1989 (2) TMI 400 - SC - Indian Laws

Interference of a High Court while exercising its writ jurisdiction under Article 226 of the Constitution of India - Held that - There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual 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 of India so as to compel the authorities to remedy a breach of contract pure and simple. Thus the scope of interference of a High Court while exercising its writ jurisdiction under Article 226 of the Constitution of India in cases of non-statutory concluded contracts like the one in hand we are constrained to hold that the High Court in the present case has gone wrong in its finding that there is arbitrariness and unreasonableness on the part of the appellants herein in increasing the cost of the houses/flats and the rate of monthly installments and giving directions in the writ petitions as prayed for.

Issues Involved:
1. Legality of the revised cost and installment terms for the flats.
2. Applicability of promissory estoppel against the Bareilly Development Authority (BDA).
3. Jurisdiction of the High Court under Article 226 of the Constitution in contractual matters.
4. Validity of the respondents' consent to the changed terms and conditions.

Issue-wise Detailed Analysis:

1. Legality of the Revised Cost and Installment Terms for the Flats:
The appellants challenged the revised cost and installment terms issued by the BDA, which significantly increased the cost of the flats and the monthly installments. The respondents argued that the BDA's unilateral decision to increase the cost was arbitrary and unreasonable, especially since the revised costs were almost double the estimated costs initially provided in the brochure. The High Court observed that the fixation of monthly installments to the tune of Rs. 1031.50 for the MIG group, whose income was hardly Rs. 1500 per month, appeared arbitrary and unreasonable. The High Court directed the BDA to re-determine the cost of the flats after hearing the grievances of the respondents.

2. Applicability of Promissory Estoppel Against the BDA:
The respondents contended that the BDA was estopped from changing the conditions under which they had applied for registration and made the initial payments. However, the High Court repelled this contention, noting that the principle of promissory estoppel did not apply in this case. The BDA had reserved the right to change, enhance, or amend any terms and conditions as per Clauses 12 and 13 of the brochure and the notes under the General Information Table.

3. Jurisdiction of the High Court Under Article 226 of the Constitution in Contractual Matters:
The appellants argued that the High Court was not the proper forum to examine the terms regarding payment of installments, as the matter involved a non-statutory concluded contract. They cited various judicial pronouncements emphasizing that when the contract is purely contractual and non-statutory, the High Court should not interfere under Article 226 of the Constitution. The Supreme Court agreed with this view, stating that the High Court had erred in its finding of arbitrariness and unreasonableness on the part of the BDA. The Supreme Court set aside the High Court's judgment, emphasizing that the relations between the parties were governed by the legally valid contract and not by constitutional provisions.

4. Validity of the Respondents' Consent to the Changed Terms and Conditions:
The appellants contended that the respondents, except for four individuals, had given their unequivocal and unconditional written consent to the revised terms and conditions. This consent was documented through letters and other forms of acceptance. The Supreme Court noted that the respondents had voluntarily accepted the terms and conditions, including the clauses that allowed the BDA to revise the costs. Therefore, the respondents could not later challenge the revised terms as they had entered into a concluded contract with the BDA.

Conclusion:
The Supreme Court allowed the appeals and set aside the judgment of the High Court. The Court held that the respondents had entered into a concluded contract with the BDA, which included clauses allowing for changes in terms and conditions. The High Court's interference under Article 226 of the Constitution was deemed inappropriate in this contractual matter. The respondents were advised to approach the BDA for correction of any clerical mistakes in the calculations, if any, and were at liberty to seek other legal remedies if entitled.

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