Supreme Court of India
SRI RAM BUILDERSversusSTATE OF M.P. & ORS.
- Citation
- 2014 INSC 343
- Decided
- 25 April 2014
- Disposal
- Dismissed
- Bench
- S S NIJJAR
Holding
The Supreme Court held that the High Court’s order for specific performance cannot be enforced; the appellant must seek remedy against MPRTC in a civil suit as there is no privity with IDA and judicial review of contractual matters involving the State is limited.
Summary
Sri Ram Builders entered into a BOT agreement with the Madhya Pradesh Road Transport Corporation (MPRTC) to construct a bus‑stand‑cum‑commercial complex on land leased by the Indore Development Authority (IDA). The High Court ordered MPRTC to hand over possession of the land and directed specific performance, but the order was later challenged after the lease was cancelled and the land was returned to IDA. The Supreme Court held that the dismissal of the Special Leave Petition in limine did not merge the High Court judgment, yet the High Court’s order could not be enforced because the lease had terminated, the appellant had no privity with IDA, and the dispute was essentially contractual. Consequently, the Court declined to grant specific performance under Article 226 and directed the appellant to pursue a civil suit against MPRTC for breach of contract. The appeals were dismissed.
Issues considered
- The effect of a non‑speaking dismissal of a Special Leave Petition on the merger of the High Court judgment.
- Whether the High Court order dated 5 August 2005 directing possession can be enforced after the lease cancellation and subsequent events.
- Whether the appellant has privity of contract with the Indore Development Authority and can claim breach of contract against it.
- Whether the Supreme Court can grant specific performance of a contract between a private builder and a public corporation under Article 226.
- Whether the directions issued by the Chief Secretary are within his jurisdiction and can be challenged.
- The applicability of the doctrine of frustration of contract to the present facts.
Legislation cited
- Constitution of Indias. Art. 136, s. Art. 141, s. Art. 226
- Indian Contract Act, 1872s. 56
- Industrial Disputes Act, 1947s. 25-0
- Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973s. 35(2), s. 35(3)
Subjects
contract lawspecific performanceprivity of contractlease terminationadministrative lawjudicial reviewrule of mergerspecial leave petitionfrustration of contractpublic authorityArticle 226Madhya PradeshBOT scheme
Judgment
[2014] 5 S.C.R. 686
A SRI RAM BUILDERS
v.
STATE OF M.P. & ORS.
(Civil Appeal No. 4896 of 2014)
APRIL 25, 2014.
B
[SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.]
Judgments:
c Rule of merger - Held: SLP having been dismissed in
limine without recording any reason, judgment of High Court
cannot be said to have merged with order of Supreme Court.
Administrative Law:
1
D Public authority - Chief Secretary of State directed by
High Court to settle issue of cancellation of lease in favour
of MPRTC - Appellant submitted representation before Chief
Secretary - Held: Appellant having not challenged
competence of Chief Secretary to decide the issue, cannot
E be permitted to say that directions issued by Chief Secretary
are without jurisdiction.
Constitution of India, 1950:
Art. 226 - Writ petition for enforcement of contract with
F instrumentality of State - Contract between appellant and
MPRTC to construct a bus stand-cum-commercial complex
on land leased to MPRTC by /DA - Held: Scope of judicial
review is very limited in contractual matters even where one
of the contracting parties is the State or an instrumentality of
G the State - High Court has rightly observed that appellant can
seek appropriate relief by way of a civil suit - High Court in
exercise of its jurisdiction under Art. 226 would not normally
grant relief of specific performance of a contract.
H 686
SRI RAM BUILDERS v. STATE OF M.P. 687
Contract: A
Contract between appellant and MPRTC to construct a
bus stand-cum-commercial complex on land leased to
MPRTC byJDA - Held: At no stage, appellant had any privity
of contract with /DA - MPRTC entered into a BOT contract
8
with appellant contrary to the terms and conditions of lease
which provided specifically that land shall be used only for
bus stand - MPRTC had no regal right to create any further
right in favour of appellant with regard to receiving of premium
on constructed units sold to third party(ies) - Even otherwise, C
by efflux of time the said /ease period expired on 21.1.2012
- So far as the breach of contract is concerned, appellant
will have no cause of action against /DA as there is no privity
of contract between the parties - Appellant shall be at liberty
·to seek its remedies against MPRTC for breach of contract - "
So far as the specific performance is concerned, the entire D
purpose of the contract has been frustrated by subsequent
events.
Subsequent Events:
E
Contract between appellant and MPRTC to construct a
bus stand-cum-commercial complex on land leased to
MPRTC by /DA - Subsequently lease in favour of MPRTC
expired - Possesson of land delivered to /DA - Held:
MPRTC would not be in a position to continue with the lease
F
as it is heavily indebted - Property of the Corporation has
been attached by various creditors - Even the proposed site
where the bus stand-cum-commercial complex was to be
constructed is under attachment.
A lease deed dated 2-11-1981 was entered into G
between Madhya Pradesh Road Transport Corporation
(MPRTC) and Indore Development Authority (IDA).
Possession of the land was handed over to MPRTC on
22-1-1982. Initially, the lease was taken by the MPRTC for
the purpose of a bus stand. On 8-11- 2001, the Council H
688 SUPREME COURT REPORTS [2014] 5 S.C.R.
A of Ministers of the State authorized construction of a
commercial complex on the land under build, operate and
trade (BOT) Scheme. A tender notice was issued on
13.4.2002. The bid of the appellant was found to be the
highest. An agreement was entered into between MPRTC
8 and the appellant on 4.2.2004 whereunder the promoters/
builders had the right to market the saleable space in the
commercial complex and collect premium on such
allotment from prospective buyers. On 25.5.2004, MPRTC
deposited the lease rental with IDA. A formal lease was
c executed on 26-5-2004, for 30 years. The leased land
(plot) was to be used only for the bus terminal. It was
specifically provided that the plot could not be divided.
On 18.12.2005, the State Government decided to wind up
the MPRTC. However, the proposal of the State
Government was not approved by the Ministry of
0
Shipping and Road Transport, Government of India and
the State Government was informed of the decision by
letter dated 17.11.2008. Meanwhile, when the State
Government intended to close down MPRTC, the
appellant filed W.P. No. 63 of 2005. On 5.8.2005, the High
E Court issued direction in the said writ petition, inter alia,
that the respondent would hand over vacant possession
of the premises in question to the appellant. The SLP filed
against the directions was dismissed by the Supreme
Court. On 2.11.2007, the lease was cancelled by IDA. The
F cancellation of the lease was challenged by MPRTC, by
way of a writ petition, which was disposed of by the High
Court on 11.12.2007 by referring the entire issue to the
Chief Secretary. The appellant did not challenge the order
dated 2.11.2007. It submitted to the jurisdiction of the
G Chief Secretary by filing a comprehensi~. e representation.
The Chief Secretary, on 4.3.2009 de 'ded the matter
holding: (I) Order dated 2.11.2007,an . notice dated
3.6.2007 for cancellation of lease be cancelled; (II) RTO
be ordered to release the land in question for attachment;
H (Ill) .MPRTC would hand over possession of land in
SRI RAM BUILDERS v. STATE OF M.P. 689
question to IDA; (IV) The amount received from appellant A
be returned with interest; and (V) Decision as to use of
land would be taken by IDA. The appellant challenged
directions Ill, IV and V of the Chief Secretary in the writ
petition before the High Court, which declined to interfere.
B
Dismissing the appeals, the Court
HELD: 1.1. The dismissal of the SLP filed by MPRTC
against the order dated 5.8. 2005 in Writ Petition No.363
of 2005 was a dismissal in limine without recording any
reason. Therefore, the judgment of the High Court cannot C
be said to have merged with the order of this Court. [para
47) [714-D]
Indian Oil Corporation Ltd. vs. State of Bihar & Ors. 1986
(3) SCR 553 = 1986 (4) SCC 146; Kunhayammed & Ors. vs. D
State of Kera/a & Anr. 2000 (1) Suppl. SCR 538 = 2000
(6) SCC 359; and Gangadhara Palo vs. Revenue Divisional
Officer & Anr. 2011 (3) SCR 746 = 2011 (4) SCC 602 "."" relied
on.
1.2. Even otherwise, the events after the passing of E
the order dated 5.8.2005 cannot be ignored. The lease to
MPRTC was cancelled on 2.11.2007 by the IDA, which
was not challenged by the appellant. The said order was
challenged by MPRTC in Writ Petition No.6770 of 2007.
On 11.12. 2007, the High Court without issuing notice to F
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 G
ought to be decided by the Chief Secretary of the State
of Madhya Pradesh by holding meetings with the officers
of th~ respective departments. The appellant submitted
a detailed representation dated 20.2.2009 before the Chief
Secretary, who revoked the order dated 2.11.2007 and H
690 SUPREME COURT REPORTS [2014] 5 S.C.R.
A notice dated 30.6.2007. R.T.O. was directed to release the
leased land from attachment. It is noteworthy that the
appellant has not chosen to challenge the said two
directions. However, the appellant challenged in the writ
petition the directions issued in Clauses Ill, IV and V, but
B did not challenge the competence of the Chief Secretary
to decide the issues. The appellant cannot be permitted
to state that the said directions are without jurisdiction.
Under the orders dated 4.3.2009 of the Chief Secretary,
possession of the land has already been delivered to IDA.
c Therefore, it would not be possible at this stage to direct
that the mandamus granted on 5.8.2005 in Writ Petition
No.636 of 2005 shall be enforced. Further, having
submitted to the jurisdiction of the Chief Secretary, it
would not be open to the appellant to challenge the order
dated 11.12. 2007. [para 50 and 60] [716-F-H-; 717-A-G;
0
723-F-G]
1.3. 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
E limited in contractual matters even where one of the
contracting parties is the State or an instrumentality of
the State. [para 51] [717-G-H]
Tata Cellular vs. Union of India 1994 (2) Suppl. SCR
F 122 = (1994) 6 SCC 651 - referred to.
1.4. The High Court 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
Art. 226 of the Constitution would not normally grant the
G relief of specific performance of a contract.[para 52l [719-
F-GJ
Ramchandra Murarilal Bhattad vs. State of
Maharashtra 2006 (10) Suppl. SCR 106 = 2007
H
SRI RAM BUILDERS v. STATE OF M.P. 691
(2) SCC 588; Noble Resources Limited vs. State of Orissa A
2006 (6) Suppl. SCR 53 = 2006 (1 O) sec 236 - relied on
1.5. 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
8
of the lease which provided specifically that the land shall
be used only for bus stand. 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). [para 53] [720-C-D]
c
1.6. Even otherwise, the possession of the proposed
site was delivered to MPRTC on 22.1.1982. The maximum
lease period was for 30 years. By efflux of time the said
lease period expired on 21.1.2012. It cannot be said that
as the entire rent had been paid, MPRTC would be o
entitled to automatic renewal of the lease for 90 years.
The renewal clause in the lease provides that the renewal
shall be with the consent of IDA. This consent by the IDA
is not a mere formality. Therefore, it cannot be accepted
that the term of the lease has to be understood to have E
commenced from 26.05.2004. [para 53] [720-D-F]
1. 7. Besides, no application has been filed even for
formal renewal by MPRTC. In any event, MPRTC would
not be in a position to continue with the lease as it is
heavily indebted. The property of the Corporation has F
been attached by 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 G
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. The
appellant shall be at liberty to seek its remedies against
MPRTC for breach of contract. As regards the specific H
692 SUPREME COURT REPORTS [2014] 5 S.C.R. ·
A performance, the entire purpose of the contract has been
frustrated by subsequent events. 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
8 breach of the terms and conditions of the lease on the
basis of which it has been terminated in accordance with·
law. [para 54 and 58] [720-G-H; 721-A-B; 722-H; 723-A]
Maritime National Fish, Limited vs. Ocean Trawlers,
Limited (1935) A.C. 524; Boothlinga Agencies vs. V. T.C.
C Poriaswami Nadar (1969) 1 SCR 65 - held inapplicable.
Pollock and Mui/a, 14th Ed.Pgs. 887-889 - referred to.
1.8. In any event, these are issues which would involve
adjudication of disputed questions of fact which can only
D 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. [para 59] [723-8-C]
E Rajasthan Housing Board & Anr. vs. G. S. Investments
& Anr. 2006 (7) Suppl. SCR 868 = 2007 (1) SCC 477 - relied
on.
Meghmala & Ors. Vs. G. Narasimha Reddy & Ors. 2010
F (10) SCR 47 = 2010 (8) SCC 383; DOA vs. Durga Chand
Kaushish 1974 (1) SCR 535 =1973 (~) SCC 825;
Ramkishore Lal vs. Kamal Narian (1963) Supp (2) SCR 417
and Sahebzada Mohammad Kamgar Shah vs. Jagdish
Chandra Deo Dabhal Deo (1960) 3 SCR 604; Provash
Chandra Dalui vs. Biswanath Banerjee 1989 (2)
G SCR 401 =1989 (1) Suppl. SCC 487; and State of U.P. vs.
Lalji Tandon2003 (5) Suppl. SCR 77 = 2004 (1) SCC 1;
Hardesh Ores (P) Ltd. Vs. Hede and Company 2007 (6)
scR 608 = 2001 (5) sec 614 - cited.
SRI RAM BUILDERS v. STATE OF M.P. 693
Case· Law Reference: A
2010 (10) SCR 47 cited para 30
1974 (1) SCR 535 cited para 32
(1963) Supp (2) SCR 417 cited para 32
B
(1960) 3 SCR 604 cited para 32
1989 (2) SCR 401 cited· para 33
2003 (5) Suppl. SCR 77. cited para 33
1969) 1 SCR 65 held para 35
inapplicable
c
2006(7) Suppl. SCR 868 relied on para 39
2007 (6) SCR 608 cited para 41
2000 (1) Suppl. SCR 538 relied on para 41
D
2011 (3) SCR 7 46 relied on para 41
1986 (3) SCR 553 relied on para 47
1994 (2) Suppl. SCR 122 referred to para 51
2006 (10) Suppl. SCR 106 relied on para 52 E
2006 (6) Suppl. SCR 53 relied on para 52
(1935) A.C. 524. Held para_56
inapplicable
CIVIL APPELLATE JURISDICTION : Civil Appeal No. F
4896 of 2014.
From the Judgment & Order dated 27.09.2012 of the High
Court of M.P. at Jabalpur in W.P. No. 2937 of 2009.
WITH G
C.!~. Nos. 4897, 4898-4899, 4900 of 2014.
R.F. Nariman, P.S. Patwalia, Sushil Kr. Jain, Puneet Jain,
.Christi Jain, Chhaya Kirti, Pratibha Jain for the Appellant.
H
694 SUPREME COURT .REPORTS [2014] 5 S.C.R.
A Dushyant Dave, J.P. Cama, Krishnan Venugopal, Sanjay
Kapur, Anmol Chandan, Priyanka Das, Lekha Vishwanath,
Ashish Wad, Jayashree Wad, Tamali Wad, Kanika Baweja (for
_J.S. Wad & Co.), Mishra Saurabh, V. Shukla, Ankit Lal for the
Respondents.
B The Judgment of the <?ourt was delivered by
SURINDER SINGH NIJJAR, J. 1. Leave granted.
2. The Civil Appeal 4896 of 2014 arising out of S.L.P. (C}
No. 35001 of 2012 impugning the judgment of the M.P. High
C 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
D aforesaid Contempt Petition and the two Review Petitions have
been disposed of in view of the order p·assed in Writ Petition
No. 2937 of 2009.
3. The relevant facts leading to the filing of the aforesaid
E SLP are as follows:-
4. In 1979, Respondent No.2 I Madhya Pradesh Road
Transport Corporation (hereinafter referred to as "MPRTC")
proposed to construct a bus stand at Vijay Nagar, Indore. To
F 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
G allotted to the Transport Corporation, initially, for 30 years. In
pursuance of the Lease Agreement, pos~ession of the
proposed site was handed over to the MPRTC. ·
5. The Council of Ministers, State of Madhya Pradesh, vide
H order dated 8th November, 2001, authorised the Transport
·SRI RAM BUILDERS v. STATE OF M.P. 695
[SURINDER SINGH NIJJAR, J.]
Corporation to construct a commercial complex on the land A
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 B
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 c
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
0
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.
E
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 F
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 G
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 H
696 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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,
B 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
C 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
D 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.
E
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.
F 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.
G 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
\H Government. The High Court, vide order dated 9th September,
SRI RAM BUILDERS v. STATE OF M.P. 697
[SURINDER SINGH NIJJAR, J.]
2004, sought reports from the State Government as well as the A
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.
B
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 C
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 D
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 E
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 C!ny existing/future order(s) passed by
various Courts, including Tribunals, in any/all matters relating to F
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 G
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 H
698 SUPREME COURT REPORTS [2014] 5 S.C.R.
A interest@ 18% per annum, w.e.f. July 2004 when
the 2r:d 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
B
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.
c iii. Respond1;mt 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
D 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
E
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
F 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,
G 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
H August, 2005.
SRI RAM BUILDERS v. STATE OF l'y1.P. 699
[SURINDER SINGH NIJJAR, J.]
16. At that stage, the Principal Secretary, Transport A
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 B
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 C
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 D
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 E
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. F
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. G
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 H
700 SUPREME COURT REPORTS [2014] 5 S.C.R.
A earmarked for the commercial complex, was onP. 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 iss.ued on 5th August, 2005. These facts could not be
s 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
C 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:
D
"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
E 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).
F 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
G 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
H the MPRTC through Writ Petition No. 6770 of 2007 in the High
SRI RAM BUILDERS v.-STATE OF M.P. 701
[SURINDER SINGH NIJJAR, J.]
Court of Madhya Pradesh. On 11th December, 2007, the High A
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 B
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 C
continue with the proceedings in the present Petition. l
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 D
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 E
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,
F
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 G
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 H
702 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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
B 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 l.D.A.
C be cancelled.
II. R.T.O. be ordered for releasing the land by the
Transport Department for attachment.
Ill. The M.P. Road Transport Corporation shall
D
hand over land in question to l.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.
E
V. Decision with respect to further use and
management of the land shall be taken by l.D.A."
24. Aggrieved by Clause (Ill}, (IV) and (V) of the aforesaid
decision, Appellant preferred Writ Petition No. 2937 of 2009
F 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.
G 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
H
SRI RAM BUILDERS v. STATE OF M.P. 703
[SURINDER SINGH NIJJAR, J.)
lease deed was cancelled by the IDA. It is this cancellation A
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 B
dated 11.12.2007 and submitted a detailed representation
dated 20.02.2009 to the Chief Secretary. The impugned
decision taken by the 9hief 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 c
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 0
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 E
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."
F
26. In view of the aforesaid directions, the High Court also
disposed of the Contempt Petition No. 469 of 2008, Review
Applicatio_n Nos. MCC No. 99 of 2009 and MCC No. 893 of
_200.8 without any further directions.
G
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 H
704 SUPREME .COURT REPORTS [2014] 5 S.C.R.
A 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
B 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
c 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
D MPRTC challenging the order of cancelling the deed in. its
favour by the IDA. The appellant was not at all involved in the
aforesaid tis. 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.
E 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
F 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
G 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 (Ill}, (IV) and (V),
which affect the rights of the appellant was challenged in the
writ petition in which the impugned judgment has been passed.
H According to the appellant, the decision Nos. (I) and (II) were
SRI RAM BUILDERS v. STATE OF M.P. 705
[SURINDER SINGH NIJJAR, J.]
correct and, therefore, there were no occasion to challenge the A
same. The directions (Ill), (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 B
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 c
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 D
till date. The aforesaid order. has become final after the
dismissal of SLP (C) No. 20038 of 2005 on 7th October, 2005.
lt 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 E
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 Petitian MCC
No. 8.93 of 2008 is not maintainable for the same reason. In
any event, the Review Petition was not decided on merits, which F
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 G
noticed here that the manner in which these submissions have
been advanced before us bear no resemblance to the manner
in ~hich these submissions were made before the High Court.
1.. (2010) a sec 383. H
706 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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 thaf the
possession of the site in terms of the lease cannot be held to
8 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
C lease commences from 26.05.2004. In this context, learned
senior counsel rely upon the following cases: DOA vs. Durga
Chand Kaushish 2; Ramkishore Lal vs. Kamal Narian 3 and
Sahebzada Mohammad Kamgar Shah vs. Jagdish Chandra
Dea Dabhal Deo. 4 These cases reiterate the well established
principles of law relating to the construction of deeds, which are
D 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
E 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
F 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 ~elied upon Provash
Chandra Dalui vs. Biswanath Banerjee 5 and State of U.P. vs.
Lalji Tandon. 6
G
2. (1973) 2 sec 825 ..
3. (1963) Supp (2) SCR 417.
4. (1960) 3 SCR 604.
5. (1989) Supp (1) SCC 487 (Para 14).
H 6. (2004) 1 sec 1 (Para 13).
SRI RAM BUILDERS v. STATE OF M.P. 707
[SURINDER SINGH NIJJAR, J.]
34. Further .according to Mr. Nariman, the terms of the A
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. B
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 C
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 Nadar7, wherein it was inter alia held that "the
doctrine of frustration of contract cannot apply where the event D
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.
E
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 F
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 G
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.
7. (1969) 1 SCR 65, at Page 79. H
708 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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.
B 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
c 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
0
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
E 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
F 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.
G Therefore, no Mandamus can be issued to IDA, to
permit the appellant to construct the Bus Stand and
commercial-cum-residential complex. Mr. Gama
further submitted that the lease commences from
22nd January, 1982 when possession was handed
H over and expired on 21st January, 2012 upon
SRI RAM BUILDERS v. STATE OF M.P. 709
[SURINDER SINGH NIJJAR, J.]·
completion of 30 years period of the lease. It is A
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 B
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 I c
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 D
commercial-cum-residential complex on 8.0.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.
E
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 F
by the appellant, the said order has not become
final inasmuch as:-
(i) IDA was not a party in fhe said proceedings;
G
(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
H
710 SUPREME COURT REPORTS [2014] 5 S.C.R.
A (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
B now willing to repay Sri Ram and hence prayed for
recall of orcler 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
C the order of SC. Hence judgment of HC can be
reviewed, even after dismissal of SLP. Reli.ance
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
8.0.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
E Rajasthan Housing Board & Anr. vs. G. S. Investments & Anr. 6
and Ramchandra Murarilal Bhattad & Ors. vs. State of
Maharashtra & Ors. 9
40. It is submitted that the arguments of the appellant that
F 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,
G 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
8: (2007) 1 sec 477.
H 9. (2007) 2 sec 588.
SRI RAM BUILDERS v. STATE OF M.P. 711
[SURINDER SINGH NIJJAR, J.]
lease period, it can be extended after renewal; that too only with A
the consent of MPRTG and IDA and further obtaining sanction
of the State Government. According to Mr. Gama, two short
questions would arise namely:-
(i) From what date, the period of 30 years is to be
B
counted?
(ii) Whether there is an automatic extension of lease?
41. It is according to Mr. Gama, admittedly possession of
the property was given to MPRTG on 21st January, 1982. This · G
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 fac~ been paid
by deposit of premium plus 15 years lease rent. It is reiterated
by Mr. Gama that admitted date of actual possession by the 0
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 E
of this submission, Mr. Gama relies on Hardesh Ores (P) Ltd.
Vs. Hede and Company10 (Pages 627 & 628). He submitted
that the agreement of lease used both words extension and
renewal but extension is ~!ways made subject to renewal. Mr.
Gama further pointed out that Order dated 5th August, 2005 F
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 G
· & Ors. vs. State of Kera/a & Anr. 11 and Gangadhara Palo vs.
Revenue Divisional Officer & Anr. 12
10. (2007) s sec 614.
11. (2000) 6 sec 359.
, ·, 2. (2011) 4 SCC 602 (Para 7). H
712 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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
B 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
c 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
D 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
E 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
F 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
G provided as under:
"The successful promoters/builders will have the right to
market the saleable space made available to him ,an
different floors in the commercial complex, collect premium
on such allotment from prospective buyers."
H
SRI RAM BUILDERS v. STATE OF M.P. 713
[SURINDER SINGH NIJJAR, J.]
45. On 25th May, 2004, MPRTC deposited the lease rental A
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 B
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 C
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." D
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 E
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 25-0 of the Industrial Disputes Act, 1947. F
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, G
2005, MPRTC was restrained from handing over the
possession of the property or to create third party interesUrights.
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 H
714 SUPREME COURT REPORTS [2014] 5 S.C.R.
A cance11ation 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 -
B 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 Ill, IV and V of the order
of the Chief Secretary.
47. We shall now consider the submission of Mr. Nariman,
C 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.
Undo_ubtedly, the SLP filed by MPRTC against the order dated
5th August, 2005 in Writ Petition No.363 of 2005 has been
D 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 th'e effect of the
•
dismissal of the SLP in limine. This Court reiterated the ratio
E laid down by this Court in Indian Oil Corporation L-td. 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."
F 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
G the grounds or reasons of its dismissal must, by
necessary implication, be taken to be that this (:;ourt 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
H 14. (1986) 4 sec 146.
_ SRI RAM BUILDERS v. STATE OF M.P. 715
[SURINDER SINGH NIJJAR, J.]
order passed by this Court was not a speaking one, it is A
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 B
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 c
of public policy analogous thereto, would the order of this
Co(frt dismissing the special leave petition operate to bar
.the trial of ident.ical issues in a separate proceeding
namely, the writ proceeding before the High Court merely
on the basis of an uncertain assumption that the issues
0
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 E
Kunhayammed (supra) observed as follows:
"27. A petition for leave to appeal to this Court may be
dismi$sed by a 11on-speaking order or by a speaking
order..Whatever be the phraseology employed in the order F
of c;:lismissal, 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 G
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):
H
716 SUPREME COURT REPORTS [2014] 5 S.C.R.
A "7. The situation is totally different where a special leave
petition is dismjssed without giving any reasons
whatsoever. It is well settled that special leave under ArticJe
136 of the Constitution of India is a discretionary remedy,
and hence a special leave petition can be dismissed for
8 a variety of reasons and not necessarily on merits. We
cannot say what was in the mind of the Court whi.le
dismissing the special leave petition without giving any
reasons. Hence, when a special leave petifion is
dismissed without giving any. reasons, there is no merger
c 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
D passed by the High Court on 5th August, 2005? Mr. Nariman
has submitted that the order passed by the Chief Secretary on
11 tl:i 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
E 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
F 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 c.haller1ge 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
G 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
H was of the opinion that the entire dispute ought to be decided.
SRI RAM BUILDERS v. STATE OF M.P. 717
[SURINDER SINGH NIJJAR, J.]
by the Chief Secretary of the State of Madhya Pradesh by A
holding, meetings between the Principal Secretary of the
Transport Department, Pdncipal Secretaries of Housing and
Environment Departrpent and the Managing Director of the
MPRTC. The appellant accepted the aforesaid order passed
by the Hig.h Court and submitted a detailed representation B
.before.the Chief Secretary on 20th February, 2009. The Chief
Secretary· in the meeting held on 4th March, 2009 took a
comprehe.nsive 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 c
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 chailenge the aforesaid two directions. However, as noticed D
e-arlier, the appellant challenged the directions issued in
Clauses Ill, 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. Ill, IV .and V E
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 C_hiefSecretary dated 4th March, 2009, the possession F
of tpe 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 b~ .enforced.
G
. 51. In the ultimate analysis, the whole controversy boils
qown.to a breach of contract by MPRTC entered into with the
appellant. The scope of judicia~ review is very limited in
contractu;:il matters even where one of the contracting parties
is the
.,,.. State
.
or an instrumentality of the State. The parameters H
718 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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
8 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
c 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
D 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
E the Government tries to get the best person or the best
quotation. TAe 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.
F
* * *
77. The duty of the court is to confine itself to the question
of legality. Its concern should be:
G (1) Whether a decision-making authority exceeded its
powers?
(2) committed an error of law,
H 14. (1994) 6 sec 651.
.SRI RAM'·BUILDERS v.
STATE OF M.P. 719
[SURINDER SINGH NIJJAR, J.]
(3) committed a breach of the rules of natural justice, A
(4) reached a decision which no reasonable tribunal would
have reached, or
'(5) abused its powers.
B
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, c
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-
0
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 rUie E
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 F
obseNed 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 Murarila/ Bhattad vs. State of G
Maharashtra. 15 This Court relying upon the earlier decision in
Noble Resources Limited vs. State of Orissa 16 held as under:
15. (2007) 2 sec 588.
16. (2006) 10 sec 236. H
720 SUPREME COURT REPORTS [2014) 5 S.C.R.
A "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
B
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
C 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
D 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
E 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.
F 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
G 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
H complex was to be constructed is under attachment. The claim
SRI RAM BUILDERS v. STATE OF M.P. 721
[SURINDER SINGH NIJJAR, J.]
made by the appellant is in the nature of damages for breach A
of contract and1or 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 B
of the contract has been frustrated by subsequent events.
55. We are also not much impr~ssed 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 C
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 D
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 E
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 F
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 G
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.
H
722 SUPREME COURT REPORTS [2014] 5 S.C.R.
A 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
B Maritime National Fish, Limited vs. Ocean Trawlers, Limited17 •
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
c 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
0
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
E of the appellant's own election, and, therefore, no frustration of
the contract.
57. This Court distinguished the aforesaid judgment and
observed as follows:-
F "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
G
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
H 17. (1935) A.C. 524.
SRI RAM BUILDERS v. STATE OF M.P. 723
[SURINDER SINGH NIJJAR, J.]
had sought permission of the State and the Union of India to A
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
B
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 C
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 D
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." E
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 201 ~. The aforesaid SLP has been filed
merely to get over the earlier lapse of not challenging the order
F
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.
G
61. For the aforesaid reasons, we see no merit in the.
appeals. The civil appeals are, therefore, dismissed.
Rajendra Prasad Appeals dismissed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "contract law"Sign in to search