Jagdish Chand Radhey Shyam Vs. The
State of Punjab & Ors  INSC 208 (6 September 1972)
MATHEW, KUTTYIL KURIEN
CITATION: 1972 AIR 2587 1973 SCR (2) 97
Constitution of IndiaArticles 14 and 19(1)
(f) Capital of Punjab (Development and Regulation) Act 1952Section 9,
forfeiture of the whole or any part of consideration money for breach of nonpayment
of the balanceWhether violative of Art. 14 of the Constitution of India
Resumption of site for unpaid consideration moneyWhether violates Article 14 of
Section 9, resumption of site for unpaid
consideration amount whether violates Article 19(1)(f) of the Constitution.
The appellant purchased a site at a public
auction for Rs. 94,000,. 25% of the price, i.e. Rs. 23,500/ was paid at the
site and the balance was to be paid in three equal installments. The appellant
paid a further sum of Rs. 21,992/ towards the first installment. Two
installments of Rs. 25,615/ each and sum of Rs. 3,623/ being the balance sum of
the first instalment were not paid by the appellant.
The Estate Officer, in exercise of powers
under section 9 of the Capital of Punjab (Development and Regulation) Act,
1952, resumed the site and forfeited the amount of Rs 42,728.01 paid by the
appellant. After exhausting his remedies under the Act, the appellant
challenged the validity of the orders and vires of Section 9 of the Act on the
ground that provisions of Section 9 regarding forfeiture of the installments paid
and the resumption of the auction site were violative of Article 14. The power
of resumption of site under section 9 was also challenged as unconstitu tional
on the ground that it imposed unreasonable restriction on the right to property
violating Article 19(1)(f) of the Constitution. The Punjab High Court held that
the Government had right to resume the site as they were the owners and till
all the installments were not paid, the title did not pass to the auction
purchaser. The High Court also held that is the Government have power to
recover the due amount as arrears of land revenue, resumption of site was not
HELD : The Prohibition in Section 3 of the
Act against sale.
mortgage or transfer, by the auction
purchaser except with the previous permission of the Estate Officer of any
right, title or interest in the site or building, recognises the ownership
rights of the purchaser.. The Government is only entitled, to a charge on the
property for the unpaid portion of the consideration money. A charge on
property is under the Transfer of Property Act enforced by instituting a suit
and bringing property to sale. Section 8 of the Act provides another power to
the Government to recover the unpai d money as arrears of land revenue. [100 E101A]
Section 9 of the Act empowers the Government to forfeit the whole or any part
of the money in case of nonpayment of consideration money or installments or
other dues or breach of covenant,,. Under the ordinary law of the land, there
is relief against forfeiture for breach of covenant.
Section 9 does not offer any relief against
forfeiture. The Government can proceed eitheir under the Transfer of Property
Act 8L348Sup.C.I./73 98 or under the present Act without any guidelines
provided in the statute. This feature makes section 9 discriminatory and
violative of Article 14 of the Constitution of India.
Section 9 also confers power to resume the
site. Where there is a charge, the same can be enforced by instituting a suit
in a court of law under Transfer of Property Act. The owner will have an
opportunity of paying the money and clearing the property of the charge. No
such opportunity of clearing the charge is possible under section 9 of the Act.
There is no guideline in the Act as to when
the Government will resort to resumption of site or forfeiture of monies.
The Government choose without any guideline
and discriminate in proceeding against one person in one manner and a second
one in other manner.
In the teeth of statutory security and
enforceability of the Government charge in preference to others, it is totally
unreasonable restriction on the enjoyment of property by resuming site for
defaults in payments of money and forfeiting the monies paid by the transferee.
Section 9 violates Article 19(1)(f). [101 C102A]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1099 of 1967.
Appeal by certificate from the judgment and
order dated 21st February 1966 of the Punjab High Court, Chandigarh in Letters
Patent Appeal No. 218 of 1965.
Mahendrajit Singh and K. B. Mehta for the
Harbans Singh and R. N. Sachthey for
The Judgment of the Court was delivered by
RAY, J. This appeal is by certificate from the judgment dated 21 February, 1966
of the High Court of Punjab and Haryana it Chandigarh.
The appellant at a public auction held by the
Estate Officer. Capital Project, Chandigarh on 21 December, 1958 purchased site
No. 43 in the Grain Market, Chandigarh. The purchase price was Rs. 94,000. 25%
of the sale price was payable at the fall of the hammer. The balance sum with
interest was payable in three equal installments of Rs.25,615 each. The
appellant paid 23, 500 being 25% of the sale price at the fall of the hammer.
The appellant paid a further sum of Rs. 21,992 towards the first installment. A
sum of Rs. 3,623 was outstanding on the first installment. The appellant made
improvements on the site.
The appellant raised construction thereon at
his own expense. He invested about Rs. 1,50,000 in the shape of building and
machinery. The appellant could not pay Rs 3,623 being the balance of the first.
installment and the second and the third installments. amounting to Rs. 25,615
99 The appellant asked for installments because
the appellant was in financial difficulty. Eventually, the Estate Officer on 2
January, 1962 resumed the site and forfeited the amount of Rs. 42,728.01 paid
by the appellant. The order of resumption and forfeiture was made by the Estate
Officer (Capital Project), Cliandigarh in exercise of powers under section 9 of
the Capital of Punjab (Development and Regulation) Act, 1952 referred to as the
The appellant filed an appeal under section
10 of the 1952 Act. The appellant's appeal was accepted by the Appellate
Authority, the Chief Administrator, Chandigarh. The appellant was given time
for the payment of installments with interest at the rate of 4 1/2% per annum
and a penalty of 10 per cent of the amount in arrears was ordered to be paid
within 30 days from the date of the Appellate order. The conveyance deed in
respect of the site was also to be executed immediately.
The appellant thereafter made a
representation to the Chief Minister and asked for further installments and
prayed that steps be not taken to resume the site. The appellant's
representation was rejected.
The appellant then filed a revision application
before the Financial Commissioner. On 14 September, 1964 the Financial
Commissioner rejected the revision application. The ground was that the
appellant had filed a first revision application. The second application was
therefore not competent. It may be stated here that section 10 aforesaid
provides an appeal to the Chief Administrator against the order of the Estate
Officer. Section 10 also states that a revision application can be presented
before the State Government against the order of the Chief Administrator.
The appellant filed a writ petition in the
High Court. The appellant challenged the validity of the orders of the
respondents. The grounds for challenge were these. First, section 9 of the 1952
Act which provides for the resumption of property by the Estate Officer is
ultra vires and unconstitutional. Secondly, section 9 provides for resumption
of property and forfeiture of money paid which are unconstitutional and
unreasonable restrictions on the right to hold property. Thirdly, the power conferred
on the Estate Officer to take action under section 9 for resumption is
unregulated and arbitrary.
In the High Court is was contended that the
appellant became owner of the site, and, therefore, no resumption of the site
could be taken by proceeding under the Punjab Public Premises and Land
(Eviction and Rent Recovery Act, 1959.
Secondly, it was contended that section 9 of
the 1952 Act violated Article 14 100 inasmuch as sections 8 and 9 of the 1952
Act provide for the same matter and there is no indication as to when action
will be taken under either of the sections. It was also said that the sections
offended Article 14 of the Constitution by reason of unregulated conferment of
The High Court held that title would pass
only when full price was paid and till then the Government remained the owner
and could resume possession. The High Court held that sections 8 and 9 of the
1952 Act were supplementary to each other and if recovery of the amount due as
arrears of land revenue was provided tat there could be, resumption of the
Counsel for the appellant repeated the
contentions which had been made before the High Court.
Broadly stated section 3 of the 1952 Act
indicate these features. The Government has power to sell by auction, allotment
or otherwise any land or building. The consideration money is to be paid in
such manner as the Government may prescribe. The unpaid portion of the
consideration money will be a first charge on the site or the building. The
transferee except with the previous permission in writing of the Estate Officer
shall not be entitled to sell, mortgage or otherwise transfer any right, title
or interest in the site or building until the amount which is a first charge
has been paid in full. Section 3 totally repels the conclusion arrived at by
the High Court that the Government remains the owner until the entire
Consideration money is paid. A charge is created for the unpaid portion of the
consideration money. The prohibition against sale, mortgage or transfer by the
transferee except with the previous permission of the Estate Officer of any
right, title or interest in the site or building establishes the ownership and
rights of the transferee. If the Government were the owner it could not be said
that the transferee could sell, mortgage or transfer any right, title or
interest. The statute speaks of payment of consideration money by and sale to
the transferee. The Government cannot after sale remain the owner. The Statute
forbids such construction. If the Government is the owner the Government cannot
at the same time be entitled to a charge on the property for the balance of the
consideration money. A charge on a property is under the Transfer of Property
Act enforced by instituting a suit and bringing the property to sale. If the
property yields a higher price then what the charge represents, the owner is
entitled to the excess sum.
Section 8 of the 1952 Act deals with
imposition of penalty and mode of recovery of arrears. If there is any default
in payment of consideration money or installment or any other money 101 due on
account of transfer or if there is default in the payment of fee or tax levied
the Estate Officer may direct a sum not exceeding that amount due to be
recovered by way of penalty. The amount due together with the penalty may
recovered as an arrears of land revenue.
Section 9 speaks of resumption of the site or
building by the Estate Officer and forfeiture of the whole or part of the money
paid on account of consideration in the case of nonpayment of consideration
money or installment or breach of any condition of transfer or breach of any
Under the ordinary law of the land it is open
to the Government to enforce the charge and to recover the due on consideration
money, installments or any other due from the transferee. It is also open to
the Government under section 8 of the Act to proceed against the transferee to
realise the amount due on consideration money or on installment or any other
due as an arrear of land revenue. Section 8 provides penalty for default in
payment of money and the recovery of the same as an arrear of land revenue.
These remedies are deterrent and drastic.
Section 9 of the 1952 Act empowers the
Government to forfeit the whole or any part of the, money in case of nonpayment
of consideration money or installments or other dues for breach of covenants,
Under the ordinary law of the land there is relief against forfeiture for
breach of covenant or provisions. Section 9 does not offer any relief against
forfeiture. This feature that the Government can precede either under the
ordinary law of the land or under the 1952 Act shows that there is
discrimination. There is nothing in the statute to guide the exercise of power
by the Government as to when and how one of the methods will be chosen.
Section 9 confers power to resume site. There
is a charge on the land for the unpaid consideration money. This charge can be
enforced by instituting a suit in a court of law.
The owner will have the opportunity of paying
the money and clearing the property of the charge. on the other hand when the
Government proceeds under section 9 of the Act to resume the land or building
the Government proceeds under the Punjab public Premises and Land (Eviction and
Rent Recovery) Act, 1959. There is no guidance in the Act as to when the,
Government will resort to either of the remedies.
Again in all these cases of recovery of money
or resumption of land or building and forfeiture of monies paid the Government
may choose and discriminate, in proceeding against one person in one manner and
another person in another manner.
102 The Act creates a charge on the property.
The Act forbids creation of a third part right by the transferee until the
amount represented by the charge is paid in full. In the teeth of statutory
security and enforceability it is totally unreasonable restriction on the
enjoyment of property by resuming the site for defaults in payments of money
and forfeiting the monies paid by the transferee.
For these reasons, we are of opinion that the
Government is not entitled to forfeit the monies paid and resume the site under
the provision contained in section 9 of the 1952 Act.
These provisions violate Articles 14 and
19(1)(f). These provisions are unconstitutional.
The judgment of the High Court is set aside.
The appeal is allowed. In view of the fact that there is no order as to costs
in the High Court the parties will pay and bear their own costs.
S.B.W. Appeal allowed..