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The Wearwell Cycle Co. Ltd. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 834 of 1973
Judge
Reported inILR1975Delhi586
ActsConstitution of India - Articles 14 and 226
AppellantThe Wearwell Cycle Co. Ltd.
RespondentUnion of India and ors.
Advocates: S.N. Chopra,; Madan Bhatia,; S. Pappu and;
Cases ReferredIn K. N. Gurswamy v. The State of Mysore and
Excerpt:
(i) constitution of india - article 226-mandamus relief of--when can be claimed--contract between the petitioner & the government of india for sale of property forming part of compensation pool under the displaced persons (compensation & rehabilitation act, 1957--breach of, by government--prerogative relief--if open to the petitioner.; the present is not a case where the government as the owner of a property is transferring the property, in the exercise of its rights as an owner. here it is acting under a statute and the rules and does not give unfettered right to the government. this statutory power cannot be equated with mere power to enter into a contract. what the petitioner is seeking to enforce is not a simple contract but right arising out of statute. the petitioner is.....rajindar sachar, j.(1) this petition under article 226 of the constitution of india seeks a writ of mandamus directing respondent no. 1, union of india through the secretary, ministry of rehabilitation and respondent no. 2 the chief settlement commissioner, new delhi, to carry out the obligation to transfer the property bearing no. 30, new industrial township, faridabad, haryana, in favor of the petitioner and a further direction to respondents 1 and 2 not to sell the aforesaid property in favor of respondent no. 3 state of haryana, or any other person. (2) the petitioner is a company incorporated under the indian companies act, 1913 with its registered office in new delhi and is carrying on the business of manufacturing bicycles in its factory at the above mentioned premises in.....
Judgment:

Rajindar Sachar, J.

(1) This petition under Article 226 of the Constitution of India seeks a writ of mandamus directing respondent No. 1, Union of India through the Secretary, Ministry of Rehabilitation and respondent No. 2 the Chief Settlement Commissioner, New Delhi, to carry out the obligation to transfer the property bearing No. 30, New Industrial Township, Faridabad, Haryana, in favor of the petitioner and a further direction to respondents 1 and 2 not to sell the aforesaid property in favor of respondent No. 3 State of Haryana, or any other person.

(2) The petitioner is a company incorporated under the Indian Companies Act, 1913 with its registered office in New Delhi and is carrying on the business of manufacturing bicycles in its factory at the above mentioned premises in Faridabad.

(3) On 28th April, 1954, the Union of India issued a press Note stating that it was anxious to encourage the establishment of New Industry at Faridabad, and that it has been decided to give facilities to parties who could satisfy the government that their schemes are sound and that they would be able to carry them out within a reasonable limits. The facility included the allotment of factory sites to the industrialists and the supply of electricity and water at certain rates mentioned therein. The allotment of land for the factory on the rental basis was to be for a period of specified terms and the building was to be constructed according to the specification of the industry. The rent was to be assessed at the rate mentioned therein. The industrialists were also given the option to purchase land and building at any time during the period of lease at the price indicated in the press note. In pursuance of the above said press note a number of industrialists including the petitioner were allotted the buildings. It was agreed amongst others by the petitioner that it would pay a rent of Rs. 23,050 per annum for the land as well as the structure. The lease was to be operative for 5 years with effect from 1-4-1956.

(4) Displaced Persons (Compensation and Rehabilitation Act, 1954 (hereinafter called the 1954 Act) came into force on 9th October, 1954. Section 14 constitutes a Compensation pool consisting of various properties. Section 20 gives power to managing officer to transfer any property out of the compensation pool subject to any rules that may be made under the Act, 1954. In exercise of the powers under Section 40, the Central Government framed the Displaced Persons (Compensation and Rehabilitation) Rule, 1955 (hereinafter called 1955 Rules) Rule 87, Chapter Xiv of 1955 Rules provides that any property forming part of the compensation pool may be sold by public auction or by inviting tenders or in such other manners as the Chief Settlement Commissioner may, by general or special order, direct. Admittedly the property in dispute forms a part of the compensation pool under the 1954 Act. By a letter dated 22-6-1961 respondent No. 1 informed the petitioner that it had been decided to allow it to purchase the factory building and the land under it which was on lease with it on the terms and conditions mentioned in the said letter. The petitions was also informed that if it fails to accept the offer within one month, it will continue under the old lease terms. The petitioner however did not indicate its desire to purchase the property with the result that it was informed by respondent No. 1 by its letter dated 23-8-1961 that as it has failed to exercise the option within one month it was not entitled to the sale of land, and thereforee it will have to continue under the old lease terms.

(5) It appears that the petitioner became in arrears for the payment of rent for the land and factory and the government thereafter proceeded against the petitioner for rent and damages under the Public premises Eviction of Land and Recovery of the Rent Act. An order of eviction was passed against the petitioner on 28-12-1965, and it was asked to hand over the possession of the premises within 30 days. The petitioner filed appeal before the District Judge. Gurgaon, against the said order of the Estate Officer and obtained a stay of the operation of the order of eviction subject to certain terms. While the appeal was still pending before the District Judge, the petitioner was naturally keen that a compromise should be arrived at with the Government; it thereforee addressed a letter dated 6th June, 1967 to the Secretary, Ministry of Rehabilitation. Government of India offering to withdraw the appeal filed before the District Judge and to pay regular rent in advance and also agreed to pay interest at 71/2 per annum on arrears of rent till the same are liquidated. To this the petitioner was informed by the Joint Secretary, to the Government of India for and on behalf of the President of India by its letter dated 4th March, 1968 that the Government was agreeable to the compromise and withdrawal of the eviction order passed by the Estate Officer on the company executing a fresh lease on the terms and conditions mentioned in the said letter. One of the terms was that the annual rent for the land and the factory building will be Rs. 30,620. The Government also agreed in principle to allow the petitioner to accommodate its sister and associated concern known as Road King Cycle Company in the same premises. The petitioner was asked to indicate its agreement to the terms and conditions mentioned therein within 15 days of the receipt of the letter. In reply to the said letter the petitioner by its letter dated 18th March, 1968 thanked the Government for having agreed to withdraw the eviction order and further stated that the board of directors was agreeable to the terms and conditions mentioned in the letter of 4th March. 1968 of the Government subject to the details mentioned by the petitioner therein. With regard to the rent of Rs. 30,620 the petitioner company agreed to this in principle but pointed out that the department had worked out at 6 per cent per annum interest basis whereas since 1st March, 1968 the rate of interest has been reduced by the Reserve Bank of India from 6 per cent to 5 per cent per annum, and thereforee humbly sought revision of the annual rent at the prevalent rate and not at the old bank rate. Barring the suggestion for the suitable revision of annual rent on account of bank rate the petitioner indicated its agreement to the terms mentioned by the Joint Secretary to the Government of India in its letter of 4th March, 1968. The petitioner also agreed to the terms for its sister concern to also sign the agreement. It appears that before any formal agreement could be executed between the parties the. District Judge, Gurgaon on 22nd June, 1968 set aside the order passed under Section 5 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1958, as the said Act had been held to be ultra virus of the Constitution. The petitioner thereupon wrote to the Joint Secretary to the Government of India, Ministry of Rehabilitation on 2nd July, 1968 informing them that the appeal had been allowed by District Judge, asking that if he permitted to purchase the property and also reiterated its willingness to enter into fresh lease as indicated to it by the Government earlier. It appears that by virtue of its power under Rule 87 of 1955 Rules, the Government decided to transfer the properties which had been allotted to various parties like the petitioner on certain terms. The petitioner was also informed with reference to his letter of 2nd July, 1968 by the Joint Secretary to the Government of India for and on behalf of the President of India by his letter dated 23rd June, 1969 that it has been decided to accept the offer of the petitioner for purchase of the land and factory building at Faridabad at a total cost of Rs. 4,71,080 to be paid by the petitioner in 10 yearly Installments together with interest on the terms and conditions mentioned therein. The petitioner was required to pay the first Installment within 30 days of the date of the acceptance of the offer amounting to Rs. 47,108 and the subsequent Installments amounting to Rs. 47,108 along with interest were to become due on the date of the month on which the first Installment is paid. The company was also to pay a sum of Rs. 2500 per month towards the arrears of rent of the factory building and the other properties which remained on rent with it from time to time in the past. The petitioner was to give his acceptance within 15 days of the date of the letter, and make payment of the first Installment and other dues within 30 days of date of acceptance, failing which the offer will be treated as withdrawn. The petitioner by its letter dated 7th July, 1969 intimated its acceptance of the offer and also requested for favor of grant of certain concessions mentioned therein if approved by the Government. One of the concession sought was for extension of time for payment of first Installment by three months as against one month. Extension was granted to the petitioner up to 7th October, 1969. Still further extension was sought by the petitioner and the same was granted and the petitioner was informed by the Under Secretary to the Government of India, Ministry of Rehabilitation by its letter dated 31st October, 1969, that the petitioner was allowed extension of time up to 31st December, 1969 for payment of either the entire cost of land and factory building including the arrears of rent or the first Installment as intimated in the department's letter dated 23rd June, 1969. It was also stated that if the payment was not received by the due date offer to sell would be treated as cancelled. In reply to the above the petitioner addressed a letter dated 29th December, 1969 to the Chief Settlement Commissioner, Department of Rehabilitation, informing him that it had succeeded in getting the loan sanctioned from the Punjab National Bank with whom it would mortgage land and building against the advance, but as it did not have proprietory rights in the land and building the bank was keen that both sale deed and mortgage deeds are executed on the same date, so that bank could make a direct payment and for this purpose it requested that some authorised officer be deputed to sign the sale deed and receive the full payment in the office of the Registrar of Assurances, Ballabgarh on the date convenient to the department. It also offered to pay Rs. 50,000 in lump-sum on account of arrears of rent. It also requested to keep the offer open till 31st January, 1970 and sought intimation of date for execution of the sale deed. This was followed by the petitioner's letter dated 1st January, 1970 to the Chief Settlement Commissioner informing him that Bank had sanctioned the loan and asking any authorised officer to execute the sale deed and receive payment of Rs. 5,21,080, (Rs. 4,71,080 as price of the land and the factory plus Rs, 50,000) amount as lump payment on account of the arrears of rent subject to verification. It appears that the petitioner learnt that arrears being demanded were Rs. 70,000 and Rs. 50,000. On this it addressed a letter dated 15th January, 1970 to the Chief Settlement Commissioner demanding that as no repairs had been done to the factory, it sought a rebate on account of non-repairs to the building to the extent of Rs. 70,712.25 paise for being adjusted from the purchase price of the factory, though it was willing to pay Rs. 5,21,080 pending verification. Not having heard from the Chief Settlement Commissioner for sometime the petitioner again wrote on 10th April, 1970 asking it to take immediate action in the matter as there was a danger that the loan sanctioned by the Punjab National Bank may not lapse. To this the petitioner was informed on behalf of the Chief Settlement Commissioner by its letter dated 20th April 1970 that the matter regarding payment of cost and execution of the sale deed was under examination and that it will hear about the decision of the Government in due course. Ultimately on 28th December 1970 the petitioner was informed by a letter of Assistant Settlement Commissioner for the Chief Settlement Commissioner in reply to the petitioner's letter dated 15th January 1970 that it was not possible to give any rebate for the non-repairs of the buildings and that the petitioner should pay the entire cost of the factory building together with the arrears of rent of the factory amounting to Rs. 1,20,165.67 up to 31st December 1970 together with the future rent or the payment of the entire cost or the first Installment of the cost of the land and factory building and the Installments of arrears of rent as laid down in the office letter of even no dated 23rd June 1969. This payment should be made within one month of the issue of the letter failing which the offer of sale would be treated as withdrawn.

(6) Against this the petitioner wrote to the Chief Settlement Commissioner, on 31st December 1970 pointing out that the letter of Settlement Commissioner dated 28th December 1970 refusing to give any rebate on account of non-repairs of the building was not correct and maintaining that it was agreeable to pay the arrears of rent less the non-repair rebate. But the petitioner obviously did not want to take a chance and by his letter dated January 12, 1971 to the Chief Settlement Commissioner informed him with reference to his letter dated 28th December 1970 that though it had asked for non-repair rebate as there was likely to be delay in the decision about this representation, if in order to remove any ambiguity hereby unequivocally accepted the offer and agree to pay the entire amount, irrespective of decision on its representation in terms of its letter dated 23rd June 1969. it, thereforee, asked the Chief Settlement Commissioner to name the authority in whose favor the draft/pay order/cheque be issued so that it could arrange payment. The petitioner sent reminders for executing the sale deed but met with silence, until it was informed for the first time on 2nd December 1971 by the Assistant Settlement Officer, Ministry of Rehabilitation that the matter in regard to sale of property will be considered after the stay of sale is vacated by High Court of Punjab and Haryana, and in the meantime asking it to deposit the amount of rent of the property outstanding against the company as on 31st December 1971. It may be noted that Municipal Committee Faridabad had filed a Civil Writ No. 3094 of 1969 against Ministry of Rehabilitation, Government of India in the High Court of Punjab and Haryana Chandigarh and the court had by its order dated 15th December 1969 stayed confirmation of sales already taken place and also stayed further sale. It may also be mentioned that this writ petition as well as stay order remained pending and was dismissed ultimately on 22nd September 1972.

(7) The petitioner also addressed a letter dated 25th December 1971 to the Chief Settlement Commissioner pointing out that as its office was keeping in abeyance the sale of the property in view of the stay order issued by the Punjab and Haryana High Court it was detrimental to its interest and requested that no objection certificate be issued to it so that it could approach the High Court at Chandigarh to take permission for transferring the property to it. No reply was received and the petitioner followed up the request by writing to the Joint Secretary Government of India by 7th August 1972 again suggesting that the High Court be moved to permit the land to be transferred to it just as the department had obtained an order from the High Court with regard to the transfer of land to Food Corporation of India. A representation to similar effect was also sent to the Deputy Minister of Rehabilitation by the petitioner, on 25th August 1972. After the writ petition had been dismissed by High Court of Punjab and Haryana the petitioner wrote to the Chief Settlement Commissioner on 3rd October 1972 giving this information and again requesting that the sale deed be formally executed as the loan from the bank stood sanctioned and seeking advice as to authority under whose name the bank may issue the pay order. Further representations were made to the Ministry on 24th March 1973 and 12th June 1973 making a grievance that in spite of their being a concluded agreement, discrimination was being practiced by the department by refusing to transfer the property to the petitioner. It appears that at about that time the Government of India was examining a proposal of entrust to respondent No. 3, the management and disposal of the undisposed vacant land and building including the one in dispute in Faridabad township in accordance with provisions of the 1954 Act. The petitioner apparently felt that if the property in dispute was formally transferred to respondent No. 3, it may become impossible to assert its rights and consequently filed the present writ petition asking for relief mentioned above. This petition thus involves a consideration of two main points namely whether the petitioner has a legal right to compel respondents 1 and 2 to transfer the property in dispute in terms of the respondent's letter dated 23rd June 1969 and 28th December 1970 and if so on what terms and conditions.

(8) Affidavit has been filed on behalf of respondents 1 and 2. A number of preliminary objections have been raised, the substance of which is that the claim in the present petition is purely a contractual one and that no mandamus can be issued for the sale of the property to the petitioner as no enforceable legal right vests in it. It is denied that there is any statutory duty cast on the respondents to transfer the property to the petitioner and it is stated that no concluded contract came into existence. Objection is also taken that the provision of Article 299 of the Constitution have not been observed and, thereforee, no valid contract can be spelled out, nor is there any valid contract. Though it is admitted that the property forms a part of the compensation pool, the position taken is that though a great deal of indulgence was shown for the transfer of the property but in spite of the indulgence the petitioner did not execute the fresh lease. The lease amount is said to be Rs. 30,620.00 per annum and the interest at 71/2- per cent on the arrears of rent is said to be due from the petitioner.

(9) The first question that calls for determination is whether a legally enforceable obligation has been incurred by respondents 1 and 2 to transfer the property to the petitioner. This has two facets, namely, (a) Whether a concluded contract came in existence; (b) Whether the contract complies with the provisions of Article 299 of Constitution of India.

(10) Now a reference to the record will show that in pursuance of the petitioner's letter of 2nd July, 1968 in which it had asked for the transfer of the property the Joint Secretary to the Government of India for and on behalf of the President of India by its letter dated the 23rd June, 1969, informed the petitioner that it had been decided to accept its offer for the purchase of the building at the price stated therein and on the terms and conditions mentioned and also asking the petitioner to give its acceptance to the terms and conditions within 15 days. This letter had as its top the heading No. 5(9)53-HII- CSC(F)./Vol. Iii, Government of India, Ministry of Labour, Employment and Rehabilitation, (Department of Rehabilitation) Office of the Chief Settlement Commissioner (Faridabad Unit) Jaiselmer House. New Delhi. The subject described was : Sale of land and factory building at Faridabad. The petitioner thereupon entered into correspondence with the Department seeking extension of the time for payment of the amount and also seeking certain clarification to offer concession. At first the petitioner was granted an extension up to 7th October, 1969, arid then up to 31st December, 1969 by the Under Secretary to the Government of India. The petitioner however had again sought an extension for a month by its letter of 31st December, 1969. Not only that it further by its letter of 15th January, 1970 raised the point of adjusting an amount of over Rs. 70,000.00 on account of non-repairs, rebate from the arrears of rent due. Now as the Government of India had by its letter of 23rd June, 1969 agreed to sell the property to the petitioner only if he paid the purchase price as well as the arrears of rent (without any adjustment on account of non-repair rebate) and extension was only up to 31st December, 1969, a completed transaction could only arise if this offer was accepted unconditionally by the petitioner. But as the petitioner had asked for extension up to 31st January, 1970 and had also raised the question of non-repair rebate, it may prima facie be accepted to be not an unconditional acceptance of the offer given by the respondents on 23rd June, 1969 and thereforee no concluded contract had come into being by 31st December, 1969. Had that been the end of correspondence between the parties things might have looked had for the petitioner. But fortunately for it in reply to its letter of 15th January, 1970, the Settlement Commissioner by its letter of 28th December, 1970 reiterated the offer made on 23rd June, 1969 and asked the payment to be made within one month failing which the offer of sale will be treated as withdrawn. Realizing the seriousness of the situation the petitioner did not prevaricate and wrote to the respondent on 12th January, 1971 unequivocally accepting the offer and agreeing to pay the entire amount and asking for the name of the authority in whose favor the payment may be made. So far as the petitioner was concerned it had done all that was expected of it. A concluded contract immediately arose on this unequivocal acceptance by the petitioner that there was no default by the petitioner is clear from the fact that the only reason for not considering the matter for sale of property mentioned by the respondent in its letter of 2nd December, 1971 was the existence of stay order by Punjab and Haryana High Court. No grievance was made that the petitioner had not accepted the offer unconditionally. No doubt the respondents did not transfer the property but that does not and cannot keep in abeyance the conclusion of the contract which had come into being by process of law. There was nothing else for the petitioner to do. Mrs. Pappu, the counsel for the respondents 1 and 2, no doubt suggested that as admittedly no payment was in fact made to the respondents it cannot be held that there was any concluded contract. I do not appreciate the argument. The petitioner had specifically asked and requested on 12th January, 1971, within the extended period, that it be advised in whose favor a cheque was to be drawn. No reply was given by the respondents. It is not the respondents case that the petitioner was asked to pay the amount but it had refused to do so. As a matter of fact it is apparent that as there was a stay order the respondents did not consider asking for the sale price because it could not have transferred the property to the petitioner, and this was specifically admitted in its letter of 2nd December, 1971. Offer had been made by the respondents and after some negotiations the petitioner had on 12th January, 1971 unequivocally accepted the offer in terms of respondent's letter of 23rd June, 1969 with a period of one month as allowed to it by the respondent's letter of 28th December, 1970. I must thereforee hold that a concluded contract arose when the petitioner unequivocally gave its acceptance by its letter of 12th January, 1971. That brings me to the second facet of the argument that before a binding contract enforceable against respondent No. 1 can abide, it must be in forum and comply with the provisions of Article 299(i) of the Constitution, which says that 'All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor..................of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor...............by such persons and in such manner as he may direct or authorise.' It is contended that the letter of 23rd June, 1969 which was signed by the Joint Secretary for and on behalf of the President of India, time was given for 15 days, and the offer lapsed thereafter because letters giving extension for various periods or keeping the offer open subsequently were not executed for and on behalf of the President of India. Extension was given up to 7th October, 1969 and 31st December, 1969 under the signature of the Under Secretary to the Government of India; further extension and keeping the offer of 23rd June, 1969 open was conveyed on 28th December, 1970 under the Signature of Assistant Settlement Commissioner for Settlement Commissioner. The argument of Mrs. Pappu is that these letters by the Under Secretary to the Government of India or on behalf of the settlement Commissioner or Chief Settlement Commissioner cannot be treated for and on behalf of the President of India and thereforee even if it is held that the petitioner had accepted the offer unequivocally it cannot bind the Government of India.

(11) In Seth Bikhraj Jaipuria v. Union of India : [1962]2SCR880 Section 175 of the Government of India Act, 1935 came in for consideration and the Supreme Court held that the provisions are mandatory and if the contract was not expressed to be made by the Governor General and was not executed on its behalf no compensation or demages can be sought for. Under Section 175(3) of the Government of India Act, the Contract had (a) to be expressed to be made by the Governor-General (b) to be executed on behalf of the Governor-General and (c) to be executed by officers duly appointed in that behalf and in such manner as the Governor General directed or authorised. In that case it was held that though the Divisional Super intendent of the Railways had been specially authorised to enter into a contract for the purchase of foodgrains yet as the purchase order was not expressed to be made by the Governor General and was not executed on behalf of the Government of India, Section 175(3) of the Government of India Act, 1935 was not complied with.

(12) That the position with respect to Section 175(3) of Government of India Act applies with equal force to Article 299(i) of the Constitution, was held in K. P. Chowdhary v. State of Madhya Pradesh and ors : [1966]3SCR919 . In that case in pursuance of the notice by the Divisional Forest Officer, the appellant had given bid at the auction but as the contract money was more than he could accept the matter was referred to the Chief Conservator of Forest who had the necessary authority to accept the bid. Later the contractor raised a dispute and ultimately as the contractor did not make the payment to the Chief Conservator of Forest cancelled the bid, and sought for recovery from the contractor for the deficient amount, occasioned by the reauction. Admitted position was that Chief Conservator of Forest had never signed the contract in writing. Contractor raised the defense that the contract in writing has not been signed by the Chief Conservator of Forest and thereforee there was no compliance with Article 299 of the Constitution. The High Court however decided against the contractor, and held that implied contract was not hit by Article 299(i) of the Constitution. The Supreme Court however allowed the appeal of contractor and held that in view of Article 299(i) of the Constitution there can be no implied contract between the Government and another person. But these cases do not advance the case of Mrs. Pappu. All that they lay down is that unless Article 299 is complied with, no valid contract can arise between government and another person. But it is equally well settled that Section 175(3) does not in terms requires that a formal document executed on behalf of the Dominion of India and other contracting party alone is effective: in Union of India v. A. L. Rallia Ram : [1964]3SCR164 . It was also held therein. that : 'In the absence of any direction by the Governor General under Section 175(3) of the Government of India Act a valid contract may result from correspondence if the requisite conditions are fulfillled.' In that case the Chief Director of Purchases (Disposal) Food Department Government of India invited tenders for the purchase of Cigarettes and the respondent submitted the tender offering to purchase the entire stock. The acceptance by the Government of India was signed by the Chief Director of Purchases. Question arose whether letter accepting the tender conformed to the requirements of Section 175(3) of the Government of India Act. The court noted that goods offered were for sale belonged to Government; the tender notice was issued by the Government of India Department of Food, the title of the notice was 'tender notice issued by the Government of India, Department of Food (Div. III) New Delhi. The name of the authority issuing the tender notice was also Government of India. The acceptance note is headed Government of India. There was a correspondence exchanged between the parties in which respondent had asked for a certain clarification from the Government of India and ultimately those clarifications were incorporated in the contract. The Chief Director of purchases had subscribed his signatures in his official capacity and designation but had not stated in the description that the contract was executed on behalf of the Governor General. Rejecting the contention of Union of India that the acceptance of Contract did not comply with Section 175(3) of the Act, and dismissing its appeal, the court observed :

'THEauthority of the Chief Director of Purchases to contract for sale of 'War Disposal' goods and sign the contract is not denied. The Chief Director of Purchases lias subscribed his signature in his official designation and he has not stated in the description that the contract was executed on behalf of the Governor General, but on a fair reading of the contents of the letter, in the light of the obligations undertaken there under, it would be reasonable to hold that the contract was executed in behalf of the Governor General. No rules made by the Governor General have been placed before the court showing that in executing a contract for the sale of 'War Disposal' goods, the officer authorised in that behalf must describe himself as signing on behalf of the Government of India'.

(13) This case was referred with approval in : [1966]3SCR919 . Now in the present case a reference to letter of 23rd June. 1969 shows that the Joint Secretary to the Government of India has not only signed it in official capacity but that it is executed for and on behalf of the President of India. The title of the letter, and the subject are as follows :

NO.5(9) 53-HII Csc (F) Vol. Iii Government of India Ministry of Labour, Employment & Rehabilitation, (Department of Rehabilitation) Office of the Chief Settlement Commissioner Faridabad Unit Sub : Sale of land and factory Building at Faridabad. The extension given up to 7th October, 1969 and then up to 31st December, 1969 are signed by Under Secretary to Government of India. The number and the title on the letter are again the same as in the letter of 23rd June, 1969. Similarly the letter of 28th December, 1970 by the Assistant Settlement Commissioner for Settlement Commissioner intimating to the petitioner that it should pay up the amount of the cost of building and the factory and the arrears as laid down in the office letter dated 23rd June, 1969 within one month otherwise the offer of sale would be treated as withdrawn also bears the same title and the subject as the letter of 23rd June, 1969.

(14) It will thus be seen that the offer of sale to the petitioner undoubtedly originated in the letter of 23rd June, 1969 and the same was executed for and on behalf of the President. Property undoubtedly belonged to the Government of India. The extension by Under Secretary and by Chief Settlement Commissioner invariably made a reference to the letter of 23rd June, 1969. In the reply affidavit no suggestion much less an averment has been made that these extensions by these officers and the correspondence on behalf of the Government of India was not done on behalf of the President of India. No material has been placed on record to show that the various officers who gave ex-tension were not authorised to do so, or were doing it in their individual capacity. Keeping the various circumstances in view and on a fair reading of the correspondence and extension it would not only be reasonable but the only conclusion that all these extensions though not expressed to be on behalf of the President of India were in the light or obligations undertaken therein, in fact being executed on behalf of Government of India. It is also relevant to remember that the petitioner is only seeking to enforce its rights as contained in the letter of 23rd June, 1969 written for and on behalf of the President of India and is not seeking any change in those terms. It is wrong thereforee for the respondent to urge that no binding obligation was undertaken by the Government of India and the petitioner thereforee cannot insist on the same being carried out.

(15) I must thereforee hold that a binding obligation had arisen, in law and the same was also in accordance with Article 299(i) of Constitution and the respondent must be held bound by it. The argument of Mrs. Pappu based on non-compliance with Article 299(i) of the Constitution is, thereforee, repelled.

(16) The next limb of argument of Mrs. Pappu was that even if a binding agreement against the Government came into existence, the action of the Government in not selling the property at the worst amounted to a breach of contract and no writ of mandamus can issue to enforce rights arising out of contract. In this connection Dr. Raj Chivendra Bahadur v. Governing Body of the Nalanda College, Bihar Sharif and others. : (1962)ILLJ247SC was referred for the proposition that a mandamus can only issue to compel the doing of something if it imposes a legal duty. I do not think that this authority is of any assistance to Mrs. Pappu. In view of my finding that a concluded contract came into existence,there is a legal obligation which the petitioner wants to enforce. The present is not a case where the petitioner is seeking a mandamus that the offer to sell should have been made in its favor , the Government ; on the contrary it. is seeking to enforce an offer for sale which by the acceptance of the petitioner has already ripened into a binding contract.

(17) In C. K. Achutan v. The State of Kerala and others : AIR1959SC490 the petition,er gave his tender for the supply of milk which was orginally accepted but was later on cancelled by the District Medical Officer who instead had given it to the Co-operative Milk Supplies Society cannaore. The grievance of the petitioner was rejected by the Supreme Court which observed that it was open to the Government as it is to the private party to choose a person to their liking, to fulfill contracts which they wish to be performed and that the breach of contract, if any entitle the person aggrieved to sue for damages or in appropriate cases even specifically perform but he cannot complain that there has been a deprivation of the right to practice any profession or to carry on any occupation, trade or business, such as is contemplated by Article 19(l)(g) or Article 31 or Article 16 of the Constitution. It will be seen that all that was decided in that case was that as at the most it was pure and simple breach of contract the same could not be enforced under Article 32 of the Constitution as being vocative of any Fundamental Right. No question of breach of rights arising out of the exercise under a statute arose in that case.

(18) In Lekhraj Sathramdas Lalvani v. N. M. Shah, Deputy Custodian cum Managing Officer, Bombay and others : [1966]1SCR120 a manager had been appointed under Section 10(2)(b) of the Administration of Evacuee Property Act, 1950 and his services were terminated by the Deputy Custodian General. This order was challenged. The court noticed that Section 10(2)(b) of the Act gave power to the Custodian General to appoint the manager for carrying on any business of the evacuee, it was held that this power carries with it the necessary power to remove whom he had appointed. The appointment was purely contractual in nature and no statutory obligation arose between the Custodian and the petitioner and any duty or obligation falling upon a public servant out of a contract entered into by him as such public servant cannot be enforced by the machinery of a writ under Article 226 of the Constitution. Again it would be seen that this was a case of appointment by the Custodian and the only question was whether his removal is illegal. No violation of statutory exercise of power came up for consideration.

(19) The argument of Mrs. Pappu that the petitioner cannot invoke Article 226 is obviously based on the mistaken assumption that the petitioner is seeking a relief arising out of breach of pure contract. Section 14 and Section 20 of the 1954 Act gives power to transfer any property out of the compensation pool subject to any rule that

(20) A may be made under the Act. Rule 87 provides any property forming part of the compensation pool may be sold by public auction or by inviting tenders or in such other manner as the Chief Settlement Commissioner may, by general or special order, direct. The power thus exercised by the Government is statutory power and derives its vitality from the statute. The present is not a case where the Government as the owner of a property is transfering the property, in the exercise of its rights as an owner. Here it is acting under a statute. It is thus clear that the power to transfer the property is controlled by statute and the rules and does not give unfettered right to the government. This statutory power cannot be equated with more power to enter into a contract. What the petitioner is seeking to enforce is not a simple contract but a right arising out of statute. In this connection reference may with advantage be made to the D.F.O. South Kheri and others v. Ram Sanghi Singh : AIR1973SC205 . In that case the writ petitioner had purchased the right to cut timber for the prescribed period but later on the Divisional Forest Officer passed an order that the sleepers which the writ petitioner claimed was removed by him was to be treated as if it was removed without any authority. Writ failed in the High Court. Before Supreme Court it was contended that as the dispute arose out of the contract and the Divisional Forest Officer under the contract has the authority to modify any action taken by a subordinate Forest authority the remedy of the respondent was to institute an action in the Civil Court and that the writ petition was not maintainable. Rejecting this contention it was observed that:

'WEare unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaing relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ in view of the judgment of this court in K. N. Guruswamy's case : [1955]1SCR305 there can be no doubt that the petition was maintainable even if the right to relief arose of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power'.

(21) Similarity in M/s. Shree Ganesh Trading Co. Sangor v. The State of Madhya Pradesh and others : AIR1973MP26 a Full Bench rejected the argument that as the right arose in contract no relief can be given under Article 226 of the Constitution and thereforee observed that the rights and liabilities, although originating in a contract, are not purely contractual, 'but they are partly contractual and partly statutory and that no doubt that the High Court can exercise the perogative powers in respect of matters arising partly out of contracts, and partly out of statutes.

(22) In the present case as the action challenged is of the Government invested with statutory power, the contention of Mrs. Pappu against the maintainability of writ petition has to be rejected. The petitioner is thus entitled to a writ of mandammus directing the respondent Nos. I and 2 to carry out their obligation of transfering the property to the petitioner interms of its letter of 23rd June, 1969.

(23) The petitioner has also made grievance of violation- of Article 14 of the Constitution on the ground of discrimination and unequal treatment.

(24) In K. N. Gurswamy v. The State of Mysore and others : [1955]1SCR305 a challenge was made to the action of the Deputy Commissioner in granting contract of excise. It was held by the Supreme Court that the grant of contract by the Deputy Commissioner was wrong and was not under the Rule. As for the question whether the writ petitioner can ask for the writ the court observed 'that where a party interested in a contract claims that he has not received the same treatment and he has not been given the same chance as any body else he is entitled to move a petition under Article 226 of the Constitution'. Now the position is that with a view to provide employment opportunity to displaced persons in Faridabad the Union of India issued a note giving certain terms to industries in regard to setting industries and allotment of land and factory building on relftal basis for a specified period. The said press note also gave the industrialists the option to purchase the land Along with the building. In pursuance of that policy the government offered to the industrialists including the petitioner on 22nd June, 1961 and asked it if it was interested in the purchase of factory and land. It was in pursuance of the same policy that the Government vide its letter of 23rd June, 1969 accepted the offer of the petitioner to sell this property to it. In the petition it was stated that respondents I and 2 had sold lands and buildings to a number of parties which had been originally leased to them and who were in the same position as the petitioner. The suggestion obviously is that selling the property to those parties while denying the same right to the petitioner amounts to discrimination. It is admitted in the return that six out of seven companies mentioned by the petitioner have been sold the land and the building leased out to them by the government in pursuance of the policy because those companies unlike the petitioner fulfillled the terms and accepted the terms of the contracts entered into by them while the petitioner was hesitating and giving the counter offer and prolonging its acceptance. Thus it is admitted that some terms were offered not only to the petitioner but to a number of other companies. Those companies which accepted the terms have been transferred the property. The reasons for not transferring the property to the petitioner is stated to be that it had not accepted the terms and thereforee was not entitled to the transfer of the property. Had the position been that the petitioner had not accepted the terms and n,o concluded contract had come into existence. the question of discrimination under Article 14 of the Constitution would not arise. But in view of my finding that the petitioner had in pursuance of the extensions given by the proper authority, accepted unequivocally the terms offered by his letter dated 12th January, 1971 no blame can be put on the petitioner. If in that situation the respondents refuse to transfer the property to the petitioner the same is not merely a question of breach of contract but of acting in discriminatory and hostile manner to the petitioner as against others to whom the property has been transferred. It is not the case of the respondents that the property which was transferred to the other companies stood on any other different footing than in the present case. The only distinction pointed out was that those companies had accepted the terms whereas the petitioner had not. But once as I have held' above that the petitioner must also be taken to have accepted the terms, the result would be that the petitioner would be in the same situation as those to whom the property had been transferred by the respondent. In that view the refusal of the respondents to transfer the property now could not but he treated to be a discriminatory act, there being no distinction between the case of the petitioner and those other companies. A uniform policy having been evolved the petitioner as well as other companies which stand on the same footing should be meted the same treatment. The only way the same treatment can meted is to transfer the property to the petitioner when it has been found that it had also accepted the terms and conditions offered to it and the difficulty why it could not be transferred to it earlier was because of the stay order issued by the Punjab and Haryana High Court. Mrs. Pappu referred to the time lapse since original 'offer; but it cannot be over-looked that from 1969 to 1972 the respondents I and 2 were not in a position to transfer the property. Respondents cannot be allowed to take advantage of a situation which was not the making of the petitioner. After the writ petition was dismissed by Punjab and Haryana Court, there was no hurdle in the way of respondents 1 and 2 in transferring the property to the petitioners in such a situation the petitioner is not only asking for observation of the legal obligation by the respondents No. 1 and 2 but is asking for relief founded under Article 14 of the Constitution so as to prevent the respondents No. 1 and 2 from discriminating against it. In such a case the objection that the petitioner is asking for a relief against the breach of contract loses all substance because the claims of the petitioner is based on a demand for equal treatment as guaranteed by Article 14 of the Constitution.

(25) In my view the petitioner would be entitled thereforee to ask for a writ of mandamus directing the respondents to transfer the property to it just as it was transferred to the other companies.

(26) That leaves the question as to whether the petitioner is entitled to get the transfer of the property without payment of arrears of rent and if not then at what rate is the rent payable. It is common case that the terms of the transfer are set down in letter of respondent No. I dated 23rd June, 1969.

(27) According to it the petitioner is required to pay a sum of Rs. 4,71,080.00 on account of land and building and the arrears of rent up-to-date. The petitioner has no quarrel with the amount of Rs. 4,71,080.00 on account of purchase price. Though the petitioner had the option to pay in 10 yearly Installments, it had agreed to pay in one lump payment and this was the position reiterated during the arguments. It is also admitted that no payment towards this sum has been made by the petitioner. It is not disputed that the liability to pay the rent. would cease, under the agreement, only if the whole or the first Installment had been paid by the petitioner. Admittedly the petitioner is in occupation of the property ever since. He is liable to pay rent up to date till he makes the payment of the purchase price. There can be no stoppage of the rental until at least the first Installment was paid. The mere fact that the petitioner gave its acceptance to the offer of 23rd June, 1969 would not by itself mean that he can continue to occupy the premises without payment of rent. Mr. Chopra sought to urge that as the petitioner. by its letter of 29th December, 1969 or at least by letter of 12th January, 1971 had offered to pay the whole amount the same would amount to a valid tender and interest and rent would cease to run from that date and referred me to V. R. Venkatarama lyer v. T. Gopalkrishna Pillay A.I.R. 1929 Mad 290 . In that case the creditor refused to accept the cheque which was offered to him and it was in these circumstances that it was held that as he had refused to accept the payment and was thereby stopped by his conduct from claiming that interest would not cease to run. In the present.case it was no doubt that after the offer by the petitioner on 12th January, 1971 the respondents were bound in law to affect the sale in its favor. But in the absence of even the first Installment having been paid by the petitioner it cannot either in law or equity be allowed to continue in the premises without paying arrears of rent up to date. The petitioner, thereforee, before it can insist upon the property being transferred to it must pay up the arrears of rent up to date. The next question is to the rate of annual rent on which the arrears are to be calculated, and further whether any interest is to be paid on the amount of arrears of rent. When the lease was given originally in 1956 for five years rental was Rs. 23.050.00 . On 22nd June, 1961 the petitioner was informed that if it did not exercise the option to purchase the property the lease will continue on the old lease terms. From this Mr. Chopra maintains that arrears of rent up to date if payable, can be calculated at the figure of Rs. 23,050.00 per annum and without interest.

(28) Now as mentioned above during the pendency of the appeal against the eviction order before District Judge the petitioner had been pursuing the matter with the government and making offers for increase of rent and also for payment of rent and interest. In that. connection the petitioner wrote to the Secretary Government of India on 6th June, 1967, that if eviction order was withdrawn it undertook to pay and liquidate the arrears of rent that are outstanding. It also agreed to pay interest at 7,1/2 per cent annum on the arrears till the same are liquidated. After some further correspondence, the Joint Secretary, Government of India, for and on, behalf of President of India, informed the petitioner that the Government was agreeable to compromise on the terms mentioned therein. One of the terms was that the annual rent for the land and factory would be Rs. 30,'620.00 The govern- ment also agreed, in principle, 'to allow the petitioner to accommodate its sister and associated concern known as Roadking Cycle Company in the same premises as sub-lessee. The letter required the peti- tioner to convey its acceptance Within 15 days. The petitioner replied to this by its letter of 18th March, 1968 and informed the Government that the Board of Directors is agreeable to the terms of conditions in the government letter of 4th March, 1968. It agreed to the lease terms in principle, but pointed out that annual rent probably had been worked out at Rs. 30.620.00 by taking 6 per cent per annum interest basis while the Reserve Bank had had reduced the interest rate to 5 per cent, and requesting for revision of interest at the existing bank rate.

(29) After the District Judge had set aside the eviction order the petitioner wrote to the Government on 2nd July, 1968 thanking it for having shown consideration and offering to enter into a fresh lease as required by the government letter of 4th March, 1968. It also referred to the letter received by the petitioner from Ministry of Finance that i per cent of rebate given for timely payment of interest (this was on the query by the petitioner about: the rate of interest being charged at 6 per cent instead of 5 per cent p.a.). Subject to this rebate of 1/4 per cent it agreed to the lease being renewed on the terms offered by President of India. It also referred to the approval already given with respect to accommodating M/s. Roadking Cycle Company (obviously reference was to the letter of Government dated 4th March, 1968).

(30) The arrears that are sought by the respondents No. 1 and 2 are worked out at an annual rental of Rs. 23,050.00 up to 28th February, 1968 and at the rate of Rs. 30,620.00 per annum from 1st March, 1968 along with interest at 71/2 per cent per annum. The only justification pleaded by Mr. Chopra for having to pay at Rs. 23,050.00 was. based on the fact that as the government had by its letter of 22nd June, 1961 extended the lease on old terms it necessarily meant annual rental of Rs. 23,050.00 But this argument conveniently forgets the correspondence and the agreement as per letter of 6th June, 1967, 4th March, 1968, 18th March, 1968 and 2nd July, 1968, by which the petitioner accepted the offer of the respondent and agreed to pay Rs. 30)620..00 as annual rent and to pay interest @ 71/2 per cent on the arrears of rent. Even the reference to the interest rate basis of 5 per cent being taken into account earlier than 6 per cent was given up in the petitioner's acceptance of 2nd July, 1968. Mr. Chopra sought to suggest that as the negotiations were going on before the eviction order was set aside by the District Judge on 22nd June, 1968, the petitioner's agreement cannot be held against him. I cannot agree. There was no element of coercion on the petitioner. It voluntarily accepted the terms of rent of Rs. 30,620.00 per annum and payment of interest at 71/2 per cent. The petitioner's acceptance was repeated to the Government in its letter of 2nd July, 1968 after the appeal had been allowed on 22nd June, 1968 by District Judge) which shows that it was a voluntary and freely entered agreement. Not only that in its letter of 2nd July, 1968, it referred to the approval given by the government to its sister concern M/s. Roadking Cycle Company (which again is a reference to the letter of government dated 4th March, 1968).

(31) Now it is the very letter of 4th March, 1968 which had fixed the annual rent of Rs. 30,620.00 . The petitioner cannot be allowed to blow hot and cold. It cannot urge that the acceptance by the government with regard to M/s. Roadking Cycle Company is to be implemented while the annual rental of Rs. 30,620.00 can be dispensed with. Neither in law nor in equity can the petitioner be permitted to say that it accepts a part of the agreement only. It has to accept the whole and cannot be premitted to choose at its discretion. In my view thereforee if the petitioner wishes to have the transfer of property effected in its favor it must discharge its liability of arrears of rent at the rate of Rs. 23,050.00 per annum up to 28th February, 1968 and the rate of Rs. 30,620.00 per annum from 1st March, 1968 along with interest on arrears of rent at the rate of 71/2 per cent per annum. The petitioner is invoking the equitable jurisdiction of this court. If it seeks to enforce on obligation incurred by the respondent No. 1 and, it cannot refuse to resile from the obligation undertaken by it willingly and freely, for it is well settled that he who comes in equity must himself also do equity. This court will not lend its aid to a person unless he comes with clean hands.

(32) In the reply affidavit filed by respondents, statement had been filed showing the arrears outstanding. The statement had been worked out on the basis which I have accepted as correct. A further statement of account was filed during the course of arguments, with a copy to the petitioner. This statement worked out the arrears outstanding up to 31st August, 1974, after taking into account the payments made by the petitioner. The correctness of this statement was accepted by the petitioner. This statement is marked C-l.

(33) The result is that the petitioner is entitled to a writ of mandammus directing the respondents No. 1 and 2 to transfer the property to the petitioner. This of course, is subject to the petitioner paying the sum of Rs. 4,71,080.00 along with the arrears of rent and interest up to date. The exact figure necessarily has to be worked out by the department. The respondents No. 1 and 2 are thereforee directed to supply to the petitioner the exact amount which will be due up to 30-11-74. This statement should be supplied by 30-9-74. The petitioner must make the full payment of Rs. 4,71,080.00 in addition to the amount of outstanding as arrears by 30-11-74. If the petitioner fails to make the payments mentioned above, the direction to the respondents to transfer the property to the petitioner will become inoperative.

(34) The petition is disposed of as above. There will be no order as to costs.


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