Jharkhand High Court
Arun Kumar Sinha vs Jharkhand State Housing Board on 21 July, 2011
Equivalent citations: 2011 (3) AIR JHAR R 777, (2011) 4 JCR 239 (JHA) (2011) 107 ALLINDCAS 347 (JHA), (2011) 107 ALLINDCAS 347 (JHA), (2011) 107 ALLINDCAS 347 (JHA) (2011) 4 JCR 239 (JHA), (2011) 4 JCR 239 (JHA)
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 1127 of 2010
Arun Kumar Sinha ... ... ... Petitioner
Versus
1. Jharkhand State Housing Board through
Managing Director, Ranchi
2. Revenue Officer (Head Quarter), Jharkhand
State Housing Board, Ranchi
3. Executive Engineer, Jharkhand State Housing
Board, Jamshedpur
4. Assistant Engineer, Jharkhand State Housing Board, Jamshedpur
5. Bihar State Housing Board through Managing Director, Patna
6. State of Jharkhand ... ... ... Respondents
CORAM: HON'BLE MRS. JUSTICE POONAM SRIVASTAV
For the Petitioner : M/s Siddhartha Ranjan, Ayush Aditya, S. Singh
For the State : Mr. S. Choudhary, G.A., S. Mishra, S. Kumar
For the Housing Board : Mr. Sachin Kumar
08/21.07.2011Heard Mr. Siddhartha Ranjan, counsel on behalf of the petitioner and Mr. Sachin Kumar counsel on behalf of the Housing Board.
The letter No. 05/AA/3255/05/2781/AA dated 29.12.2006 (Annexure7) issued by Revenue Officer, Jharkhand State Housing Board (Head Quarter), is impugned whereby the Housing Board has made a demand for a sum of Rs. 2,86,940/ up till 31.01.2007 and prayer is also for a direction for execution of the Deed of Conveyance in favour of the petitioner in respect of the house on perpetual leasehold basis pursuant to an agreement dated 27.11.1987 between the petitioner and the Housing Board.
The Housing Board floated a scheme for allotment of houses in Adityapur Middle Income Group, inviting application from the accepted allottees. The petitioner was made an allotment under the said scheme and the terms and conditions in the allotment letter dated 24.09.1983, is Annxure1 to the writ petition. Perusal of the terms and conditions of the allotment, the cost of the house was assessed at approximately Rs. 78,500/ on 30.09.1983. Paragraph 3 of the allotment letter made it clear that the cost can be escalated in the event, there is an escalation in respect of the cost of the land. The cost was subjected to the final valuation. The breakup of the cost and security deposit was detailed in paragraph 4 which is enumerated below: Cost Security deposit (A) 20% of tentative cost of House and/or land Rs. 15,700/ (B) Legal and documentation charge Rs. 150/ (C) Amount of total initial demand (A & B) Rs. 15,850/ (D) Amount deposited by the Applicant() Rs. 6,500/ (E) Total amount to be deposited (C & D) Rs. 9,350/ The allotment letter also mentioned that the cost was to be deposited in 120 monthly installments which will be almost equivalent per month along with the interest and in the event there is a default in deposit of the Installment, the allottee will be liable for payment of interest which will be payable every month. Subsequent to the allotment order, an agreement was entered into only in the year 27.11.1987, though it was stipulated between the parties that the agreement will be executed within a period of one month, but the Hire Purchase Agreement was executed only on 27.11.1987. Clause 3 of the said agreement states that the settlee will be liable to pay to the Board without waiting for any demand by the Housing Board, payment of monthly installment commencing from the first month of December 1987 in 120 monthly equal installment of Rs. 865/ to be paid within that month. Clause 3 of the agreement executed between the parties is detailed. The petitioner was handed over possession in December 1987 and he has been residing in the same house since he was handed over possession by the Housing Board. The impugned letter of demand raised the dispute regarding the demand mentioned at Serial No. 9 of the said letter which states that an amount of Rs. 25,560.20 was demanded on account of the delay in execution of the agreement. In fact, the said amount escalated to Rs. 55,961.55 after calculating interest @ 8.50% for a period of 9 years 7 months. The letter is also accompanied by a chart which shows that the payment of all the installments i.e. 120 installments were made till July 1997 and, therefore, no amount was due towards installment which was the cost of the house required to be paid by the allottee and the balance shown in the chart is 'Nil'. The calculation of the interest from July 1997 on the amount of Rs. 55,961.55 is in dispute in the instant writ petition. This amount is towards interest because of nonexecution of the agreement which was liable to be entered into within one month of the order of allotment. The rate of interest was calculated for nonexecution of agreement from next month i.e. 01.11.1983 which was Rs. 25,560.20 and thereafter, it was increased by adding interest @ 8.50% per month to Rs. 55,961.55. Thereafter, the chart shows that the amount of interest calculated was Rs. 2,86,940/ which is under challenge. Thus, the entire controversy revolves around the question whether the petitioner is liable to deposit the interest for nonexecution of agreement within the stipulated period of 30 days or not? There is no dispute so far payment of installment of the cost of the house is concerned, the entire cost has been paid but when the petitioner started to make a request for execution of the deed of transfer of the house, the respondents insisted of payment of interest on account of nonexecution of the agreement within the stipulated period of 30 days from the date of allotment when the impugned letter along with the chart was issued. The calculation shown towards interest was Rs. 1,24,074.83 for non execution of the agreement and at the bottom of the chart, revaluation of the house was shown to be 1,62,865/. Thus, the total amount was Rs. 2,86,067/.
Learned counsel on behalf of the petitioner emphatically submitted that there was no stipulation between the parties for charging interest on account of delay in execution of the agreement. No notice was ever given for execution of the agreement, neither nonexecution of the agreement can be said to be any "dues" on the part of the petitioner. Admittedly, the nonexecution of the agreement cannot be termed to be a default in payment of dues on which any interest could be charged and, therefore, evidently, the demand is only a high handed act on behalf of the respondents for nonexecution of the transfer deed.
Learned counsel has also challenged the amount of Rs. 1,62,865/ towards difference in cost which is for the first time, mentioned in the demand letter. There is no breakup given that how and when the cost escalated and that too, after a lapse of 20 years. This unilateral fixation of increase in cost cannot be charged, specially when the allotment letter clearly mentioned that the escalation in cost can be made if there is an increase in the cost of the land. There can be no increase in the cost of construction, as the possession was already handed over in the year 1987, and for the first time, the impugned letter mentioned there is an increase of cost in the year 2007. Evidently, there is no default in payment of installments or any dues whatsoever and, therefore, the petitioner has vehemently objected the demand of change of cost as well.
Learned counsel has also pointed that Clause 3(a) of the agreement, which is already detailed above, shows that the agreement is that the payment of installment of Rs. 865/ only was to commence from December 1987 and was to be paid by the petitioner in 120 installments. The chart appended to the impugned letter also shows that the month to month installment was paid commencing from December 1987 to July 1997 and the 'Nil' balance denotes that there was nothing due, no default and, therefore, the charge of interest to the tune of Rs. 55,961.55 up till July 1997 and thereafter computed interest up till January 2007 is vexatious and liable to be quashed.
Reliance has been placed on a number of decisions of this Court in the case of Sahdeo Mistry & Anr. Vs. Jharkhand State Housing Board, Ranchi & Ors. [2003 (3) JLJR 306]. This Court held that the demand by the Housing Board for executing the final deed of conveyance merely because some installments were delayed and, therefore, an exorbitant demand made by the Board, was quashed. It was held that the allottee cannot be saddled with such exorbitant demand by capitalizing the amount not paid on time. This decision was upheld in the L.P.A., which was filed by the Jharkhand State Housing Board reported in [2004 (2) JLJR 441]. Certain observations regarding malafide of the Housing Board are, however, quashed.
The next decision relied by the learned counsel is Manju Singh Vs. The Bihar State Housing Board & Ors., reported in [2001 (1) PLJR 144]. The Court following the decision of the Division Bench in another case of Citizen Cause Vs. Bihar State Housing Board, reported in [(1992) 1 BLJR 367]. Taking notice of the fact that an escalation of cost exorbitantly was depreciated after lapse of almost 17 years and 15 years of delivery of possession.
The submission in the instant case is that the possession was handed over 20 years before.
Learned counsel appearing on behalf of the Housing Board has vehemently disputed each and every argument on behalf of the petitioner. He states that the petitioner is liable to pay for the delay in execution of agreement. He admitted that the payment of Rs. 25,560.20, which increased to Rs. 55,961.55, after adding capitalized rate of interest @ 8.50% per month, is absolutely correct. He pointed out Clause 8 of the agreement which states that interest rate 1% (one percent) per month shall be charged of all dues, either in respect of premium installment or rent for the period of default. Besides, in case of each default the under noted administrative and financial charges shall be levied:
(a) For M.I.G. House/flat Rs. 10/ per default
(b) For L.I.G. House/flat Rs. 5/ per default
(c) For E.W.S. House/flat Rs. 2/ default.
Thus, the learned counsel has justified the levy of 1% (one percent) interest per month on the capitalized value.
The next submission is that the installments were liable to be paid from the very next month of the date of allotment. The petitioner failed to deposit the installment till the execution of the agreement in the year 1987, therefore, he is a defaulter and liable to pay interest at the rate fixed.
The third submission is that since the agreement speaks about an Arbitration Clause, as provided in Clause25 of the agreement, therefore, the rate is not maintainable. The matter is liable to be referred to the Arbitrator, who, according to the agreement, is the Managing Director and none else, the rate is therefore not maintainable and liable to be dismissed, on the ground of alternative remedy alone.
The fourth submission is that the escalation of cost was always reserved by the Housing Board and, therefore, the demand towards the escalated rate in the cost cannot be set aside and till the entire payment is made, no deed of transfer can be executed.
Lastly, the learned counsel has submitted that the Housing Board has an exclusive right to fix terms and conditions and it cannot be altered either at the dictate of the petitioner or by interference of the Court unless it is held to be unconstitutional.
On the ground of alternative remedy, learned counsel has placed reliance on a decision of this Court in the case of Mohan Lal Saraogi Vs. The Jharkhand State Housing Board through its Managing Director & Ors. in W.P.(S) No. 1935 of 2009 decided on 13.01.2010, which was upheld in L.P.A. No. 73 of 2010 by a Division Bench on 12.03.2010.
Learned counsel appearing on behalf of the petitioner has disputed the ground of alternative remedy as not enforceable, since the Managing Director is not the authority and he has no statutory power to make a decision. It is only the Board as provided in the Bihar State Housing Board Act & Rules under Section 115, which empowers the Board to make regulations not inconsistent with the Act. Thus, the emphasis is on another decision in the case of Priya Nandan Sahay Vs. Jharkhand State Housing Board, Ranchi & Ors., reported in [2010 (1) JCR 22 (Jhr)].
I have given a careful consideration to the arguments advanced by the respondents' counsel and also gone through the various decisions. Before I proceed to decide on the merits of the case, the preliminary objection regarding maintainability is decided. First, no doubt, there is an existence of Arbitration Clause in the agreement and the Managing Director has been agreed upon as the sole Arbitrator, but in my opinion, the Managing Director is one of the constituents of the Board, as provided under Section 4 of the Act and he is the person responsible for issuing the demand to the petitioner. Besides, admittedly, the petitioner is a person, who is a Lower Middle Income Group who could somehow manage to purchase the house as far back in the year 1983. The entire money was paid on time and the petitioner is residing there since last 20 years. If he is relegated to the arbitration proceeding after institution of the writ petition and exchange of counter and rejoinder affidavits, the right of the petitioner will stand considerably jeopardized. The alternative remedy of Arbitration can, by no stretch of imagination be said to be an efficacious remedy and, therefore, in my view, the objection of alternative remedy by Arbitration at this stage, cannot be considered and the writ petitioner be sent to approach the Arbitrator.
I have also noticed that subsequent to the receipt of the impugned letter, a representation was made on 30.03.2007, but there is no outcome of the said representation, therefore, I proceed to examine the arguments on merits. The agreement executed between the Housing Board and the petitioner clearly stipulates that the payment of installment has to commence with effect from December 1987 @ Rs. 865/ per month, which is admittedly, deposited and the chart appended to the impugned letter itself substantiate this fact, therefore, admittedly, there is no delay or default in payment of agreed installments. I am not inclined to accept the submissions of the counsel for the respondents that the installments were to be paid from the very next month after allotment letter was issued for the reason that the agreement itself is very clear that the Housing Board and the petitioner unequivocally agreed that the installments were to be deposited from December 1987 onwards when the possession was handed over. The impugned letter itself shows that the amount of Rs. 25,560.20 was for the difference in time of execution of the agreement between 01.11.1983 to 30.11.1987 whereas the agreement should have been executed within one month from the date of allotment accepted and that the agreement was to be entered into within a month, yet, no amount was due and the petitioner cannot be said to be a defaulter. The interest is levied only on the due amount, but for inaction on the part of the petitioner as well as the Housing Board in not getting the agreement executed, cannot be a reason to levy interest which swelled to Rs. 55,961.55 @ 8.50% for a period of 9 years 7 months mentioned in the impugned letter and also depicted from the chart. The delay in execution of the agreement can, by no stretch of imagination, be termed to be any amount "due" and, therefore, no interest is chargeable for this delay. It was open for the Housing Board to have cancelled the allotment for the reason of nonexecution of the agreement but on the contrary, it went ahead and get the agreement executed in the year 1987 without any objection. Not only this, the possession was handed over consequent to the agreement and the installments were accepted in terms of the agreement, therefore, the Housing Board is not entitled to decline execution of the deed of transfer for this reason.
The next question arises for consideration is the escalation in cost after 20 years which is again without even letting the petitioner, know the reason of escalation. Since, admittedly, the construction was completed at the time of execution of the agreement, possession was handed over and perusal of the terms and conditions of the agreement, it does not transpire that there was any stipulation regarding escalation of cost. On the contrary, it was a Hire Purchase scheme and the settlee was to be treated as a tenant for the hire purchase period and Clause 9 of the agreement clearly mentions that after the full payment, a deed of lease in respect of the transfer of the premises on perpetual leasehold basis will be executed in favour of the settlee. Clause9 of the agreement is quoted below: "That after the full payment has been made and all dues cleared and if there has been no violation of any of the terms and condition of this agreement or of the Board's Regulations in this regard a deed of lease in respect of the transfer of the aforesaid premises on perpetual lease hold basis shall be executed in favour of the settlee".
In view of this settlement, in fact, the Housing Board has committed a default on its part, in nontransfer of the house in question despite complete payment has been received till July 2007. The escalation in cost after a lapse of 20 years is nothing but a high handed act of the Housing Board to somehow build pressure on the petition so that the execution of the deed of transfer may be avoided. This Court has been approached by the petitioner under equity jurisdiction and I am of the considered view that the petitioner is entitled for the deed of conveyance to be executed by the respondents forthwith. The demand for nonexecution of the agreement for some time, is absolutely a frivolous at such a belated stage. If action was liable to be taken against the petitioner for nonexecution of the agreement, it should have been done right in the intervening period of 198387 and the Housing Board should have declined to execute the deed of agreement or hand over possession. Not only this, the Board proceeded to accept the installments and after lapse of 20 years, came up with an exorbitant demand inclusive of a so called escalation of cost without even detailing as to how the cost has increased after 27 years when the Board has done nothing in the house which is in occupation of the petitioner, after it was handed over to the petitioner.
In view of what has been state above, the grievance of the petitioner stands fully justified. I am not in agreement with the submissions made on behalf of the counsel for the Housing Board. The writ petition is allowed. The demand made by virtue of the impugned letter No. 05/AA/3255/05/2781/AA dated 29.12.2006 (Annexure7) issued by Revenue officer, Jharkhand State Housing Board (Head Quarter), is quashed. The Housing Board is directed to execute the deed of conveyance within a period of three months from today.
With the aforesaid observations/directions, this writ petition is disposed of.
(Poonam Srivastav, J.) Manish