INFRASTRUCTURE PRIVATE LIMITED versus THE STATE OF ORISSA & ORS.

Citation: [2021] 6 S.C.R. 1040 · Decided: 04-10-2021 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Disposed off

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 6 S.C.R.
PAULMECH INFRASTRUCTURE PRIVATE LIMITED
v.
THE STATE OF ORISSA & ORS.
(Civil Appeal No. 6023 of 2021)
OCTOBER 04, 2021
[M. R. SHAH AND A. S. BOPANNA, JJ.]
Lease: Lease agreement – Execution of – On facts, lease
agreement to be entered into between UAHCL and appellant
pursuant to the compliance of the Letter of Intent (LOI) – In terms
of the LOI, the appellant was to pay Rs 9.34 crore within the
stipulated period, however, the appellant failed to do so – Also full
payment not made within the extended period and also subsequent
to the extended period – Decision by UAHCL to terminate the LOI –
Writ petition by the appellant seeking quashing of the said letter to
terminate LOI – High Court held that the disputed questions of fact
involved could not be gone into in the writ jurisdiction and relegated
the parties to an appropriate forum – On appeal, held: Appellant
having failed to adhere to the terms indicated in the LOI and the
payment required thereunder not being made even within the
extended period, the decision of UAHCL to terminate the LOI is
justified – Thus, termination of LOI is upheld – Directions sought
to execute the lease agreement does not arise – As regards the refund
of the amount paid, the word employed is not “forfeiture”, thus, the
amount payable towards the advance lease rentals and the other
advance payments provided in the LOI, cannot be forfeited if there
is default in complying with the term – Amount of Rs.4.41 crores
paid within the stipulated period, cannot be forfeited – It is an
amount which would be available for accounting – More so, due to
the conduct of the appellant, UAHCL was unable to utilise the
property but on the other hand had to incur expenses and suffered
actual loss – In the interest of justice, UAHCL permitted to retain
the amount paid within the time frame – Liberty granted to the
appellant to file suit seeking recovery ofthe said amount – Amount
paid after the extended date cannot be retained by UAHCL since it
would amount to unjust enrichment – Issuance of direction to
UAHCL to refund the said amount deposited by the appellant.
[2021] 6 S.C.R. 1040
1040
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Disposing of the appeal, the Court
HELD: 1.1 Admittedly the appellant was not ready with the
amount to make the payment within the timeframe contemplated
under Clause 2 of LOI. The appellant, through their letter dated
04.02.2010 requested UAHCL that they be allowed to pay 50%
of the bid money by 19.02.2010 which would include all the
components indicated in Clause 2 of LOI and not just the upfront
component. The rest of the money was undertaken to be paid by
15.04.2010. UAHCL through their reply dated 12.02.2010 allowed
the same as a special case. The appellant once again through
their letter dated 17.11.2010 requested for extension of time for
payment of Rs.4.93 crore. UAHCL again extended the time till
15.12.2010. Despite indulgence shown by UAHCL the appellant
did not make the balance payment before 15.12.2010. Instead,
the sum of Rs.4.11 crore was paid subsequent thereto. [Para 12,
13][1050-C-E]
1.2 The submission of the appellant that UAHCL having
received the said payment cannot at this stage contend that the
payment was not made within the time stipulated, cannot be
accepted. UAHCL is a corporation which has different
departments and as such the remittance made being accepted in
itself cannot be taken as an act to condone the delay caused by
the appellant in complying with the terms of the LOI so as to
alter the terms of contract. There is no material on record that
subsequent to 15.12.2010, there is any positive act on behalf of
UAHCL to either extend the time for payment or for having
expressly condoned the delay and having accepted the payment
so as to regularise the transaction. This is relevant more so in
the context that at an earlier point as against the time stipulated
for payment under the LOI specific correspondence was
exchanged between the parties and the time had been expressly
extended prior to the time fixed earlier having expired. In such
situation, when admittedly the balance payment had not been made
prior to 15.12.2010, unless the appellant had obtained express
extension from UAHCL mere tendering the payment and the
same having been accepted cannot be construed as a positive
act to alter the contract. [Para 14][1050-F-H; 1051-A-B]
PAULMECH INFRASTRUCTURE PVT. LTD. v. THE STATE OF
ORISSA
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SUPREME COURT R

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