Land lease deed without consideration set aside by Supreme Court in Gwalior Development Authority case

On 19 April 2023, Supreme Court, in case titled GWALIOR DEVELOPMENT AUTHORITY  AND ANOTHER VS BHANU PRATAP SINGH, set aside the High Court's decision directing the Gwalior Development Authority to execute a lease deed for the remaining land without consideration. The court observed that the Authority's decision to extend undue indulgence to the bidder violates Article 14 of the Constitution. However, the respondent is given one opportunity to acquire the remaining land on priority based on the prevalent circle rate notified by the Government.

The court held that the direction was beyond jurisdiction and contrary to settled principles of law. The bench comprised Justice Rastogi and Justice Nariman, who heard the arguments and concluded the case on 13th April 2023.

A tender floated by the Gwalior Development Authority on 13th March, 1997, inviting bids for the grant of leases of different plots under the transport city scheme. Bhanu Pratap Singh was one of the bidders for the MC-2 plot area of 27887.50 sq. meters. Singh's offer of Rs.725 per sq. meter was the highest bid, and he was issued a letter of allotment on 29th September 1997. The letter stipulated that Singh had to deposit a sum of Rs.1,91,67,966/- by 31st October 1999, in addition to the earnest money of Rs.15 lakhs, in four instalments. However, Singh deposited the instalments in a piecemeal fashion, and the final instalment was deposited on 25th August 2005.

Despite the failure of Singh to deposit the instalments as per the bid document, no action was taken by the appellants either for the cancellation of the bid or for forfeiture of the amount deposited by the respondent. Finally, the lease deed was executed for 18262.89 sq. meters on 29th March 2006, and the transaction was concluded. After more than three and a half years, Singh filed a writ petition under Article 226 of the Constitution, seeking a mandamus against the appellants to execute the lease deed for the remaining area of 9625.50 sq. meters.

The Division Bench of the High Court of Madhya Pradesh passed a judgment on 21st April 2011, directing the Gwalior Development Authority to execute the lease deed in favour of Singh for the remaining area without any consideration, with liability on the respondent to make payment of interest. The Authority filed an appeal against the judgment in the Supreme Court.

The Supreme Court held that the transaction was concluded on execution of the lease deed for 18262.89 sq. meters on 29th March 2006, and after the instrument was registered under the law, it was not open to either party to question it in the writ jurisdiction of the High Court under Article 226 of the Constitution. The court observed that the mandate of natural justice had no role to play in the given facts and circumstances of the case.

The court held that the direction to execute the lease deed for the remainder of the area without any consideration was completely contrary to settled principles of law and deserved to be set aside. The bench observed that the litigation had been pending for a sufficiently long time, and keeping in view the escalation in the value of the property, one opportunity should be made available to Singh for the remainder of the area on priority basis on the prevalent circle rate notified by the Government.

GWALIOR DEVELOPMENT AUTHORITY  AND ANOTHER VS BHANU PRATAP SINGH