Case: H.H.M.Shantadevi P. Gaekwad Vs. Savjibhai H. Patel

would be wholly inequitable to enforce specific performance for (i) residential houses for weaker Sections of the society cannot be constructed in view of the existing master plan and, thus, no benefit can be given to the said section of the society; (ii) In any case, it is extremely difficult, if not impossible, to continuously supervise and monitor the construction and thereafter allotment of such houses; (iii) the decree is likely to result in uncalled for bonanza to the plaintiff; (iv) patent illegality of order dated 20th June, 1998; (v) absence of law or any authority to determine excess vacant land after construction of 4356 dwelling units; and (vi) agreement does not contemplate the transfer of nearly 600 acres of land in favour of the plaintiff for construction of 4356 units for which land required is about 65 acres. The object of the act was to prevent concentration of urban land in hands of few and also to prevent speculation and profiteering therein. The object of Section 21 is to benefit weaker sections of the society and not the owners. If none of these objects can be achieved, which is the factual position, it would be inequitable to still maintain decree for specific performance. 48. The contentions urged on behalf of the plaintiff by their learned Counsel that in view of clauses (6) and (7) of the agreement, despite repeal of the ULC Act, plaintiff would be entitled to specifically enforce the agreement has also no merit. The acceptance of the contention will mean that original defendant No. 1 before delivery of possession had no right to terminate the agreement. This contention placed on behalf of the plaintiff has already been rejected by us. Reading clauses (6) and (7) harmoniously with clauses (4) and (17), the contention of learned Counsel cannot be accepted. In view of these conclusions, the contention of Mr. Dhanuka that reputation of the plaintiff as a builder would be adversely affected if houses are not built is hardly of any relevance. In any case, in this regard we may refer to the decision of this court in K. Narendra v. Riviera Apartments (P) Ltd., 1999(5) SCC 77 : 1999(3) RCR(Civil) 292 (SC), a case in which this Court examined an agreement which contemplated several sanctions and clearances that were not within the power of the parties. The result was that the feasibility of a multi-storeyed complex as proposed and planned became impracticable. In that case too the seller continued to remain in possession. Under these circumstances, it was held that the contract though valid at the time when it was entered, is engrossed in such circumstances that the performance thereof cannot be secured with precision and that the discretionary jurisdiction to decree the specific performance ought not to be exercised. Dealing with the question of reputation of the purchaser as a builder being at stake, this Court held that `this is hardly a consideration which can weigh against the several circumstances.......if a multi-storyed complex cannot come up on the suit property, the respondents plans are going to fail in any case. The position in the present case is quite similar. Under the scheme as postulated by the ULC Act, it is not permissible to construct dwelling units for the residence of the weaker sections of the society. 49. It also deserves to be noticed that, strictly speaking, it is not a contract for transfer of the property but is a contract to carry out the scheme which is incapable of being carried out at this stage on account of reservation in the Master plan and also repeal of the ULC Act. It was not and cannot be the case of the plaintiff that in case the scheme had been carried out, he would have enjoyed the property. He would have only enjoyed the specified profits. At best the plaintiff could pray for damages. In the plaint, it was asserted that Rs. 16,75,000/- were spent on execution and/or implementation of the scheme. The plaintiff, for reasons best known to him, has not sought a decree for any damages, even as an alternative relief. 50. Before concluding, we may place on record that during the course of hearing, a statement was made by the appellants that in the event of the appeal and the transferred writ petition being allowed, they will unconditionally offer in writing 66 acres of land to the Government of Gujarat. The said statement reads as under : 1. The appellant through his counsel states : that even in the event of this Honble Court allowing the appeal and Transferred Writ Petition : (a) the appellant will unconditionally offer in writing 66 acres of land (unencroached and unencumbered earmarked in the plan attached) to the Government of Gujarat by way of gift or for acquisition (on a compensation of Re. 1) for the specific purpose of constructing residential dwelling units (permissible under VUDA or LIG Schemes of the Gujarat Housing Board) at the cost of Government for low-income groups. (b) if such offer is not accepted within a period of four months from the date of offer the appellant will undertake the responsibility of utilising the said land (i.e. to say approximately 65.95 acres of land) for constructing thereon dwelling units (if permitted under the relevant Town Planning Laws) for housing persons in the low-income group and letting or selling the same to such persons in low income group on no profit on loss basis : the total cost of such a project will be got certified by a reputed Chartered Accountant. 51. The appellant would be bound by the aforesaid undertaking which we accept. 52. Before parting, we wish to express, to put it mildly, our deep anguish on the manner in which the specified authority, competent authority and the State of Gujarat has been conducting itself before the trial Court, High Court and this Court. Different stands at different points of time have been taken sometimes supporting the plaintiff and sometimes the defendants.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. From facts it is evident that the transaction in question was entered into because of enactment of the ULC Act. An agreement dated 24th March, 1977 was entered into between the Fatehsinhrao P. Gaekwad as the owner and Savjibhai Haribhai Patel as the licensee in respect of a portion of property known as Laxmi Vilas Palace Estate, Vadodara. For sake of convenience hereinafter Fatehsinhrao P. Gaekwad has been referred as `original defendant No. 1 and Savjibhai Haribhai Patel as `plaintiff. The Memorandum of Agreement (for short, `the agreement) recites that the plaintiff has evolved a scheme for constructing dwelling units for the accommodation of the weaker sections of the society as envisaged by Section 21(1) of the ULC Act. The said units are to be constructed on a portion of land of the owners propertyLaxmi Vilas Palace Estate, save and except Laxmi Vilas Palace, Moti Baug Palace and Nazar Baug Palace. The area under these three palaces which is to be excluded is said to be approximately 100 acresequivalent to about 4,00,000 square metres. The total land of the property is about 707 acres. A power of Attorney (for short, `the power) was also executed on 24th March, 1977 by original defendant No. 1 in favour of the plaintiff. It, inter alia, stipulates that the power is irrevocable9. Five schemes under Section 21 of the ULC Act were filed before the competent authority for the construction of the dwelling units of accommodation of the weaker sections of the society. The first scheme was filed under the signatures of original defendant No. 1 on 15th March, 1977. It stipulated construction of 64,306 dwelling units at the proposed cost of about. It is not in dispute that even this scheme was evolved by the plaintiff. The plaintiff as power of attorney holder of original defendant No. 1 submitted a second scheme on 5th October, 1977 for construction of 38,375 dwelling units at the estimated cost of about Rs.. On 6th February, 1978 another scheme was submitted by the plaintiff which stipulated construction of 35,660 dwelling units at the proposed cost of Rs.. On 5/8th January, 1979 yet another scheme (4th scheme) for construction of 25,482 dwelling units at the estimated cost of about Rs. 48,35,00,000/was submitted. Finally, a scheme (5th scheme) proposing construction of 4,356 dwelling units at the estimated cost of about Rs. 13,37,000,00/was submitted on 29th January, 1979 by the plaintiff as a power of attorney holder of original defendant No. 112. Under the aforesaid circumstances, a suit was filed by the plaintiff against original defendant No. 1 on 7th April, 1980 seeking declaration that cancellation of the agreement and the power was illegal and also praying for decree of specific performance of the agreement besides seeking injunction and other consequential reliefs. The suit was originally filed against Fatehsinhrao Gaekwad as the only defendant. Later, however, the specified authority, the competent authority and the State of Gujarat were impleaded as defendants to the suit. Original defendant No. 1 died during the pendency of the suit and his legal representatives were brought on recordA decree for specific performance of the agreement was also granted in favour of the plaintiff. The defendants were ordered to specifically perform the agreement and were restrained from committing breach of the agreement, power of attorney and obstructing the plaintiff from acting as constituted attorney of defendant No. 1 and from taking any action regarding the scheme22. The agreement and power contemplate two stages for the parties to take steps required to them. Certain steps are required to be taken by the plaintiff prior to the grant of declaration under Section 21 and before he is put into possession and certain steps after such grant and on being put into possession. The plaintiff is required to prepare a scheme in conformity with Section 21 at this cost and to file on behalf of the owner a declaration in regard to the said property before the competent authority within the prescribed period. The original defendant No. 1 is required to sign relevant papers, applications, plans, drawings etc. as and when required by the plaintiff for the purposes of declaration and inquiries contemplated by Section 21(1) of the ULC Act. On making of declaration, as per clause (4), original defendant No. 1 is required to deliver possession of the land to the plaintiff for execution of the scheme and construction in terms thereof. The plaintiff is authorised to recover the price of the land as may be determined by the competent authority and/or the State Government from their prospective members in the scheme; and is also entitled to receive deposits from the members and obtain loans from banks and other financial institution and/or individuals for financing the scheme. Likewise, in the power of attorney also the plaintiff has been authorised to take certain steps on behalf of the owner before the grant of declaration under Section 21 and being put into possession and certain steps after being put into possession. It is correct, as contended by Mr. Dhanuka, that these documents form part of same transaction. These documents have to be read together with a view to find out the manifest intention of the parties. It may, however, be noticed thatn dated 10th February, 1988 was executed only by original defendant No. 1 for the purpose of filing it before the competent authority and it reiterates the agreement and the power. By execution of this document it was neither intended to confer any additional rights in favour of the plaintiff nor to place any restriction on original defendant No. 1 which was not envisaged by the agreement24. It is common ground that the main purpose for which the agreement was entered into between the parties was the construction of residential houses for the weaker sections of the society in term of Section 21 of the ULC Act. Mr. Nariman contended on behalf of the appellants that under the applicable master plan the suit land is reserved for `open space and residential houses cannot be constructed thereupon and, therefore, the agreement, is incapable of specific performanceOne of the salient features of the said circular was that the scheme shall be in consistence with the Master plan. It was provided that the scheme submitted should adhere to the prevailing municipal Regulations, Town Planning requirements and other statutory requirements. If any development is required as per these regulations, then the scheme should include such development. It also provided that permissible density and other regulations like minimum size, common plot, minimum height, specification and construction of stores etc. will also have to be adhered to. It further provided that the permission to undertake the scheme will be given only in residential zones as indicated in the Development Plan28. The Gujarat Government in supersession of the earlier circular dated 1st April, 1978 issued fresh guidelines on 22nd May, 1979 regarding the implementation of schemes under Section 21 of the ULC Act. These guidelines, inter alia, stipulated that the area of 50% of the total house shall not increase 40 square metres and the plinth area in the remaining building plinth area shall not exceed 80 square meters. The construction work under the scheme should be in consonance with the provisions of the Master Plan and should be over within 5 years from the date of the sanction under Section 21(1) granted by the competent authority. The units constructed under the scheme shall be allotted to the weaker sections of the society by way of sale ore or on hire basis. It also provided that the construction shall be made in accordance with the Town Planning Regulation, Municipal Regulation, Building Regulation etc. The Competent officer shall grant the scheme subject to the building regulation, margin of the municipal corporation, panchayat etc. According to the guidelines, the specified officer and the competent officer are required to ensure that the conditions are complied with. The guidelines stipulated the withdrawal of exemption in case of violation of any of the conditions. It is of significance to note that it was specifically provided that at the time of sanctioning the scheme, the competent authority shall ensure that the land in respect of which the scheme is submitted is not placed in reservation. As already stated, the land in question is shown as open space in the draft development plan of Vadodara30. The facts of Atia Begums case show that it is a case which relates to quantification of vacant land. The present case is not of quantification of vacant land. Atia Begum was not concerned with the question of Town Planning Laws and the schemes under Section 21 of the ULC Act which is one of the principlal question with which we are concerned here. It was not held in Atia Begum that planning and development which is a state subject would stand frozen on 17th February, 1976. The said decision cannot be read as laying down the law that for all and every purpose, the master plan as in existence on 17th February, 1976 will freeze.We leave open the question whether even for the purpose of quantification of vacant land that has become such after 17th February, 1976, would the position in regard to the master plan as existing on 17th February, 1976 remains unaltered or not. In the present case, on this aspect, it is not necessary to examine the correctness of the decision in Atia Begums case31. It deserves to be emphasised that by passing a resolution under clause (1) of Article 253, the State Legislature only surrendered the right to legislate in respect of laws relating to the imposition of a ceiling on the holding of urban immovable property in excess of the ceiling and all matters connected therewith or ancillary and incidental thereto in favour of the Parliament by law. It was only a limited surrender in terms of the said resolution. The aspect of Town Planning and Development by the State has not been surrendered. The imposition of ceiling on urban immovable property is an independent subject. The primary object of the Act, as already noticed, was to prevent the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and to bringing about an equitable distribution of land in urban agglomerations to subserve the common good. Basically, one uniform policy is fully understandable on such a subject and that is why on this aspect there was surrender by most of States in favour of the Parliament. The town planning, however, is altogether an independent and different subject. It is a State subject. It differs from state to State. It cannot be said that by surrendering its right to legislate on the aspect of imposition of ceiling on urban immovable property, the State Legislature also surrendered the right of development and town planning. These are essentially the rights within the purview of the State Government. The object of the ULC Act is not to sanction or permit development in the States contrary to their statutory town planning laws. The development and the town planning is an ongoing process. It goes on changing from time to time depending upon the local needs. The definition of `master plan contemplates the plan prepared under any law `for the time being in force or `in pursuance of an order made by the State Government for the development of such area or part thereof and providing for the stages by which such development shall be carried out. The definition does not contemplate a static master plan. For claiming the benefit of Section 21, the construction of the dwelling units for the accommodation of the weaker sections of the society on the land has to be if permissible as per relevant master plan when the scheme is considered by the authorities for sanction. If the land use requires the land to be used for some other purposes, it cannot be said that to grant benefit under Section 21, the land should be permitted to be used for construction of residential units. It was not intended and could never have been intended that Section 21 will take away the State power of town planning or on coming into force of the ULC Act, the Master Plan would freeze. The rules made under the ULC Act further make the position quite clear. RuleA was introduced and brought into force by amendment of Urban Land (Ceiling and Regulation) Rules on 19th December, 1977. RuleA reads as under :33. In view of above position, the High Court erroneously relying on Atia Begum held that the user as provided in the master plan as in existence on 17th February, 1976 alone is to be seen and the subsequent change in the master plan reserving the land for open space is of no consequence. The view of the competent authority in the order dated 20th June, 1998 that the land would permanently remain in residential zone is also erroneous. Further, the competent authority erroneously assumed, it seems, that the High Court directed it to grant sanction under Section 21 of the ULC Act. The High Court only directed the competent authority to decide the matter according to law. Atia Begums case cannot be held to have laid down a proposition that use as provided in the master plan as in existence on 17th February, 1976 will remain unchanged. The relevant master plan is the one which is prevalent when the scheme under Section 21 is taken up for consideration by the authorities and for this purpose neither the date of filing the scheme nor the date of enforcement of the ULC Act, is relevant. The development will not freeze on the enforcement of the ULC Act or presentation of the scheme34. In the present case, in the draft development plan of 1979 which was finalised during the pendency of the suit, the land in question is reserved for open space etc. It cannot be doubted that the agreement had been entered into between the parties mainly and rather only with the object of construction of residential houses under the scheme under Section 21 of the ULC Act for accommodation of weaker sections of the society. In May, 1979, it became evident that it will not be possible to construct residential houses in view of what was provided in the master plan. There is no substance in the contention that assuming the prescribed land use is `open space, still there will be no impediment in the implementation of scheme inasmuch as there is no absolute bar for construction of residential houses36. A bare reading of the aforesaid provision shows that it is not applicable to Section 21 of the ULC Act. Orders sanctioning schemes under Section 21 have not been saved by Section 3. The contention urged on behalf of the appellants and also the State Government is that the schemes under Section 21 are not saved by Section 3 of the ULC Act. Admittedly, the land has not vested with the Government under Section 10(3). Possession continues to be with the appellants. Mr. Bhatt, learned Counsel for the State Government as well for the authorities has argued that the necessary consequence of the repeal, on the facts of the present case, is that the land would be free from any constraints to which it may have been subjected under the ULC Act. Mr. Dhanuka, however, contended that Section 3 of the repealing Act is not exhaustive. Relying upon Section 6 of the General Clauses Act, learned Counsel submits that the repeal does not affect rights accrued in favour of the plaintiff under the ULC Act. Section 6 of the General Clauses Act, inter alia, provides that where any Central Act repeals any enactment, unless a different intention appears, the repeal shall not affect anything duly done or affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed37. We have no difficulty in accepting the contention that a repealing statute is not exhaustive and does not automatically extinguish the accrued rights unless taken away expressly41. We are unable to agree with the approach of the High Court and find substance in the contention of Mr. Nariman. Clause (17) is in the nature of express stipulation that before delivery of possession, the contract could be unilaterally terminated. When there is no ambiguity in the clause, the question of intendment is immaterial. The fact that the clause is couched in a negative form is of no consequence. The intention is clear from the plain language of clause (17) of the agreement. In the case in hand, Section 202 has no applicability. It is not a case of agency coupled with interest. No interest can be said to have been created on account of plaintiff being permitted to prepare the scheme and take ancillary steps. Plaintiff could not get possession before declaration under Section 21 of the ULC Act. Mr. Dhanuka also contended that the agreement is not determinable is clear from the conduct of original defendant No. 1 and also what he stated in then dated 10th February, 1978 about agreement not being terminable. The contention of learned Counsel is that what original defendant No. 1 has said in the said document is his interpreting statement which is admissible in law and this interpreting statement and also his conduct, clearly shows that agreement was not terminable by original defendant No. 1.In the present case we are concerned with an unambiguous document and, therefore, we have to go by its plain meaning. Further,n only reiterated what was contained in the agreement. It did not enlarge the agreement. It did not substitute any clause in the agreement. It was not a document executed between the parties. It was a document executed by original defendant No. 1 alone for the purposes of filing it before the competent authority. Clause 17 of the agreement does not call for any other interpretation except that the contract could be unilaterally rescinded before delivery of possession44. From the aforesaid, it is clear that this Court did not accept the contention that the clause in the insurance policy which gave absolute right to the Insurance Company was void and had to be ignored. The termination as per the term in the insurance policy was upheld. Under general law of contracts any clause giving absolute power to one party to cancel the contract does not amount to interfering with the integrity of the contract. The acceptance of the argument regarding invalidity of contract on the ground that it gives absolute power to the parties to terminate the agreement would also amount to interfering with the right of the parties to freely enter into the contracts. A contract cannot be held to be void only on this ground. Such a broad proposition of law that a term in a contract giving absolute right to the parties to cancel the contract, is itself enough to void it cannot be accepted45. In view of above discussion, we find force in the contention that the agreement in question was terminable before delivery of possession; it was so determined and to the agreement clause (c) of Section 14(1) of the Specific Relief Act, 1963 applies. Therefore, agreement cannot be specifically be enforced51. The appellant would be bound by the aforesaid undertaking which we accept52. Before parting, we wish to express, to put it mildly, our deep anguish on the manner in which the specified authority, competent authority and the State of Gujarat has been conducting itself before the trial Court, High Court and this Court. Different stands at different points of time have been taken sometimes supporting the plaintiff and sometimes the defendants.