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1991 Supreme(SC) 429
SUPREME COURT OF INDIA
K.Ramaswamy : N.M.Kasliwal
S.Rajagopal Chettiar
Versus
Hamasaveni Ammal
Case No. : 902 of 1977
Date of Decision : 8/23/91
Advocates Appeared: Kumar K.Ram : Raghuraman M. : Ramachandran Janaki
JANAKI RAMACHANDRAN, K.RAM KUMAR, M.Raghuraman
The master plan for urban land is dynamic and not frozen at the commencement of the Urban Land (Ceiling and Regulation) Act. Contracts allowing unilateral termination before possession are determinable and not specifically enforceable, especially when land-use restrictions make the contract's object impossible to achieve.
Headnote:(A) Urban Land (Ceiling and Regulation) Act, 1976 - Sections 2, 21 and 42 - Master plan for urban land is not static - For the purpose of sanctioning schemes for the construction of dwelling units for weaker sections of society, the master plan prevalent at the time the scheme is considered by the authorities is relevant, and not the plan in existence at the time of the Act's commencement - Town planning and development is a State subject and an ongoing process that changes according to local needs (Paras 36, 40).
(B) Indian Contract Act, 1872 - Section 202 - Agency coupled with interest - Where an agreement contains an express stipulation allowing unilateral rescission before delivery of possession, it cannot be termed as an agency coupled with interest (Paras 48, 49).
(C) Specific Relief Act, 1963 - Section 14 - Specific performance - A contract that is determinable in nature or involves the performance of a continuous duty which the court cannot supervise is not specifically enforceable (Paras 57, 58).
(D) General Clauses Act, 1897 - Section 6 - Effect of repeal - While repeal does not automatically extinguish accrued rights, no such rights accrue if the order or action taken under the repealed Act was erroneous or contrary to prevailing law (Paras 45, 46).
Facts of the case:
An agreement and an irrevocable power of attorney were executed between a landowner and a licensee for the construction of dwelling units for weaker sections of society under the Urban Land (Ceiling and Regulation) Act. The licensee prepared several schemes. Before the schemes were sanctioned and before possession was delivered, the landowner cancelled the agreement and revoked the power of attorney. The licensee filed a suit for specific performance. During the pendency of the litigation, the land was reserved as open space in the final development plan.
Findings of Court:
The agreement was unilaterally terminable before the delivery of possession. The current master plan reserves the land for open space, making the construction of residential units legally impermissible. The contract requires continuous supervision, which is not possible for the court.
Issues: Whether the master plan freezes at the time of the commencement of the Urban Land (Ceiling and Regulation) Act; whether the agreement constituted an agency coupled with interest; and whether the contract was determinable and thus incapable of specific performance.
Ratio Decidendi: The court held that town planning is a dynamic State subject and the master plan does not freeze upon the enforcement of a ceiling act. A contract containing a clear clause for unilateral termination before possession is determinable and cannot be specifically enforced under Section 14(1)(c) of the Specific Relief Act. Furthermore, specific performance is inequitable when the object of the contract cannot be achieved due to statutory land-use restrictions.
Result: Appeal allowed, set aside the impugned judgment and dismiss the suit of the plaintiff.
JUDGMENT
Y.K.SABHARWAL, JJ.
(1) BY judgment under challenge, the High Court modifying the decree passed by the trial court for specific performance in respect of land in question, directed that the plaintiff-respondent no.1 in this appeal, shall be entitled to enforce the said decree subject to the issue of final declaration under Section 21 of the Urban Land (Ceiling and Regulation) Act, 1976 (for short, the ULC Act) by the authorities in accordance with law. In other respects, substantially the judgment and decree of the trial court was upheld.
(2) THE defendants are in appeal.
(3) IN the appeal and other connected counter matters the main question is about the interpretation of certain provisions of the ULC Act. This Act, in the first instance, came into force on the date of its introduction in the Lok Sabha, i.e., 28/1/1976 and covered the Union Territories and 11 States which had already passed the requisite resolution under Clause (1) of Article 252 of the Constitution. This provision of the Constitution empowers the Parliament to legislate for two or more States on any of the matters with respect to which it has no powers to make laws except as provided in Articles 249 and 250. The effect of passing of a resolution under Clause (1) of Article 252 is that the Parliament, which has no power to legislate with respect to the matter which is the subject matter of the resolution, becomes entitled to legislate with respect to it. On the other hand, the State Legislature ceases to have a power to make a law relating to that matter.
(4) ON 14/8/1972 the Gujarat Assembly had resolved that the imposition of the ceiling on the holding of urban immovable property and acquisition of such property in excess of the ceiling and matters connected therewith or ancillary and incidental thereto should be regulated in the State of Gujarat by the Parliament by law.
(5) THE ULC Act received assent of the President on 17/2/1976. The primary object and the purpose of the ULC Act is to provide for the imposition of a ceiling on vacant land in urban agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate such land and for matters connected therewith, with a view to prEVenting the concentration of urban land in the hands of a few persons and speculation and profiteering therein, and with a view to bringing about an equitable distribution of land in urban agglomerations to subserve the common good, in furtherance of the directive principles of Article 39(b) and (c).
(6) SECTION 3 of the ULC Act provides that except as otherwise provided in the Act, on and from the commencement thereof, no person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under Sub-section (2) of Section 1. The expression vacant land is defined in Section 2fq) to mean land not being land mainly used for the purpose of agriculture, in an urban agglomeration, but does not include certain categories as stated in the Section. The term urban land is defined in Section 2(0) of the ULC Act which reads as under:
"2(0) "urban land" means,- (i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or (ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipatity (by whatEVer name called), a notified area committee, a town area committee, a city and town committee, a small town committee, a cantonment board or a panchayat, but does not include any such land which is mainly used for the purpose of agriculture. Explanation - For the purpose of this Clause and Clause (q),-
(A) "agriculture" includes horticulture, but does not include,- (i) raising of grass, (ii) dairy farming, (iii) poultry farming, (iv) breeding of livestock, and (v) such cultivation or the grow
