Delhi State Indus. Dev. Corpn. Ltd. v. Ashok Kumar Madan
Background
The respondent was allotted an industrial plot under a "Relocation Scheme" meant for businesses being moved out of residential areas, pursuant to the Supreme Court's own directions in M.C. Mehta vs. Union of India. He was required to pay 50% of the revised plot cost by an extended deadline of 31 March 2001 but paid in installments later, the final installment only in July 2004, all accepted and processed by an officer of the appellant-Corporation without objection at the time. Years later, in 2008, the Corporation cancelled the allotment citing the earlier delay, even though it had in the meantime (in 2006) asked the respondent for documents to hand over possession.
Decision Breakdown
Both the Single Judge and the Division Bench of the Delhi High Court had quashed the cancellation, holding that the Corporation's own conduct, accepting the delayed payments with interest, and later asking for handover documents, showed it had effectively condoned the delay and could not later use that same delay as a ground for cancellation. The Supreme Court agreed, holding that the Corporation had failed to give any credible explanation for retaining the respondent's money for roughly half a decade without acting on the "default," and that this created equity in the respondent's favour. The Supreme Court dismissed the Corporation's appeal and directed it to re-allot the same plot to the respondent, or an alternative plot in the same or a nearby area, within four weeks.
Lesson Learnt
A public authority that accepts a party's delayed performance (here, delayed payment) without objection, and continues to deal with that party as if the contract is on track, cannot later turn around and cancel the allotment by citing the very delay it had already effectively accepted.