* THE HON’BLE SRI JUSTICE V.V.S. RAO + WRIT PETITION Nos.7320, 7321, 7322, 7323, 7399, 9454, 9478, 9707, 9708, 9709, 9710, 10359 of 2006 AND 5732, 5938, 6495, 6503, 6513, 6514, 6515, 6516, 6517 and 6768 of 2007 % 16.7.2010 # M/s.A.B.C.India Limited, represented by its Managing Director, Sri Anand Kumar Agarwal, S/o.P.D.Agarwal, Fancy Bazar, Guwahati, Assam And others. … Petitioners Vs. $ The A.P.Industrial Infrastructure Corporation Limited, (A Government Company incorporated under the Companies Act, 1956) having its Registered Office at 5-9-58/V, 6th Floor, Parishram Bhavan, Basheerbagh, Hyderabad, represented by its Managing Director And others. … Respondents ! Counsel for the petitioners: M/s.V.V.N.Narasimham, A.Venkata Ramana, V.Ravinder Rao Counsel for the Respondents: Mr.P.Roy Reddy, Standing Counsel for APIIC < Gist : > Head Note: ? Cases referred: 1. (1977) 3 SCC 457 : AIR 1977 SC 1496 2. (1996) 6 SCC 22 : AIR 1996 SC 3515 3. (1999) 2 SCC 37 : AIR 1999 SC 296 4. 1999 (6) ALT 600 5. (2000) 6 SCC 293 : AIR 2000 SC 2573 6. (2004) 2 SCC 130 7. (1975) 1 SCC 70 : AIR 1975 SC 266 8. AIR 1968 SC 1361 9. 2001 (1) ALT 115 = 2001 (1) ALD 86 10. 2004 (2) ALT 538 11. 1987 (1) ALT 378 (FB) 12. 2006(6) ALD 623 (FB) 13. (2007) 4 SCC 669 THE HON’BLE SRI JUSTICE V.V.S.RAO WRIT PETITION Nos.7320, 7321, 7322, 7323, 7399, 9454, 9478, 9707, 9708, 9709, 9710, 10359 of 2006 AND 5732, 5938, 6495, 6503, 6513, 6514, 6515, 6516, 6517 and 6768 of 2007 July 16, 2010 Between: M/s.A.B.C.India Limited, And others. …Petitioners AND The A.P.Industrial Infrastructure Corporation Limited, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO WRIT PETITION Nos.7320, 7321, 7322, 7323, 7399, 9454, 9478, 9707, 9708, 9709, 9710, 10359 of 2006 AND 5732, 5938, 6495, 6503, 6513, 6514, 6515, 6516, 6517 and 6768 of 2007 COMMON ORDER: This group of 22 cases can conveniently be disposed of by a common order in view of the factual background and the issues that arise for adjudication are almost similar. All the petitioners were allotted industrial plots by the Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC or Corporation, for brevity), respondent No.1, two decades ago. Sale deeds were also executed transferring title in immovable property in their favour. Half a decade thereafter on the ground that the allottees flouted the conditions of allotment and agreement of sale, which preceded sale deeds, the allotment was cancelled, aggrieved by which, the present writ petitions are filed. Taking W.P.No.7320 of 2006 as illustrative case, the factual background in little more detail may be noticed. The petitioner in W.P.No.7320 of 2006 is a Company engaged in transport business all over India. They have branch Office in Visakhapatnam. APIIC developed Industrial Estate, Pedagantyada (hereafter called, IE). The second respondent, namely the Zonal Manager, APIIC, by letter dated 25.09.1987 allotted 2322.58 square metres comprised in plot No.192 at a rate of Rs.60/- per square metre for construction of godown for petitioner’s transport business. By 11.12.1987 the petitioner paid Rs.1,39,354.80 ps. The allotment letter was followed by an agreement of sale on 11.12.1987 between the petitioner and APIIC. Twelve years thereafter, on 08.10.1999 APIIC executed sale deed which was registered by the second respondent. The petitioner alleges that APIIC did not provide basic infrastructure facilities like roads, water, electricity, and therefore, the plot could not be utilized for the purpose for construction of godown. It is also the case of the petitioner that APIIC provided road, electricity, water only in 2006. The petitioner then applied seeking permission for construction of godown to Industrial Area Local Authority (IALA) i.e., Zonal Manager. By letter dated 20.01.2006 the Corporation approved the building permission. The petitioner commenced construction. At that stage, second respondent issued a show cause notice dated 10.08.2005 calling upon the petitioner company to show cause as to why the allotment of the plot should not be cancelled, as to why the agreement of sale and sale deed be determined, and as to why the petitioner should not be evicted from the premises to make available the industrial plot for utilization for industrial use by a needy entrepreneur. The petitioner statedly submitted explanation. The second respondent then passed the impugned order dated 28.03.2006 duly determining the agreement of sale dated 11.12.1987 and sale deed dated 08.10.1999. It may be noted that most of the petitioners in this group of cases are transport companies and so as to accommodate all such companies at one place, APIIC allotted industrial plots for construction of transport offices and godowns. Various details of all the petitioners are reflected in the following tabular column. Statement showing the particulars of allotment, agreement of sale, sale deed, show cause notice and date of cancellation (All the petitioners are allottees of plots in Industrial Estate, Pedagantyada) Sl. No Writ Petition No. Plot No. Area in Sq. Mts. Cost paid per Sq.Mt (Rs.) Date of Allotment Date of Agreement Date of Sale Deed Date of Cancellation 1. 7320/2006 192 2322.58 60/- 25.09.1987 11.12.1987 08.10.1999 28.3.2006 2. 7321/2006 173A and B 2136.16 132/- 31.03.1997 28.08.1997 29.12.1997 08.02.1999 23.3.2006 3. 7323/2006 188 1858.06 60/- 11.09.1987 11.12.1987 31.03.1999 23.3.2006 4. 7399/2006 164B 991 120/- 05.09.1996 26.07.1997 23.02.1999 22.3.2006 5. 9454/2006 166 2013.60 23.03.1987 22.06.1988 08.02.1999 15.4.2006 6. 9478/2006 161 2053.16 120/- 10.09.1997 09.01.1998 22.12.1998 15.4.2006 7. 9707/2006 167/B 991.00 100/- 11.01.1990 22.10.1990 31.03.1999 15.4.2006 8. 9708/2006 179/A/B 1263.48 78/- 10.05.1989 18.08.1990 28.05.2001 15.4.2006 9. 9709/2006 187/A 845.42 120/- 11.09.1996 09.05.1997 01.05.2000 15.4.2006 10. 9710/2006 180/B 1026.58 75/- 22.03.1989 20.10.1989 30.04.1999 15.4.2006 11. 10359/2006 172/B 1184.51 60/- 20.11.1987 16.09.1988 No sale deed 24.1.2004 12. 5732/2007 181/B 1026.58 75/- 16.07.1988 16.02.1991 31.03.1999 23.3.2006 13. 7322/2006 189 190B 4830.96 60/- 11.09.1987 10.12.1987 25.03.1999 28.3.2006 14. 5938/2007 173A and B 2136.16 132/- 31.03.1997 28.08.1997 29.12.1997 08.02.1999 23.3.2006 15. 6495/2007 180/B 1026.58 75/- 22.03.1989 20.10.1989 30.04.1999 15.4.2006 16. 6503/2007 38 42.60 27.03.1998 08.06.1998 13.10.1998 15.4.2006 17. 6513/2007 179 A/B 1263.48 78.76 10.05.1989 18.08.1990 28.05.2001 15.4.2006 18. 6514/2007 161 2053.16 120/- 10.09.1997 09.01.1998 22.12.1998 15.4.2006 19. 6515/2007 192 2322.58 60/- 25.09.1987 11.12.1987 08.10.1999 28.3.2006 20. 6516/2007 167/B 991.00 100/- 11.01.1990 22.10.1990 31.03.1999 15.4.2006 21. 6517/2007 187/A 842.42 120/- 11.09.1996 09.05.1997 01.05.2000 15.4.2006 22. 6768/2007 188 1858.06 60/- 11.09.1987 11.12.1987 31.03.1999 23.3.2006 N.B:- 1. The show cause notice was issued on 10.8.2005. 2. In writ petitions at Sl.Nos.1 to 13 above, order cancelling the allotment is challenged. 3. In writ petitions at Sl.Nos.14 to 22 above, challenge is to the conditional offer for extension of time. The petitioners in the writ petitions at serial Nos.1 to 13 in tabular column again filed another set of writ petitions as shown in serial Nos.14 to 22 above. To complete the narration, we may briefly indicate the circumstances leading to filing of other writ petitions. For this purpose, we may sum up the case of petitioner in W.P.No.5938 of 2007. The same petitioner filed W.P.No.7321 of 2006 challenging the cancellation order. The impugned order was suspended. The second respondent issued a letter dated 26.2.2007 informing that a decision is taken to give one more opportunity to petitioner subject to terms and conditions stipulated therein. One such condition was payment of Rs.16,01,120/- towards 50% of prevailing market value in lump sum for condoning the delay and also subject to withdrawing the writ petition filed by the petitioner earlier. Challenging the said letter, W.P.No.5938 of 2007 is filed. The conditions in the letter dated 26.2.2007 of second respondent read as under. 1. You should withdraw the suit/writ petition filed by you challenging the cancellation orders. 2. You should give an undertaking, duly signed before the Notary Public in the prescribed proforma enclosed, agreeing to commence the construction of factory building in the above Plot duly obtaining permissions from the competent authorities including the Commissioner, APIIC-IALA before 31.7.2007 and complete construction of factory building and implement your project and commence commercial production before 31.7.2007. 3. You should pay Rs.16,02,120.00 (50% on the present prevailing land cost for the entire extent of the Plot) by way of crossed demand draft drawn in favour of APIIC Ltd., payable at Visakhapatnam towards fee for condonation of delay in lump sum positively by 31.3.2007. 4. After fulfilment of the above two conditions, orders will be issued for keeping the cancellation orders issued already on 23.3.2006 in abeyance and deter the action for eviction duly granting time for commencement of Building, for completion of building and for going into commercial production. 5. Only after complying with the above conditions and after implementation of the project within the stipulated time, the allotment of above Plot shall be restored in your favour duly revoking the cancellation orders. The allottee challenged the same on the same grounds which were arrayed in the earlier writ petition. The APIIC filed separate counter affidavits in this type of cases also. The averments therein are not in any way different from the averments in the affidavits filed earlier and nothing new has been averred or alleged. As noticed supra, petitioners mentioned in Sl.Nos.1 to 13 in tabular column were served such letters and all of them filed writ petitions mentioned at Sl.Nos.14 to 22. The cause of action for this category of writ petitions is the letter of second respondent demanding 50% of prevailing market value of the land. This Court heard argument of counsel for petitioners, M/s.V.V.N.Narasimham, A. Venkata Ramana, V.Ravinder Rao, and Standing Counsel, Mr.P.Roy Reddy. APIIC also relies on Radhakrishna Agarwal v State of Bihar[1], State of Uttar Pradesh v Bridge & Roof Company (India) Ltd.,[2], Indu Kakkar v Haryana State Industrial Development Corporation Ltd.,[3], Infotech Enterprises Ltd. v Bharat Sanchar Nigam Limited[4], Kerala State Electricity Board v Kurien E. Kalathil[5], and Teri Oat Estates (P) Ltd., v U.T., Chandigarh[6]. In view of the pleadings and rival submissions, the question of maintainability of writ petitions, question of power of APIIC to cancel allotment and the question of arbitrariness and waiver are the points, which need to be considered by this Court. Maintainability of writ petitions APIIC contends that “past threshold contract dispute” arising out of private contract entered into between public authority and a private citizen is not amenable to judicial review. According to them, the allotment letter/ conditions and covenants in the sale agreement between the parties form part of registered sale deed and, therefore, dispute in relation to cancellation of allotment for non-compliance with the conditions of allotment is not justiceable before this Court. Petitioners would urge that when once the registered sale deeds are executed, petitioners acquired absolute marketable title to the property and APIIC being in the position of vendor does not have any power under Sections 11, 54 and 55 of the Transfer of Property Act, 1882 (TP Act). They would also urge that APIIC being public authority cannot unilaterally take a decision, which would render a valid registered conveyance deed ineffective. The controversy needs to be considered in two parts: first, regarding the arbitrariness on the part of APIIC and the second, power of APIIC to do so. These questions are adverted to later. In Radhakrishna Agarwal, a Division Bench of Supreme Court considered the question of maintainability of a writ petition challenging the breach of contract between the citizen and the State. In 1970, appellants therein were awarded the lease to collect and exploit sal seeds from forest area. Four years later, State Government issued orders revising rate of royalty payable by the lessees. The challenge before Patna High Court failed even though the appellants therein relied o n Erusian Equipment & Chemicals Ltd., v State of West Bengal[7]. The Supreme Court noticed that the contract was not statutory contract and, therefore, a writ petition would not lie as no questions of Article 14 of Constitution of India would arise. The Supreme Court also appraised the following three types of breaches pointed out by Patna High Court as to alleged obligation of the State or its agents where a writ petition would not lie in which event aggrieved party has to approach the Civil Court for damages for breach. (i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is short of a contract within the meaning of Article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; and (iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State. Thus where the questions of pure alleged breaches of contract are involved, a writ would not issue to compel the authorities to remedy breach of contract. In Bridge & Roof Company, the respondent was awarded a contract by the Government of Uttar Pradesh for the work of improvement of a road. After completion of the work, disputes arose about certain payments with regard to sales tax and price adjustment. The contractor approached the Commissioner of Sales Tax for reduction and composition of tax in terms of Section 7-D of U.P. Trade Tax Act, which appears to have been acceded. But the concerned Deputy Commissioner ordered 1% tax deduction at source in view of Government Order with regard to composition scheme, which was valid upto 31.3.1995. Against this, the writ petition was filed. Allahabad High Court disposed of the writ petition directing to deduct only 1% of the bill upto 31.3.1995. The Supreme Court noticed that when the contract provides for arbitration, the parties should follow that remedy and should not invoke Article 226. The relevant dictum is as follows. … … the contract between the parties is a contract in the realm of private law. It is not a statutory contract. It is governed by the provisions of the Contract Act or, maybe, also by certain provisions of the Sale of Goods Act. Any dispute relating to interpretation of the terms and conditions of such a contract cannot be agitated, and could not have been agitated, in a writ petition. That is a matter either for arbitration as provided by the contract or for the civil court, as the case may be. Whether any amount is due to the respondent from the appellant-Government under the contract and, if so, how much and the further question whether retention or refusal to pay any amount by the Government is justified, or not, are all matters which cannot be agitated in or adjudicated upon in a writ petition. Kurien E. Kalathil deals with features that distinguish non-statutory contract from that of a statutory one. Kerala State Electricity Board entered into agreement for construction of a dam. The agreement provided for payment of minimum wages fixed under the Minimum Wages Act, 1948. The contractor claimed compliance with the said condition. The Board stopped payment insofar as revised (escalated) minimum wages from January 1985. The contractor’s request to State Government was negatived ordering recovery. It was challenged before Kerala High Court seeking a direction to Board for payment of the amounts towards labour charges with interest. The same was allowed which was assailed before the Supreme Court inter alia on the ground that such dispute relating to interpretation of clause in a contract and implementation of such clause cannot be made subject matter of writ petition and that remedy of aggrieved person lies in approaching the Civil Court. The argument found acceptance by the Court and the Supreme Court held as follows. The interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. … … A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. … … A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. 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. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies. (emphasis supplied) I n Infotech Enterprises, a Division Bench of this Court considered the question of maintainability of writ petition when the allotment of industrial plot was cancelled for non-compliance with the conditions of allotment. In that case, in 1996, APIIC allotted the land admeasuring Acs.1.50 cents comprised in Plot Nos.CFC4 and CFC5 at tentative value of Rs.1,923/- per Sq.yard to Department of Telecommunications for construction of a Telephone exchange and ground based tower at Infocity, Madhapur. The payment was made with some delay. Though foundation stone was laid for construction of BSNL Bhavan, work was not taken up. In the mean while, BSNL came into existence as wholly owned Government of India company. After issuing notice, APIIC cancelled the allotment, took delivery of possession and re-allotted two plots to Infotech Enterprises. In their challenge, BSNL was successful before the learned Single Judge who held that cancellation of allotment was illegal. Before the Division Bench, the main question was regarding maintainability of writ petition in relation to dispute arising out of a non-statutory contract. While concluding in the affirmative, the Division Bench held as follows. Admittedly, the contract is not a statutory sanction behind the same, and therefore, neither side can take any benefit nor any advantage or any upper- stray in regard to its enforceability. The Industrial Infrastructure Corporation is a body, which has been constituted for the purpose of development of the industries, the business of which includes including the allotment of the plots to the eligible units, both private and public. Therefore, the question now necessarily has to be seen from the angle and a pedestal of a commoner or a citizen as to whether the same approach could have been made for any such attributions as made. Admittedly, there has been no construction and the time lapse far beyond the period and though the notice has been issued and no progress has been shown. … … The complaint admittedly is one against the cancellation of the plot and for the same being allotted to appellant herein. Necessarily, it is only by measure of damages, which the writ petitioner can as well seek to enforce rather than seeking for specific enforcement in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India. The principles in regard to the enforceability of the contractual obligations under Article 226 of the Constitution no longer res integra. No doubt each case has to be seen from its own facts and circumstances. It is not a case where any such arbitrary action can be attributed or can be made out on the facts and circumstances and even to warrant any extraordinary knock of this Court. (emphasis supplied) APIIC relies on these precedents to deny extraordinary remedy to petitioners. In the facts and circumstances of this case, however, this Court is not able to countenance the submission. Admitted fact is that the allotment was made to petitioners in 1987 followed by an agreement of sale and ten years thereafter a sale deed was also executed by APIIC conveying right, title and interest absolutely to the allottees. When the contract is concluded and regular sale deed is executed between the vendor and vendee in respect of immovable property, it cannot be said that the dispute arises in the realm of a statutory contract or non-statutory contract. The dispute is not with regard to the contract. It is in effect the question of title, which is sought to be nullified by APIIC unilaterally based on conditions of allotment. The same is not permissible in law. APIIC offered industrial plots and the entrepreneurs gave counter offer, which was accepted by the Corporation. At that stage the conditions of offer, counter offer and acceptance found expression in the allotment letter (acceptance of offer subject to conditions) and in the agreement of sale (contract of sale) in terms of Section 54 of TP Act. This ultimately resulted in the conclusion of contract by way of execution of sale deed by vendor in favour of vendee. When once the contract is concluded the allotment conditions or covenants of agreement of sale ordinarily cannot be enforced having regard to various provisions of TP Act, Indian Contract Act, 1872, the Registration Act, 1908 and Specific Relief Act, 1963, (these constitute Civil Code of India), which govern the transfer of immovable property from one person to another person. The sale agreement does not survive when once the contract is concluded on execution of registered sale deed resulting in alienation, conveyance, assignment and transfer of title. Any contrary view would be opposed to the Civil Code of India. Chapter II of TP Act contains two parts. Part A deals with transfer of property whether “movable” or “immovable” and part B deals with transfer of “movable” property. As per Section 5 thereof transfer is defined as conveyance of property from one living person to one or more living persons. Section 6 of TP Act declares that property of any kind may be transferred except the one, which is prohibited. Section 6(h) of TP Act inter alia prohibits transfer, which is opposed to the nature interest effected thereby or for an unlawful object or consideration within the meaning of Section 23 of Contract Act. Sections 8, 10 and 11 of TP Act attach sanctity and solemnity to a transfer of immovable property and read as under. 8. Operation of transfer.—Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth the movable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows and all other things provided for permanent use therewith; and, where the property is a debt or other actionable