Case: Ganga Retreat &amp; Towers Ltd.  Vs. State Of Rajasthan

1. Aggrieved by the judgment and order of the Division Bench of Rajasthan at Jaipur in setting side the order of the Single Judge, thereby, dismissing the writ petition filed by the appellants, the present appeals have been filed. All the three appeals have been filed by the same set of appellants and against the same judgment. As three separate appeals were filed by the respondents before the Division Bench against the order of the Single Judge the appellants have filed three separate appeals. They are taken up for disposal by a common order.2. The State of Rajasthan (hereinafter referred to as the Respondent No. I") decided to dispose of by public auction two prime properties situated in the heart of Jaipur City. One of the properties was known as Dr. Helligs Bungalow, near Khasa Kothi State Hotel, M.I. Road, Jaipur and the other was a plot of land situated near Khasa Kothi known as the site of Food Craft Institute building on M.I. Road, Jaipur. In the present case we are concerned with the first property only. Respondent No.1 issued advertisement for auction of Dr. Helligs Bungalow, which was scheduled to be held, according to the auction notification on 21.12.1994. In the advertisement the property was described as free hold, ceiling free, vacant, crest jewel property known as Dr. Helligs Bungalow (10,400 sq.yards). The permitted use of the property was shown as hotel/commercial complex/hotel cum-commercial complex. The terms and conditions for the auction were also provided in the advertisement. Condition Nos. 7, 8, 9, 10, 12 and 13 relate to the controversies involved in this litigation and are reproducedLand measuring 1,400 sq. mtr. shall be auctioned with the condition that the successful bidder shall have to surrender a strip of land measuring 6.2 sq.mtr. for the road widening /parking of commercial vehicle free of charges. He will be given the benefit in terms of FAR, which is calculated on the basis of original plot size.8. Other parameters of this plot size have been approved by JDA and are given as under:9. The construction work on the plot should be commenced with in one year from the date of handing over of possession of the land and the building. Building construction should be done within 3 years. If the party wants further extension beyond three years that shall be given against the penalty of Rs. 20,000/- (Rupees twenty thousand) p.m. but in no case the period shall be extended more than 2 years.)10. After the full amount due against the plot as deposited by the purchaser the Patta of the plot will be issued in favour of the purchaser which would enable him to start construction on the plot in accordance to the approved plan and under architectural control as per specifications given by JDA.12. The land shall be used for construction of Hotel/Commercial Complex /Hotel cum commercial complex only. If he uses this property for other than this purpose, he would have to seek prior permission from the Government of Rajasthan against payment of charges as the Government may fix thereof.13. The purchaser shall have to strictly abide by the parameters and set backs as laid down in condition No. 8. Any violation of these terms and conditions shall lead to the forfeiture of his right on this property and hence the property shall stand reverted to the Government without payment of any compensation for the land and the building thereupon.M/s. Ganga Retreat and Towers Ltd., a company registered under the Indian Companies Act, 1956 (formerly known as M/s. Lok Hotels and Resorts Limited), the appellants herein were declared as the successful bidder in the auction held. The appellants bid of Rs. 19,56,76,000/- being the highest was accepted and the property was knocked down in their favour. The successful bidder, as per term No.5, was required to pay the sale consideration, as per the following10% of the final bid on the spot in cash or through Demand Draft in favour of Director of Estate, Rajasthan, Jaipur (the amount of Rs. 20.00 lacs deposited as earnest money shall be allowed to be adjusted against this deposit of 10%).ii) 15% amount of the final bid will have to be deposited within 15 days from the date of acceptance, letter sent to the successful bidder by the Government of Rajasthan.iii) 75% amount of the final bid will have to be deposited by successful bidder within 60 days of the notice for deposition of the full and final amount of the bid amount which the party shall be informed by the Government of Rajasthan.Failure to deposit it the aforesaid amount at any state, i.e. (I), (ii) and (iii) above will result in forfeiture of the amount already deposited by the successful bidder and hence cancellation of the bid.The payment was not made as per schedule given above. The entire sale consideration amounting to Rs. 19,56,76,000/- was paid on 16.5.1995. As there was a delay in making the payment as per schedule the appellants accepted their liability to pay interest for the delayed payment. A sum of Rs. 30,01,273/- towards interest for delayed payment was made. Last installment of Rs. 83,562.72 P. towards the amount of interest was paid by demand draft dated 21.8.1995. Total amount paid was Rs. 19,86,77,273/-. The cost and expenses for registration of patta, stamp duty and all other incidental expenses were also to be borne by the purchaser. Sale deed could not be executed in favour of the appellants as the appellants did not furnish the stamp papers. After repeated letters including the letter dated 21.5.1996 the appellants submitted the requisite stamp duty and registration charges amounting to Rs. 1,19,25,720/- for execution of the sale deed on 18.12.1996. Thereafter, the sale deed was executed and registered on 7.1.1997 and immediately thereafter possession was delivered to the appellants. Term of the auction notice that Floor Area Ratio (for short FAR) would be 2.00 was also repeated in the sale deed.5. The appellants thereafter applied for sanction of plans for putting up construction on the property and the Planning Cell of the Jaipur Municipal Corporation (for short the JMC) demanded a deposit of Rs. 1,48,79,887/- towards map approval charges. These charges were deposited under protest by the appellants. According to the appellants the JMC had not framed any Rules in this regard and that the charges were exorbitant and without authority of law. The appellants also handed over 6.2 meters width of strip land to the JMC of old Dr. Helligs bungalow as per their letter dated 2.5.1997 (Annexure IV).6. On 11.4.1997, the Additional Director and Competent authority under the Urban Land Ceiling and Regulation Act, 1976 (for short "the Ceiling Act") issued a notice to the appellants under Section 38 of the Ceiling Act, alleging that the appellants were holding land in excess of ceiling limits and had not filed the return as required under Section 6(1) read with Section 15 of the Act. The appellants replied to the aforesaid notice on 17.4.1997 pointing out that the Respondent No,1 had sold the property as free from ceiling limit and therefore, three was no need to file a return. As the explanation was not accepted by the competent authority, the appellants applied for exemption under Section 20 of the Act. The appellants also submitted the return in the prescribed from with a covering letter dated 19.4.1997. On 3.5.1997 the Competent Authority issued a notice under Section 8(3) of the Ceiling Act enclosing a draft statement as to vacant land. Simultaneously, application filed under Section 20 of the Act for exemption was processed. On 11.8.1997, the competent authority granted exemption to the appellants on certain conditions. It was stipulated that the exemption was being granted subject to the terms and conditions stated in the conveyance deed dated 7.1.1997 and that it could be used only for the purposes set out in the conveyance deed. It was also stipulated that for any construction on the land, plans will have to be submitted for sanction to the JMC and all the standards regarding construction shall be applicable as per the norms of the JMC. Another condition put was that the land would not be transferred or conveyed in any manner to any one without prior permission of the State Government except offering it as security to the financial institutions for raising loan. As this clause has given rise to the controversy on which lengthy arguments have been addressed, the same is reproduced below forThat the sale, gift or any transfer of the plot will not be closed without prior approval of the State Government. But mortgaging the property to financial institution for taking loan without parting with the possession the State Government will have objection.On 24.6.1996 the Jaipur Development Authority (for short the JDA) revised its bye-laws. The revised building Bye-laws came into force w.e.f. 24.6.1996 in which parameters in respect of commercial hotels and commercial plots were amended. Vide Regulation No. 9.3.3 of the 1996 Regulations the FAR was reduced to 1.75 instead of 2.00 as provided by the Bye-laws of 1989.8. Appellants submitted their building plans as per FAR 2.00. JMC on 22.2.1997 approved the building plans subject to FAR 1.75 only as per 1996 Bye-laws as against FAR 2.0 permitted by the auction notice and the conveyance deed. On 10.10.97, after getting the land exempted from ceiling, the Company wrote to the JMC to re-examine the case and allow FAR 2.0 on the appellants re-submitting the plans for approval or in the alternative to advise the General Administration Department to refund the proportionate amount consequent upon the reduction in the FAR.9. On 28.10.1997, the appellants wrote a letter to the Minister for Urban Development, Government of Rajasthan, for intervening in the appellants favour in their dispute with the JMC which was not allowing FAR 2.0 as promised in the terms of auction and the sale deed. Appellants also wrote a letter to the Chief Minister on 17.11.1997 for intervention in the matter and for ordering the Secretary, Urban Development and Housing to clear that plans with FAR 2.0 as a special case urgently. On 18.12.1997 again, a communication was addressed by the appellants to the Chief Secretary giving the following threeto instruct Jaipur Nagar Nigam to allow F.A.R. 2 as per Auction conditions. As F.A.R. 2 existed before the new Byelaws came into force in September, 1996. Plus to pay interest at 18% p.a. for delayed period to clear our plans as compensation. The delayed period may be calculated from the day we deposited our plans for approval to the day the plans are approved. We have paid interest on account of delay from our side.(B) To refund the whole amount with interest, the registration cost, the maps approval charges, the L.B.T. chargesTo refund proportionate charges on all above for the reduced F.A.R. from 2 to 1.75 i.e. 12.5% all above charges.It was also stated in this letter that if no response was received to the proposals in writing within fifteen days, the appellants shall go to the court of law for redressal of their grievances. On 22.10.1997 the Chief Secretary wrote to the Urban Development and Housing Department recommending the case of the appellant for grant of FAR 2.0 instead of FAR 1.75 in compliance with the conditions of the auction. As no decision was taken, the appellants filed S.B. Civil Writ Petition No. 195/98 against the State of Rajasthan, Jaipur Development Authority, Jaipur Municipal Corporation amongst others, who were officers of the State Government, claiming the followingthe premises aforesaid the writ petition of the petitioner may kindly be allowed with costs and by an appropriate writ, order or direction, the Honble Court may be pleased to;(a) declare that on account of the reasons set out herein and the other dated 9th September, 1997 passed by the Municipal Corporation, referring to approve maps upto 2.0 FAR the contract of sale of the property described in this petition vide sale deed dated 7th Jan., 1997 stands frustrated or has become impossible of performance or invalid rendering the sale deed dated 7th Jan. 1997 void.(b) declare that the Regulations of 1996 were not applicable to the petitioner and the same cannot be enforced against the petitioner by the Municipal Corporation, Jaipur or JDA in view of the sale deed dated 7th Jan., 1997.(c) declare that the sale deed being a government grant was not required to be registered and no stamp duty was required to be paid and consequently the petitioner is entitled to the refund of the stamp duty and the registration charges.(d) direct the respondents jointly and severally to pay to the petitioner a sum of Rs. 5102.94 lakhs alongwith future interest @ 18.5 per annum.Any other appropriate writ order or direction which may be considered just and proper in the facts and circumstances of the case may kindly also be issued in favour of the Petitioners.On issuance of notice the respondents put in appearance and filed their replies. Apart from contesting on merits, preliminary objections were raised regarding maintainability of the petition on the ground that declaratory relief claimed could not be granted in the writ jurisdiction. It was also contended that the reliefs claimed pertained to the concluded contract with regard to the sale of property culminated by execution of the sale deed. That the relief being claimed was based on breach of contract and the writ petition was not the appropriate remedy for redressal of such grievances. No petition could be entertained for either specifically enforcing the contract or/ and for compensation for breach of contract. That the highly disputed questions of fact were involved which could not be adjudicated without adducing evidence. Such disputed questions of fact could not be adjudicated by the High Court in exercise of its extra-ordinary jurisdiction under Article 226 of the Constitution of India.12. Learned Single Judge rejected the preliminary objections regarding the maintainability of the petition and declared that the sale deed was statutory in nature. It was a grant as well. The right and the obligations as incorporated in the sale deed were statutory in character as regards the rights and obligation of the parties. No change could be effected thereafter on any pretext whatsoever in regard to the reducing the FAR from 2.0 to 1.75. In the auction notice property was described as free hold and ceiling free. The action of the State in not acting upon the assurance given amounted to a fraud, which invalidated the sale. Consequently, the learned Single Judge declared that the auction sale deed on 21.12.1994 and the consequent sale deed dated 7.1.1997 were null and void having no legal sanctity. The contract was frustrated. All consequent actions taken by either of the parties pursuant to the action and the sale deed were invalidated and the appellants were declared entitled to be restituted to the original position as it existed prior to the date of the auction and execution of the sale deed. Consequently, the respondents were directed to refund to the appellants, the payments received by the respective respondents, pursuant to any term of the auction dated 21.12.1994 which included the entire sale considerations as mentioned in the sale deed dated 7.1.1997 along with all other payments made to the respondents by the appellants by the appellants towards stamp duty, registration charges, land and building taxes etc. with interest @ 18% per annum calculated from the date of receipt of such amount by the respective respondents till the date of actual refund to the appellants. It was also directed that the JMC shall refund all payments made by the appellants towards building map approval charges, additional constructed area charges, licence fee, inspection charges, etc. along with interest @ 18% per annum from the date of receipt of said payments by the appellants till the date of actual refund to the appellants. As regards the damages claimed by the appellants for the incomplete construction which by that time had been raised upto 9 stories (which was held to be under compulsion), it was directed that it would be advisable that the State of Rajasthan constitutes an expert Committee consisting of the Chief Engineer PWD and Director, Town Planning Department or any other officer having expertise to assess the value at the PWD rates and value the construction on the site and after such valuation made by the Committee, the amount assessed be refunded to the appellants within forty five days of the assessment.13. As directed by the learned Single Judge, a Valuation Committee was constituted by the State Government and the value of the construction as per PWD rates was assessed at Rs. 9,97,51,003/-. From this amount, 10% was deducted by the Committee as contractors profit, which was included in the analysis of BSR rates. After deducting 10% amount, i.e. Rs. 99,75,100/- amount payable to the appellants representing the construction on the land was worked out by the Committee at 8,97,75,903/-.14. Aggrieved by the aforesaid order of the learned Single Judge, appeals were preferred before the Division Bench which were accepted. It was held that the sale of the land by way of auction was neither statutory nor by way of grant. Consequently, it was held that the rights and obligations incorporated in the sale deed were not statutory in character. That it was a completed contracted in which highly disputed questions of fact were involved which could not be adjudicated upon by the High Court in exercise of its writ jurisdiction. It was left upon to the appellants to seek their remedy in the Civil Court, if so advised.

Reasoning:
Statement about the existing state of the law innocently made cannot constitute misrepresentation if it is later found that the statement was erroneous. This would be particularly so where the other party to whom the statement is made is aware of or has the ability to conveniently apprise itself of the correct state of the facts and the law applicable. Assuming (but without holding) that there was some misrepresentation the appellants had a couple of remedies, i.e., to either rescind the contract or seek restitution or to affirm the contract without prejudice to their right to seek damages by way of restitution for the loss caused by the misrepresentation. It is apparent that the appellants did not rescind the contract or seek restitution by way of damages. Instead they affirmed the contract which is clear from the fact that they immediately commenced construction on the land even though the building plans were on FAR 1.75. Affirmation of the contract and proceeding with the constitution clearly indicates that the appellants did not rescind the contract nor reserved their right to seek restitution by award of damages; or seek restitution rather they affirmed the contract and went ahead withthe time of initiating the legal proceedings in the Court, it was open to the appellants to either affirm the contract without prejudice to their right seeking damages by way of restitution for loss caused by alleged misrepresentation or to rescind the contract by getting the declaration that the contract was not binding on the appellants. The appellants elected the first option. Had the appellants rescinded the contract and prayed for declaration that the contract was not binding on them, then, on its being so declared, terms 9 and 13 of the auction notice would not have bound the appellants in any way. The court while granting the relief could have moulded the relief according to facts and situation prevalent. It would not have in any way of affected the appellants. The appellants cannot be permitted to sit on the fence in indecision and take a chance. By putting up the construction of basement and the other floors above the appellants have encumbered the property. The respondent cannot be fastened with the liability to pay for the construction put up by the appellants with full knowledge of true facts.In our view, this decision has no application to the facts of the present case. In the said case the appellants therein was appointed as organising agent for lotteries of the Respondent State. Subsequently, disputes arose which led to termination of the agency by the State. Appellants therein got an arbitrator appointed under Section 8 of the Arbitration Act, 1940. Claims and counter-claims were filed and evidence adduced by the parties before the Arbitrator. Addition made its award determining the amount payable by the State to the appellants at Rs. 37,75,00,000/- and the amount payable by the appellants to the State by way of counter-claim at Rs. 4,61,35,242/-. District Judge made the award the rule of the court. This was in challenge in the High Court of Sikkim where there were only two Judges. Chief Justice set aside the award while the other Judge held that the matter required to be remitted to the arbitrator for re-determining the quantum of damages. The court thereafter by its order dated 29th September, 1995 directed the matter to be placed before the incoming Chief Justice/Judge. Subsequently both the Chief Justice and the other Judge were, in due course, succeeded by new incumbents to those offices. The new Judge fixed the date of hearing and before him the appellants filed an application opposing the hearing of the appeal in view of section 98(2) CPC. This application was dismissed by the Division Bench as not maintainable in view of the reference made by the Division Bench. This was challenge in this Court. After resolving the controversy on the aforesaid point, the Court proceeded to examine the award made by the arbitrator. It was held that the award under challenge stood vitiated on account of several errors of law, apparent on the face of it and such infirmities go to substantiate the claim of the State that the arbitrator not only acted arbitrarily and irrationally on a perverse understanding or misreading of the materials but was also found to have misdirected himself on the vital issues rendering the award to be bad in law. The arbitrator and the District Judge had recorded a finding that the State in spite of warnings and threats did not actually stop draws or to other subsequent draws by the appellants and allowed the lotteries to go on without any break. That the State government had condoned or waived the lapses and defaults. In this context, the observations quoted above were made by this court. It would be seen that this contract was an executory contract and not completed contract of sale of property. It was observed that a waiver involves a conscious, voluntary and intentional relinquishment or abandonment in known existing legal right. There were persistent and continuous defaults. Even if the past lapses were taken to have been waived by the State, it was observed by the Court that the State could not be compelled to condone the continues wrong and defaults of the appellants to their disadvantage and detriment. Observations quoted above are of no avail to the appellants as in that case the court found that the appellants were continuing with the defaults in an executory contract. The principle laid down in the said case would not be applicable to the facts of the present case.In either case, we find that the appellants are not entitled to any relief in the realm of the law of contracts. In spite of having acquired knowledge of the true facts assuming that there was any mistake or misrepresentation to begin with and having learnt that the title which was sought to be conferred on them by the respondents was not such full title as they had contemplated it to be, they proceeded to have the sale deed executed and registered in their favour, seeking extensions of time and paying interest for the period of delay in payment. The contract stood accomplished into a demise and the transaction ended. It is writ large that the appellants had elected to stand by the contract by digging the land, sinking the basement and raising about 9 floors above, investing crores of rupees. They have by their own conduct rendered the position irreversible and restitution impractical. We have not been shown any law or authority based whereon the appellants may annual and avoid a concluded contract and fix liability on respondents for the cost of their construction which they have voluntarily chosen to raise in spite of being aware of all the relevant facts and298 provides that the State Government has the power to cancel or modify bye-laws or rules framed by the board. Again this is of no avail to the appellants. Power under Section 298 is in the nature of power of superintendence. It is a general power given to the Government that in case the Government feels that the bye-laws framed or the orders issued are not reasonable or are detrimental to the public interest or there is any other good ground available, then, it can repeal the bye-laws wholly or in part or modify any rule or bye-law made by the Board after inviting objections. The power could not have been exercised to suit the needs of an individual case as has been contended by the learned senior counsel for theneed not go into this disputed question as it is of no consequence to the points already decided.