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MANU/SC/0213/2001
Equivalent/Neutral Citation: AIR2001SC1462, 2001(2)ALT37(SC), 2001GLH(2)140, (2001)3GLR2097, 2001INSC 157, JT2001(4)SC43, 2002-4-
LW22, 2001(2)RCR(Civil)536, 2001(1)RCR(Rent)481, 2001(2)SCALE647, ( 2 0 0 1 ) s s c c 101, [2001]2$CR590

IN T H E S U P R E M E C O U R T O F I N D I A

Appeal ( c i v i l ) 3 5 3 0 o f 1 9 9 8

Decided On: 21.03.2001

Appellants: Her Highness Maharani Shantidevi P. Gaikwad V s . Respondent: Savjibai

Haribai Patel and Ors.

Hon'ble Judges/Coram:
S. P. Bharucha, N. Santosh Hegde a n d Y.K. Sabharwal, JJ.

Counsels:
For Appel/ant/Petitioner/Plaintiff: Fali Sam Nariman, Sr. A d v . Nirupam Nanavati, Harin P.
Raval, Huzefa Ahmadi, Nagendra Singh Chauhan and Krishna Kumar; Advs R.P. Bhatt;
Sr. A d v . , A n i p Sachthey, M s . Rashmin Chhaya, M s . Sandhya Rajpal a n d Arijit Prasad,
Advs

Case Note:

Property - p o s s e s s i o n - S e c t i o n 2 0 2 of I n d i a n C o n t r a c t Act, 1 8 7 2 - a p p e a l f i l e d
c h a l l e n g i n g d e c r e e of s p e c i f i c p e r f o r m a n c e of a g r e e m e n t e n t e r e d b e t w e e n
p a r t i e s i n respect o f s o m e l a n d - a s p e r a g r e e m e n t s o m e a p p e l l a n t l i a b l e t o
d e l i v e r p o s s e s s i o n of s o m e l a n d t o r e s p o n d e n t for c o n s t r u c t i o n of d w e l l i n g
u n i t s - a g r e e m e n t c a n c e l l e d by a p p e l l a n t - p o s s e s s i o n of l a n d n o t d e l i v e r e d t o
r e s p o n d e n t - a s p e r c l a u s e 1 7 of a g r e e m e n t i t c a n b e t e r m i n a t e d before
d e l i v e r y o f p o s s e s s i o n - a g r e e m e n t a s c o n t e n d e d by r e s p o n d e n t w a s n o t o f
agency coupled with interest as no interest on account of appellant created -
S e c t i o n 2 0 2 n o t a p p l i c a b l e - a p p e a l a l l o w e d a n d s u i t f i l e d by r e s p o n d e n t
dismissed.

JUDGMENT

Y.K. Sabharwal, J.

1 . By judgment under challenge, the High Court modifying the decree passed by the
trial c o u r t f o r specific performance i n respect o f land i n q u e s t i o n , directed t h a t t h e
plaintiff-respondent No. 1 in this appeal, shall be entitled to enforce the said decree
subject to the issue of final declaration under Section 2 1 of the Urban Land (Ceiling and
Regulation) A c t , 1 9 7 6 ( F o r short. t h e 'ULC A c t ' ) b y t h e authorities i n accordance w i t h
law. I n o t h e r respects, substantially t h e j u d g m e n t a n d decree o f t h e trial c o u r t w a s
upheld.

2 . T h e defendants a r e i n appeal.

3 . I n t h e appeal a n d o t h e r connected counter matters t h e m a i n question i s a b o u t t h e

interpretation o f certain provisions of the ULC Act. This Act, i n the first instance, came
i n t o force o n t h e date o f i t s i n t r o d u c t i o n i n t h e L o k Sabha, i.e., 2 8 t h January, 1 9 7 6 and
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covered the Union Territories and 11 states which had already passed the requisite
resolution u n d e r Clause ( 1 ) o f A r t i c l e 2 5 2 o f t h e Constitution. T h i s p r o v i s i o n o f t h e
Constitution e m p o w e r s t h e Parliament to legislate f o r two o r m o r e States o n a n y o f t h e
matters w i t h respect to w h i c h i t has n o p o w e r s to m a k e l a w s except as p r o v i d e d i n
Articles 2 4 9 a n d 2 5 0 . T h e effect o f passing o f a resolution u n d e r clause ( 1 ) o f A r t i c l e
2 5 2 i s t h a t t h e Parliament, w h i c h has n o p o w e r to legislate w i t h respect to t h e m a t t e r
w h i c h i s t h e s u b j e c t matter o f t h e r e s o l u t i o n , becomes entitled to legislate w i t h respect
to i t . O n t h e o t h e r h a n d , t h e State Legislature ceases to have a p o w e r to m a k e a l a w
relating to t h a t matter.

4 . O n 1 4 t h A u g u s t , 1 9 7 2 t h e G u j a r a t Assembly h a d resolved t h a t t h e i m p o s i t i o n o f t h e
ceiling o n t h e h o l d i n g o f u r b a n i m m o v a b l e property a n d acquisition o f such property i n
excess o f t h e ceiling a n d matters connected t h e r e w i t h o r ancillary a n d incidental thereto
should b e regulated i n t h e State o f G u j a r a t b y t h e Parliament b y l a w .

5 . The ULC Act received assent o f the President on 17th February, 1976. The primary
o b j e c t a n d t h e purpose o f t h e ULC Act i s to p r o v i d e f o r t h e i m p o s i t i o n o f a ceiling o n
vacant land i n urban agglomerations, for the acquisition of such land i n excess o f the
ceiling limit, to regulate such land and for matters connected therewith, with a view to
preventing t h e concentration o f u r b a n land i n t h e hands o f a few persons and
speculation a n d profiteering t h e r e i n , a n d w i t h a v i e w to b r i n g i n g a b o u t a n equitable
distribution o f land i n u r b a n agglomerations to subserve t h e c o m m o n g o o d , i n
furtherance o f t h e directive principles o f Article 3 9 ( b ) a n d ( c ) .

6 . Section 3 o f t h e ULC A c t provides t h a t except as o t h e r w i s e p r o v i d e d i n t h e Act, o n

a n d f r o m t h e c o m m e n c e m e n t thereof, n o person shall b e entitled to h o l d a n y vacant
l a n d i n excess o f t h e ceiling l i m i t i n t h e territories to w h i c h t h i s A c t applies u n d e r s u b -
section ( 2 ) o f Section 1. T h e expression 'vacant land' i s defined i n Section 2 ( q ) to mean
l a n d n o t being land m a i n l y used f o r t h e purpose o f agriculture, i n a n u r b a n
a g g l o m e r a t i o n , b u t does n o t i n c l u d e certain categories as stated i n t h e section. T h e
t e r m 'urban land' i s defined i n Section 2 ( 0 ) o f t h e ULC Act w h i c h reads as u n d e r :

"2.(o) "urban land" means,-

( i ) a n y land situated w i t h i n t h e l i m i t s o f a n u r b a n agglomeration a n d

referred to as such i n t h e master p l a n ; o r

( i i ) i n a case w h e r e there i s n o master p l a n , o r w h e r e t h e master p l a n

does n o t refer to a n y l a n d as u r b a n l a n d , a n y land w i t h i n t h e l i m i t s o f
a n u r b a n agglomeration a n d situated i n a n y area included w i t h i n t h e
local l i m i t s o f a m u n i c i p a l i t y ( b y whatever n a m e c a l l e d ) , a n o t i f i e d area
c o m m i t t e e , a t o w n area c o m m i t t e e , a c i t y a n d t o w n c o m m i t t e e , a small
t o w n c o m m i t t e e , a c a n t o n m e n t b o a r d o r a panchayat,

b u t does n o t i n c l u d e a n y such land w h i c h i s m a i n l y used f o r t h e purpose o f

agriculture.

Explanation.- For t h e p u r p o s e o f t h i s clause a n d Cl. ( q ) , -

(A) "agriculture" includes horticulture, but does not include,-

( i ) raising o f grass,
(ii) dairy farming,
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(iii) poultry farming,

( i v ) breeding o f l i v e - s t o c k , a n d

( v ) such c u l t i v a t i o n o r t h e g r o w i n g o f such p l a n t , as m a y b e
prescribed;

( B ) land shall n o t b e deemed to b e used m a i n l y f o r t h e purpose o f

agriculture, i f such l a n d i s n o t entered i n t h e revenue o r l a n d records
before t h e appointed d a y as f o r t h e purpose o f agriculture :

Provided t h a t w h e r e o n a n y land w h i c h i s entered t h e revenue o r l a n d

records b e f o r e t h e appointed d a y as f o r t h e purpose o f agriculture,
there i s a b u i l d i n g w h i c h i s n o t i n t h e n a t u r e o f a f a r m - h o u s e t h e n , so
m u c h o f t h e extent o f such land as i s occupied b y t h e b u i l d i n g shall n o t
b e deemed to b e used m a i n l y f o r t h e purpose o f agriculture :

Provided further that i f any question arises whether any building is in

t h e n a t u r e o f a f a r m - h o u s e , such question shall b e referred to t h e State
G o v e r n m e n t a n d t h e decision o f t h e States G o v e r n m e n t thereon shall
be final;

( C ) n o t w i t h s t a n d i n g a n y t h i n g contained i n CI. ( B ) o f t h i s explanation,

land shall n o t b e deemed to b e m a i n l y used f o r t h e purpose o f
agriculture i f t h e land has been specified i n t h e master p l a n f o r a
purpose o t h e r t h a n agriculture."

7 . T h e expression 'master plan' i s defined i n Section 2 ( h ) . I t reads :

" 2 . ( h ) " m a s t e r p l a n " , i n relation to a n area w i t h i n a n u r b a n agglomeration o r

a n y p a r t thereof, means t h e p l a n ( b y whatever n a m e called) prepared u n d e r a n y
l a w f o r t h e t i m e being i n force o r i n pursuance o f a n o r d e r m a d e b y t h e State
G o v e r n m e n t f o r t h e development o f such area o r p a r t thereof a n d p r o v i d i n g f o r
t h e stages b y w h i c h such development shall b e carried o u t . "

8 . Section 4 fixes d i f f e r e n t ceiling l i m i t s w i t h respect to vacant land f a l l i n g i n categories

A , B, C a n d D . B y Section 4 ( 1 ) ( c ) , t h e ceiling l i m i t placed o n such l a n d situated i n a n
u r b a n agglomeration f a l l i n g w i t h i n category C specified i n Schedule I i s f i x e d a t 1 5 0 0
square meters. Section 5 p r o h i b i t s certain transfers o f vacant land. Section 5 ( 3 ) , i n t e r
a l i a , provides t h a t transfer m a d e i n contravention o f t h e said p r o v i s i o n shall b e deemed
to b e n u l l a n d v o i d . Section 6 provides f o r t h e f i l i n g o f statements b e f o r e t h e c o m p e t e n t
a u t h o r i t y b y persons h o l d i n g vacant land i n excess o f ceiling l i m i t . Section 8 provides
f o r preparation o f draft statement as regards vacant land held i n excess o f ceiling l i m i t .
T h e particulars o f t h e statement shall contain details as enumerated i n sub-section ( 2 ) .
Sub-section ( 3 ) provides f o r service o f t h e d r a f t statement o n t h e person concerned a n d
also f o r calling f r o m h i m objections to t h e d r a f t statement. Sub-section ( 4 ) provides
t h a t t h e competent a u t h o r i t y shall cluly consider a n y o b j e c t i o n received f r o m such
person a n d i t s h a l l , after g i v i n g such person a reasonable o p p o r t u n i t y o f being heard,
pass such orders as i t deems f i t . After disposal o f t h e objections, i f any, received u n d e r
sub-section ( 4 ) o f Section 8 , f i n a l statement i s prepared u n d e r Section 9 o f t h e Act.
Section 10 provides f o r acquisition o f vacant land i n excess o f t h e ceiling l i m i t whereas
Section 11 provides f o r t h e p a y m e n t f o r such acquired land. Section 1 5 provides t h a t
w h e r e a n y person acquires b y inheritance etc. a n y vacant l a n d w h i c h , together w i t h t h e
vacant l a n d , i f any, already h e l d b y h i m , exceeds i n aggregate t h e ceiling l i m i t , such
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person w i l l have to f i l e a statement before t h e competent a u t h o r i t y a n d t h e provisions
o f Sections 6 to 14 shall, so f a r as m a y b e , a p p l y to t h e statement f i l e d u n d e r t h i s
section and to t h e vacant land h e l d b y such person i n excess o f t h e ceiling l i m i t . Section
2 0 e m p o w e r s t h e Statement G o v e r n m e n t to e x e m p t a n y vacant land i n p u b l i c interest
a n d also i n cases w h e r e such e x e m p t i o n i s considered to b e necessary to a v o i d u n d u e
hardship to a n y person.

9 . Section 2 1 o f t h e ULC A c t provides f o r cases w h e r e excess land w i l l n o t to b e treated

as excess. T h e said section reads t h u s :

" 2 1 . Excess vacant land n o t to b e treated as excess i n certain cases.-(1)

N o t w i t h s t a n d i n g a n y t h i n g contained i n a n y o f t h e foregoing provisions o f t h i s
chapter, w h e r e a person h o l d s a n y vacant land i n excess o f t h e ceiling l i m i t a n d
such person declares w i t h i n such t i m e , i n such f o r m a n d i n such m a n n e r as m a y
b e prescribed before t h e c o m p e t e n t a u t h o r i t y t h a t such land i s to b e utilised f o r
t h e construction o f d w e l l i n g u n i t (each such d w e l l i n g u n i t h a v i n g a p l i n t h area
n o t exceeding e i g h t y square meters) f o r t h e accommodation o f t h e weaker
sections o f t h e society, i n accordance w i t h a n y scheme approved b y such
a u t h o r i t y as t h e State G o v e r n m e n t may, b y notification i n t h e official Gazette,
specify i n t h i s behalf, t h e n , t h e c o m p e t e n t a u t h o r i t y may, after m a k i n g such
i n q u i r y as i t deems f i t , declare such l a n d n o t to b e excess land f o r t h e purposes
o f t h i s chapter a n d p e r m i t such person to c o n t i n u e to h o l d such land f o r t h e
aforesaid purpose, s u b j e c t to such t e r m s and conditions as m a y b e prescribed,
i n c l u d i n g a c o n d i t i o n as to t h e t i m e l i m i t w i t h i n w h i c h such b u i l d i n g s a r e to b e
co n s t r u cted.

( 2 ) W h e r e a n y person contravenes a n y o f t h e conditions s u b j e c t to w h i c h t h e

permission has been granted u n d e r sub-section ( 1 ) , t h e c o m p e t e n t a u t h o r i t y
shall, b e order, a n d after g i v i n g such person as o p p o r t u n i t y o f b e i n g heard,
declare such land to b e excess l a n d a n d thereupon all t h e provisions o f t h i s
chapter shall apply accordingly."
1 0 . Section 2 3 provides f o r disposal o f vacant land acquired u n d e r t h e Act.

1 1 . T h e l a n d i n Vadodara falls i n Category C. T h e ceiling l i m i t i s 1 5 0 0 square meters.

O n 1 4 t h September, 1 9 7 6 a declaration i n F o r m N o . ( 1 ) u n d e r Section 6 ( 1 ) w a s f i l e d b y
Fatehsinhrao Gaekwad declaring 2 4 2 acres as vacant land u n d e r t h e ULC Act.

1 2 . F r o m facts i t i s evident t h a t t h e transaction i n question w a s entered i n t o because o f

enactment o f t h e ULC Act. A n agreement dated 2 4 t h March, 1 9 7 7 w a s entered i n t o
between t h e Fatehsinhrao P. Gaekwad as t h e o w n e r a n d Savjibhai Haribhai Patel as t h e
licensee i n respect o f a p o r t i o n o f property k n o w n a n Laxmi Vilas Palace Estate,
Vadodara. For sake o f convenience hereinafter Fatehsinhrao P. Gaekwad has been
referred as 'original defendant N o . 1' a n d Savjibhai Haribhai Patel as ' p l a i n t i f f ' . T h e
M e m o r a n d u m o f Agreement ( f o r s h o r t , ' t h e agreement') recites t h a t t h e p l a i n t i f f has
evolved a scheme f o r constructing d w e l l i n g u n i t s f o r t h e accommodation o f t h e weaker
sections o f t h e society as envisaged b y Section 2 1 ( 1 ) o f t h e ULC Act. T h e said u n i t s are
to b e constructed o n a p o r t i o n o f land o f t h e o w n e r ' s property - L a x m i Vilas Palace
Estate, save a n d except L a x m i Vilas Palace, M o t i Baugh Palace a n d Nazar Baug Palace.
T h e area u n d e r these three palaces w h i c h i s to b e excluded i s said to b e approximately
1 0 0 acres - equivalent to a b o u t 4 , 0 0 , 0 0 0 square meters. T h e t o t a l l a n d o f t h e p r o p e r t y
i s a b o u t 7 0 7 acres. A Power o f Attorney ( F o r s h o r t , ' t h e p o w e r ' ) w a s also executed o n
24th March, 1 9 7 7 b y original defendant n o . 1 i n f a v o u r o f t h e plaintiff. I t , i n t e r alia,
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stipulates t h a t t h e p o w e r i s irrevocable.

1 3 . Five schemes u n d e r Section 2 1 o f t h e ULC A c t w e r e f i l e d before t h e c o m p e t e n t

a u t h o r i t y f o r t h e construction o f t h e d w e l l i n g u n i t s f o r accommodation o f t h e weaker
sections of the society. The first scheme was filed under the signatures o f original
defendant N o . 1 o n 1 5 t h March 1 9 7 7 . I t stipulated construction o f 6 4 , 3 0 6 d w e l l i n g u n i t s
a t t h e proposed cost o f a b o u t 89,00,000,000/—. I t i s n o t i n d i s p u t e t h a t even t h i s
scheme w a s evolved b y t h e p l a i n t i f f . T h e p l a i n t i f f as p o w e r o f attorney h o l d e r o f original
defendant N o . 1 s u b m i t t e d a second scheme o n 5 t h October, 1 9 7 7 f o r construction o f
3 8 , 3 7 5 d w e l l i n g u n i t s a t t h e estimated c o s t o f a b o u t Rs. 7 8 , 3 8 , 0 0 , 0 0 0 / - . O n 6 t h
February, 1 9 7 8 a n o t h e r scheme w a s s u b m i t t e d b y t h e p l a i n t i f f w h i c h stipulated
construction o f 3 5 , 6 6 0 d w e l l i n g u n i t s a t t h e proposed c o s t o f Rs. 3 9 , 5 9 , 0 0 , 0 0 0 / - . O n
5/8th January, 1 9 7 9 yet a n o t h e r scheme ( 4 t h scheme) f o r construction o f 2 5 , 4 8 2
d w e l l i n g u n i t s a t t h e estimated c o s t o f a b o u t R s . 4 8 , 3 5 , 0 0 , 0 0 0 / - w a s submitted. Finally,
a scheme ( 5 t h scheme) p r o p o s i n g construction o f 4 , 3 5 6 d w e l l i n g u n i t s a t t h e estimated
c o s t o f a b o u t Rs. 1 3 , 3 7 , 0 0 , 0 0 0 / - w a s s u b m i t t e d o n 2 9 t h January, 1 9 7 9 b y t h e p l a i n t i f f
as a p o w e r o f attorney h o l d e r o f original defendant No. 1 .

1 4 . S o o n after t h e submission o f t h e scheme dated 6th February, 1 9 7 8 , original

defendant N o . 1 executed o n 1 0 t h February, 1 9 7 8 a n affidavit—cum-declaration. T h i s
d o c u m e n t , i n t e r alia, declares t h a t all t e r m s a n d conditions contained i n Para 1 to 19 o f
t h e agreement w e r e agreed to a n d approve b y original defendant N o . 1 a n d t h a t t h e
agreement w a s executed b y h i m v o l u n t a r i l y w h i l e i n s o u n d state o f m i n d and
consciousness a n d i s i n n o circumstances liable to b e cancelled. I t also reiterates t h e
execution o f t h e irrevocable Power dated 2 4 t h March, 1 9 7 7 authorising t h e p l a i n t i f f to
a d m i n i s t e r t h e p r o p e r t y o f t h e declarant a n d to p u t t h e h o u s i n g scheme f o r constructing
t h e houses f o r t h e weaker sections o n t h e said p r o p e r t y a n d to m a k e necessary
a d d i t i o n s a n d alterations i n t h e scheme a n d to m o d i f y t h e same consistent w i t h t h e ULC
Act a n d t h e guidelines issued thereunder :

1 5 . O n 2 3 r d February, 1 9 8 0 , original defendant N o . 1 t h r o u g h h i s advocate s e n t a

notice to t h e p l a i n t i f f , i n t e r alia, stating t h a t t h e agreement a n d t h e p o w e r dated 2 4 t h
March, 1 9 7 7 a n d affidavit-cum-declaration dated 1 0 t h February, 1 9 7 8 w e r e illegal a n d
inoperative a n d cancelling t h e agreement a n d t h e power. A letter w a s also sent to t h e
c o m p e t e n t a u t h o r i t y requesting t h e said a u t h o r i t y n o t to proceed w i t h a n y application i n
respect o f t h e p r o p e r t y u n d e r Section 2 1 o f t h e ULC A c t w h i c h m a y e i t h e r b e p e n d i n g o r
may be made i n future by the plaintiff.

1 6 . U n d e r t h e aforesaid circumstances, a s u i t w a s f i l e d b y t h e p l a i n t i f f against original

defendant n o . 1 o n 7th A p r i l , 1 9 8 0 seeking declaration t h a t cancellation o f t h e
agreement a n d t h e p o w e r w a s illegal a n d also p r a y i n g f o r decree o f specific
performance o f the agreement besides seeking injunction and other consequential
reliefs. T h e s u i t w a s o r i g i n a l l y f i l e d against Fatehsinhrao Gaekwad as t h e o n l y
defendant. Later, h o w e v e r t h e specified authority, t h e c o m p e t e n t a u t h o r i t y and t h e State
o f G u j a r a t w e r e impleaded as defendants to t h e s u i t . Original defendant N o . 1 dies
d u r i n g t h e pendency o f t h e s u i t a n d h i s legal representatives w e r e b r o u g h t o n record.

1 7 . B y j u d g m e n t a n d decree dated 1 2 t h March, 1 9 9 2 t h e t r i a l c o u r t decreed t h e s u i t

declaring t h e agreement a n d t h e p o w e r a n d affidavit-cum-declaration as v a l i d and
subsisting documents b i n d i n g o n original defendant n o . 1 a n d o n h i s legal
representatives. A decree f o r specific performance o f t h e agreement w a s also granted i n
favour of the plaintiff. The defendants were ordered to specifically perform the
agreement a n d w e r e restrained f r o m c o m m i t t i n g breach o f t h e agreement, p o w e r o f
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attorney a n d obstructing t h e p l a i n t i f f f r o m acting as constituted attorney o f defendant
n o . 1 a n d f r o m t a k i n g a n y action regarding t h e scheme.

1 8 . I n t h e f i r s t appeal f i l e d i n t h e H i g h C o u r t challenging t h e j u d g m e n t a n d decree o f

t h e t r i a l c o u r t , three m a i n questions considered w e r e ; ( 1 ) W h e t h e r t h e agreement c o u l d
b e rescinded; p o w e r o f attorney c o l d b e revoked a n d affidavit-cum-declaration ceased
to b e operative o r n o t . ( 2 ) W h e t h e r i t i s a case f o r g r a n t o f relief o f specific
performance a n d ; ( 3 ) I f specific performance w a s to b e ordered, w h e t h e r a n y conditions
w e r e required to b e i m p o s e d .

1 9 . T h e H i g h C o u r t b y i m p u g n e d j u d g m e n t dated 1 5 t h June, 1 9 9 8 h e l d t h a t t h e m a i n
purpose f o r w h i c h t h e agency was created w a s t h e execution o f t h e scheme f o r
constructing d w e l l i n g u n i t s f o r weaker sections o f t h e society a n d w i t h t h a t e n d i n v i e w
t h e p l a i n t i f f had to prepare t h e scheme a n d g e t sanction f r o m t h e a u t h o r i t y i n
accordance w i t h l a w a n d i n v o k i n g Section 2 0 2 o f t h e Contract Act, t h e H i g h C o u r t
concluded t h a t i t i s a case o f agency coupled w i t h interest. Answering t h e f i r s t question,
t h e H i g h C o u r t held t h a t t h e agreement c o u l d n o t b e rescinded, p o w e r o f attorney c o u l d
n o t b e revoked a n d affidavit-cum-declaration d i d n o t cease to b e operative. T h e second
question was also answered in favour of the plaintiff holding that the compensation in
m o n e y w a s n o t adequate relief a n d t h e p l a i n t i f f w a s entitled to specific performance o f
t h e agreement.

2 0 . I n respect o f t h e t h i r d question t h e H i g h C o u r t held t h a t t h e decree f o r specific

performance c o u l d b e enforced s u b j e c t to c o n d i t i o n s b u t f o r t h e said purpose i t w a s n o t
necessary to remand o r reverse t h e decree a n d i t c o l d b e m o d i f i e d i m p o s i n g t h e
c o n d i t i o n . I t , therefore, held t h a t t h e p l a i n t i f f w a s entitled to enforce t h e specific
performance as granted b y t h e trial c o u r t s u b j e c t to t h e c o n d i t i o n o f final declaration
u n d e r Section 2 1 o f t h e ULC Act b e i n g issued w i t h regard to t h e land i n question b y t h e
specified authority, t h e c o m p e t e n t a u t h o r i t y a n d t h e State o f G u j a r a t i n accordance w i t h
law. T h e authorities w e r e directed to t a k e a final decision either w a y w i t h regard to t h e
issue o f t h e declaration u n d e r Section 2 1 o f t h e ULC A c t a t t h e earliest possible
o p p o r t u n i t y b u t i n n o case later t h a n 1 5 t h A u g u s t , 1 9 9 8 .

2 1 . O n 2 0 t h June, 1 9 9 8 , a n o r d e r w a s passed b y t h e C o m p e t e n t A u t h o r i t y u n d e r
Section 2 1 ( 1 ) o f t h e ULC Act a p p r o v i n g t h e f i f t h scheme dated 2 9 t h January, 1 9 7 9 a n d
declaring t h a t t h e p l a i n t i f f i s entitled to h o l d as a p o w e r o f attorney h o l d e r t h e land
admeasuring 2 3 , 9 1 , 1 2 5 s q . m t r s . ( a p p r o x i m a t e l y 5 9 8 acres) as additional vacant land
f o r t h e purpose o f Chapter I I I o f t h e ULC Act a n d has r i g h t to m a k e m a x i m u m
construction as admissible u n d e r t h e rules. T h e o r d e r dated 2 0 t h June, 1 9 9 8 w a s
challenged i n a w r i t p e t i t i o n f i l e d i n t h e H i g h C o u r t o f G u j a r a t . T h e said w r i t p e t i t i o n has
been w i t h d r a w n to t h i s C o u r t to b e heard a n d disposed o f a l o n g w i t h t h i s appeal.

2 2 . T h e ULC Act has since been repealed d u r i n g t h e pendency o f t h i s appeal b y

Repealing A c t N o . 1 5 o f 1 9 9 9 . T h e Repealing Act w a s passed b y t h e Parliament o n 2 2 n d
March, 1 9 9 9 a n d w a s adopted b y a Resolution passed b y t h e legislature o f State o f
G u j a r a t u n d e r Clause ( 2 ) o f Article 2 5 2 o f t h e Constitution, o n 3 0 t h March, 1 9 9 9 .

2 3 . Reverting to facts, a d m i t t e d l y possession o f t h e land i n question was w i t h original

defendant N o . 1 w h e n t h e s u i t w a s f i l e d . I t i s n o t t h e case o f t h e p l a i n t i f f t h a t t h e
possession w a s delivered to h i m either w h e n t h e agreement was entered i n t o o r t i l l
date. T h e p l a i n t i f f i n n o t i n possession o f t h e land. Declaration u n d e r Section 2 1 o f t h e
ULC Act had not been made when the suit was filed. I t has been made after the passing
o f t h e i m p u g n e d j u d g m e n t a n d pursuant to directions contained therein. T h e said
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declaration, as already stated, i s t h e s u b j e c t matter o f challenge i n t h e transferred w r i t
( S I C ) entitled to enforce p r i o r to issue o f declaration u n d e r Section 2 1 o f t h e ULC Act
a n d b e f o r e t h e p l a i n t i f f i s p u t i n t o possession. I s t h e p l a i n t i f f entitled to seek specific
performance o f t h e agreement o r i s h e entitled to sue f o r o n l y damages?

2 4 . N o w , w i t h regard to documents executed between t h e p l a i n t i f f a n d original

defendant N o . 1 t h e agreement a n d p o w e r o f attorney w e r e executed o n t h e same day,
i.e., 2 4 t h March, 1 9 7 7 . T h e affidavit-cum-declaration w a s executed b y original
defendant N o . 1 o n 1 0 t h February, 1 9 7 8 . T h e p l a i n t i f f w a s to undertake t h e
development o f t h e p r o p e r t y i n t h e m a n n e r p r o v i d e d i n t h e agreement i n c o n f o r m i t y
w i t h Section 2 1 read w i t h rules a n d guidelines issued u n d e r t h e ULC Act. T h e original
defendant N o . 1, as stipulated i n t h e agreement, agreed t h a t t h e p l a i n t i f f shall construct
d w e l l i n g u n i t s f o r t h e accommodation o f t h e weaker sections o f t h e society o n h i s land.
T h e delivery o f possession b y original defendant N o . 1 to t h e p l a i n t i f f i s contemplated
b y clause ( 4 ) . T h e construction as p e r scheme i s contemplated u n d e r clause ( 1 3 ) .
Clause ( 1 7 ) deals w i t h rescission o f t h e agreement b y e i t h e r party. T h e said t h r e e
clauses read as u n d e r :

" ( 4 ) O n t h e Competent A u t h o r i t y m a k i n g a declaration t h a t t h e l a n d o f t h e said

p r o p e r t y i s n o t i n excess o f t h e Ceiling area a n d o n h i s g r a n t i n g permission to
t h e o w n e r to c o n t i n u e to h o l d t h e land o f t h e said p r o p e r t y f o r purpose o f t h e
scheme a b o v e referred to b e prepared b y t h e Licensee o f t h e Second Part, t h e
o w n e r o f t h e First Part shall d e l i v e r possession o f t h e said p r o p e r t y to t h e
Licensee o f t h e Second Part f o r t h e execution o f t h e said scheme a n d
construction o f t h e b u i l d i n g s u n d e r t h e said scheme.

XXX

( 1 3 ) O n t h e delivery o f possession o f t h e said property to h i m as stated i n

clause ( 4 ) above, the Licensee of the Second Part shall be entitled to construct
dwelling units and other building i n accordance with the scheme.
( 1 7 ) T h i s agreement shall n o t b e unilaterally rescinded b y either party after t h e
Licensee o f t h e Second Part has been p u t i n possession o f t h e said p r o p e r t y . "

2 5 . In S. Chattanatha Karayalar v. T h e Central B a n k o f I n d i a & Ors.

MANU/SC/OOO3/1965 : [ 1 9 6 5 ] 3 S C R 3 1 8 , t h e observations o f M o u l t o n , L.J. i n Manks v.
W h i t l e y w e r e q u o t e d a n d a r e relevant w h i l e dealing w i t h t h e question o f interpretation
o f several deeds w h i c h f o r m p a r t o f same transaction. T h e observations read as f o l l o w s

" W h e r e several deeds f o r m part o f o n e transaction a n d a r e contemporaneously

executed t h e y have t h e same effect f o r all purposes such as a r e relevant to t h i s
case as i f t h e y w e r e o n e deed. Each i s executed o n t h e f a i t h o f all t h e others
b e i n g executed also a n d i s intended to speak o n l y as p a r t o f t h e o n e
transaction, and i f o n e i s seeking to m a k e equities a p p l y to t h e parties t h e y
m u s t b e equities arising o u t o f t h e transaction as a w h o l e . "

2 6 . T h e agreement a n d p o w e r contemplate two stages f o r t h e parties to take steps

required o f t h e m . Certain steps a r e required to b e taken b y t h e p l a i n t i f f p r i o r to t h e
g r a n t o f declaration u n d e r Section 2 1 a n d b e f o r e h e i s p u t i n t o possession a n d certain
steps after such g r a n t a n d o n b e i n g p u t i n t o possession. T h e p l a i n t i f f i s required to
prepare a scheme i n c o n f o r m i t y w i t h Section 2 1 a t h i s c o s t a n d to f i l e o n behalf o f t h e
o w n e r a declaration i n regard to t h e said property b e f o r e t h e c o m p e t e n t a u t h o r i t y w i t h i n
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t h e prescribed period. T h e original defendant N o . 1 i s required to s i g n relevant papers,
applications, plans, d r a w i n g s etc. as a n d w h e n required b y t h e p l a i n t i f f f o r t h e purpose
o f declaration and inquiries contemplated by Section 21(1) of the ULC Act. On making
o f declaration, as p e r clause ( 4 ) , original defendant No. 1 i s required to deliver
possession o f t h e land to t h e p l a i n t i f f f o r execution o f t h e scheme a n d construction i n
t e r m s thereof. T h e p l a i n t i f f i s authorised to recover t h e price o f t h e land as m a y b e
determined b y t h e c o m p e t e n t a u t h o r i t y a n d / o r t h e State G o v e r n m e n t f r o m t h e i r
prospective m e m b e r s i n t h e scheme; a n d i s also entitled to receive deposits f r o m t h e
m e m b e r s a n d o b t a i n loans f r o m banks a n d o t h e r financial institutions a n d / o r i n d i v i d u a l s
f o r financing t h e scheme. Likewise, i n t h e p o w e r o f attorney a l s o , t h e p l a i n t i f f has been
authorised to take certain steps on behalf o f the owner before the grant of declaration
u n d e r Section 2 1 a n d b e i n g p u t i n t o possession a n d certain steps after being p u t i n t o
possession. I t i s correct, as contended b y Mr. D h a n u k a , t h a t these documents f o r m p a r t
o f same transaction. These documents have to b e read together w i t h a v i e w to f i n d o u t
t h e m a n i f e s t i n t e n t i o n o f t h e parties. I t may, however, b e noticed t h a t a f f i d a v i t - c u m -
declaration dated 1 0 t h February, 1 9 8 8 w a s executed o n l y b y original defendant N o . 1
f o r t h e purpose o f f i l i n g i t before t h e c o m p e t e n t a u t h o r i t y a n d i t reiterates t h e
agreement a n d t h e power. B y execution o f t h i s d o c u m e n t i n was neither intended to
confer a n y additional r i g h t s i n f a v o u r o f t h e p l a i n t i f f n o r to place a n y restriction o n
original defendant n o . 1 w h i c h w a s n o t envisaged b y t h e agreement.

2 7 . T h e disputed between t h e parties arose b e f o r e t h e scheme w a s sanctioned a n d t h e

p l a i n t i f f w a s p u t i n t o possession a n d t h e agreement a n d t h e p o w e r w e r e terminated i n
terms of notice dated 23rd February, 1980 sent on behalf o f original defendant No. 1. At
t h i s stage t h e s u i t w a s f i l e d . I n t h e p l a i n t , t h e p l a i n t i f f states t h a t i t i s necessary f o r
protection a n d preservation o f h i s r i g h t s t h a t defendant N o . 1 b e restrained f r o m p a r t i n g
w i t h possession o f t h e property. T h e f i r s t prayer o f t h e p l a i n t i f f i s t h a t i t m a y b e
declared t h a t t h e M e m o r a n d u m o f agreement dated 2 4 t h March, 1 9 7 7 , t h e irrevocable
p o w e r o f attorney dated 2 4 t h March, 1 9 7 7 a n d t h e affidavit-cum-declaration dated 1 0 t h
February, 1 9 7 8 are v a l i d , subsisting a n d b i n d i n g o n t h e Defendant N o . 1. T h e r e i s n o
prayer i n t h e p l a i n t seeking a m a n d a t o r y i n j u n c t i o n against t h e authorities directing
t h e m to sanction t h e scheme. I t has n o t been a n d cannot b e disputed t h a t i n t h e e v e n t
o f n o n - g r a n t o f t h e scheme b y t h e authorities t h e agreement w o u l d have fallen t h r o u g h .
Agreement does n o t contemplate t h a t t i t l e i n t h e land w o u l d pass o n to t h e plaintiff.
Further even t h e t i t l e i n t h e superstructure, i.e., d w e l l i n g u n i t s to b e constructed was to
r e m a i n w i t h t h e p l a i n t i f f o n l y t i l l such t i m e t h e same i s transferred b y h i m i n f a v o u r o f
t h e allottees o r t h e i r society. I t i s n o t disputed t h a t t h e p l a i n t i f f c o u l d n o t retain a n y
d w e l l i n g u n i t f o r h i s o w n benefit.

2 8 . I t i s c o m m o n g r o u n d t h a t t h e m a i n purpose f o r w h i c h t h e agreement was entered

i n t o between t h e parties w a s t h e construction o f residential houses f o r t h e weaker
sections o f t h e society i n t e r m o f Section 2 1 o f t h e ULC Act. Mr. Nariman contended o n
behalf o f t h e appellants t h a t u n d e r t h e applicable master p l a n t h e s u i t land i s reserved
f o r 'open space' a n d residential houses c a n n o t b e constructed thereupon a n d , therefore,
t h e agreement i s incapable o f specific performance. O n t h e o t h e r h a n d , Mr. Dhanuka
contended t h a t t h e applicable master p l a n i s t h e o n e t h a t existed o n t h e date w h e n
excess vacant land f i r s t acquired t h e character o f such l a n d , i.e., o n enforcement o f t h e
ULC A c t a n d according to t h e said master p l a n t h e land i s reserved f o r residential
houses. Further contention o f leaned counsel i s t h a t assuming m o d i f i c a t i o n o f t h e
master p l a n i s required to b e considered, even t h e n there i s n o i m p e d i m e n t i n t h e
implementation of the scheme inasmuch as there does not exist absolute bar for
construction o f residential houses. I t i s s u b m i t t e d t h a t as a matter o f fact, t h e
declaration dated 20th June, 1998 provides for obtaining o f all requisite permissions
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whatever, i f any, w h i c h m a y b e required before c o m m e n c i n g t h e actual construction o r
w o r k . Further, i t i s contended, i n case o f inconsistencies, i f any, between t h e provisions
o f T o w n Planning l a w s a n d t h e ULC Act, provisions o f t h e ULC A c t w i l l prevail i n v i e w o f
o v e r r i d i n g provisions as contained i n Section 4 2 o f t h e ULC Act.

2 9 . I n t h e d r a f t development p l a n dated 2 9 t h February, 1 9 6 3 prepared u n d e r t h e

B o m b a y T o w n Planning A c t , 1 9 5 4 , t h e e n t i r e area o f Laxmi Vilas Palace Estate ( E x c e p t
t h e b l o c k o f land a l o n g t h e r i v e r V i s h w a m i t r i a n d o n n o r t h a n d s o u g h o f t h e Z o o Road)
w a s l e f t undesignated. T h i s excepted part o f b l o c k o f land w a s designated f o r
agricultural use. T h e State G o v e r n m e n t o n l t September, 1 9 7 6 issued a notification
under Section 10(1) o f the aforesaid Act sanctioning the draft development plan subject
to t h e m o d i f i c a t i o n s , i n t e r alia, t h a t t h e part o f t h e area o f Laxmi Vilas Palace C o m p o u n d
w h i c h had been l e f t undesignated i n t h e development p l a n shall b e designated f o r
residential use u n d e r Section 7 ( a ) o f t h e said A c t a n d t h e b l o c k o f land situated a l o n g
t h e r i v e r V i s h w a m i t r i a n d o n n o r t h a n d s o u t h o f t h e Zoo Road passing t h r o u g h Laxmi
Vilas Palace w h i c h had been designated f o r agricultural use shall b e released f r o m t h e
said designation and t h e land s o released shall b e reserved f o r recreational purposes
u n d e r Section 7 ( b ) o f t h e A c t . A further notification dated 1 7 t h May, 1 9 7 5 u n d e r Section
1 0 A ( 1 ) o f t h e A c t w a s issued b y t h e G o v e r n m e n t o f G u j a r a t p r o p o s i n g to m o d i f y t h e
development p l a n dated l t September, 1 9 7 0 p r o v i d i n g t h a t t h e lands o f L a x m i Vilas
Palace s h o w n as residential zone i n t h e sanctioned d e v e l o p m e n t p l a n Vadodara shall b e
released f r o m t h e said use a n d t h e lands t h u s released shall b e reserved f o r o p e n space
u n d e r Section 7 ( b ) o f t h e Act as s h o w n i n t h e p l a n . A notification dated 1 6 t h January,
1 9 7 8 issued b y t h e G u j a r a t G o v e r n m e n t i n exercise o f p o w e r s conferred u n d e r Section
10A o f t h e B o m b a y T o w n Planning A c t , 1 9 5 4 sanctioning t h e variations proposed b y t h e
notification dated 1 7 t h May, 1 9 7 5 to Final D e v e l o p m e n t Plan dated l t September,
1 9 7 0 n o t i f i e d 1 5 t h March, 1 9 7 8 as t h e date f r o m w h i c h t h e variations w o u l d c o m e i n t o
force. B y clause ( 2 3 ) o f t h e Schedule appended to t h e said n o t i f i c a t i o n , i t w a s p r o v i d e d
t h a t t h e land o f L a x m i Vilas Palace s h o w n as residential zone i n t h e sanctioned
development plan of Vadodara shall be released from the said use and the lands thus
released shall b e reserved f o r o p e n space u n d e r Section 7 ( b ) o f t h e said Act. Mr.
Dhanuka i s , however, r i g h t i n contending t h a t t h e notification dated 1 6 t h January, 1 9 7 8
never became operative f o r t h e reason t h a t before t h e said notification came i n t o force,
t h e B o m b a y T o w n Planning Act, 1 9 5 4 w a s repealed w.e.f. l s t February, 1 9 7 8 a n d t h e
said notification was n o t saved u n d e r Section 1 2 4 ( 2 ) o f t h e G u j a r a t T o w n Planning and
Urban D e v e l o p m e n t Act, 1 9 7 6 , w h i c h came i n t o force w . e . f . l s t February, 1 9 7 8 .

3 0 . I f t h e p o s i t i o n h a d rested i n terms o f w h a t has been stated above, t h e

consequences m a y have been different. I t w a s , however, n o t s o . U n d e r t h e aforesaid
G u j a r a t Act, o n 1 7 t h May, 1 9 7 9 , d r a f t d e v e l o p m e n t p l a n u n d e r Section 13 was published
w h e r e i n t h e s u i t land was designated as 'open space, s p o r t s t a d i u m , Bus t e r m i n u s a n d
c o u r t ' . D u r i n g t h e pendency o f t h e s u i t , o n 2 5 t h January, 1 9 8 4 , t h e final development
plan prepared by the Vadodara Urban Development Authority issued under the Gujarat
Act came i n t o effect. A s p e r t h e said f i n a l development p l a n , t h e land i n question i s
reserved f o r open space etc. as stated i n draft d e v e l o p m e n t p l a n dated 1 7 t h May, 1 9 7 9 .

31.The G o v e r n m e n t o f G u j a r a t issued a circular dated l s t A p r i l , 1 9 7 8 regarding

implementation of guidelines issued under Section 2 1 o f the Act and amended ULC
Rules. O n e o f t h e salient feature o f t h e said circular w a s t h a t t h e scheme shall b e i n
consistence w i t h t h e Master p l a n . I t also p r o v i d e d t h a t t h e scheme s u b m i t t e d should
adhere to t h e prevailing municipal Regulations, T o w n Planning requirements a n d o t h e r
statutory requirements. I f a n y d e v e l o p m e n t i s required as p e r these regulations, t h e n
t h e scheme s h o u l d i n c l u d e such development. I t also p r o v i d e d t h a t permissible density
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a n d o t h e r regulations l i k e m i n i m u m size, c o m m o n p l o t , m i n i m u m heights, specification
a n d construction o f stories etc. w i l l also have to b e adhered t o . I t f u r t h e r p r o v i d e d t h a t
t h e permission to undertake t h e scheme w i l l b e g i v e n o n l y i n residential zones as
indicated i n t h e Development Plan.

3 2 . T h e G u j a r a t G o v e r n m e n t i n supersession o f t h e earlier circular dated l s t A p r i l , 1 9 7 8

issued fresh guidelines o n 2 2 n d May, 1 9 7 9 regarding t h e i m p l e m e n t a t i o n o f schemes
u n d e r Section 2 1 o f t h e ULC Act. These guidelines, i n t e r alia, stipulated t h a t t h e area o f
5 0 % o f t h e total house shall n o t increase 4 0 square meters a n d t h e p l i n t h area a n d t h e
r e m a i n i n g b u i l d i n g p l i n t h area shall n o t exceed 8 0 square meters. T h e construction
w o r k u n d e r t h e scheme s h o u l d b e i n consonance w i t h t h e provisions o f t h e Master plan
and should be over within 5 years from the date o f the sanction under Section 21(1)
granted b y t h e c o m p e t e n t authority. T h e u n i t s constructed u n d e r t h e scheme shall b e
allotted to t h e weaker sections o f t h e society b y w a y o f sale o r hire-purchase o r o n h i r e
basis. I t also p r o v i d e d t h a t t h e construction shall b e m a d e i n accordance w i t h t h e T o w n
Planning Regulation, Municipal Regulations, B u i l d i n g Regulations etc. T h e competent
o f f i c e r shall g r a n t t h e scheme s u b j e c t to t h e b u i l d i n g r e g u l a t i o n , m a r g i n o f t h e
municipal corporation, panchayat etc. According to t h e guidelines, t h e specified officer
a n d t h e c o m p e t e n t officer are required to ensure t h a t t h e conditions a r e c o m p l i e d w i t h .
The guidelines stipulated the withdrawal o f exemption in case of violation of any o f the
conditions. I t i s o f significance to n o t e t h a t i t was specifically p r o v i d e d t h a t a t t h e t i m e
o f sanctioning t h e scheme, t h e c o m p e t e n t a u t h o r i t y shall ensure t h a t t h e land i n respect
o f w h i c h t h e scheme i s s u b m i t t e d i s n o t placed i n reservation. A s already stated, t h e
l a n d i n question i s s h o w n as o p e n space i n t h e d r a f t d e v e l o p m e n t plan o f Vadodara.

3 3 . T h e H i g h C o u r t b y i m p u g n e d j u d g m e n t , as already noticed, m o d i f i e d t h e decree o f

t h e trial c o u r t a n d directed t h a t t h e decree f o r specific performance shall b e operative
o n l y i f declaration i s issued u n d e r Section 2 1 o f t h e ULC A c t . O n t h e question w h e t h e r
construction o f residential u n i t s o n t h e s u i t land w a s permissible o r n o t , t h e H i g h C o u r t
f o l l o w i n g t h e decision o f t h i s C o u r t i n Atia M o h a m m a d i B e g u m ( S m t . ) v. State o f U.P. &
Ors. M A N U / S C / 0 3 7 7 / 1 9 9 3 : [ 1 9 9 3 ] Z S C R 2 9 5 h e l d t h a t t h e construction o f residential
u n i t s cannot b e said to b e f o r b i d d e n because o f subsequent change i n t h e master p l a n
a n d f o r considering w h e t h e r residential u n i t s can b e constructed o r n o t , t h e relevant
master p l a n to b e considered i s t h e o n e w h i c h w a s i n existence o n 1 7 t h February, 1 9 7 6 ,
w h e n t h e ULC Act was enforced. T h e H i g h C o u r t has h e l d t h a t :

" . . t h e construction o f residential u n i t s o n such land c a n n o t b e said to b e

f o r b i d d e n b y a n y l a w m e r e l y because i n t h e subsequent master p l a n i t has been
s h o w n to b e o p e n space. T h e r i g h t o f t h e parties w e r e crystallised o n t h e date
o f t h e commencement o f t h e A c t a n d such r i g h t s have to r e m a i n unaffected b y
t h e subsequent events."

3 4 . T h e H i g h C o u r t has f u r t h e r h e l d :

"Atia M o h a m m a d i b e g u m ( s u p r a ) c a n n o t b e ignored o r c a n n o t b e held to b e

inapplicable to t h e facts o f t h e present case o n a n y o f t h e g r o u n d s raised b y t h e
learned counsel f o r t h e defendant appellant a n d t h e matter has to b e examined
o n t h e basis o f t h e p o s i t i o n as i t w a s i n existence w i t h reference to t h e master
p l a n o n t h e date w h e n t h e Ceiling Act came i n t o f o r c e o n 1 7 t h February, 1 9 7 6 ,
t h e date o n w h i c h t h e r i g h t s o f t h e parties h a d become crystallised a n d ,
therefore, a t t h a t t i m e i f t h e land i n question c o u l d b e utilised f o r residential
purposes, t h e m e r e change i n t h e development plans subsequently w o u l d n o t
create a n y legal i m p e d i m e n t against t h e use o f t h e same f o r t h e same land
 fl'mupulrdfi
purpose, w h i c h too i s a p u b l i c purpose a n d i t w o u l d n o t a m o u n t to a n y
contravention o f l a w , i f such land i s p e r m i t t e d to b e used f o r raising t h e
construction o f d w e l l i n g u n i t s f o r t h e weaker sections o f t h e society. I n t h e
facts a n d circumstances o f t h i s case, therefore, i t c a n n o t b e said t h a t , t h e MOA
w a s n o m o r e capable o f b e i n g enforced a n d t h a t t h e concerned authorities
c o u l d n o t sanction t h e scheme as such even i f t h e y wanted to sanction a n d t h e
p l a i n t i f f respondent c o u l d c l a i m to enforce t h e MOA."

3 5 . T h e c o m p e t e n t a u t h o r i t y i n t h e o r d e r dated 2 0 t h June, 1 9 9 8 a p p r o v i n g t h e scheme

dated 29th January, 1979 for construction o f 4358 dwelling units says that the ULC Act
has superior p o w e r s o v e r t h e concerned rules o f t h e State a n d , therefore, o n t h e date
t h e land w a s declared as vacant, i t w a s i n residential zone a n d f o r t h e purposes o f
Section 2 1 , i t c a n n o t b e taken t h a t t h e land i s m e a n t f o r o p e n space. T h e competent
a u t h o r i t y f u r t h e r says t h a t t h e l a n d w o u l d permanently r e m a i n i n t h e residential zone.

3 6 . I n Atia Begum's case i t was held :

" T h e 'master plan' defined i n Section 2 ( h ) a n d referred i n t h e d e f i n i t i o n o f

'urban land' i n Section 2 ( 0 ) , i n c l u d i n g Explanation ( C ) t h e r e i n , i s o b v i o u s l y a
master plan prepared and i n existence at the time o f commencement of the Act
when by virtue o f Section 3 of the Act when by virtue o f Section 3 o f the Act,
r i g h t o f t h e h o l d e r o f t h e l a n d u n d e r t h e A c t g e t crystallised a n d extinguish h i s
r i g h t to h o l d a n y vacant land i n excess o f t h e ceiling l i m i t . T h e proceedings f o r
d e t e r m i n i n g t h e vacant land i n excess o f t h e ceiling l i m i t according to t h e
machinery p r o v i s i o n s i n t h e A c t i s m e r e l y f o r quantification, a n d to effectuate
t h e r i g h t s a n d liabilities w h i c h have crystallised a t t h e t i m e o f commencement
o f t h e Act. T h e contrary v i e w taken o n t h e construction m a d e o f these
p r o v i s i o n s b y t h e H i g h C o u r t c a n n o t , therefore, b e accepted."

3 7 . T h e facts o f Atia Begum's case s h o w t h a t i t i s a case w h i c h relates to quantific o n o f

vacant l a n d . T h e present case i s n o t o f quantification o f vacant land. Atia B e g u m w a s
not concerned with the question o f Town Planning Laws and the schemes under Section
2 1 o f t h e ULC Act w h i c h i s o n e o f t h e p r i n c i p l e question w i t h w h i c h w e are concerned
here. I t w a s n o t held i n Atia B e g u m t h a t p l a n n i n g a n d development w h i c h i s a state
s u b j e c t w o u l d stand frozen o n 1 7 t h February, 1 9 7 6 . T h e said decision c a n n o t b e read as
l a y i n g d o w n t h e l a w t h a t f o r all a n d every purpose, t h e master p l a n as i n existence o n
1 7 t h February, 1 9 7 6 w i l l freeze. W e leave open t h e question w h e t h e r even f o r t h e
purpose o f quantification o f vacant l a n d t h a t has become such after 1 7 t h February,
1 9 7 6 , w o u l d t h e p o s i t i o n i n regard to t h e master p l a n as existing o n 1 7 t h February,
1 9 7 6 r e m a i n unaltered o r n o t . I n t h e present case, o n t h i s aspect, i t i s n o t necessary to
examine t h e correctness o f t h e decision i n Atia Begum's case.

3 8 . I t deserves to b e emphasised t h a t b y passing a resolution u n d e r clause ( 1 ) o f

A r t i c l e 2 5 2 , t h e State Legislature o n l y surrendered t h e r i g h t to legislate i n respect o f
l a w s relating to t h e i m p o s i t i o n o f a ceiling o n t h e h o l d i n g o f u r b a n i m m o v a b l e p r o p e r t y
i n excess o f t h e ceiling a n d all matters connected t h e r e w i t h o r ancillary a n d incidental
thereto i n f a v o u r o f t h e Parliament b y law. I t w a s o n l y a l i m i t e d surrender i n t e r m s o f
t h e said resolution. T h e aspect o f T o w n Planning a n d D e v e l o p m e n t b y t h e State has n o t
been surrendered. T h e i m p o s i t i o n o f ceiling o n u r b a n i m m o v a b l e p r o p e r t y i s a n
independent subject. T h e p r i m a r y o b j e c t o f t h e A c t , as already noticed, w a s to p r e v e n t
t h e concentration o f u r b a n l a n d i n t h e hands o f a few persons a n d speculation and
profiteering t h e r e i n , a n d to b r i n g i n g a b o u t a n equitable d i s t r i b u t i o n o f land i n u r b a n
agglomerations to subserve t h e c o m m o n g o o d . Basically o n e u n i f o r m p o l i c y i s f u l l y
 n'mupulrdfi
understandable o n such a s u b j e c t a n d t h a t i s w h y o n t h i s aspect t h e r e w a s surrender b y
m o s t o f states i n f a v o u r o f t h e Parliament. T h e t o w n p l a n n i n g , however, i s altogether a n
independent a n d d i f f e r e n t subject. I t i s a State subject. I t d i f f e r s f r o m State to State. I t
c a n n o t b e said t h a t b y surrendering i t s r i g h t to legislate o n t h e aspect o f i m p o s i t i o n o f
ceiling o n u r b a n i m m o v a b l e property, t h e State Legislature also surrendered t h e r i g h t o f
development a n d t o w n p l a n n i n g . These a r e essentially t h e r i g h t s w i t h i n t h e p u r v i e w o f
t h e State G o v e r n m e n t . T h e o b j e c t o f t h e ULC A c t i s n o t to sanction o r p e r m i t
development i n t h e States contrary to t h e i r statutory t o w n p l a n n i n g l a w s . T h e
development a n d t h e t o w n planning i s a n o n g o i n g process. I t goes o n changing f r o m
t i m e to t i m e depending u p o n t h e local needs. T h e d e f i n i t i o n o f 'master plan'
contemplates t h e p l a n prepared u n d e r a n y l a w ' f o r t h e t i m e b e i n g i n force' o r ' i n
pursuance o f a n o r d e r m a d e b y t h e State G o v e r n m e n t f o r t h e d e v e l o p m e n t o f such area
o r part thereof a n d p r o v i d i n g f o r t h e stages b y w h i c h such development shall b e carried
o u t ' . T h e d e f i n i t i o n does n o t contemplate a static master plan. For c l a i m i n g t h e b e n e f i t
o f Section 21, t h e construction o f t h e d w e l l i n g u n i t s f o r t h e accommodation o f t h e
weaker sections o f t h e society o n t h e land has to b e i f permissible as p e r relevant
master p l a n w h e n t h e scheme i s considered b y t h e authorities f o r sanction. I f t h e land
use requires t h e land to b e used f o r s o m e o t h e r purpose, i t c a n n o t b e said t h a t to g r a n t
b e n e f i t u n d e r Section 21, t h e land should b e p e r m i t t e d to b e used f o r construction o f
residential u n i t s . I t w a s n o t intended a n d c o u l d never have been intended t h a t Section
2 1 w i l l take a w a y t h e State p o w e r o f t o w n p l a n n i n g o r o n c o m i n g i n t o force o f t h e ULC
Act, t h e Master Plan w o u l d freeze. T h e Rules m a d e u n d e r t h e ULC Act f u r t h e r m a k e t h e
p o s i t i o n q u i t e clear. Rule 1 1 - A w a s introduced a n d b r o u g h t i n t o force b y a m e n d m e n t o f
U r b a n Land ( c e i l i n g a n d Regulation) Rules o n 1 9 t h December, 1 9 7 7 . Rule 1 1 - A reads as
under:

" 1 1 - A . Terms a n d c o n d i t i o n s s u b j e c t to w h i c h a person m a y b e p e r m i t t e d to

c o n t i n u e to h o l d excess vacant land u n d e r sub-section ( 1 ) o f Section 21.-The
t e r m s a n d conditions s u b j e c t to w h i c h t h e competent a u t h o r i t y m a y p e r m i t a
person to c o n t i n u e to h o l d vacant l a n d , i n excess o f t h e ceiling l i m i t , u n d e r
sub-section ( 1 ) o f Section 2 1 , f o r t h e construction o f d w e l l i n g u n i t s f o r t h e
accommodation o f t h e weaker sections o f t h e society i n accordance w i t h a n y
scheme shall b e t h e t e r m s a n d conditions specified i n Schedule 1 - A . "

3 9 . Schedule 1 - A sets o u t t e r m s a n d conditions s u b j e c t to w h i c h a person m a y b e

p e r m i t t e d to c o n t i n u e to h o l d excess vacant land u n d e r sub-section ( 1 ) o f Section 2 1 .
T h e said conditions also m a k e i t clear t h a t t h e construction o f d w e l l i n g u n i t s has to b e
consistent w i t h t h e master p l a n . C o n d i t i o n No. 1 o f Schedule 1 - A reads t h u s :

1 . T h e construction o f d w e l l i n g u n i t s f o r t h e accommodation o f t h e weaker

sections o f t h e society i n t h e vacant l a n d , i n relation to w h i c h t h e declaration o f
t h e c o m p e t e n t a u t h o r i t y i s s o u g h t o r m a d e u n d e r sub-section ( 1 ) o f Section 2 1
shall b e consistent w i t h t h e Master Plan, i f a n y f o r t h e u r b a n agglomeration o r
t h a t p a r t o f t h e u r b a n agglomeration w h e r e i n such land i s situated or, i f there i s
n o Master Plan f o r t h e u r b a n agglomeration o r such p a r t thereof such directions
as t h e State G o v e r n m e n t m a y g i v e i n relation to land used i n t h e u r b a n
a g g l o m e r a t i o n , o r such part have regard to t h e planned d e v e l o p m e n t o f t h e
urban agglomeration or any part thereof."
4 0 . Various guidelines issued from time to time also show that the master plan to be
considered i s t h e o n e i n existence a t t h e relevant t i m e w h e n t h e scheme u n d e r Section
2 1 i s considered b y t h e authorities. A s already noticed, t h e circular dated 2 2 n d May,
1 9 7 9 stipulates t h a t a t t h e t i m e o f sanctioning t h e scheme, t h e c o m p e t e n t a u t h o r i t y
 n'mnupulrdfi
shall ensure t h a t t h e land i n respect o f w h i c h t h e scheme i s p e r m i t t e d i s n o t proposed
to b e acquired f o r a n y p u b l i c purpose o r i t i s n o t placed i n reservation and t h a t t h e
construction u n d e r t h e sanctioned scheme shall b e d o n e i n accordance w i t h t o w n
p l a n n i n g regulations etc.

4 1 . I n v i e w o f above p o s i t i o n , t h e H i g h C o u r t erroneously r e l y i n g o n Atia B e g u m held

t h a t t h e user as p r o v i d e d i n t h e master p l a n as i n existence o n 1 7 t h February, 1 9 7 6
a l o n e i s to b e seen a n d t h e subsequent change i n t h e master p l a n reserving t h e land f o r
o p e n space i s o f n o consequence. T h e v i e w o f t h e c o m p e t e n t a u t h o r i t y i n t h e o r d e r
dated 20th June, 1998 that the land would permanently remain in residential zone is
also erroneous. Further, t h e c o m p e t e n t a u t h o r i t y erroneously assumed, i t seems, t h a t
t h e H i g h C o u r t directed i t to g r a n t sanction u n d e r Section 2 1 o f t h e ULC Act. T h e H i g h
C o u r t o n l y directed t h e c o m p e t e n t a u t h o r i t y to decide t h e matter according to law. Atia
Begum's case cannot b e held to have l a i d d o w n a p r o p o s i t i o n t h a t use as p r o v i d e d i n
t h e master Plan as i n existence o n 1 7 t h February, 1 9 7 6 w i l l r e m a i n unchanged. T h e
relevant master p l a n i s t h e o n e w h i c h i s prevalent w h e n t h e scheme u n d e r Section 2 1 i s
taken u p f o r consideration b y t h e authorities a n d f o r t h i s purpose neither t h e date o f
filing the scheme nor the date o f enforcement of the ULC Act is relevant. The
development will not freeze on the enforcement of the ULC Act o r presentation o f the
scheme.

4 2 . I n t h e present case, i n t h e d r a f t d e v e l o p m e n t p l a n o f 1 9 7 9 w h i c h w a s finalised

d u r i n g t h e pendency o f t h e s u i t , t h e l a n d i n question i s reserved f o r o p e n space etc. I t
c a n n o t b e d o u b t e d t h a t t h e agreement h a d been entered i n t o between t h e parties m a i n l y
a n d rather o n l y w i t h t h e o b j e c t o f construction o f residential houses u n d e r t h e scheme
u n d e r Section 2 1 o f t h e ULC A c t f o r accommodation o f weaker sections o f t h e society.
I n M a y 1 9 7 6 , i t became e v i d e n t t h a t i t w i l l n o t b e possible to construct residential
houses i n v i e w o f w h a t was p r o v i d e d i n t h e master p l a n . T h e r e i s n o substance i n t h e
contention t h a t assuming t h e prescribed land use i s 'open space', still there w i l l b e n o
impediment i n the implementation of scheme i n as much as there is no absolute bar for
construction o f residential houses. T h i s i s n o t t h e basis o n w h i c h t h e c o m p e t e n t
a u t h o r i t y had considered t h e matter. T h e agreement i s clearly incapable o f being
specifically enforced. U n d e r these circumstances, there i s n o question o f a n y
inconsistency a n d t h u s Section 4 2 o f t h e ULC Act c a n n o t have a n y applicability.

4 3 . W e m a y also consider another contention u r g e d o n behalf o f t h e appellants w h i c h i s

based o n repeal o f t h e ULC Act. Section 3 o f t h e repealing Act deals w i t h t h e saving o f
certain acts despite t h e repeal. T h a t section reads as u n d e r :

" 3 . ( 1 ) T h e repeal o f t h e principal Act shall n o t affect-

( a ) t h e vesting o f a n y vacant l a n d u n d e r sub-section ( 3 ) o f section 10,

possession o f w h i c h has been taken o v e r b y t h e State G o v e r n m e n t o r
a n y person d u l y authorised b y t h e State G o v e r n m e n t i n t h i s behalf, o r
by the competent authority:

( b ) t h e v a l i d i t y o f a n y o r d e r g r a n t i n g e x e m p t i o n u n d e r sub-section ( 1 )
o f section 2 0 o r a n y action taken thereunder, n o t w i t h s t a n d i n g a n y
j u d g m e n t o f a n y c o u r t to t h e c o n t r a r y ;

( c ) a n y p a y m e n t m a d e to t h e Stage G o v e r n m e n t as a c o n d i t i o n f o r
g r a n t i n g e x e m p t i o n u n d e r sub-section ( 1 ) o f Section 2 0 .

( 2 ) Where-
 n'mnupulrdg:3
(a) any land is deemed to have vested i n the State Government under
sub-section ( 3 ) o f section 10 o f t h e principal Act b u t possession o f
w h i c h has n o t been taken o v e r b y t h e Stage G o v e r n m e n t o r a n y person
d u l y authorised b y t h e State G o v e r n m e n t i n t h i s behalf o r b y t h e
competent authority; and

( b ) a n y a m o u n t has been p a i d b y t h e State G o v e r n m e n t w i t h respect to

suchland,

t h e n , such land shall n o t b e restored unless t h e a m o u n t p a i d , i f any, has been

refunded to t h e State Government."

4 4 . A bare reading o f t h e aforesaid p r o v i s i o n s h o w s t h a t i t i s n o t applicable to Section

2 1 o f t h e ULC Act. Orders sanctioning schemes u n d e r Section 2 1 have n o t been saved
b y Section 3 . T h e contention u r g e d o n behalf o f t h e appellants a n d also t h e State
g o v e r n m e n t i s t h a t t h e schemes u n d e r Section 2 1 a r e n o t saved b y Section 3 o f t h e ULC
A c t . Admittedly, t h e land has n o t vested w i t h t h e G o v e r n m e n t u n d e r Section 1 0 ( 3 ) .
Possession continues to b e w i t h t h e appellants. Mr. B h a t t , learned counsel f o r t h e State
G o v e r n m e n t as w e l l f o r t h e authorities has argued t h a t t h e necessary consequence o f
t h e repeal, o n t h e facts o f t h e present case, i s t h a t t h e l a n d w o u l d b e free f r o m a n y
constraints to w h i c h i t m a y have been subjected u n d e r t h e ULC A c t . Mr. D h a n u k a ,
however, contended t h a t Section 3 o f t h e repealing A c t i s n o t exhaustive. Relying u p o n
Section 6 o f t h e General Clauses A c t , learned counsel s u b m i t s t h a t t h e repeal does n o t
affect r i g h t s accrued i n f a v o u r o f t h e p l a i n t i f f u n d e r t h e ULC Act. Section 6 o f t h e
General Clauses A c t , i n t e r alia, provides t h a t w h e r e a n y Central Act repeals a n y
enactment, unless a d i f f e r e n t i n t e n t i o n appears, t h e repeal shall n o t affect a n y t h i n g d u l y
d o n e o r affect a n y r i g h t , p r i v i l e g e , o b l i g a t i o n o r l i a b i l i t y acquired, accrued o r incurred
u n d e r a n y enactment s o repealed.

4 5 . Reliance has been placed b y t h e learned counsel o n decision i n t h e case o f

Bansidhar & Ors. v. State of Rajasthan & Ors. MANU/SC/0057/1989 :
[1989]2$CR152in s u p p o r t o f t h e contention t h a t p r o v i s i o n o f Section 3 o f t h e
Repealing Act i s n o t exhaustive. Para 13 o n w h i c h reliance has been placed reads as
under:

" A saving p r o v i s i o n i n a repealing statute i s n o t exhaustive o f t h e r i g h t s a n d

obligations so saved o r t h e r i g h t s t h a t survive t h e repeal. I t i s observed b y t h i s
Court i n I.T. Commissioner, U.P. v. Shah Sadiq & Sons
MANU/SC/0351/1987 : [1987]1661'TR102(SC) :

" . . . I n o t h e r w o r d s whatever r i g h t s are expressly saved b y t h e 'savings'

provisions stand saved. B u t , t h a t does n o t m e a n t h a t r i g h t s w h i c h a r e
n o t saved b y t h e 'savings' p r o v i s i o n are extinguished o r stand ipso
facto terminated by the mere fact that a new statute repealing old
statute i s enacted. Rights w h i c h have accrued are saved unless t h e y a r e
taken a w a y expressly. T h i s i s t h e p r i n c i p l e b e h i n d Section 1 0 ( 2 2 ) 6 ( c ) ,
General Clauses Act, 1 8 9 7 . . . " .

W e agree w i t h t h e H i g h C o u r t t h a t t h e scheme o f t h e 1 9 7 3 A c t does n o t m a n i f e s t a n

i n t e n t i o n c o n t r a w t o , a n d inconsistent w i t h , t h e saving o f t h e repealed provisions o f
sec. 6 ( 6 A ) a n d Chapter I I I - B o f ' 1 9 5 5 Act' so f a r as p e n d i n g cases a r e concerned a n d
t h a t t h e r i g h t s accrued a n d liabilities incurred u n d e r t h e o l d l a w a r e n o t effaced.
Appellant's contention ( a ) i s , i n o u r o p i n i o n , insubstantial."
 n'mnupulrdfi
4 6 . W e have n o d i f f i c u l t y i n accepting t h e contention t h a t a repealing statute i s n o t
exhaustive a n d does n o t automatically extinguish t h e accrued r i g h t s unless taken a w a y
expressly. T h e question i n t h e present case, however, i s w h e t h e r a n y r i g h t s u n d e r t h e
ULC Act h a d accrued i n f a v o u r o f t h e p l a i n t i f f b e f o r e i t s repeal. I t i s o n l y t h e n t h e
question o f t h e saving o f t h e said r i g h t s w o u l d arise.

4 7 . To consider t h e aforesaid c o n t e n t i o n , i t has again to b e k e p t i n v i e w t h a t t h e

sanction o f t h e scheme f o r construction o f residential d w e l l i n g u n i t s w a s contrary to t h e
prescribed land use i n t h e master plan w h i c h had reserved t h e land f o r being used as
o p e n space. I t cannot b e h e l d , o n t h e facts o f t h e case, t h a t a n y r i g h t s accrued i n f a v o u r
o f t h e p l a i n t i f f o n l y o n execution o f t h e agreement. Assuming a n y r i g h t s accrued i n
f a v o u r o f t h e p l a i n t i f f o n passing o f o r d e r dated 2 0 t h June, 1 9 9 8 , t h e same w o u l d fall
o n o u r v i e w t h a t t h e said o r d e r dated 2 0 t h June, 1 9 9 8 w a s passed erroneously. T h e r e i s
n o substance i n t h e contention t h a t a n y r i g h t s h a d accrued i n f a v o u r o f t h e p l a i n t i f f
w h i c h have t h e protection o f Section 6 o f t h e General Clauses Act.

4 8 . We may consider another argument which is in respect o f construction of the clause

( 1 7 ) o f t h e agreement. Mr. Nariman contended t h a t t h e agreement c o u l d b e unilaterally
determined under that clause. The contention is that clause (17) is to be read with
clause (4) of the agreement and thus read, there is clearly an express provision in the
agreement g i v i n g r i g h t s to parties to unilaterally t e r m i n a t e t h e agreement a n d t h a t i t
w a s terminated b y original defendant N o . 1 b y serving notice dated 2 3 r d February, 1 9 8 0
o n t h e plaintiff. Further contention i s t h a t to such a n agreement, clause ( c ) o f Section
1 4 ( 1 ) o f t h e Specific Relief Act, 1 9 6 3 applies. A contract w h i c h i s i n i t s n a t u r e
determinable cannot b e specifically enforced [ S e c t i o n 1 4 ( 1 ) ( c ) ] . Mr. D h a n u k a , o n t h e
o t h e r h a n d , contended t h a t t h e contract i s n o t determinable a n d , therefore, Section
1 4 ( 1 ) has n o relevance a n d also t h a t to t h e agreement i n question, clause ( c ) o f Section
1 4 ( 3 ) i s applicable a n d , therefore, n o t w i t h s t a n d i n g clause ( c ) o f Section 1 4 ( 1 ) , contract
i s specifically enforceable. Section 1 4 ( 3 ) , i n t e r a l i a , provides t h a t n o t w i t h s t a n d i n g
clause ( c ) o f sub-section ( 1 ) , t h e c o u r t m a y enforce specific performance w h e r e t h e s u i t
i s f o r t h e enforcement o f a contract f o r t h e construction o f a n y b u i l d i n g o r t h e execution
o f a n y w o r k o n land. A bare reading o f clause ( c ) o f Section 1 4 ( 3 ) s h o w s t h a t i t has n o
applicability. T h e b u i l d i n g contract stipulated b y clause ( c ) o f Section 1 4 ( 3 ) i s n o t t h e
type o f t h e contract w i t h w h i c h w e a r e concerned i n t h e present case. N o w , l e t u s
examine w h e t h e r to t h e agreement i n q u e s t i o n , clause ( c ) o f sub-section ( 1 ) o f Section
14 i s applicable o r n o t .

4 9 . Clause ( 1 7 ) o f t h e agreement states t h a t t h e agreement shall n o t b e unilaterally

rescinded n y either party after t h e p l a i n t i f f has been p u t i n possession o f t h e property.
Clause ( 4 ) stipulates t h e stage a t w h i c h t h e p l a i n t i f f i s required to b e p u t i n possession.
I t i s undisputed t h a t t h e p l a i n t i f f was never p u t i n t o possession. I n fact, t h a t stage d i d
n o t arise because t h e scheme itself w a s sanctioned o n l y after t h e j u d g m e n t u n d e r
appeal a n d pursuant to directions contained i n t h e said j u d g m e n t . I n t h i s appeal, a n
o r d e r o f stay w a s passed i n f a v o u r o f t h e appellant a n d consequently t h e possession has
remained w i t h t h e appellants. T h e H i g h C o u r t i n t h e i m p u g n e d j u d g m e n t has, however,
h e l d t h a t t h e agreement c o u l d n o t b e terminated as i t constitutes a contract o f agency
coupled w i t h interest to w h i c h Section 2 0 2 o f t h e I n d i a n Contract Act, 1 8 7 2 applies. Mr.
N a r i m a n , however, r e l y i n g o n clauses ( 1 7 ) a n d ( 4 ) o f t h e agreement a n d Section 9 o f
t h e I n d i a n Contract Act, contended t h a t there i s a n express p r o v i s i o n g i v i n g r i g h t to t h e
parties to t e r m i n a t e t h e agreement a n d t h a t t h e said r i g h t w a s exercised before delivery
o f possession to the plaintiff and there is thus no question o f applicability of Section
2 0 2 o f t h e I n d i a n Contract Act. O n t h e o t h e r t h e h a n d , t h e contention o f Mr. Dhanuka i s
t h a t , a t best, clause ( 1 7 ) can b e said to b e silent o n t h e question o f t e r m i n a t i o n o f
 n'mnupulrdfi
agreement before delivery o f possession. T h e contention o f learned counsel i s t h a t there
i s n o p o s i t i v e t e r m i n t h e agreement stipulating t h a t b e f o r e delivery o f possession, t h e
agreement can b e unilaterally terminated b y t h e parties. T h e agreement [clause ( 1 7 ) ] i s
said to b e i n negative f o r m . T h e contention o f learned counsel f u r t h e r i s t h a t i t c o u l d
never have been intended t h a t t h e original defendant N o . 1 can unilaterally terminate
t h e agreement as t h e p l a i n t i f f u n d e r t h e agreement had to t a k e v a r i o u s steps a n d to
spend h u g e a m o u n t s f o r preparation o f scheme a n d f o r p u r s u i n g t h e same. Therefore,
t h e p l a i n t i f f c o u l d have never agreed to a t e r m t h a t such a n agreement m a y b e
unilaterally terminated. Learned counsel also relies u p o n Section 2 0 2 o f t h e I n d i a n
Contract A c t a n d s u b m i t s t h a t i t i s a case o f a n agency i n f a v o u r o f t h e p l a i n t i f f coupled
w i t h t h e s u b j e c t m a t t e r o f agency, w h i c h i n t h e present case, i s t h e r i g h t to w o r k o u t
t h e scheme a n d to construct t h e d w e l l i n g u n i t s irrespective o f t h e repeal o r a m e n d m e n t
of the ULC Act which aspect was also duly taken note of i n the agreement. The High
C o u r t held t h a t i t w a s a case o f agency coupled w i t h interest to w h i c h Section 2 0 2
applied a n d f o r i t s v i e w t h e H i g h C o u r t also s o u g h t s u p p o r t f r o m clause ( 1 7 ) observing
t h a t express clause to t e r m i n a t e t h e agreement w a s absent.

5 0 . W e are u n a b l e to agree w i t h t h e approach o f t h e H i g h C o u r t a n d f i n d substance i n

t h e c o n t e n t i o n o f Mr. Nariman. Clause ( 1 7 ) i s i n t h e nature o f express s t i p u l a t i o n t h a t
before delivery o f possession, t h e contract c o u l d b e unilaterally terminated. W h e n there
i s n o a m b i g u i t y i n t h e clause, t h e question o f i n t e n d m e n t i s i m m a t e r i a l . T h e fact t h a t
t h e clause i s couched i n a negative f o r m i s o f n o consequence. T h e i n t e n t i o n i s clear
f r o m t h e p l a i n language o f clause ( 1 7 ) o f t h e agreement. I n t h e case i n h a n d , Section
2 0 2 has n o applicability. I t i s n o t a case o f agency coupled w i t h interest. No interest can
b e said to have been created o n account o f p l a i n t i f f being p e r m i t t e d to prepare t h e
scheme a n d t a k e ancillary steps. Plaintiff c o u l d n o t g e t possession b e f o r e declaration
u n d e r Section 2 1 o f t h e ULC Act. Mr. Dhanuka also contended t h a t t h e agreement i s n o t
determinable i s clear f r o m t h e c o n d u c t o f original defendant N o . 1 a n d also w h a t h e
stated i n t h e affidavit-cum-declaration dated 1 0 t h February, 1 9 7 8 a b o u t agreement n o t
b e i n g terminable. T h e c o n t e n t i o n o f learned counsel i s t h a t w h a t original defendant N o .
1 has said i n t h e said d o c u m e n t i s h i s interpreting statement w h i c h i s admissible i n l a w
and this interpreting statement and also his conduct, clearly shows that agreement was
not terminable by original defendant No. 1. Strong reliance has been placed on Godhra
Electricity Co. Ltd. & Anr. v. The State of Gujarat & Anr.MANU/SC/0282/1974 :
[1975]ZSCR42 i n particular to t h e f o l l o w i n g passage:

" I n t h e process o f interpretation o f t h e t e r m s o f a contract, t h e c o u r t can

frequently g e t g r e a t assistance f r o m t h e interpreting statements m a d e b y t h e
parties themselves o r f r o m t h e i r c o n d u c t i n rendering o r i n receiving
performance u n d e r i t . Parties can, b y m u t u a l agreement, m a k e t h e i r o w n
contracts; t h e y can also b y m u t u a l agreement, remake t h e m . T h e process o f
practical interpretation a n d application, however, i s n o t regarded b y t h e parties
as a r e m a k i n g o f t h e contract; n o r d o t h e courts so regard i t . I n s t e a d , i t i s
m e r e l y a f u r t h e r expression b y t h e parties o f t h e meaning t h a t t h e y g i v e a n d
have g i v e n to t h e t e r m s o f t h e i r contract previously m a d e . T h e r e i s n o g o o d
reason w h y t h e courts should n o t g i v e g r e a t w e i g h t to these f u r t h e r expressions
b y t h e parties, i n v i e w o f t h e fact t h a t t h e y s t i l l have t h e same f r e e d o m o f
contract t h a t t h e y h a d originally. T h e American Courts receive subsequent
actions as admissible guides i n interpretation. I t i s t r u e t h a t o n e p a r t y c a n n o t
b u i l d u p h i s case b y m a k i n g a n interpretation i n h i s o w n favour. I t i s t h e
concurrence therein t h a t such a party can use against t h e o t h e r party. T h i s
concurrence m a y b e evidenced b y t h e o t h e r party's express assent t h e r e t o ,
performances t h a t indicate i t , o r b y saving n o t h i n g w h e n h e k n o w s t h a t t h e f i r s t
 fl'mupulrdfi
party i s acting o n reliance u p o n t h e interpretation."

5 1 . T h e r e i s n o m e r i t i n t h e contention o f Mr. Dhanuka. T h e decision relied u p o n b y Mr.

Dhanuka i s n o t applicable to u n a m b i g u o u s documents. T h a t i s clear f r o m t h e decision
itself. I n respect o f u n a m b i g u o u s documents, Odgers' Construction o f Deeds a n d
Statutes, 5 t h Edn. B y G . D w o r k i n a t pages 1 1 8 - 1 1 9 , has been q u o t e d i n t h e aforesaid
decision as u n d e r :

" T h e question i n v o l v e d i s t h i s : I s t h e fact t h a t t h e parties to a d o c u m e n t , a n d

particularly to a contract, have interpreted i t s t e r m s i n a particular w a y a n d
have been i n t h e h a b i t o f acting o n t h e d o c u m e n t i n accordance w i t h t h a t
interpretation, any admissible guide to the construction o f the document? I n the
case o f a n u n a m b i g u o u s d o c u m e n t , t h e answer i s 'No'."

5 2 . I t has been held t h a t " i n t h e case o f a n a m b i g u o u s i n s t r u m e n t , t h e r e i s n o reason

w h y subsequent interpreting statement s h o u l d b e inadmissible". I n t h e present case w e
a r e concerned w i t h a n u n a m b i g u o u s d o c u m e n t a n d , therefore, w e have to g o b y i t s
p l a i n meaning. Further, affidavit-cum-declaration o n l y reiterated w h a t w a s contained i n
t h e agreement. I t d i d n o t enlarge t h e agreement. I t d i d n o t substitute a n y clause i n t h e
agreement. I t w a s n o t a d o c u m e n t executed between t h e parties. I t w a s a d o c u m e n t
executed b y original defendant N o . 1 a l o n e f o r t h e purposes o f f i l i n g i t before t h e
c o m p e t e n t authority. Clause 17 o f t h e agreement does n o t call f o r a n y o t h e r
interpretation except t h a t t h e contract c o u l d b e unilaterally rescinded b e f o r e delivery o f
possession.

5 3 . Mr. Dhanuka also contended t h a t i f clause ( 1 7 ) i s construed to mean t h a t p o w e r

h a d been conferred o n t h e parties to cancel t h e contract unilaterally a t t h e i r w i s h , t h e n
such a p o w e r o f t e r m i n a t i o n has to b e exercised f o r g o o d a n d reasonable cause
o t h e r w i s e unilateral p o w e r o f cancellation w o u l d have to b e treated as v o i d and
ineffective i n law. Reliance has been placed b y t h e learned, counsel o n National
Fertilizers v. Puran Chand Nangia [(2000) 8 S C C 343 a t 351 paragraph 23]
w h i c h reads t h u s :

" 2 3 . W e m a y also state t h a t u n d e r t h e general l a w o f contracts, once t h e

contract i s entered i n t o , a n y clause g i v i n g absolute p o w e r to o n e party to
override o r m o d i f y t h e t e r m s o f t h e contract a t h i s sweet w i l l o r to cancel t h e
contract - even i f t h e o p p o s i t e p a r t y i s n o t i n breach, w i l l a m o u n t to interfering
w i t h t h e i n t e g r i t y o f t h e contract ( p e r Rajamanner, C.J. i n Maddala Thathaiah
v. Union of India MANU/TN/0091/1957 : AIR1957Mad82 O n appeal
to t h i s C o u r t , i n t h a t case, i n Union o f India v. Maddala Thathaiah
MANU/SC/0052/1963 : [1964]3SCR774the conclusion w a s upheld o n
other ground. The said judgment of the Madras High Court was considered
again i n Central Bank o f India Ltd. v. Hartford Fire Insurance Co. Ltd.
MANU/SC/0318/1964 : AIR1965$C12883ut t h e principle enunciated b y
Raja m a n n e r C.J. w a s n o t differed f r o m ( S e e t h e discussion o n t h i s aspect i n
Mulla's Contract Act, ( 1 0 t h E d n . ) p p 3 7 1 - 7 2 , u n d e r Section 3 1 o f t h e I n d i a n
Contract A c t . ) "

5 4 . W e have perused t h e decision o f Madras H i g h C o u r t referred to i n t h e aforequoted

passage as also the two decisions o f this Court and Mulla's Contract Act. With utmost
respect, w e a r e unable to agree w i t h t h e b r o a d p r o p o s i t i o n t h a t t h e absolute p o w e r o f
t e r m i n a t i o n w o u l d b e v o i d . Referring to Madras case a n d two cases o f t h i s C o u r t , Mulla
says t h a t correctness o f Madras case w a s d o u b t e d . W e reproduce as to w h a t has been
 fl'mupulrdg:3
stated i n t h e Contract Act b y Mulla a t pages 3 7 1 - 3 7 2 . I t reads :

" I f two parties stipulate t h a t t h e contract shall b e v o i d u p o n t h e happening o f

a n event o v e r w h i c h neither p a r t y shall have a n y contract t h e n t h e contract i s
v o i d o n t h e happening o f t h a t event. B u t w h e r e t h e contract i s t h a t t h e contract
shall b e v o i d o n t h e happening o f a n e v e n t w h i c h o n e o r either o f t h e m can
b r i n g a b o u t t h e n t h e b l a m e w o r t h y p a r t y c a n n o t t a k e advantage o f t h a t
stipulation because to d o so w o u l d b e to p e r m i t h i m to t a k e advantage o f h i s
o w n w r o n g . T h i s principle w a s accepted i n Australia b u t w i t h t h i s m o d i f i c a t i o n
t h a t i n b o t h cases t h e contract i s voidable a n d n o t v o i d i n o n e case a n d
voidable i n t h e other, because t h e construction cannot d i f f e r according to
events. Some Indian courts held that a clause i n a contract giving one o f the
parties t h e o p t i o n to cancel t h e contract f o r a n y reason w h e t h e r adequate a n d
v a l i d o r n o t confers a n absolute a n d a r b i t r a r y p o w e r o n o n e o f t h e parties to a
contract a n d i s , therefore, v o i d a n d unenforceable. Therefore, a clause i n a
contract o f s u p p l y o f g o o d s to t h e Railway A d m i n i s t r a t i o n conferring o n t h e
Railway A d m i n i s t r a t i o n t h e r i g h t to cancel t h e contract " a t a n y stage d u r i n g t h e
t e n u r e o f t h e contract w i t h o u t calling u p o n t h e outstandings o n t h e unexpired
portion o f the contract" was held to be a clause under which i t was open to one
o f t h e parties, w i t h o u t assigning a n y reason v a l i d o r otherwise, to say t h a t i t
w a s n o t enforceable. I t conferred a n absolute a n d arbitrary p o w e r o n o n e o f t h e
parties to cancel t h e contract.

O n appeal against t h e Madras H i g h C o u r t decision, t h e S u p r e m e C o u r t upheld

t h e o r d e r passed b u t held t h a t t h e clause authorising cancellation applied o n l y
w h e r e a f o r m a l o r d e r had n o t been placed f o r s u p p l y o f t h e g o o d s contracted
f o r a t w h i c h stage n o legal contract can b e said to have been m a d e a n d s o t h e
cancellation m a d e i n t h e Railway case c o u l d n o t b e said to have been covered
b y t h e clause. T h e Madras & B o m b a y cases w e r e reviewed b y t h e S u p r e m e
C o u r t i n a subsequent j u d g m e n t a n d distinguished a n d t h e correctness o f t h e
Madras case also d o u b t e d . A n d t h e Supreme C o u r t held t h a t w h e r e t h e language
o f a clause i n a contract i s clear i t m u s t b e interpreted according to i t s
language. I n t h a t case, a clause i n a insurance p o l i c y authorising b o t h parties to
cancel t h e p o l i c y a t w i l l w a s u p h e l d . I t i s s u b m i t t e d t h a t t h e two S u p r e m e C o u r t
j u d g m e n t s s h o w t h a t such clauses a r e v a l i d a n d enforceable except where, as i n
t h e Madras Railway case, t h e contract i s a n executed contract i n t h a t as f o r m a l
o r d e r o f s u p p l y h a d already been m a d e . "

5 5 . I n o u r v i e w , t h e aforesaid passage has been misread i n National Fertilizer's case.

Further i n t h e Central Bank of India Ltd., Amritsar v. The Hartford Fire
Insurance Co. Ltd. MANU/SC/0318/1964 : AIR1965SC1288 decisions o f
Madras H i g h C o u r t a n d o f t h i s C o u r t { U n i o n o f India v. Maddala Thathaiah
MANU/SC/0052/1963} w e r e considered. T h e question i n t h a t case w a s w h e t h e r t h e
insurance p o l i c y had been terminated. T h i s C o u r t w a s concerned w i t h a clause i n a n
insurance p o l i c y w h i c h , i n t e r alia, p r o v i d e d t h a t t h e Policy can b e terminated a t t h e
o p t i o n o f t h e I n s u r a n c e Company. T h e contention o f t h e respondent-Insurance c o m p a n y
w a s t h a t i t h a d p o w e r u n d e r t h e said clause to t e r m i n a t e t h e contract a t w i l l a n d i t had
d u l y exercised t h a t power. T h e appellant's contention w a s t h a t i t w a s i m p l i e d i n t h e
clause t h a t t e r m i n a t i o n c o u l d o n l y b e f o r a reasonable cause w h i c h d i d n o t e x i s t i n t h a t
case. I t w a s f u r t h e r contended t h a t i f t h i s interpretation o f i m p l i e d t e r m i s n o t accepted,
t h e clause g i v i n g such r i g h t to t e r m i n a t e a t w i l l w i t h o u t reasonable cause m u s t b e
treated as v o i d a n d i g n o r e d . T h i s C o u r t said :
 n'mnupulrdfi
" T h e contention o f t h e appellant i s based o n t h e interpretation o f clause 1 0 .
N o w i t i s c o m m o n p l a c e t h a t i t i s t h e court's d u t y to g i v e effect to t h e bargain o f
t h e parties according to t h e i r i n t e n t i o n a n d w h e n t h a t bargain i s i n w r i t i n g t h e
i n t e n t i o n i s to b e l o o k e d f o r i n t h e w o r d s used unless t h e y are such t h a t o n e
m a y suspect t h a t t h e y d o n o t convey t h e i n t e n t i o n correctly. I f t h o s e w o r d s a r e
clear, there i s very l i t t l e t h a t t h e c o u r t has to d o . T h e c o u r t m u s t g i v e effect to
t h e p l a i n meaning o f t h e w o r d s h o w e v e r i t m a y d i s l i k e t h e result. W e have
earlier set o u t clause 10 a n d w e f i n d n o d i f f i c u l t y o r d o u b t as to t h e meaning o f
t h e language t h e r e use. I n d e e d t h e language i s t h e plainest. T h e clause says
" T h i s insurance m a y b e terminated a t a n y t i m e a t t h e request o f t h e I n s u r e d " ,
and "The Insurance may also at any time be terminated at the instance o f the
Company". There are all the words o f the clause that matter for the present
purpose. T h e w o r d s " a t a n y t i m e " can o n l y mean " a t a n y t i m e t h e party
concerned likes". S h o r t l y p u t clause 10 says "Either party m a y a t i t s w i l l
t e r m i n a t e t h e p o l i c y " . No o t h e r meaning o f t h e w o r d s used i s conceivable."

5 6 . Regarding v a l i d i t y o f t h e clause w h i c h gave p o w e r as aforesaid, t h i s C o u r t h e l d :

" T h e n e x t a r g u m e n t was t h a t clause 10 w a s bad as i t gave m o r e o p t i o n to t h e

insurer t h a n to t h e assured. W e express n o o p i n i o n as to w h e t h e r t h e clause
w o u l d b e bad i f i t d i d s o , f o r w e a r e clear i n o u r m i n d t h a t i t d i d n o t . T h e
a r g u m e n t t h a t i t d i d w a s based o n t h e use o f t h e w o r d 'request' i n t h e case o f a
t e r m i n a t i o n b y t h e assured a n d ' o p t i o n ' i n t h e case o f a t e r m i n a t i o n b y t h e
insurer. I t w a s said t h a t t h e w o r d 'request' i m p l i e d t h a t t h e request had to b e
accepted b y t h e insurer before t h e r e w a s a t e r m i n a t i o n whereas t h e w o r d
' o p t i o n ' indicated t h a t t h e t e r m i n a t i o n w o u l d b e b y a n a c t o f t h e insurer alone.
We a r e unable to agree t h a t such i s t h e meaning o f t h e w o r d 'request'. I n o u r
v i e w , t h e clause means t h a t t h e i n t i m a t i o n b y t h e assured to terminate t h e
p o l i c y w o u l d b r i n g i t to a n e n d w i t h o u t m o r e , f o r t h e clause does n o t say t h a t
the termination shall take effect only when the assured's request has been
accepted b y t h e insurer.

Lastly, i t w a s said t h a t t h e t e r m i n a t i o n o f t h e contract b y t h e letter o f A u g u s t 7 ,

1 9 4 7 w a s a conditional t e r m i n a t i o n a n d as t h e c o n d i t i o n w a s i m p o s s i b l e o f
performance i n t h e circumstances p r e v a i l i n g , t h e r e w a s i n fact n o t e r m i n a t i o n .
T h a t c o n d i t i o n , i t w a s said, was t h e removal o f t h e g o o d s f r o m Bakarwana
Bazar, A m r i t s a r to a safer locality. W e have n o t h i n g to s h o w t h a t t h e c o n d i t i o n ,
i f i t w a s such, w a s i m p o s s i b l e o f performance. However, t h a t m a y b e , t h e r e i s
n o question o f a n y c o n d i t i o n . T h e letter clearly terminated t h e policy. I t gave a n
o p t i o n to t h e assured to keep t h e p o l i c y o n i t s feet i f i t d i d something. Further
w e d o n o t t h i n k t h a t i t c a n b e s a i d t h a t i f a party h a s a r i g h t a t w i l l to t e r m i n a t e
a c o n t r a c t , t h e i m p o s i t i o n b y h i m o f a c o n d i t i o n , h o w e v e r h a r d , o n f a i l u r e to
f u l f i l w h i c h t h e t e r m i n a t i o n w a s to t a k e effect w o u l d m a k e t h e t e r m i n a t i o n
i l l e g a l , f o r t h e party affected w a s n o t entitled even to t h e b e n e f i t o f a d i f f i c u l t
c o n d i t i o . T h e a g r e e m e n t w a s t h a t t h e p o w e r to t e r m i n a t e c o u l d b e e x e r c i s e d
without more and that is what we think was done in this case."

(Emphasis has been supplied b y u s )

5 7 . F r o m t h e aforesaid, i t i s clear t h a t t h i s c o u r t d i d n o t accept t h e contention t h a t t h e

clause i n t h e insurance p o l i c y w h i c h gave absolute r i g h t to t h e insurance c o m p a n y w a s
v o i d a n d h a d to b e i g n o r e d . T h e t e r m i n a t i o n as p e r t h e t e r m i n t h e insurance p o l i c y was
u p h e l d . U n d e r general l a w o f contracts a n y clause g i v i n g absolute p o w e r to o n e party to
cancel t h e contract does n o t a m o u n t to interfering w i t h t h e i n t e g r i t y o f t h e contract. T h e
 n'mnupulrd’fi':3
acceptance o f t h e a r g u m e n t regarding i n v a l i d i t y o f contract o n t h e g r o u n d t h a t i t gives
absolute p o w e r to t h e parties to t e r m i n a t e t h e agreement w o u l d also a m o u n t to
interfering w i t h t h e r i g h t s o f t h e parties to freely enter i n t o t h e contracts. A contract
c a n n o t b e held to b e v o i d o n l y o n t h i s g r o u n d . Such a b r o a d p r o p o s i t i o n o f l a w t h a t a
t e r m i n a contract g i v i n g absolute r i g h t to t h e parties to cancel t h e contract i s itself
e n o u g h to v o i d i t cannot b e accepted.

5 8 . I n v i e w o f above discussion, w e f i n d f o r c e i n t h e contention t h a t t h e agreement i n

question w a s t e r m i n a b l e before delivery o f possession; i t w a s s o determined a n d to t h e
agreement clause ( c ) o f Section 1 4 ( 1 ) o f t h e specific Relief Act, 1 9 6 3 applies.
Therefore, agreement cannot b e specifically b e enforced.

5 9 . I t was further contended by Mr. Nariman that the agreement is not specifically
enforceable also i n v i e w o f clause ( d ) o f sub-section ( 1 ) o f Section 14 o f t h e Specific
Relief Act, 1 9 6 3 . T h i s p r o v i s i o n provides t h a t a contract t h e performance o f w h i c h
involves t h e performance o f a continuous duty w h i c h t h e C o u r t c a n n o t supervise, i s n o t
specifically enforceable. T h e r e i s considerable force i n t h e submission o f learned
counsel. Even t h e H i g h C o u r t had substantially proceeded o n t h e basis t h a t t h e
i m p l e m e n t a t i o n o f t h e scheme m a y r e q u i r e supervision b u t held t h a t i t can b e
supervised b y t h e c o m p e t e n t authority. Having regard to t h e n a t u r e o f t h e scheme a n d
t h e facts a n d circumstances o f t h e case, to o u r m i n d i t i s clear t h a t t h e performance o f
t h e contract involves continuous supervision w h i c h i s n o t possible f o r t h e c o u r t . After
repeal, such continuous supervision c a n n o t b e directed to b e undertaken b y t h e
c o m p e t e n t a u t h o r i t y as such a n a u t h o r i t y i s n o w non-existent.

6 0 . T h e g r a n t o f decree f o r specific performance i s a m a t t e r o f discretion u n d e r Section

2 0 o f t h e Specific Relief A c t , 1 9 6 3 . T h e c o u r t i s n o t b o u n d to g r a n t such relief m e r e l y
because i t i s l a w f u l to d o so b u t t h e discretion i s n o t required to b e exercised
arbitrarily. I t i s to b e exercised o n s o u n d a n d settled judicial principles. O n e o f t h e
g r o u n d s o n w h i c h t h e C o u r t m a y decline to decree specific performance i s w h e r e i t
w o u l d b e inequitable to enforce specific performance. T h e present i s clearly such a
case. I t w o u l d b e w h o l l y inequitable to enforce specific performance f o r ( i ) residential
houses f o r weaker sections o f t h e society c a n n o t b e constructed i n v i e w o f t h e existing
master p l a n a n d , t h u s , n o b e n e f i t can b e g i v e n to t h e said section o f t h e society; ( i i ) I n
a n y case, i t i s extremely d i f f i c u l t , i f n o t i m p o s s i b l e , to continuously supervise and
m o n i t o r t h e construction a n d thereafter a l l o t m e n t o f such houses; ( i i i ) t h e decree i s
l i k e l y to r e s u l t i n uncalled f o r bonanza to t h e p l a i n t i f f ; ( i v ) p a t e n t i l l e g a l i t y o f o r d e r
dated 2 0 t h June, 1 9 9 8 ; ( v ) absence o f l a w o r a n y a u t h o r i t y to d e t e r m i n e excess vacant
l a n d after construction o f 4 3 5 5 6 d w e l l i n g u n i t s ; a n d ( v i ) agreement does n o t
contemplate t h e transfer o f nearly 6 0 0 acres o f land i n f a v o u r o f t h e p l a i n t i f f f o r
construction o f 4 3 5 6 u n i t s f o r w h i c h land required i s a b o u t 6 5 acres. T h e o b j e c t o f t h e
act was to prevent concentration of urban land i n hand of few and also to prevent
speculation a n d profiteering therein. T h e o b j e c t o f Section 2 1 i s to b e n e f i t weaker
sections o f t h e society a n d n o t t h e o w n e r s . I f n o n e o f these objects can b e achieved,
w h i c h i s t h e factual p o s i t i o n , i t w o u l d b e inequitable to still m a i n t a i n decree f o r specific
performance.

6 1 . T h e contentions u r g e d o n behalf o f t h e p l a i n t i f f b y t h e i r learned counsel t h a t i n

v i e w o f clauses ( 6 ) a n d ( 7 ) o f t h e agreement, despite repeal o f t h e ULC Act, p l a i n t i f f
w o u l d b e entitled to specifically enforce t h e agreement has also n o m e r i t . T h e
acceptance o f t h e contention w i l l m e a n t h a t original defendant N o . 1 before delivery o f
possession h a d n o r i g h t to terminate t h e agreement. T h i s contention placed o n behalf o f
t h e p l a i n t i f f has already been rejected b y us. Reading clauses ( 6 ) a n d ( 7 ) h a r m o n i o u s l y
 n'mnupulrdfi
w i t h clauses ( 4 ) and ( 1 7 ) , t h e contention o f learned counsel c a n n o t b e accepted. I n
v i e w o f these conclusions, t h e contention o f Mr. Dhanuka t h a t reputation o f t h e p l a i n t i f f
as a b u i l d e r w o u l d b e adversely affect i f houses a r e n o t b u i l t i s h a r d l y o f a n y relevance.
I n a n y case, i n t h i s regard w e m a y refer to t h e decision o f t h i s C o u r t i n K. Narendra v.
Riviera Apartments (P) Ltd. M A N U / S C / 0 3 9 2 / 1 9 9 9 : [1999]3$CR777, a case i n
w h i c h t h i s C o u r t examined a n agreement w h i c h contemplated several sanctions a n d
clearances t h a t were n o t w i t h i n t h e p o w e r o f t h e parties. T h e r e s u l t was t h a t t h e
feasibility o f a m u l t i - s t o r e y e d c o m p l e x as proposed a n d planned became impracticable.
I n t h a t case t o o t h e seller continued to r e m a i n i n possession. U n d e r these
circumstances, i t was held t h a t t h e contract t h o u g h v a l i d a t t h e t i m e w h e n i t w a s
entered, i s engrossed i n such circumstances t h a t t h e performance thereof c a n n o t b e
secured w i t h precision a n d t h a t t h e discretionary j u r i s d i c t i o n to decree t h e specific
performance o u g h t n o t to b e exercised. Dealing w i t h t h e question o f r e p u t a t i o n o f t h e
purchaser as a b u i l d e r b e i n g a t stake, t h i s C o u r t h e l d t h a t ' t h i s i s h a r d l y a consideration
w h i c h can w e i g h t against t h e several circumstances.. I f a m u l t i - s t o r e y e d c o m p l e x
c a n n o t c o m e u p o n t h e s u i t property, t h e respondent's plans a r e g o i n g to fail i n a n y
case'. T h e p o s i t i o n i n t h e present case i s q u i t e similar. U n d e r t h e scheme as postulated
b y t h e ULC Act, i t i s n o t permissible to construct d w e l l i n g u n i t s f o r t h e residence o f t h e
weaker sections of the society.
6 2 . I t also deserves to b e noticed t h a t , strictly speaking, i t i s n o t a contract f o r transfer
o f t h e property b u t i s a contract to carry o u t t h e scheme w h i c h i s incapable o f being
carried o u t a t t h i s stage o n account o f reservation i n t h e Master p l a n a n d also repeal o f
t h e ULC Act. I t w a s n o t a n d c a n n o t b e t h e case o f t h e p l a i n t i f f t h a t i n case t h e scheme
h a d been carried o u t , h e w o u l d have e n j o y e d t h e property. H e w o u l d have o n l y e n j o y e d
t h e specified p r o f i t s . At best t h e p l a i n t i f f c o u l d p r a y f o r damages. I n t h e p l a i n t , i t was
asserted t h a t R s . 1 6 , 7 5 , 0 0 0 / - w e r e spent o n execution a n d / o r i m p l e m e n t a t i o n o f t h e
scheme. T h e plaintiff, f o r reasons best k n o w n to h i m , has n o t s o u g h t a decree f o r a n y
damages, even as a n alternate relief.

6 3 . Before c o n c l u d i n g , w e m a y place o n record t h a t d u r i n g t h e course o f hearing, a

statement w a s m a d e b y t h e appellants t h a t i n t h e e v e n t o f t h e appeal a n d t h e
transferred w r i t p e t i t i o n being a l l o w e d , t h e y w i l l u n c o n d i t i o n a l l y offer i n w r i t i n g 6 6
acres o f land to t h e G o v e r n m e n t o f Gujarat. T h e said statement reads as u n d e r :

1 . T h e Appellant t h r o u g h h i s counsel states : t h a t even i n t h e e v e n t o f t h i s

Hon'ble C o u r t a l l o w i n g t h e appeal a n d Transferred W r i t Petition:

( a ) t h e Appellant w i l l unconditionally offer i n w r i t i n g 6 6 acres o f land ( u n -

encroached a n d unencumbered earmarked i n t h e p l a n attached) to t h e
G o v e r n m e n t o f G u j a r a t b y w a y o f g i f t o r f o r acquisition ( o n a compensation o f
Rs.1) f o r t h e specific purpose o f constructing residential d w e l l i n g u n i t s
( p e r m i s s i b l e u n d e r V U D A o r L I G Schemes o f t h e G u j a r a t H o u s i n g B o a r d ) a t t h e
cost o f Government for low-income groups.

( b ) i f such offer i s n o t accepted w i t h i n a p e r i o d o f f o u r m o n t h s f r o m t h e d a t e o f

offer t h e appellant w i l l undertake t h e responsibility o f u t i l i s i n g t h e said land
( i . a . to say approximately 6 5 . 9 5 acres) o f land f o r constructing thereon
d w e l l i n g u n i t s ( i f p e r m i t t e d u n d e r t h e relevant T o w n Planning Laws) f o r h o u s i n g
persons i n t h e l o w - i n c o m e g r o u p a n d l e t t i n g o r selling t h e same to such
persons i n l o w i n c o m e g r o u p o n n o p r o f i t n o loss basis : t h e t o t a l c o s t o f such
a p r o j e c t w i l l b e g o t certified b y a reputed Chartered Accountant."
 n'mnupulrdfi
6 4 . T h e appellant w o u l d b e b o u n d b y t h e aforesaid undertaking w h i c h w e accept.

6 5 . Before p a r t i n g , w e w i s h to express, to p u t i t m i l d l y , o u r deep anguish o n t h e

m a n n e r i n w h i c h t h e specified authority, c o m p e t e n t a u t h o r i t y a n d t h e State o f G u j a r a t
has been conducting i t s e l f b e f o r e t h e t r i a l C o u r t , H i g h C o u r t a n d t h i s Court. D i f f e r e n t
stands a t d i f f e r e n t p o i n t s o f t i m e have been taken sometimes s u p p o r t i n g t h e p l a i n t i f f
a n d sometimes t h e defendants.

6 6 . For the aforesaid reasons, we allow the appeal, set aside the impugned judgment
a n d dismiss t h e s u i t o f t h e plaintiff, Transfer Case ( 8 ) N o . 6 4 o f 1 9 9 8 a n d SLP ( C ) N o .
1692 o f 1999 are also disposed o f in terms o f this judgment. Parties to bear their own
costs.
© Manupatra I n f o r m a t i o n Solutions Pvt. L t d .