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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2545  OF 2017 [Arising out of SLP [C] No.23563/2007]

Orissa Industrial Infrastructure Development Corporation … Appellant

Vs.

M/s. MESCO Kalinga Steel Ltd. & Ors. … Respondents

With CA No. 2546 /2017 (@ SLP (C) No. 23759/2007 and CA No.2547/2017 (@ SLP (C) No.2683/2008).

J U D G M E N T

ARUN MISHRA, J.

1. Leave granted.

2. The  appeals  have  been  preferred  by  Orissa  Industrial  Infrastructure

Development  Corporation  (in  short  ‘IDCO’)  and  also  by  Jindal  Stainless  Ltd.

aggrieved by the impugned judgment and order dated 30.10.2007 passed by the

High Court of Orissa, thereby directing IDCO to lease out 825.68 acres of land and

to enter into a lease agreement with M/s. Mesco Kalinga Steel Ltd.

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3. The  factual  matrix  discloses  that  Mesco  Kalinga  Steel  Ltd.  (in  short

‘Mesco’)  had applied to IDCO for allotment of 2500 acres of land on 30.6.1994

and IDCO in turn, requested the Government of Orissa to issue necessary orders to

process the allotment. On 28.10.1994 the State Government conveyed in principle

approval for allotment of 2500 acres of land on the terms and conditions laid down

in  the  policy  decision  of  the  State  Government  as  revised  on  25.1.1995  for

establishment of steel plant.

4. Initially the State Government had agreed for equity participation of Rs.25

crores towards the cost of land. This offer was withdrawn by the State Government

on 2.2.1995 and was communicated to Mesco. IDCO wrote a letter on 21.3.1995 to

Mesco to deposit the land cost in twenty half-yearly equal instalments and further

requested to deposit Rs.1.25 crores towards the first instalment and Rs. 13.08 lakhs

towards  ground  rent  and  cess.  Mesco  deposited  Rs.1.25  crores  with  IDCO on

3.4.1995. On 13.6.1996 IDCO requested Mesco to take over possession of 1756.29

acres of land in the first phase and to submit the draft lease deed for execution.

Mesco took over possession of the land on 18.6.1996. However, lease deed was not

executed.  Thereafter,  on  13.10.1997,  the  State  Government  intimated  the

proceedings of the meeting held on 26.9.1997 to IDCO and required it to execute

the lease deed in favour of Mesco and also to realize the instalments due.

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5. On  27.10.1997,  IDCO  requested  Mesco  to  submit  draft  deed  of  lease

agreement  for  execution  within  15 days,  failing  which  steps  will  be  taken  for

cancellation  of  allotment  and  resumption  of  land.  IDCO  again  requested  on

26.11.1997 to submit the draft deed of agreement for execution. However Mesco

kept quiet and failed to get the lease deed executed. Thereafter, for more than 5 ½

years  nothing happened.  No steps  were  taken by Mesco  to  get  the  lease  deed

executed. Thereafter, IDCO gave final notice to Mesco on 4.7.2003 to deposit the

balance  defaulted  amount  of  Rs.22.44  crores  along  with  statutory  dues  and  to

execute the lease deed by 19.7.2003 failing which it was intimated that the said

land shall be resumed at their cost and the amount paid shall be adjusted towards

compensation for use and occupation of the land; apart from that, Mesco shall also

be liable for damages. Ultimately on 25.7.2003 on failure to get the lease deed

executed, land was resumed and possession letter of 1756.29 acres of land was

cancelled  by  IDCO.  The  amount  of  Rs.1.25  crores  deposited  by  Mesco  was

forfeited and adjusted towards compensation for use and occupation of the land

and damages.  

6. After resumption of the land, IDCO allotted 209.59 acres of land out of the

land in question to Visa Industries Ltd. on 7.11.2003 and also allotted 71.20 acres

out of the disputed land to Jindal Stainless Ltd. Possession of the land was handed

over to Visa Industries Ltd. on 30.8.2004 and to Jindal Stainless Ltd. on 28.2.2005.

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IDCO further allotted 533.52 acres of disputed land to Jindal Stainless Ltd. and

another  120 acres  of  land out  of  the disputed land to  Visa Industries  Ltd.  and

handed  over  possession  to  Jindal  and  Visa  on  11.11.2005  and  17.11.2005

respectively. The lease deed etc. have been executed between the aforesaid parties.  

7. A  representation  was  submitted  by  Mesco  on  20.8.2003  questioning

resumption in which Mesco submitted its own terms and conditions for payment.

The said representation was rejected on 26.9.2003 by IDCO. The first round of

litigation in the form of W.P. (C) No.12857/2003 was filed by Mesco questioning

the cancellation and resumption of land. The High Court disposed of the said writ

petition on 15.1.2004. Pursuant thereto, representation dated 20.1.2004 submitted

to  IDCO  had  been  rejected  on  25.2.2004.  Thereafter,  in  the  second  round  of

litigation,  W.P. (C)  No.2453/2005,  during  its  pendency,  Mesco  came  up  with

another representation dated 22.8.2005 to IDCO which was rejected on 7.10.2005

on  the  ground  that  it  was  highly  unsatisfactory,  unconvincing  and  completely

unacceptable.  Mesco  amended  the  writ  petition  to  question  the  rejection  order

dated 7.10.2005. On 11.4.2007 and 12.4.2007, the High Court again asked IDCO

whether it was willing to lease out the remaining land to Mesco. As IDCO was

unable to do so, the High Court allowed the writ application to lease out 825.68

acres of land. Aggrieved thereby, the appellants are before us.

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8. The High Court has held that since IDCO has not complied with clause 18

contained in the policy decision dated 25.1.1995 in as much as 3 months’ notice

has not been given, it was not open to resume the possession otherwise than in due

course of law. Since Mesco had confined its prayer to the available land to the

aforesaid extent, the High Court had issued directions to lease out 825.68 acres of

land.

9. It was submitted by learned senior counsel on behalf of the appellants that

the High Court has erred in law in setting aside the order of resumption of land as

there  was failure  on the  part  of  Mesco to  get  the lease  deed executed  despite

repeated reminders made by IDCO in the years 1996 and 1997 and thereafter for

several years there was lull, and ultimately after issuance of notice, resumption of

land was made which has been subsequently allotted to other industries and the

remaining  land  was  required  for  their  future  expansion.  The  land  for  mining

purposes is also not available at present. The instalments were also not deposited.

In the absence of execution of lease deed, the relationship of lessor and lessee

never came into being, as such the 3 months’ notice for resumption of land was not

required. Three months’ notice is required to terminate a lease deed. The order of

resumption was passed and pursuant thereto, possession has rightly been taken as

Mesco was not vested with any right to retain possession having failed to pay the

instalments and execute the lease deed. The order passed by IDCO for forfeiture of

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the amount deposited to the tune of Rs.1.25 crores was fully justified in the facts

and circumstances of the case. No development had been made by Mesco on the

land in question. Thus, the impugned order may be  set aside.

10. Learned senior counsel appearing on behalf of the respondent urged that the

order of the High Court is appropriate and no case for interference in the appeal is

made out. Setting up of the steel plant would be in the interest of the State and the

public at large. Due to certain legal proceedings etc, Mesco could not get the lease

deed executed. It was necessary to serve 3 months’ notice to resume the land which

has not been done. On a specific query being posed about the development over the

land, it was stated that the boundary wall had been constructed. However, no plant

etc. could be established before resumption of the land.                          

11. Before dilating upon the rival submissions, it is appropriate to take note of

certain  facts.  The  Government  of  Orissa,  Department  of  Steel  &  Mines  had

conveyed  its  in  principle  approval  for  allotment  of  2500  acres  of  land  for

establishment of 2 million tons steel plant with ultimate capacity of 3 million tons

per annum. The offer for equity participation of Rs. 25 crores was withdrawn by

the State Government vide letter dated 5.1.1995 before direction for allotment was

issued and IDCO was advised to hand over 2500 acres of land on long term lease

basis on the terms and conditions stipulated in the revised terms and conditions

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issued by the Government on 25.1.1995. They were required to deposit Rs.1.25

crores towards the first instalment and Rs.13,08,842/- towards ground rent and cess

as  reflected  in  the  letter  dated  21.3.1995.  The  amount  of  Rs.1.25  crores  was

deposited on 3.5.1995. Vide communication dated 13.6.1996 of IDCO, possession

of 1756.29 acres of land was required to be taken and Mesco was further required

to submit  a  draft  deed of  agreement  in  duplicate.  It  appears  that  on 18.6.1996

advance possession of 1756 acres of land had been handed over to Mesco but the

draft deed of agreement for execution of lease deed was not submitted by it, hence

a letter  was written on 27.10.1997 by IDCO to resume the land and to  cancel

allotment. In communication dated 26.11.1997, IDCO wrote that it had sent draft

lease deed to Mesco on 20.1.1996 and required the latter to submit the draft of

lease agreement  for  execution immediately. Thus it  is  apparent  that  though the

possession had been taken by Mesco but, at the same time, there was inexplicable

neglect on its part to execute the lease deed. Due to the contumacious default on

the part of Mesco for several years, lease deed could not be executed. Ultimately

IDCO had served notice dated 4.7.2003 to Mesco regarding resumption of land

referring to its earlier communications dated 27.10.1997 and 26.11.1997 to execute

the lease deed or to face resumption of land. The amount of instalments had also

not been deposited except the initial amount of Rs.1.25 crores. Thus Mesco was

required by notice to deposit the balance defaulted amount of Rs.22,84,48,890/-

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and to execute the lease deed by 19.7.2003 failing which land shall be resumed and

the amount paid by Mesco shall  be adjusted towards compensation for use and

occupation of  the land and there shall  be future liability of  damages and costs

thereupon. As nothing was done by Mesco, vide communication dated 25.7.2003,

IDCO  resumed  the  land  and  cancelled  delivery  of  deed  of  possession  dated

18.6.1996. The amount deposited was forfeited.  

12. The  memorandum  of  understanding  (MOU)  was  reached  between  the

Government of Orissa and Mesco Group of Industries on 4.5.1994. According to

the same, Government of Orissa had undertaken to recommend leasehold rights for

mining at suitable mining locations. The MOU was required to be converted into

agreement in due course of time. As per the general terms and conditions framed

by the Government of Orissa on 25.1.1995 for allotment of land for steel plants,

the cost of land was Rs.1 lakh per acre. The amount was to be paid in instalments

as  provided with a  right  to  hold the  demised property for  90 years.  Condition

No.18 of the general terms and conditions to be inserted in lease deed provided that

the lessee had to remedy the breach within three months after notice. Clause 18 of

the general terms and conditions is extracted hereunder :

“18. If  the dues of  the Lessor  hereby reserved or  any part thereof shall at any time being arrears and unpaid  for three months  next  after  the  date  on  which  the  same  shall  have become  due,  whether  the  same  shall  have  been  lawfully demanded or not, or if there is a breach or non-observance by

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the  Lessee  of  any  of  the  conditions  and  covenant  herein contained  and  the  lessee  fails  to  remedy  the  breach  within three months of the notice in writing given by the lessor or becomes  insolvent  or  enters  into  an  agreement  with  his creditors for composition of the said business.  This agreement will be deemed to have been terminated and the Lessee may notwithstanding the waiver of any previous causes of action or rights or remedy of re enter and without prejudice to any such rights, or remedy of the lessor for recovery of dues under the lease, enter upon the demised property and repossess the same as if this demised property had not been leased out.  In such a case the lessee shall pay to the Lessor such amount by way of damages or such other charges as may be determined by the Lessor.    The amount of damages or other dues recoverable from the Lessee will be adjusted against the amount already paid  by the  Lessee.   If  after  such adjustment  there  remains surplus, the same shall be returned to the lessee without any interest.   If  after  such  adjustment  there  shall  remains  some dues recoverable from the lessee and if lessee fails to pay the same,  the  lessor  shall  be free to  take  any legal  action  as  it deems for realization.”                                (emphasis supplied)

Aforesaid condition No.18 never came into force and remained inoperative

in the facts of the instant case as lease deed itself had not been executed. Even

otherwise, more than three months’ time was given to Mesco to remedy the breach

inasmuch as  notice for resumption was initially given in 1997 and for more than

5½  years  till  resumption  in  July,  2003,  breach  was  not  remedied.  In  spite  of

receiving  the  advance  possession,  there  was  failure  on  the  part  of  Mesco  to

execute the lease deed though draft lease deed was sent to it in January, 1996 for

execution.  The  relationship  of  lessor  and  lessee  never  came into  being,  in  the

absence of execution of lease deed. The execution of lease deed was necessary as

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the State Government had only accorded in principle approval and advised IDCO

to allot the land that could only be done by execution of lease deed. As a matter of

fact, IDCO ought not to have handed over advance possession of the land to Mesco

without execution of lease deed. However, for the reasons best known to IDCO,

advance  possession  was  given.  The  allotment  letter  itself  contemplated  the

execution of the lease deed as a condition precedent. As provided in section 33 of

the Orissa Industrial Infrastructure Development Corporation Act, 1980 (for short

‘the Act’), the Corporation can dispose of the land subject to directions given by

the State Government in such a manner and subject to such terms and conditions as

may be necessary. The condition precedent was that of execution of lease deed, and

as it  was so directed by State Government also,  in  our considered opinion,  no

concluded contract came into being and the transaction became void due to failure

on the part of Mesco to execute a formal lease deed.  

13. Section 33 of the Act is extracted hereunder:

“Section 33.   Disposal of land by the Corporation. -  (1) Subject to any directions given by the State Government the Corporation may dispose of –

(a) Any land acquired by the State Government and transferred to it, without undertaking or carrying out any development thereon; or  

(b)Any  such  land  after  undertake  or  carrying  out  such development as it thinks fit,

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to such person in such manner and subject to such terms and conditions, as it considers expedient for securing the purposes of this Act.

(2) The powers of the Corporation with respect to the disposal of land under sub-S. (1) shall be so exercised as to secure, so far as practicable, that –

(a) where the Corporation proposes to dispose of by sale any such land which is  surplus  to  its  requirement,  the  Corporation  shall offer the land in the first instance to the persons from whom it was acquired,  if  they  desire  to  purchase  it,  subject  to  such requirements as  to  its  development  and use as  the Corporation may think fit to impose.

(b)persons  who  are  residing  or  carrying  on  business  or  other activities  on  any  such  land  shall,  if  they  desire  to  obtain accommodation  on  land  belonging  to  the  Corporation  and  are willing to comply with any requirements of the Corporation as to its  development  and use have an opportunity to obtain thereon accommodation suitable to their reasonable requirements on terms settled with due regard to the price at which any such land has been acquired from them.

(3) Nothing in this Act shall be construed as enabling the Corporation  to  dispose  of  land  by  way  of  gift,  but subject as aforesaid; reference in this Act to the disposal of land shall be construed as reference to the disposal thereof  in  any  manner  whether  by  way  of  sale, mortgage, exchange, or lease or by the creation, of  any easement, right or privilege or otherwise.”

It is apparent from section 33(1) and 33(3) that it was necessary to execute

the lease deed as the Corporation could dispose of the land only in the manner as

provided in law and otherwise also it was so stipulated in the Government order

itself. Thus, due to neglect of Mesco the transaction became void and it was not

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necessary to serve three months’ notice to remedy the breach. However, in the facts

of the case for several years the breach was not remedied after communication

dated 27.10.1997 till July, 2003.

14. In the instant case it is apparent that possession had been enjoyed by Mesco

without execution of the lease deed. The conduct of IDCO was also not diligent.

Notice was served in the year 1997 for resumption but thereafter up to July, 2003

nothing was done by either IDCO or Mesco. Not even a single communication has

been placed on record by Mesco containing its proposal to remedy breach and on a

specific query being made to the learned counsel appearing for Mesco, they were

unable to explain as to what transpired between 1997 and 2003 except a vague

submission was made that it was mired in certain litigations which fact has not

been even pleaded. Thus, no explanation, good, bad or otherwise has been placed

on record for inaction on the part of Mesco. The transaction became void, due to

Mesco’s own lapse and negligence, and it has forfeited the right to get the lease

deed executed. After taking possession, it could not have waited for so many years.

What was required to be performed by Mesco was not done.  It also failed to make

any development of worth on the land. We find no force in the submission that they

have spent a sum of Rs.22 crores as they were unable to explain how they spent the

said amount, and only a bald statement was made that they have constructed a

boundary wall. It has not been established that a sum of Rs.22 crores had been

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spent by Mesco. Apart from that, having failed to execute the lease deed, they were

to invest at their own peril. In case they have invested some amount, on that basis

they cannot claim any legal or equitable right.

15. IDCO is a statutory authority and it can act only on the basis of written lease

deed. The execution of lease deed is necessary and it is in public interest to prevent

unauthorized leasing out of property on its behalf.  Lease is required to be executed

in a prescribed format in the shape of formal document which is sine qua non. In

the absence thereof, it would not be permissible to hold that relationship of lessor

and  lessee  came  into  being.  A  situation  arose  under  section  175(3)  of  the

Government of India Act, 1935 a formal document was required to be executed

which provision was  pari materia to Article 299 of the Constitution, this Court

held in  Bhikraj Jaipuria v. Union of India AIR 1962 SC 113 that for a contract

between Government and private individuals, formal document is necessary and

where it is required that a thing shall be done in the prescribed manner or form but

does not set out the consequences of non-compliance, the question whether the

provision was mandatory or directory has to be judged in the light of the intention

of  the  legislature  as  disclosed  by  the  object.  If  the  provisions  of  statute  are

mandatory, the thing done not in the manner or form prescribed can have no effect

or validity. This Court also observed that it is in the interest of the public that the

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question whether a binding contract has been made between the State and a private

individual should not be left to dispute and litigation.

It is apparent that there is a manner of executing the lease deed with the

Corporation.  Prescribed form of draft lease deed had been sent by IDCO to Mesco

but  it  failed to execute  it.  Thus,  there  was no contract  which could have been

enforced and it became void due to inaction of Mesco itself.

16. Forfeiture of amount of Rs.1.25 crores was also appropriate. In State of West

Bengal v. M/s. B.K. Mondal and Sons AIR 1962 SC 779, this Court held that the

provision of section 175(3) is mandatory and non-compliance makes the contract

invalid and section 70 of the Contract Act prevents unjust enrichment. It applies as

much to individuals as to corporations and Government. Section 70 of the Contract

Act  deals  with  the  cases  where  a  person  does  a  thing  not  intending  to  act

gratuitously and others enjoyed it. In such a situation compensation can be claimed

under section 70 and this Court has held that section 175(3) of the Government of

India Act is not in conflict with the principles enunciated under section 70 of the

Contract Act. Thus, we find no force in the submission on the part of Mesco with

respect  to the forfeiture of amount of Rs.1.25 crores. In addition, they would be

liable to pay as compensation for retaining possession so long.  In  New Marine

Coal Co. (Bengal) Private Ltd. v. The Union of India AIR 1964 SC 152 also, this

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Court has held that when a contract is found to be void due to the provisions of

section 175(3) of the Government of India Act it becomes unenforceable but in

case a party had performed its obligation, section 70 is attracted in order to recover

compensation.  

17. In Laliteshwar Prasad Sahi v. Bateshwar Prasad and Ors. AIR 1968 SC 580

where mere agreement  was entered into in contravention of  Article  299 of  the

Constitution  and was  not  ratified  by the  Government,  it  was  held  not  to  be  a

contract as it was void and unenforceable. Similar is the view taken in Karamshi

Jethabhai Somayya v. State of Bombay (now Maharashtra) AIR 1964 SC 1714. It

is true that the said provisions are not attracted in the instant case but statutory

corporation has also to act as per the mode prescribed by law.

18. There  is  no  question  of  estoppel  or  ratification  in  such  cases.  In

Mulamchand v. State of Madhya Pradesh AIR 1968 SC 1218, this Court observed

thus :

“6.  ….. The principle is that the provisions of Section 175(3) of the Government of  India  Act,  1935 or  the corresponding provisions of Article 299(1) of the Constitution of India are mandatory  in  character  and  the  contravention  of  these provisions nullifies the contracts and makes them void. There is no question of estoppel or ratification in such a case. The reason  is  that  the  provisions  of  Section  175(3)  of  the Government of India Act and the corresponding provisions of Article 299(1) of the Constitution have not been enacted for the  sake  of  mere  form  but  they  have  been  enacted  for

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safeguarding the Government against unauthorised contracts. The  provisions  are  embodied  in  Section  175(3)  of  the Government of India Act and Article 299(1) of the Constitution on the ground of public policy — on the ground of protection of general public —and these formalities cannot be waived or dispensed with. If the plea of the respondent regarding estoppel or ratification is admitted, that would mean in effect the repeal of  an  important  constitutional  provision  intended  for  the protection  of  the  general  public.  That  is  why  the  plea  of estoppel or ratification cannot be permitted in such a case. But if money is deposited and goods are supplied or if services are rendered  in  terms  of  the  void  contract,  the  provisions  of Section 70 of the Indian Contract Act may be applicable. In other words if  the conditions imposed by Section 70 of  the Indian Contract  Act  are  satisfied then the provisions of  that section  can  be  invoked  by  the  aggrieved  party  to  the  void contract. The first condition is that a person should lawfully do something for another person or deliver something to him; the second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third condition is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. If these conditions are satisfied, Section 70 imposes upon the latter person the liability to make compensation to the former  in  respect  of,  or  to  restore,  the  thing  so  done  or delivered. The important point to notice is that in a case falling under Section 70 the person doing something for another or delivering  something  to  another  cannot  sue  for  the  specific performance  of  the  contract,  nor  ask  for  damages  for  the breach of the contract, for the simple reason that there is no contract between him and the other person for whom he does something  or  to  whom  he  delivers  something.  So  where  a claim for compensation is made by one person against another under  Section  70  it  is  not  on  the  basis  of  any  subsisting contract  between  the  parties  but  on  a  different  kind  of obligation. The juristic basis of the obligation in such a case is not founded upon any contract or tort but upon a third category of  law,  namely,  quasi-contract  or  restitution.  In  Bibrosa v. Fairbairn,  1943  AC  32 Lord  Wright  has  stated  the  legal position as follows:

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“...  any  civilised  system  of  law  is  bound  to  provide remedies  for  cases  of  what  has  been  called  unjust enrichment or unjust benefit, that is, to prevent a man from retaining  the  money  of,  or  some  benefit  derived  from, another which it is against conscience that he should keep. Such  remedies  in  English  Law are  generically  different from  remedies  in  contract  or  in  tort,  and  are  now recognised to fall within a third category of the common law which has been called quasi-contract or restitution”.

In the light of aforesaid decision, when we consider the overall conduct of

Mesco in the instant case, we are fully satisfied that the High Court has adventured

into an avoidable illegality while directing execution of lease deed. It is a settled

law that  equity  follows  the  rule  of  common law in  respect  of  such  contracts.

Renewal of lease is a privilege and if a tenant wishes to claim the privilege, he

must do so strictly within the time limited for the purpose. This Court has further

considered the question where there is no time limit, an application may be made

within a reasonable time. If delay is on the part of lessee for renewal arising out of

mere  neglect  on  his  part  and  which  could  have  been  avoided  by  reasonable

diligence, would not entitle him to claim renewal. Applying the same principle to

the  instant  case,  it  is  apparent  that  the  conduct  of  Mesco  was  unfair  and

unpardonable.  The conduct disentitled it from indulgence by Court in any manner.

We  are  constrained  to  observe  that  a  number  of  times  the  High  Court  had

unnecessarily  directed  the  matter  to  be  reconsidered  and  on  each  and  every

occasion there was rejection of  the representation by the concerned authorities.

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Thus,  no  equitable  consideration  was  available  with  Mesco  to  invoke  the  writ

jurisdiction for the reliefs sought. Relief granted is not permissible as per law.

19. Mesco had no enforceable right for grant of any relief by mere handing over

of possession. The question came up before this Court in Khela Banerjee & Anr. v.

City Montessori School & Ors. (2012) 7 SCC 261 when bid was cancelled and was

not accepted but the Manager of the respondent convinced the Governor to pass

individual  order  of  possession  and  acceptance  of  the  balance  amount  in  ten

six-monthly instalments; thereafter instalments were not paid. This Court held that

no  enforceable  right  accrued  in  favour  of  the  respondent  notwithstanding  the

execution of the agreement dated 12.1.1996 and the offer made by the respondent

to make the payment of the balance price was rightly rejected. This Court has held

thus :

“29. The  first  question  which  merits  consideration  is whether  the  conclusion  recorded  by  the  High  Court  on  the issue  of  enforceability  of  the  agreement  dated  12-1-1996 is correct and Respondent 1’s prayer for issue of a direction to LDA to accept the balance price was rightly rejected. It is an admitted position that in response   to   tender notice  dated 20-12-1994, Respondent 1 gave bids for four plots including Plot No. 92-A/C and paid 25% of the price offered by it but did not pay the balance amount necessitating cancellation of the bid,   about  which    intimation  was  given vide letter dated 14-6-1995. Respondent 1 did not challenge the cancellation of bids  by  availing  appropriate  legal  remedy  but  its  Manager succeeded in convincing the Governor of the State to pass an unusual  order for handing over possession of  the plots  and acceptance of the balance amount in six-monthly instalments.

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The reasons which prompted the Governor to act in violation of the Rules of Business and ordain restoration of the plots in favour  of  Respondent  1  albeit  without  setting  aside  the decision of LDA to cancel the bids are not borne out from the records produced before this Court. Therefore, we hold that the order passed by the Governor  and the consequential  actions taken  by  the  State  Government  and  LDA  including  the execution  of  agreement  dated  12-1-1996  did  not  create  an enforceable  right  in  favour  of  Respondent  1  and  the  High Court rightly declined to issue a mandamus to LDA to accept the offer made on its behalf for payment of the balance price.

30. It is significant  to   note  that   the  agreement  dated 12-1-1996  contained  an  unequivocal  stipulation  that  if Respondent  1  fails  to  pay  the  instalments  of  balance  price within  the  prescribed  time-limit  then  the  agreement  would become void and LDA will be free to sell the plot to any other person. Admittedly, Respondent 1 did not pay the instalments of balance price. Therefore, the agreement stood automatically terminated and LDA became entitled to dispose of the plot by adopting  an  appropriate  mechanism  consistent  with  the doctrine of equality enshrined in Article 14 of the Constitution. It  is  rather  intriguing  as  to  why  the  functionaries  of  LDA remained silent for more than 13 years and did not repossess the  plot  in  question.  This  was  perhaps  due  to  the  pressure brought  by  the  Manager  of  Respondent  1  from  different quarters, administrative as well as political.

xxx xxx xxx 32. We have carefully gone through the provisions of the

2009 Act and find that they do not even remotely deal with the issue  of  allotment  of  land  to  the  educational  institutions. Therefore, the Division Bench of the High Court was not at all justified in ordering transfer of the plot to Respondent 1 and that too by ignoring its own finding that the said respondent was a ranked defaulter and the writ petition was filed after a time gap of 13 years without any tangible explanation.”                                                                (emphasis added by us)

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20. Mesco was required to do several acts in this case as per the general terms

and conditions subject  to which the lease was to be granted. Nothing has been

performed including payment of instalments etc. and in such a situation no relief is

permissible to be given as held by this Court in  Raj Kishore (Dead) by LRs. v.

Prem  Singh  &  Ors. (2011)  1  SCC  657  in  which  this  Court  has  referred  to

Halsbury’s Laws of England thus  :

“33. This  Court  also quoted with approval  the following passage from Halsbury’s Laws of England, Vol. 14, IIIrd Edn., p. 622, Para 1151:

“1151.  Conditions must as a general  rule be strictly observed.—Where under a contract, conveyance, or will a beneficial right is to arise upon the performance by the beneficiary of some act in a stated manner, or at a stated time, the act must be performed accordingly in order to obtain the enjoyment of the right, and in the absence of fraud, accident or surprise, equity will not relieve against a breach of the terms.””

                           It is apparent that when several acts are to be done in a stated manner and in

stipulated time and none of them has been performed, as in the instant case, such

gross breach became irremediable and no equitable principle could have come to

the rescue of Mesco as it has utterly failed to fulfil its obligations.

21. It  was submitted on behalf of Mesco that IDCO is bound by promissory

estoppel. We find the submission to be wholly unworthy of acceptance. It is not the

case of Mesco that there was any assurance given to it on the basis of which it has

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acted  upon.  The  State  Government  had  withdrawn  its  initial  offer  of  equity

participation of Rs.25 crores well before the order of allotment was issued.  It was

made clear in the order that the State Government had directed IDCO to allot 2500

acres of land subject to execution of lease deed. In such a situation there is no room

to entertain the plea of promissory estoppel and it is not the case that any of the

authorized persons had at any point of time, without execution of lease deed, asked

Mesco to do anything. Any such assurance even if it had been given, would be of

no consequence as held by this Court in Mumbai International Airport Private Ltd.

v. Golden Chariot Airport & Anr. (2010) 10 SCC 422. Therein a question arose that

the Airports Authority of India being a statutory body   constituted under section 3

of the Airports Authority of India Act, 1944 was required to execute the contract in

a particular form as provided under the Act and the Regulations. As such it was

held that even if oral assurance of execution of licence is proved, such assurance

cannot bind the statutory body. In the facts of the instant case, the principle of

promissory estoppel is not attracted at all.  IDCO is a statutory body and can act

only in the mode prescribed and Mesco was informed of the lease deed to  be

executed  in  prescribed format.  Thus the  High Court  could not  have issued the

impugned direction.

22. In  the  writ  petition,  a  prayer  had  been  made  for  grant  of  relief  of  a

declaration that Mesco has acquired full title to hold the property in question for a

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period of 99 years from the date of possession and IDCO has lost its title to the

said land and has the remedy to recover the balance amount by filing a suit. The

prayer  was  wholly misconceived.  In  the instant  case,  on the  basis  of  MOU or

allotment letter, no right has accrued to Mesco, and it having failed to perform its

mandatory part, the MOU/offer became void and unenforceable.  IDCO was fully

justified in resuming the land.  

23. The High Court has totally misdirected itself in directing to lease out the

balance land. The High Court has also ignored that certain intervening events have

taken  place  and  there  was  total  failure  on  the  part  of  Mesco  to  carry  out  its

obligations. The High Court could not have issued the direction more so in the

changed situation and in view of the defaults committed by Mesco.  As a matter of

fact, Mesco was never inclined to abide by the terms of the letter dated 4.7.2003.

When  resumption  was  made  on  25.7.2003,  a  representation  was  submitted  on

20.8.2003 by Mesco. In that, an attempt was made to dictate its own terms in the

garb of prayer for payment. As a matter of fact, it is apparent from the conduct of

Mesco that it had no justification at any point of time not to execute the lease deed.

It  was  delaying  the  same  for  the  reasons  best  known to  it  which  was  wholly

impermissible conduct,  particularly after taking possession. The breach was not

remedied  for  several  years  much  less  for  three  months  in  which  it  was  to  be

remedied. Thus, High Court misadventured into holding the action of IDCO of

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resumption of land to be illegal.  There was no equitable or legal consideration in

favour of the respondent herein and a writ is not issued to perpetuate an illegality.

Not only the conduct of Mesco was unfair, third party rights had also intervened.

Lawful method had been exercised for resumption of land and cancellation of letter

of  handing over the possession.  

24. Resultantly, the  impugned order  passed  by the  High Court  is  hereby set

aside. The appeals are allowed. The writ petition stands dismissed. Cost of Rs.5

lakhs is directed to be paid by Mesco to IDCO within a period of two months from

today.    

………………………J. (Arun Mishra)

New Delhi; ……………………..J. February 14, 2017. (Amitava Roy)