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CASE NO.:

Appeal (civil) 5188 of 2001

PETITIONER:

Ganga Retreat & Towers Ltd. & Anr.

RESPONDENT:

State of Rajasthan & Ors.

DATE OF JUDGMENT: 19/12/2003

BENCH:

R.C. Lahoti & Ashok Bhan

JUDGMENT:

J U D G M E N T

With

CA No. 5189 and CA No. 5190 of 2001

BHAN, J.

Aggrieved by the judgment and order of the Division Bench of

Rajasthan at Jaipur in setting side the order of the Single Judge, thereby,

dismissing the writ petition filed by the appellants, the present appeals have

been filed. All the three appeals have been filed by the same set of

appellants and against the same judgment. As three separate appeals were

filed by the respondents before the Division Bench against the order of the

Single Judge the appellants have filed three separate appeals. They are taken

up for disposal by a common order.

The State of Rajasthan (hereinafter referred to as "the Respondent No.

1") decided to dispose of by public auction two prime properties situated in

the heart of Jaipur City. One of the properties was known as Dr. Helligs

Bungalow, near Khasa Kothi State Hotel, M.I. Road, Jaipur and the other

was a plot of land situated near Khasa Kothi known as the site of Food Craft

Institute building on M.I. Road, Jaipur. In the present case we are

concerned with the first property only. Respondent No. 1 issued

advertisement for auction of Dr. Helligs Bungalow, which was scheduled to

be held, according to the auction notification on 21.12.1994. In the

advertisement the property was described as free hold, ceiling free, vacant,

crest jewel property known as Dr. Helligs Bungalow (10,400 sq. yards). The

permitted use of the property was shown as hotel/commercial complex/hotel

cum-commercial complex. The terms and conditions for the auction were

also provided in the advertisement. Condition Nos. 7,8,9,10,12 and 13 relate

to the controversies involved in this litigation and are reproduced hereunder:

"7. Land measuring 1,400 sq. mtr. shall be

auctioned with the condition that the successful

bidder shall have to surrender a strip of land

measuring 6.2 sq. mtr. for the road

widening/parking of commercial vehicle free of

charges. He will be given the benefit in terms of

FAR, which is calculated on the basis of original

plot size.

8. Other parameters of this plot size have been

approved by JDA and are given as under:

Coverage 62.5% F.A.R.

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F.A.R. 2.0

No of floors B + G + 4

Maximum permissible 16.76 Mtrs.

Height

Parking provision IPCU per 200 sq. mtr. of

built up area

Set backs

Front towards 15 mtrs. Station Front

towards roads.

Front towards 15 mtrs. Circuit House

7.5 mtr. Atal Ban (After

leaving 6.2 Mtrs. for

future road widening/

parking commercial

vehicle.

Rear 6 Mtrs. as indicated in

the plan.

9. The construction work on the plot should be

commenced with in one year from the date of

handing over of possession of the land and the

building. Building construction should be done

within 3 years. If the party wants further extension

beyond three years that shall be given against the

penalty of Rs. 20,000/- (Rupees twenty thousand)

p.m. but in no case the period shall be extended

more than 2 years.

10. After the full amount due against the plot as

deposited by the purchaser the Patta of the plot

will be issued in favour of the purchaser which

would enable him to start construction on the plot

in accordance to the approved plan and under

architectural control as per specifications given by

JDA.

12. The land shall be used for construction of

Hotel/Commercial Complex/Hotel cum

commercial complex only. If he uses this property

for other than this purpose, he would have to seek

prior permission from the Government of

Rajasthan against payment of charges as the

Government may fix thereof.

13. The purchaser shall have to strictly abide by

the parameters and set backs as laid down in

condition No. 8. Any violation of these terms and

conditions shall lead to the forfeiture of his right

on this property and hence the property shall stand

reverted to the Government without payment of

any compensation for the land and the building

thereupon."

M/s Ganga Retreat and Towers Ltd., a company registered under the

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Indian Companies Act, 1956 (formerly known as M/s Lok Hotels and

Resorts Limited), the appellants herein were declared as the successful

bidder in the auction held. The appellants' bid of Rs. 19,56,76,000/- being

the highest was accepted and the property was knocked down in their favour.

The successful bidder, as per term No. 5, was required to pay the sale

consideration, as per the following schedule:-

"i) 10% of the final bid on the spot in cash or

through Demand Draft in favour of Director

of Estate, Rajsthan, Jaipur (the amount of

Rs. 20.00 lacs deposited as earnest money

shall be allowed to be adjusted against this

deposit of 10%).

ii) 15% amount of the final bid will have to be

deposited within 15 days from the date of

acceptance, letter sent to the successful

bidder by the Government of Rajathan.

iii) 75% amount of the final bid will have to be

deposited by successful bidder within 60

days of the notice for deposition of the full

and final amount of the bid amount which

the party shall be informed by the

Government of Rajasthan.

Failure to deposit it the aforesaid amount at any

state, i.e., (I), (ii) and (iii) above will result in

forfeiture of the amount already deposited by the

successful bidder and hence cancellation of the

bid."

The payment was not made as per schedule given above. The entire

sale consideration amounting to Rs. 19,56,76,000/- was paid on 16.5.1995.

As there was a delay in making the payment as per schedule the appellants

accepted their liability to pay interest for the delayed payment. A sum of Rs.

30,01,273/- towards interest for delayed payment was made. Last installment

of Rs. 83,562.72 P. towards the amount of interest was paid by demand draft

dated 21.08.1995. Total amount paid was Rs. 19,86,77,273/-. The cost and

expenses for registration of patta, stamp duty and all other incidental

expenses were also to be borne by the purchaser. Sale deed could not be

executed in favour of the appellants as the appellants did not furnish the

stamp papers. After repeated letters including the letter dated 21.05.1996

the appellants submitted the requisite stamp duty and registration charges

amounting to Rs. 1,19,25,720/- for execution of the sale deed on 18.12.1996.

Thereafter, the sale deed was executed and registered on 7.01.1997 and

immediately thereafter possession was delivered to the appellants. Term of

the auction notice that Floor Area Ratio (for short "FAR") would be 2.00

was also repeated in the sale deed.

The appellants thereafter applied for sanction of plans for putting up

construction on the property and the Planning Cell of the Jaipur Municipal

Corporation (for short "the JMC") demanded a deposit of Rs. 1,48,79,887/-

towards map approval charges. These charges were deposited under protest

by the appellants. According to the appellants the JMC had not framed any

Rules in this regard and that the charges were exorbitant and without

authority of law. The appellants also handed over 6.2 meters width of strip

land to the JMC of old Dr. Helligs bungalow as per their letter dated

2.5.1997 (Annexure IV).

On 11.4.1997, the Additional Director and Competent authority under

the Urban Land Ceiling and Regulation Act, 1976 (for short "the Ceiling

Act") issued a notice to the appellants under Section 38 of the Ceiling Act,

alleging that the appellants were holding land in excess of ceiling limits and

had not filed the return as required under Section 6 (1) read with Section 15

of the Act. The appellants replied to the aforesaid notice on 17.4.1997

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pointing out that the Respondent No. 1 had sold the property as free from

ceiling limit and therefore, there was no need to file a return. As the

explanation was not accepted by the competent authority, the appellants

applied for exemption under Section 20 of the Act. The appellants also

submitted the return in the prescribed form with a covering letter dated

19.4.1997. On 3.5.1997 the Competent Authority issued a notice under

Section 8(3) of the Ceiling Act enclosing a draft statement as to vacant land.

Simultaneously, application filed under Section 20 of the Act for exemption

was processed. On 11.8.1997, the competent authority granted exemption to

the appellants on certain conditions. It was stipulated that the exemption

was being granted subject to the terms and conditions stated in the

conveyance deed dated 7.1.1997 and that it could be used only for the

purposes set out in the conveyance deed. It was also stipulated that for any

construction on the land, plans will have to be submitted for sanction to the

JMC and all the standards regarding construction shall be applicable as per

the norms of the JMC. Another condition put was that the land would not be

transferred or conveyed in any manner to any one without prior permission

of the State Government except offering it as security to the financial

institutions for raising loan. As this clause has given rise to the controversy

on which lengthy arguments have been addressed, the same is reproduced

below for reference:

"5) That the sale, gift or any transfer of the plot

will not be closed without prior approval of the

State Government. But mortgaging the property to

financial institution for taking loan without parting

with the possession the State Government will

have objection."

On 24.6.1996 the Jaipur Development Authority (for short "the JDA")

revised its bye-laws. The revised building Bye-laws came into force w.e.f.

24.6.1996 in which parameters in respect of commercial hotels and

commercial plots were amended. Vide Regulation No. 9.3.3 of the 1996

Regulations the FAR was reduced to 1.75 instead of 2.00 as provided by the

Bye-laws of 1989.

Appellants submitted their building plans as per FAR 2.00. JMC on

22.2.1997 approved the building plans subject to FAR 1.75 only as per 1996

Bye-laws as against FAR 2.0 permitted by the auction notice and the

conveyance deed. On 10.10.97, after getting the land exempted from

ceiling, the Company wrote to the JMC to re-examine the case and allow

FAR 2.0 on the appellants' re-submitting the plans for approval or in the

alternative to advise the General Administration Department to refund the

proportionate amount consequent upon the reduction in the FAR.

On 28.10.1997, the appellants wrote a letter to the Minister for Urban

Development, Government of Rajasthan, for intervening in the appellants'

favour in their dispute with the JMC which was not allowing FAR 2.0 as

promised in the terms of auction and the sale deed. Appellants also wrote a

letter to the Chief Minister on 17.11.1997 for intervention in the matter and

for ordering the Secretary, Urban Development and Housing to clear the

plans with FAR 2.0 as a special case urgently. On 18.12.1997 again, a

communication was addressed by the appellants to the Chief Secretary

giving the following three proposals:

"(A) to instruct Jaipur Nagar Nigam to allow

F.A.R. 2 as per Auction conditions. As F.A.R. 2

existed before the new Byelaws came into force in

September, 1996. Plus to pay interest at 18% p.a.

for delayed period to clear our plans as

compensation. The delayed period may be

calculated from the day we deposited our plans for

approval to the day the plans are approved. We

have paid interest on account of delay from our

side.

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(B) To refund the whole amount with interest,

the registration cost, the maps approval charges,

the L.B.T. charges etc.

(C) To refund proportionate charges on all

above for the reduced F.A.R. from 2 to 1.75 i.e.

12.5% all above charges."

It was also stated in this letter that if no response was received to the

proposals in writing within fifteen days, the appellants shall go to the court

of law for redressal of their grievances. On 22.10.1997 the Chief Secretary

wrote to the Urban Development and Housing Department recommending

the case of the appellants for grant of FAR 2.0 instead of FAR 1.75 in

compliance with the conditions of the auction. As no decision was taken,

the appellants filed S.B.Civil Writ Petition No. 195/98 against the State of

Rajasthan, Jaipur Development Authority, Jaipur Municipal Corporation

amongst others, who were officers of the State Government, claiming the

following reliefs.

"In the premises aforesaid the writ petition of the

petitioner may kindly be allowed with costs and by

an appropriate writ, order or direction, the Hon'ble

Court may be pleased to:

(a) declare that on account of the reasons set out

herein and the order dated 9th September,

1997 passed by the Municipal Corporation,

referring to approve maps upto 2.0 FAR the

contract of sale of the property described in

this petition vide sale deed dated 7th Jan.,

1997 stands frustrated or has become

impossible of performance or invalid

rendering the sale deed dated 7th Jan., 1997

void.

(b) declare that the Regulations of 1996 were

not applicable to the petitioner and the same

cannot be enforced against the petitioner by

the Municipal Corporation, Jaipur or JDA in

view of the sale deed dated 7th Jan., 1997.

(c) declare that the sale deed being a

government grant was not required to be

registered and no stamp duty was required to

be paid and consequently the petitioner is

entitled to the refund of the stamp duty and

the registration charges.

(d) direct the respondents jointly and severally

to pay to the petitioner a sum of Rs.5102.94

lakhs alongwith future interest @ 18.5% per

annum.

Any other appropriate writ order or direction

which may be considered just and proper in the

facts and circumstances of the case may kindly

also be issued in favour of the Petitioners."

On issuance of notice the respondents put in appearance and filed

their replies. Apart from contesting on merits, preliminary objections were

raised regarding maintainability of the petition on the ground that

declaratory relief claimed could not be granted in the writ jurisdiction. It was

also contended that the reliefs claimed pertained to the concluded contract

with regard to the sale of property culminated by execution of the sale deed.

That the relief being claimed was based on breach of contract and the writ

petition was not the appropriate remedy for redressal of such grievances. No

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petition could be entertained for either specifically enforcing the contract

or/and for compensation for breach of contract. That the highly disputed

questions of fact were involved which could not be adjudicated without

adducing evidence. Such disputed questions of fact could not be adjudicated

by the High Court in exercise of its extra-ordinary jurisdiction under Article

226 of the Constitution of India.

Learned Single Judge rejected the preliminary objections regarding

the maintainability of the petition and declared that the sale deed was

statutory in nature. It was a grant as well. The rights and the obligations as

incorporated in the sale deed were statutory in character as regards the rights

and obligation of the parties. No change could be effected thereafter on any

pretext whatsoever in regard to the reducing the FAR from 2.0 to 1.75. In

the auction notice property was described as free hold and ceiling free. The

action of the State in not acting upon the assurance given amounted to a

fraud, which invalidated the sale. Consequently, the learned Single Judge

declared that the auction sale held on 21.12.1994 and the consequent sale

deed dated 7.1.1997 were null and void having no legal sanctity. The

contract was frustrated. All consequent actions taken by either of the parties

pursuant to the auction and the sale deed were invalidated and the appellants

were declared entitled to be restituted to the original position as it existed

prior to the date of auction and execution of the sale deed. Consequently,

the respondents were directed to refund to the appellants, the payments

received by the respective respondents, pursuant to any term of the auction

dated 21.12.1994 which included the entire sale considerations as mentioned

in the sale deed dated 7.1.1997 along with all other payments made to the

respondents by the appellants towards stamp duty, registration charges, land

and building taxes etc. with interest @ 18% per annum calculated from the

date of receipt of such amount by the respective respondents till the date of

actual refund to the appellants. It was also directed that the JMC shall

refund all payments made by the appellants towards building map approval

charges, additional constructed area charges, licence fee, inspection charges,

etc. along with interest @ 18% per annum from the date of receipt of said

payments by the appellants till the date of actual refund to the appellants. As

regards the damages claimed by the appellants for the incomplete

construction which by that time had been raised upto 9 stories (which was

held to be under compulsion), it was directed that it would be advisable that

the State of Rajasthan constitutes an expert Committee consisting of the

Chief Engineer PWD and Director, Town Planning Department or any other

officer having expertise to assess the value at the PWD rates and value the

construction on the site and after such valuation made by the Committee, the

amount assessed be refunded to the appellants within forty five days of the

assessment.

As directed by the learned Single Judge, a Valuation Committee was

constituted by the State Government and the value of the construction as per

PWD rates was assessed at Rs. 9,97,51,003/-. From this amount, 10% was

deducted by the Committee as contractor's profit, which was included in the

analysis of BSR rates. After deducting 10% amount, i.e., Rs. 99,75,100/-

amount payable to the appellants representing the construction on the land

was worked out by the Committee at 8,97,75,903/-.

Aggrieved by the aforesaid order of the learned Single Judge, appeals

were preferred before the Division Bench which were accepted. It was held

that the sale of land by way of auction was neither statutory nor by way of

grant. Consequently, it was held that the rights and obligations incorporated

in the sale deed were not statutory in character. That it was a completed

contract in which highly disputed questions of fact were involved which

could not be adjudicated upon by the High Court in exercise of its writ

jurisdiction. It was left open to the appellants to seek their remedy in the

Civil Court, if so advised.

At the outset, we may state that Shri Shanti Bhushan, learned senior

counsel appearing for the appellants fairly conceded that he would not be

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able to support the findings recorded by the Single Judge to the effect that

the rights and obligations incorporated in the sale deed were statutory in

character or that the sale of land by Respondent No. 1 to the appellants were

by way of grant. He accepted the findings to the contrary recorded by the

Division Bench in this regard.

Before taking up the contentions raised on the merits by the counsel

for the parties we would like to briefly refer to the question regarding the

maintainability of the writ petition in contractual matters. Challenging the

finding recorded by the Division Bench regarding the maintainability of the

writ petition it was contended on behalf of the appellants that there is no

absolute bar to the maintainability of the writ petition in contractual matters.

Maintainability or otherwise in contractual matters is but an aspect of the

existence of equally efficacious alternative remedy. The power to entertain

a writ petition under Article 226 even in contractual matters is plenary but

actual exercise of jurisdiction in a particular case would be discretionary and

such discretion in turn is exercisable on sound judicial principles. This

Court in appropriate cases has entertained the writ petitions in contractual

matters and interfered to grant the relief deemed fit keeping in view the

facts of the case. No cause can be adjudicated without reference to some

facts and mere enquiry into facts, as those emerging from a limited set of

admitted facts does not in any manner act as a bar to the exercise of writ

jurisdiction. In the present case the entire case centers around roughly 25

undisputed documents. The question of leading oral evidence does not arise

and no intricate interpretation of documents or complicated inquiry into facts

is warranted. So far as the issue as to assessment of value of the structure

standing on the property is concerned the same stands covered by a detailed

factual report quantifying the precise valuation. Based on the inferences to

be drawn from documents, the questions of what relief, if any, this Court

considers fit to grant, and how, if at all, such relief is to be tailored to suit the

facts and circumstances of the case, are to be answered.

As against this, Mr. Harish Salve, learned senior counsel appearing

for the respondent-State submitted that the contention that contractual

disputes can be raised in proceedings under Article 226 is misconceived.

The remedy under Article 226 is a remedy in public law, and, therefore in a

remedy by way of judicial review, what is amenable to challenge is the

decision making process and not the decision itself. According to him, the

actions of the Government in contractual field, in rare cases, may be

questioned as being arbitrary or unreasonable being violative of Article 14 of

the Constitution but that does not mean that the Court is required to examine

a completed contract of sale of property being void or otherwise. That the

points involved in the writ petition are highly disputed questions of fact

which cannot be decided without taking evidence and therefore the Division

Bench was right in non-suiting the appellants on the ground of non-

maintainability of the writ petition and leaving it open to the appellants to

work out their remedy in the Civil Court.

Although prima facie we are in agreement with the view taken by the

High Court that the petition involves disputed questions of fact in relation to

a completed contract of sale of land which cannot be adequately adjudicated

upon in exercise of writ jurisdiction, but, despite holding that the disputed

questions of fact are not be adjudicated in exercise of writ jurisdiction, yet

we are not inclined, in the exercise of power under Article 136 of the

Constitution to dismiss the appeal on this account at this stage because that

is likely to result in the miscarriage of justice on account of lapse of time

which may now result in the foreclosure of all other remedies which could

be availed of by the appellants in the ordinary course. At the present stage

of the proceedings the alternative remedy of filing the suit would not be

efficacious. This Court in a number of cases, even after recording a finding

that the writ petition was not maintainable and that the High Court ought

not to have entertained it, has declined to interfere on the ground of non-

maintainability where it is found, that the matter has been pending for long

and/or the High Court has already entertained the writ petition [albeit

wrongly] and/or when to send the writ petitioner back would cause grave

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delay or harassment. In such cases this Court has proceeded to decide the

dispute on merits. For this, we may refer to a recent decision of this Court in

Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Ors.,

2000 (6) SCC 293, in which this Court observed:

"12. Ordinarily, in view of the aforesaid

conclusions on the first contention, we would have

allowed the appeal and directed dismissal of the

writ petition (OP No. 283 of 1995) without

examining the second contention. However,

despite holding that the disputes in question could

not be agitated in a writ petition and thus the High

Court wrongly assumed jurisdiction in the facts of

the case, yet we are not inclined in the exercise of

our power under Article 136 of the Constitution, to

dismiss the writ petition of the contractor at this

stage because that is likely to result in the

miscarriage of justice on account of lapse of time

which may now result in the foreclosure of all

other remedies which could otherwise be availed

of by the contractor in the ordinary course. Those

remedies are not efficacious at the present stage

and, therefore, in view of the peculiar

circumstances of the case, we have examined the

second contention and the factors which weighed

with the High Court in granting relief. "

Keeping in view the peculiar facts of the case and the fact that it will

not be a sound exercise of judicial discretion to relegate the petitioners to

recourse to the alternate remedy of civil suit belatedly at the present stage,

we proceed to examine the dispute on merits .

The case of the appellants are that the conveyance deed is liable to be

cancelled and set aside on the ground that it is vitiated by misrepresentations

made on behalf of the Respondent, on account of which the appellants were

wrongly induced to enter into the contract and that the conveyance was

entered into by mistake. The misrepresentation alleged is on account of :

(a) the FAR of the property being 1.75 whereas it was described

as 2.00 in the auction notice as well as conveyance deed;

and

(b) the property was, in the auction notice, described as "free

hold and ceiling free" whereas the appellants were

compelled to apply for exemption from land ceiling which

procedure involved some delay. While giving exemption

from the provisions of Chapter III of the Ceiling Act a

condition was put that the plot would not be "sold, gifted or

transferred" without prior approval of the State Government

which was onerous as well as contrary to the auction notice.

The land in dispute was not ceiling free as was represented

in the auction notice and that the condition put in the

exemption letter that the property would not be alienated

without prior permission of the Government made the

property not to be free hold as well.

Elaborating the first point, it was submitted that the appellants

purchased the property on a representation made to them, that the FAR was

2.0 and the property was free hold as well as ceiling free. The appellants

were persuaded to make the bid as a result of such misrepresentation by the

Government in the auction notice. The contract could not be said to have

been made by the consent of the parties under Section 10 and became

voidable at the option of the appellants under Section 19 of the Indian

Contract Act. That the contract was frustrated and incapable of being

performed in terms of Section 56 of the Indian Contract Act. That the

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appellants have almost come to ruination because of the action of the

respondents in as much as they have invested huge sums of money after

borrowing from the Bank at high rates of interest without any return for the

last so many years. As against this the case put forth on behalf of the

respondents is that there was no misrepresentation as alleged. On the date

on which the contract was entered into, i.e., the date on which auction went

in favour of the appellantss there was no misrepresentation even as alleged

by the appellants since the FAR on that date was 2.0. The FAR was

changed by virtue of change in law, which could not have been envisaged at

the time the contract was entered into. The delay in the execution of the

conveyance deed was pre-dominantly on account of causes attributable to

the appellants. That the appellants having got executed and accepted the

conveyance even after the reduction of the FAR voluntarily or without

demur and having raised construction clearly declared their intention to

proceed with the contract which is inconsistent with the plea that they had

the intention to rescind the contract. Having declared their intention to

proceed with the contract the appellants were bound by their affirmation.

Having affirmed the contract they cannot go back on their affirmation and

seek rescission of the contract. That the contention in relation to frustration

is misconceived as Section 56 of the Indian Contract Act does not apply to

the cases of completed transfer.

From the pleadings of the parties it is clear that the appellants gave

their bid in the auction for sale of the property on the terms and conditions as

contained in the auction notice which included the parameters approved by

the JDA for construction of building complex set out in Clause (8)

providing for FAR 2.0. Appellants paid the price inclusive of interest for the

delayed payment amounting to Rs. 19,86,77,273/- and got the sale deed after

paying the requisite stamp duty and registration charges, executed on

7.1.1997 and got the physical possession of the auction property vide

possession letter dated 7.1.1997. After receiving the possession the

appellants submitted the plans for construction of Hotel-cum-Commercial

Complex to the JMC on 27.1.1997 for approval. The Building Plans

Committee of the JMC on 20.2.1997 approved the plans with the

modification of FAR from specified FAR 2.0 in the sale deed to 1.75 only.

It was stated that this modification of FAR by the JMC was because of the

Buildings Regulations/Bye Laws of 1996 which came into force w.e.f.

28.6.1996. Even after approval the JMC did not release the plans till

charges for approval of plans were paid. The appellants deposited a sum of

Rs. 1,48,78,887/- for the approval of the plans with the JMC on 21.4.1997

and after receiving the approved plans the appellants commenced the

construction activities which according to the appellants were without

prejudice to their rights and the belief that the remaining FAR would be

approved.

From these facts what emerges is that on 21.12.1994, the date on

which the auction went in favour of the appellants there was no

misrepresentation even as alleged by the appellants since the FAR on that

date was 2.0. The FAR was changed by virtue of change in the law. As per

term No. 5 of the auction notice the successful bidder was required to

deposit 10% of the final bid on the spot in cash or through Demand Draft in

favour of the Director of Estate, Rajsthan. 15% of the amount of the final

bid was required to be deposited within 15 days from the date of acceptance

and the remaining 75% of the amount of the final bid was to be deposited by

successful bidder within 60 days of the notice for deposit of the said bid

amount on being informed by the Respondent. Failure to deposit the amount

as per the above stipulation could result in forfeiture of the amount already

deposited by the successful bidder and result in cancellation of the bid. The

appellants did not deposit the amount as per schedule of payment set out in

the auction notice. The entire sale consideration amounting to Rs.

19,56,76,000/- was paid on 16.5.1995. A sum of Rs. 30,01,273/- towards

interest for delayed payment (to the payment of which the appellants agreed)

was also paid. The last payment of Rs. 83,562.72 P. towards amount of

interest was made by demand draft dated 26.09.1995. The cost and expenses

for registration of patta, stamp duty and all other incidental expenses were to

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be borne by the purchaser. The sale deed could not be executed in favour of

the appellants as the appellants did not furnish the stamp paper on which the

sale deed was to be executed. After repeated letters including the letter

dated 21.05.1996 the appellants submitted the requisite stamp duty and

registration charges amounting to Rs. 1,19,25,720/- for execution of the sale

deed on 18.12.1996. Thereafter, the sale deed was executed and registered

on 7.01.1997 and immediately thereafter the possession was delivered.

These facts demonstrate that delay in the execution of the conveyance was

principally on account of the reasons attributable to the appellants. In the

meantime the FAR was changed by virtue of a change in the law. The 1989

Bye-laws were changed by Bye-laws of 1996 which came into force w.e.f.

28.6.1996. As per these bye-laws FAR was changed from 2.0 to 1.75. Had

the appellants made the payments as per schedule of the payment given in

the auction notice and submitted the requisite stamp duty the conveyance

deed would have been executed prior to the amendment in law. The

appellants by their letter dated 18.12.1996, i.e., after the reduction of the

FAR requested the respondent to execute the conveyance. This was done

despite knowledge of reduction of FAR. Request made to the respondent

on 18.12.1996 for execution of the conveyance deed despite having

knowledge of the reduction of the FAR clearly shows that the plea of

misrepresentation or mistake on account of change of FAR is not made out

on the admitted facts.

It was then contended on behalf of the appellants that in the

conveyance deed the FAR was again mentioned as 2.0 and at that stage

there was a clear misrepresentation by the respondent. To establish

misrepresentation on this count the reliance was placed on the provisions of

the Indian Contract Act. There is no force in this submission. Statement

about the existing state of the law innocently made cannot constitute

misrepresentation if it is later found that the statement was erroneous. This

would be particularly so where the other party to whom the statement is

made is aware of or has the ability to conveniently apprise itself of the

correct state of the facts and the law applicable. Assuming (but without

holding) that there was some misrepresentation the appellants had a couple

of remedies, i.e., to either rescind the contract or seek restitution or to affirm

the contract without prejudice to their right to seek damages by way of

restitution for the loss caused by the misrepresentation. It is apparent that

the appellants did not rescind the contract or seek restitution by way of

damages. Instead they affirmed the contract which is clear from the fact

that they immediately commenced construction on the land even though the

building plans were on FAR 1.75. Affirmation of the contract and

proceeding with the construction clearly indicates that the appellants did not

rescind the contract nor reserved their right to seek restitution by award of

damages; or seek restitution rather they affirmed the contract and went ahead

with it.

It was then argued that the appellants had to start construction

immediately as a very strict stipulation was contained in the auction notice

(Condition No. 9). It was also represented in the sale deed that construction

work on the plot should be commenced within one year from the date of

handing over the possession of the land and the construction of building

should be completed within 3 years. The extension beyond 3 years was to

be given subject to payment of a penalty of Rs.20,000/- per month but in no

case the period would be extended beyond 2 years. Clause 13 of the terms

of the auction also provided that any violation of any terms and conditions

would lead to forfeiture of purchase of right of the property and the property

would stand reverted to the government without paying any compensation

for the property. Because of the condition contained in clauses 9 and 13 of

the terms of auction the appellants inspite of having knocked the doors of the

court had to start with the construction otherwise they ran the risk of their

right to the property being forfeited. We do not find any merit in this

submission. At the time of initiating the legal proceedings in the Court, it

was open to the appellants to either affirm the contract without prejudice to

their right seeking damages by way of restitution for loss caused by alleged

misrepresentation or to rescind the contract by getting the declaration that

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the contract was not binding on the appellants. The appellants elected the

first option. Had the appellants rescinded the contract and prayed for

declaration that the contract was not binding on them, then, on its being so

declared, terms 9 and 13 of the auction notice would not have bound the

appellants in any way. The court while granting the relief could have

moulded the relief according to facts and situation prevalent. It would not

have in any way affected the appellants. The appellants cannot be permitted

to sit on the fence in indecision and take a chance. By putting up the

construction of basement and the other floors above the appellants have

encumbered the property. The respondent cannot be fastened with the

liability to pay for the construction put up by the appellants with full

knowledge of true facts.

The appellants have founded their case on the plea of avoidance of

contract as vitiated by misrepresentation on the part of respondents or

mistake on the part of the appellants or in the alternative, on the ground of

frustration. Let us test if the appellants have any legs to stand on, on either

of the pleas.

Misrepresentation is defined in Section 18 of the Contract Act.

Effect of mistakes is dealt with by Sections 21 and 22 of the Contract Act.

According to Section 19 of the Contract Act when consent to an

agreement is caused by misrepresentation, the agreement is a contract

voidable at the option of the party whose consent was so caused. The latter

may, if he thinks fit, insist that the contract shall be performed and that he

shall be put in the position in which he would have been if the

representations made had been true. According to Section 2 clause (i), an

agreement which is enforceable by law at the option of one or more of the

parties thereto, but not at the option of the other or others, is a voidable

contract. It is not necessary for us to record a clear finding whether there

was a misrepresentation on the part of the respondents or not. Suffice it to

observe that a voidable contract confers the right of election on the party

affected to exercise its option to avoid the legal relations created by the

contract or to stand by the contract and insist on its performance. However,

his election to stand by the contract once exercised would have the effect of

ratification of the contract with the knowledge of misrepresentation on the

part of the other party and that would extinguish its power of avoidance. In

the very nature of the right conferred on the party affected, the law expects it

to exercise its option promptly and communicate the same to the opposite

party; for until the right of avoidance is exercised, the contract is valid, and

things done thereunder may not thereafter be undone.

A right to rescind for misrepresentation can be lost in a variety

of ways, some depending on the right of election. A representee on

discovering the truth loses his right to rescind if once he has elected not to

rescind. But he may lose even before he has made any election where by

reason of his conduct or other circumstances it would be unjust or

inequitable that he retains the right. For instance where third parties have

acquired rights under the contract; again where it would be unjust to the

representor because it is impossible to restore him to his original position.

Restitutio in integrum is not only a consequence of rescission, its

possibility is indispensable to the right to rescind. Again, delay in election

may make it unjust that the right to elect should continue. For this reason

the right to rescission for misrepresentation in general must be promptly

exercised. (See, Indian Contract and Specific Relief Acts - Pollock and

Mulla, Eleventh Edition, Volume I, pp. 269-270).

Chitty on Contracts (Volume I, Twenty-Eighth Edition 1999,

para 25-003) states - "Once the innocent party has elected to affirm the

contract, and this has been communicated to the other party, then the choice

becomes irrevocable. There is no need to establish reliance or detriment by

the party in default. Thus the innocent party, having affirmed, cannot

subsequently change his mind and rely on the breach to justify treating

himself as discharged".

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Under Section 20 of the Contract Act, a mistake of fact avoids

the agreement when both the parties to an agreement are under a mistake as

to a matter of fact essential to the agreement. It is necessary that both the

parties should be under a mistake. On the appellants' own showing, the

respondents were not under mistake; according to the appellants, the

respondents knew the correct facts and yet misrepresented. The appellants

pleadings of misrepresentation and mistake in the alternative, in the facts

and circumstances of the case, are mutually destructive. Under Section 21 a

contract is not voidable because it was caused by a mistake as to any law in

force in India. The appellants cannot rely on the pleading of mistake of their

part or misrepresentation on the part of the respondents as to the

applicability of Urban Ceiling Law and FAR as provided by the bye-laws,

both being the laws in force in India. Here again, the vitiating effect of

alleged mistake shall stand obliterated no sooner it is found that the

appellants have, in spite of the so-called mistake being discovered, yet,

chosen to stand by the contract, ratifying the same by their conduct and went

ahead to exercise the rights which accrued to them under the same contract

which they are pleading to be vitiated by the mistake.

The doctrine of frustration, as applicable in India in contracts

stands, codified in Section 56 of the Contract Act. It provides :

56. An agreement to do an act

impossible in itself is void.

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.

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.

The doctrine was so enunciated by this Court in Satyabrata

Ghose Vs. Mugneeram Bangur and Co. and Anr.- 1954 SCR 310 :

"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

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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 promisor finds it impossible

to do the act which he promised to do.

In M/s Alopi Parshad and Sons. Ltd. Vs. Union of India -

(1960) 2 SCR 793, this Court clarified that the courts have no power to

absolve a party from liability to perform a contract merely because the

performance becomes onerous; the expressed covenants in a contract cannot

be ignored only on account of unexpected and uncontemplated turn of

events after the contract. However, a consideration of the terms of the

contract in the light of circumstances, when it was made, shows that the

parties never agreed to be bound in a fundamentally different situation which

unexpectedly emerges, the contract ceases to bind at that point, not because

the Court in its discretion considers it just and reasonable to qualify the

terms of the contract but because on its true construction it does not apply in

that situation. Here again, it has to be noted that the doctrine of frustration

can only apply to executory contracts and not the transactions which have

created a demise in praesenti (See, H.V. Rajan Vs. C.N. Gopal and Ors. -

AIR 1975 SC 261, 265). In Raja Dhruv Dev Chand Vs. Harmohinder

Singh & Anr., (1968) 3 SCR 339, their Lordships held - "There is a clear

distinction between a completed conveyance and an executory contract, and

events which discharge a contract do not invalidate a concluded transfer".

In the auction notice it was represented that the land in question was

freehold as well as ceiling free. The Ceiling Act does not apply to the

Government lands. It is admitted before us, that the government was aware

(though it may have had the intention right from the beginning to exempt the

land from the Ceiling Act) that the land which was being auctioned was not

exempted from ceiling and the exemption could only be granted after the

transfer of the land to a private person. The appellants received a notice

under Section 38 of the Ceiling Act informing that they own excess land in

Jaipur City as prescribed under Section 4 of the Urban Land Ceiling Act and

had not submitted their return under Section 6 read with Section 15 within

the prescribed period. Appellants were directed to appear before the

competent authority on 17.04.1997 to explain why action should not be

taken against them under Section 38 of the Act. Soon after the receipt of

the said letter, the appellants applied for exemption under the Act which was

granted promptly on 11.8.1997. Exemption was given subject to various

conditions which were imposed by the exemption order. It was stated that

para-meters of the Jaipur Municipal Corporation regarding construction

would be applicable. According to the appellants this virtually amounted to

unilaterally reducing the FAR 2 to FAR 1.75. The second condition was that

the plot will not be transferred without prior approval of the State

Government even though the property could be mortgaged to financial

institutions for taking loan without parting with possession. According to

the appellants, imposition of these conditions were contrary to the

representation contained in the auction advertisement that the property was

freehold. It was argued that it is well known that the transfer of freehold

property is freely transferable and does not require any permission. In

imposing such condition the government was taking away the freehold

character of the property. The representation that the property was ceiling

exempted was a very material representation which had induced the

appellants to offer a very high bid. That the action of the State in making a

representation that the property was ceiling free, although it knew that there

was a ceiling limit not only amounted to misrepresentation under Section 18

of the Indian Contract Act but in fact amounted to fraud because any

representation with knowledge that the representation was not true would

amount to fraud. It was argued that the contract having been induced by

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misrepresentation, it was open to the appellants to avoid the contract under

Section 19 of the Contract Act.

Per contra, it was contended on behalf of the respondents that so far as

the order dated 11th August, 1997 under the Ceiling Act, imposing certain

conditions, is concerned, the stand of the State has always been that it is not

going to enforce any of these conditions. That even today the stand of the

State is that it is not going to enforce any of the conditions as imposed in the

exemption order.

Other aspects of the plea founded on Section 19 of the Contract Act

have already been dealt with hereinbefore.

So far as the Ceiling Act is concerned, the Act itself has been repealed

by the Notification dated October 7, 1999 as published in the Rajasthan

Gazette dated October 11, 1999. With the repeal of the Ceiling Act, all

proceedings under the Ceiling Act have abated. Reference may be made to a

decision of this Court in Pandit Madan Swaroop Shrotiya Public

Charitable Trust vs, State of U.P. & Others, 2000 (6) SCC 325.

So far as the order dated 11th August, 1997 under the Ceiling Act is

concerned, the stand taken by the State through out has been that it is not

going to enforce any of those conditions. It was so submitted by the learned

Advocate General while appearing for the State of Rajasthan before the High

Court. The aforesaid fact is admitted by the appellants themselves in their

memo of appeal [Ground (u)]. Even today, the stand of the State is that it is

not going to enforce any of those conditions as imposed under the exemption

order. This apart the process for obtaining exemption from land ceiling did

not in any manner affect the appellants for the reason that their plans were

sanctioned even before the question was raised as to the application of the

Urban Land Ceiling Act to the property. The appellants as per their letter,

couched as representation, dated 10.10.1997 had started digging for the

basement in February, 1997 immediately upon the sanction of building

plans. The process of construction began immediately. Thus, the condition

imposed in the exemption order were not an impediment in any manner It

is appellants' own case that they had started construction of a multi-storeyed

complex upon the property which clearly implies that the appellants had

never the intention of the transferring the land as plots and therefore the

condition inhibiting the transfer of plots was irrelevant so far as the

appellants are concerned.

It is the appellants who delayed the payment of sale consideration on

the dates stipulated for payment. For the period of delay they agreed to pay

interest to the State Government voluntarily; they voluntarily paid stamp

duty and bore registration charges as stated above in the end of December,

1996 and got the sale deed executed on 7th January, 1997 on which date the

possession was delivered to them and thereafter they voluntarily paid the

charges for the approval of building plans with FAR 1.75 and proceeded

with construction work for establishing Hotel-cum- Commercial Complex

by demolition of existing structure of Dr. Hellings Bunglow standing on the

land in question, levelling the same, digging deep foundation, constructing

basement and thereafter further raising construction of ground floor and

other floors. They cannot now be permitted to turn round and claim refund

of any amount which they allege to have spent including the claim for the

interest. The appellants have voluntarily paid the entire money, entered into

possession, raised construction and incurred expenditure voluntarily and as

such they are not entitled to any refund or any claim and declaration as such

on the ground of frustration or impossibility of performance of the contract.

Every contract including one by auction is subject to provisions of

law. Whenever any action is taken in performance of a contract, it must

conform to the law in force at the time when action is taken. In the instant

case when the appellants applied for approval of building plans it is the law

that is in force at that time, which would be applicable. Doctrine of

promissory estoppel is not available when any action is desired to be taken

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in contravention of the provisions of law. The terms and conditions of the

sale as announced when the property was put to sale were in accordance

with law and no guarantee was given (nor could have been given) that the

law would not change, or that the terms and conditions would be

enforceable even in violation of law which may be in force. FAR was a

matter of law and the FAR was fixed either by the JDA or JMC in exercise

of its statutory powers. The contract when entered into, the FAR approved

by JDA was 2 and its subsequent reduction in 1996 to 1.75 would not

invalidate the contract or by treating as a breach of the contract nor can it be

treated by the Government.

In reply to the contention raised on behalf of the State

Government that the appellants having failed to rescind the contract

immediately on coming to know of the breach or misrepresentation by the

government, it could not exercise their right of rescinding the contract under

Section 39 or avoiding under Section 19 of the Contract Act later on, it was

submitted on behalf of the appellants that this contention of the State

Government was devoid of any force. According to the appellants the legal

right to avoid a contract or rescind the contract can be waived but there is no

principle of law which requires the exercise of the right of repudiation of

the contract to be done immediately on coming to know about the

misrepresentation or breach of contract. It was open to the aggrieved party

to persuade the defaulting party to rectify the situation and to wait till the

defaulting party refuses to rectify its default before exercising its right of

repudiation of the contract. Reference was made to Sikkin Subba

Associates vs. State of Sikkim, 2001 (5) SCC 629, wherein this Court

observed as follows:

"Waiver involves a conscious, voluntary and

intentional relinguishment or abandonment of a

known, existing legal right, advantage, benefit,

claim or privilege, which except for such a waiver,

the party would have enjoyed. The agreement

between the parties in this case is such that its

fulfilment depends upon the mutual performance

of reciprocal promises constituting the

consideration for one another and the reciprocity

envisaged and engrafted is such that one party who

fails to perform his own reciprocal promise cannot

assert a claim for performance of the other party

and go to the extent of claiming even damages for

non-performance by the other party. He who seeks

equity must do equity and when the condonation or

acceptance of belated performance was conditional

upon the future good conduct and adherence to the

promises of the defaulter, the so-called waiver

cannot be considered to be forever and complete it

itself so as to deprive the State, in this case, of its

power to legitimately repudiate and refuse to

perform its part on the admitted fact that the

default of the appellants continued till even the

passing of the award in this case. So far as the

defaults and consequent entitlement or right of the

State to have had the lotteries either foreclosed or

stopped further, the State in order to safeguard its

own stakes and reputation has continued the

operation of lotteries even undergoing the miseries

arising out of the persistent defaults of the

appellants. The same cannot be availed of by the

appellants or used as a ground by the arbitrator to

claim any immunity permanently for being

pardoned, condoned and waived of their

subsequent recurring and persistent defaults so as

to deny or denude forever the power of the State as

the other party to the contract to put an end to the

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agreement and thereby relieve themselves of the

misfortunes they were made to suffer due to such

defaults. Once the appellants failed to deposit the

prize money in advance within the stipulated time,

the time being of the essence since the prizes

announced after the draw have to be paid from out

of only the prize money deposited, the State was

well within its rights to repudiate not only due to

continuing wrongs or defaults but taking into

account the past conduct and violations also

despite the fact that those draws have been

completed by declaration or disbursement of prize

amounts by the State from out of its own funds.

The conclusion to the contrary that the State has

committed breach of the contract is nothing but

sheer perversity and contradiction in terms."

In our view, this decision has no application to the facts of the present

case. In the said case the appellants therein was appointed as "organising

agent" for lotteries of the Respondent State. Subsequently, disputes arose

which led to termination of the agency by the State. Appellants therein got

an arbitrator appointed under Section 8 of the Arbitration Act, 1940. Claims

and counter-claims were filed and evidence adduced by the parties before

the Arbitrator. Arbitrator made its award determining the amount payable

by the State to the appellants at Rs.37,75,00,000/- and the amount payable

by the appellants to the State by way of counter-claim at Rs.4,61,35,242/-.

District Judge made the award the rule of the court. This was in challenge in

the High Court of Sikkim where there were only two Judges. Chief Justice

set aside the award while the other Judge held that the matter required to be

remitted to the arbitrator for re-determining the quantum of damages. The

court thereafter by its order dated 29th September 1995 directed the matter to

be placed before the incoming Chief Justice/Judge. Subsequently both the

Chief Justice and the other Judge were, in due course, succeeded by new

incumbents to those offices. The new Judge fixed the date of hearing and

before him the appellants filed an application opposing the hearing of the

appeal in view of section 98(2) CPC. This application was dismissed by the

Division Bench as not maintainable in view of the reference made by the

Division Bench. This was challenged in this Court. After resolving the

controversy on the aforesaid point, the Court proceeded to examine the

award made by the arbitrator. It was held that the award under challenge

stood vitiated on account of several errors of law, apparent on the face of it

and such infirmities go to substantiate the claim of the State that the

arbitrator not only acted arbitrarily and irrationally on a perverse

understanding or misreading of the materials but was also found to have

misdirected himself on the vital issues rendering the award to be bad in law.

The arbitrator and the District Judge had recorded a finding that the State in

spite of warnings and threats did not actually stop draws or to other

subsequent draws by the appellants and allowed the lotteries to go on

without any break. That the State government had condoned or waived the

lapses and defaults. In this context, the observations quoted above were

made by this court. It would be seen that this contract was an executory

contract and not completed contract of sale of property. It was observed that

a waiver involves a conscious, voluntary and intentional relinquishment or

abandonment in known existing legal right. There were persistent and

continuous defaults. Even if the past lapses were taken to have been waived

by the State, it was observed by the Court that the State could not be

compelled to condone the continues wrong and defaults of the appellants to

their disadvantage and detriment. Observations quoted above are of no

avail to the appellants as in that case the court found that the appellants were

continuing with the defaults in an executory contract. The principle laid

down in the said case would not be applicable to the facts of the present

case.

Reliance was also placed on M/s Motilal Padampat Sugar Mills

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Co.Ltd. vs. State of U.P. & Others [1979 (2) SCC 409]. In this case the

point which fell for consideration was whether the assurance given by

respondent No.4 (Chief Secretary or advisor to the Government) on behalf

of the State of U.P. that the appellants would be exempt from payment of

sales tax for a period of three years from the date of commencement of

production could be enforced against the State government. On behalf of the

respondent-State, plea of waiver by the appellants were raised. The Court

rejected this plea of waiver. It was held that waiver is essentially a question

of fact and it must be properly pleaded and proved which the State had failed

to do. It was also held that waiver means abandonment of a right and it may

be either express or implied from conduct, but its basic requirement is that it

must be 'an intentional act with knowledge'. On facts it was found that

there was no waiver and the court observed:

"Now in the present case there is nothing to show

that at the date when the appellant addressed the

letter dated June 25, 1970, it had full knowledge of

its right to exemption under the assurance given by

respondent 4 and that it intentionally abandoned

such right. It is difficult to speculate what was the

reason why the appellant addressed the letter dated

June 25, 1970 stating that it would avail of the

concessional rates of Sales Tax granted under the

letter dated January 20, 1970. It is possible that

the appellant might have thought that since no

notification exempting the appellant from Sales tax

had been issued by the State Government under

Section 4-A, the appellant was legally not entitled

to exemption and that is why the appellant might

have chosen to accept whatever concession was

being granted by the State Government. The claim

of the appellant to exemption could be sustained

only on the doctrine of promissory estoppel and

this doctrine could not be said to be so well

defined in its scope and ambit and so free from

uncertainty in its application that we should be

compelled to hold that the appellant must have had

knowledge of its right to exemption on the basis of

promissory estoppel at the time when it addressed

the letter dated June 25, 1970. In fact, in the

petition as originally filed, the right to claim total

exemption from Sales Tax was not based on the

plea of promissory estoppel which was introduced

only by way of amendment."

In the present case, we have found as a fact that the appellants even

after acquiring the knowledge of fact regarding reduction of FAR from 2.00

to 1.75 and that the land was not ceiling free elected to affirm the contract

by getting their plans approved with FAR 1.75 and started putting up

construction. They started digging the foundations and continued to build

even after knowing that the land was not ceiling free. Thus, the reliance

placed on the ratio of law laid down in M/s Motilal Padampat Sugar Mills

Co.Ltd.'s case (supra) is of no avail to the appellants.

Relying upon a decision of this Court in Ningawwa Vs. Byrappa &

Others [1968 (2) SCR 797], it was contended by Shri Shanti Bhushan,

learned senior counsel that a contract or other transaction induced or tainted

by fraud is not void, but only voidable at the option of the parties defrauded,

unless it is avoided, the transaction is valid. Further, drawing a distinction

between fraudulent misrepresentation as to the character of the document

and fraudulent misrepresentation as to the contents thereof it was argued that

in the case of former the transaction is void while in the case of latter it is

merely voidable. It was also urged that the appellants could avoid the

transaction at any time. In our view, this judgment is of no assistance to the

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appellants as on facts we have found that the default committed by the

respondent-State, if any, stood condoned by the appellants.

In either case, we find that the appellants are not entitled to any relief

in the realm of the law of contracts. In spite of having acquired knowledge

of the true facts assuming that there was any mistake or misrepresentation to

begin with and having learnt that the title which was sought to be conferred

on them by the respondents was not such full title as they had contemplated

it to be, they proceeded to have the sale deed executed and registered in their

favour, seeking extensions of time and paying interest for the period of delay

in payment. The contract stood accomplished into a demise and the

transaction ended. It is writ large that the appellants had elected to stand by

the contract by digging the land, sinking the basement and raising about 9

floors above, investing crores of rupees. They have by their own conduct

rendered the position irreversible and restitution impractical. We have not

been shown any law or authority based whereon the appellants may annul

and avoid a concluded contract and fix liability on respondents for the cost

of their construction which they have voluntarily chosen to raise in spite of

being aware of all the relevant facts and circumstances.

The learned counsel for the appellants referred to the provisions of

Section 90 (1) and (2) of Jaipur Development Authority Act, 1982, which

read as under:

"90 Control by State Government -

(1) The Authority shall exercise its powers and

perform its duties under this Act in

accordance with the policy framed and the

guidelines laid down, from time to time by

the State Government for development of

the areas in the Jaipur Region.

(2) The Authority shall be bound to comply

with such directions which may be issued,

from time to time, by the State Government

for efficient administration of this Act."

It was contended that the State Government has the complete control

over the JDA and therefore could direct the JDA to adhere to the FAR 2.0 as

against the FAR 1.75 provided under the 1996 Regulations. We do not find

much force in this submission. A reading of this section clearly shows that

the Government can direct the authority to exercise its powers and perform

its duty in accordance with the policy framed and the guidelines laid down

from time to time. Policy and guidelines can be issued for general

application or for a class of persons or area or based on some such other

criteria as may withstand the test of Article 14 of the Constitution. The

power conferred by Section 90 cannot be exercised by the Government to

give directions to increase the FAR in one individual or particular case. The

appellants cannot claim a right to get exemption from the prevalent law nor

heard to say that since the Government had the power to give direction, its

failure to exercise the power of issuing direction by reference to Section 90

of the JDA Act, it has perpetuated the breach of contract.

Counsel for the appellants also brought to our notice the provisions of

Section 298(1) of the Rajasthan Municipalities Act, 1959 to contend that

Government had the power to cancel or modify the Bye-laws framed by the

Board and the failure to do so reflects that the government did not intend to

stick to the representation made by it in the auction notice or in the sale

deed. Section 298 reads as under:

"298 Power of Government to cancel or modify

bye-laws and rules of boards--

(1) The State Government may at any time by

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notification in the Official Gazette repeal

wholly or in part or modify any rule or bye-

law made by any board.

Provided that before taking any action under this

sub-section, the State Government shall

communicate to the board the grounds on which it

proposes to do so, fix a reasonable period for the

board to show cause against the proposal and

consider the explanation and objections, if any of

the board."

Section 298 provides that the State Government has the power to

cancel or modify bye-laws or rules framed by the board. Again this is of no

avail to the appellants. Power under Section 298 is in the nature of power of

superintendence. It is a general power given to the Government that in case

the Government feels that the bye-laws framed or the orders issued are not

reasonable or are detrimental to the public interest or there is any other good

ground available, then, it can repeal the bye-laws wholly or in part or modify

any rule or bye-law made by the Board after inviting objections. The power

could not have been exercised to suit the needs of an individual case as has

been contended by the learned senior counsel for the appellants.

It may be noted that the learned senior counsel for the respondent

pointed out during the course of hearing that the amended bye-laws were

more beneficial to the appellants as there was number of exemptions to be

taken into account while calculating the FAR, namely, storage on all floors,

balcony, guard-door, lobby, terrace garden, service floor, AC plant room,

locker, dark room, PBX room, guard room, power house, lift room and the

lift well. Under the amended bye-laws of 1996 the appellants would get

more covered area thus causing no prejudice to them. This has been

strongly refuted by the counsel for the appellants. We need not go into this

disputed question as it is of no consequence to the points already decided.

For the reasons stated above, we do not find any merit in these appeals

and the same are dismissed with no order as to costs.