Full Judgment Text
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CASE NO.:
Appeal (civil) 6668-6698 of 2000
PETITIONER:
Delhi Development Authority, N.D. & Anr.
RESPONDENT:
Joint Action Committee,Allottee of SFS Flats & Ors.
DATE OF JUDGMENT: 13/12/2007
BENCH:
S.B. Sinha & Harjit Singh Bedi
JUDGMENT:
J U D G M E N T
AND CA NOS.6700-6732 OF 2000
WITH
CIVIL APPEAL NOS. 6666, 6667 & 6733 OF 2000
AND
CIVIL APPEAL NOS. 5881, 5867, 5882, 5876 and 5870 OF 2007
[S.L.P. (C) NOS. 25385 OF 2005, 1003, 8033, 8262 & 13512 OF 2006]
S.B. SINHA, J :
1. Leave granted in all the Special Leave Petitions.
CIVIL APPEAL NOS. 6666, 6667, 6668-6698, 6799-6732 & 6733 of 2000
CIVIL APPEALS @ SLP (CIVIL) NOS. 25385 OF 2005, 1003, 8033 OF
2006 AND 13512 OF 2006 :
2. This batch of appeals arising out of a judgment and order dated
23.07.1999 passed by a Division Bench of the Delhi High Court, inter alia,
in Writ Petitions No. 793 of 1993 as also a judgment and order dated
22.07.2005 passed by a Full Bench of the Delhi High Court in Letters Patent
Appeal Nos. 844 of 2003 etc. were heard together and are being disposed of
by this common judgment.
FACTS :
3. Delhi Development Authority (for short, \021the Authority) has been
constituted under the Delhi Development Act, 1957 (for short, \021the Act\022).
Indisputably, it develops different areas in the town of Delhi and constructs
houses for all groups of people.
4. Principally it allocates flats under six different schemes viz : (i) Self
Financing Scheme (SFS); (ii) Higher Income Group Scheme (HIG Scheme);
(iii) Middle Income Group Scheme (MIG Scheme); (iv) Lower Income
Group Scheme (LIG Scheme), (v) Janata Scheme; and (vi) Expandable
Housing Scheme.
5. The flats constructed and allocated under the SFS Scheme are distinct
and different from the other five schemes launched by the Authority. We
shall advert to the said distinction a little later.
6. Suffice, however, it to say that not only costs of such schemes are
calculated on different basis but the rights and stipulated liabilities
thereunder are also different. Cost of flats vary from scheme to scheme.
Under one of the schemes, applications were invited by the Authority from
22.12.1992 to 11.01.1993.
7. We may notice some of the provisions containing the terms and
conditions on the basis whereof such an offer was made.
\0235.10 the details of the flats and tentative cost etc.
are available in Annexure-B. The cost of the flats
mentioned therein is tentative and subject to
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revision on account of escalation in the value of
land and cost of construction. Please note that
there is a possibility of upward revision of the
tentative cost.
5.11 Those who are successful for a ready built
flat will be called upon to make the payment in
lump sum within 60 days. Others who are
successful for a flat where the work is already in
progress will be asked to deposit within 30 days a
specified percentage anything upto 90% of the
estimated disposal price representing the
expenditure already made and the amount required
for construction of flats in next 3 to 4 months.
Applicants successful for new allocations are
asked to pay 25% the estimated cost of the flat by
way of 1st instalment payable within 30 days. In
each of the case 60 days time is further given to
remit the amount with prescribed interest.
11.2 The demand-cum-allocation letters issued
will indicate the prescribed dates by which the
payments will be required to be made. The
demand letter for final instalment for the flats in
progress and new allocations will be issued
separately and this may also include the possible
increase in the cost of the flat. No separate letters
will be issued for any of the subsequent
instalments. It will be obligatory on the part of the
allocatees to make the payments and deposit the
requisite documents before the due dates indicated.
In the event of default the allocation/allotment of
the flat in the scheme will be liable to be cancelled.
If submission of documents as demanded are
delayed, maintenance charges will be leviable
provided the delay in submission of documents is
regularized.
12.2 If the allotment of flat is cancelled (either on
the allottee\022s own request or due to the non-
fulfilment of the terms and conditions of allocation
by the allottee) after the expiry of 1, 2, 3 and 4
months from the date of issue of demand-cum-
allocation letter, interest calculated @ 12% p.a. for
the 1st month and 18% p.a. for the 2nd, 3rd and 4th
month on the amount demanded in the demand
letter shall be charged in addition to the amount of
penalty specified above.
14.1 The allottee shall be entitled to take delivery
of the possession only after he has completed all
the formalities, paid all dues and
furnished/executed all the documents as required
in the allotment-cum-demand letter of the Delhi
Development Authority.\024
8. Appellants in the first batch of cases and the respondents in the second
batch (hereinafter referred to as \021the registrants\022) applied for allocation of
flats under the SFS Scheme. The said scheme was floated in terms of Item
No.112 of 1992. For the said purpose, brochures are issued. Those who
desired to have allocation of such flats were asked to opt therefor at three
different places. Allocation of flats under the said Scheme is made upon
90% payment of the estimated costs. However, allotment is made on draw
of specific number of flats. Allocation of flats may be made in respect of
areas, floors and/or the pockets. On receipt of the letter of demand-cum-
allocation by the registrant, the schedule of payment commences.
Estimated cost for construction is calculated on the basis of the value of the
land and likely cost of constructions.
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9. The letter of demand-cum-allocation issued to successful registrants
contains a condition which may be noticed for the purpose of these cases and
read as under :
\0234. The amount demanded should be paid on or
before the due date mentioned in para 2 and 3
above. Extension of time for making payment of
the amount demanded in column 7 of para 3 above
upto a maximum period of 90 days from the due
date is admissible. An allottee need not apply for
extension but he will have to pay interest @ 12%
p.a. for the first month and @ 18% p.a. for the
subsequent period. In case payment of the amount
asked for in the demand letter is not made within
90 days of the due date, the allotment shall stand
cancelled automatically. However, cancellation
due to non-payment of first 4 instalments during
the stipulated period can be got restored on
payment of dues with interest along with
cancellation and restoration charges for each
cancellation due to non-payment, subject to
availability of the allocated flat. The cancellation
due to non-payment of final instalment within 120
days of the date of issue (letter of the block date)
of the demand letter for 5th instalment shall not be
restored under any circumstances.\024
10. It may be useful to notice some other clauses containing terms and
conditions of allocation, which are as under :
\0231. No separate demand letters will be issued for 2nd,
3rd and 4th instalments. It will be obligatory on your part
to make the payment before the due date indicated at
page-1; failing which the allocation is liable to be
cancelled.
2. The estimated cost of the flats as given in this
letter is provisional and subject to revision on the
completion of the flat. Any price difference between the
estimated cost and the cost as it comes out on completion
as per costing formula then in vogue would have to be
paid along with the 5th and final instalment. There would
be no review of the cost of the flat in the intermining
period. Interest @ 7% on the amount deposited will be
payable for the period beyond 3= years to the date of
issue of possession letter if the construction of the houses
is not completed by then.
3. The amount demanded should be paid on or before
the stipulated due date failing which the allotment shall
be liable to be cancelled without notice. In case, due to
unavoidable reasons, the allottee is not able to make the
payment within the due time, then he must ensure that his
acceptance of the allotment reaches the Housing
Department before the due date of payment with a
request for extension.\024
11. Registrants are said to have defaulted resulting in purported automatic
cancellation of their allotments. Show cause notices were issued to them.
Some of them allegedly expressed their difficulties in regard thereto.
Decisions impugned
12. The Vice-Chairman of the appellant who is said to be delegated with
the power of the Authority to which reference would be made hereinafter
took a policy decision which is reflected from Office Order issued on
16.8.1996, the relevant clauses whereof are :
\0232. With the approval of L.G. a decision was
taken that the current price for South Delhi
flats will be worked out by adding a
surcharge of 20% from the price worked out
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as per old formula. The approval of L.G. to
this decision was granted on 12.07.1996.
3. There are presently cases in the Housing
Department where there have been delays in
the making of the payments of the flats
allocated/allotted in South Delhi under SFS.
Before the aforesaid revision took place,
delays of one year or so were being
regularised with usual charges, i.e., on
payment of 18% interest per annum and
restoration charges, etc. in few cases where
delays are unusually long, current price has
also been demanded.\024
13. The aforementioned Office Order dated 16.8.1996 was reiterated in a
resolution dated 27.8.1996 wherein a further decision was taken to impose a
surcharge of 20% \023over and above\024 disposal price only in respect of
registrants who had been allotted flats in South Delhi. The said decision was
taken to balance the reduced cash flow of the Authority. It reads as under :
\0231. On the basis of the aforesaid resolutions of
the Authority, 50% flats are proposed to be
offered to the public. It is also being
proposed to offer to public the unavailed
flats if any out of the 50% flats being
reserved for Govt. organisations/PSUs. In
this manner, number of flats to be offered to
the public can be beyond 50%.
XXX XXX XXX
4. To balance the reduced cash in-flow because
of the proposed discount it will be necessary
to charge premium in the areas where the
real value in the market of DDA flats is
much more than what DDA is charging as
per its costing formula in the demand letters.
It would be in the fitness of thing to charge
premium of 20% over the disposal cost
worked out for the flats in South Delhi
SFS.\024
14. Yet again, on 5.11.1998, a purported clarification was issued in regard
to regularization of flats where there had been delay in payment of first four
instalments, stating :
\023While issuing allocation/allotment letters to the
registrants of various schemes announced by
DDA, a demand is raised from the concerned
allottees specifying the amounts to be paid with
due date of payment. However, sometimes on
account of the problem faced by the concerned
allottees the payment received by the DDA are
later than the scheduled date. Such cases are
usually examined on merits and the delay is
regularised if there is merit in the case as non-
regularisation of delays in deserving cases may be
resulted by the allottees. The following shall be
the rules applicable to the allottees of all category
of flats in case there payments are delayed and are
regularised by the competent authority.
A. Competent Authority to regularise the delay:
Period of delay Designation
i) Upto 30 days Jt./Dy. Directors
ii) Beyond 30 days but
upto 90 days Director (Housing)
iii) Beyond 90 days but Commissioner
upto 1 year (Housing)
iv) Beyond 1 year but upto Principal
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1 year 6 months Commissioner
v) More than 1 year
6 months Vice-Chairman
B. Price of the Flat :
i) If the allocated/allotted flat is in South Delhi
where the construction has been undertaken by the
South East Zone and South West Zone of the
Engineering Wing Except Dwarka (being in West
Delhi) the Price of the flat if restored, would be
\023Old Cost\024 interest or current cost whichever is
higher.
ii) In case where allottees of the localities
mentioned (i) above default a small percentage of
demand amount upto 10% beyond the due date,
this delay, if regularised would be on \023Old Cost-
interest.\024
iii) In other cases of all category flats i.e. where
the construction of flats has been undertaken by
other zones of Engineering Wing the restoration
shall be at \023Old Cost-interest\024.
2. A decision exists that while working out the
current cost for flats in South Delhi, a surcharge of
20% from the price worked out as per old formula,
will be added. This surcharge will continue to be
added for South Delhi flats. The interest rates in
the above case shall be @ 18% per annum on the
default amount.
C. RESTORATION CHARGES :
In addition to the above, the allottees/allocatees
whose allotment is restored by the competent
authority, shall be liable to pay Restoration
Charges @ 2.5% of the registration money of the
respective scheme.\024
15. Another office order dated 31.3.1999 was issued in regard to
imposition of 20% surcharge over and above disposal price only in respect
of registrants in South Delhi, relevant portion whereof reads as under :
\0232. Price of the flat
i) In cases (pertaining to any locality) where
demanded amounts were received prior to
22.08.1996 by DDA, the restoration of
allotment/regularisation of delay, if
considered would be on \023old cost interest\024.
ii) In case where allottees default a small
percentage of total demanded amount upto
10% beyond the due date, the delay if
regularised, would be on \023old cost +
interest\024.
iii) If the allocated/allotted flat is in South Delhi
i.e. where the construction has been
undertaken by the South East Zone and
South West Zone of the Engineering Wing
except Dwarka (being in West Delhi), the
price of the flat, if restored, would be \023old
cost + interest or current cost\024, whichever is
higher. This clause will be applicable in
cases for which demanded amount by DDA
is received after 22.08.1996 and the delay is
regularised.
iv) In other cases of all category flats i.e. where
the construction of flats has been undertaken
by other zones of Engineering Wing, the
restoration shall be at \023old cost + interest\024.
3. Sur Charge
The premium of 20% over the disposal cost
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worked out on current cost or old cost for the SFS
flats in South Delhi, where the real value in the
market of DDA flats is much more than DDA is
charging as per its costing formula, shall be
charged.\024
16. The said orders were issued in purported supersession of the previous
orders on the subject and were to come into force with immediate effect.
Some of the registrants made payments pursuant thereto or in furtherance
thereof. Some had made payments although, according to them,
aforementioned resolution will have no application to their case.
17. The said resolution was given a retrospective effect and retroactive
operation.
Proceedings :
18. Several writ petitions were filed at that stage questioning the legality
and/or validity of the said purported resolutions.
19. A learned Single Judge of the Delhi High Court allowed the said writ
petitions in part quashing the policy of charging current cost and upholding
the policy of charging 20% surcharge. Letters Patent Appeals were
preferred thereagainst. A Division Bench of the High Court, having regard
to conflict in decisions operating in the field referred the matter to a larger
Bench.
20. The Full Bench of the said Court by reason of the impugned judgment
modified the judgment and order of the learned Single Judge in respect of
\021current cost\022 holding that the Authority had the requisite jurisdiction also in
respect thereof. The validity of levy of 20% surcharge was also upheld.
Contention before the Full Bench :
21. Before the Full Bench, the registrants, inter alia, raised a contention
that levy of an additional amount over and above the disposal price on the
allocatees or flats in South Delhi was wholly unjustified. It was also urged
that adoption of current cost formula being contrary to the regulations was
also not sustainable in law inasmuch as rights of the writ petitioners
crystallized on issuance of the allocation letter and not when the actual
allotment of flat took place. Levy of surcharge amounts to a levy of tax or
cess, wherefor there is no authority in law.
22. Relying on or on the basis of a decision of this Court in Premji Bhai
Parmar and Others v. Delhi Development Authority [AIR 1980 SC 738] as
also on Delhi Development Authority v. Pushpendra Kumar Jain [AIR 1995
SC 1], the respondents, on the other hand, contended that the right of
registrants gets crystallized only upon final allotment and not at the stage of
issuance of allocation letter. Relying furthermore upon a Full Bench
decision of the High Court in Smt. Sheelawant v. Delhi Development
Authority [1995 (1) AD (Delhi) 725], its jurisdiction to delve into the price
fixation policy was also questioned.
Issues raised before the Full Bench :
23. Two principal issues which were raised before the High Court are :
(i) Whether the action of the Development
Authority in levying 20% surcharge from the
registrants of the South Delhi is justified ?
(ii) Whether demand for payment of current cost
as calculated by the Delhi Development
Authority from the defaulter registrants could be
said to be justified?\024
Findings of the Full Bench :
24.
(i) Levy of 20% surcharge is within the competence of the Authority in
view of the definition of the \021disposal price\022 as contained in
Regulation 2(13) of the Delhi Development Authority (Management
and Disposal of Housing Estates) Regulations, 1968 (for short, \021the
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Regulations\022), in respect whereof a decision was taken by the Vice-
Chairman on 22.08.1996.
(ii) The said Regulations governing the field exclusively permits the
Authority to decide and fix the price which would include surcharge
being in the realm of contract, the relationship between the parties was
clearly contractual; surcharge being a component of the price of the
flat.
(iii) It is also to be noted that most of the Appellants were defaulter who
had defaulted in making payments of the first four instalments on time
and therefore there was delay in making payments in their cases.
Since there was an automatic cancellation clause in the agreement the
original contracts stood cancelled.
(iv) Regulation 2(13) of the DDA Regulations defined disposal price or
hire purchase price in relation to a property to mean such price as may
be fixed by the authority. Hence the levy of surcharge was within the
competence of the authority.
(v) DDA could include surcharge in its pricing formula which would be
in the realm of contract as the relationship was purely contractual.
(vi) The meaning of the word \023cost and price\024 has been settled by the Full
Bench of the Delhi High Court in Sheelawant v. DDA which was
upheld by the Supreme Court and reaffirmed in DDA v. Ashok Kumar
Behl [(2002) 7 SCC 135].
(vii) The present case was different from the case of P.N. Verma v. Union
of India [AIR 1985 (Delhi) 417]
Submissions of the learned counsel on behalf of the registrants :
25. Mr. Rungta, Mr. Maninder Singh and Mr. Shekhar, learned counsel,
submitted :
(i) Having regard to the admitted fact that all allocations were made
during the period 1991 and 1994 and all of them having paid the
instalments except the fourth one, prior to taking of the purported
policy decision dated 22.08.1996, the Authority had no jurisdiction
either to recalculate the current cost or impose a levy of 20%
surcharge.
(ii) As the impugned \021Levy\022 comprises of three elements, namely, (i) the
current cost which is determined; whereover (ii) 20% over the actual
cost is taken into consideration, and again (iii) 20% surcharge is
required to be paid, the same is unreasonable.
(iii) The Full Bench wrongly applied P.N. Verma (supra), R.K. Sacher
(supra) and Premji Bhai Parmar (supra), which were decided on
wholly different set of facts as the scheme(s) involved therein was for
low income group of people in terms whereof payments were to be
made on completion of construction; whereas in the case of SFS,
instalments of payment is sought for immediately after the allocation.
(iv) Restoration of allotment in the case of defaulter having been the
subject-matter of contract, the terms and conditions thereof could not
have been altered or modified by the Authority unilaterally.
(v) In any event, the impugned policy decision can not be given
retrospective effect or retrospective operation.
(vi) Classification for value of flats being income-wise, area-wise, time-
wise and scheme-wise as has been laid down in Premji Bhai Parmar
(supra), any micro classification introduced by the impugned policy
decision insofar as the registrants of South Delhi alone had been asked
to pay a higher amount must be held to be discriminatory in nature.
(vii) The purported cut-off date being 22.08.1996 creates a class between
those whose allotments, although cancelled, had been restored on the
terms of the contract and those who had applied for restoration
thereafter.
(viii) As policy did not prescribe any rational basis and the same having
wrongly been applied, the same is wholly without jurisdiction and,
thus, a nullity.
(ix) Clause 5.10 of the brochure has wrongly been applied by the Full
Bench insofar as value of the land and cost of construction were also
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existing in P.N. Verma (supra), R.K. Sacher (supra) and Premji Bhai
Parmar (supra).
(x) The policy decision having been taken on the basis of \021lack of cash
flow\022, the stand taken by the Authority in its counter affidavit, that a
large sum of money was invested for rehabilitation of the migrants
from Jammu & Kashmir and Punjab is wholly untenable.
(xi) As the current cost of the flat was required to be determined in terms
of the definition contained in Regulation 2(13) of the Regulation, any
other mode or method adopted in respect thereof was wholly illegal.
(xii) Had such value been required to be arrived at having regard to the
nature and time of the project when it was launched, the impugned
policy decision is barred under the principle of promissory estoppel.
(xiii) By reason of an Executive Order, levy cannot be imposed with
retrospective effect.
(xiv) The Full Bench of the High Court misconstrued and misinterpreted
the decision of the Division Bench of the Delhi High Court in P.N.
Verma (supra), which covered the case of registrants.
26. Mr. Arun Jaitley and Mr. Sunil Gupta, learned senior counsel,
appearing on behalf of the respondents, on the other hand, submitted :
(i) The relationship between the parties being contractual, the writ
petitions were not maintainable.
(ii) Price fixation of flats being within the exclusive domain of the
Authority, the High Court has rightly refused to interfere therewith.
(iii) The findings arrived at in P.N. Verma (supra) falling in the line of
Pushpendra Kumar Jain (supra), on the one hand, and Premji Bhai
Parmar (supra), on the other, are strictly not applicable in this case as
the policy decision adopted by the Authority on 22.08.1996 was a new
one in terms whereof having regard to the equitable principle in mind,
the Authority adopted a policy de\022hors clause (4) of the letter of
allotment.
(iv) This Court not only in Premji Bhai Parmar (supra) but also
subsequently having upheld the decisions of the Delhi High Court in
P.N. Verma (supra) and Sheelawanti (supra) and in D.D.A. v. Ashok
Kumar Behl [(2002 (7) SCC 135], the same constituted a binding
precedent.
(v) Sections 5 and 6 of the Act read with Regulation 5 having authorised
the Authority to fix the price of the flats, the validity of impugned
restoration policy comprising payment of surcharge of 20% and the
interest on the said rate or current cost whichever is higher, could not
have been questioned in writ proceedings.
(vi) As the policy was formulated on the representations made by the
registrants, the registrants are estopped and precluded from
questioning the validity of the same.
(vii) In a case of this nature where interpretation of clause of contract is
involved, judicial review is not permissible.
(viii) Levy of surcharge for the subsidised schemes for weaker sections of
the society having, inter alia, been upheld in Premji Bhai Parmar
(supra), the impugned policy decision must be held to be reasonable
so as to satisfy the tests of Article 14 of the Constitution of India.
(ix) Cost of the land even in South Delhi having been worked out on the
valuation of the land situated in Dwarka, classification made in
respect of the allocation at South Delhi where market rates were much
higher from the actual cost, the scheme for restoration of flats in that
area cannot be held to be arbitrary or discriminatory.
Statutory provisions :
27. The Act was enacted to provide for the development of Delhi
according to plan and for matters connected therewith or ancillary thereto.
Interpretation clause is contained in Section 2 of the Act. Section 2(h)
defines the term \021Regulation\022 to mean a Regulation made under this Act.
Section 3 provides for constitution of the Authority consisting of a
Chairman, who shall be the Lieutenant Governor of the National Capital
Territory of Delhi, ex-officio, a Vice-Chairman to be appointed by the
Central Government, amongst others. Section 4 provides for staff of the
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Authority. Section 5-A provides for constitution of Committee in the
following terms :
\0235-A. Constitution of Committee.-(1) The
Authority may constitute as many Committees
consisting wholly of members or wholly of other
persons or partly of members and partly of other
persons and for such purpose or purposes as it may
think fit.
(2) A Committee constituted under this
Section shall meet at such time and place and shall
observe such Rules of procedure in regard to the
transaction of business at its meetings as may be
determined by Regulations made in this behalf.
(3) The members of a Committee (other than
the members of the Authority) shall be paid such
fees and allowances for attending its meetings and
for attending to any other work of the Authority, as
may be determined by Regulations made in this
behalf.\024
Section 6 provides for objects of the Authority, in the following terms:
\0236. Objects of the Authority.- The objects of the
Authority shall be to promote and secure the
development of Delhi according to plan and for
that purpose the Authority shall have the power to
acquire, hold, manage and dispose of land and
other property, to carry out building, engineering,
and manage and dispose of land and property, to
execute works in connection with supply of water
and electricity, disposal of sewage and other
services and amenities and generally to do
anything necessary or expedient for purposes of
such development for purposes incidental thereto :
Provided that save as provided in this Act,
nothing contained in this act shall be construed as
authorizing the disregard by the Authority of any
law for the time being in force.\024
Section 52 of the Act reads as under :
\02352. Power to delegate .- (1) The Authority may,
by notification in the Official Gazette, direct that
any power exercisable by it under this Act except
the power to make Regulations may also be
exercised by such officer or local Authority or
committee constituted under Section 5-A as may
be mentioned therein, in such cases and subject to
such conditions, if any, as may be specified
therein.
(2) The Central Government may, by
notification in the Official Gazette, direct that any
power exercisable by it under this Act, except the
power to make Rules may also be exercised by
such officer as may be mentioned therein, in such
cases and subject to such conditions, if any, as may
be specified therein.
(3) The Lieutenant Governor of the National
Capital Territory of Delhi may, by notification in
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the Official Gazette, direct that any power
exercisable by him under this Act, except the
power to hear appeals, may also be exercised by
such officer as may be mentioned therein, in such
cases and subject to such conditions, if any, as may
be specified therein.\024
Section 57 (1)(f) of the Act reads as under :
\02357. Power to make Regulations. (1) The
Authority, with the previous approval of the
Central Government, may, by notification in the
Official Gazette, make Regulations consistent with
this Act and the Rules made thereunder, to carry
out the purposes of this Act, and without prejudice
to the generality of this power, such Regulations
may provide for \026
\005 \005
\005
(f) The terms and conditions subject to
which user of lands and buildings in contravention
of plans may be continued.\024
28. Indisputably, in exercise of its regulation making power contained in
Section 57 of the Act, the Central Government made regulations known as
\021Delhi Development Authority (Management and Disposal of Housing
Estates) Regulations, 1968\022.
Regulation 2(13) thereof defines \021disposal price\022 in the following
terms :
\0232(13) \023disposal price\024 or \023hire purchase price\024 in
relation to property means such price as may be
fixed by the Authority for such property.\024
Sub-sections (25) and (30) of Section 2 of the Act define \023penalty\024
and \023Scheme\024 respectively, as under :
\0232(25) \023penalty\024 means an additional amount as
laid down in the relevant agreement payable by
the allottee or hirer as a consequence of his default
in the payment of prescribed dues;\024
\0232(30) \023scheme\024 means a scheme prepared by the
Authority for the creation of one or more housing
estates;\024
Regulation 3 empowers the Vice-Chairman to administer the Act
subject to general guidance and resolutions of the Authority, who may
delegate his powers to any officer of the Authority. Regulation 5 provides
for disposal of the property which may be effected by either hire-purchase or
sale or in such other manner and subject to such terms and conditions as may
be decided by the Authority from time to time.
Regulation 6 provides for fixation of price to be one which may be
determined by the Authority.
Regulation 8 provides for the manner of payment of disposal price.
Chapter III of the Regulations provides for the procedure for disposal
of property. In terms of Regulation 30 of the Regulations, the Authority is
mandated to prepare an allotment register in which names and other
particulars of the registrants are to be entered. The names of the persons on
the waiting list should also be entered in a separate section of the same
register in the order in which their names appear in the draw of lots. Power
to decide representations has been conferred upon the Committee in regard
to the selection of applicants for allotment of property.
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Regulation 37 provides for handing over of possession of the
property.
Regulation 59 provides for delegation of all or any of the powers of
the authority under the Regulations to the Vice-Chairman or to a whole time
member.
Functions of DDA :
29. In Premji Bhai Parmar (supra), a Bench of this Court noticed that the
Authority had adopted a resolution delegating its power to the Vice-
Chairman and the power to fix disposal price was said to have been
delegated to the Vice-Chairman.
30. At the outset, we may notice that the stand taken before us by Mr.
Jaitely that the scheme in question was a new one which had to be framed
keeping in view the exigencies of the situation arising out of the
representations made by the registrants, whose allotment had been cancelled,
had not been raised before the High Court. Such a stand, in fact, had never
been taken.
31. The Authority issues an invitation through its brochure.
32. The 5th SFS Scheme was announced in the year 1982. Any person
could himself get registered upon payment of fees prescribed therefor. The
brochure published by the Authority indicated the tentative cost of different
flats in different scheme category-wise. Pursuant thereto, an intending
allocattee applies thereunder, and if in the draw of lots he is declared
successful, an allocation-cum-demand letter specifying the locality and the
floor is communicated to him. It is not the case of the parties that the
estimated cost or the tentative cost was the final one. The Authority
indisputably has the jurisdiction to fix the disposal price finally upon taking
into consideration all relevant factors. In terms of the letter of allotment the
estimated price is to be paid in four equal instalments. Admittedly, question
of the final cost is communicated to the registrants who is asked to pay the
balance amount after deducting the payment made in four instalments
together with the 5th instalment. The estimated cost, according to the
Authority, itself should be worked out having regard to the following
parameters.
1. Cost of construction
2. Community facility charges
3. Floor equilization for ground floor and
subsidised for upper floors
4. Departmental charges
5. Administrative charges
6. Cost of land (Land Rate on the date of
allocation letter is taken).
The land rates of the project area are determined
on the basis of break even rates arrived on cost
benefit analysis which includes cost of acquisition,
enhanced compensation and future realisations.
This rate is approved by the Government of India.
The land rates approved by the Government of
India for Dwarka is also applied on flats in South
Delhi. They are predetermined rates on actual
break even basis.
7. Surcharge @ 20% w.e.f. 16.8.96.\024
33. Indisputably again, other components for determining the cost
remains the same every year. The only change which was effected, is the
change in the land rate, which is approved by the Government. Other
parameters for calculating the material cost were approved by the Vice-
Chairman of the Authority.
34. Delhi Development Authority has been created under a Parliamentary
Act. It, indisputedly, is a State within the meaning of Article 12 of the
Constitution of India. Being so, the provisions of Part III of the
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Constitution of India must be applied by it. Undisputedly, again, it has also
the duty to strive hard for giving effect to the Directive Principles of State
Policy as contained in Part IV of the Constitution of India.
35. Objects of the DDA is stated in Section 6 of the Act. We may notice
that although the heading of Section 6 states about the object of the Act, the
main provision contain both its objects and powers. It is also curious to
notice that its power to constitute a scheme so as to provide housing
facilities to the citizens of India and, in particular, those belonging to lower
income group as also coming from lower strata of the society has not been
mentioned which we would find pari materia in statutes framed by other
States. [See Chairman, Indore Vikas Pradhikaran v. M/s. Pure Industrial
Cock & Chem. Ltd. & Ors. 2007 (8) SCALE 110]
36. It is accepted that although the Act was enacted in the year 1957, the
idea of providing for implementation of such housing scheme started much
later. The Rules, as noticed hereinbefore, were framed only in the year 1968
and implementation of actual housing schemes are said to have been started
in late seventies or early eighties.
37. While acting as a \021State\022 within the meaning of Article 12 of the
Constitution of India, it is imperative that D.D.A., while implementing its
statutory power, upholds the fundamental rights of the citizens and strive
hard to give effect to their Directive Principles of the State Policy. We,
however, cannot also shut our eyes to the fact that in terms of Article 37 of
the Constitution of India whereas the provisions of Part III are justiciable,
the provisions of Part IV are not. Only when an action of the State is taken
to give effect to any of the provision of Part IV of the Constitution of India
which is not otherwise ultra vires the Constitution or offends the principles
embodied in Part III of the Constitution of India, the same may be upheld,
having regard to the provisions contained in Part III thereof. The action of
the State, therefore, must at the first instance be adjudged on the touchstone
of the principles of Fundamental Rights and then the provisions contained in
the Parliamentary Act, the regulations framed thereunder as also the terms of
the contract entered into by and between the parties.
38. We may or may not agree with the submission of learned counsel for
the appellants that the right of housing arising out of such a scheme is a
fundamental right within the meaning of Articles 19(1)(e) and 21 of the
Constitution of India, but there cannot be any doubt whatsoever that the
action of a State must satisfy the principal requirements of Article 14, viz.,
treating persons similarly situated equally and grant of equal protection to
them. Reasonableness and fairness is the heart and soul of Article 14 of the
Constitution of India. Keeping the aforementioned principles in mind, we
may consider the points involved herein.
Scheme
39. The basic fact that the scheme was floated in the year 1991 being SFS
is not in dispute. It has also not been denied or disputed before us that the
said scheme in its application is fundamentally different from those of the
others schemes, viz., MIG, LIG, Janta and Expandable Housing Scheme.
There is also not much dispute as regards the fact that in terms of the said
scheme, estimated costs as well as rights and liabilities of the parties are laid
down in the invitation to offer. Allocation of the area, floor etc. ought to be
notified on acceptance of the offer by the registrants. Such allocation again
undisputedly is made on the basis of draw of lot having regard to the specific
number of flats available. The registrants have no choice in that behalf.
Although he might have exercised his right of option in relation to the area
or the floor but then he, in fact, has no hands thereover. The letter of
allotment contains the schedule of payment as also other terms and
conditions in support thereof.
40. We, in this batch of appeals, are principally concerned, inter alia, with
the interpretation of clause 4 of the Letters of Allotment.
41. This scheme, ordinarily, was to operate within a time frame. DDA
was expected to complete the constructions within a period of 2= years.
Four six-monthly instalments were required to be paid by the registrants
within the aforementioned period which would include the grace period.
42. Whereas ninety days\022 time is not taken into consideration for the
purpose of computing the default clause, indisputably, again the power of
the authority to regularize the default on receipt of interest @ 18% per
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annum on the amount due to and owing to an allottee is specifically provided
for. The period of 2= years vis-‘-vis the six-monthly interest must have
been laid down keeping in view the fact that whereas the amount deposited
by the registrants by instalments would be invested for construction of the
flats. 18% interest is prescribed for default both on the part of the DDA as
also on the part of the registrants. No time limit is fixed for completion of
the scheme. The only penalty which the scheme prescribes is payment of
interest. So far as area of SFS is concerned, a registrant has no role to play.
Admittedly, constructions have been completed in the year 2000.
43. For interpretation of clause 4 of the scheme, the aforementioned
background is required to be borne in mind.
Ingredients of clause 4 are :
\023(a) The allotment letter would indicate the four
due dates on which the first four
installments are to be paid. The fifth
installment would be paid on demand.
(b) 90 days delay in the first four installments is
condonable subject to payment of prescribed
interest.
(c) After the expiry of 90 days if payment is not
made for first four installments there would
be automatic cancellation.
(d) This automatic cancellation can be restored
on payment of interest and other charges
subject to availability of the flat.
(e) The cancellation due to non-payment of
final installment will be made if the payment
is not made within 120 days with no
provision of any further extension.\024
44. It has not been denied or disputed that although the registrants
defaulted in making payments but the flats were available. In fact, when the
default took place, the flats were not constructed. They have, thus, not been
allotted to the persons on the wait list.
45. It may be true that recourse to clause (d) should be undertaken by the
allocattees within a reasonable time. What would be a reasonable time
would, however, depend on the facts and circumstances of each case. No
hard and fast rule can be laid down therefor.
46. In a given case, it may be a few months but in another having regard
to the conduct of DDA, it may be one year or more. What would constitute
a reasonable period must also be considered keeping in view the rights of the
parties as also the fact that in terms of clause 4 of the offer of allotment there
does not exist any prohibition to pray for regularization upon default, even
after a period of 120 days. In a situation of this nature, it may not be
unjustified to arrive at the conclusion that such a right can be exercised, if
not, when the flats were ready for handing over actual possession, but at
least when there has been a substantial progress. We must also take into
consideration that the scheme, the letter of allotment, the contract between
the parties to pay interest in case of default to each other leads to a
conclusion that DDA in its wisdom thought that payment of 18% interest
shall subserve the purpose. We, however, hasten to add that it does not
mean that DDA must entertain such an application for restoration and/or
condonation of default despite lapse of time. It has its own right in relation
thereto which may be invoked. The right to allot the flat to a person who is
on the wait-list as a result whereof a seal of finality can be put, the right of
the registrants or registrants even the whole or a part of the advance or other
amounts deposited by him stand forfeited.
Interpretation of the Act :
47. DDA functions through the Committees constituted in terms of
Section 5A of the Act. Power has been delegated in favour of its Chairman
and the Vice-Chairman. Such delegation of power, however, as provided for
under Section 52 of the Act does not extend to make regulations. What,
therefore, cannot be done by way of regulation, cannot be done by executive
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order.
48. It has not been denied or disputed that having regard to clause 5.10 of
the brochure and clause 4 of the letter of allotment, the term \023tentative cost\024
must be given its natural meaning.
49. It varies from time to time as it is not a one time process. The price
difference between the estimated cost and the initial cost \023as it worked out
on the completion as per costing formula in vogue\024 would have to be paid
along with the 5th and final instalment.
Notifications :
50. The impugned circulars have three distinct elements :
1. Price of South Delhi flats would be worked out by adding 20%
surcharge in terms of the office order dated 16.8.1996 duly approved
on 22.8.1996.
2. 20% surcharge will have to be paid in case where there is a small
delay, in which case only interest has to be paid.
3. In all other cases original cost + 18% or the current cost whichever is
higher would be payable.
51. Legality and/or validity of the said circulars is in question. We may,
at the outset, notice that there is nothing on record to show that the Office
Orders dated 16.8.1996, 27.8.1996 and 21.3.1999 were published in the
Gazette or were otherwise brought to the notice of the registrants.
Conduct :
52. Conduct of the parties may be noticed from the case of Manjit Singh.
Admittedly, the registrants failed to pay instalments within the stipulated
period. A notice dated 23.4.1997 was served on him which is in the
following terms :
\023WHEREAS you had been allocated a
second floor category \026 II, SFS flat in Pkt. F,
Sheikh Saria Residential Scheme vide allocation \026
cum demand letter dated 31.3.93 under the DDA
(Management & Disposal of Housing Estates)
Regulations 1968 against your registration under
the 5th SFS \026 1982.
AND WHEREAS as per the allocation cum
demand letter the following installments were to
be paid as per the following schedule :-
Installments Amount Due Date Installment Challan
paid on No.
1st Rs.1,35,867/- 30.4.93 24.5.93 032601
(Rs.1,35,867)
IInd Rs.1,25,060/- 30.10.93 30.10.93 112025
31.05.94 (Rs.43,675)
(Rs.50,000)
IIIrd Rs.1,56,325/- 30.4.94 24.11.94 010243
(Rs.50,000)
IVth Rs.1,25,060 30.10.96 25.07.96 010245
(Rs.50,000)
From the perusal of the above chart, it can
be seen that you have not deposited the installment
as per schedule indicated in the allocation cum
demand letter.
AND WHEREAS as per the terms and
conditions of the allocation cum demand letter as
contained in Clause \026 4 the allocation was liable to
be cancelled if the installments are not made as per
the schedule.
AND WHEREAS it is evident that you
failed to deposit the installments as per the
schedule and thus have committed the breach of
the terms and conditions of the allocation cum
demand letter dated 31.3.1993
Therefore, I, Dy. Director (SFS) hereby
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inform you that the allocation made to you vide
letter dated 26.3.93 \026 31.3.1993 stands
automatically cancelled due to the breach of the
terms and conditions of allocation.
It is further inform (sic) that the 5th SFS
Scheme 1982 stands already closed, therefore, you
are advised to return all the original FDR, Demand
cum allocation letter and third copy of challan so
that your case can be processed for the refund of
the amount deposited by you.\024
53. He submitted a representation praying for condonation of default. In
his representation, he stated:
\023Immediately on receipt of the DDA letter I ran
hither and thither for financial loans from relatives,
friends, and well wishes and was able to deposit
Rs.2,12,770/- vide challan No.039576 dated
12.5.97 (Annexure F) bringing the total payment to
DDA to 90% of the cost of flat. The flats are yet
to be completed.
I now, therefore, humbly APPEAL to you to
condone the delay in the payment of installments
for reasons stated above, on humanitarian and
compassionate grounds and to regularise the
allocation of the flat for which act of kindness I
shall ever pray. I am also ready to pay any amount
yet due in the form of interest.\024
54. The said representation was accepted by DDA in terms of a letter
dated 10.12.1998 which reads as under :
\023It is our pleasure to inform that you have been
allotted SFS Flat with the following details
through a computerized draw held on __/10/1998:-
Flat No. 61
Floor SEC
Category II
Sector
Block
Pocket
Type
Locality SHEIKH SARAI
We are advising the Housing Acts
Department to issue the 5th and Final Demand
Letter to you at the earliest.\024
55. It allotted the flat. No condition therefor was put. It did not ask for
payment of any surcharge. The original terms were not deviated from. It
did not ask for any extra-cost. The delay in payment of instalments was
condoned and the allocation of flat which stood cancelled in terms of the
aforementioned notice dated 23.4.1997 stood restored. DDA, thus, acted
strictly in terms of the original scheme. The offer of the allocattee was
accepted relying on or on the basis of clause 4, viz., the amount of default
and an interest charged thereupon @ 18% per annum. It is only when the 5th
and final instalment was directed to be paid in terms of demand letter dated
15.2.1999, the current cost computed in terms of the office order dated
16.8.1996 and subsequent office orders was included. The allocattee at that
stage might not have any other option but to pay the same for obtaining
possession. But by reason thereof, he never gave up his right to question the
action on the part of DDA. Rule of estoppel, therefore, has no application.
56. It was, on the other hand, DDA who having accepted the offer of the
allocattee by restoring the allotment, in our opinion, is estopped and
precluded from raising a plea as regards application of office order dated
16.8.1996. It may be noticed that even contents of those letters were not
disclosed to the allocattee.
Was it a Restoration Scheme ?
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57. The office orders, on the basis whereof the purported impugned policy
had been taken, do not refer to the scheme as a restoration scheme. The
resolutions do not say so. Had it been so, DDA would have issued a fresh
notification or at least made its stand clear to the allocattees either by way of
public notice or by informing each of such defaulters individually. Had such
conditions for the purpose of restoration being made known, the allocattees
would have accepted it or rejected it. Evidently, it is a part of the original
scheme. It is not a new one. It is well known principle of law that a person
would be bound by the terms of the contract subject of course to its validity.
A contract in certain situations may also be avoided. With a view to make
novation of a contract binding and in particular some of the terms and
conditions thereof, the offeree must be made known thereabout. A party to
the contract cannot at a later stage, while the contract was being performed,
impose terms and conditions which were not part of the offer and which
were based upon unilateral issuance of office orders, but not communicated
to the other party to the contract and which were not even the subject matter
of a public notice. Apart from the fact that the parties rightly or wrongly
proceeded on the basis that the demand by way of 5th instalment was a part
of the original scheme, DDA in its counter affidavit either before the High
Court or before us did not raise any contra plea. Submissions of Mr. Jaitley
in this behalf could have been taken into consideration only if they were
pleaded in the counter affidavit filed by DDA before the High Court.
58. We have also reservations that in absence of any provision contained
in the Act or the Regulations, the delegatee on its own could frame such a
new scheme. If not, the purported restoration policy would be ultra vires.
We, therefore, cannot persuade ourselves to agree with the contention of
DDA that the restoration policy cannot be tested on grounds of terms and
conditions of the original scheme. If it is a new scheme, it would bear
repetition to state, the terms contained therein should have been known to
the allocattees. We, thus, have no other option but to proceed to consider the
legality and/or validity of such imposition on the premise that the impugned
policy decision is a part of the original scheme and does not contain any new
policy.
Policy Decision :
59. An executive order termed as a policy decision is not beyond the pale
of judicial review. Whereas the superior courts may not interfere with the
nitty gritties of the policy, or substitute one by the other but it will not be
correct to contend that the court shall like its judicial hands off, when a plea
is raised that the impugned decision is a policy decision. Interference
therewith on the part of the superior court would not be without jurisdiction
as it is subject to judicial review.
60. Broadly, a policy decision is subject to judicial review on the
following grounds :
(a) if it is unconstitutional;
(b) if it is de\022hors the provisions of the Act and the Regulations;
(c) if the delegatee has acted beyond its power of delegation;
(d) if the executive policy is contrary to the statutory or a larger policy.
61. The stand taken by DDA itself is that the relationship between the
parties arises out of the contract. The terms and conditions therefor were,
therefore, required to be complied with by both the parties. Terms and
conditions of the contract can indisputably be altered or modified. They
cannot, however, be done unilaterally unless there exists any provision either
in contract itself or in law. Novation of contract in terms of Section 60 of
the Contract Act must precede the contract making process. The parties
thereto must be ad idem so far as the terms and conditions are concerned. If
DDA, a contracting party, intended to alter or modify the terms of contract,
it was obligatory on its part to bring the same to the notice of the allocate.
Having not done so, it, relying on or on the basis of the purported office
orders which is not backed by any statute, new terms of contract could thrust
upon the other party to the contract. The said purported policy is, therefore,
not beyond the pale of judicial review. In fact, being in the realm of
contract, it cannot be stated to be a policy decision as such.
Price Fixation
62. We would assume that the office orders were issued by DDA keeping
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in view the representations made by a large number of defaulters. The plea
taken by DDA gives rise to a dichotomy. If it is a case of contract qua
contract, the provisions of the Contract Act must be taken recourse to. If
DDA was exercising a statutory power, the same must be tested on
application of doctrine of ultra vires. Floating a scheme for providing
housing facilities to a group of people, although is governed by statute,
power under the statute by an executive not only can be tested on the
touchstone of Article 14 of the Constitution of India, but can also be tested
on the touchstone of source of the power under the statute. No provision
either in the Act or the Regulations was brought to our notice which makes
the allocattee bound by the purported policy decision taken by DDA. Even
if it is so, the superior courts may exercise its power of judicial review as the
power which is sought to be exercised by a statutory authority is not under
the contract but under a statute. When a contract emanates from a statute or
is otherwise governed by the provisions thereof, the superior court can also
exercise the power of judicial review.
63. In Gujarat State Financial Corporation v. M/s. Lotus Hotels Pvt. Ltd.
[(1983) 3 SCC 379 : AIR 1983 SC 848], it is stated that such contracts can
be subject to judicial review.
64. Regulations 5 and 6 should not be very liberally construed.
Concededly, the manner in which power is to be exercised is governed by
the past practice. Norms have been fixed for computing the disposal cost.
Although, the superior courts ordinarily would not interfere in the price
fixation but there does not exist any absolute ban. In a case where fixation
of price is required to be made in a particular manner and upon taking into
consideration the factors prescribed and if price is fixed de\022 hors the
statutory provisions, judicial review would be permissible.
65. Strong reliance has been placed upon the residuary power conferred
upon the Authority to determine the cost of construction.
66. When the same is done having regard to the relevant factors on the
basis of which brochure as well as the notice inviting tender was issued, the
superior courts may not interfere; but the same must be done in terms of the
original contract and not de\022 hors the same. The authority, even while
exercising its residuary power, is required to act within the four corners of
the contract. While doing so, the terms of the contract cannot be altered to
include any other factors which were contemplated thereunder. While
computing the extra cost, no additional factor, thus, can be taken into
consideration. If such a power is conceded in the authority, the same would
give rise to exercise of arbitrary power. It is not contemplated in law. When
construing a provision delegates a power on an authority under a statute, the
constitutional provisions must be kept in mind.
67. At the time of calculation of the amount which would be the subject
matter of demand of 5th and final instalment, the jurisdiction of DDA is to
keep itself confined only to the factors on the basis whereof, the brochure
has been issued and offer was made. No additional factor, thus, could be
taken into consideration at the time of issuing notice other than the ones on
the basis whereof offer was made by the registrants. Imposition of
equalization charge also falls within the said purview.
68. There may be some charges like conversion charges which per se may
or may not be bad. Conversion charges levied by the DDA pursuant to the
directions issued by the Central Government which in terms of Section 41 of
the Act is binding on DDA for converting the leasehold into freehold.
However, such a power also must be exercised reasonably and fairly.
Conversion of the property from leasehold to freehold is a separate
transaction. The same has nothing to do with the actions, qua contract.
Imposition of conversion charges, therefore, even if, per se, may not be held
to be bad, the said factor cannot be taken into consideration for the purpose
of computing construction costs. The High Court has struck down the
inclusion of such conversion charges in the costing of the flats. After 1996,
the ordinary cost of construction of a flat was Rs.2,00,000/-, in South Delhi
but not only it framed the basis for computing the final cost but also 20%
additional amount as also 20% surcharge were claimed thereupon.
Sometimes interest also was charged as and when applicable. Thus, so long
the conversion charge is charged by way of a separate transaction, no
exception can be taken. But, purported price fixation as has been done in the
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instant case cannot receive our approval. The same is, thus, in our opinion,
bad in law.
Applicability :
69. The scheme in question was floated in 1992-93. The purported
default on the part of the registrants took place prior to the purported
adoption of the policy decision. The purported office order dated 16.8.1996
discloses shows that an internal decision had been taken to condone the
delay in making payments of first four instalments. The authorities
mentioned therein had been delegated with the power for the period(s)
mentioned as under:
Director (H)-1 Upto 3 months
Commissioner (Housing) Upto 1 year
Principal Commissioner From 1 year to 1 = year
Vice-Chairman Full powers
Clause 3 of the said office order reads as under :
\023There are presently cases in the Housing
Department where there have been delays in the
making of the payments of the flats
allocated/allotted in South Delhi under SFS.
Before the aforesaid revision took place, delays of
one year or so were being regularized with usual
charges, i.e., on payment of 18% interest per
annum and restoration charges, etc. in few cases
where delays are unusually long, current price has
also been demanded.\024
70. Thus, a decision in that behalf had not only been taken but also was
made applicable both in the case where the delay is of one year or so and the
delay which was unusually long. By reason of the said circular, delay in
making payments of instalment was to be condoned on payment of either
current price or old price whichever is higher. From a perusal of the
Resolution dated 27.8.1996, it appears that 20% surcharge was levied over
the disposal cost worked out for the flats in South Delhi SFS. It does not
show that any subsidy was proposed to be granted for the migrants from
Jammu and Kashmir or Punjab. The policy was taken only with a view to
balance the reduced cash in-flow. DDA, thus, had in view commercial
aspect of the matter and not the social justice aspect.
71. Again, by reason of the office order dated 31.3.1999, the delegation of
power in favour of various authorities was redefined. The Vice-Chairman
could deal with delay or default even if it exceeds one year and six months.
22.8.1996 was prescribed as the cut off date for the purpose thereof. Price of
the flat was to be calculated on the basis of either current price or old price
whichever is higher. It was sought to be applied irrespective of the extent of
delay. On what basis 22.8.1996 was taken to be the cut off date has not been
disclosed. We would, however, assume that the said date was taken into
consideration in view of the Resolution dated 27.8.1996.
72. An executive officer, in absence of any provision of a statute, cannot
apply his own decision with a retrospective effect. A delegatee is bound to
act within the four corners of the delegation and not beyond the same.
73. Delegation of power in favour of an authority under a statute must
also be tested in terms of the statutory provisions. No provision under the
Act or the Regulations has been brought to our notice which empowers the
delegatee to alter the terms and conditions of the contract with retrospective
effect. The purported policy decision must, therefore, be tested not only
having regard to the provisions of the statute but also having regard to clause
4 of the offer.
74. Current cost has been calculated upon computing 20% over and above
the actual cost. A provision for surcharge had also been made in terms
whereof a premium of 20% over the disposal cost was worked out on current
cost for the SFS flats in South Delhi. Imposition of surcharge is subject to
the condition that the real value in the market of DDA flats would be much
more than it had been charging as per the cost formula. Parameters of
computation of disposal price have been laid down which we have noticed
supra. The authority having itself adopted a formula for computing the
disposal cost, the same was binding upon the delegatees. A delegatee cannot
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take any action contrary to or inconsistent with the factors laid down for
computation of disposal cost as defined in Section 2(30) of the Act.
Regulations 5 and 6 do not authorize the delegatee to apply a formula which
was not contemplated by the Authority itself. If an Executive Authority in
absence of any statutory provision cannot apply a decision with retrospective
effect, the same would be ultra vires.
75. In Vice Chancellor, M.D. University, Rohtak v. Jahan Singh [2007 (4)
SCALE 226], this Court observed:
\023The Act does not confer any power on the
Executive Council to make a regulation with
retrospective effect. The purported regulations,
thus, could not have been given retrospective
effect or retro-active operation as it is now well-
settled that in absence of any provision contained
in the legislative Act, a delegatee cannot make a
delegated legislation with retrospective effect.\024
[See also Ashok Lanka and Another v. Rishi Dixit and Others, (2005)
5 SCC 598]
76. A definite price is an essential element of binding agreement. A
definite price although need not be stated in the contract but it must be
worked out on some premise as was laid down in the contract. A contract
cannot be uncertain. It must not be vague. Section 29 of the Indian Contract
Act reads as under :
\023Section 29 - Agreements void for uncertainty
Agreements, the meaning of which is not certain,
or capable of being made certain, are void.\024
77. A contract, therefore, must be construed so as to lead to a conclusion
that the parties understood the meaning thereof. The terms of agreement
cannot be vague or indefinite. No mechanism has been provided for
interpretation of the terms of the contract. When a contract has been worked
out, a fresh liability cannot thrust upon a contracting party.
78. It is well settled that a definite price is an essential element of a
binding agreement. Although a definite price need not be stated in the
contract, but assertion thereof either expressly or impliedly is imperative.
Impugned Judgment :
79. The Full Bench of the Delhi High Court has placed strong reliance on
P.N. Verma (supra). One of the fundamental errors which has been
committed by the Full Bench, with respect, is applying P.N. Verma (supra)
without noticing the distinction between the provisions contained in the
clauses of the Brochure in the present case and those obtaining therein. In
the present case Clause 5.10 of the DDA Brochure stipulates that the price
mentioned in the allocation letter is only the estimated price and it could be
changed only on the basis of escalations in the price to be determined by
DDA on the completion of flats. In P.N. Verma (supra), however, the price
was to be fixed on allotment of flats. It gives rise to a lot of difference in
determining the issue.
In P.N. Verma (supra), the High Court observed:
\02324\005 If the stand of the DDA is that the price they
demand is only on the same formula as was
announced and that the increased price demanded
is only due to escalation in cost of construction and
fluctuation in other cost factors, then the issue will
only be whether the fixation of price is in
accordance with the contract and that can be gone
into, both by reason of principle and because it will
involve complicated factual investigations, only in
a suit. This is the alternative stand of the DDA
which we will discuss later. But if the DDA says,
whatever we may have said earlier, we can fix the
price or any basis and that cannot be questioned at
all because it is a contractual matter, the argument
is fallacious because this stand of the DDA means
going behind the contract and revising the earlier
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formula of price fixation which means travelling
back to the pre-contractual statutory stage\005\024
It was also stated:
\02346\005That actual cost was tentatively fixed at a
figure ’which was announced subject, however, to
variations in cost factors. It is not open to the DDA
to alter this basis for the determination of the
disposal cost. So long as the DDA adheres to this
basis in fixing the disposal cost, court will not
interfere. It will not interfere even if there should
be some mistakes or exaggerations in the
calculation of the components of the figure arrived
at, as that would be a matter for determination after
evidence and investigation in a suit. Even if an
item should be included in the cost components,
about the inclusion of which as one of the cost
factors there could be some doubt, the writ court
may not interfere and may leave the parties to fight
out their battle in a regular suit. But where the
disposal cost is fixed on a basis totally different
from that announced earlier or where the
components taken into account cannot be
described by any stretch of imagination as cost
factors or where a component of the cost is shown
to have been fixed arbitrarily and without any basis
whatsoever, the Court has no option but to quash
the determination of the disposal cost so fixed and
direct the DDA to undertake afresh a proper
determination thereof in accordance with the terms
of the original contract or after excluding the items
unwarrantedly included therein or after re-
determining the value of any component on a
proper and reasoned basis\005\024
On legal principle, therefore, ratio of P.N. Verma (supra) is not very
different from what has been held herein.
80. Another fundamental error committed by the Full Bench was to
approve para 29 of the judgment of the Division Bench of the Delhi High
Court in R.K. Sachar v. DDA (LPA No. 727 of 2002 decided on 15.12.2003)
opining that this Court had already approved the contention of the DDA that
it was entitled to recover such a charge in the light of the decision in Premji
Bhai Parmar (supra).
81. The Full Bench failed to notice that in P.N. Verma (supra) surcharge
over and above the disposal price titled \023equalization charge\024 purporting to
provide subsidy for construction of flats for weaker sections of the society in
trans Yamuna area was held to be ultra vires and that the said decision has
been approved by this Court. P.N. Verma (supra), therefore, was misread
and misconstrued.
82. In Premji Bhai Parmar (supra), surcharge was a component of the
disposal price. The disposal price was known to the registrants at the time of
conclusion of contract. As the contract was found to be binding on the
parties, levy of surcharge, thus, was held to be vitiated in law.
83. In this case, the case of the appellant is not that they are not bound to
pay the binding contractual stipulation as contained in Clause 4 of the letter
of allotment. They are and they must. But what cannot be thrust on them is
the price determined on the basis of factors which were not contemplated in
the original contract.
84. In Premji Bhai Parmar (supra), this Court did not record a finding that
even if a surcharge was not a part of Brochure, still the same could be
imposed without any sanction in law so as to bind the allocates to pay the
same although neither they were made aware thereof nor did they give their
consent for payment of surcharge as a part of the contract. The Full Bench
of the High Court wrongly relied upon R.K. Sachar (supra). In the light of
the decision of this Court in Premji Bhai Parmar (supra), the nature of levy
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should have been held to be completely distinct and, thus, Premji Bhai
Parmar (supra) had no application to the fact of the present case.
85. The Full Bench also misdirected itself insofar as it failed to take into
consideration that levy of 20% surcharge was in effect and substance a
compulsory exaction to augment the revenue requirements of the DDA and,
thus, could not have been a part of the contract. Any compulsory exaction
should be viewed in the light of Article 265 of the Constitution of India,
unless it comes within the sphere of contract.
86. It may be reiterated that it is only those components which fall within
the Brochure of the DDA or within the purview of the statutory requirements
can be included in the exercise of price fixation. To the said extent are the
decision of the Delhi High Court in P.N. Verma (supra), Narsingh Jain v.
Union of India [(80) 1999 DLT 742] and DDA SFS Flat Owners Society v.
UOI [AIR 2001 Del 39].
87. Against the said judgment of the Division Bench of the High Court in
P.N. Verma (supra), an appeal was preferred by the DDA before this Court.
This Court in the said appeal titled as DDA v. SFS Assn. and Ors. [Civil
Appeal No. 4402 of 1985] rejected the contention of the DDA that under the
terms of the Brochure related to the said scheme it was empowered to
recover from the registrants an additional amount over and above the
disposal price by way of equalization charges in the following terms:
\023The lengthy and elaborate judgment of the High
Court under appeal makes instructive reading in
prohibiting the DDA from adding to the prices of
the named flats on escalation termed as
\021equalisation and ad hoc charges\022. From the terms
of the model contract entered into by the DDA
with the people who opted for the self-financing
scheme, charging of the said equalization and ad
hoc charges is evidently totally missing. The DDA
in support thereof has banked upon the justness of
its cause and demand, and has no where been able
to project that to begin with, it was part and parcel
of the cost factor. The High Court has seen
through its design and has termed the venture as a
camouflage. We see no reason to take a different
view than the one taken by the High Court.\024
The said decision of this Court is binding upon the DDA.
Conclusion :
88. For the reasons aforementioned, the impugned judgment cannot be
sustained which is set aside accordingly. The appeals are allowed with
costs. Counsel\022s fee assessed at Rs. 25,000/- in each case. Appeals filed by
the DDA are dismissed.