2008 (5) TMI 611 - SC - Indian Laws

Whether the allottee had failed to comply with the terms and conditions was required to be determined? Held that - Before us, several allottees had categorically made a statement that they are ready and willing to pay the prevailing price as fixed by the appellant- Corporation. Keeping in view the facts and circumstances of this cases, we are of the opinion that in the event, respondents offer the prevailing price as on the date of judgment of the High Court, the plot, in question, shall stand re-allotted and should be subject to the same terms and conditions. Such reallotment may be made even in cases where we have found the order of the High Court to be unsustainable. Respondents shall deposit the amount within six weeks from date. Appellant shall hand over the possession of the plot, in question, within four weeks thereafter. The highest executive of Appellant - Corporation shall see to it that the order of this Court is complied with. It is, however, made clear that in the event of failure on the part of the respondents concerned in making payment in terms of this order, it would be open to the appellant to take recourse to such action as is permissible in law.

Issues Involved:
1. Validity of orders of recession of allotment of industrial plots and resumption thereof.
2. Compliance with terms and conditions of the allotment.
3. Jurisdiction of the High Court in contractual matters.
4. Application of the doctrine of proportionality and principles of natural justice.
5. Discrimination and fairness in the actions of the Corporation.
6. Specific cases of individual respondents and their compliance with the terms of allotment.

Issue-wise Detailed Analysis:

1. Validity of Orders of Recession and Resumption:
The Supreme Court examined the validity of the orders of recession of allotment of industrial plots and their resumption by the appellants. The primary function of the appellant Corporation, a public sector undertaking, is to allot industrial plots to deserving entrepreneurs to promote economic growth. The terms and conditions of the allotment, including payment schedules, construction timelines, and consequences of non-compliance, were scrutinized. The court emphasized that resumption of plots is not automatic and must be preceded by a show-cause notice and adherence to the principles of natural justice.

2. Compliance with Terms and Conditions of the Allotment:
The court analyzed whether the respondents complied with the terms and conditions of the allotment letters. In several cases, delays in construction and payment were attributed to the Corporation's delay in handing over physical possession and approving building plans. The court noted that the Corporation must also consider its own conduct and cannot take advantage of its own wrongs. The terms of the contract must be construed in light of the respective rights and obligations of the parties.

3. Jurisdiction of the High Court in Contractual Matters:
The court discussed the High Court's jurisdiction under Article 226 of the Constitution in matters arising out of contracts. It held that while the High Court generally does not interfere in contractual disputes, it can exercise its jurisdiction if the action of the State is arbitrary, unreasonable, and violative of Article 14 of the Constitution. The court cited several precedents to support this view, emphasizing that the State must act fairly and reasonably.

4. Application of the Doctrine of Proportionality and Principles of Natural Justice:
The court applied the doctrine of proportionality, stating that the drastic power of resumption and forfeiture should be a last resort. The Corporation must comply with the principles of natural justice, including providing a show-cause notice and an opportunity for a personal hearing. The court highlighted that the Corporation's actions must be judged on the touchstone of Article 14, ensuring fairness and reasonableness.

5. Discrimination and Fairness in the Actions of the Corporation:
The court examined allegations of discrimination and unfair treatment by the Corporation. It noted that similarly situated allottees should be treated equally, and any deviation must be justified. The court emphasized that the State's actions must be guided by constitutional conscience and public interest, ensuring that no arbitrary or discriminatory practices are followed.

6. Specific Cases of Individual Respondents:
The court reviewed several individual cases, each with unique facts and circumstances. In some cases, the respondents had complied with the terms of allotment, but delays were caused by the Corporation's actions. The court directed the Corporation to reallot plots to respondents willing to pay the prevailing price as on the date of the High Court's judgment. It also ordered compensation in cases where the respondents were not at fault for delays.

Conclusion:
The Supreme Court's judgment emphasized the importance of fairness, reasonableness, and adherence to the principles of natural justice in the actions of the Corporation. It upheld the High Court's jurisdiction to intervene in cases where the State's actions are arbitrary and violative of constitutional principles. The court provided specific directions for reallotment and compensation, ensuring that justice is served in each individual case.

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