Dismissed

Delhi Development Authority v. Kenneth Builders & Developers Ltd. & Ors.

Supreme Court29 Jun 20162016 INSC 458 · [2016] 3 S.C.R. 11262016 INSC 458

Case brief

AI extract

What is this about?

DDA appealed a Delhi High Court order directing refund of a builder's bid deposit after regulatory agencies blocked a residential project on land treated as Ridge. The Supreme Court held the contract was frustrated under Section 56 of the Contract Act and dismissed DDA's appeal, directing refund with interest at 6% per annum.

What did the court decide?

DDA directed to refund the builder's entire deposit with 6% per annum interest from 11th September, 2006 till realization; GNCTD/DPCC question on DDA's authority over Ridge land use left open.

Delhi Development Authority versus Kenneth… — Environment and Pollution | Supreme Court (2016)

¶1

[2016] 3 S.C.R. 1126

¶2

¶3

DELHI DEVELOPMENT AUTHORITY

¶4

¶5

KENNETH BUILDERS & DEVELOPERS LTD. & ORS.

¶6

(Civil Appeal No .. 53 70of2016)

¶7

¶8

JUNE 29, 2016

¶9

( MADAN B. LOKUR AND N.V. RAMANA, JJ. )

¶10

Contract Act, 1872 - s. 56 - Contract impossible of performance ~Auction of 'residential' land by DDA on 'as is where c is' basis - For construction of houses - Bid of the respondent-builder accepted - Project land allotted and possession thereofgiven to builder - Development agreement between DDA and the builder - As per agreement various approvals and clearances from the appropriate authorities including environmental age11cies was o responsibility of the builder - The development work on project D land objected to by Department of Forests of Government of National Capital Territory (GNCTD) on the ground that the land fell in the Ridge and hence construction without consent of Ridge Management Board and permission of the Supreme Court not allowed - Ministry of Environment and Forest, Government of India gave environment E clearance subject to condition that Delhi Pollution Control Committee (DPCC) gave "consent to establish" - However, DPCC refused to give "consent to establish" in absence of "ridge demarcation report" - Builder also could not obtain "ridge demarcation report" - Builders writ petition under Art. 226 of Constitution for setting aside of auction, for declaration that project F was incapable of performance and sought refund of the amount paid to DDA - High Court held that if DPCC did not permit construction activity, the builder was entitled to refund of the entire amount deposited witli'DDA - Even after the judgment of High Court, DPCC refused to grant "consent to establish" - Appeal by G DDA and also by GNCTD and DPCC - Held: Despite the fact that builder took all the necessary steps to commence the construction activity, it co_uld not proceed the development activity due to the impasse created by the Government agencies_ - Thus the development agreement between DDA and the builder was frustraied having become impossible of performance within meani111g of s.56, due to

1126

1127

DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & DEVELOPERS LTD. & ORS.

¶15

the intervening circumstances not contemplated by either party - DDA directed to refimd the deposit made by the builder with interest @6%.

¶16

¶17

Dismissing the appeal filed by DDA, the Court

¶18

HELD: 1. The objection to the maintainability of the writ petition, having not been raised by the DDA before the High Court or even in the petition filed in this Court, cannot be entertained. The submission has been advanced by the DDA for the first_ time during the final hearing of these appeals. It is too late in the day to raise such an objection. [Para 27) [1146-D]

¶19

2.1 The respondent-builder did take all necessary steps to commence the construction activity on the project land but due to the impasse created by the governmental agencies, it could not proceed in the development activity. Under these circumstances, the provisions of Section 56 of the Contract Act, 1872 would be attracted to the facts of the case. [Para 32) [1147F-G)

¶20

2.2 The word "impossible" used in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility. It ought to be interpreted as impracticable and useless from the poiµt of view of the object and purpose that the parties had in view when they entered -into the contract. This impracticability or uselessness could arise due to some intervening or supervening circumstance which the parties had not contemplated. However, if the intervening circumstance was contemplated by the parties, then the contract would stand despite the occurrence of such circumstance. In the present case, the DDA certainly did not contemplate a prohibition on construction activity on the project land which would fall within the Ridge or had morphological similarity to the Ridge. It is this circumstance that frustrated the performance of the contract in the. sense of making it impracticable of performance. [Paras 33 and 34) [1148= D-E; 1150-A-B)

¶21

Satyabrata Ghose v. Mugneeram Bangur & Co. (1954) SCR 310 - relied on.

¶22

2.3 It is true that the Government of India had notified the project land as "Residential" and that the project land was shown as "Residential" in the MPD-2001 and MPD-2021. But that fact alone would not change the position at law. The exact boundaries

1128

[2016] 3 S.C.R.

SUPREME COURT REPORTS

¶33

A of the Ridge do not appear to have been demarcated and in the absence of demarcation, it could not be said with any degree of certainty by the DDA that merely because of the two notifications issued by the Ministry of Urban Development the project land could be used for residential purposes even if it fell within the Ridge. This would be ignoring the position at law and would be

¶34

B stretching the argument a little too far. The DDA was unaware that even if the project land did not fall within the Ridge yet any development activity thereon would require permission from the Ridge Management Board as well as from this Court since there was morphological similarity between the Ridge and the project

¶35

c land. It is this intervening circumstance which eventually frustrated the implementation of the contract. [Para 35] [1150-BD]

¶36

2.4 When the DDA informed the builder that the project

¶37

land was available on an "as is where is basis" and that it was the responsibility of the developer to obtain all clearances, the

¶38

D conditions related only to physical issues pertaining to the project land and ancillary or peripheral legal issues pertaining to the actual construction activity, such as compliance with the building byelaws, environmental clearances etc. The terms and conditions of "as is where is" or environmental clearances certainly did not

¶39

E extend to commencement of construction activity prohibited by law except after obtaining permission of the Ridge Management Board and this Court. On the contrary, it was the obligation of the DDA to ensure that the initial path for commencement of construction was clear, the rest being the responsibility of the developer. The failure of the DDA to provide a clear passage due

¶40

F to an intervening circumstance beyond its contemplation went to the foundation of implementation of the contract with the builder and that is what frustrated its implementation. [Para 37] (1150G-H; 1151-A-B]

¶41

Punjab Urban Planning & Development Authority v.

¶42

G Raghu Nath Gupta 2012 (8) SCR 118 : 2012 (8 ) SCC 197 -relied on.

¶43

¶44

2.5 The certain circumstances had intervened, making it impracticable for the builders to commence the construction activity on the project land and thus, the contract between the DDA and the builder was impossible of performance within the

¶45

1129

¶46

DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & DEVELOPERS LTD. & ORS.

¶47

meaning of that word in Section 56 of the Contract Act. Therefore, it cannot be said that the contract between the DDA and the respondent-builders was not frustrated. [Para 39) (1151-G-H; 1152-A-B]

¶48

DDA is directed to refund the deposit made by the respondent-builder with interest at 6% per annum calculated from 11th September, 2006 (the date on which entire amount was deposited by the builder with DDA) till realization. (Para 40) (1152-C)

¶49

The question raised by Government of National Capital Territory and Delhi Pollution Control Committee, as to whether DDA was the final authority in the matter of determining the land use particularly when it related to the Ridge . is left open for consideration in an appropriate case. (Paras 41, 42) (1152-D, FJ

Kenneth Builders and Developers Ltd. v. Union of India and others, MANU/DE/1815/2010 ; IN. Godavarman

¶54

v. Union of India (2013) 8 SCC 198 - referred to.

¶55

¶56

Case Law Reference

¶57

MANU/DE/1815/2010	referred to	para2
(2013) 8sec198	referred to	para25
(1954)SCR310	reliedon·	·para33	E
2012 (8)SCR118	relied on	·para38

¶58

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5370 of2016.

¶59

From the Judgment and Order dated 30.07.2010 of the High Court of Delhi at New Delhi in Writ Petition (Civil) No. I 0.647 of2009

¶60

¶61

WITH

¶62

C. A. No. 5371 of2016.

¶63

A. Sharan, Parag Tripathi, Sr. Advs., Vishnu B. Saharya, Viresh B. Saharya, Shrehan Siddhartha, M/s. Saharya & Co., Sum it Pushkarma, Alok Gupta, Advs. for the Appellant.

¶64

Kapil Siba1, Sanjiv Sen, Ashok Panda, Sr. Advs., Mahesh Agarwal, Ankur Saigal, Rishabh Parikh, Raghav Dwivedi, E. C. Agrawala, D. N. Goburdhan, Ms. Pallavi Chopra, Lal Ramtiamma, Mohan Prasad Gupta, Shadman Ali, Gaurav Sharma, D.S. Mahra, Ms. s'ushma Suri, Advs. for the Respondents.

1130

SUPREME COURT REPORTS

¶69

[2016] 3 S.C.R .

¶70

A . The Judgment of the Court was delivered by

¶71

MADAN B. LOKUR, J. I. Delay condoned. Leave granted in both petitions.

¶72

The appellant (Delhi Development Authority or the DDA) in the first appeal is aggrieved by the judgment and order dated 30th July, B 20 l 0 passed by a Division Bench of the High Court of Delhi in W.P.(C) No. 10647 of2009.' The grievance of the DDA is that even though the Hig11 Court held that the project land that we arc concerned with was '"Residential" as contended by the DDA, yet the High Court held that in . the event construction activity thereon is not permitted by the Delhi Pollution Control Committee (or the DPCC) the developer (Kenneth c Builders) would be entitled to a refund of the entire amount deposited with the DOA pursuant to the acceptance of the developer's bid in an auction, along with interest thereon. ·

¶73

Jn the connected appeal. the appellants (Government of the National Capital Territory of Delhi or the GNCTD and its Department D of Forests) are aggrieved by the same judgment and order to the extent that it has been held that the ODA is the final authority to determine land use, even though its determination pertains to the Ridge in the National Capital Territory ofDdhi.

¶74

Before referring to the facts of the case, which we have taken frcim the appeal filed and argued by the ODA, we \VOLiid like to mention E that there has been protracted correspondence between the ODA. Kenneth Buildt:rs and the Secretary (Environment) cum Chairman of the Delhi Pollution Control Committee of the GNCTD. However, we are of opinion that it is not necessary to detail the contents of every letter between them and we propose not to burden this judgment with F · avoidable details, as long as the narrative does not suffer.

¶75

The principal question that arises for our decision is whether the development agreement between the DDA and the developer Kenneth Builders was frustrated within the meaning of Section 56 of the Indian Contract Act. 1872 due to some intervening circumstances not contemplated by either party. Our answer to the question is in the G affimiative.

¶76

The facts of the case

¶77

The DDA proposed a public-private partnership project for the development of an area of 14.3 hectares of prime land at Tehkhand in 1 K1:11i1e1h fluildcr' a11,J Developers Ltd. v. Union of India and others. MANU/Ofj H 1315/2010

¶78

1131

¶79

DELHf DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & DEVELOPERS LTD. &ORS. [MADAN 8. LOKUR,J.]

¶80

South Delhi for the construction of750 premium residential flats in a self contained community to be sold by private real estate development on free sale basis. Jn addition to the premium residential flats, the developer wou Id have to construct 3 500 resettlement houses for the economically weaker sections of society with each house having a super area of 26 sq. metres. These resettlement houses and the developed common facilities relating thereto would be handed over to the DDA for allotment.

¶81

According to the DDA (and there is no dispute about this) the project land was notified on I st August, 1990 for "Recreation" (District Park) in the Master Plan for Delhi - 200 l (MPD-200 I). According to the DOA (and again there is no dispute in this regard) two notifications were issued by the Ministry of Urban Developmeut of the Government of India on 8th January, 2002 and 23rd February, 2006 converting the project land from "Recreation" (District Park) to "Residential".

¶82

On 20th March, 2006 the DDA issued an advertisement for involving the private sector in Delhi's development and for the development of the project land for the construction of750 residential flats and 3500 resettlement houses. Pursuant to the advertisement, an auction was held by the DDA in terms of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981 on an ·'as is where is basis" and as per the terms and conditions prescribed for the auction.

¶83

The terms and conditions for the auction specifically mentioned that the bid would be for the amount of premium offered for the project land to execute the project and that the project was being offered on an "as is where is basis''. It was stated that the presumption is that the intending purchaser has inspected the site and has familiarized himself with the prevalent conditions in all respects including status of infrastructure facilities available etc. before giving its bid. It was stated that on acceptance of the bid, the highest bidder would be required to deposit 25% of the bid amount as earnest money and the balance 75% of the bid amount was required to be deposited with 90 days of the issuance of the allotment-cum-demand letter. It was also stated that possession of the project land would be handed over on payment of the entire bid amount and on execution of the development agreement, except an area of approximately 4 hectares on which there is a JJ cluster. The terms and conditions also required the developer to comply with all the statutory requirements and rules and regulations of all public bodies including payment of fees and taxes etc.

1132

SUPREME COURT REPORTS

. [2016] 3 S.C.R.

I 0. Kenneth Builders was the highest bidder in the auction held on 26th April, 2006 and its bid was accepted. On 15th June, 2006 a demand-cum-allotment letter was issued to it requiring payment of balance 75% of the bid amount. It is not in dispute that Kenneth Builders deposited the entire bid amount-0fRs. 450.01 crores with the ODA on 11th September, 2006.

¶99

Pursuant to the deposit.of the entire bid amount by Kenneth Builders, a ho objection certificate' was issued by the DOA on 6th November, 2006 for submission of building plans for the project to the Planning Department of the DOA. )hereafter, on 4th December, 2006 possession of I I .70 hectares of the project land was handed over to Kenneth Builders but an area of approximately 2.60 hectares covered by the JJ cluster was left out and possession thereof was not given.

¶100

On 5th September, 2007 a Developmen.t Agreement was signed between the DOA and Kenneth Builders whereby it was agreed, inter alia, that Kenneth Builders would construct 3500 houses for the D resettlement of slum dwellers and 750 free sale flats which Kenneth Builders would be entitled to dispose of. Kenneth Builders would also develop roads and peripheral services for the entire project.

¶101

In terms of the development agreement it was the responsibility of Kenneth Builders to obtain various approvals and clearances from the appropriate authorities including environmental agencies of the State E and the Central Government. Clause 6 of the Development Agreement is important in this regard and this reads as follows:

¶102

"6. Responsibility of Developer to get various approvals and clearances

6.1 The Developer shall be responsible for approval of drawings and for obtaining other "No Objection Certificate; from the appropriate authorities and Deptts not limited to MCD, Delhi Jal Board, Electric supplying agency concerned, Delhi Fire Services, DUAC, the environmental agencies of the State and Central Government. Authority or its authorized officers who are duly authorized to give approval 011 behalf of the Authority. (sic)

¶107

6.2 The delay in submission ofapplications, drawings, construction plans and compliance of the observation: shall be the responsibility of the Developer, and any delay in grant of approvals by the aforesaid Government bodies shall not relieve the Developer of any ofits responsibilities under the Contract."

¶108

DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

¶109

I I 33

¶110

Kenneth Builders was also deemed to have inspected the site and its surroundings and checked the info1111ation available in connection therewith including the sub-surface conditions, the hydrological and climatic conditions etc. It was also deemed to have satisfied itself of the correctness and sufficiency ofall the material and all its obligations under the contract, including dealing with concerned authorities such as environmental agencies of the State and Central Government. Clause I 1.1 of the Development Agreement in this regard is important and this reads as follows:

¶111

¶112

¶113

"11.1 Sufficiency oflnformation

¶114

The Developer shall be deemed to have satisfied itself of the correctness and sufficiency of all the material and all its obligations under the Contract, including dealing with the concerned authorities not limited to MCD, Delhi Jal Board, Electric supplying agency concerned, Delhi Fire Services, DUAC, the environmental agencies of the State and Central Government, Authority or its authorized officers who are duly authorized to give approval on behalf of the Authority at its own cost and expense, as well as all the contingencies and all matters and things necessary for the proper execution and completion of the project and the remedying of any defects therein, before submitting the tender. The Developer has agreed and understood that no request for change in the terms and conditions of the Contract shall be entertained at any stage on any ground whatsoever."

¶115

15, The problems for Keirneth Builders began when, pursuant to the Development Agreement, it attempted to establish infrastructure facilities on the project land such as its site office, DOA office, sample flat for the economically weaker sections etc. sometime in February/ March 2008. It was then that the Department of Forests of the GNCTD -raised objections to carrying out such activities on the ground that the project land falls in the Ridge and hence all activities were required to be suspended.

¶116

The objection of the DepartmentofForests compelled Kenneth Builders to ~op all building activity on the project land and that resulted in an exchange of letters for the next several months between the ODA, the GNCTD and Kenneth Builders. To cut a long story short, the DOA insisted that the project land was "Residential" and that the project could be undertaken thereon. The GNCTD was equally clear that the project

1134

SUPREME COURT REPORTS

¶125

[2016] 3 S.C.R.

¶126

A land falls within the Ridge and no construction activity could be carried out without the consent of the Ridge Management Board and the permission of this Court. On its part, the Ministry of Environment and Forest, Government of India (or the MoEF) kept aloof from the controversy and gave environmental clearance for the project on 15th July, 2008 subject to the condition that a "consent to establish" shall be

¶127

B obtained by Kenneth Builders from the DPCC under the Water (Prevention and Control of Pollution) Act, 1974 (for short the Water Act) and the Air (Prevention and Control of Pollution) Act, 1981 (for short the Air Act) and a copy submitted to the said Ministry before the start of any construction work at the site. The relevant extract of the

¶128

c environmental clearance given by the MoEF reads as follows:

¶129

"Subject: Construction of residential housing project atTehkhand New Delhi by Mis Kenneth Builders & Developers Pvt. Ltd. Environmental Clearance - Reg.

¶130

Dear Sirs,

¶131

¶132

This has reference to your application No. nil, dated 15.01.2008 and subsequent letters dated 23.04.2008 and 23.05.2008 seeking prior Environmental Clearance for the above project under the EIA Notification, 2006. The proposal has been appraised as per prescribed procedure in the light of provisions under the EIA E Notification, 2006 on the basis of the mandatory documents enclosed with the application viz., the Questionnaire, EIA. EMP and the additional clarifications furnished in r$!sponse to the observations of the Expert Appraisal Committee constituted by the competent authority in its meetings held on 13th 14th March F 2008, I st & 3rd May 2008 and 26th May, 2008 and awarded "Silver" grading to the project.

¶133

xxx xxx xxx

¶134

The Expe1i Committee after due considerations of the relevant documents submitted by the project proponent and additional G clarifications furnished in response to its observation have accorded environmental clearance as per the provisions of Environmental Jmpact Assessment Notification - 2006 an·d its subsequent amendments, subject to strict compliance of the terms and conditions as follows:

¶135

¶136

DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & 1135 DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.] PART A - SPECIFIC CONDITIONS A I. Construction Phase. (i) "Consent for Establishment" shall be obtained from Delhi Pollution Control Committee under Air and Water Act and a copy shall be submitted to the Ministry before start of any construction B work at the site.

¶137

(ii) to (xxvi) xxxxxxxxx II. Operation Phase xxxxxxxxx PART B - GENERAL CONDITIONS: xxxxxxxxx

¶138

¶139

and 5. xxx xxx xxx

¶140

The Ministry reserves the right to add additional safeguard measures subsequently, if found necessary and to take action included revoking of the environment clearance under the provisions of the Environmental (Protection) Act, 1986, to ensure effective implementation of the suggested safeguard measures in a time bound and satisfactory manner.

¶141

All other statutory clearances such as the approvals for Storage of diesel from Chief Controller of Explosives, Fire Department, Civil Aviation Department. Forest Conservation Act 1980 and Wildlife (Protection) Act, 1972 etc. shall be obtained, as applicable by project proponents from the respective competent authorities.

¶142

These stipulations would be enforced among others under the provisions of Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and control of Pollution) Act 1981, the Environment (Protection) Act, 1986 the Public Liability (Insurance) Act, 1991 and EIA Notification, 2006.

¶143

Environmental clearance is subject to final order of the Hon 'ble Supreme Court oflndia in the matterofGoa Foundation v. Union oflndia in Writ Petition (Civil) No.460 of2004 as may be applicable to this project.

I 0. xxx xxx"

1136

[2016] 3 S.C.R.

SUPREME COURT REPORTS

¶153

¶154

¶155

In view of the above, Kenneth Builders applied to the DPCC for "consent to establish" on 4th November, 2008. In response, the DPCC required Kenneth Builders to submit a "ridge demarcation report" at the earliest. Despite its asking by Kenneth Builders, the ODA did not give any such report to Kenneth Builders on the ground that the issue had already been clarified to the GNCTD in a letter dated 17th October, 2008. The letter dated 17th October, 2008 is a little ambiguous inasmuch as it mentions that the boundaries of the Ridge have been delineated, but they have not been identified at the site. The letter dated 17th October, 2008 reads as follows:

¶156

¶157

"Subject: Regarding Residential housing Project at Tehkhand, New Delhi by Mis Kenneth Builders & Developers Pvt. Ltd.

Sir,

This has reference to letter No. DPCC/MClll/3154: dated 6th August, 2008, enclosing the copy of the letter of Secretary (Environment) cum Chairman, Delhi Pollution Control Committee, Government ofNational Capital Territory of Delhi dated 13th June, 2008. In the Master Plan for Delhi-2001, Ridge has been defined in an area of7777 hectares which is to be preserved in its pristine glory. In the Preamble of the said Master Plan for Delhi-200 I, one conceptual sketch indicating the ridge has been shown as one:: of the eight concepts only, whereas the land use Plan is the legal documents/plan showing the details which are to be referred for the purpose of establishing the area/land use, in this case for the ridge/regional park.

¶163

Delhi Government through its notification dated 24.05.1994 has delineated the boundaries of the ridge but the same has not been identified on the site. This notification is under Section 4 for the areas to be earmarked as reserved forests under the Delhi Forest Act.

¶164

The land pocket where ODA has proposed residential development, G was clearly shown under District Part in-MPD-2001, and the land use of the same has already been changed from Recreational Use (District Park) to residential vide Gazette oflndia notification Nos.A-13011/30/1995-DDIB dated 08.01.2002 and 23 .02.2006 (copies enclosed). The said notifications were issued following the due process of law and taking relevant factors into

¶165

¶166

DELHIDEVELOPMENTAUTHORITYv. KENNETH BUILDERS& 1137 DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

¶167

consideration. No objection in respect of the land use of the Project A land were raised by any departments including the Forest Department at that stage.

¶168

The Ministry of Environment & Forest, after considering and taking on record the representation from both Delhi Pollution Control Committee and ODA (Letter No.F.3(60)MP/D. l l 6 dated 30.6.08) with respect to land use of the Project land, has accorded the Environment Clearance to our project on 15th July, 2008, copy of the same is attached herewith.

¶169

¶170

All the facts, documents and detailed plans have been shared and discussed in detail between the two departments, in meeting. In the light of facts been legally converted from recreational use (District Park) to residential.

¶171

¶172

In view of the facts, it is requested that the "Consent to Establish" from Delhi Pollution Control Committee under Air & Water Act be granted to the applicant at the earliest."

¶173

Faced with this impasse and unable to obtain the ridge demarcation report and therefore the "consent to establish" from the DPCC, Kenneth Builders approached the Delhi High Court by way of a writ petition on I st August, 2009 resulting in the impugned judgment and order. In the writ petition, Kenneth Builders prayed, inter alia, for setting aside of the tender/auction notice dated 20th March, 2006 as also the allotment letter dated 15th June, 2006 and a declaration that the project was incapable of performance. It was further prayed that the auction had become void and that Kenneth Builders was entitled to a refund of the amount paid to the DOA along with interest at 18% per annum till realization.

Decision of the High Court

¶178

The High Court has elaborately discussed the various letters exchanged between the concerned parties and has thereafter very succinctly put the controversy in focus in paragraphs 26 and 27 of the impugned judgment and order. These paragraphs read as follows:

¶179

"26. The foregoing demonstrates the controversy between the parties. The petitioner's stand is that it had made the bid for the project and had aid the entire amount of Rs.450.0 I crores on the clear understanding that the project site was residential. This

1138

SUPREME COURT REPORTS

[201613 S.C.R.

understanding, according to the petitioner, was based on the representation made by the ODA as the detailed facts referred to above would reveal. In fact, the DOA has maintained and continues to maintain its stand that the project site is not within the ridge area and the land use of the same has been clearly shown as residential. According to the ODA, the land in question was earlier earmarked for recreational (District Park) purposes. However, that was subsequently altered by the two notifications dated 08.01.2002 and 26.02.2006 by carrying out modifications in the Master Plan (MPD-2001 ). The stand of the ODA is also this that the land use of any particular area is to be determined under the Master Plan and the authority which does such determination is the DOA and not any other authority, such as the DPCC. The clear stand of the DOA is that the DPCC has no right or business to raise any objection with regard to the land use and that is solely within the domain and powers of the DOA. The stand of the ODA is, however, not accepted either by the DPCC or the Department of Forests, Government of NCT of Delhi. In fact, both the DPCC and the Department of Forests (respondents 2 and 4 herein) along with the Government of NCT of Delhi (respondent No.3) have taken a unified stand that the land in question falls within the ridge and more so because the Department of Forests has found the said land to be part of Khasra Nos. 444 and 445 of village Tehkhand which, in the revenue record, has been shown as "gair mum kin pahar". Thus, according to the said respondents, no construction activity can be carried out in the land in question inasmuch as, according to them it falls within the ridge area. Consequently, the DPCC has refrained from issuing the "consent to establish" under Water and Air Acts, which was a requirement and a condition of the clearance given by the Ministry of Environment and Forests, Government of India.

¶193

It is in this backdrop that the petitioner felt that there is virtually no chance of the project going ahead in view of the stalemate between the ODA and the various governmental depaiiments. It is on the basis of this situation that the petitioner has sought the setting aside of the tender/auction as also the allotment letter dated 15.06.2006 in its favour and has sought the return of the money paid by it along with interest thereon."

¶194

¶195

DELHI DEVELOPMENT AUTHORITY v. KENN°ETH BUILDERS & 1139 DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

¶196

By the impugned judgment and order, the High Court held that Kenneth Builders was not entitled to have the tender/auction in which it had participated and in which it was a highest bidder set aside. Kenneth Builders was also not entitled to have the letter of allotment issued to it pursuant to the acceptance of its bid in the.auction conducted by the ODA set aside or to the return of money paid by it to the ODA. However, it was held that Kenneth Builders would be entitled to have the DPCC examine its application forthe grant of"cqnsent to establish" from the stand point of the Water Act and theAir Act within two months for carrying out the projec.t which was the subject matter of the writ petition. It was also 11eld that in the event the DPCC does not give its "consent to establish" and the project cannot be carried out then Kenneth Builders would be entitled to a return of the entire amount (with interest at the rate of 6% till realization) paid by it to the ODA since the project would stand frustrated and would be incapable of performance.

¶197

For arriving at the above conclusions, the High Court held that once the Master Plan for Delhi prepared by the DDA earmarks land for a particular use, then no other authority can challenge the same. As far as the project land was concerned, the DOA had earmarked it for residential use and this could not be challenged. The High Court also held that after the MoEF had given the environmental clearance, the role of the DPCC was limited to the grant of "consent to establish" u'nder the Air Act and the Water Act. It was not open to the GNCTD, the Department of forests or the DPCC to question the land use of the project land as determined by the DOA on the ground that it was within the Ridge.

At this stage, it is necessary to mention that during the pendency of the writ petition in the High Court, it came out that during a meeting convened by the Lieutenant Governor on 23rd June, 2009 on some other issue, the case of Kenneth Builders came up, perhaps for an informal discussion. Nevertheless, it was decided in that meeting that the question of the status of the project land should be referred to.the MoEF (even though it had already granted environmental clearance) and that the decision of the MoEF would be accepted asJinal. These facts were putto the learned Additional Solicitor General appearing in the matter and he sought time to take instructions. Eventually, the following response dated 3rd December, 2009 was sent by the MoEF to the learned Additional Solicitor General:

1140

[2016) 3 S.C.R.

SUPREME COURT REPORTS

¶210

A "Sub: Opinion of the Ministry of Environment and Forest in regard to WP (C) No. 0647/2009

¶211

Ref.: Secretary, Environment, NCT's D.0. No. F.11 (105/PN CF /Part/09/4582 dated 27 .11.2009).

Sir,

This is with regard to Writ Petition (C) I 0647/2009 of Kenneth Builders and Developers Ltd. v. UOI & Ors. in the High Court of Delhi. An opinion was sought from Ministry of Environment and Forests to the effect that the land in the subject matter of the Writ Petition mentioned under subject is a part of Ridge or not. The opinion of Ministry of Environment and Forests in this regard is as follows:

"Keeping in view the purely legalistic position taken by ODA and exercise undertaken for identification ofridge, based upon one or more criterion decided by NCT of Delhi, as relevant for classification ofany land as "ridge" in Delhi, the said piece of land measuring 14.3 ha falling in Khasra No.444 and 445 reflected as "Gai Mumkin Pahar" in revenue land, needs to be considered as ridge in accordance to the spirit of various orders ofHon'ble Supreme Court in WP (C) 467711985, morphological features and revenue records. The Hon 'ble Apex Court is still looking into various aspects of protection & conservation of Delhi ridge, in WP (Civil) No. 467711985 from time to time. However, the. Hon'ble High Court of Delhi, if deemed appropriate, the opinion of Central Empowered Committee, set up by Hon'ble Supreme Court may be taken".

¶220

It is requested to intimate the Hon'ble Court about the opinion of the Ministry of Environment and Forests when the case will come up on 4th December, 2009."

¶221

It will be seen from the above that the MoEF had taken a virtual volte face and had opined that the project land needs to be considered G as Ridge, but if deemed appropriate the opinion of the Central Empowered Committee might be taken. This was apparently not brought to the notice of the High Court.

¶222

¶223

Be that as it may, the DOA has challengeo the order of the Delhi High Court which has effectively directed the ODA to refund the

¶224

1141

¶225

DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & DEVELOPERS LTD. & ORS. [MADAN B. LOKUR, J.)

¶226

tender amount to Kenneth Builders since "consent to establish" and continue with the project had not been granted by the DPCC. The GNCTD as well as the Department of Forests also filed a Petition for Special Leave to Appeal being SLP (C) No. 13146of2011 challenging the decision of the Delhi High Court to the effect that the DOA is the competent authority to decide the land use.

Subsequent events

After the decision of the Delhi High Court, Kenneth Builders requested the DPCC on 3rd August, 2010 in terms of the order of the Delhi High Court, for "consent to establish". By its letter of 28th October, 20 I 0 the DPCC made it quite clear that since Kenneth Builders did not have any clearance to carry out any construction on the project land from the Ridge Management Board or from this Court or from the Department of Forests, "consent to establish" under the Air Act and Water Act could not be given. It was also mentioned that the Department of Forests would be challenging the orderofthe Delhi High Court in this Com1. The letter dated 28th October, 2010 reads as follows:

¶231

¶232

¶233

"Sub: - Refusal of Consent under Water (Prevention & Control of Pollution) Act, 1974 and (Prevention & Control of Pollution) Act, 1981 as amended to date.

¶234

Whereas, you Mis KENNETH BUILDERS & DEVELOPERS PVT. LTD., MAA ANANDMAYI MARG, TEHKHAND, DELHI (hereinafter referred as addressee) have applied for Consent to Estab. (Orange Category) on 30.05.08 vide I.D. No.2589I under section 21 of Air (Prevention & Control of Pollution) Act, 1981 and u/s 25/26 of the Water (Prevention & Control of Pollution) Act, 1974 for activity of Residential Construction Project.

¶235

And whereas, a letter dt. 27.03.08 addressed to the Commissioner (L.M.), DOA was received from Deputy ConservatQr of Forest, South to provide a copy of Environmental Clearance w.r.t. large scale earth work undertaken by you (the addressee)

¶236

And whereas, a copy of letter dt. 04.04.08 addressed to the Commissioner (L.M.) DDA was received from the Deputy Conservator of Forest, South to stop all.construction activity on the said land until the permission for the same is accorded by the Ridge Management Board.

1142

[2016) 3 S.C.R.

SUPREME COURT REPORTS

And whereas, as decided by the Consent Management Committee (Orange) in its meeting held 03.06.08, a letter was issued to the Deputy Conservator of Forest, South, on 13.06.08 regarding status of Forest Clearance w.r.t. the said project.

¶249

And whereas, a 0.0. letter issued by the Chairman, DPCC on 13.06.08 to the Vice Chairman, ODA regarding immediate cessation of all construction work on the _project site till the clearance from the same obtained from the Competent Authorities including the Ridge Management Board & the Hon'ble Supreme Court.

¶250

And whereas, a letter dt. 23.06.08 has been received from the Deputy Consen'.ator of Forest Dept. informing that the clearance from the Ridge Management Board & the Hon'ble Supreme Court has not been communicated by DOA so far.

¶251

And whereas a letter was issued to the Deputy Conservator of Forest, South on 19.02.09 to confirm whether any forest clearance and ridge demarcation report to the said project has been granted or not.

¶252

And whereas, a reply was received from the Deputy Conservator of Forest, South on 17.03.09 informing that no forest clearance has been accorded so far.

¶253

¶254

And whereas, a letter was issued to the Deputy Conservator of Forest, South on 16.04.09 along with the site plans of the project to inform the status of the area as per the ridge demarcation report.

¶255

¶256

And whereas, the Hon'ble High Court vide its judgment dt. 30.07.10 directed the DPCC to examine the application of the petitioner for grant of"Consent to Establish" from the standpoint of the Water & Air Acts alone within two months fro,m the date of judgment.

¶257

And whereas, after examination, as decided by the Consent Management Committee (Orange) in its meeting held on 22.09 .10, G a letter was issued to the Forest Deptt. on 01.10.10 to send the opinion on the judgment at the earliest as the issue pertains the Forest Department.

¶258

And whereas, the case was again taken up by the Consent Management Committee (Orange) in it meeting held on I. JO. I 0 H & it was decided:

¶259

DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J.]

¶260

"Forest department is going for appeal, therefore, consent be refused."

¶261

1143

¶262

¶263

Now, therefore, as decided by the said Committee aforementioned consent to establish application under Air & Water Acts to the addressee unit is hereby refused with immediate effect.

¶264

Please note that the activity of Residential Construction Project without having valid consent under the Air & Water Acts is a punishable offence and attracts penal action under the provisions of the said Act."

¶265

In view of the categorical response, broadly speaking, the controversy remains whether the project land is a part of the Ridge or not and whether the contract between the DDA and Kenneth Builders has been frustrated due to supervening factors or not. To resolve the first controversy, this Court passed an order on 6th October, 2015 for c,,.-ascertaining whether the project land falls within the Ridge or not. This was in view of the uncertainty in the status of the project land as well as the view expressed by the MoEF in the letter dated 3rd December, 2009 addressed to the learned Additional Solicitor General appearing in the High Court that the issue cou Id be best resolved (if deemed appropriate) by a reference to the Central Empowered Committee set up by this Court. Accordingly, we referred this issue to the Central Empowered Committee (CEC) set up in T.N.Gotlavarma11 v. U11io11 of l11tlia¹ •

¶266

26·. Pursuant to the order of 6th October, 20fi the CEC submitted its Report dated 18th November, 2015 in which it was concluded that non-forestry use of land falling in the Ridge was permitted enly after a development project was cleared or recommended by the Ridge Management Board and permitted by this Court. However, a decision was rendered by the Delhi High Court in a case filed by Ashok Kumar Tanwar [W.P. (C) No. 3339 of 2011 decided on 30th November, 2011] to the effect that a development project on land outside the notified Ridge area but having morphological features conforming to the Ridge would also require clearance froin the. Ridge Management Board and this Court. Therefore, as far as the present case is -concerned though the project land falls outside the Ridge but has morphological features conforming to the Ridge bringing it within the extended Ridge, the project of the DDA involving n6n-forestry use of the land could be permitted

'(2013) s sec 198

1144

(2016] 3 SC R.

SUPREME COURT REPORTS

¶278

A only after obtaining clearance from the Ridge Management Board and after obtaining the permission of this Court. The CEC in its Report stated in this regard as follows:

¶279

"6. The non-forestry use of land falling in Delhi Ridge for implementation of the various development projects are being B permitted only after the proposal is cleared/recommended by the Ridge Management Board and permitted by this Hon'ble Court. Such permissions have been granted by this Hon'ble Court subject to deposit of 5% of the estimated project cost with the Ridge Management Board Fund for conservation and development of Delhi Ridge and compensatory afforestation over equivalent nonc forest land/Ridge land at project cost.

¶280

Earlier, the clearance from the Delhi Ridge Management Board and the permission of this Hon'ble Court was being insisted upon only in n;spect of the notified Ridge areas. One Shri Ashok Kumar Tanwar filed Writ Petition (Civil) No.3339 of 2011 before the D Hon 'ble High Court of Delhi against the construction of buildings and other infrastructure facilities being done by the Directorate General, Border Road Organisation in 2.25 acres ofland belonging to Ministry of Defence at Naraina. Delhi Cantonment on the ground that the said land falls in the Central Ridge and wherein E pursuant to the directions of this Hon'ble Court the non-forestry uses are prohibited. Tht: Government of NCT of Delhi after considering fhe view of the Delhi Ridge Management Board filed before the Hon'ble High Cou1i of Delhi an affidavit dated 30th November. 2011 wherein it was stated that the land in question is situated outside the notified ridge areas but is having morphological F features conforming to the Ridge. The Hon'ble High Court of Delhi by order dated 30th November, 2011 disposed of the said Writ Petition with.the directions that the Border Road Organisation is restrained from c:mying out any further construction works on the land till it obtains necessary clearance from the Delhi Ridge G Management Board or (and) this Hon'ble Comi through the CEC. A copy of the said order of the Hon 'ble High Court of Delhi is enclosed at ANNEXURE-R-2 to this Report. Since then, nonforestry use of any land having morphological features conforn1i11g to the Ridge but falling outside the notified ridge areas (commonly referred to as ·'extended ridge areas") is also being permitted

¶281

¶282

DELHI DEVELOPMENT i\UTHORITYv. KLNNETH BUILDERS & 1145 DEVELOPERS LTD. & ORS. [MADAN 13. LOK UR. J]

¶283

only after obtaining clearance from the Delhi Ridge Management Board and permission of"this Hon'ble Court.

¶284

The said project of the Border Road Organisation was subsequently cleared/recommended by the Delhi Ridge Management Board, recommended by the CEC and thereafter this Hon'ble Court by order dated 2nd November, 2012 granted permission for implementation of the project on 2.25 acre of land falling on the ·'extended ridge areas". This Hon'ble Cou11 by another order dated 21.10.2013 has granted permission for implementation of a project by Delhi Metro Rail Corporation (DMRC) involving use of lands falling in ·'extended ridge area''. The copies of the abovcsaid orders of the Hon'ble Cou11 dated 2nd November. 2012 and 21st October. 2013 arc enclosed at ANNEXURE-R-3 and ANNEXURE-R-4 respectively to this Report.

¶285

In the present case the Delhi Forest Department has found that the project area falls in '"extended ridge area'' i.e. outside the areas identified as Ridge area in the MPD 2001/MPD 2021 but having morphological features conforming to the ridge and that a large extent of areas in and around the project site are recorded as "Gair Mumkin Pahar" in the revenue records. The stand taken by the Forest Department has been verified by the CEC during the site visit. Copies of the photographs of the project site taken during the site visit of the CEC are collectively enclosed at ANNEXURE-R-5 to this Report. A copy of the sketch map prepared by the Forest Department showing the details of Gair Mumkin Pahar areas in and around project site is enclosed at ANN EXURE-R-6 to this Repo11. A copy of the satellite imagery made available by the DOA showing the project area in question and the adjoining areas is enclosed at ANNEXURE-R-7 to this Report.

¶286

From the above it may be seen that in the present case the land falls in the "extended Ridge area" i.e. outside the Ridge areas identified in MPD 2001/MPD2021 having morphological feature~ conforming to Ridge. Implementation of all the similarly placed cases i.e. the pr~jects involving non-forestry use of the areas falling in "extended ridge areas" have been permitted only after obtaining clearance from the Ridge Management Board and permission of

1146

[2016] 3 S.C .R.

SUPREME COURT REPORTS

¶298

A this Hon'ble Court. In two similarly placed projects of the Border Road Urganisation and DMRC this Hon 'ble Coutt by orders dated 2nd November, 2012 and 21st October, 2013 respectively has granted permission from the non-forestry use of the lands falling in the "extended Ridge area".

¶299

B 11. In the above background the CEC is of the considered view that in the present case the proposed construction of buildings can be unde1taken only after obtaining clearance from the Ridge Management Board and permission of this Hon'ble Court."

¶300

Discussion

¶301

C 27. The first submission of learned coui1sel forthe DOA was that a writ petition under Article 226 of the Constitution was not maintainable for the reliefs claimed by Kenneth Builders. The reliefs arise out of a contractual dispute and the High Court ought not to have entertained the writ petition. We are not inclined to consider this submission for the o reason that no such objection was raised by the DOA before the High Cou1t or even in the petition filed in this Court. The submission has been advanced by learned counsel for the ODA for the first time during the final hearing of these appeals. It is too late in the day for learned counsel to raise such an objection and we are not inclined to entertain it.

¶302

E , 28. On merits, it was submitted that in view of the terms and conditions of the auction and the development agreement between the

¶303

. DOA and Kenneth Builders, it was the duty and responsibility of the developer to obtain all necessary clearances including environmental clearance and consent from the DPCC for completing the project. It was pointed out that the MoEF had given environmental clearance for

¶304

F the project on 15th July, 2008 subject to the developer obtaining "consent to establish" from the DPCC under the Air Act and the Water Act. It was therefore the obligation of Kenneth Builders to approach the DPCC and obtain the necessary consent which it failed to do.

¶305

What has been overlooked by learned counsel is that the

¶306

G fresh view of the MoEF is that the project land needs to be considered as Ridge. Consequently, no construction activity is permissible on the project land. That apart, Kenneth Builders did apply to the DPCC for "consent to establish" for starting construction activity on the project land. For considering the request, the DPCC required a ridge demarcation report which was not given by the DOA to Kenneth Builders or to the

¶307

¶308

DELHI DEVELOPMENT AUTHORITY v. KENN ETH BUILDERS & 1147 DEVELOPERS LTD. & ORS. [MADAN B. LOK UR, J]

¶309

DPCC. Therefore, the DPCC was not inclined to give its consent in the absence of the ridge demarcation report. Even after judgment was delivered by the High Court, Kenneth Builders applied to the DPCC for "consent to establish" but to no effect in the absence of a ridge demarcation report and forest clearance.

¶310

It does appear from the record that the exact boundaries of the Ridge had not been identified by anybody and this is apparent from a letter dated 13th June, 2008 sent by the Secretary (Environment) of the GNCTD to the DDA ..yherein it was pointed out that there is some discrepancy between the areas notified by the Ministry of Urban Development of the Government oflndia in the notifications dated 8th January, 2002 and 23rd February, 2006 and the boundaries of the Ridge. It was further pointed out that the process of identification had been initiated by the Department of Forests of the GNCTD but it appears that the demarcation was not completed by the time the writ petition was filed by Kenneth Builders. According to the DDA the letter was based on an incorrect appreciation of facts, but that does not concern us. A 11 that is relevant is that the GNCTD believed that the construction could not go on in the project land since it fell within the boundaries of the Ridge.

¶311

3 r. In this context, it must not be forgotten that even after having given environmental clearance to Kenneth Builders, the MoEF had second thoughts regarding the status of the project land. This led the MoEF to send the letter dated 3rd December, 2009 referred to above. In other words, the status of the project land was generally 'unclear' at least to the GNCTD and the MoEF.

Be that as it may, it appears to us that Kenneth Builders did take all necessary steps to commence the constn!ction activity on the project land but due to the impasse created by the governmental agencies, it could not proceed in the development activity. We agree with learned counsel for Kenneth Builders that under these circumstances, the provisions of Section 56 of the Indian Contract Act, 1872 (the Contract Act) would be attracted to the facts of the case. Section 56 of the Contract Act reads as follows:

¶318

¶319

¶320

"56. Agreement to do impossible act - An agreement to do an act impossible in itself is void.

¶321

Contract to do act afterwards becoming impossible or

¶322

1-1

¶323

1148

¶324

SUPREME COURT REPORTS

[2016) 3 S.C.R.

/I.

(

unlawful - A contract to do an act which. after the contract is made, becomes impossible. or. by reason of some event which the promisor could not prevent, unlawful, becomes void when the act become;, impossible or unlawful.

¶330

Compensation for loss through non-performance of act known to be impossible or unlawful - Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.''

¶331

The interpretation of Section 56 of the Contract Act came up for consideration in Sa(rttbrata Gltose 11. M11g11eera111 Bangur & Co.³ It was held by this Court that the word "impossible" used in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility. It ought to be interpreted as impracticable and useless from D the point of view of the object and purpose that the parties had in view when they entered into the contract. This impracticability or uselessness could arise due to some intervening or supervening circumstance which the parties had not contemplated. However, if the intervening circumstance was contemplated by the pa11ies, then the contract would stand despite the occurrence of such circumstance. In such an event, "there can be no case of frustration because the basis of the contract being to demand performance despite the happening of a particular event, it cannot disappear \hen that event happens." This is what this Court had to say:

¶332

¶333

~ "The first paragraph of the section lays down the law in the same way as in England. lt speaks of something which is impossible inherently or by its ve1y nature, and no one can obviously be directed to perform such an act. The second paragraph enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. The wording · G of this paragraph is quite general, and though the illustrations attached to it are not at all happy, they cannot derogate from the general words used in the enactment. This much is clear that the word ''impossible" has not been used here in the sense of physical or literal impossibility. The performance of an act may not be

¶334

H '(195~) SCR 310

¶335

DELHI DEVELOPMENTAUTHORITYv. KENNETH BUILDERS & I 149 DEVELOPERS LTD & ORS. [MADAN B. LOK UR, J.]

¶336

literally impossible but it may be impracticable and useless from the point of view of the object and purpose which the parties had in view; and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested their bargain, it can very well be said that the promissor finds it impossible to do the act which he promised to do.

¶337

Although various theories have been propounded by the Judges and jurists in England regarding the juridical basis of the doctrine of frustration, yet the essential idea upon which the doctrine is based is that of impossibility of performance of the contract: in fact impossibility and frustration are often used as interchangeable expressions. The changed circumstances. it is said. make the performance of the contract impossible and the parties are absolved from the further performance of it as they did not promise to perform an impossibility. The parties shall be excused. as Lord Loreburn says'

¶338

"If substantially the whole contract becomes impossible of performance or in other words impracticable by some cause for which neither was responsible."

xxxxxxxxx

It must be pointed out here that if the parties do contemplate the possibility of an intervening circumstance which might affect the performance of the contract. but expressly stipulate that the contract would stand despite such circumstance. there can be no case of frustration because the basis of the contract being to demand performance despite the happening of a particular event, it cannot disappear when that event happens. As Lord Atkinson said in Matthey v. Curling⁵ .. a person who expressly contracts absolutely to do a thing not naturally impossible is not excused for non-performance because of being prevented by the act of God or the King's enemies ... or vis lll(Jior''. This being the legal position, a contention in the extreme form that the doctrine of frustration as recognised in English law does not come at all within the purview of Section 56 of the Indian Contract Act cannot be

accepted."

'Tamplin Steam Ship Co. Ltd. v. Anglo-Mexican Petroleum Products Co. Ltd., (1916) 2 AC 397. 403

¶350

' (I 922) 2 AC I 80 at 234

1150

[2016] 3 S.C.R.

SUPREME COURT REPORTS

¶355

A 34. In so far as the present case is concerned, the DOA certainly did not contemplate a prohibition on construction activity on the project land which would fall within the Ridge or had morphological similarity to the Ridge. It is this circumstance that frustrated the performance of the contract in the sense of making it impracticable of performance.

¶356

B 35. It is true that the Government oflndia had notified the project land as "Residential" and that the project land was shown as "Residential" in the MPD-200 I and MPD-2021. But that fact alone would not change the position at law. The exact boundaries of the Ridge do not appear to have been demarcated and in the absence of demarcation, it could not be said with any degree of certainty by the c DOA that merely because of the two notifications issued by the Ministry of Urban Development the project land could be used for residential purposes even if it fell within the Ridge. This would be ignoring the position at law and would be stretching the argument a little too far. The DOA was unaware that even ifthe project land did not fall within the D Ridge yet any development activity thereon would require permission from the Ridge Management Board as well as from this Court since there was morphological similarity between the Ridge and the project land. It is this intervening circumstance which eventually frustrated the implementation of the contract.

¶357

E 36. It is one thing for the DOA to now contend before us that Kenneth Builders could have applied to the Ridge Management Board for permission to carry out development activity and also approached this Court for necessary permission but it is another thing to say that these requirements were not within the contemplation of the DOA and certainly not within the contemplation of Kenneth Builders. For a statutory F body like the DOA to contend that in the face of the legal position (with which the ODA obviously does not agree), Kenneth Builders ought to have persisted and perhaps initiated or invited litigation cannot be appreciated. '

¶358

When the DDA informed Kenneth Builders that the project G land was available on an "as is where is basis" and that it was the responsibility of the developer to obtain all clearances, the conditions related only to physical issues pertaining to the project land and ancillary or peripheral legal issues pertaining to the actual construction activity, such as compliance with the building bye-laws, environmental clearances etc. The tenns and conditions of "as is where is" or environmental H

¶359

1151

¶360

DELHI DEVELOPMENT AUTHORITYv. KENNETH BUILDERS & DEVELOPERS LTD. & ORS. [MADAN B. LOKUR, J.]

¶361

clearances emphasized by learned counsel for the DOA certainly did not extend to commencement of construction activity prohibited by law except after obtaining permission of the Ridge Management Board and this Court. On the contrary, it was the obligation of the DOA to ensure that the initial path for commencement of construction was clear, the rest being the responsibility of the developer. The failure of the DDA to provide a clear passage due to an intervening circumstance beyond its contemplation went to the foundation of implementation of the contract with Kenneth Builders and that is what frustrated its implementation.

¶362

Reliance by learned counsel forthe DDA on the "as is where is" concept as well as clauses 6 and 11 of the Development Agreement in this context is misplaced. As mentioned above, this primarily pertains to physical issues at site. This is clear from the following passage referred to by learned counsel from Pun}ab Urban Planni11f( & Deve/opme11t Authority v. Raf(lllt Naill Gupta•:

¶363

"Evidently, the commercial plots were allotted on "as-is-whereis" basis. The allottees wou~d have ascertained the facilities available at the time of auction and after having accepted the commercial plots on "as-is-where-is" basis, they cannot be heard to contend that PUDA had not provided the basic amenities like .parking, lights, roads, water, sewerage, etc. If the allottees were not interested in taking the commercial plots on "as-is-where-is" basis, they shol.lld not have accepted the allotment and after having accepted the allotment on "as-is-where-is" basis, they are estopped from contending that the basic amenities like parking, lights, roads, water, sewerage, etc. were not provided by PUDA when the plots were allotted. Over and above, the facts would clearly indicate that there was not much delay on the pa11 of PUDA to provide those facilities as well. As noted, the electrical works and health works were completed by 24-12-2002 and 22-11-2002 respectively and all the facilities like parking, lights, roads, water, sewerage, etc. were also provided."

¶364

On a conspectus of the facts and the law placed before us, we are satisfied that certain circumstances had intervened, making it impracticable for Kenneth Builders to commence the construction activity . on the project land. Since arriving at some clarity on the issue had taken a couple of years and that clarity was eventually and unambiguously '·(2012)8sec197

1152

(2016] 3 S.C.R.

SUPREME COURT REPORTS

¶376

A provided by the report of the CEC, it could certainly be said that the contract between the ODA and Kenneth Builders was impossible of performance within the meaning of that word in Section 56 of the Contract Act. Therefore, we reject the contention of the ODA that the contract between the DOA and Kenneth Builders was not frustrated.

¶377

B 40. Learned counsel for Kenneth Builders urged that the amount deposited with the DOA ought to be returned with interest at 12% per annum and not 6% per annum as directed by the High Court. We are not inclined to accede to this request. Kenneth Builders had prayed for interest at 18% per annum in the High Court but that was declined and only 6% per annum was awarded. Kenneth Builders is not in appeal before us on c this issue. However, we make it clear that the calculation of interest on the amount deposited would be with effect from I Ith September, 2006 when the entire amount of Rs. 450.01 crores was deposited by Kenneth Builders with the DOA.

¶378

The GNCTD and the DPCC raised an issue before us that D the ODA was not the final authority in the matter of determining the land use particularly when it related to the Ridge. In the view that we have taken, it is not necessary to go into this question.

¶379

Conclusion

¶380

E 42. The appeal filed by the DOA is dismissed. The DOA should now refund the deposit made by Kenneth Builders with interest at 6% per annum calculated from 11th September, 2006 till realization. The question raised in the connected appeal filed by the GNCTD and the Department of Forests of the GNCTD is left open for consideration in an appropriate case.

¶381

¶382

There will be no order as to costs.

¶383

Kalpana K. Tripathy

¶384

Appeal dismissed.

Delhi Development Authority v. Kenneth Builders & Developers Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

Delhi Development Authority v. Kenneth Builders & Developers Ltd. & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Swaraj Abhiyan - (Ii) versus Union of India & Ors.

Swaraj Abhiyan - (Ill) versus Union of India & Ors.

Swaraj Abhiyan - (Iv) versus Union of India & Ors.

Extra Judicial Execution Victim Families Association (Eevfam) & Anr. versus Union of India & Anr.

Amin Merchant versus Chairman, Central Board of Excise & Revenue & Ors.

Madina Begum & Anr. versus Shiv Murti Prasad Pandey & Ors.