Paulmech Infrastructure Pvt. Ltd. v. State of Orissa
2017-03-09
B.R.SARANGI, VINEET SARAN
body2017
DigiLaw.ai
JUDGMENT : VINEET SARAN, J. 1. M/s. Utkal Ashok Hotel Corporation Ltd. (UAHCL) was, on 24.01.1989, granted a lease of certain area of land in Puri by the Orissa Government for 99 years. The Corporation was running ‘Hotel Nilachal Ashok’ in the said premises at Puri. In the year 2004, the hotel was closed down with the approval of Board of Directors, as operation of the same was found unviable. The UAHCL, thereafter, decided to lease out the said property for a period of 40 years, for which proceedings had been initiated in the year 2005-06, but there were no bidders. Then in the year 2009, it was again re-tendered, in which the petitioner, as well as two others participated. The petitioner, being the highest bidder, was issued a Letter of Intent (LOI) on 19.01.2010, according to which, besides several other conditions, the petitioner was to deposit a sum of Rs.9.34 crores within 30 days. Out of the said amount, Rs.8.82 crores was towards non-refundable upfront payment, and a sum of Rs.26.00 lakhs towards security deposit, and another amount of Rs.26.00 lakhs towards advance minimum guaranteed annual lease premium for the first year. 2. The lease deed was to be executed as per the said LOI and a lease amount of Rs.26.00 lakhs per year was to be paid for first two years, with a minimum increase of 11 % per annum every year thereafter. The said LOI was accepted by the petitioner vide Letter of Acceptance (LOA) dated 02.02.2010, with a request that petitioner be permitted to deposit an amount of Rs.4.41 crores by 19.02.2010, and the balance amount by 15.04.2010. The said offer of the petitioner for deferred payment was accepted by the opposite party-UAHCL vide communication dated 12.02.2010, wherein it was specifically stated that the terms in respect of payment in two installments up to 15.04.2010 was being accepted as a special case. 3. In terms of such Letter of Acceptance (LOA), the petitioner deposited the initial amount of Rs.4.41 crores on 18.02.2010 but defaulted in depositing the balance amount by the extended date granted, which was 15.04.2010. The lease agreement, of course, could thus not be executed. The matter remained pending, and ultimately on 25.11.2010, the opposite party-UAHCL allowed extension of time for payment of the balance bid amount by 15.12.2010.
The lease agreement, of course, could thus not be executed. The matter remained pending, and ultimately on 25.11.2010, the opposite party-UAHCL allowed extension of time for payment of the balance bid amount by 15.12.2010. Admittedly, this was the last extension for payment of the balance amount which was granted by the opposite party-UAHCL to the petitioner. Even then, the petitioner did not deposit the balance amount within such extended time. 4. As per the case of the petitioner, and not disputed by the opposite party-UAHCL, after the extended date expired, a sum of Rs.2.00 crores was deposited on 28.12.2010, Rs.1.41 crores on 29.12.2010 and Rs.0.70 crores on 07.01.2011. Thus, according to the petitioner, after including the initial deposit of Rs.4.41 crores, a total deposit of 8.52 crores had been made by the petitioner up to 07.01.2011. The petitioner made several correspondences thereafter stating that the balance amount shall be paid by the petitioner at the time of execution of lease deed, which was not replied to by the opposite party-UAHCL. 5. It is true that the opposite party-UAHCL did not respond to any of the letters written by the petitioner after the extended date, i.e., 15.12.2010, but in between on 02.06.2011, the General Manager, Hotel Nilachal Ashok, Puri wrote to the petitioner that certain persons were to be given voluntary retirement under the scheme (VRS) of the Corporation, the liability of which would have to be borne by the petitioner, for which it was asked to make necessary arrangement, and that the lease deed would be executed only after the payment of the said amount. 6. Then on 19.09.2013, the Board of Directors of opposite party-UAHCL took a decision to terminate the LOI issued on 19.01.2010, primarily on the ground of noncompliance of Clause-2 of the LOI, which required the petitioner to make the entire payment of Rs.9.34 crore within 30 days of issuance of LOI and also on account that because of delay on the part of the petitioner, the opposite party-UAHCL was faced with difficulties in getting clearance and as such, it was not possible for it to proceed further. The said decision of the Board of Directors of opposite party-UAHCL was intimated to the petitioner vide communication dated 10.12.2013. 7.
The said decision of the Board of Directors of opposite party-UAHCL was intimated to the petitioner vide communication dated 10.12.2013. 7. After the decision dated 19.09.2013 had been taken by the Board of Directors and before the same was communicated to the petitioner on 10.12.2013, this writ petition was filed on 01.10.2013, initially with the prayer to direct the opposite party-UAHCL to execute the lease agreement in pursuance of the LOI dated 19.01.2010 and accept the balance amount along with interest for delayed payment, but by an amendment filed subsequently, the prayer for quashing the order dated 10.12.2013 was also incorporated. The consolidated prayers, for which this writ petition has been filed, are reproduced hereunder: “1. Admit the writ petition. 1(a) Quash the letter dated 10/12/2013 where by the Board of Directors of OP No. 5 Company had decided to terminate the Letter of Intent dated 19/01/2010. 2. Direct the O.P. No.-5 and O.P. No.-3 to execute the lease agreement pertaining to the lease of Hotel Nilachal Ashok, Puri in pursuance of the letter of intent dated 19.01.2010. 3. Direct the O.P. No.5 and O.P. No.3 to calculate interest on the amounts deposited by the petitioner company, more particularly Rs.4.41 Crores since 17.02.2010, Rs. 2 Crores since 28.12.2010, Rs. 1.41 Crores since 29.12.2010 and Rs.70 lakhs since 07.10.2011 and further direct the said authorities to adjust the said interest towards balance payments.” 8. We have heard Mr. Milan Kanungo, learned Senior Counsel appearing along with Mr. P.S. Acharya, learned counsel for the petitioner; as well as Mr. N.K. Mishra, learned Senior Counsel appearing along with Mr. A. Mishra, learned counsel for the contesting opposite parties no.3 and 5, i.e., Indian Tourism Development Corporation (ITDC) and UAHCL; and also Mr. B.P. Pradhan, learned Addl. Government Advocate appearing for the State-opposite parties. The opposite party no.4, Orissa Tourism Development Corporation is not represented. Even otherwise no prayer has been made against the said opposite party no.4. 9. The submission of Mr.
B.P. Pradhan, learned Addl. Government Advocate appearing for the State-opposite parties. The opposite party no.4, Orissa Tourism Development Corporation is not represented. Even otherwise no prayer has been made against the said opposite party no.4. 9. The submission of Mr. Kanungo, learned Senior Counsel appearing for the petitioner, primarily is that there have been laches on the part of the opposite party-UAHCL, inasmuch as they have not complied with their bit of obligation under the LOI and by their conduct, especially the letter dated 02.06.2011 requiring the petitioner to disburse the amount for payment of VRS of 30 employees, they had themselves extended the time for deposit of the balance amount by the petitioner, as in the said communication it was mentioned that the entire amount, including for VRS, should be paid prior to execution of the lease deed. According to Mr. Kanungo, the amount of VRS was to be calculated by the opposite party-UAHCL, which was never communicated to the petitioner. It is further contended that prior to the passing of the impugned order dated 10.12.2013, neither any opportunity of hearing was given, nor show cause notice was issued to the petitioner, as such the order was passed in violation of the principle of natural justice, and thus liable to be quashed. 10. Per contract, Mr. N.K. Mishra, learned Senior Counsel appearing for the contesting opposite parties no.3 and 5 has submitted that no rights had accrued in favour of the petitioner, as by mere issuance of the LOI, only an offer was made, which, though accepted by the petitioner, was not complied with by the petitioner, even though time was extended initially up to 15.04.2010 and thereafter up to 15.12.2010, and since the petitioner has not paid the admitted amount within the stipulated time or even thereafter, no right has accrued in favour of the petitioner. It is also contended that since the terms of the LOI, which was merely an offer, were not complied with, there was no concluded contract between the parties, as no agreement was signed, and thus also the petitioner would not have a right for revival of the offer or LOI, which was made by the opposite party-UAHCL.
It is also contended that since the terms of the LOI, which was merely an offer, were not complied with, there was no concluded contract between the parties, as no agreement was signed, and thus also the petitioner would not have a right for revival of the offer or LOI, which was made by the opposite party-UAHCL. It was lastly contended that no direction or specific performance of an agreement or contract would be issued by this Court as disputed questions of fact are involved in this petition, which can be decided only by leading evidence, which could be done in a civil court and not in writ jurisdiction. 11. We have heard learned counsel for the parties at length and have carefully perused the record. The LOI, which was issued by the opposite party-UAHCL on 19.01.2010, was merely an offer, which was accepted by the opposite party-UAHCL by its Letter of Acceptance issued on 02.02.2010. In the said Letter of Acceptance also the petitioner had made a request for extension of time, which was duly accepted by the opposite party-UAHCL vide communication dated 12.02.2010, according to which the entire payment was to be made in two installments, first one on or before 19.02.2010 and the balance on or before 15.04.2010. It is not disputed that the second installment was not paid by the petitioner, for which the petitioner approached the opposite party-UAHCL for extension, and finally on 25.11.2010 the last extension for payment of the balance amount was granted, which was up to 15.12.2010. It is not the case of the petitioner that the balance amount was paid within the extended time. In fact no amount was paid by the petitioner between 19.02.2010 and 15.12.2010. From the record it is clear that after 15.12.2010 there was no correspondence made by the opposite party-UAHCL extending the time of contract or accepting the payment made by the petitioner. Although it is not denied that certain deposits were made by the petitioner after the extended date, i.e., 15.12.2010, but no acknowledgement of the same by the opposite party-UAHCL has been brought on record with regard to deposit of any such amount. 12.
Although it is not denied that certain deposits were made by the petitioner after the extended date, i.e., 15.12.2010, but no acknowledgement of the same by the opposite party-UAHCL has been brought on record with regard to deposit of any such amount. 12. The only correspondence after 15.12.2010 is that of the General Manager of the Hotel made on 02.06.2011 intimating the petitioner that 30 persons have sought VRS, for which the liability would be that of the petitioner, and the said amount should be paid by the petitioner prior to execution of the lease deed. In our view, the same would not amount to extension of the time by the opposite party-UAHCL for payment of the amount under LOI, as the same was not the decision of the Board of Directors or the competent officer of the opposite party-UAHCL, but a mere communication by the General Manager of the Hotel, where 30 persons were seeking voluntary retirement under the VRS Scheme, for which the payment had to be made, and since the petitioner was involved in the entire process and the management of the Hotel had yet not been handed over to the petitioner, the General Manager of the Hotel had intimated the petitioner of the liability of VRS, which would accrue, for which the petitioner would be liable as per the terms of the LOI. 13. It has been stated by learned counsel for the petitioner that the General Manager of the Hotel is an employee of the ITDC and had written on behalf of the ITDC and that ITDC was in any case the competent authority, which could have extended the time. In our view, in the facts of the present case, mere issuance of the letter by the General Manager of the Hotel would not amount to grant of extension of time for making the deposit of the balance amount by the petitioner, which was earlier fixed and then extended by UAHCL and has expired on 15.12.2010. 14. In view of the aforesaid facts, we are of the opinion that merely by issuance of LOI, no right had accrued in favour of the petitioner until the petitioner had complied with the terms of the LOI as had been accepted by the petitioner by its LOA dated 02.02.2010. 15.
14. In view of the aforesaid facts, we are of the opinion that merely by issuance of LOI, no right had accrued in favour of the petitioner until the petitioner had complied with the terms of the LOI as had been accepted by the petitioner by its LOA dated 02.02.2010. 15. The apex Court in the case of Dresser Rand S.A. v. Bindal Agro Chem Ltd., 2006 (1) SC 751 has held in paragraph-39 of the said judgment: “......a letter of intent merely indicates a party’s intention to enter into a contract with the other party in future. A letter of intent is not intended to bind either party ultimately to enter into any contract.....” 16. In the case of Rishi Kiran Logistics Private Limited v. Board of Trustees of Kandla Port Trust and Others, (2015) 13 SCC 233 , the apex Court held: “When the LOI is itself hedged with the condition that the final allotment would be made later after obtaining CRZ and other clearances, it may depict an intention to enter into contract at a later stage. Thus, we find that on the facts of this case it appears that a letter with intention to enter into a contract which could take place after all other formalities are completed. However, when the completion of these formalities had taken undue long time and the prices of land, in the interregnum, shot up sharply, the respondent had a right to cancel the process which had not resulted in a concluded contract.” 17. In view of the legal position and the facts of the case where the petitioner had not complied with the terms of making the deposit within the extended time also, we can safely arrive at a conclusion that there was neither a concluded contract nor any right had accrued in favour of the petitioner on the basis of the aforesaid LOI. In such view of the matter, issuing of show cause notice or giving opportunity to the petitioner prior to the Board of Directors taking a decision on 19.09.2013 or communication of the said decision by order dated 10.12.2013 would not arise, as the petitioner was itself a defaulter of the terms of LOI and LOA. 18.
In such view of the matter, issuing of show cause notice or giving opportunity to the petitioner prior to the Board of Directors taking a decision on 19.09.2013 or communication of the said decision by order dated 10.12.2013 would not arise, as the petitioner was itself a defaulter of the terms of LOI and LOA. 18. Where the question as to violation of fundamental right is dependent upon the investigation and determination of question of facts, the court may refuse to go into it by allowing the parties to take recourse to appropriate proceedings. In Arya Vyasa Sabha v. Commissioner of Hindu Charitable & Religious Institutions & Endowments, AIR 1976 SC 475 , notices were issued by the authority calling upon the petitioners to have their temples and institutions registered. It was contended that the action was violative of Articles 14, 19(1)(f), 25, 26 and 31 of the Constitution. The High Court dismissed the petition observing that whether or not a particular institution is of a religious denomination is a question of fact or, in any event, a mixed question of fact and law which can more satisfactorily and effectively be adjudicated upon in a competent civil court. The Supreme Court held that by dismissing the petition, the High Court had not committed any error. 19. In DLF Housing Construction (P) Ltd. v. Delhi Municipal Corporation, AIR 1976 SC 386 , the question related to the right of ownership over the land and vesting thereof in the corporation. It was contended by the petitioner that the action of the corporation to acquire right over the land was violative of the provisions of the Constitution. The High Court dismissed the petition. Confirming the order, the Supreme Court stated: “In our opinion, in a case where the basic facts are disputed, and complicated questions of law and fact depending on evidence are involved the writ court is not the proper forum for seeking relief.” 20. In National Textile Corporation Ltd. v. Haribox Swalram, AIR 2004 SC 1998 , the petitioner asserted that though goods were manufactured by the respondent and payment was made, no goods were supplied. The respondent, however, denied receipt of payment or manufacture of goods for the petitioner. It was held that such highly disputed ‘questions of fact’ could not be decided in a writ petition under Article 226 of the Constitution.
The respondent, however, denied receipt of payment or manufacture of goods for the petitioner. It was held that such highly disputed ‘questions of fact’ could not be decided in a writ petition under Article 226 of the Constitution. Similar view has also been taken by the apex Court in Dwarka Prasad v. B.D. Agarwal, AIR 2003 SC 2686 , as well as in Defence Enclave Residents’ Society v. State of U.P., AIR 2004 SC 4877 . 21. Considering the law laid down by the apex Court in the aforementioned judgments and applying the same to the present context, this Court is of the considered view that disputed questions of fact are involved in this petition, which cannot be gone into in writ jurisdiction, as for deciding the issues involved in the case, parties will have to lead evidence, which cannot be done under Article 226 of the Constitution of India. Accordingly, we are of the view that prayers made in this writ petition do not deserve to be granted in writ jurisdiction. However, it shall be open for the petitioner to approach the appropriate forum available to it in law for redressal of its grievance, if so advised. 22. With the aforesaid observations, the writ petition is accordingly dismissed. No order to cost.