LexDELHI DEVELOPMENT AUTHORITY versus KENNETH BUILDERS & DEVELOPERS LTD. & ORS.
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A B c D E F G H [2016] 3 S.C.R. 1126 DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & DEVELOPERS LTD. & ORS. (Civil Appeal No .. 53 70of2016) JUNE 29, 2016 ( MADAN B. LOKUR AND N.V. RAMANA, JJ. ) Contract Act, 1872 - s. 56 - Contract impossible of performance ~Auction of 'residential' land by DDA on 'as is where is' basis - For construction of houses - Bid of the respondent-builder accepted - Project land allotted and possession thereofgiven to builder - Development agreement between DDA and the builder - As per agreement various approvals and clearances from the appropriate authorities including environmental age11cies was o responsibility of the builder - The development work on project land objected to by Department of Forests of Government of National Capital Territory (GNCTD) on the ground that the land fell in the Ridge and hence construction without consent of Ridge Management Board and permission of the Supreme Court not allowed - Ministry of Environment and Forest, Government of India gave environment clearance subject to condition that Delhi Pollution Control Committee (DPCC) gave "consent to establish" - However, DPCC refused to give "consent to establish" in absence of "ridge demarcation report" - Builder also could not obtain "ridge demarcation report" - Builders writ petition under Art. 226 of Constitution for setting aside of auction, for declaration that project was incapable of performance and sought refund of the amount paid to DDA - High Court held that if DPCC did not permit construction activity, the builder was entitled to refund of the entire amount deposited witli'DDA - Even after the judgment of High Court, DPCC refused to grant "consent to establish" - Appeal by DDA and also by GNCTD and DPCC - Held: Despite the fact that builder took all the necessary steps to commence the construction activity, it co_uld not proceed the development activity due to the impasse created_ by the Government agencies - Thus the development agreement between DDA and the builder was frustraied having become impossible of performance within meani111g of s.56, due to 1126 DELHI DEVELOPMENT AUTHORITY v. KENNETH BUILDERS & DEVELOPERS LTD. & ORS. the intervening circumstances not contemplated by either party - DDA directed to refimd the deposit made by the builder with interest @6%. Dismissing the appeal filed by DDA, the Court HELD: 1. The objection to the maintainability of the writ petition, having not been raised by the DDA before the High Court or even in the petition filed in this Court, cannot be entertained. The submission has been advanced by the DDA for the first_ time during the final hearing of these appeals. It is too late in the day to raise such an objection. [Para 27) [1146-D] 2.1 The respondent-builder did take all necessary steps to commence the construction activity on the project land but due to the impasse created by the governmental agencies, it could not proceed in the development activity. Under these circumstances, the provisions of Section 56 of the Contract Act, 1872 would be attracted to the facts of the case. [Para 32) [1147- F-G) 2.2 The word "impossible" used in Section 56 of the Contract Act has not been used in the sense of physical or literal impossibility. It ought to be interpreted as impracticable and useless from the poiµt of view of the object and purpose that the parties had in view when they entered -into the contract. This impracticability or uselessness could arise due to some intervening or supervening circumstance which the parties had not contemplated. However, if the intervening circumstance was contemplated by the parties, then the contract would stand despite the occurrence of such circumstance. In the present case, the DDA certainly did not contemplate a prohibition on construction activity on the project land which would fall within the Ridge or had morphological similarity to the Ridge. It is this circumstance that frustrated the performance of the contract in the. sense of making it impracticable of performance. [Paras 33 and 34) [1148= D-E; 1150-A-B) Satyabrata Ghose v. Mugneeram Bangur & Co. (1954) SCR 310 - relied on. 2.3 It is true that the Government of India had notified the project land as "Residential" and that the project land was shown 1127 A 8 c D E F G as "Residential" in the MPD-2001 and MPD-2021. But that fact alone would not change the position at law. The exact
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