THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY W.P.Nos.18341, 24037, 28792 of 2008; 5742, 12845 & 13483 of 2009 (Common judgment) Dt:22-04-2010 Between : M/s IBC Knowledge Part Pvt. Ltd. Rep. By its Managing Director, Yunus Zia, Bangalore and others ...Petitioners And Hyderabad Urban Development Authority, Secunderabad, and others .. Respondents Counsel for the petitioners: Sri C.S. Vydyanadan, Sr. Counsel, Sri Noushad Ali & P. Srinivasa Murthy, Counsel for respondents : Learned Advocate General < GIST >HEAD NOTE: ? CASES REFERRED : 1) AIR 1975 SC 1121 (1) 2) (1977) 3 SCC 457 3) (1981) 3 SCC 238 4) (2008) 8 SCC 172 5) (2004) 3 SCC 553 6) AIR 1996 SC 11(1) THE HON’BLE MR JUSTICE L. NARASIMHA REDDY Writ Petition Nos.18341, 24037, 28792 of 2008; 5742, 12845 & 13483 of 2009 COMMON JUDGMENT: Certain developments in the recent past, across the world have demonstrated as to how difficult it would be, to sustain the economy at boosted levels. Howsoever tempting it may be, to keep the relevant indices at attractive figures, it is well nigh impossible to sustain the projections for a long time. It is a matter of common knowledge that the prices of land, particularly, in urban areas, in our country, and across the world have recorded phenomenal increase in the middle of the current decade. That, in turn, gave rise to a situation, where the sales or purchases of land were accentuated more by profit motives than by genuine necessity. The profits were so attractive that the State was also tempted to enter the fray. Before independence of our country, Hyderabad, as a State, was under the rule of H.E.S. the Nizam. This was one kingdom, where the Ruler owned and possessed fairly large extent of land, particularly around the capital. After the Hyderabad State became part of Union of India, the State Government succeeded to the large tracts of open land, by operation of various legislations, such as, the Jagir Abolition Regulation, etc. There are other category of properties also, as regards which, disputes existed between individuals and the State. The Government of Andhra Pradesh could not resist its temptation to gain through commercial ventures, by sale of the lands owned by it, when there was unprecedented boom. It has chosen to channelise its activities through Hyderabad Urban Development Authority, constituted under the Hyderabad Urban Development Act, which has since been reconstituted as Hyderabad Metropolitan Development Authority (for short ‘the authority’). Brochures and application forms in this regard were released by the authority in July, 2006. A plot of 100 acres was divided into 20 plots of different sizes, and the venture was named as “Golden Mile”. The upset price was quoted at Rs.4.5 crores per acre, and the auction was scheduled to take place on 20-07-2006. The petitioners in this batch of writ petitions participated in the auction, and emerged as the highest bidders for different plots. As required under the conditions stipulated in the brochure, amounts were deposited at various stages. The sales however did not reach finality. The petitioners did not deposit part of the consideration stating that they came to know about the pendency of litigation in respect of the land, offered to them. They pleaded that a clear statement and promise was made in the brochure and at the time of auction, to the effect that the land proposed to be sold is free from litigation and encumbrances, and surprisingly, litigation surfaced before this Court, challenging the very title and right of the Government over the land. Correspondence ensued in this regard, and the petitioners insisted on refund of the amounts deposited by them, with interest. At one stage, the authority also expressed its willingness to refund the amounts. However that did not materialize. Hence, this batch of writ petitions, with a prayer to direct the respondents herein to refund the amount deposited by the petitioners. The petitioners submit that the respondents have not only failed to furnish correct and proper information about their title to the land, but also failed to disclose the factum of pendency of litigation, vis-à-vis the land, which was very much in their knowledge and information. They contend that a clear representation was made to the effect that the land proposed to be sold is free from title disputes and encumbrances, and once it has emerged that the land is the subject-matter of dispute before this Court, the respondents are under obligation to refund the amount deposited by the petitioners, with interest. On behalf of the respondents, a detailed counter-affidavit is filed. It is stated that when the brochure was printed and applications were sold, no litigation as such was pending. According to them, writ petitions were filed before this Court in respect of the land, at a subsequent stage, and even this information was passed on to the petitioners at the time of auction. They contend that the petitioners participated in the auction, being fully aware of the pending litigation, and they are deemed to have waived the objections, if any, in this regard. It is also stated that the transaction between the petitioners and the respondents is purely commercial in nature, governed by various terms and conditions, and the writ petitions are not maintainable, as regards such disputes. Arguments on behalf of the petitioners were advanced by Sri C.S. Vydyanadan, learned Senior Counsel, Sri Noushad Ali and Sri P. Srinivasa Murthy, learned counsel. They submit that there was a clear infraction of Section 55(1)(a) of the Transfer of Property Act (for short ‘the Act’), by the respondents, and that they did not disclose the defect in title and pendency of litigation, in respect of the land. They submit that when the upset price itself was quoted at Rs.4.5 crores, per acre, it was the obligation of the respondents to ensure that their title is clear, and there is not a semblance of litigation, vis-à-vis the land. Learned counsel for the petitioners attempted to repel the contentions of the respondents, as to maintainability of the writ petitions. They submit that every averment made in the writ petitions is borne out by record, and no determination of disputed question of fact is necessary. They further submit that the respondents themselves offered to refund the amount, after realizing the factual situation, and the petitioners are just seeking enforcement of the promise made by the respondents. According to them, the transactions, that are the subject-matter of the writ petitions, are governed by statutory provisions and are not commercial ventures, pure and simple. On behalf of the respondents, learned Advocate-General appeared. By placing reliance upon a catena of decisions, he raised an objection as to the very maintainability of the writ petitions. He submits that the petitioners were very much aware of the nature of title to the property and have verified the same or are deemed to have done so, before they submitted their tenders and participated in the auction. He contends that a prayer for refund of the amount deposited towards part of consideration in a sale transaction can be made only in a civil suit, and a writ petition is not at all a proper remedy for that. According to the learned Advocate-General, the breach of terms of contract, if at all, is on the part of the petitioners, since they did not pay the balance of consideration. He submits that some of the purchasers have, in fact, paid the full amount and developed the properties also. In view of the extensive submissions made by the learned counsel for the petitioners, and learned Advocate-General, two questions arise for consideration in this batch of writ petitions, viz., a) whether the writ petitions are maintainable in law, and b) whether the petitioners are entitled for the relief of refund of the money, deposited by them. With slight difference as to emphasis and content, the prayer in the respective writ petitions is same, viz., to declare that the action of the respondents in insisting on payment of balance of consideration for the land, and non-refund of the amount already deposited; is illegal and arbitrary. Direction is sought against the respondents to refund the deposited amounts, with interest at 12% per annum. The respondents issued public notice, inviting tenders proposing to sell bits of land of different sizes, situated at Kokapet Village. The fact that the upset price itself was quoted at Rs.4.5 crores, per acre, and that an extent of 100 acres was proposed to be sold, discloses the magnitude of the transaction. The HMDA did not lag behind any corporate entity, in tempting the prospective purchasers. The petitioners have filed a copy of the brochure with title, “Golden Mile, Commercial, Institutional and Residential”. The brochure/application itself was priced at Rs.10,000/-. The first page of the brochure contains this statement. “A GOLDEN OPPORTUNITY BECKONS Hyderabad, the fastest growing IT destination in the country now offers one more golden opportunity to those who want a share in its success. Introducing Huda’s Golden Mile, the 100 acre development that’s slated to be an absolute gold mine. Located on the Outer Ring Road (the Rs.4000 Cr. project on which work has already commenced) at Kokapet, near Gachibowli, the Knowledge Corridor of Hyderabad, and extension of the Financial district; this urban infrastructure development is where residential, commercial and institutional assets will take shape. Within a 2 km, radius of Huda’s Golden Mile are some of the world’s blue chip majors viz. IIIT, ISB, Infosys, Wipro, Microsoft and Polaris. In the Financial District are companies like Kanbay, UBS, Franklin Templeton and many more. The proposed 60 storey twin towers at Manchidevulu is in its vicinity. Also the new international airport is just 15 minutes away and a super deluxe 7 star hotel coming up by its side, definitely compliments it. Huda, the name synonymous with Hyderabad, invites bids for plots of about 5 acres each in this landmark project the Huda Golden Mile. Bid now or settle for something far lesser than gold”. Photographs of the buildings or townships in the nearby vicinity were printed. A sentence that reads, “bid now or settle something far lesser than gold” was printed in bold letters, at the bottom of every page. In clause 12 (c) of the terms and conditions, it was stated that possession of the land will be handed over on payment of full sale price, or other dues, as per the terms and conditions. A peculiar clause, which penalizes the purchaser for his failure to take possession of the land, was also incorporated as 12(d). It reads, “The allottee/authorized representative shall take over the physical possession on or before the date, as may be prescribed in the pre-final allotment letter date, failing which Rs.50,000/- shall be levied per month, towards penalty, till the date of taking over the physical possession. This naturally connotes that the respondents are not only in possession of the land, but are not inclined to retain it, once the amount is deposited. The petitioners participated in the auction held on 20-07-2006, and the bids offered by them were much higher than the upset price. The fact that they have deposited the amounts as per the terms and conditions, shows that they were very much willing to proceed with the contract. The entire scene changed with the publication of a news item, on 02-08-2006. It was to the effect that the land, that was auctioned, as well as few hundred acres surrounding it, is the subject- matter of various writ petitions, pending before this Court. The enquiry made by the petitioners revealed that W.P.No.10084 of 2006 was filed by private individuals, before this Court, with a prayer to cause survey, demarcation, and direct the respondents therein to hand over possession of an extent of 719 acres at Kokapet Village. Notices were issued by this Court on 24-05-2006, and on 21-06-2006, an order was passed to the effect that any steps taken by the Government, in respect of the said land, shall be subject to further orders. The land that was auctioned is part of the 719 acres. W.P.No.14439 of 2006 was filed challenging the very tender notice issued by the respondents. The writ petition was dismissed on 14-07-2006. However, Writ Appeal No.887 of 2006, filed on 17-07-2006, was pending, as on the date of auction. While the petitioners plead that they were not at all informed about the pendency of the two matters referred to above, the respondents contend that this was informed orally at the time of auction. Keeping aside the controversy as to when the petitioners came to know about the pendency of the writ petitions, and their immediate impact upon the title of the respondents, upon the land in question, they have decided to withdraw from the scene and pray for refund of the amount, deposited by them, may be with interest. Correspondence ensued in this regard. In the meanwhile, there was substantial decline in the activity of sale or purchase of immovable properties, particularly in the urban areas. The reasons therefor, are not immediately relevant. A serious objection is raised as to the maintainability of the writ petition. It is stated that the relationship between petitioners and the respondents is contractual in nature, governed by the terms and conditions of the brochure and this Court cannot undertake judicial review in the matters of this nature. The objection raised by the respondents and the arguments advanced by the learned Advocate- General, in this regard, is not only formidable, but also has backing of quite a large number of precedents. In Har Shankar and others v. The Deputy Excise and Taxation Commissioner and others[1], the Hon’ble Supreme Court held that the jurisdiction of the High Court under Article 226 of the Constitution of India cannot be invoked to enforce obligations that are voluntarily incurred by the parties, under an agreement or contract. In Radhakrishna Agarwal and others v. State of Bihar and others[2], it held that if a State or its agency enters the field of ordinary contract, the relations are no longer governed by the constitutional provisions and the rights and obligations of the parties to the contract must be enforced by having recourse to the relevant civil law. It is also observed that, if in a dispute, there are disputed questions of fact that needs appreciation of evidence, it cannot be decided in proceedings under Article 226 of the Constitution of India. Divisional Forest Officer v. Bishwanath Tea Co. Ltd.[3] was a case in which the writ petitioner sought for refund of royalty, which, according to it, was collected by the respondents in contravention of the terms of lease and provisions of law. An objection raised as to the maintainability of the writ petition was turned down by the Gowahati High Court. On appeal, the Supreme Court held that the writ petition is in the form of a suit for refund of royalty and it could not have been entertained, in exercise of jurisdiction under Article 226 of the Constitution of India. The learned Advocate-General cited many such precedents on the issue. The latest on this aspect being the one, in Pimpri Chinchwad Municipal Corporation and others v. Gayatri Construction Company and another[4]. The circumstances under which, a contract can be treated as statutory in nature were explained. It was held that a writ petition is not a proper remedy for enforcement of terms of contract, even where it contains terms, that were referable to any statutory provisions. The petitioners, on the other hand, contend that there exists hardly any necessity to determine the disputed questions of fact in this batch of writ petitions, and once it becomes impossible for the petitioners as well as the respondents to proceed with the contract, the relief can be certainly claimed in writ petitions. Another facet of argument advanced by them is that the sale of the land is referable to the provisions of the A.P. Urban Areas Development Act. They place reliance upon two decisions rendered by the Hon’ble Supreme Court, in the recent past. The first is the judgment in ABL International Ltd. And another v. Export Credit Guarantee Corporation of India Ltd., and others[5]. A writ petition filed for enforcement of rights under a contract before the Calcutta High Court was resisted by the 1st respondent therein, i.e. the Export Credit Guarantee Corporation of India Ltd., mainly on the ground of maintainability. The objection was sustained and writ petition was dismissed. The Division Bench of the Calcutta High Court, took a different view and held that the writ petition is maintainable. However, no relief was granted on finding that there was no breach of contract. In the appeal that was presented before it, the Hon’ble Supreme Court extensively dealt with the question of maintainability, with reference to its earlier judgments on the issue. It has ultimately summed up the discussion as under: “Para-26: Therefore, this objection must also fail because in a given case it is open to the writ court to give such monetary relief also. Para-27: From the above discussion of ours, the following legal principles emerge as to the maintainability of a writ petition: (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable”. In Tata Cellular v. Union of India[6], the Supreme Court held inter alia, “It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercises of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down”. “Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justifiable and the need to remedy and unfairness. Such an unfairness is set right by judicial review ” (Paras 85 and 86). On a careful analysis of the precedents referred to above and other pronouncements akin to them, it emerges that the High Court cannot decline judicial review, just because the lis in a writ petition arises out of a contract. Much would depend upon the nature of the contract and the obligation of the parties arising out of it. If there does not exist much dispute as to facts, or any controversy as to interpretation of clauses, the parties cannot be driven to Civil Courts and to spend their time and money in litigating before the Civil Courts. In the instant case, every fact pleaded by the petitioners on the one hand, and the respondents, on the other hand, is borne out by record. There is hardly any difference of opinion as to interpretation of clauses. The respondents may have honestly believed that they would be in a position to convey title and deliver possession to the successful bidders on deposit of the amount offered. The petitioners were equally enthusiastic to purchase the bits of land as were the respondents, to sell and have made offers, which are indeed fabulous. They proved their bona fides by making deposit of the amounts, as stipulated. Between the date of publication of brochure/application and the date stipulated for deposit of balance of consideration, certain developments in the form of filing of writ petitions by third parties in respect of the land and passing of orders by this Court in some of them, took place almost rendering the conclusion of the contract, be it, by the petitioners or by the respondents, difficult. One significant fact, which has a direct bearing on this question and to a large extent, on the next question also is the realization of the factual situation by the authority itself. Some of the petitioners addressed letters to it, soon after they came to know about the pendency of the writ petitions filed by third parties. Acting on the same, the Vice-Chairman of the HMDA addressed letter dated 28-03- 2007, which reads as under: “Lr.No.B4/7768/2006 dated 28.3.2007 To M/s IBC Knowledge Park Pvt. Ltd., Sherieff Centre, 73/1, St. Marks Road, Bangalore-560 001 Sir, Sub: HUDA – Auctions – Kokapet village – Golden Mile Project – Request by the successful bidders for return of the payment – intimation issued – regarding. Ref: 1. Applications of successful bidders. 2. Auction conducted on 20.7.2006. 3. Writ Appeal No.887/2006 pending before the High Court of Andhra Pradesh. 4. Representation from Watermark Estates Pvt.Ltd. and others. -@@@- Please see the references cited above and it is to inform that in view of pendency of the court case in W.A.No.887/2006 and as per your representation it is agreed in principle to refund the amount paid towards the 1st and 2nd installments for the plots auctioned by HUDA in Golden Mile Project. This total amount payable towards the cost of the plot has to be paid before registration as per the payment schedule to be intimated after the disposal of the court case. The process for refund of amount will be taken up in due course subject to giving the equivalent bank guarantee for EMD paid, depending upon the outcome of the court case and availability of funds with HUDA. Yours faithfully, Sd/- For Vice-Chairman Estate Officer” This was followed by another letter dated 31-03-2007. It reads, “In continuation of this Office Reference Dt.28-03-2007, further it is to inform that refund of amount paid towards 1st and 2nd installments for the plots auctioned by HUDA in Golden Mile Project will be done in the 2nd fortnight of April 2007. Yours faithfully, Sd/- Vice Chairman” This puts at rest, any controversy as to the obligation on the part of the respondents to refund the amount. They have agreed to refund the amount and the petitioners did nothing more than to require the respondents to adhere to their commitment. For all practical purposes, the dispute between the petitioners and the respondents is no longer in the realm of the contractual obligations. It has transformed or metamorphasized into the one of requiring a statutory authority to adhere to the commitment or at least the promise made by it. Therefore, the objection raised by the respondents as to the maintainability of the writ petition cannot be sustained. Accordingly, it is held that the writ petitions are maintainable. Coming to the next question, it needs to be seen as to whether the petitioners have made out a case for refund of the amount deposited by them. One of the contentions urged on behalf of the petitioners is the failure on the part of the respondents to disclose the defect in the property, as regards their title thereto. Assuming that nobody challenged the title of the respondents, when the brochure and application form were issued, or they were not aware of it by that date, the record discloses that by the time the auction was held, the litigation in respect of the land has surfaced. The brochure has painted a rosy picture about the location, importance and value of the