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CASE NO.: Appeal (civil)  3940 of 2007

PETITIONER: HARYANA STATE INDUSTRIAL DEVELOPMENT CORPORATION

RESPONDENT: M/S CORK MANUFACTURING CO

DATE OF JUDGMENT: 27/08/2007

BENCH: TARUN CHATTERJEE & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO. 3940       OF 2007 (Arising out of SLP(C) No.11683 of 2006)

P.K. BALASUBRAMANYAN, J.

                1.              Leave granted.

2.              The defendant in Suit No. 8 of 1995 in the court  of Senior Sub-Judge, Gurgaon is the appellant in this  appeal.  The appellant allotted plot No. 259 on 12.3.1986  to the respondent through its sole proprietor Om Prakash  Saharan.  The approximate area of the plot is 1000 square  meters and the tentative price was Rs. 1,20,000/-.  On  12.2.1988, a formal agreement was entered into between  the parties.  According to the agreement, the allottee had  to start construction of a building for the setting up of an  industrial unit within a period of three months and had to  complete the construction within one and half years from  the date of issue of the letter of allotment. The  construction had to be completed and the installation of  the machinery had also to be completed and the  commercial production was to be started within a period  of two years from the date of allotment.  The Agreement  also provided that failing compliance with the above  condition by the allottee, the plot was liable to be resumed  and 10% of the cost of the plot deposited by the allottee at  the time of allotment was liable to be forfeited.  The letter  of allotment was issued on 24.12.1987.  The allottee did  not fulfil the condition of starting commercial production  within two years of the letter of allotment.  This fact is not  in dispute.  The appellant thereupon issued various  notices to the allottee.  On 19.7.1991, the allottee  requested for extension o time.  That request was rejected.   On 13.9.1991, according to the appellant, the appellant  issued an order of resumption which specifically referred  to the contravention of the terms and conditions of  allotment by the allottee.  According to the appellant,  possession was taken back on 20.9.1991.  The plot was  thereafter re-allotted to M/s Insulation & Electrical  Products (P) Ltd., New Delhi on 2.4.1992. Since that  allottee also did not fulfil the conditions, the said  allotment was cancelled on 6.1.1994.

3.              The respondent, the plaintiff, filed an application

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for referring the dispute to Arbitration.  The same was  rejected. Respondent then approached the Consumer  Forum, but that complaint was also dismissed.   

4.              On 5.10.1995, the respondent filed the present  suit No. 8 of 1995 for a permanent injunction restraining  the defendant \026 appellant from interfering, disturbing or in  any manner tampering with the possession of the plaintiff  over the plot in dispute, and restraining the defendant \026  appellant from re-allotting the plot in question to any  other person on the basis of the resumption order, if any,  or otherwise.  Though there was no prayer regarding any  resumption order, it was asserted that the resumption  order, if any passed by the defendant was void, illegal,  non-est and not binding upon the plaintiff in any manner.   A decree for mandatory injunction directing the defendant  \026 appellant to remove an existing high-tension wire going  over the plot in question and also to remove an electrical  pole existing in the plot and to make available the plot free  from all kinds of hindrances for raising the construction  was also prayed for.  The plaint was signed by one Uma  Shankar who was said to be a power of attorney of the  plaintiff \026 firm.  The plaint proceeded on the footing that  there was also an agreement between the parties that the  electric pole located in the plot would be got removed by  the appellant and it was in view of the failure of the  appellant to get it done, that the construction could not be  started by the plaintiff.  It was also admitted in the plaint  that there might have been an order of resumption of the  plot, but if there was any such order, it was illegal, void  and ineffective and not binding on the rights of the  plaintiff because of lack of opportunity of hearing given to  the plaintiff.  The plaint proceeded to state that the  defendant was threatening to dispossess the plaintiff  pursuant to that order of resumption; that the plaintiff  was in possession and that the plaintiff was entitled to  relief as claimed.   

5.              The defendant filed a written statement  contending that the plot in question was resumed on  13.9.1991 in view of the plaintiff contravening the terms of  the allotment and possession was taken back on  25.9.1991.  The plot had been re-allotted to another  concern.  The plaintiff had neither any right over the plot  in question nor any possession over the same.  Since the  plaintiff had defaulted, the plot had been rightly resumed.   There was no stipulation or condition in the allotment that  the appellant had the obligation to remove the electric post  located in the plot or the overhead electrical line.  The  plaintiff was not in posssession.  The suit was liable to be  dismissed.   

6.              On behalf of the plaintiff, one Jai Bhagwan was  examined as P.W. 6.  He gave evidence to the effect that  the plot in dispute was allotted to Om Parkash Saharan.   He had been appointed as General Power of Attorney by  the said Om Parkash Saharan on 9.4.1996.  Om Parkash  Saharan was the sole proprietor of the business of the  plaintiff \026company.  Obviously, this witness who entered  the picture by virtue of a power of attorney executed on  9.4.1996, was not a party to any of the things that had  taken place prior to the grant of power of attorney in his  favour and had no knowledge of them.  Om Parkash  Saharan in whose name the allotment was made did not  go to the box.  In the box, P.W. 6 admitted that the

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company had received the letter warranting of the  proposal to resume the plot because of its failure to fulfil  the condition of allotment.  He stated that because of the  high-tension wire passing over the plot in dispute, it was  not possible to raise construction thereon.   He admitted  that one week prior to the institution of the present suit,  the plaintiff came to know that defendant had resumed  the plot in dispute and had also prepared a report that  possession had been taken back.  He asserted that the  plaintiff had not surrendered the possession of the suit  property and the plaintiff was in possession till date.  He  stated that letters sent intimating the proposal to resume  the plot were illegal and void.  No opportunity of hearing  was afforded prior to the resumption of plot in dispute.   He admitted that the defendant had issued Exhibit  PW4/11 letter to Om Parkash Saharan, but no payment  was made by Saharan in pursuance thereof.  He stated  that he knew Om Parkash Saharan since 1983.  He  admitted that the allottee had to start construction within  two years from the date of allotment.  He admitted that  within the prescribed period, no construction was raised  but claimed that that was because of the passing of the  high-tension wire over the property.  He denied the  suggestion that the plot was resumed on 13.9.1991 and  possession was taken on 25.9.1991.  He pleaded  ignorance of the fact that the plot in question was re- allotted to another Om Parkash, son of Arjan Lal and that  possession had been given to him since 2.9.1994.  He  denied the suggestion that he was aware at the time of  execution of the Power of Attorney in his favour that the  plot in dispute was re-allotted to Om Parkash son of Arjan  Lal.  He pretended ignorance of the filing of a complaint in  the District Consumer Forum earlier by the plaintiff and  about the dismissal of the same.   He also pretended  ignorance of the fact that a petition under the Arbitration  Act was filed by the plaintiff and that was also dismissed.   But, he admitted that no construction was started by the  time the suit was filed.   He denied the suggestion that he  had no right to file the present suit.  The power of attorney  in his favour was marked as PW6/1.

7.              Letter PW-4/5 produced by the plaintiff and  proved through P.W. 4 examined on behalf of the plaintiff,  was a final show cause notice given to the plaintiff \026  company on its failure to set up an industrial unit in the  plot in question.  In that notice, after informing the  plaintiff that no further extension of time was possible, the  plaintiff was called upon to show cause within a period of  35 days from the date of issue of that letter as to why the  plot allotted to the plaintiff be not resumed on account of  the failure of the plaintiff to set up the unit within the  extended period.  The plaintiff was informed that in case  no satisfactory explanation was received within the period  specified, the Corporation would be constrained to resume  the plot without making any further reference to the  plaintiff.  Exhibit PW4/16, the letter dated 1.4.1991 sent  in reply to the above letter dated 4.3.1991 after  acknowledging the threat of resumption stated that the  plaintiff was quite eager and sincere in its desire to set up  an industrial unit but since Shri Om Parkash Saharan,  who signed the letter, was under severe stress and strain  due to a serious accident which made him almost  incapacitated for a long period, he could not take effective  steps to undertake the work, and that the plaintiff hoped  to take up the work and complete it in four months and

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praying that some more time may be allowed for that  purpose.  It is also seen from an earlier letter PW 4/6  dated 27.3.1991, that the appellant had specifically  brought to the notice of the plaintiff that the plaintiff had  contravened the terms of the agreement by not taking up  the construction and calling upon the plaintiff to show  cause within 35 days why the plot of land should not be  cancelled.  This was followed by PW4/9 dated 15.9.1991  conveying the decision of the appellant to resume the plot  for non-compliance with the terms of allotment.   Thus the  correspondence marked on the side of the plaintiff itself  clearly indicated that the plaintiff had been given notice of  the resumption for failure of the plaintiff to fulfil the terms  of the allotment.  The correspondence produced by the  plaintiff also indicates that there was no stipulation  outside the terms of the written allotment letter about any  promise of removal of any electrical pole or electrical line  passing over the plot in question.   Otherwise, that would  have been mentioned in Ex. PW4/16 dated 1.4.1991. 8.              The case tottered out on behalf of the plaintiff in  the trial court was that the authorities had agreed to have  the electrical pole removed from the plot and since it was  not removed, the work could not be started.  This is not  reflected by the written allotment letter.  In other words,  there is no term therein to that effect.  Such a claim is  also belied by the letters written by the plaintiff which  have been marked on the side of the plaintiff as exhibits  and reference to one of them has been earlier made.  Some  correspondence with some officers of the appellant  regarding the removal of the electric pole was relied on to  say that outside the written agreement, the appellant had  agreed to get the electric pole and overhead line removed.   There was also no evidence to prove the possession  claimed by the plaintiff as on the date of suit.  

9.              In spite of such glaring factors emerging, the  trial court proceeded to accept the story of the plaintiff  that it had not been given notice of the resumption of the  land and that it continued to be in possession and that  there was a condition for removal of the electric pole and  the electrical line and  since the pole and the line were  removed only by 30.11.1995, the plaintiff had time to take  up the project thereafter.   I must say that the decision of  the trial court shows total lack of application of mind and  non consideration of the pleadings and the evidence in the  case.  The suit was thus decreed declaring the resumption  order dated 13.9.1991 illegal and against the principles of  natural justice and setting it aside, a relief that does not  even seen to be sought in the plaint.  The lower appellate  court also toed the line of the trial court and dismissed the  appeal, again, without proper advertence to the relevant  materials available in the case and even without adverting  to the fact that P.W. 6, the power of attorney holder had  no knowledge of what had transpired earlier even on his  own showing and that the original grantee Om Parkash  Saharan had not even come forward to speak to the case  of the plaintiff.  The appeal was dismissed by the Appellate  Court.  I must say that as a court of first appeal and as  the final court of facts, the Appellate Court had a duty to  reappraise the entire material to decide the points arising  and the appellate court in this case has miserably failed to  perform its duty.   10.             The defendant filed a Second Appeal.  Along with  the Second Appeal, since the plaintiff had pretended  ignorance of the order of resumption, on behalf of the

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defendant, a legal notice sent by counsel for the plaintiff  was also produced by way of additional evidence by  invoking Order 41 Rule 27 of the Code of Civil Procedure.   We must say with regret that the Second Appellate Court  without any application of mind ---- in fact it pains me to  record out of my experience in this Court for three years,  that the particular High Court is disposing of Second  Appeals in such a cavalier manner that nothing else is  needed to bring discredit the system itself --- rejected the  Second Appeal by stating that no substantial questions of  law arose in the Second Appeal.  This was after dismissing  the application filed under Order 41 Rule 27 of the Code, I  get the impression, even without trying to understand  what the suit is for, what was the nature of disposal of the  suits by the courts below and what that document implied  and what it established.  The decree thus granted is under  challenge before us.  

11.             Learned counsel for the appellant submitted  that it was not a condition of the grant or allotment, that  the appellant would get removed an existing electric pole  or electric wire passing over the property before handing  over possession to the respondent.  It is pointed out that  the plaintiff had unconditionally taken possession  pursuant to the allotment.  Learned counsel pointed out  that the written letter of allotment does not contain any  such stipulation, on the other hand it contained a clear  stipulation that the allottee had to complete the entire  construction and start the commercial production within  two years from the date of issue of the letter of allotment.   Learned counsel further pointed out that even the letters  on the side of the plaintiff seeking extension of time did  not put forward any such claim and what was put forward  was only the incapacitation of the proprietor of the  plaintiff and the consequent delay in starting the  construction.  Learned counsel further pointed out that  P.W. 6 examined as the power of attorney of the plaintiff,  came into the picture only in the year 1996 and had no  knowledge of things that transpired in the year 1991 when  the allotment was cancelled, the resumption order was  passed and the land was resumed.  Om Parkash Saharan  who was the eo nominee allottee, had not even gone to the  box to speak about the letters relating to the failure of the  plaintiff to fulfil the conditions of allotment and speak  about the so called absence of knowledge about the order  of resumption.  Learned counsel submitted that it was in  that context that the original notice sent by one P.  Bhaskaran, Advocate on behalf of the plaintiff to the  appellant \026 defendant was sought to be produced in the  Second Appeallate Court so that the conscience of the  court may be satisfied in that regard since the said notice  clearly acknowledged the letter conveying the factum of  the resumption of the plot allotted to the plaintiff by the  appellant.  Learned counsel submitted that the High Court  was clearly in error in rejecting the application under  Order 41 Rule 27 even without applying its mind as to the  purpose for which the said document was produced and  the need for that document for rendering a decision more  satisfactory to the conscience of the Court and without  even properly understanding the scope of Section 100 of  Code of Civil Procedure and the duty a Second Appellate  Court is called upon to perform.  Learned counsel pointed  out that even a finding of fact ignoring vital documents or  without advertence to the relevant evidence and without  asking itself the relevant questions, was a finding that was

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not binding on a Second Appellate Court under Section  100 of the Code.  Learned counsel pointed out that there  was no evidence of the possession being with the plaintiff  as on the date of the suit and even the local  Commissioner’s report taken at the instance of the  plaintiff showed that the land was lying vacant.  The  appellant had allotted the land to another person though  it had to be resumed again because of failure of that  person to fulfil the terms of the allotment to him.  The  decree for injunction in favour of the plaintiff restraining  the appellant from interfering with the so called  possession of the plaintiff was clearly a decree not  supported by the necessary finding required under law  and a relief granted, unsupported by the necessary finding  based on evidence in that behalf, clearly amounted to the  lower appellate court making a substantial error of law  warranting correction by the High Court in Second Appeal.   Learned counsel submitted that the relief of declaration  granted was also unwarranted in the nature of the reliefs  claimed in the plaint.  

12.             On behalf of the respondent \026 plaintiff, it was  contended that the understanding was that the electric  pole and the overhead electric lines will be got removed by  the defendant \026 Corporation and since that was not done  till the year 1995, there was no default on the part of the  plaintiff.  The High Court was justified in not admitting  fresh evidence in Second Appeal since the defendant had  the opportunity to produce the same before the trial court.   Learned counsel also submitted that the finding of  possession was a finding of fact and the High Court was  justified in not interfering with the same.  Learned counsel  submitted that there is no reason to interfere with the  decree passed in the case.  

13.             The plaintiff had come forward with a dubious  case regarding the order of resumption of the plot in  question.  There was clearly a default on the part of the  plaintiff in complying with the requirement of putting up  an industry in the plot and starting commercial  production within two years of allotment.  The excuse put  forward by the plaintiff for not doing anything in the plot  was the existence of a electric pole and overhead electric  wires, which stood in the way of the construction.  It was  the further case of the plaintiff that it was for the  defendant \026 Corporation to have got them removed while  delivering possession of the plot. We find from the written  instrument of allotment, that there was no such  stipulation therein.  Having accepted the allotment on its  basis and taken possession of the plot, it is not open to  the plaintiff to raise a contention based on some other  subsequent understanding between the plaintiff and some  of the officers of the defendant or outside the agreement.   In fact, in the letter PW4/16, when such a case if true,  should have been put forward, such a case is not put  forward.  There is also no evidence of any subsequent  agreement in that regard.  Merely because the officers of  the appellant were induced to write letters regarding  removal of the pole long after the resumption does not  establish any such condition of allotment.   14.             The plaintiff’s plea that it was not aware of the  order of resumption is belied by the letters marked on its  side through PW4 and the admission of PW6.  These  letters clearly show that the plaintiff was given notice of  the resumption and was informed that if he did not

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comply with the requirement and sent satisfactory reply,  the land will be resumed without any further notice within  the time stipulated therein.  Thus obviously, adequate  notice and adequate opportunity was given to the plaintiff  before the order of resumption was passed.  The non- examination of Om Prakash Saharan was fatal to the case  of the plaintiff under the circumstances.  The courts below  acted perversely in entering a finding that the order of  resumption was illegal and was not binding on the  plaintiff.  I find that the courts below have not adverted to  the relevant materials available.  Moreover, it is seen that  P.W.6, who is examined on behalf of the plaintiff came into  the picture only in the year 1996 and was not a competent  witness to speak about anything that transpired in the  year 1991 and that the original allottee Om Parkash  Saharan had not even come forward to give evidence on  behalf of the plaintiff.  It was a clear case for drawing an  adverse inference against the plaintiff for non examination  of Om Parkash Saharan.  These vital aspects have been  ignored by the trial court and by the first appellate court  when they purported to find that the order of cancellation  was not binding on the plaintiff.  I am of the view that a  finding ignoring legal evidence available in the case and  ignoring the inferences to be drawn from the  circumstances established, is a finding that can only be  described as perverse and such a finding is not binding on  a Second Appellate Court under Section 100 of the Code.   In fact, it compels interference by the Second Appellate  Court.  The High Court has unfortunately not adverted to  anything relevant and was incorrect in thinking that the  findings of fact are not liable to be interfered with in the  case on hand.  At least, it should have seen that parole  evidence to alter the terms of a written instrument was not  permissible and the fact that the courts below had relied  on such evidence justified interference by the High Court  in Second Appeal.  15.             Same is the position regarding the finding on  possession.  The correspondence with the Electricity  Board does not establish that the plaintiff continued to be  in possession notwithstanding its default and the order of  resumption with notice to the plaintiff. .  The evidence of  P.W. 6 is not evidence at all of possession of the plaintiff  as on the date of the suit or of possession subsequent to  1991.  There is no evidence to show that the plaintiff Om  Parkash Saharan, the allottee continued in possession  until  the  power of attorney was executed in favour of  P.W. 6.  The suggestion to P.W. 6 that he was aware of the  resumption and re-allotment to another entity when he  filed the suit, is a justifiable suggestion on the facts of this  case.  The finding on possession is also found to be based  on no legal evidence and consequently infirm and liable to  be interfered with by this Court as it should have been  interfered with by the Second Appellate Court.  16.             I am also of the view that the Second Appellate  Court was clearly in error in refusing to admit in evidence  the notice sent on behalf of the plaintiff by its advocate to  the defendant.  It must be noticed that not even an  objection was filed on behalf of the plaintiff to the  application under Order 41 Rule 27 of the Code denying  the issue of such a notice.  There was no denial of the  status of the counsel who had issued the notice on behalf  of the plaintiff.  There is a presumption that when an  Advocate sends a notice on behalf of a client, the notice is  sent by him on instructions from his client.  The plaintiff  had no case before the High Court  that it had not

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instructed the concerned counsel to send such a notice.   After all, the purpose for which the notice was produced  was only to show that the plaintiff was aware of the  resumption made in the year 1991 and the specific  acknowledgement of receipt of the concerned letters in  that behalf.  Even otherwise, the letters produced at the  trial do indicate that the plaintiff was aware of the  resumption of the plot.  Therefore, this was a case where  the document produced under Order 41 Rule 27 of the  Code was required to enable the High Court to pronounce  a judgment more satisfactory to its conscience  constituting other sufficient cause within the meaning of  Order 41 Rule 27 of the Code for production of additional  evidence.   The authenticity of the notice had not been  questioned by filing an objection and the High Court was  therefore in error in thinking that it was not a document  which could be straight away accepted.   17.             Thus, on the whole, I am satisfied that the  plaintiff had not made out any case for relief in the  present suit.  The judgments of the courts below therefore  call for interference. I am satisfied that the appeal  deserves to be allowed.  If the decree now passed is not set  aside, I apprehend that I would be failing in my duty  exercising jurisdiction under Article 136 of the  Constitution of India.  After all, the jurisdiction of this  Court is a corrective jurisdiction and not a restricted one. 18.             The appeal is therefore allowed. The judgments  and decrees of the courts below are set aside and the suit  filed by the plaintiff is dismissed with costs throughout.   19.             During the course of the hearing, the defendant  -- appellant offered that the plot could be allotted afresh to  the plaintiff, if the plaintiff was willing to pay the price at  the rate of Rs.13,000/- per square meter which is the  current rate.  The plaintiff was not willing to pay that  price.  But learned counsel for the plaintiff contended that  the plaintiff had, obviously subsequent to the decreeing of  the suit, had put up a construction in the property.  It is  obvious that on the date of suit, there was no  construction.  The Local Commissioner’s report  establishes that and the evidence of P.W. 6 also indicates  that.  In that situation, taking note of the circumstances, I  think it proper to give the plaintiff an opportunity to have  the land allotted to it afresh, on its paying a price for the  plot at the rate of Rs.10,000/- per square meter.  In other  words, if the plaintiff \026 respondent pays to the defendant \026  appellant, the price of the plot at Rs.10,000/- per square  meter within four months from today, there will be a fresh  allotment of the plot by the defendant to the plaintiff.   While calculating the amount, the plaintiff will be entitled  to adjust any sum that might have been paid towards the  allotment of the plot originally made in the year 1987 and  it need only pay the balance amount.  In case, the price at  the rate of Rs.10,000/- per square meter is not paid by  the plaintiff to the defendant within a period of four  months as stipulated above, the defendant would  forthwith take physical possession of the land and report  that fact to the trial court by way of the affidavit and deal  with the plot in accordance with law.  20.             Before leaving this case, I think it necessary to  issue a direction and to make an observation.  The  direction is to the appellant to initiate action against those  officers who were dealing with the cancellation of the  allotment and taking possession of the property, and more  particularly those who were in charge of the litigation and  who failed to produce vital documents including the notice

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issued on behalf of the plaintiff that was sought to be  produced in Second Appeal.  It is absolutely necessary to  take such action in the interests of the appellant, the  citizens and the State since it should not be forgotten that  the appellant is a trustee of public property and is  expected to deal with it as a trustee with all care and  caution.  The second is to exhort the trial courts, the first  appellate courts and the second appellate courts in the  State to show better application of mind while deciding a  lis keeping in mind that what they are performing is a  divine function that is onerous and at the same time  challenging.  I am making these observations regarding  the courts in the concerned State since for the last three  years I have been noticing with regret the lack of  application in many a case that had come before this  Court.