Bombay High Court: In a writ petition filed by Wipro against Maharashtra Airport Development Company Limited (MADC), seeking refund of the advance payment made by it for the development of IT Park in Multi Modal International Passenger and Cargo Hub Airport at Nagpur (MIHAN) project, the Division Bench of Alok Aradhe, CJ. and Sandeep V. Marne*, J., directed MADC to refund the advance amount of around Rs. 10.29 crores to Wipro. The Court held that claim of MADC, that the forfeiture was done as the payment made was Earnest Money Deposit, was incorrect as the said amount was referred as “advance money” in the Letter of Acceptance (LOA). Additionally, it was opined by the Court that in absence of explicit clause in the contract regarding the forfeiture of the advance money in case of breach of contract, the same is impermissible as per Section 74 of the Contract Act, 1872.
Background
In order to remove regional disparity, Government of Maharashtra decided to develop a composite project named MIHAN. For the purpose of planning, constructing, operating, developing and maintaining aviation infrastructure in the State of Maharashtra, the Government constituted MADC- respondent. For implementing MIHAN project, MADC decided to acquire large tract of land near Nagpur Airport and after developing the same, allotment of such developed land was planned for setting up industries.
As a part of MIHAN project, MADC proposed establishment of IT Park in the Special Economic Zone (SEZ) area and designated land admeasuring 500 acres for the same. In furtherance of the same, Wipro was approached by MADC and was offered land at a concessional rate. Since Wipro showed interest in the said project, an LOA dated 5-4-2007 was issued by MADC to Wipro in respect of land admeasuring 117 acres at the price of Rs.44 lakh per acre on lease basis for the period of 99 years. The consideration was agreed at Rs.51.48 crores out of which 20% of the consideration was to be paid in advance and remaining 80% was to be paid at the time of handing over possession of the land. Thus, the said amount of advance was paid on 24-4-2007.
Wipro contended that there was lack of necessary facilities such as approach roads, water supply, telecommunication network, power supply layout, transportation and efficient and reliable air connectivity on account of which, Wipro was not willing to go ahead with development of the project on the allotted land. Wipro wrote to MADC to limit allotment of land to 23 acres proposing to commence operations within 36-48 months. On 22-2-2013, MADC responded agreeing to the request to limit the allotment of land to 23 acres, on condition of commencement of operations within 24 months. MADC, thereafter, sent letter dated 3-12-2014, threatening to terminate LOA and forfeit the part payment, to which the Wipro pointed out absence of infrastructure for development of the project. On 27-5-2015, MADC terminated the LOA and forfeited the amount of Rs.10.29 crores paid by the Wipro.
MADC once again approached the Wipro with an offer for allotment of land measuring 23.40 acres and made certain enquiries by letter dated 7-2-2018. Thus, the dispute remained under discussions and correspondence, without yielding any positive result. On 13-9-2024, Wipro addressed notice to MADC alleging wrongful termination of LOA and seeking refund of the amount paid alongwith interest. Wipro’s claim was refuted by MADC.
Aggrieved by the same, Wipro filed a writ petition before the Court, seeking refund of the part payment made by it, alongwith the interest.
Analysis, Law and Decision
The Court noted that the allotment has been cancelled vide communication dated 27-5-2015 but thereafter, MADC made a voluntary approach to the Wipro by letter dated 17-11-2017 making inquiries about the time frame within which it could develop a plot in Sector 12 of about 23.40 acres in MIHAN SEZ area.
The Court pointed out that the case does not involve usual case of allotment of government land through open tender process where there are multiple bidders competing against each other. MADC had approached Wipro and requested it to set up an IT Park with a view to make MIHAN project more viable. Hence, the relationship between the parties must be appreciated.
The Court observed that the reason behind MADC’s fresh approach to Wipro after two and half years of cancellation of allotment and forfeiture of advance payment showed that MADC was willing to offer smaller portion of land under a sanguine hope of Wipro setting up IT park in MIHAN SEZ. Additionally, it was noted that it took about 7 years for MADC to allot 10 acres of land on 25-2-2022 and 9 years to allot 17 acres of land. It appeared that MADC was unable to find takers for the land, allotment of which was cancelled by communication dated 27-5-2015.
Therefore, the Court observed that MADC’s voluntary offer on 17-11-2017, Wipro’s response on 7-2-2018 and Wipro’s request for refund on 24-11-2022 offer enough justification for ignoring the delay, in filing the present petition as the cancellation of allotment or forfeiture of advance amount had not attained finality.
Regarding the issue of refund of advance amount, the Court observed that MADC contended that amount of Rs. 10.29 crores were paid towards Earnest Money Deposit and that MADC was entitled to forfeit the same. But the LOA does not use the word Earnest Money Deposit for describing the said amount and brands it as “advance payment”. Hence, this contention of MADC was rejected by the Court.
The Court thus, opined that for claiming such sum, it is necessary that there is a contractual clause between the parties. Referring to Section 74 of the Contract Act, 1872, it was stated that in absence of such a clause in the contract, it is impermissible to retain amount paid towards advance payment. Thus, forfeiture cannot be resorted to unless the contract explicitly provides for the same.
Accordingly, the Court directed MADC to refund the advance payment of Rs. 10,29,60,000 made by Wipro within a period of six weeks without any interest and held that since LOA contained no such clause on forfeiture of the advance payment, so if MADC is permitted to retain the advance amount, the same would amount to unjust enrichment as MADC has already allotted 33 acres of land to other entities at much higher rate.
[Wipro Ltd. v. Maharashtra Airport Development Co. Ltd., 2025 SCC OnLine Bom 2944, decided on 19-8-2025]
*Judgement authored by- Justice Sandeep V. Marne
Advocates who appeared in this case:
Advocate for the Petitioners- Rahul Narichania, Senior Advocate; Shubharata Chakraborti, Naozad Golwalla, Aayush Barat i/b Mehernosh Humranwala, Advocates
Advocate for the Respondents- Atul Vanarse, AGP; Zulfiq Multani, Manoj Kumar Mishra, Advocates
