INFRASTRUCTURE PRIVATE LIMITED versus THE STATE OF ORISSA & ORS. on 4 October 2021

SUPREME COURT REPORTS

[2021] 6 S.C.R.

APAULMECH INFRASTRUCTURE PRIVATE LIMITED

v.

THE STATE OF ORISSA & ORS.

(Civil Appeal No. 6023 of 2021)

BOCTOBER 04, 2021

[M. R. SHAH AND A. S. BOPANNA, JJ.]

Lease: Lease agreement – Execution of – On facts, leaseagreement to be entered into between UAHCL and appellantpursuant to the compliance of the Letter of Intent (LOI) – In termsCof the LOI, the appellant was to pay Rs 9.34 crore within thestipulated period, however, the appellant failed to do so – Also fullpayment not made within the extended period and also subsequentto the extended period – Decision by UAHCL to terminate the LOI –Writ petition by the appellant seeking quashing of the said letter toDterminate LOI – High Court held that the disputed questions of factinvolved could not be gone into in the writ jurisdiction and relegatedthe parties to an appropriate forum – On appeal, held: Appellanthaving failed to adhere to the terms indicated in the LOI and thepayment required thereunder not being made even within theextended period, the decision of UAHCL to terminate the LOI isEjustified – Thus, termination of LOI is upheld – Directions soughtto execute the lease agreement does not arise – As regards the refundof the amount paid, the word employed is not “forfeiture”, thus, theamount payable towards the advance lease rentals and the otheradvance payments provided in the LOI, cannot be forfeited if thereFis default in complying with the term – Amount of Rs.4.41 crorespaid within the stipulated period, cannot be forfeited – It is anamount which would be available for accounting – More so, due tothe conduct of the appellant, UAHCL was unable to utilise theproperty but on the other hand had to incur expenses and sufferedactual loss – In the interest of justice, UAHCL permitted to retainGthe amount paid within the time frame – Liberty granted to theappellant to file suit seeking recovery ofthe said amount – Amountpaid after the extended date cannot be retained by UAHCL since itwould amount to unjust enrichment – Issuance of direction toUAHCL to refund the said amount deposited by the appellant.H

Disposing of the appeal, the Court

HELD: 1.1 Admittedly the appellant was not ready with theamount to make the payment within the timeframe contemplatedunder Clause 2 of LOI. The appellant, through their letter dated04.02.2010 requested UAHCL that they be allowed to pay 50%of the bid money by 19.02.2010 which would include all thecomponents indicated in Clause 2 of LOI and not just the upfrontcomponent. The rest of the money was undertaken to be paid by15.04.2010. UAHCL through their reply dated 12.02.2010 allowedthe same as a special case. The appellant once again throughtheir letter dated 17.11.2010 requested for extension of time forpayment of Rs.4.93 crore. UAHCL again extended the time till15.12.2010. Despite indulgence shown by UAHCL the appellantdid not make the balance payment before 15.12.2010. Instead,the sum of Rs.4.11 crore was paid subsequent thereto. [Para 12,13][1050-C-E]

1.2 The submission of the appellant that UAHCL havingreceived the said payment cannot at this stage contend that thepayment was not made within the time stipulated, cannot beaccepted. UAHCL is a corporation which has differentdepartments and as such the remittance made being accepted initself cannot be taken as an act to condone the delay caused bythe appellant in complying with the terms of the LOI so as toalter the terms of contract. There is no material on record thatsubsequent to 15.12.2010, there is any positive act on behalf ofUAHCL to either extend the time for payment or for havingexpressly condoned the delay and having accepted the paymentso as to regularise the transaction. This is relevant more so inthe context that at an earlier point as against the time stipulatedfor payment under the LOI specific correspondence wasexchanged between the parties and the time had been expresslyextended prior to the time fixed earlier having expired. In suchsituation, when admittedly the balance payment had not been madeprior to 15.12.2010, unless the appellant had obtained expressextension from UAHCL mere tendering the payment and thesame having been accepted cannot be construed as a positiveact to alter the contract. [Para 14][1050-F-H; 1051-A-B]

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A1.3 No doubt, the appellants relied on the communicationdated 13.04.2011 addressed by the General Manager, UAHCLindicating therein that the issue of offering VRS to all theemployees unwilling to join the new management was aconsideration and the VRS amount will have to be paid by theappellant to UAHCL. Apart from the reason assigned by the HighBCourt to indicate that the same cannot be treated in favour of theappellant, the said letter does not indicate that the discussion inthat regard was after indicating to the appellant that the delay inpayment of the upfront amount has been condoned and accepted.If at all the said aspect relating to VRS of the employees was alsoCmutually agreed and, in that context, if UAHCL had proceededto condone the delay and enter into the lease agreement it isonly in such circumstance the exchange of correspondence inthat regard would have assumed relevance. If that be the position,when admittedly the appellant was required to make the agreedpayments within the timeframe indicated under LOI and theDappellants themselves being unable to comply with therequirement, though having secured extensions on two occasionscannot turn around to contend otherwise at this juncture. Despitethe extended period having come to an end on 15.12.2010, theappellant not having made the full payment within the said dateEcannot at this stage contend to have complied with the terms soas to seek a direction to UAHCL to execute the lease agreement.In fact, the High Court having examined the material on recordhas also arrived at such conclusion. Notwithstanding suchconclusion reached by the High Court, ultimately it arrived atthe decision that in view of the disputed questions to be resolvedFbetween the parties, the same cannot be gone into in writjurisdiction. [Para 15, 16][1051-B-G]

1.4 On facts, the High Court arrived at the conclusion thatsuch disputed questions of fact cannot be resolved in the writpetition of the instant nature. Therefore, in the instant facts, theGHigh Court has not dismissed the writ petition on maintainabilitybut having taken note of the issue involved was of the opinionthat the submission urged would necessitate the requirement ofrecording evidence and therefore relegated the parties to anappropriate forum. To that extent, though the observations madeH

by the High Court are taken note of, keeping in view the natureof the considerations made, the prayers which were sought inthe amended writ petition were required to be conclusivelyanswered by the High Court on the aspect as to whether thedecision of UAHCL to terminate the LOI dated was justified andthe requirement for resolution of the dispute by an appropriateforum ought to have been left open only to the incidental aspectwhich may require appropriate evidence to be tenderedand adjudication to be made by an appropriate forum.[Para 17][1052-F-H; 1053-A]

1.5 Having noted that the appellant had failed to adhere tothe terms indicated in the LOI and the payment requiredthereunder not being made even within the extended period, theBoard of Directors of UAHCL were justified in deciding toterminate the LOI through their letter dated 10.12.2013. In fact,the prayer seeking calculation of interest on the amount depositedand such amount is being sought to be adjusted towards thebalance payments would in itself indicate that even to theknowledge of the appellant, the entire payments had not beenmade even as on the date of the filing the writ petition. In suchcircumstance, when the LOI has been rightly terminated, thedirections sought in the writ petition to execute the leaseagreement pertaining to ‘Hotel Nilanchal Ashok’, Puri does notarise and the prayers in that regard are liable to be rejected.[Para 18][1053-B-D]

1.6 A close perusal of the phrase employed in the LOI wouldindicate the one-time payment made upfront is shown as “non-refundable” and such payment is towards execution of theOperating Lease Agreement. If that be the position, the terms ofLOI is clear that the said payment is towards the lease rentalsand is the upfront payment which becomes a part of the leasetransaction and therefore not refundable only if the leaseagreement comes into operation and not otherwise. The wordemployed is not “forfeiture”, therefore, the amount payabletowards the advance lease rentals and the other advancepayments provided in clause 2 of the LOI, cannot be forfeited ifthere is default in complying with the term and entering into thelease agreement, going by the stipulations contained in the LOI

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Agoverning the parties. That apart, the amount was required to bepaid, latest by the extended date i.e., 15.12.2010. The verytermination of the LOI is for the reason that the entire paymentwas not made even within the timeframe. The cause fortermination of LOI occurred on 15.12.2010. Hence the amountpaid after the extended date, in any event cannot be retained byBUAHCL as otherwise it will amount to unjust enrichment.Therefore, it is liable to be refunded. Even with regard to theamount of Rs.4.41 crores which was paid on 07.02.2010, sincethe same cannot be forfeited it is an amount which will be availablefor accounting. In a normal circumstance, a direction was requiredCto be issued to refund the said amount also. [Para 20][1053-F-H;1054-A-C]

1.7 UAHCL submitted that due to the conduct of theappellant in not paying the amount within time and completingthe lease agreement formalities and thereafter involving UAHCLDin litigation and taking benefit of the status quo order, UAHCLwas unable to utilise the property but on the other hand had toincur expenses. On this aspect, prima facie it is seen that thelease transaction ought to have been entered into before19.02.2010. However, in the whole process itself more than 10months had elapsed. Soon thereafter the appellant had filed theEwrit petition before the High Court and the matter has beenpending before one forum or the other for nearly a decade duringwhich time the property could not be utilised nor expenses couldbe frozen. Even if that be so, it would not be appropriate for thisCourt to hazard a guess with regard to the actual loss that would Fhave been suffered by UAHCL. At the same time, when this primafacie aspect is noticed it would also not be appropriate for thisCourt to direct UAHCL to refund the amount to the extent ofRs.4.41 crore which was paid within the timeframe and allowUAHCL to thereafter initiate recovery process. On the other hand, it would be in the interest of justice to permit UAHCL toGretain the amount and grant liberty to the appellant to file anappropriately constituted civil suit seeking recovery of the saidamount. [Para 21][1054-D-G]

1.8 The order passed by High Court is modified. In thatview, the prayer of the appellant to quash the letter terminatingH

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the letter of LOI is rejected. Consequently, the termination ofLOI is upheld. However, UAHCL is directed to refund theamounts deposited by the appellant after the extended date in allamounting to Rs.4.11 crores within the stipulated period. Theappellant is reserved liberty to file a civil suit for recovery ofRs.4.41 crores paid to UAHCL. [Para 22][1055-B-D]

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Unitech Ltd. and Others vs. Telangana State IndustrialInfrastructure Corporation 2021 (2) SCALE 653; AryaVyasa Sabha v. Commissioner of Hindu Charitable &Religious Institutions & Endowments AIR 1976 SC 475;DLF Housing Construction Private Ltd. Vs. DelhiMunicipal Corporation AIR 1976 SC 386; NationalTextile Corporation Ltd. vs. Haribox Swalram AIR 2004SCC 1998 : [2004] 3 SCR 738; Dwarka Prasad v. B.D.Agarwal AIR 2003 SC 2686 : [2003] 1 Suppl. SCR336; Defence Enclave Residents’ Society v. State of U.P.AIR 2004 SC 4877 – Referred to.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No.6023 of2021.

From the Judgment and Order dated 09.03.2017 of the High Courtof Orissa at Cuttack in W.P. (C) No.23103 of 2013.

Sanjay Bansal, Ms. Swati Bansal, Ms. Vaishali Gupta, G. K. Bansal,Advs. for the Appellant.

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Ashok K. Gupta, Sr. Adv., Abhishek Gupta, Farrukh Rasheed,Ms. Ikshita Singh, Kapil Raghav, Gaurav Sharma, Som Raj Choudhury,Advs. for the Respondents.

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1046SUPREME COURT REPORTS

[2021] 6 S.C.R.

AThe Judgment of the Court was delivered by

A. S. BOPANNA, J.

1. The appellant is before this Court assailing the order dated09.03.2017 passed by the High Court of Orissa at Cuttack, in W.P.(C)No.23103/2013. By the said order the High Court was of the opinionBthat the disputed questions of fact involved in the petition cannot be goneinto in the writ jurisdiction. Accordingly, the prayer made in the petitionwas not entertained and the appellant was relegated to approach theappropriate forum available for redressal of its grievance. The appellant,therefore being aggrieved is before this Court.

C2. The respondent No.1-State of Odisha had granted the lease ofthe property in question in favour of the respondent No.5-Utkal AshokHotel Corporation Limited (for short ‘UAHCL’) for 99 years under thedocument dated 24.01.1989. UAHCL was, in that view, running anestablishment in the name and style ‘Hotel Nilachal Ashok’ in the said

premises at Puri. The same being unviable was closed down with theDapproval of Board of Directors in the year 2004. Thereafter, UAHCLdecided to lease out the same for a period of 40 years. Tender wasfloated in the year 2009. The appellant was one among the tendererswho participated in the process and being the highest bidder wasconsidered. Accordingly, the Letter of Intent (for short ‘LOI’) datedE19.01.2010 was issued in favour of the appellant delineating the terms tobe complied pursuant to which the lease agreement was to be signed.

3. Among the other conditions which were to form part of thelease agreement, even before executing the lease agreement therequirement was for the appellant to pay a sum of Rs.9.34 crores toUAHCL within 30 days, of which Rs.8.82 crores was towards non-Frefundable amount which was to be paid upfront; the security deposit ofRs.26 lakhs and the advance minimum guaranteed annual lease premiumfor the first year of Rs.26 lakhs was also to be paid.

4. On payment of the said amount the lease was to be executedand the other conditions would come into operation. The appellant whoGwas unable to pay the amount within the time stipulated, requested theUAHCL that they be permitted to deposit a part of the amount i.e.,Rs.4.41 crores on 19.09.2010 and the balance amount by 15.04.2010which was favourably considered by UAHCL through theircommunication dated 12.02.2010. Such indulgence was shown as specialHcase. The appellant accordingly deposited a portion of upfront amount to the tune of Rs.4.41 crores on 18.02.2010, but the balance amountwas not deposited within the extended time stipulated i.e., before15.04.2010. In that view, the lease agreement could not be executed.However, in view of the request from the appellant, UAHCL throughtheir communication dated 25.11.2010 once again acceded to the requestpermitting the appellant to pay the balance amount before 15.12.2010.

5. The appellant thereafter paid (i) the sum of Rs.2 crores on28.12.2010, (ii) sum of Rs.1.41 crores on 29.12.2010 and (iii) the sum ofRs.70 lakhs on 07.01.2011. Such payment, according to the appellantconstitutes the payment which was required to be made as per the LOI.However, the time gap which had ensued had created a position whereinthe grievance of the employees was to be addressed and they were tobe given the benefit of voluntary retirement. Since the LOI dated19.01.2010 had also provided for regulating the manner in which theemployees are to be treated during the lease period and had providedthe liberty to offer voluntary retirement, the UAHCL required theappellant to bear the liability towards the same. The same did not reacha finality and in the meanwhile the Board of Directors of UAHCL tookthe decision to terminate the LOI dated 19.01.2010 since the appellanthad failed to comply with clause 2 thereof, which required the paymentof Rs.9.34 crores within 30 days of issuance of LOI.

6. Even prior to communication of the decision on 10.12.2013, theappellant filed the special writ petition before the High Court on01.10.2013 wherein a prayer was sought to direct UAHCL to executethe lease agreement pursuant to the terms agreed under LOI dated19.01.2010 and accept the balance amount along with interest for delayedpayment. During the pendency of the writ petition the prayer was amendedand the appellant sought for quashing the letter dated 10.12.2013 wherebyUAHCL decided to terminate the LOI. UAHCL had filed their objectionstatement opposing the writ petition including contending therein withregard to the maintainability of the writ petition in a contractual matter.The learned Division Bench of the High Court having taken note of therival contentions and the dispute involved for adjudication, was of theopinion that the disputed questions are best left to be resolved before theappropriate forum. The appellant is assailing the said order.

7. We have heard Mr. Sanjay Bansal, learned counsel appearingfor the appellant, Mr. Ashok Kumar Gupta, learned senior counselappearing for UAHCL and perused the appeal papers.

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A8. The learned counsel for the appellant would contend that theaction of UAHCL to cancel the LOI and retain the amount paid thereunderis not justified. In an attempt to fortify his submission, the learned counselhas referred to LOI dated 19.01.2010 with reference to clause 2, topoint out that the upfront amount payable within 30 days though not paidwithin the time stipulated therein, the appellant had sought extension ofBtime to pay which was agreed to by the communication dated 04.02.2010and extended by the communication dated 25.11.2010. Though the timeagreed thereunder is up to15.12.2010, the amount paid by the appellanton 28.12.2010 (Rs.2 crores), 29.12.2010 (Rs.1.41 crores) and 07.11.2011(Rs.70 lakhs) had been accepted without demur and as such the upfrontCpayment of Rs.8.82 crores as required had been paid. In that view, thelease agreement was required to be executed. It is contended, thoughthat was position, UAHCL instead of executing the lease agreementhad through the communication dated 13.04.2011 raised the issue of theappellant having to bear the total liability on account of providing voluntaryretirement to the employees which was as per the decision of the BoardDof UAHCL due to insistence of the State Government, though it was nota condition in the LOI nor could have been included in the leaseagreement. It is pointed out that clause 11 of the LOI though providedfor regulating the manner in which the employees are to be maintainedhad indicated that the appellant shall not retrench them but the libertyEwas for the appellant to consider VRS. As such it could not be imposedon the appellant is the contention. In such circumstance, it is contendedby the learned counsel that the appellant having made the payment wasentitled for the lease agreement to be executed in their favour. Hencethe termination being bad, be set aside and the UAHCL be directed toexecute the lease agreement is his submission.F

9. The learned counsel for UAHCL would on the other handcontend that the LOI was issued in favour of the appellant after thetender process and as such the terms of the LOI was required to becomplied. Despite the payment of Rs.9.34 crores required to be madewithin 30 days, the appellant had failed to comply with the same. It isGtrue that as per the request of the appellant the time was extended, butit was only a concession as a special case. Even as per the extensiongranted the payment was required to be made by 15.12.2010. But, evenas per the admitted case of the appellant the payment towards the balanceof the upfront amount was made only on 28.12.2010, 29.12.2010 andH07.01.2011 which was subsequent to the date till which extension was

provided. That apart, since the requirement is to pay Rs.9.34 croreswithin the time stipulated, the security deposit and advance minimumguaranteed annual lease premium amount was also required to be paidwithin the time stipulated but had not been paid. As such the appellantcannot contend that they have performed their obligation so as to assailthe termination of LOI and seek execution of the lease agreement. Inthat view, while justifying the termination it is also contended that theupfront amount of Rs.8.82 crores being one-time non-refundable amount,it is within the powers of UAHCL to retain the same. Alternatively, it iscontended that UAHCL was forced to incur idle expenses towardsmaintenance and the benefits payable to the employees without gettingreturns as the lease had not materialised due to the default committed bythe appellant. In this regard, roughly an amount of Rs.4.5 crores hasbeen incurred by UAHCL which in any event, the appellant is liable toreimburse. In that view, the learned counsel seeks that the appeal bedismissed.

10. In the light of the contentions put forth, it is seen that the leaseagreement was to be entered into between the parties pursuant to theterms depicted in LOI and on compliance of the initial obligations set outtherein. The present dispute relates to the initial payment that was requiredto be made by the appellant within the time frame set out in the LOI andnon-adherence to which has resulted in termination of LOI. Clause 2 ofthe LOI provides for the same, which reads as hereunder: - “2. You shall execute the Operating Lease Agreement within 30days of the issue of LOI and pay an amount of Rs.9.34 crore withinthese 30 days as per following details i.One-time non-refundable upfront payment of Rs.8.82 crore.

ii.Security Deposit (Rs.26.00 lakh) as per article iv.

iii.Advance Minimum Guaranteed Annual Lease Premium forthe first year (Rs.26.00 lakh) as per annex-ix-Financial Bid.”

11. A perusal of the same indicates that the appellant was obligedto pay an amount of Rs.9.34 crore within 30 days from 19.01.2010 andexecute the Operating Lease Agreement. Towards the said amount, asum of Rs. 8.82 crore was payable upfront as an one-time non-refundableamount. Though the learned counsel for the appellant sought to contendthat the Minimum Guaranteed Annual Lease Premium and Securitydeposit of Rs. 26 lakh each are to be paid subsequently when the lease AB

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Ais executed, in our view it cannot be considered to be loose ended. SinceClause 2 refers to Rs.9.34 crore which is payable in 30 days and thatincludes the said amount of Advance Annual Premium and Securitydeposit, the entire amount was payable within 30 days. And the LeaseAgreement was simultaneously executable. It only means that the sameshould be paid and the formality of execution of Lease Agreement alsoBshould be completed in the said 30 days and the payment to be madeincludes the upfront amount of Rs.8.82 crore.

12. In that backdrop it is necessary to examine the manner inwhich the things have proceeded after issue of LOI. Admittedly theappellant was not ready with the amount to make the payment withinCthe timeframe contemplated under Clause 2 of LOI. The appellant,through their letter dated 04.02.2010 requested UAHCL that they beallowed to pay 50% of the bid money by 19.02.2010 which in our viewwill include all the components indicated in Clause 2 of LOI and not justthe upfront component. The rest of the money was undertaken to beDpaid by 15.04.2010. UAHCL through their reply dated 12.02.2010 allowedthe same as a special case. The appellant once again through their letterdated 17.11.2010 requested for extension of time for payment of Rs.4.93crore. UAHCL again extended the time till 15.12.2010.

13. Despite such indulgence shown by UAHCL the appellant didEnot make the balance payment before 15.12.2010. Instead, the sum ofRs.4.11 crore was paid subsequent thereto and that too, in instalmentsof Rs. 2 crores on 28.12.2010; Rs.1.41 crore on 29.12.2010 and Rs.70lakhs on 07.01.2011.

14. Though the learned counsel for the appellant seeks to contendFthat UAHCL having received the said payment cannot at this stagecontend that the payment was not made within the time stipulated, weare unable to accept such contention. UAHCL is a corporation whichhas different departments and as such the remittance made beingaccepted in itself cannot be taken as an act to condone the delay causedby the appellant in complying with the terms of the LOI so as to alter theGterms of contract. There is no material on record that subsequent to15.12.2010, there is any positive act on behalf of UAHCL to either extendthe time for payment or for having expressly condoned the delay andhaving accepted the payment so as to regularise the transaction. This isrelevant more so in the context that at an earlier point as against the timeHstipulated for payment under the LOI specific correspondence was exchanged between the parties and the time had been expressly extendedprior to the time fixed earlier having expired. In such situation, whenadmittedly the balance payment had not been made prior to 15.12.2010,unless the appellant had obtained express extension from UAHCL meretendering the payment and the same having been accepted cannot beconstrued as a positive act to alter the contract.

15. No doubt, the appellants have relied on the communicationdated 13.04.2011 addressed by the General Manager, UAHCL indicatingtherein that the issue of offering VRS to all the employees unwilling tojoin the new management was a consideration and the VRS amount willhave to be paid by the appellant to UAHCL. Apart from the reasonassigned by the High Court to indicate that the same cannot be treatedin favour of the appellant, the said letter does not indicate that thediscussion in that regard was after indicating to the appellant that thedelay in payment of the upfront amount has been condoned and accepted.If at all the said aspect relating to VRS of the employees was alsomutually agreed and, in that context, if UAHCL had proceeded to condonethe delay and enter into the lease agreement it is only in such circumstancethe exchange of correspondence in that regard would have assumedrelevance. If that be the position, when admittedly the appellant wasrequired to make the agreed payments within the timeframe indicatedunder LOI dated 09.01.2010 and the appellants themselves being unable to comply with the requirement, though having secured extensions ontwo occasions cannot turn around to contend otherwise at this juncture.Despite the extended period having come to an end on 15.12.2010, theappellant not having made the full payment within the said date cannotat this stage contend to have complied with the terms so as to seek adirection to UAHCL to execute the lease agreement. In fact, the HighCourt having examined the material on record has also arrived at suchconclusion.

16. Notwithstanding such conclusion reached by the High Court,ultimately it has arrived at the decision that in view of the disputedquestions to be resolved between the parties, the same cannot be goneinto in writ jurisdiction. The learned counsel for the appellant in thatview has placed reliance to the case in Unitech Ltd. and Others vs.Telangana State Industrial Infrastructure Corporation (TSICC andOrs.) 2021 (2) SCALE 653, the decision to which one of us (Mr. JusticeM.R. Shah) is a member on the Bench, with specific reference to para32 thereof, which reads as hereunder:

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A“32. Much of the ground which was sought to be canvassed inthe course of the pleadings is now subsumed in the submissionswhich have been urged before this Court on behalf of the State ofTelangana and TSIIC. As we have noted earlier, during the courseof the hearing, learned Senior Counsel appearing on behalf of theState of Telangana and TSIIC informed the Court that theBentitlement of Unitech to seek a refund is not questioned nor isthe availability of the land for carrying out the project being placedin issue. Learned Senior Counsel also did not agitate the groundthat a remedy for the recovery of moneys arising out a contractualmatter cannot be availed of under Article 226 of the Constitution.CHowever, to clear the ground, it is necessary to postulate thatrecourse to the jurisdiction under Article 226 of the Constitution isnot excluded altogether in a contractual matter. A public law remedyis available for enforcing legal rights subject to well-settledparameters.”

D17. Having noted the said decision, a reference to the order passedby the High Court would indicate that the High Court though havingreferred to the decisions in Arya Vyasa Sabha v. Commissioner ofHindu Charitable & Religious Institutions & Endowments, AIR 1976SC 475, DLF Housing Construction Private Ltd. Vs. Delhi MunicipalCorporation AIR 1976 SC 386, National Textile Corporation Ltd. vs.EHaribox Swalram AIR 2004 SCC 1998 , Dwarka Prasad v. B.D.Agarwal, AIR 2003 SC 2686, and Defence Enclave Residents’ Societyv. State of U.P. AIR 2004 SC 4877 to note the limitations whileconsidering a writ petition under Article 226 of the Constitution of Indiahas in that view taken note of the fact situation arising in the instant Fcase. It is on facts that the High Court has arrived at the conclusion thatsuch disputed questions of fact cannot be resolved in the writ petition ofthe present nature. Therefore, in the present facts, the High Court hasnot dismissed the writ petition on maintainability but having taken note ofthe issue involved was of the opinion that the contentions urged would necessitate the requirement of recording evidence and therefore relegatedGthe parties to an appropriate forum. To that extent, though we take noteof the observations made by the High Court, keeping in view the natureof the considerations made, the prayers which were sought in theamended writ petition were required to be conclusively answered by theHigh Court on the aspect as to whether the decision of UAHCL toHterminate the LOI dated 19.01.2010 was justified and the requirement for resolution of the dispute by an appropriate forum ought to have beenleft open only to the incidental aspect which may require appropriateevidence to be tendered and adjudication to be made by an appropriateforum.

18. Keeping these aspects in view, having noted that the appellanthad failed to adhere to the terms indicated in the LOI dated 19.01.2010and the payment required thereunder not being made even within theextended period, the Board of Directors of UAHCL were justified indeciding to terminate the LOI through their letter dated 10.12.2013. Infact, the prayer no. 3 seeking calculation of interest on the amountdeposited and such amount is being sought to be adjusted towards thebalance payments would in itself indicate that even to the knowledge ofthe appellant, the entire payments had not been made even as on thedate of the filing the writ petition. In such circumstance, when the LOIhas been rightly terminated, the directions sought in the writ petition toexecute the lease agreement pertaining to ‘Hotel Nilanchal Ashok’, Puridoes not arise and the prayers in that regard are liable to be rejected.

19. Having arrived at the above conclusion, the next aspect whichwould engage our attention is as to the manner in which the amount paidby the appellant is to be treated. The learned counsel for UAHCL wouldcontend that the LOI provides that the one-time upfront amount to bepaid is non-refundable, in that view, it is contended that the said amountis not liable to be refunded. Even otherwise due to the delay caused bythe appellant and having obtained the status-quo order from the court bylitigating with regard to the subject matter UAHCL have been preventedfrom otherwise utilising the property which has caused loss to them andthe said amount would be adjustable towards the same is his contention.

20. On taking note of the contention, a close perusal of the phraseemployed in the LOI would indicate the one-time payment made upfrontis shown as “non-refundable” and such payment is towards executionof the Operating Lease Agreement. If that be the position, the terms ofLOI is clear that the said payment is towards the lease rentals and is theupfront payment which becomes a part of the lease transaction andtherefore not refundable only if the lease agreement comes into operationand not otherwise. The word employed is not “forfeiture”, therefore, theamount payable towards the advance lease rentals and the other advancepayments provided in clause 2 of the LOI, cannot be forfeited if there isdefault in complying with the term and entering into the lease agreement, A

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Agoing by the stipulations contained in the LOI governing the parties herein.That apart, as noted, the amount was required to be paid, latest by theextended date i.e., 15.10.2010. The very termination of the LOI is forthe reason that the entire payment was not made even within thetimeframe. The cause for termination of LOI occurred on 15.10.2010.Hence the amount paid on 28.12.2010 (Rs.2 crores), 29.12.2010B(Rs.1.41crores) and 7.01.2011 (Rs. 70 lakhs) being clearly made afterthe said date in any event cannot be retained by UAHCL as otherwise itwill amount to unjust enrichment. Therefore, it is liable to be refunded.Even with regard to the amount of Rs.4.41 crores which was paid on07.02.2010, since we have held that the same cannot be forfeited it is anCamount which will be available for accounting. In a normal circumstance,a direction was required to be issued to refund the said amount also.21. However, as noted it is the contention on behalf of UAHCLthat due to the conduct of the appellant in not paying the amount withintime and completing the lease agreement formalities and thereafterDinvolving UAHCL in litigation and taking benefit of the status quo order,UAHCL was unable to utilise the property but on the other hand had toincur expenses. On this aspect, prima facie it is seen that the leasetransaction ought to have been entered into before 19.02.2010. It is onaccount of the difficulty expressed by the appellant, the time for paymentof upfront amount was extended ultimately up to 15.12.2010, in whichEprocess itself more than 10 months had elapsed. Soon thereafter theappellant had filed the writ petition before the High Court and the matterhas been pending before one forum or the other for nearly a decadeduring which time the property could not be utilised nor expenses couldbe frozen. Even if that be so, it would not be appropriate for this Court to Fhazard a guess with regard to the actual loss that would have beensuffered by UAHCL. At the same time, when this prima facie aspect isnoticed it would also not be appropriate for this Court to direct UAHCLto refund the amount to the extent of Rs.4.41 crore which was paidwithin the timeframe and allow UAHCL to thereafter initiate recovery

process. On the other hand, it would be in the interest of justice to permitGUAHCL to retain the amount and grant liberty to the appellant to file anappropriately constituted civil suit seeking recovery of the said amount.In the said proceedings it would be open for UAHCL to put forth thecontention to set off the amount towards the loss suffered by them or toseek for counter claim if any further amount is due. In such proceedingsHit would be open for the competent civil court to independently consider that aspect of the matter on its own merits for which we have notexpressed any opinion on merits relating to that aspect. Even with regardto the claim of interest, if any, by the appellant that aspect is also keptopen to be adjudicated in the civil suit. The pendency of the suit shall notbe an impediment for UAHCL to deal with the property or to re-tenderthe same in any manner.

A

B

22. In the light of the above we pass the following order:-

(i) The order dated 09.03.2017 passed by High Court of Orissaat Cuttack in W.P.(C) No.23103/2013 stands modified.

(ii) In that view, the prayer of the appellant to quash the letterCdated 10.12.2013 terminating the letter of LOI dated19.01.2010 stands rejected. Consequently, the terminationof LOI dated 19.01.2010 is upheld. However, UAHCL isdirected to refund the amounts deposited by the appellanton 28.12.2010 (Rs.2 crores), on 29.12.2010 (Rs.1.41 crores)and on 07.01.2011 (Rs.70 lakhs), in all amounting to Rs.4.11Dcrores within four weeks from this day.

D

(iii) The appellant is reserved liberty to file a civil suit for recoveryof Rs.4.41 crores paid to UAHCL on 17.02.2010 subject tothe observations made above and all contentions of theparties in that regard are left open.

E

(iv) In view of the above conclusions and disposal of the appeal,the amount of Rs.3 crores deposited by the appellant beforethis Court, which is kept in fixed deposit shall be refundedto the appellant with accrued interest thereon.

(v) The appeal is disposed of accordingly with no order as toFcosts.

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

Nidhi Jain

Appeal disposed of.

G

H