments up to a maximum period of
180 days, subject to payment of interest on the balance amount
@ 18 per cent per annum. The demand letter for payment of
the said ·amount was issued on 3.1.1996 but only a part thereof
was deposited on 19.2.1996 with a prayer for further extension
G to make the balance payment. Such prayer was granted and
further time was granted for the said purpose. Pursuant to said
extensions certain amounts were deposited towards the bal- '( '
ance 75 per cent, but ultimately when on 2 .9 .1996 further exten-
sion was sought for there was no reply to the letter though vari-
H ous sums deposited thereafter were accepted by the Authority
SKYLINE CONTRACTORS PVT. LTD. & ANR. v. STATE 595
OF U.P. & ORS. [ALTAMAS KABIR,J.]
-~
despite the fact that such deposits were made after the stipu- A
lated time. It was also brought to the notice of the Court that the
entire balance amount had since been paid for the plot in ques-
tion. Since, despite having accepted the delayed payment the
plot was not delivered to the appellant, legal notices were is-
sued on its behalf and subsequent thereto the allotment was B
cancelled and the earnest money was forfeited. The writ peti-
tion filed in the High Court against said cancellation of allot-
ment was dismissed on 29.2.2000 by the High Court which held
that after the expiry of the period stipulated in the agreement
the.allottee could not have deposited the balance amount uni- c
laterally without any demand being issued to him after the ex-
tended dates and no relief could be given to the allottee. Learned
counsel pointed out that when the said matter was carried to
this Court, this Court held that the order of the High Court could
,.. not be sustained particularly when both the delayed payments
D
and the interest amount thereupon were accepted by the re-
""' spondent-authority. This Court observed that the moment those
payments were accepted there was deemed extension of time
and that it was only one and half years after the legal notices
had been sent to the Authority that the allotment order was can-
celled. This Court held in the facts of that case that after accept- E
ing the delayed payment the respondent-authority could not have
cancelled the allotment.
10. Reliance was also placed on the decision of this Court
~ in Teri Oat Estates (P) Limited v. U.T. Chandigarh and another
~
F
((2004) 2 SCC 130) where the concept of disproportionate ac-
tion was applied in a similar case where the lessee defaulted/
delayed in payment of instalments of premium, interest thereon
and ground rent in terms of the letter of allotment but it was found
that the same had been occasioned due to a situation beyond
G
the control of the lessee and not on account of any wilful or dis-
. . "!
honest intention on the part of the lessee. Keeping in mind the
principles of proportionality, this Court not only held that the les-
see/appellants therein had not only shown their bona fides in
making payments before the High Court but they had also shown
H
596 SUPREME COURT REPORTS [2008] 10 S.C.R.

..f--·
A their willingness to make payment on the difference amount and
pursuant to the orders passed by this Court had not only paid
the entire amount due, but had also paid the ground rent upto
1998-99 and 10 per cent penalty on the forfeited amount _of the
entire consideration money. While allowing the appeals, this -
B Court observed that the land in question for all intents and pur-
poses had been transferred in favour of the lessee who was
+--
merely required to pay the balance amount of 75 per cent of the ,t "\
consideration amount in instalments, While also deprecating
the conduct of the lessees in not making an endeavor to pay·the _
c instalments within a reasonable period, this.Court in consona'nce '-
(·

wiJh the doctrine of proportionality observe9 that after the letter
of allotment had been issued in favour of the lessee/appellant it
had been put in possession of the property and had raised a .'
six-storied building on the said land. It was also observed that it
had paid a part of the first instalment and had during the pen:.
D ~
dency of the proceeding before the High Court paid a substaro.- ~
tial amount, together with interest@ 12 per cent per annurri, as
enhanced from time to time. This Court ~as, thereto.re, of the
view that the resumption of the plot by the Estate Officer was
too drastic and such power of resumption and forfeiture should
E be exercised only as a last resort. Of course, it was also indi-
cated th;::it such an observation did not mean that_the power of
resumption and forfeiture should never be resorted to if the in-
tention of the allottee was dishonest or with ill-motive or the pay-
ments in terms of the allotment were made with· a dishonest
~
F view or dishonest motive. I

+
11. Learned counsel submitted that having regard to the
aforesaid decision it must also be held in this case that cancel- •
i
lation of the allotment six months after the entire balance amount
had been deposited could not be sustained and the High Court
G
had erred in dismissing the writ petition filed by the appellant
company challenging the cancellation 'o_f the allotment made in
'( ~
its favour.
12. The learned counsel appearing both for the State of
H U;P. and NOIDA supported the decision of the High Court and
SKYLINE CONTRACTORS PVT. LTD. & ANR. v. STATE 597
- ·-\
OF U.P. & ORS. [AlTAMAS KABIR,J.]

submitted that since the appellant had failed to deposit any A
amount, other than the initial deposit of Rs.13,20,000/-, within
the time stipulated in the allotment order and had unilaterally
deposited the balance amount 2% years after the allotment or-
der was made and, that too, after a letter had been addressed
to the appellant asking for proof of deposit of the said amounts, B
it was not entitled to any relief. It was urged on behalf of the
NOIDA that the deposits said to have been made by the appel-
lant after receipt of the said letter, had been made unilaterally·
and had not been accepted by. the NOIDA. Accordingly, the
appellant could not derive any benefit from the decisions cited c I

on its behalf since in all the said cases, the deposits, though
made out of time, had subsequently been accepted by the con-
cerned authority.
13. It was also. submitted that since third party interests
had intervened and the plot had since been allotted in favour of D
the respondent NO .5, the relief sought for by the appellant in the
writ petition could not be granted.
14. Similar submissions were made on behalf of the re-
spondent No.5, in whose favour the plot in question had been
allotted after the allotment in favour of the appellant was can- E
41
celled.

15. It was submitted that the reason sought to be given on
behalf of the appellant for non payment of the premium amount
r
~ was extremely dubious and had been rejected by the NOIDA in F
its discretion. The decisions cited on behalf of the appellant
could not be applied to the facts of this case, since in the present
case, the deposits subsequently made by the appellant had not
been accepted by the NOIDA. It was lastly urged that, in any
event, no relief could be granted in favour of the appellant, since
G
no prayer had been made in the writ petition for cancellation of
';
"I the allotment made in favour of the respondent No.5.
16. Having considered the submissions made on behalf
of the respective parties, we are not inclined to interfere with
the order of the High Court in the present appeal. H
598 SUPREME COURT REPORTS [2008] 10 S.C.R.

A 17. There is no dispute that the appellant did not make
any deposits, other than the initial deposit of Rs.13,20,000/-, in
terms of the allotment order. There is also no dispute that the
deposits ultimately made 2% years after the allotment order had
been passed, had been made unilaterally and only after a corn-
s munication was received from the NOIDA asking for proof of +- ·
deposits made and, that too, three months after receipt of such
letter.
18. We are inclined to accept the submissions made on
behalf of the respondents that the reason given for not making
C the deposits, as per the allotment order, is. not very convincing.
'·
We are also inclined to accept the other submissions made on
behalf of the respondents that since the deposits subsequently
made by the appellant had not been accepted by the NOIDA,
the ratio of the decisions cited on behalf of the appellant would
D not apply to the facts of this case, particularly, when third party
interests have intervened and a fresh allotment order had been
made in favour of the respondent No.5 and no prayer has been
made in the writ petition for setting aside such allotment.
19. We, therefore, have no option but to dismiss the ap-
E peal, but without any order as to costs. The appellant will be I-
entitled to withdraw the deposits made by it in favour of the
respondents towards the balance of the premium amount.
R.P. Appeal dismissed.

y