Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 7252-7253 OF 2003

The Rajasthan State Industrial Development …Appellants

and Investment Corporation & Anr.

Versus

Diamond and Gem Development Corporation Ltd. …Respondents

& Anr.

WITH

CIVIL APPEAL NOS. 8222-8223 OF 2003

J U D G M E N T

Dr. B. S. CHAUHAN, J.

1.These appeals have been preferred against the impugned

judgment and order dated 30.7.2002 passed by the High Court of

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

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

Page 2 filed by the respondent-Diamond and Gem Development Corporation

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

of cancellation of allotment of land and directing the appellants for

providing the approach/access road.

2.As these appeals have been preferred against the common

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

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

circumstances giving rise to these appeals are :

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

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

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

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

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

industrial development, to be executed by the appellant Rajasthan

State Industrial Development and Investment Corporation (in short

‘RIICO’).

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

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

2

Page 3 requisite statutory requirements contained in the Act, possession of

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

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

Land Acquisition Collector assessed the market value of the land and

made an award on 14.5.1984. RIICO made allotment of land

admeasuring 105 acres vide allotment letter dated 10.3.1988 to the

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

Industrial Estate for the manufacturing of Gem stones.

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

executed between the appellant and respondent-company on

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

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

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

the terms and conditions of the lease agreement were not complied

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

addition to which, various other conditions were also incorporated

therein.

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

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

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

3

Page 4 slow pace, the appellant issued various notices from time to time,

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

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

must accelerate work. Additionally, there also arose some difficulty

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

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

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

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

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

land.

E.The appellant vide notice dated 4.7.1992, informed the

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

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

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

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

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

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

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

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

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

4

Page 5 development of the said land by the respondent-company, filed a reply

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

under any obligation to provide to the respondent-company the

aforementioned approach road, as the lease deed had been executed

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

the appellant issued a show cause notice dated 29.8.1996, to

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

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

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

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

pursuance thereof, the lease deed was cancelled vide order dated

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

appellant on 3.10.1996.

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

1997, challenging the cancellation order dated 1.10.1996 and the

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

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

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

ensure compliance with the terms and conditions incorporated in the

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

5

Page 6 the said project within a period of 5 years. However, presently, the

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

light of the aforementioned circumstances, the appellant had no choice

but to cancel the lease deed and take back possession.

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

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

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

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

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

Hence, these appeals.

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

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

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

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

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

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

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

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

6

Page 7 cancellation of the deed was in accordance with the terms and

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

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

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

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

access road.

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

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

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

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

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

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

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

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

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

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

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

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

7

Page 8 4.Per contra, Shri P.S. Patwalia, learned senior counsel appearing

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

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

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

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

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

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

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

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

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

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

RIICO was in possession of other lands surrounding the land in

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

company, an access road on equitable grounds, taking into

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

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

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

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

merit and, are liable to be dismissed.

8

Page 9 5.We have considered the rival submissions made by learned

counsel for the parties and perused the record.

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

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

Rule 11-A of the Rules 1959 read :

“………………….

xx xx xx

Clause (iv) of Rule 11-A.- The Rajasthan State Industrial

Development and Investment Corporation Ltd. may sub-

lease the leased land or part thereof for industrial

purpose; including essential welfare and supporting

services. Provided that in the case of Diamond and Gem

Development Corporation to whom the land has already

been leased out by RIICO for 99 years, the sub-lessee i.e.

DGDC may further sublet and the terms and conditions

and other provisions contained in the rules in so far as

they relate to RIICO shall mutatis mutandis apply to

DGDC also as if the land in question has been let out to

them by State Government under Rule 11-A.”

(Emphasis added)

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

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

“In Rule 11-A of the said rules, after

condition (iv) and before condition (v), the

9

Page 10 following new condition (iv-a) shall be

inserted; namely:-

(iv-a) The sub lessee of the Rajasthan State

Industrial Development and Investment

Corporation Limited may further sub-lease

the sub-leased land or part thereof on such

terms and conditions as may be mutually

agreed between such sub-lessee and

subsequent sub-lessee. The terms and

conditions applicable to sub-lessee shall

also mutatis mutandis apply to such

subsequent sub-lessee”.

7.Rajasthan State Industrial & Investment Corporation Limited

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

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

Relevant rules thereof read as under:

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

of the Corporation, be allowed to sublet the constructed

premises for industrial purpose only which can be

considered on following conditions:

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

the industrial areas of the Corporation shall not be

allowed.

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

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

of the constructed premises after the allottee has cleared

10

Page 11 all the outstanding dues of the Corporation and started

the production at the allotted plot on the following

conditions:

(iii) xx xx xx

(iv)Permission for transfer of surplus/unutilized land

with the units which have come into commercial

production shall be granted on payment of premium as

may be decided by the Corporation from time to time

which is presently equal to 50% rate of development

charges at the time of such transfer of difference amount

between the prevailing rates of development charges and

the rates of development charges on which the allotment

was made whichever is higher.

24.Cancellation- The Corporation shall have the right

to cancel the allotment after issuing 30 days show cause

notice to the allottee by the concerned Senior Regional

Manager/Regional Manager on any breach of any of

these rules, condition of allotment letter and terms of

lease agreement.”

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

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

“AND WHEREAS the lessor has agreed to demise and

the lessor has agreed to take on lease, the piece of land

11

Page 12 known as plot no. SP-1 Indusrial Area, Sanganer, Phase-

II on “as is where is basis”:

xx xx xx

2(b)That the lessee will bear, pay and discharge all

service charges as may be decided by the lessor from

time to time which for the present would be @ Rs.10.10

(Ten paisa per sq.mtrs.) per year from the date, the

lessor provided as pucca links road in this area.

xx xx xx

(d)That the lessee will erect on the demised premises

…..and will commence such construction within the

period of 6 months and will completely finish the same fit

for use and start production within the period of 60

months from the date of these presents or within such the

case of these presents, or within such the date of these

presents or within such extended period of time as may

be allowed by the lessor in writing at its discretion.

xx xx xx

(g)That the lessee will provide and maintain in good

repair a properly constructed approached road or path

alongwith the event across drain to the satisfaction of the

lessor/local Municipal Authority leading from the

public/cooperation road to the building to be erected on

the demises premises.

xx xx xx

(i)The lessee will not without the general prior

consent in writing of the lessor transfer, sublet,

relinquish, mortgage or assign his interest in the demised

premises……..

xx xx xx

(m)………That lessee shall construct and complete the

said building and put the demised premises with the

buildings constructed thereon to use hereinabove

mentioned within 54 calendar months from the date of

12

Page 13 possession of the said land is handed over to him and in

any case within 60 calendar months from the date of this

agreement provided that the lessor may at his discretion

extend the time hereinbefore provided if in his opinion

the delay is caused for reasons beyond the control of the

lessee. Provided that utilized land of the allotted plot of

land shall revert to the Corporation on the expiry of the

prescribed/extended period for starting production/

expansion of the unit.

xx xx xx

(r)The lessee will in each year within 2 months from

the expiry of the account in year supply to the lessor a

copy of his profit and loss account pertaining to the

accounting year and the business run by him in the

demised premises.

3(a)Notwithstanding anything hereinbefore contained

if there shall have been in opinion of the lessor any

breach by the lessor…. or if the lessee fails to commence

and complete the buildings in time and manner it shall

be lawful for the lessor ….to reenter without taking

recourse to the Court of law up on the demised premises

or any part there of his name of whole and there on this

demise shall absolutely cease and determine and the

money paid by the Lessee by virtue of these preset shall

stand forfeited to the lessor without prejudice to rights of

the lessor here under with interest thereon at @19% per

annum and the Lessee shall not be entitled to any

compensation whatsoever.

xx xx xx

3(h)Every dispute, difference or question touching or

arising out or in respect of this agreement to the subject

matter shall be referred to the sole arbitrator, the

Collector of the District wherein the leased plot is

situated or a, person appointed by him. The decision of

13

Page 14 such arbitrator shall be final and binding on the

parties.”

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

with the legal issues involved herein:

I.Approbate and Reprobate

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

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

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

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

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

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

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

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

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

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

2009 SC 713; Pradeep Oil Corporation v. Municipal Corporation

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

Mangalore v. Hornor Resources (International) Company

14

Page 15 Limited, (2011) 10 SCC 420; and V. Chandrasekaran & Anr. v.

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

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

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

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

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

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

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

right which he would have otherwise had.

II.Mutatis Mutandis - means

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

AIR 1983 SC 394, this court held as under:

“Earl Jowitt's 'The Dictionary of English

Law 1959)' defines 'mutatis mutandis' as

'with the necessary changes in points of

detail'. Black's Law Dictionary (Revised 4th

Edn.1968) defines 'mutatis mutandis' as

'with the necessary changes in points of

detail, meaning that matters or things are

generally the same, but to be altered when

necessary, as to names, offices, and the

like…’Extension of an earlier Act mutatis

mutandis to a later Act, brings in the idea of

adaptation, but so far only as it is necessary

15

Page 16 for the purpose, making a change without

altering the essential nature of the things

changed, subject of course to express

provisions made in the later Act….In the

circumstances the conclusion reached by

the High Court that the two Acts were

independent of each other was wrong. We

are of the view that, it is necessary to read

and to construe the two Acts together as if

the two Acts are one, and while doing so to

give effect to the provisions of the Act which

is a later one in preference to the provisions

of the Principal Act wherever the Act has

manifested an intention to modify the

Principal Act…”

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

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

under:

“The expression “mutatis mutandis” itself

implies applicability of any provision with

necessary changes in points of detail….”

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

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

2000 SC 1771).

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

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

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

16

Page 17 III.Contractual disputes and writ jurisdiction

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

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

the contract can be enforced through writ jurisdiction under Article

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

any relief based on terms and conditions incorporated in the

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

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

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

3515).

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

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

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

interpret the disputed terms of a contract observing as under:

“The interpretation and implementation of a

clause in a contract cannot be the subject-

matter of a writ petition. ….If a term of a

contract is violated, ordinarily the remedy is

not the writ petition under Article 226. We

are also unable to agree with the

observations of the High Court that the

17

Page 18 contractor was seeking enforcement of a

statutory contract…..The contract between

the parties is in the realm of private law. It

is not a statutory contract. The disputes

relating to interpretation of the terms and

conditions of such a contract could not have

been agitated in a petition under Article 226

of the Constitution of India. That is a matter

for adjudication by a civil court or in

arbitration if provided for in the contract….

The contractor should have relegated to

other remedies.”

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

exercise its writ jurisdiction to enforce the contractual obligation. The

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

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

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

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

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

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

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

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

court must exercise discretion, taking into consideration a wide

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

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

18

Page 19 refusal of the writ, and the nature and extent of injury that is likely to

ensue by such grant or refusal.

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

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

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

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

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

or not substantial justice will be promoted. Furthermore, while

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

the averments of the writ petition, whether there exist proper

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

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

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

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

officer having the requisite authority to perform the act demanded.

Furthermore, the authority against whom mandamus is issued, should

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

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

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

19

Page 20 demand of the applicant with respect to the enforcement of his legal

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

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

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

consider the demand.

IV.Interpretation of terms of contract

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

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

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

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

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

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

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

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

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

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

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

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

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

20

Page 21 of either of the parties adversely. (Vide: United India Insurance Co.

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

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

2005 SC 286).

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

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

court held:

“It is a settled principle in law that a contract

is interpreted according to its purpose. The

purpose of a contract is the interests,

objectives, values, policy that the contract is

designed to actualise. It comprises joint intent

of the parties. Every such contract expresses

the autonomy of the contractual parties’

private will. It creates reasonable, legally

protected expectations between the parties

and reliance on its results. Consistent with

the character of purposive interpretation, the

court is required to determine the ultimate

purpose of a contract primarily by the joint

intent of the parties at the time the contract so

formed. It is not the intent of a single party; it

is the joint intent of both parties and the joint

intent of the parties is to be discovered from

the entirety of the contract and the

circumstances surrounding its formation. As

is stated in Anson's Law of Contract, "a basic

principle of the Common Law of Contract is

that the parties are free to determine for

themselves what primary obligations they will

21

Page 22 accept...Today, the position is seen in a

different light. Freedom of contract is

generally regarded as a reasonable, social,

ideal only to the extent that equality of

bargaining power between the contracting

parties can be assumed and no injury is done

to the interests of the community at large."

The Court assumes "that the parties to the

contract are reasonable persons who seek to

achieve reasonable results, fairness and

efficiency...In a contract between the joint

intent of the parties and the intent of the

reasonable person, joint intent trumps, and

the Judge should interpret the contract

accordingly.”

V.“As-is-where-is” – means

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

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

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

“We notice that the respondents had

accepted the commercial plots with open

eyes, subject to the abovementioned

conditions. Evidently, the commercial plots

were allotted on “as-is-where-is” basis. The

allottees would have ascertained the

facilities available at the time of auction

and after having accepted the commercial

plots on “as-is-where-is” basis, they cannot

be heard to contend that PUDA had not

provided the basic amenities like parking,

lights, roads, water, sewerage, etc. If the

allottees were not interested in taking the

commercial plots on “as-is-where-is” basis,

22

Page 23 they should not have accepted the allotment

and after having accepted the allotment on

“as-is-where-is” basis, they are estopped

from contending that the basic amenities

like parking, lights, roads, water, sewerage,

etc. were not provided by PUDA when the

plots were allotted…”

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

Ors., (2009) 4 SCC 660).

VI.“As if” – means

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

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

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

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

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

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

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

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

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

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

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

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

23

Page 24 Radhakissen Chamria & Ors. v. Durga Prasad Chamria & Anr.,

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

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

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

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

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

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

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

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

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

adopted and followed persistently. It set out as under:

“The statute says that you must imagine a

certain state of affairs; it does not say that

having done so, you must cause or permit

your imagination to boggle when it comes to

the inevitable corollaries of that state of

affairs".

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

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

"It is now axiomatic that when a legal fiction is

incorporated in a statute, the court has to

24

Page 25 ascertain for what purpose the fiction is created.

After ascertaining the purpose, full effect must be

given to the statutory fiction and it should be

carried to its logical conclusion. The court has to

assume all the facts and consequences which are

incidental or inevitable corollaries to giving effect

to the fiction. The legal effect of the words 'as if he

were' in the definition of owner in Section 3(n) of

the Nationalisation Act read with Section 2(1) of

the Mines Act is that although the petitioners were

not the owners, they being the contractors for the

working of the mine in question, were to be treated

as such though, in fact, they were not so."

(Emphasis

added)

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

aforesaid settled legal propositions.

The terms and conditions incorporated in the lease deed reveal

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

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

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

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

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

develop such road, and there was absolutely no obligation placed

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

respondent-company was responsible for the creation of its own

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Page 26 infrastructure, it has no legal right to maintain the writ petition, and

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

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

deed.

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

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

receiving the consideration amount and executed the lease deed in its

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

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

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

High Court committed an error treating that the whole case was

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

application at all.

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

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

conducted by it showing various irregularities and pointing out the

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

matter entirely unrelated to the allotment and development of the said

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Page 27 land. Rule 11-A of the Rules 1959, as amended created a legal fiction

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

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

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

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

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

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

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

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

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

cancellation of land was not permissible; there was a constructive

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

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

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

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

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

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

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

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

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Page 28 cancel the allotment made in favour of the respondent-company, there

was no justification to hold RIICO responsible for providing the

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

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

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

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

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

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

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

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

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

develop its own infrastructure, and the same would include

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

not under any obligation to provide the said access road.

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

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

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

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Page 29 property, as it had paid the entire amount for the land to the State

when possession of land was handed over to it.

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

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

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

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

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

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

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

Government had executed the lease in favour of the respondent-

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

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

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

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

over the land.

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

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

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

appellant RIICO looses all its lands and properties and rendered the

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Page 30 development authority existing on papers only, without any

status/authority.

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

basis of supposed intention and imaginative purpose to the

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

rendered the appellant-RIICO totally insignificant and irrelevant

without realising that the appellant-RIICO had autonomous

functioning, and the interpretation given by the High Court has

devastating effect underlying its status, authority and autonomous

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

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

RIICO on its property without realising that the amendment to Rule

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

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

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

speculative and hypothetical reasons.

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

timely completion of construction and also for the commencement of

production within a stipulated period. Records however, reveal that

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Page 31 only 10% of total construction work stood completed by the

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

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

have been taken through the record.

While providing justification for the non-completion of

construction and commencement of production, in very vague terms,

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

was sought from statutory authorities. However, the said application

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

that too, without meeting any requirements provided in the statutory

rules.

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

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

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

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

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

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

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

for development of the land.

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Page 32 31. The cancellation of allotment was made by appellant- RIICO

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

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

been challenged by filing a review application before the competent

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

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

Infrastructure Development Committee of the Board. The respondent-

company ought to have resorted to the arbitration clause provided in

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

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

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

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

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

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

statutory/alternative remedy available to him in law.

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

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

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

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Page 33 company by the appellant is restored. However, in the facts and

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

………………………J.

(Dr. B.S. CHAUHAN)

………………………J.

(V. GOPALA

GOWDA)

New Delhi,

February 12, 2013

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