SUPREME COURT HOLDS THAT PARTIES ARE NOT ENTITLED TO CHALLENGE A REGISTERED INSTRUMENT EXECUTED WITH MUTUAL CONSENT OF PARTIES IN A WRIT PETITION

A Two Bench of the Supreme Court comprising of Justice Ajay Rastogi and Justice Bela M Trivedi passed a Judgment dated 19.04.2023 in a recent case of Gwalior Development Authority and another vs Bhanu Pratap Singh Civil Appeal No. 8549 of 2014 and observed that when an instrument is registered and a transaction is concluded with the consent of both parties, the parties cannot raise any question regarding validity of such contract in a writ petition.

Facts 

1) In the present case, one Gwalior Development Authority, the Appellant herein, had issued an advertisement, thereby inviting bids for grant of leases for different plots under the Transport City Scheme.

2) One, Bhanu Pratap Singh, the Respondent herein became the highest bidder for MC-2 Market Complex admeasuring a plot area of 27887.50 sq. Meters @ Rs.725/- per sq. meter.

3) Thereafter, the Appellant-Authority issued an Allotment Letter dated 29.09.1997 in favor of the Respondent-Lessee for a plot area of 27887.50 for a total consideration of Rs. 2,06,67,966/- payable by the Respondent Lessee in four installments on or before 31.10.1999, with the condition that if the Respondent- Lessee failed to deposit the bid amount, the security deposit of Rs. 15 Lakhs would be forfeited.

4) However, the Respondent-Lessee delayed in depositing the amount, as the Respondent-Lessee was required to pay the full amount in 4 installments, but he deposited Rs. 2,02,18,437/- in 13 installments, and the last installment was paid on 25.08.2005, as opposed to the deadline fixed by the Appellant-Authority of 31.10.1999.

5) Thereafter, the Appellants and the Respondent executed a Lease Deed dated 29.03.2006, , whereby, the Parties with mutual consent modified the terms of lease and agreed that (i) the lease would be granted in respect of a reduced plot area admeasuring 18262.89 sq. meters instead of the earlier agreed area of 27887.50 sq. meters, (ii) the principal amount of Rs. 1,32,39,356/- would be adjusted and the remaining amount of Rs. 69,97,087/- would be adjusted towards interest for delayed payment by the Respondent-Lessee.

6) After 3 and half years of execution of Lease Deed, the Respondent-Lessee filed a Writ Petition No. 2792 of 2009 before the Madhya Pradesh High Court at Gwalior Bench, seeking directions against the Appellants to execute the Lease Deed for the remaining plot area of 9625.50 sq. meters in accordance with the earlier agreed offer of grant of lease in respect of a total plot area of 27887.50 sq. meters.

7) The High Court of Madhya Pradesh at Gwalior Bench passed an Order dated 21.04.2011 in WP No. 2792 of 2009 directing the Appellant-Authority to execute the Lease Deed in favor of the Respondent-Lessee for the remaining area and to not charge any interest for the delayed period of 17.08.2001 to 29.03.2006.

Supreme Court Observations

Aggrieved by the High Court Order dated 21.04.2011, the Appellant filed Civil Appeal No. 8459 of 2014 before the Hon’ble Supreme Court. The Apex Court passed a Judgment dated 19.04.2023 and made the following observations:

(i) That the Respondent-Lessee failed to deposit the installments within the deadline and as per the terms and conditions of the Bid / Tender Document, as the whole amount was paid in 13 installments and the last one being paid on 25.08.2005, as opposed to payment of whole amount in 4 installments on or before 31.10.1999.

(ii) That as per the Bid / Tender Document, if the Respondent-Lessee failed to comply with the said terms, the auction was supposed to be canceled and the earnest money ought to be forfeited.

(iii) That the modification of the terms of lease, vide Registered Lease Deed, was done with the mutual consent of both the Parties, including the reduction of plot area from 27887.50 sq. meters to 18262.89 sq. meters, etc and charging of interest for delayed period.

(iv) Thus, the Bench observed that as the Lease Deed was duly registered under Section 17 of the Registration Act, 1908 (Documents of which registration is compulsory) and the terms of Lease were modified with mutual consent of both Parties, thus, it was nowhere open to be altered or amended even by the High Court in exercise of its jurisdiction under Article 226 of the Constitution.

(v) However, as it has been a long pending litigation and the value of the property has escalated over a period of time, the Bench directed the Appellant-Authority to consider allowing one more opportunity to the Respondent-Lessee to purchase the remainder of the area on priority basis on the prevalent circle rate notified by the Government.

Conclusion

Thus, based on the aforesaid observations, the Supreme Court held that the Appellant-Authority may consider the request on priority basis and if the Respondent-Lessee does not show any inclination in purchasing the remainder area, then the Appellant is at liberty to put the subject land for disposal. As a result, the High Court Order dated 21.04.2011 was set aside and the Appeal filed by the Appellant-Authority was allowed.

Suneel Jaiswal

Advocate

The Indian Lawyer