M/S. PURAVANKARA PROJECTS LTD. versus M/S. HOTEL VENUS INTERNATIONAL AND ORS.

Citation: [2007] 2 S.C.R. 215 · Decided: 02-02-2007 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Appeal(s) allowed

Judgment (excerpt)

) 
MIS. PURA VANKARA PROJECTS LTD. 
A 
v. 
MIS. HOTEL VENUS INTERNATIONAL AND ORS. 
FEBRUARY 2, 2007 
[DR. ARIJIT PASA YAT AND S.H. KAPADIA, JJ.] 
B 
Kera/a Land Reforms Act, 1963--Sections 81(3)(b) and 87-Transfer 
of land by Government with authority to sell it in public auction-Transferee 
selling it to successful bidder in tender-Jn pre-bid meeting, transferee assuring C 
that exemption notification from government under Section 81 (3) (b) would 
be obtained in a few days-However, successful bidder insisting on it as pre 
condition to furnishing of bank guarantee as per tender terms-Second 
highest bidder knowing that bank guarantee had not been furnished, matched 
the highest offer and entire payment in lump sum-On failure of successful 
bidder to furnish bank guarantee, transferee cancelling their letters of D 
confirmation issued earlier-High Court holding that (lj contract was un-
enforceable in view of Section 87 of Act of I 963 (iij as disregard of statutory 
requirements could render contract illegal opposed to public policy under 
Section 23, Indian Contract Act, 1872, exemption notification should have 
come before invitation of tender (iii} exemption notification was part of E 
implied terms (iv) successful bidder was entitled to farther time to furnish 
bank guarantee after grant of exemption-Correctness of-Held-High Court 
mis-construed scope of Section 87-Reason that bank guarantee was not 
given was of no consequence-Facts showed that successful bidder was itself 
conscious that exemption notification was not necessary before famishing of 
bank guarantee-Government itself had permitted seller to sell property F 
initially and Section 23 of Contract Act was not applicable-It was not 
permissible for High Court to modify contract by implying term absent in 
tender and post paining time by which bank guarantee was to be furnished-
Second highest bidder directed to make payments as per their offer. 
Administrative and contractual law-Distinction between-Principles G 
of natural justice ensuring fair decision in quasi-judicial fanction and doctrine 
of fairness ensuring fair action in administrative function-They cannot be 
invoked to amend, alter or vary expressed terms of contract between parties. 
215 
H 
216 
SUPREME COURT REPORTS 
[2007] 2 S.C.R. 
A 
GIDA, a non statutory State Government Undertaking, had some land 
transferred to it by State Government and was authorized to sell in public 
auction. It invited tenders for that purpose. Respondent no. I was the 
successful bidder therein and appellant was the second highest bidder. In the 
pre-bid meeting one of the queries raised by participants was regarding when 
B exemption notification under Section 81(3)(b) of the Kerala Land Reforms 
Act, 1963 would be obtained from the Government In response, Secretary, 
GIDA replied that it had moved for same and it will be obtained in a few days. 
However, after acceptance of its bid, respondent no. I insisted on exemption 
being obtained by GIDA as a pre condition to fulfil the tender terms and 
conditions, more particularly relating to furnishing of bank guarantee. 
C Appellant knowing that respondent no. I had not furnished the said bank 
guarantee, matched the highest offer and agreed to pay the entire amount in 
a .lump sum. When GIDA did not respond to their offer, appellant moved the 
High Court for direction for consideration of its tender and sought cancellation 
of tender of respondent no. I, as well as consequential relief that the time for 
them to furnish bank guarantee should not be extended. In the meantime, as 
D respondent no. I failed to furnish the bank guarantee, GIDA cancelled letters 
of confirmation issued to them earlier. Respondent no.I challenged this before 
High Court contending that time for compliance should be computed only from 
date of exemption. However, GIDA accepted the aforesaid offer of appellant, 
subject to the decision of the High Court in the pending writ petitions. 
E 
High Court allowed the writ petition of respondent no. I and dismissed 
those filed by the appellants. It held that (i) the contract was Un-enforceable 
in view of Section 87 of Act of I963 (ii) both the Government as well as GIDA 
were aware that without the exemptions notification, entire contract would be 
rendered void, unworkable and stand frustrated (iii) disregard of statutory 
F requirements could have rendered the contract illegal as opposed to public 
policy in view of Section 23 of Indian 

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