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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDCITION

CIVIL APPEAL NO. 5370  OF 2016 (Arising out of S.L.P. (Civil) No. 35374 of 2010)

Delhi Development Authority         …Appellant

Versus

Kenneth Builders & Developers Ltd. & Ors.          ...Respondents

WITH

CIVIL APPEAL NO.5371  OF 2016 (Arising out of S.L.P. (Civil) No. 13146 of 2011)

J U D G M E N T

Madan B. Lokur, J.

1.   Delay condoned.  Leave granted in both petitions.  

2.   The appellant (Delhi Development Authority or the DDA) in the first

appeal  is  aggrieved  by  the  judgment  and  order  dated  30th July, 2010

passed by a Division Bench of the High Court of Delhi in W.P.(C) No.

10647 of 2009.1 The grievance of the DDA is that even though the High

Court  held  that  the  project  land  that  we  are  concerned  with  was

“Residential” as contended by the DDA, yet the High Court held that in

the  event  construction  activity  thereon  is  not  permitted  by  the  Delhi

1 Kenneth Builders and Developers Ltd. v. Union of India and others, MANU/DE/1815/2010

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Pollution  Control  Committee  (or  the  DPCC)  the  developer  (Kenneth

Builders) would be entitled to a refund of the entire amount deposited

with the DDA pursuant to the acceptance of the developer’s bid in an

auction, along with interest thereon.   

3.   In the connected appeal, the appellants (Government of the National

Capital Territory of Delhi or the GNCTD and its Department of Forests)

are aggrieved by the same judgment and order to the extent that it has

been held that the DDA is the final authority to determine land use, even

though its  determination pertains to  the Ridge in  the National  Capital

Territory of Delhi.  

4. Before referring to the facts  of  the case,  which we have taken

from the appeal filed and argued by the DDA, we would like to mention

that there has been protracted correspondence between the DDA, Kenneth

Builders  and the Secretary (Environment)  cum Chairman of the Delhi

Pollution Control Committee of the GNCTD. However, we are of opinion

that it is not necessary to detail the contents of every letter between them

and we propose not to burden this judgment with avoidable details, as

long as the narrative does not suffer.  

5. The principal question that arises for our decision is whether the

development  agreement  between the  DDA and the developer  Kenneth

Builders was frustrated within the meaning of Section 56 of the Indian

Contract  Act,  1872  due  to  some  intervening  circumstances  not

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contemplated  by  either  party.  Our  answer  to  the  question  is  in  the

affirmative.  

The facts of the case     

6. The DDA proposed a  public-private  partnership project  for  the

development of an area of 14.3 hectares of prime land at Tehkhand in

South Delhi for the construction of 750 premium residential flats in a self

contained community to be sold by private real estate development on

free sale basis. In addition to the premium residential flats, the developer

would have to construct 3500 resettlement houses for the economically

weaker sections of society with each house having a super area of 26 sq.

metres. These resettlement houses and the developed common facilities

relating thereto would be handed over to the DDA for allotment.

7. According to the DDA (and there is no dispute about this)  the

project land was notified on 1st August, 1990 for “Recreation” (District

Park) in the Master Plan for Delhi - 2001 (MPD-2001). According to the

DDA (and again there is no dispute in this regard) two notifications were

issued by the Ministry of Urban Development of the Government of India

on 8th January, 2002 and 23rd February, 2006 converting the project land

from “Recreation” (District Park) to “Residential”.

8. On  20th March,  2006  the  DDA  issued  an  advertisement  for

involving  the  private  sector  in  Delhi’s  development  and  for  the

development of the project land for the construction of 750 residential

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flats and 3500 resettlement houses.   Pursuant to the advertisement, an

auction  was  held  by  the  DDA  in  terms  of  the  Delhi  Development

Authority (Disposal of Developed Nazul Land) Rules, 1981 on an “as is

where is basis” and as per the terms and conditions prescribed for the

auction.  

9. The terms and conditions for the auction specifically mentioned

that the bid would be for the amount of premium offered for the project

land to execute the project and that the project was being offered on an

“as  is  where  is  basis”.  It  was  stated  that  the  presumption  is  that  the

intending purchaser has inspected the site and has familiarized himself

with  the  prevalent  conditions  in  all  respects  including  status  of

infrastructure facilities available etc. before giving its bid.  It was stated

that on acceptance of the bid, the highest bidder would be required to

deposit 25% of the bid amount as earnest money and the balance 75% of

the bid amount was required to be deposited with 90 days of the issuance

of the allotment-cum-demand letter. It was also stated that possession of

the  project  land  would  be  handed  over  on  payment  of  the  entire  bid

amount and on execution of the development agreement, except an area

of approximately 4 hectares on which there is a JJ cluster. The terms and

conditions also required the developer to comply with all the statutory

requirements  and  rules  and  regulations  of  all  public  bodies  including

payment of fees and taxes etc.

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10. Kenneth Builders was the highest bidder in the auction held on

26th April,  2006  and  its  bid  was  accepted.  On  15th June,  2006  a

demand-cum-allotment  letter  was  issued  to  it  requiring  payment  of

balance 75% of the bid amount. It is not in dispute that Kenneth Builders

deposited the entire bid amount of Rs. 450.01 crores with the DDA on

11th September, 2006.

11. Pursuant  to  the  deposit  of  the  entire  bid  amount  by  Kenneth

Builders,  a  no  objection  certificate  was  issued  by  the  DDA  on  6th

November, 2006 for submission of building plans for the project to the

Planning  Department  of  the  DDA. Thereafter,  on  4th December,  2006

possession  of  11.70  hectares  of  the  project  land  was  handed  over  to

Kenneth Builders but an area of approximately 2.60 hectares covered by

the JJ cluster was left out and possession thereof was not given.  

12. On 5th September, 2007 a  Development  Agreement  was  signed

between the DDA and Kenneth Builders whereby it  was agreed,  inter

alia,  that  Kenneth  Builders  would  construct  3500  houses  for  the

resettlement  of  slum  dwellers  and  750  free  sale  flats  which  Kenneth

Builders would be entitled to dispose of. Kenneth Builders would also

develop roads and peripheral services for the entire project.

13. In terms of the development agreement it was the responsibility of

Kenneth Builders  to  obtain various approvals  and clearances from the

appropriate authorities including environmental agencies of the State and

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the  Central  Government.  Clause  6  of  the  Development  Agreement  is

important in this regard and this reads as follows:

“6.  Responsibility  of  Developer  to  get  various  approvals  and clearances

6.1 The Developer shall be responsible for approval of drawings and  for  obtaining  other  “No  Objection  Certificate;  from  the appropriate authorities and Deptts not limited to MCD, Delhi Jal Board, Electric supplying agency concerned, Delhi Fire Services, DUAC,  the  environmental  agencies  of  the  State  and  Central Government.  Authority or its authorized officers who are duly authorized to give approval on behalf of the Authority. (sic)

6.2  The  delay  in  submission  of  applications,  drawings, construction plans and compliance of the observation: shall be the responsibility  of  the  Developer,  and  any  delay  in  grant  of approvals by the aforesaid Government bodies shall not relieve the Developer of any of its responsibilities under the Contract.”

14. Kenneth Builders was also deemed to have inspected the site and

its  surroundings  and  checked  the  information  available  in  connection

therewith  including  the  sub-surface  conditions,  the  hydrological  and

climatic conditions etc. It was also deemed to have satisfied itself of the

correctness and sufficiency of all the material and all its obligations under

the  contract,  including  dealing  with  concerned  authorities  such  as

environmental  agencies of  the State and Central  Government.   Clause

11.1 of the Development Agreement in this regard is important and this

reads as follows:

“11.1 Sufficiency of Information The  Developer  shall  be  deemed to  have  satisfied  itself  of  the correctness  and  sufficiency  of  all  the  material  and  all  its

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obligations  under  the  Contract,  including  dealing  with  the concerned  authorities  not  limited  to  MCD,  Delhi  Jal  Board, Electric  supplying  agency  concerned,  Delhi  Fire  Services, DUAC,  the  environmental  agencies  of  the  State  and  Central Government,  Authority  or  its  authorized officers  who are duly authorized to give approval on behalf of the Authority at its own cost and expense, as well as all the contingencies and all matters and things necessary for the proper execution and completion of the  project  and  the  remedying  of  any  defects  therein,  before submitting the tender.  The Developer has agreed and understood that  no  request  for  change  in  the  terms  and conditions  of  the Contract  shall  be  entertained  at  any  stage  on  any  ground whatsoever.”

15. The problems for Kenneth Builders began when, pursuant to the

Development Agreement, it attempted to establish infrastructure facilities

on the project land such as its site office, DDA office, sample flat for the

economically weaker sections etc. sometime in February/March 2008. It

was then that the Department of Forests of the GNCTD raised objections

to carrying out such activities on the ground that the project land falls in

the Ridge and hence all activities were required to be suspended.  

16. The objection of the Department of Forests compelled Kenneth

Builders to stop all building activity on the project land and that resulted

in an exchange of letters for the next several months between the DDA,

the GNCTD and Kenneth Builders. To cut a long story short, the DDA

insisted that the project land was “Residential” and that the project could

be undertaken thereon. The GNCTD was equally clear that the project

land falls within the Ridge and no construction activity could be carried

out  without  the  consent  of  the  Ridge  Management  Board  and  the

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permission of this Court. On its part, the Ministry of Environment and

Forest,  Government  of  India  (or  the  MoEF)  kept  aloof  from  the

controversy and gave environmental clearance for the project on 15th July,

2008  subject  to  the  condition  that  a  “consent  to  establish”  shall  be

obtained  by  Kenneth  Builders  from  the  DPCC  under  the  Water

(Prevention and Control of Pollution) Act, 1974 (for short the Water Act)

and the Air (Prevention and Control of Pollution) Act, 1981 (for short the

Air Act) and a copy submitted to the said Ministry before the start of any

construction work at the site. The relevant extract of the environmental

clearance given by the MoEF reads as follows:

“Subject: Construction of residential housing project at Tehkhand New Delhi  by  M/s  Kenneth  Builders  & Developers  Pvt.  Ltd. Environmental Clearance – Reg.

Dear Sirs,

This has reference to your application No. nil, dated 15.01.2008 and subsequent letters dated 23.04.2008 and 23.05.2008 seeking prior Environmental  Clearance for the above project  under the EIA Notification, 2006.  The proposal has been appraised as per prescribed procedure  in  the  light  of  provisions  under  the  EIA Notification,  2006  on  the  basis  of  the  mandatory  documents enclosed with the application viz., the Questionnaire, EIA, EMP and  the  additional  clarifications  furnished  in  response  to  the observations of the Expert  Appraisal Committee constituted by the competent authority in its meetings held on 13th 14th March 2008,  1st &  3rd May  2008  and  26th May,  2008  and  awarded “Silver” grading to the project.  

2.  xxx xxx xxx  

3.  The Expert Committee after due considerations of the relevant documents  submitted  by  the  project  proponent  and  additional

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clarifications  furnished  in  response  to  its  observation  have accorded  environmental  clearance  as  per  the  provisions  of Environmental  Impact  Assessment  Notification  –  2006 and its subsequent amendments, subject to strict compliance of the terms and conditions as follows:

PART A – SPECIFIC CONDITIONS           

I. Construction Phase.  (i) “Consent for Establishment” shall be obtained from Delhi Pollution Control Committee under Air and Water Act and a copy shall be submitted to the Ministry before start of any construction work at the site. (ii) to  (xxvi) xxx xxx xxx

II. Operation Phase xxx xxx xxx  

PART B - GENERAL CONDITIONS:   xxx xxx xxx

4. and 5. xxx xxx xxx

6.   The Ministry reserves the right to add additional safeguard measures  subsequently,  if  found  necessary  and  to  take  action included  revoking  of  the  environment  clearance  under  the provisions of the Environmental (Protection) Act, 1986, to ensure effective implementation of the suggested safeguard measures in a time bound and satisfactory manner.

7.   All  other  statutory  clearances  such  as  the  approvals  for Storage  of  diesel  from  Chief  Controller  of  Explosives,  Fire Department,  Civil  Aviation  Department.   Forest  Conservation Act,  1980  and  Wildlife  (Protection)  Act,  1972  etc.  shall  be obtained, as applicable by project proponents from the respective competent authorities.  

8.  These stipulations would be enforced among others under the provisions of Water (Prevention and Control  of Pollution) Act, 1974, the Air (Prevention and control of Pollution) Act 1981, the Environment  (Protection)  Act,  1986  the  Public  Liability (Insurance) Act, 1991 and EIA Notification, 2006.

9. Environmental  clearance  is  subject  to  final  order  of  the

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Hon’ble Supreme Court of India in the matter of Goa Foundation v. Union of India in Writ Petition (Civil) No.460 of 2004 as may be applicable to this project.  

10. xxx xxx”

17. In view of the above, Kenneth Builders applied to the DPCC for

“consent to establish” on 4th November, 2008. In response,  the DPCC

required Kenneth Builders to submit a “ridge demarcation report” at the

earliest. Despite its asking by Kenneth Builders, the DDA did not give

any such report  to Kenneth Builders on the ground that  the issue had

already been clarified to the GNCTD in a letter dated 17 th October, 2008.

The letter dated 17th October, 2008 is a little ambiguous inasmuch as it

mentions that the boundaries of the Ridge have been delineated, but they

have not been identified at the site. The letter dated 17th October, 2008

reads as follows:

“Subject: Regarding Residential housing Project at Tehkhand,  New Delhi by M/s Kenneth Builders & Developers Pvt. Ltd.  

Sir,

This  has  reference  to  letter  No.  DPCC/MCIII/3154:  dated  6th August,  2008,  enclosing  the  copy  of  the  letter  of  Secretary (Environment)  cum  Chairman,  Delhi  Pollution  Control Committee, Government of National Capital Territory of Delhi dated 13th June, 2008.  In the Master Plan for Delhi-2001, Ridge has  been  defined  in  an  area  of  7777  hectares  which  is  to  be preserved in its pristine glory.  In the Preamble of the said Master Plan for Delhi-2001, one conceptual sketch indicating the ridge has been shown as one of the eight concepts only, whereas the land use  Plan  is  the  legal  documents/plan  showing the  details which  are  to  be  referred  for  the  purpose  of  establishing  the area/land use, in this case for the ridge/regional park.   

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Delhi Government through its notification dated 24.05.1994 has delineated the boundaries of the ridge but the same has not been identified on the site.  This notification is under Section 4 for the areas to be earmarked as reserved forests under the Delhi Forest Act.  

The  land  pocket  where  DDA  has  proposed  residential development,  was  clearly  shown  under  District  Part in-MPD-2001,  and the  land use  of  the  same has  already been changed from Recreational Use (District Park) to residential vide Gazette of India notification Nos.A-13011/30/1995-DDIB dated 08.01.2002  and  23.02.2006  (copies  enclosed).   The  said notifications were issued following the due process of law and taking  relevant  factors  into  consideration.   No  objection  in respect of the land use of the Project land were raised by any departments including the Forest Department at that stage.

The  Ministry  of  Environment  & Forest,  after  considering  and taking  on  record  the  representation  from both  Delhi  Pollution Control Committee and DDA (Letter No.F.3(60)MP/D.116 dated 30.6.08) with respect to land use of the Project land, has accorded the Environment Clearance to our project on 15th July, 2008, copy of the same is attached herewith.

All the facts, documents and detailed plans have been shared and discussed in detail between the two departments, in meeting.  In the light  of  facts  been legally  converted from recreational  use (District Park) to residential.

In view of the facts, it is requested that the “Consent to Establish” from Delhi Pollution Control Committee under Air & Water Act be granted to the applicant at the earliest.”  

18. Faced  with  this  impasse  and  unable  to  obtain  the  ridge

demarcation  report  and  therefore  the  “consent  to  establish”  from  the

DPCC, Kenneth Builders approached the Delhi High Court by way of a

writ petition on 1st August, 2009 resulting in the impugned judgment and

order. In the writ petition, Kenneth Builders prayed, inter alia, for setting

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aside  of  the  tender/auction  notice  dated  20th March,  2006  as  also  the

allotment letter dated 15th June, 2006 and a declaration that the project

was incapable of performance. It was further prayed that the auction had

become void and that Kenneth Builders was entitled to a refund of the

amount  paid  to  the  DDA along  with  interest  at  18%  per  annum  till

realization.

Decision of the High Court  

19. The  High  Court  has  elaborately  discussed  the  various  letters

exchanged  between  the  concerned  parties  and  has  thereafter  very

succinctly put the controversy in focus in paragraphs 26 and 27 of the

impugned judgment and order. These paragraphs read as follows:

“26.  The  foregoing  demonstrates  the  controversy  between  the parties.  The petitioner’s stand is that it had made the bid for the project and had aid the entire amount of Rs.450.01 crores on the clear  understanding that  the  project  site  was  residential.   This understanding,  according  to  the  petitioner,  was  based  on  the representation made by the DDA as the detailed facts referred to above  would  reveal.   In  fact,  the  DDA  has  maintained  and continues to maintain its stand that the project site is not within the  ridge  area  and the  land  use  of  the  same  has  been  clearly shown as residential.  According to the DDA, the land in question was earlier earmarked for recreational (District Park) purposes. However, that was subsequently altered by the two notifications dated 08.01.2002 and 26.02.2006 by carrying out modifications in the Master Plan (MPD-2001).  The stand of the DDA is also this that the land use of any particular area is to be determined under  the  Master  Plan  and  the  authority  which  does  such determination is the DDA and not any other authority, such as the DPCC. The clear stand of the DDA is that the DPCC has no right or business to raise any objection with regard to the land use and that is solely within the domain and powers of the DDA.  The stand of the DDA is, however, not accepted either by the DPCC

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or the Department of Forests, Government of NCT of Delhi.  In fact, both the DPCC and the Department of Forests (respondents 2  and 4 herein)  along with  the  Government  of  NCT of  Delhi (respondent  No.3)  have  taken a  unified  stand that  the  land in question  falls  within  the  ridge  and  more  so  because  the Department  of  Forests  has  found  the  said  land  to  be  part  of Khasra  Nos.  444  and  445  of  village  Tehkhand  which,  in  the revenue record, has been shown as “gair mumkin pahar”.  Thus, according to the said respondents, no construction activity can be carried out in the land in question inasmuch as, according to them it  falls  within  the  ridge  area.  Consequently,  the  DPCC  has refrained from issuing the “consent to establish” under Water and Air  Acts,  which  was  a  requirement  and  a  condition  of  the clearance  given  by  the  Ministry  of  Environment  and  Forests, Government of India.

27.   It  is  in  this  backdrop that  the  petitioner  felt  that  there  is virtually  no  chance  of  the  project  going ahead in  view of  the stalemate  between  the  DDA  and  the  various  governmental departments.  It is on the basis of this situation that the petitioner has  sought  the  setting  aside  of  the  tender/auction  as  also  the allotment letter dated 15.06.2006 in its favour and has sought the return of the money paid by it along with interest thereon.”  

20. By the impugned judgment and order, the High Court held that

Kenneth Builders was not entitled to have the tender/auction in which it

had participated and in which it was a highest bidder set aside. Kenneth

Builders was also not entitled to have the letter of allotment issued to it

pursuant to the acceptance of its bid in the auction conducted by the DDA

set aside or to the return of money paid by it to the DDA. However, it was

held that Kenneth Builders would be entitled to have the DPCC examine

its application for the grant of “consent to establish” from the stand point

of the Water Act and the Air Act within two months for carrying out the

project which was the subject matter of the writ petition.  It was also held

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that in the event the DPCC does not give its “consent to establish” and

the project cannot be carried out then Kenneth Builders would be entitled

to  a  return  of  the  entire  amount  (with  interest  at  the  rate  of  6% till

realization) paid by it to the DDA since the project would stand frustrated

and would be incapable of performance.  

21. For arriving at the above conclusions, the High Court held that

once the Master Plan for Delhi prepared by the DDA earmarks land for a

particular use, then no other authority can challenge the same. As far as

the project land was concerned, the DDA had earmarked it for residential

use and this could not be challenged. The High Court also held that after

the MoEF had given the environmental clearance, the role of the DPCC

was limited to the grant of “consent to establish” under the Air Act and

the Water Act. It was not open to the GNCTD, the Department of Forests

or the DPCC to question the land use of the project land as determined by

the DDA on the ground that it was within the Ridge.  

22. At this stage, it is necessary to mention that during the pendency

of the writ petition in the High Court, it came out that during a meeting

convened by the Lieutenant Governor on 23rd June, 2009 on some other

issue,  the case of  Kenneth Builders came up,  perhaps for  an informal

discussion. Nevertheless, it was decided in that meeting that the question

of the status of the project land should be referred to the MoEF (even

though  it  had  already  granted  environmental  clearance)  and  that  the

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decision of the MoEF would be accepted as final. These facts were put to

the learned Additional Solicitor General appearing in the matter and he

sought time to take instructions. Eventually, the following response dated

3rd December,  2009  was  sent  by  the  MoEF to  the  learned  Additional

Solicitor General:  

“Sub:  Opinion  of  the  Ministry  of  Environment  and  Forest  in regard to WP (C) No. 0647/2009

Ref.:  Secretary,  Environment,  NCT’s  D.O.  No.  F.11 (105/PA/CF/Part/09/4582 dated 27.11.2009).

Sir,

This is with regard to Writ Petition (C) 10647/2009 of Kenneth Builders and Developers Ltd. v. UOI & Ors. in the High Court of Delhi.  An opinion was sought from Ministry of Environment and Forests to the effect that the land in the subject matter of the Writ Petition mentioned under subject is a part of Ridge or not. The opinion of Ministry of Environment and Forests in this regard is as follows:

“Keeping in view the purely legalistic position taken by DDA and exercise undertaken for identification of ridge, based  upon  one  or  more  criterion  decided  by  NCT  of Delhi, as relevant for classification of any land as “ridge” in Delhi, the said piece of land measuring 14.3 ha falling in  Khasra  No.444  and  445  reflected  as  “Gai  Mumkin Pahar” in revenue land, needs to be considered as ridge in accordance  to  the  spirit  of  various  orders  of  Hon’ble Supreme  Court  in  WP  (C)  4677/1985,  morphological features and revenue records.  The Hon’ble Apex Court is still  looking  into  various  aspects  of  protection  & conservation of Delhi ridge, in WP (Civil) No. 4677/1985 from time to time.  However, the Hon’ble High Court of Delhi,  if  deemed  appropriate,  the  opinion  of  Central Empowered Committee, set up by Hon’ble Supreme Court may be taken”.

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It is requested to intimate the Hon’ble Court about the opinion of the Ministry of Environment and Forests when the case will come up on 4th December, 2009.”  

It will be seen from the above that the MoEF had taken a virtual  volte

face and had opined that the project land needs to be considered as Ridge,

but  if  deemed  appropriate  the  opinion  of  the  Central  Empowered

Committee might be taken. This was apparently not brought to the notice

of the High Court.   

23. Be that as it may, the DDA has challenged the order of the Delhi

High Court which has effectively directed the DDA to refund the tender

amount to Kenneth Builders since “consent  to establish” and continue

with the project had not been granted by the DPCC. The GNCTD as well

as the Department of Forests also filed a Petition for Special Leave to

Appeal being SLP (C) No. 13146 of 2011 challenging the decision of the

Delhi High Court to the effect that the DDA is the competent authority to

decide the land use.  

Subsequent events

24. After  the  decision  of  the  Delhi  High  Court,  Kenneth  Builders

requested the DPCC on 3rd August,  2010 in terms of  the order of  the

Delhi High Court, for “consent to establish”. By its letter of 28th October,

2010 the DPCC made it quite clear that since Kenneth Builders did not

have any clearance to carry out any construction on the project land from

the Ridge Management Board or from this Court or from the Department

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of Forests, “consent to establish” under the Air Act and Water Act could

not be given. It was also mentioned that the Department of Forests would

be challenging the order of the Delhi High Court in this Court. The letter

dated 28th October, 2010 reads as follows:

“Sub: - Refusal of Consent under Water (Prevention & Control of Pollution) Act, 1974 and (Prevention & Control of Pollution) Act, 1981 as amended to date.  

Whereas,  you M/s  KENNETH BUILDERS & DEVELOPERS PVT. LTD., MAA ANANDMAYI MARG, TEHKHAND, DELHI (hereinafter referred as addressee) have applied for Consent to Estab. (Orange Category) on 30.05.08 vide I.D. No.25891 under section 21 of Air (Prevention & Control of Pollution) Act, 1981 and u/s 25/26 of the Water (Prevention & Control of Pollution) Act, 1974 for activity of Residential Construction Project.   

And whereas, a letter dt. 27.03.08 addressed to the Commissioner (L.M.), DDA was received from Deputy Conservator of Forest, South to provide a copy of Environmental Clearance w.r.t. large scale earth work undertaken by you (the addressee)  

And  whereas,  a  copy  of  letter  dt.  04.04.08  addressed  to  the Commissioner  (L.M.)  DDA  was  received  from  the  Deputy Conservator of Forest, South to stop all construction activity on the said land until the permission for the same is accorded by the Ridge Management Board.  

And whereas, as decided by the Consent Management Committee (Orange) in its meeting held 03.06.08, a letter was issued to the Deputy  Conservator  of  Forest,  South,  on  13.06.08  regarding status of Forest Clearance w.r.t. the said project.  

And whereas, a D.O. letter issued by the Chairman, DPCC on 13.06.08  to  the  Vice  Chairman,  DDA  regarding  immediate cessation  of  all  construction  work  on  the  project  site  till  the clearance  from  the  same  obtained  from  the  Competent Authorities  including  the  Ridge  Management  Board  &  the Hon’ble Supreme Court.  

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And whereas,  a letter  dt.  23.06.08 has been received from the Deputy Conservator of Forest Dept. informing that the clearance from  the  Ridge  Management  Board  &  the  Hon’ble  Supreme Court has not been communicated by DDA so far.  

And whereas a letter was issued to the Deputy Conservator of Forest,  South  on  19.02.09  to  confirm  whether  any  forest clearance and ridge demarcation report  to  the  said project  has been granted or not.

And whereas, a reply was received from the Deputy Conservator of Forest, South on 17.03.09 informing that no forest clearance has been accorded so far.

And whereas, a letter was issued to the Deputy Conservator of Forest, South on 16.04.09 along with the site plans of the project to  inform the  status  of  the  area  as  per  the  ridge  demarcation report.  

And  whereas,  the  Hon’ble  High  Court  vide  its  judgment  dt. 30.07.10 directed the DPCC to examine the application of the petitioner for grant of “Consent to Establish” from the standpoint of the Water & Air Acts alone within two months from the date of judgment.  

And  whereas,  after  examination,  as  decided  by  the  Consent Management  Committee  (Orange)  in  its  meeting  held  on 22.09.10, a letter was issued to the Forest Deptt. on 01.10.10 to send  the  opinion  on  the  judgment  at  the  earliest  as  the  issue pertains the Forest Department.  

And  whereas,  the  case  was  again  taken  up  by  the  Consent Management Committee (Orange) in it meeting held on 1.10.10 & it was decided:

“Forest department is going for appeal, therefore, consent be refused.”

Now,  therefore,  as  decided  by  the  said  Committee aforementioned  consent  to  establish  application  under  Air  & Water Acts to the addressee unit is hereby refused with immediate effect.

Please note that the activity of Residential Construction Project

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without having valid consent  under the Air  & Water  Acts is  a punishable offence and attracts penal action under the provisions of the said Act.”  

25. In  view  of  the  categorical  response,  broadly  speaking,  the

controversy remains whether the project land is a part of the Ridge or not

and whether the contract between the DDA and Kenneth Builders has

been frustrated  due to  supervening factors  or  not.  To resolve  the first

controversy,  this  Court  passed  an  order  on  6th October,  2015  for

ascertaining whether the project land falls within the Ridge or not. This

was in view of the uncertainty in the status of the project land as well as

the view expressed by the MoEF in the letter dated 3rd December, 2009

addressed to  the learned Additional  Solicitor  General  appearing in the

High Court that the issue could be best resolved (if deemed appropriate)

by a reference to the Central Empowered Committee set up by this Court.

Accordingly, we referred this issue to the Central Empowered Committee

(CEC) set up in T.N.Godavarman v. Union of India2.  

26. Pursuant to the order of 6th October, 2015 the CEC submitted its

Report  dated  18th November,  2015  in  which  it  was  concluded  that

non-forestry use of land falling in the Ridge was permitted only after a

development  project  was  cleared  or  recommended  by  the  Ridge

Management Board and permitted by this Court. However, a decision was

rendered by the Delhi High Court in a case filed by Ashok Kumar Tanwar

[W.P. (C) No. 3339 of 2011 decided on 30th November, 2011] to the effect

2  (2013) 8 SCC 198

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that a development project on land outside the notified Ridge area but

having  morphological  features  conforming  to  the  Ridge  would  also

require  clearance  from the  Ridge  Management  Board  and  this  Court.

Therefore, as far as the present case is concerned though the project land

falls outside the Ridge but has morphological features conforming to the

Ridge bringing it  within  the extended Ridge,  the  project  of  the  DDA

involving  non-forestry  use  of  the  land  could  be  permitted  only  after

obtaining  clearance  from  the  Ridge  Management  Board  and  after

obtaining the permission of this Court.  The CEC in its Report stated in

this regard as follows:

“6.  The  non-forestry  use  of  land  falling  in  Delhi  Ridge  for implementation of  the various development projects  are being permitted only after the proposal is cleared/recommended by the Ridge Management Board and permitted by this Hon’ble Court. Such  permissions  have  been  granted  by  this  Hon’ble  Court subject to deposit of 5% of the estimated project cost with the Ridge  Management  Board  Fund  for  conservation  and development  of  Delhi  Ridge  and  compensatory  afforestation over equivalent non-forest land/Ridge land at project cost.

7.   Earlier,  the  clearance  from the  Delhi  Ridge  Management Board  and  the  permission  of  this  Hon’ble  Court  was  being insisted upon only in respect of the notified Ridge areas.  One Shri Ashok Kumar Tanwar filed Writ Petition (Civil) No.3339 of 2011  before  the  Hon’ble  High  Court  of  Delhi  against  the construction of buildings and other infrastructure facilities being done by the Directorate General, Border Road Organisation in 2.25 acres of land belonging to Ministry of Defence at Naraina, Delhi Cantonment on the ground that the said land falls in the Central  Ridge  and  wherein  pursuant  to  the  directions  of  this Hon’ble  Court  the  non-forestry  uses  are  prohibited.   The Government of NCT of Delhi after considering the view of the Delhi Ridge Management Board filed before the Hon’ble High

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Court of Delhi an affidavit dated 30th November, 2011 wherein it was  stated  that  the  land  in  question  is  situated  outside  the notified  ridge  areas  but  is  having  morphological  features conforming to the Ridge.  The Hon’ble High Court of Delhi by order  dated  30th November,  2011  disposed  of  the  said  Writ Petition with the directions that the Border Road Organisation is restrained from carrying out any further construction works on the land till it obtains necessary clearance from the Delhi Ridge Management  Board  or  (and)  this  Hon’ble  Court  through  the CEC. A copy of the said order of the Hon’ble High Court of Delhi  is  enclosed  at  ANNEXURE-R-2 to  this  Report.   Since then, non-forestry use of any land having morphological features conforming to the Ridge but falling outside the notified ridge areas (commonly referred to as “extended ridge areas”) is also being permitted only after  obtaining clearance from the Delhi Ridge Management Board and permission of this Hon’ble Court.

8.   The  said  project  of  the  Border  Road  Organisation  was subsequently  cleared/recommended  by  the  Delhi  Ridge Management Board,  recommended by the CEC and thereafter this Hon’ble Court by order dated 2nd November, 2012 granted permission for  implementation of  the  project  on 2.25  acre  of land falling on the “extended ridge areas”.  This Hon’ble Court by another order dated 21.10.2013 has granted permission for implementation of  a  project  by Delhi  Metro Rail  Corporation (DMRC) involving use of lands falling in “extended ridge area”. The copies of the abovesaid orders of the Hon’ble Court dated 2nd November.  2012  and  21st October,  2013  are  enclosed  at ANNEXURE-R-3  and  ANNEXURE-R-4  respectively  to  this Report.  

9.  In the present case the Delhi Forest Department has found that the project area falls in “extended ridge area” i.e. outside the areas identified as Ridge area in the MPD 2001/MPD 2021 but having morphological features conforming to the ridge and that a large extent of areas in and around the project site are recorded as “Gair Mumkin Pahar” in the revenue records. The stand taken by the Forest Department has been verified by the CEC during the site visit.  Copies of the photographs of the project site taken during  the  site  visit  of  the  CEC are  collectively  enclosed  at ANNEXURE-R-5 to  this  Report.   A copy of  the  sketch  map prepared by the Forest Department showing the details of Gair Mumkin Pahar areas in and around project  site is enclosed at ANNEXURE–R-6  to  this  Report.   A  copy  of  the  satellite

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imagery made available by the DDA showing the project area in question and the adjoining areas is enclosed at ANNEXURE-R-7 to this Report.  

10. From the above it may be seen that in the present case the land falls  in the “extended Ridge area” i.e.  outside the Ridge areas identified in MPD 2001/MPD 2021 having morphological features  conforming  to  Ridge.   Implementation  of  all  the similarly placed cases i.e. the projects involving non-forestry use of  the  areas  falling  in  “extended  ridge  areas”  have  been permitted  only  after  obtaining  clearance  from  the  Ridge Management  Board and permission  of  this  Hon’ble  Court.  In two similarly placed projects of the Border Road Organisation and DMRC this Hon’ble Court by orders dated 2nd November, 2012 and 21st October, 2013 respectively has granted permission from the non-forestry use of the lands falling in the “extended Ridge area”.

11. In the above background the CEC is of the considered view that in the present case the proposed construction of buildings can be undertaken only after obtaining clearance from the Ridge Management Board and permission of this Hon’ble Court.”

Discussion

27. The first submission of learned counsel for the DDA was that a

writ petition under Article 226 of the Constitution was not maintainable

for the reliefs claimed by Kenneth Builders. The reliefs arise out of a

contractual dispute and the High Court ought not to have entertained the

writ  petition.  We are  not  inclined  to  consider  this  submission  for  the

reason that no such objection was raised by the DDA before the High

Court or even in the petition filed in this Court.  The submission has been

advanced by learned counsel for the DDA for the first time during the

final hearing of these appeals. It is too late in the day for learned counsel

to raise such an objection and we are not inclined to entertain it.

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28. On  merits,  it  was  submitted  that  in  view  of  the  terms  and

conditions of  the auction and the development agreement between the

DDA and Kenneth  Builders,  it  was  the  duty  and responsibility  of  the

developer  to  obtain  all  necessary  clearances  including  environmental

clearance and consent from the DPCC for completing the project. It was

pointed out  that  the MoEF had given environmental  clearance  for  the

project on 15th July, 2008 subject to the developer obtaining “consent to

establish” from the DPCC under the Air Act and the Water Act.  It was

therefore the obligation of Kenneth Builders to approach the DPCC and

obtain the necessary consent which it failed to do.

29. What  has been overlooked by learned counsel  is  that  the fresh

view of  the  MoEF is  that  the  project  land needs  to  be  considered  as

Ridge.  Consequently,  no  construction  activity  is  permissible  on  the

project  land.  That  apart,  Kenneth Builders  did apply to the DPCC for

“consent  to  establish”  for  starting  construction  activity  on  the  project

land. For considering the request, the DPCC required a ridge demarcation

report which was not given by the DDA to Kenneth Builders or to the

DPCC. Therefore, the DPCC was not inclined to give its consent in the

absence  of  the  ridge  demarcation  report.   Even  after  judgment  was

delivered by the High Court, Kenneth Builders applied to the DPCC for

“consent  to  establish”  but  to  no  effect  in  the  absence  of  a  ridge

demarcation report and forest clearance.  

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30. It does appear from the record that the exact boundaries of the

Ridge had not been identified by anybody and this is apparent from a

letter dated 13th June, 2008 sent by the Secretary (Environment) of the

GNCTD  to  the  DDA wherein  it  was  pointed  out  that  there  is  some

discrepancy  between  the  areas  notified  by  the  Ministry  of  Urban

Development of the Government of India in the notifications dated 8th

January, 2002 and 23rd February, 2006 and the boundaries of the Ridge.  It

was  further  pointed  out  that  the  process  of  identification  had  been

initiated by the Department of Forests of the GNCTD but it appears that

the demarcation was not completed by the time the writ petition was filed

by Kenneth Builders. According to the DDA the letter was based on an

incorrect appreciation of facts, but that does not concern us. All that is

relevant is that the GNCTD believed that the construction could not go on

in the project land since it fell within the boundaries of the Ridge.

31. In this  context,  it  must  not  be forgotten that  even after  having

given  environmental  clearance  to  Kenneth  Builders,  the  MoEF  had

second thoughts  regarding the  status  of  the  project  land.  This  led the

MoEF to send the letter dated 3rd December, 2009 referred to above. In

other words, the status of the project land was generally ‘unclear’ at least

to the GNCTD and the MoEF.  

32. Be that as it may, it appears to us that Kenneth Builders did take

all necessary steps to commence the construction activity on the project

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land but  due  to  the  impasse  created  by the  governmental  agencies,  it

could not  proceed in the development  activity. We agree with learned

counsel  for  Kenneth  Builders  that  under  these  circumstances,  the

provisions of Section 56 of the Indian Contract Act, 1872 (the Contract

Act)  would  be  attracted  to  the  facts  of  the  case.   Section  56  of  the

Contract Act reads as follows:

“56.  Agreement to do impossible act  -  An agreement to do an act impossible in itself is void. Contract to do act afterwards becoming impossible or unlawful - A contract  to  do  an  act  which,  after  the  contract  is  made,  becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful  -  Where one person has promised to do something which he knew, or, with reasonable diligence, might have known,  and  which  the  promisee  did  not  know, to  be  impossible  or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.”

33. The interpretation of Section 56 of the Contract Act came up for

consideration in Satyabrata Ghose v. Mugneeram Bangur & Co.3  It was

held by this Court that the word “impossible” used in Section 56 of the

Contract  Act  has  not  been  used  in  the  sense  of  physical  or  literal

impossibility. It ought to be interpreted as impracticable and useless from

the point of view of the object and purpose that the parties had in view

when they entered into the contract. This impracticability or uselessness

could arise due to some intervening or supervening circumstance which

3 (1954) SCR 310

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the  parties  had  not  contemplated.  However,  if  the  intervening

circumstance was contemplated by the parties, then the contract would

stand  despite  the  occurrence  of  such  circumstance.  In  such  an  event,

“there can be no case of frustration because the basis of the contract being

to demand performance despite the happening of  a  particular  event,  it

cannot disappear when that event happens.” This is what this Court had to

say:   

“The first paragraph of the section lays down the law in the same way as in England. It speaks of something which is impossible inherently or  by its  very nature,  and no one can obviously be directed to perform such an act. The second paragraph enunciates the law relating to discharge of contract by reason of supervening impossibility  or  illegality  of  the  act  agreed  to  be  done.  The wording  of  this  paragraph  is  quite  general,  and  though  the illustrations  attached  to  it  are  not  at  all  happy,  they  cannot derogate  from  the  general  words  used  in  the  enactment.  This much is clear that the word “impossible” has not been used here in the sense of physical or literal impossibility. The performance of  an  act  may  not  be  literally  impossible  but  it  may  be impracticable and useless from the point of view of the object and purpose which the parties had in view; and if an untoward event or  change  of  circumstances  totally  upsets  the  very  foundation upon which the parties rested their bargain, it can very well be said that the promissor finds it impossible to do the act which he promised to do.

Although various theories have been propounded by the Judges and jurists in England regarding the juridical basis of the doctrine of frustration, yet the essential idea upon which the doctrine is based is that of impossibility of performance of the contract; in fact  impossibility  and  frustration  are  often  used  as interchangeable  expressions.  The  changed  circumstances,  it  is said,  make the performance of the contract impossible and the parties are absolved from the further performance of it as they did not  promise  to  perform  an  impossibility.  The  parties  shall  be excused, as Lord Loreburn says4

4 Tamplin Steam Ship Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd., (1916) 2 AC 397, 403

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“If substantially the whole contract becomes impossible of performance  or  in  other  words  impracticable by  some cause for which neither was responsible.”

xxx xxx xxx

It must be pointed out here that if the parties do contemplate the possibility of an intervening circumstance which might affect the performance  of  the  contract,  but  expressly  stipulate  that  the contract would stand despite such circumstance, there can be no case  of  frustration  because  the  basis  of  the  contract  being  to demand performance despite the happening of a particular event, it cannot disappear when that event happens. As Lord Atkinson said in  Matthey v.  Curling5 “a person who expressly contracts absolutely to do a thing not naturally impossible is not excused for  non-performance because of  being prevented by the  act  of God or the King's enemies … or vis major”. This being the legal position, a contention in the extreme form that  the doctrine of frustration  as  recognised  in  English  law does  not  come  at  all within  the  purview  of  Section  56  of  the  Indian  Contract  Act cannot be accepted.”

34. In so far as the present case is concerned, the DDA certainly did

not contemplate a prohibition on construction activity on the project land

which would fall within the Ridge or had morphological similarity to the

Ridge.   It  is  this  circumstance  that  frustrated  the  performance  of  the

contract in the sense of making it impracticable of performance.

35. It  is true that the Government of India had notified the project

land  as  “Residential”  and  that  the  project  land  was  shown  as

“Residential”  in  the  MPD-2001  and  MPD-2021.  But  that  fact  alone

would not change the position at law.  The exact boundaries of the Ridge

do  not  appear  to  have  been  demarcated  and  in  the  absence  of

5 (1922) 2 AC 180 at 234

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demarcation, it could not be said with any degree of certainty by the DDA

that merely because of the two notifications issued by the Ministry of

Urban  Development  the  project  land  could  be  used  for  residential

purposes  even if  it  fell  within  the  Ridge.  This  would  be  ignoring the

position at law and would be stretching the argument a little too far. The

DDA was unaware that even if the project land did not fall within the

Ridge  yet  any development  activity  thereon would  require  permission

from the Ridge Management Board as well as from this Court since there

was morphological similarity between the Ridge and the project land. It is

this  intervening  circumstance  which  eventually  frustrated  the

implementation of the contract.   

36. It is one thing for the DDA to now contend before us that Kenneth

Builders  could  have  applied  to  the  Ridge  Management  Board  for

permission to carry out development activity and also approached this

Court for necessary permission but it is another thing to say that these

requirements were not within the contemplation of the DDA and certainly

not within the contemplation of Kenneth Builders.  For a statutory body

like the DDA to contend that in the face of the legal position (with which

the  DDA obviously  does  not  agree),  Kenneth  Builders  ought  to  have

persisted and perhaps initiated or invited litigation cannot be appreciated.

37. When the DDA informed Kenneth Builders that the project land

was  available  on  an  “as  is  where  is  basis”  and  that  it  was  the

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responsibility  of  the  developer  to  obtain  all  clearances,  the  conditions

related only to physical issues pertaining to the project land and ancillary

or peripheral  legal  issues pertaining to the actual  construction activity,

such as compliance with the building bye-laws, environmental clearances

etc.  The  terms  and  conditions  of  “as  is  where  is”  or  environmental

clearances emphasized by learned counsel for the DDA certainly did not

extend  to  commencement  of  construction  activity  prohibited  by  law

except after obtaining permission of the Ridge Management Board and

this Court. On the contrary, it was the obligation of the DDA to ensure

that the initial path for commencement of construction was clear, the rest

being  the  responsibility  of  the  developer.  The  failure  of  the  DDA to

provide a clear passage due to an intervening circumstance beyond its

contemplation went to the foundation of implementation of the contract

with Kenneth Builders and that is what frustrated its implementation.

38. Reliance by learned counsel for the DDA on the “as is where is”

concept as well as clauses 6 and 11 of the Development Agreement in this

context  is  misplaced.  As  mentioned  above,  this  primarily  pertains  to

physical issues at site. This is clear from the following passage referred to

by  learned  counsel  from  Punjab  Urban  Planning  &  Development

Authority v. Raghu Nath Gupta6:  

“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

6 (2012) 8 SCC 197

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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,  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. Over and above,  the  facts  would clearly  indicate  that  there  was not much delay on the part of PUDA to provide those facilities as well.  As  noted,  the  electrical  works  and  health  works  were completed by 24-12-2002 and 22-11-2002 respectively and all the facilities  like parking,  lights,  roads,  water, sewerage,  etc.  were also provided.”

39. On a conspectus of the facts and the law placed before us, we are

satisfied  that  certain  circumstances  had  intervened,  making  it

impracticable for Kenneth Builders to commence the construction activity

on the project land. Since arriving at some clarity on the issue had taken a

couple  of  years  and  that  clarity  was  eventually  and  unambiguously

provided by the report  of  the CEC, it  could certainly be said that  the

contract  between  the  DDA and  Kenneth  Builders  was  impossible  of

performance  within  the  meaning  of  that  word  in  Section  56  of  the

Contract Act.  Therefore, we reject the contention of the DDA that the

contract between the DDA and Kenneth Builders was not frustrated.

40. Learned  counsel  for  Kenneth  Builders  urged  that  the  amount

deposited with the DDA ought to be returned with interest at 12% per

annum and not 6% per annum as directed by the High Court. We are not

inclined  to  accede  to  this  request.  Kenneth  Builders  had  prayed  for

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interest at 18% per annum in the High Court but that was declined and

only  6% per  annum was  awarded.  Kenneth  Builders  is  not  in  appeal

before us on this issue. However, we make it clear that the calculation of

interest  on  the  amount  deposited  would  be  with  effect  from  11th

September,  2006  when  the  entire  amount  of  Rs.  450.01  crores  was

deposited by Kenneth Builders with the DDA.  

41. The GNCTD and the DPCC raised an issue before us that  the

DDA was not the final authority in the matter of determining the land use

particularly when it related to the Ridge. In the view that we have taken,

it is not necessary to go into this question.   

Conclusion  

42. The appeal filed by the DDA is dismissed. The DDA should now

refund the deposit  made by Kenneth  Builders  with interest  at  6% per

annum calculated from 11th September, 2006 till realization. The question

raised in the connected appeal filed by the GNCTD and the Department

of Forests of the GNCTD is left open for consideration in an appropriate

case.  

43. There will be no order as to costs.  

                                    ………………………………J

( Madan B. Lokur )

        ……………………………….J New Delhi; ( N.V. Ramana ) June 29, 2016

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