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High Court of Judicature at Madras
N. PAUL VASANTHAKUMAR & P. DEVADASS, JJ.
The State Industries Promotion Corporation of Tamil Nadu Limited, rep. by the Managing Director & Another
Versus
M/s. Singapore Reality Private Limited, rep. by its Director
Writ Appeal Nos. 1546, 1547, 2179 & 2180 of 2013
Decided on: 14-03-2014
MOU - Cancellation - Principles of Natural Justice - Promissory Estoppel - Impossibility of Performance - Government Grants Act, 1895 - Writ Maintainability - Arbitration Clause - Environmental Clearance - SIPCOT - Writ Appeal - Civil Right - Legitimate Expectation - Frustration of Contract.
Fact of the Case:
Singapore Realty Private Limited (petitioner) entered into a Memorandum of Understanding (MOU) with the Government of Tamil Nadu and SIPCOT to develop an integrated township at the IT Park run by SIPCOT at Siruseri. The petitioner was allotted 102 acres of land for the project and executed sale deeds for the same. The petitioner commenced construction activities, but the project was halted due to a stop-work order issued by the Ministry of Environment and Forests (MoEF) for lack of environmental clearance. Subsequently, the Government of Tamil Nadu cancelled the MOU and the allotment orders, and directed the petitioner to re-convey the property. The petitioner challenged these orders by filing writ petitions, which were allowed by the single judge.
Finding of the Court:
The court held that the writ petitions were maintainable despite the existence of an arbitration clause in the MOU, as the facts were not in dispute. The court also held that the respondents had no jurisdiction to cancel the MOU and allotment orders before the expiry of the period to complete the first phase of the project. The court further held that the respondents had violated the principles of natural justice by not issuing a notice to the petitioner before cancelling the MOU and allotment orders. The court also held that the doctrine of impossibility of performance could not be pleaded by the respondents as there was a possibility to complete the first phase of the project within the stipulated time. The court also held that the provisions of the Government Grants Act, 1895 could not be invoked by the respondents as the conditions imposed in the MOU, allotment orders, and sale deeds had not been breached by the petitioner. The court further held that the petitioner had a legitimate expectation to complete the project and that the cancellation of the MOU and allotment orders was arbitrary and violative of Article 14 of the Constitution of India.
Issues: 1. Whether the learned single Judge was right in entertaining the writ petitions. 2. Whether the respondents have jurisdiction to cancel the MOU and the allotment orders before the expiry of the period to complete the first phase of work. 3. Whether the principles of natural justice was violated by the respondents while passing the impugned orders. 4. Whether in the facts and of the case the Doctrine of impossibility of performance can be allowed to be pleaded for passing the impugned orders.
Ratio Decidendi: 1. The writ petitions were maintainable despite the existence of an arbitration clause in the MOU, as the facts were not in dispute. 2. The respondents had no jurisdiction to cancel the MOU and allotment orders before the expiry of the period to complete the first phase of the project. 3. The respondents had violated the principles of natural justice by not issuing a notice to the petitioner before cancelling the MOU and allotment orders. 4. The doctrine of impossibility of performance could not be pleaded by the respondents as there was a possibility to complete the first phase of the project within the stipulated time. 5. The provisions of the Government Grants Act, 1895 could not be invoked by the respondents as the conditions imposed in the MOU, allotment orders, and sale deeds had not been breached by the petitioner. 6. The petitioner had a legitimate expectation to complete the project and that the cancellation of the MOU and allotment orders was arbitrary and violative of Article 14 of the Constitution of India.
Final Decision: The writ appeals were dismissed, and the orders of the single judge allowing the writ petitions were upheld.
N. Paul Vasanthakumar, J.
1. W.A.Nos.1546 and 1547 of 2013 are filed by the State Industries Promotion Corporation of Tamil Nadu Limited (for short "SIPCOT"), challenging the common order made in W.P.Nos.6243 and 6244 of 2006 dated 08.11.2012. The very same common order is also challenged by the Government of Tamil Nadu along with SIPCOT in W.A.Nos.2179 and 2180 of 2013. The issue raised in these writ appeals being common, all the appeals were ordered to be heard together, as specially ordered matters, by the order of the Hon'ble The Chief Justice.
2. For the sake of convenience, the parties are referred as per their array in the writ petitions.
3. The facts leading to the writ petitions filed by the respondent in these writ appeals viz., Singapore Realty Private Limited are as follows:-
(i) Writ petitioner is a subsidiary company of M/s.Lee Kim Tah Enterprises Private Limited (hereinafter called "LKT"), a public listed company in the Republic of Singapore. It has been incorporated in India for the purpose of setting up an integrated Township at the IT Park run by the SIPCOT.
(ii) During the Budget Session in the Assembly in the year 2002, the State Government announced a proposal for setting up of a "Knowledge based Integrated Township" at the IT Park run by the SIPCOT at Siruseri. The Singapore Trade Development Board thereafter, initiated a dialogue with the Government of Tamil Nadu and various companies in Singapore, which would be interested in tying up with the Government of Tamil Nadu in such a project. LKT, is one such company, having vast experience in setting up mass housing projects.
(iii) On 08.6.2002, LKT wrote a letter to the Government of Tamil Nadu expressing its interest in setting up the Integrated Township. The Government of Tamil Nadu informed LKT that SIPCOT would be the nodal agency in this regard. The SIPCOT, thereafter, offered fully developed plots for sale with all infrastructural requirements by its communication dated 08.8.2002 to LKT. After prolonged correspondences, terms and conditions were finalised and a Memorandum of Understanding (hereafter called "MOU") was reached and signed on 16.9.2003, as per which the Government of Tamil Nadu undertook to allot 102 acres of land to the company for the project. Thereafter, LKT with consortium partners incorporated a Joint Venture Company (for short "JVC") in India under the name and style as "Singapore Realty Private Limited", who is the petitioner in the writ petitions, after obtaining requisite approvals from the Foreign Investment Promotion Board at New Delhi (for short "FIPB").
(iv) In Clause-II of MOU, it is stated that SIPCOT shall offer an extent of about 102 acres of land within the IT Park for setting up of the Township at a pre-fixed price of Rs.15 lakhs per acre, out of which, Rs.13 lakhs per acre is to be paid to SIPCOT on allotment as per the terms of allotment and the balance amount of Rs.2 lakhs per acre is to be paid to SIPCOT on completion of the 1st Phase of the project or at the end of three years from the date of allotment, whichever is earlier. It was also stated in the MOU that SIPCOT will advise the developer for any statutory approvals required from the State/Central Government and will facilitate in obtaining the same, as the Township project is located within the Siruseri IT Park.
(v) It is the case of petitioner that pursuant to the MOU, the SIPCOT passed allotment orders on 13.2.2004 and 10.12.2004, allotting 62.94 acres of land and 41.17 acres of land respectively at the SIPCOT IT Park to the petitioner company. The SIPCOT also executed two absolute sale deeds in respect of the above extent infavour of the petitioner company for a sale consideration of Rs.9,44,10,000/- and Rs.6,17,55,000/-respectively, as per the sale deeds dated 06.5.2004 and 16.12.2004 registered as Document Nos.1689/2004 and 5898/2004 before the Sub-Registrar at Thirupporur, Kancheepuram District. Possession of the said lands were also handed over
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