Appellant, highest bidder, allotted land by R1/HUDCO for construction of hotel – Appellant paid first instalment in terms of allotment letter – Dispute arose as Appellant claimed further instalments were due only after HUDCO obtained statutory clearances and executed sub-lease in its favour – Despite lacking perpetual lease, HUDCO insisted on instalments and threatened cancellation – Appellant filed First Suit seeking injunction to defer payments and restrain cancellation of allotment – HUDCO cancelled allotment, forfeited amount, and invited fresh bids, now disclosing perpetual lease was not yet executed – Second Suit filed seeking declaration that cancellation was illegal and for possession – First Suit dismissed as withdrawn unconditionally – R2/Ministry of Urban Development, Government of India impleaded in Second Suit, sought rejection u/Or.VII r.11 CPC for deficient court fee – Trial Court rejected, but High Court upheld objection and held fee payable on market value – Appellant then dropped relief of possession and confined suit to declaration – Civil Court decreed suit holding HUDCO guilty of breach entitling Appellant to declaration on account of concealment and gross misrepresentation of fact – Affirmed by First Appellate Court – High Court allowed second appeal holding suit suffered from fatal defect of not claiming possession as further relief in terms of proviso to s.34 Specific Relief Act – Further noting Appellant’s conduct was inequitable and aimed at prolonging litigation, thus disentitling discretionary relief – Hence, appeal before Supreme Court:
Held: Clause 5(vi) of Allotment Letter imposed mandatory obligation on HUDCO to obtain statutory approvals and to execute requisite documents – Had this not been obligatory, the clause would not have mandated refund in case of failure – There was also breach of clauses requiring execution of sub-lease – Without perpetual lease in its favour, HUDCO could not have executed sub-lease or handed over possession – Perpetual lease was obtained only after cancellation of appellant’s allotment – Failure to execute sub-lease owing to lack of title amounted to breach – HUDCO, being incapable of fulfilling its reciprocal obligations, was not entitled to demand further instalments – HUDCO also failed to secure revised layout plan approvals – Having found HUDCO in breach, Appellant liable to refund as provided for in allotment letter as it is imperative to maintain the sanctity of contractual terms – A commercial document ought not to be interpreted in a manner that defeats the parties’ original intention. [Paras 31-40, 42, 44-47, 60(i)] Appellant was not entitled to interest under the allotment letter – However, interest pendente lite or post-decree may be awarded under s.34 CPC, dehors the contract, as a discretionary relief based on equitable considerations – Ensuring neither undue enrichment nor unfair deprivation – Thus, court examined conduct of Appellant: failure to deposit Rs. 15 crores under a status quo order in First Suit, followed by unconditional withdrawal of the suit with an oblique motive to avoid proceedings before the very Court whose order had not been complied with amounted to forum shopping and abuse of process – In Second Suit, Appellant abandoned relief of possession to evade court fee, casting doubt on its bona fides – Material on record indicated appellant lacked clean hands and sought to prolong litigation to mask financial incapacity – A party seeking equity must come with clean hands – ‘Clean hands’ implies absence of concealment or attempt to secure illegitimate gains – Any contrary conduct disentitles a party from relief – Courts cannot abet inequity; he who seeks equity must do equity – Though as general rule in commercial disputes, interest pendente lite or post-decree is granted to compensate for time value of money that was due but withheld during legal process, present case warranted deviation. [Paras 48-59, 60(ii)]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Aandrita Deb, Hony. Associate Editor (Verified by: Liz Mathew, Sr. Adv.). Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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