Punjab-Haryana High Court
M/S Panna Lal Kundan And Others vs State Of Haryana And Others on 17 May, 2012
Bench: Hemant Gupta, A.N. Jindal
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
Date of Decision: 17.05.2012
(1) CWP No. 13024 of 2001
M/s Panna Lal Kundan and others ...Petitioners
Versus
State of Haryana and others ...Respondents
(2) CWP No. 19616 of 2009
M/s Padam Chand Subhash Chand and another ...Petitioners
Versus
State of Haryana and others ...Respondents
(3) CWP No. 1932 of 2004
Raj Kumar and another ...Petitioners
Versus
State of Haryana and others ...Respondents
(4) CWP No. 19381 of 2003
Mohammed Hayat Khan ...Petitioners
Versus
State of Haryana and others ...Respondents
(5) CWP No. 17258 of 2003
M/s Panna Lal Kundan Lal Jain and others ....Petitioners
Versus
State of Haryana and others ...Respondents
CWP No. 13024 of 2001 & other connected cases -2-
(6) CWP No. 6701 of 2011
M/s Panna Lal Kundan Lal Jain and others ...Petitioners
Versus
State of Haryana and others ...Respondents
CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA
HON'BLE MR. JUSTICE A.N. JINDAL
Present: Mr. Veneet Sharma, Advocate
for the petitioners.
Ms. Palika Monga, DAG Haryana
for respondent No.1.
Mr. Partap Singh, Advocate,
for respondents No. 2 to 4
HEMANT GUPTA, J.
Petitioners in all the above mentioned writ petitions are the licencees to carry on the work as Commission Agents in terms of Punjab Agriculture Produce Markets Act, 1961 at Ferozepur Jhirka.
Challenge in the present writ petition is either to the claim of interest on the balance 75% of the sale consideration, extension fee for not raising construction and of resumption of plots for the reason of not raising construction.
The Haryana State Agricultural Marketing Board-respondent No.3 herein, established a new anaj mandi at the outskirts of city of Ferozepur Jhirka by acquiring the land for the purpose. In the new anaj mandi, 90 plots for shops-cum-residence were carved out out of which 30 CWP No. 13024 of 2001 & other connected cases -3- plots were of the size 20''x 85'' and 60 plots were of the size 20''x50''. In addition to the aforesaid land, plots for booths were carved out as well as the land was reserved for Post Office, Bank, Market Office, Kisan Rest House, Cattle Shed, Platforms etc. The plots and the commercial sites were to be disposed of in accordance with the Haryana State Agricultural Marketing Board (Sale of Immovable Property) Rules, 2000 (herein after referred to as the "Rules"). 20 old licencees were eligible for allotment of plots on fixed price. The petitioners, 20 in numbers were allotted plots of the size 20''x85'' at the fixed price of Rs. 4,52,900/-. The petitioners deposited 25% of the price of the plot i.e. Rs. 1,13,225/- whereas the remaining 75% were payable in six half yearly installments with interest @ 16%.
The grievance of the petitioners is that it was the duty of the respondents to fully develop the anaj mandi and to provide the basic amenities and facilities like electricity, water, sewerage, roads, public urinals and laterine, cattle shed, water hut, cattle drinking water hut, common plat form with shed, post office and bank building etc., but such facilities were not provided as the respondents were bound to hand over the possession for the plots only after development of such amenities.
The respondent Market Committee offered the possession of the plots to the petitioners on 24.10.2000 even in the absence of development work except that some platforms have been constructed in the middle of the market which was also let out by respondent Market Committee through Haryana Warehousing Corporation which is being utilized for open storage of wheat. As per the conditions of allotment, petitioners were to complete construction within two years but this period of two years could be extended CWP No. 13024 of 2001 & other connected cases -4- on payment of extension fee. For non construction and non payment of extension fee, the plots could be resumed. It is pointed out that on account of non development of new anaj mandi, none of the petitioners could start the construction of the building on the allotted plots. Therefore, the petitioners are not liable to pay interest on the amount of installments of the balance sale consideration. Some of the writ petitioners challenged the show cause notice issued for resumption of plot for not raising the construction within the time granted.
In the written statement dated 6.3.2002, it was asserted that Board has provided most of the basic facilities which are required in grain market whereas the rest of the facilities are in the process to be completed. The basic facilities which were provided includes common platforms, individual platforms, internal roads in the grain market, street lights, public toilets, tower lights, drinking facilities, coolers for drinking water, boundary wall with gates and check post. It was denied that the petitioners are doing the business only in old anaj mandi. It is disclosed that in the current year Rs. 29,43,301/- was collected as a market fee in new anaj mandi whereas the market fee calculated from the old anaj mandi is Rs. 5,03,208/-. It was also pleaded that new grain market was declared as market yard as per the government notification dated 3.12.1992. It was also pleaded that the petitioners can raise construction of the plot as the land is free from encroachment. It was also admitted that the open platform has been given to warehousing corporation for storage of wheat in the vacant platform in the interest of the nation.
CWP No. 13024 of 2001 & other connected cases -5- Learned counsel for the petitioners has vehemently argued that the Local Commissioner appointed by this Court has noticed that amenities have not been provided, therefore, the respondents are not entitled to charge interest on the unpaid balance sale consideration.
Reliance is placed upon an order passed by the Hon'ble Supreme Court in AIR 2009 SC (Supp.) 258 State of Haryana and others vs. Narinder Kumar and others. It is also argued that 2000 Rules were amended on 5.3.2002 and in terms of the amendment, the interest on installments is to accrue from the date of offer of possession. The offer of possession could be offered after the minimum basic facilities i.e. the roads, water supply, sewerage and electrification are provided. Relevant provisions from the Rules reads as under: -
4(5). The balance seventy-five percent of the price of plot may either be deposited without interest within thirty days from the date of issue of allotment letter or in six half yearly installments, with fifteen percent interest or at such rate of interest as may be specified by the Board from time to time. The first such installment shall fall due after six months from the date of allotment letter.*[However, interest on installments shall accrue from the date of offer of possession].
5. The possession of the plot shall be offered to the allottee by the Executive Officer-cum-Secretary, Market Committee within thirty days from the date of issue of allotment letter *[if the basic facilities i.e. roads, water supply, sewerage and electrification are existing and if the said basic facilities are not existing, then after providing the said basic facilities.] (Note *added by notification dated 5th March 2002) The Local Commissioner, appointed by this court, in his voluminous report dated 10.4.2002 reported that common platforms, individual platforms, internal roads in the grain market, street lights, public CWP No. 13024 of 2001 & other connected cases -6-
toilets, tower lights, drinking water facilities/hand pump for water, coolers for drinking water, boundary wall with gates, check posts have been provided, though it was reported that public toilets cannot be said to be functional or the coolers for drinking water were not operational or that the gates were freshly painted.
The issue; whether the lack of basic amenities can be made basis for not paying the installments or the interest thereon came to be settled by the judgment of Hon'ble Supreme Court in (2009) 4 SCC 660, U.T. Chandigarh Administration and another vs. Amarjeet Singh and others, in relation to the commercial sites sold by public auction in Chandigarh. Hon'ble the Supreme Court noticed the conflicting decisions of this Court in AIR 2001 P&H 309, Shanti Kunj Investment (P) Ltd. vs. U.T. Administration. and DLG Builders (P) Ltd. Vs. Administration (CWP 13695 of 2001 decided on 18.2.2002). It was held that the judgment of this Court in Shanti Kunj's case (supra) cannot be sustained.
In (2006) 4 SCC 109 Municipal Corporation, Chandigarh & others Vs. Shantikunj Investment (P) Ltd. & others, the Hon'ble Supreme Court has held that it is not possible in every case that whole area is developed first and allotment is served on a platter and that it is not possible to accept a sweeping proposition that if all the facilities or amenities are not provided, then the allottees/lessees can take upon themselves not to pay the lease amount, interest and penalty. It has never been the condition precedent. It was observed that it is true that in order to fully enjoy the allotment, proper linkage is necessary. But to say that this is a condition precedent, that is not the correct approach in the matter. It was further held that once the allotment CWP No. 13024 of 2001 & other connected cases -7- has been made in favour of the allottee, he can take possession of the property and use the same in accordance with law. That does not mean that all the facilities should be provided first for the so-called enjoyment of the property as this was not the condition of auction.
The Hon'ble Supreme Court in an earlier judgment reported as (1996) 1 SCC 485, Sector 6, Bahadurgarh Plot Holders' Association (regd.) vs. State of Haryana, considered the question of payment of interest. In the aforesaid case, the plots offered were developed and not the undeveloped sites. The allottees were informed that all modern amenities like underground sewerage, storm, water drainage, roads electricity, supply of potable water will be provided. The Court observed as under: -
"8.... As the offer had stated that modern amenities noticed above 'wiil be provided', it cannot be held that till the amenities as mentioned have become fully functional, the offer is incomplete. It is for this reason that the fact that full development has not yet taken place, even if that be the position as contended by Shri Bhandare, cannot be a ground to hold that interest has not become payable. It is true that the applicants were given to understand that the amenities noted above would become available (and within reasonable time), the fact that the same did not become available to the desired extent could not be a ground not to accept delivery of possession. From the order of the High court which we have quoted above, we find that the offer of possession of the under developed plot was not accepted by the counsel of the appellant. That order being of 17.10.1980, we are of the view that interest did become payable from that date. The fact that the plot has not yet been fully developed, as is the case of the appellant, has, therefore, no significance in so far as charging of interest is concerned. We are not in a position to accept the submission of Shri Bhandare that equity would not demand charging of interest, even though the plots are yet to be fully developed. When parties enter into contract, they are to abide by the terms and CWP No. 13024 of 2001 & other connected cases -8- conditions of the same, unless the same be inequitable. In the present case, question of equity does not really arise in as much as the condition relating to interest is founded on a statutory rule, vires of which has not been challenged".
In a judgment reported as (2009) 4 SCC 684, Secy., Bhubaneshwar Development Authority vs. Susanta Kumar Mishra, it was observed: -
44. In the instant case, having regard to the provisions in the Leasehold Rules and the contractual terms ( as contained in the general terms and conditions of the auction, the lease and the letter of confirmation of lease-cum-offer of possession), the following position is evident: -
(i) Interest at 10% per annum is payable from the date of auction till the date of payment on the balance of premium (if the lessee chooses to pay 75% of the premium in installments.
(ii) payment of interest has nothing to do with provision of amenities.
(iii) If the premium interest on ground rent is not paid on the due date, then interest will be payable at 24% p.a. From the date of default (due date) to date of payment.
(iv) The lessee will not be liable to pay interest on the premium installments or the rent, till the actual and physical possession of the site is delivered or offered to be delivered to the lessee (whichever date is earlier).
The Hon'ble Supreme Court in a judgment reported as (2011) 13 SCC 504 Haryana State Agricultural Marketing Board & another Vs. Raj Pal, has set aside the judgment of this Court, wherein the directions were issued not to charge interest or penal interest until the water, sewerage disposal and other facilities were provided. The Hon'ble Supreme Court allowed the appeal partly and permitted the Market Committee to issue CWP No. 13024 of 2001 & other connected cases -9- revised demand notices claiming only simple interest at the rate of 15% per annum. Such direction was given for the reason that the basic amenities of water and sewerage disposal were not available, when the allotment letters were issued and that works commenced only in 2001 & 2002 and were in progress in the year 2007.
In Raj Pal's case (supra), while interpreting the similar Rules, it was found that the letters of allotment were issued in the year 1999 and that the work of sewerage and water started in the year 2001 & 2002. It was under these circumstances, the Court granted the benefit of penal and compound interest. The Court held to the following effect:
15. In Sector 6, Bahadurgarh Plot Holders' Association v. State of Haryana (1996) 1 SCC 485, this court held that where the Rules required delivery of possession within a reasonable time after payment of 29% of the price, interest cannot be demanded till the offer of possession is made. But where the advertisement stated that modern amenities "will be provided", interest cannot be denied merely because all amenities had not become fully functional and interest will be payable from the date of the offer of possession of the plot, though not fully developed.
16. The aforesaid decisions, when read with reference to the provisions of the rules applicable make it clear that the allottees were liable to pay the instalments and simple interest thereon in terms of the letters of allotment.
However, having regard to the admitted position emerging from the counter affidavit filed by the appellants before the High Court, the basic amenities of water and sewerage disposal were not available when the allotment letters were issued and the said works were commenced only in 2001 and 2002 and were in progress even in the year 2007. It is in these circumstances, apparently, some of the allottees did not commence construction or did not commence their business. Be that as it may.
17. In view of the principles laid down in Bahadurgarh Plot Holders' Association (supra), Shantikunj (supra) and Amarjeet Singh (supra), it is clear that the allottees cannot postpone the payment of instalments merely on the ground that some of the amenities were not ready. If they were not CWP No. 13024 of 2001 & other connected cases -10- entitled for postponement of the instalments, it follows that they will be liable to pay the normal interest on the delayed instalments up to date of payment. However, having regard to the fact that the Rules did not contemplate compound interest and penal interest and the Market Committee was yet to complete certain infrastructural work like water, sewerage disposal, as held in Shantikunj (supra), the Market Committee will not be entitled to claim any compound interest or penal interest.
18. We, therefore, allow these appeals in part and permit the Market Committee to issue revised Demand Notices claiming only simple interest at the rate 15% per annum. The respective respondent shall pay the interest within three months from the date of receipt of the demand notice from the Market Committee. If the amount of interest is not paid, the Market Committee will be entitled to take such action as may permissible in terms of the rules in accordance with law.
19. As it is stated that in case of Mahem Grain Market, the Board has given some concession even in regard to the normal interest with effect from the date (5.3.2002) when the amended rules came into force, it is open to the respondent-allottees to give a representation to the Board or pursue their pending representation in that behalf for similar relief. The decision in these appeals will not come in the way of the Board considering such representation and granting appropriate relief. Having regard to the fact that we have permitted the Market Committee to issue revised demands, we request the Board to dispose of the representation of the respondents expeditiously so that the decision thereon can be taken note of by the Market Committee for finalizing the demand."
In the present case, even from the report of the Local Commissioner, it is apparent that the basic amenities such as water supply, roads and sewerage are available. The allottees have started work in the New Anaj Mandi, which is apparent from the fact that Market Committee has realized substantial amount of market fee from the conduct of the transactions of sale and purchase in new Market yard vis-a-vis the transaction of sale and purchase conducting in old Market yard. The basic amenities have been provided. May be there is scope of improvement of CWP No. 13024 of 2001 & other connected cases -11- quality of amenities provided, but that will not absolve the allottees/lessees not to pay the interest on the amount of instalments.
In Raj Pal's case (supra), the Hon'ble Supreme Court has noticed that the Rules did not contemplate charging of compound interest and penal interest. Therefore, the present writ petitions are disposed of with a direction to the respondents to issue revised demand notices claiming simple interest at the rate of 15% per annum. The petitioners shall pay the due amount within three months from the date of receipt of the demand notice. If the amount of interest is not paid, the Market Committee will be entitled to take such action as may be permissible in terms of the Rules in accordance with law.
However, in cases where the resumption orders have been passed for non-payment of the amount of instalments or the interest thereon, the same shall stand set aside with liberty to the respondents to issue revised demand notice, as mentioned earlier. The respondents shall also be entitled to claim extension fee for not raising construction within the time granted in the letter of allotment.
Ordered accordingly.
(HEMANT GUPTA) JUDGE (A.N.JINDAL) JUDGE 17.05.2012 preeti/Vimal