HON'BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.2085 of 2007 ORDER : This writ petition is filed seeking a Writ of Mandamus to declare the action of the 1st respondent-Andhra Pradesh Housing Board in issuing letter No.205/AE/PC/2005, dated 2nd February 2007, terminating the Joint Development Agreement dated 8th February 2006 for development of land admeasuring about Ac.35.05 gts., in Survey No.1009/1/P situated at Kukatpalli village and Mandal of Ranga Reddy District. 2. The 1st respondent-Andhra Pradesh Housing Board is a statutory body constituted under the provisions of Andhra Pradesh Housing Board Act, 1956. The petitioner is the joint sector Company promoted by the 1st respondent-Board and M/s.IJM (India) Infrastructure Limited, a Company registered under the Companies Act, 1956. In the petitioner-Company, the shareholding of the 1st respondent Board is 49% and that of M/s.IJM (India) Infrastructure Limited is 51%. The 1st respondent-Board is a rightful owner of the above said land of Ac.35.05 gts., and decided to develop the said land by constructing residential and commercial space. The petitioner-Company which is already executing a project with the 1st respondent-Board, offered to purchase adjoining parcel of lands approximately Ac.9.05 gts. Further, it also offered to purchase additional parcel of land measuring approximately Ac.26-00 gts., which was in the form of hillock. 3. The petitioner-Company, for the above said parcel of lands, submitted its suo motu proposals and an undertaking dated 26th October 2005 to the 1st respondent-Board for developing residential and commercial space. It had offered a development fee for the development rights and undertook to share gross revenues accruing from the development of residential and commercial space. Pursuant to the proposals and suo motu undertaking, the 1st respondent- Housing Board decided to invite competing proposals from prospective bidders under the Swiss Challenge Process with a view to derive the market driven price as against the price offers received from the petitioner-Company i.e. M/s.SITCO (Swarnandhra IJMII Integrated Township Development Company) Private Limited (hereinafter referred to as 'SITCO'). As per the concept, SITCO having submitted the project proposals, was deemed as “original proponent” for the development of the said parcel of land and 1st respondent-Board was deemed as a State Agency mandated with the development of the land. As per the Swiss Challenge Process, the petitioner, who is the original proponent, has agreed to match the offer of the top rank bidder and the entire development fee is payable in five instalments. First instalment aggregating to Rs.27,89,97,520/- representing the 20% of the total development fee, was paid at the time of entering into agreement. In terms of the proposals and agreed terms and conditions, petitioner-Company also furnished bank guarantee for the total development fee amounting to 108,48,80,000/- . Consequent to payment of the 1st instalment amount and furnishing the bank guarantee for the entire development fee, an agreement dated 8th February 2006 was entered by the 1st respondent-Board with the petitioner with agreed terms with regard to development. 4. When the matter stood thus, the 1st respondent addressed a letter dated 15th December 2006 in letter No.205/AE/PC/2005, purportedly in exercise of power under Clause 7.1.2 of the agreement dated 8th February 2006, alleging default on the part of the petitioner in payment of the 2nd instalment amount. In the said letter, there is also an allegation about shortfall of Rs.10 lakhs in the 1st instalment amount and further, it is stated that the 2nd instalment amount of 20% of the total development fee was to be paid only on issuance of Power of Attorney by the 1st respondent in favour of the petitioner- Company, or three months from the agreement date, whichever is earlier. But however, though the said period was over, payment towards 2nd instalment was not made. It is also stated in the letter that there was an additional area of Ac.1.018 gts., handed over to the petitioner and the differential bank guarantee also has to be furnished by the petitioner, apart from paying the defaulted amount within a period of thirty days. On receipt of the said letter, on behalf of the petitioner-Company, a reply letter dated 10th January 2007 in letter No.APHB/SITCO/07-002, was addressed to the 1st respondent. In this reply letter, it was averred by the petitioner-Company that there was no default on their part in payment of the instalment amount, asmuch as the 2nd instalment of development fee is payable, as per the payment schedule of the development agreement, only on issuance of Power of Attorney by 1st respondent-Board in favour of the petitioner-Company. It is stated that asmuch as the power of attorney was not yet issued, the question of default does not arise. 5. Thereafter, a further letter dated 24th January 2007 was addressed by the 1st respondent-Board in letter No.205/AE/PC/2005, indicating that the 2nd, 3rd and 4th instalment amounts of the development fee had fallen due on 08.05.2006, 09.08.2006 and 09.12.2006 respectively. Further, the petitioner was directed to pay the entire defaulted amount without any further delay and further indicated about taking up further action in the event of not paying the amount in terms of the agreement. A further letter in letter No.205/AE/PC/2005, dated 29th January 2007 was also addressed to the petitioner, demanding the payment of default amount and also further alleging that there is violation of the terms of agreement as the petitioner had started construction of Electric Sub-Station, which was intended for Phase-I, in the Phase-II area. 6. In response to the said letters, the petitioner addressed the 1st respondent-Board, a further letter dated 29th January 2007 disputing the payment schedule. In the above said letter it is stated that as the 1st respondent has failed in his obligation by not executing the Power of Attorney in terms of the agreement dated 8th February 2006, as such, he is not liable to pay any further development fee as per the agreement. Thereafter, the impugned letter was issued in letter No.205/AE/PC/2005, dated 02.02.2007, terminating the contract mainly on the grounds that the petitioner-Company has resorted to unauthorised constructions in violation of terms and conditions of the agreement dated 8th February 2006 and also not adhering to the payment schedule in terms of the said agreement. The said termination was in terms of Clause 7.1.3 of the agreement dated 8th February 2006 entered by the 1st respondent with the petitioner- Company. In the said letter, the request of the petitioner for arbitration is also rejected, stating that the dispute, as raised by the petitioner, is not arbitrarable as per the agreement dated 8th February 2006. 7. In the affidavit filed in support of the writ petition, which is sworn in by one of the Directors of the petitioner-Company, it is stated that it has submitted proposals suo motu for award of the contract for development of residential and commercial space belonged to 1st respondent-Board and the said proposals are accepted as per the Swiss Challenge Process and it is stated that a letter of award was issued on 31.12.2005 and an agreement was entered into on 8th February 2006. It is also stated that the petitioner was put in possession of the land on 02.05.2006 and he carried out large scale development activity for levelling of the hillock by using heavy machinery and it has incurred an expenditure of about 8 to 9 Crores. It is stated in the affidavit that asmuch as the proposals submitted by the petitioner are anterior to the agreement dated 8th February 2006, they have got no independent existence de horse the payment schedule mentioned in Schedule-IV of the agreement dated 8th February 2006. It is alleged that the action of the 1st respondent in invoking the power under Clause 7.1.3 of the agreement for termination, is illegal and arbitrary. It is stated that though some unauthorised constructions were referred to in the impugned termination proceedings dated 02.02.2007, no details are indicated therein with reference to the alleged unauthorised constructions. It is also the case of the petitioner-Company that in view of the agreement entered into on 8th February 2006, based on the proposals and letter of undertaking given by the petitioner with regard to payment schedule, the termination is ordered contrary to the payment schedule as per the said agreement. It is also alleged that the very clause under 7.1.3 of the agreement which enables the 1st respondent to terminate the agreement and encash the bank guarantee which was given towards the total development fee, is un- constitutional and contrary to Section 23 of the Indian Contract Act. 8. The Project Co-ordinator of the A.P.Housing Board has filed counter-affidavit on behalf of the 1st respondent-Board. By way of preliminary objections, it is averred that the deponent to the present writ petition is not competent to initiate proceedings on behalf of the petitioner-Company. It is stated that only the Board of Directors of the Company are having powers to institute any litigation on behalf of SITCO. Asmuch as there is no authorization in favour of Mr.Manjit Singh Brar, as such, the proceedings are initiated without any authority. 9. In the counter it is admitted that the petitioner is a Private Limited Company promoted by 1st respondent and M/s.IJM (India) Infrastructure Limited, and further stated that petitioner is executing another joint venture agreement with the 1st respondent-Board under the development and shareholding agreement dated 04.11.2003. It is stated that the petitioner has given suo motu proposals to the 1st respondent to purchase additional piece of land admeasuring Ac.35.50 gts., and the same is covered by independent agreement dated 8th February 2006. While accepting receipt of 20% of the 1st instalment amount, they denied the allegation of the petitioner that 2nd instalment amount of development fee is payable only after issue of Power of Attorney by the 1st respondent. It is alleged that the petitioner is trying to read certain clauses in the agreement in isolation. It is submitted that the terms of agreement, the correspondence and undertaking given by the petitioner have to be read conjointly and harmoniously. It is stated that pursuant to the suo motu undertaking dated 26.05.2005 given by the petitioner, the 1st respondent invited tenders calling for Request for Proposal (hereinafter referred to as 'RFP' for brevity) for selection of a private developer for modern township project on the land admeasuring Ac.35.50 gts., situated at Kukatpalli through Swiss Challenge Bidding. It is stated that the petitioner herein has matched the offer of the top rank bidder and the acceptance of the offer of the petitioner was subject to the terms of RFP and the suo motu undertaking dated 26.05.2005. With reference to the allegations of the petitioner in paragraph 4 of the affidavit, it is stated that the petitioner has paid an initial amount of 20% of the development fee and then, the permissive possession was handed over to the petitioner to enable it to commence the work. However, it is submitted that respondents are under no obligation to hand over possession as per the terms of the agreement. The permissive possession given to SITCO is one of the authorizations under Power of Attorney. It is further stated that while admitting the permissive possession, it is not open for the petitioner to postpone the payment schedule with regard to 2nd instalment amount onwards. It is stated that the development agreement was entered into by the petitioner and the 1st respondent under Swiss Challenge Bidding, under which, the original proponent would submit its suo motu proposals along with the details while undertaking a particular work. Based on such proposal, the owner of the land would release the particulars and details of the proposals. It is always open for any third party to come forward and give a better offer for development fee, in which event, the 1st option to match the bid will be given to the original proponent. In the event of original proponent not coming forward to match the offer of top ranking bidder, the contract would be given to the highest bidder. In case of the original proponent coming forward with a matching proposal, the original proponent would be given preference. It is submitted that the acceptance of particular bid is based on the particular proposal submitted by the party, as such, the terms of proposals (RFP), the undertaking, and the agreement, as such, would have to be read together harmoniously and jointly. It is stated that as per the terms of undertaking, the entire consideration towards the development fee was payable within a period of 14 months from the date of the agreement. It is stated that since permissive possession of the land was given to the petitioner on 02.05.2006, and having offered payment schedule by way of voluntary undertaking, it is not open for the petitioner to recent from such an undertaking. It is further stated that there was nothing on record to suggest that the undertaking was intended to be superseded by the agreement. 10. With regard to execution of Power of Attorney, it is alleged that the 1st respondent has never refused to execute the Power of Attorney at any point of time and the petitioner has never asked for such Power of Attorney. Therefore, non-issuance of Power of Attorney has never been impediment for the transaction. It is stated that asmuch as the payment schedule was not adhered to by the petitioner, it was inevitable for the 1st respondent to terminate the agreement and to repossess the property, which was rightly done as per Clause 7.1.3 of the agreement dated 8th February 2006. It is alleged that as per the terms of agreement, particularly under Clause 3.1 of the agreement, handing over possession was linked to Power of Attorney and having taken possession even according to the petitioner, it is not open to plead that the 2nd instalment is payable only after issuance of Power of Attorney. While denying the allegation of the petitioner that the power under Clause 7.1.3 was contrary to the provisions of Section 23 of the Contract Act, sought for dismissal of the writ petition on the ground that the action of the 1st respondent is based on the concluded contract, as such, the petitioner is not entitled for any relief in the writ petition filed under Article 226 of the Constitution. 11. Further, additional affidavit is also filed by the petitioner, stating that in view of the resolution of the Board of Directors of the Petitioner-Company, dated 15.07.2006, the deponent Sri Manjit Singh Brar is authorised to represent the Company to institute the proceedings. Further, it is stated that there was a meeting of the members of the Board on 24.03.2007 and there was a resolution by the Board, declaring that the termination of the contract is detrimental to the interests of the Company and further resolution was passed ratifying the action taken by Sri Manjit Singh Brar, Director and Chief Operating Officer of the Company, in seeking legal redressal of the matter by filing a writ petition before this Court. 12. A reply affidavit is also filed by the petitioner denying various allegations levelled against the petitioner in the counter affidavit filed by the respondents. In the reply affidavit, it is stated that since the petitioner has paid the initial amount of 20% of the total development fee and also gave a bank guarantee for the remaining amount, the 1st respondent had delivered possession to the petitioner to carry on preliminary site clearance works. It is stated that such delivery of possession was not under compulsion of anybody, and after possession was delivered, petitioner had incurred substantial expenditure for carrying out site clearing works. It is stated that as the 1st respondent itself has committed breach of the terms of agreement dated 8th February 2006 by not issuing Power of Attorney in favour of the petitioner, thereby disabled the petitioner from executing the project. Referring to a judgment of the Apex Court reported in Noble Resources Ltd. v. State of Orissa, it is stated that even a post contractual dispute in a non-statutory contract is also open to judicial review and it is alleged that as the termination of contract is arbitrary exercise of power, offending rights under Article 14 of the Constitution of India, the matter can be agitated in this petition filed before this Court under Article 226 of the Constitution. It is further stated that since there is a bank guarantee in subsistence for the total unpaid instalment, no prejudice can be complained by the 1st respondent- Board for the alleged non-payment of 2nd instalment. 13. Head learned counsel Sri Vedula Venkata Ramana, appearing for the petitioner and Sri S.R.Ashok, leaned Senior Counsel appearing for the 1st respondent-Housing Board. 14. In the above backdrop of the pleadings, it is contended by Sri Vedula Venkata Ramana, learned counsel for petitioner that the order of termination terminating the contract and the agreement entered into by the 1st respondent-Board with the petitioner on 08.02.2006, is illegal and arbitrary. It is submitted that as per the terms of agreement, which is a concluded contract, there is a specific clause providing payment schedule as contemplated under Schedule-IV appended to the agreement. It is submitted that as per the Schedule of payment, the 2nd instalment amount of 20% of the total development fee is payable only on issue of Power of Attorney by the 1st respondent- Board. It is submitted that though initial proposal was submitted by the petitioner for payment of the 2nd instalment amount on issuance of Power of Attorney or three months from the date of the agreement whichever is earlier, but however, in view of Schedule-IV to the agreement, it is not open for the 1st respondent to allege any breach of conditions of the agreement on the part of the petitioner so as to invoke the power under Clause 7.1.3 for termination of the contract. The learned Counsel has referred to various clauses in the agreement and also the schedule to the agreement dated 8th February 2006. It is submitted that though the further allegation of unauthorised construction is made against the petitioner, but no details are ever indicated with regard to the alleged unauthorised constructions. As such, the impugned order of termination is illegal and arbitrary and is in violation of Article 14 of the Constitution of India. 15. The learned counsel for petitioner has placed reliance on the judgments of the Hon'ble Supreme Court in the case of Sunil Pannalal Banthia v. City and Industrial Development Corporation of Maharashtra Ltd. and also in the case of Noble Resources Ltd. (1 supra). He has also relied on a judgment of the Delhi High Court in the case of Gangasaran & Sons Private Limited v. Sachdeva Offset & Packing Industries Pvt. Ltd. 16. On the other hand, it is argued by the learned Senior Counsel Sri S.R.Ashok appearing for the 1st respondent-Housing Board that having regard to the procedure adopted by the petitioner, if all the relevant clauses in the agreement dated 8th February 2006 coupled with the proposals forwarded by the petitioner and undertaking dated 26.05.2005 are read conjointly, it is clear that the 2nd instalment amount of development fee i.e. 20% of the total development fee was payable within three months from the date of agreement. It is submitted that in view of the Swiss Challenge Bidding approach adopted by the 1st respondent-Board, the petitioner having furnished the proposals for payment of 2nd instalment amount within a period of three months from the date of agreement, or on issuance of General Power of Attorney, whichever is earlier, and having failed to pay any subsequent instalments, breached the terms of agreement and in that view of the matter, as per the terms of contract, invoking power under Clause 7.1.3 of the agreement dated 8th February 2006, the contract was terminated. It is further argued that the petitioner, without any authority of law, started constructing the Electric Sub-Station of 1st Venture in the land which is the subject matter of the agreement dated 8th February 2006. In that way also, he has violated the terms of agreement. In any event, it is submitted that having regard to several factual disputes, the petitioner cannot agitate the matter before this Court in this petition filed under Article 226 of the Constitution. It is also brought to the notice of this Court that subsequent to filing of the writ petition, a notice was also issued for filing a suit in terms of Section 68 of the A.P.Housing Board Act, 1956, as such, it is submitted that as the issue involved relates to contractual obligations and in view of severe factual disputes, no right of petitioner, much less, any fundamental right is violated so as to seek relief from this Court in this petition filed under Article 226 of the Constitution. 17. Before adverting to the contentions of the learned counsel for the parties and considering the issues, which arise for consideration, I deem it appropriate to refer to the Swiss Challenge Approach, which is one of the recognized modes for award of contracts by the Government Companies and its agencies as contemplated under Andhra Pradesh Infrastructure Development Enabling Act, 2001. With the object of reducing administrative and procedural delays, identifying Generic Project risks, detailing various incentives, detailing the project delivery process, procedures for reconciliation of disputes and also to provide for other ancillary and incidental matters, the State of Andhra Pradesh has brought the legislation i.e. Andhra Pradesh Infrastructure Development Act, 2001. The Swiss Challenge Approach is one of the methods provided in the said Act for award of contracts by the Government and Governmental agencies and Statutory bodies. In terms of the said Act, the Swiss Challenge Approach means when a Private Sector Participant (Original Project Proponent) submits an Unsolicited or suo motu proposal and draft contract principles for undertaking a project not already initiated by the Government agency or the local authority, and the Government agency or the local authority then invites competitive counter proposals in such manner as may be prescribed by the Government. The proposal and contract principles of the Original Project Proponent would be made available to any interested applicants, however, proprietary information contained in the original proposal shall remain confidential and will not be disclosed. The applicants then will have an opportunity to better the Original Project Proponent’s proposal. If the Government finds that one of the competing counter proposals is more attractive, then the Original Project Proponent will be given the opportunity to match the competing counter proposal and win the project. In case the original project proponent is not able to match the more attractive and competing counter proposal, the project is awarded to the Private Sector Participant submitting the more attractive competing counter proposal. 18. However, as per the Act, ‘Unsolicited or suo motu Proposal’ means, a proposal in respect of a project not already initiated by the Government or Government agency or local authority and which proposal is submitted by any private sector participant to the Government agency or local authority in respect of any infrastructure in the State supported by project specifications, technical, commercial and financial viability and prima facie evidence of financial and technical viability of such private sector participant to undertake such project with full details of composition of the Private Sector Participant and his financial and business background. 19. In this case, it is not in dispute that the petitioner Company, which was already executing a project of the 1st respondent, has offered to purchase these two pieces of land admeasuring Ac.9.05 gts., and Ac.26.00 gts., and submitted its suo moto proposal as per the Swiss Challenge Approach. The said suo motu proposal was submitted along with the undertaking dated 26th October 2005. It is appropriate to refer to clause 7 of the undertaking, which deals with payment terms. It reads as follows :- “Payment Terms : SITCO, in the event is awarded the development right for the said parcel of land pursuant to the Bidding Process, shall undertake to pay to APHB the Final Offer Price