Goverment cannot withdraw its assurance even if it is a party in a contract #indianlaws

Cancellation of allotment of land was the subject matter of challenge in the present writ petition filed under Article 226 of the Constitution of India. The allotments were stated to be made without inviting public tenders and the concluded agreements were void on the thrust of Section 23 of the Contract Act, 1872 being opposed to the public policy and also in violation of Article 14 of the Constitution of India.

The primary issue before the Court for consideration was the grounds on which the show causes notices calling for cancellation of allotment were built and the foundation on which the action of cancellation of plots was based. The allotment of plots was stated to be arbitrary and contrary to the established Rules, Regulations and Conventions since no tenders were invited, hence per se illegal and void ab initio on the thrust of Section 23 of the Contract Act, 1872.

It was held that if based upon the assurances of one of the Party if the other party has altered its position to its prejudice, it will not then be open to the former party to take a unilateral decision to cancel or withdraw from its commitment (allotment of plot in the instant case) on the ground that it had acted without jurisdiction.

In the instant case, even though the petitioners did not make any construction on the lands in question, it was their case that they have expended large sums on preparation of building plans by engaging architects and entire lease premium was paid by them long back and said money was lying with the agency (CIDCO in the instant case) since then. In such a situation, it was held as not possible to say that there would be no prejudice caused to the Petitioners. The impugned order cancelling allotment orders was accordingly set aside.

[Popcorn Entertainment Corporation vs. The City Industrial Development Corporation]
(Bombay HC, 01.09.2009)