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TMI Blog1996 (8) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... m so that the systems brought about by them for doing something to the Society work smoothly and peacefully and persons concerned may act accordingly to law laid down by the Courts. (2) I am happy to place on record my sincere appreciation of the able, incisive and effective arguments advanced by the learned Counsel for the parties. They have made a lot of research and a good deal of hard work had gone in. They put forward their respective view points with considerable skill and dexterity. I was greatly benefited by their consummate arguments. From the arguments advanced I could see that lawyers also felt the pinch, the facts posing a novel situation. They converted an insipid position into a very interesting and absorbing one. The learned Counsel for the parties argued the matter for a considerable length of time and the lengthy arguments served to fine tune the points that have arisen for consideration. (3) India Habitat Centre, hereinafter referred to as the 'Centre', is stated to be located in Lodhi Estate for the purpose of promoting on no profit no loss basis a Habitat Centre for Organisations drawn from various sources for the benefit of the community and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittee were of the unanimous opinion that it would be prudent to award this work to the group managing Broadway Hotel for the following reasons. 1. If given this work it would be their main project since the only other operation of the group is as mall hotel, restaurant in Delhi and IHC would become their major project to which they would commit themselves fully. 2. Though at present the hotel run by them is a small one, the group had two big hotels in Kashmir before the trouble began there. Hence they have had the requisite experience. 3. Being a young professionally qualified and dynamic group with innovative new concepts it was felts that they would be ideal for a complex such as the IHC which was a first in many fields, including Hi-Tech operations. 4. The Chief Executive of this group because of his association with Mahindra Owen (a subsidiary of Mahindra's) and their tie up with Day Inns of the USA could be able to access international expertise at the appropriate level in project management and marketing. 5. Clearly their offer for profit sharing was the best offered and the group was prepared to back it up with a guarantee. 6. On 23.4.1993 a note was put up to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have already discussed most of these issues and their possible solutions, we shall submit all our recommendations within a couple of days. Please do let us know if you would require any further clarifications. Alongwith the letter the plaintiff also sent various details of the agreement. Part consisted of some salient features and assurances of Ihc relevant to Operating Agreement, 30 points are mentioned in Part I. In Part II the plaintiff had mentioned adverse effects of modifications. The plaintiff had pointed out what will be the effect of modifications that may be made if the suggestions of the defendant are accepted. Therefore, the plaintiff hayed presented even as early as in June, 1993 the pros and cons of the points raised by the plaintiff, (8) On 24.6.1993 the defendant wrote to the plaintiff in response to the letter dated 17.6.1993 and disclosed to the plaintiff that the defendant had applied his mind to the points raised by the plaintiff and the defendant had agreed to certain terms. (9) On 28.6.1993 the plaintiff wrote to the defendant in reply to the letter dated 24.6.1993. The plaintiff again mentioned all the aspects of the matter and again put forth it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive and the Architect requested final directions as to how and to what extent additional facilities requested by the group are to be provided. (16) On 16.7.1993 the defendant put up a note about the work done by Casa Plus and it was desired to release, on account, the payment of ₹ 1.50 lakhs to Casa Plus. (17) On 20.7.1993 plaintiff wrote to the defendant regarding the Fitness Centre and also the Laundry. (18) On 3.8.1993 the defendant wrote to Shri Mohit Gujral of M/s. Design Plus stating: THE finishing works for the following areas are yet to be started and can be finalised as per your concepts. (a) Corridors in the guest house. (b) Public toilets. (e) Health club facility. (d) Changing rooms. (e) Ground floor lobby and (f) Restaurants. (19) On 13.8.1993 the plaintiff wrote to the defendant, gave certain suggestions regarding the Project and for further Explanation and clarification the plaintiff requested the defendant to have a joint meeting with the Architects and the Designer for the Conference Centre. (20) On 1.10.1993 plaintiff wrote to the defendant mentioning about the augmentation and additions required for facilities already panned for. The pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your agreement with Ihc have been approved by the Subcommittee. It has also approved the budget and operational modalities as indicated by you. The area statement as presented in Schedule B has also been generally approved. Your request for the compensation of additional space for loss of committed food service space was accepted by the Committee who have referred the matter to the Building Committee for a decision. Since the signing of the formal agreement may take a few days, you may now take up the work on site without any further loss of time. As soon as you have worked out the details please let me have a schedule of completion. What emerges from this letter is the final terms and conditions have been approved by the Sub-Committee and the plaintiff may take the work as signing of the formal agreement may take a few days. (25) Therefore, by writing this letter defendant had agreed in unmistakable term, the terms and conditions in the Draft Agreement which had been finalised by both the parties. It may be (sic.) noticed here itself that the terms and conditions approved by the defendant are not the terms and conditions suggested by the plain tiff alone and so much discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warded to Old World Hospitality Pvt. Ltd. The Group have been in the hospitality business for over three decades, and will now be responsible for the efficient functioning of the host of facilities at the Centre. (31) In that news letters, the letter to the members given by the plaintiff is also published. In the first paragraph it is stated as follows : OLD World Hospitality Pvt. Ltd. (OWH) has moved into its site office, temporarily located in the East Court, opposite the Amphitheatre. We are working towards meeting our ambitious deadline of December, 1994, when some of the facilities would be made available to you. Thereafter, we hope to commence operations of the other facilities. The plaintiff also had been writing to the defendant about the operations. The plaintiff had also pointed out that the Conference by International Poul try Association was to be held and in April, 1995 the plaintiff sent the license fee. On 4.5.1995 the defendant wrote to the Manager, Bank of Baroda in the following terms : THE Manager Bank of Baroda Parliament Street New Delhi. Dear Sir, This is with reference to the Bank loan requested by our licensee, M/s. Old World Hospitality Priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1995 the defendant wrote the following to the Commissioner of Excise, Delhi Administration THIS is to submit that India Habitat Centre has been formed to develop an integrated physical environment in which various professionals and institutions dealing with different facets of the habitat are located. The Centre provides a conducive atmosphere for their attempts to resolve habitat related problems in a coordinated manner. Spread over nine acres in the heart of New Delhi, the Centre has a built up area of approximately 10 million sq. ft. It incorporates innovative new technologies in building management systems, conference systems, communications and energy conservation, creating probably the most intelligent building in the country. Several leading corporate entities and non profit organisations, sharing a common concern for the habitat, have come together to participate in this exating venture of institution building and have evolved a unique equation of synergy within this complex. The India Habitat Centre is now home not only to these offices and research organisations but also houses a club for about 8,000 distinguished members, and their spouses, India's most compreh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant had commended the plaintiff and the following would show how the defendant had said about the plaintiff: AS India's most recent and comprehensive Convention Centre, Ihc offers over a dozen seminar rooms, most of which have built-in-audio-visual facilities. The 600 seater auditorium, provided with a computer controlled conference system and simultaneous interpretation system, is comparable to the best in the country. A permanently dedicated secretariat and documentation centre will take care of all the conference needs. Integral to conference needs are banquet, cultural and entertainment requirements. Habitat world at India Habitat Centre is well equipped to provide all related services. The cultural venues are capable of hand ling music and dance recitals, theatre or any other type of performance. The dates scheduled for the opening of the conference, banquet and cultural venues re: Lecture Seminar and Conference Halls in November, 1995 Exhibition Hall in November, 1995 Auditorium and Basement Theater in December, 1995. When you want have an bash, do call us, as outdoor parties have commenced. We invite you to see the venues and make your bookings with the Confer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to incur lot of expenditure with the prospect of negative net return; (7) There is been complete change in the terms and conditions; (8) The Designer Consultants were paid by the defendant on the advice off the plaintiff; (9) There was no concluded contract, no detailed arrangements have been worked out and the ad-hoc arrangement has not worked properly and satisfactorily; (10) The demands made by the plaintiff are exorbitant, unusual, unreasonable and excessive; (11) The defendant is a non-profit, non-Governmental Organisation which acts as a nodal centre to promote research and awareness of Habitat and uncertain ad-hoc arrangement cannot be permitted to continue; (12) The original offer made by the plaintiff has undergone sea change in so many major aspects which would alter the basic character of the bid; (13) The terms are unreasonable, non specific and not acceptable to the defendant; (14) The plaintiff had committed breach in view of the excessive and unreasonable demand upon the defendant which are materially at variance with the original bid. (15) The plaintiff was asked to vacate the premises within/days from the date of this letter. (38) The plaintiff presented the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 16th of October, 1995 is wholly arbitrary, in violation of the terms and conditions of the contract, issued on extraneous considerations and quite contrary to the terms of the agreement and, Therefore, it is null and void. The contract is for a period of 20 years. The plaintiff had made elaborate arrangements and had engaged several persons who are specially trained for the Hotel Management and providing facilities of such a magnitude and the plaintiff had committed itself to a long term arrangement leaving out the other business endeavours that may be tried and if the defendant is allowed to withdraw from the contract in the way in which it has been done, the plaintiff would be put to irreparable loss and the loss cannot be quantified in terms of money and this is a case where it could not be said that the plaintiff could be compensated adequately by awarding damages. If injunction is granted and the plaintiff is permitted to operate the facilities in the Complex, the defendant would not be put to any prejudice; the Management of the defendant is made by Government officials and as a matter of fact the land had been assigned by the Government for the purpose of the Habitat Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff could not be entitled to the relief of specific performance because the matter involves supervision by Court in respect of minute details of providing facilities and various expenditure to be made by the defendant and such a thing cannot be subject matter of specific relief. (12) Inasmuchas, the plaintiff cannot have therelief of specific performance. The plaintiff cannot ask for interim injunction by virtue of Section 41 of the Specific Relief Act, 1963; (13) The suit by the plaintiff is barred under Section 34 of the Specific Relief Act; (14) The provisions of the alleged contract are unconscionable, one sided giving unfair advantage to the plaintiff and cannot be specifically enforced; (15) The plaintiff fraudulently induced the defendant to proceed with negotiations of the alleged license agreement; (16) The balance of convenience is in favor of the defendant. (42) The two principal points for consideration are : (1)whether there was a concluded contract between the parties? and (2) whether the applicant-plaintiff can seek the relief that the contract is subsisting and seek to injunct the defendant from enforcing the letter dated 16.10.1995. (43) For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid a sum in excess of ₹ 65 lacs so far to the various consultants, engaged by the plaintiff for interior decoration, kitchen facility planning and service planning in terms of Clause 14 of the terms and conditions. (e) Defendant has paid a sum of ₹ 12,150.00 as security deposit to the Gas Agency M/s. Cactus Lily Enterprises towards availability of gas cylinders and connections to the plaintiff in terms of Clause 8 of the terms and conditions. (f) Defendant took insurance for assets purchased by it and provided to the plaintiff in terms of Clause 13 of the terms and conditions. (g) Defendant awarded contracts to the Contractors for civil, electrical, plumbing, interior, equipment etc. as per specification and design provided by the plaintiff in terms of Clause 20. A list of the contracts awarded by the defendant is given in Annexure-A hereto. (h) Defendant has borne all the expenses relating to electricity for the areas under the possession and operations of the plaintiff in terms of Clause 19 of the terms and conditions. (i) In August,1994 the plaintiff started operations of the project canteen to cater to the office goers to the India Habitat Centre Complex and visi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eply would show that the plaintiff itself had gone back on its bid and the capital costs had been raised by six times from its original offer. According to the defendant, the Annexure-B filed Along with the reply would show how the plaintiff has repudiated its own bid and sought to negotiate a position by which the defendant would be put to enormous and wholly unsustainable annual burden. It is not stated in the reply and what is the basis on which these Annexures-A B had been prepared and how these figures would show without anything more that what is stated in Annexures-A B be accepted. The suit is barred under Section 41 of the Specific Relief Act, 1963. There has been mutual mistake. The Governing Council did not agree with the Draft Agreement. Therefore, according to the defendant there was no concluded contract. (46) The fact that plaintiff was put in possession of the site and so many other things have been done pursuant to, what is called by the defendant at the stage of negotiation is not disputed. I shall start from the Memorandum of Understanding dated 5.4.1994 as that is admitted by the defendant and from there I can sometime later go to the document which is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in formal agreement. In Clause 4 what are the operations to be carried on are mentioned in the following terms: THAT the licencee shall carry on licensed operations at the said property consisting of club/hotel, restaurants, bars, night club, conference halls and banquet halls, amphi theatre, auditorium, etc. in accordance with acceptable standards keeping in view the noble ideas of the licensor. The fact that the defendant has handed over physical possession of the property to the plaintiff for carrying on the operations is also mentioned. In Clause 9 it is agreed that the operating expenses shall be met by the licensor and licencee in the manner as has been mutually agreed. Therefore, the terms and conditions had been agreed is admitted. (47) Clause 8 reads as follows: THAT the licensor shall be responsible for all sanitation, cleaning, janitorial, utilities, horticulture, greenery and landscaping, etc. of the said property. Therefore, the fact that parties had agreed to the terms and conditions and they also commenced acting on the basis of the terms and conditions agreed and everything must going on without any kind of hitch. Right from 1992 when the bid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 27 speaks of Imports. Clause 28 refers to compulsory acquisition, expropriation, condemnation. Clause 29 is the termination clause. Clause 30 speaks of force majeure. Clause 31 speaks of consequences of termination due to force majeure, etc. Clause 32 speaks of mutual interest of the parties. Clause 33 speaks of waiver. Clause 34 refers to partial invalidity and it reads as follows: IN the event that any article mentioned in this Agreement is/are held to be void or not valid or not enforceable, the said Article shall be deemed not to have been a part of this Agreement and the existence of such an Article(s) shall not invalidate or nullify its Agreement as the license hereby granted is irrevocable for the duration of this Agreement and shall continue to be in force uninterrupted and be binding on the parties hereto. Clause 35 speaks of notice. The parties had also agreed about the jural relationship between the parties. Clause 36 speaks of that relationship in the following terms: 36. Relations between the Parties. 36.1. Nothing contained herein shall be construed as establishing or creating a relationship of master and servant, partnership, joint venture, principal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent aspect which will be dealt with in the course of this judgment. There is an interesting case in Nicolen Ltd. v. Simmonds 1953 (1) Aer 882, a decision by the Court of Appeal in England. There the contract was for the sale of 3,000 tons steel reinforcing bars. The seller broke his contract. The buyer claimed damages. The defense by the seller was that there was no contract at all. The seller expressed his acceptance in the following terms: WHERE any agreement with the usual conditions of acceptance apply. The Court took the view that the words 'usual conditions of acceptance' are meaningless. The Court observed that a clause which is meaningless can often be ignored while still leaving the contract good; whereas a clause which has yet to be agreed may mean that there is no contract at all, because the parties have not agreed on all the essential terms. (49) The Court indicated a test to find out the intention, that on a true construction of the document essential terms are yet to be agreed then there is no contract, but if vague and uncertain words can be ignored without impairing the efficacy of the other terms the parties can be said to have had consens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Council never agreed to sell the premises. Lord Denning held rejecting the contention on behalf of the Council : A. further point was taken. It was said that the town clerk had not actually signed the form of agreement. No matter. He had signed a letter of March 9, 1971, and that was sufficient. It was a note or memorandum sufficient to satisfy the statute. The final point was this : Mr. Francis said that the town clerk did not intend to be bound by the letter of March 9, 1971. He intended that the Corporation should not be bound except on exchange. There is nothing in this point. In contracts you do not look into the actual intent in a man's mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract. A man cannot get out of a contract by saying: I did not intend to contract if by his words he has done so. His intention is to be found only in the outward expression which his letters convey. If they show a concluded contract, that is enough. It seems to me that the Judge was quite right in holding that there was a binding contract in this case, even though there was no exchange. It is a proper case for specific pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition that they should enter into an agreement to buy petrol for the purpose of their motor-coach business exclusively from him. This agreement was duly executed, but the defendants broke it, and argued that it was incomplete because it provided that the petrol should be bought at a price to be agreed by the parties from time to time . The Court of Appeal rejected this argument and held that, in default of agreement, a reasonable price must be paid. May Butchery. R. [1934] 2 K.B. 17 was distinguished on a number of grounds; the agreement in Foley's case was contained in a stamped document; it was believed by both parties to be binding and had been acted upon for a number of years; it contained an arbitration clause in a somewhat unusual form which was construed to apply to any failure to agree as to the price [1934] 2 K.B. 1; and it formed part of a larger bargain under which the defendants had acquired the land at a price which was no doubt based on the assumption that they would be bound to buy all their petrol from the plaintiff. While none of these factors in itself is conclusive, their cumulative effect seems to be sufficient to distinguish the two cases. 2.094. Crit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sential ; and where the agreed machinery is of this character, the Court can, on its failure to operate, substitute other machinery; for example, the Court can itself fix the price with the aid of expert evidence. This is so not only where the agreed machinery fails because of one party's refusal to operate it, but also where it fails for some other reason, such as the refusal of a designated valuer to make the valuation. (54) In Pagnan S.P.A. v. Feed Products Ltd. 1987 (2) LL R 601, the Court of Appeal observed that there may be some cases where continued negotiations after a contract has allegedly been made will lead to the inference that the parties never in truth intended to bind themselves, as in Hussey v. Horne-S.P. Sayne (1879) L.R. 4 A C 311. The Court of Appeal further observed : THE parties are to be regarded as masters of their contractual fate. It is their intentions which matter and to which the Court must strive to give effect. In this endeavour, help is to be gained from the observation of Lord Denning Mr in Port Sudan Cotton Co. v. Chettiar (1977) 2 L R 5 p. 10: In considering this question, I do not much like the analysis in the text-books of inquiring w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforceable contract unless the condition is fulfilled or on the ground that law does not recognise a contract to enter into a contract. In Ridgway v. Wharton (1957) 6 HLC 238, Lord Cran worth observed that the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to an agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement. On facts the Madras High Court held that there was no concluded contract. (56) This Court had occasion to consider the question whether there was a concluded contract between the parties on the facts of that case in J.K. Industries Limited v. Mohan Investments Properties Private Limited, AIR 1992 Delhi 305. The facts briefly are this. The defendant represented to the plaintiff that it owned certain premises and offered to grant lease of the premises to the plaintiff. The facts would indicate that the plaintiff gave certain amount as advance to the defendant during negotiations. The parties do not appear to have come to any concluded contract either by exchange of letters or by acceptance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y relief in this case. (60) The next point to be considered is whether the letter dated 16.10.1995 issued by the defendant is justifiable. (61) A survey of the events is necessary though it involves a repetition of some of the events already related but in a case of this nature such exercise becomes inevitable. The defendant filed a type set of papers on 14.11.1995 Along with its reply to the application under Order 39, Rules I and 2 filed by the plaintiff. At page 140 the defendant has filed the agenda for the 22nd meeting of the Governing Council to be held on 26.11.1993. Agenda No. 22.06 reads: 22.06 Cost of interiors for the facilities block The budget estimates for the interiors of the Conference Centre and the Library (₹ 3.5 crores) and the estimates for conference equipment (2.20 crores) have been approved by the Building Committee after presentations by the respective architects/consultants. However, the budgetary estimates of the cot of interiors of restaurants, guest houses, the equipment of the kitchen, etc. which amount to ₹ 7.19 crores and the cost of upgradiation of services amounting to ₹ 3.79 crores have yet to be formally approved. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Governing Council did not consider the contract. The members of the Governing Council must have been aware of what was going on. If they want us to believe that they did not have any knowledge of the agreement/I am afraid, they demonstrate themselves totally unequal to the task entrusted to them. A commercial venture has to be approached with commercial perception and the bureacratical methodology may be cautious but would be counter productive not only with reference to the work on hand but in general. The Officers in charge of a big project involving several crores of rupees are expected to be vigilant and are expected to act with alacrity. They are to have in mind the twin objects, the public interest and the rights of the citizens. (63) On 3.2.1994 the plaintiff sent photo copies of the advertisement issued by it to show that it is going to have a team to work in the Complex for the purpose of providing an exemplary service to the members and the invitees to the Centre. On the same day, the plaintiff wrote to the defendant giving a progress report. The plaintiff stated therein: We feel that it would be helpful for you to get an up to date progress report on our activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asement till date has not permitted our consultants to even explore the said area properly. Recruitment Old World Hospitality Private Ltd. has already recruited a few key executives and spent generously on a recruitment campaign in order to attract the finest talent in the land. We have also attached a lot of importance to our management training programme and you shall be happy to know that we have selected an extremely bright batch of management trainees from the Catering Institutes. We interviewed hundreds of students personally and have hand picked the few we feel shall be long term assets at the India Habitat Centre. Within the course of the next month, we would be hiring almost all our key executives and department heads. We would thus be requiring office space almost immediately at the centre. A start up General Manager, Mr. Pierre Fori, with over 35 years of experience in the U.S. shall be joining us on February 15,1994 for a few months. His forte is operational planning, systems and training. He is also extremely strong in cuisines and is a celebrated television personality. Interiors Mr. Mohit Gujral and his team at Casa Plus have been working full steam on the interior p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 the Agenda reads as under: ALLOCATION of 300 sqm at upper ground floor zone 4 for resultant That work of operation and management of the facilities block has been awarded to M/s. Old World Hospitality Services. When offers were invited Ihc had indicated capacities of various restaurants and conference halls, based on which all quotations wYere made by the tenderers. On the award of work and on detail design analysis it was found that the capacities were falling way short of what was estimated in the following areas due to following reasons. (a) Those areas which were earlier conference-cum-eating areas were now designated either as dedicated conferences or eating areas thus resulting in a loss of effective catering areas. (b) The figures for capacities indicated by Ihc in the tender papers were not in conformity with hotel industry standards and in actual fact there was lesser effective capacity for catering than indicated in our bid papers. Due to the above it was found out that they were short of around 300-400 covers overall. The matter was discussed with M/s. Old World and Sdb and it was agreed that the loss in capacities was genuine. Earlier an area in the West Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... you to expedite giving us the office space. The project has been getting delayed and it is quite surprising that we are completing almost a year of interaction and have not been in a position to activate any work. This as you well understand, shall increase the delay of the commissioning as you will understand. On the 31st of March, 1994 the plaintiff wrote to the defendant giving suggestions about the communication system inside the Complex and about the transportation of goods intra Complex. (66) On the 5th of April, 1994 the Director of the defendant sent a copy of the agreement to the plaintiff. On that day it self a Memorandum of Understanding was executed between the parties about which I have already referred to. It is not the case of the defendant that before 5th of April, 1994 the financial implication of the project were not studied by the defendant. This Memorandum of Understanding is not disputed. I shall refer to the nature of the attack on this Memorandum of Understanding a little later when I deal with the submissions made by learned Senior Counsel Dr. Singhvi on behalf of the defendant. (67) On 3rd of May,1994 the Monitoring Officer Mr.U.Sarath C.Kanth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as the restaurant below. A serious matter had been mooted out by the plaintiff and that was apparently being considered by the defendant. Nothing is mentioned about it in the reply of the arguments. (72) On the 27th of May, 1994 the plaintiff again wrote to the defendant about the Comprehensive Project Budget. Here also the plaintiff made it clear Therefore, as we had clarified earlier the initial costs presented were only rough estimates to form some basis of the volume of work to be done and it is only now that one can present the estimates as true estimated cost. This has involved a tremendous exercise of M/s. Casa Plus as well as our entire team in the absence of all B.Q.Qs. and supplier's quotes . This letter is referred to in the Agenda for the 71st Building Committee Meeting to be held on the 6th of July, 1994. (73) On the 23rd of June, 1994 the plaintiff wrote to the defendant enclosing a letter from Casa Plus. The letter from Casa Plus is stated to be dated 27.6.1994. It may not be correct because in the letter dated 23.6.1994 reference naturally cannot be made to any letter dated 27.6.1994 but that is a different point. The fact is that the plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of the facilities to be provided by Ihc rather than demands being made by the licencee. We also have to take into account the fact that the licences has come a long way, made financial and other commitments towards his preparedness to start operations. I do not think we have an option to go back and start all over again. The cost of the delay and the legal costs would also be a factor to consider. On the 13th of July,1994 the plaintiff wrote to the Director of the defendant about the letter addressed to Casa Plus and also stating that the plaintiff had employed about 51 employees and the work was going on. The plaintiff is training a batch of the 21 brightest managing trainees picking them up from 800 Graduates. The plaintiff has also stated about the efforts it had taken to secure the best possible talent for doing the job in the Complex. The plaintiff also brought to the notice of the defendant that the Managing Director had refused several other assignments depending upon the work in the Complex and he wanted to discharge his obligations under the contract. (76) On the 26th of July, 1994 the defendant wrote to the plaintiff enclosing a cheque for ₹ 2,83,197.00 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sulted in a loss of revenue both in terms of conferences and banquet or party spaces for the evenings. The loss has been quantified as follows: (b) Banquet facilities As against an original offer of ₹ 17,14,000.00 month due to the changes in function the revenue from banquet had dropped to ₹ 11,88,000.00 month, since against the earlier mentioned conferences halls which were also being used for banquets in the evenings only 5 halls were now available for food services. (c) Conferences facilities Against the original offerof₹ 24,20,000.00 month froml4halls,due to the restricted usage of conference halls and dedicated food service area the revenue from the conferences has now dropped to ₹ 13,44,000.00 due to halls being reduced to 10 from the earlier mentioned 14 with the lower capacities being affected the most. Incidentally the lower capacity halls are the ones which have been found to be more frequently in use in the other such conference centres. These are figures given over a year ago. Further to the above Owh have also used up the entire ground floor cafeteria space for putting up their main kitchen to serve the south block since the space provided earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993 meeting. At page 101 it is explained as to why there is change in figures in the budget and in the conclusion paragraph it is stated as follows: We have reached the final stages of the project with necessary approvals of concepts and budgets at every stage. Regarding our license arrangement Ihc has been fair and equitable in its dealings with all bidders. If the budget appears to be large it is on account of the facilities to be provided by Ihc rather than demands being made by the licencee. We also have to take into account the fact that the licences has come a long way, made financial and other commitments towards his preparedness to start operations. I do not think we have an option to go back and start all over again. The cost of the delay and the legal costs would also be a factor to consider. (80) On 2nd of September, 1994 Mr. Vinay Jha, Director of the defendant wrote to Mr. K.K. Bhatnagar giving his comments on the salient features what had happened. The Cmd, Hudco Mr. K.K. Bhatnagar had received the comments and he had not raised any objection relating to the matter. (81) On the 15th of September, 1994 there was a meeting of the Governing Council of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporary suspension of work. This brought the entire activity to a stand still. We had repeated meetings with your office to resume the work. We were basically informed that the stoppage is due to IHC's own internal budgeting problem, which will be sorted out shortly. Kindly refer to the meeting that was held on Monday, November 7, in the chambers of the President, India Habitat Centre. In the aforesaid meeting, we were asked to present some sort of package in which we would surrender some space to help the Centre meet its financial requirement and reduced its constrains. This meeting was brought about due to the unfortunate turn of events that the project had taken over the past few months. In our last meeting on October 19, the Building Committee had requested us to look into the possibilities of reducing spaces and thereby budgets. This had come on the heel of 11 successive meetings held over four months in which our spaces according to bid invitation as well as standard norms, budgets, as well as the entire stand was totally vindicated. The Centre also appointed outside consultants to examine the matter whether spaces were adequate or not and we are given to understand that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st delays. (e) Approval for utilisation of outdoor areas for catering in the evening;. and during non office hours. (85) The minutes of the meeting of the Governing Council held on the 10th of November, 1994 is at page 39 of the type set filed Along with the rejoinder. In that meeting Mr. K.K. Bhatnagar, Cmd, Hudco and Mr. Dinesh Mehta were present. Dr. R.K. Pachauri was not present. The Members said : THE members examined in detail, the space requirement specially in relation to the kitchens and the back-of-the-house facilities. In response to a question, it was clarified that back-of-the-house included storage, pro-preparation of food before it went into the kitchens, administrative offices and areas used by the staff, e.g., locker rooms, toilets, etc. The proposal of the licencee to relocate the fast food preparation facilities outside the complex was also examined especially in the context of the problem of converting some storage space into Far space and the resultant compounding charges. This proposal had been made in response to certain options formulated by the Building Committee in respect of hospitality operations. It was pointed out that the major difference in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the view that the format of the presentation of figures did not correctly reflect the picture. The cost of services and facilities that were to be provided by Ihc, the scope of work transferred from other contracts and the increase in cost over bid figures due to changes in specifications made on request of Ihc, etc. should be shown separately to enable a correct assessment of the cost increases. In other words, the revised format should clearly show what was transferred from other accounts, what was due to inadequate original provision and what was due to increase of space. The Governing Council also desired that the provisions for additional lifts in place of dumb waiter, generator and kitchen equipment be reviewed again and their justification reconfirmed. It was decided that these proposals be given a final shape and put up for the approval of the Governing Council at a meeting to be convened on November 21, 1994 at 4.30 p.m. Further, the Governing Council decided : (1) That a blue collar canteen be provided in the basement and that the cost implications for this both in terms of interiors and space conversion (FAR) be indicated separately, (2) Not to accept the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to the space and the approval of the budget. (91) On the 16th of January, 1995 the plaintiff wrote to the defendant in the- following terms: THIS is a follow-up on our letter dated December 21, 1994. We made a presentation to the General Council on November, 7 and the Committee quite kindly acceded to our requests since they were considered justifiable. However, several issues have still not been resolved and the Committee was expected to meet on November 21,1994 to do so. That meeting was postponed to December 23, 1994 wherein again we believe the Committee could not deliberate upon our issues due to paucity of time. We would like to submit now that the following points need to be addressed immediately : 1. The General Council had realised that the delay caused by India Habitat Centre had cost us a tremendous amount not only in time but in precious finances. Our situation now is quite grim and we shall be running out of bank loaned funds in a very short period. We had thus made a proposal to you on November 8, 1994 and are eagerly awaiting disbursement of the funds. 2. We need to urgently shift our project office to the East Court first floor area and are awaiting you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dire straits financially. In this context we are now being asked whether a net return of 28% on the licensed operations is a fair amou for us to take home . The return oi 28% is not our net income but Gross Operation Profit. It appears that the concept of Gross Operating Profit as prevailing in our business has not been properly understood. 28% was projected as a probable Gross Operating Profit(G.O.P.). To compute net profit, we have to first pay/our license fee share out of this G.O.P., take care of our investment and intere stand then take home the rest. To better illustrate the picture, we are presenting as Annexure A' our comparative earnings statement. We must add that these are approximate projected figures and further delay in start of operations as well as other factors would adversely disturb these projections. For no fault on our part and on account of reasons mentioned in our earlier letters the project has been delayed by several months and tremendous losses have been borne by the licencee. in fact the loan to tide over these losses for the time being has still not been given. Other than the initial investment these losses would also take a long time to reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther than invest in a laundry operation off site where it would have no control. The pay back of this amount is guaranteed since the Centre would be collecting the revenue accrued from fitness centre fees. Annexure at Iii enumerates the potential share of the Centre and the licencee. The licencee would not be disbursed their share till the loan Along with interest at 18% is realised by the Centre. According to projection this would take less than 3 years. The projected health club income and calculation are at Annexure IV. (98) On the 29th of March, 1995 the Director sent supplementary Agenda for the meeting of the Building Committee to be held on 31st of March, 1995. (99) Then in the meeting held on the 31st of March, 1995 the Building Committee decided to place the matter before the Governing Council. (100) This is the cause for the letter dated 16.10.1995. The defendant was not inclined to grant the loan and later on it had decided to terminate the contract. (101) On the 4th of April, 1995 the plaintiff wrote to the defendant enclosing a cheque towards the share of the defendant. (102) On the 29th of April, 1995 plaintiff wrote to the defendant about the joint in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... your estimate, from ₹ 3.54 crores to ₹ 20.63 crores which is obviously exponential and unacceptable; operational areas to be earmarked by Ihc for your operations have substantially enhanced; Ihc is asked to fulfilll several conditions and assurances not envisaged under the original offer document. Notwithstanding the increase in the capital costs the minimum amount of return, which was stated to be gross and not net payment, remains of ₹ 4 crores whereas the proposed terms on the one hand made the payment subject to conditions which in effect invalidate the offer and on the other hand enjoin on Ihc the obligation of incurring series of costs on operation and maintenance with the prospect of having negative net return in this arrangement. Under the circumstances, it has not been possible to come to any understanding much less an agreement or contract in respect of the detailed terms and conditions of your presence at Ihc and as a result the scope of work, the mutual obligations of the two parties, the essential terms and conditions regarding area and space of operation, the budgetary allocations necessary for the proposed Hospitality Centre, the tariff setting stru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he excessive and unreasonable demands made by you upon Ihc materially at variance with the original bid. In the aforesaid circumstances Ihc is constrained to discontinue the arrangements with immediate effect and you are requested to withdraw your staff and the facilities given to you for operating in the premises of IHC. In the context of the foregoing facts and circumstances, we hereby direct and request you to cease all. such operations immediately and vacate the Ihc premises within 7 days from the date of this letter. Kindly note that this letter is not an exhaustive itemisation of all the grounds of cessation of the present arrangement and we reserve all rights to add to, vary and modify the same. (107) As could be seen from the letter the defendant had assumed that what was agreed was only on ad-hoc basis and all detailed terms and conditions were yet to be worked out . It is not known from 5.4.1994 to 16.10.1995 when the work was going on and when the work was stopped and resumed what was the defendant doing. If terms were to be worked out the defendant should say what was the terms agreed upon and what were the terms to be worked out. The defendant of its own volition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g done by the Officers in charge of the administration of the Centre. It is really an unfortunate situation. And what is more, the Officers who are entrusted with the administration of the Centre feel that they are the Judges of their own cause and they are not under control of anybody and they can decide anything they like and they can file affidavits in the Courts without any regard for truth and they can get away with those things with impunity. The arbitrary action of the defendant is writ large in the letter and the tenor of the letter makes me feel very sad and the Officer in charge of the defendant should have acted in the manner in which they have dealt with the plaintiff. Every Public Institution in India as pointed out by the Supreme Court in Ramana Dayaram Shetty v. The International Air-port Authority of India and Others, Mr (1979) IILLJ 217 SC, which has been reiterated in Kasturi Lal Lakshmi Reddy v. State of Jammu Kashmir and Am.. [1980] 3 SCR 1338, and right up to the famous Cricket match case reported in Secy., Ministry of information and Broadcasting. Government of India and Others v. Cricket Association of Bengal and Others, [1995] 1 SCR 1036, is to act for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Annual Report 1991-92. 2. Original Thirty first Annual Report 1992-93. 3. Original Eighth Annual Report 1993-94. 4. Original Seventh Annual Report 1993-94. 5. Original Seventh Annual Report 1993-94. 6. Original Thirty third Annual Report 1993-94. 7. Original Annual Report 1993-94 Tata Energy Research Institute. 8. Original Indo-French Centre for the Promotion of Advanced Research (IFCPAR). 9. Original Thirty ninth Annual Report. 10. Original Annual Report 1994-95. 11. Original Thirty fourth Annual Report 1994-95. 12. Original Eighth Annual Report 1994-95. 13. Original Indo-French Centre for the Promotion of Advanced Research (IFCPAR) Annual Report 1994-95. 14. Original Auditor's Report and Account 1994. 15. Original Ncr Planning Board Annual Report 1994-95. 16. Original Housing Development Finance Corporation Limited Annual Report 1994-95. 17. Original Delhi Urban Art Commission Annual Report 1994-95. 18. Original Annual Accounts Annual Report 1994-95. 19. Original Thirty fifth Annual General Meeting 25th September, 1995. 20. Original Third Annual Report 1994-95 National Foundation For India. 21. Original Auditors Report to the Members of the Board of Trustees of National F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of entering into the contract. (110) Lord Wright in 1940 A.C. 701 had observed that the party seeking to terminate has to justify the determination of the contract or the case will be one of breach repudiation. (111) The House of Lords in White Cartr (Councils) Ltd. v. Me Gregor 1962 A.C. 413, had occasion to consider the award or a contract. (112) The contract in Clause29 provides for termination under the circumstances state therein. Clause 29(3) gives rights to the defendant to terminate for a reason other than specified inArticle29(l)/29(2). Therefore, the contract spedfically states that it could be terminated only for reasons to be stated and the reason could be only on objective basis and it can never be subjective satisfaction of the defendant. Therefore, I have no hesitation in coming to die conclusion that the letter dated 16.10.1995 is primafacie, void in law and it cannot affect the rights of the plaintiff under the contract which had been complete and acted upon by the defendant. (113) Before I go to the other arguments of Dr. Singhvi one principal point very much pressed by him was that the plaintiff is seeking to enforce the contract which requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the contract even though an award of nominal damages would have covered all the losses of the estate. The Court made the award of compulsory performance because they though that it achieved a just result, for otherwise the nephew would have been unjustly enriched by being entitled to hold onto his uncle's business without paying his aunta penny. The modern judicial test asks the question: is it just in all the circumstances that the plaintiff should be confined to his remedy in damages? This test squarely raises the issue of describing the circumstances which induce a Court to find the award of the remedy of specific performance more just than damages. The key to the law of compulsory performance lies in recognizing that such a remedy is not designed to compensate the injured party for the losses, but to force performance of the contract. Normally a Court declines to order performance because damages provide a sufficient incentive to complete most contracts except where the defendant hopes to achieve unusual economic benefits from breach, in which case to compel performance would only serve to discourage contracts and to reduce the combined wealth of the contracting pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) In Halsbury's Laws of England Vol. 44 4th Edn., the statement of law is in the following terms: IN certain circumstances the Court may even grant a mandatory injunction directly requiring a party to the contract to perform his contractual obligations either on an interlocutory application or at the trial of the action. The footnote given in this Volume there is considerable law on the point and the same is in the following terms: SMITH v. Peters (875) Lr 20 Eq 511, where a vendor was ordered to give a valuer access to premises; Sky Petroleum Ltd. v. Vip Petroleum Ltd. (1974) I All Er 954: (1974) I WLR567, where the defendants were ordered not to withhold supplies of motor fuel from the plaintiffs; filling stations, no alternative sources of supply being available; Astro Exito Navegacion S.A. v. Southland Enterprise Co. Ltd. (ChaseManhattanBankN.Aintervening).TheMessinikaiTolmi(1982)3AIIER335: (1982) 3 Wlr 296, Ca (cited in Practice And Procedure, Vol. 37, para 361), where the buyers of a ship were ordered to sign a notice of readiness in order to enable money secured by a confirmed letter of credit to be paid out before the expiration of the letter. See also Acrow (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall bar the suit. (3) Notwithstanding anything contained in Clause (1) or Clause (e) or Clause (d) of Sub-section (1), the Court may enforce specific performance in the following cases (a) where the suit is for the enforcement of a contract. (i) S to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once; Provided that where only a part loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract; or (ii) to take and pay for any debentures of a company; (b) where the suit is for, (i) the execution of aformal deed of partnership, the parties having commenced to carry on the business of the partnership; or (ii) the purchase of a share of a partner in a firm; (e) where the suit is for the enforcement of contract for the construction of any building or the execution of any other work on land: Provided that the following conditions are fulfilled, namely (i) the building or other work is described in the contract in terms sufficiently precise to enable the Court to determine the exact nature of the building or work; (ii) the plaintiff has a substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on 23.11.1949, but the contractor assured the Chief Engineer by his letter dated 29.11.1949, that the contractor had recognised his partnership would not have any more financial difficulty he agreed in writing that 112 flats would be completed by 7.1.1950, 88 flats by 31.3.1950, on this assurance departmental action was stayed, but as the contractor did not keep to his promise his progress was slow, on 24.2.1950, the Dept. withdrew its staying of the action under Clause 3(a) of the terms of the contract. The contractor has put in his affidavit in reply but has not specifically denied the statements made with regard to the facts which I have given above. Therefore, this case cannot be of any help to the defendant. (118) The learned Senior Counsel brought to my notice the judgment of the Rajasthan High Court reported in Ramchandm Tanwar v. Mis. Ram Fakiniial Amichandand Another. The caserelates to right of a person doing business of vending articles in stall in the Railway Station. The learned Judge declined to grant injunction on the ground that the case of the plaintiff would fall under Section 14(1)(a) of the Specific Relief Act, 1963 as the plaintiff himself ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no perpetual injunction could be granted in view of the provisions of Section 38 and Section 41 of the Specific Relief Act, 1963 (Act 47 of 1963) or.......and any order for injunction granted in contravention of these provisions shall be void. And the High Court agreeing with the Ntpc that the contract was not specifically enforceable and, Therefore, the plaintiff was not entitled to the relief of injunction. The facts are very clear in this case and I don't think that the judgment of the Allahabad High Court is of any help to the defendant. (121) The learned Senior Counsel relied upon the judgment of the Andhra Pradesh High Court for the proposition that injunction cannot be granted if damages are adequate relief. The argument proceeds on the assumption that damages are adequate relief to the plaintiff in this rase. I have already dealt with this aspect. Prima fade, I feel that damages cannot be adequate relief to the plaintiff as explained by Chitty on Contracts. In M/s. Golden Wine Agencies, Hyderabad v. M/s. Venedela Distilleries (P) Ltd., Hyderabad Air 1984 A P 274, the Division Bench was considering the suit for specific performance of agreement to sell certain goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvenience of both the parties. In order to succeed the plaintiff must establish that the inconvenience he is likely to suffer by the refusal of the injunction would be greater than that which the defendant would suffer, if it is granted. And injury which the plaintiff is likely to suffer is unquantifiable, that is, the damages and other forms of security would not furnish an adequate remedy at the end of the trial of the suit. In paragraph Ii the Court rejected the claim of the plaintiff. Therefore, this case is of no use to the defendant. (123) The learned Senior Counsel then referred to the decision of the Calcutta High Court Ranjit Chandra Mitterv. Union of India, AIR 1963 Cal 594. There, the contractor filed an application for injunction restraining the Union of India from accepting the tender for work of any other contractor in respect of which the petitioner alleged that he had subsisting contract with the Government. In paragraph 4 of the judgment the learned Single Judge observed as under: IN Donald Keating's Law and Practice of Building Contracts (2nd Ed.) the equitable remedies open to a contractor on a wrongful termination of the contract is stated in the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court in S.P. Chengalvaraya Naidu (Dead) by L.Rs. v. Jagannath (dead) by L.R.S. and Others AIR 1994 SC 853. The officers of the defendant had considered all the aspects of the matter and nothing is suggested anywhere in the pleadings or in the entire correspondence with the plaintiff at any time made any attempt to conceal facts. I expressed my mind to Dr. Singhvi that if the defendant too much press into service this plea I may have to commentupon the various acts of commissions and onimissions on the part of the Officers of the defendant and I expressed my view that I did not propose to do that exercise in this matter except touching upon the affidavits filed by the three office. (128) The learned Senior Counsel submitted that the alleged license agreement cannot be enforced on the ground of mutual mistake. He relied upon the following decisions: 1.Rflmanujulu Naidu v. Gajaraja Animal, AIR 1950 Mad 146. 2. Chimanram Motilal v. Divanchand Govindram, Air 1932 Bom 151. 3. Norwich Union Fire Insurance Society Ltd. v. \Vm. H. PriceLtd. Air 1934 P C 171. There is absolutely no basis for such a plea and I have no difficulty in rejecting the contention. (129) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner not warranted by the information of the person making it, of that which is not true. though he believes it to be true; (2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming untier him, by misleading another to his prejudice, or to the prejudice of an) one claiming under him; (3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement . The learned Senior Counsel relied upon the judgment of the Himachal Pradesh High Court reported in. I do not find any substance in this argument. (132) The learned Senior Counsel apart from contending that there is no concluded contract, thought that his coup de grace, was that the defendant would be incurring heavy losses and that one circumstance alone would suffice for the purpose of refusing injunction to the plaintiff. (133) The question arises whether the appellant-plaintiff is entitled to interim injunction pending the suit. The principles relating to the grant of injunction are well settled but in applying the principles to the facts of a given case the difficulty arises be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein it was decided to appoint a Committee under the Chairmanship of Mr. R.N. Malhotra, Ex. Governor, R.B.I, to look into the capital cost and other implications of the draft agreement. It is further stated by him that the Governing Council never approved the draft agreement at any stage, had never authorised the communication of the letter dated 26.10.1993, never authorised the execution of the Memorandum of Understanding. The Governing Council was never approached for permission in this regard. It is further stated in paragraph 5 that the Governing Council have since authorised the President to call for the comments of the then Director and ascertain the basis on which he has proceeded to incorrectly represent that a Sub-Committee had approved the Draft Agreement. This position is totally false to the best of my knowledge and the then Director had admitted this to the Malhotra Committee . (136) Mr. K.K. Bhatnagar in his affidavit has stated that the Governing Council did not confirm or approve of the Draft Agreement, The Draft Agreement submitted to the Director was given to him for informal comments and guidance. Some of the aspects of the Draft Agreement sent by him were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not their case that the Journals published by the defendant were, without any reference to them. They have not referred to the nature of the Draft Agreement. They have not referred to the Auditor's Report and the opinion given by their Counsel. They have not said as to how the Auditors of the defendant and the Counsel of the defendant had gone wrong and they have not acted in the interest of the Centre. They had not taken care to mention very very many materials particulars which would be of assistance to the Court in the affidavit. They have assumed that whatever they say in the affidavit should be accepted by the Court. They do not say under what authority they had appointed the Malhotra Committee. What is the legal effect of the report of a Committee appointed by them when they are bound by the terms of the contract and whey they are bound to give respect of the Auditor's Report and opinion given by the Counsel. They could have issued die letter dated 16.10.1995. if they thought what they were doing was legal and proper without the formation of the Malhotra Committee giving the same reasons. They have not said anything in the letter dated 16.10.1995 about the reasons sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Council dated 26.11.1993. Tell me what is the effect of the decision of the Governing Council? Ans. The only effect of this decision approval of the Budget estimates of the cost of interiors for the facilities block. The facilities block had a number of areas in which Ihc itself was required to carry out certain works which Along with the estimates for the remaining part of the facilities block were approved in this meeting . When asked about the communication sent by the Director to the plaintiff on 5.4.1994 the answer is : Q.54.See page 22 of the type set filed by the plaintiff. Before sending this communication to the plaintiff, when was the decision taken by the Centre? Ans. The Governing Council at no stage took this decision to approve the agreement. The Governing Council did not meet at all before this communication was sent to the plaintiff. The matter came to the Governing Council only in September, 1995 when it was decided to appoint a committee under Shri R.N. Malhotra to look into the aspects relating to the agreement and the capital outlays for the hospitality facilities . Answer to question No. 55 would also show how Mr. Bhatnagar would deal with the positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining ₹ 7 crores the Council asked the Director to explore the possibility through both the proposals put forth in the agenda namely- (i) We could sell the conference centre to a large corporate organisation such as Itc, Pepsi etc. In fact the company we choose would in lend its name and the conference centre would be named the Habitat - (GO'S name) Conference Centre. As is the case will the Ncpa Bombay, Wwf Delhi etc. (ii) Borow the amount from a financial institution. Initial enquiries with Hudco indicate that they might be in a position to loan Ihc this money . As I had pointed out earlier the Governing Council did not reject the agreement. The three Officers who had filed the affidavits in the light of the specific language of the agenda and the minutes would state that the Governing Council did not consider any Draft Agreement on 26.11.1993. It is a travesty of truth. The answer to question 57 would belie the statement of the deponent of the affidavit that it was only in September, 1995 the Governing Council considered the matter : Q.57. Could you tell me when in August, 1994 you senta letter to Mr. Vinay Jha, did he take any steps to convene the Governing C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once gain and given my comments. We will have to discuss them at the earliest. Some of the crucial portions in the agreement are not clearly typed which we can see at the time of discussion. You would kindly recall that earlier also I had given extensive comments on the agreement and, I am not sure, whether they have been taken into consideration while finalising the draft. Possibly, it has not been donen certain cases. I shall be grateful if the earlier copy in which I had suggested modifications could be traced and also made available at the time of discussion. One of the comments which I had made at that time and I would like to repeat, is that, this is a highly loaded agreement in favor of the licensee and some of the legal implications may not become clear to a general reader. We will have to get them checked through a competent legal expert unless this has already been done. Quite a few portions do not even appear to be relevant and could be just deleted since, later on, these could give rise to avoidable interpretation and controversy . If may be recalled that on August 9,1994 Mr. Bhatnagar had written to Mr. Jha about the agreement and by letter dated 2nd of September, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requested for payment of money from the Centre. If the defendant did not want to pay the money to the plaintiff the defendant could have taken the stand in a straight forward way stating that the defendant cannot provide the assistance and if the plaintiff cannot defend for itself the plaintiff must leave the premises. The defendant had acted in a very arbitrary way subsequent to the demand made by the plaintiff. There is no Explanation at all from the defendant as to how it was justified p. 111.3 in stopping the work in July, 1994 and asking the plaintiff to resume the work in the beginning of 1995. However, such things could not be tolerated in a democratic set up. And I am afraid, that the affairs and the efficient management of the Centre are not safe in the hands of officers like Mr. K. K. Bhatnagar, Dr. R.K. Pachauri arid Mr. Dinesh Mehta and they had ignored that the officers have to function as a public functionaries within the parameters of the Constitution. The defendant had full faith in the plaintiff's capacity to do the service and on that basis the plaintiff had employed persons who are well qualified, very many industries who would look forward to promising care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has given details about the allotment and how the defendant had allotted to the members at a low cost when the market late is very high. Q.I1. Now these allottee members, whereby promotee members of subsequent allottees, all of them together they could have paid to the Centre towards cost of the building, towards the license fee of the land. Ans. I think the total contribution from the allottee members was in the region of 72 or 74 crores. This was a project on cost sharing basis with no profit no loss. The Habitat was the mandatory agency for the allottees and M/s. S.D.B. who were the project consultants. One of the reasons why the problems about the budget arose was that approximately ₹ 30 crores which was to be spent on the Facilities Block i.e. the interior of the Conference Hall, Auditorium, Laboratory, Guest Rooms, Restura was not planned and budgeted by the Consultants. Without doing this very important part of the planning exercised the selling price of the space had been determined by the Governing Council of the defendant at Rs. l,700.00 per sq.ft. Subsequent allotments made were ata price which was arrived at by adding 18% interest every quarter to this price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... budget proposals given by the plaintiff for ₹ 17 crores was accepted by the Governing Council in the meeting held in November, 1994. Q.21. Could you kindly recollect and toll me before the matter examined by the Malhotra Committee the Governing Council accepted the Budget presented by the plaintiff for ₹ 17crores and if so when ? Ans. I do not have recollection of the particular meeting in which be of ₹ 17 crores. approximately was accepted but it is my recollection that it was accepted before the review was undertaken by the Malhotra Committee. I cannot be definite since I am unable to locate agenda notes but I recollect that this was the Governing Council meeting of 9th/llth November, 1994. The Minutes of the Special Meeting of the Governing Council dated 10.11.1994 is on record. It is only there the Governing Council decided to resume the work. Therefore, what Mr. Vinay Jha state in die statement should be correct. In the Special Meeting Mr. Bhatnagar and Mr. Dinesh Mehta were present. Mr. R.K. Pachauri was not present. It is not stated by the three Officers, who had Filed the affidavits or in the reply to the injunction application that a Director had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money. It is very easy to say for the person who had committed a breach that the other side can always be compensated in terms of money. Any transaction like the one we see in the present case is not one of many transactions which often come up before Courts. In view of the development in the society and the advancement invarious fields of human endeavours, providing such services became necessary for the proper and efficient functioning of the various organisations housed in the Complex. Therefore, an innovative thinking i s required to find out a solution which could be of help to both the parties. The defendant being a public authority has asserted that it can do no wrong and the complete answer to the plaintiff's case is Report by the Malhotra Committee. Yet another seemingly formidable argument according to the defendant is that the contract is not specifically enforceable and, Therefore, I should not grant injunction. The plaintiff would be put to irreparable loss and hardship and as pointed out by Goddard Lord Justice in Borough of Howtslow v. Twickenham Garden Developiiwnts Ltd. (1970) 3 All E.R. 326, the status-quo to be preserved was not that which existed after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff, that could be seen from the materials placed before me, the defendant has not said anything which could persuade me to say that the continuance of die plaintiff in the Complex would affect the rendering of service to the persons coming to the Complex. Of course, in fiscal matters one has to be careful and in particular when one has to handle public money but that is no reason to deprive a citizen of his legitimate rights. The plaintiff had accepted the decision by the defendant that the income from the Fitness Centre should go to the defendant and as a matter of fact that plaintiff had not objected to anything that is directed to bedone by the defendant. Having entered in to a contract and having hulled the plaintiff into a sense of security and the guarantee of continuance of the contract and having stopped the work fornearly five months and having asked the plaintiff to resume work pursuant to the decision of the Governing Council on 10th of November, 1994 it is not open to the defendant to say I do not want you. I will be incurring loss even though my Auditors or my lawyers may have different opinion. I go by my Malhotra Committee's Report . In my view, this can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration for the plaintiff. The plaintiff had been making a request for a financial accommodation to the tune of ₹ 125 lakhs. On 9th of June 1995 the defendant wrote to the plaintiff in the following terms : THIS is the confirmation of our telephonic talk we had today. Your request for loan of ₹ 125 lakhs has been examined. At the outset the following clarifications/acceptance area sought from you before proceeding on the matter. On 13th of June, 1995 the plaintiff wrote to the defendant suggesting how timings could be done in the following terms : WE open a Recurring Deposit Loan Repayment Account. At the end of ever)' month, the pro-rata monthly share of that year's repayment of principal and interest shall be deposited. The Bank shall have instructions not to let O.W.H. withdraw from this account without a second signature, that of a nominee of I.H.C. In addition the Bank shall have standing instructions to put the pro-rata relevant monthly amount directly from our Current Account every month into this loan repayment account. This way the relevant amount due to I.H.C. is secured and we cannot withdraw it without I.H.C.'s concurrence. Our working ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintiff there from and from taking possession of any capital goods, equipment and supplies in the possession of the plaintiff till the disposal of the suit. No order as to costs. --- *** --- I.A.799/96 disposed of. Post the matter for admission and denial on the 14th of November, 1996 before the Joint Registrar. ORDERED accordingly I.A. disposed of. merely because he is minded to do so-he must in the exercise of his discretion do not what he likes but what he ought. In other words, he must, by the use of his reason, ascertain and follow the course which reason directs. He must act reasonably. 20.I am of the view that the imposition of penalty by the Arbitrator is an arbitrary exercise of power. I have no hesitation in setting aside this part of the award. The Arbitrator should have awarded interest on ₹ 91,000.00 only @ 10% per annum only from the date of award. Consequently, the award is modified arid is made a rule of the Court as per the above terms. Suit and is are disposed of. 21.There shall be a decree : 1. directing the objector, M/s. Bry Air (India) Pvt. Ltd. to pay the claimant, M/s. Ram Bahadur Thakur (P) Ltd. the sum of ₹ 3,30,00-; 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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