Full Judgment Text
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CASE NO.:
Appeal (civil) 3706 of 1998
PETITIONER:
Bareilly Development Authority
RESPONDENT:
Vrinda Gujarati & Ors.
DATE OF JUDGMENT: 26/02/2004
BENCH:
S. Rajendra Babu, Dr. AR. Lakshmanan & G.P. Mathur.
JUDGMENT:
JUDGMENT
Dr. AR. Lakshmanan
This appeal is directed against the judgment and order
dated 14.5.1996 passed by the High Court of Judicature at Allahabad
in Civil Misc. Writ Petition No. 36735 of 1995. The appellant-Bareilly
Development Authority ( hereinafter referred to as "the BDA") was set
up by the State of U.P. by Notification dated 19.4.1977 issued under
Section 3 of the U.P. Urban Planning and Development Act, 1973.
The BDA issued an advertisement calling for applicants to apply for
allotment of flats to be constructed by it in the Priyadarshani Nagar
Yojna of Bareilly under the Pushpanjali Scheme and the Kusumanjali
Scheme. The appellant also issued a Brochure giving the terms and
conditions under which the said applicants could apply for and be
allotted the flats under the said Scheme. The estimated cost of the
said flats was also given in the said Brochure and it was clearly
mentioned that the final costing will be done later and the costing of
the flats was subject to the right of the appellant to amend the same.
The Brochure also did not contain any prescribed date or time period
for either construction of the flats or the delivery of possession.
The respondents in this appeal applied for allotment of flats in
Kusumanjali Scheme. As per the Brochure, 52 flats under the Scheme
were to be of 57.10 Sq. Mtrs. (614.39 Sq. Ft.) and were to cost as
follows:-
Ground Floor - Rs.2,10,000.00
First Floor - Rs.2,00,000.00
Second Floor - Rs.1,90,000.00
Third Floor - Rs.1,80,000.00
Respondents 1-5 registered themselves for the flats in
Kusumanjali Scheme and also paid the required registration fee. The
construction of the flats was started and thereafter, there was some
dispute between the BDA and its contractor and the construction was
delayed for nearly one and a half year and finally the construction was
re-started though only two floors instead of original four were built in
the Kusumanjali Scheme and thus only 22 flats were built out of 52
originally intended. After the draw of lots, the respondents were
issued allotment letters indicating therein in Clause 2 that the price of
the flat was still an estimated one and that the final costing would be
done after completion on the basis of the actual costs and would be
informed thereafter to the allottee which would be payable by them.
Clause 2 of the Allotment Letter (Annexure-B) reads as under:
"The estimated cost of the flat is Rs.2,10,000/-. The
final cost would be intimated to you on the basis of
actual costing after the completion of the Scheme, which
would be payable by you."
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A Final Costing Committee was set up by the BDA consisting of
the Secretary, the Chief Accounts Officer and the Executive Engineer
of the BDA and the Committee, after due deliberation, recommended
that on the basis of the actual cost of each flat, the price had to be
enhanced (in the case of flats on the ground floor, for example,
increasing from Rs.2,10,000/- to Rs.2,81,100/-). The Committee also
recommended that the allottees be given additional time to deposit the
enhanced amount of the price as the said allottees had already
deposited their respective quarterly instalments. It has further
recommended that in case the allottees fail to deposit the said amount
in the time prescribed, interest @ 18% be charged from them. The
respondents were duly informed by individual notices by the appellant
about the final costing of the said flats and also that they were
required to deposit within 15 days of the receipt of the said notice the
balance amount of price of the flat as well as the proposed lease rent.
The respondents filed objections to the said increase in price. The
said representations were rejected by the appellant on
21.10.1993(Annexure-D). When the flats were ready for delivery of
possession, in view of the reluctance shown by the respondents in
paying the enhanced amount, the BDA offered the option to the
respondents to either file an undertaking by way of affidavit that they
would pay the enhanced amounts or to take back their deposit sums
with interest. All the respondents filed their undertakings by way of
affidavits dated 19.5.1994 and undertook unconditionally to be bound
by the final costing of the flats by the BDA and also to pay the
enhanced amount. The affidavit reads thus:-
AFFIDAVIT
I, Shrimati Vrinda Gujarati, Wife of Shri B.K. Das, am the
resident of 330, Madhobadi, Bareilly and I hereby on oath state as
following:
1. That the decision taken in future by the Bareilly Development
Authority regarding the increase in the cost of the Flat No.9-A (Ground
Floor), Kusumanjali Scheme, Priyadarshani Nagar, Bareilly allotted to
me would be binding on me.
2. That the deponent is ready to deposit the entire amount of the
increase in cost.
Sd/-
Varinda
On 19.6.1993 to 13.7.1994, the BDA delivered possession of
the said flats on various dates to the respondents. The respondents,
after taking possession of their respective premises and after filing the
above undertakings once again made representation to the appellant
against the final costing of the said flats. The BDA, in the meantime,
sent another notice to the respondents to pay the enhanced unpaid
amounts of the costs with 18% interest or else legal action would be
taken against them. Since the respondents failed to pay the said
amount in spite of repeated demands, the BDA initiated recovery
proceedings against the respondents under the U.P. Zamindari
Abolition and Land Reforms Act, 1950 and recovery certificates were
issued against the respondents by the Tahsildar, Bareilly. Being
aggrieved, the respondents filed C.M.W.P. No.36735 of 1995 before
the High Court of Judicature at Allahabad challenging enhancement
in the final cost of the flats and praying, inter alia, that the recovery
proceedings against the respondents initiated by the BDA for
recovery of the unpaid amounts be quashed. The High Court stayed
the recovery proceedings provided the respondents deposited
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Rs.45,000/- on or before 31.1.1996. Before the High Court, the BDA
placed the Chart showing the details of the reasons for enhancement
of the price. (Annexure-N). The High Court by its judgment and
order dated 14.5.1996 allowed the writ petition filed by the
respondents herein and issued further directions to the BDA regarding
adjustment of various amounts against the final price of the flats,
though the High Court did not either strike down the enhanced price or
hold it illegal. Aggrieved by the said judgment, the BDA has preferred
this appeal by way of special leave petition.
We heard Shri Bharat Sangal, learned senior counsel
appearing for the BDA and Mr. A.K. Sanghi & Mr. Punit D. Tyagi,
learned counsel appearing for the respondents.
Learned counsel appearing for the appellant made the following
submissions:
(i) There has been no application of mind by the High Court to
the terms and conditions of the contract entered into between the BDA
and the respondents and the High Court has ignored totally the law in
regard to such cases as laid down by this Court.
(ii) The High Court failed to appreciate that Clause 2 of the
Brochure of May, 1990 produced by the BDA for the concerned
scheme in which the said respondents applied for and obtained the
concerned flats, clearly provided that the cost of each flat given in the
said Brochure was only an estimated and actual cost would be
intimated later at the time of allotment.
(iii) The High Court failed to appreciate that in Clause 15 of the
Brochure it was clearly stated that the BDA reserves the right to
amend any term or condition of the Scheme till the time of allotment
and such amendment shall be binding on the allottees.
(iv) It was contended that the revised cost of the said flats,
necessitated by the increase in size of the flat as well as the increase
in each flat’s share in cost of the land due to reduction in number of
flats built, were informed to the respondents, they accepted the
increased cost and also filed undertakings by way of affidavits
affirming their decisions to abide by the increase and pay the required
enhanced amount.
(v) The High Court has failed to appreciate that Clause 13 of
the Brochure only provides that the possession would be given to the
allottee only after the full amount has been deposited and it cannot be
interpreted to mean that the possession would be given immediately
after the allotment is made. The direction issued by the High Court
regarding the payment of interest by the authority to the respondents is
baseless and issued without any reason.
It was submitted that the High Court has erred in holding that
the appellant is not entitled to any interest on the amounts unpaid to it
by the concerned respondents for the period between 20.12.1995,
date of the interim order and 14.5.1996, the date of the final judgment.
In this regard, it was submitted that the High Court has failed to
appreciate that by the interim order dated 20.12.1995, the High Court
had only stayed the recovery proceedings against the said
respondents for non-payment of balance amount, and it cannot be
said that the said order has also stayed the liability of the said
respondents to pay the said amount.
It was further submitted that the High Court has not struck
down the enhanced cost announced by the appellant nor has it held
that the appellant is not entitled to recover the unpaid amounts from
the respondents and it has only directed that certain adjustments on
account of interest payable to the respondents and difference in
registration fee be adjusted from the final price.
(vi) The High Court has failed to appreciate that there was no
challenge made to the terms of the Brochure by the respondents at
any stage and thus there could be no interference with the said terms
and conditions by the High Court and in that regard, the High Court
has exceeded its jurisdiction by doing so.
It was further submitted that the judgment and order of the High
Court is also bad as it has exceeded its jurisdiction by granting
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compensation to the respondents.
Per contra, Mr. A.K. Sanghi, learned counsel appearing for the
respondents, submitted that the appellant being a statutory body is
under obligation to provide flats to the respondents, who belong to the
Middle Income Group and other citizens of a reasonable and just price.
The High Court, therefore, was perfectly justified in law in holding that
the enhancement sought to be recovered from the respondents is
arbitrary and without basis whatsoever.
A reading of the terms and conditions of the Brochure would
show that the same were one sided and were rightly held by the High
Court to be unconscionable because the BDA has a duty to construct
and allot flats to the poor citizens who are unable to construct houses
on their own. It was further contended that the terms and conditions of
the contract as well as the undertaking given by the respondents are
not voluntary and that the respondents who are weaker sections of the
society were forced to give undertakings which were unforceable.
We have gone through the relevant records, the undertakings
and the affidavits given by the respondents and the Chart of
Escalation and the judgment of the High Court.
Before proceeding further, it is beneficial to reproduce the Chart
of Escalation which is as follows:
Chart of Escalation
1. Estimated area = 614 Sq.ft.
2. Finally constructed area = 702 Sq.ft.
3. Increase in covered area = 88 Sq. ft.
4. Rate of construction per sq. ft. = Rs.342/-
(cost of land included)
5. Increase in construction cost = 342x88= Rs.30,096/-
6. Cost of land also increased for
every purchaser as the construction
made was 2 storeyd in place of 4
storeyed
7. Initially purchaser of ground f
floor had to pay for land = Rs.137/- per Sq. ft.
(This was included in estimated cost of Rs.2,10,000/-)
8. After final costing cost of land
increased to = Rs.183/- per sq. ft.
9. Increase in cost of land = Rs.46/- per sq. ft.
10. Total increase in cost of land = Rs.32,292/-
for every purchaser of
ground floor
11. Increase in cost of other
facilities = Rs.8,500/- such
as parking, water, sewer etc.
12. Total increase = Rs.30,0096+Rs.32.292+
Rs.8,500 = Rs.70,888/-
Details of increased area
1. One more toilet was constructed.
2. In place of two common passages, three common passages
were constructed.
3. Bigger Verandah was made.
Total increase in covered area = 88 Sq. ft.
It is seen from the above Chart that the finally constructed area
is 702 Sq. ft. and the increase in the covering area is 88 sq. ft. The
BDA has claimed only the increase in construction cost of 88 sq. ft. @
construction per sq. ft. at Rs. 342/- namely, Rs.342 x 88 = 30,096/-.
According to the BDA, the cost of the land has also increased for every
purchaser as the construction made was two storeyed in place of four
storeyed. Initially the purchaser of the ground floor had to pay for land
Rs.137/- per sq. ft. which was included in the estimated cost of
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Rs.2,10,000/-. After final costing, the cost of the land is now increased
to Rs.183/- per sq. ft. The increase in cost of the land is Rs. 46/- per
sq. ft. and the total increase in the cost of the land for every purchaser
of ground floor is Rs. 32,292/-. It is also an admitted fact that the BDA
had provided the other facilities such as parking, water, sewer etc. and
the increase in cost of these facilities is Rs.8,500/-. Thus the total
increase of construction cost, cost of the land and the other facilities
come to Rs.70,888/-. The details of the increased area has also been
very clearly spelt out which includes one more toilet, in place of two
common passages, three common passages were constructed and a
bigger Verandah was made and the area covered by these items
comes to 88 sq. ft.
We have already referred to the allotment letter, undertaking by
way of affidavit and Chart of Escalation etc. and as per the above
undertaking, the BDA is entitled to collect the enhanced price from the
allottees. Once the respondents owe money to the appellant, it is fully
in the competence of the Authority to recover the same. The parties to
this action are bound by the terms of the contract.
This Court in its judgment in the case of Bareilly
Development Authority & Anr.vs. Ajai Pal Singh & Ors. , (1989) 2
SCC 116 has clearly held that the authority or its agent after entering
into the field of ordinary contract acts purely in its executive capacity.
Thereafter, the relations are no longer governed by the constitutional
provisions but by the legally valid contract which determines the rights
and obligations of the parties inter se. At page 124 of the judgment,
this Court has also held that once the respondents have given their
written consent accepting the changed and varied terms and
conditions, they cannot be permitted to contend that the authority has
gone back on its original terms and conditions to their detriment. This
Court further held that once the respondents have entered into the
realm of concluded contract pure and simple with the authority they
cannot step out of the terms of the contract unless some statute steps
in and confers some special statutory obligations on the authority in
the contractual field.
The above view was endorsed by this Court in its judgment in
Indore Development Authority vs. Sadhana Agarwal (Smt.) &
Ors., (1995) 3 SCC 1.
This Court in paragraph 9 of this judgment held as under:
"But taking all facts and circumstances into
consideration, this Court said that it cannot be held that
there was misstatement or incorrect statement or any
fraudulent concealment, in the brochure published by
the Authority. It was also said that the respondents
cannot be heard to say that the Authority had arbitrarily
and unreasonably changed the terms and conditions of
the brochure to the prejudice of the respondents. In that
connection, it was pointed out that the most of the
respondents had accepted the changed and varied
terms. Thereafter they were not justified in seeking any
direction from the Court to allot such flats on the original
terms and conditions."
This Court further in paragraph 10 of the judgment held as under:
"So far the facts of the present case are concerned, it is
an admitted position that in the proforma 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
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 are of the flat
itself from 500 ft. to 714.94 Sq. fgt. From 1982 to 1984,
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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."
We are, therefore, of the opinion that only obligation on the BDA
was to provide the houses in question on the contractual price and in
that regard the judgment of this Court in L.I.C. of India & Anr.vs.
Consumer Education & Research Centre & Ors., (1995) 5 SCC 482
was cited. The above judgment has no relevance with the present
case.
It was denied by the BDA that the respondents have paid full
amount towards the cost of the flats as alleged. The enhancement in
the cost was due to actual increase in the cost of the flat as detailed in
the chart annexed as Annexure-N which formed part of the
supplementary affidavit filed before this Court. Such enhancement, in
our opinion, was in accordance with clauses 2 and 15 of the Brochure
of May, 1990 and the said enhancement was also in accordance with
clause 2 of the allotment letters dated 10.12.1991 issued to various
applicants. The said enhancement was clearly accepted by the
respondents by their various affidavits of undertakings filed on
19.4.1994 and other respective dates before the BDA. The
respondents after undertaking to pay the enhanced amount and after
taking possession of the flats on that ground cannot be allowed to
raise frivolous contentions to avoid payment to the appellant.
At the time of hearing, this Court on 11.4.1997 passed an
order directing the counsel appearing on behalf of the BDA to find out
whether there is a proposal or likelihood of two more storeyes being
added to the flats that have been constructed. Counsel for the BDA
submitted before the Court that the Scheme originally was to build
four storeyed buildings but now only two storeyed building has been
built. As a result, the entire cost of the flats has rateably been
distributed among the occupiers of the two storeys building instead of
larger number of occupiers of the four storeys building as was
originally envisaged. This is another reason for the enhancement in
the cost of the flat.
This Court in the case of Delhi Development Authority vs.
Pushpendra Kumar Jain, 1994 Supp(3) SCC 494, which was cited
before the High Court, has misinterpreted the said decision. In that
case in paragraph 7 at page 497 of the judgment, this Court held that
there was no material produced before any Court in the said matter
to show that there was any delay in allotment of the flats in the said
case due to inefficiency on the part of the authority and further that as
there was no period prescribed in the Scheme for the allotment hence
it could not be said that there was any inordinate delay.
In the present case also, there was no period prescribed for
allotment and in any case, the flats in question were allotted within
two years from the issuance of the Brochure and there cannot be said
to be any inordinate delay.
The High Court also has not given any finding that the final
costing of the flats concerned was wrong or unreasonable. The High
Court has only held that there is unreasonable delay in delivery of
possession and hence, directed to pay the interest @ 18% for the
delayed period from the date of the allotment to the date of the
delivery of the possession.
The BDA Housing Scheme provides that no interest is payable
on instalments under Self Financing Scheme. However, the Scheme
provides that if the amounts payable to the BDA are not paid within the
prescribed time limit, penal interest at the rate of 18% per annum shall
be payable along with payable amounts.
At the time of hearing, learned counsel made an appeal to the
Court to reduce the rate of interest from 18% to 6% on the ground that
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the allottees under the Scheme in question belonged to Middle Income
Group and, therefore, they would not be in a position to pay the
interest. In our view, once the liability of the respondents to pay the
balance amount remaining unpaid out of the final cost of the flat is not
struck down and remains in existence, the appellant cannot be asked
to forego the interest for the period, or any part thereof, for which the
said amounts remain unpaid. The High Court is not right in creating
double jeopardy for the BDA directing it to pay interest to the
respondents while at the same time to direct the respondents not to
pay interest on the unpaid amounts. However, taking note of the
financial status of the respondents and in the peculiar facts and
circumstances of the case, we direct the respondents to pay simple
interest @ 9% on the enhanced price of the flats. The enhanced
price of the flats shall be paid in six monthly equal instalments together
with accrued interest payable on diminishing balance on or before the
10th of every succeeding month commencing from April 2004. If the
respondents commit any two defaults in the payment of instalments on
the enhance price, the interest @ 18% shall be recovered from them
by the BDA. The amounts deposited by the respondents as per the
interim order, if any, will be given credit to. According to the Brochure,
the Housing Scheme is a Self Financing Scheme wherein the allottees
were to pay the cost of the flats in quarterly instalments. The parties
are bound by the terms of the contract in regard to the payment of the
original cost of the flats as per the agreement.
For the foregoing reasons, the present appeal filed by the BDA
deserves to be allowed. The judgment and order of the High Court
dated 14.5.1996 in CMWP No. 36735/95 is set aside. But however,
we make no order as to costs.