Full Judgment Text
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CASE NO.:
Appeal (civil) 1731 of 2005
PETITIONER:
M.P. Housing Board
RESPONDENT:
Anil Kumar Khiwani
DATE OF JUDGMENT: 14/03/2005
BENCH:
ARIJIT PASAYAT & S.H. KAPADIA
JUDGMENT:
J U D G M E N T
[Arising out of SLP (Civil) No.22560 of 2004]
WITH
CIVIL APPEAL No.1732 OF 2005
[Arising out of SLP (Civil) No.22616 of 2004]
M.P. Housing Board \005 Appellant
Versus
Kishan Lal Mulani \005 Respondent
KAPADIA, J.
Leave granted.
These civil appeals by grant of special leave are directed
against a common Order dated 2.7.2004 passed by the High
Court of Madhya Pradesh at Jabalpur in M.A. No.1611 of 2003
and M.A. No.1628 of 2003.
Since the impugned order is common in both the appeals,
the same are jointly disposed of by this judgment.
For the sake of convenience, we may mention briefly the
facts of Civil Appeal No. 1731 of 2005 [arising out of SLP
(C) No.22560 of 2003].
On 18th January, 2000, M.P. Housing Board, appellant
herein, issued an advertisement in local newspaper "Dainik
Bhaskar" inviting offers to subscribe to two schemes floated by
the Board, namely, Katara Hills Residential Scheme and Centre
Point Commercial Scheme. In these appeals, we are concerned
with the booking of a showroom in the commercial complex.
According to the said advertisement, the estimated cost of a
showroom and departmental store in the commercial complex
(Centre Point), having built up area of 3550 sq. ft. on the upper
ground level, was Rs.39 lacs. The registration amount was
Rs.3.90 lacs i.e. 10% of the estimated cost of Rs.39 lacs. What
was proposed to be constructed was a seven storeyed
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commercial complex of showrooms, shops, halls etc. near New
Market Stadium, Bhopal. To give publicity to the said
schemes, brochures were also distributed.
On the basis of the above advertisement, Anil Kumar
Khiwani, the respondent herein, submitted an application in the
prescribed form enclosing his cheque for Rs.3.90 lacs, being
10% of the estimated cost of the showroom. On 25.9.2000, a
temporary registration was made in favour of the said
respondent. On the same date, he was informed in writing that
temporary registration stood granted to him and further
particulars would be conveyed to him on a later date regarding
the total consideration. Thereafter, the appellant herein took
steps to prepare a detailed Project Report, which was approved
by the Town Planning Authority, the Municipal Corporation
and a Committee known as Building High-rise Committee. The
appellant also called upon the State government to forward the
actual land cost and the lease rent, which the State proposed to
charge. The appellant also called upon the electricity board to
forward to them the estimated strengthening charges. After
getting all these informations and approvals, tenders were
invited and after receiving the tenders, the actual cost was
worked out which came to Rs.2000/- per sq. ft.
Accordingly, by letter dated 27.9.2001, the respondent
herein was called upon to give his consent within one month.
By the said letter, each of the contributors including the
respondent was given an option to withdraw from the scheme if
he did not agree to the proposed actual cost of Rs.2000/- per sq.
ft. The contributors were told to collect the registration amount
with interest @ 8% per annum from the board if they opted for
withdrawal from the commercial scheme, provided they opted
for refund by 10.10.2001.
By letter dated 16.10.2001, the respondent wrote to the
board stating that he was not willing to accept the price nor was
he willing to withdraw the registration amount.
By letter dated 27.11.2001, the board called upon the
respondent to pay an amount of Rs.71 lacs for the showroom on
the upper ground floor admeasuring 3550 sq. ft. This was
objected to by the respondent vide notice given to the board.
Ultimately, on 29.6.2002, the appellant cancelled the
registration and called upon the respondent to collect the
registration amount of Rs.3.90 lacs with interest @ 8%
calculated up to June 30, 2002.
On 15.7.2002, the present suit was filed for declaration
and injunction in the Court of Additional District Judge, Bhopal
(hereinafter referred to as "the trial Court"), being Civil Suit
No.39-A of 2002. In the said suit, an application was moved
under order 39 rules 1 & 2 CPC.
By impugned order dated 22.4.2003, the trial Court
prima facie came to the conclusion that the board was guilty of
inordinate delay in the implementation of the scheme; that the
board had demanded almost twice the amount indicated in the
advertisement after accepting the advance and consequently, the
board was restrained from allotting the showroom in question to
any other person, till the final hearing and disposal of the suit.
By the impugned order, the trial Court permitted the board to
call upon the contributor to deposit Rs.39 lacs in four
instalments in terms of the schedule indicated in the above
advertisement.
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Aggrieved by the said decision, the matter was carried in
appeal. By the impugned decision dated 2.7.2004, the High
Court dismissed the Miscellaneous Appeal No.1611 of 2003 as
well as Miscellaneous Appeal No.1628 of 2003. Hence, these
appeals.
Normally, this Court is reluctant to interfere with the
interim orders passed under order 39 rules 1 & 2 CPC.
However, in the present case, we are concerned with
construction of a seven storeyed commercial premises under a
self-financing scheme floated by the appellant. In the said
complex, there are showrooms, departmental stores and halls
for commercial uses.
The question involved in this case is \026 whether the offer
contained in the above advertisement was for a fixed amount of
Rs.39 lacs?
In the present case, the advertisement inserted by the
appellant in "Times of India" indicated Rs.39 lacs as cost of the
built-up area admeasuring 3550 sq. ft., whereas the
advertisement inserted in the local newspaper "Dainik Bhaskar"
indicated Rs.39 lacs as estimated cost for the aforestated built-
up area.
According to the respondent herein, investment was
made by him on the basis of the advertisement in "Times of
India". According to the respondent, Rs.39 lacs was a fixed
cost and, therefore, the board was not entitled to raise the price
to Rs.71 lacs, particularly when it was guilty of delay in
completing the project. It was submitted that the board was not
entitled to approbate and reprobate and that it was bound by its
offer of Rs.39 lacs as contained in advertisement in "Times of
India".
In this case, we are concerned with a self-financing
scheme under which a commercial complex is constructed. In a
self-financing scheme, costing plays an important role. The
building in question comprises of various units. These units are
self-financed. A buyer of the unit has to fund the cost of
construction. A buyer under such a scheme cannot be permitted
to buy a unit at a price which is less than the cost of
construction. In a self-financing scheme, pricing is generally
based on cost of construction unlike sale of houses after they
are completed, in which cases pricing is generally market
related. In the case of a self-financing scheme, no buyer can
claim a right to purchase any unit at a price lower than the
actual construction cost, as the board raises its funds in turn
from the banks and other financial institutions to whom the
board is required to pay interest periodically. In the case of a
self-financing scheme, even if there is failure on the part of one
contributor to pay the costs, the entire scheme falls in jeopardy
and, therefore, there is no merit in the contention advanced on
behalf of the respondent that the impugned orders should not be
interfered with as they are confined only to a particular unit
purchased by the respondent.
It was urged on behalf of the appellant that there was a
mistake in the advertisement inserted in "Times of India",
inasmuch as the word "estimated" stood omitted inadvertently
from the fourth column dealing with cost, though it has been so
mentioned in the advertisement in the local newspaper "Dainik
Bhaskar". It was further contended on behalf of the appellant
that the respondent had filled-in an application form to which
the terms and conditions of allotment were attached. Clause 10
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of the conditions read as follows:
"The cost of plot/house/flat which is mentioned in
the table, is estimated. If there is any increase then
the same will be informed to the allottee."
It was, therefore, submitted that the respondent was fully aware
that the amount of Rs.39 lacs mentioned in the advertisement
was an estimated cost and not a fixed cost.
On the other hand, it was urged on behalf of the
respondent that the document on which reliance is placed by the
board was not placed before the trial Court as well as before the
High Court and, therefore, no interference was called for in the
matter. It was urged on behalf of the respondent that the
respondent was ready and willing to deposit Rs.39 lacs at the
earliest and that the board should be restrained from charging
and recovering the entire amount of Rs.71 lacs, pending hearing
and final disposal of the suit. In this connection, reliance was
also placed on the decision of this Court in Indore
Development Authority v. Sadhana Agarwal (Smt.) & Others
reported in [(1995) 3 SCC 1] as also the decision of this Court
in Kanpur Development Authority v. Smt. Sheela Devi &
Others reported in [AIR 2004 SC 400].
Time has come when the Courts should be slow in
interfering at interim stage with schemes which are based on
costing. India is having cost-push economy. In a self-financing
scheme based on costing, an interim injunction has a cascading
effect. Failure on the part of even one contributory in
contributing the amount to the cost results in total failure of the
project. The developer, like the housing board, makes an initial
investment by borrowing funds from the market. Therefore, an
interim injunction at the initial stage of the project would result
in the total collapse of the entire project. It would also affect
the contributions made by other co-purchasers. Several
components go into costing, including the lease rent payable to
the State Government. These aspects have not been considered
by the trial Court.
Our observations herein however should not be read to
mean that the developer in the present case has an absolute right
to increase the cost of flats initially announced as estimated
cost. The final cost should be proportionate to the estimated
cost mentioned in the offer keeping in mind the rate of
inflation, escalation of the prices of inputs, escalation in the
prices of the construction material and labour charges. These
factors have got to be taken into account on the basis of the
evidence which may be considered at the time of final hearing
of the suit. In the present case, however, the appellant has not
placed before the trial Court the documents mentioned
hereinabove and, therefore, we are remitting the matter to the
trial Court for fresh decision, in accordance with law.
In the case of Gujarat Bottling Co. Ltd. v. Coca Cola Co.
reported in [(1995) 5 SCC 545] this Court, while discussing the
factors to be considered by the Courts in exercise of the
discretion under order 39 rules 1 & 2 CPC, has observed as
follows:
"The grant of an interlocutory injunction during
the pendency of legal proceedings is a matter
requiring the exercise of discretion of the court.
While exercising the discretion the court applies
the following tests \026 (i) whether the plaintiff has a
prima facie case; (ii) whether the balance of
convenience is in favour of the plaintiff; and (iii)
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whether the plaintiff would suffer an irreparable
injury if his prayer for interlocutory injunction is
disallowed. The decision whether or not to grant
an interlocutory injunction has to be taken at a
time when the existence of the legal right assailed
by the plaintiff and its alleged violation are both
contested and uncertain and remain uncertain till
they are established at the trial on evidence. Relief
by way of interlocutory injunction is granted to
mitigate the risk of injustice to the plaintiff during
the period before that uncertainty could be
resolved. The object of the interlocutory
injunction is to protect the plaintiff against injury
by violation of his right for which he could not be
adequately compensated in damages recoverable in
the action if the uncertainty were resolved in his
favour at the trial. The need for such protection
has, however, to be weighed against the
corresponding need of the defendant to be
protected against injury resulting from his having
been prevented from exercising his own legal
rights for which he could not be adequately
compensated. The court must weigh one need
against another and determine where the "balance
of convenience" lies. In order to protect the
defendant while granting an interlocutory
injunction in his favour the court can require the
plaintiff to furnish an undertaking so that the
defendant can be adequately compensated if the
uncertainty were resolved in his favour at the trial.
Under Order 39 of the Code of Civil
Procedure, jurisdiction of the Court to interfere
with an order of interlocutory or temporary
injunction is purely equitable and, therefore, the
Court, on being approached, will, apart from other
considerations, also look to the conduct of the
party invoking the jurisdiction of the Court, and
may refuse to interfere unless his conduct was free
from blame. Since the relief is wholly equitable in
nature, the party invoking the jurisdiction of the
Court has to show that he himself was not at fault
and that he himself was not responsible for
bringing about the state of things complained of
and that he was not unfair or inequitable in his
dealings with the party against whom he was
seeking relief. His conduct should be fair and
honest. These considerations will arise not only in
respect of the person who seeks an order of
injunction under Order 39 Rule 1 or Rule 2 of the
Code of Civil Procedure, but also in respect of the
party approaching the Court for vacating the ad
interim or temporary injunction order already
granted in the pending suit or proceedings."
The judgment of this Court in the case of Indore
Development Authority (supra) supports the appellant herein.
In that case, an advertisement was issued by the development
authority in the year 1977 inviting applications from persons
interested in purchase of flats on hire-purchase basis. The
estimated cost for the LIG flat was mentioned at Rs.45,000/-.
In the proforma attached to the application for registration, the
development authority had stated that the price mentioned by
them was a probable price and that the definite price shall be
intimated at the time of allotment. The purchasers were given
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possession in the year 1984. They instituted writ petition
before the High Court challenging the demand raised by the
development authority based on escalation. The writ petition
was allowed by the High Court. This Court, in the facts and
circumstances of that case, came to the conclusion that the High
Court should not have interfered with the hike in the cost of
construction. This Court observed that the development
authority owed a duty to explain and satisfy the Court the
reasons for such high-escalation but this did not warrant the
High Court while exercising the jurisdiction to examine every
detail of the cost of construction. Accordingly, this Court
allowed the appeal filed by the development authority
observing:
"9. \005. Although this Court has from time to
time, taking the special facts and circumstances of
cases in question, has upheld the excess charged
by the development authorities over the cost
initially announced as estimated cost, but it should
not be understood that this Court has held that such
development authorities have absolute right to hike
the cost of flats, initially announced as
approximate or estimated cost for such flats. It is
well known that persons belonging to middle and
lower income groups, before registering
themselves for such flats, have to take their
financial capacity into consideration and in some
cases it results in great hardship when the
development authorities announce an estimated or
approximate cost and deliver the same at twice or
thrice of the said amount. The final cost should be
proportionate to the approximate or estimated cost
mentioned in the offers or agreements. With the
high rate of inflation, escalation of the prices of
construction materials and labour charges, if the
scheme is not ready within the time-frame, then it
is not possible to deliver the flats or houses in
question at the cost so announced. It will be
advisable that before offering the flats to the public
such development authorities should fix the
estimated cost of the flats taking into consideration
the escalation of the cost during the period the
scheme is to be completed. In the instant case the
estimated cost for the LIG flat was given out at
Rs.45,000. But by the impugned communication,
the appellant informed the respondents that the
actual cost of the flat shall be Rs.1,16,000 i.e. the
escalation is more than 100%. The High Court
was justified in saying that in such circumstances,
the Authority owed a duty to explain and to satisfy
the Court, the reasons for such high escalation.
We may add that this does not mean that the High
Court in such disputes, while exercising the writ
jurisdiction, has to examine every detail of the
construction with reference to the cost incurred.
The High Court has to be satisfied on the materials
on record that the Authority has not acted in an
arbitrary or erratic manner.
10. So far the facts of the present case are
concerned, it is an admitted position that in the pro
forma attached to the application for registration,
the appellant said that the price mentioned by them
was a probable and estimated cost, the definite
price shall be intimated at the time of the
allotment. Thereafter, the appellant had been
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informing the respondents and others who had got
themselves registered, from time to time regarding
the escalation in the cost of the flat. One of the
reasons for the rise of the price for the LIG flat
from Rs.60,000 to Rs.1,16,000 appears to be the
increase in the area of the flat itself from 500 sq. ft.
to 714.94 sq. ft. From 1982 to 1984, possession of
the flats could not be delivered because of the
dispute pending in the Court which also
contributed to the increase in the cost of the flat.
Admittedly, the respondents came in possession of
the flats in the year 1984. In the facts and
circumstances of the case, we are satisfied that no
interference was called for by the High Court."
The judgment of this Court in the case of Kanpur
Development Authority (supra), on which reliance is placed on
behalf of the respondent, has no application to the facts of the
present case as in that matter there was an express clause in the
brochure that the escalation shall not exceed 10%. In the
present case, there is no such clause in the brochure. In the
present case, we are concerned with a commercial complex
constructed under a self-financing scheme and not with the
residential houses as was the case in the matter of Kanpur
Development Authority(supra). Hence, the said judgment has
no application to the facts of the present case.
Before concluding, we may point out that the
observations made herein are only to give reasons in support of
this judgment and they will not bind the parties hereto in the
proceedings before the trial Court.
Subject to above, both the appeals are allowed; the
impugned judgment and orders are set aside and the matter is
remitted to the trial Court for fresh decision, in accordance with
law. However, in the facts and circumstances of this case, there
will be no order as to costs.