CHANAKYA NATIONAL LAW UNIVERSITY,

NYAYA NAGAR, MITHAPUR, PATNA – 800001.

TOPIC - “Ghaziabad Authority Development v. Union of India”

FINAL DRAFT SUBMITTED IN THE PARTIAL FULFILMENT OF THE

COURSE TITLED-
LAW OF CONTRACT-I

SUBMITTED TO:
MRS. SUSHMITA SINGH
Faculty of Law of Contracts

SUBMITTED BY:
ADITHYAN BIJOY.
ROLL NO: 2206
SEMESTER: SECOND
SESSION: 2019-2024

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 ACKNOWLEDGEMENT

I would like to thank my faculty Mrs. Sushmita Singh whose guidance helped me a lot with
structuring of my project. I take this opportunity to take deep sense of gratitude for her
guidance and encouragement which sustained my efforts on all stage of this project.

I owe the present accomplishment of my project to my friends, who helped me immensely

with materials throughout the project and without whom I couldn’t have completed it in the
present way. I would also like to thank the library staff of my college which assisted me in
acquiring the sources necessary for the compilation of my project.

I would also like to extend my gratitude to my parents and all those unseen hands that helped
me out at every stage of my project.

THANKYOU.

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 DECLARATION BY STUDENT

I, Adithyan Bijoy, student of Chanakya National Law University hereby declare that the work
reported in the B.B.A. LL.B.(HONS) project report entitled: “Ghaziabad Development
Authority v. Union of India: Case Analysis ” submitted in Chanakya National Law University
,Patna is an authentic record of my work carried out under the supervision of Mrs. Sushmita
Singh. I have not submitted this work elsewhere for any other degree of diploma. I am fully
responsible for the contents of my project report.

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Table of Contents
Chapter 1: Introduction..............................................................................................................5

Chapter 2: Ghaziabad Development Authority v. Union of India.............................................7

Facts of the Case:....................................................................................................................7

Issues of the Case...................................................................................................................8

Judgement of the Case............................................................................................................8

Analysis of the case................................................................................................................9

Chapter 3: Case Laws...............................................................................................................13

Harvey v Facey 1893............................................................................................................13

Boots v Pharmaceutical Society of Great Britain 1953........................................................13

Fisher v Bell 1961................................................................................................................13

Harris v Nickerson 1873.......................................................................................................14

Chapter 4: Invitation to Treat in current scenario....................................................................15

Conclusion................................................................................................................................17

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Chapter 1: Introduction
A valid contract is an agreement enforceable by law. And a valid agreement requires an offer
and acceptance from the person to who the proposal was made. between two parties where
proposes and the other accepts. According to Indian Contract Acts of 1872, an offer is the
final expression of willingness by the offeror or to be bound by his offer, should the other
party choose to accept it as inferred by Section 2(a), which emphasizes there should be
willingness to do or abstain with a view to obtaining the assent of the offer. But in cases
where a buyer picks up a thing to buy from the shelves of the shop, it does not amount to an
acceptance of a offer to sell rather it is the customer who makes an offer to buy and there
would be no valid contract until the seller accepts the offer 1. An invitation to treat forms a
stage immediately before the offer but there can be some ambiguity due to the similarities
between the two actions. An invitation to treat is only an indication that someone is prepared
to receive offers with the view of forming a binding contract. An invitation to
treat (or invitation to bargain in the United States) is a concept within contract law which
comes from the Latin phrase invitatio ad offerendum, meaning "inviting an offer". According
to Professor Andrew Burrows, an invitation to treat is:
"...an expression of willingness to negotiate. A person making an invitation to treat does not
intend to be bound as soon as it is accepted by the person to whom the statement is
addressed."2
A contract is a legally binding voluntary agreement formed when one person makes an offer,
and the other accepts it. There may be some preliminary discussion before an offer is
formally made. Such pre-contractual representations are known variously as “invitations to
treat”, “requests for information” or “statements of intention”.
True offers may be accepted to form a contract, whereas representations such as invitations to
treat may not. However, although an invitation to treat cannot be accepted it should not be
ignored, for it may nevertheless affect the offer. For example, where an offer is made in
response to an invitation to treat, the offer may incorporate the terms of the invitation to treat.
Research Objective
 To analyze the concept of invitation to offer.
 To understand its relevance in current scenario.
 To analyse the case of Ghaziabad Development Authority v. Union of India
1
Contract and Specific Relief Act, Avtar Singh 12 th edition
2
http://en.m.wikipedia.org/wiki/Invitation_to_treat

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Research Questions
 What is invitation to offer?
 What is its relevance in the context of Indian law?
 How it is different from offer?
Hypothesis
The researcher believes that invitation to offer is different from a normal offer and it is
prevalent in current scenario.
Research Methodology
The research is based on secondary source of data such as books, journals, websites etc., and
is a doctrinal mode of research.
Limitation of Study
The limitation of the study is that the sources to conduct the research was limited to books
and websites.

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Chapter 2: Ghaziabad Development Authority v. Union of India

Facts of the Case:

Ghaziabad Development Authority had announced a scheme for allotment of developed plots
which was known as Indirapuram Scheme. The Authority informed the claimants that a plot
of 35 sq. metres was reserved for them, the estimated cost of which plot was Rs.4,20,000/-
payable in specified instalments. An allotment of plot was also informed. Then at one point
of time the claimants were informed that due to some unavoidable reasons and the
development work not having been completed there has been delay in handing over
possession. Having waited for an unreasonable length of time the claimants approached the
MRTP Commission.
When a development authority announces a scheme for allotment of plots, the brochure
issued by it for public information is an invitation to offer. Several members of public may
make applications for availing benefit of the scheme. Such applications are offers. Some of
the offers having been accepted subject to rules of priority or preference laid down by the
Authority result into a contract between the applicant and the Authority. The legal
relationship governing the performance and consequences flowing from breach would be
worked out under the provisions of the Contract Act and the Specific Relief Act except to the
extent governed by the law applicable to the Authority floating the scheme. In case of breach
of contract damages may be claimed by one party from the other who has broken its
contractual obligation in some way or the other. The damages may be liquidated or
unliquidated. Liquidated damages are such damages as have been agreed upon and fixed by
the parties in anticipation of the breach. Unliquidated damages are such damages as are
required to be assessed. Broadly the principle underlying assessment of damages is to put the
aggrieved party monetarily in the same position as far as possible in which it would have
been if the contract would have been performed. Here the rule as to remoteness of damages
comes into play. Such loss may be compensated as the parties could have contemplated at the
time of entering into the contract. The party held liable to compensation shall be obliged to
compensate for such losses as directly flow from its breach. Chitty on Contracts (27th
Edition, Vol.1, para 26.041) states - Normally, no damages in contract will be awarded for
injury to the plaintiffs feelings, or for his mental distress, anguish, annoyance, loss of
reputation or social discredit caused by the breach of contract; The exception is limited to
contract whose performance is to provide piece of mind or freedom from distress. Damages
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may also be awarded for nervous shock or an anxiety state (an actual breakdown in health)
suffered by the plaintiff, if that was, at the time the contract was made, within the
contemplation of the parties as a not unlikely consequence of the breach of contract. Despite
these developments, however, the Court of Appeal has refused to award damages for injured
feelings to a wrongfully dismissed employee, and confirmed that damages for anguish and
vexation caused by breach of contract cannot be awarded in an ordinary commercial contract.
The ordinary heads of damages allowable in contracts for sale of land are settled. A vendor
who breaks the contract by failing to convey the land to the purchaser is liable to damages for
the purchasers loss of bargain by paying the market value of the property at the fixed time for
completion less the contract price. The purchaser may claim the loss of profit he intended to
make from a particular use of the land if the vendor had actual or imputed knowledge thereof.
For delay in performance the normal nature of damages is the value of the use of the land for
the period of delay, viz. usually its rental value

Issues of the Case

The questions arising for decision are:-
(i) Whether compensation can be awarded for mental agony suffered by the claimants?
(ii) Whether in the absence of any contract or promise held out by the Ghaziabad
Development Authority any amount by way of interest can be directed to be paid on the
amount found due and payable by the Authority to the claimants?
(iii) If so, the rate at which the interest can be ordered to be paid?
Judgement of the Case
In this batch of appeals, Ghaziabad Development Authority constituted under Section 4 of the
Uttar Pradesh Urban Planning and Development Act, 1973 is the appellant. The Authority
has from time to time promoted and advertised several schemes for allotment of developed
plots for construction of apartments and/or flats for occupation by the allottees. Several
persons who had subscribed to the schemes approached different forums complaining of
failure or unreasonable delay in accomplishing the schemes. Some have filed complaints
before the Monopoly and Restrictive Trade Practices Commission and some have raised
disputes before the Consumer Disputes Redressal Forum. In two cases civil writ petitions
under Article 226 of the Constitution were filed before the High Court seeking refund of the
amount paid or deposited by the petitioners with the Authority. In all the cases under appeal

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the Court or Commission or Forum concerned has found the appellant-Authority guilty of
having unreasonably delayed the accomplishment of the announced scheme or guilty of
failure to perform the promise held out to the claimants and therefore directed the amount
paid or deposited by the respective claimants to be returned along with interest. In the cases
filed before the High Court of Allahabad there was a term in the brochure issued by the
Authority that in the event of the applicant withdrawing its offer or surrendering the same no
interest whatsoever would be payable to the claimants. Also, when a development authority
announces a scheme for allotment of plots, the brochure issued by it is an invitation to offer.
Several members of public may make applications for availing benefit of the scheme. Such
applications are offers having been accepted by the authority. In present case, since the
contract was breached by Ghaziabad Development Authority by not giving the possession of
the house even after reasonable period of time had elapsed; it was liable for paying back the
amount. The High Court has held such term of the brochure to be unconscionable and
arbitrary and hence violative of Article 14 of the Constitution. The High Court has directed
the amount due and payable to be refunded with interest calculated at the rate of 12 per cent
per annum from the date of deposit to the date of refund. In all the other appeals before us the
impugned order passed by the Commission or the Forum directs payment of the amount due
and payable to the respective claimants with interest at the rate of 18 per cent per annum. In
Civil Appeal No.8316 of 1995, G.D.A. Vs. Brijesh Mehta, the MRTP Commission has held
the claimants entitled to an amount of Rs.50,000/- payable as compensation for mental agony
suffered by the claimants for failure of the Authority to make available the plot as promised
by it.

Analysis of the case

In opinion of researcher, compensation for mental agony could not have been awarded as has
been done by the MRTP Commission.
However, the learned counsel for the respondents has invited our attention to Lucknow
Development Authority Vs. M.K. Gupta3 wherein this Court has upheld the award by the
Commission of a compensation of Rs.10,000/- for mental harassment. The basis for such
award is to be found in paras 10 and 11 wherein this Court has stated inter alia - Where it is
found that exercise of discretion was mala fide and the complainant is entitled to
compensation for mental and physical harassment then the officer can no more claim to be

3
- (1994) 1 SCC 243

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under protective cover. When the citizen seeks to recover compensation from a public
authority in respect of injuries suffered by him for capricious exercise of power and the
National Commission finds it duly proved then it has a statutory obligation to award the
same. The Court has further directed the responsibility for the wrong done to the citizens to
be fixed on the officers who were responsible for causing harassment and agony to the
claimants and then recover the amount of compensation from the salary of officers found
responsible. The judgment clearly shows the liability having been fixed not within the realm
of the law of contracts but under the principles of administrative law. We do not find any
such case having been pleaded much less made out before the Commission. Indeed, no such
finding has been arrived at by the Commission as was reached by this Court in the case of
Lucknow Development Authority (Supra). The award of compensation of Rs.50,000/- for
mental agony suffered by the claimants is held liable to be set aside.

The next question is the award of interest and the rate thereof. It is true that the terms of the
brochure issued by the Authority relevant to any of the cases under appeal and the
correspondence between the parties do not make out an express or implied contract for
payment of interest by the Authority to the claimants. Any provision contained in
the Consumer Protection Act, 1986, the Monopolies and Restrictive Trade Practices Act,
1969 and U.P. Urban Planning and Development Act, 1973 enabling the award of such
interest has not been brought to our notice. The learned counsel for the claimants have placed
reliance on a recent decision of this Court in Sovintorg (India) Ltd. Vs. State Bank of India,
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New Delhi wherein in similar circumstances the National Consumer Disputes Redressal
Commission directed the amount deposited by the claimants to be returned with interest at the
rate of 12 per cent per annum. This Court enhanced the rate of interest to 15 per cent per
annum. To sustain the direction for payment of interest reliance was placed on behalf of the
claimants on Section 34 of the CPC and payment of interest at the rate at which moneys are
lent or advanced by National Banks in relation to commercial transactions was demanded.
This Court did not agree. However, it was observed:-
There was no contract between the parties regarding payment of interest on delayed deposit
or on account of delay on the part of the opposite party to render the services. Interest cannot
be claimed under Section 34 of the Civil Procedure Code as its provisions have not been
specifically made applicable to the proceedings under the Act. We, however, find that the
general provision of Section 34 being based upon justice, equity and good conscience would
4
- (1999) 6 SCC 406

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authorise the Redressal Forums and Commissions to also grant interest appropriately under
the circumstance of each case. Interest may also be awarded in lieu of compensation or
damages inappropriate cases. The interest can also be awarded on equitable grounds.
The State Commission as well as the National Commission were, therefore, justified in
awarding the interest to the appellant but in the circumstances of the case we feel that grant of
interest at the rate of 12% was inadequate as admittedly the appellant was deprived of the
user of a sum of Rs. one lakh for over a period of seven years. During the aforesaid period,
the appellant had to suffer the winding-up proceedings under the Companies Act, allegedly
on the ground of financial crunch. We are of the opinion that awarding interest at the rate of
15 per cent per annum would have served the ends of justice.
The researcher is therefore of the opinion that interest on equitable grounds can be awarded
in appropriate cases. In Sovintorg (India) Ltd.s case the rate of 15 per cent per annum was
considered adequate to serve the ends of justice. The Court was apparently influenced by the
fact that the claimant had to suffer winding-up proceedings under the Companies Act and the
defendant must be made to share part of the blame. However, in the cases before us, the
parties have not tendered any evidence enabling formation of opinion on the rate of interest
which can be considered ideal to be adopted. The rate of interest awarded in equity should
neither be too high nor too low. In our opinion awarding interest at the rate of 12 per cent per
annum would be just and proper and meet the ends of justice in the cases under consideration.
The provision contained in the brochure issued by the Development Authority that it shall not
be liable to pay any interest in the event of an occasion arising for return of the amount
should be held to be applicable only to such cases in which the claimant is itself responsible
for creating circumstances providing occasion for the refund. In the cases under appeal the
fault has been found with the Authority. The Authority does not therefore have any
justification for resisting refund of the claimants amount with interest.
For the foregoing reasons, the direction made by the MRTP Commission for payment of
Rs.50,000/- as compensation for mental agony suffered by the claimants-respondents is set
aside. In all the other cases the direction for payment of interest at the rate of 18 per cent shall
stand modified to pay interest at the rate of 12 per cent per annum. This case relates to
allotment of a flat. The MRTP Commission has held the claimant entitled to allotment of a
flat. An option has been given to the claimant. If the claimant may refuse to take the flat in
terms of the direction made by the commission, he will be entitled to the refund of the
amounts deposited by him with interest at the rate of 18 per cent per annum from the dates of
deposit of the various amounts by the claimant. During the course of hearing before this court

11
the possibility of the claim being satisfied by allotment of an alternative flat was explored but
that could not materialise as the claimant was not agreeable to accept the flat offered by the
Authority submitting that it was located in a deserted area and was heavily priced. That being
the position the direction of the Commission for refund of the amount shall stand though the
rate of interest shall be 12 per cent and not 18 per cent.

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Chapter 3: Case Laws
Harvey v Facey5 1893
Facts: Facey, had been negotiating with the Mayor of Kingston (in Jamaica) to sell some
property to the city. Harvey sent Facey a telegram. It said, “Will you sell us Bumper Hall
Pen? Telegraph lowest cash price”. Facey replied on the same day: “Lowest price for Bumper
Hall Pen £900.” Harvey then replied in the following words. “We agree to buy Bumper Hall
Pen for the sum of nine hundred pounds.” Facey, refused to sell at that price, at which Harvey
sued.

Judgement: The Privy Council decided that no contract existed between the two parties. The
statement of a lowest price was merely giving information and did not amount to an offer.

Boots v Pharmaceutical Society of Great Britain6 1953

Facts: Boots Chemists had changed the way their shops worked. Shoppers could choose
medicine off the shelves in the shop and then pay for them at the till. (Before then, all
medicines were stored behind a counter and an assistant had to get what was requested.)

The Pharmaceutical Society of Great Britain argued that under the Pharmacy and Poisons Act
1933 a pharmacist needed to supervise sales. The Society argued that displays of goods were
an “offer” and when a shopper selected and put the drugs into their shopping basket, that was
an “acceptance”. Therefore because no pharmacist had supervised the transaction at this
point, Boots was in breach of the Act.

Judgment: There was no binding contract. They held that the display of goods was an
invitation to treat. The customer made an offer by placing the goods into the basket, and this
offer could be either accepted or rejected by the pharmacist at the cash desk. Therefore Boots
did not breach the act.

Fisher v Bell7 1961
Facts: The Defendant displayed a flick knife in the window of his shop next to a ticket
bearing the words “Ejector knife – 4 shillings.” Under the Restriction of Offensive Weapons
Act 1959, it was illegal to offer for sale any knife “which has a blade which opens

5
[1893] UKPC 1 AC 552
6
[1953] 1 QB 401
7
[1961] 1 QB 394 DC

13
automatically by hand pressure applied to a button or other device attached to the handle of
the knife”.

Judgment: In ordinary language the knife is there inviting people to buy it, and it is for sale;
but any statute must of course be looked at in the light of the general law of the country. It is
clearly established that displaying an item is an invitation to treat.”

Harris v Nickerson8 1873
Facts: The Defendant placed an advertisement that office furniture would be placed up for
auction. The Claimant spent time and money to travel to bid for the office furniture. During
the auction the furniture was withdrawn. The Claimant sued for loss of time and expense.

Judgment: The court held that the advertisement did not constitute an offer, but rather was a
mere declaration of intent. Blackburn, J. founded his judgment on public policy grounds,
calling it a “startling proposition” that “anyone who advertises a sale by publishing an
advertisement would become responsible to everybody who attends the sale for his travelling
expenses.”

8
[1873] LR 8 QB 286

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Chapter 4: Invitation to Treat in current scenario
A contract is formed where there is an offer, acceptance, consideration and an intention to
create a legal relation. An invitation to treat, on the other hand, is merely an invitation to
submit an offer. Offer indicates a willingness to enter into a contract whereas an invitation to
treat lacks an intention to create legal obligations. Invitations to treat is an invitation to
bargain and it arises in pre-contractual negotiations, advertisements and store displays and an
invitation to bid in the public procurement process. Before making a definite offer, parties
may make a statement of intention, in the course of negotiation on the terms of the contract,
which it is not intended to require acceptance. If one person invites the other to express his
willingness to do or not to do something, it would be an invitation to treat since for an offer
the final expression of willingness to undertake a definite obligation, upon certain stipulated
terms and obligation, by the other party’s notification of acceptance is required.
Whether a statement is an offer or an invitation to treat depends on the intention of the
offeror. If the offeror expresses his willingness to be bound by it without further negotiations,
on acceptance, then it will amount to offer. A Shopkeeper’s catalogue or list price is only an
invitation to intending customer to make an offer to buy at the indicated price and is not an
offer. Advertisements in newspapers or in any other media are invitations to treat, which
allows vendors to refuse to sell products at list price.  They can also be considered offers in
certain cases of unilateral contracts. If a shop mistakenly displays a good for sale at a very
low price it is not obliged to sell it for that amount 9.An invitation to treat may be an invitation
to tender, a request for bids, or a request for proposals. The invitation to treat is simply a
solicitation and does not qualify to be an offer as the party making it does not wish to enter
into a legally binding contract without further negotiations. The party making the invitation
seeks bids or tenders for the specific commodities from prospective suppliers. Any
subsequent bids are deemed to be an offer which the party who issued the invitation to bid
may accept or reject. 

Another example of an invitation to treat prevalent these days is that of a tender process. The
general rule is that an auction is a sale by public competition to a bidder who makes an offer
to an auctioneer, an agent of the vendor who may accept or reject it. The contract is
concluded when the auctioneer signifies his assent by knocking down the hammer or in any
other customary manner. If the owner states that no reserve price or a reserve price beyond

9
Fisher v. Bell [1961] 1 QB 394

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which offers shall be accepted then the auction is a contractual offer which is accepted by the
highest bidder10.

10
Spencer v. Harding (1870) LR 5 CP 561

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Conclusion
An invitation to treat is an action inviting other parties to make an offer to form a contract. 
These actions may sometimes appear to be offers themselves, and the difference can
sometimes be difficult to determine.  The distinction is important because accepting an offer
creates a binding contract while "accepting" an invitation to treat is actually making an offer.
An invitation to treat and an offer can be differentiated on the basis of the intention of the
parties while making an invitation to offer or an offer. When the promisor makes an offer, he
intends to enter into the legal relationship with the acceptance of the offer by the promisee.
Whereas, in invitation to treat the persons intends other party to make an offer and he/she
shall accept the offer made.

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