PETITIONER- Her Highness Maharani Shanti Devi Vs. RESPONDENTS- Savjibhai Haribhai Patel & Ors.

AIR 2001 SC 1462 Submitted by Ananya Pratap Singh Division-C Roll No.- 36 Class- 2011-2016 of Symbiosis Law School, NOIDA Symbiosis International University, PUNE In February, 2012 Under the guidance of Dr. Md. Salim (Associate Professor) & Dr. Madhuker S. (Assistant Professor) Symbiosis Law School, Noida

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CERTIFICATE

The project entitled Her Highness Maharani Shanti Devi Vs. Savjibhai Haribhai Patel & Ors. AIR 2001 SC 1462 submitted to the Symbiosis Law School, NOIDA for Law of Contract as part of Internal assessment is based on my original work carried out under the guidance of Dr. Md. Salim & Dr.MadhukerS. from December to February. The research work has not been submitted elsewhere for award of any degree. The material borrowed from other sources and incorporated in the thesis has been duly acknowledged. I understand that I myself could be held responsible and accountable for plagiarism, if any, detected later on.

Signature of the candidate Date:

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ACKNOWLEDGEMENT
I take immense pleasure in thanking Dr. Mohd. Salim & Dr. Madhuker S., our beloved Professor for having

permitted me to carry out this project work.

Needless to mention that Dr. Mohd. & Salim Dr. Madhuker S. course in charge Law of Contract , who had been a source of inspiration and for his timely guidance in the conduct of our project work. Finally, yet importantly, I would like to express my heartfelt thanks to my beloved parents for their blessings, my friends/classmates for their help and wishes for the successful completion of this project.

Ananya Pratap Singh

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Index
S.No. Subject
1. a) b) c) d) e) f) g) h) i) j) 2. 3. 4. 5. Statutory Provisions referred to in the case law The Indian Contract Act, section 31 The Indian Contract Act, section 202 Sec 14(1) Of Specific Relief Act,1963 Sec 20 of Specific Relief Act,1963 Urban Land (Ceiling & Regulation) Act,1976 Constitution of India Bombay Town Planning act 1954 Gujarat Town Planning & Urban Development Act, 1976 Urban Land (Ceiling & Regulation) Rules (1977)Rule 11-A Mullas Contract Act Cases Referred Ratio- Decidendi Present Status of Ratio- Decidendi of this case My Opinion

Page no.
6 6 7 7 10 15 15 15 15 15 15 15,16 17 18 19

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Bibliography
1. The Specific relief Act,1963 (47 of 1963),2012,Universal law Publishing Co. Pvt. Ltd.,New Delhi. 2. The Indian Contract Act,1872 [Act No.9 of 1872],2011,Commercial Law Publishers (India) Pvt. Ltd.,Delhi 3. http://urbanindia.nic.in/legislations/sub_legis/ulcra_1976.pdf 4. http://indiankanoon.org/doc/967342/ 5. http://indiankanoon.org/doc/1858757/ 6. http://www.feeleminds.com/indialaws/view.php?id=2035&title=t he-urban-land-ceiling-and-regulation-act7. http://dilipchandra12.hubpages.com/hub/Contingent-Contractand-Types-of-Contingent-Contracts 8. http://hanumant.com/SpecificPerformance.html 9. http://lawnotes.in/Section_99_of_Code_of_Civil_Procedure,_190 8 10. http://indiankanoon.org/doc/593844/ 11. http://en.wikipedia.org/wiki/Urban_Land_Ceiling_Act_(India)

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Statutory Provisions referred to in the caselaw

1. The Indian Contract Act, Section 31 says:
Contingent contract defined: A Contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen. Illustrations: y A contracts to pay B Rs. 1 lakh if Bs house is burnt. This is contingent contract. y A promises to B Rs. 1 crore if a certain ship does not return within a year. y There is a Contract between A and B according to which A has to sell his goods which are in voyage, to B if the ship reaches the harbor safely. It is Contingent Contract. Types of Contingent Contracts 1. Depending Upon Happening of an Uncertain Event: Sometimes Contingent Contract depends upon happening of uncertain event. Then if such uncertain event takes place, the Contingent Contract becomes valid and if that uncertain event does not take place, the Contingent Contract is Void. For example: According to Contract formed between A and B, A has to sell goods to B, if ship comes there safely, their Contract is valid and if the ship gets drowned, their Contract is void. 2. Depending upon non-happening of an uncertain event: At times the Contingent Contract may depend upon non-happening of uncertain event. Then if that event does not happen, the Contract is Valid and if that event takes place, the contract is void. For example: There is a contract between A and B according to which A has to sell goods to B, if the ship does not come back. Here, if the ship come back, the Contract is void and if the ship gets drowned away, then it is valid. 3. Depending upon happening of an Uncertain event in a fixed period: At times Contingent Contract may depend upon happening of uncertain event in a fixed period. If such event happens within fixed period, the contract is Valid. If such event does not take place with in fixed period, the contract is void. For Example: As per the contract formed between A and B, A has to sell goods to B, if the ship comes back within 10 days. If it comes
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on 8th day (or) 9th day, the contract is valid and if it comes back on 12th day (or) 13th day, the contract is void. 4. Depending upon non-happening of an uncertain event in a fixed period: At times the Contingent Contract may depend upon non-happening of uncertain event in a fixed period then if such event place within that fixed period, the contract is void and if that event does not takes place within agreed period, then it is valid. For example: A has to sell goods to B if the ship does not come back within 10 days. If it comes on 8th day (or) 9th day, the contract is void and if it comes back on 12th day (or) 13th Day, the contract is valid. 5. Depending upon an Impossible Event: Sometimes the Contingent Contract may depend upon impossible event. Such a type of Contingent Contract is abinitio void. For example: there is a contract between A and B where A will pay Rs.100000/- to B if B marry C. Assume that C was dead 5 years ago, now element of impossibility can be seen and their contract is Abinitio void.

2. Section 202 of the Indian Contract Act, 1872 says:

Termination of Agency , where agent has an interest in subjectmatter Where the agent has himself an interest in the property which forms the subject- matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. Illustrations: y A gives authority to B to sell As land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death. y A consigns 1,000 bales of cptton to b, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death.

3.

Section 14(1) of Specific Relief Act 1963, says:

the Following contracts cannot be specifically enforced, namely: a) A contract for the non- performance of which compensation is an adequate relief;
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b) A contract which runs into minute or numerous details or which is so dependent on the personal qualifications or volition of the parties ,or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms; c) A contract which is in its nature determinable; d) A contract the performance of which involves the performance of a continuous duty which the court cannot supervise. Illustrations of section 14(1)(a): Illustration 1: a) Contract between A and B, a car showroom, to buy new car at certain price b) B fails to deliver the car on specified date c) Prices of car increase on that date d) B can be ordered to pay the amount by which the price of car has increased e) It would be adequate relief since even if A buys car from any other dealer, he would not have to pay more than the increased price Illustration 2: 1 When a loan has already been advanced on the understanding that a security will be provided against it, this can be specifically enforced. Illustrations of section 14(1)(b): Illustration 1: A is a builder. A had a contract with B w.r.t. sale & purchase of flat build by A. It was mentioned in detail in contract between A & B that who-who will be the masons, carpenters, electricians, plumbers, painters, etc. A further had contracts with masons, carpenters, electricians, plumbers, painters, etc. accordingly. It is a contract which runs into minute detail. Illustration 2: A is an artist. B had a contract with A to make out a painting at certain price. The performance of contract is based on personal qualities/volitions of A. Illustration 3: A is an Indian national, and B is a Chinese. They had contract with respect to import-export of toys from China.
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Mennakshisundara vs Rathnasami 1918

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If tomorrow, the govt. puts up ban on import of toys from China, the nature of contract between A and B changes from valid contract to void contract. Due to this change in nature of contract, the Court can-not enforce specific performance of material term, i.e., import-export. Illustration 4: Specific contract for delivering lecture by a professor cannot be specifically enforced because it depends on his personal skill, qualification and volition. Illustrations of section 14(1)(c): Illustration 1: a) A agrees to hand over the possession of his flat to B. b) It cant be determined from this fact that what is nature of this contract. c) Is it sale & purchase agreement, or a rent agreement? d) Since, nature of this kind of contract cant be determined, the Court cant enforce its specific performance
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Illustration 2: Narendra and Virendra enter into a partnership to do certain business, without specifying the duration of the partnership. This cannot be specifically enforced because if enforced, either Narendra or Virendra might at once dissolve the partnership. Narendra contract to employment is not specifically enforceable. The remedy in such cases is to sue for damages.

Illustrations of section 14(1)(d): Illustration 1: a) There is contract of sale & purchase between A & B b) They agree to refer their dispute, if any arises, to Arbitrator c) Its not an agreement of arbitration under statutory law w.r.t. Arbitration

Indian Oil Corp. vs Amritsar Gas Agency 1991

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d) There is breach on part of A w.r.t. this contract of referring their dispute to Arbitration e) There is breach on part of B w.r.t. other contents of their contract f) Since, A commits breach of clause w.r.t. arbitration, it restricts him to sue B
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Illustration 2: An agreement to keep an airfield in operation, or an agreement by railway to keep signals operating.

4. Section 20 of Specific Relief Act 1963, says:

Discretion as to decreeing Specific Performance: ` (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. ` (2) The following are cases in which the court may properly exercise discretion not to decree specific performance` (a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or ` (b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; ` (c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance. ` Explanation 1.-Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within

Rayner vs Stone 1792

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the meaning of clause (a) or hardship within the meaning of clause (b). ` Explanation 2.-The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract. ` (3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance. ` (4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party. Illustrations of Section 20 of specific relief act, 1963: 1. Section 20(1): 2. Section 20(2)(a): Illustration 1: a. Arun is a contractor who agrees to give his rickshaws to a no. of rickshaw-pullers to run the same and earn b. As per terms of the contract, the rickshaw-pullers would have to incur the expenses of repair c. The rickshaws are in very poor condition d. Its an unfair term of the contract as the poor rickshawpullers would have to bear such expenses e. Its so at the time of entering into the contract Illustration 2: a) Amit is a contractor who agrees to give his rickshaws to a no. of rickshaw-pullers to run the same and earn b) As per terms of the contract, the rickshaw-pullers would have to incur the expenses of repair c) The rickshaws are in good condition d) It would not be unfair if the poor rickshaw-pullers would have to bear such expenses e) Hence, it would not give any unfair advantage to Amit at the time of entering into contract f) When the same contract runs into number of years, when then the rickshaws would be in poor condition, then, terms of the contract may be unfair for the rickshaw11 | P a g e

pullers, but, the relevant provisions herein say that it should be unfair at the time of entering into contract. Illustration 3: a) Amar offers to sell his horse to Balram. b) The horse is of unsound mind, but, Amar did not say any such thing to Balram. c) Balram agrees to buy the horse d) There is no fraud on part of Amar . e) It gives unfair advantage to Amar as he was getting the price of a sound horse. f) It was his conduct of not telling the truth that gives him unfair advantage. Illustration 4: a) Ajit bank offers to give loan to Basu for purchasing a new car @ 9% rate of interest b) The Bank official did not speak about the penalty if the customer repays the loan before the expiry of loan repayment period, though its mentioned in the contract c) Its not a fraud on part of the bank official d) Its unfair for the customer to pay penalty if he wants to repay the loan early e) It was conduct of the bank official of not telling the truth that gives the bank unfair advantage. Illustration 5: a) There is an accident of Amans car with that of Ramans b) The fault was that of Raman c) Raman agrees to get the car of Aman repaired d) Raman further agrees to pay compensation to Aman e) Its unfair on part of Raman to do both the things f) But, Raman had agreed for so because of the circumstances g) Hence, the Court may not give remedy of specific performance in favour of Aman. Illustration 6: a) Mohan offers Sohan to buy his plot of value of Rs.10,00,100 /- at Rs. 1,00,000/- only b) Sohan agrees at the proposal though the consideration for him is very meagre c) There is breach on part of Sohan d) Mohan sues Sohan for remedy of specific performance e) Its apparent on face of the contract that the consideration was inadequate for Sohan
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f) But, the first presumption of the Court would not be that there was unfair advantage just because the consideration was inadequate Illustration 7: a) Karan is a contractor who agrees to hire labourers on very meager salary b) The labourers would have to work for 10 hrs a day c) Its very oppressive for the labourers d) There is breach on part of the labourers e) Karan sues the labourers for remedy of specific performance f) The first presumption of the Court would not be that there was unfair advantage just because the terms of contract were oppressive 3. Section 20(2)(b): Illustration 1: a) Ramesh is a poor man, and has a big family b) He mortgages his house to Suresh against loan c) Suresh is a rich man, and has a no. of properties d) Ramesh fails to repay the loan amount e) As per mortgage contract between Ramesh and Suresh, Suresh can take the possession of the house, and can put the house on sale f) Suresh sues Ramesh with a request to give him remedy of specific performance g) As per terms of the contract, and as per various provisions of S.R.A., especially S.14.3.a.i., the Court can give the remedy of Specific Performance to Suresh. 4. Section 20(2)(c): Illustration 1: a. A is a poor man, and he is in need of money for medical purposes b. B offered him loan, but, at very high rate of interest, A agreed c. Here, it is inequitable for A to pay high rate of interest Illustration 2: a) A puts his house on mortgage to B against loan b) As per terms of the contract, if there is breach on part of A, B can take possession of the property and can put the same on sale c) Five years hence, there is breach on part of A

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d) The financial condition of A has deteriorated in last five years, now, he has lot of responsibilities, he will be homeless if B takes possession of his house e) Here, it would be inequitable if possession of house of A is given to B f) But, this inequity gets created five years later of agreeing upon, not at the time of agreement, hence it fails to satisfy Sec. 20.2.c 5. Section 20(3): Illustration 1: a) A agrees to supply 100 coolers to B by a certain date b) For this purpose, A has hired electricians and labours, he has purchased everything required for making coolers c) A fails to supply coolers by the agreed date d) A requests B to give him a weeks time, but, B rescinds the contract very next date of the agreed date e) A sues B for remedy of specific performance of contract f) Here, the Court may give relief to A provided: g) A is willing to perform his part, and he has done substantial acts h) Here, A had already purchased material to be used for making of coolers, he had already hired electricians and labours for this purpose, it means he had done substantial acts in pursuance of contract i) When A requests B to give him a weeks time, it means A is willing to perform his part j) Hence, the Court may give A remedy of specific performance though the contract had expired on the agreed date 6. Section 20(4): Illustration 1: a) A agrees to give his property on rent to B from the next month b) In between, A puts his property on rent to C c) B sues A for remedy of specific performance d) A takes the defence that since the property is already given on rent, hence contract cant be enforced specifically e) The Court shall not refuse the decree of specific performance to B as the non-performance of contract was at instance of the defendant, i.e. A.

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5. Urban Land (Ceiling & Regulation) Act, 1976:

Section 1,2,3,4,5,6(1),7,8,10A(1),15,21,23,39 & 42.

6. Constitution of India:
Article 39, 249 ,250 & 252.

7. Bombay Town Planning Act, 1954. 8. Gujarat Town Planning & Urban Development Act,1976. 9. Urban Land (Ceiling & Regulation) Rules(1977) Rule 11-A. 10. Mullas contract Act.

Cases Referred:
1. 2. 3. S. Chattanatha Karayalar v. The Central Bank of India & Ors. Moulton, L.J. in Manks v. Whitley. Atia Mohammadi Begum (Smt.) v. State of U.P. & Ors. In Atia Begum's case it was held : "The 'master plan' defined in Section 2(h) and referred in the definition of 'urban land' in Section 2(o), including Explanation (C) therein, is obviously a master plan prepared and in existence at the time of commencement of the Act when by virtue of Section 3 of the Act when by virtue of Section 3 of the Act, right of the holder of the land under the Act get crystallised and extinguish his right to hold any vacant land in excess of the ceiling limit. The proceedings for determining the vacant land in excess of the ceiling limit according to the machinery provisions in the Act is merely for quantification, and to effectuate the rights and liabilities which have crystallised at the time of commencement of the Act. The contrary view taken on the construction made of these provisions by the High Court cannot, therefore, be accepted." Bansidhar & Ors. v. State of Rajasthan & Ors. Reliance has been placed by the learned counsel on decision in the case of Bansidhar & Ors. v. State of Rajasthan & Ors. [1989]2SCR152 in support of the contention that provision of Section 3 of the Repealing Act is not exhaustive. Para 13 on

4.

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which reliance has been placed reads as under "A saving provision in a repealing statute is not exhaustive of the rights and obligations so saved or the rights that survive the repeal. 5. I.T. Commissioner, U.P. v. Shah Sadiq & Sons. It is observed by this Court in I.T. Commissioner, U.P. v. Shah Sadiq & Sons In other words whatever rights are expressly saved by the 'savings' provisions stand saved. But, that does not mean that rights which are not saved by the 'savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing old statute is enacted. Rights which have accrued are saved unless they are taken away expressly. This is the principle behind Section 10(22) 6(c), General Clauses Act, 1897 ...". 6. Godhra Electricity Co. Ltd. & Anr. v. The State of Gujarat & Anr. In the case of Godhra Electricity Co. Ltd. and Anr. v. State of Gujarat and Anr. the Supreme Court observed in para 11 that, in the process of interpretation of the terms of the contract, the Court can frequently get great assistance from the interpreting statements made by the parties themselves or from their conduct in rendering or in receiving performance under it. Parties can, by mutual agreement, remake their own contracts; they can also, by mutual agreement, remake them. The process of practical interpretation and application, however, is not regarded by the parties as a remaking of the contract; nor do the Court so regard it. 7. Maddala Thathaiah v. Union of India. 8. The Central Bank of India Ltd., Amritsar v. The Hartford Fire Insurance Co. Ltd. 9. K. Narendra v. Riviera Apartments (P) Ltd.

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Ratio-decidendi
1. Section 21 Of Urban land (Ceiling & Regulation) Act, 1976. a) Notwithstanding anything contained in any of the foregoing provisions of this Chapter, where a person holds any vacant land in excess of the ceiling limit and such person declares within such time, in such form and in such manner as may be prescribed before the competent authority that such land is to be utilised for the construction of dwelling units (each such dwelling unit having a plinth area not exceeding eighty square metres) for the accommodation of the weaker sections of the society, in accordance with any scheme approved by such authority as the State Government may, by notification in the Official Gazette, specify in this behalf, then, the competent authority may, after making such inquiry as it deems fit, declare such land not to be excess land for the purposes of this Chapter and permit such person to continue. to hold such land for the aforesaid purpose, subject to such terms and conditions as may be prescribed, including a condition as to the time limit within which such buildings are to be constructed. b) Where any person contravenes any of the conditions subject to which the permission has been granted under sub-section (1), the competent authority shall, by order, and after giving such person an opportunity of being heard, declare such land to be excess land and thereupon all the provisions of this Chapter shall apply accordingly. 2. Specific Relief Act. Mentioned Above. 3. Section 99 of Code of Civil Procedure. No decree shall be reversed or substantially varied, nor shall any case be remanded in appeal on account of any misjoinder [or non-joinder] of parties or causes of action or any error, defect or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of the Court. [Provided that nothing in this section shall apply to non-joinder of a necessary party.] 4. Section 167 of Evidence Act. No new trial for improper admission or rejection of evidence.The improper admission or rejection of evidence shall not be
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ground of itself for a new trial or reversal of any decision in any case, if it shall appear to the Court before which such objection is raised that, independently of the evidence objected to and admitted, there was sufficient evidence to justify the decision, or that, if the rejected evidence had been received, it ought not to have varied the decision. SCHEDULE I Enactments repealed. THE SCHEDULE.--[ Enactments repealed.] Rep. by the Repealing Act, 1938 (1 of 1938 ), s. 2 and Sch.

Present Status of Ratio-decidendi of this case

1. Section 21 Of Urban land (Ceiling & Regulation) Act, 1976. This act has had a huge bearing on urban development, by barring development on large tracts of available land. As a result, the act has already been repealed in some states, such as Gujarat. This act was repealed in November 2007 in the state of Maharashtra. The repeal was a pre-condition to the state government with a grant under the Jawaharlal Nehru National Urban Renewal Mission(JNNURM), to be used for major infrastructure development projects (like the Mumbai Trans Harbour Link, the Mumbai Metro Project, the Bandra-Worli, the Worli-Nariman Point sealink and the Mumbai Urban Transport Project-II). However, there is still considerable confusion in the process required for the clearance of land for buildings; the repeal has not had much impact on the ground. The Maharashtra Government has purchased large tracts of land under provisions of this act, to be used to provide low-cost housing to the common people. However, this land continues to lie vacant. 2. Specific Relief Act. It is still in practice in India. 3. Section 99 of Code of Civil Procedure. It is still in practice in India. 4. Section 167 of Evidence Act. It is still in practice in India.

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My Opinion
it is clear that this court did not accept the contention that the clause in the insurance policy which gave absolute right to the insurance company was void and had to be ignored. The termination as per the term in the insurance policy was upheld. Under general law of contracts any clause giving absolute power to one party to cancel the contract does not amount to interfering with the integrity of the contract. The acceptance of the argument regarding invalidity of contract on the ground that it gives absolute power to the parties to terminate the agreement would also amount to interfering with the rights of the parties to freely enter into the contracts. A contract cannot be held to be void only on this ground. Such a broad proposition of law that a term in a contract giving absolute right to the parties to cancel the contract, is itself enough to void it cannot be accepted. In view of above discussion, we find force in the contention that the agreement in question was terminable before delivery of possession; it was so determined and to the agreement clause (c) of Section 14(1) of the Specific Relief Act, 1963 applies. Therefore, agreement cannot be specifically be enforced. The main controversy in this case centres around the following documents: (i) MOA (Memorandum of Agreement) (ii) POA (Power of Attorney) (iii) ACD (Affidavit-cum-declaration) in my opinion, the following questions are required to be considered as the main questions: (i) Whether (a) the MOA could not be rescinded? (b) the POA could not be revoked? (c) the ACD did not cease to be operative?

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