Whether high court can grant relief in the nature of specific performance of contract in writ jurisdiction?

IN THE HIGH COURT OF BOMBAY (AURANGABAD BENCH)

Writ Petition No. 2944 of 1997

Decided On: 12.01.2017

Chhabildas and Ors.
Vs.
Jalgaon Municipal Council and Ors.

Hon’ble Judges/Coram:V.M. Kanade and Sangitrao S. Patil, JJ.

Citation: 2017(4) MHLJ 66

1. Heard the learned Senior Counsel for the petitioners and the learned Counsel for the respective respondents, at length.

2. Brief facts, which are relevant for the purpose of deciding this petition, are as under:-

3. A plot of land belonging to one Liladhar Bhatia was gifted by him to A.P.M.C., Jalgaon. Thereafter, said Bhatia expired and his heirs decided to give the plot to respondent no. 1 – Jalgaon Municipal Council (“the Municipal Council”, for short). Accordingly, the Municipal Council became owner of the plot.

4. The Municipal Council decided to develop the plot and a tender bid was invited for construction of a 17-story building and also two other buildings. Since the plot was not developed for a long period, there were several encroachments on the said plot. Ultimately, tender bid was awarded to a developer namely, M/s. Golani Brothers, respondent no. 5 (“the developer”, for short). In the agreement, it was agreed that the developer would construct a 17-story building, which would be used for administrative offices of the Municipal Council, and the developer would rehabilitate all the shop keepers, who have constructed the shops on the said plot.

5. Half way during the construction, the developer could not construct the remaining portion of the building. The construction was also delayed on account of the suits filed in the Courts and other circumstances. In the meantime, there was escalation in the cost of construction and the developer was unable to complete the construction work at the rate given in the agreement. According to the Municipal Council, under those circumstances, it had two options, either to file a suit against the developer for recovery of damages for non-performance of the agreement or to purchase 206 flats. Accordingly, the flats were purchased and thereafter, the developer completed remaining construction of the building. A resolution to that effect was passed by the Municipal Council.

6. The petitioners challenged the resolution passed by the Municipal Council, before the Collector under Section 308 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 (“the Act”, for short). The Collector, Jalgaon, vide order dated 27.07.1993, suspended execution of the resolution holding that the resolution was not in the interest of public and there was loss of revenue to the Municipal Council. The Divisional Commissioner, vide order dated 29.08.1994, confirmed the order passed by the Collector. Against that order, a Revision Application was preferred before the Hon’ble Minister, who set aside the order passed by the Collector and the Divisional Commissioner and confirmed the resolution passed the Municipal Council. Being aggrieved by the decision of the Hon’ble Minister, the petitioners have filed this petition in this Court.

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7. Initially, this Court dismissed the petition inter-alia holding that there was no public interest involved. Against that order, the petitioners preferred a Special Leave Petition in the Apex Court. The Apex Court, sometime in the year 2001, set aside the order passed by this Court and remanded the matter back for further consideration. The matter was heard, thereafter, on several occasions. At one stage on 13.11.2014, this Court asked the petitioners, whether they are still interested in pursuing the matter.

8. After the order was passed by the Hon’ble Minister, other subsequent events had taken place. It appears that in the agreement between the Municipal Council and the developer, there was a provision for appointment of an Arbitrator and accordingly, the Arbitrator was appointed. The Arbitrator decided the reference and increased the payment which was to be made to the developer, and the developer was accordingly paid the amount by the Municipal Council.

9. Mr. Dixit, learned Senior Counsel appearing for the petitioners submits that a huge financial loss has been caused to the Municipal Council on account of excess payment made by the Municipal Council to the developer. He submits that the excess payment made to the developer may be directed to be repaid to the Municipal Council. He submits that even after the Minister passed the impugned order, there was no occasion for the Municipal Council to refer the matter to the Arbitrator. The order of the Arbitrator asking more payment to be made to the developer, also is liable to be set aside. He submits that the developer may be directed to refund the excess amount paid to it. He submits that the Hon’ble Minister could not have interfered with the order passed by the Collector under Section 308 of the Act, which was confirmed by the Divisional Commissioner.

10. Mr. Dixit also submits that there was loss of public money and the Municipal Council had, with a mala fide intention, made the excess payment to the developer. In fact, the Municipal Council was entitled to get damages from the developer for non-performance of the contract. He submits that apart from there was breach of the agreement, there was non-performance on the part of the developer and therefore, the order passed by the Hon’ble Minister is liable to be set aside directing developer to refund to the Municipal Council the excess amount.

11. The petitioners placed reliance on a report submitted by the State Government showing excess payment made to the developer. The learned Counsel for the respondents raised objection for relying on the said report since it has been tendered across the Bar and it was not accompanied to the petition.

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12. Mr. Dixit submits that he is ready to file a reply tomorrow and the matter may be adjourned till tomorrow.

13. We, however, have declined to adjourn the petition any further since it is an old petition of 1997 and pending in this Court since last twenty years. We are of the view that the petition will have to be decided one way or the other.

14. The learned counsel for the respondent – Municipal Council, on the other hand, submits that the resolution passed by the Municipal Council, was in the interest of the Municipal Council. He submits that construction of the building was not complete and unless some new arrangement was made, construction of the building would have remained incomplete and it would not have benefited anyone. He, therefore, submits that as a result of the resolution passed by the Municipal Council, construction of the building was completed and shops have now been given on rent and the Municipal Council is earning rent as well as property tax from the occupants of the building.

15. The learned Counsel for the respondent – Municipal Council further submits that in the additional affidavit filed by the respondents, it is stated that as per the ready-reckoner, prices of properties in the area are Rs. 1,34,500/- per square metre for commercial building and for residential building, it is Rs. 54,100/- per square metre. It is submitted that therefore viewed from any angle, the Municipal Council has taken appropriate decision, which is in the interest of the Municipal Council and there was no loss of revenue to it. He submits that the Municipal Council paid the cost of construction of the building to the developer and it has received possession of all the flats.

16. The petitioners in this petition is seeking reliefs in terms of prayer clauses (A) and (B). So far as prayer clause (B) is concerned, the said relief is in the nature of specific performance of contract and the such relief cannot be granted by this Court while exercising its writ jurisdiction under Article 226 of the Constitution of India.

17. So far as prayer clause (A) is concerned, we are of the view that much water has flown after the order passed by the Hon’ble Minister, which is impugned in this petition. As a result of the resolution passed by the Municipal Council, which was confirmed by the Hon’ble Minister, the building has been fully constructed and the same appears to be occupied by the shop keepers who have been rehabilitated and so also, the other shops have been given on rent.

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18. The learned Counsel for the respondent – Municipal Council has given photocopies of the buildings. We find that construction of the entire 17-story building has been completed so also construction of the other two buildings of 5- story, have been completed fully. Quality of the construction appears to be very good.

19. We are, therefore, of the view that practically, the petition has become infructuous by efflux of time and no purpose would be served by turning the clock back by setting aside the order passed by the Hon’ble Minister. If that order is set aside, the orders passed by the Collector and the Divisional Commissioner would be confirmed, which would result in setting aside the resolution passed by the Municipal Council. This would create further problems since third party interest has been created.

20. We are, therefore, not inclined to go into the issue as to whether, loss was caused to the Municipal Counsel and wrongful gain was caused to the developer. The Municipal Council has tried to justify its decision by giving reasons in the affidavit-in-reply. The State Government also has filed their reply giving reasons, why the Hon’ble Minister felt that the resolution passed by the Municipal Council, was right.

21. Mr. Dixit, learned Senior Counsel has vehemently argued that excess amount has been paid to the developer and the developer should have been asked to refund the said amount.

22. It has to be noted that in this petition, prayer for refund of amount, which has been made pursuant to the order passed by the Arbitrator, is not made. Even otherwise, the question is, whether the order passed by the Arbitrator, who has been appointed pursuant to the arbitration clause under the Act, can be set aside by this Court while exercising the writ jurisdiction. It is an admitted position that the directions given by the Arbitrator have not been challenged on the ground of fraud or those being against the public policy. It is not, therefore, now open for the petitioners to challenge the said order, particularly when there is no such prayer made in this petition. We are, therefore, not inclined to interfere with the order passed by the Arbitrator while exercising the writ jurisdiction under Article 226 of the Constitution of India.

23. The Writ Petition is, therefore, disposed of reserving the right of the petitioners or any other party, to take out appropriate proceedings seeking recovery of the excess amount, if any, paid to the developer. The contention of the Municipal Council that the said amount was rightly paid, is kept open.

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