B.N. Kirpal, J.
(1) This judgment will dispose of L. P.A. Nos. 9 and 25 of 1982 filed by the Delhi Development Authority (hereinafter referred to as 'the D.D.A.') and Ms. Nehru Place Hotels Ltd. (hereinafter referred to as 'the company') from the judgment of a single Judge of this Court who had partially allowed the writ petition filed by the Company relating to the passing of its building plans on a plot of land in Nehru Place which was given on lease by the D.D.A. to the Company.
(2) In order to understand the controversy between the parties it will be necessary to enumerate the facts of the case in some detail. These fact's can be divided into three periods. The first period being up to 17th March, 1976 on which date the plot in question was auctioned; the second period is up to 30th November, 1977 when the lease-deed was D.D.A. in favor of the Company and the other facts are with regard to the period subsequent to the execution of the lease-deed. The pre-lease facts would indicate as to what transpired between the parties till the execution of the lease-deed and the post-lease facts would indicate as to how the parties understood the terms of the lease and what was the reason for the D.D.A. not to pass the building plans submitted by the Company.
(3) Under section 7 of the Delhi Development Act (hereinafter referred to as 'the Act'), the D.D.A. is to prepare a master plan for Delhi in which the manner in which the land is proposed to be used has to be indicated. The said plan is required to be approved by the Central Government under section 9(2) of the Act. In accordance with the provisions of the Act, the master plan of Delhi was prepared and, after it was approved by the Central Government, the same was published on 1st September, 1962. In the said plan it was, inter alia, stated that in order to decentralise commercial activity, it was proposed to develop 15 district centres in the outlined Planning Divisions. One of the 15 district centres, with which we are concerned in this case, was located at Kalkaji. It was to have a total area of 82 acres. The break-up indicated of this area was that 57 acres was to be utilised for 'commercial including service industries', 15 acres was meant for 'work-cum-industrial centres' while the remaining 10 acres was earmarked for Government Offices. The D.D.A. is also, simultaneously with the preparation of the master plan or soon thereafter, required to prepare zonal development plans for each of the zones into which Delhi is divided. Such a plan is prepared in accordance with the powers conferred on the D.D.A. under section 8 of the Act. Like the master plan, the zonal development plan which is prepared under section 8, also has to be approved by the Central Government. It may here be noted that before the master plan or the zonal development plan is submitted to the Central Government for approval, the D.D.A. is required to prepare draft' of the said plans and publish them. This is so provided by section 10 of the Act. The publication is necessary because opportunity has to be given to people to file objections and to make suggestions, under sub-section (3) of section 10. After considering all the objections, suggestions and representations the D.D.A. has finally to prepare a plan for submission to the Central Government for its approval under section 9. In the present case there was considerable time lag between the preparation of the master plan and the zonal development plan. Prior to the preparation of the zonal development plan, it appears, the D.D.A. passed a. resolution No. 379 on 7th August. 1963. It was, inter alia, resolved that the lay-out pain for district centre at Kalkaji should be revised so that 'instead of one hotel site of 3.5 crores some 4.5 sites should he earmarked for housing hotels with a total capacity of about 500 to 700 beds'. In Table Iii attached to the said resolution the land in question was stated be located in blocks Nos. 55 and 56. Under the sub-heading 'Commercial Establishments' it was indicated in the said Table that the number of floors which could be constructed in block No. 55 were I to 12 and for land in block No. 56 it was I to 8. Whereas in the said Table there was a separate heading for 'Cinemas' and 'Restaurants', 'Retail Shopping', 'Civil Building' and 'Service' Industries' besides 'Commercial Establishments', there was no sub-heading for Hotels. It is evident, thereforee, that hotels came under the heading of 'Commercial Establishments' in the said resolution. Thereafter the lay-out plan for district centre a Kalkaji was revised. On 28th September, 1963 resolution No. 468 was passed in which it was, inter alia, resolved as follows:
'4hotels have been provided, out of which 2 hotels are so located that they face the district park on the north-east and the remaining 2 hotels are proposed over the commercial establishment in the commercial area.'
In the lay-out Plan stated to have been approved by the aforesaid resolution No. 468 dated 28th September, 1963, which has been filed by the D.D.A. before us during the course of the hearing of the appeals, two hotel buildings have been shown in the land in blocks 55 and 56. In the said plan different type of land use has been shown. Blocks 55 and 56 are part of commercial area. In the distribution of floor spaces in commercial area blocks 55 and 56 are under the heading of 'Commercial Establishments'. There is no separate heading of hotels though there is a separate heading of 'Cinemas' and 'Restaurants'. It seems that this lay-out plan was as;ain revised and another lay-out plan dated 27th January, 1969 was prepared. That has been placed on record before us. That plan indicates that there are to be two hotels on the existing site of 5 acres. Even here the hotels are shown as part of 'Commercial Establishments'.
(4) The D.D.A. also prepared the zonal development plan of the area, as envisaged by section 8 of the Act. The draft of the said plan was published in accordance with the procedure prescribed by section 10 and thereafter was approved by the Ministry of Works & Housing, Government of India vide its letter dated 28th December, 1973. District Centre Kalkaji fell in Zone F-2. With regard to this zone it was stated in the zonal development plan as follows:
'There is a district centre of 82 acres (33.184 Hets.) proposed in this zone. The detailed lay-out plan has been prepared by the Delhi Development Authority.'
Apart from the text of the zonal development plan, a printed copy of the plan itself has also been placed on record. In Zone F-2 with which we are concerned, the district centre at Kalkaji is indicated. It is this plan which was approved by the Central Government under section 9(2) of the Act on 28th December, 1973. In this plan there is no indication that any portion of the district centre was earmarked for a hotel or for any other specific commercial use. On behalf of the D.D.A. it was urged by the learned counsel that the lay-out plan, referred to in the text of the zonal development plan, was to be the lay-out plan approved by the D.D.A. vide its resolution No. 468 on 28th September, 1968 According to the learned Counsel, the said lay-out plan, by reference, became incorporated in the zonal development plan. On a specific question being put by us, it was concede that the draft of the lay-out plan, as approved by the D.D.A. by the aforesaid resolution No. 468 dated 28th Sept. 1963. was never published as prescribed by section 10 of the Act and there was no specific approval to the said lay-out plan by the Central Government under section 9(2) and nor has the said lay-out plan been published as prescribed by section 11 of the Act. Merely because, in the text of the zonal development plan, a statement of fact has been made that a detailed lay-out plan of the district centre has been prepared would not, in our opinion, give the said lay-out plan any statutory force. The only plans which are statutory plans are the master plan and the zonal development plan. It is those plans which require the approval of the Central Government and which can be altered only with its approval. The zonal development plan indicates the land use and thereafter the D.D.A. is free to prepare a detailed lay-out plan providing for the use of the said land in the manner prescribed by the zonal development plan. The lay out plan passed by the D.D.A. can be, and has in fact been, altered by it from time to time without any reference to the Central Government. In this very case, whereas the lay-out plan approved by resolution No. 468 indicated that there were to be two hotels on the aforesaid blocks Nos. 55 and 56, in fact what had been auctioned to the Company, and which is the subject matter of dispute, was one plot of land on which, according to the D.D.A. one hotel has t0 be erected.
(5) In February, 1976 the D.D.A. advertised in several newspapers a notice regarding the auction of various sites in Nehru Place District Centre, New Delhi which it was proposing to conduct on 17th March, 1976. According to the advertisement, the terms and conditions of the auction could be obtained from the Sales Counter of the D.D.A. It was further stated that the highest bidder would be required to deposit at the fall of the hammer 25 per cent of the amount in cash or by bank draft in favor of the D.D.A and the remaining 75 per cent would be payable within six months the issuance of the communication of the acceptance of the bid by the D.D.A.
(6) In the said advertisement, particulars were given of a number of plots which were sought to be auctioned. 'The first column of the particular was under the hearing 'purpose', the second column of it contained the number of plot and the other particulars ware given in the third column of the advertisement. The first plot which was specified therein was described as, 'Hotel'. Number of the plot was not given but it was stated that its area was five acres.
(7) The Company is stated to have obtained from the D.D.A. a document which contained the terms and conditions for the sale by auction by the D.D.A. of the perpetual lease-hold rights in the said plots in the Nehru Place District Centre. The said terms and conditions, inter alia, provided that 25 per cent of the bid money would have to be paid by the highest bidder at the fall of the hammer by way of earnest money. It the bid was accepted, then the balance 75 per cent was to be paid within six months of the acceptance of the bid.
(8) A number of other terms and conditions were also contained in the said document. For instance, it was stated that the terms and conditions of the lease, which would be executed with the successful bidder, were contained in the form of the perpetual lease-deed which could be obtained from the office of the D.D.A. The main conditions of the lease were also described in the said document. Some of the terms of the lease described in the document, inter alia, provided for the lessee being able to sell or transfer, with prior permission of the D.D.A. in writing, the floor area constructed on the plot after paying the specific charges. The lessee was also permitted to organise a cooperative society.
(9) It was also provided that the intending purchasers of the floor area would not use the said area for purpose other than as an office/show room for business purposes. The terms and conditions contained in the said document further contemplated that architectural control drawings would be exhibited at the time of the auction. It is an admitted case of the parties that with regard to the auction of the Hotel site no such architectural control drawings were ever exhibited. The architectural control conditions for the disposal of the hotel plot, inter alia, provided that 3 to 5 star hotel 1976.
(10) The possession of the plot was handed over to the Company as scheduled. On 2nd November, 1976 the D.D.A. issued a no objection certificate in which it was stated that the Company had made full payment of rupees one crore and had taken over possession of the aforesaid plot. It was further stated that the D.D.A. had no objection to the Company submitting building plans for the purpose of construction on the plot in accordance with building bye laws and architectural control..
(11) Along with its covering letter dated 11th January, 1977, the Company forwarded to the D.D.A. two sets of preliminary drawing for its consideration. The Company was informed that the said drawing could be accepted only after the payment of building plan fee. Vide its letter dated 24th January, 1977, the Company re-submitted its plans to the D.D.A. It seems that no action was immediately taken by the D.D.A. on the plans so submitted. The Company, on the other hand, learnt that the D.D.A. was contemplating not to execute the lease-dead and intended to vary the terms of the auction and the draft perpetual lease-deed. The Company made repeated requests to the D.D.A. asking it to execute the lease-deed and to take further action in the matter. The first such letter, which was written, was on 23rd March. 1977. The Company stated in the letter that it had bid for a commercial plot where a hotel of 3 to 5 star category was also permitted. It was on the basis of the terms, and conditions, which had been signed by the Company at the time of the auction, that it had bid rupees one crore for the said plot and had paid the said money. According to the Company, the D.D.A. had no right to change, add to or alter the terms, and conditions at this stage and it was obliged to execute the lease-deed. A reminder was sent on 11th April, 1977, which was followed by another letter dated 23rd April, 1977. The three specific requests, which were made in the said letters were for the execution of the lease deed; for the comments of the D.D.A. on the preliminary drawing; and for the permission to be granted to the Company to start digging on the said plot of land.
(12) During the course of the hearing before the learned single Judge and also before us, the relevant files of the D.D.A. have been placed before the Court. The perusal of the same shows that the D.D.A. was not satisfied about the terms of the auction and of the draft perpetual lease-deed. There was apprehension in the minds, of some of the officials of the D.D.A. that the said terms did not bind the Company to construct a hotel of a reasonable size and further there should be some restriction with regard to the extent of the built-up floor area which it could sell for being used for ordinary commercial purpose. The D.D.A. took advice of its Legal Adviser. His advice was that the D.D.A. could not, in law, insert any new clause in the lease-deed nor could it charge or modify the terms and conditions of the sale.
(13) The perusal of the D.D.A.'s files further reveal that a detailed note dated 16th August, 1977 was put up by the Vice-Chairman to the Lt. Governor. In the said note after the history of the case was given, it was, inter alia, stated that the terms and conditions, which were signed at the time of the auction, were normal terms which were offered for all commercial buildings. The Vice-Chairman noted, with regard to the said terms, that 'it did not indicate that the party will have to use it for hotel building and for no other purpose'. It was mentioned therein that the Company had obtained exemption under the Urban Land (Ceiling and Regulation) Act, 1976 and had also made full payment for the plot and had taken over the possession thereof. It was apprehended that only a small portion of the plot would be built for use as hotel and the remaining portion would be utilized as a commercial plot would be sold at enormous profit. The Vice Chairman observed that the Company was pressing for the execution of the lease as indicated to them at the time of auction. Under the circumstances. the Vice Chairman suggested that the following four alternatives were available to the D.D.A.: (i) The D.D.A. may execute the lease and allow the Company to put up a hotel according to the norms laid down by I.T.D.C. and the remaining portion he allowed to be utilised for commercial building.
(II)'We may negotiate with tre party and a,sk them to put up a hotel block with necessary requirements comprising of accommodation for at least 250 beds, as appears to have been agreed to by them in the discussion with Dy. Commissioner (Implementation) (Page 29-30 ante). If they do so, the remaining part may be allowed to be used as commercial block. The hotel block will be deemed to be one composite block and will not be allowed to be partitioned for the purpose of transfer. This will, of course, be a via-media between what was required for the use of this plot and what the party is now intending to do'.
(iii) The bid may be cancelled and the D.D.A. :should be prepared to pay damages to the Company. The difficulty in taking this course was that possession had already been handed over to the company and there may be a long litigation during which time the plot may :not be available to the D.D.A. (iv)The D.D.A. may insist that no building other than a hotel will be allowed to come upon this plot. This could be controlled by granting sanc corporation for the building plan. The plan, which is submitted by the Company may be approved only if the proposed building was going to constitute a composite unit of a hotel.' The recommendation of the Vice Chairman was that the fourth suggestion mentioned above should be adopted.
(14) The file was then dealt with by the Lt. Governor. On 19-8-1977 the Lt. Governor made a note on the file, the relevant portion of which is as under : - 'In the position in which we are placed, it seems to me that alternative (ii) seems to be the best whereby we can .lot the party get maximum utilisation of the space for a hotel and letting him utilise the remaining area for ordinary commercial space. Actually, while he may be making more profit, this will still serve a public service, as in Delhi we are terribly short of commercial space. With more commercial space available we can have the residential premises vacated which are now unauthorisedly occupied by commercial firms and offices, etc. Failing any compromise of the type above we have no option but to use the architectural control to ensure that an hotel of at least 250 rooms is put up and only thereafter such commercial space may be allowed as may fit in with over all scheme. In view of the financial implications and carelessness pointed out in this case. it would be appropriate to bring this case to the notice of .the .Ministry and also get their clearance to the approach indicated above. They may, if sold at enormous profit. The Vice Chairman observed that the Company was pressing for the execution of the lease as indicated to them at the time of auction. Under the circumstances. the Vice Chairman suggested that the following four alternatives were available to the D.D.A.: (i) The D.D.A. may execute the lease and allow the Company to put up a hotel according to the norms laid down by I.T.D.C. and the remaining portion he allowed to be utilised for commercial building.
(II)'We may negotiate with thr party and ask them to put up a hotel block with necessary requirements comprising of accommodation for at least 250 beds, as appears to have been agreed .to by them in the discussion with Dy. Commissioner (Implementation) (Page 29-30 ante). If they do so, the remaining part may be allowed to be used as commercial block. The hotel block will be deemed to be one composite block and will not be allowed to be partitioned for the purpose of transfer. This will, of course, be a via-media between what was required for the use of this plot and what the party is now intending to do'.
(iii) The bid may be cancelled and the D.D.A. should be prepared to pay damages to the Company. The difficulty in taking this course was that possession had already been handed over to the company and there may be a long litigation during which time the plot may;not be available to the D.D.A. (iv) The D.D.A. may insist that no building other than a hotel will be allowed to come upon this plot. This could be controlled by granting sanc necessary, consult the Ministry of Law also but the case should be dealt with expeditiously.' As desired by the Lt. Governor, the case was then referred to the Ministry of Works & Housing. The said Ministry took the advice of the Ministry of Law. After taking that advice into consideration, the Joint Secretary, Ministry of Works & Housing, vide his note dated 10th October, 1977, inter-alia, observed as follows : 'The Law Ministry have further advised against any negotiations with the party and leave the size of the hotel to the stage of building plans. However, the Lt. Governor has suggested a compromise by which the party may be obliged to put up a hotel of at least 250 beds and only thereafter utilise the remaining area as 'commercial' space. Failing a compromise with the party to this effect, he has suggested using architectural control to achieve the same objective. It would be recalled that the norms prescribed by the Dept. of Tourism for a 3 5 star hotel provide for 20 to 25 settable rooms only. As against this, the Lt. Governor proposes to ensure atleast a 250-bed hotel. This would be a considerable improvement over what the party appears to be legally obliged to construct by way of hotel. This Ministry, thereforee, approves of the L.G.'s suggestion that the D.D.A. may aim at ensuring a hotel of at least 250-beds and thereafter leaving it to the party to utilise the remaining area as ordinary commercial space. Since according to the advice of the Law Ministry there can be no modification in terms of the lease, nor should the Dda resort to any negotiations at this stage, the lease deed as per proforma may be executed forthwith and the aforesaid objective achieved through architectural control while sanctioning the building plans.'
(15) In his note dated 19-8-1977 the Lt. Governor bad slated that it should be ensured that the Company constructs a hotel of at least 250 'rooms'. In fact the negotiations which had been conducted between the D.D.A. and the Company were with regard to a hotel providing for 250 beds and not for 250 rooms. Accordingly on 11th November, 1977 the Vice Chairman sought to bring to the notice of the Lt. Governor the mistake which appears to have crept in the earlier note of the Lt. Governor. As is apparent from the file, the Lt. Governor confirmed that he had intended that the hotel should provide for 250 beds and not for 250 rooms.
(16) From the aforesaid facts it is clear that it was decided by the Lt. Governor and by the Government of India that the second suggestion in the Vice Chairman's note dated 18-8-1977 should be implemented. The D.D.A. was required to negotiate with the Company to agree to put up a hotel block comprising of accommodation for at least 250 beds and the remaining part could be allowed to be used as a commercial block. The Company was accordingly asked to furnish an undertaking agreeing to the aforesaid proposal. On 29th November, 1977 the Company executed the following undertaking:
'This undertaking is made on this 29th day of November, 1977. Whereas the Lesser, Delhi Development Authority, has agreed to the execution of the Lease Deed in respect of plot for hotel site situated at Nehru Place, New Delhi. And. whereas we, the Lessees of the above plot have undertaken to construct a hotel of size of at least 250 beds. ., Now, thereforee, we the lessees of the above plot in anticipation of the execution of the Lease Deed pertaining to the plot in Nehru Place, New Delhi, hereby undertake that we shall construct a hotel of- a size of at least 250 beds and we shall use the remaining space for purposes as permissible under the terms and conditions of the Lease Deed and the architectural control.'
(17) On the next day i.e. on 30th November, 1977, the perpetual lease deed of the said plot was executed by the D.D.A. in favor of the Company. The lease-deed which was executed shows that the demise of the -land was, inter alia, made in the following terms :
'NOWTHIS Indenture Witnesseth that, in consideration of the premium of Rs. 1,00,00,000 (Rupees One crore Only) paid before the execution of these presents ; (the receipt whereof the Lesser hereby acknowledge ) and of the rent hereinafter reserved and; of the covenants on the part of the Lessee hereinafter contained, the Lesser doth hereby demise unto the Lessee all plot of. land being the Plot No. Hotel Site Block No.- -in the layout plan of Nehru Place.'
This demise was made subject t0 the .various covenants and conditions contained in different clauses of the lease. Some of the relevant sub-clauses are as follows : 'II.. The .Lessee for himself, his heirs, executive, administrators and assigns covenants with the Lesser in the manner following, that is to say: (3) (a) The lessee shall, within a period of three years from the date of offer of possession of the plot, the time so specified shall be the essence of the contract after obtaining designs ; plans and specification, from the Delhi Development Authority, at his own expense, erect upon the plot and complete a commercial building with the requisite and proper walls, sewers and drains and other conveniences in accordance with the sanctioned building plan and to the satisfaction of such municipal or other authority and the Delhi Development Authority. (b) The architectural restrictions to be observed in regard to the construction of the building will be as given in drawing No: - As per written architectural conditions. (4) (a) The lessee shall not be entitled to sell, sublet, transfer, assign or otherwise part with the possession of the whole or any other part of the commercial plot before or after erection of the building except with the prior consent in writing of the Lesser which he shall be entitled to refer in his absolute discretion. (b) In the event of permission being granted, 50 per cent of the unearned increase in the value of the land i.e. difference between the premium paid and the market value of the land at the time of the transfer of the plot, would be paid to the D.D.A. However, no unearned increase in the value of the plot will be charged if the plot is transferred by the lessee to a Co-operative Society that may be formed of all the purchasers. of floor space units of the building during the first three years after handing over the possession of the plot. The lease may sub-let the whole or part of the building that may be erected front the plot for the purposes specified in the terms and conditions of the original lease. The lessee may also, with prior permission of the D.D.A. in writing, sell or transfer the floor space constructed on the plot. The written permission will be granted on payment of Rs. 100 for each case of sale/transfer provided such a transaction does not violate the said terms and conditions. For sale/transfer subsequent to the first sale of the floor space units, the permission of the D.D.A. shall be required which will be given after charging by the Authority Re. 1 per sq. ft. of the floor space to be transferred. (14) The plot or the building thereon shall not be used for a purpose other than that as specified. The lessee shall also ensure that the purchasers of floor area units in the building observe the general conditions of lease entered into between the Lesser and the lessee. The purchasers of the floor area units shall not use or cause to be used the unit/show rooms or any portion thereof for any purpose whatsoever other than that of the office show-room or shop as specified for business purposes nor shall he use or cause to be used the said unit/show-room in such manner which may or is likely to cause nuisance or annoyance to the neighbourers of any other unit/show-rooms in the building or to the owners and occupiers of any other adjoining and neighbouring property. Nor shall he use the said unit I show-room for any illegal, immoral purposes or for any residential purposes. VI. In the event of any question, dispute or difference. arising under these presents, or in connection therewith (except as any matters the decision of which is specially provided by these presents), the same shall be referred to the sole arbitration of the Vice-Chairman or any other person appointed by him. It will be no objection that the arbitrator is a Government servant, and that. he has to deal with the matters to which the lease relates, or that in the course of his duties as a servant of the Authority. He has expressed his views on all or any of the matters in dispute or difference. The award of the arbitrator shall be final and binding on the parties.
(18) The arbitrator may. with the consent of the parties, enlarge the time to time. for making any publishing the award.
'Subject as aforesaid, the Arbitration Act, 1940 and the Rules there under and any modifications thereof for the time being in force shall be deemed to apply to the arbitration proceedings under this Clause. Grants Act, 1895 (Act Xv of 1895). (c)This Lease is granted under the Government Grants Act, 1895 (Act Xv of 1895).
In the Schedule no plot number was indicated but the land was identified as follows : - 'All that plot of land being the plot No. Hotel Site in Block No. in the lay-out plan of Nehru Place.'
In the lease-deed the words 'Hotel Site' were used at two places. At both the places the words were used only with reference to indicating or identifying the plot which was being demised by the lease. It was not stated that the company was to construct only a hotel and nothing else. Clause (3)(b) made it obligatory for the Company to construct the building as per the written architectural conditions. These architectural conditions were also annexed to the lease-deed. The heading ..of this document read as follows :
'Architectural conditions for disposal of Hotel plot in Nehru Place. (District Centre Kaikaji).'
The relevant clauses of these architectural conditions are as follows:
'2.AREA Of Plot : The plot measures 221.28 mtrs.X91.440 mtrs. 776'-OX 300'(0) 2.02 Ha (5.00 acres) 3. Category Of HOTEL: 3 to 5 star Hotel is permitted as per the norms laid down by the Department of Tourism, Govt. of India. 4. Maximum HEIGHT. Coverage & F. A. R. There is no restriction the maximum height of the hotel building (subject to further approval from Delhi Urban Arts Commissioner). However, no part of the hotel building shall be taller than the 20 storey buildings in the Nehru Place Commercial Complex. The ground floor coverage is restricted to 25 per cent of the plot area & the F. A. R. permitted is 200. A basement is ment to be exclusively for the use of services, storage & parking of the hotel, . subject to' maximum of the area covered on the ground floor. This shall not be counted in the F. A. R. This space shall not be allowed to be rented out or for any commercial use whatsoever. 6. Parking : The entire parking needs, of the Hotel shall be met in the hotel plot itself. Notes : (ii) The scheme for the hotel building shall be designed by keeping in view the existing scheme of Nehru Place and shall be so structured as to become a part of the overall structure of the Nehru Place complex. (iv) Any electric sub-station that is to be built by the owner as per the needs of the hotel building & shall bean integrated part of the hotel complex with the approval of D. E. S. U.'
(19) With the execution of the aforesaid deed. the rights liabilities and obligations of the parties stood fully crystalised. In term it was stated that the lease was granted under the Government Grants Act, 1895. What is the effect of this would be noticed presently. Mr. Narula, learned counsel for the Company, stated that though, in law, the undertaking dated 29th November, 1977 could have been avoided by his clients but they have chosen not to do so and have always been ready and willing to abide by the same. In view of this submission the undertaking will have to be read along with the lease deed and the architectural conditions annexed thereto.
(20) The next part of the story relates to what happened after the execution of the aforesaid lease-deed. According to the learned counsel for the Company those fad's are not strictly relevant for the purposes of interpreting the terms of the lease documents and the undertaking, but the said facts would show the future conduct of the parties, especially the D.D.A., and would also indicate as to how the parties understood their respective rights and obligations.
(21) The company had already submitted its preliminary drawings for the approval of the D.D.A. on 24th January, 1977. Vide its letter dated 2nd December, 1977, followed by another letter dated 21st December, 1977. the company complained about the delay in the clearance of the preliminary drawings. Thereupon the Vice Chairman directed that the preliminary drawings should be examined and a final decision taken. 21 A. The Commissioner (Land), D.D.A. issued a circular letter/order dated 2nd January, 1978 to the various Departments of the D.D.A. dealing with the plans of the Company. In the said order it was stated as follows:
'LT.Governor/Chairman D.D.A. has ordered that the building plan of Hotel site in Nehru Place may be sanctioned and the lease-deed of the plot may be executed expeditiously. In this connection the Lt. Governor has ordered that D.D.A. may aim at ensuring a Hotel of atleast 250 beds and thereafter leaving it to the party to utilise the remaining area as ordinary commercial space and this object may be secured through Architectural control while building plans are submitted for sanction. An extract from Lt. Governor's orders is sent herewith for information and necessary action.'
(22) By its letter dated 14th March, 1978 the D.D.A. asked the Company to re-submit the preliminary drawings 'after taking into consideration the guidelines indicated in the said letter in addition to the architectural conditions which had already been prescribed. Some of the guidelines, so indicated were as follows: '(a) To provide the entire parking of 496 care on the available open area of the Hotel plot. (c) The Hotel tower block with mainly Hotel use should be located towards the western side of the plot close to the open area suggested to be left for landscaping. (j) The provision of 250 beds will be clearly made and as indicated in the building plans and only thereafter the remaining space will be allowed to be used for ordinary commercial. (m) The commercial space permissible will be integrated in the main building and will be addi According to the Company, it prepared the necessary drawings and submitted the same, on 22nd March, 1978, to the Delhi Urban Arts Commission turn its comments. The said Commission asked for certain amendments to be carried out. The preliminary drawing was accordingly revised and revised drawings were furnished keeping in view the comments which had been made by the Commission in its meeting held on 5th April, 1978.
(23) The file of the D.D.A. shows that the then Vice Chairman reversed the earlier decision which had been taken and on 29th April, 1978 and recorded a note in which he stated that the Company could construct only a Hotel on the said plot of land. He directed that any guidelines which had been issued by which an expression had been given that the plot could be used for purpose other than for a hotel should be withdrawn It is not necessary to' go' into the question as to what prompted the Vice Chairman to suo motu give the aforesaid direction. However, pursuant to the said order, the Company received a letter dated 8th May, 1978 in which it was stated that it had been decided that the Company was permitted to construct only a hotel it was further observed that 'only that part of the hotel complex is 'to be utilised for ancillary use and activities which are incidental to the main use for which the plot was sold, that is. hotel.' It was further stipulated in the letter that the guidelines which had been issued earlier in this regard maybe treated as withdrawn. The Company was also asked to submit it's building plans accordingly.
(24) Naturally, the Company protested against the directions in the said letter. It immediately sent a detailed representation to the Commissioner (Land), D.D.A. and also to the Lt. Governor, Delhi. To the D.D.A. the representation made by the Company was that the aforesaid letter dated 8th May, 1978 should be withdrawn. The Lt. Governor was requested by the Company to look into the matter and to direct the aforesaid letter 8th May, 1978 and to honour the terms and conditions of the lease as well as the commitments which were made to the Company.
(25) According to the Company, its representatives also met the Vice Chairman of the D.D.A. in the second week of May, 1978. At that time it resubmitted its preliminary drawings. The Vice Chairman directed the officials of the D.D.A. to prepare an analysis of the floor area based on the preliminary drawings. On 3rd June, 1978 the analysis, as prepared by the officials of the D.D.A., was explained' to the Vice Chairman when a discussion took place between the Company's representatives and the Vice Chairman. The analysis prepared showed that area under the offices, as per the drawings, was 27.3 per cent of the permissible built up area. It was decided in the meeting that. this area should be reduced to 25 per cent. By letter dated 8th June, 1978 the Company was formally communicated the decision which had been arrived at in the aforesaid meeting held on 3rd June, 1978. The said letter reads as follows :
''THISis with reference to the meeting held in the chamber of the Vice-Chairman, Dda on 3-6-78 regarding approval of preliminary drawings, of the above hotel plot. In this connection I am. directed to enclose herewith the analysis of floor are.' based on preliminary drawings submitted by you and to say that the building plans may be submitted to the Dda keeping in view the following observations : - 1.Net area of 25 per cent will be allowed for office in the Hotel Complex against the 27.3 HCD/83 4 per cent calculated as per the preliminary drawings and mentioned in the analysis; and 2. The balance floor area of 2.3 per cent should go into the Hotel or into movement corridors, waiting areas etc.'.
The effect of the issuance of the letter dated 8th June, 1978 obviously was that the earlier letter dated 8th May, 1978. written by the D.D.A. unilaterally amending the guidelines dated 14th March, 1978, stood superseded. The letter dated 8th June, 1978 left no manner of doubt that the Company was not required to make only a hotel. The Company was permitted to construct a net area of 25 per cent to be used for offices in the Hotel Complex.
(26) According to the Company, keeping in view the guidelines dated 14th March, 1978 and 8th June. 1978, it submitted, on 16119th February. 1979, fresh drawings. Building plan fee of Rs. 27,600 was also stated to have been deposited. It appears that some discussions took place, regarding the drawings, between the officers of the D.D.A. and the Company's Architects. As a result thereof on 1st May, 1979 the Company is stated to have submitted revised drawings. The D.D.A. again issued a letter dated 21st May, 1979 listing some objections. On 5th June. 1979 the Company is again stated to have re-submitted fresh drawings. According to the Company it had removed all the objections which had been raised.
(27) With its forwarding letter dated 2nd July, 1979 the D.D.A. sent two sets of plans, to the Urban. Art's Commission. Request was made in the said letter that the Commission may accord its permission at an early date. The Urban Arts Commission, in its meeting held on 7th July. 1979, approved the plans. The approval of the same was communicated to the D.D.A. by the Urban Arts. Commis sion vide its letter dated 24th July, 1979. In this connection it is alleged in the petition that after the clearance of the plans by the Urban Arts Commission the papers were put up to the Engineer-Member of the D.D.A. in the last week of July, 1979. It is alleged that the Engineer-Member passed orders to the effect that it would be difficult to reject the building plans as the lease and the undertaking had been executed, the guidelines had been issued, the approval of the preliminary drawings and the clearance of the Urban Arts Commission had been communicated to the Company. These averments in the petition have not been denied by the D.D.A.
(28) The Company contends that it was surprised to receive a letter dated 31st July, 1979 from the D.D.A. whereby the plans submitted along with the Company's letter dated 5th June, 1979 were rejected. The only reason given for the rejection of the plans was as follows :
'Floor area proposed for commercial use is more than permissible limits of 25 per cent of F.A.R. to be used for commercial purpose.'
It was further stated that fresh plans should be submitted 'conforming to the purpose for which the plot has been allotted i.e., a Hotel'. The Company, by its letter dated 11th August, 1979, protested to the Vice Chairman of the D.D.A. against the aforesaid rejection of plan,. The Company alleged in the petition that its representative met the Vice Chairman on or about 20th August. 1979. The Vice Chairman of the D.D.A. informed him that he had already passed orders to the effect that 25 per cent of the area may be used for offices and 15 per cent for shops and that the sanction for the plans on that basis would be communicated shortly. This allegation of the Company is also not denied by the D.D.A. in its return to the writ petition. An office note dated 20th August, 1979 of the then Vice Chairman of the D.D.A. has also been placed on record, which reads as under :
'(1)Office space must be reduced to 25 per cent. ' (2) Shopping cannot exceed another 10 per cent to 15 per cent provided it integrates with the Hotel. (3) If basements are not specifically designed and used for parking there will be no basements. sd/- M. N. Buch.'
(29) The Company was still not communicated with the approval of the plans. It accordingly made a representation on 5th September, 1979 to the Vice Chairman and on 10th September, 1979 to the Lt. Governor. To the latter representation the Company received fresh guidelines vide D.D.A.'s letter dated 19th September, 1979. In the said letter it was stated as under :
'Kindly refer to your representation dated .10-9-1979 to the Chairman, D.D.A. on the above subject, I am directed to inform you that the building plans for .the Hotel site in Nehru Place can be examined for sanction, subject to the following : (i) that the Hotel site shall be utilised to the extent of 75 per cent of the total F.A.R. for Hotel purpose; (ii) that an overall 25 per cent gross area of F.A.R. shall be allowed to be utilised for commercial purposes. This area shall include the shopping area provided in the Hotel proper. You are, thereforee, requested to submit the revised building plans on the above lines.'
(30) After taking into consideration the fresh guidelines issued by the D.D.A. on 19th September, 1979, the Company re-submitted it's building plans to the D.D.A. vide its letter dated 7-11-1979. In the said letter it was specifically stated that the fresh guidelines which had been issued were illegal, arbitrary and In violation of the agreement between the parties. It was also mentioned that the revised plans were being submitted by the Company without prejudice to its legal rights to use the floor space/building in accordance with the lease agreement, the undertaking and the guidelines dated 14th March, 1978.
(31) The troubles of the Company did not end here. On the contrary, by its letter dated 30th November, 1979, the Ministry of Works and Housing summoned the records of the D.D.A. regarding the auction of the said plot of land. In the said letter it was stated as follows :
'I am directed to request in terms of sub-section (3) of Section 41 of the Delhi Development Act, 1957 (61 of 1957) that the records of the D.D.A. regarding auction of Nehru Place Hotels, site may kindly be sent to this Ministry immediately for perusal of the Ministry.'
Oil. 1.8th December, 1979 the records were sent to the Ministry. On the other hand, vide a letter dated 18; 19-12-1979 the D.D.A. wrote to the Company to the effect that their building plans, which had been submitted on 9-11-79, were under active consideration for sanction. The Company was, however, asked not to undertake any construction activity on the plot without obtaining prior approval for the same. By the said letter the D.D.A. also asked for some clarifications with regard to the drawings which had been submitted. The Company replied vide its letter dated 20th December, 1979 that the clarifications asked for had already been supplied.
(32) On 7th January, 1980 the Ministry of Works and Housing wrote a letter to the Vice Chairman of the D.D.A. After referring to its earlier letter dated 29th/30th November, 1979 whereby the records of the D.D.A. were summoned, the Deputy Secretary in the said Ministry of Works and Housing, inter alia, wrote that 'I am desired to request that clearance of the proposal in the instant case be stopped until further orders from the Government, and that you may kindly discuss the matter with the Secretary of this Ministry within the next few days. In case you want to consult the records before the discussion with the Secretary, the same may kindly be seen in this Ministry at your convenience'.
(33) By this time the Company came to know that the records had been sent for by the Ministry on, as contended by the Company, a false complaint having been lodged against it. Accordingly the Company made a detailed representation on 17th January, 1980 to the Minister of Works and Housing. After staling all the facts of the case, the Company requested that directive should be given to the D.D.A., under section 41(3) of the Act, to act reasonably and to implement the orders of the Ministry which were communicated to the D.D.A. as far back as October, 1977. Request was also made for being granted an opportunity for being heard in person.
(34) The Ministry returned the requisitioned files to the D.D.A. along with its forwarding letter dated 20th February, 1980. Along with the said letter the representation dated 17-1-1980 was also enclosed. Apart from asking for the comments of the D.D.A. on some of the observations, which were referred to in the said letter, the Ministry also asked the D.D.A. to send its comments on the Company's representation.
(35) According to the Company the plans which were submitted by it on 9th November, 1979, along with its forwarding letter dated 7-11-1979. stood automatically approved when period of sixty days expired on 9-2-1980. On 11th March, 1980, it accordingly wrote a letter to the Joint Director (Building). D.D.A. contending that as the statutory period of sixty days had already expired, the building plans stood approved in accordance with law. The D.D.A. was requested to deliver to the Company one s:et of drawings duly stamped as approved. This ambitious claim of the Company was, of course. never acceded to.
(36) From the documents on the file it appears that on 20th March, 1980 the D.D.A. sent an explanatory note regarding the case to the Ministry, which was asked for by the Ministry by its letter dated 20th February, 1980. At the time of the hearing, the counsel for the D.D.A. stated that the tile containing the aforesaid note dated 20th March, 1980 was not traceable and, thereforee, could not be produced in Court. The counsel for the Company, however, filed a photo copy of the said note. The correctness of the same has not been denied by the counsel for the D.D.A. A perusal of this note dated 20th March, 1980 shows that according to the D.D.A. it had acted in accordance with law after having taken the opinion of the Ministry of Works & Housing as. well as of Law Ministry. In this connection it was stated in the note that the Ministry had approved the suggestion of the Lt. Governor/Chairman that the D.D.A. should ensure that at least 250 beds' hotel is constructed by the Company and thereafter it may utilise the remaining area as ordinary commercial space. It was also stated in the note that the D.D.A. had not been put to any loss. It was observed that when the plot was disposed of it was the highest bid ever received by the D.D.A. and the then Commissioner (Land & Housing) had observed that the said bid of rupees one crore should be accepted as in the reauction the D.D.A. may not set such a handsome bid. The D.D.A. also refuted the allegation that any favor was being shown to the Company. This note was considered by the Ministry and vides its letter dated 10th April, 1980 the Government advised that the case may be put up to the Lt. Governor for taking a view in the matter. It was also stated therein that the Minister for Works & Housing desired the Lt. Governor to first discuss the case with him.
(37) On behalf of the Company it is alleged, and it is not denied by the respondents, that on 8th July. 1980 a meeting was held by the Minister for Works & Housing. That meeting was attended by the Minister, petitioner No. 2, the Lt. Governor, the Vice Chairman of the D.D.A. and other representatives of the Ministry and of the D.D.A. Shri N. K. P, Salve, was also present at the said meeting. According to the averments in the petition, petitioner No. 2 accepted the suggestion given at the meeting to raise the number of beds in the hotel block from 250 to 400 and this, was subject to the condition that the sanctioned plans would be released within a week's time.
(38) The Company did not receive the sanctioned plans. On the contrary, on 11th August, 1980, at a meeting of the D.D.A. the present case was considered. A note was placed before the Authority giving the history of the case and it was stated that the Ministry of Works & Housing had, vide its letter dated 10th April. 1980, desired that the matter may be put to the Lt. Governor and the Lt. Governor, in turn, had desired that the case be discussed in the meeting of the Authority. Accordingly the case was discussed and the following resolution was passed : -
'Resolved that maximum 17 per cent of the total floor space built-up permitted as commercial and incidental to hotel and the remaining to be used for hotel purposes. Resolved further that the space permitted for commercial /incidental to hotel use be not an independent block but be merged with incidental to hotel activity.'
As the Company had not received the sanctioned plans, Shri N. K. P. Salve wrote a letter dated 1st September, 1980 to the then Minister for Works & Housing. In the said letter reference was made to the aforesaid meeting which had taken place in the Minister's office on 8th July, 1980. Advertising to it, it was stated as under :
'In the said meeting on your initiative it was decided that notwithstanding the terms of the lease which did not stipulate any specific area to he earmarked for hotel accommodation and ordinary commercial use, the hotel building had to contain a minimum of 400 beds in a minimum, maximum 250 rooms (actual number of rooms to be decided after discussion between the Lt. Governor and the lessee). This it was considered would and the controversy of apportionment between hotel and ordinary commercial accommodation, for subject to area necessary for hotel of the size determined by you, the balance only could be used for ordinary commercial purposes, by the lessee.'
The Minister was informed by this letter that despite the decision which had been taken that the project would be cleared within a week's time, no action had been taken and, on the contrary, the D.D.A. appears to be going back on the said decision.. The Minister was requested to intervene in the matter. The aforesaid letter was forwarded by the Joint Secretary, Ministry of Works & Housing. vide his letter dated 1st September, 1980, to the then Vice Chairman of the D.D.A. In the forwarding letter it was stated that the representation of Shri N. K. P. Salve stated that the D.D.A. had gone back on the settlement arrived at in the room of the Minister on 8th July, 1980. The Vice Chairman was requested to furnish a full report of the developments in the case 'indicating what exactly is the hitch in going ahead with the hotel now'.
(39) The Vice Chairman sent a reply to the Ministry vide his letter of the same day i.e. 1st September, 1980. In this letter it was stated that in its meeting held on 11th August, 1980 the D.D.A. had passed the abovementioned resolution. That resolution was to be confirmed in the subsequent meeting. In the letter the Vice Chairman did not contradict the correctness of the statements made in the letter of Shri Salve and with respect to the meeting, which had taken place on 8th July, 1980. the Vice Chairman had the following comments to offer:-
'It may be pointed out that in the meeting held in the room of Hon'ble Minister for Works & Housing, it was suggested that we should resolve the issue regarding the maximum permissible area for commercial and incidental use. The number of rooms has been kept on the basis of F.A.R. and the area of the plot because more than 400 rooms can be easily constructed. it will be seen that the Authority has tried to give maximum possible relaxation in this case primarily with a aim to ensure that' the hotel is constructed so as to be used during the Asian Games, 1982.'
(40) The Company then received letter dated 17th September. 1980 from the D.D.A. The Company was informed for the first time by the said letter that the D.D.A. by its resolution dated 11th August, 1980, had decided that a maximum of 17 per cent of the total floor space build-up be permitted as commercial and incidental to hotel and the remaining be used for hotel purposes,. The Company was also informed that there should be one block and not two independent blocks as originally envisaged. The Company was lastly advised to submit revised building plans for getting the same sanctioned. By another letter dated 27th September, 1980 the D.D.A. again asked the Company to furnish revised building plans keeping in view the details given by the D.D.A. in its, earlier letter dated 17th September, 1980.
(41) The Company thereupon filed a writ petition No. 61 of 1981 in January, 1981. The main prayers in the petition were that an appropriate writ, order or direction should be issued quashing the D.D.A.'s resolution dated 11th August, 1980 as well as the guidelines dated 8th June, 1978 and 19th September, 1979, which had been issued by the D.D.A. It was also prayed that an appropriate order should be issued declaring that in terms of the lease, the Architectural Control and the conditions of the auction read with the undertaking dated 29th November, 1977 and the guidelines dated 14th March, 1978, the Company was entitled to construct a hotel on the said plot with a minimum of 250 beds and was entitled to utilise the balance space for ordinary commercial purposes. It was further prayed that an appropriate writ should be issued commanding the D.D.A. to performs its statutory duty.
(42) Rule nisi was issued by this Court. Thereupon return was filed by the D.D.A. The main case of the D.D.A. was that only a hotel could be constructed on the said plot of land and the Company was not entitled to use any portion of the built-up area for ordinary commercial purposes. The D.D.A. defended the validity of its resolution dated 11th August, 1980. It was also submitted that the lease deed contained an arbitration clause and as such the Company was debarred from raising disputes regarding the breach of the lease conditions by a petition under Article 226 of the Constitution.
(43) At the time of hearing before the learned single Judge, the entire records of the case were produced by the D.D.A. vide his judgment dated 4th November, 1981 the learned single Judge observed that the following five points arose for consideration before the Court, which had been raised in the return filed by the D.D.A. :
'(I)the lease deed contains an arbitration clause and as such the petitioners are debarred from raising disputes regarding the breach of the lease conditions by way of petition under Article 226 of the Constitution: (ii) the plot in question was sold for the construction of a hotel. It was clearly defined in the architectural control that 3-5 Star Hotel was permitted on the plot and as such the plot could not be used for any other commercial purposes; (iii) the Authority leas acted in accordance with the directions issued to it by the Central Government under section 41 of the Delhi Development Act', 1957. The directive was issued by the Government of India and the Authority was bound to act in accordance with the said directive which is a over-riding effect by virtue of the provisions of the said Act: (iv) the lease deed did not provide with regard to the percentage of the area which, is to be used for commercial purpose or otherwise this matter was to be negotiated between petitioner and the respondents. In accordance with the negotiations, the respondents were entitled to issue guidelines from time to time. The withdrawal of the earlier guidelines did net amount to arbitrary exercise of power by the Authority; and (v) the building plans have not been approved .because the petitioners did not comply with the latest guidelines provided to them by the Authority.'
(44) With regard to the first point the learned single judge held that the alternative remedy, if any, was no bar to the filing of the writ petition. It was observed that the grievance of the Company was that the action of the D.D.A. was arbitrary and vocative of Article 14 of the Constitution, and under the circumstances the discretion of the writ cour could not be , exercised in favor of the D-D.A. with regard to the second point the single Judge came to the conclusion that the lease- deed did not disclose that the Company was not permitted to construct' any commercial building. He also noted that in the lease-deed there was no specific clause either confining or restricting the use of the plot for only hotel business. With regard to the contention of the D.D.A. that it was bound by the directions issued by the Central Government under section 41 of the Act, the single Judge found that the contention of the D.D.A. was not factually correct. In fact the Government of India had accepted the note of the Lt. Governor wherein it had been stated that the Company should be persuaded to construct a hotel with 250 rooms (later on corrected to 250 beds), and it should be permitted to utilise the remaining area for ordinary commercial space. Furthermore, was held that any directions which are issued prejudicial to the interest of the Company without its being given an opportunity of being heard could not be regarded as valid directions. With regard to the fourth contention the learned single Judge observed that the guidelines issued by the D.D.A. from time to time were arbitrary and vocative of Article 14 of the Constitution. Lastly, the learned single Judge came to the conclusion that the D.D.A. was not' justified in withholding the building plans. The learned single Judge observed that the Company had accepted the guidelines contained in the letter dated 8th June, 1978. thereforee, the D.D.A. was held to be bound to sanction the drawings if the same were in accordance with the said guidelines. The rule was accordingly made absolute and the impugned order dated 17th September, 1980 was quashed and the D.D.A. was directed to approve the drawings in accordance with the undertaking dated 29th November, 1977 and the guidelines dated 8th June, 1978.
(45) The aforesaid decision of the learned single Judge has been challenged by the D.D.A. as well as by the Company. The grievance of the D.D.A. is that the single Judge ought not to have quashed the order dated 17th September, 1980 and not to have directed that the building plans should be approved as indicated in the judgment'. On the other hand, the Company has filed an appeal because according to it even the guidelines dated 8th June, 1978 were liable to be quashed and the Company was entitled to have the building plans passed as long as they were in accordance with the terms of the lease and the undertaking.
(46) As we have already noticed the present lease was deemed to be a grant under the Government Grants Act. Before dealing with the rival contentions, it will be useful to consider the various, principles laid down with regard to the nature of such a grant and the manner in which the grant has to be interpreted.
(47) The two relevant provisions of the Government Grants Act are sections 2 and 3, which read as under :
'2.Transfer of Property Act', 1882, not to apply to Government grants. Nothing in the Trans fer of Property Act, 1882, contained shall apply or be deemed ever to have applied to any grant or other transfer of land or of any interest therein heretofore made or hereafter to be made by or on behalf of the Government to, or in favor of, any person whomsoever, but ever every such grant and transfer shall be construed and take effect as if the said Act had not been passed. 3. Government grants to take effect according to their tenor. All provisions, restrictions, conditions and limitations over contained in any such grant or transfer as aforesaid shall be valid and take effect according to their tenor, any rule of law, statute or enactment of the Legislature to the contrary notwithstanding'.
These two sections came up for consideration before the Supreme Court in the case of The State of U.P. v. Zahoor Ahmed and another : [1974]1SCR344a The Supreme Court interpreted these sections in the following words : Section 3 of the Government Grants Act declares the unfettered discretion of the Government to impose such conditions and limitations as it thinks fit, no matter what the general law of the land be. That meaning of Sections 2 and 3 of the Government Grants Act is that the scope of that Act is not limited to affecting the provisions of the Transfer of Property Act only. The Government has unfettered discretion to impose any condition, limitations, or restrictions, in its grants, and the right, privileges and obligations' of the grantee would be regulated according to the terms of the grant. Just as the Government has the discretion 'to impose conditions in the grant notwithstanding the provisions of any statutory or common law. similarly it has been held by the Privy Council in the case of Thakur Jagannath Baksh Singh v. The United Provinces (2) that after a grant has been given, the Legislature can vary the effect of the grant. It would appear, thereforee. that once a grant had been given its, terms can be varied only in accordance with the provisions of the grant or by Legislation. The grantor has no right to vary or modify any of the terms in exercise of its executive power if the grantor is not permitted to modify such terms by the express language of the grant itself. Connected with this arises the question as to what is the principle to be adopted with regard to the construction of a grant. In this connection reference may usefully be made to the decision of the Supreme Court in the case of Raja Rajinder Chand v. Mst. Sukhi and others : [1956]1SCR889 where at page 292 it was observed as follows:
''ITis. we think, well settled that the ordinary rule applicable to grants -made by a subject does not apply to grants made by the sovereign authority; and grants made by the Sovereign are to be construed most favorably for the Sovereign. This general rule, however, is capable of important relaxations, in favor of the subject. It is necessary to refer here to such only of those relaxations as have a bearing on the cons- truction of the document before us,; thus, if the intention is obvious, a fair and liberal interpretation must be given to the grant to enable it to take effect: and the operative part, if plainly expressed, may take effect not withstanding qualifications in the recitals. In cases where the grant is for valuable consideration, it is construed in favor of the grantee, for the honour of the Sovereign; and where two constructions are possible, one valid and the other void, that which is valid ought to be preferred, for the honour of the sovereign ought to be more regarded than the Sovereign's profit.'
Another case which is relevant is of Sahebzada Mohamnad Kamgarh Shah v. Jagdish Chandra Deo Dhabal Deb and others, : [1960]3SCR604 . The question in this case arose regarding the construction of a Government grant contained in a tease. Before the Supreme Court, on behalf of the appellant therein, the counsel had arrayed the principles of construction of the grants. In the words of the Supreme Court, these principles as urged, were as follows :
'The first of these is that the intention of the parties to a document of grant must be ascertained first and foremost from the words used in the disposition clause, understanding the words used in their strict, natural' grammatical sense and that once the intention can be clearly understood from the words in the disposition clause thus interpreted it is no business of the courts to examine what the parties may have said in other portions of the document. Next it is urged that if it does appear that the later clauses of the document purport to restrict or cut down in any way the effect of the earlier clause disposing of property the earlier clause must prevail. Thirdly it is said that if there be any ambiguity in that disposition clause taken by itself, the benefit of that ambiguity must be given to the grantee, the rule being that all documents of grants must be interpreted strictly as against the grantor. Lastly it was urged that where the operative portion of the document can be interpreted without the aid of the preamble, the preamble ought not and must not be looked into.'
Dealing with these submissions the Supreme Court observed as follows :
'The correctness of these principles is too well established by authorities to justify and detailed discussion. The task being to ascertain the intention of the parties, the cases have laid down that that intention has to be gathered by the words used by the parties themselves. In doing so the parties must be presumed to have used the words in their strict grammatical sense. If and when the parties have first expressed themselves in one way and then go on saying something, which is irreconcilable with what has gone before, the courts have evolved the principle on the theory that what once had been granted cannot next be taken away, that the clear disposition by an earlier clause will not be allowed to be cut down by a later clause. Where there is ambiguity it is the duty of the court to look at all the parts of document to ascertain what was really intended by the parties. But even here the rule has to be borne in mind that the document being the grantor's document it has to be interpreted strictly against him and in favor of the grantee.'
The principle enunciated by the Supreme Court in interpreting the grants in the case of Raja Rajinder Chand (supra) was again reiterated in the case of Mohsin Ali and other v. State of Madhya Pradesh, : AIR1975SC1518 . Holding that a Firman has to be construed in accordance with the well established rule of construction applicable to Sovereign grants, the Supreme Court, following the Privy Council decision in the case of Gulabdas Jagjivandas v. Collector of Surat (1878) 6 IA 54 (6), observed as follow :
'Another cardinal canon of interpretation to be borne in mind is that in order to ascertain the real intend on of the grantor, the Firman has to be read as a whole. It will not be correct as the appellants want us to do to dissert the Firman into three water-tight compartments or to read the last sentence of the Firman out of the context. It is also permissible to consider the surrounding circumstances and the occasion in which this grant was made as legitimate aids to construction of the Firman.'
It is in the light of the aforesaid observations of the Supreme Court that we have to decide the main disputes which arise in the present case. Though very learned and elaborate arguments were urged on behalf of both the parties over a considerable period of time, the only two questions which really arise for consideration are as to whether a part of the building which was required to be constructed on the plot in question could be used for ordinary commercial purposes like offices or not. If the answer to this query is in the affirmative, then the next question which would arise is as to what is the extent to which the building can be put to non-hotel use. According to the learned counsel for the D.D.A. no part of the building can be used for ordinary commercial purposes whereas the learned counsel for the Company urged that In view of the undertaking given by it,' the Company was only obliged to provide for 250 beds hotel and the balance of the building could be used by it for ordinary commercial. It was, of course, agreed by both the counsel that use of that part of the building for purposes which are incidental to the hotel use, like shops etc. as referred to in the I.T.D.C. norms, would be regarded as being put to hotel use.
(48) In our opinion from the facts stated hereinabove there can be little doubt that the D.D.A. sold a plot of land on which a hotel had to be constructed. Though we are not able to agree with the contention of Dr. Singhvi that the layout plan becomes a part parcel of the zonal development plan merely because in the zonal development plan a reference is made that the D.D.A. has prepared a layout plan, but the adoption of the lay-out plan does show that in the district Centre at Kalkaji the particular plot of land was ear-marked for a hotel. The sale of the plot of land 'was also advertised as sale of a hotel plot. The architectural conditions annexed to the draft lease-deed, which was available prior to the auction, also-stated that a 3 to 5 star hotel was permitted Mr. Narula sought to contend that this meant that the Company had to construct a commercial building in which it was allowed to construct 3 to 5 star hotel and it was not mandatory for the Company to construct a hotel. This extreme argument cannot be accepted. Reading the architectural conditions as well as, the resolutions passed by 'the D.D.A., the advertisement in the paper and other surrounding facts, it appears to us that it was made clear to the general public that, on the plot of land which was going to be auctioned, one or two star hotel was not permitted but a three to five star hotel as per the T.T.D.C. norms was to be constructed. The purchaser had to construct a hotel on the plot. It is to be borne in mind that a hotel building is also a commercial building. The master plan and the zonal development plan are statutory plans under the 'D.D.A. Act. They contemplate the area. in question to be used for commercial purposes. One of the commercial purpose is.the construction of a hotel building. This was the position at the time when the plot in question was auctioned. All the parties .knew at that stage that a hotel was required to be constructed on the plot in question. The next question which arises is whether only a hotel had to be constructed or a part of. the building could be used for ordinary commercial use. In this connection another subsidiary point which will arise is that terms of the lease-deed which is executed the Company was entitled to use a part of the building for ordinary commercial .purposes, then could any conditions be imposed subsequently by the D.D.A. which has the effect of restricting the said user.
(49) There .can belittle doubt that the document of title of the Company is the .lease-deed executed on 30th November, 1977. The rights and liabilities of the Company in respect of the land must flow from this. According to the learned counsel for the Company, the lease-deed itself entitles the Company to construct a building in which part of the premises can be used for ordinary commercial purposes. In this connection strong reliance is placed by the learned counsel on clause 14 of the lease deed, which expressly provided and restricted the manner in which, the floor area space in the building could be used, and one of the manners specified therein was that of an 'office'. On the other hand. the submission of Dr. Singhvi was that as only a hotel had to be constructed on the plot in question it necessarily implied that the building, which is constructed can be user only for hotel purposes and for no other purpose. In other words, the submission was that when the purpose for which the building was put to use was specified then the same could no be used or any other purpose.
(50) It appears to us that a lease-deed, which is executed by. the parties, is final and binding on both of them. As observed by the Supreme Court in the cases noted herein above, a grant has to be read as a whole in order to ascertain the real intention of the grant. Secondly, if there is any ambiguity then the benefit thereof must be given to the grantee. The document, being a grantor's document, is required to be interpreted strictly against him and in favor of the grantee. It has also been held in Mohsin Ali's case (supra) that it is permissible to consider the surrounding circumstances and the occasion on which the grant was .made. The argument of Dr. Singhvi that clause 14 of the lease-deed is to be ignored as it is contrary to the later part of the deed where, in the Schedule, reference is made to the Resolution No. 468 of the D.D.A. which provided that the plot in question had to be used for the construction of a hotel, is contrary to the views expressed by the Supreme Court in the aforesaid cases. If possible, the lease-deed has to be read as a whole and different parts of the same harmonised. If two constructions are possible, one which would make all the provisions of the deed valid and the other which would make some or all of the provisions of the dead void. then that construction which give effect to all the provisions of the deed has to be preferred. Furthermore, if there is any ambiguity in the lease then, as held in S. Mohammad Kamgarh. Shah's case. (supra), the benefit of the ambiguity must be given to the company and not to the D.D.A. in view of the Rule that a grant has to be interpreted strictly against the grantor.
(51) It was also urged on behalf of the D.D.A. that reference to the Architectural Conditions would show that only a Hotel could be constructed, more so as the said conditions use the expression 'Hotel Building', We are unable to agree with this. The architectural conditions are admittedly part of the lease deed. The two have to be read together. We cannot so construe the architectural conditions so as to be in conflict with or override any of the clauses of the lease-deed. The expression. 'Hotel Building' is only a name of the building and it does not mean that the building is to be used only as a Hotel. The name of a building cannot alter the terms of the demise.
(52) In any case the Schedule, in which reference is made to the aforesaid resolution No. 468, is merely descriptive of the location of the plot. Reference to the said resolution cannot be restricted to mean that no part of the building to be constructed could be used as for ordinary commercial purposes and that, as contended by Dr. Singhvi. at least a part of clause 14 has to be scored off which permits part of the building to be used as offices. This would be contrary to the abovementioned principles of construction of Government Grants as laid down by the Supreme Court.
(53) Reading the lease as a whole we find that following rights are conferred by it on the Company : (a) The Company can put up a commercial building to the extent of the total permissible covered area (as per clause 3 (a) read with the Architectural Conditions). (b) The Company has a right to sell commercial space units on payment of specified amounts to any extent subject to the undertaking given by the Company to construct a hotel of 250 beds (as per clause 4(d) of the deed and the undertaking read together). (c) The Company or its transferees have the absolute right to use the units for commercial office or commercial show-rooms or shops. This is provided by clause 14 of the lease. By the said lease the premises cannot even be used for residential purposes but as the lease has to be read as a whole and all the clauses have to be harmonised, the only conclusion possible is that as a hotel has to be constructed the prohibition in clause 14 not to use the part of the building for residential purposes will not be applicable to extent of providing accommodation to the guests in the hotel. (d) The Company had to construct a 3 to 5 star hotel (as per clause 3(b) read with the architectural conditions). (e) The Company has a right to form cooperative societies of all the owners of different space units and may transfer the Company's right to the society without paying any unearned increase (as per clause 4(d) of the lease).
(54) By reading the lease deed in the aforesaid manner all the provisions of the said lease as well as the architectural conditions would stand completely harmonised. If the argument of Dr. Singhvi is accepted, the result would be that clause 14 of the deed would become completely or partly redundant. Merely because at the time of auction and in the lay-out plan it was contemplated that a hotel had to be constructed on the plot in question, it does not mean that a part of the building could not be used for ordinary commercial purpose. As long as the predominant or main use of the building was for a hotel, which is a commercial activity, the lay-out plan or the various resolutions of the D.D.A. would not be violated merely because the D.D.A. itself permitted some portion of the building to be used for ordinary commercial purpose. This permission was expressly granted in the aforesaid lease-deed and particularly in clause 14 thereof. The grant of such a permission did not contravene any of the provisions of the D.D.A. Act or of the master plan of the zonal development plan.
(55) Particularly while interpreting the Government grants if is dangerous, and in our opinion not permissibe, to tear away a few words from any part of the document from its context and then try to interpret the document. Essential parts of the lease cannot be ignored in order to give effect to some presumed intention of the lesser in such a way so as to alter or override the main meaning of the operative part of the lease. In interpreting a deed inter vivos the question is not what the parties may have intended, but what is the meaning of the words in the document is what is important. Even if it be assumed that the intention of the D.D.A. was to permit only a hotel to be constructed, the deed which was executed does not bring out this intention. Reference to a resolution of the D.D.A. contained in the Schedule to the lease deed cannot override other parts of the lease deed and of clause 14 in particular. If there is no apparent conflict between two clauses then nothing contained in one particular clause can be used to destroy the meaning and operation of the unambiguous words in the main part of the deed. If any part of the deed is ambiguous then the deed has to be read as a whole and the meaning of that ambiguous part should be sought from the said reading. Applying these principles, the only conclusion which flows from the reading of the entire lease deed is that use of a part of the building, to be constructed, for ordinary commercial purposes was not prohibited by the lease.
(56) We may, at this stage, refer to another fact. According to the lay-out plan, one plot in the district centre was required to be used for constructing a cinema. If the argument of Dr. Singhvi is correct that when in the lay-out plan the purpose for which the building can be constructed is stipulated then the same cannot be used for any other purpose, then in the plot meant for a cinema only a cinema hall could have been constructed. Our attention was also invited to the auction of a cinema plot which was to be held on 17th March, 1976, the date when the plot in question was purchased by the Company in this case. In the conditions of auction it was stated that the plot was to be used lor a specific purpose of constructing a cinema house for which it was earmarked. Nevertheless, in clause 5 of the said terms of auction, it was stated that 'a minimum of 20 per cent of the total permissible floor space could be used. if so desired, for providing commercial (professional offices. This is in addition to 5 per cent of ground coverage allowed for providing show windows, stalls etc. as per para 4(b) in the cinema stalls'. This clearly gives the indication that though the plot was to be sold by the D.D.A. for construction of a cinema house, but 20 per cent of the total permissible floor space could be used for non-cinema purpose, namely, providing commercial/professional offices. The said clause 5 is analogous to clause 14 of the present lease deed. In the present deed, executed between the parties, the percentage of the total permissible area to be used for providing commercial 'professional offices is not specifically provided but in clause 14 it is clearly stipulated that floor space can be used for office purposes. The comparison of the two deeds clearly shows that merely because at the time of auction or in the lease-deed the plot is described as a hotel plot or a cinema plot it does not mean that said plots are to be put to exclusive use of only a hotel or only a cinema. Roth types of buildings i.e. hotel building or cinema building, are commercial buildings and there is nothing to prevent the D.D.A. from permitting part of the buildings so constructed to be put to ordinary commercial use. This has been expressly permitted by the D.D.A. in clause 14 of the deed in question, just as it was permitted in the aforesaid clause 5 of the terms of auction in respect of the cinema plot.
(57) It was then contended by Dr. Singhvi that by virtue of the provisions of section 53 of the D.D. Act the non-obstante provisions of the Government Grants Act stand superseded. It is not necessary for us to go into this controversy. Even if what is submitted by Dr. Singhvi is correct that principle can have no bearing on the present case. Unless and until it can be shown that the terms of the grant contained in the lease are contrary to the provisions of the D.D.Act, the non-obstante provisions contained in section 53 of the said Act will not affect the grant so made. As we have already noticed, the master plan and the zonal development plan, which are the only plans which can be regarded as statutory, postulate that the land in question will be used for commercial purposes. There was nothing to prevent the D.D.A. from permitting the Company to construct a building m which hotel as well as commercial offices could be housed. Both the hotel and the offices are commercial. The land use prescribed by the master plan and the zonal development plan would be adhered to. According to section 9 of the D.D.Act plan means master or zonal plan. thereforee, in section 12(4) and section 14 of the said Act reference to plan is only to the master plan or the zonal plan and there can be no reference to the lay-out or building plans which are prepared or approved by the D.D.A. A lay-out plan is not regarded as a statutory plan. Admittedly in the preparation of the lay-out plan the procedure provided in the Act with regard to the approval of the zonal plan or the master plan by the Central Government is not followed. Furthermore, the lay-out plan has been and can be amended by the D.D.A. whenever they so desire. There is, in other words, no statutory sanctity attached to the lay-out plan. thereforee, even if the lay-out plan had shown that the plot in question could be used for constructing a building in which only a hotel could be set-up, there was nothing to prevent the D.D.A., which had originally prepared the lay-out plan. to subsequently change its opinion and permit that a part of the building can be used for no hotel purposes also.
(58) As already noticed, in Mohsin All's case (supra) the Supreme Court has. inter aha, held that in construing a grant it is permissible to consider the surrounding circumstances and the occasion on which the grant was made. This would mean that in construing the lease in question the Court can look. into the circumstances and the facts which existed at the time when the lease was executed on 30th November, 1977.
(59) 'FROM the facts setout hereinabovc, which emerge from the correspondence exchanged between the parties and the departmental files, there can be no .doubt that, at the time when the lease deed was executed, the intention of the parties clearly was that the Company would be entitled to use part of the building as office space and sell the. same to. outsiders. The case of the D.D.A. is that soon after the auction had taken place it came to know that the Company had advertised for sale of office space. At that time, the files of the D.D.A. show, the question arose as to whether the Company could be permitted to sell part,of the building to be used as office space. In the note dated 19th August, 1977 the Lt. Governor clearly stated that the Company should be asked to set-up a hotel of at least 250 rooms (subsequently corrected to 250 beds) and it .should be permitted to utilise the remaining area for ordinary commercial space. The Ministry of Works & Housing, after taking the advice of the Ministry of law, also gave the same opinion. It was in these circumstances that the Company's representatives were called and asked to furnish an undertaking. An undertaking was executed on 29th November, 1977. In the undertaking it was clearly stated that the Company would construct a hotel of a size of at least 250 beds and that 'we shall use the remaining space for purposes as permissible under the terms and conditions of the lease deed and the architectural control'. If the Company was debarred from constructing anything but a hotel there was no question of its being asked to execute the aforesaid undertaking. The reservation contained in the undertaking, for using the remaining space for purposes which were permissible under the terms and conditions of the lease deed, obviously has reference to clause 14 of the lease, which permitted use of the space in the building for offices, shops and show-rooms. Furthermore, though the D.D.A. knew that the Company 'as soiling part of the floor area for office purposes it did not write any letter to the Company informing it that the Company could not utilise or permit the utilisation of any part of the building for ordinary commercial purpose. At that time, prior to the execution of the lease-deed, the only anxiety of the D.D.A. was to ensure that a hotel of at least 250 beds was set-up by the Company. It will be seen that in the draft lease-deed and in the architectural conditions the minimum size of the hotel was not indicated. All that was mentioned was that the Company could set-up a 3 to 5 star hotel as per the I.T.D.C. norms. The T.T.D.C. norms permitted that a 3 star hotel could have as few as 25 beds. This being so the D.D.A. obviously realised that it could not permit such a small hotel to be constructed on to plot in question. It is for this reason that they were anxious to ensure that a reasonable size hotel was constructed. The facts set out hereinabove do not disclose that any decision was taken by the D.D.A. or the Government of India to prohibit the Company from utilising part of the building for ordinary commercial purposes. It is quite obvious that the Company executed the undertaking on 29th November, 1977 only because of the understanding which had been reached at that stage, namely, that if such an undertaking is furnished by the Company then it shall be permitted to use the remaining built-up area for ordinary commercial purposes. At the time of auction the Company had with it the draft of the lease-deed which was to be executed. Clause 14 of the said draft lease also specified that the floor area which was constructed could be used for office purposes. According to the Company it approached its bankers with a copy of the draft lease deed for the advance I of some money. The bankers wanted to confirm that the proforma of the perpetual lease deed, which had been furnished to it by the Company, was the one on which the perpetual lease deed, would ultimately be executed. The Bank accordingly wrote to the D.D.A. for the confirmation of the same. By letter dated 2nd July, 1976 the D.D.A. informed the New Bank of India that the proformas of the perpetual lease deed received by the Bank was in order. It is clear from this fact also that prior to the execution of the lease-deed both the parties knew that in the building to be constructed part of the built-up floor area would be utilised for ordinary commercial purposes. Knowing all this, the D.D.A. executed the lease-deed in question and did not put in any clause prohibiting the use of the building for non-hotel purposes.
(60) The only inference which can be drawn from the aforesaid facts is that, at the time when the lease-deed was executed, it was contemplated by the parties that the Company would set-up a hotel of at least 250 beds. with facilities incidental to the hotel, and in addition thereto would also be entitled to use the remaining space for ordinary commercial purposes. thereforee, whether the lease-deed is taken by itself or in conjunction with the facts and circumstances which were existing at the time when the lease- deed was executed, the only conclusion which can be arrived at is that the contention of the Company before us is correct, namely, that it is permitted to sell part of the built-up area of the building to be constructed for use as ordinary commercial purpose.
(61) The correspondence exchange between the parties and the documents which came into existing subsequent to the execution of the lease-deed are not strictly relevant for the purposes of construing the terms of the lease. As submitted by the learned counsel, the rights and liabilities of the parties are really to flow from the terms of the lease read as a whole. Nevertheless, even the subsequent conduct of the D.D.A., as is evident from the post-lease documents which are on the record, would show that the various officers of the D.D.A. and the Lt. Governor did interpret the lease to contemplate permission having been granted to the Company to construct a building in which some portion of the floor area could be used as ordinary commercial space, not incidental to the hotel. Till the passing of the impugned resolution on 11th August, 1980, which was communicated to the Company vide its letter dated 17th September, 1980, the D.D.A. had never informed the Company, except on one occasion, that no part of the building could be used for ordinary commercial use. It was only by letter dated 8th May, 1978 that the D.D.A. informed the Company that it had been decided that only a hotel could be constructed on the plot in Question and a part of the hotel complex could be utilised for ancillary use and activities which were incidental to the hotel. But on a representation having been filed by the Company and the meeting which was held by the Company's representatives, the decision contained in the aforesaid letter dated 8th May, 1978 was reversed. This is clear from the D.D.A.'s aforesaid letter dated 8th June, 1978 wherein the D.D.A. categorically informed the Company that 'a net area of 25% will be allowed for offices in the hotel complex. . . .'. The dispute at this stage was only with regard to the quantum of area which could be utilised for non-hotel purposes.
(62) Reference may also be made, at this stage, to a meeting held with the Minister for Works & Housing on 8th June, 1980. It is contended by the Company in the writ petition that at the said meeting the Company agreed to raise the number of beds in the hotel complex from 250 to 400 so that the plans could be sanctioned. When no action was taken Mr. N.K.P. Salve wrote a letter to the Minister on 1st September. 1980. In the letter it was clearly stated that it had been agreed that the Company would be permitted to utilise part of the floor space for ordinary commercial purposes. A copy of this letter was forwarded to the D.D.A. turn its comments. In the reply dated 1st September, 1980 of the Vice Chairman of the D.D.A. the correctness of the contents of Mr. Salve's letter is not denied. There is no comment offered with regard to the decision which was taken in the Minister's room on 8th July, 1980. In the said letter the Vice Chairman made a reference to the impugned resolution dated 11th August. 1980. When one looks at the precis put before the D.D.A. in its meeting held on 11th August, 1980, it is significant to note that in the history of the case which was set outtherein, there is absolutely no reference to the meeting which had taken place with the Hon'ble Minister on 8th July. 1980 and of the agreement which was arrived at therein. Be that as it mav. it is clear that even (he Minister on 8th July. 1980 did agree that the Company was permitted to utilise part of the building for non hotel use. Whether the D.D.A. was competent to pass a resolution overriding the decision so arrived at or prohibiting the Company from constructing ordinary commercial space, which the Company was permitted to construct in terms of the lease-deed, is a question which will be dealt with subsequently. The facts on record, however, show that even after the execution of the lease deed the same was interpreted for a long time by the officers of the D.D.A. including Vice Chairman, the Lt. Governor and the Minister in the manner in which is being canvassed by the Company. This being so, even if we were to hold that there was any ambiguity in the lease-deed, as to whether part of the building could be used for commercial purposes or not, the subsequent conduct of the parties shows that the ambiguity, if any, has to be resolved in favor of the Company.
(63) It was then contended on behalf of the D.D.A. that the agreement between the parties spear out from the lease cannot override or pre-empt the powers, obligations and duties of the D.D.A. as a statutory body in determining the matter or in granting or withholding building permission. In this connection it was submitted that the resolution dated 11th August, 1980 was passed by the D.D.A. In exercise of its statutory powers and has a statutory character and the said resolution was a reasonable determination by it on the basis of the relevant consideration. The D.D.A., no doubt, is a statutory authority. It has rights, duties and power under the said Act. The lease has been granted to the Company not under the D.D.A. Act but under the Government Grants Act. Under the D.D.A. Act the D.D.A. has the right and duty to pass the building plans under section 13 of the Act. The Act does not give the D.D.A. power to pass a resolution which can take away vested rights of the grantees under a valid grant. If any of the terms of the lease is contrary to the provisions of the D.D.A. Act then, of course there can be no question of that part of the lease being give effect to but, as in this case, when the terms of the lease do no violate any of the provisions of the Act. we are unable to come to the conclusion that the Act gives powers to the Authority to nullify the said grant. Our attention has not been drawn to any specific provision or the Act which authorises the D.D.A. to amend, cancel or alter any of the terms of a lease granted under the Government Grants Act. The D.D.A. has received a consideration of a crore of rupees in 1976. A valid lease deed has been executed. At that time the parties were ad-idem on the question as to whether part of the building could be used for non hotel purposes or not. Clause 14 expressly permitted such user. The offices, the Lt. Governor and the Minister had also led the Company to believe that such user was permissible. Under these circumstances, even if it be assumed that D.D.A. has some power under the Act to vary the terms of the lease, in our opinion, the exercise of such power would be clearly arbitrary and, furthermore, the 6 HCD/83--6 D.D.A. would be clearly estopped from exercising such a power. Even if the Government had asked the Lt. Governor to look into the matter and the Lt. Governor in turn had asked the D.D.A. to do likewise, we are of the firm opinion that the D.D.A. could not pass any resolution which could adversely affect the rights of the Company. By the impugned resolution not only has the D.D.A. fixed the maximum of 17% of the total floor space to be used as commercial area but has further restricted the said user to be incidental to the hotel Non-incidental commercial use is, thereforee, sought to be prohibited. This, in our view, is clearly contrary to the terms of the lease and the D.D.A. had no justification or jurisdiction to pass the said resolution.
(64) As already noted, it is under section 13 that die building plans are sanctioned by the D.D.A. If the building plans, which are submitted, are according to the building bye-laws, which were framed by the Municipal Corporation and have been adopted by the D.D.A., and the said plans do not violate the provisions of the master plan or the zonal development plan with regard to the land use then, in our opinion, the D.D.A. would have no option but to pass the building plans. Rejection of the building plans on any other ground would be clearly without jurisdiction and on extraneous considerations. We are in complete agreement with the conclusion of the learned single Judge that the impugned resolution dated 11th August, 1980, communicated to the Company by the D.D.A. vide its letter dated 17th September 1980. had to be quashed.
(65) There is yet another reason why the validity of the resolution dated 11th August. 1980 cannot be upheld. As we have already observed, the Company was entitled to construct a hotel building in which some of the floor space could be used as commercial area not incidental to the hotel. This right of the Company was sought to be taken away by the D.D.A. by the impugned resolution dated 11th August, 1980. The rights of the Company could not be taken away without the Company being given an opportunity of being heard. If the D.D.A. wanted to restrict the user then before passing the impugned resolution it was under an obligation to issue a show cause notice and give an opportunity to the Company to be heard. The denial of such an opportunity clearly results in the violation of the principles of natural justice which are attracted to the present case. A statutory authority is not only required to act according to the statute but is also obliged to comply with the provisions of natural justice, wherever applicable. We have no doubt that in the present case the principles of natural justice were applicable and had to be complied with. As, admittedly, no such opportunity had been granted to the Company prior to the D.D.A. passing the impugned resolution, the said resolution was liable to be quashed on the ground of its having been passed in violation of the principles of natural justice.
(66) It was strenously contended on behalf of the D.D.A. that it is bound by any direction given by the Central Government under section 41 of the Act. It was contended that by letter dated 29th November, 1979 the Government called for the D.D.A.'s records. Thereafter interim directions were given, which are alleged to have been exercised under section 41 of the Act, on 7th January, 1980. 20th February, 1980 and 10th April, 1980. after considering the matter, it is contended, the Lt. Governor put the case before the D.D.A. who passed the resolution on 11th August, 1980. It was submitted that if the directions of 7th January, 1980 are taken to have merged in the directions of 10th April, 1980 then the resolution of 11th August, 1980 became final under the directions given under section 41(3). If, on the other hand, it was submitted, it is held that the matter has to be placed before the Central Government then the petition is pre mature as the Central Government has not given any final direction in the matter. In this behalf it was also contended that the directions given by the Central Government on 29th November 1979, 7th January, 1980 and 10th April, 1980 have not been challenged and furthermore, it is the Company itself which had invoked the powers of the Central Government under section 41(3).
(67) In order to consider the aforesaid contention, it is necessary to refer to the relevant provisions of section 41 of the Act. The same read as under :
'41(1) The Authority shall carry out such directions as may be issued to it from time to time by the Central Government for the efficient administration of this Act. (2) .................. ...... (3) The Central Government may, at any time, either on its own motion or on application made to it in this behalf, call for the records of any case disposed of or order passed by the Authority for the purpose of satisfying itself as to the legality or propriety of any order passed or direction issued and may pass such order or issue such direction in relation thereto as it may think fit : Provided that the Central Government shall not pass an order prejudicial to any person without affording such person a reasonable opportunity of being heard.'
Under sub-section (1) of section 41. as is evident- from the plain reading of the said sub-section, the directions which arc issued by the Central Government to the Authority are in connection with the efficient administration of the Act. Section 41(1) ensures the administrative control of the Central Government over the Authority. Sub-section (3), on the other hand, is applicable only if an order has been passed or direction issued by the D.D.A. It is for the purpose of satisfying itself as to the legality or propriety of any such order passed or direction issued that the Central Government may call for the records of the case and thereafter pass an order thereon. The proviso to sub-section (3) ensures that the principles of natural justice are complied with and the Central Government does not pass an order prejudicial to any person without affording such person a reasonable opportunity of being heard.
(68) From the facts enumerated hereinabove, we are unable to find any order or direction of the D.D.A. which the Central Government was seeking to revise under subsection (3) of section 41 of the A..t. In the letter dated 29th November, 1979 the Government does make a reference to section 41(3) for the purpose of calling for the records of the case for perusal of the Minister. Reference to this letter is then made in the letter dated 7th January, 1980 wherein the Central Government directed the D.D.A. that the clearance of the proposal in the case should be stopped till further orders from the Government. It is wrong to suggest that this order of 7th January, -1980 was passed at the instance of the Company. This was a unilateral direction issued by Government of India behind the back of the Company. We have to presume that such a direction was issued under section 41(3), for there is no other provision of the Act under which a direction like this can be issued to D.D.A. This being so, it was obligatory on the Government to have given the Company an opportunity of being heard. This was the mandatory requirement of the proviso to sub-section (3) of section 41. This mandatory requirement not having been complied with, the said direction was void and of no consequence. In both the letters of 29th November, 1979 and 7th January, 1980 there is no indication by the Central Government as to which order or decision of the D.D.A. it is seeking to revise. In the absence of the existence of such a jurisdictional fact the Government cannot be regarded as having any authority to issue any interim or other directions under section 41(3) of the Act.
(69) By letter dated 20th February, 1980 the D.D.A. was asked to give it's comments with regard to the case. By that time the Company had also filed its representation dated 17th January, 1980. The representation was stated to be under section 41(3) and the request made therein was that the D.D.A. should be asked to act reasonably and to implement the orders which had been issued by the Ministry. The representation of the Company cannot be clubbed together With the action which was being taken by the Ministry on its own. As far as the suo motu action which was taken by the Ministry is concerned, the aforesaid letter of 20th February, 1980 was followed by a letter of 9/10th April, 1980 along with which the files of the case were returned. The only direction which was given in the said letter was as follows :
'In view of its importance, this case may be put up to the Lt. Governor for taking a view in the matter. The Minister for Works & Housing desires that the L.G. be requested als,o first to discuss the case with him. You will, no doubt, inform the L.G. accordingly.'
(70) There is nothing to indicate that this was a direction issued under section 41(3). We do not believe that the Government treated this to be a direction for otherwise it would have given an opportunity to the Company to be heard in terms of the proviso to section 41(3). In any case the of the Act'. On the contrary, in the return filed it has been stated that on a representation of the Company dated 17th January, 1980 the Central Government directed that the clearance of the proposal should be stopped till further orders. It is also stated in the return that it is in consequence of the said directive that the impugned resolution dated 11th August, 1980 was passed. The averments are clearly contrary to the facts on the record. The letter dated 7th January, 1980 was issued by the Central Government
(71) Before the representation of the Company dated 17th January, 1980 was filed. Furthermore, there is no directive on the record issued by the Central Government' requiring the D.D.A. to consider the matter and to pass any resolution. Nor is there anything to show that the Government is still seized of the matter under section 41(3). Even if it is presumed that the Government is contemplating some action under section 41(3), such an action, if taken, cannot be contrary to the terms of the lease.
(72) Assuming that the contention of learned counsel for the D.D.A. is correct and the Central Government can issue a directive under section 41(3), which would be binding on the parties, then on the facts of this case the benefit must go to the Company. Section 41(3) postulates a hearing being given before any decision is taken. The decision is to be taken by the Government. It cannot be disputed that the Minister of Works & Housing would have the jurisdiction to take a decision in behalf of the Government. On 8th July, 1980 the representative of the Company and of the D.D.A. were present before the Minister. At that meeting decision was taken to the effect that after constructing 400 beds hotel the balance are could be used as ordinary commercial space. The Minister was a party to this decision. Even if any proceedings under section 41 were pending before the Central Government they must be regarded as having come to an end on 8th July, 1980. The decision arrived at in that meeting would be a directive or a decision under section 41(3) which would be binding on both the parties. After 8th July, 1980 there is no order passed or direction given by the Minister after hearing the representative of the Company. The only direction, if any, issued in accordance with the provisions of section 41(3) can be the decision which was taken on 8th July, 1980 in the presence of all the parties.. Whether or not the Company accepts the said decision of the Minister i.s irrelevant but what is of importance is that the said decision would in any case be final and binding on the D.D.A. As far as the Authority is concerned, it is obliged to act in accordance with what was decided in that meeting.
(73) There could also be no occasion for the Company to challenge the letters dated 29th November, 1979, 7th January, 1980 and 10th April, 1980. It is only in the letter of 7th January, 1980 that the D.D.A. was told not to proceed further in the case. The direction contained in the s.aid letter was issued behind the back of the Company and is void. Furthermore, no copy of the same was sent to the Company and it could not have any knowledge of any such direction having been issued. In any case, with the passage of time the said orders must be regarded as having lapsed. We have already held that the Government is not seized of any matter under section 41(3) of the Act. This being so, there can be no occasion for the interim orders issued on 7th January, 1980 continuing to exist. In any case, when on 10th April, 1980 the Central Government had advised that the case be put up to the Lt. Governor for taking a view in the matter, it must be presumed that at least with effect from that date the Central Government ceased to have the said case under its consideration. Lastly, on 8th July, 1980 a meeting had taken place where the Minister had concurred to the Company being allowed to put up a hotel with about! 400 beds and to use the remaining space for ordinary commercial purposes. Even if the matter was pending before the Central Government the decision having been arrived at by the Minister on 8th July, 1980, the earlier orders stated to have been passed by the Government, must be regarded as having come to an end. There was, thereforee, no occasion or necessity for the Company to challenge the said orders.
(74) While on this aspect of the case, we would like to observe that on two occasions, the Ministry of Works & Housing had expressed definite views with regard to the Company being permitted to use part of the floor area for non-hotel use. In its note dated 10th October, 1977 the Ministry had approved the Lt. Governor's views expressed in his note dated 19th August, 1977, and the Ministry had directed the execution of a lease-deed so as to ensure that the Company constructs a building in which there would be 250 beds, hotel and the balance could be used as ordinary commercial area. If at all this has to be regarded as a direction having been issued by the Central Government either under section 41(1) or 41(3), this direction would be binding on the D.D.A. and it is pursuant to this that the lease-deed was executed after the undertaking had been obtained from the Company. The direction was categorical to the effect that part of the building could be used for ordinary commercial purpose. This being so, the D.D.A., in law and otherwise,, could not act to the contrary. This direction was binding on it and any action of the D.D.A. in rejecting the building plans on the ground that non-hotel use of the building was not permitted would be clearly contrary to the said direction of the Ministry. As such a direction can only be relatable to section 41. The necessary corollary would be that the rejection of the building plans on the said ground would also be vocative of directions given under section 41. There is also no doubt in our mind that on 8th July, 1980 the Minister of Works & Housing had agreed to the Company constructing a building in which part of the floor space could be utilised as ordinary commercial area. This is. clearly borne out from the letter of Shri N. K. P. Salve, the correctness of which has not been denied. If the contention of the D.D.A. is correct that it is bound by the directions issued by the Central Government, then this decision arrived at on 8th July, 1980 by the Minister must also be regarded as, a direction under section 41. In the said meeting the Lt. Governor, representative of the D.D.A. as well as of the Company were present. The decision so arrived at, namely, that part of the building could be put to ordinary commercial use was accepted by all and the D.D.A. could not unilaterally act contrary there to.
(75) IT/WAS vehemently contended that a contract under the lease-deed or the undertaking or by means of correspondence is not enforceable by filing a petition under Article 226 of the Constitution. It was submitted that the Company had not adopted the appropriate remedy open to it. The submission was that if the Company had any grievance it ought to have filed either a civil suit or should have taken resort to the arbitration clause contained in the lease-deed, which could be invoked. In this connection it was contended that disputed questions of fact were involved in the case and the parties should be left to take resort to the remedies open to the under contract. Strong reliance was placed on the case of The Divisional Forest Officer v. Bishwanath Tea Co. Ltd. : [1981]3SCR662 in which it was held that a party could not, by way of a petition under Article 226 of the Constitution, enforce a contractual right under the specific terms of contract of lease agreed to between that party and the Company. Reference is also made to the case of Premji Bhai Parmar and others etc. v. Delhi Development Authority and others, : [1980]2SCR704 in which it was held that a petition under Article 32 was not a proper ready for reopening the concluded contracts with a view to getting back a part of the purchase price paid and the benefits taken. Our attention was also invited to a decision of a Division Bench of this Court in the case of M/s. Jasjeet Films (Pvt.) Ltd. and another v. Delhi Development Authority and others, : AIR1980Delhi83 (9). In that case it was held that the transaction was in the realm of contract and the petitioner herein had to file a suit to perform the specific contract or claim damages by means of a suit and that writ petition was not a remedy for enforcing contractual obligations.
(76) In our opinion, none of the aforesaid decisions have any application to the present case. This is not a case where the Company is; trying to enforce its contractual rights. The challenge in the petition is to the action of the D.D.A. which has refused to pass the building plans. This power of refusal was not exercised by the D.D.A. in terms of the lease but is purported to have been exercised under section 13 of the D.D.A. Act. When the Company contends that rejection of the building plans was wrongful, it is, the D.D.A. which, in its defense, contended that the Company was not permitted, in terms of the said lease, to 'have the building plans passed which permitted certain areas to be used for non-hotel us.e. In other words it is the D.D.A. which has to refer to the lease-deed and other documents in order to justify its own action under section 13 of the Act. It is while examining the correctness of the decision of the D.D.A. that reference has to be made to the documents, including the lease-deed, in order to find out whether the contention of the D.D.A., that the company was not permitted to construct a building and use any part thereof for non-hotel purpose, is correct or not.
(77) We may view this matter from a different angle. When the action of the D.D.A. in not passing the plans under section 13 is being challenged, the Company is entitled to refer to its documents of title to show that it bestows certain rights which cannot be infringed by the D.D.A. By making such a reference, the lease deed is not being enforced. It is merely being used as a shield it has not reaped the fruits of its investment. Furthermore, the resolution dated 11th August, 1980 was passed independent of the contract and the same had to be challenged by the Company.
(78) The challenge to the same cannot be regarded as enforcing the contract. The said resolution could not be challenged by way of arbitration proceedings. A petition under Article 226 was, in our opinion, a proper remedy to challenge such a resolution.. Without getting the said resolution set-aside, the Company cannot get any relief, especially because rejection of the last set of building plans submitted by it was because of the aforesaid resolution. If, thereforee, challenge to the said resolution dated 11th August;, 1980 by way of a petition under Article 226 was rightly made, then it will be proper for the Court to exercise its discretion and permit the Company to raise other contentions therein, even though the other submissions could also have been raised by way of a suit or in an arbitration proceeding.
(79) We may now deal with the question as to what is the extent of the space which can be utilised by the Company for non-hotel purposes. According to Mr. Narula no restriction can be placed by the D.D.A. with regard to the extent of such user and the limitation prescribed by the D.D.A. in the various guidelines issued by it, except in the guidelines dated 14th March, 1978, was uncalled for. We have already held that the rights and liabilities of the parties have to be determined according to the terms of the lease-deed. In the architectural conditions, which form part of the lease-deed, the maximum permissible area which could be built on the said plot of land was indicated. The architectural conditions permitted an F.A.R. of 200. According to the analysis given by the D.D.A. itself, along with its letter dated 8th June, 1978, on the basis of F.A.R. of 200 the permissible floor area which could be constructed was about 4,35,000 sq. ft. Basement, mezzanine area and left area were not included. By including the same the total floor area which could be constructed comes to 5,16,150 sq. ft. By reason of the undertaking having been given by the Company, it was bound to construct a hotel of at least 250 beds. Ordinarily the Company could not be asked to construct a bigger hotel. Asand when fresh guidelines were issued, the Company submitted fresh drawings. The same were, however, submitted under protest. We are unable to agree with learned single Judge that the Company submitted its plans subsequent to the guidelines dated 8th June, 1978, and impliedly accepted the said guidelines. In the writ petition it is averred that fresh drawings were submitted on 5th February, 1979 by the Company under protest. This averment is not denied. The observations of the learned single Judge 'that the Company had impliedly accepted the suggestions contained in the guidelines dated 8th June, 1978 are not really borne out from the record. According to the guidelines dated 8th June, 1978, the Company was asked to submit drawings afresh on the basis that only 25 per cent will be allowed for offices in the hotel complex. As per the terms of the lease read with the undertaking, the Company was obliged to construct a hotel of 250 beds in accordance with I.T.D.C. norms and the balance of the permissible area could be utilised by it for constructing offices. The guidelines which had been issued by the D.D.A. from time to time including that of 8th June, 1978 were clearly without the authority of law. The only guidelines which have been accepted by the Company were those which were issued on 14th March, 1978. The single Judge was, thereforee, not correct in coming to the conclusion that the guidelines of 8th June, 1978 would be binding on the Company. For the aforesaid reasons the guidelines of 8th June, 1978 were also liable to be quashed.
(80) In view of the findings above, the Company would ordinarily be entitled to construct a hotel of only 250 beds The Company, however, in the meeting held with the Minister on 8th July, 1980, agreed to raise the number of beds in the hotel complex from 250 to 400. Incidentally, we may note here that in the revised building plans, which were submitted by the Company, the number of beds indicated by it were about; 392. As the Company's representatives had agreed to raise the number of beds in the hotel block, it would not be equitable for the Company to get away from- this commitment, especially when we are of the opinion that the decision of the Minister of 8th July, 1980, wherein it had been agreed by all that the balance area could be used for ordinary commercial purpose, was binding on the D.D.A. As such we hold that the Company is committed to provide about 400 beds in the hotel.
(81) During the course of arguments Mr.Narula drew our attention to the counter-affidavit filed on behalf of the D.D.A. in which it was, inter alia, stated that the site had been auctioned for the construction of the hotel and if the purpose is now changed then the permission which had been accorded to retain the excess vacant land under the Urban Land Ceiling Act shall stand cancelled. He submitted that this is a threat which was held out by the D.D.A. and the same was uncalled for. We do not believe that the D.D.A. will be vindictive and cancel the permission already granted merely because of the decision in this case. What is the nature of the building, which has to be constructed, has nothing to do with the permission which has been accorded under the Urban Land Ceiling Act, especially when the Company is obliged to utilise major portion of the building as a hotel.
(82) From the aforesaid discussion the following conclusions flow : (i) On the plot in question the Company was obliged to construct a hotel building in which there was to be a hotel of about 400 beds and in which building the remaining floor area could be used for purposes incidental to the hotel and also as ordinary commercial area e.g. commercial offices. (ii) The lease dated 30th November, 1977 could not be varied by the D.D.A. in exercise of its executive power. (iii) The Company's rights under the lease could not be encroached upon or inroads made by the D.D.A. as it had no statutory or other authority to do so. (iv) Resolution No: 106 was ultra vires' arbitrary and vocative of the Company's rights under Article 14 of the Constitution and was liable to be quashed. (v) The rejection of the plans by the D.D.A. was without any valid basis. (vi) There was no valid or subsisting order or direction of the Government of India under section 41 of the Act which prohibits the D.D.A. from passing the building plans of the Company. (vii) The D.D.A. has no authority to restrict the ordinary commercial user of the building area as long as the Company uses the said area for any one or more of the commercial purposes specified in clause 14 of the lease subject to the undertaking dated 29th November, 1977 read with the agreement of 8th July, 1980 which provided that the hotel building must have a hotel in which there has to be a hotel of at least 400 beds.
(83) For the aforesaid reasons the appeal filed by the D.D.A. is dismissed. As regards the appeal filed by the Company, because in our opinion the guidelines dated 8th June, 1978 have also to be quashed, the same is partially allowed for even after the quashing of these guidelines the Company is obliged to construct a hotel consisting of 400 beds as per I.T.D.C. norms and use the balance permissible area as ordinary commercial space. Direction is, however, given to the D.D.A. that the building plans which may be re-submitted by the Company should be considered and dealt with by it in accordance with the Municipal Bye-laws and the lease deed dated 30th November, 1977 read with the undertaking dated 29th November, 1977 and the guidelines dated 14th March, 1978 and the agreement with the Minister dated 8th July, 1980 and in the light of the judgment given by us. The plans should be considered and dealt with within sixty days of their being submitted. The Company would be entitled to costs. Counsel's fee Rs. 5,000.
(84) For the aforesaid reasons the appeal filed by the D.D.A. is dismissed. As regards the appeal filed by the Company, because in our opinion the guidelines dated 8th June, 1978 have also to be quashed, the same is partially allowed, for even after the quashing of these guidelines the Company is obliged to construct a hotel consisting of 400 beds as per I.T.D.C. norms and use the balance permissible area as ordinary commercial space. Direction is, however, given to the D.D.A. that the building plans which may be re-submitted by the Company should be considered and dealt with by it in accordance with the Municipal Bye-laws and the lease deed dated 30th November, 1977 read with the undertaking dated 29th November, 1977 and the guidelines dated 14th March, 1978 and the agreement with the Minister dated 8th July, 1980 and in the light of the judgment given by us. The plans should be considered. and dealt with within sixty days of their being submitted. The Company would be entitled to costs. Counsel's fee Rs. 5,000.