2007 (3) TMI 830 - SC - Indian Laws

Summary

Issues Involved:
1. Legality of CIDCO's unilateral cancellation of the allotment.
2. Applicability of Section 23 of the Contract Act, 1872.
3. Availability and adequacy of alternative remedies.
4. Estoppel against CIDCO for resiling from its assurances.

Summary:

1. Legality of CIDCO's Unilateral Cancellation of the Allotment:
The Supreme Court examined whether CIDCO acted within its jurisdiction in cancelling the allotment made to the appellants on the grounds that it was in contravention of its rules and regulations. The Court found that CIDCO had issued a letter of allotment, accepted transfer charges, executed a Deed of Lease, and issued necessary permissions. The appellants had commenced construction based on these assurances. The Court held that CIDCO could not unilaterally cancel the allotment after the appellants had altered their position to their prejudice, citing Regulation 4 of the New Bombay Disposal of Land Regulations, 1975, which allowed CIDCO to dispose of plots based on individual applications.

2. Applicability of Section 23 of the Contract Act, 1872:
CIDCO argued that the allotment was void u/s 23 of the Contract Act as it was opposed to public policy. The Supreme Court rejected this argument, stating that the allotment was made in accordance with the Regulations and that CIDCO's unilateral decision to cancel the allotment was itself opposed to public policy. The Court emphasized that public bodies are bound to carry out representations and promises made by them, relying on which other persons have altered their position to their prejudice.

3. Availability and Adequacy of Alternative Remedies:
The Bombay High Court had dismissed the writ petition on the ground of an alternative remedy being available. The Supreme Court, however, decided to address the merits of the case, noting that the facts of this appeal were different from those remitted to the High Court for reconsideration. The Court held that the availability of an alternate remedy did not bar the filing of a writ petition, especially when the writ petition had been admitted and pleadings completed.

4. Estoppel Against CIDCO for Resiling from its Assurances:
The Supreme Court referred to the principle of estoppel, citing cases like *Century Spinning and Manufacturing Co. Ltd. v. The Ulhasnagar Municipal Council* and *U.P. Rajkiya Nirman Nigam Ltd. v. Indure Private Limited*. The Court held that CIDCO was estopped from resiling from its earlier assurances after the appellants had acted upon them and invested substantial amounts in the development of the allotted plot.

Conclusion:
The Supreme Court allowed the appeal, set aside the order of the High Court, and quashed CIDCO's order dated 29th March 2006 and the Show Cause Notice dated 19th July 2005. The Court ruled that CIDCO could not unilaterally cancel the allotment after the appellants had altered their position based on CIDCO's assurances. There was no order as to costs.