Back
SUPREME COURT OF INDIA
M.R. SHAH, A.S. BOPANNA, JJ.
PAULMECH INFRASTRUCTURE PRIVATE LIMITED – APPELLANT
VERSUS
THE STATE OF ODISHA & ORS. - RESPONDENT
CIVIL APPEAL NO. 6023 OF 2021(ARISING OUT OF SLP(CIVIL) NO.25409 OF 2017)
DECIDED ON : 04-10-2021
Government Contract – Tender – Mining lease – Demand of huge pre-agreement amount including non-refundable amount which was to be paid upfront as well as security deposit and advance minimum guaranteed annual lease premium – Utkal Ashok Hotel Corporation Limited (UAHCL) is a corporation which has different departments and as such remittance made being accepted in itself cannot be taken as an act to condone delay caused by appellant in complying with terms of LOI so as to alter terms of contract – When admittedly balance payment had not been made prior to extended period, unless appellant had obtained express extension from UAHCL mere tendering payment and same having been accepted cannot be construed as a positive act to alter contract – High Court has not dismissed writ petition on maintainability but having taken note of issue involved was of opinion that contentions urged would necessitate requirement of recording evidence and relegated the parties to an appropriate forum – Keeping in view nature of considerations made, prayers which were sought in amended writ petition were required to be conclusively answered by High Court on the aspect as to whether decision of UAHCL to terminate LOI was justified and requirement for resolution of dispute by an appropriate forum ought to have been left open only to incidental aspect which may require appropriate evidence to be tendered and adjudication to be made by an appropriate forum – Entire payments had not been made even as on date of filing writ petition – In such circumstance, when LOI has been rightly terminated, directions sought in writ petition to execute lease agreement pertaining to does not arise and prayers in that regard are liable to be rejected – Pendency of Civil Suit shall not be an impediment for UAHCL to deal with property or to retender the same in any manner – Order passed by High Court modified – Termination of LOI upheld – However, UAHCL directed to refund amounts deposited by appellant. (Paras 14, 15, 17, 18, 21 and 22)
Facts of the Case:
Present dispute relates to the initial payment that was required to be made by the appellant within the time frame set out in the LOI and non-adherence to which has resulted in termination of LOI. Appellant is assailing order dated 09.03.2017 passed by the High Court of Orissa at Cuttack, in W.P.(C) No.23103/2013. By said order the High Court was of the opinion that disputed questions of fact involved in the petition cannot be gone into in the writ jurisdiction. Accordingly, prayer made in the petition was not entertained and appellant was relegated to approach the appropriate forum available for redressal of its grievance. The appellant, therefore being aggrieved is before this Court.
Findings of Court:
Prayer of the appellant to quash the letter dated 10.12.2013 terminating the letter of LOI dated 19.01.2010 stands rejected. Consequently, the termination of LOI dated 19.01.2010 is upheld. However, UAHCL is directed to refund amounts deposited by the appellant on 28.12.2010 (Rs.2 Crores), on 29.12.2010 (Rs.1.41 Crores) and on 07.01.2011 (Rs.70 lakhs), in all amounting to Rs.4.11 Crores within four weeks from this day.
Result : Appeal disposed of with directions.
JUDGMENT :
A.S. Bopanna, J.
1. The appellant is before this Court assailing the order dated 09.03.2017 passed by the High Court of Orissa at Cuttack, in W.P.(C) No.23103/2013. By the said order the High Court was of the opinion that the disputed questions of fact involved in the petition cannot be gone into in the writ jurisdiction. Accordingly, the prayer made in the petition was not entertained and the appellant was relegated to approach the appropriate forum available for redressal of its grievance. The appellant, therefore being aggrieved is before this Court.
2. The respondent No.1-State of Odisha had granted the lease of the property in question in favour of the respondent No.5-Utkal Ashok Hotel Corporation Limited (for short ‘UAHCL’) for 99 years under the document dated 24.01.1989. UAHCL was, in that view, running an establishment in the name and style ‘Hotel Nilachal Ashok’ in the said premises at Puri. The same being unviable was closed down with the approval of Board of Directors in the year 2004. Thereafter, UAHCL decided to lease out the same for a period of 40 years. Tender was floated in the year 2009. The appellant was one among the tenderers who participated in the process and being the highest bidder was considered. Accordingly, the Letter of Intent (for short ‘LOI’) dated 19.01.2010 was issued in favour of the appellant delineating the terms to be complied pursuant to which the lease agreement was to be signed.
3. Among the other conditions which were to form part of the lease agreement, even before executing the lease agreement the requirement was for the appellant to pay a sum of Rs.9.34 crores to UAHCL within 30 days, of which Rs.8.82 crores was towards nonrefundable amount which was to be paid upfront; the security deposit of Rs.26 lakhs and the advance minimum guaranteed annual lease premium for the first year of Rs.26 lakhs was also to be paid.
4. On payment of the said amount the lease was to be executed and the other conditions would come into operation. The appellant who was unable to pay the amount within the time stipulated, requested the UAHCL that they be permitted to deposit a part of the amount i.e., Rs.4.41 crores on 19.09.2010 and the balance amount by 15.04.2010 which was favourably considered by UAHCL through their communication dated 12.02.2010. Such indulgence was shown as special case. The appellant accordingly deposited a portion of upfront amount to the tune of Rs.4.41 crores on 18.02.2010, but the balance amount was not deposited within the extended time stipulated i.e., before 15.04.2010. In that view, the lease agreement could not be executed. However, in view of the request from the appellant, UAHCL through their communication dated 25.11.2010 once again acceded to the request permitting the appellant to pay the balance amount before 15.12.2010.
5. The appellant thereafter paid (i) the sum of Rs.2 crores on 28.12.2010, (ii) sum of Rs.1.41 crores on 29.12.2010 and (iii) the sum of Rs.70 lakhs on 07.01.2011. Such payment, according to the appellant constitutes the payment which was required to be made as per the LOI. However, the time gap which had ensued had created a position wherein the grievance of the employees was to be addressed and they were to be given the benefit of voluntary retirement. Since the LOI dated 19.01.2010 had also provided for regulating the manner in which the employees are to be treated during the lease period and had provided the liberty to offer voluntary retirement, the UAHCL required the appellant to bear the liability towards the same. The same did not reach a finality and in the meanwhile the Board of Directors of UAHCL took the decision to terminate the LOI dated 19.01.2010 since the appellant had failed to comply with clause 2 thereof, which required the payment of Rs.9.34 crores within 30 days of issuance of LOI.
6. Even prior to communication of the decision on 10.12.2013, the appellant filed the special writ petition before the High Court on 01.10
Tender – Remittance made being accepted in itself cannot be taken as an act to condone delay caused by appellant in complying with terms of LOI so as to alter terms of contract.
(1) Breach of reciprocal contractual obligations – A commercial document ought not to be interpreted in a manner that arrives at a complete variance with what may originally have been intention of pa....
Disputes arising from contractual agreements with state bodies should generally be resolved in civil courts, not via writ petitions under Article 226.
Authorities must clarify payment structures and ensure timely refunds, as consumer rights are pivotal in contractual agreements.
Non-payment of lease salami within stipulated time does not automatically cancel allotment; requires active governmental cancellation, establishing a directory interpretation of time limits.
The court established that a party can terminate a contract without notice if the other party fails to comply with payment obligations over consecutive periods as stipulated in the agreement.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
