Full Judgment Text
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PETITIONER:
BAREILLY DEVELOPMENT AUTHORITY & ANR.
Vs.
RESPONDENT:
AJAI PAL SINGH & ORS.
DATE OF JUDGMENT17/02/1989
BENCH:
PANDIAN, S.R. (J)
BENCH:
PANDIAN, S.R. (J)
OZA, G.L. (J)
CITATION:
1989 AIR 1076 1989 SCR (1) 743
1989 SCC (2) 116 JT 1989 (1) 368
1989 SCALE (1)439
ACT:
U.P. Urban (Planning and Development) Act, 1973: S.4
Bareilly Development Authority--Construction of dwelling
units--Whether entitled to revise cost of houses/flats and
rate of monthly instalments-Applicants whether entitled to
assail the action of the Authority in writ petition.
Constitution of India, 1950: Articles 12, 14, 32 &
226--Bareilly Development Authority--Whether other authority
for purpose of Article 12--Construction of flats and dwell-
ing units--Cost of flats/rate of instalment revised on
allotment--Whether amenable to writ jurisdiction.
HEADNOTE:
The appellant-Authority offered to register names of
intending applications desirous of purchasing LIG, MIG, HIG
and EWS type houses/flats. The ’General Information Table’
given in the brochure indicated the type of houses, corre-
sponding income groups, cost, initial payment to be made,
rate of interest and approximate monthly instalments. Note
(1) under the said table stated that the cost shown therein
was only estimated cost and it would increase or decrease
according to the rise or fail in the price at the time of
completion of the houses, while Note (2) stated that the
date given therein could be amended as felt necessary. By
clauses 12 and 13 contained in the brochure the Authority
reserved its discretion to change, alter or modify any of
the terms and/or conditions of the allotment as and when
necessary.
All the respondents registered their names for allotment
of the flats in accordance with the terms and conditions in
the brochure and made the initial deposit. Subsequently,
they received notices from the Authority intimating the
revised cost of houses and the amount of monthly instalment
rates which were almost double of those initially stated in
the ’General Information Table’. The respondents were fur-
ther informed that those who intend to buy houses on the
revised price/instalments must send their written acceptance
by the date specified other-wise their claims would not be
included in the lots to be drawn. Except a few, all other
respondents gave their unequivocal and unconditional written
consent. Hence their names were included in the
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743
744
draws and on becoming lucky in the draw, they were allotted
their respective houses.
At this stage. all the respondents approached the High
Court under Article 226 of the Constitution challenging the
revised terms and conditions on the ground that the appel-
lants were estopped from changing the conditions subject to
which the respondents had applied for registration and
deposited the initial payment, that the enhancement of cost
of the house amounting to almost double of the estimated
cost as shown in the brochure and the increase of the month-
ly instalments were much beyond their means and that this
arbitrary and unilateral stand of the appellants was to the
prejudice of the respondents. These petitions were resisted
by the appellants by contending that the respondents were
estopped from challenging the varied terms and conditions of
the allotment after having consented.
The High Court found the action of the Authority in
fixing the revised cost and instalments arbitrary and unrea-
sonable and directed the appellant-Authority to re-determine
the cost of the flats and instalments payable by them after
hearing the parties.
In these appeals by special leave it was contended for
the appellant-Authority that the income of the applicants
was relevant only to determine the category of the scheme in
which they had to be included for eligibility to get a house
under the scheme but not for enhancement of the cost of the
house and monthly instalments, that it had fixed the cost of
the houses and the rate of instalments after taking into
consideration the escalation in the price of building mate-
rial, labour charges, cost of transport and allied valuable
factors which all enter into the price fixation, that in
price fixation the executive has a wide discretion and it is
only answerable provided there is any statutory control over
its policy of price fixation, and that after the parties had
entered into the field of ordinary contract, as in the
instant case. the relations were no longer covered by the
constitutional provisions but by the legally valid contract
which determines the rights and obligations of the parties
inter se
Allowing the appeals,
HELD: 1. Where the contract entered into between the
State and the persons aggrieved is non-statutory and purely
contractual and the rights are governed only by the terms of
the contract, no writ or order can be issued under Article
226 of the Constitution of India so as
745
to compel the authorities to remedy a breach of contract
pure and simple. [755C]
Radhakrishna Agarwal & Ors. v. State of Bihar & Ors.,
[1977] 3 SCR 249; Premji Bhai Parmar & Ors. etc. v. Delhi
Development Authority & Ors. [1980] 2 SCR 704 and D.F.O.v.
Biswanath Tea Company Ltd., [1981] 3 SCR 662 referred to.
The respondents in the instant case had voluntarily
registered themselves as applicants only after fully under-
standing the terms and conditions of the brochure, inclusive
of cls. 12 and 13 and Notes 1 and 2 of the General Informa-
tion Table under which the Authority had reserved its right
to change the terms and conditions as and when felt neces-
sary evidently depending upon the escalation of the prices.
The Authority did not compel anyone of the applicants to
purchase the flat at the rates subsequently fixed by it and
pay the increased monthly instalments. On the contrary the
option was left over only to the allottees. All the same,
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the respondents gave their written consent unconditionally
accepting the changed and varied terms and conditions.
[753H;754A-C]
The respondents after accepting the conditions imposed
by the Authority had thus entered into the realm of a con-
cluded contract pure and simple with the Authority and hence
they could only claim the right conferred upon them by the
said contract and were bound by the terms of the contract
unless some statute stepped in and conferred some special
statutory obligations on the part of the Authority in the
contractual field. The contract between the respondents and
the Authority did not contain any statutory terms and/or
conditions. [754C-E]
Even conceding that the Authority had the trappings of a
State or would be comprehended in ’other authority’ for the
purpose of Article 12 of the Constitution, while determining
price of the houses flats constructed by it and the rate of
monthly instalments to be paid, the ’authority’ or its agent
after entering into the field of ordinary contract had acted
purely in its executive capacity. Thereafter the relations
were no longer. governed by the Constitutional provisions
but by the legally valid contract which determined the
rights and obligations of the parties inter-se. In this
sphere, they could only claim rights conferred upon them by
the contract in the absence of any statutory obligations on
the part of the Authority in the said contractual field.
[754G-H; 755A-B]
Ramana Dayaram Shetty v. The International Airport Authority
746
of India & Ors., AIR 1979 S.C. 1628.
The High Court while exercising its jurisdiction under
Article 226 of the Constitution had, therefore, gone wrong
in its finding that there was arbitrariness and unreasona-
bleness on the part of the appellants in increasing the cost
of the houses/flats and the rate of monthly instalments, and
giving directions in the writ petitions as prayed for.
[755D-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2809-
2812A of 1986.
From the Judgment and Order dated 6.2.1986 of the Alla-
habad High Court in Civil Misc. W.P. Nos. 2274, 2983, 3860,
4558 and 3202 of 1984.
Rajinder Sachher and Bharat Sanghal for the Appellants.
Harbans Lal, Dr. Meera Agarwal, R.C. Misra and Arun
Madan for the Respondents.
The Judgment of the Court was delivered by
S. RATNAVEL PANDIAN, J. These five appeals by Special
Leave under Article 136 of the Constitution of India are
preferred against the Judgment and Or, let dated 6.2.86
passed by the Allahabad High Court in Civil Misc. Writ
Petition No. 2274/84 connected with Civil Misc. Writ Peti-
tion Nos. 2983/84, 3860/84, 4558/84 & 3202/84 directing the
respondents (appellants herein) to re-determine the cost of
the appellants’ (respondents herein) flats and instalments
payable by them after hearing their grievances.
Since identical contentions are urged in all the ap-
peals, we are rendering a common judgment.
As it is said that Civil Appeal No. 2809/86 arising out
of Civil Misc. Writ Petition No. 2274/84 is more comprehen-
sive and the facts alleged therein may be taken as represen-
tative in character, the facts relating to this appeal are
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briefly stated.
The Bareilly Development Authority (hereinafter re-
ferred. as ’BDA’), the first appellant was constituted under
Section 4 of the U.P. Urban Planning and Development Act,
1973 by the State Government
747
for the purposes of development in the District of
Bareilly., With a view to casing the acute housing problem
in the said District, the BDA has undertaken construction of
dwelling units for people belonging to different income
groups styled as ’Lower Income Group’, ’Middle Income
Group’, ’High Income Group’ and the ’Economically Weaker
Sections’ (hereinafter referred as LIG, MIG, HIG and EWS
respectively). The BDA issued’ an advertisement offering to
register names of intending applicants desirous of purchas-
ing dwelling houses/flats in any one of the different income
groups intended to be constructed by the BDA. In this appeal
i.e. Civil Appeal No. 2809/86, the respondents 1 to 17 and
20 got themselves registered for allotment of flats in MIG
scheme and respondents 18 and 19 in HIG scheme with the BDA
in accordance with the terms and conditions contained in the
brochure issued by the Authority. The following table of the
brochure shows the necessary details inclusive of the esti-
mated cost for the different types of flats under various
categories:
Type of Range of Cost Initial Interest Approx
House Income payment monthly
instalment
MIG Rs. 1000 to Rs.64,000 Rs.5000 12% Rs.551
p.m. for
Rs. 1500 p.m. 15 yrs.
HIG Rs. 1500 and Rs. 1, 15,000 Rs.7000 12% Rs. 1440
above p.m. p.m. for
10 yrs.
LIG Rs.351 to Rs.35,000 Rs.2000 11% Rs.345
p.m. for
Rs. 1000 p.m. 15 yrs.
EWS Rs.350 p.m. Rs. 11,000 Rs, 100 7% Rs.89
p.m. for
20 yrs.
The note under the ’General Information Table’ given in
the said brochure states that the cost shown therein is only
estimated cost and it would increase or decrease according
to the rise or fail in the price at the time of completion
of the houses/flats.
All the respondents registered.their names’ for MIG, HIG and
748
EWS flats as the case may be and made the initial deposit.
Thereafter, the respondents in MIG group received indentical
notices dated 19/20.1.84 from the Secretary, Bareilly Devel-
opment Authority (second appellant) intimating that the
revised cost of houses/flats of MIG group as well as the
amount of monthly instalment would be as follows:
1. No. of houses available 77
2. Cost of the house Rs. 1,27,000
3. Down payment to be made/ Rs.35,000
paid on allotment
4. No. of monthly instalment 180
fixed for the payment of
remaining amount
5. Rate of yearly interest 13.5%
6. Amount of monthly instalment Rs. 1,031.50
with interest.
By the said notice, the respondents in MIG group were
informed that 40% of the houses/flats mentioned in the
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notice would be given to the allottees who would deposit the
entire cost in one cash payment and that the other allottees
who intend to buy houses/flats on the above revised
price/instalments must send by 28.1.84 their written accept-
ance on the annexed proforma to the Registration Section of
the office of the BDA otherwise their claims would not be
included in the lots to be drawn on 31.1.1984. Except the
respondents Nos. 13, 17, 18 and 20, all other respondents in
reply to those notices gave their unequivocal and uncondi-
tional written consent. Hence their names were included in
the draw and on being lucky in the draw, the respondents
barring the above 4 were allotted their respective houses.
After allotment, they were asked to complete the other
formalities and make down payments in accordance with the
notice. dated 19/20.1.1984, by a further notice dated
3.2.1984 (Annexure ’F’). Similar notices were issued to all
the registered allottees for all types of houses and the
respondents were also intimated that in case any of the
registered persons does not want to purchase the house, his
name would not be included in the draw but he would have his
choice later on.
749
At this stage, all the respondents in these appeals
approached the High Court under Article 226 of the Constitu-
tion of India challenging the revised terms and conditions
of the BDA on the ground that the petitioners were estopped
from changing the conditions subject to which the respond-
ents-applicants had applied for registration and deposited
the initial payment in the year 1980; that the enhancement
of cost of the house/flat amounting almost double of the
estimated cost as shown in the brochure while inviting the
applications and the increase of the monthly instalments are
much beyond the means of the respondents and that this
arbitrary and unilateral stand of the petitioners is to the
prejudice of the respondents. On the above contentions, the
respondents prayed in their respective petitions for issue
of writ of mandamus directing the petitioners to maintain
the allotment of the flats in their favour on the original
terms and conditions, to hand over the possession of the
same and further to restrain the petitioners from cancelling
the original allotment. The above plea was resisted by the
petitioners strongly relying on certain conditions contained
in the brochure especially of clauses 12 and 13 as per which
the BDA has reserved its discretion to change, alter or
modify any of the terms and/or conditions of the allotment
given in the brochure; that its decision would be final with
regard to any matter concerning the registration and allot-
ment and that the BDA has right to relax any condition in
its discretion. It has been further contended that respond-
ents barring 13, 17, 18 and 20 have given their written
acceptance to the changed conditions as mentioned in the
notice dated 19/20.1.1984 and as such they are not entitled
to the reliefs claimed in the writ petition. According to
the petitioners the increase in the cost and the interest
demanded from the respondents is neither arbitrary nor
unreasonable and the High Court is not the proper forum for
examining in detail the terms regarding payment of instal-
ments in the circumstances of the present case, and if the
respondents were not agreeable to the changed terms and
conditions, they could as well resile from their consent.
Finally, it was contended that the respondents are estopped
from challenging the varied terms and conditions of the
allotment after having consented.
The High Court though repelled the contention of the
respondents (allottees) based on the principle of promissory
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estoppel, made the following observations with regard to the
case of the respondents in the MIG category:
"In the circumstances of the present case the
fixation of monthly instalment to the tune of
Rs.1031.50 from the
750
petitioners of MIG group whose income is
hardly Rs. 1500 per month appears to us smack-
ing of arbitrariness and unreasonableness on
the part of the contesting opposite party
(petitioners herein)";
"In the circumstances of the present case, we
are not satisfied that the contesting opposite
party has succeeded in establishing its demand
of double the estimated cost by facts and
figures. The end of justice demands that the
authority should refix the cost of the peti-
tioner’s flats after hearing their grievance."
The High Court answered the objections taken by the
petitioners herein that the respondents have consented for
the changed terms and conditions observing, "We think that
the consent obtained from the petitioners was also not
reasonable act on the part of the contesting opposite par-
ties (appellants herein)". Finally, the High Court adopting
the above reasoning in respect of the cases of other re-
spondents also falling under various categories directed the
appellants herein in all the writ petitions "to re-determine
the cost of the petitioners’ (respondents herein) flats and
instalments payable by them after heating their grievances."
Being aggrieved by the impugned judgment the appellants
have filed these appeals by special leave.
Shri Rajinder Sachher, St. Adv. after taking us through
the relevant documents and the additional affidavit filed by
the second respondent and the reply affidavit assailed the
reasonings given by the High Court contending that the said
Court has erroneously held that the BDA has failed to justi-
fy the demand of the enhancement in the cost of houses/flats
as well as the increase of the monthly instalments in dis-
proportionate to their income, because the income of the
applicant was relevant only to determine the category of the
scheme in which the applicant had to be included for eligi-
bility to get a house/flat under the scheme but not for
enhancement of the cost of the houses/ flats and monthly
instalments. According to him since the declared policy of
the BDA being ’No Profit No Loss’, it had fixed the cost of
the houses/flats and the rate of instalments after taking
into consideration of the escalation of the building materi-
al, labour charges, cost of transport and the allied valu-
able factors which all enter into the price fixation, and as
such the High Court is not correct in going into the ques-
tion of computation of cost of the construction of
houses/flats and
751
the plea of clerical mistakes exercising its jurisdiction
under Article 226 of the Constitution of India. He further
submits that the High Court has gone wrong in importing the
principle laid down in Ramana Dayaram Shetty v. The Interna-
tional Airport Authority of India & Ors., AIR 1979 Supreme
Court 1628 to the present facts and circumstances of the
case in view of the fact that in price fixation the execu-
tive has a wide discretion and it is only answerable provid-
ed there is any statutory control over its policy of price
fixation and it is not the function of the High Court to sit
in judgment over such matters of economic policy. It has
been vehemently urged that after the parties have entered
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into the field of ordinary contract, the relations are no
longer covered by the constitutional provisions but by the
legally valid contract which determines the rights and
obligations of the parties inter-se.
The fact that all respondents had applied for registra-
tion only on acceptance of terms and conditions contained in
the brochure inclusive of Clauses 12 & 13 as well as the
conditions mentioned in the Notes 1 and 2 of the ’General
Information Table’ of the said brochure, and further the
respondents barring respondents Nos. 13, 17, 18 and 20 in
MIG group gave their reply accepting the changed terms and
conditions as per letter dated 19/20.1.1984 cannot be chal-
lenged in view of the unassailable documentary evidence
namely Annexures ’A’, ’D’, ’E’ and ’F’.
Now, we shall reproduce some of the relevant conditions
of the brochure as well as the changed conditions contained
in the letter dated 19/20.1.1984. Clauses 12 and 13 of the
brochure issued by the BDA and the notes 1 and 2 of the
General Information Table thereto read thus:
Clause 12
For allotment by lottery all the above-men-
tioned terms and rules given in the booklet
would ordinarily be followed but the Develop-
ment Authority will have the right to change,
enhance or amend any of the terms and/or
condition as and when it thinks necessary and
at its discretion.
Clause 13
The decision of the Development Authority in
regard to any matter in relation to the regis-
tration application will be final. It would
have the right to relax any of the conditions
at its discretion. The fight to sell by auc-
tion the Middle
752
Income Group and Higher Income Group
plots/houses or any portion thereof, of the
various schemes, will also vest in the Devel-
opment Authority.
General Information Table
Note: (1) The cost shown in the column 4
is only estimated cost. It will increase or
decrease according to the rise or fall in the
price at the time of completion of the
property.
Note: (2) The data given in the above
mentioned table can be amended as felt neces-
sary.
The last paragraph of the letter dated 19/20.1.84
(Annexure ’D’) reads thus:
"If you want to buy the house on the above
price/instalment then you must send by
28.1.1984 your written acceptance on the
annexed proforma to the Registration Section
of this office."
It may be mentioned here that in this letter (Annexure
’D’), the BDA has informed the allottees of MIG about the
enhancement of the cost of the houses/flats as well as the
increase of the monthly instalment and the rate of yearly
interest etc. and requested the allottees to give their
written acceptance so that their names could be included in
the list.
The respondents except the four above have sent their
written acceptance to the letter (Annexure ’D’). For a
better appreciation of the case of the appellants, we think
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that as an example the letter (Annexure ’E’) of the first
respondent in this case namely Shri Ajay Pal Singh may be
reproduced:
"I, Ajay Pal Singh, S/o Shri Sujan Singh want
to take a Middle Income Group house in the
Housing Scheme No. 2 situated at Tibrinath of
the Bareilly Development Authority on payment
by instalment. I have seen the house and am
satisfied. I accept the rules of the Bareilly
Development Authority."
753
Only on the basis of the written acceptance, the name of
the first respondent was included in the draw and he has
successful in getting the allotment of House No. 37 in MIG
type which fact if clearly borne out by the letter from the
second respondent (Annexure ’F’). In this connection, it is
worthwhile to note that the first respondent, Shri Ajay Pal
Singh is the Principal of Shri Guru Govind Singh Inter
College and his educational qualifications are M.A. (Econ. &
Hist.), B.Sc., B.Ed., LL.B. From the above, it is clear that
all the respondents who have sent their applications for
registration with initial payment only after having fully
understood the terms and conditions of the brochure inclu-
sive of the Clauses 12 and 13 and Notes 1 and 2 of the
General Information Table as per which the BDA has reserved
its right to change, enhance or amend any of the terms
and/or conditions as and when felt necessary, and also the
right to relax any of the conditions at its discretion, and
that the cost shown in the column 4 of the brochure was only
estimated cost subject to increase or decrease according to
the rise or fail in the price at the time of completion of
the property. This is not only the case of the applicants of
MIG scheme but also of the other applicants falling under
the other categories i.e. HIG, LIG and EWS. So it cannot be
said that there was a mis-statemennt or incorrect statement
or an fraudulent concealment in the information supplied in
the brochure published by the BDA on the strength of which
all the applicants falling under the various categories
applied and got their names registered. In such a circum-
stance the respondents cannot be heard to say that the BDA
has arbitrarily and unreasonably changed the terms and
conditions of the brochure to the prejudice of the respond-
ents.
More so, the respondents barring respondent Nos. 13, 17,
18 and 20 after having given their written consent accepting
the changed and varied terms and conditions as shown in the
letter dated 19/20.1.84 are not justified in contending that
the BDA has gone back on its original terms’ and conditions
and has substituted new conditions to their detriment. It is
quite un-understandable that the persons like the first
respondent who is highly educated, occupying the post of the
Principal of a College and who has accepted the changed
terms and conditions by his letter is making these allega-
tions against the BDA.
The respondents were under no obligation to seek allot-
ment of houses/flats even after they had registered them-
selves. Notwithstanding, they voluntarily registered them-
selves as applicants, only after fully understanding the
terms and conditions of the brochure inclusive of Clauses 12
and 13 and Notes 1 and 2 of the General Information
754
Table which we have reproduced above, they are now trying to
obtain the houses/flats at the price indicated in the bro-
chure at the initial stage conveniently ignoring the other
express conditions by and under which the BDA has reserved
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its right to change the terms and conditions as and when
felt necessary, evidently depending upon the escalation of
the prices. One should not loose sight of the fact that the
BDA did not compel anyone of the applicants to purchase the
flat at the rates subsequently fixed by it and pay the
increased monthly instalments. On the contrary, the option
was left over only to the allottees. In fact, the respond-
ents in Civil Appeal No. 2809 of 1986 except the four above
mentioned have unconditionally accepted the changed terms
and conditions.
Thus the factual position in this case clearly and
unambiguously reveals that the respondents after voluntarily
accepting the conditions imposed by the BDA have entered
into the realm of concluded contract pure and simple with
the BDA and hence the respondents can only claim the right
conferred upon them by the said contract and are bound by
the terms of the contract unless some statute steps in and
confers some special statutory obligations on the part of
the BDA in the contractual field. In the case before us, the
contract between the respondents and the BDA does not con-
tain any statutory terms and/or conditions. When the factual
position is so, the High Court placing reliance on the
decision in Ramana Dayaram Shetty case (AIR 1979 SC 1628)
has erroneously held:
"It has not been disputed that the contesting
opposite party is included within the term
’other authority’ mentioned under Article 12
of the Constitution. Therefore, the contesting
opposite parties cannot be permitted to act
arbitrarily with the principle which meets the
test of reason and relevance. Where an author-
ity appears acting unreasonably this Court is
not powerless and a writ of mandamus can be
issued for performing its duty free from
arbitrariness or unreasonableness."
This finding, in our view, is not correct in the light
of the facts and circumstances of this case because in
Ramana Dayaram Shetty case there was no concluded contract
as in this case. Even conceding that the BDA has the trap-
pings of a State or would be comprehended in ’other authori-
ty’ for the purpose of Article 12 of the Constitution, while
determining price of the houses/flats constructed by it and
the rate of monthly instalments to be paid, the ’authority’
or its agent after
755
entering into the field of ordinary contract acts purely in
its executive capacity. Thereafter the relations are no
longer governed by the constitutional provisions but by the
legally valid contract which determines the rights and
obligations of the parties inter-se. In this sphere, they
can only claim rights conferred upon them by the contract in
the absence of any statutory obligations on the part of the
authority (i.e. B.D.A. in this case) in the said contractual
field.
There is a line of decisions where the contract entered
into between the State and the persons aggrieved is non-
statutory and purely contractual and the rights are governed
only by the terms of the contract, no writ or order can be
issued under Article 226 of the Constitution of India so as
to compel the authorities to remedy a breach of contract
pure and simple Radhakrishna Agarwal & Ors. v. State of
Bihar & Ors., [1977] 3 SCR 249; Premji Bhai Parmar & Ors.
etc. v. Delhi Development Authority & Ors, [1980] 2 SCR 704
and D.F.O. v. Biswanath Tea Company Ltd., [1981] 3 SCR 662.
In view of the authoritative judicial pronouncements of
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this Court in the series of cases dealing with the scope of
interference of a High Court while exercising its writ
jurisdiction under Article 226 of the Constitution of India
in cases of non-statutory concluded contracts like the one
in hand, we are constrained to hold that the High Court in
the present case has gone wrong in its finding that there is
arbitrariness and unreasonableness on the part of the appel-
lants herein in increasing the cost of the houses/flats and
the rate of monthly instalments and giving directions in the
writ petitions as prayed for.
For the reasons hereinbefore stated, we set aside the
judgment of the High Court and accordingly allow all the
appeals. There will be no order as to costs.
Before parting with the judgment, we would like to
observe that it is open to the respondents to approach the
appellants for correction of any clerical mistakes in the
calculation, if any and they are at liberty to move any
proper authority for any remedy if they are otherwise legal-
ly entitled to.
P.S.S. Appeals al-
lowed.
756