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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 8549 OF 2014

GWALIOR DEVELOPMENT AUTHORITY

AND ANOTHER ….APPELLANT(S)

VERSUS

BHANU PRATAP SINGH ….RESPONDENT(S)

J U D G M E N T

Rastogi, J.

1. The instant appeal is directed against the judgment and order

dated 21

st April, 2011 passed by the Division Bench of the High Court

of Madhya Pradesh, Bench at Gwalior with the following directions:

i) The Respondents are directed to execute the lease deed in favour of the

petitioner of remaining area of the land i.e. 9625.50 sq. mtr. in

accordance with the acceptance of his offer of total plot area 27887.50

sq. mtr.

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ii) The petitioner shall be liable to make payment of interest from

17.8.2001 upto 29.3.2006 when the lease deed was executed in favour

of the petitioner excluding the period of 27.5.2004 to 29.3.2005.

iii) The Respondents are at liberty to calculate the amount of interest

accordingly after verification of the amount which has been paid by the

petitioner.

iv) The order be complied with within a period of three months from the

date of receipt of the copy of the order.

2. The facts of the case culled out from the record are that the

appellants, according to the land disposal rules, issued an

advertisement and invited bids for grant of leases of different plots

under the transport city scheme. The respondent was also one of

the bidders for MC-2 (Market Complex-2) plot area 27887.50 sq.

meters. The offer of the respondent @Rs.725/- per sq. meter being

the highest bid was finally accepted. Consequently, a letter of

allotment dated 29

th September, 1997 was issued in favour of the

respondent whereby it was informed that the bid of the respondent

was found to be the highest and it had been decided to lease out the

plot area of 27887.50 sq. meters in his favour for a consideration of

Rs.2,06,67,966/- and the auction bidder/respondent was directed to

deposit a sum of Rs.1,91,67,966/- upto the period of 31

st October,

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1999 in addition to the earnest money of Rs.15 lakhs in four

instalments in the following manner:

(i) Rs.51,66,922/- by 31.10.1997 (for 25% amount)

(ii) Rs.51,66,922/- by 30.06.1998 (for first instalment)

(iii) Rs.51,66,922/- by 28.10.1999 (for second instalment)

(iv) Rs.36,36,990/- by 31.10.1999 (for third instalment)

3. The letter of allotment contained a rider that the market

complex has to be constructed in accordance with the sanctioned

plan by the Gwalior Development Authority (hereinafter being

referred to as the “Authority”) and construction work has to be

completed within the period of two years with a further stipulation

that failure to deposit the instalments in terms of the conditions of

the bid document, the security amount shall be forfeited.

4. It is not disputed that the respondent deposited a total sum of

Rs.2,02,18,437/- from September, 1997 to the last instalment on

25

th August, 2005. The amount deposited by the respondent on

various dates be stated as under:

1 27.9.1997 Rs. 15,00,000.00

2 6.11.1997 Rs. 2,00,000.00

3 31.12.1997 Rs. 3,00,000.00

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4 17.4.1998 Rs. 5,00,000.00

5 22.1.2003 Rs. 16,00,000.00

6 30.1.2003 Rs. 3,00,000.00

7 30.1.2003 Rs. 2,00,000.00

8 31.12.2001 Rs. 5,00,000.00

9 19.12.2003 Rs. 5,00,000.00

10 12.4.2004 Rs. 10,00,000.00

11 27.2.2004 Rs. 10,00,000.00

12 5.1.2004 Rs. 10,00,000.00

13 25.8.2005 Rs.1,16,18,437.00

Total -----------------------

Rs.2,02,18,437.00

-----------------------

5. It reveals from the record that, in the meanwhile, the

respondent requested for revising the layout plan in order to enable

to deposit the requisite amount with the Authority and the layout

plans were also revised, but finally the amended layout plan was

accepted by the Authority on 17

th August, 2001. It is also not

disputed that despite the respondent failed to deposit the instalments

in terms of conditions of the bid document by 31

st October, 1999 and

the final amount being deposited on 25

th August, 2005, no action was

taken by the appellants either for cancellation of the bid or for

forfeiture of the amount deposited by the respondent and what

transpires between the parties is not made available on record but

the fact is that the lease deed was finally executed for 18262.89 sq.

meters on 29

th March, 2006 to the extent of principal amount of

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Rs.1,32,39,356/- @Rs.725/- per sq. meter plus the component of

interest for the said amount for the delay in deposit of Rs.69,97,087/-

total Rs.2,02,18,437/- and the lease deed was executed by the

respondent without any demur. We do not find any justification as

to what was the reason for the Authority to grant such undue

indulgence to the respondent in depositing the instalments which

ought to have been deposited by 31

st October, 1999 but were

deposited upto 25

th August, 2005, be that as it may, it appears that

after some round table negotiations to the extent of principal amount

it was adjusted against the auction bid and balance to be adjusted

towards interest, the total land which was put to public auction of

27887.50 sq. meters, was reduced to 18262.89 sq. meters and with

the consent of parties and without any demur, the lease deed was

executed on 29

th March, 2006.

6. After more than a period of three and half years, the writ petition

came to be filed by the respondent under Article 226 of the

Constitution seeking a mandamus against the appellants to execute

the lease deed for the remaining area of 9625.50 sq. meters in

addition to the lease earlier executed in favour of the respondent and

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the Division Bench of the High Court while accepting the prayer made

by the respondent, directed the appellants to execute the lease deed

in favour of the respondent for the remaining area of 9625.50 sq.

meters without any consideration with liability on the respondent to

make payment of interest for the period 17

th August, 2001 upto

29

th March, 2006, the day when the lease deed was executed in

favour of the respondent, excluding the period of 27

th May, 2004 to

29

th March, 2005. As a matter of fact, no additional consideration

was required to be paid by the respondent except the interest for the

interregnum period of which reference has been made under the

impugned judgment and that became the subject matter of challenge

at the instance of the Authority in the instant appeal.

7. Notices were issued by this Court on 4

th January, 2012 and

after hearing the parties, leave was granted on 5

th September, 2014.

8. It reveals from the record that at one point of time, it was

informed to this Court that there is a possibility of settlement of

dispute between the parties, which reflects from the order of this

Court dated 27

th August, 2019, but later, it reveals from the order

dated 4

th May, 2022, that counsel for the respondent on instructions

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informed this Court that the circle rate fixed by the State Government

in reference to the subject land in question is not viable and is much

higher than the market value of the subject property as on that day

for commercial use. As no settlement was arrived at between the

parties, the matter was finally heard and arguments stood concluded

on 13

th April, 2023.

9. Learned counsel for the respondent informed this Court that on

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th March, 2023, although it was not reflected in the order, the

respondent was called upon as to whether the prevalent circle rate in

reference to the subject property in question is acceptable, the

appellant Authority can be called upon to examine, but we find from

the record that there was no such order as referred to by the

respondent’s learned counsel, the fact is that whatever circle rate

prevalent at the relevant point of time of which we have made a

reference, was not considered to be viable by the respondent and

once this amicable resolution has failed, the matter was being heard

on merits.

10. Shri Sanjay Hegde, Senior Advocate appearing for the

appellants, submits that undue indulgence was granted to the

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respondent and the last instalment which was to be made over by the

respondent by 31

st October, 1999 was finally paid by 25

th August,

2005. Although, in the ordinary course, since the conditions of bid

were not complied with by the respondent (successful bidder), the

auction ought to have been cancelled, but the Authority after due

deliberations, in the peculiar facts and circumstances, granted

indulgence to the respondent and taking into consideration the fact

that the last instalment was deposited by him on 25

th August, 2005,

with a break-up of principal amount and the component of interest

thereof, the lease deed was duly executed between the parties without

demur, obviously with the consent of the parties, as they are

signatories to the document/instrument for 18262.89 sq. meters

which was executed on 29

th March, 2006.

11. Learned senior counsel further submits that the auction

proceedings which were initiated at the first instance on 13

th March,

1997, finally culminated into execution of the lease deed without

demur for 18262.89 sq. meters on 29

th March, 2006 and the

transaction has attained finality. There was no reason or justification

for the respondent to open the transaction which was finally

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concluded on execution of the lease deed, with no cause of action

subsisting filed a writ petition under Article 226 of the Constitution

and that too after three and half years of the execution of the lease

deed on 29

th March, 2006.

12. Learned counsel submits that the High Court has committed a

serious manifest error in completely overlooking the fact that once

the lease deed was executed without demur on 29

th March, 2006 and

the transaction initiated pursuant to a tender floated by the Authority

on 13

th March, 1997 finally concluded by execution of the lease deed

without demur and th at being a pure business/commercial

transaction entered with the open eyes, there was no justification

available to invoke the jurisdiction under Article 226 of the

Constitution with a direction to execute the lease deed for the

remaining area of land i.e. 9625.50 sq. meters without any

consideration and that amounts to amendment in the instrument

which was duly registered and an amendment in the instrument was

not permissible in law even under the jurisdiction of the High Court

under Article 226 of the Constitution.

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13. Learned counsel, on instructions, submits that the land

available at the disposal of the Authority is always to be put to

commercial use and disposed of in terms of the land disposal rules,

but in the peculiar facts of the case, the Authority may consider the

claim of the respondent if they are interested for the remaining area

of land i.e. 9625.50 sq. meters on the prevalent circle rate if

acceptable, only to give a quietus to the dispute which is pending for

quite a long time, failing which the only option left with the Authority

is to dispose of the area of land admeasuring 9625.50 sq. meters in

accordance with land disposal rules.

14. Per contra, learned counsel for the respondent, while

supporting the finding recorded by the High Court, submits that once

the tender was floated by the appellants for 27887.50 sq. meters and

the bid of the respondent @Rs.725/- per sq. meter was the highest

in September, 1997 and accepted by the Authority and the last

instalment of 25

th August, 2005 was accepted, there was no

justification available with the appellant to segregate and sever the

land which was put to auction into two parcels and the very execution

of the lease deed for 18262.89 sq. meters on 29

th March, 2006 and

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keeping away the remainder of the land and not taking any action

thereof, has compelled the respondent to invoke the jurisdiction of

the High Court by filing a petition under Article 226 of the

Constitution and the appellant being the public Authority and a State

within the meaning of Article 12 of the Constitution, it is always

expected to act fairly even in the business/commercial transactions

and as there was denial of the legitimate right conferred to the

respondent and the interests of the appellants have been fully

secured by putting the liability on the respondent to pay interest for

the interregnum period and that is the only equitable way in

balancing the right and interest of the parties inter se and in the

circumstances no error was committed by the High Court which calls

for interference of this Court.

15. We have heard counsel for the parties and with their assistance

perused the material on record.

16. It is not in dispute that the tender was originally floated by the

appellants on 13

th March, 1997 and the respondent was a successful

bidder and submitted his offer for 27887.50 sq. meters @ Rs.725/-

per sq. meter for a total value of Rs.2,06,67,966/- which was to be

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paid in four instalments and after making the advance payment of

Rs.15 lakhs as earnest money, the remaining four instalments were

to be deposited on 31

st October, 1997, 30

th June, 1998, 28

th October,

1999 and the last instalment by 31

st October, 1999. Admittedly, the

respondent deposited the amount in piecemeal and not in terms of

the instalments, as agreed, which was in terms of the conditions of

the tender document and the final instalment was deposited in

reference to the auction bid by 25

th August, 2005.

17. In the ordinary course of business, as the respondent has failed

to deposit in terms of the tender document, the last instalment by

31

st October, 1999, the auction was supposed to be cancelled and

the earnest money deserved to be forfeited. We find no reasonable

justification in the present facts and circumstances as to what would

be the reason for undue indulgence being shown to the respondent

while extending him the benefit to deposit the instalment by 25

th

August, 2005 and we have our strong reservations and such exercise

of power by the Authority, in our view, is a clear abuse of discretion

which is not only violative of Article 14 of the Constitution, but also

smacks of an undue favour which is always to be avoided and

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whenever there is such a business/commercial transaction, it is

always to be examined on the commercial principles where equity has

no role to play. Be that as it may, as much water has flown in the

Ganges, we would not like to stretch it any further.

18. However, the fact is that the parties sitting across the table, got

the lease deed executed for 18262.89 sq. meters without demur on

29

th March, 2006 and the transact ion stood concluded after

execution of the lease deed, which was initiated pursuant to a tender

floated by the appellant on 13

th March, 1997 and since the lease deed

was to be compulsorily registered under Section 17 of the

Registration Act, 1908, it was nowhere open to be altered or amended

even by the High Court in exercise of its jurisdiction under Article

226 of the Constitution.

19. The High Court under impugned judgment has although passed

a very lengthy order, but the judgments on which reliance has been

placed have no semblance to the facts of the instant case and natural

justice has no role to play in the given facts and circumstances, of

which reference has been made. In our considered view , the

judgment passed by the High Court in issuing a mandamus to

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execute the lease deed in favour of the respondent for the remaining

area of 9625.50 sq. meters is completely beyond jurisdiction and

such directions, in our view, being contrary to law deserve to be set

aside.

20. The submission made by the respondent that the tender floated

by the appellants on 13

th March, 1997 was called upon to the bidders

to submit their bid for 27887.50 sq. meters and which could not have

been segregated, more so after the bid has been finalized @Rs.725/-

per sq. meter and that alone has been taken care of by the High Court

by directing to execute the lease deed for the remainder of the land,

in our considered view, is bereft of merit for the reason that so far as

the tender floated by the Authority on 13

th March, 1997 is concerned,

the transaction was concluded on execution of the lease deed

executed without demur for 18262.89 sq. meters on 29

th March,

2006 and after the transaction is concluded and the instrument

being registered under the law, it was not open to either party to

question at least in the writ jurisdiction of the High Court under

Article 226 of the Constitution and the mandamus issued by the High

Court to execute the lease deed for the remainder of the area without

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any consideration is completely contrary to the settled principles of

law and deserves to be set aside.

21. Learned counsel for the respondent further submits that

although at one point of time they have not been able to consider the

remainder of the land in reference to which the High Court has

directed for execution of the lease deed viable as per the circle rate

fixed by the State Government, but later on, they revisited and took

a decision to take the remainder of the land independently on the

circle rate fixed by the State Government as it was on 16

th March,

2023, but in our considered view, once the negotiations have failed

and the respondent has shown his inability for taking the remainder

of the land on the circle rate notified by the State Government not

considered to be viable, it is always open for the parties to negotiate

afresh and settle, if advised, but it may not be available to the

respondent on the prevalent circle rate notified by the

government/competent authority.

22. Before we conclude, we would like to observe that the litigation

is pending for sufficiently long time and keeping in view the

escalation in the value of the property in question based on

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commercial principles, we consider it appropriate to observe that the

respondent being originally the bidder for the remainder of the land

as well, let one opportunity be made available to the respondent for

the remainder of the area on priority basis on the prevalent circle rate

notified by the Government.

23. It is informed that the remaining area at the relevant time was

9625.50 sq. meters, but certain developments have taken place and

part of the land has been used for public purpose and as on today

the remaining area of the land is less than what is being reflected in

the impugned judgment. Taking that into consideration, we make it

clear that let the first opportunity be afforded to the respondent to

purchase the remaining area of the land which was a part of the land

originally put to auction in terms of tender floated on 13

th March,

1997 for 27887.50 sq. meters and if it is acceptable to the respondent

on the present prevalent circle rate notified by the Government, the

Authority may consider his request on priority basis and if the

respondent fails or does not show his inclination or interest on the

present prevalent circle rate of the subject land in question, the

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appellants are at liberty to put the subject land for disposal as per

their land disposal rules.

24. The appeal deserves to succeed and is accordingly allowed. The

judgment impugned dated 21

st April, 2011 passed by the Division

Bench of the High Court of Madhya Pradesh, Bench at Gwalior is

quashed and set aside with the afore-stated observations.

25. Pending application(s), if any, shall stand disposed of.

……………………………..J.

(AJAY RASTOGI)

……………………………J.

(BELA M. TRIVEDI)

NEW DELHI

APRIL 19, 2023.