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2007 (2) TMI 582 - SC - Indian LawsValidity of the order of cancellation - Entitlement to further time to furnish the bank guarantee after the order granting exemption in terms of Section 81(3)(b) of the Kerala Land Reforms Act 1963 ( Act ) - Interpretation of tender terms and conditions - appellants not come to Court with clean hands - difference between administrative law and contractual law - principles relating to implied terms . HELD THAT - It is clear that the Division Bench of the High Court was of the view that duty is cast on the Government as well as GIDA to inform the prospective bidders as to whether they propose to place any restriction or condition in granting exemption under Section 81(3)(b). The High Court also noted that both the Government and the GIDA were aware of the necessity of issuing a statutory notification in the gazette under Section 81(3)(b) of the Act failing which the entire contract would be rendered void and unworkable. Once the Government refuses exemption the entire contract would be frustrated as also the restrictions or conditions the Government may impose in a given case may not be acceptable to the parties. Disregard of statutory requirements may render the contract illegal and when the contract is entered into in violation of these statutory requirements it would be opposed to public policy and may violate Section 23 of the Indian Contract Act 1872 ( Contract Act ). Therefore it was held that notification under Section 81(3)(b) should have come before inviting the global tender so that the bidders were in a position to know the restrictions and conditions which Government would impose while granting exemption. That being so learned Single Judge s view is affirmed by the Division Bench of the High Court. Clauses 10 and 15 in the tender document which have been extracted above are of considerable significance. Clause 10 provides the mode of payment. Clause 13 provides that in case of non-payment of 1st installment the bank guarantee can be invoked. Clause 15 provides that the sale deed is to be registered on payment of the full value of the land. The High Court misconstrued the scope of Section 87 of the Act. The reason that the bank guarantee was not given is of no consequence. In fact as rightly submitted by learned counsel for the appellant Venus itself being conscious that the exemption notification was not necessary before furnishing of bank guarantee requested for immediate registration of the sale deed. The only reason indicated was that if it is done before a particular date considerable amount of stamp duty would be saved. At that stage GIDA was never even intimated by Venus that it had no money or that it was awaiting for bank finances or that there was any necessity to obtain exemption notification. It appears even the stands regarding the availability of finances are different at different points of time. The High Court also has held that the exemption notification can be treated as part of implied terms. It is to be noted that the Government itself permitted GIDA to sell the property initially. Section 23 of the Contract Act has really no application to the facts of the case. Section 87 as noted above deals with acquisition after the date of notification and permits filing of the statement subsequently in terms of Sub-section (1A) of Section 87. Illegality is attached to a case where a person continues to hold the land and there is a requirement of surrender after acquisition. It is to be noted that there was no privity of contract between Government and the bidders. The tender conditions inter alia contained provisions relating to signing of contract and payment of money. There can be no implied terms so far as the Government is concerned. Terms can be claimed to be implied by the parties to the contract. Thus it was open to the contracting parties to say that subject to obtaining exemption notification the contract would be given effect to. It is not so in the present case. An implied warranty or as it has been called a covenant in law as distinguished from an express contract or express warranty is really founded on the presumed intention of the parties and upon reason. The implication which the law draws from what must obviously have been the intention of the parties it draws with the object of giving efficacy to the transaction and preventing such failure of consideration as cannot have been within the contemplation of either side. In view of what we have stated above it is not necessary to deal with the grievance raised by the State Government in its belated Special Leave Petition.
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