Transfer of Property Act, 1882: ss. 5, 8, 10, 11 and 55 – Allotment of industrial plots to the respondents/entrepreneurs by appellant-Corporation to construct transport offices and godowns – Allotment letters contained terms and conditions that respondents to establish their units within two years from taking possession, otherwise allotment would be cancelled – Thereafter, agreement/sale deeds entered into between the Corporation and the respondents – Subsequently, issuance of notices for cancellation of plots since respondents failed to establish their units – Later Corporation revised its decision of cancelling the allotments and demanded payment of 50% of the prevailing market value of the plots for condoning the delay in raising the construction – Challenge to, by the respondents – Single Judge of the High Court allowed the writ petitions – Upheld by the Division Bench – On appeal, held: There was no condition of completion of construction within a period of two years in the sale deed but was only in the allotment letter – However, after the said allotment, the Corporation not only received entire consideration but executed the sale deeds wherein no such condition was stipulated – Thus, the High Court rightly held that after the registration of sale deed of the property by the Corporation to the respondents, transferring the ownership in the plots in the favour of the respondents whereby the respondents acquired absolute marketable title to the property, the Corporation had no right to insist on the conditions mentioned in the allotment letter, which ceased to have any effect after the execution of the sale deed – Further, the High Court rightly held that the Corporation had withdrawn the action of cancellation of the plots, instead, it demanded 50% of the prevailing market value in lump sum towards the cost of the plots – There was no legal basis for such a demand – Thus, the order passed by the High Courts upheld. Dismissing the appeals, the Court
HELD: 1.1 There is no condition of completion of construction within a period of two years in the sale deed. Such a condition was only in the allotment letter. However, after the said allotment, the appellant-Corporation not only received entire consideration but executed the sale deeds as well. In the sale deeds no such condition was stipulated. Therefore, the High Court is right in holding that after the sale of the property by the appellant-Corporation to the respondents, whereby the respondents acquired absolute marketable title to the property, the appellant-Corporation had no right to insist on the conditions mentioned in the allotment letter, which cease to have any effect after the execution of the sale deed. [Para 14] [464-A-C]
1.2 Section 5 of the Transfer of Property Act defines ‘transfer’ as conveyance of property from one living person to one or more living persons. Sections 8, 10 and 11 thereof attach sanctity and solemnity to a transfer of immovable property. Section 55 of the Act deals with rights and liabilities of buyer and seller. As per this provision, when the buyer discharges obligations and seller passes/conveys the ownership of the property, the contract is concluded. Thereafter, the liabilities, obligations and rights, if any, between the buyer and seller would be governed by other provisions of the Contract Act and the Specific Relief Act, on the execution of the sale deed. The seller cannot unilaterally cancel the conveyance or sale. [Paras 15-16] [464-D; 465-F]
1.3 The submission that the doctrine of proportionality is not applicable in these cases, cannot be accepted. In the realm of Administrative Law ‘proportionality’ is a principle where the Court is concerned with the process, method or manner in which the decision-maker has ordered his priorities and reached a conclusion or arrived at a decision. The very essence of decisionmaking consists in the attribution of relative importance to the factors and considerations in the case. The doctrine of proportionality thus steps in focus true nature of exercise-the elaboration of a rule of permissible priorities. ‘Proportionality’ involves ‘balancing test’ and ‘necessity test’. The ‘balancing test’ permits scrutiny of excessive onerous penalties or infringement of rights or interests and a manifest imbalance of relevant considerations. [Para 19] [467-D-F]
1.4 The submission that the land is not used for putting a factory building but was used for some other purpose, was not pleaded by the appellant-Corporation in the High Court or even in these appeals. This was not the reason for initially cancelling the allotment or demanding payment of 50% of the prevailing market value. Therefore, this oral argument advanced at the time of hearing cannot be accepted without any material on record and when it was not the basis of cancellation/demand of payment. [Para 20] [467-G; 468-A]
1.5 The High Court rightly held that the appellantCorporation had withdrawn the action of cancellation of the plots. Instead, it demanded 50% of the prevailing market value in lump sum towards the cost of the plots. There is no legal basis for such a demand, more so, after the registration of the sale deeds in favour of the respondents thereby transferring the ownership in these plots in their favour. [Para 21] [468-F-G] Indu Kakkar v. Haryana State Industrial Development Corporation Ltd. & Anr. (1999) 2 SCC 37 : [1998] 3 Suppl. SCR 277 – distinguished.
State of Kerala v. Cochin Chemical Refineries Ltd. [1968] 3 SCR 556; Teri Oat Estates (P) Ltd. v. U.T., Chandigarh & Ors. (2004) 2 SCC 130 : [2003] 6 Suppl. SCR 1235; Union of India v. G. Ganayutham, (1997) 7 SCC 463 : [1997] 3 Suppl. SCR 549; Mohinder Singh Gill & Anr. v. The Chief Election Commissioner, New Delhi & Ors. (1978) 1 SCC 405 : [1978] 2 SCR 272 – referred to.
Judicial Review of Administrative Action (1995) para 13.085, 601-605; Wade, Administrative Law (2009) 157-158, 306-308 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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