Allotment of land for cement factory - as conditions not performed , it was cancelled - Writ challenging the cancellation order - this Court held that mere letter of allotment does not confer with any rights and non-communication of withdrawal order does not make it ineffective and further held that in the absence of any malafides , no writ petition is maintainable and as such dismissed the writ petition = Gujrat Ambuja Cement Limited, Mumbai, Rep. by its Vice-President..Petitioner Andhra Pradesh Industrial Infrastructure Corporation Ltd. Rep. by its Vice Chairman and Managing Director. and others... Respondents = 2014 (March. Part ) judis.nic.in/judis_andhra/filename=11029
Allotment of land for cement factory - as conditions not performed , it was cancelled - Writ challenging the cancellation order - this Court held that mere letter of allotment does not confer with any rights and non-communication of withdrawal order does not make it ineffective and further held that in the absence of any malafides , no writ petition is maintainable and as such dismissed the writ petition =
whether the action taken by the respondent in cancelling the allotment is valid
or not.
Admittedly, the respondent is a Government Company governed by provisions
of Companies Act, 1956. Since majority of shares are held by Government and
decision making is controlled to some extent by the Government, the respondent
is a 'State' within the meaning of Art.12 of the Constitution of India. But its
decisions cannot be elevated to the decisions of Government or to the decisions
of statutory authorities/administrative authorities. Since the respondent is a
State, its actions should be fair, reasonable and should not be arbitrary in the
facts and circumstances of the case.
Mere letter of allotment does not confer any right
The petitioner was allotted land under letter dated 4-3-1995 and it reads
as follows:
" With reference to your application cited for allotment of land at
IDA-VAKALAPUDI, KAKINADA. We are pleased to allot the land admeasuring 70.00
ACRES for setting up of CEMENT PLANT on out right sale basis, subject to the
following terms and conditions, and such other terms and conditions that are
stipulated in the agreement of sale. A rough sketch is enclosed.
1. The land admeasuring 70.00 ACRES is allotted at a tentative cost of
Rs.1,25,000.00 per acre. The total cost of the land works out to Rs.87,50,000/-
(Rupees Eighty Seven Lakhs and Fifty thousand only).
2. You should pay the development charges for the land in "as is where is
basis" at a cost of Rs.1,82,000.00 per acre (excluding cost of sewerage disposal
scheme) which works out to Rs.1,27,40,000/- (Rupees One Crore Twenty Seven Lakhs
Forty thousands only).
3. You should pay 100% of the cost of the land and development cost which
works out to Rs.2,14,90,000.00 (Rupees Two Crores Fourteen Lakhs Ninety
Thousands only) within one month from the date of receipt of these orders, less
EMD of Rs.2,50,000.00 already paid.
4. You should execute the sale agreement in the prescribed proforma with full
stamp duty and should take physical possession of the land invariably within ONE
MONTH from the date of receipt of the allotment order. All costs of stamp
duties in connection with execution of sale agreement should be borne by you.
5. You should execute a separate agreement for the payment of development
charges on a requisite stamp paper under Indian Stamp Act within one month from
the date of receipt of the allotment letter.
6. The land cost is provisional and is subject to enhancement of
compensation, if any, by the competent court under the land acquisition act.
7. Interest 19% per annum from the date of taking possession or from 61st day
from the date of receipt of these orders, whichever is earlier and thereafter
21% per annum.
8. You should submit valid licences required for your implementation of the
above project including completion of studies in respect of risk analysis
HAZOP/HAZON, pollution control and its impact on environment and the clearance
from the Chief Controller of Explosives, Nagpur and other
certificates/documents, as the case may be along with the agreement of sale.
9. All payments shall be made in the Zonal Office, Kakinada/Head Office by
way of Crossed Demand draft favouring 'APIIC LTD.' Payable at Kakinada/Hyderabad
only.
10. If the payments stipulated in Clause (3) above are not made within one
month of receipt of this letter, these orders will be treated as cancelled and
EMD paid sands forfeited automatically.
11. The allotment is also subject to the other terms and conditions stipulated
in the Annexure appended hereto.
12. The allotment is also subject to the other terms and conditions enclosed
in Annexure hereto."
20. As per the above conditions, the development charges for the land in "as
is where is basis" have to be paid. The sale agreement in the prescribed
proforma should be executed and physical possession of land should be taken
within one month from the date of receipt of allotment order. Now the allotment
is cancelled for violating those conditions and also condition No.10 of
allotment.
21. Since there was no agreement of sale which was executed, the rights of the
parties are based on the simple letter of allotment which can be called as an
"offer" in the terms of Contract law and non-fulfilment of any of the terms
would not result in a binding contract in the absence of which the petitioner
cannot complain with regard to the withdrawal of offer. An offer can be
withdrawn before it is accepted and hence the Writ Petition is liable to be
dismissed on this ground.
This Court relied upon a
decision of the Hon'ble Court in Kollipara Sriramulu V. T.Aswatha Narayana3,
wherein the Hon'ble Supreme Court observed as follows:
"It is well established that a mere reference to a future formal contract will
not prevent a binding bargain between the parties. The fact that the parties
refer to the preparation of an agreement by which the terms agreed upon are to
be put in a more formal shape does not prevent the existence of a binding
contract. There are, however, cases where the reference to a future contract is
made in such terms as to show that the parties did not intend to be bound until
a formal contract is signed. The question depends upon the intention of the
parties and the special circumstances of each particular case"
No order become effective only on communication
The Constitution Benches of this Court in Bachhittar Singh V. State of
Punjab7 and State of Punjab V. Amar Singh Harika8, have held that an order does
not become effective unless it is published and communicated to the person
concerned. Before the communication, the order cannot be regarded as anything
more than provisional in character. A similar view has been reiterated in Union
of India V. Dinanath Shantaram Karekar9 and State of W.B. V. M.R. Mondal10.
23. In Laxminarayan R. Bhattad V. State of Maharashtra11 this court held that
the order of the authority must be communicated for conferring an enforceable
right and in case the order has been passed and not communicated, it does not
create any legal right in favour of the party."
No Malafides
The petitioner did not allege malafides. No other ground is urged by the
petitioner. In view of the above facts, it cannot be termed that the action of
the respondents in issuing the impugned orders dated 31.12.2004 of the second
respondent and the consequential order dated 06.01.2005 of the third respondent
as unfair, unreasonable or arbitrary. In view of non compliance of the
petitioners, the order dated 16-05-2005 and the order dated 21-03-2006 cannot be held illegal.
33. The Writ Petition is dismissed with costs.
2014 (March. Part ) judis.nic.in/judis_andhra/filename=11029
THE HON'BLE SRI JUSTICE A.RAMALINGESWARA RAO
WRIT PETITION No.10570 OF 2006
18-03-2014
Gujrat Ambuja Cement Limited, Mumbai, Rep. by its Vice-President..Petitioner
Andhra Pradesh Industrial Infrastructure Corporation Ltd. Rep. by its Vice
Chairman and Managing Director. and others... Respondents
Counsel for the Petitioner : Sri M.P.Chandramouli
Counsel for the Respondents: Sri P.Roy Reddy
<Gist :
>Head Note :
?Cases referred
1. (2009) 1 SCC 475
2. AIR 1997 AP 200
3. AIR 1968 SC 1028
4. (1996) 7 SCC 339
5. (2009) 4 SCC 369
6. (2010) 9 SCC 157
7. AIR 1963 SC 395
8. AIR 1966 SC 1313
9. (1998) 7 SCC 569
10.(2001) 8 SCC 443
11.(2003) 5 SCC 413
HON'BLE SRI JUSTICE A.RAMALINGESWARA RAO
WRIT PETITION No.10570 of 2006
ORDER:
Heard Sri E.Manohar, the learned Senior Counsel for petitioner and the
learned Advocate General, representing Sri P.Roy Reddy, the learned Standing
Counsel for respondents.
2. The facts in this case are undisputed. The petitioner is a company
incorporated under the provisions of the Companies Act, 1956 in the year 1984
and commenced its commercial production of cement in 1986. It is stated to be
the first company in India which introduced bulk transportation of cement
through sea route and it owns 3 bulk terminals apart from owning 3 ports and 7
ships. The petitioner company's production is over 13 million tons per annum.
3. The petitioner company wanted to establish a cement plant at Nadikudi and
grinding unit in Kakinada by harnessing the large un-exploited limestone
deposits in Dachepalli, Gurazala and Karempudi mandals of Guntur District. It
acquired Acs.1052 of land through the first respondent at Nadikudi. It further
acquired an extent of Acs.20 of land through private negotiations. It obtained
two mining leases of 277.87 hectares and 673.73 hectares from the Government of
Andhra Pradesh and obtained various permissions and statutory clearances from
various Departments of State and Central Governments.
4. On 02.01.1995, the petitioner company applied to the first respondent for
allotment to an extent of land Acs.100.00 at Industrial Development Area,
Vakalapudi near Kakinada deep-water port for establishment of
clinker grinding unit. Accordingly, the first respondent by letter dated
04.03.1995 allotted Acs.70.00 of land on outright sale basis at a cost of
Rs.1,25,000/- per acre. The petitioner accepted the said allotment vide its
letter dated 06.03.1995 and requested for allotment of 30 meter wide strip of
land for railway siding for infrastructure purpose. The total cost of the land
including development charges amounting to Rs.2,14,90,000/- was directed to be
paid within one month from the date of allotment order. Accordingly, the
petitioner paid an amount of Rs.2,12,40,000/- after adjusting the EMD of
Rs.2,50,000/- by way of demand draft under covering letter dated 21.03.1995.
The first respondent, by letter dated 15.03.1996, informed the petitioner that
it fixed the land cost and development charges at Rs.4,00,000/- per acre for the
land of Acs.2.53 cents allotted for railway siding and the same was also paid.
5. Thereafter, lot of correspondence exchanged between the petitioner and the
first respondent with regard to the extent of land, the price adjustment, change
of name of the company etc., and the substance of entire correspondence is not
relevant for the purpose of present case. There was correspondence with regard
to the payment of stamp duty from 1996 to 1998 and the first respondent directed
the petitioner to file an agreement with stamp duty and also documentary proof
to show its intention to take up the project vide its letter dated 22.08.1998.
The petitioner replied on 02.09.1998 expressing its keenness to go ahead with
the project and requested the first respondent to intimate the convenient date
for registration and for taking physical possession of the land. The petitioner
also obtained a demand draft on 03.12.1998 for Rs.9,92,000/- drawn in favour of
Assistant Inspector of General of Stamps and approached the Zonal Manager,
Kakinada for completing the formalities. Then the petitioner for the first time
came to know that one of the land owners filed W.P.No.15111 of 1990 in respect
of Acs.1.08 cents of land which is in the middle of the land allotted to it and
also touching the railway line corridor. In those circumstances, the petitioner
expressed its unwillingness to take up the registration until the dispute is
settled. The first respondent vide its letter dated 22.05.1999 stated that it
has decided to execute the agreement for Acs.71.06 cents only, deleting the
disputed land of Acs.1.08 cents and directed the petitioner to furnish agreement
for the reduced extent. The petitioner gave a reply on 26.05.1999 stating that
it already obtained a demand draft for Rs.9,92,000/- towards stamp duty and
stated that since the disputed land falls in between the land and the railway
siding, it was essential for the project and requested the first respondent to
settle the dispute and execute agreement for the entire land allotted.
6. The third respondent vide letter dated 12.05.2003 informed the petitioner
about the dismissal of writ petition and requested it to file an agreement and
take possession of the land within 15 days, failing which action will be
initiated for cancellation of allotment. The petitioner gave a reply on
23.05.2003 stating that the time of 15 days was not sufficient as the Kakinada
Cement Grinding factory is a split unit of 2 million ton cement plant proposed
at Nadikudi and it was decided to implement both the factories by a subsidiary
company called Ambuja Cement India Limited which was promoted by the petitioner
wherein the foreign companies are having shares and therefore requested for
transfer of allotment. The petitioner met the Executive Director of the second
respondent and the minutes of discussions were sent vide letter dated
30.06.2003.
7. While so, the petitioner received a letter dated 31.12.2004 from the
second respondent informing that it was decided to cancel the allotment and
refund the amount to the petitioner and directed the petitioner to approach the
third respondent to get the refund of the amount. Subsequently, the third
respondent issued another letter dated 06.01.2005 stating that EMD amount was
forfeited under clause 10 of the allotment letter, the allotment was cancelled
and the amounts paid by the petitioner would be returned as per rules. Since
the said communications were arbitrary, the matter was brought to the notice of
the Principal Secretary (Industries & Commerce), Government of Andhra Pradesh by
way of a representation dated 13.01.2005. Thereafter, the petitioner was
directed to submit revised project implementation schedule and the petitioner
submitted a letter dated 27.01.2005 intimating the revised schedule. The third
respondent issued a letter dated 16.05.2005 informing the petitioner that the
request for registration of the land was considered and it was also agreed to
transfer ownership in favour of new company called Ambuja Cement India Limited
from the petitioner on certain conditions.
8. The petitioner gave a reply on 20.05.2005 in principle agreeing for the
conditions, but requested for allotment of entire land of Acs.72.14 cents with a
request for copy of the orders of the Court enhancing the compensation payable
to the land by Rs.4,00,000/- per acre, to which the first respondent replied
that it is not possible to restore the entire land of Acs.72.14 cents and the
dispute with regard to Acs.1.08 cents is not decided. The petitioner replied on
12.07.2005 expressing its willingness to take possession of Acs.71.06 cents and
the remaining land of Acs.1.08 cents as and when the case is settled.
Thereafter, some correspondence ensued between the parties. The petitioner also
met the first respondent on 10.03.2006 and discussed the subject with regard to
pending issues, but the petitioner was surprised to receive a letter from the
third respondent dated 21.03.2006 stating that the order of restoration issued
earlier were withdrawn and the orders of cancellation dated 06.01.2005 holds
good.
9. The petitioner filed a revision petition on 04.04.2006 under Regulation
No.21 of Andhra Pradesh Industrial Infrastructure Corporation Allotment
Regulations, 1988 before the first respondent challenging the orders dated
31.12.2004 of the second respondent and the consequential orders of the third
respondent dated 06.01.2005. The said revision was rejected by order dated
10.05.2006 of the first respondent with a copy marked to the third respondent.
Challenging the orders dated 31.12.2004 of the second respondent and the
consequential order dated 06.01.2005 of the third respondent, the present writ
petition was filed.
10. This Court, while admitting the writ petition on 31.05.2006, directed the
respondents not to alienate or otherwise alter the nature of the land in
question.
11. A counter-affidavit was filed on behalf of the respondents stating that
the petitioner failed to take the possession of the land on one pretext or other
and dodged the matter and prevented the first respondent from re-allotting the
same to another needy entrepreneur all these years. In fact, the allotment of
the land stood cancelled, since the petitioner failed to execute the agreement
and take possession of the land within one month from the date of receipt of the
allotment order. The petitioner in its application undertook to commence
construction of the factory buildings within six months from the date of taking
possession of the land and complete the same in 24 months period. The
petitioner assured that the industry would go in production by the end of 1996.
The first respondent reposed confidence in the petitioner and believed the
assurances made by it as true and bonafide and therefore agreed to allot the
land in its favour vide letter dated 04.03.1995. Though the petitioner paid the
amounts towards provisional cost of the land including developmental charges, it
failed to execute the agreement and take possession of the land till the date of
cancellation. The allotment orders dated 04.03.1995 remains cancelled due to
failure of the petitioner in executing the agreement and taking possession of
the land within one month as stipulated in clause 5(ii) of the General
Conditions of allotment of plot/shed incorporated in the guidelines furnished to
the petitioner along with the application. Though the first respondent reminded
the petitioner with regard to execution of the agreement and taking possession
of the land, there was no positive response from the petitioner.
12. The counter also states that the several letters were addressed to the
petitioner culminating in issuance of a show cause notice dated 17.03.1997
asking for the reasons of the petitioner for not cancelling the allotment. The
petitioner vide its letter dated 28.03.1997 informed the first respondent that
it may be granted further time of six months to comply with the requirements
stipulated in the notice dated 17.03.1997 of the first respondent. The first
respondent examined the request and informed the petitioner vide its letter
dated 26.05.1997 that the petitioner should implement the project by 27.06.1997.
The petitioner sought time till 30.09.1997 to implement the project and by
letter dated 24.06.1997 came out with a request to transfer the allotment of
land in favour of one M/s.Kakinada Cements Limited which was registered on
17.07.1997 for implementing the project by 30.09.1997. The said request was
also agreed by the first respondent and the allotment of land was transferred in
favour of M/s.Kakinada Cements Limited vide letter dated 02.09.1997 of the first
respondent subject to the condition that the project should be implemented by
30.09.1997. The petitioner once again promised and finally the first respondent
issued a letter on 17.10.1997 granting time of one year for implementation of
the project, while informing the petitioner that possession of the land has to
be taken over after execution of agreement. It was also followed by another
letter dated 15.04.1998 asking the petitioner to execute the sale agreement
within 15 days and take possession of the land failing which action would be
taken for cancellation of the allotment of land. Another notice was also issued
on 22.08.1998. It is alleged that the petitioner, in order to gain further
time, requested vide letter dated 17.10.1998 for re-transfer of allotment in
favour of the petitioner and the said request was also agreed by the first
respondent vide its letter dated 23.11.1998 subject to the conditions stipulated
therein including that agreement has to be executed and possession of the land
should be taken before 20.12.1998. The petitioner failed in that respect also.
A reminder was also issued on 17.02.1999 to execute the agreement within 7 days.
13. With regard to the land acquisition issue leading to the filing of
W.P.No.15111 of 1990, it was stated that the land of the petitioner therein was
taken under Land Acquisition Act and an Award was also passed by the Land
Acquisition Officer (LAO) much prior to the filing of the said writ petition,
but as a matter of precaution, the first respondent vide its letter dated
22.05.1999 informed the petitioner company that agreement would be executed for
the extent of Acs.71.06 cents out of Acs.72.14 cents, since the disputed land of
Acs.1.08 cents was covered by the court proceedings in the writ petition. The
said writ petition was dismissed on 28.04.2003 on the ground that the possession
of the land was already taken over under the LA Act on 28.08.1990 and an Award
was already passed on 15.04.1991 much prior to the allotment of the land in
favour of the petitioner on 04.03.1995. The fact of dismissal of that writ
petition was informed to the petitioner vide letter dated 12.05.2003 with a
request to execute the agreement for entire extent of land within 15 days
failing which the allotment would be cancelled. The decision of the first
respondent about cancellation of allotment of land was informed to the
petitioner vide letter dated 31.12.2004. Then the petitioner again made a
request for transfer of allotment in favour of M/s.Ambuja Cement India Limited
vide its letter dated 23.05.2003 in order to gain time. In those circumstances
only, the first respondent was compelled to cancel the allotment vide letter
dated 06.01.2005 duly forfeiting EMD of Rs.2.50 lakhs paid by the petitioner as
per the conditions of allotment orders dated 04.03.1995.
14. The petitioner company vide its letter dated 27.01.2005 submitted a
revised schedule of implementation of the project and sought restoration of
allotment of the land in favour of M/s.Ambuja Cements India Limited in order to
gain one more opportunity. The first respondent issued orders vide letter dated
16.05.2005 agreeing for restoration of the allotment, but the petitioner failed
to comply with the conditions mentioned in the letter dated 16.05.2005. The
first respondent once again reminded the petitioner vide its letter dated
20.05.2005 to comply with the conditions stipulated in the letter dated
16.05.2005 within 15 days failing which the offer of restoration automatically
stood withdrawn. Since the conditions of offer in letter dated 16.05.2005 were
not complied, the earlier orders of cancellation dated 06.01.2005 remained in
force. However, the petitioner by its letter dated 06.01.2006 requested the
first respondent to retransfer the allotment of land from the petitioner in
favour of M/s.Kakinada Cements Limited and undertook to comply with the
conditions stipulated in the letter dated 16.05.2005. In view of the past
conduct, the first respondent vide its letter dated 21.03.2006 rejected the
request for retransfer of allotment in favour of M/s.Kakinada Cements Limited
and confirmed the orders of cancellation dated 06.01.2005. The revision
petition filed by the petitioner before the first respondent was rejected, as
the impugned orders were passed pursuant to the decision taken by him only.
Finally, it was stated that the petitioner obtained allotment of the large
extent of scarce and valuable industrial land at subsidised rate by the first
respondent assuring that it would set up the cement plant and failed to honour
its commitment inspite of granting unbelievable indulgence by the first
respondent and the petitioner company was interested in retaining the allotment
of the land and does not require genuinely for industrial use, but for
speculative purposes.
15. The learned Senior Counsel for petitioner submitted that subsequent to the
correspondence in November and December, 2005, the petitioner met the first
respondent on 10.03.2006 and discussed the subject and he responded positively.
But, the petitioner was surprised to receive the letter dated 21.03.2006
restoring the earlier orders of cancellation dated 06.01.2005. The decision
making process as evidenced by the notings in the file is vitiated, as the first
respondent has not applied his mind to the facts of the case properly. He also
submitted that the order dated 21.03.2006 was issued by the third respondent who
has no authority to issue the order. He further submitted that the subsequent
letters dated 08.12.2005 and 06.01.2006 were not considered and the third
respondent passed orders on 21.03.2006 unilaterally and hence the order passed
by the third respondent was invalid.
16. On the other hand, the learned Advocate General contends that the
cancellation orders were passed in accordance with the terms and conditions of
letter of allotment. The petitioner has only an inchoate right since the land
was allotted under a letter of allotment and the petitioner cannot get any
relief even by way of specific performance before a competent civil court and
invocation of jurisdiction under Article 226 is misconceived. He also contends
that the land was allotted way back in 1995 and for nearly 10 years, the
petitioner has neither taken possession of the land nor implemented the project.
The past conduct of the petitioner would show that in stead of sufficient
opportunity given to the petitioner, it did not execute the agreement for all
these years and take possession of the land. The respondents are willing to
refund the amount paid by the petitioner by duly forfeiting the EMD amount as
per the terms and conditions of letter of allotment.
17. In view of the rival contentions, the only point that has to be decided is
whether the action taken by the respondent in cancelling the allotment is valid
or not.
18. Admittedly, the respondent is a Government Company governed by provisions
of Companies Act, 1956. Since majority of shares are held by Government and
decision making is controlled to some extent by the Government, the respondent
is a 'State' within the meaning of Art.12 of the Constitution of India. But its
decisions cannot be elevated to the decisions of Government or to the decisions
of statutory authorities/administrative authorities. Since the respondent is a
State, its actions should be fair, reasonable and should not be arbitrary in the
facts and circumstances of the case.
19. The petitioner was allotted land under letter dated 4-3-1995 and it reads
as follows:
" With reference to your application cited for allotment of land at
IDA-VAKALAPUDI, KAKINADA. We are pleased to allot the land admeasuring 70.00
ACRES for setting up of CEMENT PLANT on out right sale basis, subject to the
following terms and conditions, and such other terms and conditions that are
stipulated in the agreement of sale. A rough sketch is enclosed.
1. The land admeasuring 70.00 ACRES is allotted at a tentative cost of
Rs.1,25,000.00 per acre. The total cost of the land works out to Rs.87,50,000/-
(Rupees Eighty Seven Lakhs and Fifty thousand only).
2. You should pay the development charges for the land in "as is where is
basis" at a cost of Rs.1,82,000.00 per acre (excluding cost of sewerage disposal
scheme) which works out to Rs.1,27,40,000/- (Rupees One Crore Twenty Seven Lakhs
Forty thousands only).
3. You should pay 100% of the cost of the land and development cost which
works out to Rs.2,14,90,000.00 (Rupees Two Crores Fourteen Lakhs Ninety
Thousands only) within one month from the date of receipt of these orders, less
EMD of Rs.2,50,000.00 already paid.
4. You should execute the sale agreement in the prescribed proforma with full
stamp duty and should take physical possession of the land invariably within ONE
MONTH from the date of receipt of the allotment order. All costs of stamp
duties in connection with execution of sale agreement should be borne by you.
5. You should execute a separate agreement for the payment of development
charges on a requisite stamp paper under Indian Stamp Act within one month from
the date of receipt of the allotment letter.
6. The land cost is provisional and is subject to enhancement of
compensation, if any, by the competent court under the land acquisition act.
7. Interest 19% per annum from the date of taking possession or from 61st day
from the date of receipt of these orders, whichever is earlier and thereafter
21% per annum.
8. You should submit valid licences required for your implementation of the
above project including completion of studies in respect of risk analysis
HAZOP/HAZON, pollution control and its impact on environment and the clearance
from the Chief Controller of Explosives, Nagpur and other
certificates/documents, as the case may be along with the agreement of sale.
9. All payments shall be made in the Zonal Office, Kakinada/Head Office by
way of Crossed Demand draft favouring 'APIIC LTD.' Payable at Kakinada/Hyderabad
only.
10. If the payments stipulated in Clause (3) above are not made within one
month of receipt of this letter, these orders will be treated as cancelled and
EMD paid sands forfeited automatically.
11. The allotment is also subject to the other terms and conditions stipulated
in the Annexure appended hereto.
12. The allotment is also subject to the other terms and conditions enclosed
in Annexure hereto."
20. As per the above conditions, the development charges for the land in "as
is where is basis" have to be paid. The sale agreement in the prescribed
proforma should be executed and physical possession of land should be taken
within one month from the date of receipt of allotment order. Now the allotment
is cancelled for violating those conditions and also condition No.10 of
allotment.
21. Since there was no agreement of sale which was executed, the rights of the
parties are based on the simple letter of allotment which can be called as an
"offer" in the terms of Contract law and non-fulfilment of any of the terms
would not result in a binding contract in the absence of which the petitioner
cannot complain with regard to the withdrawal of offer. An offer can be
withdrawn before it is accepted and hence the Writ Petition is liable to be
dismissed on this ground. This would be the position under Civil Law and keeping
this in view, the learned Advocate General contended that the petitioner cannot
even file a suit for specific performance of contract in a competent Civil
Court. He is correct in this respect.
22. In Speech & Software Technologies (India) Ltd. V. Neos Interactive Ltd.1,
it was held by the Hon'ble Supreme Court that the letter of intent on a bare
reading is nothing but an agreement to enter into another agreement and the same
is not enforceable nor does it confer any right upon the parties.
23. In M/s.Lotus Constructions V. The Govt. of A.P.2, this Court considered an
identical situation and held that a reading of the clauses would undoubtedly
show that a letter of communication of acceptance itself is not enough unless
the same is followed by an agreement and if no agreement is entered within the
stipulated period, shall result in forfeiture of Earnest Money Deposit and the
letter of acceptance issued to the tenderer shall be deemed to have been
cancelled. Entering into an agreement, thus, is not mere formality; but, one of
the necessary conditions for concluding the contract. This Court relied upon a
decision of the Hon'ble Court in Kollipara Sriramulu V. T.Aswatha Narayana3,
wherein the Hon'ble Supreme Court observed as follows:
"It is well established that a mere reference to a future formal contract will
not prevent a binding bargain between the parties. The fact that the parties
refer to the preparation of an agreement by which the terms agreed upon are to
be put in a more formal shape does not prevent the existence of a binding
contract. There are, however, cases where the reference to a future contract is
made in such terms as to show that the parties did not intend to be bound until
a formal contract is signed. The question depends upon the intention of the
parties and the special circumstances of each particular case"
24. Ultimately, this Court held that the Government Order proposing to entrust
the project to the petitioner cannot be construed as concluded contract and it
held as follows:
"22. Be that as it may, the petitioner is virtually asking for the relief of
specific performance of a contract and such relief cannot be granted by this
Court in exercise of its jurisdiction under Article 226 of the Constitution of
India. Rights if any accrued in favour of the petitioners are nebulous in
nature and cannot form the basis of foundation for issuing a writ in the nature
of Mandamus. If the petitioner is complaining breach of an agreement/Contract
the Forum is elsewhere."
25. In Haryana S.I.D.C V. Inderjeet Sawhney4, the case of a party who was
initially offered an extent of one acre was modified by offering half acre of
land in respect of which an agreement was entered and possession was delivered.
When the party filed a writ petition seeking allotment of remaining half acre of
land pursuant to the initial provisional allotment letter, it was held by the
Hon'ble Supreme Court that the provisional letter of allotment did not confer
any vested legal right on respondent to insist upon allotment of one acre of
land. But, we are examining the issue in a Constitutional set up and the
principles are different.
26. Now to view the validity of the orders of cancellation, revocation and
withdrawal of the same later within the parameters of judicial review, it has to
be seen whether the impugned orders are fair, reasonable and not arbitrary.
27. The petitioner company was allotted land an extent of Acs.70.00 cents in
Vakalapudi village near Kakinada by letter of allotment dated 04.03.1995. As
per condition No.4, the petitioner should execute the sale agreement in the
prescribed proforma with full stamp duty and take physical possession of the
land within one month from the date of receipt of the allotment order. The
petitioner failed to execute the agreement within one month. Even after
furnishing the format of sale agreement, development agreement and undertaking
vide letter dated 22.07.1996, the petitioner did not execute the agreement nor
took possession of the land. The respondents waited for nearly six months and
issued a show cause notice on 17.03.1997. Thereafter, the petitioner has been
dodging the matter on one pretext or other and in fact the respondents agreed to
the request of the petitioner for allotment of the land in favour of
M/s.Kakinada Cements Limited subject to the condition that the project should be
implemented by 30.09.1997. Another show cause notice was issued on 15.04.1998
followed by a notice dated 22.08.1998. The petitioner did not comply with the
same and on the other hand, in order to gain further time, requested vide its
letter dated 17.10.1998 to retransfer of land in favour of the petitioner. The
respondents agreed vide their letter dated 23.11.1998 to the said request also
with a condition that the agreement had to be executed and possession of the
land to be taken before 20.12.1998. Another notice was issued by the
respondents on 17.02.1999 indicating that action would be taken to cancel the
allotment if possession of the land was taken. The petitioner again requested
for transfer of land in favour of M/s.Ambuja Cements India Limited vide its
letter dated 23.05.2003 and ultimately allotment was cancelled on 06.01.2005.
These events clearly show that for the reasons best known to the petitioner, it
did not execute the agreement and did not take possession of the land allotted
even after paying the cost of the land.
28. The petitioner explains the delay in taking over the possession of the
land by relying on W.P.No.15111 of 1990 filed by one V.Ramakrishna challenging
the land acquisition proceedings. By way of caution, the respondents informed
the petitioner that the agreement would be executed for Acs.71.06 cents out of
Acs.72.14 cents since the extent of Acs.1.08 cents was covered by the Court
proceedings and the possession of the land was taken on 28.08.1990 and an Award
was passed on 15.04.1991, prior to the allotment of land in favour of the
petitioner on 04.03.1995. In the show cause notice dated 12.05.2003, the fact
of dismissal of the said writ petition was informed to the petitioner by the
respondents and requested for execution of the agreement for the entire area and
for taking possession of the land within 15 days. The petitioner requested for
transfer of land in favour of M/s.Ambuja Cements India Limited in stead of
complying with the condition of allotment.
29. The respondents issued an order of restoration on 16-5-2005 with certain
terms and conditions. When they were not complied, the respondents issued a
letter dated 23.06.2005 requesting the Petitioner to comply with all the terms
and conditions indicated therein without fail by 10-07-2005 for considering the
request for restoration of land in favour of the petitioner to the extent of
Ac.71.06 cents. The petitioner corresponded on 12-07-2005 and 16-
09-2005 and when the same was not satisfactory, the respondents ultimately
issued a letter on 25.11.2005 to the petitioner requesting it to fulfil the
terms and conditions stipulated in the order of restoration dated 23.06.2005
(for 16-5-2005) within 15 days from the date of receipt of the said notice i.e.,
on or before 10.12.2005 and stating that failure of the same would result in
withdrawal of offer of restoration as the possession of the land is with APIIC
only. Just 4 days before the dates stipulated in the said letter, the
petitioner addressed a letter on 6-12-2005 followed by a letter dated
06.01.2006. Thus the petitioner did not avail several opportunities given to it
but engaged in correspondence and ultimately did not fulfil the condition No.4
and 5 of letter of allotment resulting in withdrawal of orders of restoration on
21-3-2006.
30. The petitioner entered into unnecessary correspondence and dodged the
issue on one pretext or other without complying the terms and conditions of
letter of allotment. The respondents gave a long rope and waited for nearly 10
years and the orders of cancellation dated 06.01.2005 were restored on 16-5-2005
and ultimately they had to withdraw the orders of restoration on
21-3-2006. The land meant for industrialisation was held up in procrastination
and litigation for more than a decade. In Chaman Lal Singhal V. HUDA5, the
Hon'ble Supreme Court examined the nature of letter of allotment and held that
since there was no agreement/contract between the parties due to non-compliance
with the terms of letter of allotment, the issue with regard to violation of
principles of natural justice would not arise.
31. The petitioner relied on a meeting with the first respondent on 10.03.2006
where it was stated to have been assured of positive action and it was surprised
to receive the letter dated 21.03.2006 later informing that the earlier orders
of restoration stood withdrawn. In support of this, it relied on the internal
notings in the office file of the respondents. Though a decision was initially
taken by the first respondent on 10.03.2006 pursuant to the meeting with the
representative of the petitioner to insist for implementation of the project and
briefing the Chairman, after meeting the Chairman, a decision was taken on
17.03.2006 to withdraw the orders of restoration as the project was not
implemented. Pursuant to the said decision of the first respondent, the
impugned orders of withdrawal of restoration were issued on 21.03.2006. The
notings in the file does not indicate any positive response and in any event,
the same do not create right in the petitioner unless they are communicated. In
Greater Mohali Area Development Authority V. Manju Jain6, it was held by the
Hon'ble Supreme Court that an order which was passed but not communicated does
not create any legal right in favour of a party. The Hon'ble Supreme Court
relied upon some of its earlier decisions and held as follows:
"22. The Constitution Benches of this Court in Bachhittar Singh V. State of
Punjab7 and State of Punjab V. Amar Singh Harika8, have held that an order does
not become effective unless it is published and communicated to the person
concerned. Before the communication, the order cannot be regarded as anything
more than provisional in character. A similar view has been reiterated in Union
of India V. Dinanath Shantaram Karekar9 and State of W.B. V. M.R. Mondal10.
23. In Laxminarayan R. Bhattad V. State of Maharashtra11 this court held that
the order of the authority must be communicated for conferring an enforceable
right and in case the order has been passed and not communicated, it does not
create any legal right in favour of the party."
32. The petitioner did not allege malafides. No other ground is urged by the
petitioner. In view of the above facts, it cannot be termed that the action of
the respondents in issuing the impugned orders dated 31.12.2004 of the second
respondent and the consequential order dated 06.01.2005 of the third respondent
as unfair, unreasonable or arbitrary. In view of non compliance of the
petitioners, the order dated 16-05-2005 and the order dated 21-03-
2006 cannot be held illegal.
33. The Writ Petition is dismissed with costs. Miscellaneous petitions
pending, if any in this Writ Petition, shall stand closed.
_____________________________
A.RAMALINGESWARA RAO, J
Date: 18.03.2014
whether the action taken by the respondent in cancelling the allotment is valid
or not.
Admittedly, the respondent is a Government Company governed by provisions
of Companies Act, 1956. Since majority of shares are held by Government and
decision making is controlled to some extent by the Government, the respondent
is a 'State' within the meaning of Art.12 of the Constitution of India. But its
decisions cannot be elevated to the decisions of Government or to the decisions
of statutory authorities/administrative authorities. Since the respondent is a
State, its actions should be fair, reasonable and should not be arbitrary in the
facts and circumstances of the case.
Mere letter of allotment does not confer any right
The petitioner was allotted land under letter dated 4-3-1995 and it reads
as follows:
" With reference to your application cited for allotment of land at
IDA-VAKALAPUDI, KAKINADA. We are pleased to allot the land admeasuring 70.00
ACRES for setting up of CEMENT PLANT on out right sale basis, subject to the
following terms and conditions, and such other terms and conditions that are
stipulated in the agreement of sale. A rough sketch is enclosed.
1. The land admeasuring 70.00 ACRES is allotted at a tentative cost of
Rs.1,25,000.00 per acre. The total cost of the land works out to Rs.87,50,000/-
(Rupees Eighty Seven Lakhs and Fifty thousand only).
2. You should pay the development charges for the land in "as is where is
basis" at a cost of Rs.1,82,000.00 per acre (excluding cost of sewerage disposal
scheme) which works out to Rs.1,27,40,000/- (Rupees One Crore Twenty Seven Lakhs
Forty thousands only).
3. You should pay 100% of the cost of the land and development cost which
works out to Rs.2,14,90,000.00 (Rupees Two Crores Fourteen Lakhs Ninety
Thousands only) within one month from the date of receipt of these orders, less
EMD of Rs.2,50,000.00 already paid.
4. You should execute the sale agreement in the prescribed proforma with full
stamp duty and should take physical possession of the land invariably within ONE
MONTH from the date of receipt of the allotment order. All costs of stamp
duties in connection with execution of sale agreement should be borne by you.
5. You should execute a separate agreement for the payment of development
charges on a requisite stamp paper under Indian Stamp Act within one month from
the date of receipt of the allotment letter.
6. The land cost is provisional and is subject to enhancement of
compensation, if any, by the competent court under the land acquisition act.
7. Interest 19% per annum from the date of taking possession or from 61st day
from the date of receipt of these orders, whichever is earlier and thereafter
21% per annum.
8. You should submit valid licences required for your implementation of the
above project including completion of studies in respect of risk analysis
HAZOP/HAZON, pollution control and its impact on environment and the clearance
from the Chief Controller of Explosives, Nagpur and other
certificates/documents, as the case may be along with the agreement of sale.
9. All payments shall be made in the Zonal Office, Kakinada/Head Office by
way of Crossed Demand draft favouring 'APIIC LTD.' Payable at Kakinada/Hyderabad
only.
10. If the payments stipulated in Clause (3) above are not made within one
month of receipt of this letter, these orders will be treated as cancelled and
EMD paid sands forfeited automatically.
11. The allotment is also subject to the other terms and conditions stipulated
in the Annexure appended hereto.
12. The allotment is also subject to the other terms and conditions enclosed
in Annexure hereto."
20. As per the above conditions, the development charges for the land in "as
is where is basis" have to be paid. The sale agreement in the prescribed
proforma should be executed and physical possession of land should be taken
within one month from the date of receipt of allotment order. Now the allotment
is cancelled for violating those conditions and also condition No.10 of
allotment.
21. Since there was no agreement of sale which was executed, the rights of the
parties are based on the simple letter of allotment which can be called as an
"offer" in the terms of Contract law and non-fulfilment of any of the terms
would not result in a binding contract in the absence of which the petitioner
cannot complain with regard to the withdrawal of offer. An offer can be
withdrawn before it is accepted and hence the Writ Petition is liable to be
dismissed on this ground.
This Court relied upon a
decision of the Hon'ble Court in Kollipara Sriramulu V. T.Aswatha Narayana3,
wherein the Hon'ble Supreme Court observed as follows:
"It is well established that a mere reference to a future formal contract will
not prevent a binding bargain between the parties. The fact that the parties
refer to the preparation of an agreement by which the terms agreed upon are to
be put in a more formal shape does not prevent the existence of a binding
contract. There are, however, cases where the reference to a future contract is
made in such terms as to show that the parties did not intend to be bound until
a formal contract is signed. The question depends upon the intention of the
parties and the special circumstances of each particular case"
No order become effective only on communication
The Constitution Benches of this Court in Bachhittar Singh V. State of
Punjab7 and State of Punjab V. Amar Singh Harika8, have held that an order does
not become effective unless it is published and communicated to the person
concerned. Before the communication, the order cannot be regarded as anything
more than provisional in character. A similar view has been reiterated in Union
of India V. Dinanath Shantaram Karekar9 and State of W.B. V. M.R. Mondal10.
23. In Laxminarayan R. Bhattad V. State of Maharashtra11 this court held that
the order of the authority must be communicated for conferring an enforceable
right and in case the order has been passed and not communicated, it does not
create any legal right in favour of the party."
No Malafides
The petitioner did not allege malafides. No other ground is urged by the
petitioner. In view of the above facts, it cannot be termed that the action of
the respondents in issuing the impugned orders dated 31.12.2004 of the second
respondent and the consequential order dated 06.01.2005 of the third respondent
as unfair, unreasonable or arbitrary. In view of non compliance of the
petitioners, the order dated 16-05-2005 and the order dated 21-03-2006 cannot be held illegal.
33. The Writ Petition is dismissed with costs.
2014 (March. Part ) judis.nic.in/judis_andhra/filename=11029
THE HON'BLE SRI JUSTICE A.RAMALINGESWARA RAO
WRIT PETITION No.10570 OF 2006
18-03-2014
Gujrat Ambuja Cement Limited, Mumbai, Rep. by its Vice-President..Petitioner
Andhra Pradesh Industrial Infrastructure Corporation Ltd. Rep. by its Vice
Chairman and Managing Director. and others... Respondents
Counsel for the Petitioner : Sri M.P.Chandramouli
Counsel for the Respondents: Sri P.Roy Reddy
<Gist :
>Head Note :
?Cases referred
1. (2009) 1 SCC 475
2. AIR 1997 AP 200
3. AIR 1968 SC 1028
4. (1996) 7 SCC 339
5. (2009) 4 SCC 369
6. (2010) 9 SCC 157
7. AIR 1963 SC 395
8. AIR 1966 SC 1313
9. (1998) 7 SCC 569
10.(2001) 8 SCC 443
11.(2003) 5 SCC 413
HON'BLE SRI JUSTICE A.RAMALINGESWARA RAO
WRIT PETITION No.10570 of 2006
ORDER:
Heard Sri E.Manohar, the learned Senior Counsel for petitioner and the
learned Advocate General, representing Sri P.Roy Reddy, the learned Standing
Counsel for respondents.
2. The facts in this case are undisputed. The petitioner is a company
incorporated under the provisions of the Companies Act, 1956 in the year 1984
and commenced its commercial production of cement in 1986. It is stated to be
the first company in India which introduced bulk transportation of cement
through sea route and it owns 3 bulk terminals apart from owning 3 ports and 7
ships. The petitioner company's production is over 13 million tons per annum.
3. The petitioner company wanted to establish a cement plant at Nadikudi and
grinding unit in Kakinada by harnessing the large un-exploited limestone
deposits in Dachepalli, Gurazala and Karempudi mandals of Guntur District. It
acquired Acs.1052 of land through the first respondent at Nadikudi. It further
acquired an extent of Acs.20 of land through private negotiations. It obtained
two mining leases of 277.87 hectares and 673.73 hectares from the Government of
Andhra Pradesh and obtained various permissions and statutory clearances from
various Departments of State and Central Governments.
4. On 02.01.1995, the petitioner company applied to the first respondent for
allotment to an extent of land Acs.100.00 at Industrial Development Area,
Vakalapudi near Kakinada deep-water port for establishment of
clinker grinding unit. Accordingly, the first respondent by letter dated
04.03.1995 allotted Acs.70.00 of land on outright sale basis at a cost of
Rs.1,25,000/- per acre. The petitioner accepted the said allotment vide its
letter dated 06.03.1995 and requested for allotment of 30 meter wide strip of
land for railway siding for infrastructure purpose. The total cost of the land
including development charges amounting to Rs.2,14,90,000/- was directed to be
paid within one month from the date of allotment order. Accordingly, the
petitioner paid an amount of Rs.2,12,40,000/- after adjusting the EMD of
Rs.2,50,000/- by way of demand draft under covering letter dated 21.03.1995.
The first respondent, by letter dated 15.03.1996, informed the petitioner that
it fixed the land cost and development charges at Rs.4,00,000/- per acre for the
land of Acs.2.53 cents allotted for railway siding and the same was also paid.
5. Thereafter, lot of correspondence exchanged between the petitioner and the
first respondent with regard to the extent of land, the price adjustment, change
of name of the company etc., and the substance of entire correspondence is not
relevant for the purpose of present case. There was correspondence with regard
to the payment of stamp duty from 1996 to 1998 and the first respondent directed
the petitioner to file an agreement with stamp duty and also documentary proof
to show its intention to take up the project vide its letter dated 22.08.1998.
The petitioner replied on 02.09.1998 expressing its keenness to go ahead with
the project and requested the first respondent to intimate the convenient date
for registration and for taking physical possession of the land. The petitioner
also obtained a demand draft on 03.12.1998 for Rs.9,92,000/- drawn in favour of
Assistant Inspector of General of Stamps and approached the Zonal Manager,
Kakinada for completing the formalities. Then the petitioner for the first time
came to know that one of the land owners filed W.P.No.15111 of 1990 in respect
of Acs.1.08 cents of land which is in the middle of the land allotted to it and
also touching the railway line corridor. In those circumstances, the petitioner
expressed its unwillingness to take up the registration until the dispute is
settled. The first respondent vide its letter dated 22.05.1999 stated that it
has decided to execute the agreement for Acs.71.06 cents only, deleting the
disputed land of Acs.1.08 cents and directed the petitioner to furnish agreement
for the reduced extent. The petitioner gave a reply on 26.05.1999 stating that
it already obtained a demand draft for Rs.9,92,000/- towards stamp duty and
stated that since the disputed land falls in between the land and the railway
siding, it was essential for the project and requested the first respondent to
settle the dispute and execute agreement for the entire land allotted.
6. The third respondent vide letter dated 12.05.2003 informed the petitioner
about the dismissal of writ petition and requested it to file an agreement and
take possession of the land within 15 days, failing which action will be
initiated for cancellation of allotment. The petitioner gave a reply on
23.05.2003 stating that the time of 15 days was not sufficient as the Kakinada
Cement Grinding factory is a split unit of 2 million ton cement plant proposed
at Nadikudi and it was decided to implement both the factories by a subsidiary
company called Ambuja Cement India Limited which was promoted by the petitioner
wherein the foreign companies are having shares and therefore requested for
transfer of allotment. The petitioner met the Executive Director of the second
respondent and the minutes of discussions were sent vide letter dated
30.06.2003.
7. While so, the petitioner received a letter dated 31.12.2004 from the
second respondent informing that it was decided to cancel the allotment and
refund the amount to the petitioner and directed the petitioner to approach the
third respondent to get the refund of the amount. Subsequently, the third
respondent issued another letter dated 06.01.2005 stating that EMD amount was
forfeited under clause 10 of the allotment letter, the allotment was cancelled
and the amounts paid by the petitioner would be returned as per rules. Since
the said communications were arbitrary, the matter was brought to the notice of
the Principal Secretary (Industries & Commerce), Government of Andhra Pradesh by
way of a representation dated 13.01.2005. Thereafter, the petitioner was
directed to submit revised project implementation schedule and the petitioner
submitted a letter dated 27.01.2005 intimating the revised schedule. The third
respondent issued a letter dated 16.05.2005 informing the petitioner that the
request for registration of the land was considered and it was also agreed to
transfer ownership in favour of new company called Ambuja Cement India Limited
from the petitioner on certain conditions.
8. The petitioner gave a reply on 20.05.2005 in principle agreeing for the
conditions, but requested for allotment of entire land of Acs.72.14 cents with a
request for copy of the orders of the Court enhancing the compensation payable
to the land by Rs.4,00,000/- per acre, to which the first respondent replied
that it is not possible to restore the entire land of Acs.72.14 cents and the
dispute with regard to Acs.1.08 cents is not decided. The petitioner replied on
12.07.2005 expressing its willingness to take possession of Acs.71.06 cents and
the remaining land of Acs.1.08 cents as and when the case is settled.
Thereafter, some correspondence ensued between the parties. The petitioner also
met the first respondent on 10.03.2006 and discussed the subject with regard to
pending issues, but the petitioner was surprised to receive a letter from the
third respondent dated 21.03.2006 stating that the order of restoration issued
earlier were withdrawn and the orders of cancellation dated 06.01.2005 holds
good.
9. The petitioner filed a revision petition on 04.04.2006 under Regulation
No.21 of Andhra Pradesh Industrial Infrastructure Corporation Allotment
Regulations, 1988 before the first respondent challenging the orders dated
31.12.2004 of the second respondent and the consequential orders of the third
respondent dated 06.01.2005. The said revision was rejected by order dated
10.05.2006 of the first respondent with a copy marked to the third respondent.
Challenging the orders dated 31.12.2004 of the second respondent and the
consequential order dated 06.01.2005 of the third respondent, the present writ
petition was filed.
10. This Court, while admitting the writ petition on 31.05.2006, directed the
respondents not to alienate or otherwise alter the nature of the land in
question.
11. A counter-affidavit was filed on behalf of the respondents stating that
the petitioner failed to take the possession of the land on one pretext or other
and dodged the matter and prevented the first respondent from re-allotting the
same to another needy entrepreneur all these years. In fact, the allotment of
the land stood cancelled, since the petitioner failed to execute the agreement
and take possession of the land within one month from the date of receipt of the
allotment order. The petitioner in its application undertook to commence
construction of the factory buildings within six months from the date of taking
possession of the land and complete the same in 24 months period. The
petitioner assured that the industry would go in production by the end of 1996.
The first respondent reposed confidence in the petitioner and believed the
assurances made by it as true and bonafide and therefore agreed to allot the
land in its favour vide letter dated 04.03.1995. Though the petitioner paid the
amounts towards provisional cost of the land including developmental charges, it
failed to execute the agreement and take possession of the land till the date of
cancellation. The allotment orders dated 04.03.1995 remains cancelled due to
failure of the petitioner in executing the agreement and taking possession of
the land within one month as stipulated in clause 5(ii) of the General
Conditions of allotment of plot/shed incorporated in the guidelines furnished to
the petitioner along with the application. Though the first respondent reminded
the petitioner with regard to execution of the agreement and taking possession
of the land, there was no positive response from the petitioner.
12. The counter also states that the several letters were addressed to the
petitioner culminating in issuance of a show cause notice dated 17.03.1997
asking for the reasons of the petitioner for not cancelling the allotment. The
petitioner vide its letter dated 28.03.1997 informed the first respondent that
it may be granted further time of six months to comply with the requirements
stipulated in the notice dated 17.03.1997 of the first respondent. The first
respondent examined the request and informed the petitioner vide its letter
dated 26.05.1997 that the petitioner should implement the project by 27.06.1997.
The petitioner sought time till 30.09.1997 to implement the project and by
letter dated 24.06.1997 came out with a request to transfer the allotment of
land in favour of one M/s.Kakinada Cements Limited which was registered on
17.07.1997 for implementing the project by 30.09.1997. The said request was
also agreed by the first respondent and the allotment of land was transferred in
favour of M/s.Kakinada Cements Limited vide letter dated 02.09.1997 of the first
respondent subject to the condition that the project should be implemented by
30.09.1997. The petitioner once again promised and finally the first respondent
issued a letter on 17.10.1997 granting time of one year for implementation of
the project, while informing the petitioner that possession of the land has to
be taken over after execution of agreement. It was also followed by another
letter dated 15.04.1998 asking the petitioner to execute the sale agreement
within 15 days and take possession of the land failing which action would be
taken for cancellation of the allotment of land. Another notice was also issued
on 22.08.1998. It is alleged that the petitioner, in order to gain further
time, requested vide letter dated 17.10.1998 for re-transfer of allotment in
favour of the petitioner and the said request was also agreed by the first
respondent vide its letter dated 23.11.1998 subject to the conditions stipulated
therein including that agreement has to be executed and possession of the land
should be taken before 20.12.1998. The petitioner failed in that respect also.
A reminder was also issued on 17.02.1999 to execute the agreement within 7 days.
13. With regard to the land acquisition issue leading to the filing of
W.P.No.15111 of 1990, it was stated that the land of the petitioner therein was
taken under Land Acquisition Act and an Award was also passed by the Land
Acquisition Officer (LAO) much prior to the filing of the said writ petition,
but as a matter of precaution, the first respondent vide its letter dated
22.05.1999 informed the petitioner company that agreement would be executed for
the extent of Acs.71.06 cents out of Acs.72.14 cents, since the disputed land of
Acs.1.08 cents was covered by the court proceedings in the writ petition. The
said writ petition was dismissed on 28.04.2003 on the ground that the possession
of the land was already taken over under the LA Act on 28.08.1990 and an Award
was already passed on 15.04.1991 much prior to the allotment of the land in
favour of the petitioner on 04.03.1995. The fact of dismissal of that writ
petition was informed to the petitioner vide letter dated 12.05.2003 with a
request to execute the agreement for entire extent of land within 15 days
failing which the allotment would be cancelled. The decision of the first
respondent about cancellation of allotment of land was informed to the
petitioner vide letter dated 31.12.2004. Then the petitioner again made a
request for transfer of allotment in favour of M/s.Ambuja Cement India Limited
vide its letter dated 23.05.2003 in order to gain time. In those circumstances
only, the first respondent was compelled to cancel the allotment vide letter
dated 06.01.2005 duly forfeiting EMD of Rs.2.50 lakhs paid by the petitioner as
per the conditions of allotment orders dated 04.03.1995.
14. The petitioner company vide its letter dated 27.01.2005 submitted a
revised schedule of implementation of the project and sought restoration of
allotment of the land in favour of M/s.Ambuja Cements India Limited in order to
gain one more opportunity. The first respondent issued orders vide letter dated
16.05.2005 agreeing for restoration of the allotment, but the petitioner failed
to comply with the conditions mentioned in the letter dated 16.05.2005. The
first respondent once again reminded the petitioner vide its letter dated
20.05.2005 to comply with the conditions stipulated in the letter dated
16.05.2005 within 15 days failing which the offer of restoration automatically
stood withdrawn. Since the conditions of offer in letter dated 16.05.2005 were
not complied, the earlier orders of cancellation dated 06.01.2005 remained in
force. However, the petitioner by its letter dated 06.01.2006 requested the
first respondent to retransfer the allotment of land from the petitioner in
favour of M/s.Kakinada Cements Limited and undertook to comply with the
conditions stipulated in the letter dated 16.05.2005. In view of the past
conduct, the first respondent vide its letter dated 21.03.2006 rejected the
request for retransfer of allotment in favour of M/s.Kakinada Cements Limited
and confirmed the orders of cancellation dated 06.01.2005. The revision
petition filed by the petitioner before the first respondent was rejected, as
the impugned orders were passed pursuant to the decision taken by him only.
Finally, it was stated that the petitioner obtained allotment of the large
extent of scarce and valuable industrial land at subsidised rate by the first
respondent assuring that it would set up the cement plant and failed to honour
its commitment inspite of granting unbelievable indulgence by the first
respondent and the petitioner company was interested in retaining the allotment
of the land and does not require genuinely for industrial use, but for
speculative purposes.
15. The learned Senior Counsel for petitioner submitted that subsequent to the
correspondence in November and December, 2005, the petitioner met the first
respondent on 10.03.2006 and discussed the subject and he responded positively.
But, the petitioner was surprised to receive the letter dated 21.03.2006
restoring the earlier orders of cancellation dated 06.01.2005. The decision
making process as evidenced by the notings in the file is vitiated, as the first
respondent has not applied his mind to the facts of the case properly. He also
submitted that the order dated 21.03.2006 was issued by the third respondent who
has no authority to issue the order. He further submitted that the subsequent
letters dated 08.12.2005 and 06.01.2006 were not considered and the third
respondent passed orders on 21.03.2006 unilaterally and hence the order passed
by the third respondent was invalid.
16. On the other hand, the learned Advocate General contends that the
cancellation orders were passed in accordance with the terms and conditions of
letter of allotment. The petitioner has only an inchoate right since the land
was allotted under a letter of allotment and the petitioner cannot get any
relief even by way of specific performance before a competent civil court and
invocation of jurisdiction under Article 226 is misconceived. He also contends
that the land was allotted way back in 1995 and for nearly 10 years, the
petitioner has neither taken possession of the land nor implemented the project.
The past conduct of the petitioner would show that in stead of sufficient
opportunity given to the petitioner, it did not execute the agreement for all
these years and take possession of the land. The respondents are willing to
refund the amount paid by the petitioner by duly forfeiting the EMD amount as
per the terms and conditions of letter of allotment.
17. In view of the rival contentions, the only point that has to be decided is
whether the action taken by the respondent in cancelling the allotment is valid
or not.
18. Admittedly, the respondent is a Government Company governed by provisions
of Companies Act, 1956. Since majority of shares are held by Government and
decision making is controlled to some extent by the Government, the respondent
is a 'State' within the meaning of Art.12 of the Constitution of India. But its
decisions cannot be elevated to the decisions of Government or to the decisions
of statutory authorities/administrative authorities. Since the respondent is a
State, its actions should be fair, reasonable and should not be arbitrary in the
facts and circumstances of the case.
19. The petitioner was allotted land under letter dated 4-3-1995 and it reads
as follows:
" With reference to your application cited for allotment of land at
IDA-VAKALAPUDI, KAKINADA. We are pleased to allot the land admeasuring 70.00
ACRES for setting up of CEMENT PLANT on out right sale basis, subject to the
following terms and conditions, and such other terms and conditions that are
stipulated in the agreement of sale. A rough sketch is enclosed.
1. The land admeasuring 70.00 ACRES is allotted at a tentative cost of
Rs.1,25,000.00 per acre. The total cost of the land works out to Rs.87,50,000/-
(Rupees Eighty Seven Lakhs and Fifty thousand only).
2. You should pay the development charges for the land in "as is where is
basis" at a cost of Rs.1,82,000.00 per acre (excluding cost of sewerage disposal
scheme) which works out to Rs.1,27,40,000/- (Rupees One Crore Twenty Seven Lakhs
Forty thousands only).
3. You should pay 100% of the cost of the land and development cost which
works out to Rs.2,14,90,000.00 (Rupees Two Crores Fourteen Lakhs Ninety
Thousands only) within one month from the date of receipt of these orders, less
EMD of Rs.2,50,000.00 already paid.
4. You should execute the sale agreement in the prescribed proforma with full
stamp duty and should take physical possession of the land invariably within ONE
MONTH from the date of receipt of the allotment order. All costs of stamp
duties in connection with execution of sale agreement should be borne by you.
5. You should execute a separate agreement for the payment of development
charges on a requisite stamp paper under Indian Stamp Act within one month from
the date of receipt of the allotment letter.
6. The land cost is provisional and is subject to enhancement of
compensation, if any, by the competent court under the land acquisition act.
7. Interest 19% per annum from the date of taking possession or from 61st day
from the date of receipt of these orders, whichever is earlier and thereafter
21% per annum.
8. You should submit valid licences required for your implementation of the
above project including completion of studies in respect of risk analysis
HAZOP/HAZON, pollution control and its impact on environment and the clearance
from the Chief Controller of Explosives, Nagpur and other
certificates/documents, as the case may be along with the agreement of sale.
9. All payments shall be made in the Zonal Office, Kakinada/Head Office by
way of Crossed Demand draft favouring 'APIIC LTD.' Payable at Kakinada/Hyderabad
only.
10. If the payments stipulated in Clause (3) above are not made within one
month of receipt of this letter, these orders will be treated as cancelled and
EMD paid sands forfeited automatically.
11. The allotment is also subject to the other terms and conditions stipulated
in the Annexure appended hereto.
12. The allotment is also subject to the other terms and conditions enclosed
in Annexure hereto."
20. As per the above conditions, the development charges for the land in "as
is where is basis" have to be paid. The sale agreement in the prescribed
proforma should be executed and physical possession of land should be taken
within one month from the date of receipt of allotment order. Now the allotment
is cancelled for violating those conditions and also condition No.10 of
allotment.
21. Since there was no agreement of sale which was executed, the rights of the
parties are based on the simple letter of allotment which can be called as an
"offer" in the terms of Contract law and non-fulfilment of any of the terms
would not result in a binding contract in the absence of which the petitioner
cannot complain with regard to the withdrawal of offer. An offer can be
withdrawn before it is accepted and hence the Writ Petition is liable to be
dismissed on this ground. This would be the position under Civil Law and keeping
this in view, the learned Advocate General contended that the petitioner cannot
even file a suit for specific performance of contract in a competent Civil
Court. He is correct in this respect.
22. In Speech & Software Technologies (India) Ltd. V. Neos Interactive Ltd.1,
it was held by the Hon'ble Supreme Court that the letter of intent on a bare
reading is nothing but an agreement to enter into another agreement and the same
is not enforceable nor does it confer any right upon the parties.
23. In M/s.Lotus Constructions V. The Govt. of A.P.2, this Court considered an
identical situation and held that a reading of the clauses would undoubtedly
show that a letter of communication of acceptance itself is not enough unless
the same is followed by an agreement and if no agreement is entered within the
stipulated period, shall result in forfeiture of Earnest Money Deposit and the
letter of acceptance issued to the tenderer shall be deemed to have been
cancelled. Entering into an agreement, thus, is not mere formality; but, one of
the necessary conditions for concluding the contract. This Court relied upon a
decision of the Hon'ble Court in Kollipara Sriramulu V. T.Aswatha Narayana3,
wherein the Hon'ble Supreme Court observed as follows:
"It is well established that a mere reference to a future formal contract will
not prevent a binding bargain between the parties. The fact that the parties
refer to the preparation of an agreement by which the terms agreed upon are to
be put in a more formal shape does not prevent the existence of a binding
contract. There are, however, cases where the reference to a future contract is
made in such terms as to show that the parties did not intend to be bound until
a formal contract is signed. The question depends upon the intention of the
parties and the special circumstances of each particular case"
24. Ultimately, this Court held that the Government Order proposing to entrust
the project to the petitioner cannot be construed as concluded contract and it
held as follows:
"22. Be that as it may, the petitioner is virtually asking for the relief of
specific performance of a contract and such relief cannot be granted by this
Court in exercise of its jurisdiction under Article 226 of the Constitution of
India. Rights if any accrued in favour of the petitioners are nebulous in
nature and cannot form the basis of foundation for issuing a writ in the nature
of Mandamus. If the petitioner is complaining breach of an agreement/Contract
the Forum is elsewhere."
25. In Haryana S.I.D.C V. Inderjeet Sawhney4, the case of a party who was
initially offered an extent of one acre was modified by offering half acre of
land in respect of which an agreement was entered and possession was delivered.
When the party filed a writ petition seeking allotment of remaining half acre of
land pursuant to the initial provisional allotment letter, it was held by the
Hon'ble Supreme Court that the provisional letter of allotment did not confer
any vested legal right on respondent to insist upon allotment of one acre of
land. But, we are examining the issue in a Constitutional set up and the
principles are different.
26. Now to view the validity of the orders of cancellation, revocation and
withdrawal of the same later within the parameters of judicial review, it has to
be seen whether the impugned orders are fair, reasonable and not arbitrary.
27. The petitioner company was allotted land an extent of Acs.70.00 cents in
Vakalapudi village near Kakinada by letter of allotment dated 04.03.1995. As
per condition No.4, the petitioner should execute the sale agreement in the
prescribed proforma with full stamp duty and take physical possession of the
land within one month from the date of receipt of the allotment order. The
petitioner failed to execute the agreement within one month. Even after
furnishing the format of sale agreement, development agreement and undertaking
vide letter dated 22.07.1996, the petitioner did not execute the agreement nor
took possession of the land. The respondents waited for nearly six months and
issued a show cause notice on 17.03.1997. Thereafter, the petitioner has been
dodging the matter on one pretext or other and in fact the respondents agreed to
the request of the petitioner for allotment of the land in favour of
M/s.Kakinada Cements Limited subject to the condition that the project should be
implemented by 30.09.1997. Another show cause notice was issued on 15.04.1998
followed by a notice dated 22.08.1998. The petitioner did not comply with the
same and on the other hand, in order to gain further time, requested vide its
letter dated 17.10.1998 to retransfer of land in favour of the petitioner. The
respondents agreed vide their letter dated 23.11.1998 to the said request also
with a condition that the agreement had to be executed and possession of the
land to be taken before 20.12.1998. Another notice was issued by the
respondents on 17.02.1999 indicating that action would be taken to cancel the
allotment if possession of the land was taken. The petitioner again requested
for transfer of land in favour of M/s.Ambuja Cements India Limited vide its
letter dated 23.05.2003 and ultimately allotment was cancelled on 06.01.2005.
These events clearly show that for the reasons best known to the petitioner, it
did not execute the agreement and did not take possession of the land allotted
even after paying the cost of the land.
28. The petitioner explains the delay in taking over the possession of the
land by relying on W.P.No.15111 of 1990 filed by one V.Ramakrishna challenging
the land acquisition proceedings. By way of caution, the respondents informed
the petitioner that the agreement would be executed for Acs.71.06 cents out of
Acs.72.14 cents since the extent of Acs.1.08 cents was covered by the Court
proceedings and the possession of the land was taken on 28.08.1990 and an Award
was passed on 15.04.1991, prior to the allotment of land in favour of the
petitioner on 04.03.1995. In the show cause notice dated 12.05.2003, the fact
of dismissal of the said writ petition was informed to the petitioner by the
respondents and requested for execution of the agreement for the entire area and
for taking possession of the land within 15 days. The petitioner requested for
transfer of land in favour of M/s.Ambuja Cements India Limited in stead of
complying with the condition of allotment.
29. The respondents issued an order of restoration on 16-5-2005 with certain
terms and conditions. When they were not complied, the respondents issued a
letter dated 23.06.2005 requesting the Petitioner to comply with all the terms
and conditions indicated therein without fail by 10-07-2005 for considering the
request for restoration of land in favour of the petitioner to the extent of
Ac.71.06 cents. The petitioner corresponded on 12-07-2005 and 16-
09-2005 and when the same was not satisfactory, the respondents ultimately
issued a letter on 25.11.2005 to the petitioner requesting it to fulfil the
terms and conditions stipulated in the order of restoration dated 23.06.2005
(for 16-5-2005) within 15 days from the date of receipt of the said notice i.e.,
on or before 10.12.2005 and stating that failure of the same would result in
withdrawal of offer of restoration as the possession of the land is with APIIC
only. Just 4 days before the dates stipulated in the said letter, the
petitioner addressed a letter on 6-12-2005 followed by a letter dated
06.01.2006. Thus the petitioner did not avail several opportunities given to it
but engaged in correspondence and ultimately did not fulfil the condition No.4
and 5 of letter of allotment resulting in withdrawal of orders of restoration on
21-3-2006.
30. The petitioner entered into unnecessary correspondence and dodged the
issue on one pretext or other without complying the terms and conditions of
letter of allotment. The respondents gave a long rope and waited for nearly 10
years and the orders of cancellation dated 06.01.2005 were restored on 16-5-2005
and ultimately they had to withdraw the orders of restoration on
21-3-2006. The land meant for industrialisation was held up in procrastination
and litigation for more than a decade. In Chaman Lal Singhal V. HUDA5, the
Hon'ble Supreme Court examined the nature of letter of allotment and held that
since there was no agreement/contract between the parties due to non-compliance
with the terms of letter of allotment, the issue with regard to violation of
principles of natural justice would not arise.
31. The petitioner relied on a meeting with the first respondent on 10.03.2006
where it was stated to have been assured of positive action and it was surprised
to receive the letter dated 21.03.2006 later informing that the earlier orders
of restoration stood withdrawn. In support of this, it relied on the internal
notings in the office file of the respondents. Though a decision was initially
taken by the first respondent on 10.03.2006 pursuant to the meeting with the
representative of the petitioner to insist for implementation of the project and
briefing the Chairman, after meeting the Chairman, a decision was taken on
17.03.2006 to withdraw the orders of restoration as the project was not
implemented. Pursuant to the said decision of the first respondent, the
impugned orders of withdrawal of restoration were issued on 21.03.2006. The
notings in the file does not indicate any positive response and in any event,
the same do not create right in the petitioner unless they are communicated. In
Greater Mohali Area Development Authority V. Manju Jain6, it was held by the
Hon'ble Supreme Court that an order which was passed but not communicated does
not create any legal right in favour of a party. The Hon'ble Supreme Court
relied upon some of its earlier decisions and held as follows:
"22. The Constitution Benches of this Court in Bachhittar Singh V. State of
Punjab7 and State of Punjab V. Amar Singh Harika8, have held that an order does
not become effective unless it is published and communicated to the person
concerned. Before the communication, the order cannot be regarded as anything
more than provisional in character. A similar view has been reiterated in Union
of India V. Dinanath Shantaram Karekar9 and State of W.B. V. M.R. Mondal10.
23. In Laxminarayan R. Bhattad V. State of Maharashtra11 this court held that
the order of the authority must be communicated for conferring an enforceable
right and in case the order has been passed and not communicated, it does not
create any legal right in favour of the party."
32. The petitioner did not allege malafides. No other ground is urged by the
petitioner. In view of the above facts, it cannot be termed that the action of
the respondents in issuing the impugned orders dated 31.12.2004 of the second
respondent and the consequential order dated 06.01.2005 of the third respondent
as unfair, unreasonable or arbitrary. In view of non compliance of the
petitioners, the order dated 16-05-2005 and the order dated 21-03-
2006 cannot be held illegal.
33. The Writ Petition is dismissed with costs. Miscellaneous petitions
pending, if any in this Writ Petition, shall stand closed.
_____________________________
A.RAMALINGESWARA RAO, J
Date: 18.03.2014
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