THE ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED AND versus S. N. RAJ KUMAR AND ANOTHER on 10 April 2018

THE ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURECORPORATION LIMITED AND OTHERS

v.

S. N. RAJ KUMAR AND ANOTHER

(Civil Appeal No. 3020 of 2018)

APRIL 10, 2018

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]

Transfer of Property Act, 1882: ss. 5, 8, 10, 11 and 55 –Allotment of industrial plots to the respondents/entrepreneurs byappellant-Corporation to construct transport offices and godowns– Allotment letters contained terms and conditions that respondentsto establish their units within two years from taking possession,otherwise allotment would be cancelled – Thereafter, agreement/sale deeds entered into between the Corporation and the respondents – Subsequently, issuance of notices for cancellation of plots sincerespondents failed to establish their units – Later Corporation revisedits decision of cancelling the allotments and demanded payment of50% of the prevailing market value of the plots for condoning thedelay in raising the construction – Challenge to, by the respondents – Single Judge of the High Court allowed the writ petitions – Upheldby the Division Bench – On appeal, held: There was no conditionof completion of construction within a period of two years in thesale deed but was only in the allotment letter – However, after thesaid allotment, the Corporation not only received entireconsideration but executed the sale deeds wherein no such conditionwas stipulated – Thus, the High Court rightly held that after theregistration of sale deed of the property by the Corporation to therespondents, transferring the ownership in the plots in the favourof the respondents whereby the respondents acquired absolutemarketable title to the property, the Corporation had no right toinsist on the conditions mentioned in the allotment letter, whichceased to have any effect after the execution of the sale deed –Further, the High Court rightly held that the Corporation hadwithdrawn the action of cancellation of the plots, instead, itdemanded 50% of the prevailing market value in lump sum towards

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Athe cost of the plots – There was no legal basis for such a demand– Thus, the order passed by the High Courts upheld.

Dismissing the appeals, the Court

HELD: 1.1 There is no condition of completion ofconstruction within a period of two years in the sale deed. Such aBcondition was only in the allotment letter. However, after the saidallotment, the appellant-Corporation not only received entireconsideration but executed the sale deeds as well. In the saledeeds no such condition was stipulated. Therefore, the High Courtis right in holding that after the sale of the property by theCappellant-Corporation to the respondents, whereby therespondents acquired absolute marketable title to the property,the appellant-Corporation had no right to insist on the conditionsmentioned in the allotment letter, which cease to have any effectafter the execution of the sale deed. [Para 14] [464-A-C]

D1.2 Section 5 of the Transfer of Property Act defines‘transfer’ as conveyance of property from one living person toone or more living persons. Sections 8, 10 and 11 thereof attachsanctity and solemnity to a transfer of immovable property.Section 55 of the Act deals with rights and liabilities of buyer andseller. As per this provision, when the buyer dischargesEobligations and seller passes/conveys the ownership of theproperty, the contract is concluded. Thereafter, the liabilities,obligations and rights, if any, between the buyer and seller wouldbe governed by other provisions of the Contract Act and theSpecific Relief Act, on the execution of the sale deed. The sellerFcannot unilaterally cancel the conveyance or sale. [Paras 15-16][464-D; 465-F]

1.3 The submission that the doctrine of proportionality isnot applicable in these cases, cannot be accepted. In the realm ofAdministrative Law ‘proportionality’ is a principle where the CourtGis concerned with the process, method or manner in which thedecision-maker has ordered his priorities and reached aconclusion or arrived at a decision. The very essence of decision-making consists in the attribution of relative importance to thefactors and considerations in the case. The doctrine ofproportionality thus steps in focus true nature of exercise-theH

elaboration of a rule of permissible priorities. ‘Proportionality’involves ‘balancing test’ and ‘necessity test’. The ‘balancing test’permits scrutiny of excessive onerous penalties or infringementof rights or interests and a manifest imbalance of relevantconsiderations. [Para 19] [467-D-F]

1.4 The submission that the land is not used for putting afactory building but was used for some other purpose, was notpleaded by the appellant-Corporation in the High Court or evenin these appeals. This was not the reason for initially cancellingthe allotment or demanding payment of 50% of the prevailingmarket value. Therefore, this oral argument advanced at the timeof hearing cannot be accepted without any material on recordand when it was not the basis of cancellation/demand of payment.[Para 20] [467-G; 468-A]

1.5 The High Court rightly held that the appellant-Corporation had withdrawn the action of cancellation of the plots.Instead, it demanded 50% of the prevailing market value in lumpsum towards the cost of the plots. There is no legal basis forsuch a demand, more so, after the registration of the sale deedsin favour of the respondents thereby transferring the ownershipin these plots in their favour. [Para 21] [468-F-G]

Indu Kakkar v. Haryana State Industrial DevelopmentCorporation Ltd. & Anr. (1999) 2 SCC 37 : [1998] 3Suppl. SCR 277 – distinguished.

State of Kerala v. Cochin Chemical Refineries Ltd.[1968] 3 SCR 556; Teri Oat Estates (P) Ltd. v. U.T.,Chandigarh & Ors. (2004) 2 SCC 130 : [2003] 6 Suppl.SCR 1235; Union of India v. G. Ganayutham, (1997) 7SCC 463 : [1997] 3 Suppl. SCR 549; Mohinder SinghGill & Anr. v. The Chief Election Commissioner, NewDelhi & Ors. (1978) 1 SCC 405 : [1978] 2 SCR 272 –referred to.

Judicial Review of Administrative Action (1995) para13.085, 601-605; Wade, Administrative Law (2009)157-158, 306-308 – referred to.

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[2018] 3 S.C.R.

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3020of 2018.

CFrom the Judgment and Order dated 25.06.2013 by the High Courtof Judicature of Andhra Pradesh at Hyderabad in Writ Appeal No. 996of 2011

WITH

C. A. Nos. 2995, 2994, 2996, 2997, 2998-3014, 2954-2989, 3015,3016, 3018-3019, 2990, 3017, 2991, 2992 and 2993 of 2018.D

Vikramjeet Banerjee, ASG, Basava Prabhu Patil,K. V. Vishwanathan, Debal Banerji, A. T. M. Rangaramanujam, Sr.Advs., Guntur Prabhakar, Guntur Pramod Kumar, Ms. Prerna Singh,Ravi Kishore, Prashant Chaudhary, Chava Badri Nath Babu, C. M.

Angadi, V. R. Ayudu, Rameshwar Prasad Goyal, R. Santhnam Krishnan,EAditya Kr. A., Lokesh Sharma, Abdulla, C. S. N. Mohan Rao, AnnamD. N. Rao, A. Venkatesh, Sudipto Sircar, Rahul Mishra, Ms. TulikaChikker, R. Anand Padmanabhan, Romil Pathak, Ms. Ananya Mukherjee,Akshay R., Shashi Bhushan Kumar, Gaurav Juneja, Shikhar Srivastava,Sanjeev Kapoor, M/s. Khaitan & Co., Harish Beeran, Mushtaq Salim,FUsman Ghani Khan, Dev Prakash, Radha Shyam Jena, Romy Chacko,Ms. Meera Mathur, Ms. C. K. Sucharita, Sanjeev Kumar, H. K. Naik,Rajnish, Venkateswara Rao Anumolu, Mohd. S. Haneef, PrabhakarParnam, P. Madhu Sudhan Reddy, Piyush Chaudhary, AniruddhaP. Mayee, Ms. Anu Gupta, Gouri Karuna Das Mohanti, Pawan KumarSharma, Rakesh Dahiya, H. K. Naik, Satya Mitra, Ajay Amrit Raj,GMs. Divya Swami, Nikhil Swami, Mrs. Prabha Swami, Vikas SinghJangra, Ms. Jennifer Rohita Xavier, Ms. S. Lakshmi, M. Srinivas R.Rao, Arun Devdas, Mrs. Sudha Gupta, Sridhar Potaraju, Prabhat Kumar,Ms. Sindoora VNL, Ms. Ankita Sharma, Ms. Praveena Gautam,Ms. Manjula Gupta, Raj Bahadur, Ms. Shruti Agarwal, Ayush Anand,HShubendu Anand, Mrs. Anil Katiyar, Advs. for the appearing parties.

The Judgment of the Court was delivered by

A. K. SIKRI, J. 1. Appellant No.1, Andhra Pradesh IndustrialInfrastructure Corporation Limited, is a public sector undertakingincorporated under the Companies Act, 1956. Appellant Nos. 2 and 3are its office bearers. The main object of the appellant-Corporation is todevelop industrial areas at various places in the State of Andhra Pradeshand allot them to the needy entrepreneurs for the purpose of establishingindustries.

2. During 1996-97, the appellant-Corporation allotted industrialplots to the respondents/ entrepreneurs herein at Visakhapatnam andother places in the State of Andhra Pradesh. All the respondents aretransport companies with their headquarters all over India and they gotallotted the aforesaid plots in Visakhapatnam or other places in the Statewith the purpose of having branch offices. Intention was to constructtransport offices and godowns. The allotment letters vide whichallotments were made by the appellant-Corporation contained certainterms and conditions. One of the conditions, which is the bone ofcontention in these appeals, was that the respondents were supposed toestablish their units within two years from the date of taking possessionof their plots allotted to them for industrial purposes. It was also stipulatedthat contravention of any of the terms and conditions of the allotmentwould result in cancellation of such allotment. The relevant clausessignifying the aforesaid stipulation are worded as under:

“10. The allottee should note that the Corporation forfeits allamounts paid by the allottee if any of the terms and conditionsstipulated in the allotment letter are not complied with by theallottee.

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17. You should implement the project envisaged within two yearsof taking possession of the land/plot/shed. If within two yearsfrom the date of final allotment and taking possession for the land/plot/shed the project is not implemented, the allotment will becancelled.

18. Registration of the sale deed will be made in your favour onlyafter implementation of the unit in the allotted plot/shed. Anundertaking on Rs.100/- NJS Paper to the effect that the allottee A

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Awill take sale deed for the plot/shed/ land allotted within one monthof intimation from the APIIC Limited and to pay the penaltieslevied by the Corporation in case of failure should be furnished inthe proforma enclosed.”

3. Though initial allotments were made by issuing allotment lettersBas above, these were followed by agreements of sale which were enteredbetween the appellant-Corporation and the respondents on different datesbetween 1997 and 1999. During this period, sale deeds were alsoexecuted by the appellant-Corporation in favour of the respondents, afterreceiving full consideration of the plots in question, thereby transferringthe ownership rights in favour of the respondents herein. Almost sixCyears after the execution of the sale deed, show-cause notices wereissued to the respondents for cancellation of the plots on the ground thatthe respondents had failed to establish their industrial units on the saidplots within the stipulated period and had kept them idle which wasdetrimental to the industrial development. The respondents submittedDtheir separate replies to these show-cause notices wherein, broadlyspeaking, the position was taken that the appellant-Corporation did notprovide basic infrastructure facilities like roads, water, electricity and,therefore, the plots could not be utilised for the purpose of constructionof godowns.

E4. Interestingly, the aforesaid facilities were provided in the year2006 only, i.e. after the issuance of show-cause notices and replies theretoby the respondents. In these circumstances, the respondents applied forpermission to construct the godowns. Vide letter dated January 20, 2006,the appellant-Corporation approved the building plans, in pursuancewhereof the respondents commenced construction. However, thereafter,Fthe appellant-Corporation passed orders dated March 28, 2006 statingtherein that there was no justification for not establishing industrial/business units within the time specified in the allotment letters and passedorders cancelling the allotments made to the respondents. Challengingthese cancellation orders, batch of writ petitions came to be filed by theGrespondents. In these writ petitions, one of the primary contentions ofthe respondents was that once sale deeds had been executed by theappellant-Corporation resulting in conferring upon the respondentsabsolute ownership of the plots in question, the appellant-Corporationhad no power to cancel the allotments.

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5. While these writ petitions were pending, there was a change ofheart, to a little extent, insofar as the appellant-Corporation is concerned.It revised its decision of cancelling the allotments and instead decided togive one more opportunity to the respondents herein, subject to certainconditions. One of the conditions was that the respondents pay 50% ofthe prevailing market value for condoning the delay in raising theconstruction. Challenging this position, fresh writ petitions came to befiled.

6. In the aforesaid scenario, it becomes clear that the issue beforethe High Court was as to whether the appellant-Corporation can demand50% of the prevailing market value as a condition for giving extension/another opportunity to the respondents to raise construction on the plotssold to them.

7. The challenge of the respondents to the aforesaid conditionwas predicated on the same ground, namely, after the execution of thesale deed, the appellant-Corporation had no power to cancel the allotmentor demand payment of 50% of the prevailing market value. Theappellant-Corporation, on the other hand, took up the plea that theallotments were subject to certain terms and conditions made thereinand any contravention thereof was liable to be cancelled. Therefore,mere execution of the sale deeds did not absolve the respondents fromcompliance with the terms and conditions of the allotment.

8. The matters were heard by the learned Single Judge whoallowed the writ petitions vide common judgment dated July 16, 2010accepting the plea of the respondents, namely, once the sale deeds wereexecuted, the appellant-Corporation was denuded of any power to cancelthe allotments or to make demand of 50% amount of the prevailing marketvalue of the plots. The appellant-Corporation, feeling aggrieved by thesaid judgment, preferred writ appeals before the Division Bench, whichhave also been dismissed vide the impugned judgment, thereby affirmingthe judgment of the learned Single Judge. Not satisfied with this outcome,the present appeals are preferred.

9. In nutshell, reasoning of the High Court is that the allotmentwas made to the respondents followed by agreements of sale andthereafter sale deeds were also executed by the appellant-Corporationconveying right, title and interest absolutely, to the respondents. When ABC

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Athe contract is concluded and regular sale deed is executed between thevendor and vendee in respect of an immovable property, it cannot besaid that the dispute arises in the realm of a statutory contract or non-statutory contract. The dispute is not with regard to the contract. It is ineffect the question of title which is sought to be nullified by the appellant-Corporation unilaterally based on conditions of allotment and the same isBnot permissible in law.

10. It was further held that the appellant-Corporation offeredindustrial plots and the respondents/entrepreneurs gave counter offerwhich was accepted by it. At that stage, the conditions of offer, counteroffer and acceptance found expression in the allotment letter (acceptanceCof offer subject to conditions) and in the agreement of sale (contract ofsale) in terms of Section 54 of the Transfer of Property Act, 1882(hereinafter referred to as the Act). This ultimately resulted in theconclusion of contract by way of execution of the sale deed by vendor infavour of the vendee. Once the contract is concluded, the allotmentDconditions or covenants of agreement of sale ordinarily cannot be enforcedhaving regard to the various provisions of the Transfer of Property Act,Indian Contract Act, 1872, the Registration Act, 1908 and the SpecificRelief Act, 1963, which constitute the Civil Code of India and govern thetransfer of immovable property from one person to another. The allotmentletter or the sale agreement does not survive once the contract is concludedEon execution of the registered sale deed resulting in alienation,conveyance, assignment and transfer of title.

11. The High Court has referred to Sections 5, 6, 8, 10 and 11 ofthe Act as well as Section 23 of the Indian Contract Act, 1872 incementing the aforesaid conclusion. The High Court also relied uponFSections 4 and 55 of the Act. Support of the judgment of this Court inthe case of State of Kerala v. Cochin Chemical Refineries Ltd.[1] andtwo judgments of its own High Court was also taken. The matter waslooked into by the High Court from another angle as well. It noted thatin these cases, after the allotment was made, all the respondents paidGentire sale considerations. The appellant-Corporation entered intoagreements and long thereafter executed registered sale deeds. A decadethereafter, when the respondents applied for building permission, as astatutory authority, accorded such sanction. In this background, thequestion posed was whether the harsh action of cancelling allotment is 1 (1968) 3 SCR 556H

proportionate to the situation. It gave the answer in the negative, applyingthe doctrine of proportionality as was applied in Teri Oat Estates (P)Ltd. v. U.T., Chandigarh & Ors.[2]

12. Another dimension which has been highlighted by the HighCourt is that though initially the decision was taken to cancel the allotment,the appellant-Corporation on its own came forward and decided tocompound the alleged contravention by a novel method and decided tocondone the so-called default on the part of the respondents by demanding50% of the prevailing market value in lump sum towards the costs of theplots. In the opinion of the High Court, once the sale deed is registered,the seller has no such enforceable right to demand more money and thisdemand was not backed by any law. We may also point out that theappellant-Corporation had relied upon the judgment of this Court in InduKakkar v. Haryana State Industrial Development Corporation Ltd.& Anr.[3] The High Court, however, took the view that the aforesaidjudgment had no application to the facts of these cases at hand.

13. Before us, arguments of Mr. Basava Prabhu Patil, learnedsenior counsel appearing for the appellant-Corporation, remained thesame which were advanced before the High Court. It was contendedthat even if there was a sale in favour of the respondents by executionof the sale deed, the seller (appellant-Corporation) could impose acondition in the said sale deed, which the buyer was under obligation tofulfill as sale was coupled with the said condition. It was argued thatjudgment of this Court in Indu Kakkar’s case had decided the samequestion, which was in favour of the appellant, and the High Court hasdistinguished the said judgment on erroneous grounds. It was also arguedthat the judgment of this Court in Teri Oat Estates (P) Ltd., on thedoctrine of proportionality, was wrongly applied by the High Court asthe doctrine of proportionality was not at all applicable in these cases.He also submitted that one of the conditions contained in the sale deeditself was that the purchaser shall use the land for the purpose specifiedtherein, i.e. for putting up a factory or factories duly permitted by thecompetent authority and for no other purpose and shall also not put anystructure or buildings other than a factory building or buildings and someof the respondents had violated this condition as the land was not usedfor putting up a factory.

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3 (1999) 2 SCC 37

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A14. We do not find any merit in any of the aforesaid arguments.In the first instance, it needs to be emphasised that there is no suchcondition of completion of construction within a period of two years inthe sale deed. Such a condition was only in the allotment letter. However,after the said allotment, the appellant-Corporation not only receivedentire consideration but executed the sale deeds as well. In the saleBdeeds no such condition was stipulated. Therefore, the High Court isright in holding that after the sale of the property by the appellant-Corporation to the respondents, whereby the respondents acquiredabsolute marketable title to the property, the appellant-Corporation hadno right to insist on the conditions mentioned in the allotment letter, which Ccease to have any effect after the execution of the sale deed.

15. Section 5 of the Act defines ‘transfer’ as conveyance ofproperty from one living person to one or more living persons. Sections8, 10 and 11 thereof attach sanctity and solemnity to a transfer ofimmovable property. These provisions read as under:D8. Operation of transfer– Unless a different intention isexpressed or necessarily implied, a transfer of property passesforthwith to the transferee all the interest which the transferor isthen capable of passing in the property and in the legal incidentsthereof.

ESuch incidents include, when the property is land, the easementsannexed thereto, the rents and profits thereof accruing after thetransfer, and all things attached to the earth;

and, where the property is machinery attached to the earth, themovable parts thereof; and, where the property is a house, theFeasements annexed thereto, the rent thereof accruing after thetransfer, and the locks, keys, bars, doors, windows, and all otherthings provided for permanent use therewith; and, where the property is a debt or other actionable claim, thesecurities therefor (except where they are also for other debts orGclaims not transferred to the transferee), but not arrears of interestaccrued before the transfer; and, where the property is money or other property yielding income,the interest or income thereof accruing after the transfer takeseffect.

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10. Condition restraining alienation– Where property istransferred subject to a condition or limitation absolutely restrainingthe transferee or any person claiming under him from parting withor disposing of his interest in the property, the condition or limitationis void, except in the case of a lease where the condition is for thebenefit of the lessor or those claiming under him:

PROVIDED that property may be transferred to or for the benefitof a women (not being a Hindu, Muhammadan or Buddhist), sothat she shall not have power during her marriage to transfer orcharge the same for her beneficial interest therein.

11. Restriction repugnant to interest created– Where, on atransfer of property, an interest therein is created absolutely infavour of any person, but the terms of the transfer direct thatsuch interest shall be applied or enjoyed by him in a particularmanner, he shall be entitled to receive and dispose of such interestas if there were no such direction.

Where any such direction has been made in respect of one pieceof immovable property for the purpose of securing the beneficialenjoyment of another piece of such property, nothing in this sectionshall be deemed to affect any right which the transferor mayhave to enforce such direction or any remedy which he may havein respect of a breach thereof.”

16. Section 55 of the Act deals with rights and liabilities of buyerand seller. As per this provision, when the buyer discharges obligationsand seller passes/conveys the ownership of the property, the contract isconcluded. Thereafter, the liabilities, obligations and rights, if any, betweenthe buyer and seller would be governed by other provisions of the ContractAct and the Specific Relief Act, on the execution of the sale deed. Theseller cannot unilaterally cancel the conveyance or sale.

17. Insofar as the judgment in Indu Kakkar’s case is concerned,the High Court has rightly held that that would not apply to the facts ofthis case. On the facts of that case, the Court, in the first instance,came to the conclusion that clause 7 of the agreement, which was enteredinto between the parties, was binding. As per clause 7, construction ofthe building for setting up the industry, in respect of which land wasgiven to the appellant in that case, was to start within a period of six A

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Amonths and the construction had to be completed with two years fromthe date of issue of the allotment letters. Since the appellant had failedto commence or build the construction within the stipulated time, show-cause notice has been issued as to why the plot be not resumed as perclause 7 of the agreement. In this backdrop, the appellant had challengedthe enforceability of clause 7 of the agreement taking aid of Section 11Bof the Act. This contention was repelled in the following manner:

“16. However, the allottee has contended before the trial courtthat clause 7 of the agreement is unenforceable in view of Section11 of the TP Act. But that contention was repelled, according tous, rightly because the deed of conveyance had not created anyCabsolute interest in favour of the allottee in respect of the plotconveyed. For a transferee to deal with interest in the propertytransferred “as if there were no such direction” regarding theparticular manner of enjoyment of the property, the instrument oftransfer should evidence that an absolute interest in favour of theDtransferee has been created. This is clearly discernible from Section11 of the TP Act. The section rests on a principle that any conditionwhich is repugnant to the interest created is void and when propertyis transferred absolutely, it must be done with all its legal incidents.That apart, Section 31 of the TP Act is enough to meet the aforesaidcontention. The section provides that D

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“on a transfer of property an interest therein may be createdwith the condition super-added that it shall cease to exist incase a specified uncertain event shall happen, or in case aspecified uncertain event shall not happen”.

FIllustration (b) to the section makes the position clear, and it reads:

“(b) A transfers a farm to B, provided that, if B shall not go toEngland within three years after the date of the transfer, hisinterest in the farm shall cease. B does not go to England withinthe term prescribed. His interest in the farm ceases.”

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17. All that Section 32 of the Transfer of Property Act provides isthat “in order that a condition that an interest shall cease to existmay be valid, it is necessary, that the event to which it relates beone which could legally constitute the condition of the creation ofan interest”. If the condition is invalid, it cannot be set up as a H

condition precedent for crystallization of the interest created. Thecondition that the industrial unit shall be established within aspecified period failing which the interest shall cease, is a validcondition. Clause 7 of the agreement between the parties is,therefore, valid and is binding on the parties thereto.”

18. This legal position is not disputed. However, in the instantcase, there was no such stipulation in the agreement to sell or the saledeed. It was in the allotment letter. On the contrary, insofar as clause 7of the sale deeds executed is concerned, the only condition imposed isthat the purchaser shall use the land for the purpose of putting up afactory or factories duly permitted by the competent authority and forno other purpose. This makes all the difference between the two cases.Here, the undisputed fact is that the agreements/sale deeds entered intobetween the appellant-Corporation and the respondents do not containany clause which can be construed as ‘condition super-added’.

19. We do not agree with the contention of the appellant-Corporation that the doctrine of proportionality is not applicable in thesecases. In the realm of Administrative Law ‘proportionality’ is a principlewhere the Court is concerned with the process, method or manner inwhich the decision-maker has ordered his priorities and reached aconclusion or arrived at a decision. The very essence of decision-makingconsists in the attribution of relative importance to the factors andconsiderations in the case. The doctrine of proportionality thus steps infocus true nature of exercise – the elaboration of a rule of permissiblepriorities[4]. De Smith[5] also states that ‘proportionality’ involves‘balancing test’ and ‘necessity test’. The ‘balancing test’ permitsscrutiny of excessive onerous penalties or infringement of rights orinterests and a manifest imbalance of relevant considerations.

20. Insofar as the argument that the land is not used for putting afactory building but was used for some other purpose is concerned, nosuch case was pleaded by the appellant-Corporation in the High Courtor even in these appeals. This was not the reason for initially cancellingthe allotment or demanding payment of 50% of the prevailing marketvalue. Therefore, this oral argument advanced at the time of hearingcannot be accepted without any material on record and when it was not 4 Union of India v. G. Ganayutham, (1997) 7 SCC 463

5 Judicial Review of Administrative Action (1995) para 13.085, 601-605; see also, Wade,Administrative Law (2009) 157-158, 306-308

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Athe basis of cancellation/demand of payment. This Court in the case ofMohinder Singh Gill & Anr. v. The Chief Election Commissioner,New Delhi & Ors.[6]held as under:

“8. The second equally relevant matter is that when a statutoryfunctionary makes an order based on certain grounds, its validityBmust be judged by the reasons so mentioned and cannot besupplemented by fresh reasons in the shape of affidavit orotherwise. Otherwise, an order bad in the beginning may, by thetime it comes to Court on account of a challenge, get validated byadditional grounds later brought out. We may here draw attentionto the observations of Bose, J. in Gordhandas BhanjiC(Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR1952 SC 16):

“Public orders, publicly made, in exercise of a statutoryauthority cannot be construed in the light of explanationssubsequently given by the officer making the order of what heDmeant, or of what was in his mind, or what he intended to do.Public orders made by public authorities are meant to havepublic effect and are intended to affect the actings and conductof those to whom they are addressed and must be construedobjectively with reference to the language used in the orderEitself.”

Orders are not like old wine becoming better as they grow older.”

21. In view of the above, it is not necessary to deal with theargument as to whether doctrine of proportionality is applicable in theinstant case or not. It is to be borne in mind, as rightly held by the HighFCourt, that the appellant-Corporation had withdrawn the action ofcancellation of the plots. Instead, it demanded 50% of the prevailingmarket value in lump sum towards the cost of the plots. There is nolegal basis for such a demand, more so, after the registration of the saledeeds in favour of the respondents thereby transferring the ownership inGthese plots in their favour.

22. As a result, all these appeals are dismissed with costs.

Nidhi Jain

Appeals dismissed.

H6 (1978) 1 SCC 405