* THE HON’BLE MR JUSTICE C.Y.SOMAYAJULU +WRIT PETITION No.19813 OF 2004 %Dated 18.02.2008 #Bharat Sanchar Nigam Limited, Hyderabad. …Petitioner. and $ Government of Andhra Pradesh represented by the Chief Secretary, GAD Department, Hyderabad and others. …Respondents ! Counsel for petitioner: Sri R.S.Murthy ^ Counsel for Respondents: GP for General Administration < GIST: > HEAD NOTE: ? Cases referred 1. 2004(3) SCC 553 2. AIR 1999 SC 296 3. AIR 1996 SC 3515 4. 2000 (20) ALD 148 5. 1993 (2) ALT 80 (D.B.) IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE EIGHTEENTH DAY OF FEBRUARY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE C.Y.SOMAYAJULU WRIT PETITION NO : 19813 of 2004 Between: Bharat Sanchar Nigam Limited, rep. by its Prl. Geneal Manager, Surya Lok Somplex, Abids, Gunfoundary, Hyderabad 500 001. ..... PETITIONER AND 1 Govt of A.P., rep. by the Chief Secretary, GAD Department, Secretariat, Hyd. 2 A.P. Industrial Infractructure Corporation Ltd., rep. by Vice Chairman and M.D., Parishrama Bhavan, 6th Floor, 5-9-58/B Fahte Maidan Road, Basheerbagh, Hyd. 3 M/s. Infotech Enterprises Ltd., rep. by the Managing Director, Madhapur, Hyd. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to Issue a writ order or directions more particularly is the nature of mandamus declare the proceedigns a) 1013/DW/INF/APIIC/96 DT. 30;01.2003. B) 1013/PM(IPU)/APIIC/96 DT. 02.01.2004, & 1013/PM(IPU)/APIIC/1996 DT. 02.01.2004. c) 1013/PM(IPU)APIIC/1996, DT. 27.01.2004, d) 1013/PM(IPU)APIIC/1996, DT. 30.01.2004, e) 1013/PM(IPU)APIIC/1996, DT. 26.01.2004, h) 1013/DW/INF/APIIC/96, DT. 01.07.2004, i) 1013/PM(IPU)APIIC/1996,II DT. 13.07.2004, as being illegal null and void and direct the 2nd respondent to restore the position as on 31.03.2004 as being illegal null and void and direct the 2nd respondent to restore the position as on 31.03.1999 with further directions restraining the 3rd respondent from any entry including storing of building materials and the construction there of and pass. Counsel for the Petitioner:MR.R.S.MURTHY Counsel for the Respondent No.: GP FOR GENERAL ADMINISTRATION The Court made the following : THE HON'BLE MR JUSTICE C.Y.SOMAYAJULU WRIT PETITION NO : 19813 of 2004 ORDER: This Writ Petition is filed questioning the cancellation of the allotment of plot No.CFC-5, Software Units Layout, Madhapur, made in favour of the petitioner by the second respondent i.e. Andhra Pradesh Industrial Infrastructure Corporation Limited (hereinafter referred to as APIIC). (2) The case in brief of the petitioner is that APIIC, which is a wholly owned Government of Andhra Pradesh undertaking, came into existence with an object to acquire land for development of industrial area in the State of Andhra Pradesh, had offered plots to Software Industries and Public Utility Services in Madhapur area. It had, on a request made by the Principal General Manager, Telecom District, Hyderabad, allotted two plots in the Madhapur Software Units Layout bearing CFC-4 in an extent of Ac.1.00 and CFC-5 in an extent of 0.25 cents subject to payment of price @ Rs.1923/- per square yard for the purpose of construction of telephone exchange and ground based tower. Subsequently, vide its proceedings No.1013/Hitec/97/982, dated 10.12.1997 APIIC, at the request of the Telecom Department, reduced the cost of the land to Rs.1,282/- per square yard i.e.Rs.77,56,100/-, with a stipulation that the sale consideration has to be paid before 30.06.1998 and the allotment would be subject to cancellation in the event of its not taking up the construction in those plots by 30.06.1999, vide clauses 11 and 12 of the letter of allotment. Being a public sector undertaking of the Union Government, and as it was being run on the budget allotted by the Union Government, Telecom Department sought relaxation of clauses 11 and 12, whereupon APIIC, vide its letter dated 10.02.1998, informed that those clauses are relaxed and that it has to furnish detailed schedule of construction work, and delivered possession of the land allotted. The amount due to APIIC from the Telecom Department for that land was paid on 31.03.1999. Subsequently vide its letter, dated 20.07.2000 APIIC demanded Rs.2,16,872/- from the Telecom Department on the ground that an extent of one more cent was occupied by it while constructing a compound wall. When exemption of payment of further amount was sought by the Telecom Department, APIIC vide its letter dated 14.10.2000, reduced the cost to Rs.1,30,303/-, which was paid by the Telecom Department on 17.01.2001. Thereafter, petitioner came into existence with effect from 01.10.2000, as a wholly owned Government of India undertaking, with change in the hierarchy. As funds were not made available to it for construction of telephone exchange by the Union Government, petitioner could not complete the construction of the telephone exchange within the time stipulated by APIIC in the letter of allotment and wanted to take up construction in the first quarter of 2004-05 after funds were allotted to it for construction of telephone exchange, and informed that fact to APIIC, when APIIC issued notice dated 30.01.2003 threatening to cancel the allotment on the ground of non-compliance with condition No.11 of the letter of allotment, and followed it by another letter dated 10.03.2003 informing vacant land tax of Rs.1,18,296/- also is due. Petitioner while sending a cheque for Rs.2,23,982/- towards vacant land tax from 01.10.2000 to 31.03.2003 and Rs.1,80,997/- towards vacant land tax for the year 2003-2004 vide cheque, dated 05.01.2004 reiterated that it would take up construction in the first quarter of 2004-05. Yet APIIC vide its letter dated 02.01.2004 informed the petitioner that the allotment of sites made to it is liable to be cancelled as the project, for establishment of which the land was allotted, did not come into existence, and sought surrender of vacant possession of the land, in spite of the fact that petitioner informing APIIC that a compound wall was already constructed all around the sites allotted and foundation stone for construction of the telephone exchange was laid on 23.02.2004. Thereafter, APIIC vide its letter dated 26.02.2004 reiterated that it would, in exercise of its power of reentry, reenter into the land allotted by 4 PM on 11.03.2004, and the amounts sent to it would be refunded after deducting the EMD and rentals as per the Rules framed by it. In spite of protest by the petitioner, APIIC, vide its letter dated 12.03.2004, intimated the petitioner that it reentered into plot CFC-5 measuring about 0.25 cents, with an Officer of the third respondent as one of the witnesses to the reentry. Alleging that it is still in possession of plot CFC-5 and that its reentry claim is not correct, petitioner sent a notice dated 22.06.2004 to APIIC. In reply thereto APIIC vide its letter dated 01.07.2004 stated that plot CFC No.5 to an extent of 0.25 cents was delivered possession of to the third respondent under a contract and that 3rd respondent is in possession thereof. Hence, the writ petition questioning the cancellation of allotment of plot CFC-5 and its re- allotment to the third respondent. (3) No counter-affidavit is filed on behalf of the 1st respondent, i.e., the State of Andhra Pradesh represented by the Chief Secretary. (4) On behalf of APIIC, its Manager (Law) filed his counter affidavit inter alia contending that in as much as allotment of land was sought by the Telecom Department for construction of a telephone exchange and as that land, which was allotted for that purpose, was not utilized for that purpose even after a lapse of long period, and as that land was kept vacant, even though the letter of allotment clearly shows that the allotment would automatically stand cancelled if the land allotted is not utilized for the purpose for which it was allotted, allotment of Plot CFC 5 was cancelled for the petitioner’s failure to make construction of a telephone exchange therein in spite of several opportunities granted to it, and though the APIIC while relaxing clauses 11 and 12 of the letter of allotment wanted the Telecom Department to submit its detailed schedule for construction of the buildings on the land allotted to it. Though APIIC, through its letters dated 09.03.1998, 30.06.1998 and 17.07.1998, sought execution of an agreement as a condition precedent for handing over the land allotted to it, as the Telecom Department wanted to take a sale deed directly for the land allotted to it and made a request for delivery of possession of plot Nos.CFC-4 and 5, whose total extent is Acs.1.25, those plots were handed over to the Telecom Department on 31.03.1999. Merely because APIIC agreed to relax the condition relating to utilization of the land within the stipulated time, and merely because it happens to be a public utility service, petitioner has no right to keep the said land idle forever. As no sale deed is executed in favour of the petitioner, APIIC continues to be the owner of the land allotted to the Telecom Department. Petitioner, which came into existence on 01.10.2000 and which did not obtain orders for transfer of allotment of the land made in favour of the Telecom Department, it cannot, even without utilizing the land for the purpose for which it was allotted even after a lapse of more than 7 years, claim any relief from the Court on the basis of the allotment made in favour of the Telecom Department. Though the petitioner failed to give its explanation to the show cause notice as to why the allotment made cannot be cancelled for its failure to commence the construction, APIIC through its letters dated 10.03.2003, 17.09.2003 and 02.12.2003 gave further opportunity to the petitioner to take up construction in the land allotted. Thereafter only petitioner informed its proposal for construction of telephone exchange during the year 2004-05 vide its letter dated 16.12.2003. As payment of vacant land tax by itself would not enable the petitioner to retain the land idle without utilizing the same as per the original understanding, allotment of plot CFC 5 admeasuring 0.252 cents only, made in favour of the Telecom Department, was cancelled on 02.01.2004, for non utilization of the land, and called upon the petitioner to surrender said Plot CFC-5, which after receiving the order of cancellation on 02.01.2004, made a request for revocation of that order on the ground that it would commence construction in the first quarter of 2004-05. After examining the issue, APIIC through its letter dated 27.01.2004 informed the petitioner that it is not possible to revoke the order of cancellation and directed surrender of vacant possession of Plot CFC- 5 by 14.02.2004 and clearly informed the petitioner that in the event of its failure to surrender, it would resume possession on 16.02.2004, and followed it by another letter dated 26.02.2004 seeking surrender by 10.03.2004. As the petitioner failed to deliver possession of Plot CFC- 5, its possession was resumed on 10.03.2004 and that fact was intimated to the petitioner through the letter dated 12.03.2004, and Rs.16,78,721/- was refunded to the petitioner along with the letter dated 10.06.2004, deducting the amount towards EMD and rentals for the period of occupation of the plot, by including the cost of the compound wall constructed. When the petitioner returned the said cheque through its letter dated 15.06.2004, it was resent to the petitioner through the letter dated 22.06.2004 but the same was returned as refused. As APIIC entered into agreement with the 3rd respondent as per the direction of the Government of Andhra Pradesh in terms of its memorandum of understanding with the 3rd respondent, possession of plot CFC-5 was handed over to the 3rd respondent on 09.06.2004, permitting the petitioner to utilize Plot No.CFC-4 admeasuring 1-00 acre. As the 3rd respondent occupied the land allotted to it as per the Memorandum of Understanding dated 08.10.2003 and as the 3rd respondent developed an I.T. campus, by investing huge amounts and created opportunities for employment to several persons, petitioner is not entitled to any relief. (5) In the counter affidavit filed on behalf of 3rd respondent, it is stated that in pursuance of the agreement entered into by it with the Government of Andhra Pradesh, it (third respondent) with a view to set up I.T facility at Madapur for software development activities, requested the APIIC to allot 1.5 acres of land, but APIIC could allot only 1.25 acres and promised to allot the balance land required when a contiguous plot is available and entered into a memorandum of understanding on 08.10.2003. In furtherance of the said memorandum of understanding only Plot No.CFC-5 was allotted to it on 29.05.2004 after it paid Rs.20.64 lakhs and took possession of the said land on 09.06.2004 itself, and a sale deed was also executed on the same day conveying that land to it. As per the conditions of allotment, and G.O.Ms.No.27 of Department of I.T & C, dated 27.06.2002 also, it has to employ 500 eligible employees within a period of 3 years from the date of taking possession of the land, paying a minimum salary of Rs.5000/- p.m. per person amounting to Rs.3 crores per annum. As the petitioner did not take up construction of telephone exchange, in spite of APIIC addressing letters dated 18.02.1997, 21.02.1997, 12.09.1997 and 10.02.1998 requesting it to take up construction immediately, APIIC issued a show cause notice dated 30.01.2003 calling upon the petitioner to show cause why allotment of Plot No.CFC-5 to an extent of Ac.0.25 should not be cancelled and followed it by several letters. In any event, as the contract between the petitioner and APIIC is a non-statutory and a business contract, writ petition under Article 226 of the Constitution of India is not maintainable and so the petitioner is not entitled to any relief. (6) Heard Sri E.Manohar, Senior Advocate on behalf of the petitioner, Sri K.V.Simhadri, standing counsel for APIIC and Sri A.Hanumantha Reddy, learned counsel for the 3rd respondent at length. (7) The main contention of Sri E. Manohar is that in as much as plots of CFC-4 and 5 are meant for common facilities, they can be used only for common facilities, and cannot be used for any other purpose, and as telephone facility is but a common facility, APIIC erred in cancelling the allotment of plot CFC 5 made in favour of the petitioner and in re-allotting it to 3rd respondent, which is a business concern and which cannot set up any common facility in that plot. It is his contention that petitioner, which is a Government of India undertaking, cannot act independently, and as it was not allotted any funds immediately after its formation, for construction of the telephone exchange, it could not take up the construction of Telephone Exchange in the plots allotted, till the end of the financial year 2004, though foundation stone for the said building was laid in 2003 itself. It is his contention that APIIC, which relaxed clauses 11 and 12 of the letter of allotment cannot, in any event, by invoking conditions 11 and 12, cancel the allotment on the ground of the construction not being taken up in the allotted plots and contended that probably APIIC, with a view to help the 3rd respondent, in view of the memorandum of understanding entered into between respondents 1 and 2, which contains a clause relating to ‘further purchase’, reading The parties hereto further agree that, GoAP will cause APIIC to sell 0.25 (cents) acre of land as available and M/s. Infotech, shall purchase, property adjacent to the Plot (herein referred to as “Additional Property”, and more fully described in Schedule II attached hereto), as per the terms mentioned at para 2(d) of the MoU valid up to December 2003. might have cancelled allotment of plot CFC-5 only, which is adjacent to the plot allotted to the 3rd respondent. Relying in ABL International v. Export Credit Guarantee Corporation of India[1], he contended that the writ petition is maintainable even though it relates to a non- statutory contract. (8) Sri K.V.Simhadri, learned standing counsel for APIIC, after taking me through all the documents produced by the parties, contended that as the petitioner, in spite of being given an opportunity of several years to complete the project, did not comply with the conditions stipulated in the letter of allotment, and as relaxation of clauses 11 and 12 mentioned in the letter of allotment was not absolute and was conditional as the letter sent by APIIC reading Your request for relaxation of clause Nos.11 & 12 regarding taking up of civil works and their completion is considered favourably. However, you are requested to furnish detailed schedule of construction works. and as the petitioner, who was bound to furnish the detailed schedule of construction of work, failed to furnish the details of the schedule for taking up the construction in spite of several reminders being issued, petitioner cannot be heard to say that conditional relaxation of clauses 11 and 12 would enure to its benefit, in spite of its not furnishing the details of the schedule of construction for several years, and its keeping the land allotted idle, though it was delivered possession of those plots even without entering into a formal agreement, accepting request for execution of a sale deed. It is his contention that the petitioner which failed to obtain sale deeds, and also failed to give the schedules of construction even after issuing several reminders, cannot complain about the cancellation of the allotment made and the APIIC taking over possession of the plot by virtue of the power of reentry vested in it. It is his contention that in view of regulation No. 14.3 of the regulations reading 14.3 Works like compound wall, fencing, filing up of earth and other measures to protect the property shall be excluded while computing the works implemented.....” mere fact that of the petitioner constructing a compound wall, and its alleged levelling of the land would not amount to taking up the work of construction of the building in the land and in any event as APIIC cancelled the allotment of only plot CFC 5, but not the allotment of plot CFC 4 petitioner should not have a grievance as it continues to have the benefit of plot CFC 4. It is his contention that APIIC after taking over possession of plot CFC-5 handed over its possession to the 3rd respondent, and as 3rd respondent is in actual physical possession of the same after entering into an agreement of sale with APIIC, and so petitioner is not entitled to any relief. It is also his contention that in any event the Writ Petition is not maintainable because no fundamental right of the petitioner is violated and as the transaction between the petitioner and APIIC is a pure business or commercial but not a statutory contract. Relying on Indu Kakkar Vs. State of Haryana[2] he contended that inasmuch as the condition that in the event of failure to construct within the time stipulated in the letter of allotment, the allotment made would automatically gets cancelled is a valid condition and is binding on the parties, and so in any event petitioner who does not have a registered sale deed in its favour is not entitled to any relief. (9) The contention of Sri A. Hanumantha Reddy, learned counsel for the 3rd respondent, is that in as much as the transaction between the petitioner and APIIC is a non statutory contract and is an ordinary contract for sale of land, petitioner cannot by filing a writ petition obtain any relief as held in State of U.P. vs. Bridge & Roof Co. (India) Ltd.[3], D. Mohan vs. Regional Manager, APSRTC, Khammam District[4] and The Executive Engineer, Irrigation Circle No.3, Nizamabad vs. C. Raghava Reddy[5] and contended that the petitioner which failed to take up construction as per the terms and the Regulations framed is not entitled to any relief, in as much as the third respondent is already put in possession of plot CFC 5 and as APIIC had also executed an agreement for sale in respect thereof. (10) In reply, the contention of Sri E.Manohar is that in as much as the apex Court, after considering the entire case law on the subject including the Bridge & Roof Co. (India) Ltd (3 supra) relied on by the learned counsel for the 3rd respondent, held that if an authority which has to perform a public function or public duty acts arbitrarily, in appropriate cases, even if the issues in dispute relate to made contractual obligations only, a Writ Petition under Article 226 of the Constitution of India is maintainable, and contended that in as much as the area of dispute in this case is narrow and does not require any oral or other documentary evidence other than what is already on record, this Court can, in exercise of its jurisdiction under Article 226 of the Constitution interfere and grant appropriate relief. (11) The undisputed facts in this case are Department of Telecommunications, Hyderabad, which was under the control of the Union Government, had on 06.06.1996 sought allotment of site of 2 acres from APIIC for setting up of a telephone exchange at Info City in Madapur. Through its letter dated 14.08.1996 APIIC informed the Deputy General Manager (Planning) of the Telecommunication Department that land admeasuring about 2 acres would be allotted to it at a tentative cost of Rs.1,923/- per square yard, value of which works out to Rs.1,86,14,640/- besides frontage charges @ 10%. Subsequently, vide its letter dated 26.10.1996, APIIC informed the Deputy General Manager (Planning) of Telecommunication Department that provisional allotment of Act.1.00 of land, at a tentative cost of Rs.1,282/- per square yard is made to it and so a total cost of Rs.62,04,880/- may be paid on or before 30.11.1996. As that amount was not paid, APIIC through the letter dated 18.02.1997 addressed to the Deputy General Manager (Planning) Telecommunications Department, requested him to depute one official of Telecommunications Department for physical inspection of the plot earmarked for the Telecommunications Department, and make necessary arrangements for payment of the cost without further delay, and followed it by another letter dated 21.02.1997 addressed to the Chief General Manager, Telecommunications of Andhra Pradesh, informing that APIIC already allotted Ac.25.75 to some units, and as layout, finalized for Ac.41.50 cents was submitted to Hyderabad Urban Development Authority for its approval, and as it is likely to take up development activities like providing roads, streetlights, which are expected to be completed by December 1998, it allotted one acre of land in the layout for establishment of telephone exchange, to meet the requirement of entrepreneurs of the locality and others in and around Madapur village, and as it did not receive any communication from the Telecommunications Department in regard to payment to be made for that land, that reminder is being sent, and followed it by another letter dated 12.09.1997. In reply to the letter dated 12.9.1997, the General Manager (Planning), Hyderabad Telecom District, requested APIIC to provide two CFC marked sites for construction of telephone exchange and building, one adjacent to plot Nos.6 and 7 measuring one acre and another site of about 5 acres. In reply thereto APIIC through its letter dated 10.12.1997, addressed to the General Manager (Planning) Hyderabad Telecom District, stated that it is allotting a total extent of Ac.1.25 (Ac.1.00 in CFC 4 and Ac.0.25 in CFC 5) on outright sale basis in Phase I, Hitec City Project, Madapur, for setting up a telephone exchange subjected the conditions mentioned therein. By the letter dated 29.01.1998, Divisional Engineer in the office of the General Manager Telecom District, Hyderabad, requested APIIC to relax conditions 11 and 12 mentioned in the letter of allotment, as telecom is a Central Government public utility service department, and the land allotted to it will be utilized only for the purpose of the department, and sent Rs.77,61,100/- towards tentative cost of Ac.1.25 cents and process fees etc to APIIC through the letter dated 09.02.1998. Thereafter APIIC through its letter dated 10.02.1998, informed the General Manager (Development), Hyderabad Telecom District, that the request made to it for relaxation of clause Nos.11 and