Mafatlal Industries Limited vs Nadiad Nagarpapika and Others

Akil Kureshi, J.—The petition is filed seeking directions to the respondent No. 1 - Nadiad Municipality to name the community center/hall as `Mafatlal Nagarpalika Community Center'', or in the alternative, to name the said hall as `Mafatlal'' Ipcowala Nagarplika Community Hall''.

Shortly stated, the facts leading to the present controversy are as follow.

The petitioner, a public limited company entered into Memorandum of Understanding (`MOU'' for short) with the respondent No. 1'' Municipality for construction of the community hall at Nadiad on 14.07.94. The community hall was to be constructed at the costs of the petitioner within one year, for which, exemption u/s 35AC of the Income Tax Act was granted. The MOU also envisaged that the petitioner should complete the entire project from its own fund and hand over the completed project within one year. Clause 8 of the MOU provided that the Community Centre shall be named as `Mafatlal Nagarpalika Community Centre''.

It is not in dispute that pursuant to the MOU, the petitioner started construction and spent substantial amount in excess of Rs. 1.20 crores. However, the petitioner company thereafter faced financial constraints and could not carry out further construction or complete the project. The correspondence between the petitioner and the respondent No. 1 culminated into letter dated 9.3.1999 from the petitioner to the respondent No. 1 stating interalia that the petitioner has already spent substantial amount in excess Rs. 1.20 crores but they are unable to raise further construction, the petitioner therefore, be permitted to hand over the site to the respondent No. 1 to enable the Municipality to have remaining work completed through another agency. The petitioner requested that in terms of the MOU, the remaining cost should not be recovered from the petitioner. In the last paragraph of the letter, the petitioner stated that the though it does not have objection to addition of name of the new donor in the name of Community Hall, however, insisted that name of `Mafatlal'' should continue.

It appears that the Municipality thereafter authorized its President to take appropriate decision in this regard. Pursuant to which, task of completing the remaining construction work was entrusted to respondent No. 2 herein. Apparently, the respondent No. 2 completed the remaining construction at its own costs in view of the promise of the Municipality that the community shall be called as `Ipcowala Community Centre''.

The petitioner approached this Court before formal inauguration of the centre. Initially, interim order was granted in favour of the petitioner. However, by subsequent order dated 1.10.99, the same came to be vacated making further clarification that any action which the respondents may take hereafter shall be subject to the result of this petition.

Learned advocate Ms. Nisha Thakor appearing for the petitioner submitted that the petitioner had spent substantial amount for construction of the part of the centre. While handing over possession, the petitioner had insisted that name of `Mafatlal'' should continue along with another name of the community hall. She contended that the Municipality did not fulfill its promise. It is, therefore, case of promissory estopple. She relied upon the following decisions of the Apex Court in support of her submissions.

(1) Union of India (UOI) and Others Vs. Godfrey Philips India Ltd.,

(2) M/s. Pawan Alloys and Casting Pvt. Ltd., Meerut etc, etc. Vs. U.P. State Electricity Board and others,

She also contended that the President of the Municipality had no authority to change the name. She relied on the decision in the case of Nathubhai Parbhat v. Rajkot Nagarpalika and Ors. reported in 1977 (2) SLR 768.

On the other hand, learned advocate Mr. B.Y. Mankad for the Municipality as well as learned advocate Mr. H.M. Parikh for the respondent No. 2 opposed the petition contending interalia that the petition is not maintainable. That the petitioner could not complete the project and therefore, cannot claim enforcement of the term of the MOU.

Having, thus, heard the learned advocates for the parties, I find that admittedly the petitioner could not complete the project at his own costs on account of financial constraints. It is true that the petitioner had spent substantial amount in excess of Rs. 1.20 crores before it abandoned the project. However, the petitioner was granted tax exemption for the sale u/s 35AC of the Income Tax Act. When the petitioner itself could not complete the project, it was not opened for the petitioner to insist that in terms of the conditions of the MOU name `Mafatlal'' should continue. The community hall was to be named as `Mafatlal Nagarpalika Community Center'' upon its completion at the hands of the petitioner. The petitioner abandoned the project for want of resources. This is clearly stated by the petitioner in the communication dated 9.3.1999. The petitioner voluntarily handed over the possession of the site. It is true that in the said letter the petitioner had contended that along with the new name of the donor, the name of `Mafatlal'' should continue. However, there is nothing on record to suggest that the Municipality agreed to this condition. No fresh agreement between the parties, thus, was arrived at in this regard. The petitioner cannot seek enforcement of this clause which was not agreed to by the Municipality.

Even otherwise, the stand of the municipality can be said to be justified and understandable. Having earlier agreed to complete the project the petitioner had abandoned the project in the mid way on account of its financial difficulties. The Municipality had to complete the project and for want of its own resources, had to rely on private donor. Under the circumstances, the Municipality agreed to name the hall after name of such donor. The petitioner, in the above background of the present case cannot object to the action of the respondent - Municipality.

Though, it was contended on behalf of the respondent No. 2 that the petitioner also received Octroi exemption for undertaking the construction work, I do not find the same is born out from the record. The municipality has also not taken any such contention.

The present case is also not one of promissory estoppel by the Municipality since the petitioner itself could not fulfill its part of the duty flowing form the MOU.

There is sufficient material on record to suggest that the Municipality authorized the President to take appropriate decision for completing the project through participation of the new agency.

For all these reasons, I find no reason to interfere, and the petition is therefore dismissed. Rule stands discharged.