http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 24  

CASE NO.: Appeal (civil) 3530  of  1998

PETITIONER: HER HIGHNESS MAHARANI SHANTIDEVI P.  GAIKWAD

       Vs.

RESPONDENT: SAVJIBHAI HARIBHAI PATEL & ORS.

DATE OF JUDGMENT:       21/03/2001

BENCH: S.P. Bharucha, N. Santosh Hegde & Y.K. Sabharwal

JUDGMENT:

[With T.C.(C) No.63/1998 and SLP(C) No.1692/99]

J U D G M E N T

Y.K.SABHARWAL,J.

L...I...T.......T.......T.......T.......T.......T.......T..J

   By  judgment  under challenge, the High Court  modifying the   decree  passed  by  the   trial  court  for   specific performance  in  respect of land in question, directed  that the  plaintiff-respondent  No.1  in this  appeal,  shall  be entitled  to enforce the said decree subject to the issue of final  declaration  under  Section  21  of  the  Urban  Land (Ceiling  and  Regulation)  Act, 1976 (For short,  the  ‘ULC Act’)  by the authorities in accordance with law.  In  other respects, substantially the judgment and decree of the trial court was upheld.

   The  defendants are in appeal.  In the appeal and  other connected  counter  matters the main question is  about  the interpretation  of certain provisions of the ULC Act.   This Act,  in the first instance, came into force on the date  of its  introduction in the Lok Sabha, i.e., 28th January, 1976 and  covered  the Union Territories and 11 states which  had already  passed the requisite resolution under Clause (1) of Article  252  of  the Constitution.  This provision  of  the Constitution empowers the Parliament to legislate for two or more  States on any of the matters with respect to which  it has  no  powers to make laws except as provided in  Articles 249  and  250.  The effect of passing of a resolution  under clause  (1) of Article 252 is that the Parliament, which has no  power  to legislate with respect to the matter which  is the  subject  matter of the resolution, becomes entitled  to legislate  with respect to it.  On the other hand, the State Legislature ceases to have a power to make a law relating to that  matter.  On 14th August, 1972 the Gujarat Assembly had resolved  that the imposition of the ceiling on the  holding of urban immovable property and acquisition of such property in  excess of the ceiling and matters connected therewith or ancillary  and incidental thereto should be regulated in the State of Gujarat by the Parliament by law.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 24  

   The  ULC  Act received assent of the President  on  17th February,  1976.  The primary object and the purpose of  the ULC  Act  is to provide for the imposition of a  ceiling  on vacant  land in urban agglomerations, for the acquisition of such  land in excess of the ceiling limit, to regulate  such land  and  for matters connected therewith, with a  view  to preventing the concentration of urban land in the hands of a few  persons  and speculation and profiteering therein,  and with  a view to bringing about an equitable distribution  of land in urban agglomerations to subserve the common good, in furtherance of the directive principles of Article 39(b) and (c).

   Section  3  of  the  ULC Act  provides  that  except  as otherwise  provided in the Act, on and from the commencement thereof, no person shall be entitled to hold any vacant land in  excess of the ceiling limit in the territories to  which this  Act  applies under sub-section (2) of Section 1.   The expression  ‘vacant land’ is defined in Section 2(q) to mean land  not  being  land  mainly   used  for  the  purpose  of agriculture, in an urban agglomeration, but does not include certain  categories  as  stated in the  section.   The  term ‘urban land’ is defined in Section 2(o) of the ULC Act which reads as under :  "2.(o) "urban land" means,-

   (i)  any  land  situated within the limits of  an  urban agglomeration  and  referred to as such in the master  plan; or

   (ii)  in a case where there is no master plan, or  where the  master  plan does not refer to any land as urban  land, any  land  within the limits of an urban  agglomeration  and situated  in any area included within the local limits of  a municipality  (by  whatever  name called), a  notified  area committee, a town area committee, a city and town committee, a  small town committee, a cantonment board or a  panchayat, but  does not include any such land which is mainly used for the  purpose of agriculture.  Explanation.- For the  purpose of this clause and Cl.(q),-

   (A)     "agriculture" includes horticulture, but does not include,-

(i)     raising of grass, (ii)    dairy farming, (iii)   poultry farming, (iv)    breeding of live-stock, and (v)     such cultivation or the growing of         such plant, as may be prescribed;

   (B)  land shall not be deemed to be used mainly for  the purpose  of agriculture, if such land is not entered in  the revenue  or land records before the appointed day as for the purpose  of  agriculture :  Provided that where on any  land which  is  entered  the revenue or land records  before  the appointed  day as for the purpose of agriculture, there is a building which is not in the nature of a farm-house then, so much  of  the  extent  of such land as is  occupied  by  the building  shall  not  be deemed to be used  mainly  for  the purpose of agriculture :

   Provided further that if any question arises whether any building  is  in the nature of a farm-house,  such  question shall  be referred to the State Government and the  decision

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 24  

of the State Government thereon shall be final;

   (C) notwithstanding anything contained in Cl.(B) of this explanation,  land shall not be deemed to be mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture."

   The expression ‘master plan’ is defined in Section 2(h). It reads :

   "2.(h)  "master plan", in relation to an area within  an urban  agglomeration or any part thereof, means the plan (by whatever  name  called) prepared under any law for the  time being in force or in pursuance of an order made by the State Government  for the development of such area or part thereof and providing for the stages by which such development shall be carried out."

   Section 4 fixes different ceiling limits with respect to vacant land falling in categories A, B, C and D.  By Section 4(1)(c),  the ceiling limit placed on such land situated  in an  urban agglomeration falling within category C  specified in  Schedule  I is fixed at 1500 square meters.   Section  5 prohibits  certain transfers of vacant land.  Section  5(3), inter  alia, provides that transfer made in contravention of the  said  provision  shall be deemed to be null  and  void. Section  6 provides for the filing of statements before  the competent authority by persons holding vacant land in excess of  ceiling  limit.  Section 8 provides for  preparation  of draft  statement  as regards vacant land held in  excess  of ceiling  limit.   The  particulars of  the  statement  shall contain   details   as  enumerated   in   sub-section   (2). Sub-section  (3) provides for service of the draft statement on  the  person  concerned  and also for  calling  from  him objections to the draft statement.  Sub-section (4) provides that  the  competent  authority   shall  duly  consider  any objection  received  from  such person and it  shall,  after giving  such person a reasonable opportunity of being heard, pass  such  orders as it deems fit.  After disposal  of  the objections,  if  any,  received  under  sub-section  (4)  of Section  8,  final statement is prepared under Section 9  of the Act.  Section 10 provides for acquisition of vacant land in  excess of the ceiling limit whereas Section 11  provides for the payment for such acquired land.  Section 15 provides that  where  any  person acquires by inheritance  etc.   any vacant  land  which, together with the vacant land, if  any, already held by him, exceeds in aggregate the ceiling limit, such  person  will  have  to file  a  statement  before  the competent  authority and the provisions of Sections 6 to  14 shall,  so far as may be, apply to the statement filed under this  section and to the vacant land held by such person  in excess  of  the  ceiling  limit.  Section  20  empowers  the Statement  Government  to exempt any vacant land  in  public interest  and  also  in  cases   where  such  exemption   is considered  to  be necessary to avoid undue hardship to  any person.

   Section  21  of  the ULC Act provides  for  cases  where excess  land  will  not to be treated as excess.   The  said section reads thus :

   "21.   Excess vacant land not to be treated as excess in certain cases.-(1) Notwithstanding anything contained in any of  the foregoing provisions of this chapter, where a person holds  any  vacant land in excess of the ceiling  limit  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 24  

such  person declares within such time, in such form and  in such  manner  as  may  be prescribed  before  the  competent authority  that  such  land  is  to  be  utilised  for   the construction  of  dwelling  unit (each  such  dwelling  unit having a plinth area not exceeding eighty square meters) for the  accommodation of the weaker sections of the society, in accordance with any scheme approved by such authority as the State  Government  may,  by  notification  in  the  official Gazette,  specify  in  this   behalf,  then,  the  competent authority  may,  after making such inquiry as it deems  fit, declare  such land not to be excess land for the purposes of this chapter and permit such person to continue to hold such land  for  the aforesaid purpose, subject to such terms  and conditions as may be prescribed, including a condition as to the  time  limit  within  which such  buildings  are  to  be constructed.   (2)Where  any person contravenes any  of  the conditions  subject to which the permission has been granted under  sub-section  (1), the competent authority  shall,  by order,  and after giving such person as opportunity of being heard, declare such land to be excess land and thereupon all the provisions of this chapter shall apply accordingly."

   Section 23 provides for disposal of vacant land acquired under the Act.

   The  land in Vadodara falls in Category C.  The  ceiling limit  is  1500  square meters.  On 14th September,  1976  a declaration  in Form No.(1) under Section 6(1) was filed  by Fatehsinhrao  Gaekwad  declaring  242 acres as  vacant  land under the ULC Act.

   From  facts  it  is  evident  that  the  transaction  in question  was  entered into because of enactment of the  ULC Act.   An agreement dated 24th March, 1977 was entered  into between  the  Fatehsinhrao  P.   Gaekwad as  the  owner  and Savjibhai  Haribhai  Patel as the licensee in respect  of  a portion  of  property  known an Laxmi Vilas  Palace  Estate, Vadodara.   For sake of convenience hereinafter Fatehsinhrao P.   Gaekwad has been referred as ‘original defendant  No.1’ and Savjibhai Haribhai Patel as ‘plaintiff’.  The Memorandum of  Agreement (for short, ‘the agreement’) recites that  the plaintiff  has  evolved a scheme for  constructing  dwelling units  for  the accommodation of the weaker sections of  the society  as envisaged by Section 21(1) of the ULC Act.   The said units are to be constructed on a portion of land of the owner’s  property  -  Laxmi Vilas Palace  Estate,  save  and except  Laxmi Vilas Palace, Moti Baug Palace and Nazar  Baug Palace.   The area under these three palaces which is to  be excluded  is said to be approximately 100 acres - equivalent to  about  4,00,000  square meters.  The total land  of  the property  is  about  707 acres.  A Power  of  Attorney  (For short, ‘the power’) was also executed on 24th March, 1977 by original  defendant  no.1 in favour of the  plaintiff.   It, inter alia, stipulates that the power is irrevocable.

   Five  schemes under Section 21 of the ULC Act were filed before  the competent authority for the construction of  the dwelling  units for accommodation of the weaker sections  of the  society.   The  first  scheme   was  filed  under   the signatures  of  original defendant No.1 on 15th March  1977. It  stipulated construction of 64,306 dwelling units at  the proposed  cost  of  about  89,00,000,000/-.  It  is  not  in dispute  that even this scheme was evolved by the plaintiff. The  plaintiff  as  power  of attorney  holder  of  original defendant  No.1  submitted a second scheme on  5th  October,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 24  

1977  for  construction  of  38,375 dwelling  units  at  the estimated cost of about Rs.78,38,00,000/-.  On 6th February, 1978  another  scheme was submitted by the  plaintiff  which stipulated  construction  of  35,660 dwelling units  at  the proposed  cost of Rs.39,59,00,000/-.  On 5/8th January, 1979 yet  another scheme (4th scheme) for construction of  25,482 dwelling   units   at   the    estimated   cost   of   about Rs.48,35,00,000/-  was  submitted.  Finally, a  scheme  (5th scheme)  proposing  construction of 4,356 dwelling units  at the  estimated cost of about Rs.13,37,00,000/- was submitted on  29th  January,  1979  by the plaintiff  as  a  power  of attorney holder of original defendant No.1.

   Soon  after  the  submission  of the  scheme  dated  6th February,  1978,  original defendant No.1 executed  on  10th February, 1978 an affidavit-cum-declaration.  This document, inter alia, declares that all terms and conditions contained in Para 1 to 19 of the agreement were agreed to and approved by  original  defendant  No.1  and that  the  agreement  was executed by him voluntarily while in sound state of mind and consciousness  and  is  in  no circumstances  liable  to  be cancelled.    It  also  reiterates   the  execution  of  the irrevocable  Power  dated 24th March, 1977  authorising  the plaintiff to administer the property of the declarant and to put  the housing scheme for constructing the houses for  the weaker  sections on the said property and to make  necessary additions  and  alterations in the scheme and to modify  the same  consistent with the ULC Act and the guidelines  issued thereunder :

   On  23rd February, 1980, original defendant No.1 through his  advocate  sent a notice to the plaintiff,  inter  alia, stating  that the agreement and the power dated 24th  March, 1977  and  affidavit-cum- declaration dated  10th  February, 1978  were  illegal  and   inoperative  and  cancelling  the agreement  and  the  power.  A letter was also sent  to  the competent  authority  requesting the said authority  not  to proceed  with  any  application in respect of  the  property under  Section 21 of the ULC Act which may either be pending or may be made in future by the plaintiff.

   Under  the aforesaid circumstances, a suit was filed  by the  plaintiff against original defendant no.1 on 7th April, 1980  seeking declaration that cancellation of the agreement and  the  power was illegal and also praying for  decree  of specific  performance  of  the   agreement  besides  seeking injunction  and  other consequential reliefs.  The suit  was originally  filed  against Fatehsinhrao Gaekwad as the  only defendant.   Later,  however, the specified  authority,  the competent  authority and the State of Gujarat were impleaded as  defendants  to the suit.  Original defendant  No.1  died during   the   pendency   of  the   suit   and   his   legal representatives were brought on record.

   By  judgment and decree dated 12th March, 1992 the trial court decreed the suit declaring the agreement and the power and   affidavit-cum-declaration  as   valid  and  subsisting documents  binding  on  original defendant no.1 and  on  his legal representatives.  A decree for specific performance of the  agreement was also granted in favour of the  plaintiff. The  defendants  were  ordered to specifically  perform  the agreement  and were restrained from committing breach of the agreement,  power of attorney and obstructing the  plaintiff from  acting  as constituted attorney of defendant no.1  and from taking any action regarding the scheme.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 24  

   In  the first appeal filed in the High Court challenging the  judgment  and  decree of the trial  court,  three  main questions  considered were;  (1) Whether the agreement could be  rescinded;   power  of  attorney could  be  revoked  and affidavit-cum-declaration  ceased  to be operative  or  not. (2)  Whether  it is a case for grant of relief  of  specific performance  and;   (3)  If specific performance was  to  be ordered, whether any conditions were required to be imposed.

   The  High  Court by impugned judgment dated  15th  June, 1998  held  that the main purpose for which the  agency  was created  was  the execution of the scheme  for  constructing dwelling  units for weaker sections of the society and  with that end in view the plaintiff had to prepare the scheme and get  sanction from the authority in accordance with law  and invoking  Section  202 of the Contract Act, the  High  Court concluded that it is a case of agency coupled with interest. Answering  the first question, the High Court held that  the agreement  could  not be rescinded, power of attorney  could not  be revoked and affidavit-cum-declaration did not  cease to  be operative.  The second question was also answered  in favour  of  the plaintiff holding that the  compensation  in money was not adequate relief and the plaintiff was entitled to specific performance of the agreement.

   In  respect  of the third question the High  Court  held that  the decree for specific performance could be  enforced subject  to  conditions but for the said purpose it was  not necessary  to  remand or reverse the decree and it could  be modified  imposing the condition.  It, therefore, held  that the   plaintiff  was  entitled  to  enforce   the   specific performance  as  granted by the trial court subject  to  the condition  of final declaration under Section 21 of the  ULC Act  being issued with regard to the land in question by the specified  authority, the competent authority and the  State of  Gujarat  in accordance with law.  The  authorities  were directed  to take a final decision either way with regard to the issue of the declaration under Section 21 of the ULC Act at  the  earliest possible opportunity but in no case  later than  15th  August, 1998.  On 20th June, 1998, an order  was passed by the Competent Authority under Section 21(1) of the ULC  Act approving the fifth scheme dated 29th January, 1979 and  declaring  that the plaintiff is entitled to hold as  a power  of  attorney  holder the land  admeasuring  23,91,125 sq.mtrs.   (approximately  598 acres) as  additional  vacant land  for the purpose of Chapter III of the ULC Act and  has right  to make maximum construction as admissible under  the rules.   The order dated 20th June, 1998 was challenged in a writ  petition filed in the High Court of Gujarat.  The said writ  petition has been withdrawn to this Court to be  heard and  disposed  of along with this appeal.  The ULC  Act  has since  been  repealed during the pendency of this appeal  by Repealing  Act No.15 of 1999.  The Repealing Act was  passed by  the Parliament on 22nd March, 1999 and was adopted by  a Resolution  passed  by the legislature of State  of  Gujarat under Clause (2) of Article 252 of the Constitution, on 30th March,  1999.  Reverting to facts, admittedly possession  of the  land in question was with original defendant No.1  when the  suit  was filed.  It is not the case of  the  plaintiff that  the  possession was delivered to him either  when  the agreement  was entered into or till date.  The plaintiff  is not in possession of the land.  Declaration under Section 21 of  the  ULC Act had not been made when the suit was  filed. It  has been made after the passing of the impugned judgment

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 24  

and  pursuant  to  directions contained therein.   The  said declaration,  as  already stated, is the subject  matter  of challenge  in  the  transferred writ petition.  One  of  the questions  which  falls for our determination is as to  what rights  the plaintiff is entitled to enforce prior to  issue of  declaration  under Section 21 of the ULC Act and  before the  plaintiff  is  put into possession.  Is  the  plaintiff entitled to seek specific performance of the agreement or is he  entitled  to sue for only damages?  Now, with regard  to documents  executed  between  the   plaintiff  and  original defendant  No.1  the  agreement and power of  attorney  were executed  on  the  same day, i.e., 24th  March,  1977.   The affidavit-cum-   declaration   was   executed  by   original defendant No.1 on 10th February, 1978.  The plaintiff was to undertake  the  development  of the property in  the  manner provided in the agreement in conformity with Section 21 read with  rules  and guidelines issued under the ULC  Act.   The original  defendant  No.1, as stipulated in  the  agreement, agreed that the plaintiff shall construct dwelling units for the  accommodation of the weaker sections of the society  on his  land.  The delivery of possession by original defendant No.1  to  the plaintiff is contemplated by clause (4).   The construction  as  per  scheme is contemplated  under  clause (13).  Clause (17) deals with rescission of the agreement by either party.  The said three clauses read as under :

   "(4)  On  the Competent Authority making  a  declaration that  the land of the said property is not in excess of  the Ceiling  area and on his granting permission to the owner to continue  to hold the land of the said property for  purpose of  the scheme above referred to be prepared by the Licensee of  the  Second  Part,  the owner of the  First  Part  shall deliver  possession of the said property to the Licensee  of the  Second  Part for the execution of the said  scheme  and construction of the buildings under the said scheme.

   xxx                 xxx                 xxx

   (13)  On the delivery of possession of the said property to  him  as stated in clause (4) above, the Licensee of  the Second  Part  shall be entitled to construct dwelling  units and other building in accordance with the scheme.

   (17)  This agreement shall not be unilaterally rescinded by  either  party after the Licensee of the Second Part  has been put in possession of the said property."

   In  S.   Chattanatha Karayalar v.  The Central  Bank  of India  &  Ors.   [(1965)  3 SCR 318],  the  observations  of Moulton,  L.J.   in  Manks v.  Whitley were quoted  and  are relevant  while dealing with the question of  interpretation of  several deeds which form part of same transaction.   The observations read as follows :

   "Where  several  deeds form part of one transaction  and are contemporaneously executed they have the same effect for all  purposes  such as are relevant to this case as if  they were  one  deed.  Each is executed on the faith of  all  the others  being executed also and is intended to speak only as part  of the one transaction, and if one is seeking to  make equities  apply to the parties they must be equities arising out of the transaction as a whole."

   The  agreement and power contemplate two stages for  the parties  to take steps required of them.  Certain steps  are

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 24  

required  to be taken by the plaintiff prior to the grant of declaration  under  Section  21 and before he  is  put  into possession  and certain steps after such grant and on  being put into possession.  The plaintiff is required to prepare a scheme in conformity with Section 21 at his cost and to file on  behalf of the owner a declaration in regard to the  said property   before  the  competent   authority   within   the prescribed  period.  The original defendant No.1 is required to  sign relevant papers, applications, plans, drawings etc. as  and  when required by the plaintiff for the  purpose  of declaration  and inquiries contemplated by Section 21(1)  of the  ULC Act.  On making of declaration, as per clause  (4), original defendant No.1 is required to deliver possession of the  land  to the plaintiff for execution of the scheme  and construction  in terms thereof.  The plaintiff is authorised to recover the price of the land as may be determined by the competent  authority and/or the State Government from  their prospective  members in the scheme;  and is also entitled to receive  deposits  from  the members and obtain  loans  from banks  and  other financial institutions and/or  individuals for  financing  the  scheme.   Likewise,  in  the  power  of attorney  also,  the plaintiff has been authorised  to  take certain  steps  on behalf of the owner before the  grant  of declaration  under Section 21 and being put into  possession and  certain  steps after being put into possession.  It  is correct,  as contended by Mr.  Dhanuka, that these documents form  part of same transaction.  These documents have to  be read together with a view to find out the manifest intention of   the  parties.   It  may,   however,  be  noticed   that affidavit-cum-declaration  dated  10th  February,  1988  was executed  only by original defendant No.1 for the purpose of filing  it before the competent authority and it  reiterates the  agreement and the power.  By execution of this document it  was neither intended to confer any additional rights  in favour  of  the  plaintiff nor to place any  restriction  on original  defendant  no.1  which was not  envisaged  by  the agreement.

   The disputes between the parties arose before the scheme was sanctioned and the plaintiff was put into possession and the  agreement  and  the power were terminated in  terms  of notice  dated 23rd February, 1980 sent on behalf of original defendant  No.1.  At this stage the suit was filed.  In  the plaint,  the  plaintiff  states  that it  is  necessary  for protection  and  preservation of his rights  that  defendant No.1  be  restrained  from parting with  possession  of  the property.   The first prayer of the plaintiff is that it may be  declared  that  the Memorandum of agreement  dated  24th March,  1977,  the irrevocable power of attorney dated  24th March,  1977  and the affidavit-cum-declaration  dated  10th February,  1978  are  valid, subsisting and binding  on  the Defendant  No.1.  There is no prayer in the plaint seeking a mandatory  injunction against the authorities directing them to  sanction  the  scheme.  It has not been  and  cannot  be disputed that in the event of non-grant of the scheme by the authorities  the  agreement  would   have  fallen   through. Agreement  does not contemplate that title in the land would pass  on  to the plaintiff.  Further even the title  in  the superstructure,  i.e., dwelling units to be constructed  was to remain with the plaintiff only till such time the same is transferred  by  him  in favour of the  allottees  or  their society.   It  is not disputed that the plaintiff could  not retain any dwelling unit for his own benefit.

   It  is common ground that the main purpose for which the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 24  

agreement  was  entered  into between the  parties  was  the construction  of residential houses for the weaker  sections of  the  society in term of Section 21 of the ULC Act.   Mr. Nariman contended on behalf of the appellants that under the applicable  master plan the suit land is reserved for  ‘open space’   and  residential  houses   cannot  be   constructed thereupon  and,  therefore,  the agreement is  incapable  of specific  performance.   On  the other  hand,  Mr.   Dhanuka contended  that  the applicable master plan is the one  that existed  on the date when excess vacant land first  acquired the  character of such land, i.e., on enforcement of the ULC Act  and  according  to  the said master plan  the  land  is reserved  for  residential  houses.  Further  contention  of learned  counsel is that assuming modification of the master plan  is  required to be considered, even then there  is  no impediment  in the implementation of the scheme inasmuch  as there  does  not  exist  absolute bar  for  construction  of residential  houses.   It is submitted that as a  matter  of fact,  the  declaration dated 20th June, 1998  provides  for obtaining  of  all requisite permissions whatever,  if  any, which   may  be  required   before  commencing  the   actual construction  or work.  Further, it is contended, in case of inconsistencies,  if  any,  between the provisions  of  Town Planning  laws  and the ULC Act, provisions of the  ULC  Act will  prevail in view of overriding provisions as  contained in Section 42 of the ULC Act.  In the draft development plan dated  29th  February, 1963 prepared under the  Bombay  Town Planning  Act,  1954, the entire area of Laxmi Vilas  Palace Estate (except the block of land along the river Vishwamitri and  on  north  and  sough  of   the  Zoo  Road)  was   left undesignated.   This  excepted  part of block  of  land  was designated  for  agricultural use.  The State Government  on 21st  September,  1976 issued a notification  under  Section 10(1) of the aforesaid Act sanctioning the draft development plan subject to the modifications, inter alia, that the part of  the  area of Laxmi Vilas Palace Compound which had  been left   undesignated  in  the   development  plan  shall   be designated  for  residential use under Section 7(a)  of  the said  Act  and  the block of land situated along  the  river Vishwamitri  and on north and south of the Zoo Road  passing through  Laxmi  Vilas Palace which had been  designated  for agricultural use shall be released from the said designation and  the land so released shall be reserved for recreational purposes  under  Section  7(b)  of   the  Act.   A   further notification  dated  17th May, 1975 under Section 10A(1)  of the Act was issued by the Government of Gujarat proposing to modify  the  development  plan dated  21st  September,  1970 providing  that  the  lands of Laxmi Vilas Palace  shown  as residential zone in the sanctioned development plan Vadodara shall  be  released  from the said use and  the  lands  thus released shall be reserved for open space under Section 7(b) of  the Act as shown in the plan.  A notification dated 16th January,  1978 issued by the Gujarat Government in  exercise of  powers  conferred under Section 10A of the  Bombay  Town Planning  Act,  1954 sanctioning the variations proposed  by the  notification dated 17th May, 1975 to Final  Development Plan dated 21st September, 1970 notified 15th March, 1978 as the  date  from which the variations would come into  force. By  clause  (23)  of  the  Schedule  appended  to  the  said notification,  it was provided that the land of Laxmi  Vilas Palace   shown  as  residential   zone  in  the   sanctioned development plan of Vadodara shall be released from the said use  and the lands thus released shall be reserved for  open space  under Section 7(b) of the said Act.  Mr.  Dhanuka is, however,  right  in contending that the  notification  dated

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 24  

16th  January,  1978 never became operative for  the  reason that  before  the  said notification came  into  force,  the Bombay  Town  Planning  Act, 1954 was repealed  w.e.f.   1st February, 1978 and the said notification was not saved under Section  124(2)  of  the  Gujarat Town  Planning  and  Urban Development  Act,  1976, which came into force  w.e.f.   1st February, 1978.

   If  the  position had rested in terms of what  has  been stated  above, the consequences may have been different.  It was,  however, not so.  Under the aforesaid Gujarat Act,  on 17th  May, 1979, draft development plan under Section 13 was published  wherein  the  suit land was designated  as  ‘open space,  sport stadium, Bus terminus and court’.  During  the pendency  of  the  suit, on 25th January,  1984,  the  final development  plan prepared by the Vadodara Urban Development Authority issued under the Gujarat Act came into effect.  As per the said final development plan, the land in question is reserved for open space etc.  as stated in draft development plan dated 17th May, 1979.

   The  Government  of Gujarat issued a circular dated  1st April,  1978  regarding implementation of guidelines  issued under  Section 21 of the Act and amended ULC Rules.  One  of the salient feature of the said circular was that the scheme shall  be  in  consistence with the Master  plan.   It  also provided  that  the  scheme submitted should adhere  to  the prevailing municipal Regulations, Town Planning requirements and  other  statutory requirements.  If any  development  is required  as  per these regulations, then the scheme  should include such development.  It also provided that permissible density  and  other  regulations like minimum  size,  common plot,  minimum  height,  specification and  construction  of stories  etc.  will also have to be adhered to.  It  further provided that the permission to undertake the scheme will be given  only  in  residential  zones   as  indicated  in  the Development Plan.

   The  Gujarat  Government in supersession of the  earlier circular  dated  1st April, 1978 issued fresh guidelines  on 22nd May, 1979 regarding the implementation of schemes under Section  21  of the ULC Act.  These guidelines, inter  alia, stipulated that the area of 50% of the total house shall not increase  40  square  meters  and the plinth  area  and  the remaining  building  plinth area shall not exceed 80  square meters.  The construction work under the scheme should be in consonance with the provisions of the Master plan and should be  over within 5 years from the date of the sanction  under Section 21(1) granted by the competent authority.  The units constructed under the scheme shall be allotted to the weaker sections  of the society by way of sale or hire-purchase  or on hire basis.  It also provided that the construction shall be  made  in accordance with the Town  Planning  Regulation, Municipal   Regulations,  Building   Regulations  etc.   The competent  officer  shall  grant the scheme subject  to  the building  regulation,  margin of the municipal  corporation, panchayat  etc.  According to the guidelines, the  specified officer  and  the competent officer are required  to  ensure that  the  conditions  are complied  with.   The  guidelines stipulated  the withdrawal of exemption in case of violation of  any  of the conditions.  It is of significance  to  note that  it  was  specifically  provided that at  the  time  of sanctioning the scheme, the competent authority shall ensure that the land in respect of which the scheme is submitted is not  placed in reservation.  As already stated, the land  in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 24  

question  is  shown as open space in the  draft  development plan of Vadodara.

   The High Court by impugned judgment, as already noticed, modified the decree of the trial court and directed that the decree  for specific performance shall be operative only  if declaration  is issued under Section 21 of the ULC Act.   On the  question  whether construction of residential units  on the  suit  land  was  permissible or  not,  the  High  Court following the decision of this Court in Atia Mohammadi Begum (Smt.)  v.   State of U.P.  & Ors.  [(1993) 2 SCC 546]  held that the construction of residential units cannot be said to be forbidden because of subsequent change in the master plan and  for  considering  whether   residential  units  can  be constructed  or  not,  the  relevant   master  plan  to   be considered  is  the  one  which was  in  existence  on  17th February,  1976,  when the ULC Act was enforced.   The  High Court has held that :

   "...the  construction of residential units on such  land cannot  be said to be forbidden by any law merely because in the  subsequent  master  plan it has been shown to  be  open space.   The rights of the parties were crystallised on  the date  of the commencement of the Act and such rights have to remain unaffected by the subsequent events."

   The High Court has further held :

   "Atia  Mohammadi  begum  (supra) cannot  be  ignored  or cannot  be  held  to  be inapplicable to the  facts  of  the present  case  on any of the grounds raised by  the  learned counsel for the defendant appellant and the matter has to be examined on the basis of the position as it was in existence with  reference  to  the master plan on the  date  when  the Ceiling Act came into force on 17th February, 1976, the date on  which the rights of the parties had become  crystallised and,  therefore, at that time if the land in question  could be utilised for residential purposes, the mere change in the development  plans  subsequently would not create any  legal impediment  against  the use of the same for the  same  land purpose,  which  too  is a public purpose and it  would  not amount  to  any  contravention  of  law,  if  such  land  is permitted  to  be  used  for  raising  the  construction  of dwelling  units for the weaker sections of the society.   In the  facts  and  circumstances of this case,  therefore,  it cannot  be  said that, the MOA was no more capable of  being enforced  and  that  the  concerned  authorities  could  not sanction  the scheme as such even if they wanted to sanction and  the  plaintiff  respondent could claim to  enforce  the MOA."

   The  competent  authority in the order dated 20th  June, 1998  approving  the  scheme dated 29th  January,  1979  for construction  of  4358 dwelling units says that the ULC  Act has  superior  powers over the concerned rules of the  State and, therefore, on the date the land was declared as vacant, it  was in residential zone and for the purposes of  Section 21,  it  cannot  be taken that the land is  meant  for  open space.   The competent authority further says that the  land would  permanently remain in the residential zone.  In  Atia Begum’s case it was held :

   "The  ‘master plan’ defined in Section 2(h) and referred in the definition of ‘urban land’ in Section 2(o), including Explanation (C) therein, is obviously a master plan prepared

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 24  

and in existence at the time of commencement of the Act when by  virtue  of Section 3 of the Act, right of the holder  of the  land under the Act get crystallised and extinguish  his right  to  hold  any vacant land in excess  of  the  ceiling limit.   The proceedings for determining the vacant land  in excess  of  the  ceiling limit according  to  the  machinery provisions  in the Act is merely for quantification, and  to effectuate   the   rights  and    liabilities   which   have crystallised  at  the time of commencement of the Act.   The contrary  view  taken  on  the construction  made  of  these provisions   by  the  High   Court  cannot,  therefore,   be accepted."

   The  facts  of Atia Begum’s case show that it is a  case which relates to quantification of vacant land.  The present case  is  not of quantification of vacant land.  Atia  Begum was  not  concerned with the question of Town Planning  Laws and the schemes under Section 21 of the ULC Act which is one of  the principle question with which we are concerned here. It  was not held in Atia Begum that planning and development which  is  a  state  subject  would  stand  frozen  on  17th February,  1976.  The said decision cannot be read as laying down the law that for all and every purpose, the master plan as  in  existence  on 17th February, 1976 will  freeze.   We leave  open  the  question whether even for the  purpose  of quantification  of  vacant land that has become  such  after 17th  February,  1976, would the position in regard  to  the master  plan  as  existing  on 17th  February,  1976  remain unaltered  or not.  In the present case, on this aspect,  it is  not necessary to examine the correctness of the decision in  Atia Begum’s case.  It deserves to be emphasised that by passing  a  resolution under clause (1) of Article 252,  the State Legislature only surrendered the right to legislate in respect  of laws relating to the imposition of a ceiling  on the  holding  of urban immovable property in excess  of  the ceiling and all matters connected therewith or ancillary and incidental  thereto in favour of the Parliament by law.   It was   only  a  limited  surrender  in  terms  of  the   said resolution.   The aspect of Town Planning and Development by the  State  has  not been surrendered.   The  imposition  of ceiling  on  urban  immovable  property  is  an  independent subject.  The primary object of the Act, as already noticed, was  to prevent the concentration of urban land in the hands of  a few persons and speculation and profiteering  therein, and  to bringing about an equitable distribution of land  in urban agglomerations to subserve the common good.  Basically one uniform policy is fully understandable on such a subject and  that is why on this aspect there was surrender by  most of  states in favour of the Parliament.  The town  planning, however, is altogether an independent and different subject. It  is a State subject.  It differs from State to State.  It cannot  be said that by surrendering its right to  legislate on  the  aspect of imposition of ceiling on urban  immovable property,  the State Legislature also surrendered the  right of development and town planning.  These are essentially the rights  within  the  purview of the State  Government.   The object  of  the  ULC  Act  is  not  to  sanction  or  permit development  in the States contrary to their statutory  town planning  laws.  The development and the town planning is an ongoing  process.   It  goes on changing from time  to  time depending  upon the local needs.  The definition of  ‘master plan’  contemplates the plan prepared under any law ‘for the time  being  in force’ or ‘in pursuance of an order made  by the  State  Government for the development of such  area  or part  thereof  and  providing for the stages by  which  such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 24  

development  shall be carried out’.  The definition does not contemplate  a static master plan.  For claiming the benefit of  Section  21, the construction of the dwelling units  for the  accommodation of the weaker sections of the society  on the  land  has to be if permissible as per  relevant  master plan  when  the scheme is considered by the authorities  for sanction.   If the land use requires the land to be used for some  other purpose, it cannot be said that to grant benefit under  Section  21, the land should be permitted to be  used for  construction of residential units.  It was not intended and could never have been intended that Section 21 will take away  the  State  power of town planning or on  coming  into force  of  the ULC Act, the Master Plan would  freeze.   The Rules made under the ULC Act further make the position quite clear.   Rule 11-A was introduced and brought into force  by amendment  of  Urban Land (Ceiling and Regulation) Rules  on 19th  December,  1977.  Rule 11-A reads as under  :   "11-A. Terms  and  conditions  subject  to which a  person  may  be permitted  to  continue  to hold excess  vacant  land  under sub-section  (1)  of  Section 21.-The terms  and  conditions subject to which the competent authority may permit a person to  continue  to hold vacant land, in excess of the  ceiling limit,  under  sub-section  (1)  of   Section  21,  for  the construction  of dwelling units for the accommodation of the weaker sections of the society in accordance with any scheme shall  be  the  terms and conditions specified  in  Schedule 1-A."

   Schedule  1-A  sets out terms and conditions subject  to which  a person may be permitted to continue to hold  excess vacant  land under sub-section (1) of Section 21.  The  said conditions  also  make  it clear that  the  construction  of dwelling  units  has to be consistent with the master  plan. Condition No.1 of Schedule 1-A reads thus :

   1.    The  construction  of   dwelling  units  for   the accommodation  of the weaker sections of the society in  the vacant  land,  in relation to which the declaration  of  the competent  authority is sought or made under sub-section (1) of  Section 21 shall be consistent with the Master Plan,  if any,  for the urban agglomeration or that part of the  urban agglomeration  wherein such land is situated or, if there is no  Master  Plan  for the urban agglomeration or  such  part thereof  such directions as the State Government may give in relation  to  land used in the urban agglomeration, or  such part  have  regard to the planned development of  the  urban agglomeration or any part thereof."

   Various  guidelines  issued from time to time also  show that  the  master  plan  to  be considered  is  the  one  in existence at the relevant time when the scheme under Section 21  is  considered by the authorities.  As already  noticed, the  circular  dated 22nd May, 1979 stipulates that  at  the time  of  sanctioning  the scheme, the  competent  authority shall ensure that the land in respect of which the scheme is permitted  is  not  proposed to be acquired for  any  public purpose  or  it  is not placed in reservation and  that  the construction  under  the sanctioned scheme shall be done  in accordance with town planning regulations etc.

   In  view  of above position, the High Court  erroneously relying  on Atia Begum held that the user as provided in the master  plan as in existence on 17th February, 1976 alone is to  be  seen  and the subsequent change in the  master  plan

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 24  

reserving the land for open space is of no consequence.  The view  of  the  competent authority in the order  dated  20th June,  1998  that  the  land  would  permanently  remain  in residential  zone is also erroneous.  Further, the competent authority erroneously assumed, it seems, that the High Court directed  it  to grant sanction under Section 21 of the  ULC Act.   The High Court only directed the competent  authority to  decide  the matter according to law.  Atia Begum’s  case cannot  be held to have laid down a proposition that use  as provided  in  the  master  Plan  as  in  existence  on  17th February,  1976 will remain unchanged.  The relevant  master plan  is  the one which is prevalent when the  scheme  under Section  21 is taken up for consideration by the authorities and  for this purpose neither the date of filing the  scheme nor the date of enforcement of the ULC Act is relevant.  The development  will  not freeze on the enforcement of the  ULC Act or presentation of the scheme.

   In  the  present case, in the draft development plan  of 1979  which  was finalised during the pendency of the  suit, the  land  in question is reserved for open space  etc.   It cannot  be doubted that the agreement had been entered  into between  the parties mainly and rather only with the  object of construction of residential houses under the scheme under Section  21  of  the  ULC Act for  accommodation  of  weaker sections  of  the society.  In May 1979, it  became  evident that it will not be possible to construct residential houses in  view of what was provided in the master plan.  There  is no  substance in the contention that assuming the prescribed land  use is ‘open space’, still there will be no impediment in  the  implementation of scheme in as much as there is  no absolute  bar for construction of residential houses.   This is  not  the  basis  on which the  competent  authority  had considered  the matter.  The agreement is clearly  incapable of  being specifically enforced.  Under these circumstances, there  is no question of any inconsistency and thus  Section 42  of  the ULC Act cannot have any applicability.   We  may also  consider  another  contention urged on behalf  of  the appellants which is based on repeal of the ULC Act.  Section 3 of the repealing Act deals with the saving of certain acts despite the repeal.  That section reads as under :

   "3.(1) The repeal of the principal Act shall not affect-

   (a)  the  vesting of any vacant land under sub-  section (3)  of section 10, possession of which has been taken  over by the State Government or any person duly authorised by the State  Government  in  this  behalf,  or  by  the  competent authority;

   (b)  the validity of any order granting exemption  under sub-section   (1)  of  section  20   or  any  action   taken thereunder, notwithstanding any judgment of any court to the contrary;

   (c)  any  payment  made  to the Stage  Government  as  a condition  for  granting exemption under sub-section (1)  of Section 20.

   (2)     Where-

   (a)  any  land  is deemed to have vested  in  the  State Government  under  sub-section  (3)  of section  10  of  the principal  Act  but possession of which has not  been  taken over  by the Stage Government or any person duly  authorised

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 24  

by  the State Government in this behalf or by the  competent authority;  and

   (b)  any  amount has been paid by the  State  Government with  respect  to  such land, then, such land shall  not  be restored  unless the amount paid, if any, has been  refunded to the State Government."

   A  bare reading of the aforesaid provision shows that it is  not  applicable  to Section 21 of the ULC  Act.   Orders sanctioning  schemes under Section 21 have not been saved by Section 3.  The contention urged on behalf of the appellants and  also  the  State Government is that the  schemes  under Section  21  are  not  saved by Section 3 of  the  ULC  Act. Admittedly,  the  land  has not vested with  the  Government under  Section  10(3).  Possession continues to be with  the appellants.   Mr.   Bhatt,  learned counsel  for  the  State Government  as well for the authorities has argued that  the necessary  consequence  of the repeal, on the facts  of  the present  case,  is  that  the land would be  free  from  any constraints  to  which it may have been subjected under  the ULC Act.  Mr.  Dhanuka, however, contended that Section 3 of the repealing Act is not exhaustive.  Relying upon Section 6 of the General Clauses Act, learned counsel submits that the repeal  does  not  affect rights accrued in  favour  of  the plaintiff  under  the  ULC Act.  Section 6  of  the  General Clauses Act, inter alia, provides that where any Central Act repeals any enactment, unless a different intention appears, the repeal shall not affect anything duly done or affect any right,  privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.

   Reliance  has  been  placed by the  learned  counsel  on decision  in  the  case of Bansidhar & Ors.   v.   State  of Rajasthan  &  Ors.   [(1989) 2 SCR 152] in  support  of  the contention  that provision of Section 3 of the Repealing Act is  not  exhaustive.   Para 13 on which  reliance  has  been placed reads as under :

   "A  saving  provision  in  a repealing  statute  is  not exhaustive  of  the rights and obligations so saved  or  the rights  that  survive  the repeal.  It is observed  by  this Court  in  I.T.  Commissioner, U.P.  v.  Shah Sadiq &  Sons, AIR 1987 SC 1217 at 1221 :

   ".....   In  other words whatever rights  are  expressly saved  by  the ‘savings’ provisions stand saved.  But,  that does  not  mean  that  rights which are  not  saved  by  the ‘savings’  provision  are extinguished or stand  ipso  facto terminated by the mere fact that a new statute repealing old statute  is  enacted.  Rights which have accrued  are  saved unless they are taken away expressly.  This is the principle behind  Section  10(22).6(c),  General   Clauses  Act,  1897 .....".

   We agree with the High Court that the scheme of the 1973 Act  does  not  manifest  an   intention  contrary  to,  and inconsistent  with, the saving of the repealed provisions of sec.6(6A)  and Chapter III-B of ‘1955 Act’ so far as pending cases  are  concerned  and  that   the  rights  accrued  and liabilities  incurred  under  the old law are  not  effaced. Appellant’s   contention   (a)    is,    in   our   opinion, insubstantial."

   We have no difficulty in accepting the contention that a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 24  

repealing   statute   is  not   exhaustive  and   does   not automatically  extinguish  the accrued rights  unless  taken away  expressly.  The question in the present case, however, is  whether  any  rights under the ULC Act  had  accrued  in favour  of the plaintiff before its repeal.  It is only then the question of the saving of the said rights would arise.

   To consider the aforesaid contention, it has again to be kept   in  view  that  the   sanction  of  the  scheme   for construction  of residential dwelling units was contrary  to the  prescribed  land  use  in the  master  plan  which  had reserved  the land for being used as open space.  It  cannot be  held, on the facts of the case, that any rights  accrued in  favour  of  the  plaintiff  only  on  execution  of  the agreement.   Assuming  any rights accrued in favour  of  the plaintiff  on  passing of order dated 20th June,  1998,  the same  would fall on our view that the said order dated  20th June, 1998 was passed erroneously.  There is no substance in the  contention that any rights had accrued in favour of the plaintiff  which  have  the protection of Section 6  of  the General Clauses Act.

   We  may consider another argument which is in respect of construction  of  the  clause (17) of  the  agreement.   Mr. Nariman  contended that the agreement could be  unilaterally determined under that clause.  The contention is that clause (17) is to be read with clause (4) of the agreement and thus read, there is clearly an express provision in the agreement giving  rights  to  parties to  unilaterally  terminate  the agreement  and that it was terminated by original  defendant No.1  by  serving  notice dated 23rd February, 1980  on  the plaintiff.  Further contention is that to such an agreement, clause (c) of Section 14(1) of the Specific Relief Act, 1963 applies.   A  contract which is in its  nature  determinable cannot  be  specifically enforced [Section  14(1)(c)].   Mr. Dhanuka,  on the other hand, contended that the contract  is not  determinable  and,  therefore,  Section  14(1)  has  no relevance and also that to the agreement in question, clause (c)   of  Section  14(3)  is  applicable   and,   therefore, notwithstanding  clause  (c) of Section 14(1),  contract  is specifically   enforceable.   Section   14(3),  inter  alia, provides that notwithstanding clause (c) of sub-section (1), the court may enforce specific performance where the suit is for  the  enforcement of a contract for the construction  of any  building or the execution of any work on land.  A  bare reading  of clause (c) of Section 14(3) shows that it has no applicability.   The building contract stipulated by  clause (c)  of  Section 14(3) is not the type of the contract  with which  we  are concerned in the present case.  Now,  let  us examine  whether to the agreement in question, clause (c) of sub-section  (1) of Section 14 is applicable or not.  Clause (17) of the agreement states that the agreement shall not be unilaterally  rescinded by either party after the  plaintiff has  been  put  in possession of the property.   Clause  (4) stipulates  the stage at which the plaintiff is required  to be  put in possession.  It is undisputed that the  plaintiff was  never put into possession.  In fact, that stage did not arise  because  the scheme itself was sanctioned only  after the  judgment  under  appeal   and  pursuant  to  directions contained in the said judgment.  In this appeal, an order of stay  was passed in favour of the appellant and consequently the  possession has remained with the appellants.  The  High Court  in the impugned judgment has, however, held that  the agreement  could  not  be  terminated as  it  constitutes  a contract  of  agency coupled with interest to which  Section

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 24  

202 of the Indian Contract Act, 1872 applies.  Mr.  Nariman, however,  relying  on clauses (17) and (4) of the  agreement and  Section  9 of the Indian Contract Act,  contended  that there is an express provision giving right to the parties to terminate  the  agreement  and  that   the  said  right  was exercised before delivery of possession to the plaintiff and there is thus no question of applicability of Section 202 of the  Indian  Contract  Act.   On the  other  the  hand,  the contention of Mr.  Dhanuka is that, at best, clause (17) can be  said  to  be silent on the question  of  termination  of agreement  before delivery of possession.  The contention of learned  counsel  is that there is no positive term  in  the agreement  stipulating  that before delivery of  possession, the agreement can be unilaterally terminated by the parties. The  agreement [clause (17)] is said to be in negative form. The  contention of learned counsel further is that it  could never  have  been intended that the original defendant  No.1 can  unilaterally  terminate the agreement as the  plaintiff under  the agreement had to take various steps and to  spend huge  amounts for preparation of scheme and for pursuing the same.  Therefore, the plaintiff could have never agreed to a term  that such an agreement may be unilaterally terminated. Learned  counsel also relies upon Section 202 of the  Indian Contract  Act and submits that it is a case of an agency  in favour  of the plaintiff coupled with the subject matter  of agency,  which in the present case, is the right to work out the  scheme and to construct the dwelling units irrespective of  the repeal or amendment of the ULC Act which aspect  was also  duly  taken note of in the agreement.  The High  Court held  that it was a case of agency coupled with interest  to which  Section  202 applied and for its view the High  Court also  sought support from clause (17) observing that express clause to terminate the agreement was absent.

   We  are  unable to agree with the approach of  the  High Court  and find substance in the contention of Mr.  Nariman. Clause  (17)  is in the nature of express  stipulation  that before  delivery  of  possession,   the  contract  could  be unilaterally  terminated.  When there is no ambiguity in the clause,  the question of intendment is immaterial.  The fact that  the  clause  is couched in a negative form  is  of  no consequence.  The intention is clear from the plain language of  clause  (17)  of the agreement.  In the  case  in  hand, Section  202  has  no applicability.  It is not  a  case  of agency  coupled  with interest.  No interest can be said  to have been created on account of plaintiff being permitted to prepare  the  scheme  and take ancillary  steps.   Plaintiff could not get possession before declaration under Section 21 of  the  ULC  Act.   Mr.  Dhanuka also  contended  that  the agreement  is not determinable is clear from the conduct  of original  defendant  No.1  and also what he  stated  in  the affidavit-cum-declaration  dated  10th February, 1978  about agreement  not being terminable.  The contention of  learned counsel is that what original defendant No.1 has said in the said  document  is  his   interpreting  statement  which  is admissible  in law and this interpreting statement and  also his conduct, clearly shows that agreement was not terminable by original defendant No.1.  Strong reliance has been placed on  Godhra  Electricity Co.  Ltd.  & Anr.  v.  The State  of Gujarat  &  Anr.   [(1975) 2 SCR 42] in  particular  to  the following passage :

   "In  the  process  of interpretation of the terms  of  a contract, the court can frequently get great assistance from the  interpreting statements made by the parties  themselves

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 24  

or  from  their  conduct  in   rendering  or  in   receiving performance  under  it.  Parties can, by  mutual  agreement, make  their  own  contracts;   they   can  also  by   mutual agreement,   remake   them.   The   process   of   practical interpretation  and application, however, is not regarded by the  parties  as  a remaking of the contract;   nor  do  the courts  so  regard  it.   Instead, it is  merely  a  further expression  by the parties of the meaning that they give and have  given to the terms of their contract previously  made. There is no good reason why the courts should not give great weight  to these further expressions by the parties, in view of  the  fact  that  they still have  the  same  freedom  of contract  that  they  had originally.  The  American  Courts receive   subsequent  actions  as   admissible   guides   in interpretation.   It is true that one party cannot build  up his  case by making an interpretation in his own favour.  It is the concurrence therein that such a party can use against the  other party.  This concurrence may be evidenced by  the other  party’s  express  assent thereto,  performances  that indicate  it,  or by saying nothing when he knows  that  the first party is acting on reliance upon the interpretation."

   There  is  no merit in the contention of  Mr.   Dhanuka. The  decision relied upon by Mr.  Dhanuka is not  applicable to  unambiguous documents.  That is clear from the  decision itself.   In  respect  of   unambiguous  documents,  Odgers’ Construction of Deeds and Statutes, 5th Edn.  By G.  Dworkin at  pages 118-119, has been quoted in the aforesaid decision as  under  :

   "The  question involved is this :  Is the fact that  the parties  to a document, and particularly to a contract, have interpreted  its terms in a particular way and have been  in the  habit of acting on the document in accordance with that interpretation,  any admissible guide to the construction of the  document?  In the case of an unambiguous document,  the answer is ‘No’."

   It  has  been  held that "in the case  of  an  ambiguous instrument,  there is no reason why subsequent  interpreting statement  should be inadmissible".  In the present case  we are  concerned with an unambiguous document and,  therefore, we   have   to   go  by   its   plain   meaning.    Further, affidavit-cum-declaration only reiterated what was contained in the agreement.  It did not enlarge the agreement.  It did not  substitute  any clause in the agreement.  It was not  a document  executed  between the parties.  It was a  document executed  by original defendant No.1 alone for the  purposes of  filing it before the competent authority.  Clause 17  of the  agreement  does not call for any  other  interpretation except  that  the contract could be  unilaterally  rescinded before delivery of possession.

   Mr.   Dhanuka  also  contended that if  clause  (17)  is construed  to  mean  that power had been  conferred  on  the parties  to cancel the contract unilaterally at their  wish, then  such  a power of termination has to be  exercised  for good  and  reasonable  cause otherwise unilateral  power  of cancellation   would  have  to  be   treated  as  void   and ineffective in law.  Reliance has been placed by the learned counsel  on  National  Fertilizers v.   Puran  Chand  Nangia [(2000) 8 SCC 343 at 351 paragraph 23] which reads thus :

   "23.   We  may also state that under the general law  of contracts,  once  the contract is entered into,  any  clause

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 24  

giving absolute power to one party to override or modify the terms  of  the contract at his sweet will or to  cancel  the contract - even if the opposite party is not in breach, will amount  to  interfering with the integrity of  the  contract (per  Rajamanner,  C.J.   in Maddala Thathiah v.   Union  of India  [(AIR 1957 Mad 82].  On appeal to this Court, in that case, in Union of India v.  Maddala Thathaiah [((1964) 3 SCR 774]  the conclusion was upheld on other grounds.  The  said judgment  of  the Madras High Court was considered again  in Central  Bank of India Ltd.  v.  Hartfort Fire Insurance Co. Ltd.   [(AIR  1965 SC 1288] but the principle enunciated  by Rajamanner  C.J.  was not differed from (See the  discussion on  this  aspect  in Mulla’s Contract Act,  (10th  Edn.)  pp 371-72, under Section 31 of the Indian Contract Act.)"

   We  have  perused  the  decision of  Madras  High  Court referred  to  in  the aforequoted passage as  also  the  two decisions  of  this  Court and Mulla’s Contract  Act.   With utmost  respect,  we  are  unable to agree  with  the  broad proposition  that the absolute power of termination would be void.  Referring to Madras case and two cases of this Court, Mulla  says that correctness of Madras case was doubted.  We reproduce  as to what has been stated in the Contract Act by Mulla at pages 371-372.  It reads :

   "If  two  parties stipulate that the contract  shall  be void upon the happening of an event over which neither party shall  have  any contract then the contract is void  on  the happening of that event.  But where the contract is that the contract  shall  be void on the happening of an event  which one  or either of them can bring about then the  blameworthy party  cannot take advantage of that stipulation because  to do  so  would be to permit him to take advantage of his  own wrong.   This  principle was accepted in Australia but  with this  modification  that  in  both  cases  the  contract  is voidable and not void in one case and voidable in the other, because  the construction cannot differ according to events. Some  Indian courts held that a clause in a contract  giving one of the parties the option to cancel the contract for any reason whether adequate and valid or not confers an absolute and  arbitrary power on one of the parties to a contract and is,  therefore, void and unenforceable.  Therefore, a clause in   a   contract  of  supply  of  goods  to   the   Railway Administration  conferring on the Railway Administration the right to cancel the contract "at any stage during the tenure of the contract without calling upon the outstandings on the unexpired  portion of the contract" was held to be a  clause under  which  it  was open to one of  the  parties,  without assigning  any reason valid or otherwise, to say that it was not  enforceable.   It conferred an absolute  and  arbitrary power on one of the parties to cancel the contract.

   On  appeal  against the Madras High Court decision,  the Supreme  Court  upheld  the order passed but held  that  the clause  authorising cancellation applied only where a formal order had not been placed for supply of the goods contracted for  at  which stage no legal contract can be said  to  have been  made and so the cancellation made in the Railway  case could  not be said to have been covered by the clause.   The Madras  & Bombay cases were reviewed by the Supreme Court in a  subsequent judgment and distinguished and the correctness of the Madras case also doubted.  And the Supreme Court held that  where the language of a clause in a contract is  clear it  must be interpreted according to its language.  In  that case,  a  clause  in  a insurance  policy  authorising  both

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 24  

parties  to  cancel  the policy at will was upheld.   It  is submitted  that  the two Supreme Court judgments  show  that such  clauses are valid and enforceable except where, as  in the  Madras  Railway  case,  the  contract  is  an  executed contract  in that as formal order of supply had already been made."

   In  our view, the aforesaid passage has been misread  in National  Fertilizer’s case.  Further in The Central Bank of India  Ltd.,  Amritsar v.  The Hartford Fire  Insurance  Co. Ltd.  [AIR 1965 SC 1288], decisions of Madras High Court and of this Court {Union of India v.  Maddala Thathaiah [((1964) 3  SCR 774]} were considered.  The question in that case was whether  the  insurance  policy had been  terminated.   This Court  was  concerned with a clause in an  insurance  policy which,  inter  alia,  provided  that   the  Policy  can   be terminated  at  the  option of the Insurance  Company.   The contention  of the respondent-Insurance company was that  it had power under the said clause to terminate the contract at will  and it had duly exercised that power.  The appellant’s contention  was  that  it  was implied in  the  clause  that termination  could only be for a reasonable cause which  did not  exist  in that case.  It was further contended that  if this  interpretation  of implied term is not  accepted,  the clause  giving  such  right  to terminate  at  will  without reasonable  cause must be treated as void and ignored.  This Court said :

   "The  contention  of  the  appellant  is  based  on  the interpretation  of clause 10.  Now it is commonplace that it is  the  court’s duty to give effect to the bargain  of  the parties  according to their intention and when that  bargain is in writing the intention is to be looked for in the words used  unless they are such that one may suspect that they do not  convey  the  intention correctly.  If those  words  are clear,  there is very little that the court has to do.   The court  must  give effect to the plain meaning of  the  words however  it may dislike the result.  We have earlier set out clause  10  and  we find no difficulty or doubt  as  to  the meaning  of the language there used.  Indeed the language is the  plainest.   The  clause  says "This  insurance  may  be terminated  at any time at the request of the Insured",  and "The  Insurance  may also at any time be terminated  at  the instance  of  the Company".  There are all the words of  the clause  that matter for the present purpose.  The words  "at any  time"  can only mean "at any time the  party  concerned likes".  Shortly put clause 10 says "Either party may at its will  terminate the policy".  No other meaning of the  words used is conceivable."

   Regarding  validity  of the clause which gave  power  as aforesaid,  this  Court held :  "The next argument was  that clause 10 was bad as it gave more option to the insurer than to  the  assured.  We express no opinion as to  whether  the clause  would  be bad if it did so, for we are clear in  our mind that it did not.  The argument that it did was based on the  use of the word ‘request’ in the case of a  termination by  the assured and ‘option’ in the case of a termination by the  insurer.   It was said that the word ‘request’  implied that  the  request had to be accepted by the insurer  before there  was a termination whereas the word ‘option’ indicated that  the  termination  would be by an act  of  the  insurer alone.   We are unable to agree that such is the meaning  of the  word ‘request’.  In our view, the clause means that the intimation  by  the  assured to terminate the  policy  would

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 24  

bring it to an end without more, for the clause does not say that  the  termination  shall  take  effect  only  when  the assured’s request has been accepted by the insurer.

   Lastly, it was said that the termination of the contract by   the  letter  of  August  7,  1947  was  a   conditional termination   and  as  the   condition  was  impossible   of performance  in  the circumstances prevailing, there was  in fact  no termination.  That condition, it was said, was  the removal  of  the goods from Bakarwana Bazar, Amritsar  to  a safer locality.  We have nothing to show that the condition, if  it  was such, was impossible of  performance.   However, that  may  be, there is no question of any  condition.   The letter  clearly terminated the policy.  It gave an option to the  assured  to  keep  the policy on its  feet  if  it  did something.  Further we do not think that it can be said that if  a party has a right at will to terminate a contract, the imposition  by him of a condition, however hard, on  failure to  fulfil  which the termination was to take effect,  would make the termination illegal, for the party affected was not entitled  even to the benefit of a difficult condition.  The agreement was that the power to terminate could be exercised without  more  and  that is what we think was done  in  this case."

   (Emphasis has been supplied by us)

   From  the aforesaid, it is clear that this court did not accept  the  contention  that the clause  in  the  insurance policy  which  gave absolute right to the insurance  company was  void and had to be ignored.  The termination as per the term  in the insurance policy was upheld.  Under general law of  contracts any clause giving absolute power to one  party to  cancel the contract does not amount to interfering  with the  integrity  of  the  contract.  The  acceptance  of  the argument regarding invalidity of contract on the ground that it  gives  absolute  power to the parties to  terminate  the agreement  would also amount to interfering with the  rights of  the  parties  to  freely enter into  the  contracts.   A contract  cannot  be  held to be void only on  this  ground. Such  a  broad proposition of law that a term in a  contract giving absolute right to the parties to cancel the contract, is  itself enough to void it cannot be accepted.  In view of above  discussion, we find force in the contention that  the agreement  in  question  was terminable before  delivery  of possession;   it  was  so determined and  to  the  agreement clause (c) of Section 14(1) of the Specific Relief Act, 1963 applies.   Therefore,  agreement cannot be  specifically  be enforced.

   It  was  further  contended  by Mr.   Nariman  that  the agreement  is  not specifically enforceable also in view  of clause (d) of sub- section (1) of Section 14 of the Specific Relief  Act, 1963.  This provision provides that a  contract the  performance  of  which involves the  performance  of  a continuous  duty  which the Court cannot supervise,  is  not specifically  enforceable.   There is considerable force  in the  submission of learned counsel.  Even the High Court had substantially proceeded on the basis that the implementation of  the scheme may require supervision but held that it  can be  supervised by the competent authority.  Having regard to the  nature of the scheme and the facts and circumstances of the  case,  to our mind it is clear that the performance  of the  contract  involves continuous supervision which is  not possible  for  the  court.  After  repeal,  such  continuous

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 24  

supervision  cannot  be  directed to be  undertaken  by  the competent   authority   as   such  an   authority   is   now non-existent.

   The grant of decree for specific performance is a matter of  discretion under Section 20 of the Specific Relief  Act, 1963.   The  court is not bound to grant such relief  merely because  it  is  lawful to do so but the discretion  is  not required to be exercised arbitrarily.  It is to be exercised on sound and settled judicial princples.  One of the grounds on   which  the  Court  may   decline  to  decree   specific performance  is  where  it would be inequitable  to  enforce specific  performance.  The present is clearly such a  case. It   would  be  wholly   inequitable  to  enforce   specific performance  for (i) residential houses for weaker  sections of the society cannot be constructed in view of the existing master  plan and, thus, no benefit can be given to the  said section  of the society;  (ii) In any case, it is  extremely difficult,  if not impossible, to continuously supervise and monitor  the  construction and thereafter allotment of  such houses;   (iii)  the decree is likely to result in  uncalled for  bonanza  to the plaintiff;  (iv) patent  illegality  of order  dated  20th  June, 1998;  (v) absence of law  or  any authority to determine excess vacant land after construction of  4356  dwelling  units;   and  (vi)  agreement  does  not contemplate  the  transfer  of nearly 600 acres of  land  in favour  of the plaintiff for construction of 4356 units  for which  land  required is about 65 acres.  The object of  the act  was to prevent concentration of urban land in hands  of few  and  also  to   prevent  speculation  and  profiteering therein.   The  object  of Section 21 is to  benefit  weaker sections  of  the  society and not the owners.  If  none  of these  objects  can  be  achieved,   which  is  the  factual position,  it would be inequitable to still maintain  decree for specific performance.

   The  contentions  urged  on behalf of the  plaintiff  by their learned counsel that in view of clauses (6) and (7) of the  agreement,  despite  repeal of the ULC  Act,  plaintiff would  be entitled to specifically enforce the agreement has also  no merit.  The acceptance of the contention will  mean that  original defendant No.1 before delivery of  possession had  no  right to terminate the agreement.  This  contention placed  on behalf of the plaintiff has already been rejected by  us.   Reading  clauses  (6) and  (7)  harmoniously  with clauses  (4)  and  (17), the contention of  learned  counsel cannot  be  accepted.   In view of  these  conclusions,  the contention  of Mr.  Dhanuka that reputation of the plaintiff as  a  builder would be adversely affect if houses  are  not built  is  hardly  of any relevance.  In any case,  in  this regard  we  may  refer to the decision of this Court  in  K. Narendra v.  Riviera Apartments (P) Ltd.  [(1999) 5 SCC 77], a  case  in  which this Court examined  an  agreement  which contemplated  several sanctions and clearances that were not within  the  power of the parties.  The result was that  the feasibility  of  a  multi-storeyed complex as  proposed  and planned  became impracticable.  In that case too the  seller continued   to   remain   in    possession.    Under   these circumstances, it was held that the contract though valid at the  time  when  it  was   entered,  is  engrossed  in  such circumstances that the performance thereof cannot be secured with  precision  and that the discretionary jurisdiction  to decree  the specific performance ought not to be  exercised. Dealing  with the question of reputation of the purchaser as a  builder  being  at stake, this Court held that  ‘this  is

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 24  

hardly  a consideration which can weight against the several circumstances....   If a multi- storeyed complex cannot come up on the suit property, the respondent’s plans are going to fail  in  any  case’.  The position in the present  case  is quite  similar.   Under the scheme as postulated by the  ULC Act,  it is not permissible to construct dwelling units  for the residence of the weaker sections of the society.

   It  also deserves to be noticed that, strictly speaking, it  is not a contract for transfer of the property but is  a contract to carry out the scheme which is incapable of being carried  out at this stage on account of reservation in  the Master  plan and also repeal of the ULC Act.  It was not and cannot  be the case of the plaintiff that in case the scheme had  been  carried out, he would have enjoyed the  property. He  would have only enjoyed the specified profits.  At  best the plaintiff could pray for damages.  In the plaint, it was asserted  that Rs.16,75,000/- were spent on execution and/or implementation  of  the scheme.  The plaintiff, for  reasons best  known to him, has not sought a decree for any damages, even as an alternate relief.

   Before  concluding,  we may place on record that  during the  course  of  hearing,  a   statement  was  made  by  the appellants  that  in  the  event  of  the  appeal  and   the transferred   writ  petition  being   allowed,   they   will unconditionally  offer  in writing 66 acres of land  to  the Government of Gujarat.  The said statement reads as under:

   1.   The  Appellant through his counsel states  :   that even  in the event of this Hon’ble Court allowing the appeal and Transferred Writ Petition:

   (a)  the Appellant will unconditionally offer in writing 66  acres of land (unenroached and unencumbered earmarked in the  plan  attached) to the Government of Gujarat by way  of gift  or for acquisition (on a compensation of Rs.1) for the specific  purpose of constructing residential dwelling units (permissible  under  VUDA  or  LIG Schemes  of  the  Gujarat Housing  Board)  at  the cost of Government  for  low-income groups.

   (b)  if  such offer is not accepted within a  period  of four  months  from  the  date of offer  the  appellant  will undertake  the  responsibility  of utilising the  said  land (i.e.   to  say  approximately  65.95  acres)  of  land  for constructing  thereon dwelling units (if permitted under the relevant  Town  Planning  Laws) for housing persons  in  the low-income  group  and letting or selling the same  to  such persons  in  low income group on no profit no loss  basis  : the  total cost of such a project will be got certified by a reputed Chartered Accountant."

   The   appellant   would  be   bound  by  the   aforesaid undertaking which we accept.

   Before  parting,  we wish to express, to put it  mildly, our  deep  anguish  on  the manner in  which  the  specified authority,  competent authority and the State of Gujarat has been  conducting  itself before the trial Court, High  Court and  this  Court.  Different stands at different  points  of time  have been taken sometimes supporting the plaintiff and sometimes the defendants.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 24  

   For  the  aforesaid  reasons, we allow the  appeal,  set aside  the  impugned  judgment and dismiss the suit  of  the plaintiff.   Transfer  Case  (C) No.64 of 1998 and  SLP  (C) No.1692  of  1999  are  also disposed of in  terms  of  this judgment.  Parties to bear their own costs.