IMPORTANT POINTS
Development agreement creating rights and obligations for both parties is a valid contract even without apparent consideration.
The party accepting the development agreement and acting thereupon cannot turn back and challenge the same.

Headnote:(a) Indian Contract Act, 1872 – Section 23 r/w section 68, NIT Act – Development agreement between appellant trust and NIT – Development agreement though without apparent consideration, creating reciprocal rights and obligations between the parties with some objects – Held a valid contract (Para 32, 33)
       (b) Town planning – Development agreement between appellant-trust and NIT – Appellant-trust accepted and acted upon the agreement – agreement providing for transfer of land to NIT which is earmarked in the lay out – Appellant-trust cannot dispute allotment of land to respondent no. 3. (Para 35, 36)
       (2007) 8 SCC 705 – Relied upon
       (1995) 1 SCC 47; (1994) 5 SCC 709; (2006) 5 SCC 353; (1988) 1 SCC 530; (1981) 1 SCC 537 – Referred
       (1986) 3 SCC 156 – Distinguished
       Facts of the case:
       On 01.01.1937, the Nagpur Improvement Trust was constituted under Nagpur Improvement Trust Act, 1936.
       Civil Station Expansion Scheme of 1939 was sanctioned for the NIT.
       On 28.02.1942, one Smt. Laxmibai Gawande, wife of Narayanrao Gawande purchased a piece of land, measuring 3.59 acres in Nagpur by a registered deed from Vithoba Fakira Teli. On 27.04.1944, she executed a Release Deed in favour of her husband Narayanrao Gawande whereby he became the absolute owner of the said land.
       The land in question fell within the Civil Station Expansion Scheme of 1939 of NIT.
       On 11.11.1968, Mr. Narayanrao Gawande applied to respondent no.2-NIT for the development of his said open space land. In this connection, a development agreement was executed between Narayanrao Gawande and the NIT, whereby NIT permitted him to develop the said land in a planned way in accordance with the approved scheme and as per the sanctioned layout plan. In the said layout plan, an area was reserved for primary school, which was a public utility land.
       After the death of Narayanrao Gawande, the appellant-Narayanrao Jagobaji Gawande Public Trust was created and the said land became the property of this trust. On 21.02.1985, a development agreement was executed between the appellant-trust and the NIT for ratifying the earlier development agreement dated 11.11.1968 which included the sanctioned map/plan showing the land reserved for primary school/public utility purpose. Under the said agreement, the appellant-trust was permitted to develop the layout subject to various conditions.
       Respondent no.1-State sanctioned the allotment of land for the construction of a senior college and respondent no. 2-NIT allotted a piece of land in B.D. Thapar layout to Respondent no.3-Santaji Mahavidyalaya including 1907.65sq.m, comprised in Narayanrao Gawande layout to respondent no.3 in exchange of land.
       The appellant-trust approached the High Court. Some other writ petitions were also filed by the aggrieved parties. The High Court vide its common judgment and order dated 29.08.2008 has dismissed all the Writ Petitions.
       Finding of the Court:
       There is no infirmity in the impugned judgment.
       Result: Appeals dismissed.

JUDGMENT :

Delay condoned. Leave granted.

2. These appeals are directed against the common impugned judgment and order dated 29.8.2008 passed by the Division Bench of High Court of Judicature at Bombay, Nagpur Bench, Nagpur in various Writ Petitions including Writ Petition No.1034 of 1995, wherein the High Court has dismissed all the writ petitions.

3. As all the appeals raise the same question of law, for the sake of convenience and brevity, we would refer to the facts from the appeal arising out of SLP (C) No. 25972 of 2009. Brief facts are stated hereunder to appreciate the rival legal contentions urged on behalf of both the parties:

On 01.01.1937, the Nagpur Improvement Trust Act, 1936 (hereinafter referred to as the “NIT Act”) came into force under which the Nagpur Improvement Trust (hereinafter referred as “NIT”) was established and incorporated to provide for improvement and expansion of Nagpur Town.

4. The State of Maharashtra vide notification dated 29.06.1939 sanctioned a Civil Station Expansion Scheme of 1939 of the NIT.

5. On 28.02.1942, one Smt. Laxmibai Gawande, wife of Narayanrao Gawande purchased a piece of land, measuring 3.59 acres, comprised in Khasra no. 65, Mouza Ajni, Nagpur by a registered deed from Vithoba Fakira Teli. On 27.04.1944, she executed a Release Deed in favour of her husband Narayanrao Gawande whereby he became the absolute owner of the said land.

6. It is an undisputed fact that the land in question fell within the Civil Station Expansion Scheme of 1939 of NIT.

7. On 11.11.1968, Mr. Narayanrao Gawande applied to respondent no.2-NIT for the development of his said open space land and gave an undertaking whereby he agreed to have the layout of the land formed as per the plans, suggestions and directions of respondent no.2- NIT. In this connection, a development agreement was executed on the same day between Narayanrao Gawande and the NIT, whereby NIT permitted him to develop the said land in a planned way in accordance with the approved scheme and as per the sanctioned layout plan. In the said layout plan, an area was reserved for primary school, which was a public utility land.

8. After the death of Narayanrao Gawande, the appellant-Narayanrao Jagobaji Gawande Public Trust (hereinafter called the “appellant-trust”) was created and the said land became the property of this trust. On 21.02.1985, a development agreement was executed between the appellant-trust and the NIT for ratifying the earlier development agreement dated 11.11.1968 which included the sanctioned map/plan showing the land reserved for primary school/public utility purpose. Under the said agreement, the appellant-trust was permitted to develop the layout subject to various conditions including the following one:

“Whereas the said Party No.2 shall agree to transfer the land and or primary school/open land in the said layout at free of cost for Party No.1 before release of plots and Party No.1 shall be free to dispose of this land as per its rules and regulations.”

The above Clause contained in the said development agreement (hereinafter called the “impugned clause”) provides for the transfer of the land earmarked for the primary school or other public utility purposes, after its development in favour of respondent no.2-NIT without payment of any compensation to the land owners.

9. Respondent no.1-State vide its order dated 05.8.1993 sanctioned the allotment of land from out of Khasra no. 41/1 and 45 Mouza Somalwada, Nagpur in favour of respondent no.3-Santaji Mahavidyalaya for the construction of a senior college. Pursuant to the aforementioned sanction, respondent no. 2-NIT allotted a piece of land in B.D. Thapar layout to Respondent no.3-Santaji Mahavidyalaya. On 25.02.1994 respondent no.3 requested respondent no.2-NIT for a change in location of the allotted plot for the construction of said senior college. The respondent no.2-NIT, by its resolution allotted a land, measuring 1907.65sq.m, comprised in Narayanrao Gawande layout to respond

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2016 Supreme(SC) 133

IMPORTANT POINTSDevelopment agreement creating rights and obligations for both parties is a valid contract even without apparent consideration. The party accepting the development agreement and acting thereupon cannot turn back and challenge the same.

Cases Referred (7)

IMPORTANT POINTS
Development agreement creating rights and obligations for both parties is a valid contract even without apparent consideration.
The party accepting the development agreement and acting thereupon cannot turn back and challenge the same.