*THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY +WRIT PETITION No.16005 of 2006 %Date:23-01-2008 #Smt. G.Bharati Devi and two others. … Petitioners Vs. $The Hyderabad Urban Development Authority, Reptd., by its Vice-Chairman, Paigah Plaza, Rasoolpura Police Lines, Secunderabad-3 and another. … Respondents !Counsel for the petitioners : Sri K.R.Prabhakar. ^Counsel for respondents : Advocate General & Sri M.Dhananjay Reddy, Standing Counsel for R.1 and R.2. <Gist: >Head Note: ?Cases referred: 1. (1991) 1 SCC 212 = AIR 1991 SC 537 2. (1996) 6 SCC 22 3. (2005) 6 SCC 657 4. AIR 1977 SC 1496 5. (200) 6 SCC 293 6. (2004) 12 SCC 327 7. AIR 1989 SC 1642 8. AIR 1990 SC 1031 9. (2004) 3 SCC 553. 10. 1998(5) ALD 565 (DB) 11. AIR 1963 SC 1558 12. AIR 1983 SC 1015 13. AIR 1991 SC 1726 14. JT 1993 (6) SC 331 THE HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.16005 of 2006 Date:23-01-2008 Between: Smt. G.Bharati Devi and two others. … Petitioners AND The Hyderabad Urban Development Authority, Reptd., by its Vice-Chairman, Paigah Plaza, Rasoolpura Police Lines, Secunderabad-3 and another. … Respondents Counsel for the petitioners : Sri K.R.Prabhakar. Counsel for respondents : Advocate General & Sri M.Dhananjay Reddy, Standing Counsel for R.1 and R.2. HON’BLE MR. JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION NO.16005 of 2006 ORDER: The petitioners, who are successful bidders in respect of seven plots situated in Nalagandla Residential Complex, near BHEL Township, Hyderabad, in the auction held by the Hyderabad Urban Development Authority, respondent No.1 herein, in pursuance of auction notification dated 28-2-2006, filed this Writ Petition for a Writ of Mandamus to declare the inaction of the respondents in handing over of possession of the plots to them by providing infrastructure facilities, as arbitrary, illegal, discriminatory and violative of fundamental rights guaranteed under Articles 14, 19(1) (g) and 300-A of the Constitution of India. The petitioners also sought for a consequential direction to the respondents to hand over possession of the auctioned property after providing all the infrastructural facilities. Respondent No.1 issued notification for sale of vacant plots situated in different areas, included in the Hyderabad Urban Agglomeration. In respect of the plots relating to Nallagandla Residential Complex, tender- cum-auction was conducted on 28-2-2006. The petitioners emerged highest bidders in respect of seven plots, the details of which are mentioned in the table given below: Sl.No. Group Housing Block No. Revised Extent (approx) in Sq.yds. Highest Bid for Sq.yd. Rs. Sale price worked out (Column No.3x4) in Rs. Name of Highest bidder who knocked down with highest bid 1 2 3 4 5 6 1 VII 1937.52 19300 37394136 G.Bharathi Devi 2. VI 1937.52 22600 43787952 G.Bhasker 3 IX 1937.52 20100 38944152 G.Bhasker 4. X 1937.52 22100 42819192 G.Bhasker 5 I 2125.05 19200 40800960 H.Venkateswara Rao 6 II 2870.4 19000 54537600 H.Venkateswara Rao 7 VIII 1937.52 19000 36812880 H.Venkateswara Rao As per Clause 5(m) of the Terms and Conditions of the Tender Notification for Allotment of Plots (for short “the Tender Conditions”) fixed by respondent No.1, Initial Deposit (I.D), which includes Earnest Money Deposit (EMD), shall be payable within seven working days from the date of auction without any interest. The said Clause further provided that if the highest bidder fails to make such payment, the bid will not be confirmed and the auction in respect of such plot is deemed to have been cancelled by forfeiting the EMD, and that the bidder will have no further right. According to the petitioners, though they were ready to pay the bid amount, respondents were unable to deliver possession of the plots after completing necessary works for providing infrastructure viz., demarcation of plots, water supply, drainage system etc. It is their further case that they approached the respondents with a request to complete the above mentioned works, but without fulfilling the said requirements, the respondents issued notices dated 20-6-2006 to the petitioners, calling upon them to remit the I.D amounts, excluding the EMD, on or before 30-6-2006 and indicating therein that if they failed to do so, the bids will be cancelled and the EMD forfeited. The petitioners further pleaded that they gave replies on 30-6-2006 to the said notices of the respondents, wherein they have stated that the respondents failed to undertake and complete the infrastructural facilities as promised by them in the tender conditions even after a lapse of four months from the date of auction and they have also requested the respondents not to reduce the plot sizes and maintain the road width upto 60’ instead of 40’, and that till the completion of all the infrastructural works, demand for payment of the I.D amount may not be made. In their affidavits, the petitioners further maintained that they have personally inspected the auctioned plots on 29-6-2006 and 25-7-2006 and noticed that the respondents have not initiated any steps to provide infrastructure and demarcate the land into plots. According to the petitioners, without discharging their obligation of demarcation of plots and providing infrastructure, the respondents cannot demand the I.D amount and threaten them to cancel the bid and forfeit the EMD. The Writ Petition was dismissed in limine by a learned single Judge of this Court, without going into the merits, on the ground that the issues raised by the petitioners fall in the realm of a non-statutory contract, which are normally to be adjudicated by a civil court of competent jurisdiction or by way of an arbitration, if the contract provides one. The said order, however, was set aside by a Division Bench of this Court, of which I am a party, by order dated 31-1-2007 in Writ Appeal No.90 of 2007 filed by the petitioners. The Division Bench has taken the view that in view of the dicta laid down in Shrilekha Vidyarthi V. State of U.P.[1], the issues raised by the petitioners require detailed consideration, and that the learned single Judge committed an error by non-suiting the petitioners at the threshold. While admitting the Writ Petition, the Division Bench remitted the case to the single Bench for disposal on merits. After remand, respondent No.2 filed a counter-affidavit on behalf of the respondents. It is, inter alia, averred therein that when group house plots in Nallagandla Residential Complex were put to auction on 28-2- 2006, the proposed auction purchasers pointed out that the proposed 30’ road width is not in conformity with the building regulations; that the respondents, therefore, agreed for increase in the minimum width of the road to 40’ and, accordingly, reduced the sizes and extents of the plots. It is further averred that having been satisfied with the said assurance, the tenderers, including the petitioners, participated in the tender process and the petitioners became the highest bidders in respect of the above- mentioned seven plots. It is also averred that as per the Tender Conditions, the petitioners will have to pay 1/4th of the sale price as the I.D amount within seven working days from the date of auction, which had expired on 7-3-2006, that the petitioner through their separate letters dated 16-3-2006 (marked as Annexure-R1-A) requested for extension of time for payment of I.D amount by three weeks on the ground that the NRI funds were not remitted to their accounts; and that through another set of letters dated 6-5- 2006 (marked as Annexure-R1-B) the petitioners again sought for further time of two months for payment of the I.D amount on the premise that in view of the demand for separate Telangana, there is a delay in remittance of NRI funds into the petitioners’ accounts, besides strike of the employees of the State Bank of India for about two weeks. As the petitioners failed to deposit the amount as per the tender conditions, the respondents issued notice dated 20-6-2006 calling upon the petitioners to pay the I.D amount on or before 30-6-2006 by specifically mentioning therein that if they failed to do so, the bids will be cancelled and the EMDs will be forfeited. The respondents alleged that the petitioners suppressed in the Writ Petition the two letters alleged to have been addressed by them to the respondents and, for the first time in their letter dated 30-6-2006 the petitioners have taken the plea that the respondents have failed to provide infrastructure and demarcate the plots. The respondents denied receipt of letters dated 1-8- 2006 and 7-8-2006 alleged to have been written by the petitioners. While denying the plea of the petitioners that the respondents have not provided infrastructure facilities, they have specifically pleaded that all the facilities like laying of the roads, water distribution system, drainage system and external electricity net work were already provided in the layout in question except widening of the road from 30’ to 40’. The respondents referred to and relied upon Clause No.16 (m) of the Tender Conditions and averred that the plots were put to auction on “as is where is condition” and that payment of I.D amount does not depend upon the facilities which are undertaken to be provided in Clause 16(m). While terming the plea of the petitioners about the reduction of plot sizes and the alleged failure of the respondents to provide infrastructural facilities as lame excuses for their failure to pay the I.D amounts, the respondents pleaded that in view of the petitioners’ failure to make the payments as per the Tender Conditions, the tender is deemed to have been cancelled and the EMD amounts have to be forfeited. On 11-9-2007 the petitioners filed WPMP No.24953 of 2007 seeking stay of all further proceedings in pursuance of a fresh notification issued by respondent No.1, proposing to auction the aforesaid seven plots, which are in dispute. In the affidavit filed in support of the said application, petitioner No.2 averred in paragraph 4 of the affidavit that to prove his bona fides, he paid the I.D amount by way of demand drafts obtained in favour of respondent No.1 on 7-8-2006. In the counter-affidavit filed by respondent No.2 in the said WPMP., he denied the alleged payment of I.D amount and pointed out that though the petitioners enclosed Xerox copies of pay orders issued by IDBI Bank, Banjara Hills Branch, they have neither remitted the said amounts in the HUDA account at Indian Oversees Bank, Himayatnagar Branch, nor submitted the demand drafts in the office of the HUDA. It is further stated that their enquiries revealed that out of the seven pay orders issued by the IDBI Bank in favour of the Vice-Chairman, four were cancelled and the amounts were credited to the petitioners’ account on the same day and the other three pay orders were cancelled on 29-8-2006. The respondents alleged that the petitioners indulged in misleading this Court by coming out with false averments that the I.D amounts were paid by them. In their reply affidavit, the petitioners tried to explain their statement that they have paid the I.D amounts by stating that the petitioners approached the Indian Oversees Bank counter situated at the office of respondent No.1 along with the demand drafts on 7-8-2006 and that the person available at the counter refused to receive the said demand drafts by saying that they have contacted Sri B.Yadagiri Rao, Divisional Administrative Officer of HUDA and he instructed not to receive those demand drafts, and that, therefore, four out of the seven demand drafts were cancelled on the same day and having kept the remaining three demand drafts with them for several days, the amounts there under were got credited to their accounts. At the hearing, Sri K.R.Prabhakar, learned counsel for the petitioners, submitted that unless the respondents discharge their part of the obligation as envisaged in Clause No.16(m) of the Tender Conditions by providing infrastructure - like roads, water distribution (network within the layout) system, drainage system, external electricity net work – the petitioners’ obligation to pay I.D amount will not commence and that the alleged deemed cancellation of the tender and forfeiture of E.M.Ds is illegal. He further submitted that the “as is where is condition” contained in Clause 16(m) is referable to the plots and not to the infrastructure facilities and that, therefore, unless the infrastructure facilities are provided, the respondents are not entitled to payment of I.D amounts. The learned counsel submitted, alternatively, that even if I.D amounts were required to be paid within seven days from the date of auction, as prescribed in Clause 5(m), by extending the time for payment upto 30-6-2006 the respondents are deemed to have waived the said condition. Opposing the contentions of the learned counsel for the petitioners, the learned Advocate General contended that the Writ Petition is liable to be dismissed for suppression of material facts by the petitioners. He further contended that the petitioners violated the mandatory tender conditions by failing to pay the I.D amounts even within the extended time and that, therefore, they are not entitled to invoke the discretionary jurisdiction of this Court. He has also contended that since the plots were auctioned on “as is where is condition”, the petitioners cannot raise the bogie of alleged non-provision of infrastructure as a reason for their failure to deposit the I.D amounts. He further contended that the issues raised by the petitioners arise under a non-statutory and commercial contract pure and simple and they do not fall within the realm of public law field to be adjudicated by this Court while exercising the jurisdiction under Article 226 of the Constitution of India. Before going into the contentions on merits, let me first dispose of the objection raised by the learned Advocate General regarding the maintainability of this Writ Petition. As noted earlier, the learned Advocate General contended that since the issues raised by the petitioners arise under a commercial contract, the Writ Petition is not the appropriate remedy. In support of his contention, the learned Advocate General relied upon the judgments of the Supreme Court in State of UP V. Bridge & Roof Co. (India) Ltd[2], and Binny Ltd. Vs. V.Sadasivan[3]. There is virtual dichotomy of the views expressed by the Supreme Court on the maintainability of writ petitions in matters arising under commercial contracts. While the Supreme Court in Radha Krishna Agarwal V. State of Bihar[4] followed by the judgments in Bridge &Roof Co. (India) Ltd (2 supra), Kerala State Electricity Board V. Kurien E.Kalathil[5], State of Jammu and Kashmir V. Ghulam Mohd. Dar[6], Binny Ltd., (3 supra) etc., has taken the view that Writ Petition under Article 226 is not an appropriate remedy to adjudicate the disputes arising under and to enforce the terms of a non-statutory contract; in another line of judgments the Supreme Court has taken almost a converse view in its judgments in M/s.Dwaradas Mafratia & Sons V. Board of Trustees, Bombay Port[7], Mahabir Auto Stores v. Indian Oil Corporation[8], Shrilekha Vidyarthi (1 supra) and ABL International Ltd V. Export Credit Guarantee Corpn. of India Ltd.[9], to cite a few. In the latter judgments, the Supreme Court held that even under a concluded contract, which is non-statutory, if the State or its instrumentalities act arbitrarily and in violation of Article 14 of the Constitution, a Writ Petition under Article 226 can be entertained by the High Court and adjudicate the issues raised therein on merits. Having regard to these divergent views, the learned Advocate General, at the hearing, fairly conceded that this Court may decide the case on merits without going into the issue on the maintainability of the Writ Petition. Accordingly, the Writ Petition is being disposed of on merits. To appreciate the rival contentions advanced by the learned counsel representing their respective parties, it is necessary to consider the relevant Clauses in the Tender Conditions. Clause 5(k) of the Tender Conditions prescribes that 1/4th of the sale price shall be payable towards I.D; sub-clause (l) prescribes that Initial Deposit includes EMD by way of adjustment; and under sub-clause (m) after deducting the EMD paid, the balance amount of I.D shall be payable by the highest bidder within seven working days from the date of auction without any interest, failing which the bid will not be confirmed and the auction of that particular plot will be deemed to have been cancelled by forfeiting the EMD. This clause also envisages that the bidder will have no further right. Under Clause 7 the bidder shall pay the balance sale price within two months from the date of auction and the bidder shall pay simple interest at the rate of 12% per annum after seven working days from the date of auction. Under Clause 11(a) all the payments shall be made within the stipulated time and for non-payment of the sale price within such time, the allotment will be cancelled without any intimation of whatsoever nature; and under sub-clause (c) it is provided that the allotment is also liable for cancellation for violation of any other terms and conditions contained therein or as may be communicated from time to time. Under sub-clause (d) in case of cancellation of allotment, for whatsoever reason, the I.D in full will be forfeited. Under Clause 13(a) it is provided that the plot size is subject to variation. Sub-clause (c) provides that possession of the plot will be handed over on payment of the full sale price or any other dues. Under sub- clause (f), after delivery of possession and payment of sale price and any other dues, sale deed will be registered. Clause 16(m), which is the bone of the contention of the parties, reads as under: “ HUDA will provide infrastructure like roads, water distribution (Net work within the layout) system, drainage system, external electricity net work. The plots put for auction are on as is where is condition. The applicants shall inspect the site and satisfy themselves of the condition and location of the plot before participating in the auction. HUDA will not carry any development work in any individual plot such as removal of boulders, land leveling etc” (Emphasis is added). A perusal of the material filed by the respondents, along with the counter-affidavits, shows that after the auction has taken place on 28-2- 2006, the petitioners wrote separate, but, similar letters to the Vice- Chairman of respondent No.1, wherein it is mentioned that the NRI funds are being remitted to their accounts and, therefore, they requested to extend the time for payment of I.D amounts by three weeks. Evidently, there was no reply from the respondents, but no action was taken by them for nonpayment of the I.D amounts. Thereafter, the petitioners addressed individual letters on 6-5-2006, wherein it is, inter alia, mentioned that time for payment of the I.D amounts was extended by the respondents upto 31- 3-2006, that the petitioners offered very high rates, which were more than the rates prevailing in the market, that the issue of separate Telangana State lead to a lot of confusion in the minds of general public affecting the real estate business, and that the NRI funds are being remitted to the petitioners’ accounts and due to strike of SBI staff for almost two weeks the process of remittance got delayed, disabling them from making payment as on 31-3-2006. While expressing their preparedness to pay interest on the delayed payment of I.D amounts, the petitioners requested the respondents to grant extension of further time for payment of I.D amounts by two months. While no specific replies to the above mentioned letters were sent by the respondents, they have, however, sent separate notices dated 20-6- 2006, wherein they called upon the petitioners to pay the balance I.D amounts on or before 30-6-2006 to get the bids confirmed, failing which the bids are liable for cancellation by forfeiting the EMD amounts. In response to the said notices, the petitioners sent separate replies, wherein they have mentioned that under the new F.S.I. Rules, minimum 60’ front wide roads are necessary and the 40’ frontage wide roads are not sufficient and that the sizes of the plots are varied. It was further pointed out that the infrastructure in the layout is not complete even after four months of auction and that demanding payment of I.D amounts - without completion of infrastructure works, viz., laying of B.T. roads, drainage system, water supply etc., and varying the plot sizes without notice to them - is highly unjustified. A month after sending the said letters, the petitioners filed the present Writ Petition. As could be noted from the Tender Conditions, the plots were put to auction on “as is where is condition” basis. Further, the tenderers were required to inspect the site and satisfy themselves about the condition and location of the plots before participating in the auction. Therefore, before filing their tenders, the petitioners were expected to inspect the proposed plots and satisfy themselves about the condition and location of the plots. It is not the pleaded case of the petitioners that they have not inspected the plots before participating in the auction, nor is it their case that they were prevented from inspecting the plots. It is, therefore, reasonable to presume that the petitioners were aware of the condition and location of the plots when they have filed their bids and participated in the auction. It is not the case of the petitioners that either at the time of their participating in the auction or thereafter, till they wrote letters dated 30-6-2006, they have ever raised objection regarding lack of infrastructure. If the petitioners felt that without providing infrastructural facilities the respondents are not entitled to demand and collect the I.D. amounts, it would have been open to them to raise the said issue either at the time of filing the tenders or at least in the letters addressed on 16-3-2006 and 6-5-2006. None of the objections, which were raised in letters dated 30-6-2006, have been raised in either of the said two letters. Not only that, they failed to raise those objections, but in letters dated 6-5-2006 they made an unequivocal promise that they are prepared to pay interest on the delayed payment of I.D amounts. I have, therefore, no hesitation to conclude that the objections raised by the petitioners for the first time in letters dated 30-6-2006 are intended only to avoid payment of the I.D amounts and were pure afterthought. In the counter-affidavit filed by the respondents, they have categorically averred that all the infrastructural facilities such as laying of roads, water distribution system, drainage system and external electricity network were already provided in the layout and that the only work, which remained to be done is widening of the road from 30’ to 40’. Though the petitioners disputed this claim, for the purpose of disposal of this case there is no need to dilate on this aspect, because, in my considered opinion, payment of 1/4th bid amount as I.D amounts has neither any nexus nor bearing on the provision for infrastructural facilities, nor the petitioners are justified in withholding the payment by taking shelter thereunder. From Clause 16(m) of the Tender Conditions, which is reproduced hereinabove, it is quite evident that the plots put to auction were on “as is where is condition”. The said Clause, in which the undertaking that the respondents will provide infrastructural facilities, and Clause 5(m), which stipulates payment of I.D. amounts within seven working days from the date of auction, are absolutely independent of each other and there is no warrant to link the obligation of the respondents to provide infrastructure facilities with the obligation of the petitioners to pay I.D. amounts as stipulated in Clause 5(m). Even if the contention of the learned counsel for the petitioners that the expression “as is where is” contained in Clause 16 (m) is referable to the condition of the plots and not to the layout is accepted, the petitioners still cannot have any justification to withhold payment on the ground that the infrastructure as held out in Clause 16(m) was not provided. If at all there is any failure on the part of the respondents in discharging this part of their