2003 Supreme(SC) 1326

2004(1) Supreme 925
Supreme Court of India
(From Rajasthan High Court)
R.C. Lahoti & Ashok Bhan, JJ.
Ganga Retreat & Towers Ltd. & Anr. -Appellants
versus
State of Rajasthan & Ors. -Respondents
Civil Appeal No. 5188 of 2001
With
C.A.Nos. 5189 and 5190 of 2001
Decided on 19-12-2003
Counsel for the Parties :
For the Appearing Parties : Shanti Bhushan, Dr. Abhishek M. Singhvi, M.R. Calla, Harish N. Salve, Sr. Advocates, Sunil Kumar Jain, S. Borthakur, Kamal Gupta, S.M. Mehta, Advocate General for State, Ms. Sandhya Goswami, J.B. Singh, Ms. Meenakshi Sakhardande, Ms. Aparajita Singh, Pradeep Agarwal, Dr. P.C. Jain, A.P. Dhamija, L.P. Singh, Punit Jain, Sushil Kumar Jain, Manish Singhvi and Ashok K. Mahajan, Advocates.

Important point
In a case of purchase of prime property in an auction sale where the successful bidder had voluntarily paid the entire money, entered into possession, raised construction and incurred expenditure voluntarily and as such they are not entitled to any refund or any claim and declaration as such on the ground of frustration or impossibility of performance of the contract.

Headnote:(i) Constitution of India-Article 226-Writ Petition in contractual matters-Maintainability-Disputed questions of fact in relation to a completed contract of sale of land-Whether can be adjudicated upon in exercise of writ jurisdiction-(No)-Disputed questions of fact are not to be adjudicated in ­exercise of writ jurisdiction-Writ petition held not maintainable in such cases. (Para 18)

       (ii) Indian Contract Act, 1872-Sections 10, 19 and 56-Voidable contract-Right to rescind for misrepresentation-Doctrine of frustra­tion-Public auction of two prime properties situated in Jaipur City-In the advertisement, property was described as free hold, ceiling free, vacant, crest jewel property-Floor Area Ratio indicated as 2.00-Permitted use of property was shown as hotel/commercial complex/hotel cum-commercial complex-Appellants declared as success­ful bidder in the auction held-However, there was a delay in making payment as per schedule-Appellants accepted their liability to pay interest for delayed payment-Appellants on execution of sale deed in their favour applied for sanction of plans for putting up construc­tion-Notice under Section 38 of Urban Ceiling Act-Competent Authori­ty granted exemption to appellants on certain conditions-Building plans approved subject to FAR 1.75 only as against 2.00 permitted by auction notice-Writ petition filed by appellants alleging that conve­yance deed is liable to be cancelled and set aside on ground that it is vitiated by misrepresentations made on behalf of respondents-Whether maintainable-(No)-Whether appellants are enti­tled to any refund or any claim and declaration as such on ground of frustration or impossibility of performance of contract-(No)-Appellants are not entitled to any relief in the realm of law of contracts.

       Held : It is the appellants who delayed the payment of sale consideration on the dates stipulated for payment. For the period of delay they agreed to pay interest to the State Government voluntarily; they voluntarily paid stamp duty and bore registration charges as stated above in the end of December, 1996 and got the sale deed executed on 7th January, 1997 on which date the possession was delivered to them and thereafter they voluntarily paid the charges for the approval of building plans with FAR 1.75 and proceeded with construction work for establishing Hotel-cum- Commercial Complex by demolition of existing structure of Dr. Hellings Bunglow standing on the land in question, levelling the same, digging deep foundation, constructing basement and thereafter further raising construction of ground floor and other floors. They cannot now be permitted to turn round and claim refund of any amount which they allege to have spent including the claim for the interest. The appellants have voluntarily paid the entire money, entered into possession, raised construction and incurred expenditure voluntarily and as such they are not entitled to any refund or any claim and declaration as such on the ground of frustration or impossibility of performance of the contract. Every contract including one by auction is subject to provisions of law. Whenever any action is taken in performance of a contract, it must conform to the law in force at the time when action is taken. In the instant case when the appellants applied for approval of building plans it is the law that is in force at that time, which would be applicable. Doctrine of promissory estoppel is not available when any action is desired to be taken in contravention of the provisions of law. The terms and conditions of the sale as announced when the property was put to sale were in accordance with law and no guarantee was given (nor could have been given) that the law would not change, or that the terms and conditions would be enforceable even in violation of law which may be in force. FAR was a matter of law and the FAR was fixed either by the JDA or JMC in exercise of its statutory powers. The contract when entered into, the FAR approved by JDA was 2 and its subsequent reduction in 1996 to 1.75 would not invalidate the contract or by treating as a breach of the contract nor can it be treated by the Government. (Paras 38 and 39)

       In the present case, we have found as a fact that the appellants even after acquiring the knowledge of fact regarding reduction of FAR from 2.00 to 1.75 and that the land was not ceiling free elected to affirm the contract by getting their plans approved with FAR 1.75 and started putting up construction. They started digging the foundations and continued to build even after knowing that the land was not ceiling free. (Para 43)

       In either case, we find that the appellants are not entitled to any relief in the realm of the law of contracts. In spite of having acquired knowledge of the true facts assuming that there was any mistake or misrepresentation to begin with and having learnt that the title which was sought to be conferred on them by the respondents was not such full title as they had contemplated it to be, they proceeded to have the sale deed executed and registered in their favour, seeking extensions of time and paying interest for the period of delay in payment. The contract stood accomplished into a demise and the transaction ended. It is writ large that the appellants had elected to stand by the contract by digging the land, sinking the basement and raising about 9 floors above, investing crores of rupees. They have by their own conduct rendered the position irreversible and restitution impractical. We have not been shown any law or authority based whereon the appellants may annul and avoid a concluded contract and fix liability on respondents for the cost of their construction which they have voluntarily chosen to raise in spite of being aware of all the relevant facts and circumstances. (Para 45)