Premji Bhai Parmar & Ors Vs. Delhi
Development Authority & Ors [1979] INSC 272 (21 December 1979)
DESAI, D.A.
DESAI, D.A.
KRISHNAIYER, V.R.
CITATION: 1980 AIR 738 1980 SCR (2) 704 1980
SCC (2) 129
ACT:
Constitution of India 1950 Articles 14 &
32 & Delhi Development Authority Act 1957-Authority constructing flats and
selling them to public-Levy and collection of surcharge as price of flat in
addition to the construction cost- Authority to work on 'no profit no loss'
basis-Such surcharge-Whether illegal-Discriminatory.
HEADNOTE:
The Delhi Development Authority Act was
enacted to provide for the development of Delhi through Master and Zonal Plans.
The authority undertakes constructions of dwelling units for people belonging
to different income groups styled as Middle Income, Low Income, Janata and
Community Personnel Service. In 1971, the authority commenced registration of
intending applicants desirous of having dwelling units in different Income
Groups. Some of the petitioners got themselves registered with the authority in
accordance with the terms and conditions laid down by it, for allotment of
flats in deposits as required by the terms and conditions for MIG Scheme at
Lawrence Road, Prasad Nagar and Rajouri Garden and made the initial deposit.
The number of available flats being less in each scheme compared to the number
of applicants registered, lots were drawn and the petitioners were informed
that each of them should deposit the amount mentioned in the letter of
allotment. The Petitioners paid the amount as intimated and consequently a flat
was allotted to each of them and they entered into possession.
In their writ petitions under Article 32, the
petitioners assailed the levy and collection of surcharge in addition to the
cost price of the flats. It was con tended on their behalf that; (i) The
treatment meted by the Authority is discriminatory inasmuch as no surcharge was
levied on flats in MIG schemes constructed and allotted prior to November, 1976
and after January, 1977; (ii) As the authority formulates income-wise,
area-wise schemes for constructing flats, there should be only income-wise
classification wholly ignoring area and time factor for classification; (iii)
Levying of surcharge runs counter to the object for which the authority was set-up
namely to make available housing accommodation on "no profit no loss"
basis; (iv) Surcharge is arbitrary inasmuch as how the surcharge is worked out
in each case does not conform to any rational, tangible, scientific or
understandable formula;
(v) The Vice-Chairman had no authority to
levy surcharge and that even if he has authorised the same, it runs counter to
the principle of fixing disposal price incorporated in resolution No. 209 dated
November 26, 1974; (vi) Even if the Vice-Chairman had such power there is
nothing to show that he has exercised this power and given direction for adding
the surcharge to the disposal price and that therefore, the levy of surcharge
is unauthorised; and (vii) that the authority has made a, huge profit by levy
of surcharge.
The respondents raised a preliminary
objection that the petitions were not maintainable under Article 32 of the
Constitution inasmuch as the petitioners have not come to the Court. fol
enforcement of a fundamental right conferred upon.
705 them under Part III of the Constitution
but that the petitioners have invoked the jurisdiction of the Court for the
relief of reopening concluded contracts, and that if the court accepts the
contentions, the petitioners would derive an unfair advantage over others who
may not have applied for flats because of the price set out in the brochure and
if surcharge is excluded they may have applied for Flats at a lower price. The
Court should not therefore entertain the petitions.
Dismissing the petitions, ^
HELD: 1. As the Court has heard the petitions
on merits it is not inclined to reject them on the preliminary objections. It
is undeniable that camouflage of Art. 14 cannot conceal the real purpose
motivating the petitions, namely to get back a part of the purchase price of
flats paid by the petitioners with wide open eyes after flats have been
securely obtained. Petition to this Court under Art. 32 is not a proper remedy
nor is the Supreme Court a proper forum for re-opening concluded contracts with
a view to getting back a part of the purchase price paid after the benefit is
taken. [712 D-E] In the instant case it is difficult to appreciate how Art. 14
can be attracted. Cost price of a property offered for Sale is determined
according to the volition of the owner who has constructed the property unless
it is shown that he is under any statutory obligation to determine cost price
according to certain statutory formula. The authority is under no obligation to
fix price of different flats in different schemes albeit in the same income
group at the same level or by any particular statutory or binding formula.
Those who opt to take flats in a particular income- wise, area-wise scheme in
which all flats came up together as one project, may form a class and any
discriminatory treatment In the same class may attract Art. 14. But to say that
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. [713
E, 715 A-F] Radhakrishna Agarwal & Ors. v. State of Bihar & Ors.
[1977] 3 S.C.R. 249 at 255; Har Shankar &
Ors. etc. v. The Dy. Excise & Taxation Commr. & Ors. [1975] 3 S.C.R.
254, referred to.
2. 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
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. [715 F-G] Prag Ice & Oil Mills and
Anr. etc. v. Union of India, [1978] 3 S.C.R, 293 at 330; Avinder Singh v. State
of Punjab [1979] 1 S.C.R. 845; State of Gujarat & another v. Shri Ambica
Mills Ltd. Ahmedabad, etc. [974] 3 S.C.R 760 at 782;
referred to.
3. Price of land, building, material, labour
charges and cost of transport, quality and availability of land, supervision
and management charges are all variable factors that enter into price fixation.
Their cost varies time-wise, place wise and availability-wise. All these
uncertain factors cannot be overlooked for the purpose of classification. It is
not possible therefore to hold that allottees of 706 flats in MIG scheme at any
place and executed at any time will form one class for the purpose of pricing
policy. The only valid basis for classification would be income-wise,
area-wise, time-wise, scheme-wise, meaning all flats constructed at or about
the same time in same area in one project for particular income-group will form
a class, and there is no discrimination amongst them. [716 G-H. 717 A-B]
4. Pricing policy is an executive policy. If
the Authority was set up for making available dwelling units at reasonable
prices to persons belonging to different 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 on their own meagre emoluments or income, a little more
from those who can afford for the benefit of those who need succour, can by no
stretch of imagination attract Art. 14. [717 B-D]
5. 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 persons or objects and not others. It is 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
Art. 14. [717 E-F] East India Tobacco Co. v. State of Andhra Pradesh, [1963] 1
S.C.R. 404.
6. The principle of "no profit no
loss" cannot apply either to every flat or to every scheme or to every
piece of land developed by the Authority. It would be impossible for the
Authority lo function on such fragmented basis and such a policy statement has
not been made by the Authority. [718 D-E]
7. There is not the slightest or even a
remote reference to "no profit no loss" formula for determining the
cost price. A survey of the Regulations do not spell out any formula for price
determination on the basis of "no profit no loss". Project-wise price
fixation cannot be dubbed as arbitrary or discriminatory by comparing it with
other projects at different places or at different times. [719 A-B
In the instant case after the work commenced
and the actual cost estimate started coming in the revised estimate for 304
flats was of the order of Rs. 2,07,33,000/- which was approved by the
Vice-Chairman on September 18, 1976.
According to the revised estimate the
approximate disposal cost for each flat. came tc Rs. 68.202/- and the cost of
land per dwelling; unit was Rs. 7008/-. The revised estimate showed the
disposal price of each flat as Rs. 75.200/-. The Commissioner of Income Tax who
wanted to acquire 40 MIG flats in Prasad Nagar area offered the price of Rs.
75,000/- per flat which price was accepted. The difference between the cost
price and the disposal price of Rs. 75,000/- per flat was treated as surcharge
and the purpose was to use the extra money for extending price reduction
benefit to The allottees of flats in LIG, Janata and CPS schemes. It is
therefore difficult to entertain the contention that even if surcharge could be
justified its actual computation is arbitrary and irrational. [720 B-E, E-F]
707 8 . The Vice-Chairman is appointed by the Central Government as per
Section. 3(3)(b) of the Act. He is a whole time officer and the Chief Executive
of the Authority. The composition of the Authority as set out in section 3
would include such persons as Finance and Accounts Member, Engineering Member,
representatives of Municipal Corporation of Delhi and representatives of
Metropolitan Council. Three other persons, were to be nominated by Central
Government of whom one shall be person with experience of planning. It is a
high power body. Yet it completely abdicated its power and authority in favour
of Housing Committee. The Housing Committee will practically supplant the
Authority. By a process of elimination the Housing Committee would supplant the
Authority and the Chairman could constitute the Housing Committee. Therefore,
the Chairman enjoyed a very wide discretionary power. However once the power to
delegate is given by the Regulations, the challenge to validity on the ground
of delegation must fail. [720 G-H; 721 E-H, 722 A]
9. Resolution No. 209 is the one adopted by
the Housing Committee. It takes note of the delegation of powers to fix
disposal and hire-purchase price of flats to the Vice- Chairman and further
provides that if there is a marginal saving in any scheme the amount be
diverted to subsidies cost of Janata and CPS houses. The Resolution No. 200 of
the Authority read with Resolution No. 709 of the Housing Committee sets out
clearly that the power to fix the disposal price was delegated to the
Vice-Chairman and ordinarily such excessive delegation to one man may be
galling to a judicial body yet the scheme of regulations and the provisions
contained in Regulation 3 read with Section 59 clearly envisages such
delegation of powers. [722 C-E]
10. The note of Accounts Officer (Housing)
dated September 8, 1976, submitted to the Financial Advisor (Housing) shows
that the flats have been offered at the rate of Rs. 75,000/- to the
Commissioner of Income Tax for the Income Tax Department and that should be the
disposal price.
This note was approved by the Financial
Advisor (Housing) and ultimately countersigned by the Vice-Chairman Even if it
includes surcharge it cannot be said with confidence that the Vice-Chairman has
not approved has not approved the surcharge as a component of disposal price.
[722 G-H]
11. The contention that the Authority has
made a huge profit by levy of surcharge is without merits. On the contrary it
appears that the overall working of the Authority is deficit ridden. [723 A-B]
& ORIGINAL JURISDICTION: Writ Petitions Nos. 4660/78 & 562/79 (Under
Article 32 of the Constitution).
Y. S. Chitale and R. B. Datar for the
Petitioner in W.P. No. 4660/78.
L. M. Singhvi, Sardar Bahadur Sahariya,
Vishnu Bahadur Sahariya and L. K. Pandey for the Respondent No. 1 in both the
Writ Petitions.
F. S. Nariman and B. Datta and K. K.
Manchanda for the Petitioner in W.P. No. 562/79.
The Judgment of the Court was delivered by
DESAI, J. Allottees of flats, constructed by the Delhi Development Authority
('Authority' for short), located at Rajouri, Garden, 708 Prasad Nagar and
Lawrence Road comprised in Middle Income Group scheme, question the decision of
first respondent (Delhi Development. Authority) to collect surcharge as part of
the sale price of each flat from each of them as unauthorized and
discriminatory i character, in there two petitions under Article 32 of tho
Constitution. Both the petitions raise identical contentions and i was said
that Writ Petition No. 562 of 1979 is more comprehensive in character and,
therefore, the facts alleged therein may be taken as representative character.
They may be briefly stated.
Delhi Development Authority was set up under
the Delhi Development Act, 1957. The Act was enacted to provide for the
development of Delhi according to plan and for matters ancillary thereto and
for carrying out the objects underlying the Act, the Authority has prepared
Master and Zonal development plans for Delhi. With a view to easing the acute
housing problems in the capital city the Authority undertakes construction of
dwelling units for people belonging to different income groups styled as Middle
Income Group ('MIG' for short), Low Income Group ('LIG' for short), Janta and
Community Personnel Service ('CPS' for short). In 1971 the Authority commenced
registration of intending applicants desirous of having n dwelling unit in
different income groups. Some of the petitioners got themselves registered with
the authority in accordance with the terms and conditions laid down by it and
made the initial deposits as required by the terms and conditions. Petitioners
had applied and got themselves registered for allotment of flats in MIG scheme
situated at Lawrence Road. As the number of available flats in this scheme were
less than the number of allottees registered, lots were drawn and the
petitioners were informed that they have been allotted flats and that each of
them should deposit the amount mentioned in the letter of allotment. It appears
that the petitioners paid the amount they were called upon to pay and a flat
was allotted to each of them and they have entered into possession. Petitioners
now contend that the Authority being a statutory body formed with an object of
working on 'no profit no loss' basis and having prescribed a formula for
working out the cost price of flats has levied and collected a surcharge from
each of the petitioner. According to the petitioners the cost price worked out
in accordance with the formula prescribed by the Authority cost of each flat
would be between Rs. 51,800 and Rs. 55,600 depending upon the area, extra
balcony etc. However, each one of them had to pay between Rs. 56,000 to Rs. 60,000
and that according to the petitioners a surcharge varying from Rs. 3,400 to Rs.
6,000 for a flat has been illegally and
unlawfully collected by way of premium or profit. It is further alleged that
the 709 Authority has not levied and collected such surcharge from other A
allottees of flats in some other MIG Schemes and that this action of levying
and collecting surcharge is violative of Art. 14 inasmuch as persons belonging
to the same class, namely, allottees of flats in MIG Scheme have been unequally
treated. It is also alleged that there was no valid or understandable
justification of levying and collecting surcharge as price of flats comprised
in MIG Schemes, between 1976 and 1977, and that from May 10, 1978, this
unauthorised surcharge has been abolished. Petitioners also contend that the
assertion of the Authority that this surcharge was levied and collected with a
view to financing housing projects for lower income groups, Janta and CPS
dwelling units so as to provide these weaker sections of the society, houses at
a price lower than cost price with a view to making them affordable by such
members of the weaker sections of the society, is belied by facts undisputed
and that the whole attempt of the Authority, in violation of its avowed policy,
was to make profit by levying such illegal surcharge. The petitioners,
therefore, prayed for issue of a writ or order or direction declaring the levy
of surcharge as illegal and unconstitutional and for a direction for refund
thereof together with the interest at the rate of 12% per annum from the date
of levy and collection till the date of refund.
In the cognate petition the petitioners are
allottees of flats situated at Prasad Nagar and Rajouri Garden under MIG scheme
and they complain that in their case surcharge varies from Rs. 19,200 to .
22,600.
Respondents to the petition are Delhi
Development Authority, No. 1 and Chairman and Vice-Chairman of the Authoring,
Nos. 2 and 3 respectively. In Writ Petition No. 4660/78 the Authority is
respondent 1 and Union of India, respondent 2. Petitions were mainly contested
by and on behalf of the Authority.
The Delhi Development Act, 1957 ('Act' for
short), was enacted as its long title shows with the a view to providing for
the development of Delhi according to the plan and for arresting haphazard
growth and for matters ancillary thereto. It envisages the setting up of an
Authority to be styled as Delhi Development Authority which would be a body
corporate by the name aforesaid having perpetual succession and a common seal
with power 'o acquire, hold and dispose of property, both movable and
immovable, and to contract and shall by the said name, sue and be sued. The
composition of the Authority is set out in sub-section (iii) of s. 3.
Amongst others, Administrator of Union
Territory of Delhi would be an ex-officio Chairman and a Vice-Chairman to be
appointed by the Central Government. The 710 Vice-Chairman may be either a
whole-time or part-time officer as the Central Government may think fit.
Section S contemplates the constitution of an Advisory Council for the purpose
of advising, the Authority on the preparation of the master plan and on such
matters relating to the planning of development or arising out of or in
connection with the administration of the Act. Section 5A which was added by
amending Act 56 of 1963 confers power on the Authority to constitute as many
committees consisting wholly of members or wholly of other persons or partly of
members and partly of other persons and for such purpose or purposes as it may
think fit. Chapter Ill-A which was inserted by the Amending Act of 1963 confers
power for modification of the master plain once prepared. Chapter IV provides
for development of lands. Chapter V confers power on the Central Government to
acquire land for the purposes of development or for any other purpose under the
Act under the provisions to the Land Acquisition Act, 1894, and further
authorises the Central Government to transfer the land so acquired to the
Authority.
Chapter VI provides for finances and audit of
the accounts of the Authority Chapter VII provides for supplemental and
miscellaneous provisions. Section 52 confers power on the Authority to delegate
any power exercisable by it under the Act, except the power to make
regulations, on such officer or local authority or committee constitued under
s. 5A as may be mentioned, by a notification to be published in the Official
Gazette in such cases and subject to such conditions, if any, as may be
specified therein. One more section of which notice should be taken is s. 57
which confers power on the Authority with the previous approval of the Central
Government by notification in the official Gazette to make regulations
consistent; with the Act and the rules made thereunder to carry out the purposes
of this Act.
Sub-s. provides that until the Authority is
established under the Act any regulation which may be made under. sub-s. may be
made by the Central Government and any regulation so made may be altered or
rescinded by the Authority in exercise of its powers under sub-s. Section 58
makes it obligatory to lay every rule and regulation made under this Act before
each House of Parliament in session for a period of 30 days and subject to any
alteration or modification therein the rule or regulation shall after expiry of
the prescribed period mentioned have effect only in such modified form or be of
no effect as the case may be, so however that any such modification or
annulment shall be without prejudice to the validity of anything previously
done under the rule or regulation.
Petitioners belong to MIG, each of whom
registered himself as an intending applicant for a flat in MIG scheme and each
of whom has 711 been allotted a flat either in Rajouri Garden, Prasad Nagar or
Lawrence Road. Number of persons desirous of having a flat registered with the
Authority far outnumbered the available flats with the result that lots had to
be drawn and the lucky ones got a letter of allotment to pay the price set out
in the brochure in respect of each scheme and to obtain a flat. Each petitioner
had paid the price and has entered into possession of the allotted flat. All
the petitioners now contend that the Authority has levied and collected a
surcharge as part o: purchase price of flat arbitrarily and without the authority
of law and has collected the same from them in violation of its object of
functioning on 'no profit no loss' basis and thereby made a huge profit. They
further contend that they have been subjected to discriminatory treatment in
contravention of Art. 14 of the Constitution inasmuch as no surcharge has been
collected from allottees of flats in MIG schemes prior to November 1976 and
subsequent to January 1977 except these three schemes and one Wazirpur MIG
scheme. Further, no other MIG scheme flats have been subjected to such
unauthorised levy of surcharge. It is pointed out that the levy of surcharge
has been scrapped in 1978. The petitioners contend that levy of surcharge has
no nexus to the object for which the Authority was set up namely, providing housing
accommodation at reasonable price by the Authority whose declared policy is 'no
profit no loss'. It was said on behalf of the petitioners that even if the
Authority was set up for providing housing accommodation to the people in
different income groups (keeping in view their financial
capacity/affordability) yet a statutory body like the Authority operating on
'no profit no, loss' basis must have a scientifically prescribed formula for
working out its price structure and that must be uniformly applied to all those
who apply for flats and to whom they are allotted and such a statutory
Authority cannot discriminate in working out the disposal price of the flats by
including surcharge in respect of some MIG schemes within a certain specified
period, a surcharge not authorised by law and not sanctioned by the Authority
as a component of price and unknown to pricing of flats, while others similarly
situated and similarly circumstanced and belonging to the same income group
enjoyed the benefit of getting flats at cost price and, therefore, petitioners
have been accorded discriminatory treatment in the matter of price of flats
allotted to them. Petitioners, therefore, contend that even if they applied for
flats and got registered and were offered flats and accepted the same at the
price stated in the brochure and even if it has resulted in a concluded
contract yet the Court should not turn a blind eye to such gross discrimination
by a statutory authority charged with a duty to provide housing accommodation acting
on the declared policy of 'no profit no 712 loss'. It was simultaneously
contended that the Vice- Chairman of the Authority authorised to determine the
prices of flats in each income group has not made any order or has not given
any direction for levy of surcharge and that the levy of surcharge was wholly
unauthorised.
A preliminary objection was raised by the
Authority that the petitions are not maintainable under Art. 32 of the
Constitution inasmuch as The petitioners have not come to the Court for enforcement
of a t fundamental right conferred upon the petitioners under Part III of the
Constitution but the petitioners have invoked jurisdiction of this Court for a
relief of re-opening concluded contracts. It was also submitted that if the
Court accepts the contention of the petitioners they would derive an unfair
advantage over others who may not have applied for flats because of the price
set out in the brochure and if surcharge is excluded they may have applied for
flats at a lower price and, therefore, also the Court should not entertain the
petitions.
Though we are not inclined to reject the
petitions on this preliminary objection as we have heard them on merits it is
undeniable that camouflage of Art. 14 cannot conceal the real purpose
motivating these petitions, namely, to get back a part of the purchase price of
flats paid by the petitioners with wide open eyes after flats have been
securely obtained and petition to this Court under Art. 32 is not a proper
remedy nor is this Court a proper forum for re-opening the concluded contracts
with a view to getting back a part of the purchase price paid and the benefit
taken. The undisputed facts are that petitioners offered themselves for
registration for allotment of flats that may be constructed by the, Authority
for MIG scheme. After the registration and when the flats were constructed and
ready for occupation brochures were issued by the Authority. One such brochure
for ', allotment of MIG flats in Lawrence Road residential scheme is Annexure
R-1. This brochure specifies the terms and conditions including price on which
flat will be offered. It also reserved the right to surrender or cancel the
registration, the mode and method of paying the price and handing over the
possession. There is an application form annexed to the brochure. Annexure 'A'
to the brochure sets out the price of flat on the ground floor, first floor and
second floor respectively. It sets out the premium amount payable for land as
also the total cost in respect of the flats on the ground floor, first floor
and second floor. The statement also shows the earnest money deposited at the
time of the registration and the balance payable. It is on the basis of these
brochures that the applicants applied for the flats in Lawrence Road and other
MIG schemes. They knew and are presumed to know the contents of the brochure
and particularly the price 713 payable. They offered to purchase the flats at
the price on which the Authority offered to sell the same. After the lots were
drawn and they were lucky enough to be found eligible for allotment of flats,
each one of them paid the price set out in the brochure and took possession of
the flat, and thus sale became complete. There is no suggestion that there was
a mis-statement or incorrect statement or any fraudulent concealment in the
information supplied in the brochure published by the Authority on the strength
of which they applied and obtained flats. How the seller works out his price is
a matter of his own choice unless it is subject to statutory control. Price of
property is in the realm of contract between a seller and buyer. There is no
obligation on the purchaser to purchase the flat at the price offered.
Even afar registration the registered
applicants may opt for other schemes. His light to enter into-other scheme
opting out of present offer is not thereby jeopardised or negatived and
applicants so outnumbered the available flats that lots had to be drawn. With
this background the petitioners now contend that the Authority has collected surcharge
as component of price which the Authority was not authorised or entitled to
collect. Even if there may be any merit in this contention, though there is
none, such a relief of refund cannot be the subject-matter of a petition under
Art. 32.
And Art. 14 cannot camouflage the real bone
of contention.
Conceding for this submission that the
Authority has the trappings of a State or would be comprehended in 'other
authority' for the purpose of Art. 12, while determining price of flats
constructed by it, it acts purely in its executive capacity and "is bound
by the obligations which dealings of the State with the individual citizens
import into every transacting entered into the exercise of its constitutional
powers But after the State or its agents have entered into the field of
ordinary contract, the relations are no longer governed by the Constitutional
provisions but by the legally valid contract which determines rights and
obligations of the parties inter se. No question arises of violation of Art. 14
or of any other constitutional provision when the State or its agents,
purporting to act within this field, perform any act. In this sphere, they can
only claim rights conferred upon them by contract and are bound by the. terms
of the contract only unless some statute steps in and confers some special
statutory power or obligation on the State in the contractual field which is
apart from contract" (see Radhakrishna Agarwal & Ors. v. State of
Bihar & Ors.) Petitioners were under no obligation to seek allotment of
flats even after they had registered themselves. They looked at the price and
flats and applied for the flats. This they did voluntarily. hey were advised by
the brochures to look at the flats before going 714 in for the same. They were
lucky enough to get allotment when the lots were drawn. Each one of them was
allotted a flat and he paid the price voluntarily. They are now trying to
wriggle out by an invidious method so as to get back a part of the purchase
price not offering to return the benefit under the contract, namely, surrender
of flat. I The Authority in its affidavit in reply in terms stated that it is.
willing to take back the fiats and to repay them the full price. The
transaction is complete, viz., possession of the flat is taken and price is
paid. At a later stage when they are secure in possession with title,
petitioners are trying to get back a part of the purchase price and thus trying
to re-open and wriggle out of a concluded contract only partially. In a similar
and identical situation a Constitution Bench of this Court in Har Shankar &
ors. etc.
etc. v. The Dy. Excise & Taxation Commr.
& ors. has observed that those who contract with open eyes must accept the
burdens of the contract along with its benefits. Reciprocal rights and obligations
arising out of contract do not depend for their enforceability upon whether a
contracting party finds it prudent to abide by the terms of the contract. By
such a test no contract would ever have a binding force. The jurisdiction of
this Court under Art. 32 of the Constitution is not intended to facilitate
avoidance of obligations voluntarily incurred. It would thus appear that
petitions ought not to have been entertained. However, as the petitions were
heard on merits, the contentions canvassed on behalf of the petitioners may as
well be examined The principal contention canvassed on behalf of the
petitioners is that the treatment meted to them by the Authority is
discriminatory inasmuch as no surcharge was levied on flats in MIG scheme
constructed and allotted prior to November 1976 and after January 1977. MIG
flats involved in these petitions were constructed and were available for
allotment in November 1976 and the lots were drawn in January 1977. There is
one more MIG scheme at Munirka where the allotment took place at or about the
same time but in which case no surcharge was levied. The contention is that
once for the purpose of eligibility to acquire a flat, the criterion is
grounded in income brackets, MIG, LIG, et .
those in the same income bracket form one
class even for the purpose of determining disposal price of flat allotable to
them irrespective of situation, location or other relevant determinants which
enter into price calculation and therefore, in the same income group there
cannot be differentiation by levying of surcharge in some cases and charging
only the cost price in other cases and that the discrimination is thus writ
large on the face of the record 715 because by levying surcharge in case of
petitioners they have been treated unequally and with an evil eye. It is
difficult to appreciate how Art. 14 can be attracted in the circumstances
hereinabove mentioned. Cost price of a property offered for sale is determined
according to the volition of the owner who has constructed the property unless
it is shown that he is under any statutory obligation to determine cost price
according to certain statutory formula. Except the submission that the
Authority has a proclaimed policy of constructing and offering flats on 'no
profit no loss' basis which according to Mr. Nariman has a statutory flavour in
the regulations enacted under the Act, the Authority is under no statutory
obligation about its pricing policy of the flats constructed by it. When the
flats were offered to the petitioners the price in round figure in respect of
each flat was mentioned and surcharge was not separately set out and this price
has been accepted by the petitioners. The obligation that regulations are
binding on the Authority and have provided for a statutory price fixation
formula on 'no profit no loss' basis will be presently examined but save this
the Authority is under no obligation to fix price of different flats in
differed.
schemes albeit in the same income group at
the same level or by any particular statutory or binding formula. The Authority
having the trappings of a State might be covered by the expression 'other
authority' in Art. 12 and would certainly be precluded from according
discriminatory treatment to persons offering to purchase flats in the same scheme.
Those who opt to take flats in a particular income- wise area-wise scheme, in
which all flats came up together as one project, may form a class and any
discriminatory treatment in the same class may attract Art. 14. But to say that
throughout its course of existence the Authority would be bound to offer flats
income-groupwise 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 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 (See Prag Ice & oil Mills and Anr.
etc. v. Union of India) In the leading
judgment it has been observed that mechanics of price fixation have necessarily
to be left to the executive and unless it is patent that there is hostile
discrimination against a class the processual basis of price fixation has to be
accepted in the generality of cases as valid.
716 This Court in Avinder Singh v. State of
Punjab,(l) approved the following dictum of Willis on Constitutional Law, page
587:
"The State does not have to tax
everything in order to tax something. It is allowed to pick and choose
districts, objects, persons, methods and even rates for taxation if it does so
reasonably . . . The Supreme Court has been practical and has permitted a very
wide latitude in classification for taxation.
What is forbidden by Art. 14 is discrimination
amongst persons of the same class and for the purposes of allotment of flats
scheme-wise, allottees of flats in the same scheme, not different schemes in
the same income bracket, will have to be treated as a class and unless in each
such class there is unequal treatment or unreasonable or arbitrary treatment,
the complaint that Art. 14 is violated cannot be entertained. Therefore, in the
State of Gujarat & Another v. Shri Ambica Mills Ltd., Ahmedabad, etc.,
Mathew, J., speaking for the Court observed as under:
"A reasonable classification is one
which includes all who are similarly situated and none who are not.
The question then is what does the phrase
'similarly situated' mean ? The answer to the question is that we must look
beyond the classification to the purpose of the law. A reasonable
classification is one which includes all persons who are similarly situated
with respect to the purpose of the law. The purpose of a law may be either the
elimination of a public mischief or the achievement of some positive public
good." Is the classification income-wise scheme-wise violative of Art. 14
in any manner ? The Authority formulates income- wise area-wise schemes for
constructing flats. Petitioners contend that there should be only income-wise
classification wholly ignoring area and time factor for classification.
They say that allottees of flats in all MIG
schemes irrespective of area and location and irrespective of when the flats
were constructed form one class for determining price of flats. There. is no
merit in this contenting. What are price determinants ? Price of land, building
material, labour charges and cost of transport, quality and availability of
land, supervision and management charges are all variable factors that enter
into price fixation. Their cost varies time-wise, place-wise,
availability-wise. All these uncertain factors cannot 717 be overlooked for the
purpose of classification. Therefore, it is not possible to hold that allottees
of flats in MIG scheme at any place and executed at any time will form one
class for the purpose of pricing policy. only valid basis for classification
would be income-wise, area-wise, time- wise, scheme-wise, meaning all flats
constructed at or about the same time in same area in one project for particular
income-group will form a class. And there is no discrimination amongst them.
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 or 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 succour, can by no
stretch of imagination attract Art.
14. People in, the MIG can be charged more
than the actual cost price so as to give benefit to allottees of flats in LIG,
Janata 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 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 persons or objects and not others. It is 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 Art. 14, (see East India Tobacco Co. v. State of Andhra
Pradesh). 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 resorted to and t-hat in MIG schemes pertaining to period prior to November
1976 and later April 1977 no surcharge was levied.
718 If a certain pricing policy was adopted
for a certain period and was uniformly 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.
It was, however, said that levying of
surcharge runs counter to object for which the Authority was set up, namely, to
make available housing accommodation on 'no profit no loss' basis. The argument
proceeds on the assumption that the principle of 'no profit no loss' implies
that in respect of each flat the cost of its construction must be worked out
and that alone can be the disposal price of each flat. Principle of 'no profit
no loss' has been explained by the respondents. It IS said that in the over-
all working, planning and execution of projects which the Authority undertakes
as part of development of Delhi, the integral part of it being construction of
flats for different income-groups the motives and working of it would not be
profit oriented but would work on 'no profit no loss' economic doctrine. This
would not for a moment suggest that the principle of 'no profit no loss' should
apply either to every flat or to every scheme or to every piece of land
developed by the Authority. It would be impossible for the Authority to
function on such fragmented basis and such a policy statement has not been made
by the Authority. Of course, some public statement appears to have been made
that the overall working of the Authority is on "no profit no loss' basis.
Respondent 1 has been able to point out that the Authority's housing scheme, as
a whole has been running in a heavy deficit because flats including such as those
of the petitioners actually cost much more than the initially determined
estimates and by the time flats are ready for occupation initial estimates
founded on prevalent market prices of materials and labour escalate and revised
estimates have to be made. It is also shown that till Municipal authority takes
over municipal services the Authority spends for the same and incurs cost.
Apart from that petitioners have not been able to show that the Authority is
actuated by commercial profit oriented approach in its overall working.
It is, however, necessary to examine the
contention whether this 'no profit no loss' policy statement has any statutory
flavour as contended by Mr Nariman. The regulations 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 719 determining the cost price. A quick survey of the Regulations do A 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.
It is at this stage necessary to examine the
contention that in the case of Wazirpur and Munirka LIG schemes which came up
during this very period no surcharge was levied and, therefore, there is
invidious discrimination amongst members of the same class. Again the argument
proceeds that income- wise classification alone is valid. Here time-wise
(November 1976 to January 1977) classification is relied upon. It is an
admitted position that no surcharge is levied on MIG flats at Munirka. The
affidavit in reply shows that the land on which flats are constructed in
Munirka MIG scheme turned out to be very rocky with the result that the
construction cost in respect of flats at Munirka MIG scheme worked out at Rs.
456 per plinth area per metre whereas in respect of Lawrence Road it came to Rs.
401.54 p. Only. The Authority, therefore, thought that if surcharge is levied
on flats under MIG scheme in Munirka area the disposal price would be very high
and would be beyond the reach of MIG. It is in this background of the special
facts that 'no surcharge was levied in respect of any flat in MIG in Munirka
area.
Project-wise price fixation cannot be dubbed
as arbitrary or discriminatory in comparison with other projects at different
places.
It was, however, pointed out that 132 flats
in Rajouri Garden MIG scheme were disposed of- without levying surcharge as
component of sale price. It is pointed out in affidavit in reply that those
flats were handed over to the Government of India for meeting their needs for
staff quarters and that was done in the year 1978. It is also pointed out that
the Government charged half the price of the land in respect of these 132 flats
and, therefore, surcharge was not levied. There is two-fold fallacy in this
submission. Government ordinarily is in a class by itself and its needs of
staff quarters deserve to be met in large public interest. Government has not
got any undeserved benefit at the cost and risk of petitioners. Hence their
complaint in this behalf is without merits.
It was next contended that surcharge is arbitrary
inasmuch as how the surcharge is worked out in each case does not answer any
720 rational, tangible, scientific or understandable formula.
How the figure of surcharge has been worked
out has been explained in detail in affidavit in reply. Briefly recapitulating
the same, it may be mentioned that initial estimates for 304 MIG flats in
Prasad Nagar area were prepared in or about 1971 and the estimated cost was Rs.
1,17,83,200 and that on March 21, 1972, an estimate of Rs 1,09,97,100 was
sanctioned. After the work commenced and the actual cost started coming in the
revised estimate for 304 flats was of the order of Rs. 2,07,33,000 which was
approved by the Vice-Chairman on September 18, 1976. According to the revised
estimate the approximate disposal cost for each flat came to Rs. 68,202 and the
cost of land per dwelling unit was Rs. 7,008. Extracts of original notes of
Financial Adviser (Housing) and the approval of the same by the Vice- Chairman
have been set out in the affidavit in reply. The subsequent revised estimates
show that disposal price of each flat would be Rs. 75,200. In the meantime the
Income Tax Department wanted to acquire 40 MIG flats in Prasad Nagar area and
the same were offered at the price of Rs. 75,000, per flat. Commissioner of Income
Tax accepted the price. This became the starting point for working out the
disposal price in that period. The difference between the cost price and the
disposal price of Rs. 75,000 per flat was treated as surcharge and the purpose
was to use the extra money for extending cost reduction benefit to the
allottees of flats in LIG, Janata and CPS schemes. Affidavit in reply of the
Secretary of Respondent 1 provides further information which show that the cost
price would be Rs. 78,000. Therefore, at best the component of surcharge would
be between Rs. 1700 to Rs. 2200 in Rajouri Garden MIG flats.
Similarly, with regard to MIG flats at
Lawrence Road the actual cost price would be in close proximity of the disposal
price would be in close proximity of the disposal price charged from the
petitioners. It is, therefore, difficult to entertain the contention that even
if surcharge could be justified its actual computation is arbitrary and
irrational.
The next contention is that Vice-Chairman had
no authority to levy surcharge and that even if he has authorised the same it
runs counter to the principle of fixing disposal price incorporated in
Resolution No. 209 dated November 26, 1974. The Vice-Chairman is to be
appointed by the Central Government as per s. 3(3)(b) of the Act. It appears
that this Vice-Chairman is whole-time officer and will be the Chief Executive
of the Authority.
This becomes clear from regulation 3 of the
Regulations which provides as under:
"3. These regulations shall be
administered by the Vice-Chairman, subject to general guidance and resolutions
of the 721 Authority, who may delegate his powers to any officer of the
Authority".
Thus the Vice-Chairman, subject to general
guidance and resolutions of the Authority, shall administer the regulations. He
can delegate the functions to any officer of the Authority. Regulation 59 is
important which reads as under:- "59. The Authority may delegate all or
any of its powers under these regulations to the Vice-Chairman or to a whole
time member".
Armed with this power of delegation the
Authority adopted Resolution No. 60 dated February 21, 1970 which reads as
under:
"Resolved that the recommendations of
the Committee be approved and all the powers of Delhi Development Authority be
exercised by the Housing Committee and the Chairman, Delhi Development
Authority be authorised to constitute the said committee, determine the
organisational set-up and take (sic) all efforts for implementing the housing
and allied schemes".
Serious exception was taken to this gross
abdication of its powers and functions by the Authority. The composition of the
Authority as set out in s. 3 would include such persons as Finance and Accounts
Member, Engineering Member, representatives of Municipal Corporations of Delhi
and representatives of Metropolitan Council as and when set up.
Three other persons were to be nominated by
Central Government of whom one shall be person with experience of planning. It
is a high power body. Yet it completely abdicated its power and authority in
favour of Housing Committee. The Housing Committee will practically supplant
the Authority. But the more objectionable part of Resolution No. 60 is that
such Housing Committee which is to enjoy all powers and functions of the
Authority was to be constituted by the Chairman at his sole discretion because
he was authorised not only to constitute the Housing Committee but to determine
organisational set up and then make all efforts for implementing the housing
and allied schemes. It is really difficult to appreciate such whole-sale
abdication or delegation of powers by a statutory authority in favour of a
Committee whose composition would be determined by one man, the Chairman. By a
process of elimination the Housing Committee could supplant the Authority and
the Chairman could constitute Housing Committee. Therefore, the Chairman
enjoyed 722 a very wide discretionary power. Though Mr. Nariman did challenge
the validity of Resolution No. 60, Mr. Chitaley in cognate petition refrained
from doing so. Once the power to delegate is given by the Regulations the
challenge to validity on the ground of delegation must fail It is, however,
necessary to examine the submission whether Vice-Chairman could have permitted
levy of surcharge as a component of the price of flats in MIG schemes. In this
connection it would be advantageous to refer to Resolution No. 20 dated June
18, 1968. Of the Authority by which the recommendations of the Standing
Committee, inter alia, empowering the Vice-Chairman to approve forms of application
as well as to fix the disposal and hire-purchase price were accepted.
Resolution No. 209 is the one adopted by the Housing Committee. It takes note
of the delegation of powers to fix disposal and hire-purchase price of flats to
the Vice-Chairman and further provides that if there is a marginal saving in
any scheme the amount is always diverted to subsidies cost of Janata and CPS
houses. It seems the Resolution is for information of the Housing Committee and
the Housing Committee has merely resolved that the information be noted. The
Resolution No. 200 of the Authority with Resolution No. 209 of the Housing
Committee sets out clearly that the power to fix the disposal price was
delegated to the Vice-Chairman and ordinarily such excessive delegation to one man
may be galling to a judicial body yet the scheme of regulations and the
provisions contained in Regulation 3 read with s. 59 clearly envisages such
delegation of powers. It is, therefore, idle to contend that the Vice-Chairman
had no authority to levy the surcharge as component of disposal price of flats.
It was next contended that even if
Vice-Chairman had such power there is nothing to show that he has exercised
this power and that, therefore, somewhere without any authority someone has
added the surcharge to the disposal price and that, therefore, the levy of
surcharge is unauthorised. The submission seems to be factually incorrect. The
note of Accounts officer (Housing) dated September 8, 1976, submitted to the
Financial Advisor (Housing) shows that the flats have been offered at the rate
of Rs. 75,000 to the Commissioner of Income Tax for the Income Tax Department
and that should be the disposal price This note was approved by the Financial
Advisor (Housing) and ultimately countersigned by the Vice-Chairman. Therefore,
the price of Rs. 75,000 as the disposal price is approved by the Vice-Chairman.
Even if it includes surcharge it cannot be said with confidence that the
Vice-Chairman has not approved the surcharge as a component of disposal price.
723 The last contention is that the Authority
has made a huge profit by levy of surcharge. In this connection statistical
table was annexed to the petition and there was serious controversy about the
facts and figures set out therein, by the other side. Having gone through the
detailed affidavit in reply it transpires that the contention is without
merits. Therefore, there is no substance in the contention that the Authority
has made a huge profit. On the contrary it appears that the overall working of
the Authority is deficit ridden.
These were all the contentions in these
petitions and as there is no Merit in any of them the petitions are dismissed.
There will be no order as to cost N.K.A Petitions dismissed.
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