DELHI DEVELOPMENT AUTHORITY versus KENNETH BUILDERS & DEVELOPERS LTD. & ORS.
[2016] 3 S.C.R. 1126, Supreme Court of India, 2016
Outcome: Dismissed (Dismissed)
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[2016] 3 S.C.R. 1126 
DELHI DEVELOPMENT AUTHORITY 
v. 
KENNETH BUILDERS & DEVELOPERS LTD. & ORS. 
(Civil Appeal No .. 53 70of2016) 
JUNE 29, 2016 
( MADAN B. LOKUR AND N.V. RAMANA, JJ. ) 
Contract Act, 1872 - s. 56 - Contract impossible of 
performance ~Auction of 'residential' land by DDA on 'as is where 
is' basis - For construction of houses - Bid of the respondent-builder 
accepted - Project land allotted and possession thereofgiven to 
builder - Development agreement between DDA and the builder -
As per agreement various approvals and clearances from the 
appropriate authorities including environmental age11cies was o 
responsibility of the builder - The development work on project 
land objected to by Department of Forests of Government of National 
Capital Territory (GNCTD) on the ground that the land fell in the 
Ridge and hence construction without consent of Ridge Management 
Board and permission of the Supreme Court not allowed - Ministry 
of Environment and Forest, Government of India gave environment 
clearance subject to condition that Delhi Pollution Control 
Committee (DPCC) gave "consent to establish" - However, DPCC 
refused to give "consent to establish" in absence of "ridge 
demarcation report" - Builder also could not obtain "ridge 
demarcation report" - Builders writ petition under Art. 226 of 
Constitution for setting aside of auction, for declaration that project 
was incapable of performance and sought refund of the amount
paid to DDA - High Court held that if DPCC did not permit 
construction activity, the builder was entitled to refund of the entire 
amount deposited witli'DDA - Even after the judgment of High 
Court, DPCC refused to grant "consent to establish" - Appeal by 
DDA and also by GNCTD and DPCC - Held: Despite the fact that 
builder took all the necessary steps to commence the construction 
activity, it co_uld not proceed the development activity due to the 
impasse created_ by the Government agencies - Thus the development 
agreement between DDA and the builder was frustraied having 
become impossible of performance within meani111g of s.56, due to 
1126
DELHI DEVELOPMENT AUTHORITY v. KENNETH 
BUILDERS & DEVELOPERS LTD. & ORS. 
the intervening circumstances not contemplated by either party -
DDA directed to refimd the deposit made by the builder with interest 
@6%. 
Dismissing the appeal filed by DDA, the Court 
HELD: 1. The objection to the maintainability of the writ 
petition, having not been raised by the DDA before the High 
Court or even in the petition filed in this Court, cannot be 
entertained. The submission has been advanced by the DDA for 
the first_ time during the final hearing of these appeals. It is too 
late in the day to raise such an objection. [Para 27) [1146-D] 
2.1 The respondent-builder did take all necessary steps to 
commence the construction activity on the project land but due 
to the impasse created by the governmental agencies, it could 
not proceed in the development activity. Under these 
circumstances, the provisions of Section 56 of the Contract Act, 
1872 would be attracted to the facts of the case. [Para 32) [1147-
F-G) 
2.2 The word "impossible" used in Section 56 of the 
Contract Act has not been used in the sense of physical or literal 
impossibility. It ought to be interpreted as impracticable and 
useless from the poiµt of view of the object and purpose that the 
parties had in view when they entered -into the contract. This 
impracticability or uselessness could arise due to some 
intervening or supervening circumstance which the parties had 
not contemplated. However, if the
intervening circumstance was 
contemplated by the parties, then the contract would stand despite 
the occurrence of such circumstance. In the present case, the 
DDA certainly did not contemplate a prohibition on construction 
activity on the project land which would fall within the Ridge or 
had morphological similarity to the Ridge. It is this circumstance 
that frustrated the performance of the contract in the. sense of 
making it impracticable of performance. [Paras 33 and 34) [1148= 
D-E; 1150-A-B) 
Satyabrata Ghose v. Mugneeram Bangur & Co. (1954) 
SCR 310 - relied on. 
2.3 It is true that the Government of India had notified the 
project land as "Residential" and that the project land was shown 
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as "Residential" in the MPD-2001 and MPD-2021. But that fact 
alone would not change the position at law. The exact boundaries 
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SUPREME COURT REPORTS 
[2016] 3 S.C.R. 
of the Ridge do not appear to have been demarcated and in the 
absence of demarcation, it could not be said with any degree of 
certainty by the DDA that merely because of the two notifications 
issued by the Ministry of Urban Development the project land 
could be used for residential purposes even if it fell within the 
Ridge. This would be ignoring the position at law and would be 
stretching the argument a little too far. The DDA was unaware 
that even if the project land did not fall within the Ridge yet any 
development activity thereon would require permission from the 
Ridge Management Board as well as from this Court since there 
was morphological similarity between the Ridge and the project 
land. It is this intervening circumstance which eventually 
frustrated the implementation of the contract. [Para 35] [1150-B-
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2.4 When the DDA informed the builder that the project 
land was available on an "as is where is basis" and that it was the 
responsibility of the developer to obtain all clearances, the 
conditions related only to physical issues pertaining to the project 
land and ancillary or peripheral legal issues pertaining to the actual 
construction activity, such as compliance with the building bye-
laws, environmental clearances etc. The terms and conditions of 
"as is where is" or environmental clearances certainly did not 
extend to commencement of construction activity prohibited by
law except after obtaining permission of the Ridge Management 
Board and this Court. On the contrary, it was the obligation of 
the DDA to ensure that the initial path for commencement of 
construction was clear, the rest being the responsibility of the 
developer. The failure of the DDA to provide a clear passage due 
to an intervening circumstance beyond its contemplation went to 
the foundation of implementation of the contract with the builder 
and that is what frustrated its implementation. [Para 37] (1150-
G-H; 1151-A-B] 
Punjab Urban Planning & Development Authority v. 
Raghu Nath Gupta 2012 (8) SCR 118 : 2012 (8 ) SCC 
197 -relied on. 
2.5 The certain circumstances had intervened, making it 
impracticable for the builders to commence the construction 
activity on the project land and thus, the contract between the 
DDA and the builder was impossible of performance within the
DELHI DEVELOPMENT AUTHORITY v. KENNETH 
BUILDERS & DEVELOPERS LTD. & ORS. 
meaning of that word in Section 56 of the Contract Act. Therefore, 
it cannot be said that the contract between the DDA and the 
respondent-builders was not frustrated. [Para 39) (1151-G-H; 
1152-A-B] 
3. DDA is directed to refund the deposit made by the 
respondent-builder with interest at 6% per annum calculated from 
11th September, 2006 (the date on which entire amount was 
deposited by the builder with DDA) till realization. (Para 40) 
(1152-C) 
4. The question raised by Government of National Capital 
Territory and Delhi Pollution Control Committee, as to whether 
DDA was the final authority in the matter of determining the land 
use particularly when it related to the Ridge . is left open for 
consideration in an appropriate case. (Paras 41, 42) (1152-D, FJ 
Kenneth Builders and Developers Ltd. v. Union of India 
and others, MANU/DE/1815/2010 ; IN. Godavarman 
v. Union of India (2013) 8 SCC 198 - referred to. 
Case Law Reference 
MANU/DE/1815/2010 
(2013) 8 sec 198 
(1954) SCR 310 
referred to 
referred to 
relied on· 
para 2 
para 25 
·para 33 
2012 (8) SCR 118 
relied on 
· para 38 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5370 
of2016. 
From the Judgment and Order dated 30.07.2010 of the High Court 
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of Delhi at New Delhi in Writ Petition (Civil) No. I 0.647 of2009 
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WITH 
C. A. No. 5371 of2016. 
A. Sharan, Parag Tripathi, Sr. Advs., Vishnu B. Saharya, Viresh 
B.
Saharya, Shrehan Siddhartha, M/s. Saharya & Co., Sum it Pushkarma, 
Alok Gupta, Advs. for the Appellant. 
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Kapil Siba1, Sanjiv Sen, Ashok Panda, Sr. Advs., Mahesh Agarwal, Ankur 
Saigal, Rishabh Parikh, Raghav Dwivedi, E. C. Agrawala, D. N. 
Goburdhan, Ms. Pallavi Chopra, Lal Ramtiamma, Mohan Prasad Gupta, 
Shadman Ali, Gaurav Sharma, D.S. Mahra, Ms. s'ushma Suri, Advs. for 
the Respondents. 
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[2016] 3 S.C.R . 
. The Judgment of the Court was delivered by 
MADAN B. LOKUR, J. I. Delay condoned. Leave granted 
in both petitions. 
2. The appellant (Delhi Development Authority or the DDA) in 
the first appeal is aggrieved by the judgment and order dated 30th July, 
20 l 0 passed by a Division Bench of the High Court of Delhi in W.P.(C) 
No. 10647 of2009.' The grievance of the DDA is that even though the 
Hig11 Court held that the project land that we arc concerned with was 
'"Residential" as contended by the DDA, yet the High Court held that in 
. the event construction activity thereon is not permitted by the Delhi 
Pollution Control Committee (or the DPCC) the developer (Kenneth 
Builders) would be entitled to a refund of the entire amount deposited 
with the DOA pursuant to the acceptance of the developer's bid in an 
auction, along with interest thereon. 
· 
3. Jn the connected appeal. the appellants (Government of the 
National Capital Territory of Delhi or the GNCTD and its Department 
of Forests) are aggrieved by the same judgment and order to the extent 
that it has been held that the ODA is the final authority to determine land 
use, even though its determination pertains to the Ridge in the National 
Capital Territory ofDdhi. 
4. Before referring to the facts of the case, which we have taken 
frcim the appeal filed and argued by the ODA, we \VOLiid like to mention 
that there has been protracted correspondence
between the ODA. 
Kenneth Buildt:rs and the Secretary (Environment) cum Chairman of 
the Delhi Pollution Control Committee of the GNCTD. However, we 
are of opinion that it is not necessary to detail the contents of every 
letter between them and we propose not to burden this judgment with 
F · avoidable details, as long as the narrative does not suffer. 
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5. The principal question that arises for our decision is whether 
the development agreement between the DDA and the developer 
Kenneth Builders was frustrated within the meaning of Section 56 of 
the Indian Contract Act. 1872 due to some intervening circumstances 
not contemplated by either party. Our answer to the question is in the 
affimiative. 
The facts of the case 
6. The DDA proposed a public-private partnership project for the 
development of an area of 14.3 hectares of prime land at Tehkhand in 
1 K1:11i1e1h fluildcr' a11,J Developers Ltd. v. Union of India and others. MANU/Ofj 
1315/2010
DELHf DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & 
DEVELOPERS LTD. &ORS. [MADAN 8. LOKUR,J.] 
South Delhi for the construction of750 premium residential flats in a self 
contained community to be sold by private real estate development on 
free sale basis. Jn addition to the premium residential flats, the developer 
wou Id have to construct 3 500 resettlement houses for the economically 
weaker sections of society with each house having a super area of 26 
sq. metres. These resettlement houses and the developed common 
facilities relating thereto would be handed over to the DDA for allotment. 
7. According to the DDA (and there is no dispute about this) the 
project land was notified on I st August, 1990 for "Recreation" (District 
Park) in the Master Plan for Delhi - 200 l (MPD-200 I). According to 
the DOA (and again there is no dispute in this regard) two notifications 
were issued by the Ministry of Urban Developmeut of the Government 
of India on 8th January, 2002 and 23rd February, 2006 converting the 
project land from "Recreation" (District Park) to "Residential". 
8. On 20th March, 2006 the DDA issued an advertisement for 
involving the private sector in Delhi's development and for the development 
of the project land for the construction of750 residential flats and 3500 
resettlement houses. Pursuant to the advertisement, an auction was 
held by the DDA in terms of the Delhi Development Authority (Disposal 
of Developed Nazul Land) Rules, 1981 on an ·'as is where
is basis" and 
as per the terms and conditions prescribed for the auction. 
9. The terms and conditions for the auction specifically mentioned 
that the bid would be for the amount of premium offered for the project 
land to execute the project and that the project was being offered on an 
"as is where is basis''. It was stated that the presumption is that the 
intending purchaser has inspected the site and has familiarized himself 
with the prevalent conditions in all respects including status of 
infrastructure facilities available etc. before giving its bid. It was stated 
that on acceptance of the bid, the highest bidder would be required to 
deposit 25% of the bid amount as earnest money and the balance 75% 
of the bid amount was required to be deposited with 90 days of the 
issuance of the allotment-cum-demand letter. It was also stated that 
possession of the project land would be handed over on payment of the 
entire bid amount and on execution of the development agreement, except 
an area of approximately 4 hectares on which there is a JJ cluster. The 
terms and conditions also required the developer to comply with all the 
statutory requirements and rules and regulations of all public bodies 
including payment of fees and taxes etc. 
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I 0. Kenneth Builders was the highest bidder in the auction held 
on 26th April, 2006 and its bid was accepted. On 15th June, 2006 a 
demand-cum-allotment letter was issued to it requiring payment of 
balance 75% of the bid amount. It is not in dispute that Kenneth Builders 
deposited the entire bid amount-0fRs. 450.01 crores with the ODA on 
11th September, 2006. 
11. Pursuant to the deposit.of the entire bid amount by Kenneth 
Builders, a ho objection certificate' was issued by the DOA on 6th 
November, 2006 for submission of building plans for the project to the 
Planning Department of the DOA. )hereafter, on 4th December, 2006 
possession of I I .70 hectares of the project land was handed over to 
Kenneth Builders but an area of approximately 2.60 hectares covered 
by the JJ cluster was left out and possession thereof was not given. 
12. On 5th September, 2007 a Developmen.t Agreement was 
signed between the DOA and Kenneth Builders whereby it was agreed, 
inter alia, that Kenneth Builders would construct 3500 houses for the 
resettlement of slum dwellers and 750 free sale flats which Kenneth 
Builders would be entitled to dispose of. Kenneth Builders would also 
develop roads and peripheral services for the entire project. 
13. In terms of the development agreement it was the responsibility 
of Kenneth Builders to obtain various approvals and clearances from 
the appropriate authorities including
environmental agencies of the State 
and the Central Government. Clause 6 of the Development Agreement 
is important in this regard and this reads as follows: 
"6. Responsibility of Developer to get various approvals and 
clearances 
6.1 The Developer shall be responsible for approval of drawings 
and for obtaining other "No Objection Certificate; from the 
appropriate authorities and Deptts not limited to MCD, Delhi Jal 
Board, Electric supplying agency concerned, Delhi Fire Services, 
DUAC, the environmental agencies of the State and Central 
Government. Authority or its authorized officers who are duly 
authorized to give approval 011 behalf of the Authority. (sic) 
6.2 The delay in submission ofapplications, drawings, construction 
plans and compliance of the observation: shall be the responsibility 
of the Developer, and any delay in grant of approvals by the 
aforesaid Government bodies shall not relieve the Developer of 
any ofits responsibilities under the Contract."
DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & 
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.] 
14. Kenneth Builders was also deemed to have inspected the site 
and its surroundings and checked the info1111ation available in connection 
therewith including the sub-surface conditions, the hydrological and 
climatic conditions etc. It was also deemed to have satisfied itself of the 
correctness and sufficiency ofall the material and all its obligations under 
the contract, including dealing with concerned authorities such as 
environmental agencies of the State and Central Government. Clause 
I 1.1 of the Development Agreement in this regard is important and this 
reads as follows: 
"11.1 Sufficiency oflnformation 
The Developer shall be deemed to have satisfied itself of the 
correctness and sufficiency of all the material and all its obligations 
under the Contract, including dealing with the concerned authorities 
not limited to MCD, Delhi Jal Board, Electric supplying agency 
concerned, Delhi Fire Services, DUAC, the environmental 
agencies of the State and Central Government, Authority or its 
authorized officers who are duly authorized to give approval on 
behalf of the Authority at its own cost and expense, as well as all 
the contingencies and all matters and things necessary for the 
proper execution and completion of the project and the remedying 
of any defects therein, before submitting the tender. The Developer 
has agreed and understood that no request for
change in the terms 
and conditions of the Contract shall be entertained at any stage 
on any ground whatsoever." 
15, The problems for Keirneth Builders began when, pursuant to 
the Development Agreement, it attempted to establish infrastructure 
facilities on the project land such as its site office, DOA office, sample 
flat for the economically weaker sections etc. sometime in February/ 
March 2008. It was then that the Department of Forests of the GNCTD 
-raised objections to carrying out such activities on the ground that the 
project land falls in the Ridge and hence all activities were required to be 
suspended. 
16. The objection of the DepartmentofForests compelled Kenneth 
Builders to ~op all building activity on the project land and that resulted 
in an exchange of letters for the next several months between the ODA, 
the GNCTD and Kenneth Builders. To cut a long story short, the DOA 
insisted that the project land was "Residential" and that the project could 
be undertaken thereon. The GNCTD was equally clear that the project 
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land falls within the Ridge and no construction activity could be carried 
out without the consent of the Ridge Management Board and the 
permission of this Court. On its part, the Ministry of Environment and 
Forest, Government of India (or the MoEF) kept aloof from the 
controversy and gave environmental clearance for the project on 15th 
July, 2008 subject to the condition that a "consent to establish" shall be 
obtained by Kenneth Builders from the DPCC under the Water 
(Prevention and Control of Pollution) Act, 1974 (for short the Water 
Act) and the Air (Prevention and Control of Pollution) Act, 1981 (for 
short the Air Act) and a copy submitted to the said Ministry before the 
start of any construction work at the site. The relevant extract of the 
environmental clearance given by the MoEF reads as follows: 
"Subject: Construction of residential housing project atTehkhand 
New Delhi by Mis Kenneth Builders & Developers Pvt. Ltd. 
Environmental Clearance - Reg. 
Dear Sirs, 
This has reference to your application No. nil, dated 15.01.2008 
and subsequent letters dated 23.04.2008 and 23.05.2008 seeking 
prior Environmental Clearance for the above project under the 
EIA Notification, 2006. The proposal has been appraised as per 
prescribed procedure in the light of provisions under the EIA 
Notification, 2006 on the basis of the mandatory documents 
enclosed with the application viz., the Questionnaire, EIA.
EMP 
and the additional clarifications furnished in r$!sponse to the 
observations of the Expert Appraisal Committee constituted by 
the competent authority in its meetings held on 13th 14th March 
2008, I st & 3rd May 2008 and 26th May, 2008 and awarded 
"Silver" grading to the project. 
2. xxx xxx xxx 
3. The Expe1i Committee after due considerations of the relevant 
documents submitted by the project proponent and additional 
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clarifications furnished in response to its observation have accorded 
environmental clearance as per the provisions of Environmental 
Jmpact Assessment Notification - 2006 an·d its subsequent 
amendments, subject to strict compliance of the terms and 
conditions as follows: 
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DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 
1135 
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.] 
PART A - SPECIFIC CONDITIONS 
A 
I. Construction Phase. 
(i) "Consent for Establishment" shall be obtained from Delhi 
Pollution Control Committee under Air and Water Act and a copy 
shall be submitted to the Ministry before start of any construction 
work at the site. 
(ii) to (xxvi) 
xxxxxxxxx 
II. Operation Phase 
xxxxxxxxx 
PART B - GENERAL CONDITIONS: 
xxxxxxxxx 
4. and 5. xxx xxx xxx 
6. The Ministry reserves the right to add additional safeguard 
measures subsequently, if found necessary and to take action 
included revoking of the environment clearance under the 
provisions of the Environmental (Protection) Act, 1986, to ensure 
effective implementation of the suggested safeguard measures in 
a time bound and satisfactory manner. 
7. All other statutory clearances such as the approvals for Storage 
of diesel from Chief Controller of Explosives, Fire Department, 
Civil Aviation Department. Forest Conservation Act 1980 and 
Wildlife (Protection) Act, 1972 etc. shall be obtained, as applicable 
by project proponents from the respective competent authorities. 
8. These stipulations would be enforced among others under the 
provisions of Water (Prevention and Control of Pollution) Act, 
1974, the Air (Prevention and control of Pollution) Act 1981, the 
Environment (Protection) Act, 1986 the Public Liability (Insurance) 
Act, 1991 and EIA Notification, 2006. 
9.
Environmental clearance is subject to final order of the Hon 'ble 
Supreme Court oflndia in the matterofGoa Foundation v. Union 
oflndia in Writ Petition (Civil) No.460 of2004 as may be applicable 
to this project. 
I 0. xxx xxx" 
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17. In view of the above, Kenneth Builders applied to the DPCC 
for "consent to establish" on 4th November, 2008. In response, the DPCC 
required Kenneth Builders to submit a "ridge demarcation report" at the 
earliest. Despite its asking by Kenneth Builders, the ODA did not give 
any such report to Kenneth Builders on the ground that the issue had 
already been clarified to the GNCTD in a letter dated 17th October, 
2008. The letter dated 17th October, 2008 is a little ambiguous inasmuch 
as it mentions that the boundaries of the Ridge have been delineated, but 
they have not been identified at the site. The letter dated 17th October, 
2008 reads as follows: 
"Subject: Regarding Residential housing Project at Tehkhand, New 
Delhi by Mis Kenneth Builders & Developers Pvt. Ltd. 
Sir, 
This has reference to letter No. DPCC/MClll/3154: dated 6th 
August, 2008, enclosing the copy of the letter of Secretary 
(Environment) cum Chairman, Delhi Pollution Control Committee, 
Government ofNational Capital Territory of Delhi dated 13th June, 
2008. In the Master Plan for Delhi-2001, Ridge has been defined 
in an area of7777 hectares which is to be preserved in its pristine 
glory. In the Preamble of the said Master Plan for Delhi-200 I, 
one conceptual sketch indicating the ridge has been shown as one:: 
of the eight concepts only, whereas the land use Plan is the legal 
documents/plan showing the details which are
to be referred for 
the purpose of establishing the area/land use, in this case for the 
ridge/regional park. 
Delhi Government through its notification dated 24.05.1994 has 
delineated the boundaries of the ridge but the same has not been 
identified on the site. This notification is under Section 4 for the 
areas to be earmarked as reserved forests under the Delhi Forest 
Act. 
The land pocket where ODA has proposed residential development, 
was clearly shown under District Part in-MPD-2001, and the land 
use of the same has already been changed from Recreational 
Use (District Park) to residential vide Gazette oflndia notification 
Nos.A-13011/30/1995-DDIB dated 08.01.2002 and 23 .02.2006 
(copies enclosed). The said notifications were issued following 
the due process of law and taking relevant factors into
DELHIDEVELOPMENTAUTHORITYv. KENNETH BUILDERS& 
1137 
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.] 
consideration. No objection in respect of the land use of the Project 
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land were raised by any departments including the Forest 
Department at that stage. 
The Ministry of Environment & Forest, after considering and taking 
on record the representation from both Delhi Pollution Control 
Committee and ODA (Letter No.F.3(60)MP/D. l l 6 dated 30.6.08) 
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with respect to land use of the Project land, has accorded the 
Environment Clearance to our project on 15th July, 2008, copy of 
the same is attached herewith. 
All the facts, documents and detailed plans have been shared and 
discussed in detail between the two departments, in meeting. In 
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the light of facts been legally converted from recreational use 
(District Park) to residential. 
In view of the facts, it is requested that the "Consent to Establish" 
from Delhi Pollution Control Committee under Air & Water Act 
be granted to the applicant at the earliest." 
D 
18. Faced with this impasse and unable to obtain the ridge 
demarcation report and therefore the "consent to establish" from the 
DPCC, Kenneth Builders approached the Delhi High Court by way of a 
writ petition on I st August, 2009 resulting in the impugned judgment and 
order. In the writ petition, Kenneth Builders prayed, inter alia, for setting 
E 
aside of the tender/auction notice dated 20th March, 2006 as also the 
allotment letter dated 15th June, 2006
and a declaration that the project 
was incapable of performance. It was further prayed that the auction 
had become void and that Kenneth Builders was entitled to a refund of 
the amount paid to the DOA along with interest at 18% per annum till 
realization. 
F 
Decision of the High Court 
19. The High Court has elaborately discussed the various letters 
exchanged between the concerned parties and has thereafter very 
succinctly put the controversy in focus in paragraphs 26 and 27 of the 
impugned judgment and order. These paragraphs read as follows: 
"26. The foregoing demonstrates the controversy between the 
parties. The petitioner's stand is that it had made the bid for the 
project and had aid the entire amount of Rs.450.0 I crores on the 
clear understanding that the project site was residential. This 
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[201613 S.C.R. 
understanding, according to the petitioner, was based on the 
representation made by the ODA as the detailed facts referred to 
above would reveal. In fact, the DOA has maintained and 
continues to maintain its stand that the project site is not within 
the ridge area and the land use of the same has been clearly 
shown as residential. According to the ODA, the land in question 
was earlier earmarked for recreational (District Park) purposes. 
However, that was subsequently altered by the two notifications 
dated 08.01.2002 and 26.02.2006 by carrying out modifications in 
the Master Plan (MPD-2001 ). The stand of the ODA is also this 
that the land use of any particular area is to be determined under 
the Master Plan and the authority which does such determination 
is the DOA and not any other authority, such as the DPCC. The 
clear stand of the DOA is that the DPCC has no right or business 
to raise any objection with regard to the land use and that is solely 
within the domain and powers of the DOA. The stand of the 
ODA is, however, not accepted either by the DPCC or the 
Department of Forests, Government of NCT of Delhi. In fact, 
both the DPCC and the Department of Forests (respondents 2 
and 4 herein) along with the Government of NCT of Delhi 
(respondent No.3) have taken a unified stand that the land in 
question falls within the ridge and more so because the Department 
of Forests has found the said
land to be part of Khasra Nos. 444 
and 445 of village Tehkhand which, in the revenue record, has 
been shown as "gair mum kin pahar". Thus, according to the said 
respondents, no construction activity can be carried out in the 
land in question inasmuch as, according to them it falls within the 
ridge area. Consequently, the DPCC has refrained from issuing 
the "consent to establish" under Water and Air Acts, which was a 
requirement and a condition of the clearance given by the Ministry 
of Environment and Forests, Government of India. 
27. It is in this backdrop that the petitioner felt that there is virtually 
no chance of the project going ahead in view of the stalemate 
between the ODA and the various governmental depaiiments. It 
is on the basis of this situation that the petitioner has sought the 
setting aside of the tender/auction as also the allotment letter dated 
15.06.2006 in its favour and has sought the return of the money 
paid by it along with interest thereon."
DELHI DEVELOPMENT AUTHORITY v. KENN°ETH BUILDERS & 
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.] 
20. By the impugned judgment and order, the High Court held 
that Kenneth Builders was not entitled to have the tender/auction in 
which it had participated and in which it was a highest bidder set aside. 
Kenneth Builders was also not entitled to have the letter of allotment 
issued to it pursuant to the acceptance of its bid in the.auction conducted 
by the ODA set aside or to the return of money paid by it to the ODA. 
However, it was held that Kenneth Builders would be entitled to have 
the DPCC examine its application forthe grant of"cqnsent to establish" 
from the stand point of the Water Act and theAir Act within two months 
for carrying out the projec.t which was the subject matter of the writ 
petition. It was also 11eld that in the event the DPCC does not give its 
"consent to establish" and the project cannot be carried out then Kenneth 
Builders would be entitled to a return of the entire amount (with interest 
at the rate of 6% till realization) paid by it to the ODA since the project 
would stand frustrated and would be incapable of performance. 
21. For arriving at the above conclusions, the High Court held 
that once the Master Plan for Delhi prepared by the DDA earmarks 
land for a particular use, then no other authority can challenge the same. 
As far as the project land was concerned, the DOA had earmarked it 
for residential use and this could not be
challenged. The High Court also 
held that after the MoEF had given the environmental clearance, the 
role of the DPCC was limited to the grant of "consent to establish" 
u'nder the Air Act and the Water Act. It was not open to the GNCTD, 
the Department of forests or the DPCC to question the land use of the 
project land as determined by the DOA on the ground that it was within 
the Ridge. 
22. At this stage, it is necessary to mention that during the 
pendency of the writ petition in the High Court, it came out that during a 
meeting convened by the Lieutenant Governor on 23rd June, 2009 on 
some other issue, the case of Kenneth Builders came up, perhaps for an 
informal discussion. Nevertheless, it was decided in that meeting that 
the question of the status of the project land should be referred to.the 
MoEF (even though it had already granted environmental clearance) 
and that the decision of the MoEF would be accepted asJinal. These 
facts were putto the learned Additional Solicitor General appearing in 
the matter and he sought time to take instructions. Eventually, the 
following response dated 3rd December, 2009 was sent by the MoEF to 
the learned Additional Solicitor General: 
1139 
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SUPREME COURT REPORTS 
[2016) 3 S.C.R. 
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"Sub: Opinion of the Ministry of Environment and Forest in regard 
to WP (C) No. 0647/2009 
8 
c 
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Ref.: Secretary, Environment, NCT's D.0. No. F.11 (105/PN 
CF /Part/09/4582 dated 27 .11.2009). 
Sir, 
This is with regard to Writ Petition (C) I 0647/2009 of Kenneth 
Builders and Developers Ltd. v. UOI & Ors. in the High Court of 
Delhi. An opinion was sought from Ministry of Environment and 
Forests to the effect that the land in the subject matter of the Writ 
Petition mentioned under subject is a part of Ridge or not. The 
opinion of Ministry of Environment and Forests in this regard is as 
follows: 
"Keeping in view the purely legalistic position taken by ODA 
and exercise undertaken for identification ofridge, based upon 
one or more criterion decided by NCT of Delhi, as relevant for 
classification ofany land as "ridge" in Delhi, the said piece of 
land measuring 14.3 ha falling in Khasra No.444 and 445 
reflected as "Gai Mumkin Pahar" in revenue land, needs to be 
considered as ridge in accordance to the spirit of various orders 
ofHon'ble Supreme Court in WP (C) 467711985, morphological 
features and revenue records. The Hon 'ble Apex Court is still 
looking into various aspects of protection & conservation of 
Delhi ridge, in WP (Civil) No. 467711985 from time to time. 
However, the. Hon'ble High Court of Delhi, if deemed 
appropriate, the opinion of Central Empowered Committee, set 
up by Hon'ble Supreme
Court may be taken". 
It is requested to intimate the Hon'ble Court about the opinion of 
the Ministry of Environment and Forests when the case will come 
up on 4th December, 2009." 
It will be seen from the above that the MoEF had taken a virtual 
volte face and had opined that the project land needs to be considered 
as Ridge, but if deemed appropriate the opinion of the Central Empowered 
Committee might be taken. This was apparently not brought to the notice 
of the High Court. 
23. Be that as it may, the DOA has challengeo the order of the 
Delhi High Court which has effectively directed the ODA to refund the
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 
DEVELOPERS LTD. & ORS. [MADAN B. LOKUR, J.) 
tender amount to Kenneth Builders since "consent to establish" and 
continue with the project had not been granted by the DPCC. The GNCTD 
as well as the Department of Forests also filed a Petition for Special 
Leave to Appeal being SLP (C) No. 13146of2011 challenging the decision 
of the Delhi High Court to the effect that the DOA is the competent 
authority to decide the land use. 
Subsequent events 
24. After the decision of the Delhi High Court, Kenneth Builders 
requested the DPCC on 3rd August, 2010 in terms of the order of the 
Delhi High Court, for "consent to establish". By its letter of 28th October, 
20 I 0 the DPCC made it quite clear that since Kenneth Builders did not 
have any clearance to carry out any construction on the project land 
from the Ridge Management Board or from this Court or from the 
Department of Forests, "consent to establish" under the Air Act and 
Water Act could not be given. It was also mentioned that the Department 
of Forests would be challenging the orderofthe Delhi High Court in this 
Com1. The letter dated 28th October, 2010 reads as follows: 
"Sub: - Refusal of Consent under Water (Prevention & Control 
of Pollution) Act, 1974 and (Prevention & Control of Pollution) 
Act, 1981 as amended to date. 
1141 
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Whereas, you Mis KENNETH BUILDERS & DEVELOPERS 
E 
PVT. LTD., MAA ANANDMAYI MARG, TEHKHAND, 
DELHI (hereinafter referred as
addressee) have applied for 
Consent to Estab. (Orange Category) on 30.05.08 vide I.D. 
No.2589I under section 21 of Air (Prevention & Control of 
Pollution) Act, 1981 and u/s 25/26 of the Water (Prevention & 
Control of Pollution) Act, 1974 for activity of Residential 
F 
Construction Project. 
And whereas, a letter dt. 27.03.08 addressed to the Commissioner 
(L.M.), DOA was received from Deputy ConservatQr of Forest, 
South to provide a copy of Environmental Clearance w.r.t. large 
scale earth work undertaken by you (the addressee) 
G 
And whereas, a copy of letter dt. 04.04.08 addressed to the 
Commissioner (L.M.) DDA was received from the Deputy 
Conservator of Forest, South to stop all.construction activity on 
the said land until the permission for the same is accorded by the 
Ridge Management Board. 
H
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SUPREME COURT REPORTS 
[2016) 3 S.C.R. 
And whereas, as decided by the Consent Management Committee 
(Orange) in its meeting held 03.06.08, a letter was issued to the 
Deputy Conservator of Forest, South, on 13.06.08 regarding status 
of Forest Clearance w.r.t. the said project. 
And whereas, a 0.0. letter issued by the Chairman, DPCC on 
13.06.08 to the Vice Chairman, ODA regarding immediate 
cessation of all construction work on the _project site till the 
clearance from the same obtained from the Competent Authorities 
including the Ridge Management Board & the Hon'ble Supreme 
Court. 
And whereas, a letter dt. 23.06.08 has been received from the 
Deputy Consen'.ator of Forest Dept. informing that the clearance 
from the Ridge Management Board & the Hon'ble Supreme Court 
has not been communicated by DOA so far. 
And whereas a letter was issued to the Deputy Conservator of 
Forest, South on 19.02.09 to confirm whether any forest clearance 
and ridge demarcation report to the said project has been granted 
or not. 
And whereas, a reply was received from the Deputy Conservator 
of Forest, South on 17.03.09 informing that no forest clearance 
has been accorded so far. 
And whereas, a letter was issued to the Deputy Conservator of 
Forest, South on 16.04.09 along with the site plans of the project 
to inform the status of the area as per the ridge demarcation report. 
And whereas, the Hon'ble High Court vide its judgment dt. 
30.07.10 directed
the DPCC to examine the application of the 
petitioner for grant of"Consent to Establish" from the standpoint 
of the Water & Air Acts alone within two months fro,m the date 
of judgment. 
And whereas, after examination, as decided by the Consent 
Management Committee (Orange) in its meeting held on 22.09 .10, 
a letter was issued to the Forest Deptt. on 01.10.10 to send the 
opinion on the judgment at the earliest as the issue pertains the 
Forest Department. 
And whereas, the case was again taken up by the Consent 
Management Committee (Orange) in it meeting held on I. JO. I 0 
& it was decided:
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 
1143 
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.] 
"Forest department is going for appeal, therefore, consent be 
A 
refused." 
Now, therefore, as decided by the said Committee aforementioned 
consent to establish application under Air & Water Acts to the 
addressee unit is hereby refused with immediate effect. 
Please note that the activity of Residential Construction Project 
without having valid consent under the Air & Water Acts is a 
punishable offence and attracts penal action under the provisions 
of the said Act." 
25. In view of the categorical response, broadly speaking, the 
controversy remains whether the project land is a part of the Ridge or 
not and whether the contract between the DDA and Kenneth Builders 
has been frustrated due to supervening factors or not. To resolve the 
first controversy, this Court passed an order on 6th October, 2015 for 
c,,.-ascertaining whether the project land falls within the Ridge or not. This 
was in view of the uncertainty in the status of the project land as well as 
the view expressed by the MoEF in the letter dated 3rd December, 2009 
addressed to the learned Additional Solicitor General appearing in the 
High Court that the issue cou Id be best resolved (if deemed appropriate) 
by a reference to the Central Empowered Committee set up by this 
Court. Accordingly, we referred this issue to the Central Empowered 
Committee (CEC) set up in T.N.Gotlavarma11 v. U11io11 of
l11tlia1• 
26·. Pursuant to the order of 6th October, 20fi the CEC submitted 
its Report dated 18th November, 2015 in which it was concluded that 
non-forestry use of land falling in the Ridge was permitted enly after a 
development project was cleared or recommended by the Ridge 
Management Board and permitted by this Court. However, a decision 
was rendered by the Delhi High Court in a case filed by Ashok Kumar 
Tanwar [W.P. (C) No. 3339 of 2011 decided on 30th November, 2011] 
to the effect that a development project on land outside the notified 
Ridge area but having morphological features conforming to the Ridge 
would also require clearance froin the. Ridge Management Board and 
this Court. Therefore, as far as the present case is -concerned though 
the project land falls outside the Ridge but has morphological features 
conforming to the Ridge bringing it within the extended Ridge, the project 
of the DDA involving n6n-forestry use of the land could be permitted 
'(2013) s sec 198 
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SUPREME COURT REPORTS 
(2016] 3 SC R. 
only after obtaining clearance from the Ridge Management Board and 
after obtaining the permission of this Court. The CEC in its Report 
stated in this regard as follows: 
"6. The non-forestry use of land falling in Delhi Ridge for 
implementation of the various development projects are being 
permitted only after the proposal is cleared/recommended by the 
Ridge Management Board and permitted by this Hon'ble Court. 
Such permissions have been granted by this Hon'ble Court subject 
to deposit of 5% of the estimated project cost with the Ridge 
Management Board Fund for conservation and development of 
Delhi Ridge and compensatory afforestation over equivalent non-
forest land/Ridge land at project cost. 
7. Earlier, the clearance from the Delhi Ridge Management Board 
and the permission of this Hon'ble Court was being insisted upon 
only in n;spect of the notified Ridge areas. One Shri Ashok Kumar 
Tanwar filed Writ Petition (Civil) No.3339 of 2011 before the 
Hon 'ble High Court of Delhi against the construction of buildings 
and other infrastructure facilities being done by the Directorate 
General, Border Road Organisation in 2.25 acres ofland belonging 
to Ministry of Defence at Naraina. Delhi Cantonment on the 
ground that the said land falls in the Central Ridge and wherein 
pursuant to the directions of this Hon'ble Court the non-forestry 
uses are prohibited. Tht: Government of NCT of Delhi after
considering fhe view of the Delhi Ridge Management Board filed 
before the Hon'ble High Cou1i of Delhi an affidavit dated 30th 
November. 2011 wherein it was stated that the land in question is 
situated outside the notified ridge areas but is having morphological 
features conforming to the Ridge. The Hon'ble High Court of 
Delhi by order dated 30th November, 2011 disposed of the said 
Writ Petition with.the directions that the Border Road Organisation 
is restrained from c:mying out any further construction works on 
the land till it obtains necessary clearance from the Delhi Ridge 
Management Board or (and) this Hon'ble Comi through the CEC. 
A copy of the said order of the Hon 'ble High Court of Delhi is 
enclosed at ANNEXURE-R-2 to this Report. Since then, non-
forestry use of any land having morphological features conforn1i11g 
to the Ridge but falling outside the notified ridge areas (commonly 
referred to as ·'extended ridge areas") is also being permitted
DELHI DEVELOPMENT i\UTHORITYv. KLNNETH BUILDERS & 
DEVELOPERS LTD. & ORS. [MADAN 13. LOK UR. J] 
only after obtaining clearance from the Delhi Ridge Management 
Board and permission of"this Hon'ble Court. 
8. The said project of the Border Road Organisation was 
subsequently cleared/recommended by the Delhi Ridge 
Management Board, recommended by the CEC and thereafter 
this Hon'ble Court by order dated 2nd November, 2012 granted 
permission for implementation of the project on 2.25 acre of land 
falling on the ·'extended ridge areas". This Hon'ble Cou11 by 
another order dated 21.10.2013 has granted permission for 
implementation of a project by Delhi Metro Rail Corporation 
(DMRC) involving use of lands falling in ·'extended ridge area''. 
The copies of the abovcsaid orders of the Hon'ble Cou11 dated 
2nd November. 2012 and 21st October. 2013 arc enclosed at 
ANNEXURE-R-3 and ANNEXURE-R-4 respectively to this 
Report. 
9. In the present case the Delhi Forest Department has found 
that the project area falls in '"extended ridge area'' i.e. outside the 
areas identified as Ridge area in the MPD 2001/MPD 2021 but 
having morphological features conforming to the ridge and that a 
large extent of areas in and around the project site are recorded 
as "Gair Mumkin Pahar" in the revenue records. The stand taken 
by the Forest Department has been verified by the CEC during 
the site visit. Copies of the photographs of the project site taken 
during the site visit of the CEC are
collectively enclosed at 
ANNEXURE-R-5 to this Report. A copy of the sketch map 
prepared by the Forest Department showing the details of Gair 
Mumkin Pahar areas in and around project site is enclosed at 
ANN EXURE-R-6 to this Repo11. A copy of the satellite imagery 
made available by the DOA showing the project area in question 
and the adjoining areas is enclosed at ANNEXURE-R-7 to this 
Report. 
10. From the above it may be seen that in the present case the 
land falls in the "extended Ridge area" i.e. outside the Ridge areas 
identified in MPD 2001/MPD2021 having morphological feature~ 
conforming to Ridge. Implementation of all the similarly placed 
cases i.e. the pr~jects involving non-forestry use of the areas falling 
in "extended ridge areas" have been permitted only after obtaining 
clearance from the Ridge Management Board and permission of 
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SUPREME COURT REPORTS 
[2016] 3 S.C .R. 
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this Hon'ble Court. In two similarly placed projects of the Border 
Road Urganisation and DMRC this Hon 'ble Coutt by orders dated 
2nd November, 2012 and 21st October, 2013 respectively has 
granted permission from the non-forestry use of the lands falling 
in the "extended Ridge area". 
B 
11. In the above background the CEC is of the considered view 
that in the present case the proposed construction of buildings 
can be unde1taken only after obtaining clearance from the Ridge 
Management Board and permission of this Hon'ble Court." 
Discussion 
C 
27. The first submission of learned coui1sel forthe DOA was that 
a writ petition under Article 226 of the Constitution was not maintainable 
for the reliefs claimed by Kenneth Builders. The reliefs arise out of a 
contractual dispute and the High Court ought not to have entertained the 
writ petition. We are not inclined to consider this submission for the 
o 
reason that no such objection was raised by the DOA before the High 
Cou1t or even in the petition filed in this Court. The submission has been 
advanced by learned counsel for the ODA for the first time during the 
final hearing of these appeals. 
It is too late in the day for learned 
counsel to raise such an objection and we are not inclined to entertain it. 
E , 
28. On merits, it was submitted that in view of the terms and 
conditions of the auction and the development agreement between the 
. DOA and Kenneth
Builders, it was the duty and responsibility of the 
developer to obtain all necessary clearances including environmental 
clearance and consent from the DPCC for completing the project. It 
was pointed out that the MoEF had given environmental clearance for 
F 
the project on 15th July, 2008 subject to the developer obtaining "consent 
to establish" from the DPCC under the Air Act and the Water Act. It 
was therefore the obligation of Kenneth Builders to approach the DPCC 
and obtain the necessary consent which it failed to do. 
G 
H 
29. What has been overlooked by learned counsel is that the 
fresh view of the MoEF is that the project land needs to be considered 
as Ridge. Consequently, no construction activity is permissible on the 
project land. That apart, Kenneth Builders did apply to the DPCC for 
"consent to establish" for starting construction activity on the project 
land. For considering the request, the DPCC required a ridge demarcation 
report which was not given by the DOA to Kenneth Builders or to the
DELHI DEVELOPMENT AUTHORITY v. KENN ETH BUILDERS & 
DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J] 
DPCC. Therefore, the DPCC was not inclined to give its consent in the 
absence of the ridge demarcation report. Even after judgment was 
delivered by the High Court, Kenneth Builders applied to the DPCC for 
"consent to establish" but to no effect in the absence of a ridge 
demarcation report and forest clearance. 
30. It does appear from the record that the exact boundaries of 
the Ridge had not been identified by anybody and this is apparent from a 
letter dated 13th June, 2008 sent by the Secretary (Environment) of the 
GNCTD to the DDA ..yherein it was pointed out that there is some 
discrepancy between the areas notified by the Ministry of Urban 
Development of the Government oflndia in the notifications dated 8th 
January, 2002 and 23rd February, 2006 and the boundaries of the Ridge. 
It was further pointed out that the process of identification had been 
initiated by the Department of Forests of the GNCTD but it appears that 
the demarcation was not completed by the time the writ petition was 
filed by Kenneth Builders. According to the DDA the letter was based 
on an incorrect appreciation of facts, but that does not concern us. A 11 
that is relevant is that the GNCTD believed that the construction could 
not go on in the project land since it fell within the boundaries of the 
Ridge. 
3 r. In this context, it must not be forgotten that even after having 
1147 
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given environmental clearance to Kenneth Builders, the MoEF had second 
E 
thoughts regarding the status of the project land. This led the MoEF to 
send the letter dated 3rd December, 2009 referred to above. In other 
words, the status of the project land was generally 'unclear' at least to 
the GNCTD and the MoEF. 
32. Be that as it may, it appears to us that Kenneth Builders did 
F 
take all necessary steps to commence the constn!ction activity on the 
project land but due to the impasse created by the governmental agencies, 
it could not proceed in the development activity. We agree with learned 
counsel for Kenneth Builders that under these circumstances, the 
provisions of Section 56 of the Indian Contract Act, 1872 (the Contract 
Act) would be attracted to the facts of the case. Section 56 of the 
G 
Contract Act reads as follows: 
"56. Agreement to do impossible act - An agreement to do an 
act impossible in itself is void. 
Contract to do act afterwards becoming impossible or 
1-1
1148 
SUPREME COURT REPORTS 
[2016) 3 S.C.R. 
/I. 
unlawful - A contract to do an act which. after the contract is 
made, becomes impossible. or. by reason of some event which 
the promisor could not prevent, unlawful, becomes void when the 
act become;, impossible or unlawful. 
B 
( 
D 
Compensation for loss through non-performance of act 
known to be impossible or unlawful - Where one person has 
promised to do something which he knew, or, with reasonable 
diligence, might have known, and which the promisee did not know, 
to be impossible or unlawful, such promisor must make 
compensation to such promisee for any loss which such promisee 
sustains through the non-performance of the promise.'' 
33. The interpretation of Section 56 of the Contract Act came up 
for consideration in Sa(rttbrata Gltose 11. M11g11eera111 Bangur & Co. 3 
It was held by this Court that the word "impossible" used in Section 56 
of the Contract Act has not been used in the sense of physical or literal 
impossibility. It ought to be interpreted as impracticable and useless from 
the point of view of the object and purpose that the parties had in view 
when they entered into the contract. This impracticability or uselessness 
could arise due to some intervening or supervening circumstance which 
the parties had not contemplated. However, if the intervening 
circumstance was contemplated by the pa11ies, then the contract would 
stand despite the occurrence of such circumstance. In such an event,
"there can be no case of frustration because the basis of the contract 
being to demand performance despite the happening of a particular event, 
it cannot disappear \\hen that event happens." This is what this Court 
had to say: 
~ 
"The first paragraph of the section lays down the law in the same 
way as in England. lt speaks of something which is impossible 
inherently or by its ve1y nature, and no one can obviously be directed 
to perform such an act. The second paragraph enunciates the 
law relating to discharge of contract by reason of supervening 
impossibility or illegality of the act agreed to be done. The wording 
· G 
of this paragraph is quite general, and though the illustrations 
attached to it are not at all happy, they cannot derogate from the 
general words used in the enactment. This much is clear that the 
word ''impossible" has not been used here in the sense of physical 
or literal impossibility. The performance of an act may not be 
H 
'(195~) SCR 310
DELHI DEVELOPMENTAUTHORITYv. KENNETH BUILDERS & 
DEVELOPERS LTD & ORS. [MADAN B. LOK UR, J.] 
literally impossible but it may be impracticable and useless from 
the point of view of the object and purpose which the parties had 
in view; and if an untoward event or change of circumstances 
totally upsets the very foundation upon which the parties rested 
their bargain, it can very well be said that the promissor finds it 
impossible to do the act which he promised to do. 
Although various theories have been propounded by the Judges 
and jurists in England regarding the juridical basis of the doctrine 
of frustration, yet the essential idea upon which the doctrine is 
based is that of impossibility of performance of the contract: in 
fact impossibility and frustration are often used as interchangeable 
expressions. The changed circumstances. it is said. make the 
performance of the contract impossible and the parties are absolved 
from the further performance of it as they did not promise to 
perform an impossibility. The parties shall be excused. as Lord 
Loreburn says' 
"If substantially the whole contract becomes impossible of 
performance or in other words impracticable by some cause 
for which neither was responsible." 
xxxxxxxxx 
It must be pointed out here that if the parties do contemplate the 
possibility of an intervening circumstance which might affect the 
performance of the contract. but expressly stipulate that the 
contract would stand despite such circumstance.
there can be no 
case of frustration because the basis of the contract being to 
demand performance despite the happening of a particular event, 
it cannot disappear when that event happens. As Lord Atkinson 
said in Matthey v. Curling5 .. a person who expressly contracts 
absolutely to do a thing not naturally impossible is not excused for 
non-performance because of being prevented by the act of God 
or the King's enemies ... or vis lll(Jior''. This being the legal 
position, a contention in the extreme form that the doctrine of 
frustration as recognised in English law does not come at all within 
the purview of Section 56 of the Indian Contract Act cannot be 
accepted." 
'Tamplin Steam Ship Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd., (1916) 
2 AC 397. 403 
' (I 922) 2 AC I 80 at 234 
I 149 
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SUPREME COURT REPORTS 
[2016] 3 S.C.R. 
34. In so far as the present case is concerned, the DOA certainly 
did not contemplate a prohibition on construction activity on the project 
land which would fall within the Ridge or had morphological similarity to 
the Ridge. It is this circumstance that frustrated the performance of the 
contract in the sense of making it impracticable of performance. 
35. It is true that the Government oflndia had notified the project 
land as "Residential" and that the project land was shown as 
"Residential" in the MPD-200 I and MPD-2021. But that fact alone 
would not change the position at law. The exact boundaries of the Ridge 
do not appear to have been demarcated and in the absence of 
demarcation, it could not be said with any degree of certainty by the 
DOA that merely because of the two notifications issued by the Ministry 
of Urban Development the project land could be used for residential 
purposes even if it fell within the Ridge. This would be ignoring the 
position at law and would be stretching the argument a little too far. The 
DOA was unaware that even ifthe project land did not fall within the 
Ridge yet any development activity thereon would require permission 
from the Ridge Management Board as well as from this Court since 
there was morphological similarity between the Ridge and the project 
land. It is this intervening circumstance which eventually frustrated the 
implementation of the
contract. 
36. It is one thing for the DOA to now contend before us that 
Kenneth Builders could have applied to the Ridge Management Board 
for permission to carry out development activity and also approached 
this Court for necessary permission but it is another thing to say that 
these requirements were not within the contemplation of the DOA and 
certainly not within the contemplation of Kenneth Builders. For a statutory 
body like the DOA to contend that in the face of the legal position (with 
which the ODA obviously does not agree), Kenneth Builders ought to 
have persisted and perhaps initiated or invited litigation cannot be 
appreciated. 
' 
37. When the DDA informed Kenneth Builders that the project 
land was available on an "as is where is basis" and that it was the 
responsibility of the developer to obtain all clearances, the conditions 
related only to physical issues pertaining to the project land and ancillary 
or peripheral legal issues pertaining to the actual construction activity, 
such as compliance with the building bye-laws, environmental clearances 
etc. The tenns and conditions of "as is where is" or environmental
DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 
DEVELOPERS LTD. & ORS. [MADAN B. LOKUR, J.] 
clearances emphasized by learned counsel for the DOA certainly did 
not extend to commencement of construction activity prohibited by law 
except after obtaining permission of the Ridge Management Board and 
this Court. On the contrary, it was the obligation of the DOA to ensure 
that the initial path for commencement of construction was clear, the 
rest being the responsibility of the developer. The failure of the DDA to 
provide a clear passage due to an intervening circumstance beyond its 
contemplation went to the foundation of implementation of the contract 
with Kenneth Builders and that is what frustrated its implementation. 
38. Reliance by learned counsel forthe DDA on the "as is where 
is" concept as well as clauses 6 and 11 of the Development Agreement 
in this context is misplaced. As mentioned above, this primarily pertains 
to physical issues at site. This is clear from the following passage referred 
to by learned counsel from Pun}ab Urban Planni11f( & Deve/opme11t 
Authority v. Raf(lllt Naill Gupta•: 
"Evidently, the commercial plots were allotted on "as-is-where-
is" basis. The allottees wou~d have ascertained the facilities 
available at the time of auction and after having accepted the 
commercial plots on "as-is-where-is" basis, they cannot be heard 
to contend that PUDA had not provided the basic amenities like 
.parking, lights, roads, water, sewerage, etc. If
the allottees were 
not interested in taking the commercial plots on "as-is-where-is" 
basis, they shol.lld not have accepted the allotment and after having 
accepted the allotment on "as-is-where-is" basis, they are estopped 
from contending that the basic amenities like parking, lights, roads, 
water, sewerage, etc. were not provided by PUDA when the plots 
were allotted. Over and above, the facts would clearly indicate 
that there was not much delay on the pa11 of PUDA to provide 
those facilities as well. As noted, the electrical works and health 
works were completed by 24-12-2002 and 22-11-2002 respectively 
and all the facilities like parking, lights, roads, water, sewerage, 
etc. were also provided." 
39. On a conspectus of the facts and the law placed before us, 
we are satisfied that certain circumstances had intervened, making it 
impracticable for Kenneth Builders to commence the construction activity . 
on the project land. Since arriving at some clarity on the issue had taken 
a couple of years and that clarity was eventually and unambiguously 
'·(2012)8sec197 
1151 
A 
B 
c 
D 
E 
F 
G 
H
1152 
A 
B 
c 
D 
SUPREME COURT REPORTS 
(2016] 3 S.C.R. 
provided by the report of the CEC, it could certainly be said that the 
contract between the ODA and Kenneth Builders was impossible of 
performance within the meaning of that word in Section 56 of the Contract 
Act. Therefore, we reject the contention of the ODA that the contract 
between the DOA and Kenneth Builders was not frustrated. 
40. Learned counsel for Kenneth Builders urged that the amount 
deposited with the DOA ought to be returned with interest at 12% per 
annum and not 6% per annum as directed by the High Court. We are not 
inclined to accede to this request. Kenneth Builders had prayed for interest 
at 18% per annum in the High Court but that was declined and only 6% 
per annum was awarded. Kenneth Builders is not in appeal before us on 
this issue. However, we make it clear that the calculation of interest on 
the amount deposited would be with effect from I Ith September, 2006 
when the entire amount of Rs. 450.01 crores was deposited by Kenneth 
Builders with the DOA. 
41. The GNCTD and the DPCC raised an issue before us that 
the ODA was not the final authority in the matter of determining the 
land use particularly when it related to the Ridge. In the view that we 
have taken, it is not necessary to go into this question. 
Conclusion 
E 
42. The appeal filed by the DOA is dismissed. The DOA should 
F 
now refund the deposit made by Kenneth Builders with interest at 6% 
per annum calculated from
11th September, 2006 till realization. The 
question raised in the connected appeal filed by the GNCTD and the 
Department of Forests of the GNCTD is left open for consideration in 
an appropriate case. 
43. There will be no order as to costs. 
Kalpana K. Tripathy 
Appeal dismissed.