GWALIOR DEVELOPMENT AUTHORITY AND ANOTHER versus BHANU PRATAP SINGH on 19 April 2023

1. The instant appeal is directed against the judgment and orderdated 21[st] April, 2011 passed by the Division Bench of the High Court ofMadhya Pradesh, Bench at Gwalior with the following directions:

i)The Respondents are directed to execute the lease deed infavour of the petitioner of remaining area of the land i.e.9625.50 sq. mtr. in accordance with the acceptance of hisoffer of total plot area 27887.50 sq. mtr.

ii)The petitioner shall be liable to make payment of interestfrom 17.8.2001 upto 29.3.2006 when the lease deed wasexecuted in favour of the petitioner excluding the period of27.5.2004 to 29.3.2005.

iii)The Respondents are at liberty to calculate the amount ofinterest accordingly after verification of the amount whichhas been paid by the petitioner.

iv)The order be complied with within a period of three monthsfrom the date of receipt of the copy of the order.

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A2. The facts of the case culled out from the record are that theappellants, according to the land disposal rules, issued an advertisementand invited bids for grant of leases of different plots under the transportcity scheme. The respondent was also one of the bidders for MC-2(Market Complex-2) plot area 27887.50 sq. meters. The offer of therespondent @Rs.725/- per sq. meter being the highest bid was finallyBaccepted. Consequently, a letter of allotment dated 29[th] September, 1997was issued in favour of the respondent whereby it was informed that thebid of the respondent was found to be the highest and it had been decidedto lease out the plot area of 27887.50 sq. meters in his favour for aconsideration of Rs.2,06,67,966/- and the auction bidder/respondent wasCdirected to deposit a sum of Rs.1,91,67,966/- upto the period of 31[st]October, 1999 in addition to the earnest money of Rs.15 lakhs in fourinstalments in the following manner:

(i) Rs.51,66,922/- by 31.10.1997 (for 25% amount)

(ii) Rs.51,66,922/- by 30.06.1998 (for first instalment)

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(iii) Rs.51,66,922/- by 28.10.1999 (for second instalment)

(iv) Rs.36,36,990/- by 31.10.1999 (for third instalment)

3. The letter of allotment contained a rider that the market complexhas to be constructed in accordance with the sanctioned plan by theEGwalior Development Authority (hereinafter being referred to as the“Authority”) and construction work has to be completed within the periodof two years with a further stipulation that failure to deposit theinstalments in terms of the conditions of the bid document, the securityamount shall be forfeited.

F4. It is not disputed that the respondent deposited a total sum ofRs.2,02,18,437/- from September, 1997 to the last instalment on 25[th]August, 2005. The amount deposited by the respondent on various datesbe stated as under:

127.9.1997

Rs.15,00,000.00

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26.11.1997

Rs.2,00,000.00

331.12.1997

Rs.

3,00,000.00

417.4.1998

Rs.

5,00,000.00

522.1.2003

Rs.

16,00,000.00

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GWALIOR DEVELOPMENT AUTHORITY AND ANR. v.BHANU PRATAP SINGH [AJAY RASTOGI, J.]

5. It reveals from the record that, in the meanwhile, the respondentrequested for revising the layout plan in order to enable to deposit therequisite amount with the Authority and the layout plans were also revised,but finally the amended layout plan was accepted by the Authority on17[th] August, 2001. It is also not disputed that despite the respondentfailed to deposit the instalments in terms of conditions of the bid documentby 31[st] October, 1999 and the final amount being deposited on 25[th] August,2005, no action was taken by the appellants either for cancellation of thebid or for forfeiture of the amount deposited by the respondent and whattranspires between the parties is not made available on record but thefact is that the lease deed was finally executed for 18262.89 sq. meterson 29[th] March, 2006 to the extent of principal amount of Rs.1,32,39,356/- @Rs.725/- per sq. meter plus the component of interest for the saidamount for the delay in deposit of Rs.69,97,087/- total Rs.2,02,18,437/-and the lease deed was executed by the respondent without any demur.We do not find any justification as to what was the reason for the Authorityto grant such undue indulgence to the respondent in depositing theinstalments which ought to have been deposited by 31[st] October, 1999but were deposited upto 25[th] August, 2005, be that as it may, it appearsthat after some round table negotiations to the extent of principal amountit was adjusted against the auction bid and balance to be adjusted towardsinterest, the total land which was put to public auction of 27887.50 sq.meters, was reduced to 18262.89 sq. meters and with the consent ofparties and without any demur, the lease deed was executed on 29[th]March, 2006.

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A6. After more than a period of three and half years, the writ petitioncame to be filed by the respondent under Article 226 of the Constitutionseeking a mandamus against the appellants to execute the lease deedfor the remaining area of 9625.50 sq. meters in addition to the leaseearlier executed in favour of the respondent and the Division Bench ofthe High Court while accepting the prayer made by the respondent,Bdirected the appellants to execute the lease deed in favour of therespondent for the remaining area of 9625.50 sq. meterswithout anyconsideration with liability on the respondent to make payment of interestfor the period 17[th] August, 2001 upto 29[th] March, 2006, the day whenthe lease deed was executed in favour of the respondent, excluding theCperiod of 27[th] May, 2004 to 29[th] March, 2005. As a matter of fact, noadditional consideration was required to be paid by the respondent exceptthe interest for the interregnum period of which reference has beenmade under the impugned judgment and that became the subject matterof challenge at the instance of the Authority in the instant appeal.D7. Notices were issued by this Court on 4[th] January, 2012 andafter hearing the parties, leave was granted on 5[th] September, 2014.

8. It reveals from the record that at one point of time, it wasinformed to this Court that there is a possibility of settlement of disputebetween the parties, which reflects from the order of this Court datedE27[th] August, 2019, but later, it reveals from the order dated 4[th] May,2022, that counsel for the respondent on instructions informed this Courtthat the circle rate fixed by the State Government in reference to thesubject land in question is not viable and is much higher than the marketvalue of the subject property as on that day for commercial use. As nosettlement was arrived at between the parties, the matter was finallyFheard and arguments stood concluded on 13[th] April, 2023.

9. Learned counsel for the respondent informed this Court that on16[th] March, 2023, although it was not reflected in the order, the respondentwas called upon as to whether the prevalent circle rate in reference tothe subject property in question is acceptable, the appellant AuthorityGcan be called upon to examine, but we find from the record that therewas no such order as referred to by the respondent’s learned counsel,the fact is that whatever circle rate prevalent at the relevant point oftime of which we have made a reference, was not considered to beviable by the respondent and once this amicable resolution has failed,Hthe matter was being heard on merits.

10. Shri Sanjay Hegde, Senior Advocate appearing for theappellants, submits that undue indulgence was granted to the respondentand the last instalment which was to be made over by the respondent by31[st] October, 1999 was finally paid by 25[th] August, 2005. Although, inthe ordinary course, since the conditions of bid were not complied withby the respondent (successful bidder), the auction ought to have beencancelled, but the Authority after due deliberations, in the peculiar factsand circumstances, granted indulgence to the respondent and taking intoconsideration the fact that the last instalment was deposited by him on25[th] August, 2005, with a break-up of principal amount and the componentof interest thereof, the lease deed was duly executed between the partieswithout demur, obviously with the consent of the parties, as they aresignatories to the document/instrument for 18262.89 sq. meters whichwas executed on 29[th] March, 2006.

11. Learned senior counsel further submits that the auctionproceedings which were initiated at the first instance on 13[th]March, 1997,finally culminated into execution of the lease deed without demur for18262.89 sq. meters on 29[th] March, 2006 and the transaction has attainedfinality. There was no reason or justification for the respondent to openthe transaction which was finally concluded on execution of the leasedeed,with no cause of action subsisting filed a writ petition under Article226 of the Constitution and that too after three and half years of theexecution of the lease deed on 29[th] March, 2006.

12. Learned counsel submits that the High Court has committed aserious manifest error in completely overlooking the fact that once thelease deed was executed without demur on 29[th] March, 2006 and thetransaction initiated pursuant to a tender floated by the Authority on13[th]March, 1997finally concluded by execution of the lease deed withoutdemur and that being a pure business/commercial transaction enteredwith the open eyes, there was no justification available to invoke thejurisdiction under Article 226 of the Constitution with a direction to executethe lease deed for the remaining area of land i.e. 9625.50 sq. meterswithout any consideration and that amounts to amendment in theinstrument which was duly registered and an amendment in the instrumentwas not permissible in law even under the jurisdiction of the High Courtunder Article 226 of the Constitution.

13. Learned counsel, on instructions, submits that the land availableat the disposal of the Authority is always to be put to commercial use AB

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Aand disposed of in terms of the land disposal rules, but in the peculiarfacts of the case, the Authority may consider the claim of the respondentif they are interested for the remaining area of land i.e. 9625.50 sq.meters on the prevalent circle rate if acceptable, only to give a quietus tothe dispute which is pending for quite a long time, failing which the onlyoption left with the Authority is to dispose of the area of land admeasuringB9625.50 sq. meters in accordance with land disposal rules.

14. Per contra, learned counsel for the respondent, while supportingthe finding recorded by the High Court, submits that once the tenderwas floated by the appellants for 27887.50 sq. meters and the bid of therespondent @Rs.725/- per sq. meter was the highest in September, 1997Cand accepted by the Authority and the last instalment of 25[th] August,2005 was accepted, there was no justification available with the appellantto segregate and sever the land which was put to auction into two parcelsand the very execution of the lease deed for 18262.89 sq. meters on 29[th]March, 2006 and keeping away the remainder of the land and not takingDany action thereof, has compelled the respondent to invoke the jurisdictionof the High Court by filing a petition under Article 226 of the Constitutionand the appellant being the public Authority and a State within the meaningof Article 12 of the Constitution, it is always expected to act fairly evenin the business/commercial transactions and as there was denial of thelegitimate right conferred to the respondent and the interests of theEappellants have been fully secured by putting the liability on the respondentto pay interest for the interregnum period and that is the only equitableway in balancing the right and interest of the parties inter se and in thecircumstances no error was committed by the High Court which callsfor interference of this Court.F15. We have heard counsel for the parties and with their assistanceperused the material on record.

16. It is not in dispute that the tender was originally floated by theappellants on 13[th] March, 1997 and the respondent was a successfulbidder and submitted his offer for 27887.50 sq. meters @ Rs.725/- perGsq. meter for a total value of Rs.2,06,67,966/- which was to be paid infour instalments and after making the advance payment of Rs.15 lakhsas earnest money, the remaining four instalments were to be depositedon 31[st] October, 1997, 30[th] June, 1998, 28[th] October, 1999 and the lastinstalment by 31[st] October, 1999. Admittedly, the respondent depositedHthe amount in piecemeal and not in terms of the instalments, as agreed, which was in terms of the conditions of the tender document and thefinal instalment was deposited in reference to the auction bid by 25[th]August, 2005.

17. In the ordinary course of business, as the respondent has failedto deposit in terms of the tender document, the last instalment by 31[st]October, 1999, the auction was supposed to be cancelled and the earnestmoney deserved to be forfeited. We find no reasonable justification inthe present facts and circumstances as to what would be the reason forundue indulgence being shown to the respondent while extending himthe benefit to deposit the instalment by 25[th] August, 2005 and we haveour strong reservations and such exercise of power by the Authority, inour view, is a clear abuse of discretion which is not only violative ofArticle 14 of the Constitution, but also smacks of an undue favour whichis always to be avoided and whenever there is such a business/commercial transaction, it is always to be examined on the commercialprinciples where equity has no role to play. Be that as it may, as muchwater has flown in the Ganges, we would not like to stretch it any further.

18. However, the fact is that the parties sitting across the table,got the lease deed executed for 18262.89 sq. meters without demur on29[th] March, 2006 and the transaction stood concluded after execution ofthe lease deed, which was initiated pursuant to a tender floated by theappellant on 13[th] March, 1997and since the lease deed was to becompulsorily registered under Section 17 of the Registration Act, 1908,it was nowhere open to be altered or amended even by the High Courtin exercise of its jurisdiction under Article 226 of the Constitution.

19. The High Court under impugned judgment has although passeda very lengthy order, but the judgments on which reliance has been placedhave no semblance to the facts of the instant case and natural justicehas no role to play in the given facts and circumstances, of whichreference has been made. In our considered view, the judgment passedby the High Court in issuing a mandamus to execute the lease deed infavour of the respondent for the remaining area of 9625.50 sq. meters iscompletely beyond jurisdiction and such directions, in our view, beingcontrary to law deserve to be set aside.

20. The submission made by the respondent that the tender floatedby the appellants on 13[th] March, 1997 was called upon to the bidders tosubmit their bid for 27887.50 sq. meters and which could not have been AB

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Asegregated, more so after the bid has been finalized @Rs.725/- per sq.meter and that alone has been taken care of by the High Court by directingto execute the lease deed for the remainder of the land, in our consideredview, is bereft of merit for the reason that so far as the tender floated bythe Authority on 13[th] March, 1997 is concerned, the transaction wasconcluded on execution of the lease deed executed without demur forB18262.89 sq. meters on 29[th] March, 2006 and after the transaction isconcluded and the instrument being registered under the law, it was notopen to either party to question at least in the writ jurisdiction of the HighCourt under Article 226 of the Constitution and the mandamus issued bythe High Court to execute the lease deed for the remainder of the areaCwithout any consideration is completely contrary to the settled principlesof law and deserves to be set aside.

21. Learned counsel for the respondent further submits thatalthough at one point of time they have not been able to consider theremainder of the land in reference to which the High Court has directedDfor execution of the lease deed viable as per the circle rate fixed by theState Government, but later on, they revisited and took a decision to takethe remainder of the land independently on the circle rate fixed by theState Government as it was on 16[th] March, 2023, but in our consideredview, once the negotiations have failed and the respondent has shownhis inability for taking the remainder of the land on the circle rate notifiedEby the State Government not considered to be viable, it is always openfor the parties to negotiate afresh and settle, if advised, but it may not beavailable to the respondent on the prevalent circle rate notified by thegovernment/competent authority.

22. Before we conclude, we would like to observe that the litigationFis pending for sufficiently long time and keeping in view the escalation inthe value of the property in question based on commercial principles, weconsider it appropriate to observe that the respondent being originallythe bidder for the remainder of the land as well, let one opportunity bemade available to the respondent for the remainder of the area on priorityGbasis on the prevalent circle rate notified by the Government.

23. It is informed that the remaining area at the relevant time was9625.50 sq. meters, but certain developments have taken place and partof the land has been used for public purpose and as on today the remainingarea of the land is less than what is being reflected in the impugnedHjudgment. Taking that into consideration, we make it clear that let the

first opportunity be afforded to the respondent to purchase the remainingarea of the land which was a part of the land originally put to auction interms of tender floated on 13[th] March, 1997 for 27887.50 sq. meters andif it is acceptable to the respondent on the present prevalent circle ratenotified by the Government, the Authority may consider his request onpriority basis and if the respondent fails or does not show his inclinationor interest on the present prevalent circle rate of the subject land inquestion, the appellants are at liberty to put the subject land for disposalas per their land disposal rules.

24. The appeal deserves to succeed and is accordingly allowed.The judgment impugned dated 21[st] April, 2011 passed by the DivisionBench of the High Court of Madhya Pradesh, Bench at Gwalior isquashed and set aside with the afore-stated observations.

25. Pending application(s), if any, shall stand disposed of.

Divya Pandey

Appeal allowed.

(Assisted by : Lavam Tyagi and Shevali Monga, LCRAs)

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