Delhi High Court
Smt. Madhu Chawla And Anr. vs Delhi Development Authority And Anr. on 17 September, 1999
Equivalent citations: 82(1999)DLT7, 1999(51)DRJ594, 1999RLR558
Author: D.K. Jain
Bench: Arun Kumar, D.K. Jain
JUDGMENT D.K. Jain, J.
1. By this writ petition under Article 226 of the Constitution, the petitioners seek a direction to the Delhi Development Authority (for short the DDA) to issue a no objection certificate/sale permission in respect of the industrial plot No.X-10, Okhla Industrial Area Phase-II, New Delhi, which was sold on 17th April, 1993, by auction under the order of the Court, after charging the un-earned increase at the approved rates.
2. To appreciate the controversy involved, some material facts may be noticed.
3. In an open auction of the said plot on 19th February, 1974, by the DDA, the bid of one M/s. Work Enterprises Private Limited, in the sum of Rs. 78,500/- was accepted and a lease deed was executed in their favour on 17th February, 1977. After obtaining in permission from the DDA, the plot was mortgaged by the said company with Punjab & Sind Bank for raising loan. The project having failed, the Bank filed a suit (No. 470/80) in this Court for recovery of its dues. During the pendency of the suit, the Court ordered sale of the said plot by public auction. The reserve price was fixed at Rs. 28 lakhs inclusive of un-earned increase. Pursuant to the said direction, the plot was put to open public auction on 17th April, 1993. The petitioner's bid for Rs. 19.50 lakhs exclusive of un-earned increase payable to the DDA, being the highest, was accepted by the auctioneer and the initial amount of Rs. 5 lakhs was deposited by the petitioners. The balance amount of Rs. 14.50 lakhs was deposited by the petitioners on 29th April, 1993.
4. The petitioners applied for confirmation of the sale by the Court. Objections to the confirmation was raised by one Raja Ram, who was in occupation of the subject land. These objections were dismissed on 1st November, 1993 and the sale of the plot was confirmed in favour of the petitioners. While doing so, the Court directed the Registry to issue a certificate of sale in favour of the petitioners within four weeks from the date of the petitioners producing a no-objection certificate from the DDA. The petitioners were directed to approach the DDA for the said purpose within two weeks from the date of the said order.
5. Consequent upon the said order, the petitioners, vide their letter dated 4th November, 1993, approached the DDA for issue of no-objection certificate. Having failed to gel any response from the DDA to the request contained in the said letter the petitioners filed an application (IA 3514/94 in Suit No. 470/80) on 5th April, 1994, seeking a direction to the DDA to issue the demand note for payment of un-earned increase and the no-objection certificate expeditiously. Simultaneously, vide their letter dated 19th April, 1994, the petitioners also requested the Lt. Governor to fix accountability and responsibility on the person concerned for delay in filing reply to the said application. Ultimately, the DDA filed its reply affidavit to the said application. Since one of the contentions urged by learned counsel for the petitioners is based on the stand of the DDA in the said reply affidavit, it would be beneficial to extract the relevant portion of the reply affidavit, dated 18th September, 1994. It reads thus:
"In the present case, the average auction rate for the calender year 1990-91 were taken since the last auction for similarly sized plots was held then. The average auction rate for almost the same size of plots, works out to be Rs. 7106/- per Sq.Mtr. If this is taken to be the rate for the years 1991-92 with escalation of 10% for subsequent years 1992-93 and 1993-94, the market rate for the year 1993-94 works out to Rs. 8598-26p per Sq.Mtr. It may be noted that as per the normal practice in DDA, the rates in the past have to be escalated by 20% p.a. However, in this case, keeping in view the slump in the property the mortgaged status of land, it was decided that the rates should be escalated only by 10% p.a. instead of 20%. It was also decided that the interest w.e.f. the date of confirmation of sale @ 18% should not be charged in this case as was the usual practice in other cases because the demand had not been issued so far. On this basis, 50% of the unearned increase which the unit is liable to pay, works out to Rs. 21,23,384/-."
6. Along with the reply affidavit the DDA filed a calculation sheet, indicating the basis for determining the un-earned increase, payable by the petitioners, at Rs.
21,23,384/- as against Rs. 9,35,750/- worked out by the petitioner. According to the said calculations the un-earned increase has been worked out by adopting the auction rate for the year 1991-92 with escalation of 10% for each of the subsequent years namely, 1992-93 and 1993-94, arrive at the market rate of the land for the year 1993-94 at Rs. 8598.26p per Sq.Mtr. However, before the Court could decide the issue, the suit filed by the Bank was transferred to the Debts Recovery Tribunal. Since the Debts Recovery Tribunal could not go into the question of un-earned increase payable by the petitioners in respect of the subject plot, the present petition was filed, challenging the afore noted amount of un-earned increase demanded by the DDA, inter alia, on the grounds namely, (i) the un-earned increase should not be worked out on notional value but on the basis of actual sale price, which the property fetched in the auction conducted on 17th April, 1993, more so when in public auction it could not fetch more than Rs. 15.50 lakhs; (ii) the Government of the National Capital Territory of Delhi had itself fixed the rates for the purpose of unearned increase in July, 1997 and, there after, the unearned increase should be worked out in accordance with the said rates at Rs. 9,35,750/-; (iii) the value of the property at Rs. 43,25,268.70p has been fixed at an arbitrary figure without any basis and (iv) by including the amount of un-earned in crease in the bid amount, the actual market value of the plot works out to Rs.
28,85,750/-, which is more than the reserve price of Rs. 28 lakhs, fixed by the Court and, therefore, it should be accepted for the purpose of determining the un-earned in crease.
7. An affidavit in opposition has been filed by the DDA and the petition is resisted mainly on the grounds namely (i) as per Clause II(iv) of the lease deed, the decision of the lessor in respect of the market value of the plot is final and binding upon all the parties and, therefore, the petitioners cannot challenge the amount determined by the DDA by way of un-earned increase; (ii) as per the terms and conditions of the lease deed it is the absolute discretion of the lessor to grant the requisite permission for substitution of names of the petitioners in the lease deed and, therefore, the petitioners have no vested right to be substituted as lessees without complying with the conditions as may imposed by the DDA and (iii) the petitioners are also liable to pay interest @ 18% per annum on the un-earned increase determined by the DDA after the expiry of 30 days of the demand till actual payment.
8. We have heard Mr. Mukul Rohtagi, learned senior counsel, assisted by Mr. A.J. Bhambani on behalf of the petitioners and Ms. Geeta Mittal, learned counsel for the DDA.
9. During the course of arguments, apart from reiterating the afore noted grounds urged in the petition, learned counsel for the petitioners placed on record a booklet containing guidelines on simplified procedure for calculation of un-earned increase due to the DDA. According to the learned counsel the DDA is bound by the terms and conditions contained in the said booklet and the unearned increase in the present case has to be calculated @ Rs. 4,346/- per Sq.Mtr., as prescribed in the booklet. Since learned counsel for the DDA Was confronted with the said booklet during the course of the hearing, on her request, she was granted time to seek instructions and to file an affidavit stating the DDA's stand in this behalf, which has been done.
10. In the additional affidavit filed by the Director (Lands), it is stated that what is contained in the said booklet is not applicable on the facts of this case as the same became effective after 1995 and the policy and principles in vogue till 1993-94 would apply in the instant case. It is asserted by learned counsel for the DDA that the rate applied for calculation of the unearned increase is based on the actual auctions, which took place during the relevant period and, therefore, it could not be said to be arbitrary or whimsical, warranting interference by this Court in writ jurisdiction. To buttress the argument that the rate applied reflects the correct market value of the said plot at the relevant time, learned counsel has also produced the register maintained by the DDA for recording particulars of the auction conducted by the said authority.
11. Thus, the short question falling for consideration is whether the DDA is justified in initially calculating the unearned increase at Rs. 8,598.26p per Sq.Mtr. on the basis of auction rate of December, 1991, loaded by escalation of 10% per annum and then subsequently supporting it on the basis of actual auction rate at Rs. 7,022/- per Sq.Mtr. or is it bound by the rates mentioned in the booklet issued to the public on 20th November, 1996. We may not that if it is held that the policy and principles announced in the said booklet are applicable in the instant case, the un-earned increase will have to be worked out at Rs. 4,346/- per Sq.Mtr.
12. In order to answer the question, it will be necessary to notice the intent and purpose of the said guidelines. The preface to the booklet states that it contains a simplified procedure for calculation of un-earned increase in the market value of the plot as per lease deed to meet the requirement of auction purchasers/allotters of residential/commercial/industrial plots who sell/transfer their leased properties outside their blood relations for which the lessor's permission is required, in order to avoid hardships and considerable cost on the transaction, not anticipated beforehand. The essential aim of the booklet is stated to be to provide guidelines on un-earned increase liability as applicable now to the lessees for their knowledge and is expected to fill the information gap being encountered by them. Some of the relevant paragraphs of the booklet, issued pursuant to the DDA's resolution No. 98/95, read as follows:
"2. CHANGES In supersession of the previous policy on the method of calculation of unearned increase, the following methods are prescribed as approved by Authority vide Resolution No. 98/95.
3. ADMINISTRATIVE GUIDELINES These calculations will be applied as per the administrative guidelines on the applicability of unearned increase under various circumstances for transfer/sale as prevailing now.
4. CRUCIAL DATE & ISSUE OF DEMAND LETTER The rate shall be charged as applicable on the date of filing the application. The demand letter will not be updated if issued late. However, interest @ 18% per annum shall be charged if payment is made after 60 days from the date of issue of demand letter.
5. OLD CASES All the cases where final demand has not been raised and/or received for calculations of UEI based on the rates of 1994-95, the demand will be finalised on the basis of this new policy"
13. The above paragraphs indicate that these guidelines are to apply to all the cases where final demand has not been raised and/or received for calculation but the rate has to be charged as applicable on the date of filing of the application for issue of no-objection certificate for sale/transfer of a plot. Therefore, the moot question is whether the petitioners having applied for issue of no-objection certificate on 4th November, 1993 i.e. much prior to the announcement of the afore-mentioned policy, are liable to pay the un-earned increase on the basis of the rates announced in the booklet containing the new guidelines.
14. As noted above, according to the scheme announced, the demand on account of un-earned increase will be finalised on the basis of new policy in all cases where final demand has not been raised and/or received for calculation of un-earned increase even on the basis of rates of 1994-95. There is no serious dispute on this aspect as well except that the stand of learned counsel for the DDA is that though a final demand letter for payment of unearned increase had not been issued to the petitioners but the amount of un-earned increase payable by them having been disclosed in the reply affidavit filed by the DDA in September, 1994, in Suit No. 470/80, a final demand is deemed to have been raised for the purpose of para-5 of the said guidelines and, therefore, the rates prescribed in the new guidelines are not applicable in the instant case.
15. We are unable to persuade ourselves to agree with learned counsel for the DDA. It is evident from the afore-extracted paragraph of the reply affidavit filed in the said suit that even according to its own stand, in the present case the DDA had decided not to charge interest from the date of completion of sale as per the usual practice because the demand notice had not been issued to the petitioner. The argument of learned counsel for the DDA that the said reply may be deemed to be a final demand notice in terms of para-5 of the guidelines is stated to be rejected. By merely stating the amount of un-earned increase payable by the petitioners in its reply affidavit, the DDA cannot be absolved of its obligation to raise the final demand and communicate the same to the party concerned strictly as per its usual practice. Besides, the amount of un-earned increase indicated in the reply affidavit, as payable by the petitioners, was calculated @ Rs. 8,598.26p per Sq.Mtr. on a notional figure on the plea that no auctions had taken place after 1991-92. This is contradictory to DDA's present stand that as per the actual sale transactions which look place in the year 1993-94 the market value comes to Rs. 7,022/- per Sq.Mtr and, therefore, on DDA's own showing the amount indicated in the said reply affidavit cannot otherwise be enforced against the petitioners.
16. We are of the considered view that no final demand towards the un-earned increase having been raised and communicated to the petitioners till date, the new guidelines contained in the booklet issued on 20th February, 1996 are applicable in the instant case and the un-earned increase has to be calculated in accordance with the rates prescribed therein. Having announced a policy for the benefit of the general public, it is not open to the DDA to go back on it.
17. Consequently, the petition is allowed and the Rule issued in the petition is made absolute by issuing a mandamus to the DDA to re-calculate the amount of un-earned increase in accordance with the afore noted guidelines and issue a final demand notice to the petitioners within four weeks from today. On petitioners depositing the said amount within four weeks thereof, no objection certificate shall be issued by the DDA within two weeks of the receipt of intimation from the petitioners about the deposit of un-earned increase. If the petitioners fail to deposit the said amount within the time granted, they will be liable to pay interest @ 18% per annum from the date of receipt of the demand notice till the date of actual payment. There will, however, be no order as to costs.