2003(4) ALL MR 42
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

R.M. LODHA AND A.S. AGUIAR, JJ.

Sion-Vishwabharati Co-Op. Hsg. Society Ltd. & Ors. Vs. Life Insurance Corporation Of India & Ors.

Writ Petition No.2781 of 1989

22nd July, 2003

Petitioner Counsel: Mr. H. J. THACKER,Ms. MANJIRI SHAH,Mr. V. L. Panjuani
Respondent Counsel: Mr. UPAL JOSHI,M/s. Thakordas & Madgavkar

Constitution of India, Arts.12, 14, 226 - Judicial review - Contractual dealings of statutory authority - All actions including contractual dealings of statutory authority are subject to judicial review - If the action of statutory authority is found to be malafide or violative of Art.14 or arbitrary the same can be corrected in judicial review under Art.226 of constitution - However, in a pure and simple dispute relating to contractual matter where there is even dispute about existence of concluded contract, invocation of Writ jurisdiction would neither be proper nor justified.

It is no doubt true that all actions including contractual dealings of statutory authority are subject to judicial review and if the action of statutory authority is found to be malafide or violative of Article 14 of Constitution of India or arbitrary the same can be corrected in judicial review under Article 226 of the Constitution of India, but each case has to be seen in the backdrop of its own facts. A pure and simple civil dispute relating to contractual matter where there is even dispute about the existence of concluded contract, invocation of writ jurisdiction would neither be proper nor justified. The summary extraordinary jurisdiction under Article 226 of the Constitution of India is not an adequate and convenient forum for adjudication of serious and disputed question as to whether a concluded contract came into existence between the parties or not. This indeed is a matter of evidence. (1989)3 SCC 293 and (1991)1 SCC 212 - Referred to. [Para 6]

Cases Cited:
M/s. Dwarkadas Marfatia & Sons Vs. Board of Trustees of the Port of Bombay, (1989)3 SCC 293 [Para 6]
Kumari Shrilekha Vidyarthi Vs. State of U.P., (1991)1 SCC 212 [Para 6]


JUDGMENT

R. M. LODHA, J. :- Is this a fit case for invocation of writ jurisdiction under Article 226 of Constitution of India directing the first respondent - Life Insurance Corporation of India to convey the property known as Vishwabharati Building situated at 164, Sion (East), Bombay, is the question before us.

2. The petitioner nos.2 to 11 are tenants occupying various portions of the aforesaid building. Life Insurance Corporation of India (for short, "LIC") is the owner of the said building. In the month of May 1980, LIC issued advertisement for sale of subject building. It appears that the occupants-tenants of the said building formed a society in the name of Sion Vishwabharati Cooperative Housing Society Limited and offered to purchase the subject building initially for a consideration of Rs.2,75,000/-, but later on enhanced to Rs.3,25,000/-. LIC by its communication dated 11.09.1980 expressed its willingness to sell the subject property to the first petitioner subject to the terms and conditions set out therein. The petitioner's case is that the first petitioner having agreed and confirmed the said terms and conditions, a concluded contract came into existence for sale of the subject property. It is petitioner's case that pursuant to the said contract within the time extended by LIC the entire consideration of Rs.3,25,000/- was paid; parties acted on the said agreement; LIC stopped recovering rent from the tenants-occupants and the first petitioner started paying municipal taxes. Thereafter correspondence ensued between the parties for execution of agreement for sale; drafts were prepared, but ultimately LIC declined to convey the subject property necessitating the filing of the present writ petition. LIC is opposing the petitioner's prayer on diverse grounds interalia by setting up the case that no concluded contract came into existence between the parties for sale of the subject property; no formal agreement as was contemplated under the terms and conditions referred to in the communication dated 11.09.1980 came to be executed between the parties and in any case the Central Government having directed LIC not to dispose of the properties in metropolitan cities without clearance from the Government, the question of conveying the subject property to the first petitioner does not arise. LIC has also set up the defence that the petitioners are virtually seeking enforcement of contract allegedly having come into existence between the parties, the enforcement of which cannot be subject matter of writ jurisdiction.

3. The petitioners have filed rejoinder reiterating their stand pleaded in the writ petition.

4. Having considered the entire pleadings placed on record, whatever be the form and frame of the writ petition, the fact of the matter is that the petitioners are seeking specific performance of the contract alleged to have taken place between the parties on 11.09.1980 vide document Exhibit "D". In the circumstances, it will be beneficial to refer here the document dated 11.09.1980 itself. The said document reads thus:

“LIFE INSURANCE CORPORATION OF INDIA

Central Office : Yogakshema,
Jeevan Bima Marg,
Bombay 400 021.

Hsg. Devpt. Department/1480

11.9.80
Shri. G. L. Shroff,
Vishwabharati Building,
Flat No.1,164, Sion (East),
Bombay 22.
Dear Sir,
Re:





Proposed sale of our property known as Vishwabharati Building (B.C. No.144) Sion (East), Bombay 22.


———

This has reference to the offer for purchase of our abovementioned property submitted on behalf of the sitting tenants on 26th June, 1980 and subsequent discussions tenants representatives had with our Managing Director and Executive Director on the above subject.

We are agreeable to sell the above mentioned property for Rs.3,25,000/- (Rupees three lakhs twenty five thousand only) subject to the terms and conditions set out herein:

1. You agree to purchase the above mentioned property on "as is where is" basis for Rs.3,25,000/-.

2. You shall deposit with us the entire purchase price i.e. Rs.3,25,000/- by demand draft within 10 days from the date of this letter, time being of the essence of the contract. Out of the said sum of Rs.3,25,000/- a sum of Rs.81,250/- shall be treated as earnest money deposit.

3. You shall enter into an agreement for purchase of the above mentioned property as per the form annexed herewith within 46 days from the date of this letter failing which we shall forfeit the said earnest money deposit of Rs.81,250/- as liquidated damages and the offer shall stand cancelled, time being of the essence of the contract.

4. You shall get the proposed society registered within three months from the date of execution of the agreement for purchase and complete the purchase at your cost within six months from the date of the agreement for purchase, time being of the essence of the contract.

5. The conveyance deed in respect of the above mentioned property will be executed in favour of the co-operative society to be formed by the sitting tenants of the above building.

6. The property shall be sold on "as is, where is" basis and you shall carry out all repairs to the building including all the repairs specified in notices from the Municipal Corporation of Greater Bombay, served or to be served upon as either by yourself or through outside agencies at your risk and cost from the date of handing over national possession, till then rents accrue to us.

7. In the event of any mishap or accident occurring in or to the said premises you shall indemnify the LIC of India against all claims arising therefrom.

8. On payment of the full purchase price and the entire arrears of rent, if any, due from the tenants, we shall hand over notional possession of the above property and you shall be required to pay all revenues rates, taxes, outgoings and cesses that may be payable to the Government or any local authority and development charges, betterment fees or charges for conversion of usage etc. from the date we hand over to you the notional possession of the above property.

9. All expenses and charges incidental to the sale of the above property including stamp duty, registration charges etc. shall be borne and paid by you, each party shall bear its own solicitors/advocates fees.

10. The arrears of rent due from the tenants of the above building shall be paid by you upto the date of payment of the entire purchase price. The exact arrears of rent due from the tenants to be paid to us will be intimated to you in due course.

11. Nothing contained herein shall in any way effect the Corporation's right to institute, conduct, defend, compound or abandon any legal proceedings by or against the tenants or otherwise concerning the said property or to deal with the existing tenants, and the Corporation shall be entitled to exercise all or any of these rights in such manner as it may think fit so long as the conveyance has not been executed.

This letter is sent to you in duplicate and copy of the same may be sent to us duly signed in token of your acceptance of the terms and conditions mentioned above.

Yours faithfully
Sd.
P.Executive Director (Bldgs.)
We agree to and confirm the above terms, and conditions.
Sd/-
Secretary,
Vishwabharati Co-operative”

5. A close reading of the aforesaid document shows that LIC agreed to sell the subject property to the first petitioner subject to the terms and conditions set out therein. Interalia the material conditions provided a deposit of Rs.3,25,000/- within 10 days from the date of the said communication and execution of agreement for purchase of the subject property as per the form annexed therewith. It also provided time being the essence of the contract in respect of the deposit of entire purchase price and execution of agreement as per the form annexed and completion of purchase within six months from the date of agreement for purchase. It does appear that time for deposit of purchase price was extended from time to time and ultimately the purchase price was deposited by the first petitioner within the extended time. However, it is clear from the available material that no formal agreement for purchase as stipulated in clause (3) of the document dated 11.09.1980 ever came to be executed. There were exchanges of draft agreement between the parties, but no formal agreement ever came to be executed. In the meanwhile, the Central Government communicated to LIC not to dispose of its properties situated in Metropolitan cities without clearance from the Government and as no clearance was given by the Government of India, further action even for execution of formal agreement was not taken by LIC much less conveyance of the property. We are afraid, the aforesaid facts do not persuade us to invoke our extraordinary jurisdiction which if invoked would only mean a decree for specific performance of the contract set up by the petitioners though according to LIC, no such formal agreement came into existence.

6. Mr. Thacker, the learned senior counsel appearing for the petitioners, heavily relied upon the judgment of the Apex Court in M/s. Dwarkadas Marfatia & sons Vs. Board of Trustees of the Port of Bombay, (1989)3 SCC 293 and Kumari Shrilekha Vidyarthi & ors. Vs. State of U.P. & ors., (1991)1 SCC 212 and submitted that LIC being an authority covered under Article 12 of Constitution cannot act arbitrarily even in contractual matters and once there is no dispute about the document dated 11.09.1980, LIC cannot act arbitrarily and must honour their commitment by executing conveyance in respect of subject property. It is no doubt true that all actions including contractual dealings of statutory authority are subject to judicial review and if the action of statutory authority is found to be malafide or violative of Article 14 of Constitution of India or arbitrary the same can be corrected in judicial review under Article 226 of the Constitution of India, but each case has to be seen in the backdrop of its own facts. A pure and simple civil dispute relating to contractual matter where there is even dispute about the existence of concluded contract, we are afraid, invocation of writ jurisdiction would neither be proper nor justified. The summary extraordinary jurisdiction under Article 226 of the Constitution of India is not an adequate and convenient forum for adjudication of serious and disputed question as to whether a concluded contract came into existence between the parties or not. This indeed is a matter of evidence. In this view of the matter the two judgments relied upon by the learned senior counsel for the petitioners cannot be applied in the facts of the present case. Moreover, it cannot be said that action of LIC in not proceeding further in the matter was unjustified. The fact is and there seems to be no controversy that vide communication dated 16.05.1981 the Government of India asked LIC not to dispose of its assets in Metropolitan cities without prior clearance from the Government. Even if the LIC is a statutory body, it cannot be said that LIC could have ignored and overlooked a specific direction of Government of India. The Government of India appears to have sent its communication to the LIC keeping in view the larger public interest inasmuch as the assets and property of LIC were sought to be retained in the light of appreciation of lands and building in Metropolitan cities. The action of LIC, therefore, also cannot be said to be inconsistent with public interest.

7. All in all, we do no find any justifiable ground for invocation of writ jurisdiction in fact situation which we have already indicated above.

8. Writ Petition is accordingly dismissed. Rule is discharged. No costs.

Petition dismissed.