Technoco Industries Private Ltd. and Another vs The State of Haryana and Others

V.K. Jhanji, J.—The petitioner-company in order to set up ancillary Unit for manufacture of components for Maruti cars applied to the Director of Industries, Haryana, for allotment of a plot measuring 1000 Sq. Metres. Later on, the Company realised that it was not possible to set up Manufacturing Unit in 1000 Sq. Metres plot and requested that the Company be allotted a 2000 Square Metres plot. On receipt of the request from the petitioner-Company, respondent No. 3 sought view of the Maruti Udyog Limited as to the feasibility of project proposed to be set up by the petitioner-Company. Maruti Udyog Limited wrote to respondent, No. 3 that the request of the petitioner-Company for the allotment of 2000 Square Metres plot be considered. Respondent No. 3, vide letter dated 20.7.1988 informed the Managing Director, Haryana State Industrial Development Corporation Limited (hereinafter referred to as the Corporation), respondent No. 2 that the Government had accorded approval for the industrial plot measuring 1/2 acre to the petitioner-Company for the manufacture of components for Maruti cars. The Director of Industries, respondent No. 3, directed the Corporation to allot the plot to the petitioner-Company on the usual terms and conditions In pursuance of this letter, the Corporation vide its letter dated 14.9.1988, made an offer to the petitioner-Company for allotment of a plot measuring 1/2 acre in the industrial estate of Gurgaon, The rate of the land was fixed at the rate of Rs. 175/- per square metre. The petitioner-Company was also asked, that in case the offer is accepted, they should remit a sum of Rs. 37,500/- towards 25 per cent of the cost within 15 days from the issue of the letter. The balance cost price was payable in 10 equated instalments with interest at the rate of 15.5% p. a. However, it was made clear that in case acceptance was not received within 30 days from the issue of the letter, the offer for allotment of plot shall stand withdrawn. The petitioner-Company vide letter dated 11.10.1988 accepted the offer and, sent a sum of Rs. 87,500/- by way of two bank drafts drawn on Canara Bank, Chandigarh. The Corporation, on receipt of the amount, issued a provisional letter of allotment dated 7.11.1988 and in the said allotment letter, it was made clear that, the tentative rate of the land will be Rs. 175/- per square metre and the balance 75 per cent of the cost will be payable in 10 equated instalments with interest at the rate of 15.5% p. a. on the unpaid amount. The allotment was provisional and the petitioner-Company was asked to complete certain conditions contained in letter dated 7.11.1988 (Annexure P-4) before final allotment letter could be issued in favour of the petitioner-Company. The petitioner-Company was asked to complete the following pre-requisite conditions :-

(i) Please get the unit registered with the General Manager of the District Industries Centre concerned for medium Scale Unit, registeration letter of intent from the Director General, Technical Dev. (DGTD)/Government of India should be obtained.

(ii) Please get the drawings of the unit approved from , the Senior Town Planner/Divisional Town Planner concerned, copy of the Zoning plan of the plot required for the preparation of detailed drawings may be obtained from the office of D.T.P. concerned.

(iii) Arrangement of finance by getting the loan required to meet the cost of land, building and machinery sanctioned from Haryana Financial Corporation and Scheduled Bank/State and All India Financial Institution.

OR

In case of self-financing of the project, please furnish us proof regarding availability of liquid resources to meet the total cost of project.

(iv) List of plant and machinery to be installed.

It is not in dispute that by provisional allotment letter the petitioner-Company was asked to accept the offer within 30 days and the provisional allotment letter was to remain valid for a period of 90 days during which the petitioner-Company was required to furnish proof of having completed the formalities as contained in the letter and indicated above. However, the petitioner-Company, due to certain reasons could not complete the pre-requisite formalities and extension was granted upto 6.3.1989. Despite extension of 3 months granted upto 6-8-1982, the petitioner-Company could not complete the pre-requisite formalities. It was only on 22.12.1989 when the petitioner-Company completed the formalities as was required under the provisional allotment letter. Vide letter dated 20.12.1989, the petitioner-Company asked the Corporation to issue final letter of allotment. The Corporation vide letter dated 19.2.1990 (Annexure P-16) informed the petitioner-Company that since the petitioner-Company failed to complete the formalities upto the extended period, it had to seek extension for a period of 90 days i. e. upto 5.11.1989 fey remitting extension fee @ 0.25 paise per square metre per month. The delay from 5.11.1989 to 22.12.1989 was condoned by the Corporation as the circumstances for the delay were found to be beyond the control of the petitioner-Company. The petitioner-Company was also asked to remit a sum of Rs. 1,500/- towards extension fee and send acceptance of the revised rate of the land i. e. Rs. 595/- per square metre as the Corporation had revised the rate of land and had fixed the price @ Rs. 595/- per Square Metre with effect from 1.1.1990, so that final letter of allotment could be issued to the petitioner-Company.

The petitioner-Company, by way of. this writ petition, has impugned the letter dated 19.2.1990 (Annexure P-16) vide which the Corporation asked the petitioner-Company to send its acceptance of the revised rate of land i. e., Rs. 595/- per square metre which was revised with effect from 1.1.1990.

The Corporation, in reply to the petition, has filed a written-statement contesting the claim of the petitioner-Company. The Corporation has also annexed a copy of the letter dated 4.1.1990, Annexure R-1 vide which the petitioner-Company was informed that since petitioner-Company failed to complete the formalities as required under the provisional allotment letter, even in the extended period, the offer of allotment of plot No. 38. Industrial Area, Gurgaon, stands'' withdrawn. The Corporation also intimated to the petitioner-Company that the money so deposited shall be sent to the petitioner-Company shortly.

The precise stand of the Corporation is that on the failure of the petitioner-Company to complete the pre-requisite formalities, the offer was withdrawn vide letter dated 4. 1. 1990. The petitioner-Company having represented against the said withdrawal and after considering the representation of the petitioner-Company, the Corporation, vide letter dated 19. 2. 1990 (Annexure P-16), decided to condone the delay with retrospective effect on payment of fee and allotment of plot at the rate of Rs. 595/- per square metre which was applicable to similarly situated allottees after 1.1.1990.

Shri J. K. Sibal, learned counsel for the petitioner-Company has contended that the action of the Corporation in asking the petitioner-Company to pay the price of the plot, at the enhanced rate is arbitrary, unjustified and against the public policy. He further contended that in the case of the petitioner-Company, provisional allotment was made in November, 1988 subject to certain formalities which were duly complied with and after having condoned the delay, the Corporation is not entitled to allot the plot at the enhanced rate of Rs. 595/- per square metre. In support of his argument,, he has placed reliance on Mahabir Auto Store and Ors. v. Indian Oil Corporation J. T. 1990 (1) S. C. 363.

On the other hand, learned counsel for the Corporation has submitted that no writ or order can be issued under article 226 of the Constitution of India so as to direct the Corporation to allot the plot at the rate of Rs. 175/- per square metre as the agreement entered into between the Corporation and the petitioner-Company is purely contractual and the rights are governed only on the terms of the contract.

After hearing the learned counsel for the parties, we find no merit in the writ petition. The petitioner-Company was allotted the plot provisionally on 7-11.1988 (Annexure P-4) and the price of the plot was tentatively fixed at the rate of Rs, 175/- per square metre. However, the allotment was subject to certain terms and conditions as contained in the letter dated 7. 11.1988 which were to be completed by the petitioner-Company within 90 days as stated in the said letter. The petitioner-Company, who could not complete the formalities during the stipulated period, asked for extension and despite extension having been granted, still could not complete the formalities. It was only on 22. 12. 1989 that the formalities could be completed when the Indian Bank, Chandigarh, communicated their acceptance for financing the working capital/term-loan required for setting up the Unit by the petitioner-Company. It was open to the Corporation to withdraw the offer after the petitioner-Company had failed to complete the formalities after the extended period and this precisely was done by the Corporation vide letter dated 4.1.1990 vide which the petitioner-Company was informed that the provisional letter of allotment in respect of Plot No. 28, Industrial Estate, Gurgaon, stands withdrawn. The petitioner-Company cannot seek any support from the letter dated 19.2.1990 (Annexure P- 16) vide which the Corporation, on the representation of the petitioner-Company, decided to condone the delay and asked the petitioner-Company to remit a sum of Rs. 1,500/-, as extension fee and also send the acceptance of the revised rate of land at the rate of Rs. 595/- per square metre. This action of the Corporation cannot be said to the arbitrary as the Corporation decided to renew the offer only on February 19, 1990 whereas the price was revised with effect from 1.1.1990. In view of this, the Corporation was well within its right to demand the enhanced rate of the plot at the revised rate. The judgment cited by the learned counsel for the petitioner-Company (Mahabir, Auto Stores and Ors. v. Indian Oil Corporation J. T. 190 (1) S. C. 363), has no bearing, on the facts of the present case. In the said, case the action of the Indian Oil Corporation to discontinue the supply of lubricants to the appellants thereunder was challenged on the ground that the Indian Oil Corporation who had been supplying lubricants since 1965 cannot discontinue the supply with effect from 27.5.1983 merely on the pretext that there was no written contract with the Indian Oil Corporation. This action of the Indian Oil Corporation was found not to be fair particularly when the supply of lubricants was discontinued without taking the parties into confidence whose rights were likely to be affected. However, this is not the position in this case as the petitioner-Company was well aware at the time of provisional allotment that the final allotment letter will be issued only on completion of certain formalities within the stipulated period. The petitioner-Company having failed to fulfil the terms and conditions of the agreement, cannot make a grievance that the action of the Corporation is arbitrary. The petitioner-Company was bound by the terms and conditions of the agreement.

We also find force in the argument of the learned counsel for the respondent that even if there is a breach of the agreement on the part of the Corporation, the same cannot be enforced by this Court under article 226 of the Constitution of India so as to compel the Corporation to remedy a breach of contract. The agreement between the parties is purely a contractual and the parties to the agreement are governed only by the terms of the contract and this Court cannot issue any order or writ under article 226 of the Constitution even if there is any breach of the agreement for compelling the defaulting party to perform his part 6f the contract. For this, we find support from the decision of the apex Court in Bareilly Development Authority and Another Vs. Ajay Pal Singh and Others, . wherein the Supreme Court observed as under :-

"There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contratual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution so as to compel the authorities to remedy a breach of contract pure and simple."

For the reasons recorded above, this writ petition is dismissed. However, parties are left to bear their own costs.

Before parting with the judgment, we would like to observe-that possession of the land was delivered to the petitioner-Company vide interim order dated 3.9.1990 passed by this Court which is reproduced as under :-

"The petitioner undertakes that, he will deposit the entire amount due according to the old rates within one month from today failing which his petition shall stand dismissed. In case the said amount is deposited and an undertaking is filed before respondent No. 2 that in case the writ petition fails the amount will be paid according to new rates with interest of 18% p. a. then the possession will be delivered to the petitioner of the plot."

Learned counsel for the petitioner-company has stated at the bar that the petitioner-Company not only furnished undertaking before respondent No. 2 but also deposited the amount due according to old rates. As the writ petition is being dismissed, the petitioner- Company shall pay the amount due to the Corporation at the revised rate with interest at the rate of 18 per cent per annum within three months from today. If the petitioner-Company fails to pay the amount with interest at the rate of 18 per cent per annum, if would be open to the Corporation to cancel the allotment and resume the plot in accordance with law.