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CASE NO.: Appeal (civil)  5188 of 2001

PETITIONER: Ganga Retreat & Towers Ltd. & Anr.                               

RESPONDENT: State of Rajasthan & Ors.                                        

DATE OF JUDGMENT: 19/12/2003

BENCH: R.C. Lahoti & Ashok Bhan  

JUDGMENT: J U D G M E N T

With

CA No. 5189 and CA No. 5190 of 2001

BHAN, J.

       Aggrieved by the judgment and order of the Division Bench of  Rajasthan at Jaipur in setting side the order of the Single Judge, thereby,  dismissing the writ petition filed by the appellants, the present appeals have  been filed.  All the three appeals have been filed by the same set of   appellants and against the same judgment. As three separate appeals were  filed by the respondents before the Division Bench against the order of the  Single Judge the appellants have filed three separate appeals. They are taken  up for disposal by a common order.

       The State of Rajasthan (hereinafter referred to as "the Respondent No.  1") decided to dispose of by public auction two prime properties situated in  the heart of Jaipur City.  One of the properties was known as Dr. Helligs  Bungalow, near Khasa Kothi State Hotel, M.I. Road, Jaipur and the other  was a plot of land situated near Khasa Kothi known as the site of Food Craft  Institute building on M.I. Road, Jaipur.   In the present case we are  concerned with the first property only.  Respondent No. 1 issued  advertisement for auction of Dr. Helligs Bungalow, which was scheduled to  be held, according to the auction notification on 21.12.1994.  In the  advertisement the property was described as free hold, ceiling free, vacant,  crest jewel property known as Dr. Helligs Bungalow (10,400 sq. yards).  The  permitted use of the property was shown as hotel/commercial complex/hotel  cum-commercial complex.  The terms and conditions for the auction were  also provided in the advertisement.  Condition Nos. 7,8,9,10,12 and 13 relate  to the controversies involved in this litigation and are reproduced hereunder:

"7.     Land measuring 1,400 sq. mtr. shall be  auctioned with the condition that the successful  bidder shall have to surrender a strip of land  measuring 6.2 sq. mtr. for the road  widening/parking of commercial vehicle free of  charges.  He will be given the benefit in terms of  FAR, which is calculated on the basis of original  plot size.

8.      Other parameters of  this plot size have been  approved by JDA and are given as under:

Coverage        62.5% F.A.R.

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F.A.R.  2.0

No of floors    B + G + 4

Maximum permissible     16.76 Mtrs. Height

Parking provision       IPCU per 200 sq. mtr. of         built up area

Set backs

Front towards   15 mtrs. Station Front  towards roads.

Front towards   15 mtrs. Circuit House  7.5 mtr. Atal Ban (After  leaving 6.2 Mtrs. for  future road widening/  parking commercial  vehicle.

Rear    6 Mtrs. as indicated in  the plan.

9.      The construction work on the plot should be  commenced with in one year from the date of  handing over of possession of the land and the  building.  Building construction should be done  within 3 years.  If the party wants further extension  beyond three years that shall be given against the  penalty of Rs. 20,000/- (Rupees twenty thousand)  p.m. but in no case the period shall be extended  more than 2 years.

10.     After the full amount due against the plot as  deposited by the purchaser the Patta of the plot  will be issued in favour of the purchaser which  would enable him to start construction on the plot  in accordance to the approved plan and under  architectural control as per specifications given by  JDA.

12.     The land shall be used for construction of  Hotel/Commercial Complex/Hotel cum  commercial complex only.  If he uses this property  for other than this purpose, he would have to seek  prior permission from the Government of  Rajasthan against payment of charges as the  Government may fix thereof.

13.     The purchaser shall have to strictly abide by  the parameters and set backs as laid down in  condition No. 8.  Any violation of these terms and  conditions shall lead to the forfeiture of his right  on this property and hence the property shall stand  reverted to the Government without payment of  any compensation for the land and the building  thereupon."   

M/s Ganga Retreat and Towers Ltd., a company registered under the

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Indian Companies Act, 1956 (formerly known as M/s Lok Hotels and  Resorts Limited), the appellants herein were declared as the successful  bidder in the auction held.  The appellants’ bid of Rs. 19,56,76,000/- being  the highest was accepted and the property was knocked down in their favour.   The successful bidder, as per term No. 5, was required to pay the sale  consideration, as per the following schedule:-

"i)     10% of the final bid on the spot in cash or  through Demand Draft in favour of Director  of Estate, Rajsthan, Jaipur (the amount of  Rs. 20.00 lacs deposited as earnest money  shall be allowed to be adjusted against this  deposit of 10%). ii)     15% amount of the final bid will have to be  deposited within 15 days from the date of  acceptance, letter sent to the successful  bidder by the Government of Rajathan. iii)    75% amount of the final bid will have to be  deposited by successful bidder within 60  days of the notice for deposition of the full  and final amount of the bid amount which  the party shall be informed by the  Government of Rajasthan.

Failure to deposit it the aforesaid amount at any  state, i.e., (I), (ii) and (iii) above will result in  forfeiture of the amount already deposited by the  successful bidder and hence cancellation of the  bid."

The payment was not made as per schedule given above.  The entire  sale consideration amounting to Rs. 19,56,76,000/- was paid on 16.5.1995.  As there was a delay in making the payment as per schedule the appellants  accepted their liability to pay interest for the delayed payment.  A sum of Rs.  30,01,273/- towards interest for delayed payment was made. Last installment  of Rs. 83,562.72 P. towards the amount of interest was paid by demand draft  dated 21.08.1995. Total amount paid was Rs. 19,86,77,273/-.  The cost and  expenses for registration of patta, stamp duty and all other incidental  expenses were also to be borne by the purchaser.  Sale deed could not be  executed in favour of the appellants as the appellants did not furnish the  stamp papers.   After repeated letters including the letter dated 21.05.1996  the appellants submitted the requisite stamp duty and registration charges  amounting to Rs. 1,19,25,720/- for execution of the sale deed on 18.12.1996.   Thereafter, the sale deed was executed and registered on 7.01.1997 and  immediately thereafter possession was delivered to the appellants.  Term of  the auction notice that Floor Area Ratio (for short "FAR")  would be 2.00  was also repeated in the sale deed.

The appellants thereafter applied for sanction of plans for putting up  construction on the property and the Planning Cell of the Jaipur Municipal  Corporation (for short "the JMC") demanded a deposit of Rs. 1,48,79,887/-  towards map approval charges.  These charges were deposited under protest  by the appellants.  According to the appellants the JMC had not framed any  Rules in this regard and that the charges were exorbitant and without  authority of law.  The appellants also handed over 6.2 meters width of strip  land to the JMC of old Dr. Helligs bungalow as per their letter dated  2.5.1997 (Annexure IV).

On 11.4.1997, the  Additional Director and Competent authority under  the Urban Land Ceiling and Regulation Act, 1976 (for short "the Ceiling  Act") issued a notice to the appellants under Section 38 of the Ceiling Act,  alleging that the appellants were holding land in excess of ceiling limits and  had not filed the return as required under Section 6 (1) read with Section 15  of the Act.  The appellants replied to the aforesaid notice on 17.4.1997

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pointing out that the Respondent No. 1 had sold the property as free from  ceiling  limit and therefore, there was no need to file a return.  As the  explanation was not accepted by the competent authority, the appellants  applied for exemption under Section 20 of the Act.  The appellants also  submitted the return in the prescribed form with a covering letter dated  19.4.1997.  On 3.5.1997 the Competent Authority issued a notice under  Section 8(3) of the Ceiling Act enclosing a draft statement as to vacant land.   Simultaneously, application filed under Section 20 of the Act for exemption  was processed.  On 11.8.1997, the competent authority granted exemption to  the appellants on certain conditions.  It was stipulated that the exemption  was being granted subject to the terms and conditions stated in the  conveyance deed dated 7.1.1997 and that it could be used only for the  purposes set out in the conveyance deed.  It was also stipulated that for any  construction on the land, plans will have to be submitted for sanction to the  JMC and all the standards regarding construction shall be applicable as per  the norms of the JMC.  Another condition put was that the land would not be  transferred or conveyed in any manner to any one without prior permission  of the State Government except offering it as security to the financial  institutions for raising loan. As this clause has given rise to the controversy  on which lengthy arguments have been addressed, the same is reproduced  below for reference:

"5)     That the sale, gift or any transfer of the plot  will not be closed without prior approval of the  State Government.  But mortgaging the property to   financial institution for taking loan without parting  with the possession the State Government will  have objection."

       On 24.6.1996 the Jaipur Development Authority (for short "the JDA")  revised its bye-laws.  The revised building Bye-laws came into force w.e.f.  24.6.1996 in which parameters in respect of commercial hotels and  commercial plots were amended.  Vide Regulation No. 9.3.3 of the 1996  Regulations the FAR was reduced to 1.75 instead of 2.00 as provided by the  Bye-laws of 1989.            

       Appellants submitted their building plans as per FAR 2.00.  JMC on  22.2.1997 approved the building plans subject to FAR 1.75 only as per 1996  Bye-laws as against FAR 2.0 permitted by the auction notice and the  conveyance deed.  On 10.10.97, after getting the land exempted from  ceiling, the Company wrote to the JMC to re-examine the case and allow  FAR 2.0 on the appellants’ re-submitting the plans for approval or in the  alternative to advise the General Administration Department to refund the  proportionate amount consequent upon the reduction in the FAR.

       On 28.10.1997, the  appellants wrote a letter to the Minister for Urban  Development, Government of  Rajasthan, for intervening in the appellants’  favour in their dispute with the JMC which was not allowing FAR 2.0 as  promised in the terms of auction and the sale deed.  Appellants also wrote a  letter to the Chief Minister on 17.11.1997 for intervention in the matter and  for ordering the Secretary, Urban Development and Housing to clear the  plans with FAR 2.0 as a special case urgently.  On 18.12.1997 again, a  communication was addressed by the appellants to the Chief Secretary  giving the following three proposals:

"(A)    to instruct Jaipur Nagar Nigam to allow  F.A.R. 2 as per Auction conditions.  As F.A.R. 2  existed before the new Byelaws came into force in  September, 1996.  Plus to pay interest at 18% p.a.  for delayed period to clear our plans as  compensation.  The delayed period may be  calculated from the day we deposited our plans for  approval to the day the plans are approved.  We  have paid interest on account of delay from our  side.

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(B)     To refund the whole amount with interest,  the registration cost, the maps approval charges,  the L.B.T. charges etc.

(C)     To refund proportionate charges on all  above for the reduced F.A.R. from 2 to 1.75 i.e.  12.5% all above charges."

       It was also stated in this letter that if no response was received to the  proposals in writing within fifteen days, the appellants shall go to the court  of law for redressal of their grievances. On 22.10.1997 the Chief Secretary  wrote to the Urban Development and Housing Department recommending  the case of the appellants for grant of FAR 2.0 instead of FAR 1.75 in  compliance with the conditions of the auction.  As no decision was taken,  the appellants filed S.B.Civil Writ Petition No. 195/98 against the State of  Rajasthan, Jaipur Development Authority, Jaipur Municipal Corporation  amongst others, who were officers of the State Government, claiming the  following reliefs.

"In the premises aforesaid the writ petition of the  petitioner may kindly be allowed with costs and by  an appropriate writ, order or direction, the Hon’ble  Court may be pleased to:

(a)     declare that on account of the reasons set out  herein and the order dated 9th September,  1997 passed by the Municipal Corporation,  referring to approve maps upto 2.0 FAR the  contract of sale of the property described in  this petition vide sale deed dated 7th Jan.,  1997 stands frustrated or has become  impossible of performance or invalid  rendering the sale deed dated 7th Jan., 1997  void. (b)     declare that the Regulations of 1996 were  not applicable to the petitioner and the same  cannot be enforced against the petitioner by  the Municipal Corporation, Jaipur or JDA in  view of the sale deed dated 7th Jan., 1997. (c)     declare that the sale deed being a  government grant was not required to be  registered and no stamp duty was required to  be paid and consequently the petitioner is  entitled to the refund of the stamp duty and  the registration charges. (d)     direct the respondents jointly and severally  to pay to the petitioner a sum of Rs.5102.94  lakhs alongwith future interest @ 18.5% per  annum.

Any other appropriate writ order or direction  which may be considered just and proper in the  facts and circumstances of the case may kindly  also be issued in favour of the Petitioners."

On issuance of notice the respondents put in appearance and filed  their replies.  Apart from contesting on merits, preliminary objections were  raised regarding maintainability of the petition on the ground that  declaratory relief claimed could not be granted in the writ jurisdiction. It was  also contended that the reliefs claimed pertained to the concluded contract  with regard to the sale of property culminated by execution of the sale deed.   That the relief being claimed was based on breach of contract and the writ  petition was not the appropriate remedy for redressal of such grievances. No

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petition could be entertained for either specifically enforcing the contract  or/and for compensation for breach of contract.  That the highly disputed  questions of fact were involved which could not be adjudicated without  adducing evidence.  Such disputed questions of fact could not be adjudicated  by the High Court in exercise of its extra-ordinary jurisdiction under Article  226 of the Constitution of India.

Learned Single Judge rejected the preliminary objections regarding  the maintainability of the petition and declared that the sale deed was  statutory in nature.  It was a grant as well.  The rights and the obligations as  incorporated in the sale deed were statutory in character as regards the rights  and obligation of the parties.  No change could be effected thereafter on any  pretext whatsoever in regard to the reducing the FAR from 2.0 to 1.75.  In  the auction notice property was described as free hold and ceiling free. The  action of the State in not acting upon the assurance given amounted to a  fraud, which invalidated the sale.   Consequently, the learned Single Judge  declared that the auction sale held on 21.12.1994 and the consequent sale  deed dated 7.1.1997 were null and void having no legal sanctity.  The  contract was frustrated.  All consequent actions taken by either of the parties  pursuant to the auction and the sale deed were invalidated and the appellants  were declared entitled to be restituted to the original position as it existed  prior to the date of auction and execution of the sale deed.  Consequently,  the respondents were directed to refund to the appellants, the payments  received by the respective respondents, pursuant to any term of the auction  dated 21.12.1994 which included the entire sale considerations as mentioned  in the sale deed dated 7.1.1997 along with all other payments made to the  respondents by the appellants towards stamp duty, registration charges, land  and building taxes etc. with interest @ 18%  per annum calculated from the  date of receipt of such amount by the respective respondents till the date of  actual refund to the appellants.  It was also directed that the JMC shall  refund all payments made by the appellants towards building map approval  charges, additional constructed area charges, licence fee, inspection charges,  etc. along with interest @ 18% per annum from the date of receipt of said  payments by the appellants till the date of actual refund to the appellants.  As  regards the damages claimed by the appellants for the incomplete  construction which by that time had been raised upto 9 stories (which was  held to be under compulsion), it was directed that it would be advisable that  the State of Rajasthan constitutes an expert Committee consisting of the  Chief Engineer PWD and Director, Town Planning Department or any other  officer having expertise to assess the value at the PWD rates and value the  construction on the site and after such valuation made by the Committee, the  amount assessed be refunded to the appellants within forty five days of the  assessment.    

As directed by the learned Single Judge, a Valuation Committee was  constituted by the State Government and the value of the construction as per  PWD rates was assessed at Rs. 9,97,51,003/-.  From this amount, 10%  was  deducted by the Committee as contractor’s profit, which was included in the  analysis of BSR rates.  After deducting 10% amount, i.e., Rs. 99,75,100/-  amount payable to the appellants representing the construction on the land  was worked out by the Committee at 8,97,75,903/-.  

Aggrieved by the aforesaid order of the learned Single Judge, appeals  were preferred before the Division Bench which were accepted.  It was held  that the sale of land by way of auction was neither statutory nor by way of  grant.  Consequently, it was held that the rights and obligations incorporated  in the sale deed were not statutory in character.  That it was a completed  contract in which highly disputed questions of fact were involved which  could not be adjudicated upon by the High Court in exercise of its writ  jurisdiction.  It was left open to the appellants to seek their remedy in the  Civil Court, if so advised.           At the outset, we may state that Shri Shanti Bhushan, learned senior  counsel appearing for the appellants fairly conceded that he would not be

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able to support the findings recorded by the Single Judge to the effect that  the rights and obligations incorporated in the sale deed were statutory in  character or that the sale of land by Respondent No. 1 to the appellants were  by way of grant.  He accepted the findings to the contrary recorded by the  Division Bench in this regard.

       Before taking up the contentions raised on the merits by the counsel  for the parties we would like to briefly refer to the question regarding the  maintainability of the writ petition in contractual matters.  Challenging the  finding recorded by the Division Bench regarding the maintainability of the  writ petition it was contended on behalf of the appellants that there is no  absolute bar to the maintainability of the writ petition in contractual matters.   Maintainability or otherwise in contractual matters is but an aspect of the  existence of equally efficacious alternative remedy.  The power to entertain  a writ petition under Article 226 even in contractual matters  is plenary but  actual exercise of jurisdiction in a particular case would be discretionary and  such discretion in turn is exercisable on sound judicial principles.  This  Court in appropriate cases has entertained the writ petitions  in contractual  matters and  interfered to grant the relief deemed fit keeping in view the  facts of the case.   No cause can be adjudicated without reference to some  facts and mere enquiry into facts, as those emerging from a limited set of  admitted facts does not in any manner act as a bar to the exercise of writ  jurisdiction.  In the present case the entire case centers around roughly 25  undisputed documents.  The question of leading oral evidence does not arise  and no intricate interpretation of documents or complicated inquiry into facts  is warranted.    So far as the issue as to assessment of value of the structure  standing on the property is concerned the same stands covered by a detailed  factual report quantifying the precise valuation.  Based on the inferences to  be drawn from documents, the questions of what relief, if any, this Court  considers fit to grant, and how, if at all, such relief is to be tailored to suit the  facts and circumstances of the case, are to be answered.  

As against this, Mr. Harish Salve, learned senior counsel appearing  for the respondent-State submitted that the contention that contractual  disputes can be raised in proceedings under Article 226 is misconceived.   The remedy under Article 226 is a remedy in public law, and, therefore in a  remedy by way of judicial review, what is amenable to challenge is the  decision making process and not the decision itself.   According to him, the  actions of the Government in  contractual  field, in  rare cases, may be  questioned as being arbitrary or unreasonable being violative of Article 14 of  the Constitution but that does not mean that the Court is required to examine  a completed contract of sale of property being void or otherwise.  That the  points involved in the writ petition are highly disputed questions of fact  which cannot be decided without taking evidence and therefore the Division  Bench was right in non-suiting the appellants on the ground of non- maintainability of the writ petition and leaving it open to the appellants to  work out their remedy in the Civil Court.

Although prima facie we are in agreement with the view taken by the  High Court that the petition involves disputed questions of fact in relation to  a completed contract of sale of land which cannot be adequately adjudicated  upon in exercise of writ jurisdiction, but, despite holding that the disputed  questions of fact  are not be adjudicated in exercise of writ jurisdiction, yet  we  are not inclined, in the exercise of power under Article 136 of the  Constitution to dismiss the appeal on this account at this stage because that  is likely to result in the miscarriage of justice on account of lapse of time  which may now result in  the foreclosure of all other  remedies which could  be availed of by the appellants in the ordinary course.  At the present stage  of the proceedings the alternative remedy of filing the suit would not be  efficacious.   This Court in a number of cases, even after recording a finding  that the writ petition was  not maintainable and that the High Court ought  not to have entertained it, has declined to interfere on the ground of non- maintainability where it is found, that the matter has been pending for long  and/or the High Court has already entertained the writ petition [albeit  wrongly] and/or when to send the writ petitioner back would cause grave

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delay or harassment.  In such cases this Court has proceeded to decide the  dispute on merits.  For this, we may refer to a recent decision of this Court in   Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Ors.,  2000 (6) SCC 293,  in which this Court observed:

"12. Ordinarily, in view of the aforesaid  conclusions on the first contention, we would have  allowed the appeal and directed dismissal of the  writ petition (OP No. 283 of 1995) without  examining the second contention. However,  despite holding that the disputes in question could  not be agitated in a writ petition and thus the High  Court wrongly assumed jurisdiction in the facts of  the case, yet we are not inclined in the exercise of  our power under Article 136 of the Constitution, to  dismiss the writ petition of the contractor at this  stage because that is likely to result in the  miscarriage of justice on account of lapse of time  which may now result in the foreclosure of all  other remedies which could otherwise be availed  of by the contractor in the ordinary course.  Those  remedies are not efficacious at the present stage  and, therefore, in view of the peculiar  circumstances of the case, we have examined the  second contention and the factors which weighed  with the High Court in granting relief. "

                Keeping in view the peculiar facts of the case and the fact that it will  not be a sound exercise of judicial discretion to relegate the petitioners to  recourse to the alternate remedy of civil suit belatedly at the present stage,  we proceed to examine the dispute on merits .   

       The case of the appellants are that the conveyance deed is liable to be  cancelled and set aside on the ground that it is vitiated by misrepresentations  made on behalf of the Respondent, on account of which the appellants were  wrongly induced to enter into the contract and that the conveyance was  entered into by mistake.  The misrepresentation alleged is on account of :

(a)     the FAR of the property being 1.75 whereas it was described  as 2.00 in the auction notice as well as conveyance deed;  and  (b)     the property was, in the auction notice, described as  "free  hold and  ceiling free" whereas the appellants were  compelled to apply for exemption from land ceiling which  procedure involved some delay.  While giving exemption  from the provisions of Chapter III of the Ceiling Act a  condition was put that the plot would not be "sold, gifted or  transferred" without prior approval of the State Government  which was onerous as well as contrary to the auction notice.   The land in dispute was not ceiling free as was represented  in the auction notice and that the condition put in the  exemption letter that the property would not be  alienated  without prior permission of the Government made the  property not to be free hold as well.   

Elaborating the first point, it was submitted that the appellants  purchased the property on a representation made to them, that the FAR was  2.0 and the property was free hold as well as ceiling free. The appellants  were  persuaded to make the bid as a result of such misrepresentation by the  Government in the auction notice.  The contract could not be said to have  been made by the consent of the parties under Section 10 and became  voidable at the option of the appellants under Section 19 of the Indian  Contract Act.  That the contract was frustrated and incapable of being  performed in terms of Section 56 of the Indian Contract Act.  That the

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appellants have almost come to  ruination because of the action of the  respondents in as much as they have invested huge sums of money after  borrowing from the Bank at high rates of interest without any return for the  last so many years.  As against this the case put forth on behalf of the  respondents is that there was no misrepresentation as alleged.  On the date  on which the contract was entered into, i.e., the date on which auction  went  in favour of the appellantss there was no misrepresentation even as alleged  by the appellants since the FAR on that  date was 2.0.   The FAR was  changed by virtue of change in law,  which could not have been envisaged at  the time the contract was entered into.  The delay in the execution of the  conveyance deed was pre-dominantly on account of causes  attributable to  the appellants. That the appellants having got executed and accepted the  conveyance even after the reduction of the FAR voluntarily or without  demur and having raised construction clearly declared their intention to  proceed with the contract which is inconsistent with the plea that they had  the intention to rescind the contract. Having declared their intention to  proceed with the contract the appellants were bound by their affirmation.   Having affirmed the contract they cannot go back on their affirmation and  seek rescission of the contract.  That the contention in relation to frustration  is misconceived as Section 56 of the Indian Contract Act does not apply to  the cases of completed transfer.

       From the pleadings of the parties it is clear that the appellants  gave  their bid in the auction for sale of the property on the terms and conditions as  contained in the auction notice which included the parameters approved by  the JDA for construction of  building complex set out in Clause (8)  providing for FAR 2.0.  Appellants paid the price inclusive of interest for the  delayed payment amounting to Rs. 19,86,77,273/- and got the sale deed after  paying the requisite stamp duty and registration charges, executed on  7.1.1997 and got the physical possession of the auction property vide  possession letter dated 7.1.1997.  After receiving the possession the  appellants submitted the plans  for construction of Hotel-cum-Commercial  Complex to the JMC on 27.1.1997 for approval.  The Building Plans  Committee of the JMC on 20.2.1997 approved the plans with the  modification of FAR from specified FAR 2.0 in the sale deed to 1.75 only.   It was stated that this modification of FAR by the JMC was because of the  Buildings Regulations/Bye Laws of 1996 which came into force  w.e.f.   28.6.1996.  Even after approval the JMC did not release the plans till  charges for approval of plans were paid.  The appellants deposited a sum of  Rs. 1,48,78,887/- for the approval of the plans with the JMC on 21.4.1997  and after receiving the approved plans the appellants commenced the  construction activities which according to the appellants  were without  prejudice to their rights and the belief that the remaining FAR would be  approved.  

From these facts what emerges is that on 21.12.1994, the date on  which the  auction went in favour of the appellants there was no  misrepresentation even as alleged by the appellants since the FAR on that  date was 2.0.  The FAR was changed  by virtue of change in the law.  As per  term No. 5 of the auction notice the successful bidder was required to  deposit 10% of the final bid on the spot in cash or through Demand Draft in  favour of the Director of Estate, Rajsthan.  15% of the amount of the final  bid was required to be deposited within 15 days from the date of acceptance  and the remaining 75% of the amount of the final bid was to be deposited by  successful bidder within 60 days of the notice for deposit of the said bid  amount on being informed by the Respondent.  Failure to deposit the amount  as per the above stipulation could result in forfeiture of the amount already  deposited by the successful bidder and result in cancellation of the bid.   The  appellants did not deposit the amount as per  schedule of  payment set out in  the auction notice.  The entire sale consideration amounting to Rs.  19,56,76,000/- was paid on 16.5.1995.  A sum of Rs. 30,01,273/- towards  interest for delayed payment (to the payment of which the appellants agreed)  was also paid.  The last payment of Rs. 83,562.72 P. towards amount of  interest was made by demand draft dated 26.09.1995.  The cost and expenses  for registration of patta, stamp duty and all other incidental expenses were to

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be borne by the purchaser.   The sale deed could not be executed in favour of  the appellants as the appellants did not furnish the stamp paper on which the  sale deed was to be executed.  After repeated letters including the letter  dated 21.05.1996 the appellants submitted the requisite stamp duty and  registration charges amounting to Rs. 1,19,25,720/- for execution of the sale  deed on 18.12.1996.  Thereafter, the sale deed was executed and registered  on 7.01.1997 and immediately thereafter the possession was delivered.     These facts demonstrate that delay in the execution of the conveyance was  principally on account of the reasons attributable to the appellants.  In the  meantime the FAR was changed by virtue of a change in the law.  The 1989  Bye-laws were changed by Bye-laws of 1996 which came into force w.e.f.  28.6.1996.  As per these bye-laws FAR was changed from 2.0 to 1.75.    Had  the appellants made the payments as per  schedule of the payment given in  the auction notice and submitted the requisite stamp duty the conveyance  deed would have been executed prior to the amendment in law.  The  appellants by their letter dated 18.12.1996, i.e., after the reduction of the  FAR requested the respondent to execute the conveyance.  This was done   despite knowledge of reduction of FAR.   Request made to the respondent  on 18.12.1996 for execution of the conveyance deed despite having  knowledge of the reduction of the FAR clearly shows that the plea of  misrepresentation or mistake on account of change of FAR is not made out  on the admitted facts.  

It was then contended on behalf of the appellants that in the  conveyance deed the FAR was again mentioned as 2.0  and at that stage  there was a clear misrepresentation by the respondent.  To establish  misrepresentation on this count  the  reliance was placed on the provisions of  the Indian Contract Act.  There is no force in this submission.  Statement  about the existing state of the law innocently made cannot constitute  misrepresentation if it is later found that the statement was erroneous.  This  would be particularly so where the other party to whom the statement is  made is aware of or has the ability to conveniently apprise itself of the  correct state of the facts and the law applicable.  Assuming (but without  holding) that there was some misrepresentation the appellants had  a couple  of remedies, i.e., to either rescind the contract or seek restitution or to affirm  the contract without prejudice to their right to seek damages by way of  restitution for the loss caused by the misrepresentation.  It is apparent that  the appellants did not rescind the contract or seek restitution by way of  damages.  Instead they affirmed the contract  which is clear from the fact  that they immediately commenced construction on the land even though the  building plans were on FAR 1.75.  Affirmation of the contract and  proceeding with the construction clearly indicates that the appellants did not  rescind the contract nor reserved their right to seek restitution by award of  damages; or seek restitution rather they affirmed the contract and went ahead  with it.

It was then argued that the appellants had to start construction  immediately as a very strict stipulation was contained in the auction notice  (Condition No. 9).  It was also represented in the sale deed that construction  work on the plot should be commenced within one year from the date of  handing over the possession of the land and the construction of building  should be completed within 3 years.   The extension beyond 3 years was to  be given subject to payment of a penalty of Rs.20,000/- per month but in no  case the period would be extended  beyond 2 years.  Clause 13 of the terms  of the auction also provided that any violation of any terms and conditions  would lead to forfeiture of  purchase of right of the property and the property  would stand reverted to the government without paying any compensation  for the property.   Because of the condition contained in clauses 9 and 13 of  the terms of auction the appellants inspite of having knocked the doors of the  court had to start with the construction otherwise they ran the risk of their  right to the property being forfeited.  We do not find any merit in this  submission.  At the time of initiating the legal proceedings in the Court, it  was open to the appellants to either affirm the contract without prejudice to  their right seeking damages by way of restitution for loss caused by alleged  misrepresentation or to rescind the contract by getting the declaration that

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the contract was not binding on the appellants.  The appellants elected the  first option.  Had the appellants rescinded the contract and prayed for  declaration that the contract was not binding on them, then, on its being so  declared, terms 9 and 13 of the auction notice would not have bound the  appellants in any way.  The court while granting the relief could have  moulded the relief according to facts and situation prevalent.  It would not  have in any way affected the appellants.  The appellants cannot be permitted  to sit on the fence in indecision and take a chance.  By putting up the  construction of basement and the other floors above the appellants have  encumbered the property.  The respondent cannot be fastened with the  liability to pay for the construction put up by the appellants with full  knowledge of true facts.

The appellants have founded their case on the plea of avoidance of  contract as vitiated by misrepresentation on the part of respondents or  mistake on the part of the appellants or in the alternative, on the ground of  frustration.  Let us test if the appellants have any legs to stand on, on either  of the pleas.   

       Misrepresentation  is defined in Section 18 of the Contract Act.   Effect of mistakes is dealt with by Sections 21 and 22 of the Contract Act.

       According to Section 19 of the Contract Act when consent to an  agreement is caused by misrepresentation, the agreement is a contract  voidable  at the option of the party whose consent was so caused.  The latter  may, if he thinks fit, insist that the contract shall be performed and that he  shall be put in the position in which he would have been if the  representations made had been true.  According to Section 2 clause (i), an  agreement which is enforceable by law at the option of one or more of the  parties thereto, but not at the option of the other or others, is a voidable  contract.  It is not necessary for us to record a clear finding whether there  was a misrepresentation on the part of the respondents or not.  Suffice it to  observe that a voidable contract confers the right of election on the party  affected to exercise its option to avoid the legal relations created by the  contract or to stand by the contract and insist on its performance.  However,  his election to stand by the contract once exercised would have the effect of  ratification of the contract with the knowledge of misrepresentation on the  part of the other party and that would extinguish its power of avoidance.  In  the very nature of the right conferred on the party affected, the law expects it  to exercise its option promptly and communicate the same to the opposite  party; for until the right of avoidance is exercised, the contract is valid, and  things done thereunder may not thereafter be undone.

       A right to rescind for misrepresentation can be lost in a variety  of ways, some depending on the right of election.  A representee on  discovering the truth loses his right to rescind if once he has elected not to  rescind.  But he may lose even before he has made any election where by  reason of his conduct or other circumstances it would be unjust or  inequitable that he retains the right.  For instance where third parties have  acquired rights under the contract; again where it would be unjust to the  representor  because it is impossible to restore him to his original position.   Restitutio in integrum is not only a consequence of   rescission,  its  possibility is indispensable to the right to rescind.  Again, delay in election  may make it unjust that the right to elect should continue.  For this reason  the right to rescission for misrepresentation in general must be promptly  exercised. (See, Indian Contract and Specific Relief Acts  - Pollock and  Mulla, Eleventh Edition, Volume I, pp. 269-270).

       Chitty on Contracts (Volume I, Twenty-Eighth Edition 1999,  para 25-003) states -   "Once the innocent party has elected to affirm the  contract, and this has been communicated to the other party, then the choice   becomes irrevocable.  There is no need to establish reliance or detriment by  the party in default.  Thus the innocent party, having affirmed, cannot  subsequently change his mind and rely on the breach to justify treating  himself as discharged".  

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       Under Section 20 of the Contract Act, a mistake of fact avoids  the agreement when both the parties to an agreement are under a mistake as  to a matter of fact essential to the agreement. It is necessary that both the  parties should be under a mistake. On the appellants’ own showing, the  respondents were not under mistake; according to the appellants, the  respondents knew the correct facts and yet misrepresented.  The appellants  pleadings of misrepresentation and mistake in the alternative, in the facts  and circumstances of the case, are mutually destructive.  Under Section 21 a  contract is not voidable because it was caused by a mistake as to any  law in  force in India.  The appellants cannot rely on the pleading of mistake of their  part or misrepresentation on the part of the respondents as to the  applicability of Urban Ceiling Law and FAR as provided by the bye-laws,  both being the laws in force in India.  Here again, the vitiating effect of  alleged mistake shall stand  obliterated no sooner it is found that the  appellants have, in spite of the so-called mistake being discovered, yet,  chosen to stand by the contract, ratifying the same by their conduct and went  ahead to exercise the rights which accrued to them under the same contract  which they are pleading to be vitiated by the mistake.

       The doctrine of frustration, as applicable in India in contracts  stands, codified in Section 56 of the Contract Act. It provides :

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

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 becomes  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.

       The doctrine was so enunciated by this Court in   Satyabrata  Ghose Vs. Mugneeram Bangur and Co. and Anr.-  1954 SCR 310 : "The first paragraph of the section  lays down the law in the same way as in  England.  It speaks of something which is  impossible inherently or by its very 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 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  literally impossible but it may be

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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 promisor finds it impossible  to do the act which he promised to do.

       In M/s Alopi Parshad and Sons. Ltd. Vs. Union of India  -  (1960) 2 SCR 793, this Court clarified that the courts have no power to  absolve a party from liability to perform a contract merely because the  performance becomes onerous; the expressed covenants in a contract cannot  be ignored only on account of unexpected and uncontemplated turn of   events after the contract.  However, a consideration of the terms of the  contract in the light of circumstances, when it was made, shows that the  parties never agreed to be bound in a fundamentally different situation which  unexpectedly emerges, the contract ceases to bind at that point, not because  the Court in its discretion considers it just and reasonable to qualify the  terms of the contract but because on its true construction it does not apply in  that situation.  Here again, it has to be noted that the doctrine of frustration  can only apply to executory contracts and not the transactions which have  created a demise in praesenti (See, H.V. Rajan Vs. C.N. Gopal and Ors. -  AIR 1975 SC 261, 265).  In Raja Dhruv Dev Chand Vs. Harmohinder  Singh & Anr., (1968) 3 SCR 339, their Lordships held - "There is a clear  distinction between a completed conveyance and an executory contract, and  events which discharge a contract do not invalidate a concluded transfer".

In the auction notice it was represented that the land in question was  freehold as well as ceiling free. The Ceiling Act does not apply to the  Government lands.  It is admitted before us, that the government was aware  (though it may have had the intention right from the beginning to exempt the  land from the Ceiling Act) that the land which was being auctioned was not  exempted from ceiling and  the exemption could only be granted after the  transfer of the land to a private person. The appellants received a notice  under Section 38 of the Ceiling Act informing that they own excess land in  Jaipur City as prescribed under Section 4 of the Urban Land Ceiling Act and  had not submitted their return under Section 6 read with Section 15 within  the prescribed period.  Appellants were directed to appear before the  competent authority on 17.04.1997 to explain why action should not be  taken against them under Section 38 of the Act.   Soon after the receipt of  the said letter, the appellants applied for exemption under the Act which was  granted promptly on 11.8.1997.  Exemption was given subject to various  conditions which were imposed by the exemption order.  It was stated that  para-meters of the Jaipur Municipal Corporation regarding construction  would be applicable.  According to the appellants this virtually amounted to  unilaterally reducing the FAR 2 to FAR 1.75.  The second condition was that  the plot will not be transferred without prior approval of the State  Government even though the property could be mortgaged to financial  institutions for taking loan without parting with possession.  According to  the appellants, imposition of these conditions were contrary to the  representation contained in the auction advertisement that the property was  freehold.  It was argued that it is well known that the transfer of freehold  property is freely transferable and does not require any permission.  In  imposing such condition the government was taking away the freehold  character of the property.  The representation that the property was ceiling  exempted was a very material representation which had induced the  appellants to offer a very high bid.  That the action of the State in making a  representation that the property was ceiling free, although it knew that there  was a ceiling limit not only amounted to misrepresentation under Section 18  of the Indian Contract Act but in fact amounted to fraud because any  representation with knowledge that the representation was not true would  amount to fraud.  It was argued that the contract having been induced by

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misrepresentation, it was open to the appellants to avoid the contract under  Section 19 of the Contract Act.   

Per contra, it was contended on behalf of the respondents that so far as  the order dated 11th August, 1997 under the Ceiling Act, imposing certain  conditions, is concerned, the stand of the State has always been that it is not  going to enforce any of these conditions.  That even today the stand of the  State is that it is not going to enforce any of the conditions as imposed in the  exemption order.

Other aspects of the plea founded on Section 19 of the Contract Act  have already been dealt with hereinbefore.

So far as the Ceiling Act is concerned, the Act itself has been repealed  by the Notification dated October 7, 1999 as published in the Rajasthan  Gazette dated October 11, 1999.  With the repeal of the Ceiling Act, all  proceedings under the Ceiling Act have abated.  Reference may be made to a  decision of this Court in Pandit Madan Swaroop Shrotiya Public  Charitable Trust vs, State of U.P. & Others, 2000 (6) SCC 325.

So far as the order dated 11th August, 1997 under the Ceiling Act is  concerned, the stand taken by the State through out has been that it is not  going to enforce any of those conditions.  It was so submitted by the learned  Advocate General while appearing for the State of Rajasthan before the High  Court.  The aforesaid fact is admitted by the appellants themselves in their  memo of appeal [Ground (u)].  Even today, the stand of the State is that it is  not going to enforce any of those conditions as imposed under the exemption  order.  This apart the process for obtaining exemption from land ceiling did  not in any manner affect the appellants for the reason that their plans were  sanctioned even before the  question was raised as to the application of the  Urban Land Ceiling Act to the property.  The appellants as per their letter,  couched as representation, dated 10.10.1997 had started digging for the  basement in February, 1997 immediately upon the sanction of building  plans.  The process of construction began immediately.  Thus, the condition  imposed in the exemption order  were not an impediment in any manner  It  is appellants’ own case that they had started construction of a multi-storeyed  complex upon the property which clearly implies that the appellants had  never the intention of the transferring the land as plots and therefore the  condition inhibiting the transfer of plots was irrelevant so far as the  appellants are concerned.

It is the appellants who delayed the payment of sale consideration on  the dates stipulated for payment.  For the period of delay they agreed to pay  interest to the State Government voluntarily; they voluntarily paid stamp  duty and bore registration charges as stated above in the end of December,  1996 and got the sale deed executed on 7th January, 1997 on which date the  possession was delivered to them and thereafter they voluntarily paid the  charges for the approval  of building plans with FAR 1.75 and proceeded  with construction work for establishing Hotel-cum- Commercial Complex  by demolition of existing structure of Dr. Hellings Bunglow standing on the  land in question, levelling the same,  digging deep foundation, constructing  basement and thereafter further raising construction of ground floor and  other floors.  They cannot now be permitted to turn round and claim refund  of any amount which they allege to have spent including the claim for the  interest.  The appellants have voluntarily paid the entire money, entered into  possession, raised construction and incurred expenditure voluntarily and as  such they are not entitled to any refund or any claim and declaration as such  on the ground of frustration or impossibility of performance of the contract.

Every contract including one by auction is subject to provisions of  law.  Whenever any action is taken in performance of a contract, it must  conform to the law in force at the time when action is taken. In the instant  case when the appellants applied for approval of building plans it is the law  that is in force at that time, which would be applicable.   Doctrine of  promissory estoppel is not available when any action is desired to be taken

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in contravention of the provisions of law.  The terms and conditions of the  sale as announced when the property was put to sale were in accordance  with law and no guarantee was given (nor could have been given) that the  law would not change, or that the terms and  conditions would be  enforceable even in violation of law which may be in force.  FAR was a  matter of law and the FAR was fixed either by the JDA or JMC in exercise  of its statutory powers.  The contract when entered into, the FAR approved  by JDA was 2 and its subsequent reduction in 1996 to 1.75 would not  invalidate the contract or by treating as a breach of the contract nor can it be  treated by the Government.

In reply to the contention raised  on behalf of the State  Government that the appellants having failed to rescind the contract  immediately on coming to know of the breach or misrepresentation by the  government, it could not exercise their right of rescinding the contract under  Section 39 or avoiding under Section 19 of the Contract Act later on, it was  submitted on behalf of the appellants that this contention of the State  Government was devoid of any force.  According to the appellants the legal  right to avoid a contract or rescind the contract can be waived but there is no  principle of law which requires the exercise of  the right of repudiation of  the contract to be done immediately on coming to know about the  misrepresentation or breach of contract.  It was open to the aggrieved party  to persuade the defaulting party to rectify the situation and to  wait till the  defaulting party refuses to rectify its default before exercising its right of  repudiation of the contract.  Reference was made to Sikkin Subba  Associates vs. State of Sikkim, 2001 (5) SCC 629, wherein this Court  observed as follows:

"Waiver involves a conscious, voluntary and  intentional relinguishment or abandonment of a  known, existing legal right, advantage, benefit,  claim or privilege, which except for such a waiver,  the party would have enjoyed.  The agreement  between the parties in this case is such that its  fulfilment depends upon the mutual performance  of reciprocal promises constituting the  consideration for one another and the reciprocity  envisaged and engrafted is such that one party who  fails to perform his own reciprocal promise cannot  assert a claim for performance of the other party  and go to the extent of claiming even damages for  non-performance by the other party.  He who seeks  equity must do equity and when the condonation or  acceptance of belated performance was conditional  upon the future good conduct and adherence to the  promises of the defaulter, the so-called waiver  cannot be considered to be forever and complete it  itself so as to deprive the State, in this case, of its  power to legitimately repudiate and refuse to  perform its part on the admitted fact that the  default of the appellants continued till even the  passing of the award in this case.  So far as the  defaults and consequent entitlement or right of the  State to have had the lotteries either foreclosed or  stopped further, the State in order to safeguard its  own stakes and reputation has continued the  operation of lotteries even undergoing the miseries  arising out of the persistent defaults of the  appellants.  The same cannot be availed of by the  appellants or used as a ground by the arbitrator to  claim any immunity permanently for being  pardoned, condoned and waived of their  subsequent recurring and persistent defaults so as  to deny or denude forever the power of the State as  the other party to the contract to put an end to the

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agreement and thereby relieve themselves of the  misfortunes they were made to suffer due to such  defaults.  Once the appellants failed to deposit the  prize money in advance within the stipulated time,  the time being of the essence since the prizes  announced after the draw have to be paid from out  of only the prize money deposited, the State was  well within its rights to repudiate not only due to  continuing wrongs or defaults but taking into  account the past conduct and violations also  despite the fact that those draws have been  completed by declaration or disbursement of prize  amounts by the State from out of its own funds.   The conclusion to the contrary that the State has  committed breach of the contract is nothing but  sheer perversity and contradiction in terms."

       In our view, this decision has no application to the facts of the present  case.  In the said case the appellants therein was appointed as "organising  agent" for lotteries of the Respondent State.  Subsequently, disputes arose  which led to termination of the agency by the State. Appellants therein got  an arbitrator appointed under Section 8 of the Arbitration Act, 1940.  Claims  and counter-claims were filed and evidence adduced by the parties before  the Arbitrator.  Arbitrator made its award determining the amount payable  by the State to the appellants at Rs.37,75,00,000/- and the amount payable  by the appellants to the State by way of counter-claim at Rs.4,61,35,242/-.   District Judge made the award the rule of the court.  This was in challenge in  the High Court of Sikkim where there were only two Judges.  Chief Justice  set aside the award while the other Judge held that the matter required to be  remitted to the arbitrator for re-determining the quantum of damages.  The  court thereafter by its order dated 29th September 1995 directed the matter to  be placed before the incoming Chief Justice/Judge.  Subsequently both the  Chief Justice and the other Judge were, in due course, succeeded by new  incumbents to those offices.  The new Judge fixed the date of hearing and  before him the appellants filed an application opposing the hearing of the  appeal in view of section 98(2) CPC.  This application was dismissed by the  Division Bench as not maintainable in view of the reference made by the  Division Bench.  This was challenged in this Court.  After resolving the  controversy on the aforesaid point, the Court proceeded to examine the  award made by the arbitrator.  It was held that the award under challenge  stood vitiated on account of several errors of law, apparent on the face of it  and such infirmities go to substantiate the claim of the State that the  arbitrator not only acted arbitrarily and irrationally on a perverse  understanding or misreading of the materials but was also found to have  misdirected himself on the vital issues rendering the award to be bad in law.   The arbitrator and the District Judge had recorded a finding that the State in  spite of warnings and threats did not actually stop draws or to other  subsequent draws by the appellants and allowed the lotteries to go on  without any break.  That the State government had condoned or waived the  lapses and defaults.  In this context, the observations quoted above were  made by this court.  It would be seen that this contract was an executory  contract and not completed contract of sale of property.  It was observed that  a waiver involves a conscious, voluntary and intentional relinquishment or  abandonment in known existing legal right.  There were persistent and  continuous defaults.  Even if the past lapses were taken to have been waived  by the State, it was observed by the Court that the State could not be  compelled to condone the continues wrong and defaults of the appellants to  their disadvantage and detriment.   Observations quoted above are of no  avail to the appellants as in that case the court found that the appellants were  continuing with the defaults in an executory contract.  The principle laid  down in the said case would not be applicable to the facts of the present  case.

        Reliance was also placed on M/s Motilal Padampat Sugar Mills

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Co.Ltd. vs. State  of U.P. & Others [1979 (2) SCC 409].  In this case the  point which fell for consideration was whether the assurance given by  respondent No.4 (Chief Secretary or advisor to the Government) on behalf  of the State of U.P. that the appellants would be exempt from payment of  sales tax for a period of three years from the date of commencement of  production could be enforced against the State government.  On behalf of the  respondent-State, plea of waiver by the appellants were raised.  The Court  rejected this plea of waiver.  It was held that waiver is essentially a question  of fact and it must be properly pleaded and proved which the State had failed  to do.  It was also held that waiver means abandonment of a right and it may  be either express or implied from conduct, but its basic requirement is that it  must be ’an intentional act with knowledge’.  On facts it was found that  there was no waiver and the court observed:

"Now in the present case there is nothing to show  that at the date when the appellant addressed the  letter dated June 25, 1970, it had full knowledge of  its right to exemption under the assurance given by  respondent 4 and that it intentionally abandoned  such right.  It is difficult to speculate what was the  reason why the appellant addressed the letter dated  June 25, 1970 stating that it would avail of the  concessional rates of Sales Tax granted under the  letter dated January 20, 1970.  It is possible that  the appellant might have thought that since no  notification exempting the appellant from Sales tax  had been issued by the State Government under  Section 4-A, the appellant was legally not entitled  to exemption and that is why the appellant might  have chosen to accept whatever concession was  being granted by the State Government.  The claim  of the appellant to exemption could be sustained  only on the doctrine of promissory estoppel and  this doctrine could not be said to be so well  defined in its scope and ambit and so free from  uncertainty in its application that we should be  compelled to hold that the appellant must have had  knowledge of its right to exemption on the basis of  promissory estoppel at the time when it addressed  the letter dated June 25, 1970.  In fact, in the  petition as originally filed, the right to claim total  exemption from Sales Tax was not based on the  plea of promissory estoppel which was introduced  only by way of amendment."

       In the present case, we have found as a fact that the appellants even  after acquiring the knowledge of fact regarding reduction of FAR from 2.00  to 1.75 and that the land was not ceiling free elected to affirm the contract  by getting their plans approved with FAR 1.75 and started putting up  construction. They started digging the foundations and continued to build  even after knowing that the land was not ceiling free.  Thus, the reliance  placed on the ratio of law laid down in M/s Motilal Padampat Sugar Mills  Co.Ltd.’s case (supra) is of no avail to the appellants.  

       Relying upon a decision of this Court in Ningawwa Vs.  Byrappa &  Others [1968 (2) SCR 797], it was contended by Shri Shanti Bhushan,  learned senior counsel that a contract or other transaction induced or tainted  by fraud is not void, but only voidable at the option of the parties defrauded,  unless it is avoided, the transaction is valid.  Further, drawing a distinction  between fraudulent misrepresentation as to the character of the document  and fraudulent misrepresentation as to the contents thereof it was argued that  in the case of former the transaction is void while in the case of latter it is  merely voidable.  It was also urged that the appellants could avoid the  transaction at any time.  In our view, this judgment is of no assistance to the

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appellants as on facts we have found that the default committed by the  respondent-State, if any, stood condoned by the appellants.          In either case, we find that the appellants are not entitled to any relief  in the realm of the law of contracts.  In spite of having acquired knowledge  of the true facts assuming that there was any mistake or misrepresentation to  begin with and having learnt that the title which was sought to be conferred  on them by the respondents was not such full title as they had contemplated  it to be, they proceeded to have the sale deed executed and registered in their  favour, seeking extensions of time and paying interest for the period of delay  in payment.  The contract stood accomplished into a demise and the  transaction ended.  It is writ large that the appellants had elected to stand by  the  contract  by digging the land, sinking the basement and raising about 9  floors above,  investing  crores of rupees.  They have by their own conduct  rendered the position irreversible and restitution impractical.  We have not  been shown any law or authority based whereon the appellants may annul  and avoid a concluded contract and fix liability on respondents for the cost  of their construction which they have voluntarily chosen to raise in spite of  being aware of all the relevant facts and circumstances.

The learned counsel for the appellants referred to the provisions of  Section 90 (1) and (2) of Jaipur Development Authority Act, 1982, which  read as under:

"90 Control by State Government - (1)     The Authority shall exercise its powers and  perform its duties under this Act in  accordance with the policy framed and the  guidelines laid down, from time to time by  the State Government for development of  the areas in the Jaipur Region. (2)     The Authority shall be bound to comply  with such directions which may be issued,  from time to time, by the State Government  for efficient administration of this Act."

It was contended that the State Government has the complete control  over the JDA and therefore could direct the JDA to adhere to the FAR 2.0 as  against the FAR 1.75 provided under the 1996 Regulations.  We do not find  much force in this submission.  A reading of this section clearly shows that  the Government can direct the authority to exercise its powers and perform  its duty in accordance with the policy framed and the guidelines laid down  from time to time.  Policy and guidelines can be issued for general  application or for a class of persons or area or based on some such other  criteria as may withstand the test of Article 14 of the Constitution.  The  power conferred by Section 90 cannot be exercised by the Government to  give directions to increase the FAR in one individual or particular case.  The  appellants cannot claim a right to get exemption from the prevalent law nor  heard to say that since the Government had the power to give direction, its  failure to exercise the power of issuing direction by reference to Section 90  of the JDA Act, it has perpetuated the breach of contract.   

Counsel for the appellants also brought to our notice the provisions of  Section 298(1) of the Rajasthan Municipalities Act, 1959 to contend that  Government had the power to cancel or modify the Bye-laws framed by the  Board and the failure to do so reflects that the government did not intend to  stick to the representation made by it in the auction notice or in the sale  deed.  Section 298 reads as under:

"298 Power of Government to cancel or modify  bye-laws and rules of boards--

(1)     The State Government may at any time by

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notification in the Official Gazette repeal  wholly or in part or modify any rule or bye- law made by any board.

Provided that before taking any action under this  sub-section, the State Government shall  communicate to the board the grounds on which it  proposes to do so, fix a reasonable period for the  board to show cause against the proposal and  consider the explanation and objections, if any of  the board."

Section 298 provides that the State Government has the  power to  cancel or modify bye-laws  or rules framed by the board.  Again this is of no  avail to the appellants.  Power under Section 298 is in the nature of power of  superintendence.  It is a general power given to the Government that in case  the Government feels that the bye-laws framed or the orders issued are not  reasonable or are detrimental to the public interest or there is any other good  ground available, then, it can repeal the bye-laws wholly or in part or modify  any rule or bye-law made by the Board after inviting objections.  The power  could not have been exercised to suit the needs of an individual case as has  been contended by the learned senior counsel for the appellants.

       It may be noted that the learned senior counsel for the respondent  pointed out during the course of hearing that the amended bye-laws were  more beneficial to the appellants as there was number of exemptions to be  taken into account while calculating the FAR, namely, storage on all floors,  balcony, guard-door, lobby, terrace garden, service floor, AC plant room,  locker, dark room, PBX room, guard room, power house, lift room and the  lift well.    Under the amended bye-laws of 1996 the appellants would get  more covered area thus causing no prejudice to them.  This has been  strongly refuted by the counsel for the appellants.  We need not go into this  disputed question as it is of no consequence to the points already decided.

       For the reasons stated above, we do not find any merit in these appeals  and the same are dismissed with no order as to costs.