Smt. Rattan Kaur vs Delhi Development Authority And Anr. on 26 July, 2007

[Cites 4, Cited by 8]

Delhi High Court

Smt. Rattan Kaur vs Delhi Development Authority And Anr. on 26 July, 2007

1. The challenge in this writ petition is to a communication dated 15.7.2002 sent by the Delhi Development Authority ('DDA') to the petitioner stating that her application dated 26.9.1997 for conversion of the plot No. F- 97, Naraina Vihar, New Delhi (the property) from leasehold to free hold, and her representation dated 18.3.2002 were rejected since she had not deposited misuse charges in the sum of Rs.5,08,387. The petitioner also challenges the communication dated 8.11.2002 sent by the DDA requiring her to deposit the aforementioned misuse charges within 15 days from the date of receipt of that letter failing which appropriate action would be initiated against her.

2. The facts leading to the filing of the present petition and set out hereinafter are based on the pleadings of the parties and the record of the DDA which has been perused by this Court. By a lease deed dated 23.3.1968 the property in question was leased by the DDA to one Shri Dwarka Nath. The petitioner's late husband Shri Sohan Singh is stated to have purchased Page 2221 the property from Shri Dwarka Nath some time in 1974. It appears that for the first time on 11.10.1974 an inspection was carried out in the locality. The DDA found that the one room in the property was being used for running a typing institute named as Modern Commercial College. An FIR was lodged on the same day by the DDA through its Prosecution Branch. Notice was issued by the DDA to Shri Dwarka Nath on 28.8.1975 asking him to discontinue the misuse within a period of 15 days. The DDA record shows that the said notice was received on behalf of Shri Dwarka Nath by Shri Sohan Singh, the husband of the petitioner on 28.8.1975. In reply to the notice on 11.9.1975 a reply signed on behalf of Shri Dwarka Nath by Shri Sohan Singh was sent to the DDA stating the premises had been allotted to Shri Resham Singh for residential purposes. The said reply thereafter reads: He is using only one room 10' x 12' (lines scored out). Shri Resham Singh is also residing with his family in the same house.... The scored out lines state that the said room was being used by for typing Institute.

3. The only note on the DDA's file is the one dated 12.3.1975 proposing that a show cause notice be issued to Shri Dwarka Nath. There is no other note either in regard to the FIR lodged or the reply to the show cause notice. Given the fact that the next noting in sequence is dated 13.2.1979, it appears that no action was taken by the DDA pursuant to the notice dated 28.8.1975.

4. The notice for completion of construction case was given on 17.8.1978 and completion certificate was granted on 19.12.1978. When a completion certificate was sought for the extension in the building, the file was again processed by the DDA. At that stage a fresh report about misuse was sought in order to ascertain the charges that should be recovered as a pre-condition to granting the completion certificate. An inspection of the premises was therefore carried out and the noting dated 22.2.1979 in that regard reads as under:

Inspected the site No. F/97, Naraina Res. Scheme. Misuse has since been vacated from three to four months back. Local enquiries were made but nobody could give a definite date for commencement of the misuse pl.

On 17.3.1979 it was noted that: when the misuse vacated, as reported as noting page 14, no action by this office required on LSB file. However, documentary evidence may be obtained for removal of misuse with date. However, the matter does not appear to have been pursued further.

5. The nothings then show that the file was thereafter misplaced for some time and recovered few months later on 23.1.1980. Nothing appears to have happened in the next seven years.

6. The record reveals that a general inspection of several premises in the area was undertaken and a misuse report dated 14.7.1987 was prepared. Against the property in question (No. F-97, Naraina Residential Colony), the inspection report indicated Type and Commercial College. On the basis of this report, a show cause notice was issued to Shri Dwarka Nath Page 2222 on 27.10.1987 directing him to discontinue the misuse within a period of 30 days from the receipt of the notice. A reply dated 7.1.1988 was sent to the said show cause notice dated 27.10.1987 stating the the person who is residing in the said house is using purely for residential purposes.It was stated in para 2 of the said reply that: only one room is kept for consultant purposes i.e. own typing work. The nothings on the file do not indicate whether the DDA considered this reply at all. The only nothings in regard to the second instance of alleged misuse are prior to the service of the notice dated 27.10.1987. Therefore it is apparent that no further action was taken in respect of the second misuse notice.

7. An application was made by the petitioner on 5.5.1995 seeking conversion of the property in question from leasehold to freehold. This triggered the next inspection. The noting of 19.7.1995 indicates that it was decided to inspect the property in order to intimate this office about the latest position of the misuse. A joint inspection of the site was undertaken on 6.1.1996 and the noting in this regard stated, inter alia, that the owner of the house met in the premises and on enquiry he told that premises was being misused for typing Commercial College since March 1975 and same was continued up to 2/79 and thereafter the same was closed. The note further recites: A show cause notice was again issued on 27.10.1987 on the basis of survey report received in the office dated 21.7.1987 and that the reply dated 7.1.1988 stated that premises was being used for residential purpose and one room is being used for consultant purpose. Para 5 of the note is significant. It reads: the area under misuse is one room i.e.12 x 10 = 120 sq. ft. The premises at present is being used for residential purpose. The note then proposes that: In view of the above, if agreed, we may recover the misuse charges from 1.3.1975 to 15.1.1988 against the area under misuse i.e. 120 sq.ft.

8. The nothings thereafter reveal that the DDA processed the application for conversion on the footing that the misuse was continuing since 28.8.1975. Further, the calculations on file were at one stage made on the basis that the misuse was till 15.1.1988. However, the noting of 7.4.1997 proposed that the date of start of misuse had to be considered as September 1974 instead of 28.8.1975 and that the misuse charges should be recovered on the basis that the misuse continued till the date of the conversion application.

9. Consequently a demand letter dated 26.9.1997 was issued to the petitioner herein directing her to deposit a sum of Rs.5,08,387 on account of misuse charges for the period 1.9.1974 to 5.5.1995. A final letter was issued on 9.5.2001 to the petitioner stating that she should deposit the aforementioned amount within 15 days else the lease would be cancelled. The petitioner replied on 25.10.2001 maintaining that the house is being used purely for residential purposes. She reiterated that no commercial activity was ever carried out in the house. The representation having been rejected by the DDA, the petitioner filed the present writ petition.

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10. In its reply to the writ petition, the DDA has, apart from the stating some of the facts mentioned hereinabove, relied upon its circulars 26.6.2001 and 8.8.2001 which required the DDA to collect charge past misuse charges at the time of considering the request for conversion of the property from leasehold to freehold. It is further maintained that the misuse of the premises in the instant case does not come under any of the ten categories of professional uses permissible. The DDA has also placed on record the details to show how the amount of misuse charges has been calculated

11. Ms. Madhu Tewatia, learned Counsel appearing for the petitioner submitted:

(a) Each of the show cause notices for misuse of the property issued were vague. No evidence has been gathered which would go to show that the premises has been used for a commercial purpose of a typing college when all that it was used for was consultation work. Further the petitioner was never associated with any of the inspections at any time.

(b) There has been no determination by DDA of misuse on the file prior to issuing a demand for recovery of misuse charges. The demand of misuse charges should be therefore quashed.

(c) Once the DDA itself came to the conclusion that in February 1979 the misuse of the premises had stopped, and there was no evidence that the misuse had continued thereafter, the DDA was not justified in re-rentering the property.

(d) Since no action has been taken on the alleged misuse since 1979 the DDA could not in 1997 seek to recover the misuse charges; such recovery beyond the period of three years was both illegal and unreasonable.

(e) In any event the misuse charges sought to be levied were exorbitant and without legal basis.

12. Ms. Sangeeta Chandra, learned Counsel appearing for the DDA in reply submits:

(a) The DDA has strictly gone by its own circulars dated 26.6.2001 and 8.8.2001 in the matter of considering the application for conversion from leasehold rights to freehold rights. None of circulars have been challenged in these proceedings.

(b) The material on file is sufficient to infer that misuse was continuing from 1974 till the third inspection in 1996. That the misuse continued till February 1979 was admitted by the petitioner herself.

(c) The DDA was in fact being lenient with the petitioner in not terminating the lease and in being willing to consider the request for conversion on payment of misuse charges. There was no right in the petitioner to demand conversion and the application of such purpose had to be processed strictly in accordance with the circulars which had not only the approval of the central government but this Court as well as is evident from the decisions in J.K. Bhartiya v. Union of India .

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(d) On the question of quantum of misuse charges she submits that the basis for such calculation was the circular being followed by the Land and Development Office of the Union Ministry of Urban Affairs. The decisions of this Court in Vinay Kumar Aggarwal v. Union of India and Union of India v. Vinay Kumar Aggarwal , which restrict the recovery of damages for misuse to the first demand notice issued, are subject matter of pending appeals by the DDA in the Hon'ble Supreme Court. She also states that in certain LPAs file in some other matters the Division Bench of this Court has stayed orders of Single Judges that have quashed the demand for recovery of past misuse charges.

13. The narration of the facts hereinabove indicate that the question of there being a misuse of the property from 11.10.1974 when it was first detected till February 1979 when it is stated to have been stopped, is more or less established. The noting on the file that the misuse had stopped by February 1979 when the DDA again inspected the premises is corroborated by the joint inspection in January 1996 when the owner is stated to have made an admission to the same effect. The fact that one room measuring 120 sq.ft was the area of misuse is also not disputed by the DDA itself as evidenced from the joint inspection report of January 1996 and the calculation of misuse charges made on that basis thereafter.

14. However, the case of the DDA that the misuse again commenced after February 1979 and continued thereafter till 1996 has not been established by any cogent and reliable material on record. The inspection report dated 14.7.1987 does not indicate whether the entire premises was being used for type of commercial college or whether one room was being so used. Significantly, there is no material in the form of inspection notes which would show whether anyone from the DDA visited the premises; whether prior notice was given prior to such visit and whether the petitioner or any other occupant of the property or even a neighbour was questioned. It seems to be if at all a unilateral determination. Further, as already noticed, the record does not show that the DDA considered the petitioner's reply dated 7.1.1988 in response to the notice sent to the petitioner by the DDA on 27.10.1987. In any event, no consequential action was taken on the basis of the said inspection report. The decision of the DDA that the misuse commenced once again after February 1979 and continued till 1988 is, therefore, not based on any reliable objective material.

15. As regards the joint inspection of 6.1.1996, it did not show that the misuse had continued after February 1979. Yet, the note of joint inspection proposed the levy of misuse charges for the entire period from 1.3.1975 till 15.1.1988. The last mentioned date was presumably the date of receipt by the DDA the petitioner's reply dated 7.1.1988, in which, in fact, the petitioner denied such misuse. Further although the note stated in Para 5 that the premises at present is being used for residential purpose, it was decided on 7.4.1997 to collect Page 2225 misuse charges on the basis that it commenced on 1.9.1974 and continued till the date of the application for conversion i.e.5.5.1995. There is no factual evidence anywhere in the file of the DDA that the misuse continued till that date. Yet, this decision was justified as being based on the latest policy.

16. That brings us the two circulars dated 26.6.2001 and 8.8.2001 which according to DDA permit it to recover misuse charges for the past period. Ms. Chandra, learned Counsel for the respondent is right in contending that the Court is not, in these proceedings, required to determine the validity of the levy of misuse charges. To be fair to Ms. Tewatia, learned Counsel for the petitioner, she too did not lay any such challenge. The questions that arise are (i) whether the circulars permit recovery of charges for past misuse without any determination of actual misuse and (ii) whether misuse charges can be collected at any time for past misuse and for any length of period of such past misuse. The answer to the first question will determine whether the levy of misuse charges till 5.5.1995 is justified. The answer to the second will determine whether the DDA could have on 26.9.1997 seek to recover charges in respect of a misuse that admittedly stopped in February 1979.

17. Paras 1 and 2 of the the Circular dated 26.6.2001 read as under:

1. All cases of conversion where the past misuse/ unauthorized construction was reported or the misuse is continuing are to be processed for conversion.

2. The misuse charges would be payable for the period of misuse from the date of detection of misuse till the date of vacation of misuse or up to 28.06.1999 whichever is earlier.

18. Likewise paras 1 and 2 of the modified circular dated 8.8.2001 read as under:

1. All cases of conversion where the past misuse/unauthorized construction was reported or the misuse is continuing may be processed for conversion, according to the procedure as set out here.

2. The misuse charges would be payable for the period of misuse from the date of detection of misuse till the date of vacation of misuse or up to 28.06.1999 whichever is earlier.

19. In the further Circular dated 11.8.2003 (to which a reference has been made in para 20 of the judgment in J.K. Bhartiya) the above provisions stand modified and read as under:

(a) Misuse charges shall henceforth be levied up-to-date or actual date of closure, whichever is earlier. In such cases in which the lessee GPA has applied for conversion of the property, the misuse charges shall be levied up to the date of receipt of complete application for conversion along with all annexure and documents. It is further clarified that misuse charges will be levied up to the date of receipt of last Installment or up to the date of closure whichever is earlier in those cases where it has been preferred by the lessee/GPA to deposit conversion charges in Installments.

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(b) Generally the misuse charges are levied from the date of detection as per the survey report/site report, etc. However, in such cases where any proof indicating the misuse of property from an earlier date is available misuse charges will be charged from such earlier date, irrespective of actual date of detection.

20. A reading of the above three circulars shows that before misuse charges can be levied, there has to be a factual determination of past misuse. This is clear from the requirement that misuse charges can be levied only for the period of misuse from the date of detection of misuse till the date of vacation of misuse. The circular dated 11.8.2003 states that it would be levied up-to- date or actual date of closure whichever is earlier. Therefore, the two points i.e., the date of the commencement of misuse and the date of the closure or stoppage of misuse have to be determined factually and a decision in that regard will have to be arrived at before proceeding to levy and collect misuse charges. The circulars dated 26.6.2001 and 8.8.2001 say that the application for conversion will be processed after recovering misuse charges as per para (2) if applicable. The circular dated 11.8.2003 permits collection of misuse charges levied up to the date of receipt of complete application for conversion. The circulars certainly do not permit a presumption the misuse has continued till the date of the filing of such application for conversion. In fact they proceed on the premise that there has been actual misuse in the past or that the misuse of the past is continuing till the date of the application for conversion. Clause (b) of the Circular dated 11.8.2003 indicates that there should be proof of misuse of property from an earlier date to justify levy of misuse charges from such earlier date.

21. There is nothing in these circulars that envisage a situation where for a misuse that has stopped in February 1979, a demand for misuse charges can be levied in 1997. It is no argument to say that because the circulars do not lay down any limitation as regards the demand for past misuse, the DDA can seek to recover past misuse charges at any point in time. The power granted by the circulars to collect misuse charges has to necessarily be tempered by a limitation as regards the period within which such past misuse charges have to be demanded by the DDA.

22. The judgments of this Court referred to by counsel really do not answer the questions that arise for determination in the present case. J.K. Bhartiya proceeds on the footing that the DDA has the power to collect damages for condoning breaches of the lease and for not re-entering the leased premises. The said decision no doubt refers to the circulars of the DDA concerning misuse charges and the connected circulars of the central government. However, the said decision does not provide an answer to the questions that arise for determination here.

23. Likewise, on the facts of the case in Vinay Kumar Aggarwal v. Union of India (supra) the questions arising in the present case were not required to be considered. There, around Rs. 60 lakhs damages were claimed by the Page 2227 DDA a pre- condition to grant of conversion calculated on the basis of the prevalent market rates for different periods of time. This Court was of the view that the very first demand raised in 1969 could alone be recovered together with interest. This judgment was confirmed by the Division Bench in Union of India v. Vinay Kumar Aggarwal. However, in the present case there has been no demand raised at all by the DDA either in 1979 or even within three years thereafter for the misuse between the period 1.9.1974 and February 1979. Therefore, the fact that the decision in Vinay Kumar Aggarwal is pending in appeal in the Hon'ble Supreme Court, need not delay the decision in the present case.

24. Reverting to the two questions that arise here, it must be held that there is nothing in the circulars which justify the DDA's decision to collect misuse charges on the basis that the misuse continued till 5.5.1995 i.e., the date of the filing of the application for conversion. As explained earlier, the misuse charges can be collected on that basis only if on the date of filing of the application of conversion the misuse was continuing. Therefore, in answer to the question (i) it is held that there is absolutely no justification for the DDA to proceed on the footing that the misuse in this case was continuing till 5.5.1995. Such decision is clearly based on no evidence.

25. As regards the answer to question (ii), the only period of misuse which the DDA has been able to establish from the record is 11.10.1974 to February 1979 and no further. The admitted position is that the demand for misuse charges for this period is was sought to be raised for the first time on 26.9.1997. In the view of this Court, it would be unreasonable and arbitrary for the DDA to seek to levy such misuse charges after a gap of 18 years after such misuse stopped. It is actually a stale claim which DDA itself had given a quiet burial to. The demand was sought to be revived only because the petitioner filed an application for conversion on 5.5.1995. Even thereafter for more than 2 years no demand was raised. The Court sees no reason why the conduct of the DDA in the present case should be condoned and it should be permitted to collect misuse charges after a gap of 18 years. All such powers have to be exercised within a reasonable time if they have to be held to be sustainable in law. A delay of 18 years certainly cannot be termed reasonable.

26. The Court fails to appreciate the argument advanced that the DDA is, in not levying misuse charges for over 18 years, being actually lenient with the petitioner. This can hardly be the answer to the contention of the petitioner that the DDA cannot seek to revive a demand for misuse charges 18 years after the misuse has stopped. The DDA is charged with a statutory duty of ensuring that it takes prompt corrective action after the detection of misuse. Further, the underlying presumption of reasonable exercise of statutory powers in such instance would be that the further corrective action, after the stoppage of misuse, would also be taken within a reasonable time. Just like the DDA cannot seek to prosecute a person for an offence under the Delhi Development Act, 1957 at any length of time, likewise collection of fines and penalties will also have to be done within a reasonable Page 2228 time, if no outer limit for such recovery is specifically mentioned. In other words, there cannot be an open- ended time frame for recovery of misuse charges. If the DDA wants to avoid the loss it might suffer for the failure of its officials to act within a reasonable time, it requires to put its house in order and ensure that the necessary corrective action, in the event of a misuse, and the consequential action after the stoppage of such misuse is taken promptly. The answer to question (ii) is that the demand by the DDA made on 26.9.1997 for the misuse that stopped in February 1979 is unsustainable in law.

27. For the above reasons, the impugned communications dated 15.7.2002 and 8.11.2002 of the DDA to the petitioner are hereby quashed. The demand for misuse charges by the letter dated 26.9.1997 is also quashed. Accordingly, a direction is issued to the DDA to now process and decide the petitioner's application for conversion in accordance with law, without demanding past misuse charges and consistent with this judgment, within a period of eight weeks from today. If there is no other legal impediment to the grant of conversion, the necessary documentation for conversion of the property to freehold must be completed within a further period of four weeks thereafter.

28. With the above directions, this writ petition is allowed with costs of Rs.5,000/- which will be paid by the DDA to the petitioner within a period of four weeks from today. The pending application also stands disposed of.

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