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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7252-7253 OF 2003

The Rajasthan State Industrial Development                 …Appellants  and Investment Corporation & Anr.  

Versus

Diamond and Gem Development Corporation Ltd.       …Respondents  & Anr.  

WITH

CIVIL APPEAL NOS.  8222-8223 OF 2003

J U D G M E N T   

Dr. B. S. CHAUHAN, J.

1. These  appeals  have  been  preferred  against  the  impugned  

judgment  and  order  dated  30.7.2002  passed  by  the  High  Court  of  

Rajasthan (Jaipur Bench) in Civil Writ Petition Nos. 5481/1994 and  

105/1997,  by which the High Court  has  allowed the writ  petitions

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filed by the respondent-Diamond and Gem Development Corporation  

Ltd. (hereinafter referred to as the ‘Company’), for quashing the order  

of cancellation of allotment of land and directing the appellants for  

providing the approach/access road.  

2. As  these  appeals  have  been  preferred  against  the  common  

impugned judgment, for the sake of convenience, Civil Appeal Nos.  

7252-53/2003 are to be taken to be the leading case.  The facts and  

circumstances giving rise to these appeals are :

A. That a huge area of land admeasuring 607 Bighas and 5 Biswas  

situate  in  the  revenue  estate  of  villages  Durgapura,  Jhalan  Chod,  

Sanganer  and  Dhol-ka-Bad  in  District  Jaipur,  stood  notified  under  

Section 4(1) of the Rajasthan Land Acquisition Act, 1953 (hereinafter  

referred  to  as  the  `Act’)  on  18.7.1979,  for  a  public  purpose  i.e.  

industrial  development,  to  be  executed  by  the  appellant  Rajasthan  

State  Industrial  Development  and Investment  Corporation (in  short  

‘RIICO’).  

B. Declaration under Section 6 of the Act was made on 22.6.1982  

for the land admeasuring 591 Bighas and 17 Biswas. After meeting all  

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requisite statutory requirements contained in the Act,  possession of  

the land, was taken over by the Government and was subsequently  

handed over to appellant-RIICO, on 18.10.1982 and 17.11.1983.  The  

Land Acquisition Collector assessed the market value of the land and  

made  an  award  on  14.5.1984.   RIICO  made  allotment  of  land  

admeasuring 105 acres vide allotment letter  dated 10.3.1988 to the  

respondent no.1 company,  to facilitate the  establishment of a Gem  

Industrial Estate for the manufacturing of Gem stones.  

C. In pursuance of the aforesaid allotment letter, a lease deed was  

executed  between  the  appellant  and  respondent-company  on  

22.5.1989, with a clear stipulation that the land was allotted on an “as  

is-where-is”, and that the respondent-company must complete the said  

project within a period of 5 years, and further that, in the event that  

the terms and conditions of the lease agreement were  not complied  

with,  the  appellant  would  be  entitled  to  recover  its  possession  in  

addition  to  which,  various  other  conditions  were  also  incorporated  

therein.  

D. After  possession  was  taken  by  the  respondent-company,  

construction could be carried only on a portion of the land allotted to  

it.  As the development work was being carried out at an extremely  

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slow pace,  the  appellant  issued various  notices  from time to time,  

reminding the respondent-company that it was under an obligation to  

complete  the  project  within  a  specified  period,  owing to  which,  it  

must accelerate work.  Additionally, there also arose some difficulty  

with respect  to the respondent-company’s attempts to sub-lease the  

said premises,  or parts thereof, and in view of this,  an amendment  

dated  4.11.1991 was inserted  in  Rule  11-A of  the  Rajasthan  Land  

Revenue (Industrial area Allotment) Rules, 1959 (hereinafter referred  

to as the ‘Rules 1959’), enabling the company to sub-lease the said  

land.  

E. The  appellant  vide  notice  dated  4.7.1992,  informed  the  

respondent-company,  that  as  per  clause  2(n)  of  the  lease  deed,  all  

construction had to be completed within a stipulated time period of 5  

years.  The respondent-company began asking the appellant to provide  

it accessibility via road, from the Jaipur Tonk main road and, as the  

same was not provided, the respondent-company filed Writ Petition  

No. 5481 of 1994 before the High Court, seeking the issuance of a  

direction to the appellant to provide to it, the aforesaid road.  

F. During the pendency of the aforesaid writ petition, the appellant  

expressing  its  dis-satisfaction  with  regard  to  the  progress  of  the  

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development of the said land by the respondent-company, filed a reply  

to the said writ petition before the High Court stating that it was not  

under  any  obligation  to  provide  to  the  respondent-company  the  

aforementioned approach road, as the lease deed had been executed  

between them, on the basis of an “as-is-where is” agreement. Further,  

the  appellant  issued  a  show  cause  notice  dated  29.8.1996,  to  

determine the lease in light of the lease  agreement, in lieu of the fact  

that the respondent-company had not made any progress regarding the  

completion of the project, and even after the expiry of a period of 5  

years,  only  10%  of  the  total  construction  stood  completed.  In  

pursuance  thereof,  the  lease  deed  was  cancelled  vide  order  dated  

1.10.1996, and possession of the land in dispute was taken back by the  

appellant on 3.10.1996.

G. The respondent-company filed another Writ Petition No. 105 of  

1997,  challenging  the  cancellation  order  dated  1.10.1996  and  the  

taking over of possession by the appellant on 3.10.1996. The appellant  

contested the said writ petition on the grounds that it was entitled to  

restoration  of  possession,  as  the  respondent-company had failed  to  

ensure compliance with the terms and conditions incorporated in the  

lease deed, according to which, the company was required to complete  

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the said project within a period of 5 years.  However, presently, the  

extent of development completed by it stood at 10%. Therefore, in  

light of the aforementioned circumstances, the appellant had no choice  

but to cancel the lease deed and take back possession.   

H. The High Court vide its impugned judgment and order, allowed  

both the writ petitions quashing the order of cancellation, and directed  

the restoration of possession of the aforesaid land to the respondent-

company,  and further,  also directed the appellant  to provide to the  

respondent-company, the approach/access road demanded by it.  

Hence, these appeals.  

3. Shri Dhruv Mehta, learned senior counsel appearing on behalf  

of the appellant-RIICO, and Shri Manish Singhvi, learned Additional  

Advocate General for the State of Rajasthan have submitted that, as  

the allotment of the land had been made to the respondent-company  

on an ‘as-is-where-is” basis,  there was no obligation on the part of  

RIICO to provide to it, the said access road. The terms of the contract  

must be interpreted by court, taking into consideration the intention of  

the parties and  not on the basis of equitable grounds. Moreover, the  

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cancellation  of  the  deed  was  in  accordance  with  the  terms  and  

conditions incorporated in the lease deed, and therefore, in light of  

the facts and circumstance of the case, the High Court has committed  

an  error,  by  quashing  the  order  of  cancellation  and,  in  issuing  a  

direction for the restoration of possession and for the provision of the  

access road.  

The High Court has mis-interpreted the amendment to Rule 11-

A of  the  Rules  1959,  and has  thus  held  that  the  appellant  had no  

jurisdiction to cancel  the said lease,  as the respondent-company by  

virtue of the operation of the amended provision, had become a direct  

lessee of the State. In such a fact-situation, there was no obligation on  

the part of the appellant to provide the approach road as it was not the  

lessor of the respondent-company. In case by virtue of the amendment  

in Rule 11-A of the Rules 1959, the State Government became the  

lessor,  the  appellant-RIICO lost  the  title/interest  over  the  property  

which had been acquired by it on making payment of the huge money  

and that too, without getting any refund. Such an interpretation leads  

to absurdity. Thus, the appeals deserve to be allowed.  

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4. Per contra, Shri P.S. Patwalia, learned senior counsel appearing  

for  the  respondent-company,  has  submitted  that  the  judgment  and  

order of the High Court does  not require any interference whatsoever,  

for  the  reason  that  the  respondent-company  had  been  invited  to  

establish and develop the Gem Stone industrial park at Jaipur. In view  

of the fact, that the amendment to Rule 11-A of the Rules 1959 was  

made exclusively to facilitate the respondent-company to sub-lease a  

part of the developed premises, the High Court has rightly held that  

the  State  Government  became  the  lessor  and  that,  RIICO  had  no  

concern whatsoever in relation to the said matter, owing to which, it  

had no competence to cancel the lease. In the light of the fact that  

RIICO  was  in  possession  of  other  lands  surrounding  the  land  in  

question, the High Court has directed it to provide to the respondent-

company,  an  access  road  on  equitable  grounds,  taking  into  

consideration the fact that, in the event that the respondent-company’s  

area remained land locked, it would be impossible for it to develop the  

project, and has stated that not providing the access road was in fact,  

the  basic  reason  for  delay  in  development.  Thus,  the  appeals  lack  

merit and, are liable to be dismissed.  

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5. We  have  considered  the  rival  submissions  made  by  learned  

counsel for the parties and perused the record.  

Before proceeding further,  it may be pertinent to refer to the  

relevant statutory provisions, and certain terms of the lease deed.  

Rule 11-A of the Rules 1959 read :

“………………….

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Clause (iv) of Rule 11-A.- The Rajasthan State Industrial  Development and Investment Corporation Ltd. may sub- lease  the  leased  land  or  part  thereof  for  industrial  purpose;  including  essential  welfare  and  supporting  services. Provided that in the case of Diamond and Gem  Development Corporation to whom the land has already  been leased out by RIICO for 99 years, the sub-lessee i.e.  DGDC may further sublet and the terms and conditions  and other provisions contained in the rules in so far as  they  relate  to  RIICO  shall  mutatis  mutandis apply  to  DGDC also as if the land in question has been let out to  them by State Government under Rule 11-A.”

(Emphasis added)

6. There has been further amendment to Rule 11-A of the Rules  

1959 w.e.f. 12.10.2000, and the relevant part thereof reads as under:

“In  Rule  11-A  of  the  said  rules,  after   condition (iv) and before condition (v), the   

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following  new  condition  (iv-a)  shall  be   inserted; namely:-

(iv-a) The sub lessee of the Rajasthan State   Industrial  Development  and  Investment   Corporation Limited may further sub-lease   the sub-leased land or part thereof on such   terms  and  conditions  as  may  be  mutually   agreed  between  such  sub-lessee  and   subsequent  sub-lessee.  The  terms  and   conditions  applicable  to  sub-lessee  shall   also  mutatis  mutandis  apply  to  such   subsequent sub-lessee”.  

7. Rajasthan  State  Industrial  & Investment  Corporation Limited  

(Disposal  of  Land)  Rules,  1979  (hereinafter  referred  to  as  `Rules  

1979’),  deals with the allotment of land by RIICO to entrepreneurs.  

Relevant rules thereof read as under:  

“16. The allottee shall not except with the written consent  

of the Corporation, be allowed to sublet the constructed  

premises  for  industrial  purpose  only  which  can  be  

considered on following conditions:

(i) The sub-letting of vacant and/or unutilized land in  

the  industrial  areas  of  the  Corporation  shall  not  be  

allowed.

(ii) That consent of the Managing Director  be given to  

the allottee of the plot (owner) to sublet the whole or part  

of the constructed premises after the allottee has cleared  

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all  the outstanding dues of the Corporation and started  

the  production  at  the  allotted  plot  on  the  following  

conditions:  

(iii)        xx    xx xx

(iv) Permission for  transfer  of  surplus/unutilized land  

with  the  units  which  have  come  into  commercial  

production shall be granted on payment of premium as  

may be decided by the Corporation from time to time  

which  is  presently  equal  to  50%  rate  of  development  

charges at the time of such transfer of difference amount  

between the prevailing rates of development charges and  

the rates of development charges on which the allotment  

was made whichever is higher.  

24. Cancellation- The Corporation shall have the right  

to cancel the allotment after issuing 30 days show cause  

notice to the allottee by the concerned Senior Regional  

Manager/Regional  Manager  on  any  breach  of  any  of  

these  rules,  condition  of  allotment  letter  and  terms  of  

lease agreement.”  

8. It  may  also  be  pertinent  to  refer  the  relevant  terms  and  

conditions of lease deed dated 22.5.1989, which read as under:

“AND WHEREAS the lessor has agreed to demise and   the lessor has agreed to take on lease, the piece of land   

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known as plot no. SP-1 Indusrial Area, Sanganer, Phase- II on “as is where is basis”:

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2(b) That the lessee  will  bear,  pay and discharge  all   service  charges  as may be decided by the lessor  from  time to time which for the present would be @ Rs.10.10   (Ten  paisa  per  sq.mtrs.)  per  year  from  the  date,  the   lessor provided as pucca links road in this area.  

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(d) That the lessee will erect on the demised premises   …..and  will  commence  such  construction  within  the   period of 6 months and will completely finish the same fit   for  use  and  start  production  within  the   period  of  60   months from the date of these presents or within such the   case of these presents, or within such the date of these   presents or within such extended period of time as may   be allowed by the lessor in writing at its discretion.  

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(g) That the lessee will provide and maintain in good   repair a properly constructed approached road or path  alongwith the event across drain to the satisfaction of the   lessor/local  Municipal  Authority  leading  from  the   public/cooperation road to the building to be erected on   the demises premises.  

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(i) The  lessee  will  not  without  the  general  prior   consent  in  writing  of  the  lessor  transfer,  sublet,   relinquish, mortgage or assign his interest in the demised   premises……..

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(m) ………That lessee shall construct and complete the   said  building  and  put  the  demised  premises  with  the   buildings  constructed  thereon  to  use  hereinabove   mentioned within 54 calendar months from the date of   

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possession of the said land is handed over to him and in   any case within 60 calendar months from the date of this   agreement provided that the lessor may at his discretion   extend the time hereinbefore provided if in his opinion   the delay is caused for reasons beyond the control of the   lessee. Provided that utilized land of the allotted plot of   land shall revert to the Corporation on the expiry of the   prescribed/extended  period  for  starting  production/   expansion of the unit.  

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(r) The lessee will in each year within 2 months from  the expiry of the account in year supply to the lessor a   copy  of  his  profit  and  loss  account  pertaining  to  the   accounting  year  and  the  business  run  by  him  in  the   demised premises.  

3(a) Notwithstanding anything hereinbefore  contained  if  there  shall  have  been  in  opinion  of  the  lessor  any   breach by the lessor…. or if the lessee fails to commence   and complete the buildings in time and manner it  shall   be  lawful  for  the  lessor  ….to  reenter  without  taking  recourse to the Court of law up on the demised premises   or any part there of his name of whole and there on this   demise  shall  absolutely  cease  and  determine  and  the   money paid by the Lessee by  virtue of these preset shall   stand forfeited to the lessor without prejudice to rights of   the lessor here under with interest thereon at @19% per   annum  and  the  Lessee  shall  not  be  entitled  to  any   compensation whatsoever.

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3(h) Every dispute, difference or question touching or   arising out or in respect of this agreement to the subject   matter  shall  be  referred  to  the  sole  arbitrator,  the   Collector  of  the  District  wherein  the  leased  plot  is   situated or a, person appointed by him.  The decision of   

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such  arbitrator  shall  be  final  and  binding  on  the   parties.”   

Before entering into merits of the case,  it  is  required to deal  

with the legal issues involved herein:

I. Approbate and Reprobate

9. A party cannot be permitted to “blow hot-blow cold”, “fast and  

loose” or “approbate and reprobate”.   Where one knowingly accepts  

the  benefits  of  a  contract,  or  conveyance,  or  of  an  order,  he  is  

estopped from denying the validity of, or the binding effect of such  

contract, or conveyance, or order upon himself. This rule is applied to  

ensure equity, however, it must not be applied in such a manner, so as  

to violate the principles of,  what is  right  and,  of  good conscience.  

(Vide:  Nagubai Ammal & Ors.  v.  B. Shama Rao & Ors.,   AIR  

1956 SC 593;  C.I.T. Madras v. Mr. P. Firm Muar, AIR 1965 SC  

1216;  Ramesh Chandra Sankla etc. v. Vikram Cement etc., AIR  

2009 SC 713; Pradeep Oil Corporation v. Municipal Corporation  

of  Delhi  & Anr.,  AIR 2011  SC 1869;  Cauvery  Coffee  Traders,  

Mangalore  v.  Hornor  Resources  (International)  Company  

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Limited, (2011) 10 SCC 420; and  V. Chandrasekaran & Anr. v.  

The Administrative Officer & Ors., JT 2012 (9) SC 260).  

10. Thus, it is evident that the doctrine of election is based on the  

rule of estoppel- the principle that one cannot approbate and reprobate  

is inherent in it. The doctrine of estoppel by election is one among the  

species of estoppels in pais (or equitable estoppel), which is a rule of  

equity. By this law, a person may be precluded, by way of his actions,  

or conduct, or silence when it is his duty to speak, from asserting a  

right which he would have otherwise had.

II. Mutatis Mutandis - means

11. In M/s. Ashok Service Centre & Anr. etc. v. State of Orissa,  

AIR 1983 SC 394, this court held as under:  

“Earl  Jowitt's  'The  Dictionary  of  English   Law  1959)'  defines  'mutatis  mutandis'  as   'with  the  necessary  changes  in  points  of   detail'. Black's Law Dictionary (Revised 4th   Edn.1968)  defines  'mutatis  mutandis'  as   'with  the  necessary  changes  in  points  of   detail,  meaning that  matters  or  things are   generally the same, but to be altered when   necessary,  as  to  names,  offices,  and  the   like…’Extension  of  an  earlier  Act  mutatis   mutandis to a later Act, brings in the idea of   adaptation, but so far only as it is necessary   

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for  the purpose,  making a change without   altering  the  essential  nature  of  the  things   changed,  subject  of  course  to  express   provisions  made  in  the  later  Act….In  the   circumstances  the  conclusion  reached  by   the  High  Court  that  the  two  Acts  were   independent of  each other was wrong. We   are of the view that, it is necessary to read   and to construe the two Acts together as if   the two Acts are one, and while doing so to   give effect to the provisions of the Act which   is a later one in preference to the provisions   of  the Principal  Act  wherever  the Act  has   manifested  an  intention  to  modify  the   Principal Act…”

Similarly, in Prahlad Sharma v. State of U.P. & Ors., (2004)  

4  SCC 113,  the  phrase  ‘mutatis  mutandis’  has  been explained as  

under:  

“The  expression  “mutatis  mutandis”  itself   implies  applicability  of  any provision with   necessary changes in points of detail….”

(See also:  Mariyappa & Ors. v. State of Karnataka & Ors., AIR  

1998 SC 1334; and Janba (dead) thr. Lrs. v. Gopikabai (Smt.), AIR  

2000 SC 1771).

Thus,  the phrase “mutatis mutandis” implies that a provision  

contained in  other  part  of  the  statute  or  other  statutes  would  have  

application as it is with certain changes in points of detail.   

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III. Contractual disputes and writ jurisdiction  

12. There can be no dispute  to  the settled  legal  proposition that  

matters/disputes relating to contract cannot be agitated nor terms of  

the contract can be enforced through writ jurisdiction under Article  

226 of the Constitution. Thus, writ court cannot be a forum to seek  

any  relief  based  on  terms  and  conditions  incorporated  in  the  

agreement by the parties. (Vide: Bareilly Development Authority &  

Anr. v. Ajay Pal Singh & Ors., AIR 1989 SC 1076; and  State of  

U.P.  & Ors.  v.  Bridge  & Roof  Co.  (India)  Ltd.,  AIR  1996  SC  

3515).  

13. In  Kerala  State  Electricity  Board  &  Anr.  v.  Kurien  E.  

Kalathil  & Ors.,  AIR 2000 SC 2573,  this  Court  held  that  a  writ  

cannot  lie  to  resolve  a  disputed  question  of  fact,  particularly  to  

interpret the disputed terms of a contract  observing as under:  

“The interpretation and implementation of a   clause in a contract cannot be the subject- matter of a writ  petition. ….If a term of a   contract is violated, ordinarily the remedy is   not the writ petition under Article 226. We   are  also  unable  to  agree  with  the   observations  of  the  High  Court  that  the   

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contractor  was  seeking  enforcement  of  a   statutory  contract…..The  contract  between  the parties is in the realm of private law. It   is  not  a  statutory  contract.  The  disputes   relating to  interpretation  of  the terms and   conditions of such a contract could not have   been agitated in a petition under Article 226   of the Constitution of India. That is a matter   for  adjudication  by  a  civil  court  or  in   arbitration if provided for in the contract….   The  contractor  should  have  relegated  to   other remedies.”

14. It is evident from the above, that generally the court should not  

exercise its writ jurisdiction to enforce the contractual obligation. The  

primary purpose of a writ of mandamus, is to protect and establish  

rights and to impose a corresponding imperative duty existing in law.  

It is designed to promote justice (ex debito justiceiae).  The grant or  

refusal of the writ is at the discretion of the court. The writ cannot be  

granted unless it is established that there is an existing legal right of  

the applicant,  or an existing duty of the respondent.  Thus,  the writ  

does not lie to create or to establish a legal right, but to enforce one  

that  is  already  established.  While  dealing  with  a  writ  petition,  the  

court  must  exercise  discretion,  taking  into  consideration  a  wide  

variety of circumstances, inter-alia, the facts of the case, the exigency  

that warrants such exercise of discretion, the consequences of grant or  

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refusal of the writ, and the nature and extent of injury that is likely to  

ensue by such grant or refusal.

15. Hence, discretion must be exercised by the court on grounds of  

public policy, public interest and public good. The writ is equitable in  

nature  and  thus,  its  issuance  is  governed  by  equitable  principles.  

Refusal of relief must be for reasons which would lead to injustice.  

The prime consideration for the issuance of the said writ is, whether  

or  not  substantial  justice  will  be  promoted.  Furthermore,  while  

granting such a writ, the court must make every effort to ensure from  

the  averments  of  the  writ  petition,  whether  there  exist  proper  

pleadings. In order to maintain the writ of mandamus, the first and  

foremost requirement is that the petition must not be frivolous, and  

must be filed in good faith. Additionally, the applicant must make a  

demand which is clear, plain and unambiguous. It must be made to an  

officer  having the requisite authority to perform the act  demanded.  

Furthermore, the authority against whom mandamus is issued, should  

have  rejected  the  demand  earlier.  Therefore,  a  demand  and  its  

subsequent refusal, either by words, or by conduct, are necessary to  

satisfy the court that the opposite party is determined to ignore the  

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demand of the applicant with respect to the enforcement of his legal  

right.  However, a demand may not be necessary when the same is  

manifest  from the  facts  of  the  case,  that  is,  when  it  is  an  empty  

formality,  or  when it  is  obvious  that  the opposite  party would not  

consider the demand.

IV. Interpretation of terms of contract  

16. A party cannot claim anything more than what is covered by the  

terms of contract, for the reason that contract is a transaction between  

the  two  parties  and  has  been  entered  into  with  open  eyes  and  

understanding the nature of contract. Thus, contract being a creature  

of an agreement between two or more parties, has to be interpreted  

giving literal meanings unless, there is some ambiguity therein.  The  

contract is to be interpreted giving the actual meaning to the words  

contained in the contract and it is  not permissible for the court to  

make a new contract, however is reasonable, if the parties have not  

made it themselves. It is to be interpreted in such a way that its terms  

may not be varied. The contract has to be interpreted without giving  

any outside aid. The terms of the contract have to be construed strictly  

without altering the nature of the contract, as it may affect the interest  

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of either of the parties adversely. (Vide: United India Insurance Co.  

Ltd. v. Harchand Rai Chandan Lal, AIR 2004 SC 4794; Polymat  

India P. Ltd. & Anr. v. National Insurance Co. Ltd. & Ors.,  AIR  

2005 SC 286).  

17. In  DLF  Universal  Ltd.  &  Anr.  v.  Director,  T.  and  C.  

Planning Department Haryana & Ors.,  AIR 2011 SC 1463, this  

court held:

“It is a settled principle in law that a contract   is  interpreted  according to  its  purpose.  The   purpose  of  a  contract  is  the  interests,   objectives, values, policy that the contract is   designed to actualise. It comprises joint intent   of the parties. Every such contract expresses   the  autonomy  of  the  contractual  parties’   private  will.  It  creates  reasonable,  legally   protected  expectations  between  the  parties   and  reliance  on  its  results.  Consistent  with   the character of purposive interpretation, the   court  is  required  to  determine  the  ultimate   purpose of a contract primarily by the joint   intent of the parties at the time the contract so   formed. It is not the intent of a single party; it   is the joint intent of both parties and the joint   intent of the parties is to be discovered from  the  entirety  of  the  contract  and  the   circumstances surrounding its formation.  As   is stated in Anson's Law of Contract, "a basic   principle of the Common Law of Contract is   that  the  parties  are  free  to  determine  for   themselves what primary obligations they will   

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accept...Today,  the  position  is  seen  in  a   different  light.  Freedom  of  contract  is   generally  regarded  as  a  reasonable,  social,   ideal  only  to  the  extent  that  equality  of   bargaining  power  between  the  contracting   parties can be assumed and no injury is done   to  the  interests  of  the community  at  large."   The  Court  assumes  "that  the  parties  to  the   contract are reasonable persons who seek to   achieve  reasonable  results,  fairness  and   efficiency...In  a  contract  between  the  joint   intent  of  the  parties  and  the  intent  of  the   reasonable  person,  joint  intent  trumps,  and   the  Judge  should  interpret  the  contract   accordingly.”  

V. “As-is-where-is” – means   

18. The phrase, “as is-where-is”, has been explained by this  Court  

in  Punjab Urban Planning & Development Authority & Ors. v.  

Raghu Nath Gupta & Ors., (2012) 8 SCC 197, holding as under:    

“We  notice  that  the  respondents  had   accepted  the  commercial  plots  with  open   eyes,  subject  to  the  abovementioned   conditions. Evidently, the commercial plots   were allotted on “as-is-where-is” basis. The   allottees  would  have  ascertained  the   facilities  available  at  the  time  of  auction   and after  having accepted  the  commercial   plots on “as-is-where-is” basis, they cannot   be  heard  to  contend  that  PUDA  had  not   provided  the  basic  amenities  like  parking,   lights,  roads,  water,  sewerage,  etc.  If  the   allottees  were  not  interested  in  taking the   commercial plots on “as-is-where-is” basis,   

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they should not have accepted the allotment   and after having accepted the allotment on   “as-is-where-is”  basis,  they  are  estopped   from  contending  that  the  basic  amenities   like parking, lights, roads, water, sewerage,   etc. were not provided by PUDA when the   plots were allotted…”  

(See also:  UT Chandigarh Admn. & Anr. v. Amarjeet Singh &  

Ors., (2009) 4 SCC 660).

VI. “As if” – means  

19. The  expression  “as  if”,  is  used  to  make  one  applicable  in  

respect of the other. The words "as if" create a legal fiction. By it,  

when  a  person  is  "deemed  to  be"  something,  the  only  meaning  

possible is that, while in reality he is not that something, but for the  

purposes  of  the Act of  legislature  he is  required to be treated that  

something, and not otherwise. It is a well settled rule of interpretation  

that, in construing the scope of a legal fiction, it would be proper and  

even necessary, to assume all those facts on the basis of which alone,  

such  fiction  can  operate.  The  words  “as  if”,  in  fact  show  the  

distinction between two things and, such words must be used only for  

a  limited purpose.  They further show that a  legal fiction must be  

limited  to  the  purpose  for  which  it  was  created.   (Vide:  

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Radhakissen Chamria & Ors. v. Durga Prasad Chamria & Anr.,  

AIR 1940 PC 167; Commr. of Income-tax, Delhi v. S. Teja Singh,  

AIR 1959 SC 352; Ram Kishore Sen & Ors. v. Union of India &  

Ors., AIR 1966 SC 644; Sher Singh v. Union of India & Ors., AIR  

1984 SC 200; State of Maharashtra v. Laljit Rajshi Shah & Ors,  

AIR 2000  SC 937; Paramjeet  Singh Patheja  v.  ICDS Ltd. AIR  

2007  SC  168;  and  Commissioner  of  Income  Tax  v.  Willamson  

Financial Services & Ors. (2008) 2 SCC 202).

20. In East  End  Dwelling  Co.  Ltd.  v.  Finsbury  Borough  

Council, 1952 AC 109, this Court approved the approach which stood  

adopted and followed persistently. It set out as under:  

“The statute says that you must imagine a   certain state of affairs; it does not say that   having done so, you must  cause or permit   your imagination to boggle when it comes to   the  inevitable  corollaries  of  that  state  of   affairs".

21. In Industrial Supplies Pvt. Ltd. & Anr. v. Union of India &  

Ors., AIR 1980 SC 1858, this Court observed as follows:-

"It is now axiomatic that when a legal fiction is   incorporated  in  a  statute,  the  court  has  to   

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ascertain for what  purpose the fiction is created.   After ascertaining the purpose, full effect must be   given  to  the  statutory  fiction  and  it  should  be   carried to its logical conclusion. The court has to   assume all the facts and consequences which are   incidental or inevitable corollaries to giving effect   to the fiction. The legal effect of the words 'as if he   were' in the definition of owner in Section 3(n) of   the Nationalisation Act read with Section 2(1) of   the Mines Act is that although the petitioners were   not the owners, they being the contractors for the   working of the mine in question, were to be treated   as such though, in fact, they were not so."

                    (Emphasis  added)

22. The instant case is required to be decided in the light of the  

aforesaid settled legal propositions.   

The terms and conditions incorporated in the lease deed reveal  

that, the allotment was made on “as-is- where-is” basis. The same was  

accepted by the respondent-company without any protest, whatsoever.  

The lease deed further enabled the appellant to collect charges, in case  

it decided to provide the approach road.  Otherwise, it would be the  

responsibility  of  the  respondent-company to  use  its  own means  to  

develop  such  road,  and  there  was  absolutely  no  obligation  placed  

upon the appellant to provide to the respondent the access road. As the  

respondent-company  was  responsible  for  the  creation  of  its  own  

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infrastructure, it has no legal right to maintain the writ petition, and  

courts cannot grant relief on the basis of an implied obligation.  The  

order of the High Court is in contravention of clause 2(g) of the lease  

deed.   

23. The State of Rajasthan had acquired the land in exercise of its  

eminent domain and transferred the same to the appellant-RIICO after  

receiving the consideration amount and executed the lease deed in its  

favour.   The  State  exercised  its  power  in  transferring  the  land  to  

RIICO under the Rules 1959. However, further allotment by RIICO to  

the  respondent-company was under  the  Rules  1979.  Therefore,  the  

High  Court  committed  an  error  treating  that  the  whole  case  was  

governed only under  the  Rules  1959,  and that  Rules  1979 had no  

application at all.

24. The High Court recorded a finding, as regards the submission  

made  on  behalf  of  the  appellant-RIICO,  stating  that  the  audit  

conducted by it  showing various irregularities  and pointing out the  

mis-appropriation of public funds by the respondent-company, was a  

matter entirely unrelated to the allotment and development of the said  

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land.  Rule 11-A of the Rules 1959, as amended created a legal fiction  

by which the respondent-company had become a lessee and the State  

of  Rajasthan,  the  lessor  and  therefore  the  order  passed  by  the  

appellant-RIICO, was wholly without jurisdiction, as after 4.11.1991,  

RIICO had no authority whatsoever, to cancel the allotment of land  

made in favour of the respondent-company, since it was only the State  

of Rajasthan that had the authority to cancel the said allotment; by not  

providing for  an access  road,  the purpose for  which allotment was  

made by RIICO stood defeated, and this was what had resulted in the  

delay of the development of the said land, and in such a fact-situation,  

cancellation  of  land  was  not  permissible;  there  was  a  constructive  

obligation on the part of the appellant-RIICO to provide an approach  

road with respect to the land which was allotted; and that RIICO had  

failed to co-operate with the respondent-company to accomplish the  

task it had undertaken, and that the order of cancellation was liable to  

be set aside for lack of jurisdiction and for want of competence.     

25. The aforesaid  reasons given by the High Court  are mutually  

inconsistent.  When the High Court came to the conclusion that the  

appellant-RIICO had  no  competence  to  deal  with  the  land  and  to  

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cancel the allotment made in favour of the respondent-company, there  

was  no  justification  to  hold  RIICO  responsible  for  providing  the  

approach  road.   Such  a  finding  could  be  permissible  only  if  the  

appellant-RIICO had competence to deal with the land in dispute.

26. The  High  Court  also  erred  in  holding  that  the  provision  of  

providing  the  access  road  was  an  obligation  on  the  part  of  the  

appellant-RIICO, deciding this on equitable grounds. The terms of the  

lease deed clearly stipulated that in case the appellant-RIICO provides  

the access road, it will be vested with the right to collect the charges  

incurred  by  it  from  the  respondent-company,  therein,   and  in  the  

alternative, it would be the obligation of the respondent-company to  

develop  its  own  infrastructure,  and  the  same  would  include  

development of the access road. Therefore, the appellant-RIICO was  

not under any obligation to provide the said access road.     

27. The interpretation given to the amended Rule 11-A of the Rules  

1959  by the High Court, takes away the vested right of the appellant-

RIICO in the title as well as in the interest that it had acquired in the  

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property, as it  had paid the entire amount for the land to the State  

when possession of land was handed over to it.

Rule 11-A of the Rules 1959 was amended only to facilitate the  

respondent-company  to  grant  further  sub-lease  and  not  to  divest  

RIICO from its rights and title.  It  was found necessary in wake of  

difficulties faced by the respondent-company as it was not permissible  

for it  to grant further sub-lease. Thus, the rule provided a deeming  

clause/fiction  that  for  the  purpose  of  sub-lease  by  the  respondent-

company  to  further  allottees,  it  would  be  deemed  that  the  State  

Government  had  executed  the  lease  in  favour  of  the  respondent-

company. The terms “mutatis mutandis”, and “as if”, used in the  

amended provisions of Rule 11-A of the Rules 1959 simply facilitated  

the sub-letting of a part of the premises by the respondent-company,  

and did not take away the title and rights that the appellant-RIICO had  

over the land.  

The Rule 11-A of the Rules 1959 has further been amended on  

12.10.2000 enabling all  the allottees of RIICO to sub-lease further.  

Thus, if the interpretation given by the High Court is accepted, the  

appellant RIICO looses all its lands and properties and rendered the  

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development  authority  existing  on  papers  only,  without  any  

status/authority.

28.        The ultra activist view articulated by the High Court on the  

basis  of  supposed  intention  and  imaginative  purpose  to  the  

amendment act,  is uncalled for and ought to have been avoided.  It  

rendered  the  appellant-RIICO  totally  insignificant  and  irrelevant  

without  realising  that  the  appellant-RIICO  had  autonomous  

functioning,  and  the  interpretation  given  by  the  High  Court  has  

devastating   effect  underlying its  status,  authority  and autonomous  

functioning. In fact, by interpretation the High Court had conferred an  

authoritarian  role  to  the  State,  taking  away  the  right  of  appellant-

RIICO on its property without realising that the amendment to Rule  

11-A of the Rules 1959 had specifically been engrafted therein only,  

for the purpose of facilitating the respondent-company to grant further  

sub-lease.   Thus, it is evident that the High Court decided the case on  

speculative and hypothetical reasons.

29. The  terms  incorporated  in  the  lease  deed  itself  provide  for  

timely completion of construction and also for the commencement of  

production within a stipulated period. Records however, reveal that  

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only  10%  of  total  construction  work  stood  completed  by  the  

respondent-company. No proper application was ever filed for seeking  

extension of time by the respondent-company, as per the Rules. We  

have been taken through the record.  

While  providing  justification  for  the  non-completion  of  

construction and commencement of production, in very vague terms,  

it was submitted by the respondent-company that extension of time  

was sought from statutory authorities. However, the said application  

did not specify how much more time the company was seeking, and  

that too, without meeting any requirements provided in the statutory  

rules.  

30. According to clause 2(d) of the lease deed the entire project was  

to be completed within a period of five years i.e. by 25.5.1994. But it  

is evident from the material on record that construction was just made  

on the fraction of the entire land. Clause 2 (i) contemplated that, the  

lessee will not transfer nor sub-let nor relinquish rights without prior  

permission from the appellant-RIICO. However, it is evident from the  

record that the respondent-company had negotiated with a third party  

for development of the land.  

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31.  The cancellation of allotment was made by appellant- RIICO  

in exercise of its power under Rule 24 of the Rules 1979 read with the  

terms of the lease agreement. Such an order of cancellation could have  

been challenged by filing a review application before the competent  

authority under Rule 24 (aa) and, in the alternative, the respondent-

company could have preferred an appeal under Rule 24(bb)(ii) before  

Infrastructure Development Committee of the Board. The respondent-

company ought to have resorted to the arbitration clause provided in  

the lease deed in the event of a dispute, and the District Collector,  

Jaipur would have then, decided the case.  However, the respondent-

company  did  not  resort  to  either  of  the  statutory  remedy,  rather  

preferred a writ petition which could not have been entertained by the  

High Court. It is a settled law that writ does not lie merely because it  

is  lawful  to  do  so.  A  person  may  be  asked  to  exhaust  the  

statutory/alternative remedy available to him in law.

32. In view of the above, the appeals deserve to be allowed.  Thus,  

the appeals are allowed.  Judgment and order impugned are set aside  

and the order of cancellation of allotment in favour of the respondent-

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company  by  the  appellant  is  restored.   However,  in  the  facts  and  

circumstances of the case, there shall be no order as to costs.

………………………J. (Dr. B.S. CHAUHAN)  

………………………J.          (V.  GOPALA  

GOWDA)

New Delhi,                                                                                   February 12, 2013

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