Delhi High Court
Smt. Renu Bali vs Delhi Development Authority [Along ... on 22 July, 2005
Equivalent citations: 128(2006)DLT204
Author: Mukundakam Sharma
Bench: Mukundakam Sharma, Tirath Singh Thakur, Swatanter Kumar
JUDGMENT Mukundakam Sharma, J.
1. Right to live with dignity is a recognised basic human right which is guaranteed by all the civilized societies of the world. The said right encompasses within its ambit the right to food, water, decent environment, education, medical care and shelter Although right to shelter is not explicitly recognised as a Fundamental Right under the Constitution of India, yet our Courts have proclaimed that the same is embedded in the provisions of Articles 19 and 21 of the Constitution of India. In the case of State of Karnataka v. Narsimhamurti , it was declared by the Supreme Court that the right to shelter is a Fundamental Right guaranteed under Article 19(1) of the Constitution. In Chameli Singh and Ors. etc. v. State of U.P. And Anr., , it was declared as follows in paragraph 7 of the judgment:
"The right to shelter, therefore, does not mean a mere right to a roof over one's head but right to all the infrastructure necessary to enable them to live and develop as a human being. Right to shelter when used as an essential requisite to the right to live, should be deemed to have been guaranteed as a fundamental right. As is enjoined in the Directive Princes, the State should be deemed to be under an obligation to secure it for its citizens, of course subject to its economic budgeting. In a democratic society as a member of the organized civic community one should have permanent shelter so as to physically, mentally and intellectually equip to improve his excellence as a useful citizen as enjoined in the Fundamental Duties and to be useful citizen and equal participant in democracy."
2.In terms of the aforesaid declared law, the State has an obligation subject to economic budgeting to provide facilities and opportunities to have house sites and also to undertake construction of house for accommodation of the houseless. It is more so in a place like Delhi, which not only has a large population of its own but has also to accommodate a huge influx of population from the neighbouring states and various areas in search of job opportunities. There is always a sizeable demand for housing accommodation in and around Delhi.
3. In order to fulfilll the aforesaid avowed object and also to meet the requirements compelled by the circumstances, the Delhi Development Authority was constituted by a Central Act being Act 61 of 1957, which was enacted to provide for development of Delhi according to plan and for matters ancillary thereto. The object of the Delhi Development Authority is defined under Section 6 of the said Act wherein it is provided that the objects of the Delhi Development Authority would be to promote and secure the development of Delhi according to plan and for that purpose the Authority would have the power to acquire, hold, manage or dispose of land and other properties to carry out building, engineering, mining and other operations.
4. The Delhi Development Authority has also been empowered under the provisions of Section 57 read with Section 11 of the Delhi Development Act to make the Regulations to carry out the object of the Act with the previous approval of the Central Government. In exercise of the said powers the Delhi Development Authority has made a regulation called the "Delhi Development Authority Management and Disposal of Housing Estates Regulation, 1968". Regulation No.2 of the said Regulations defines the words allotment letter and "allottee" under Regulation 2(3) and 2(4) as follows:
"2(3) "Allotment Letter" means a letter in such form as may be prescribed by the Authority from time to time making allotment of a particular property to an applicant.
2(4) "Allottee" means a person to whom a property has been allotted by way of sale."
5. Terms and conditions and the manner for the disposal of property are also set out in Chapter II of the said Regulations. As to how the property has to be disposed of by the Delhi Development Authority is set out in Regulation 5 of the Regulations as follows:
"5. Disposal of property. - The disposal of a property shall be effected by either hire-purchase or or sale or in such other manner and subject to such terms and conditions as may be decided by the Authority from time to time."
6. Fixation of price is also to be determined by the Authority in the manner provided for under Regulation 6, which provides as follows:
"6. Fixation of price. - The hire-purchase price or the disposal price, as the case may be, shall be such price, as may be determined by the Authority."
7. The procedure for disposal of property is also set out in the said Regulations under Regulation 21 onwards.
8. The Delhi Development Authority in order to meet its statutory obligation and requirement, took steps for acquisition of vast strips of land through the machinery of the Government. The said land upon acquisition by the State Government was placed at the disposal of Delhi Development Authority for construction of various types of houses under various housing projects. Various schemes were floated by the Delhi Development Authority to cater to the needs of various groups of population being Higher Income Group, Middle Income Group, Lower Income Group and Janta Group. Number of flats of different sizes were constructed by the Delhi Development Authority to meet the requirements of various groups of the society. On completion of construction, the same were sold to the registrants who had applied for purchase of such flats constructed by the Delhi Development Authority on the basis of advertisements issued by the Delhi Development Authority from time to time. One of the Schemes, which was also foated by the Delhi Development Authority was meant for financial participation in construction of flats by the registrants by contributing funds from time to time. The said Scheme was known as Self Financing Scheme. The registrants under the said Scheme were registered and draw of lots were held. The successful registrants in the draw of lots were issued allocation letters allocating a particular flat in the locality and zone. The successful applicants in the said draw are allocated flats in the particular area where he/she is successful. In recognition of the same, allocation letters were issued containing specific terms and conditions, which were already set out in the brochure. At that stage, however, no flat number could be assigned and the applicant/allottee, at that stage, only knew that he has to get a flat in a particular area and particular zone. The allocation letter provides for payment of four Installments towards 90% of the tentative price of the flat. When the flats are almost ready or allotment, draw of lots are again held to allocate specific flat numbers and then after payment of the 5th and final Installment, letter of allotment was issued allocating specific flat number and the balance payment to be made within the stipulated period. Only upon payment and completion of necessary formalities that possession of the flat was handed over to the successful applicant / registrant. Under one of the aforesaid Schemes, applications were invited by the Delhi Development Authority from 2nd of December 1992 to 11th January, 1993. The brochure issued for the purpose of inviting applications contained a number of clauses regarding terms and conditions. The relevant provisions are quoted herein below:
"1.2 The allotment under the scheme will be on the terms and conditions contained in this brochure and the Delhi Development Authority (Management and Disposal of Housing Estates) Regulation, 1968.
5.10 The details of the flats and tentative cost etc. are available in Annexure-B. The cost of the flats mentioned therein is tentative and subject to revision on account of escalation in the value of land and cost of construction. Please note that there is a possibility of upward revision of the tentative cost.
5.11 Those who are successful for a ready built flat will be called upon to make the payment in lumpsum within 60 days. Ors. who are successful for a flat where the work is already in progress will be asked to deposit within 30 days a specified percentage anything up to 90% of the estimated disposal price representing the expenditure already made and the amount required for construction of flats in next 3 to 4 months. Applicants successful for new allocations are asked to pay 25% the estimated cost of the flat by way of 1st Installment payable within 30 days. In each of the case 60 days time is further given to remit the amount with prescribed interest.
11.1 The tentative cost of different flats in different schemes is indicated categorywise in Annexure 'B' . The payments are to be made by bank draft/pay order drawn in favor of Delhi Development Authority (Housing Deptt) or by/through Challan in the various branches of the State Bank/Central Bank of India indicated in Annexure-C: No payment by cheque or cash will be accepted.
11.2 The demand-cum-allocation letters issued will indicate the prescribed dates by which the payments will be required to be made. The demand letter for final Installment for the flats in progress and new allocations will be issued separately and this may also include the possible increase in the cost of the flat. No separate letters will be issued for any of the subsequent Installments. It will be obligatory on the part of the allocatees to make the payments and deposit the requisite documents before the due dates indicated. In the event of default the allocation/allotment of the flat in the scheme will be liable to be cancelled. If submission of documents as demanded are delayed, maintenance charges will be leviable provided the delay in submission of documents is regularised.
Surrender/cancellation 12.1 In case the allocation made to an applicant on the basis of the lots is sought to be surrendered / cancelled by him/her, he/she shall have to pay penalty equal to 10% of the registration deposit, if the application for surrender/cancellation has been made within one month of the date of issue of demand-cum-allocation letter. In the event of cancellation of allocation/allotment in the above said manner, the applicant will have to pay the amount of penalty within a fortnight of the letter sent to him/her failing which the amount of penalty will be deducted from the registration deposit and the balance will become refundable to the applicants. In this situation his/her registration shall stand cancelled. In such cases no interest on registration depot it will be allowed beyond the date of draw. In case he/she deposits the penalty in time, his/her registration will continue to be valid, for applying in next brochure only.
12.2 If the allotment of flat is cancelled (either on the allottee's own request or due to the non-fulfilment of the terms and conditions of allocation by the allottee) after the expiry of 1,2,3 and 4 months from the date of issue of demand-cum-allocation letter, interest calculated @ 12% p.a. for the 1st month and @ 18% p.a. for the 2nd, 3rd and 4th month on the amount demanded in the demand letter shall be charged in addition to the amount of penalty specified above.
12.3 If the applicant does not pay the subsequent Installments before the due date, the allocation of the flat in the Scheme will be automatically cancelled and the amount deposited till date will be refunded to the party after deducting 10% of the amount of the registration deposit.
Handing over possession 14.1 The allottee shall be entitled to take delivery of the possession only after he has completed all the formalities, paid all dues and furnished/executed all the documents as required in the allotment-cum-demand letter or the Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968, as the case may be. If the allottee does not take possession of the flat within 3 months from the date of issue of possession letter, he shall be liable to pay maintenance / watch and ward charges at prescribed rates.
14.2 The Property is being offered on "as is where is" basis. The DDA will not entertain any request for additions or alterations or any complaints, whatsoever, regarding Property Circumstances (PC) as defined in para 19 of Regulation referred to above or about cost of flats, its design, the quality of material used, workmanship or any other defect.
17.4. The above terms and conditions will be followed generally but the DDA reserves its right to alter any of them in its discretion if and when considered necessary. The altered terms, if any, will supercede these terms and conditions.
9. The allocation letter issued to the successful registrants contained a condition in clause 4, which reads as follows:
"4. The amount demanded should be paid on or before the due date mentioned in para 2 and 3 above. Extension of time for making payment of the amount demanded in column 7 of para 3 above up to a maximum period of 90 days from the due date is admissible.
An allottee need not apply for extension but he will have to pay interest @ 12% p.a. for the first month and @ 18% p.a for the subsequent period. In case payment of the amount asked for in the demand letter is not made within 90 days of the due date, the allotment shall stand cancelled automatically. However, cancellation due to non-payment of first 4 Installments during the stipulated period can be got restored on payment of dues with interest along with cancellation and restoration charges for each cancellation due to non-payment, subject to availability of the allocated flat. The cancellation due to non-payment of final Installment within 120 days of the date of issue (letter of the block date) of the demand letter for 5th Installment shall not be rest red under any circumstances."
10. Some other relevant clauses of terms and conditions circulated with the allocation letter read as under:-
"1. No separate demand letters will be issued for 2nd, 3rd and 4th Installments. It will be obligatory on your part to make the payment before the due date indicated at page-1; failing which the allocation is liable to be cancelled.
2. The estimated cost of the flats as given in this letter is provisional and subject to revision on the completion of the flat. Any price difference between the estimated cost and the cost as it comes out on completion as per costing formula then in vogue would have to be paid along with the 5th and final Installment. There would be no review of the cost of the flat in the intermining period. Interest @ 7% on the amount deposited will be payable for the period beyond 3-+ years to the date of issue of possession letter if the construction of the houses is not completed by then.
3. The amount demanded should be paid on or before the stipulated due date failing which the allotment shall be liable to be cancelled without notice. In case, due to unavoidable reasons, the allottee is not able to make the payment within the due time, then he must ensure that his acceptance of the allotment reaches the Housing Department before the due date of payment with a request for extension.
11. The Delhi Development Authority issued an office memorandum on the subject of regularisation of delays in respect of flats allotted in South Delhi under the Self Financing Scheme on 16th August, 1996. The relevant part of the said office order is as follows:
"Sub: Regularisation of delays in respect of the flats allotted in South Delhi under the SFS.
Under the present delegation of powers, delay in making payments of first 4 Installments as well as payment of 5th and final Installment are regularised as per following delegation of powers:
Director(H)-1 - up to 3 months Commr. - up to 1 year Principal Commr. - From 1 year to 1 -+ year V.C.- Full powers
2. With the approval of L.G a decision was taken that the current price for South Delhi flats will be worked out by adding a surcharge of 20% from the price worked out as per old format. The approval of L.G to this decision was granted on 12.07.1996.
3. There are presently cases in the Housing Department where there have been delays in the making of the payments of the flats allocated/allotted in South Delhi under S.F.S. Before the aforesaid revision took place, delays of one year or so were being regularised with usual charges, i.e on payment of 18% interest per annum and restoration charges, etc. in few cases where delays are unusually long, current price has also been demanded.
4. With the revision aforesaid, a question has arisen whether delay should be got regularised or flats should be disposed of at current price since that can fetch perhaps some more revenue in few cases.
5. Matter has been considered and it is felt that non-regularisation of delays in deserving cases will be presented and, therefore, in the cases of those who have got allocation/allotments in South Delhi, if any time extension/regularisation is done as per above delegation of powers, then we may do so with the following condition:-
'Delay shall be regularised on payment of either current price or "old" price/usual charges, whichever is higher:"
12. The aforesaid policy decision was again clarified by issuing Anr. office memorandum dated 5.11.1998 setting out therein rules applicable to the allottees of all categories of flats in case their payments are delayed and are regularised by the competent authority. The price of the flat is set out under column B thereof, which reads as follows:
"B. Price of the Flat.
i) If the allocated/ allotted the flat in South Delhi where the construction has been undertaken by the South East Zone and South West Zone of the Engineering Wing Except Dwarka (being in West Delhi) the Price of the flat if restored, would be "Old Cost interest or current cost whichever is higher.
ii) In case where allottees of the localities mentioned (i) above default a small percentage of demanded amount up to 10% beyond the due date, this delay, if regularised would be on "Old Cost-interest."
iii) In other cases of all category flats i.e. where the construction of flats has been undertaken by other zones of Engineering Wing the restoration shall be at "Old Cost-Interest."
13. Clause C thereof speaks of the restoration charges payable by the registrants. Anr. clarification was issued on 31st March, 1999 by the Delhi Development Authority in respect of pricing of the flats, levy of sur-charge, interest and restoration charges to the following effect:
"2. Price of the flat
i) In cases (pertaining to any locality) where demanded amounts were received prior to 22.08.1996 by DDA, the restoration of allotment/regularisation of delay, if considered, would be on "old cost + interest".
ii) In case where allottees default a small percentage of total demanded amount up to 10% beyond the due date, the delay, if regularised, would be on "old cost + interest".
iii) If the allocated / allotted flat is in South Delhi i.e. where the construction has been undertaken by the South East Zone and South West Zone of the Engineering Wing except Dwarka (being in West Delhi), the price of the flat, if restored, would be old cost + interest or current cost , whichever is higher. This clause will be applicable in cases for which demanded amount by DDA is received after 22.08.1996 and the delay is regularized.
iv) In other cases of all category flats i.e. where the construction of flats has been undertaken by other zones of Engineering Wing, the restoration shall be at "old cost + interest".
3. Sur-charge The premium of 20% over the disposal cost worked out on current cost or old cost for the SFS flats in South Delhi, where the real value in the market of DDA flats is much more than DDA is charging as per its costing formula, shall be charged.
4. Interest
i) Where the allottee enters the scheme at a later stage, he shall deposit all the due installments with Actual Period Interest @ 10% per annum from time to time as per schedule already fixed.
ii) While working out the current disposal cost, in addition to current land premium at pre-determined rate, Actual Period Interest @ 10% per annum shall be charged.
iii) For updating the old cost, Actual period Interest on the 5th and final installment shall be charged @ 18% per annum from the date of issue of demand letters in bulk.
iv) In other cases, the interest rate shall be @ 18% per annum.
5. Restoration charges In addition to the above, the allottees/allocates of SFS flats whose allotment is restored by the competent authority, shall be liable to pay Restoration Charges @ 25% of the registration money as per terms of allocation / allotment letter. However, such allottees of other categories of flats, shall be liable to pay "Restoration Charge" as Rs. 1000/- for Janta, Rs. 1500/- for LIG and EHS Type-'A' and Rs. 2500 for MIG and EHS Type-'B'."
14. Claiming a right to levy a surcharge of 20% for the flats constructed in South Delhi and also claiming payment of current cost as calculated by the Delhi Development Authority in cases of those registrants who were defaulters in making payment of their Installments and whose cases were regularised by way of restoration of the allocation, demand letters were issued to such registrants for payment of the said charges. Some of such registrants filed writ petitions in this court challenging the action of the Delhi Development Authority in levying surcharge of 20% and demanding payment of current cost for restoration of the allocation.
15. A very extensive arguments was made in the aforesaid batch of writ petitions which were filed in this court and were heard by the learned Single Judge. The learned Single Judge passed a judgment and order whereunder he upheld levy of surcharge of 20% by the Delhi Development Authority. While upholding the said levy, the learned Single Judge has observed that a specific flat is allotted only when allotment letter is issued and not at the stage when allocation letter was issued. It was held that a flat is allocated in a particular area but it is only on issuance of the allotment letter, the right of the allottee gets crystalised. In terms thereof the learned Single Judge rejected the contention of the petitioners that the right of the registrants gets crystalised prior to the issuance of the allotment letter. However so far the payment of current cost or price by the Delhi Development Authority is concerned, it was held by the learned Single Judge that current price, as calculated by the Delhi Development Authority, cannot be demanded as because when restoration is made on payment of interest, the interest is charged on both the components which form part of the estimated cost and, therefore, by charging the actual period interest on the Installments interest had already been charged on the element of the cost of land included as a part of the component of cost at the stage of issuance of the allocation letter. It was also held that the current cost of land is already charged and in case of demand of further current cost by the Delhi Development Authority, the same would amount to an element of dual charging of interest. It was held by the learned Single Judge that the cost arrived at on the basis of the formula of restoration of flat on payment of old cost and interest or the current cost made applicable only to the defaulters of South Delhi whichever is higher could not be sustained and the same was accordingly ordered to be quashed by the learned Single Judge.
16. Being aggrieved by the aforesaid judgment and order passed by the learned Single Judge, several writ appeals were filed. The registrants, upon whom levy of surcharge of 20% and demand for payment of current cost was made, filed appeals as against the judgment and order passed by the learned Single Judge upholding levy of 20% surcharge whereas Delhi Development Authority filed an appeal as against the said order quashing the demand for payment of current cost as calculated by the Delhi Development Authority. The aforesaid appeals came up for hearing before the learned Division Bench of this court. The Division Bench heard the appeals relating to the imposition of 20% surcharge and recovery of the cost of the flat on current cost formula by DDA for registration under sixth Self Financing Scheme. The learned Division Bench of this court after hearing the submissions of the counsel appearing for the parties was of the opinion that there exists two lines of decision on the issues involved in those appeals. It was observed that one line of reasoning was adopted in P.N. Verma's case (supra) and Narsing Jain's case (supra) wherein it has been held that levy of any extra amount which is not being included or indicated in the original application stage would not be sustained. According to the learned Division Bench, the said reasoning in P.N. Verma was expressly affirmed by the Supreme Court by a speaking order which, prima facie, appears to be a declaration of law under Article 141. It was also observed that the second line of reasoning is the one contained in DDA Self-Financing and the decision in R.K. Sachar's case.
17. In the light of the aforesaid observations, it was held that the aforesaid two distinct lines of reasoning are irreconcilable and, therefore, it held that the law laid down in R.K. Sachar's case is required to be reconsidered by a larger Bench to which reference was made by the learned Division Bench by its order dated 18th August, 2004
18. In terms of the aforesaid order, these appeals have been listed before us on which we have heard the learned counsel for the parties at length.
19. The contention that is raised by the appellants against levy of surcharge on the said registrants was that such levy of an additional amount over and above the disposal price on the allottees who were allotted flats in South Delhi, was not justified and also that adoption of the current cost formula is also not sustainable in law. It was also submitted on their behalf that the right of Self-Financing Scheme Registrants crystalised upon issuance of the allocation letter and not when the actual allotment of flat takes place and therefore, there could be no addition to the disposal price which is already fixed and crystalised with the issuance of the allocation letter. In support of the said contention, the counsel appearing for the registrants relied on the decisions in P.N. Verma v. Union of India reported in AIR 1985 Delhi 417 and Narsing Jain v. Union of India reported in (80) 1999 DLT 742. It was also pointed out that the decision in P.N. Verma's case (supra) has been affirmed by the Supreme Court in CA no.4402/85 titled Delhi Development Authority v. Self-Financing Residents Association disposed of by the Supreme Court in 28.11.1996.
20. It was also one of the contentions on their behalf that the levy of surcharge in the present case amounts to levy of a tax or cess without any authority of law. Additionally, the pleas of promissory estoppel and also hostile discrimination, which present the respondents from collecting the amount in question were also raised. Counsel for the DDA on the other hand submitted that the issues raised are no longer res integra because the power and competence of the DDA to levy a surcharge has been upheld in the judgment of the Supreme Court in Premji Bhai Parmar and Ors. v. Delhi Development Authority . Reliance was also placed on the decision of the Supreme Court in Delhi Development Authority v. Pushpendra Kumar Jain, , which lays down the law that the right of registrants gets crystalised only at the time of final allotment and not at the stage of issuance of the allocation letter. The decision of the Full Bench of this court in Smt. Sheelawant v. Delhi Development Authority reported in 1995 (1) AD (Delhi) 725 was also placed before us in support of the contention that the High Court cannot delve into the exercise of costing in exercise of jurisdiction under Article 226 of the Constitution of India. It was also submitted that policy resolution proposing levy of surcharge to the extent of 20% was upheld in the decision of the Division Bench of this court in R.K. Sachar v. DDA (LPA 727/2002 decided on 15.12.2003). Reliance was placed on Anr. decision of the Division Bench of this court in DDA Self Financing Flat owners Society v. Union of India in support of the aforesaid contentions.
21. In the light of the aforesaid submissions and reference to various decisions of this court and also of the Supreme Court by the counsel appearing for the parties, we have scrutinised the entire records which were placed before us and in the light of the same, we proceed to dispose of these appeals after recording our findings and conclusions.
22. In the light of the aforesaid submissions, two principal issues arise for our consideration:
(i) Whether the action of the Delhi Development Authority in levying 20% surcharge from the registrants of the South Delhi flats is justified?
(ii) Whether demand for payment of current cost as calculated by the Delhi Development Authority from the defaulter registrants could be said to be justified?
23. Both the aforesaid issues were vehemently argued by both the parties and would, therefore, require an indepth consideration by us. We, however, for the sake of convenience initially take up the first issue and after rendering our decision thereon, we shall proceed to record our findings and the decision on the second issue.
(i) Levy of surcharge of 20% from the registrants of South Delhi Flats
24. Various points were urged by Mr.Rungta and Mr.Maninder Singh, who are representing the flat owners in LPA 844/2003, LPA 118/2004 and LPA 159/2004 It was submitted that there could be no revision of costing formula and the Delhi Development Authority is incompetent to charge a new component of 20% surcharge, which was not included as component for costing in the tentative cost notified in the brochure or in the Scheme in question or at the time of issuance of allocation letters. It was contended that such levy is unjustified and arbitrary in view of the decision of the Division Bench of this court in P.N.Verma's case (supra), which is also upheld by the Supreme Court in its judgment dated 28.11.1996. It was also submitted that the aforesaid revision of price by adding 20% surcharge with the disposal price is hit by doctrine of arbitrariness and doctrine of promissory estoppel. It was submitted that the Delhi Development Authority agreed to provide houses at their actual cost and on such promise the appellants altered their position and suffered considerable detriment and, therefore, the DDA cannot be allowed to go back on the said promise. It was also submitted that at any rate the policy laid down by the respondent / DDA of levying 20% surcharge would at best apply prospectively and the effect of the same cannot be given retrospectively to the allottees of SFS flats who have already paid 3/4 Installments before passing of the aforesaid resolution by the DDA containing the policy of levying 20% surcharge which could at best be made effective from the date of issuance of the aforesaid memorandum dated 16th August, 1996. Anr. submission which was made was that the aforesaid levy of 20% surcharge is a tax and the same could not have been imposed without a Legislative support.
25. Counsel appearing for the Delhi Development Authority, however, strongly refuted the aforesaid submissions and contended before us that the aforesaid policy adopted by the Delhi Development Authority for levying 20% surcharge is supported by cogent reasons and is legal and valid. It was also submitted that the terms and conditions in the brochure as also the allocation and the allotment letters support the imposition of 20% surcharge. It was submitted that in any case the relationship between the parties was purely contractual and also could be said to be governed by the provisions of the Regulations. She submitted that according to the Regulations the disposal cost would be the cost worked out by the Authority and that since cost and price have been held to be synonymous, therefore, addition of something extra other than the actual cost would not render the disposal cost bad particularly when the same is charged to give cushion to those who cannot afford to pay full value. It was submitted that the amount so collected was meant to be utilised for subsidising flats given to the weaker sections of the society including Kashmir migrants and Punjab Migrants. It was submitted that neither the principles of arbitrariness or the principles of promissory estoppal are applicable in the facts and circumstances of the present case.
26. The aforesaid submissions were made by the counsel for the parties referring to the records and the various clauses of the contracts between the parties. Clause 5.10 of the brochure stated that cost of the flats mentioned in the brochure would be tentative and subject to revision on account of escalation in the value of land and cost of construction. It was also mentioned therein that there is a possibility of upward revision of the tentative cost. Clause 4 also states thus:
Clause 4:"The estimated cost of the flat given in this letter is provisional and subject to revision on the completion of the flat. "Any price difference between the estimated cost and the cost as it comes out on completion as per costing formula then in vogue" would have to be paid along with the final Installment."
27. Clause 2 of the allocation letter in clear terms stipulated that the estimated cost of the flats as given in the said letter was provisional and subject to revision on the completion of the flat and that any price difference between the estimated cost and the cost as it comes out on completion as per costing formula then in vogue would have to be paid along with the 5th and final Installment. Clause 5.10 of the Brochure also clearly stipulated a similar term where it is stated that the cost of the flat is tentative and subject to revision on account of escalation in the value of the land and cost of construction and that there could be a possibility of the upward revision of the price of the flat.
28. The allottees accepted the aforesaid terms and conditions in clear terms and they were bound by the aforesaid contracts. Therefore, it cannot be said that the appellants herein (flat owners) were required to pay only the tentative price, which was quited by the Delhi Development Authority at the time of issuance of the allocation letter, which ex facie was tentative and provisional and was subject to revision as per costing formula then in vogue meaning thereby that cost of the flat would be the price which was prevalent at the time of final allotment of a flat in favor of the appellants. In the brochure there is no mention about criteria or manner of assessing the cost and whatever price / cost was mentioned in the allocation letter was stated to he tentative and provisional which was subject to revision on account of escalation in the value of land and cost of construction and also was subject to upward revision of the tentative cost. The appellants undertook to pay the price difference between the estimated cost and the cost as it came out on completion as per costing formula prevailing at the time of final allotment of the flats. On 12th July, 1996, the Lt. Governor of Delhi granted an approval that the price of South Delhi flats would be worked out by adding 20% surcharge. This approval of the Lt. Governor of Delhi finds mention in para 2 of the office order dated 16.8.1996, which was duly approved on 22.8.1996. The inclusion of 20% surcharge was further approved by the Delhi Development Authority vide item No.105 dated 27.8.1996. A copy of the same is placed at page 148 of the appeal paper book. Therefore, when the final allotment letter of the flat was issued with a direction to pay 20% surcharge along with 5th and final Installment, the aforesaid policy laying down the costing formula was in vogue or prevailing. Consequently, the inclusion of 20% surcharge became a part of the disposal cost of the flat and the demand of the 5th and the final Installment made by the Delhi Development Authority by including the aforesaid 20% surcharge cannot be said to be illegal and arbitrary. There could not be refusal to pay according to the costing formula in vogue as the same was agreed upon by the appellants under the contract which included a clause for payment of cost as it worked out on completion as per the costing formula in vogue. In some of the cases, which are before us, the allocation letter was sent on 26.3.1993 giving estimated cost of four Installments whereas the final and the fifth Installment was demanded on 15.2.1999 which also included 20% surcharge. It is also to be noted that most of the appellants herein were defaulters who had defaulted in making payments of the first four Installments on time and, therefore, there was delay in taking payment in their cases. There was default on their part to make contribution to the finance as stipulated in the contract. The 5th and the final Installment was demanded to be paid from them only after the aforesaid policy was promulgated by the Delhi Development Authority.
29. At this stage we may usefully notice some of the relevant judgments to which our specific attention was drawn by the learned counsel appearing for the parties during their arguments. One of the said decisions is the decision in the case of P.N. Verma(supra). In paragraph 24 of the said judgment it was observed by a Division Bench of this Court as follows:
"We think this stand of the DDA cannot be upheld. It is true that the regulations give a discretion of the DDA to fix the price of the flats and, in fixing the price, the DDA exercises an executive power. As has already been pointed out this Court will normally decline to go into the merits of the fixation of price in a writ petition or perhaps even in a suit, so long as the fixation is based on some relevant principles and not arbitrary or discriminatory. But the position in this case is different.
The DDA has already announced the basis on which it was fixing the price of the flats (viz. Actual cost) but it is now claiming that it can given this principle or basis a go-by and fix the price at any level and in any manner it chooses to. This we think means a revision of the policy of price fixation which is a pre-contractual stage."
30. In paragraph 28 of the said judgment it was also held as follows:
"The DDA cannot be allowed to go back on this promise and to fix such prices for the property as they desire on totally different principles far above those the petitioners had bargained for."
31. Relying on the aforesaid observations of the Division Bench of this Court, which according to the learned counsel for the appellants were upheld by the Supreme Court, it was submitted that the DDA cannot levy surcharge of 20% over and above the disposal price, which is already fixed, on totally different principles, than what the appellants have bargained for. Counsel for the appellants also drew our attention to the following passage of the said decision, appearing in paragraph 49:
"Whatever may be the relevance or justification for making an addition of this type in fixing the market price or disposal price in otherwise free conditions, the DDA, having committed itself to allot flats at the actual cost, cannot make any such addition, whatsoever to the cost as determined by them."
32. The Supreme Court while dismissing the appeal filed as against the decision rendered by the Division Bench in P.N. Verma's case (supra) held as follows:
"From the terms of the model contract entered into by the DDA with the people who opted for the self-financing scheme, charging of the said equalisation and ad hoc charges is evidently totally missing. The DDA in support thereof has banked upon the justness of its cause and demand and has nowhere been able to project that to begin with it was part and parcel of the cost factor. The High Court has been through its decision and has termed the venture as a "camouflage". We see no reason to take a different view than the one taken by the High Court."
33. Our attention was also drawn to the decision of the Division Bench of this Court in Nar Singh Jain and Ors. (supra). We may usefully refer to the passage on which reliance was placed by the learned counsel appearing for the appellants. Paragraph 4 of the said judgment stated thus:
"In view of this authoritative pronouncement, followed in CWP No.3065/91 (J.P. Gupta v. DDA), wherein a similar challenge to the costing of flats allotted under the same self-financing scheme was repelled, we are not inclined to go into the merits of the fixation of the price done by the DDA for the flats allotted to the petitioners more so when it has not been shown to us how the determination of various components, like the cost of land, cost of development, construction and certain other expenses, which, according to the DDA, have gone into the actual costing of the flats or the formula applied by it for including these elements in the cost of flats is arbitrary or discriminatory."
34. After recording the aforesaid observations, the Division Bench recorded the contentions of the petitioners therein in the following manner:
"They vehemently contend that the petitioners are neither liable to pay the equalisation charges and the transfer charges or interest thereon as part of cost of the flats allotted to them."
Thereafter, referring to the observations of the Supreme court in P.N. Verma's case (supra) it was observed by the Division Bench in paragraph 17 as follows:
"The Apex Court has thus held that the equalisation charges cannot be said to be part of cost of the flat in the light of the said decision, which we respectfully follow and hold that the equalisation charges, admittedly included in the cost of the flats, being demanded, are not payable by the petitioners."
35. In DDA Self Financing Flat owners Society v. Union of India and Ors. it was held by a Division Bench of this Court that the principle of promissory estoppel would not come to the aid of the allottees when brochure itself indicated that the pricing was an estimated provisional cost. It was further held in the said decision that once the calculations are made by the DDA as per policies approved by the competent authority, difference arising out of various factors cannot be said to be arbitrary and unreasonable. In paragraph 15 of the said judgment the Supreme Court observed as follows:
"15. Even this clause in no uncertain terms indicates that the terms and conditions contained in the Brochure were alterable and were subject to change. Even looking to the practical aspect of the matter, it appears to us that the estimated cost of the venture, which was to be completed in future, was merely indicative of probable or approximate cost thereof. In case during its execution prices of material and labour went up and if the excess cost was not to be recovered from the allottees, DDA will be running the housing scheme in deficit, which is not desirable. It needs to be noted that DDA is a public authority. The money which it utilises for construction of flats is public money. The DDA is not supposed to offer the flats to the allottees at rates lower than the cost of construction of flats incurred by it. In case the cost of construction is higher than the estimated and projected cost of flats, the difference needs to be recovered from the allottees in order to save tax payers money. The before, it seems to us that the price indicated in the Brochure was liable to change according to the cost incurred by the DDA for the construction of the flats under the Scheme. This being the position we fail to appreciate how the principle of promissory estoppel will apply to the facts of the instant case. There was no categorical assurance by the DDA to the proposed purchasers that the flats will be sold at the price indicated in the Brochure. Rather the DDA had amply clarified that the price was tentative and was subject to change. Even in the demand-cum-allotment letters issued by the DDA to the allottees it was categorically stated that the actual cost of the flats will be finalised after the completion of construction of the flats and the difference, if any, would be payable by the allottees along with the 5th and last Installment before handing over possession of the flats. The allottees accepted the condition without demur at that stage. In the circumstances, therefore, the contention of the learned counsel for the petitioners based on promissory estoppel fails and is hereby rejected."
36. In SFS Self Financing Flat owners Society case (supra) it was held as follows:
"Even if the DDA were to charge the petitioners more than the cost price of the flats in order to generate funds to provide dwelling units to whose who fall in lower income groups at a subsidised cost, no fault could be found with the same. The Supreme Court in Premji Bhai's case (AIR 1980 SC 738) (supra) dealing with the question of pricing held that where the authority was set up for making available dwelling units to persons belonging to different groups it would not precluded from, formulating its own price formula for different income groups. In doing so it would collect something more than cost price from those with higher incomes to benefit those who are in the lower income groups."
37. Strong reliance was also placed on the ratio of the decision of the Supreme Court in Premji Bhai Parmar's case. In the said decision it was held that the executive has a wide discretion in the case of price fixation. In that context it was observed as under:
"In price fixation executive has a wide discretion and is only answerable provided there is any statutory control over its policy of price fixation and it is not for the function of the court to sit in judgment over such matters of economic policy as must be necessarily left to the Government of the day to decide. The experts alone can work out the mechanics of price determination; Court can certainly not be expected to decide without the assistance of the experts."
38. In paragraph 10 of the said judgment it was held specifically as follows:
"Pricing policy is an executive policy. If the Authority was set up for making available dwelling units at reasonable price to persons belonging to different income-groups it would not be precluded from devising its own price formula for different income-groups. If in so doing it uniformally collects something more than cost price from those with cushion to benefit those who are less fortunate it cannot be accused of discrimination. In this country where weaker and poorer sections are unable to enjoy the basic necessities, namely food, shelter and clothing, a body like the Authority undertaking a comprehensive policy of providing shelter to those who cannot afford to have the same in the competitive albeit harsh market of demand and supply nor can afford it on their own meagre emoluments or income, a little more from those who can afford for the benefit of those who need succor, can by no stretch of imagination attract Art. 14. People in the MIG can be charged more than the actual cost price so as so give benefit to allottees of flats in LIG, Janta and CPS. And yet record shows that those better off got flats comparatively cheaper to such flats in open market. It is a well recognised policy underlying tax law that the State has a wide discretion in selecting the persons or objects it will tax and that the statute is not open to attack on the ground that it taxes some only when within the range of its selection the law operates unequally, and this cannot be justified on the basis of a valid classification, that there would be a violation of Article 14 ( see East India Tobacco C. v. State of Andhra Pradesh. (1963) SCR 404). can it be said that classification income-wise-cum-scheme-wise is unreasonable? The answer is a firm no. Even the petitioners could not point out unequal treatment in same class. However a feeble attempt was made to urge that allottees of flats in MIG scheme at Munirka which project came up at or about the same time were not subjected to surcharge. This will be presently examined but aside from that contention is that why within a particular period namely, November 1976 to January 1977 the policy of levying surcharge was restored to and that in MIG schemes pertaining to period prior to November 1976 and later April 1977 to surcharge was levied. If a certain pricing policy was adopted for a certain period and was uniformally applied to projects coming up during that period, it cannot be the foundation for a submission why such policy was not adopted earlier or abandoned later."
39. In the said decision the Supreme Court also referred to the provisions of the DDA (Management and Disposal of Housing Estates) Regulations 1968 and dealt with the same in the following manner:
"It is however necessary to examine the contention whether this 'no profit not loss' policy statement has any statutory flavour as contended by Mr. Nariman. The regulation styled as the Delhi development Authority (Management and Disposal of Housing Estates) Regulations 1968 (Regulations for short) are framed in exercise of the powers conferred by S. 57 and were laid before the Houses of Parliament as required by S. 58. Disposal price has been defined in Regulation 2(13) to mean in relation to a property such price as may be fixed by the Authority for such property. There is not the slightest or even a remote reference to 'no profit no loss' formula for determining the cost price. A quick survey of the Regulations do not spell out any formula for price determination on the basis of 'no profit no loss". Whether the power to determine disposal price is in the Housing Committee will be presently examined. Regulations, however, on the contrary indicate that the power to determine the disposal price is vested in the Authority and as price has been fixed by the delegate of the authority even if it is inclusive of surcharge it cannot be said that it runs counter to the declared policy of the Authority."
40. In the case of Pushpendra Kumar Jain (supra) the Supreme Court had occasion to deal with the issue as to when the right of an allotttee to a flat gets crystallized. In that case the Supreme court observed as under:
"Now coming to the other ground, we are unable to find any legal basis for holding that the respondent obtained a vested right to allotment on the draw of lots. Since DDA is a public authority and because the number of applicants are always more than he number of flats available the system of drawing of lots is being resorted to with a view to identify the allottee. It is only a mode, a method, a process to identify the allottee, i.e. it is a process of selection. It is not allotment by itself. Mere identification or selection of the allottee does not clothe the person selected with a legal right to allotment at the price prevailing on the date of drawl of lots. The scheme evolved by the appellant does not say so either expressly or by necessary implication. On the contrary, clause (14) thereof says that "the estimated prices mentioned in the brochure are illustrative and are subject to revision/modification depending upon the exigencies of lay out, cost of construction etc." It may be noted that registration of applicants under the said scheme opened on September 1, 1979. About 1,70,000 persons applied. Flats were being constructed in a continuous process and lots were being drawn from time to time for a given number of flats ready for allotment. Clause (14) of the Scheme has to be understood in this context G" the steady rise in the cost of construction and of land. No provision of law also could be brought to our notice in support of the proposition that mere drawl of lots vests an indefeasible right in the allottee for allotment at the price obtaining on the date of drawl of lots. In our opinion, since the right to flat arises only on the communication of the letter of allotment, the price or rates prevailing on the date of such communication is applicable unless otherwise provided in the Scheme. If in case the respondent is not willing to take or accept the allotment at such rate, it is always open to him to decline the allotment. We see no fairness in the above procedure."
41. The provisions of the Regulations are silent as to the method of calculation for fixing up the price of the flats. It also does not provide for the component to be included for fixing of the price of the flat. It only provides in Regulation 6 that the hire-purchase price or the disposal price, as the case may be, could be such price, as may be determined by the Authority. Regulation 2(13) has defined the "disposal price" or the "hire purchase price" in relation to a property to mean such price as may be fixed by the Authority for such property. Therefore, the Regulations empower the Authority to fix the disposal price of the property. Such a decision for fixation of the disposal price of the property was taken by the Vice Chairman of the DA in respect of South Delhi flats on 22.8.1996 which was approved by the Delhi Development Authority on 27.8.1996 whereby a decision was taken for inclusion of surcharge of 20% in the disposal price of South Delhi flats. Therefore, levy of the aforesaid surcharge is also within the competence of the Authority and, therefore, there cannot be any refusal to make payment of the aforesaid surcharge of 20%.
42. In the case of Sheelawanti (supra) the Full Bench of this Court clearly held that pricing cannot be regarded as one time process and that the DDA could revise the price although it had fixed some price in the brochure. It was also held in the said decision that it cannot be said that the DDA is obliged to sell them at a price that may result in loss to it or at a price that does not contain any profit element. Accordingly it was held that even if DDA takes into account of some profit element, the same does not render the price fixed as arbitrary or unreasonable. To the same effect is the judgment of the Supreme Court in Premji Bhai Parmar (Supra). Paragraph 10 of the said judgment has been quoted above in extenso. The said paragraph also deals with the concept of right to shelter which we have discussed in the opening paragraph of this judgment. This decision upheld the power of the DDA to collect something more than cost price from those with cushion to benefit those who are less fortunate. A similar contention that the DDA is deviating from its policy of making available flats on "no profit no loss" basis by resorting to levy an additional surcharge as raised in the present appeals was also canvassed before the Supreme Court in the said decision which was negatived by holding that the said principle of "no profit no loss" could not be made applicable either to every flat or to every scheme or to every piece of land developed by the Authority. This decision also firmly laid down that the DDA has no statutory price fixation formula and also has no statutory obligation about the pricing policy of the flats constructed bu it. It went on to hold as follows:
"But to say that throughout its course of existence the Authority would be bound to offer flats income-group-wise according to the same price formula is to expect the Authority to ignore time, situation, location and other relevant factors which all enter the price structure. In price fixation executive has a wide discretion and is only answerable provided there is any statutory control over its policy of price fixation and it is not the function of the Court to sit in judgment over such matters of economic policy as must be necessarily left to he government of the day to decide."
From the aforesaid discussion it is therefore established that pricing formula as fixed by the DDA to include surcharge would be within the realm of contract and the relationship is purely contractual. Statute governing the field exclusively permits the DDA to decide and fix the price of the flat. Therefore, the Authority shall have full power to add a surcharge as one of the components of price of the flat on the person who are more fortunate to cushion those who are less fortunate than them.
43. A dispute had been sought to be raised in respect of actual meaning of the word 'cost' and 'price'. According to Mr.Rungta, there is a difference in the meaning of the aforesaid two words 'cost' and 'price'. However, the aforesaid issue, which was raised before us is no longer res integra in view of the decision of the Full Bench of this court in Smt. Sheelawanti v. Delhi Development Authority (supra), which held that the word 'cost' referred in the scheme cannot be equated to the basic expenditure incurred by the DDA and that the term has a wider significance and is used to convey the meaning of the term 'price'. Regulation 2 of the Regulations provides that the disposal cost would be the cost worked out by the Authority and, therefore, there was no prohibition for addition of something extra other than the usual cost particularly when 'cost' and 'price' have been held to be synonymous. The reasons for levy of surcharge have been stated and spelt out from the records placed. One of such reasons is said to be that the cost of land in South Delhi is much more than elsewhere in Delhi and while fixing price of flats, the cost of the land is a material factor. It is also stated that the proceeds of surcharge are being used and utilised for subsidising the flats given to the weaker sections of the society including Kashmir migrants and Punjab migrants. It is also stated that the Delhi Development Authority even after charging 20% surcharge has not departed from its obligation to provide flats on 'no profit no loss' basis inasmuch as the total collection by levy of 20% surcharge would be a maximum of Rs. 50 crores including surcharge levied on Motia Khan flats whereas the amount of subsidy allowed in the shape of discount for cash down allotment and given to the Punjab and Kashmir Migrants would be much more than the amount already received and likely to be received by levy of 20% surcharge on the South Delhi flats. In the case of Premji Bhai Parmar (supra) the Supreme Court has upheld the costing done on the basis of 'no loss no profit'. In the said decision, the Supreme Court specifically upheld the concept 'no profit no loss' and went on to state that the Delhi Development Authority could charge little extra to give cushion to those who are unfortunate. It also permitted the Delhi Development Authority to take development cost also.
44. Strong reliance was placed on the decision rendered by the Division Bench of this court in P.N.Verma's case (supra). The learned Single Judge has held that the said case is distinguishable on facts. We have also given our indepth consideration in respect of the issues involved in both these cases. The clause in the brochure of P.N. Verma's case (supra) was different than the clause of the present case wherein it was specifically stated that the estimated cost of the flat is tentative and provisiona and subject to upward revision on the completion of the flat. In the brochure itself in P.N. Verma's case (supra) estimated cost was stipulated. There was no stipulation in P.N. Verma's case (supra) that there could be a possibility of upward revision of the tentative cost unlike the present case. In P.N. Verma's case (supra), it was held that the use of the word 'cost' instead of 'price' is very significant. It went on to hold that the word 'cost' includes something more by way of margin of profit and, therefore, these two words were held to be not synonymous. However, in the decisions of Smt. Sheelawanti v. Delhi Development Authority (supra) and DDA Self Financing Flat owners Society v. Union of India (supra) both the words were held to be synonymous. The aforesaid two decisions have also held that the Delhi Development Authority is not precluded from enhancing the price of the dwelling units by recovering a little more for subsidising housing schemes for weaker sections of the society and meeting its legitimate organisation expenses. Besides, the laudable object for levying of surcharge has been upheld in the aforesaid decisions on the ground that there is a rationale basis for charging the same. In the case of P.N. Verma (supra) the equalisation charges were struck down holding the same to be arbitrary as the same could not be explained. However, in the present case, the reasons for levy of 20% surcharge has been explained and the said reasons are found to be rational. Therefore, in our considered opinion the decision of P.N. Verma's case (supra) is clearly distinguishable on facts and the ratio of the said decision cannot be imported and applied while deciding on the facts of the present case. The decision in Narsing Jain's case (supra) is also distinguishable for the same reasons and, therefore, we are of the considered opinion that none of the aforesaid two decisions on which strong reliance was placed by the counsel for the appellants (flat owners) would be applicable.
45. On going through the records and the aforesaid decisions which are referred to by the counsel for the parties, we are of the considered opinion that the ratio decided in Premji Bhai Parmar's case (supra) is fully and squarely applicable to the facts of the present case and, therefore, the learned Single Judge was right and justified in upholding the imposition of 20% surcharge on the allottees of South Delhi flats relying on the decisions of this court in R.K. Sachar v. DDA (supra) and DDA Self Financing Flat owners Society v. Union of India (supra). The Supreme Court has also authoritatively decided that the rights of the parties arise on the date of issuance of the allotment letter in the case of Delhi Development Authority v. Pushpendra Kumar J. in (supra). In the said decision it was held by the Supreme Court as follows:
"No provision of law also could be brought to our notice in support of the proposition that mere drawl of lots vests and indefeasible right in the allottee for allotment at the price obtaining on the date of drawl of lots. In our opinion, since the right to a flat arises only on the communication of the letter of allotment, the price or rates prevailing on the date of such communication is applicable unless otherwise provided in the Scheme."
46.The aforesaid proposition was followed in the Full Bench decision of this court in Smt. Sheelawanti's case (supra), DDA Self Financing Flat owners Society v. Union of India (supra) and R.K. Sachar's case (supra). We are also informed that the case of Nar Singh Jain (supra) is under consideration of the Supreme Court on a Special Leave Petition. As a matter of fact and as pointed out in the preceding paragraphs we have found that the facts of the said case are distinguishable from the facts of the present case. So far the case of R.K. Sachar (supra) is concerned, facts of the said case are akin to the facts of the present case. In the said decision, the Division Bench found that the surcharge has to be considered as part of the disposal price. In the said decision it was also held that the purpose of levy of surcharge in the said case was the same as that in Premji Bhai Parmar's case (supra) and DDA Self Financing Flat owners Society v. Union of India (supra). It was held by the Division Bench that the levy cannot be equated to ad hoc and equalisation charges as in the case of P.N. Verma (supra). We are of the considered opinion that the aforesaid decision in the cases of DDA Self Financing Flat owners Society (supra) and R.K. Sachar (supra) were rightly and correctly decided by the Division Bench of this court. The Division Bench of this Court in the case of Ashok Kumar Bahl and Ors. v. Union of India reported in 52 (1993) DLT 153 relying on the judgment of P.N.Verma's case (supra) held that the action of the DDA by revising the estimate on the basis otherwise than on the terms of the original contract is illegal and liable to be quashed. The said judgment was reversed by the Supreme Court in the case of DDA v. Ashok Kumar Bahl reported in (2002) 6 SCALE 70.
47. We may, at this stage, scrutinise the submissions of the counsel appearing for the appellants (flat owners) that the aforesaid imposition of 20% surcharge is in the nature of a tax or cess. We are, however, unable to agree with the aforesaid submissions, for, in our considered opinion, the said surcharge is neither a tax nor could be called a cess but is a component of the price of the flat. The aforesaid submission is also misconceived in the light of the ratio of the decision of the Supreme Court in Premji Bhai Parmar's case (supra). There was also no promise made by the Delhi Development Authority that the disposal price of the flat at the time of entering into the contract was fixed. Rather on the other hand, it was categorically stipulated at that stage and also understood by the parties that the price/cost of the flat is tentative and provisional and the cost would be dependent on the costing formula then in vogue meaning thereby the price which was prevalent at the time of issuance of the final letter of allotment of the flat. Therefore, the principle of promissory estoppel in the facts and circumstances of these cases is not attracted and the submissions made in that regard by the counsel for the appellants is found to be misconceived. We accordingly uphold the decision of the learned Single Judge upholding the levy of 20% surcharge in respect of the South Delhi flats.
48. While rendering the aforesaid conclusion, we are also supported by the Full Bench decision of this court in Smt. Sheelawanti's case (supra).
49. The first issue having been decided in the aforesaid manner, we may now proceed to decide the second issue which arises for our consideration and which was urged before us vehemently by the counsel appearing for the parties. Demand for payment of current cost as calculated by the Delhi Development Authority from the defaulting registrants of South Delhi Flats.
50. The Delhi Development Authority adopted policy decisions allegedly empowering it to ask for and demand payment of current costs for the flats located in South Delhi as a pre-condition for regularising delay in payment of the Installments/restoration of flats which stood cancelled automatically in terms of the contract entered into by the parties for non-payment of the Installments within the time stipulated. The registrants who were the writ petitioners in these cases were all allottees of South Delhi flats and they were defaulters in payment of the 2nd, 3rd and 4th Installments. The brochure included a term and condition by way of clause 12.3 which stated that if the applicant does not pay the subsequent Installments before the due date, the allocation of the flat in the scheme would be automatically cancelled and the amount deposited till that date would be refunded to the party after deducting 10% of the amount of the registration deposit. There was a similar clause in the allocation letter which provided that if the amount demanded is not paid on or before the stipulated date in that event the allotment would be liable to be cancelled without notice. Since various instances of such default came to the notice of the Delhi Development Authority and since there was a request for restoration of the flats/regularisation of delay, the matter was discussed by the Delhi Development Authority and a policy decision was taken which was communicated vide Memorandum dated 16.8.1996. The subject mentioned in the said memorandum itself clearly establishes that the same deals with the regularisation of delay in respect of the flats allotted in the South Delhi under the Self Finance Scheme. The said policy decision envisages that delay in payment of Installments could thereafter be regularised on payment of either current price or old price/usual charges, whichever is higher. The same came to be approved by the Vice-Chairman, Delhi Development Authority in respect of South Delhi flats on 2.8.1996 and was approved by the Delhi Development Authority on 27.8.1996. A further policy decision was again issued by way of clarification under Office Memorandum dated 5.11.1998 which was further clarified under policy decision dated 31.3.1999. In he said policy decision, a provision was also made for demanding payment of interest. It provided that while working out the current disposal cost, in addition to current land premium at pre-determined rate, actual period interest @ 10% per annum shall be charged. The learned Single Judge in the light of the aforesaid provisions, in paragraph 17 of his judgment has referred to a comparative chart showing the basis for costing. The said chart was made out as follows:
Sl.No. Element/component of cost For Old Cost + Interest For Current cost Interest on 4 Installments @ 18% p.a. Simple @ 10% p.a. simple(API) 2 Cost of construction Actual expenditure incurred on construction Actual expenditure incurred on construction. 3 Land Premium At the rates prevalent on the date of allocation. At the rates prevalent on the date of allotment. 4 Surcharge @ 20% On cost of construction + land premium + API, if any. On cost of construction + land premium+ API, if any.
The said demand for payment of current cost was challenged in the writ petitions filed on the ground that when provision was made for condensation of delay in making payment of interest at a higher rate for regularising the same and when the allotment was restored by revoking the cancellation, the registrants were put back to the original position and, therefore, costing could have been revised only by directing for payment of interest at a higher rate. It was submitted that current cost could not have been demanded by the Delhi Development Authority only from the registrants of flats in the South Delhi and since such a demand is made only in respect of registrants of flats in South Delhi and no such demand is made in respect of similarly situated registrants of flats in other areas of Delhi, although being placed under similar circumstances, the said policy decision taken only in respect of South Delhi flats is discriminatory. It was also submitted that there is dual charging as interest of 10% p.a. is also charged on the defaulted Installments for the purpose of restoration of flats/regularisation of the delay and, therefore, the demand made for payment of current cost amounts to dual charging of interest which is not permissible under the law. The learned Single Judge considered the aforesaid submissions and was persuaded by the same when he held that the demand for payment of current cost from the defaulters was not only discriminatory but was also arbitrary and he accordingly quashed the said demand. Being aggrieved by the same, the Delhi Development Authority is before this Court with an appeal against the said part of the order of the learned Single Judge.
51. Documents have been placed on record to show that the estimated cost or the tentative cost at the time of allocation is worked out on the following parameters:
1. Actual cost of construction.
2. Community facility charges.
3. Floor equalisation for ground floor and subsidised for upper floors.
4. Departmental charges.
5. Administrative charges.
6. Cost of land which is calculated on the basis of land rate on the date of issuance of the letter of allocation, which is approved by the Government of India. The said land rates are pre-determined rates on the basis of break-even rate arrived on cost benefit analysis which includes cost of acquisition, enhanced compensation and future realisations. The land rates approved by the Government of India for Dwarka are also applied on flats in South Delhi.
7. Surcharge @ 20% w.e.f. 16.8.96.
The tentative cost is worked out on the basis of parameters with regard to costing every year. The only change in the parameters of costing is that the land rate is changed each year on the basis of the land rates approved by the Government of India for that year. According to the Delhi Development Authority the allottees under Clause 4 of the allocation letter were required to make payment of the Installments within 90 days failing which there was an automatic cancellation clause. The said clause has to be given effect to and, therefore, policy decisions were taken by the Delhi Development Authority which empowered the Delhi Development Authority to demand current cost price for the South Delhi flats. It was submitted that the current land rates to be charged from these allottees would mean land rates on the date of issuance of the demand-cum-allotment letter which according to the authority is legal and valid and based on justifiable grounds.
52. There is no dispute to the fact that all the allottees involved in these cases were defaulters in making payment of the Installments within the period stipulated in the contract. Therefore, in accordance with the terms and conditions of the contract entered into, their allotment stood cancelled automatically. With the aforesaid cancellation, the contract which was entered into between the parties came to an end. It is established from the records placed before us that the default in making payment of the Installments was even to the extent of 2/3 years. The scheme was a Self Finance Scheme where the allottees were required to make contribution to the funds for construction of the flats. Due to the aforesaid default, the said earmarked contribution did not come into the hands of the Delhi Development Authority which necessarily created obstacles and hindrances in carrying out and fulfillling the project undertaken by the Delhi Development Authority. Be that as it may, considering the hardships being faced by the allottees due to the aforesaid automatic cancellation of their allotments, a policy decision was taken for restoration of their allotment and regularisation of the delay in making payment of the Installments by inserting a clause that the same would be done only upon a pre-condition of payment of current cost of the land and also on payment of interest @ 10% p.a. The contention of the said allottees against whom such demands were raised was that the said demand is discriminatory and arbitrary which was upheld by the learned Single Judge on the ground that it amounted to discrimination inasmuch as the allocation letter and the terms and conditions of the contract never specified that defaulters in different areas would be treated differently. It was also held that there was an element of dual charging inasmuch as whereas the cost of construction is taken on the same basis as in the earlier formula but the land premium is taken and charged on the date of allotment along with interest which is also being charged on the element of cost of land included as a part of component of cost at the stage of issuance of the allocation letter. It was observed that the justification given by the Delhi Development Authority that the interest on Installments charged as per the formula of old cost plus interest is @ 18% p.a., while at the current cost it is 10% p.a., has no rationale nor does it balance the two aspects. The learned counsel appearing for the allottees who are the appellants in three appeals before us supported the aforesaid finding recorded by the learned Single Judge and advanced their arguments relying on the said reasoning given by the learned Single Judge.
53.The terms and conditions in the brochure and the allocation letter issued to all the allottees of the South Delhi flats made a provision that for non-payment of first four Installments during the stipulated period would result into cancellation of the allotment. The same also, however, made provision for restoration of such cancellation of allotment on payment of dues with interest along with cancellation and restoration charges for cancellation due to non-payment, subject to availability of the allocated flats. In this regard the term and condition as stipulated in clause 4 of the contract which is extracted hereinabove is relevant and material. It provided that extension of time for making payment of the amount demanded in terms of col. 7 of para 3 of the same could be done up to a maximum period of 90 days from the due date. In case of such default, an allottee need not apply for extension but he was required to pay interest @ 12% per annum for the first month and @ 18% p.a. for the subsequent period. The said clause further provided that the cancellation due to non-payment of final Installment within 120 days of issue of the demand letter for 5th final Installment would not be restored under any circumstances whereas cancellation due to non-payment of first four Installments during the stipulated period could be got restored on payment of dues with interest along with cancellation and restoration charges for each cancellation due to non-payment of Installments subject to availability of allocated flats. In order to streamline the process for such restoration a policy decision in the aforesaid manner as stated in the preceding paragraphs was taken by the Delhi Development Authority which laid down the condition for such regularisation of delay/restoration of the allocation which could be done on payment of either current price or old price/usual charges, whichever is higher. The policy decision of the Delhi Development Authority to restore allocation to the allottees was an equitable act of the Delhi Development Authority in the larger interest of the allottees. To stipulate terms and conditions of restoration was rightly in the domain of the Delhi Development Authority and would not call for judicial intervention unless exercise of such discretion was arbitrary or opposed to public policy. The decision of the Delhi Development Authority, in our view, was not offending the terms of contract between the parties or the law. On the contrary, it was duly backed by Clause 5.10 of the brochure and various policies framed by the Delhi Development Authority from time to time in that regard. Allottee's right was ex de facto Jurisdiction, as a result of cancellation of the allotment by the Delhi Development Authority. Relaxing the figures of the letter of the allotment, the Delhi Development Authority decided to allow conditional restorations in favor of the allottees which are not violative of any right of the petitioners under the contract or otherwise. Except that, the petitioners would be entitled to a limited relief as allowed in this judgment.
54. The cost of the flat as mentioned in the allocation letter was also tentative and provisional. The allottees, therefore, were bound under the contract to make payment for the escalation in the value of the land and also the escalation in the cost of construction. The aforesaid position was also accepted by the counsel for the flat-owners. The cost of the land is pre-determined every year on the basis of the land rates approved by the Government of India for that particular year on the basis of the parameters laid down for the purpose. In accordance with the terms and conditions of the contract and also in terms of the policy decision taken by the Delhi Development Authority current price is charged from the defaulters of South Delhi flats by including the concept of current land rate at the time of issuance of 5th and final Installment letter keeping in view the other parameters of costing which includes the cost of construction remaining unchanged. The allottees of the South Delhi flats who have become defaulters in making payment of the Installments within the time stipulated were to be solely blamed and responsible for such delay in making payment of the Installments thereby contributing to the delay in completing the project. In the meantime land rates also came to be revised on the basis of the pre-determined rates. Therefore, whatever increase and escalation has taken place in the value of land and cost of construction, the allottees are obliged and have to pay the same as agreed to as and when demanded. The Delhi Development Authority decided and took a policy decision in that regard that any escalation so far as the land value is concerned would alone be taken only from the allottees of the South Delhi flats and not from other allottees of other areas in Delhi. Land in the South Delhi is more valuable than other areas in Delhi of which judicial notice could definitely be taken. The said flats are also more prestigiously located and for restoration of the allotment and or regularisation of the delay in payment of the Installments for each flat if a decision is taken by the Delhi Development Authority to give effect to one of the terms and conditions of the contract and if a policy decision is taken laying down that such restoration would be possible only on payment of land rate as prevalent on the date of restoration, the same cannot be said to be in any manner arbitrary or discriminatory. In arriving at the aforesaid conclusion we derive support from the decision of the Supreme Court in Pushpendra Kumar Jain's case (supra) wherein a similar contention was raised by the allottee contending, inter alia, that the revised land rates could not be applied to him inasmuch as the said rates came into force after the draw of lots. The Supreme Court, however, negatived the aforesaid contention by making a reference to a similar clause in the contract that the estimated prices mentioned in the brochure are illustrative and are subject to revision/modification depending upon the exigencies of lay out, cost of construction etc. It was held that the aforesaid clause of the scheme has to be understood in the context that there is a steady rise in the cost of construction and of land and that the right to the flat arises only on the communication of letter of allotment and the prices or rates prevailing on the date of such communication shall be applicable unless otherwise provided in the scheme. It was also held that if in case the respondent was not willing to take or accept the allotment at such rate, it would always be open to him to decline the allotment. The aforesaid decision of DDA was held to be not in any manner unfair. Almost to the same effect is the decision of the Full Bench of this Court in Sheelawanti's case(supra) and also DDA SFS Flat owners Society's case (supra). Therefore, the demand of charging the current land rate has been upheld by the Supreme Court and also by this Court.
55. The application of the aforesaid policy only to South Delhi flats could also be justified as South Delhi forms a separate class by virtue of its location. While coming to the aforesaid conclusion we are fortified by the decision of the Supreme Court in Premji Bhai Parmar's case (supra), wherein the Supreme Court has also held that the Delhi Development Authority could always take into consideration the time, situation, location and other relevant factors while laying down the price structure.
In paragraph 9 of the said judgment, the Supreme Court has held that to say that throughout its course of existence, the Authority would be bound to offer flats income-group wise according to the same price formula is to expect the Authority to ignore time, situation, location and other relevant factors which all enter into the price structure. It was also held that in price fixation, the Executive has a wide discretion and is only answerable provided there is any statutory control over its policy of price fixation. The Supreme Court also held that all the price determining factors like price of land, building material, labour charges and cost of transport, quality and availability of land, supervision and management charges are all variable actors that enter into price fixation and their cost varies time-wise, place-wise, and availability-wise and that all these factors cannot be overlooked for the purpose of classification. Therefore, in the light of the factual matrix and the law laid down, we do not find any discrimination in the policy laying down guidelines empowering the Authority to demand for payment of current cost on the basis of land rates prevailing on the date of issuance of the final allotment letter, particularly in the light of the decision of the Supreme court in Premji Bhai Parmar (supra) and in Pushpendra Kumar Jain (supra). The project was a self financing project which required the allottees to participate and contribute finance for the construction of the said flats. They failed to discharge their obligations and abide by all the terms and conditions of the contract. Without cancelling their allotment altogether and selling the same to some other persons at the market rate prevailing on the date of such sale the Delhi Development Authority took a conscious and reasonable decision that the aforesaid cancellation of the allotment could be revoked and the allotment could be restored back provided the allottees of the South Delhi flats agreed to pay the current land rate on the date of issuance of the demand-cum-allotment letter. The Delhi Development Authority also though it fit not to make a similar demand from the other allottees of flats in other areas of Delhi considering the fact that the flats in South Delhi have an added advantage and they are a class apart from other areas of Delhi. In so deciding, the Delhi Development Authority has not committed any illegality nor the said action could be termed as discriminatory. Accordingly we set aside that part of the order of the learned Single Judge by which the learned Judge has set aside and quashed the demand of current cost from the allottees of the South Delhi flats who were defaulters.
56. At this stage, however, one relevant aspect needs specific mention. The comparative chart which is referred to in para 70 of the impugned judgment of the learned Single Judge would indicate that in addition to the demand of current land rates, 10% p.a., interest is also being charged on the defaulted Installments. The said position and the chart prepared was disputed by the DDA. The said Installments include both the components, namely, cost of construction as also the cost of land. When a default is only for a short period , i.e., up to a period of one year, the policy decision envisages that in such case the cancellation of allotment could be revoked and restored and the delay in payment of the Installments could be regularised by payment of the old cost with interest @ 18% p.a., whereas if the default is for more than one year and if payment of the demanded amount towards the first four Installments is received prior to 22.8.96 in that event the restoration of allotment/regularisation of delay would be made on the basis of old cost with interest @ 18% p.a. On the other hand in case of South Delhi when the demanded amount is received after 22.8.96, the flat would be restored on old cost and interest @ 18% per annum or current cost whichever is higher. The current cost which becomes payable in that event includes not only cost of land on the basis of the land rates approved on the date of issuance of the demand-cum-allotment letter but also envisages payment of 10% p.a., interest on the delayed payments which in our considered opinion cannot be demanded and directed to be paid as the same amounts to dual charging for the allottee is not only to pay the enhanced rate on the basis of the escalation of the land rate but also interest on the same at 10% p.a., which is found to be self contradicting and would be a case of dual charging. Therefore, we hold that 10% p.a., interest could be levied by the Delhi Development Authority on the cost of construction for the escalation on such construction in the meantime but such interest @ 10% p.a., cannot be charged by the Delhi Development Authority on the cost of land on the basis of prevailing land rates on the date of issuance of demand-cum-allotment letter as the allottee is already made to pay the escalation charges on the cost of land. We are also of the opinion that if the restoration of the allotment of the flat is made by the Delhi Development Authority by revoking the cancellation of the flat earlier than the date of assurance of demand-cum-allotment letter, the said date of restoration would be the relevant date for calculating the cost of land on the basis of the land rates prevailing on the said date of restoration. This order is passed in order to protect the interests of the allottees as we have found in some cases and also held by the learned Single Judge that in those cases there was undue delay on the part of the Delhi Development Authority in issuing the final demand-cum-allotment letter. In para 11 of the said judgment the learned Single Judge has recorded that it has been illustrated that in some cases that there has been inordinate delay of as much as 2 to 3-1/2 years in issuance of allotment letters even after restoration. If such restoration was made by the DDA much prior to the date of issuance of final demand-cum-allotment letters i.e. 2/3 years prior to the date in that event the date of restoration would be relevant and material for the purpose of determining the current cost and not the date of issuance of the final demand-cum-allotment letter. The Delhi Development Authority cannot be compensated for their own lapse and default.
57. In view of the above pervasive discussion on various aspects of the case with particular reference to the policy decision of the Delhi Development Authority dated 22nd August, 1996, we would record our conclusions as well as issue directions to the Delhi Development Authority to recomputed the cost payable by the defaulting allottees of South Delhi flats, in the following manner :-
i. Levy of surcharge to the extent of 20% in respect of allottees of South Delhi flats is valid and the judgment of the learned Single Judge is upheld to the aforesaid extent.
ii.(a)When a default is only for a short period i.e. up to a period of one year, cancellation of allotment could be revoked and restored and the delay in payment of the Installment regularised by the DDA on payment of old cost both for cost of land as also cost of construction with interest @18 % per annum, ii.(b)If the default is for more than one year and payment of the demanded amount towards the first four Installments is received prior to 22.8.1996 in that event restoration of allotment / regularisation of delay would be made on the basis of old cost with interest @ 18% per annum.
ii.(c)In case of South Delhi flats only when demanded amount is received after 22.8.1996, the flat could be restored on old cost and interest @ 18% per annum or current cost, whichever is higher. While calculating current cost, 10% interest could be levied by the Delhi Development Authority on the cost of construction for escalation in such construction in the meantime, which will be payable till the date of restoration. However, levy of 10% interest per annum on cost of land on the basis of prevailing land rates on the date of restoration would not be permissible.
iii. When restoration of flat to South Delhi allottees is made by the Delhi Development Authority much prior to the date of issuance of final demand-cum-allotment letters i.e. two to three years prior to the date of issuance of such final demand-cum-allotment letters, in that event the date of restoration would be relevant and material for the purpose of determining the current cost and not the cost of issuance of the final demand-cum-allotment letter.
58. The Delhi Development Authority is directed to re-calculate price/cost of the flat in terms of the observations and directions issued herein and such fresh calculation would be issued to the individual allottees after making adjustment of the amount as ready paid by the allottees.
59. On receipt of the said re-calculation from the Delhi Development Authority, the balance amount shall be paid by the allottees of South Delhi flats within eight weeks. In the event of failure in making payment of the balance amount in terms of the said demand to be issued by the Delhi Development Authority, the allotment of the flat in favor of such allottee and the lease deed issued in his/her favor shall stand cancelled automatically.
60. For the reasons recorded above, we would partially allow the appeal filed by the Delhi Development Authority (LPA No.118/2004), while declining to grant to the allottees of the South-Delhi flats any relief except to the limited extent afore-stated, the appeals of the allottees (LPAs No.159/2004, 844/2003 and 58/2004) are disposed of in terms of the conclusions afore-stated.
61. However, in the facts and circumstances of the case, we leave the parties to bear their respective costs.