IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated :
14. 03-2014 Coram The Honourable Mr.Justice N.PAUL VASANTHAKUMAR and The Honourable Mr.Justice P.DEVADASS Writ Appeal Nos.1546, 1547, 2179 and 2180 of 2013 & Connected Miscellaneous Petitions W.A.No.1546 & 1547 of 2013: The State Industries Promotion Corporation of Tamil Nadu Limited, rep. By the Managing Director, No.19-A, Rukmani Lakshmipathy Road, Egmore, Chennai 600 008. ... Appellant. vs. M/s.Singapore Reality Private Limited, Plot K1, Singapore IT Park, Siruseri, Navaloor Post 603 103 rep. By its Director. The Government of Tamil Nadu, rep. By the Secretary to Government, Industries (IT) Department, Fort St. George, Chennai 600 0009. ... Respondents. W.A.Nos.2179 & 2180 of 2013:
1. The Government of Tamil Nadu, rep. By the Secretary to Government, Industries (IT) Department, Fort St. George, Chennai 600 009.
2. The State Industries Promotion Corporation of Tamil Nadu, rep. by the Managing Director, 19-A, Rukmani Lakshmipathi salai, Egmore, Chennai 600 008. ... Appellants. vs. Singapore Reality Private Limited, Plot K1, Singapore IT Park, Siruseri, Navaloor Post, Pin -603 103 rep. by its Director. ... Respondent Writ appeals are preferred under Clause 15 of the Letters Patent against the Common order dated 14.3.2012 made in W.P.Nos.6243 and 6244 of 2006 respectively. W.A.Nos.1546 & 1547 of 2013: For Appellant : Mr.A.L.Somayaje in both the appeals Advocate General assisted by M/s.Sudharshana Sundar For 1st Respondent : Mr.R.Krishnamurthy in W.A.No.1546/2013 Senior Counsel for Mr.Srinath Sridevan For 1st Respondent in : Mr.M.S.Krishnan, W.A.No.1547/2013 Senior Counsel for Mr.Srinath Sridevan W.A.Nos.2179 & 2180 of 2013: For Appellants in : Mr.A.L.Somayaje, both the appeals Advocate General assisted by Mr.T.N.Rajagopalan, Spl. Government Pleader For Respondent in : Mr.Gopal Subramanian both the appeals Senior Counsel for Mr.Srinath Sridevan COMMON
JUDGMENTN. PAUL VASANTHAKUMAR, J.
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 to the petitioner company on 02.9.2004 and 29.4.2005 respectively. After getting possession, the petitioner applied for consent under the Prevention of Water and Air Pollution Acts. (vi) On 18.5.2004, the petitioner informed the SIPCOT that FIPB approval was obtained and submitted an application for Zonal reclassification and for permission to put up multistoried buildings. On 28.2.2005, the petitioner applied for permission from the Director of Town and Country Planning to grant approval for constructing multistoried buildings, followed with an application dated 01.3.2005 before the Executive Officer, Siruseri Panchayat. The petitioner has also sought for assistance from the SIPCOT to obtain NOC from the competent authorities in May, 2005. On 29.8.2005, the petitioner received a communication from the Director of Town and Country Planning to obtain clearance certificates as per EIA Notification, for which, the petitioner sent a reply on 06.9.2005 stating that the petitioner will produce environmental clearance certificates and also sent a draft EIA report prepared by the Consultant dated 21.10.2005. (vii) When the matter was pending, a Public Interest Litigation was filed in W.P.No.40129 of 2005 challenging the Township project. No injunction was granted. On 14.12.2005, Mamallapuram Local Planning Authority and the Tamil Nadu Pollution Control Board (TNPCB) issued notices, directing the petitioner to stop work and to restart the work after getting environmental clearance. A reply was sent on 20.12.205 to both the authorities stating that environmental clearance certificate will be obtained and produced and assured that the petitioner is having no intention to continue with further construction activities prior to obtaining environmental clearance. (viii) On 23.12.2005, a revised application was submitted before the Zonal Officer, Central Pollution Control Board. Based on the said application, Ministry of Environment and Forests (MoEF), New Delhi gave direction to the Chairman, Central Pollution Control Board to inspect the site by its communication dated 29.12.2005. On 30.12.2005, the site was inspected and a report was submitted by the Central Pollution Control Board to MoEF and consequently, MoEF gave direction to Environment Department, Government of Tamil Nadu to stop/postpone the construction immediately, stop electricity and water supplies to the said construction site and take action for violating the provisions of Environmental (Protection) Act, 1986. They, further directed to submit action taken report within a period of 15 days from the date of receipt of the said directions. (ix) On 17.1.2006, the Environment and Forest Department, Government of Tamil Nadu addressed a letter to TNPCB to take action regarding stoppage of construction as well as to issue notice to the Electricity Department to disconnect electricity and water supplies and on the same day, the TNPCB addressed a letter to the SIPCOT to stop water supply to the site and also addressed a letter to the petitioner to stop the construction activities and issued show cause notice, as to why penal action should not be taken. (x) On 17.2.2006, without any notice to the petitioner, the Government of Tamil Nadu issued G.O.(Ms) No.17 Industries (IT) Department and cancelled the MOU by stating that the petitioner have violated the provisions of EIA Notification by undertaking the development activities without obtaining prior environment clearance. The said Government Order was challenged by the petitioner in W.P.No.6243 of 2006. (xi) Pursuant to the said G.O.(Ms) No.17, dated 17.2.2006, the SIPCOT issued cancellation of plot allotment orders issued infavour of the petitioner and further directed the petitioner to re-convey the property, including handing of the possession immediately, by an order dated 28.2.2006. The said order of SIPCOT was challenged by the petitioner in W.P.No.6244 of 2006. Both the orders were set aside by the learned single Judge by allowing the two writ petitions, by a common order, against which these writ appeals are filed.
4. Mr.A.L.Somayaji, learned Advocate General appearing for the appellants submitted that the writ petitions filed by the writ petitioner, respondent herein are not maintainable, in view of the clause contained in the MOU dated 16.9.2003 stating that based on the contract, the petitioner has chosen to trace its right and if alternative remedy of raising arbitrariness is available, the writ petitions ought not to have been entertained and there are various disputed questions of facts and the writ jurisdiction cannot be invoked. The object of allotment is for setting up of an Integrated Township for developing 102 acres in Township with 6000 housing units in three phases and 2000 houses within a period of three years from the date of registration of the sale deed and as per the MOU, no show cause notice before termination of the same is contemplated. Hence, the petitioner cannot challenge the cancellation orders, on the ground of violation of principles of natural justice. As EIA clearance could not be obtained from the Government of India, the contract itself got frustrated. Therefore, the MOU and allotment orders were cancelled as EIA clearance is mandatory to begin the project. The contention of the petitioner that it has put up a model house, without EIA clearance, ought not to have been countenanced. The balance sale price of Rs.2,09,42,000/- paid by the petitioner through pay order dated 19.1.2007 was returned on 31.1.2007, which was not appreciated by the learned single Judge. The conditions stipulated in the allotment orders dated 13.2.2004 and 10.12.2004 were violated, particularly, clause 15, as the allottee failed to get EIA clearance to complete the 1st phase of the project. The respondents are having full control over the entire project and the land was not sold to the petitioner on out-right basis and therefore, the contention that the petitioner company became the owner of the land ought not to have been accepted by the learned single Judge. There is no possibility of completing the construction work of 2000 houses, as environment clearance was not obtained. Hence, issuance of notice and hearing the petitioner is nothing but an empty formality, which will not have any bearing.
5. The learned Advocate General further submitted that the land is a Government land and the provisions of (The) Government Grants Act, 1895 will apply and by virtue of the said provision contained in the Act, the Government is entitled to resume the land. The learned Advocate General also cited some of the decisions of the Hon'ble Supreme Court in support of his contentions, particularly, for not issuing notice, prior to the cancellation orders and for the proposition that the lands can be resumed, if the purpose for which the allotment was made could not be achieved.
6. Mr.Gopal Subramanian, learned Senior Counsel, Mr.R.Krishnamurthy, learned Senior Counsel and Mr.M.S.Krishnan, learned Senior Counsel argued on behalf of the writ petitioner/respondent herein. Learned Senior Counsels submitted that Section 56 of Indian Contract Act, 1872 viz., frustration of contract will arise only by an act of God or impossibility of performance. Absolute sale deeds were executed conveying an extent of 62.94 acres and 41.17 acres respectively and 80% of the sale price was also paid. The sale deeds once executed cannot be unilaterally cancelled. The property having vested with the petitioner by virtue of allotment orders, followed by execution of sale deeds, cannot be divested in an arbitrary manner without issuing notice or opportunity of hearing, as the civil right of the petitioner company is affected. The action of the Government as well as SIPCOT are unsustainable and arbitrary and violative of Article 14 of the Constitution of India. The petitioner has got legitimate expectation to complete the project and the cancellation order was issued even before the expiry of three years to complete the 1st phase of 2000 houses. The direction issued by MoEF was only to stop the construction activities and the petitioner can commence construction, after getting clearance from MoEF and approval from the Central Pollution Control Board. The petitioner company has shown their willingness to pay the remaining sale price and the demand draft sent was also returned. There is no justification in passing the impugned orders, which are subject matter in these writ petitions and the learned single Judge has rightly interfered with and set aside those orders and allowed the writ petitions. The learned Senior Counsels further submitted that resumption of land must be the last resort and merely because, stop work order was issued, the impugned Government Order as well as the cancellation of allotment orders ought not to have been passed. The learned Senior Counsels cited several decisions of the Hon'ble Supreme Court and of this Court in support of their contentions.
7. According to the learned Senior Counsels, the contention of the learned Advocate General that Government Grants Act will apply, has no basis as Section 3 deals with Government grants and in this case, SIPCOT allotted the land, followed by sale deeds executed with two conditions viz., part of the sale price should be paid later and within three years from the date of sale, 2000 houses are to be constructed. The said conditions having not been breached by the petitioner to enforce the said clause in allotment orders and sale deeds, the cause of action to initiate proceeding has not arisen. Hence, the learned Senior Counsels justified the order passed by the learned single Judge.
8. In reply, the learned Advocate General submitted that the petitioner has not obtained clearance for the construction till date and the transaction being a commercial transaction, there is no scope for issuing notice in compliance with the principles of natural justice and approaching this Court under Article 226 of the Constitution of India is impermissible and therefore, the order of the learned single Judge is liable to be set aside.
9. We have considered the rival submissions and the relevant documents filed and the decisions cited.
10. The issues arise for consideration are, (a) Whether the learned single Judge was right in entertaining the writ petitions. (b) Whether the respondents have jurisdiction to cancel the MOU and the allotment orders before the expiry of period to complete the 1st phase of work. (c) Whether the principles of natural justice was violated by the respondents while passing the impugned orders. (d) 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.
11. It is not in dispute that the Government of Tamil Nadu decided to develop an Information Technology Park (I.T. Park) at Siruseri, on the old Mahabalipuram road, through SIPCOT and the SIPCOT in order to encourage creation of a Township, had to interact with number of Singapore Government linked companies and Government Agencies. M/s. LKT Holdings Limited, a Singapore Public listed company expressed interest in procuring land in SIPCOT IT Park to develop an Integrated Township to international standards within the IT Park, consisting about 6000 housing units to meet the housing requirement of IT Park and the IT Corridor. The SIPCOT and the Government of Tamil Nadu therefore, decided to enter into MOU with the said company to implement the said project on 16.9.2003 at Chennai. The said company along with its consortium partners have formed an SPV in Singapore in the name of M/s.LKT Enterprises Private Limited and have incorporated a Joint Venture company in India viz., Singapore Realty Private Limited, the petitioner.
12. The SIPCOT offered 102 acres of land within the IT Park for setting up of the Township project 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 and the balance amount of Rs.2 lakhs per acre is to be paid by the petitioner on completion of the 1st phase of the project or at the end of three years from the date of sale deed, whichever is earlier. The SIPCOT agreed to hand over possession of the land on receipt of first instalment of Rs.13 lakhs per acre along with an undertaking from the petitioner to pay the balance amount of Rs.2 lakhs per acre as provided under clause 2 as stated above. The land was treated as freehold land without any encumbrance and clear of all tenancies, liens, encroachments and claims.
13. Clause 5 of the MOU states that the petitioner shall develop an integrated Township. There is development of up to 6000 housing units in three phases of 2000 housing units each and phase 1 is to be completed within three years, from the date of registration of the sale deed and the subsequent phases shall be completed in two years each thereon, subject to demand. The Township project shall adhere to the Government of India's guidelines on Foreign Direct Investment (FDI) and Foreign Investment Promotion Board (FIPB) norms and also adhere to DTCP and local body regulations regarding FSI norms.
14. Clause 11 of the MOU states that SIPCOT will advise the developer for any statutory approvals required from the State/Central Government and will facilitate obtaining of the same as the Township project is located within the Siruseri IT Park. The MOU shall be valid for six months and to be renewed for further period before expiry of its validity as may be mutually agreed between the parties.
15. Clause 18 of the MOU deals with approvals. It is stated therein that petitioner agrees to apply to the Government of India, Government of Tamil Nadu and all other relevant/requisite agencies or authorities obtaining all the necessary approvals in connection with the Township project.
16. Pursuant to the said MOU, SIPCOT issued the allotment order on 13.2.2004 allotting 61.93 acres with an assurance that the balance area will be allotted within 180 days. In the allotment order, in Clause 8, it is stated that SIPCOT shall not interfere in the construction activities and the petitioner shall have right to dig ditches, erect structures, store building materials, lay pipes, use generators and do all acts as are incidental to and part of construction activities and to sink well, however, prior approval of the SIPCOT has to be obtained.
17. In Clause 10 of the allotment order, it is stated that all the buildings to be constructed shall be in conformity with the bye-laws and regulations of the local body. However, the allottee can start the construction immediately after submitting application for building plan approval to the appropriate authorities, provided a certificate from a Chartered Architect or a Civil Engineer registered with the concerned local body confirming that the plan is not in violation of any rules and regulations, including the Zone regulations under the Town and Country Planning Act, 1971.
18. As per Clause 15, after payment of the first portion of the land cost by the allottee, the SIPCOT shall arrange to execute the sale deed infavour of the allottee and the allottee shall develop the Township project in phases, as stated in the MOU. Accordingly, the sale deed was executed on 16.5.2004 for 62.94 acres and was registered in Document No.1689/2004 with the Sub-Registrar, Tirupporur.
19. The remaining portion of the land measuring 41.17 acres was also allotted by a separate order dated 10.12.2004 on the same terms and conditions. In the allotment order, in Clause 16(b), it is stated that the allottee shall provide area for commercial purposes, schools, health care services, recreation club, playground etc. and Clause 18 states that within the allotted land the allottee shall develop all internal infrastructure such as roads, power cables, water and sewer lines at their cost. For the above said 41.17 acres also, a separate sale deed was executed on 16.12.2004 and it was registered in Document No.5898 in the office of Sub-Registrar, Tirupporur on the same terms and conditions as stated in the previous sale deed.
20. From the MOU, allotment orders as well as the sale deeds stated above, it is clear that the petitioner company shall construct 2000 housing units in 1st phase within three years from the date of the last sale deed which was executed on 16.12.2004. The said three years period was available to the petitioner upto 15.12.2007 to complete the 1st phase.
21. From the records filed, we could see the following undisputed facts. On 22.12.2004, the petitioner requested the SIPCOT to enter upon permission for using the land to survey and conduct soil test etc., to prepare the master plan, followed by another letter dated 24.12.2004 requesting the SIPCOT to assist for diverting the existing power transmission lines to proceed with the work without any hindrance. On the same day, through another letter the SIPCOT was informed about the commencement of the project work, such as earth filling on the area designed for model flats/sales office.
22. On 28.12.2004, guidelines for using the road was communicated by the SIPCOT to the petitioner. On 18.2.2005, SIPCOT also informed the petitioner that Tamil Nadu Electricity Board was requested as to the feasibility of shifting of the E.B. line to the western corner of the plot and consent of the petitioner was also sought for to proceed further. On 18.3.2005, drawing for the proposed drain levels in the new 30 meter road was also submitted. Reply regarding laying of pipe line was issued by the SIPCOT on 25.4.2005.
23. On 23.5.2005, the petitioner requested the SIPCOT to provide relevant FMB sketches on the layout indicating the boundaries, as stated in the sale agreement. On 25.5.2005, another communication was issued by the SIPCOT to the petitioner informing about convening of a meeting on 03.6.2006 at 11.00 a.m. in the Industries Department, Government of Tamil Nadu at the Conference Hall in the State Secretariat to discuss the outstanding issues and to review the progress of the Township project work. On 26.5.2005, petitioner sent a letter to the SIPCOT to expedite the issuance of No Objection Certificate from the Department of Fire Service, as the said file was pending with the Divisional Fire Officer, Kancheepuram.
24. On 06.6.2005, in terms of the decision taken at the meeting with the Secretary, Industries Department held on 03.6.2005, the petitioner requested the SIPCOT to get approval from the relevant Government Departments, seeking permission to build up to a maximum of 60 meter in height and, also requested for re-classification of the land use of the 104 acres of land allotted and, also requested to convince the TNEB to provide underground cables for the proposed Township. On 17.6.2005, the petitioner attached modified master plan mentioning the quantity of storm water discharge at each point with culvert crossings along with the proposed SIPCOT drain.
25. On 27.6.2005, the SIPCOT addressed a letter to the petitioner seeking approval for the draft water supply agreement to enable the SIPCOT to execute water supply agreement and to give water connection to the site. On 29.8.2005, the Additional Director of Town and Country Planning directed the petitioner to obtain clearance certificate as per EIA Notification, for which a reply was given on 06.9.2005, stating that the petitioner will produce environmental clearance. Change of plot number to 104.71 acres by Mamallapuram Local Planning Authority assigning No.K1 was also intimated by the SIPCOT to the petitioner on 15.9.2005. All the above narrated facts clearly establish the effective steps taken by the petitioner for implementing the project in terms of MOU, allotment orders as well as the sale deeds.
26. On 14.12.2005, the Local Planning Authority and TNPCB issued notices to stop work and, re-start the work after obtaining environmental clearance. On the application submitted seeking environmental clearance, a public hearing was held on 15.12.2005. On the basis of the complaint, by an order dated 20.12.2005, MoEF requested the Chairman, Central Pollution Control Board to inspect the project site of the petitioner and, on 22.12.2005, spot inspection was carried out and the inspection report was forwarded to MoEF on 30.12.2005.
27. The said order dated 30.12.2005 communicated to the Government of Tamil Nadu states that MoEF had issued Environmental Impact Assessment Notification, 1994, as amended from time to time under the Environment (Protection) Act, 1986 which impose restriction and prohibition on the expansion and modernisation of any activity or new projects being undertaken in any part of India, unless environmental clearance has been accorded by the Central Government or the State Government and Item No.31 of Schedule 1 of the Environmental Impact Assessment Notification, 1994 stipulates that ".new construction projects". are required to obtain prior environmental clearance under EIA Notification before initiating the project and a complaint was received on 19.12.2005 from one Rose S.Natarajan, addressed to the Secretary, Ministry of Environment & Forests, Government of India stating that the petitioner is undertaking constructions, which include building up of 6000 dwelling units within 102 acres of land owned by the SIPCOT Industrial Park in S.F.No.240 and site inspection was made and a report was submitted on 30.12.2005 stating as follows:- ". ..... i) that the said site is fenced in all directions. ii) levelling work at the site has already been completed. iii) a 2 storeyed building has been completed, where the company has housed administrative and other offices. iv) 3 numbers of sheds/godowns have been completed and in one shed a stone crushing unit for producing gravels of different sizes for construction is housed. v) other building materials such as steels, etc. are in the premises. vi) load bearing tests for foundation work etc. are in progress. vii) tall cranes are also operating within the premises. ". The petitioner company have not obtained prior environmental clearance under EIA Notification. A direction was issued to the Principal Secretary, Environment Department, Government of Tamil Nadu under Section 5 of Environment (Protection) Act, 1986 to direct as follows:- (i) direct the project proponent stop the construction work immediately. (ii) stop electricity and water supplies to the said construction site. (iii) take action on the project proponent for violating the provisions of the Environment (Protection) Act, 1986. (iv) submit an Action Taken Report within 15 days from the receipt of the above directions. It was also stated therein that in case of non-compliance of the above direction, the Ministry will be constrained to initiate action under Section 15 of Environment (Protection) Act, 1986.
28. At this juncture, it is relevant to note that the said order was not communicated to the petitioner and copies were marked to The Chief Secretary, Government of Tamil Nadu, The Chairman, Tamil Nadu Pollution Control Board, The Chairman, Central Pollution Control Board and The Chief Conservator of Forests (SZ), Ministry of Environment and Forests, Bangalore.
29. Pursuant to the said directions, the Government of Tamil Nadu addressed a letter dated 17.1.2006 to the Member Secretary, TNPCB to take immediate steps to stop the construction work and issue notice to the Electricity Board to stop supply of electricity and also the Chennai Metropolitan Water Supply and Sewerage Board/Local Body/SIPCOT to stop the water supplies to the construction site and on the same day i.e. on 17.1.2006, the TNPCB addressed a letter to the SIPCOT to take follow up action. On receipt of a copy of the said letter, work was immediately stopped by the petitioner and the electricity connection was disconnected by the Tamil Nadu Electricity Board and water supply was also stopped by the Tamil Nadu Water Supply Board.
30. Thus, it is evident that on 17.1.2006 itself, the entire construction activities were stopped. However, the Government of Tamil Nadu passed the impugned order in G.O.(Ms)No.17 Industries (IT) Department, dated 17.2.2006, cancelling the MOU stating that the project cannot be completed, because of the action initiated by Ministry of Environment and Forest, Government of India and the performance of the contract by the project company in terms of MOU has become practicably impossible. The SIPCOT also cancelled the allotment orders, by its orders dated 17.2.2006 and 28.2.2006 and ordered to re-convey the property immediately and also directed to hand over possession, so as to refund the amount remitted by the petitioner for the plots allotted and if the plots are not re-conveyed, necessary action would be taken for cancelling the sale deeds dated 06.5.2004 and 16.12.2004 respectively executed infavour of the petitioner.
31. As rightly contended by the learned Senior Counsels for the petitioner company, the Ministry of Environment and Forest, Government of India in its order dated 30.12.2005 only ordered to stop the construction work, as no prior environmental clearance was obtained. It is the case of the petitioner company that it has already applied for environmental clearance and public hearing was also held on 15.12.2005. Public hearing was extended in terms of the guidelines issued by the Hon'ble Supreme Court in the decision reported in AIR2011SC2781(Lafarge Umiam Mining Pvt. Ltd. v. Union of India and others). In Paragraph (32), Clause (xiv), the Hon'ble Supreme Court directed that public hearing is a mandatory requirement of the environment clearance process and it provides an effective forum for any person aggrieved on any aspect of a project to register and seek redressal of his or her grievances and the said guidelines viz., providing public hearing was directed to be implemented in all future cases of environmental and forest clearance till a regulatory mechanism is devised. Thus the issue regarding environmental clearance is pending before the competent authority at the time of passing the impugned orders and even now the same is pending consideration by the competent authority. The learned Senior Counsels appearing for the petitioner company submitted that without getting environmental clearance, no further construction will be carried out and the works already carried out are fencing, levelling, putting up of model house and sheds for godown purposes to store the building materials, steels etc.
32. In the affidavit filed in support of the writ petitions also, the petitioner has stated that no construction work will be undertaken without obtaining environmental clearance. As already stated, the entire area/site was handed over to the petitioner company on 16.12.2004 i.e., after execution of the second sale deed and even according to the MOU, terms of allotment orders as well as the sale deeds, three year period is available for the petitioner to complete the 1st phase of completing the construction of 2000 housing units. The said three year period will expire only on 15.12.2007. The impugned Government Order dated 17.2.2006 was issued on a mistaken notion that Government of India has rejected the request seeking environmental clearance and the 1st phase project cannot at all be completed before the stipulated time of three years i.e. up to 15.12.2007.
33. The consequential cancellation of allotment orders were issued pursuant to the impugned Government Order dated 17.2.2006. It is relevant to note at this juncture that even if the environmental clearance is obtained by the petitioner company within a reasonable time, the 1st phase of the project can be completed within the stipulated time i.e. prior to 15.12.2007, as about 22 months are left for the expiry of the time granted as per the MOU, allotment orders as well as the sale deeds. Hence, the reason stated in the impugned Government Order dated 17.2.2006 that the contract became frustrated due to impossibility of performance is an imaginary and invented reason which is contrary to facts. The said reason was also objected as there was total non-application of mind on the part of the respondents while passing the impugned orders.
34. The cause of action for cancelling the MOU and the consequential proceedings will arise only after the completion of three year period, namely, on or after 15.12.2007 and till such time, the SIPCOT was bound to co-operate with the petitioner for completion of the 1st phase of the project in terms of MOU and the sale deeds and it is pertinent to note that SIPCOT also co-operated with the petitioner upto September 2005. Thus, the reasons stated in the impugned orders are not valid reasons to cancel the MOU as well as the allotment orders.
35. The learned Advocate General submitted that the 1st phase of project could not have been completed before the time fixed as per MOU, hence issuance of notice before cancelling the MOU as well as the allotment orders is not necessary, as the petitioner has no valid explanation to offer even if a notice is given. Therefore, the useless formality theory can be applied.
36. The said submission cannot be countenanced as the respondents having initiated the project and sought for willingness from the petitioner to take up the project, entered into an agreement viz., MOU, issued allotment orders, as well as executed sale deeds, handed over possession and received 80% of the sale consideration and the time granted to complete the 1st phase was also not over and in fact the petitioner applied for environmental clearance and the same has not been rejected by MoEF. If notice was issued, the petitioner could have explained the pendency of application seeking environmental clearance and the petitioner could have also convinced the respondents that it could complete the 1st phase of the project as per the MOU as well as allotment orders within the stipulated time i.e. by 15.12.2007. Thus, the useless formality theory cannot be applied to the facts of this case.
37. Issuance of notice before taking an adverse decision to the party likely to be affected is in compliance of principles of natural justice, which is now recognised as a constitutional right unless the same is expressly prohibited by Statute, in this case by MOU. On careful perusal of MOU, it is evident that there is no clause excluding applicability of principles of natural justice. It is well settled proposition of law that unless the Statute prohibits, issuance of notice before deciding the issue is now an implied requirement.
38. The requirement of observance of principles of natural justice, while deciding the rights of parties either by quasi-judicial authority or by an administrative authority is well settled. The Hon'ble Supreme Court in the decision reported in (1974) 2 SCC121(Nawabkhan Abbaskhan v. State of Gujarat) held that in Indian Constitutional Law, following of the principles of Audi Alteram Partem is an independent requirement and the duty to give a fair hearing is a constitutional requirement and, failure to comply with the same is fatal. The failure of duty to hear is traversity of constitutional guarantees and any order made without hearing the party likely to be affected and, if there is an injury and then, it is violation of the constitutional right. [See Article 21 of the Constitution of India and, Menaka Gandhi v. Union of India (1978) 1 SCC248.
39. In the decision reported in (1980) 4 SCC379(S.L.Kapoor v. Jagmohan and others), the Hon'ble Supreme Court held that only in cases of admitted or indisputable facts which speaks for itself and, only when one conclusion alone is possible, the Court may not issue its writ to compel the observance of principles of natural justice, as in such cases issuing writ for violation of natural justice is futile and the principles of natural justice will satisfy the general principle that justice should not only be done, but must manifestly and undoubtedly be seen to be done.
40. In the decision reported in (1981) 1 SCC664(Swadeshi Cotton Mills v. Union of India), the Hon'ble Supreme Court held as follows:- ".106. The principles of natural justice have taken deep root in the judicial conscience of our people, nurtured by Dr.Bina Pani (1967) 2 SCR625 Kraipak (1969) 2 SCC262 Mohinder Singh Gill (1978) 1 SCC405 Menaka Gandhi (1978) 1 SCC248 They are now considered so fundamental as to be 'implicit in the concept of ordered liberty' and, therefore, implicit in every decision-making function, call it judicial, quasi-judicial or administrative. Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. No wider right than that provided by statute can be claimed nor can the right be narrowed. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. The implication of natural justice being presumptive it may be excluded by express words of statute or by necessary intendment. ....".
41. The Hon'ble Supreme Court, in the decision reported in AIR1990SC1402(Km.Neelima Misra v. Dr.Harinder Kaur Paintal and others) held that an administrative order, which involves civil consequences must be made consistently by following the principles of natural justice. Paragraph (19) of the said judgment, reads as follows:- ".19. ..... An administrative function is called quasi-judicial when there is an obligation to adopt the judicial approach and to comply with the basic requirements of justice. Where there is no such obligation, the decision is called 'purely administrative' and there is no third category. ....".
42. In the decision reported in (2002) 3 SCC302(State of Karnataka and another v. Mangalore University Non-Teaching Employees' Association and others), the Hon'ble Supreme Court held that only in cases where there is no possibility of prejudice by not issuing notice, the High Court under Article 226 of Constitution of India need not set aside the action of the Government for non-compliance of the principles of natural justice.
43. The Hon'ble Supreme Court in the decision reported in (2009) 12 SCC40(Uma Nath Pandey and others v. State of U.P. and another), held that principles of natural justice are those rules, which have been laid down by the Courts as being the minimum protection of the rights of the individual against the arbitrary procedure/action taken by a judicial, quasi-judicial and administrative authority, while making an order affecting those rights and, these rules are intended to prevent such authority from doing injustice and will exclude arbitrariness and enhance the quality of administrative justice. The old distinction between a judicial act and an administrative act has been obliterated, withered away and now even an administrative order, which involves civil consequences must be consistent with the rules of natural justice and civil consequences encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations, and non-pecuniary damages. In its wide umbrella comes everything that affects a citizen in his civil life. Natural justice is the essence of fair adjudication, deeply rooted in tradition and conscience to be ranked as fundamental and, it is fair play in administrative action.
44. In the decision reported in (2009) 14 SCC690(Prakash Ratan Sinha v. State of Bihar and others), the Hon'ble Supreme Court held that the action of cancelling the promotion attaches civil consequences. The persons who are likely to be affected in cancelling the promotion are bound to be heard, if there is a power to decide detrimentally to the prejudice of a person, duty to act judicially is implicit in exercise of such a power and that the rule of natural justice operates in areas not covered by any law validly made. The adherence to principles of natural justice by all civilized Nations is of supreme importance when a quasi-judicial authority or administrative authority is called upon to determine the dispute between the parties involving civil consequences.
45. The Hon'ble Supreme Court in the decision reported in AIR2011SC2709(Kesar Enterprises Limited v. U.P. and others), following the earlier decisions, held that following of principles of natural justice will prevent the challenge of the action taken as an arbitrary decision.
46. In the light of the undisputed facts as well as non-issuance of notice prior to the cancellation of MOU and the allotment orders with a direction to return the lands, the learned Advocate General is not justified in contending that the High Court ought not to have entertained the writ petitions and in the light of having alternative remedy for moving arbitration process.
47. The Hon'ble Supreme Court in the decisions reported in (2003) 2 SCC107[Habanslal Sahnia v. Indian Oil Corporation Limited].; (2005) 6 SCC499[State of H.P. v. Gujarat Ambuja Cement Limited].; (2005) 8 SCC242(Sanjana M.Wig v. Hindustan Petroleum Corporation Ltd.) held that if a mandatory violation is established, this Court can entertain writ petition. The above decisions were followed in the subsequent decision of the Hon'ble Supreme Court reported in (2007) 10 SCC88(M.P.State Agro Industries Development Corporation Ltd. v. Jahan Khan) and in Paragraph (12), it is held thus:- ".12. Before parting with the case, we may also deal with the submission of learned counsel for the appellants that a remedy by way of an appeal being available to the respondent, the High Curt ought not to have entertained his petition filed under Articles 226/227 of the Constitution. There is no gainsaying that in a given case the High Court may not entertain a writ petition under Article 226 of the Constitution on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. The rule of exclusion of writ jurisdiction due to availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of the availability of an alternative remedy, a writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely, (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In these circumstances, an alternative remedy does not operate as a bar. (See Whirlpool Corpn. v. Registrar of Trade Mars [(1998 (8) SCC1; Harbanslal Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC107; State of H.P. v. Gujarat Ambuja Cement Ltd. [(2005) 6 SCC499 and Sanjana M.Wig v. Hindustan Petroleum Corpn. Ltd. [(2005) 8 SCC242.". The same principle is reiterated in the decision of the Hon'ble Supreme Court reported in (2010) 1 SCC126(Satwati Deswal v. State of Haryana) and the judgment of the Division Bench of this Court, reported in (2010) 4 MLJ255(M/s.Hindustan Petroleum Corporation Ltd. v. Geetha Kasturirangan), in which one of us (N.P.V.,J) is a member.
48. In (2010) 1 SCC126(Satwati Deswal v. State of Haryana), the Hon'ble Supreme Court held as follows:- ".5. .... It is well settled that a writ petition can be held to be maintainable even if an alternative remedy is available to an aggrieved party where the court or the tribunal lacks inherent jurisdiction or for enforcement of a fundamental right; or if there had been a violation of a principle of natural justice; or where vires of the Act were in question.". Thus, merely because, an alternative remedy available, the Constitutional Courts are not prohibited from exercising its writ jurisdiction, if the facts are not in dispute and the decision taken was in violation of principles of natural justice. The decision relied on by the learned Advocate General, reported in (2008) 8 SCC172(Pimpri Chinchwad Municipal Corporation and others v. Gayatri Construction Company and another) is distinguishable as facts in that case was in dispute, in Paragraph (8), it was urged as follows:- ".8. .... Before the High Court the writ petition was questioned on three grounds: (i) disputed questions relating to facts were involved; (ii) to enforce the terms of contractual rights, remedy under the civil law is available, and (iii) in any event, the writ petition was not maintainable in respect of contractual matters. ......".
49. The learned Senior Counsels appearing for the petitioner company have rightly submitted that since the time granted to complete the 1st phase of the project being available, the petitioner is having legitimate expectation that MOU will not be cancelled and the sale deeds and the allotment orders issued pursuant thereto will not be withdrawn. Having regard to the admitted fact that time was available to complete the 1st phase of construction work up to 15.12.2007, the respondents are estopped from cancelling the MOU/allotment orders up to 15.12.2007.
50. The principle of Promissory Estoppel against the Government/Authority under Article 12 of the Constitution of India can be applied and the said issue is already settled by the Hon'ble Supreme Court. In (1970) 1 SCC582[Century Spg. and Mgf. Co. Ltd. v. Ulhasnagar Municipal Council), it is held that the public bodies are not exempted from their liability to carryout their obligation arising out the representations made by them, when relying upon which a citizen has altered his position to his prejudice.
51. In the decision reported in (1979) 4 SCC409(Motilal Padampat Sugar Mill Co. Ltd. v. State of U.P), the Hon'ble Supreme Court held that Doctrine of Promissory Estoppel is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice and it can be the basis of a cause of action.
52. In (1983) 3 SCC379[Gujarat State Financial Corporation v. Lotus Hotels (P) Ltd.), even though contention was raised by the Gujarat State Financial Corporation Limited that dispute between the parties is in the realm of contract and, even if there is failure of the Corporation to carryout its part of the obligation, writ is not the remedy was negatived and held as follows:- ".9. ...... Acting on the solemn undertaking, the respondent proceeded to undertake and execute the project of setting up a 4-star hotel at Baroda. The agreement to advance the loan was entered into in performance of the statutory duty cast on the Corporation by the statute under which it was created and set up. On its solemn promise evidenced by the aforementioned two documents, the respondent incurred expenses, suffered liabilities to set up a hotel. Presumably, if the loan was not forthcoming, the respondent may not have undertaken such a huge project. Acting on the promise of the appellant evidenced by documents, the respondent proceeded to suffer further liabilities to implement and execute the project. In the back drop of this incontrovertible fact situation, the principle of promissory estoppel would come into play. In Motilal Padampat Sugar Mills Co. (P) Ltd. v. State of U.P. (1979) 4 SCC409 this Court observed as under : The true principle of promissory estoppel, therefore, seems to be that where one party has by his words of conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective of whether there is any pre-existing relationship between the parties or not. 10. Thus the principle of promissory estoppel would certainly estop the Corporation from backing out of its obligation arising from a solemn promise made by it to the respondent.
11. .....
12. .....
13. Now if appellant entered into a solemn contract in discharge and performance of its statutory duty and the respondent acted upon it, the statutory corporation cannot be allowed to act arbitrarily so as to cause harm and injury, flowing from its unreasonable conduct, to the respondent. In such a situation, the court is not powerless from holding the appellant to its promise and it can be enforced by a writ of mandamus directing it to perform its statutory duty. A petition under Article 226 of the Constitution would certainly lie to direct performance of a statutory duty by other authority as envisaged by Article 12.". (Emphasis supplied) 53. In the decision reported in (1995) 6 SCC363[State of H.P. v. Ganesh Wood Products]., the Hon'ble Supreme Court in Paragraph (55) held thus:- ".55. ...... the doctrine of promissory estoppel was evolved to protect a promisee who acts on the faith of a promise/representation made by promisor and alters his position even though there is no consideration for the promise and even though the promise is not recorded in the form of a formal contract. Surely, a representation made or undertaking given in a formal contract is as good as, if not better than, a mere representation. All that we wish to emphasise is that anything and everything done by the promisee on the faith of the representation does not necessarily amount to altering his position so as to preclude the promisor from resiling from his representation. If the equity demands that the promisor is allowed to resile and the promisee is compensated appropriately, that ought to be done. If, however, equity demands, in the light of the things done by the promisee on the faith of the representation, that the promisor should be precluded from resiling and that he should be held fast to his representation, that should be done. To repeat, it is a matter of holding the scales even between the parties to do justice between them. This is the equity implicit in the doctrine.".
54. In (2012) 4 SCC246[Bhushan Power and Steel Limited and others v. State of Orissa and another]., the similar issue was considered regarding not extending the co-operation for construction of the plant. In Paragraphs (37) to (41), it is held thus:- ".37. Pursuant to the MoU with Bhushan Ltd., the State Government had not only allotted land for the setting up of the steel plant at Lapanga, it had even extended all help for the commissioning of the plant, which, in fact, had already started functioning. However, it is the claim made by BSSL under the MoU executed on 15-5-2002, that had created obstructions in the setting up of the steel plant at Lapanga.
38. Despite having allotted land and granted sanction to Bhushan Ltd. to take steps for construction of the said plant, it was subsequently contended that the application filed by Bhushan Ltd. was premature and could not, therefore, be acted upon. Specific instances have been mentioned hereinabove of the steps taken by the various departments in extending cooperation to Bhushan Ltd. to set up its steel plant at Lapanga. To now turn around and take a stand that the application made by Bhushan Ltd. was premature, is not only unreasonable, but completely unfair to Bhushan Ltd., who have already invested large sums of money in setting up the plant.
39. The State Government had, on its own volition, entered into the MoU with Bhushan Ltd. on 15-5-2002, and had even agreed to request the Central Government to allot mining areas and coal blocks for operating the steel plant. Whatever differences that may have resulted on account of the dispute within the Bhushan Group, which could have led to the rethinking on the part of the State Government, have now been laid to rest by virtue of the settlement arrived at between Bhushan Ltd. (now BPSL) and BSSL. The State Government has also accepted the said position. In addition to the above, the action taken by the State Government appears to us to be highly unreasonable and arbitrary and also attracts the doctrine of legitimate expectation.
40. There is no denying the fact that the appellants have altered their position to their detriment in accordance with the MoU dated 15-5-2002. Whatever may have been the arrangement subsequently arrived at between the State Government and BSSL, the original MoU dated 15-5-2002 continued to be in existence and remained operative. The State Government appears to have acted arbitrarily in requiring Bhushan Ltd. to enter into a separate MoU, notwithstanding the existence of the MoU dated 15-5-2002, which, as mentioned hereinabove, had been acted upon by the parties.
41. In the light of the above, the High Court erred in holding that it could not interfere with the decision of the State Government calling upon the appellants to sign a fresh MoU with the Government, during subsistence of the earlier MoU. Since the State Government has already made allotments in favour of others in relaxation of the Mineral Concession Rules, 1960, under Rule 59(2) thereof, no cogent ground had been made out on behalf of the State to deny the said privilege to the appellants as well. Accordingly, we allow the appeal and set aside the judgment and order of the High Court of Orissa and also the decision of the State Government dated 9-2-2006, rejecting the appellants claim for grant of mining lease.".
55. As already stated in this case, after elaborate negotiations, an understanding was reached and MOU was signed. Pursuant to which, allotment orders were issued by the SIPCOT and the sale deeds were also executed by paying 80% of the sale price with condition to pay the remaining within three years and possession was handed over and the project work also commenced by laying road etc. and the petitioner company also sent balance sale price by demand draft which was returned. Thus the principle of Promissory Estoppel is applicable to this case in full force. The impugned orders having been passed on 17.2.2006 and 28.2.2006 respectively, the said orders are unsustainable.
56. The reasons stated in the Government Order to cancel the MOU is that the purpose for which the allotment orders issued due to impossibility of performance is justified or not is to be considered at this juncture. As already stated, time to complete the 1st phase of the project viz., construction of 2000 houses was not over and 22 months were available to the petitioner company to complete the project. Thus, the reasons stated in the Government Order that the purpose for which the allotment orders have been issued due to impossibility of performance is unsustainable.
57. Provisions of (The) Government Grants Act, 1895 cannot also be invoked by the respondents in the facts and circumstances of the case, as the conditions imposed in the MOU, allotment orders and sale deeds to complete the 1st phase of the project and payment of 20% within three years from the last sale deed was not over to invoke provisions of The Government Grants Act. It is not the case of the petitioner company that they are unable to fulfil the conditions imposed in the MOU, allotment orders as well as sale deeds. Without waiting for expiry of the time to comply with the condition mentioned in the said orders, the respondents have chosen to cancel the same and, now they are trying to justify their action by referring the provisions of (The) Government Grants Act, 1895 even though, no reference is made in the impugned orders on that aspect. Hence, the learned Senior Counsels for the petitioner company are justified in contending that either in the counter-affidavit or during the course of arguments, it is not open to the respondents to state new grounds to justify the impugned orders, by relying upon the judgment of the Hon'ble Supreme Court reported in (1978) 1 SCC405[Mahindher Singh Gill and another v. Chief Election Commissioner, New Delhi and others]..
58. The decision cited by the learned Advocate General, reported in (1999) 2 SCC37(Indu Kakkar v. Haryana State Industrial Development Corporation Limited and another) can be applied, if the period of three years have expired on the date of the impugned orders.
59. In fine, we answer the issues framed by us in the following manner:- (a) Learned single Judge was right in entertaining the writ petitions, inspite of having arbitration clause in the MOU, as facts are not in dispute. (b) Respondents have no jurisdiction to cancel the MOU and allotment orders, before expiry of the period to complete the 1st phase of the project that was up to 15.12.2007. (c) Respondents have violated the principles of natural justice as the petitioner's civil right is affected and there is a chance to explain as on 17.02.2006 whether the petitioner was in a position to complete the 1st phase of the project before 15.12.2007 as the application for environmental clearance was pending and not rejected. (d) Doctrine of impossibility of performance can not be pleaded as on 17.02.2006 on the facts and circumstances of the case as there was every possibility to complete the 1st phase of the project by 15.12.2007.
60. For the above said reasons, these writ appeals are dismissed. No costs. Consequently, connected miscellaneous petitions are closed. Index : Yes/No.(N.P.V.,J) (P.D.S.,J.) Internet : Yes/No.14.03.2014 bbr Note to Office: Issue copy of this judgment on 18.03.2014 B/o. bbr 17.3.2014 N.PAUL VASANTHAKUMAR, J.
and P. DEVADASS, J.
bbr Common Judgment in W.A.Nos.1546 , 1547, 2179 & 2180 of 2013 14.03.2014