# Ahsan Karim Khan v. State of U.P. & Ors

- **Citation:** (2019) 1 ILRA 1085
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-09-05
- **Case number:** Writ-C No. 54063 of 2017
- **Bench:** Pradeep Kumar Singh Baghel, Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/ahsan-karim-khan-v-state-of-u-p-ors-44409
- **Pages:** 14

## Headnote

A. Article 226 Constitution of India,
Contract Act, 1872. Section 4 - Article
226 - not a remedy for breach of
contract-if there has been no violation
of justice.

Petitioner's
allotment
for
the
plot
for
commercial purpose was cancelled. Amount
deposited by him was returned. The following
questions fell for consideration: -

1.Whether by issuance of allotment letter and
deposit of money by the petitioner the
contract was concluded?

## Text

_Characters 0–39,982 of 45,880. This is a partial read: ask again with offset=39982 for what follows._

1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1085
doing a wholesome review of evidence,
both documentary and oral. Therefore, the
contention of Sri M.C. Singh, learned
counsel for the petitioner based on the
limitation of the power under Section 48
of the Act, also does not stand to scrutiny.

25. On a consideration of the entire
facts and circumstances on record this
Court is of clear opinion that there is no
such infirmity in the order impugned
passed by the Deputy Director of
Consolidation, dated 06.08.1997, as may
call for interference under Article 226 of
the Constitution.

26. In the result writ petition fails
and is dismissed with costs.

28. Let a copy of this order be
communicated to the Deputy Director of
Consolidation, Bulandshahr, by the Office
within a month.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 05.09.2019

BEFORE
THE HON'BLE PRADEEP KUMAR SINGH
BAGHEL, J.
THE HON'BLE ROHIT RANJAN AGARWAL, J.

Writ-C No. 54063 of 2017

Ahsan Karim Khan ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Udit Chandra

Counsel for the Respondents:
C.S.C., Sri Dhananjay Awasthi

A. Article 226 Constitution of India,
Contract Act, 1872. Section 4 - Article
226 - not a remedy for breach of
contract-if there has been no violation
of justice.

Petitioner's
allotment
for
the
plot
for
commercial purpose was cancelled. Amount
deposited by him was returned. The following
questions fell for consideration: -

1.Whether by issuance of allotment letter and
deposit of money by the petitioner the
contract was concluded?

2. Whether for the breach of the contract the
petitioner can seek the relief under Article 226
of the Constitution?
There was a concluded contract between the
parties. In case of breach of contract, it is
open to the petitioner to work out other
remedy available under the law. (Para 26, 48).
The Court will not insist for compliance of the
principles of natural justice. While exercising
the jurisdiction under Art. 226, the High
Court has the power to refuse the writs if
it was satisfied that there has been no
violation of justice.
(Para 36, 37). In two enquiries were made
by
the
senior
officers,
serious
irregularities were found. There wasn't
any arbitrary action on the part of the
development authority in cancelling the
allotment, giving the opportunity, in the
facts of the present case would be a
formality. (Para 40,48)

Precedent followed: -

1.Uttar Pradesh Avas Evam Vikas Parishad
and others Vs. Om Prakash Sharma,
(2013) 5 SCC 182 (Para 24)

2. Kisan Sahkari Chini Mills Limited and
others Vs. Vardan Linkers and others,
(2008) 12 SCC 500 (Para 29)

3. Divisional Forest Officer Vs. Bishwanath
Tea Co. Ltd., (1981) 3 SCC 238 (Para 31)

4. M/s Dwarkadas Marfatia and Sons Vs.
Board of Trustees of the Port of Bombay,
(1989) 3 SCC 293 (Para 32)
1086 INDIAN LAW REPORTS ALLAHABAD SERIES
5. JSW Infrastructure Limited and another
Vs. Kakinada Seaports Limited and others,
(2017) 4 SCC 170 (Para 33)

6. Tata Cellular Vs. Union of India, (1994)
6 SCC 651 (Para 33)

7. State Bank of Patiala and others Vs.
S.K. Sharma, (1996) 3 SCC 364 (Para 36)

8. Aligarh Muslim University and others
Vs. Mansoor Ali Khan, (2000) 7 SCC 529
(Para 36)

9. A.M. Allison and another Vs. B.L. Sen
and others, AIR 1957 SC 227 (Para 37)

10. Ravi S. Naik Vs. Union of India and
others, 1994 Supp (2) SCC 641 (Para 37)

11. Kumari Shrilekha Vidyarthi and others
Vs. State of U.P. and others, (1991) 1 SCC
212 (Para 38)

12. Mohinder Singh Gill and another Vs.
The Chief Election Commissioner, New
Delhi and others (1978) 1 SCC 405; AIR
1978 SC 851 (Para 39)

Precedent distinguished:-

1. Lalbi Vs. Modinamma @ Modinbee and
others, (Karnataka) (DB)(Circuit Bench at
Gulbarga); Law Finder Doc Id # 771754 :
2012 ILR (Karnataka) 4403; 2012 (74) R.C.R.
(Civil) 283 (Para 17)

2. Popcorn Entertainment and another Vs. City
Industrial
Development
Corporation
and
another, (2007) 9 SCC 593 (Para 17, 42)

3. Sunil Pannalal Banthia and others Vs. City
and Industrial Development Corporation of
Maharashtra Ltd. and another, (2007) 10 SCC
674 (Para 17, 41)

4. State Bank of India and others Vs. D.C.
Aggarwal and another, AIR 1993 SC 1197
 (Para 17, 43)

5. Commisioner is Income Tax, Madras Vs.
K.R. Sadayappan, (1990) 4 SCC 1 (Para 17,
43) (E-4)
(Delivered by Hon. Pradeep Kumar Singh
Baghel, J.)

1. The writ jurisdiction of this Court
under Article 226 of the Constitution is
invoked
against
the
order
dated
26/28.08.2017 passed by respondent no.4,
whereby the petitioner's allotment of the
plot for commercial purpose has been
cancelled and the amount deposited by
him has been returned.

2. A brief reference to the factual
aspects would suffice.

3.

The
Gorakhpur
Industrial
Development Authority, Gorakhpur1, the
respondent no.2, issued an advertisement
on 22.07.2014 inviting applications for
allotment of 26 vacant industrial plots of
different
sizes
in
Industrial
Area,
Gorakhpur.
Pursuant
to
the
said
advertisement the petitioner made an
application on 19.08.2014 for allotment of
an industrial plot of an area of 9000
square meters in Sector-13 or in any other
sector.

4. The respondent no.2 vide a
communication letter dated 30.08.2014
informed the petitioner that for allotment
of the said plots an Allotment Committee
has been constituted and he was asked to
appear before the Allotment Committee
for his interview. The interview was held
on 28.01.2015. The petitioner was issued
an allotment letter dated 31.03.2015,
whereby he was allotted Plot No. F-5 in
Industrial Sector-15. The area of the plot
is 6733 square meter.

5. On 01.01.2016 the petitioner was
called upon to deposit a sum of
Rs.19,02,570/-. The said amount was
deposited by the petitioner on 15.01.2016.
1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1087
By a notice dated 03.02.2016 the
petitioner
was
asked
to
deposit
maintenance fee as well as lease rent.

6. It is stated in the petition that in
the meantime after the allotments were
made, complaints were made to various
authorities in respect of the irregularity in
the allotment of the plots including the
Commissioner of the Division, who set up
an enquiry on 02.11.2015. The enquiry
report was placed before the GIDA and
which resolved to stay the allotment
proceedings and to cancel all the
allotments. It also appears from the
materials
on
record
that
serious
complaints regarding the irregularity
committed
by
the
Chief
Executive
Officer2 and the Manager (Property) of
the GIDA were made. Pursuant to the said
complaint a preliminary enquiry was
made and it was forwarded to the State
Government and on the basis of the report
dated 28.12.2015 the State Government
passed an order dated 19.02.2016 to
initiate disciplinary proceedings against
the erring officials.

7. In compliance of the order of the
State Government the two delinquent
officers, namely, Gyan Prakash Tripathi and
Anil Kumar Singh preferred a writ petition,
being Service Bench No. 5769 of 2016,
Gyan Prakash Tripathi and another v. State
of U.P. and others, in this Court at Lucknow
Bench
to
challenge
the
disciplinary
proceedings amongst other grounds that
enquiry officers are junior to the petitioners
therein. The order passed by the Court on
16.03.2017 reads as under:

"The petitioner has assailed the
order dated 19 February 2016 passed by
the State Government, whereby the State
Government has taken a decision to issue
a charge sheet against the petitioner on
the basis of inquiry report submitted by
two members of fact finding enquiry
committee.

Learned Counsel for the petitioner
has submitted that the said committee was
constituted with the two officers who had
been juniors to the petitioner that too on
the basis of complaint made by the
District General Secretary, Samajwadi
Party, Gorakhpur. It has been submitted
that the said complaint has not been made
by any public representative rather it is
based on the political party politics which
may not be the basis for an inquiry.

The petitioner has also brought on
record the said inquiry report. Since the
inquiry
report
has
reported
some
irregularities in allotment of plots,
therefore, we, suo motu permit the
respondents to inquire the matter by some
senior officers independently and the
report submitted by those officer would
only be the basis for further action.

With the aforesaid liberty the order
impugned dated 19 February 2016 is
hereby quashed.

The writ petition stands disposed of."

8. Similar complaints were made to
the Lokayukta, U.P., Lucknow in respect
of the same allotment. The Lokayukta
appointed Commissioner, Consolidation
Department, U.P., Lucknow as enquiry
officer on 29.04.2016, and on 27.05.2016
the General Manager (Finance), GIDA
was nominated as Nodal Officer to assist
the enquiry officer in the enquiry. While
the said enquiry was pending, the GIDA,
the respondent no.2 in its 47th Board
Meeting held on 18.06.2016 considered
the report dated 28.12.2015 and took a
decision to cancel all the allotments made
by the GIDA in pursuance of the
advertisement dated 22.07.2014.
1088 INDIAN LAW REPORTS ALLAHABAD SERIES

9. It is averred in the petition that on
26.09.2016 the enquiry officer appointed
by the Lokayukta submitted a report to
the State Government. In the said enquiry
report it was recorded that the respondent
no. 2 has advertised only 26 plots but it
has allotted 83 plots. The report further
recorded that no fresh advertisement was
issued nor fresh applications were invited
for the allotment of more than 26 plots. It
is mentioned in the report that for the
allotment of extra 57 plots advertisement
should have been issued. A copy of the
enquiry report is on the record.

10. The Board of the respondent
no.2 in its meeting dated 18.06.2016
resolved to cancel all the 26 allotments
for the reason that in the advertisement
the applications were invited for allotment
of only 26 plots but 83 industrial plots
were allotted. Thus, the financial interest
of respondent no.2 was unsecured.

11. Consequently, the petitioner's
allotment was cancelled vide order dated
28.08.2017 and the amount deposited by
the petitioner has been returned. It is
stated that the Lokayukta has not taken
any decision on the basis of the report
dated 29.06.2016.

12. An amendment application has
been filed whereby the petitioner has
brought on record the copy of the
allotment letter and the proposed lay out
plan.

13. A counter affidavit has been
filed on behalf of respondent nos. 2 to 4.
The stand taken by the respondent no.2 is
that an advertisement dated 22.07.2014
was issued for the allotment of 26
industrial plots in Sector 13 and 15. The
complaints were made in respect of
various illegalities in the allotment. The
Commissioner, Gorakhpur Division set up
an enquiry vide order dated 02.11.2015.
The enquiry report pointed out several
serious
illegalities
in
the
allotment
process. The said report and this matter
were considered by the Board of GIDA in
its 46th meeting held on 11.02.2016. It
was resolved, "all further activities
regarding
allotment
of
the
above
mentioned plot should be stopped and
status quo should be maintained and the
allotment of plots be cancelled.". The said
report was sent to the State Government,
which recommended initiation of the
disciplinary proceedings against two
officers,
i.e.,
CEO
and
Manager
(Property) of the GIDA.

14. In the meantime, the Lokayukta
on the basis of some complaints asked the
State to get an enquiry conducted from
some State Officers. Thereafter the
Commissioner,
Consolidation,
U.P.,
Lucknow has been appointed as enquiry
officer. He was earlier CEO of the GIDA
in the past. The report of the enquiry
officer was sent to the State Government
which vide order dated 25.04.2017
directed the GIDA Board to consider and
take
decision
whether
the
existing
allotment should be cancelled and reallotment will be done or not. The GIDA
Board in its 50th Board Meeting held on
07.06.2017 considered the letter of the
State Government dated 25.04.2017 and it
was decided to cancel allotment of all the
83 plots on the ground of various
anomalies which were pointed out in the
two separate enquiry reports. It is stated
that the petitioner was allotted a plot but
the allotment never progressed beyond the
stage of allotment letter. The lease-deed
was never executed in favour of the
petitioner, hence, the petitioner cannot
1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1089
claim a right on the basis of allotment of
the plot. It is stated that 83 plots have
been cancelled due to illegality committed
in the allotment, which is in contravention
of the rules, which is apparent from the
minutes of the 46th Board Meeting held
on 24.02.2016 and 47th meeting held on
18.06.2016
(Annexure-CA-1
to
the
counter affidavit). The same minutes have
also been annexed by the petitioner as
Annexure-11 to the writ petition.

15. A rejoinder affidavit has been
filed wherein the averments made in the
writ petition are reiterated.

16. Learned counsel for the
petitioner submits that there is violation of
principle of natural justice. The petitioner
was allotted plot on 31.03.2015 and the
petitioner has deposited the reservation
fees but the respondent no.2 did not
execute the lease deed and on the basis of
exparte report and without issuing any
show cause notice the allotment was
cancelled. It is further submitted that the
reports submitted by the enquiry officers
were merely preliminary reports and the
State Government and the respondent
no.2 have illegally taken a cognizance of
preliminary reports submitted by the
enquiry officers. It is further submitted
that the reports are also self- contradictory
and
are
based
on
conjecture
and
assumption. Next it is submitted that the
enquiry reports are exparte and without
affording any opportunity of hearing. The
learned counsel further submits that the
advertisement uses the word "almost" to
allot only 26 plots. It is submitted that the
small mistake does not make the entire
process nugatory.

17. Learned counsel for the
petitioner next submitted that Section 7 of
the
Uttar
Pradesh
Industrial
Area
Development Act, 19763 gives the power
of allotment to the CEO. It is submitted
that only financial consideration is not the
criteria for the development authority.
The object is not to earn money but to set
up the industries. Lastly, it was urged that
the State largess can be granted without
advertisement unless it is found that it
was
arbitrary,
irrational
and
discriminatory. He has placed reliance on
the judgment of the Karnataka High Court
in the case of Lalbi v. Modinamma @
Modinbee
and
others4,
and
the
judgments of the Supreme Court in
Popcorn Entertainment and another v.
City Industrial Development Corpn.
and another5; Sunil Pannalal Banthia
and others v. City & Industrial
Development
Corporation
of
Maharashtra Ltd. and another6; State
Bank of India and others v. D.C.
Aggarwal and another7; Commissioner
of Income Tax, Madras v. K.R.
Sadayappan8.

18. Sri Dhananjay Awasthi, learned
counsel for the respondents, has submitted
that GIDA advertised only 26 plots, in
which the petitioner was given allotment
letters,
but
subsequently
due
to
irregularities in the allotment it was
cancelled and money was refunded vide
cancellation order dated 26/28.08.2017. A
fresh advertisement was made which was
cancelled and again it has been advertised
on 02.03.2019 and the last date for the
submission
of
application
was
07.04.2019.
He
submitted
that
irregularities were pointed out in an
enquiry conducted at the behest of the
Lokayukta and acting on the enquiry
report the State directed for cancellation
of the allotment. He has drawn our
attention to the enquiry report, which is
1090 INDIAN LAW REPORTS ALLAHABAD SERIES
annexure-1 to the counter affidavit,
wherein several irregularities have been
found in the said enquiry. It was further
submitted that mere issuance of allotment
letter does not create any indefeasible
right
in
such
contractual
matters
especially when deposited money has also
been returned. Lastly, it was urged that
two separate enquiries were conducted:
one at the instruction of the Lokayukta
and
the
preliminary
enquiry
report
submitted by the Chief Development
Officer, and on the basis of those
enquiries the GIDA Board resolved to
cancel the allotment and return the
deposited money.

19. Lastly, it was urged that no
document has been executed in pursuance
of the allotment order and possession has
also not been given.

20. We have heard and considered
the submissions advanced by learned
counsel for the parties and perused the
material on the record.

21. The questions, therefore, that fall
for consideration are as to whether by
issuance of allotment letter and deposit of
money by the petitioner the contract was
concluded; and, (ii) whether for the
breach of the contract the petitioner can
seek the relief under Article 226 of the
Constitution of India.

22. On the first issue, learned
counsel for the petitioner has submitted
that if an allotment letter has been issued,
it amounts acceptance of the offer of the
petitioner and the contract has concluded.
Per contra, the contention of learned
counsel for the respondents is that
pursuant to the allotment order the
petitioner was not handed over the
possession nor any lease-deed has been
executed in his favour, hence it cannot be
said that the contract has been concluded
or there is a concluded contract.

23. Before proceeding further we
deem it appropriate to refer some
decisions of the Supreme Court on the
first issue i.e. whether it was concluded
contract.

24. In Uttar Pradesh Avas Evam
Vikas Parishad and others v. Om
PrakashSharma9
somewhat
similar
situation arose. The Uttar Pradesh Avas
Evam Vikas Parishad, which is a statutory
authority, auctioned some shops and a
plot by a public auction. The appellant
before the Supreme Court i.e. the Uttar
Pradesh Avas Evam Vikas Parishad
accepted
the
highest
bid
of
the
respondent, who deposited 20% of the bid
amount plus the earnest money. The bid
was
rejected
by
the
Housing
Commissioner of the Board and the
amount
was
refunded
to
the
respondent/plaintiff. The respondent filed
a suit under Section 34 of the Specific
Relief Act, 1963 seeking declaratory
relief that the auction in his favour was
final and binding on the Avas Evam
Vikas Parishad. The trial Court decreed
the suit. In appeal the judgment and
decree of the trial Court was set aside.
The High Court in the second appeal
again decreed the suit. The review was
also dismissed by it. Before the Supreme
Court the issues, amongst other, raised
were that "(a) What are the rights of the
plaintiff/bidder
participating
in
the
auction process in relation to the plot in
question? (b) Whether there is any vested
right upon the plaintiff/ bidder until the
bid is accepted by the competent authority
in relation to the property in question?
Merely because the plaintiff is the highest
1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1091
bidder by depositing 20% of the bid
amount without there being approval of
the same by the competent authority and
it amounts to a concluded contract in
relation to the plot in question? (c)
Whether
the
plaintiff
could
have
maintained the suit in absence of a
concluded contract?"

25. The Supreme Court answered
the points (a) and (b) in affirmative and
held that "so long as an order regarding
final acceptance of the bid had not been
passed by the Chairman of the Housing
Board, the highest bidder acquire no
vested right to have the auction concluded
in his favour and the auction proceedings
could always be cancelled.". The Court
held that in absence of acceptance of the
bid offer by the plaintiff to the competent
authority of the defendant there is no
concluded contract. The Court further
held that under Section 4 of the Contract
Act the proposal can be said to be
completed when the same is accepted by
the competent authority. Relevant part of
the judgment reads as under:

"39. Further, the communication
under Section 4 of the Contract Act
speaks of when the communication will
complete. It says:

"4. Communication when complete.-
The communication of a proposal is
complete when it comes to the knowledge
of the person to whom it is made.

The communication of an acceptance
is complete-

as against the proposer, when it is
put in a course of transmission to him so
as to be out of the power of the acceptor;

as against the acceptor, when it
comes to the knowledge of the proposer."

The proposal is said to have been
completed when the same is accepted by
the competent authority, which has not
been done in the instant case. Neither the
Housing Commissioner nor the Assistant
Housing Commissioner accepted the
proposal in writing; therefore, there is no
communication of acceptance of the offer
of the plaintiff. In this regard, this Court
in Haridwar Singh v. Begum Sumbrui10
has held that the communication of
acceptance of the highest bid is necessary
for concluding the contract."

26. Applying the aforesaid principle
in the present case, we find that there is
considerable merit in the contention urged
by learned counsel for the petitioner that
there was a concluded contract between
the parties. Indisputably, the respondent
has
issued
an
allotment
letter
on
31.03.2015
and
the
petitioner
has
deposited a sum of Rs.19,02,570/- on
15.01.2016 in pursuance of the demand
made by the respondents. Thereafter a
letter was sent to the petitioner on
03.02.2016 raising demand for the lease
rent etc.. These facts have not been
denied in the counter affidavit. Hence, it
can be safely held that after acceptance
of the bid of the petitioner and allotting
him Plot No. F-5 in Sector-15, the
contract was concluded irrespective of
the fact that the possession was not
given to the petitioner and formal lease
deed has not been executed.

27. We can not persuade ourselves
to subscribe the view that the petitioner
has no legal right or vested right to
challenge the decision of the second
respondent cancelling the entire auction
and to invite fresh applications in
respect of all the 83 plots.

28. In respect of Question No. (II)
we may in this regard gainfully refer to
1092 INDIAN LAW REPORTS ALLAHABAD SERIES
the decisions of the Supreme Court
which are apposite in the facts of the
present case.

29. In Kisan Sahkari Chini Mills
Limited and others v. Vardan Linkers
and
others
the
respondent
therein
pursuant to a tender notice issued by the
Sugar Mill, which produces the molasses,
offered for the purchase of molasses. In
the State of Uttaranchal, there were six
State controlled sugar mills. The sale of
molasses is controlled by the Molasses
Sale Committee, which was constituted
by the State Government. The respondent
therein was permitted to lift certain
amount of molasses from five sugar mills.
In the meantime the State Government
received several complaints, hence the
competent authority stayed the operation
of the order passed by the Assistant Cane
Commissioner for lifting molasses. The
respondent therein challenged the said
action by way of a writ petition for a
direction for continuance of supply of the
entire quantity for which the permission
was granted to him. The High Court
directed the State Government to consider
the grievance of the respondent. The State
Government rejected the representation of
the respondent therein on the ground that
there was no valid contract for the supply
of molasses and the order/letter issued by
the Assistant Cane Commissioner was
without any authority and consequently,
the State Government cancelled the same.
Similar issues, as raised in the present
writ petition, were raised before the Court
which read as under:

"(i) Whether the High Court was
right in concluding/ assuming that there
was a valid contract?

(ii) Whether the High Court was
justified in quashing the cancellation
order dated 24-4-2004 passed by the
Secretary, (Sugar)?"

30. While answering the issue
regarding the jurisdiction of the Court
under Article 226 of the Constitution of
India the Court held that even in case the
High Court finds that there is valid
contract but if the cancellation of contract
is not arbitrary or unreasonable, the Court
can still refuse to interfere in the matter
leaving the aggrieved party to take
recourse to the remedy available under the
law. The Court held thus:

"23. ...The issue whether there was a
concluded contract and breach thereof
becomes secondary. In exercising writ
jurisdiction, if the High Court found that
the exercise of power in passing an order
of cancellation was not arbitrary and
unreasonable, it should normally desist
from giving any finding on disputed or
complicated questions of fact as to
whether there was a contract, and
relegate the petitioner to the remedy of a
civil suit. Even in cases where the High
Court finds that there is a valid contract,
if the impugned administrative action by
which the contract is cancelled, is not
unreasonable or arbitrary, it should still
refuse to interfere with the same, leaving
the aggrieved party to work out his
remedies in a civil court. In other words,
when there is a contractual dispute with a
public law element, and a party chooses
the public law remedy by way of a writ
petition instead of a private law remedy of
a suit, he will not get a full-fledged
adjudication of his contractual rights, but
only
a
judicial
review
of
the
administrative
action.
The
question
whether there was a contract and whether
there was a breach may, however, be
examined incidentally while considering
1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1093
the reasonableness of the administrative
action. But where the question whether
there was a contract, is seriously
disputed, the High Court cannot assume
that there was a valid contract and on
that basis, examine the validity of the
administrative action."

31. Reference may also be made to
Divisional Forest Officer v. Bishwanath
Tea Co. Ltd.12. In this case the Supreme
Court has considered the issue with regard
to maintainability of the writ petition
where a complaint is made against a
statutory authority after the breach of
contract. The Court has held that
ordinarily the suit would be congnizable
by a civil court and the High Court in its
extraordinary
jurisdiction
would
not
entertain a petition and a relief flowing
from a contract has to be claimed in a
civil suit. The Court observed thus:

"9. Ordinarily, where a breach of
contract is complained of, a party
complaining of such breach may sue for
specific performance of the contract, if
contract is capable of being specifically
performed, or the party may sue for
damages. Such a suit would ordinarily be
cognizable by the civil court. The High
Court in its extraordinary jurisdiction
would not entertain a petition either for
specific performance of contract or for
recovering damages. A right to relief
flowing from a contract has to be claimed
in a civil court where a suit for specific
performance of contract or for damages
could be filed. This is so well settled that
no authority is needed. However, we may
refer to a recent decision bearing on the
subject. In Har Shankar v. The Deputy
Excise & Taxation Commissioner13, the
petitioners offered their bids in the
auctions held for granting licences for the
sale
of
liquor.
Subsequently,
the
petitioners moved to invalidate the
auctions challenging the power of the
Financial Commissioner to grant liquor
licences.
Rejecting
this
contention,
Chandrachud J., (as he then was),
speaking for the Constitution Bench at
page 263 observed as under: (SCC p.746,
para 16)

Those who contract with open eyes
must accept the burdens of the contract
along with its benefits. The powers of the
Financial Commissioner to grant liquor
licences by auction and to collect licence
fees through the medium of auctions
cannot by writ petitions be questioned by
those who, had their venture succeeded,
would have relied upon those very powers
to found a legal claim. Reciprocal rights
and obligations arising out of contract do
not depend for their enforceability upon
whether a contracting party finds it
prudent to abide by the terms of the
contract. By such a test no contract could
ever have a binding force.

Again at page 265 there is a
pertinent observation which may be
extracted: (SCC p. 747, para 21)

Analysing the situation here, a
concluded contract must be held to have
come into existence between the parties.
The appellants have displayed ingenuity
in
their
search
for
invalidating
circumstances but a writ petition is not an
appropriate
remedy
for
impeaching
contractual obligations.

This apart, it also appears that in a
later decision, the Assam High Court
itself took an exactly opposite view in
almost
identical
circumstances.
In
Woodcrafts Assam v. Chief Conservator
of Forests14 a writ petition was filed
challenging the revision of rates of
royalty
for
two
different
periods.
Rejecting
this
petition
as
not
1094 INDIAN LAW REPORTS ALLAHABAD SERIES
maintainable, a Division Bench of the
High Court held that the complaint of the
petitioner is that there is violation of his
rights under the contract and that such
violation of contractual obligation cannot
be remedied by a writ petition. That
exactly is the position in the case before
us. Therefore, the High Court was in
error in entertaining the writ petition and
it should have been dismissed at the
threshold."

32. In M/s Dwarkadas Marfatia
and Sons v. Board of Trustees of the
Port of Bombay15 the Supreme Court
has held that the superior courts while
exercising
their
jurisdiction
in
the
administrative decisions are concerned
with decision making process. The writ
Courts should not interfere unless the
decision is totally arbitrary, malafide and
perverse.

33. Recently, the Supreme Court in
JSW
Infrastructure
Limited
and
another v. Kakinada Seaports Limited
and others, in a slightly different context,
has reiterated the principles laid down in
Tata Cellular v. Union of India17.
Paragraph-8 of the judgment reads as
under:

"8. We may also add that the law is
well settled that superior courts while
exercising their power of judicial review
must act with restraint while dealing with
contractual matters. A three-Judge Bench
of this Court in Tata Cellular v. Union of
India18 held that:

(i) there should be judicial restraint
in review of administrative action;

(ii) the court should not act like court
of appeal; it cannot review the decision
but can only review the decision-making
process;

(iii) the court does not usually have
the necessary expertise to correct such
technical decisions;

(iv) the employer must have play in
the joints i.e. necessary freedom to take
administrative decisions within certain
boundaries."

34. The principles underlying in
these decisions are that if a public element
is involved then even in the case of
concluded contract, the High Court under
Article 226 of the Constitution can
entertain a writ petition if it is established
that
the
Government
or
its
instrumentality, which is a State within
the meaning of Article 12 of the
Constitution,
has
acted
unfairly,
unreasonably or arbitrarily. The Court can
also in its jurisdiction under the judicial
review examine whether the transparency
was maintained by the authorities while
disposing the public largess. If the Court
finds that the action of the authorities was
unreasonable and unfair then the Court
can strike down such decision under
Article 14 of the Constitution in spite of
the fact that the action between the parties
was in the realm of the contract.

35. Learned counsel for the
petitioner has vehemently urged that
cancellation of plot of the petitioner has
been
made
without
furnishing
any
opportunity to the petitioner, hence on
this ground alone the decision of
respondent no. 4 is arbitrary and illegal.

36. It is a trite law that principles of
natural justice cannot be put in a
straitjacket formula. In the recent time,
the principles of natural justice have
undergone a sea-change. The Court has
now shifted from its earlier concept that
non-observance of the principles of
1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1095
natural justice itself causes prejudice,
hence the order becomes arbitrary. The
recent shift in the judgments of the
Supreme Court in the case of State Bank
of
Patiala
and
others
v.
S.K.
Sharma19and
Aligarh
Muslim
University and others v. Mansoor Ali
Khan20 lays down "useless formality
theory". In such cases the Supreme Court
has held that the Court will not insist for
compliance of the principles of natural
justice.

37. In A.M. Allison and another v.
B.L. Sen and others21 the Supreme
Court has ruled that "while exercising the
jurisdiction under Article 226 of the
Constitution, the High Court has the
power to refuse the writs if it was satisfied
that there has been no violation of
justice". The said judgment has been
quoted with approval by the Supreme
Court in the case of Ravi S. Naik v. Union
of India and others22.

38.

In
Kumari
Shrilekha
Vidyarthi and others v. State of U.P.
and others23 the Supreme Court has held
as under:

"48. ... Non-arbitrariness, being a
necessary concomitant of the rule of law,
it is imperative that all actions of every
public functionary, in whatever sphere,
must be guided by reason and not
humour, whim, caprice or personal
predilections of the persons entrusted
with the task on behalf of the State and
exercise of all power must be for public
good instead of being an abuse of the
power."

39. In Mohinder Singh Gill and
another
v.
The
Chief
Election
Commissioner, New Delhi and others24
the Supreme Court, speaking through
Hon'ble Mr. Justice Krishna Iyer, has
observed as under:

"For fairness itself is a flexible:
pragmatic and relative concept, not a
rigid,
ritualistic
or
sophisticated
abstraction. It is not a bull in a china
shop nor a bee in one's bonnet. Its essence
is a good conscience in a given situation:
nothing more- but nothing less."

40.

Applying
the
principle
propounded
in
the
above-mentioned
cases, in the present case we find that two
enquiries were made by the senior officers
and in both the separate enquiries serious
irregularities were found. We do not find
that there was any arbitrary action on the
part of the development authority in
cancelling the allotment, giving the
opportunity, in the facts of the present
case, would be a formality.

41. Learned counsel for the
petitioner has placed reliance on the
judgment of the Supreme Court in Sunil
Pannalal Banthia (supra). We find that
the said case is distinguishable on the
ground that in the said case the Court has
found that a discrimination has been done
and the irregularity, which was found in
the enquiry, on the basis of which the
cancellation of the allotment was made,
was not found to be applicable in the case
of the petitioners therein. In that context,
the Supreme Court held that in such a
case the allotment could not have been
cancelled
merely
because
certain
recommendations have been made by a
Committee. In the said case, the allottee
had commenced the construction work
and proceeded upto the first floor and it
also
completed
construction
of
underground water tank. In the present
case, the possession has not been handed
1096 INDIAN LAW REPORTS ALLAHABAD SERIES
over to the petitioner nor any lease deed
has been executed. The said case has no
application in the facts of the present case.

42. In Popcorn Entertainment
(supra) the allotment order for a
commercial plot was issued by the City
Industrial Development Corporation (for
short, the 'CIDCO'). Earlier the CIDCO
had issued an advertisement for the plots
but no response was received by it.
Thereafter on the application of the
appellant therein, Popcorn Entertainment,
an allotment letter was issued asking to
pay the price of the plot which was
deposited by it. Later the allotment order
was cancelled. When the appellant therein
challenged the cancellation order, its writ
petition was dismissed by the High Court
on the ground of alternative remedy. The
Supreme Court set aside the order of the
High Court and remitted the matter back
to the High Court to decide the matter on
merit. This case also is not of much help
in the present case.

43. We have carefully perused the
judgment of Commissioner of Income
Tax, Madras (supra) and found that this
case has no application in the facts of the
present case. In D.C. Aggarwal (supra)
the case was in respect of observance of
the natural justice in the disciplinary
proceeding. We have already referred the
law on the violation of the natural justice
in the earlier part of the judgment. In our
view, this case also does not help the
petitioner.

44. As regards the maintainability of
the writ petition, it is a trite law that if the
action of the State is found to be arbitrary
and
illegal,
the
writ
petition
is
maintainable and in the judicial review
the Court can examine the facts whether
there was any arbitrary or unreasonable
stand of the respondents. It is a well
settled law that the parameters of the
judicial review are very limited and when
the Court finds that the action is malafide
or unreasonable, only in that situation the
Court interferes in the matter. In the
present case, no element of malafide has
been made against the GIDA. We have
carefully perused the enquiry report dated
28th December, 2015 submitted by the
Chief Development Officer, Gorakhpur
and
the
Additional
Commissioner
(Administration), Gorakhpur. They have
found
serious
irregularities
in
the
allotment of the plot. The relevant part of
the enquiry report is extracted below:

"... tSlk fd Åij mYys[k fd;k tk pqdk gS fd
xhMk }kjk 26 Hkw[kaMksa ds vkoaVu gsrq uksfVl@Vs.Mj
foKkiu v[kckj esa izdkf'kr djk;k x;k Fkk vkSj mlds
foijhr 83 Hkw[kaMksa dk vkoaVu fd;k x;kA 26 Hkw[kaMksa ds
djk, x, vkoaVu ds fo:) 242 vkosnu i= vk,A
fuf'pr :i ls vkosnudrkZvkas us vkosnu djrs le; 26
Hkw[kaMksa ij gh /;ku dsafnzr fd;k gksxk vkSj mlh ds
vuqlkj vius&vius vkosnu i= xhMk dks izsf"kr fd, x,
gksaxsA mudks ;g irk ugha jgk gksxk fd 26 Hkw[kaMksa dk
izdk'ku djk;k tk jgk gS vkSj vkoaVu 83 Hkw[kaMksa dks dj
fn;k tk,xkA fuf'pr :i ls ;fn 83 Hkw[kaMksa dk foKkiu
djk;k x;k gksrk rks vkosnudrkZvksa dh la[;k vf/kd gksrh
vkSj ,sls vkosnudrkZ tks 26 Hkw[kaMksa ds fo:) vkosnu ds
bPNqd ugha Fks] os 83 Hkw[kaMksa ds fo:) viuk vkosnu
fuf'pr :i xhMk dks Hkstrs vkSj ;g la[;k 242 ds
foijhr fuf'pr :i ls vf/kd gksrh vkSj bl izdkj xhMk
}kjk Hkw[kaM vkoaVu dh dk;Zokgh vf/kd ikjn'khZ gksrh vkSj
vf/kd ls vf/kd la[;k esa bPNqd vkosnudrkZ blesa Hkkx
ysrs] ijarq xhMk }kjk ,slk ugha fd;k x;kA xhMk dh bl
dk;Zokgh esa ikjnf'kZrk ifjyf{kr ugha gksrh gS vkSj dh xbZ
dk;Zokgh nwf"kr gSA ,slk yxrk gS xhMk us tkucw>dj
,slk fd;k gS vkSj yksxksa dks Hkze o va/ksjs esa j[kk] ftlls
bPNqd vkosnudrkZ vkosnu djus ls oafpr jg x,A
mijksDrkuqlkj mDr f'kdk;r xaHkhj izd`fr dh gS vkSj
xhMk ds vf/kdkfj;ksa }kjk dh xbZ dk;Zokgh fu;ekuqlkj
ugha gSA bl izdkj f'kdk;r fcanq la[;k&1 lgh gSA"

45. In addition to above, the
Lokayukta, U.P. has also issued a
1 All. Ahsan Karim Khan Vs. State of U.P.& Ors.
1097
direction to the State Government to
enquire into the allegations of irregularity
and corruption. Pursuant to the said
communication of the Lokayukta the
State Government had appointed the
Commissioner,
Consolidation,
U.P.,
Lucknow to look into the matter. The
Commissioner,
Consolidation,
has
submitted a report dated 26th September,
2016 before the authority in respect of the
same illegalities.