Allowed

Bharat Sanchar Nigam Limited, v. Govt of A.P.

Telangana HC18 Feb 2008WP/19813/2004

Case brief

AI extract

What is this about?

The High Court allowed a writ petition challenging the cancellation of a land allotment by APIIC. It found the cancellation arbitrary as it targeted only one adjacent plot to benefit another entity, ignored lack of funds, and violated conditions of use. The order quashed the cancellation and ordered restoration of possession.

What did the court decide?

The impugned order cancelling the allotment was set aside. The authority was directed to execute a sale deed in favour of the petitioner for both plots and restore possession.

Bharat Sanchar Nigam Limited, Vs Govt of… — Pension and Retirement Benefits | Telangana HC (2008)

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*** THE HON’BLE MR JUSTICE C.Y.SOMAYAJULU**

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+WRIT PETITION No.19813 OF 2004

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%Dated 18.02.2008

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#Bharat Sanchar Nigam Limited, Hyderabad.

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…Petitioner.

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and

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$ Government of Andhra Pradesh represented by the Chief Secretary, GAD Department, Hyderabad and others.

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…Respondents

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! Counsel for petitioner: Sri R.S.Murthy

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^ Counsel for Respondents: GP for General Administration

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< GIST:

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> HEAD NOTE:

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? Cases referred

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1. 2004(3) SCC 553

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2. AIR 1999 SC 296

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3. AIR 1996 SC 3515

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4. 2000 (20) ALD 148

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5. 1993 (2) ALT 80 (D.B.)

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IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction)

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MONDAY, THE EIGHTEENTH DAY OF FEBRUARY TWO THOUSAND AND EIGHT

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PRESENT

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THE HON'BLE MR JUSTICE C.Y.SOMAYAJULU WRIT PETITION NO : 19813 of 2004

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Between:

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Bharat Sanchar Nigam Limited, rep. by its Prl. Geneal Manager, Surya Lok Somplex, Abids, Gunfoundary, Hyderabad 500 001.

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..... PETITIONER

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AND

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1 Govt of A.P., rep. by the Chief Secretary, GAD Department, Secretariat, Hyd.

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2 A.P. Industrial Infractructure Corporation Ltd., rep. by Vice Chairman and M.D.,

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Parishrama Bhavan, 6th Floor, 5-9-58/B Fahte Maidan Road, Basheerbagh, Hyd.

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3 M/s. Infotech Enterprises Ltd., rep. by the Managing Director, Madhapur, Hyd.

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.....RESPONDENT(S)

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Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to Issue a writ order or directions more particularly is the nature of mandamus declare the proceedigns a) 1013/DW/INF/APIIC/96 DT. 30;01.2003. B) 1013/PM(IPU)/APIIC/96 DT. 02.01.2004, & 1013/PM(IPU)/APIIC/1996 DT. 02.01.2004. c) 1013/PM(IPU)APIIC/1996, DT. 27.01.2004, d) 1013/PM(IPU)APIIC/1996, DT. 30.01.2004, e) 1013/PM(IPU)APIIC/1996, DT. 26.01.2004, h) 1013/DW/INF/APIIC/96, DT. 01.07.2004, i) 1013/PM(IPU)APIIC/1996,II DT. 13.07.2004, as being illegal null and void and direct the 2nd respondent to restore the position as on 31.03.2004 as being illegal null and void and direct the 2nd respondent to restore the position as on 31.03.1999 with further directions restraining the 3rd respondent from any entry including

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storing of building materials and the construction there of and pass.

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Counsel for the Petitioner:MR.R.S.MURTHY

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Counsel for the Respondent No.: GP FOR GENERAL ADMINISTRATION

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The Court made the following : THE HON'BLE MR JUSTICE C.Y.SOMAYAJULU

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WRIT PETITION NO : 19813 of 2004

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ORDER:

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This Writ Petition is filed questioning the cancellation of the allotment of plot No.CFC-5, Software Units Layout, Madhapur, made in favour of the petitioner by the second respondent i.e. Andhra Pradesh Industrial Infrastructure Corporation Limited (hereinafter referred to as APIIC).

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(2) The case in brief of the petitioner is that APIIC, which is a wholly owned Government of Andhra Pradesh undertaking, came into existence with an object to acquire land for development of industrial area in the State of Andhra Pradesh, had offered plots to Software Industries and Public Utility Services in Madhapur area. It had, on a request made by the Principal General Manager, Telecom District, Hyderabad, allotted two plots in the Madhapur Software Units Layout bearing CFC-4 in an extent of Ac.1.00 and CFC-5 in an extent of 0.25 cents subject to payment of price @ Rs.1923/- per square yard for the purpose of construction of telephone exchange and ground based tower. Subsequently, vide its proceedings No.1013/Hitec/97/982, dated 10.12.1997 APIIC, at the request of the Telecom Department,

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reduced the cost of the land to Rs.1,282/- per square yard i.e.Rs.77,56,100/-, with a stipulation that the sale consideration has to be paid before 30.06.1998 and the allotment would be subject to cancellation in the event of its not taking up the construction in those plots by 30.06.1999, vide clauses 11 and 12 of the letter of allotment. Being a public sector undertaking of the Union Government, and as it was being run on the budget allotted by the Union Government, Telecom Department sought relaxation of clauses 11 and 12, whereupon APIIC, vide its letter dated 10.02.1998, informed that those clauses are relaxed and that it has to furnish detailed schedule of construction work, and delivered possession of the land allotted. The amount due to APIIC from the Telecom Department for that land was paid on 31.03.1999. Subsequently vide its letter, dated 20.07.2000 APIIC demanded Rs.2,16,872/- from the Telecom Department on the ground that an extent of one more cent was occupied by it while constructing a compound wall. When exemption of payment of further amount was sought by the Telecom Department, APIIC vide its letter dated 14.10.2000, reduced the cost to Rs.1,30,303/-, which was paid by the Telecom Department on 17.01.2001. Thereafter, petitioner came into existence with effect from 01.10.2000, as a wholly owned Government of India undertaking, with change in the hierarchy. As funds were not made available to it for construction of telephone exchange by the Union Government, petitioner could not complete the construction of the telephone exchange within the time stipulated by

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APIIC in the letter of allotment and wanted to take up construction in the first quarter of 2004-05 after funds were allotted to it for construction of telephone exchange, and informed that fact to APIIC, when APIIC issued notice dated 30.01.2003 threatening to cancel the allotment on the ground of non-compliance with condition No.11 of the letter of allotment, and followed it by another letter dated 10.03.2003 informing vacant land tax of Rs.1,18,296/- also is due. Petitioner while sending a cheque for Rs.2,23,982/- towards vacant land tax from 01.10.2000 to 31.03.2003 and Rs.1,80,997/- towards vacant land tax for the year 2003-2004 vide cheque, dated 05.01.2004 reiterated that it would take up construction in the first quarter of 2004-05. Yet APIIC vide its letter dated 02.01.2004 informed the petitioner that the allotment of sites made to it is liable to be cancelled as the project, for establishment of which the land was allotted, did not come into existence, and sought surrender of vacant possession of the land, in spite of the fact that petitioner informing APIIC that a compound wall was already constructed all around the sites allotted and foundation stone for construction of the telephone exchange was laid on 23.02.2004. Thereafter, APIIC vide its letter dated 26.02.2004 reiterated that it would, in exercise of its power of reentry, reenter into the land allotted by 4 PM on 11.03.2004, and the amounts sent to it would be refunded after deducting the EMD and rentals as per the Rules framed by it. In spite of protest by the petitioner, APIIC, vide its letter dated 12.03.2004, intimated the petitioner that it reentered into plot CFC-5 measuring

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about 0.25 cents, with an Officer of the third respondent as one of the witnesses to the reentry. Alleging that it is still in possession of plot CFC-5 and that its reentry claim is not correct, petitioner sent a notice dated 22.06.2004 to APIIC. In reply thereto APIIC vide its letter dated 01.07.2004 stated that plot CFC No.5 to an extent of 0.25 cents was delivered possession of to the third respondent under a contract and that 3^rd respondent is in possession thereof. Hence, the writ petition questioning the cancellation of allotment of plot CFC-5 and its reallotment to the third respondent.

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(3) No counter-affidavit is filed on behalf of the 1^st respondent, i.e., the State of Andhra Pradesh represented by the Chief Secretary.

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(4) On behalf of APIIC, its Manager (Law) filed his counter affidavit inter alia contending that in as much as allotment of land was sought by the Telecom Department for construction of a telephone exchange and as that land, which was allotted for that purpose, was not utilized for that purpose even after a lapse of long period, and as that land was kept vacant, even though the letter of allotment clearly shows that the allotment would automatically stand cancelled if the land allotted is not utilized for the purpose for which it was allotted, allotment of Plot CFC 5 was cancelled for the petitioner’s failure to make construction of a telephone exchange therein in spite of several opportunities granted to it, and though the APIIC while relaxing clauses 11 and 12 of the letter of allotment wanted the Telecom Department to submit its detailed schedule for construction of the

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buildings on the land allotted to it. Though APIIC, through its letters dated 09.03.1998, 30.06.1998 and 17.07.1998, sought execution of an agreement as a condition precedent for handing over the land allotted to it, as the Telecom Department wanted to take a sale deed directly for the land allotted to it and made a request for delivery of possession of plot Nos.CFC-4 and 5, whose total extent is Acs.1.25, those plots were handed over to the Telecom Department on 31.03.1999. Merely because APIIC agreed to relax the condition relating to utilization of the land within the stipulated time, and merely because it happens to be a public utility service, petitioner has no right to keep the said land idle forever. As no sale deed is executed in favour of the petitioner, APIIC continues to be the owner of the land allotted to the Telecom Department. Petitioner, which came into existence on 01.10.2000 and which did not obtain orders for transfer of allotment of the land made in favour of the Telecom Department, it cannot, even without utilizing the land for the purpose for which it was allotted even after a lapse of more than 7 years, claim any relief from the Court on the basis of the allotment made in favour of the Telecom Department. Though the petitioner failed to give its explanation to the show cause notice as to why the allotment made cannot be cancelled for its failure to commence the construction, APIIC through its letters dated 10.03.2003, 17.09.2003 and 02.12.2003 gave further opportunity to the petitioner to take up construction in the land allotted. Thereafter only petitioner informed its proposal for construction of telephone exchange

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during the year 2004-05 vide its letter dated 16.12.2003. As payment of vacant land tax by itself would not enable the petitioner to retain the land idle without utilizing the same as per the original understanding, allotment of plot CFC 5 admeasuring 0.252 cents only, made in favour of the Telecom Department, was cancelled on 02.01.2004, for non utilization of the land, and called upon the petitioner to surrender said Plot CFC-5, which after receiving the order of cancellation on 02.01.2004, made a request for revocation of that order on the ground that it would commence construction in the first quarter of 2004-05. After examining the issue, APIIC through its letter dated 27.01.2004 informed the petitioner that it is not possible to revoke the order of cancellation and directed surrender of vacant possession of Plot CFC5 by 14.02.2004 and clearly informed the petitioner that in the event of its failure to surrender, it would resume possession on 16.02.2004, and followed it by another letter dated 26.02.2004 seeking surrender by 10.03.2004. As the petitioner failed to deliver possession of Plot CFC5, its possession was resumed on 10.03.2004 and that fact was intimated to the petitioner through the letter dated 12.03.2004, and Rs.16,78,721/- was refunded to the petitioner along with the letter dated 10.06.2004, deducting the amount towards EMD and rentals for the period of occupation of the plot, by including the cost of the compound wall constructed. When the petitioner returned the said cheque through its letter dated 15.06.2004, it was resent to the petitioner through the letter dated 22.06.2004 but the same was

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returned as refused. As APIIC entered into agreement with the 3^rd respondent as per the direction of the Government of Andhra Pradesh in terms of its memorandum of understanding with the 3^rd respondent, possession of plot CFC-5 was handed over to the 3^rd respondent on 09.06.2004, permitting the petitioner to utilize Plot No.CFC-4 admeasuring 1-00 acre. As the 3^rd respondent occupied the land allotted to it as per the Memorandum of Understanding dated 08.10.2003 and as the 3^rd respondent developed an I.T. campus, by investing huge amounts and created opportunities for employment to several persons, petitioner is not entitled to any relief.

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(5) In the counter affidavit filed on behalf of 3^rd respondent, it is stated that in pursuance of the agreement entered into by it with the Government of Andhra Pradesh, it (third respondent) with a view to set up I.T facility at Madapur for software development activities, requested the APIIC to allot 1.5 acres of land, but APIIC could allot only 1.25 acres and promised to allot the balance land required when a contiguous plot is available and entered into a memorandum of understanding on 08.10.2003. In furtherance of the said memorandum of understanding only Plot No.CFC-5 was allotted to it on 29.05.2004 after it paid Rs.20.64 lakhs and took possession of the said land on 09.06.2004 itself, and a sale deed was also executed on the same day conveying that land to it. As per the conditions of allotment, and G.O.Ms.No.27 of Department of I.T & C, dated 27.06.2002 also, it has to employ 500 eligible employees within a period of 3 years from the

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date of taking possession of the land, paying a minimum salary of Rs.5000/- p.m. per person amounting to Rs.3 crores per annum. As the petitioner did not take up construction of telephone exchange, in spite of APIIC addressing letters dated 18.02.1997, 21.02.1997, 12.09.1997 and 10.02.1998 requesting it to take up construction immediately, APIIC issued a show cause notice dated 30.01.2003 calling upon the petitioner to show cause why allotment of Plot No.CFC-5 to an extent of Ac.0.25 should not be cancelled and followed it by several letters. In any event, as the contract between the petitioner and APIIC is a non-statutory and a business contract, writ petition under Article 226 of the Constitution of India is not maintainable and so the petitioner is not entitled to any relief.

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(6) Heard Sri E.Manohar, Senior Advocate on behalf of the petitioner, Sri K.V.Simhadri, standing counsel for APIIC and Sri A.Hanumantha Reddy, learned counsel for the 3^rd respondent at length.

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(7) The main contention of Sri E. Manohar is that in as much as plots of CFC-4 and 5 are meant for common facilities, they can be used only for common facilities, and cannot be used for any other purpose, and as telephone facility is but a common facility, APIIC erred in cancelling the allotment of plot CFC 5 made in favour of the petitioner and in re-allotting it to 3^rd respondent, which is a business concern and which cannot set up any common facility in that plot. It is his contention that petitioner, which is a Government of India

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undertaking, cannot act independently, and as it was not allotted any funds immediately after its formation, for construction of the telephone exchange, it could not take up the construction of Telephone Exchange in the plots allotted, till the end of the financial year 2004, though foundation stone for the said building was laid in 2003 itself. It is his contention that APIIC, which relaxed clauses 11 and 12 of the letter of allotment cannot, in any event, by invoking conditions 11 and 12, cancel the allotment on the ground of the construction not being taken up in the allotted plots and contended that probably APIIC, with a view to help the 3rd respondent, in view of the memorandum of understanding entered into between respondents 1 and 2, which contains a clause relating to ‘further purchase’, reading

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The parties hereto further agree that, GoAP will cause APIIC to sell 0.25 (cents) acre of land as available and M/s. Infotech, shall purchase, property adjacent to the Plot (herein referred to as “Additional Property”, and more fully described in Schedule II attached hereto), as per the terms mentioned at para 2(d) of the MoU valid up to December 2003.

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might have cancelled allotment of plot CFC-5 only, which is adjacent to the plot allotted to the 3^rd respondent. Relying in ABL International v. Export Credit Guarantee Corporation of India^[1] , he contended that the writ petition is maintainable even though it relates to a nonstatutory contract.

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(8) Sri K.V.Simhadri, learned standing counsel for APIIC, after taking me through all the documents produced by the parties, contended that as the petitioner, in spite of being given an opportunity

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of several years to complete the project, did not comply with the conditions stipulated in the letter of allotment, and as relaxation of clauses 11 and 12 mentioned in the letter of allotment was not absolute and was conditional as the letter sent by APIIC reading

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Your request for relaxation of clause Nos.11 & 12 regarding taking up of civil works and their completion is considered favourably. However, you are requested to furnish detailed schedule of construction works.

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and as the petitioner, who was bound to furnish the detailed schedule of construction of work, failed to furnish the details of the schedule for taking up the construction in spite of several reminders being issued, petitioner cannot be heard to say that conditional relaxation of clauses 11 and 12 would enure to its benefit, in spite of its not furnishing the details of the schedule of construction for several years, and its keeping the land allotted idle, though it was delivered possession of those plots even without entering into a formal agreement, accepting request for execution of a sale deed. It is his contention that the petitioner which failed to obtain sale deeds, and also failed to give the schedules of construction even after issuing several reminders, cannot complain about the cancellation of the allotment made and the APIIC taking over possession of the plot by virtue of the power of reentry vested in it. It is his contention that in view of regulation No. 14.3 of the regulations reading

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14.3 Works like compound wall, fencing, filing up of earth and other measures to protect the property shall be excluded while computing the works implemented.....”

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mere fact that of the petitioner constructing a compound wall, and its

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alleged levelling of the land would not amount to taking up the work of construction of the building in the land and in any event as APIIC cancelled the allotment of only plot CFC 5, but not the allotment of plot CFC 4 petitioner should not have a grievance as it continues to have the benefit of plot CFC 4. It is his contention that APIIC after taking over possession of plot CFC-5 handed over its possession to the 3^rd respondent, and as 3^rd respondent is in actual physical possession of the same after entering into an agreement of sale with APIIC, and so petitioner is not entitled to any relief. It is also his contention that in any event the Writ Petition is not maintainable because no fundamental right of the petitioner is violated and as the transaction between the petitioner and APIIC is a pure business or commercial but not a statutory contract. Relying on Indu Kakkar Vs. State of Haryana^[2] he contended that inasmuch as the condition that in the event of failure to construct within the time stipulated in the letter of allotment, the allotment made would automatically gets cancelled is a valid condition and is binding on the parties, and so in any event petitioner who does not have a registered sale deed in its favour is not entitled to any relief.

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(9) The contention of Sri A. Hanumantha Reddy, learned counsel for the 3^rd respondent, is that in as much as the transaction between the petitioner and APIIC is a non statutory contract and is an ordinary contract for sale of land, petitioner cannot by filing a writ petition obtain

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any relief as held in State of U.P. vs. Bridge & Roof Co. (India) Ltd .^[3] ,

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D. Mohan vs. Regional Manager, APSRTC, Khammam Distric t^[4] and The Executive Engineer, Irrigation Circle No.3, Nizamabad vs. C. Raghava Reddy^[5] and contended that the petitioner which failed to take up construction as per the terms and the Regulations framed is not entitled to any relief, in as much as the third respondent is already put in possession of plot CFC 5 and as APIIC had also executed an agreement for sale in respect thereof.

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(10) In reply, the contention of Sri E.Manohar is that in as much as the apex Court, after considering the entire case law on the subject including the Bridge & Roof Co. (India) Ltd (3 supra) relied on by the learned counsel for the 3^rd respondent, held that if an authority which has to perform a public function or public duty acts arbitrarily, in appropriate cases, even if the issues in dispute relate to made contractual obligations only, a Writ Petition under Article 226 of the Constitution of India is maintainable, and contended that in as much as the area of dispute in this case is narrow and does not require any oral or other documentary evidence other than what is already on record, this Court can, in exercise of its jurisdiction under Article 226 of the Constitution interfere and grant appropriate relief.

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(11) The undisputed facts in this case are Department of Telecommunications, Hyderabad, which was under the control of the

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Union Government, had on 06.06.1996 sought allotment of site of 2 acres from APIIC for setting up of a telephone exchange at Info City in Madapur. Through its letter dated 14.08.1996 APIIC informed the Deputy General Manager (Planning) of the Telecommunication Department that land admeasuring about 2 acres would be allotted to it at a tentative cost of Rs.1,923/- per square yard, value of which works out to Rs.1,86,14,640/- besides frontage charges @ 10%. Subsequently, vide its letter dated 26.10.1996, APIIC informed the Deputy General Manager (Planning) of Telecommunication Department that provisional allotment of Act.1.00 of land, at a tentative cost of Rs.1,282/- per square yard is made to it and so a total cost of Rs.62,04,880/- may be paid on or before 30.11.1996. As that amount was not paid, APIIC through the letter dated 18.02.1997 addressed to the Deputy General Manager (Planning) Telecommunications Department, requested him to depute one official of Telecommunications Department for physical inspection of the plot earmarked for the Telecommunications Department, and make necessary arrangements for payment of the cost without further delay, and followed it by another letter dated 21.02.1997 addressed to the Chief General Manager, Telecommunications of Andhra Pradesh, informing that APIIC already allotted Ac.25.75 to some units, and as layout, finalized for Ac.41.50 cents was submitted to Hyderabad Urban Development Authority for its approval, and as it is likely to take up development activities like providing roads, streetlights, which are

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expected to be completed by December 1998, it allotted one acre of land in the layout for establishment of telephone exchange, to meet the requirement of entrepreneurs of the locality and others in and around Madapur village, and as it did not receive any communication from the Telecommunications Department in regard to payment to be made for that land, that reminder is being sent, and followed it by another letter dated 12.09.1997. In reply to the letter dated 12.9.1997, the General Manager (Planning), Hyderabad Telecom District, requested APIIC to provide two CFC marked sites for construction of telephone exchange and building, one adjacent to plot Nos.6 and 7 measuring one acre and another site of about 5 acres. In reply thereto APIIC through its letter dated 10.12.1997, addressed to the General Manager (Planning) Hyderabad Telecom District, stated that it is allotting a total extent of Ac.1.25 (Ac.1.00 in CFC 4 and Ac.0.25 in CFC 5) on outright sale basis in Phase I, Hitec City Project, Madapur, for setting up a telephone exchange subjected the conditions mentioned therein. By the letter dated 29.01.1998, Divisional Engineer in the office of the General Manager Telecom District, Hyderabad, requested APIIC to relax conditions 11 and 12 mentioned in the letter of allotment, as telecom is a Central Government public utility service department, and the land allotted to it will be utilized only for the purpose of the department, and sent Rs.77,61,100/- towards tentative cost of Ac.1.25 cents and process fees etc to APIIC through the letter dated 09.02.1998. Thereafter APIIC through its letter dated 10.02.1998,

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informed the General Manager (Development), Hyderabad Telecom District, that the request made to it for relaxation of clause Nos.11 and 12, which relate to taking up of the civil works and their completion, was considered favourably and that it, however, has to furnish the details of the schedule of construction works. In response to the letter dated 19.11.1998 of the Deputy General Manager (Planning), Hyderabad Telecom District, for handing over the possession of plots CFC – 4 & 5 pending execution of the agreement for sale, APIIC, through its letter dated 11.02.1998, informed that plots CFC 4 & 5 are being handed over to the Telecom Department pending execution of agreement, as per the revised sketch prepared, by deleting the area through which a public drain is passing through, and handed over possession of plots CFC 4 and 5 on 31.03.1999. Thereafter, through the letter dated 20.07.2000, APIIC informed the Principal General Manager, Hyderabad Telecom District, that as an excess area of 0.021 acres (101.64 Sq. yards) was put in its possession, the telecom department has to pay its cost of Rs.2,16,872/- on or before 08.08.2000, whereupon the Deputy General Manager (Planning), Hyderabad Telecom District, through his letter dated 11.09.2000 requested exemption from payment of Rs.2,16,872/- towards excess land found in its possession after construction of the compound wall, for which APIIC through its letter dated 14.10.2000 stated that it is waiving interest of Rs.86,569/- but land cost at Rs.1,282/- per sq.yard for 101.64 sq.yards, amounting to Rs.1,30,303/- has to be paid by the

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Telecom Department. That amount of Rs.1,30,303/- was paid by the telecom department to APIIC through the letter dated 18.01.2001. Thereafter the petitioner came into existence as a wholly owned Union Government company and foundation stone for ‘BSNL Bhavan’ was laid by the then Minister for Communications, Government of India on 23.02.2001. Through its letter dated 22.1.2003, APIIC informed the petitioner that in as much as it did not take up construction of telephone exchange building, and kept the land vacant, it has to pay vacant land tax of Rs.3,42,278/- from the date of its taking over possession i.e. 31.03.1999 within 15 days, and followed it by a letter dated 30.01.2003 stating that in as much as it failed to take up construction work of the telephone exchange within 2 years from 31.3.1999 the date of taking over possession of the land as contemplated by clause 11 of the conditions in the letter of allotment, in spite of several reminders, it has to show cause within 15 days as to why the allotment made in its favour should not be cancelled, for which petitioner sent a reply dated 4/7.3.2003 that construction work would be taken up as and when funds are made available by the head quarters, and as the Hyderabad Telecom District, became BSNL, as a Government of India Enterprise, demand for payment of Rs.3,42,278/towards vacant land tax from it is not justified, and made a request for waiver of that amount, more so because the land allotted to it would be used for public utility purpose only. But, APIIC, as a final show cause notice, through its letter dated 10.03.2003, asked the petitioner to show

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cause as to why the allotment made in its favour should not be cancelled for non implementation of the project as per the terms and conditions of the allotment, and followed it by another letter dated 05.07.2003, demanding the petitioner to pay Rs.1,18,296/- towards vacant land tax within 15 days from the date of receipt of that letter and reminded the petitioner through the letter dated 17.09.2003, to expedite implementation of project and payment of dues. While paying Rs.2,23,982/- towards vacant land tax for the two plots CFC 4 & 5 to APIIC, petitioner, through its letter dated 10.11.2003, requested APIIC to exempt it from payment of vacant land tax, stating that it would take up construction work as soon as funds are made available to it. In reply thereto, APIIC through the letter dated 14.11.2003, informed the petitioner that as it is liable to pay vacant land tax, in the form of service charges leviable by local authorities, it has to pay Rs.1,80,997/- towards vacant land tax as service charges. When the petitioner, through its letter dated 17.11.2003, requested APIIC to execute sale deeds, APIIC through its letter dated 02.12.2003, informed the petitioner that it would examine its request for execution of sale deed if steps for implementation of project, as envisaged in the original proposal, are taken up and when balance vacant land tax is paid, and if it were fail to do so it will have no other option except to cancel the allotment made to it and resume possession of plots CFC 4 and 5. In reply, petitioner through its letter dated 16.12.2003, informed APIIC that it would arrange payment of vacant land tax soon and as

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the construction of telephone exchange and customer service center etc were approved for 2004-05, it will take up those works shortly and so the plots may be registered in its favour. Thereafter through its letter dated 02.01.2004 APIIC informed the petitioner that as allotment of plot CFC-5 is cancelled it has to deliver vacant possession of that plot, and that it would register plot CFC 4 only after it takes up construction of the telephone exchange, and reiterated its stand through the letter dated 2.1.2004, whereupon petitioner sent a cheque for Rs.1,80,997/towards vacant land tax and service charges for the plot Nos. CFC 4 & 5 through its letter dated 8.1.2004. Subsequently APIIC through its letters dated 27.01.2004 and 30.11.2004 asked the petitioner to deliver back possession of plot No.CFC-5, for which petitioner through its letter dated 05.02.2004 informed that inasmuch as the construction of proposed ‘BSNL Bhavan’ and telephone exchange are planned for construction in the first quarter of 2004-05, and as the value of the cables to be laid is approximately Rs.1.2 crores, it cannot surrender plot CFC 5, whereupon APIIC through the letter dated 26.2.2004 informed the petitioner that inasmuch as it failed to implement the project, as envisaged, even after lapse of three years nine months from the date of taking over of possession of the plots, and as allotment of plot CFC-5 was already cancelled, its request for extension of time is negatived and so it has to surrender possession of plot CFC 5 on or before 10.03.2004, failing which it would resume possession of plot CFC 5 in exercise of its power of re-entry on 11.03.2004, and the

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amount paid towards cost of plot CFC-5 would be refunded after deducting EMD and rentals for the period of its occupation as per rules in force, whereupon the petitioner through its letter dated 05.03.2004, addressed to the Chairman and Managing Director of APIIC, stated that inasmuch as the site was procured for construction of a full fledged customer service center etc and as underground cables worth Rs.1.2 Crores were laid and as construction work of the proposed buildings would commence in the first quarter of 2004-05 and would be completed soon, allotment of the site may be restored. In reply APIIC, through its letter dated 12.03.2004, informed the petitioner that physical possession of plot CFC-5 was resumed on 11.03.2004 at 4.00 PM before witnesses and a copy of the resumption proceedings which was pasted on the main gate of the plot is being enclosed therewith for information, and followed it by another letter dated 10.06.2004 enclosing a cheque for Rs.16,78,721/- towards the refund of land cost and cost of structures, to the Deputy General Manager of the petitioner, which cheque was returned to APIIC along with the letter dated 15.4.2004 which was returned by the petitioner and when APIIC resent that cheque petitioner refused to receive the same. (12) Though no submissions are made in this regard, a plea in fact was taken in the counter affidavit filed on behalf of APIIC that inasmuch as no allotment or assignment of the allotment made in favour of the Hyderabad Telecommunications is made in favour of the petitioner, it cannot maintain the writ petition, I have to state that I find

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no force in that plea because petitioner is but a successor in interest of the Hyderabad Telecom Department, and as APIIC, itself in fact was willing to execute sale deeds in favour of the petitioner, provided it fulfils the conditions laid down by it, as seen from its letter dated 2.12.2003, in reply to the letter dated 17.11.2003 of the petitioner addressed to APIIC. In fact the cancellation of allotment of CFC-5 was not on the ground that no allotment or assignment of the allotment was made in favour of the petitioner, but it was made on the ground that petitioner did not fulfil the conditions imposed on it at the time of allotment. So it is clear that the allotment made in favour of the predecessor in interest of the petitioner enured to the benefit of the petitioner also and so petitioner can maintain the writ petition, though it is not the original allottee.

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(13) The topography of the two plots CFC-4 and CFC-5, which were allotted to the Telecom Department and succeeded by the petitioner, shows that they are situated at two different places and are separated by a road. Extent of Plot CFC-4 is Ac.1.00 cents and the extent of plot CFC-5 is Ac.0.25 cents and a site which is adjacent to CFC-5 was allotted to the

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3^rd Respondent by the APIIC in pursuance of an agreement dated 08.10.2003 entered into between the Government of Andhra Pradesh

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(1^st respondent) and the 3^rd respondent.

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(14) The ground for the APIIC cancelling the allotment of plot CFC-5 made in favour of the predecessor in interest of the petitioner is the

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petitioner not taking up the construction activity in that plot. Here it should be stated that the petitioner, admittedly, did not take up construction activity even in plot CFC-4 also. If the ground for cancellation of allotment of the plot CFC 5 really is the petitioner not taking up the construction activity therein, why APIIC did not cancel the allotment of plot CFC-4 also, and restricted cancellation of allotment to plot CFC 5 only should have been explained by APIIC. As it failed to do so, I am of the considered opinion that the real reason for cancellation of allotment of plot CFC 5 is not for the reason of the petitioner not taking up the construction of a building therein, and that there are some other reasons for APIIC cancelling the allotment of Plot CFC-5 only. On the basis of the documents produced by the parties, it is easy to see that the reason for cancellation of allotment of plot CFC5 could only be to alienate that plot CFC 5 to 3^rd respondent, to enable the first respondent to fulfil its obligation undertaken by the agreement dated 08.10.2003 with the 3^rd respondent relating to allotment of additional property of 0.25 cents for the 3^rd respondent. The only way in which that can be achieved was by cancelling the allotment of plot CFC 5, made in favour of the predecessor in interest of the petitioner, so that that plot can be made available for allotment to the 3^rd respondent. If petitioner not taking up the construction activity in the plots allotted really is the reason for cancellation of the allotment, why APIIC did not cancel the allotment of plot CFC-4 remains a mystery, as it is left unanswered by APIIC. In fact from the documents produced

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by both the parties it is easy to see that APIIC hastened its efforts to cancel allotment of plot CFC 5 only after the 3^rd respondent entered into an agreement with the 1^st respondent on 08.10.2003, even without taking into consideration the statement of the General Manager (Planning) of the petitioner, in his D.O. letter dated 05.02.2004 addressed to Sri L.Subrahmanyam CMD, APIIC, that cables worth approximately 1.2 crores are already laid, in an integral part of the Telephone Exchange Master plan.

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(15) Though the petitioner, through its letter dated 05.02.2004, and earlier letters, informed APIIC that in as much as funds are going to be released in the budget for the next financial year, it would take construction work in the first quarter of 2004-05, APIIC even without waiting till the next financial year commencing from 1.4.2004 claims to have taken possession, of plot CFC-5 only, on 11.03.2004 in exercise of its power of reentry, obviously in view of the agreement dated 08.10.2007, between respondents 1 and 3, wherein clause 5 relating to further purchase reads:

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The 2^nd schedule attached to the Memorandum of Understanding reads:

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All of the freehold land located at SUL, Madhapur, APIIC Industrial Development Area, Survey # 64, Madhapur, Serilingampally, R.R. District, Andhra Pradesh,

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ad-measuring about 0.25 (cents) Acres of land, carved out by APIIC, and acceptable to M/s. Infotech.

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Clause 2 of the agreement of sale dated 09.06.2004 entered into between APIIC and the third respondent reads:

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“M/s. Infotec Enterprises Limited have entered into M.O.U. on 08.10.2003 with the Government of Andhra Pradesh undertaking to establish office development of 1,50,000/- Sq.Ft. for establishment of IT facilities in theState of Andhra Pradesh employing 500 eligible employees with an investment of Rs.50.00 Crores towards project Cost within a period of 3 years from the date of taking possession of the land. For this purpose an area of Ac.1.294 was already allotted. Now the additional plot in Plot No.CFC-5 measuring 0.252 acres Software Units Layout, Madhapur situated in Survey No.64 part of Madhapur Village, within the Serilingampalli revenue Mandal, Rangareddy District (AP) is now indicated to M/s. Infotec Enterprises Limited for expansion of their existing Software Unit as ‘Additional Property’ as per the Commitment of GOAP vide MOU dt.08.10.2003 between GOAP & Infotech, on outright sale basis under APIIC Allotment Regulations. Hence total land for creation of facilities, employment & investment by Infotech under the terms of MOU can be read as 1.546 Acres.”

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So, it is prima facie evident that APIIC, either at the instance of first respondent or otherwise, was eager to allot 0.25 cents plot CFC-5, which is adjacent to the Ac.1.294 cents plot allotted to the

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3^rd respondent, by somehow wriggling out of its commitment with the petitioner, and for that reason only it must have thought it fit to cancel the allotment of plot CFC 5 only, ostensibly on the ground of the petitioner’s failure to construct a building there, though the real and true reason for its cancellation is for the purpose of allotment of that plot to the 3^rd respondent. As stated earlier, if non-construction of a building is the real and true reason for cancellation, APIIC in normal

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course of events would and should have cancelled the allotment of plot CFC-4 also.

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(16) It is no doubt true that as per clause 14(3) of the regulations, construction of compound wall and leveling of the land would not amount to taking up the construction of building. As stated above, letter dated 05.03.2004 of the General Manager of petitioner, addressed to the Chairman and Managing Director of APIIC clearly shows that under ground cable work 1.2 crores was laid. Under ground cables are the heart and soul of a telephone exchange, as without those cables no telephone exchange can work, because by mere construction of a telephone exchange building, without laying under ground cables, no telephone exchange can work. Laying of under ground cables, therefore, can be taken as a part and parcel of the construction activity of a telephone exchange, and so the assumption on the part of APIIC that no construction was taken up may not be correct.

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(17) By relying on the sentence reading: “furnish detailed schedule of construction works” in the letter dated 10.02.1998 addressed by APIIC to the General Manager (Development), Hyderabad Telecom District, while relaxing clauses 11 and 12 in the letter of allotment, the learned Standing Counsel for APIIC contended that in as much as petitioner failed to furnish those details, APIIC had no other option but to cancel the allotment of plot CFC 5. Petitioner informed APIIC that in view of lack of funds, it is unable to take up the construction work

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immediately, and that it would take up the work, from out of the funds to be allotted in the budget for the year 2004-05 in the first quarter itself. Then why APIIC, which waited for several years, had to exercise its power of reentry on 11.03.2004, without waiting for a few more days till the first quarter of the financial year 2004-05, which commences from 01.04.2004 remains unexplained. The hurried manner in which APIIC exercised its power of reentry on 11.03.2004 itself, by taking the help of an officer of the third respondent as one of the two mediators at the time of reentry tells its own story.

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(18) All the above apart Plot CFC-5, allotted to the petitioner, can only be used for common facilities. Even though the regulations were made subsequent to the allotment made in favour of the petitioner, as they have a retrospective operation, as they are deemed to have come into effect from 01.06.1998, they apply to the allotment made to the petitioner also. From a reading of clause 7.7 of the Regulations it can be seen that the common facilities are post office, fire station, police station, Government/ESI dispensaries, telephones, APSEB (APTRANSCO), APSRTC, Banks, dispensaries run by private individuals/missionaries. So CFC plots can be allotted to such departments only, but they cannot be put to commercial use. It is faintly contended that CFC-5 allotted to the petitioner would be used for common facilities like car parking area. As car parking may be meant for the employees or the clientele of the third respondent only, it cannot be equated to “common facilities” referred to in Clause 7.7 of the

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regulations. It is not the case of the third respondent that it runs any common facility service. As per condition No.14, the allottee should use the land for the purpose for which it was allotted. As CFC 5 is a common facility plot and as 3^rd respondent cannot use plot CFC 5 for establishing any of the common facilities, allotment of plot CFC 5 to 3^rd respondent is improper on that ground also. (19) Condition as in para 2(d) of the agreement dated 08.10.2003 entered into between respondents 1 and 3, introduced as per paras 7(e) and 7(g) of ICT policy 2002-05 read with annexures V & VII thereof, which contemplates that the allottees of the plots have to employ 500 eligible employees within a period of three years from the date of taking possession, is not and cannot be made applicable to plots allotted for common facilities like post offices, telephones, dispensaries etc, and can be made applicable only to plots other than CFC plots because departments of government would be bound by the G.Os. and other rules and service conditions etc., laid down by the government. So in respect of CFC plots neither APIIC nor the first respondent i.e. Government of Andhra Pradesh can expect any employment generation or payment of salaries as mentioned therein as in respect of the plots allotted to other commercial undertaking like the third respondent.

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(20) It is no doubt true in Indu Kakkar case (2 supra) strongly relied on by the learned counsel for APIIC, the apex Court held that condition imposed at the time of allotment that the industrial unit shall be

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established within the period specified failing which the allotment would stand cancelled, is a valid binding condition on the parties to the agreement. But that decision is not of any help in deciding this case, because clauses 11 and 12 relating to the completion of construction was relaxed by APIIC. Moreover, as stated above, APIIC did not explain why it had not, by invoking those clauses 11 and 12, cancelled the allotment of CFC-4, and cancelled the allotment of CFC-5 only. As per condition Nos.11 and 12 in the letter of allotment construction work has to be commenced before 30.06.1998 and should be completed within two years, question of APIIC invoking those clauses does not arise. As those two conditions were relaxed at the request made by the Hyderabad Telecom Department, predecessors in interest of the petitioner. It is no doubt true that in that letter APIIC wanted the Hyderabad Telecom Department to furnish the details of the schedule of construction. From a reading of the letter dated 10.02.1998 it cannot be said that furnishing of details of the schedule of construction was made a condition precedent for relaxation of conditions 11 and 12 in the letter of allotment. So mere failure to furnish the detailed schedule of construction works would not automatically revive those conditions. So, I am unable to agree with the contention of the learned standing counsel for APIIC that relaxation of the conditions 11 and 12 was conditional. APIIC, which relaxed conditions 11 and 12 cannot, by invoking those clauses 11 and 12, cancel the allotment on the ground that the petitioner did not take up the construction works within two

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years from the date of allotment. So the fact that the petitioner admitted that it was not having money to take up construction prior to 31.03.2003 due to non allocation of funds in the budget by the Union Government, is not and cannot be a ground for canceling the allotment made.

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(21) It is no doubt true that till a sale deed is executed, APIIC continues to be the owner of the land allotted to the allottees. Question of ownership pales into insignificance in this case firstly because no registered sale deed is executed in respect of plot CFC 5 in favour of the third respondent also, and secondly because the point for consideration in this case is not about the transfer of ownership of plot CFC-5 but is about the cancellation of the allotment of the plot made in favour of the petitioner.

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(22) Coming to the maintainability of the writ petition, it is no doubt true that the transaction between the petitioner and the second respondent is not a statutory contract and is a plain agreement to sell land between two institutions one of which is a wholly owned State Government undertaking (APIIC) and another is a wholly owned Central Government undertaking (petitioner). No doubt in C.Raghava Reddy case (5 supra), D.Mohan case (4 supra) and Bridge and Roof Company (India) Limited case (3 supra) it is held that writ jurisdiction of the High Court under Article 226 of the Constitution of India cannot be invoked in respect of non-statutory contracts and the remedy lies in the civil Court, but as the apex Court in ABL International Limited

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case (1 supra) after referring to all the earlier decisions including Bridge & Roof Company (India) case

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(3 supra) and several other decisions of the apex Court held that in cases where the State or the instrumentality of the State, even in a matter of contract, acts arbitrarily, the aggrieved party can approach the Court by way of writ under Article 226 of the Constitution of India, and the High Court in such circumstances can grant relief under Article 226 of the Constitution, in the matter of a non-statutory contracts also, if on the facts and circumstances of the case, if this Court comes to a conclusion that APIIC acted arbitrarily and at its whims and fancies to favour the third respondent, this Court can interfere with such arbitrary activities under Article 226 of the Constitution. In the facts and circumstances of this case, it cannot but be said that APIIC acted arbitrarily in cancelling the allotment of plot CFC 5 on the ground of the petitioner not taking up construction work as per clauses 11 and 12 of the letter of allotment because it was done so only for the purpose of allotting that plot to the third respondent, which was already allotted a plot adjacent to CFC-5, so that third respondent can have the benefit of using the adjacent plot also for its business purpose. Had not the APIIC been harboring an intention to help the third respondent by cancelling the allotment of Plot CFC-5 made in favour of the petitioner, and allot the same to the third respondent, for it to have the benefit of a contiguous plot. If really the cancellation, thought of by APIIC, was due to petitioner not taking up the construction work, APIIC would have

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cancelled allotment of plot CFC-4 also. Probably because third respondent was not interested in plot CFC-4 which is far away from the plot allotted to it, APIIC did not think of canceling allotment of Plot CFC-4 made in favour of the petitioner. As the cancellation of plot CFC 5 is arbitrary and unsustainable, APIIC exercising power of reentry in plot CFC 5 also is arbitrary and illegal. APIIC allegedly putting the plot CFC 5 in possession of the third respondent is unsustainable.

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(23) Hence, the order impugned is liable to be and is set aside. After payment of the amount due to APIIC by the petitioner, APIIC shall execute a sale deed in favour of the petitioner not only for plot CFC-4 but in respect of plot CFC-5 also and put back the petitioner in possession of plot CFC 5 also.

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(24) Accordingly, the Writ Petition is ordered. No order as to costs.

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___________________ C.Y.SOMAYAJULU, J

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Dt.18.02.2008 L.R.Copy to be marked. gj/kvsn

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