Bahadurgarh Plot Holders Association & Ors Vs.  INSC 800 (6 December 1995)
B.L. (J) Hansaria B.L. (J) Ramaswamy, K.Majmudar S.B. (J) Hansaria, J.
1996 SCC (1) 485 JT 1995 (9) 167 1995 SCALE (6)765
was declared as an urban estate by the State Government of Haryana in exercise
of powers conferred by section 3 of the Punjab Urban Estates (Development &
Regulation) Act, 1964 (hereinafter 'the Punjab Act'). The declaration of any
area to be 'urban estate', permits the State Government, inter alia, to sell
the sites in accordance with the Punjab Urban Estates (Sales of Sites) Rules,
1965 (for short 'the Punjab Rules'). An offer was accordingly made for free
hold sale of about 2200 plots on first come first serve basis in Sector No.6 of
were informed that "all modern amenities like underground sewerage, storm
water, drainage, roads, electricity, supply of potable water etc. will be
to this invitation, a number of persons some of whom are the members of
appellant-Association, applied for allotment. Appellant No.2, Jeet Ram, is one
such applicant and by memo of even number dated 9.8.1972, the Estate Officer, Faridabad informed Jeet Ram about the
allotment of residential Plot No.852 to him on terms and conditions mentioned
in the memo. (Similiar is the position qua other allottees). We are concerned
with condition Nos.4 and 5 which read as below :
In case, you accept this allotment, you should send the enclosed acceptance in
the form given at Annexure A to this letter together with a Bank draft for
Rs.750/- in order to make 29 per cent of the price of the above mentioned plot
within 30 days from the date of issue of this also tement order, the payment
shall be made by a Bank draft payable to the Estate Officer, Faridabad, and
drawn on the State Bank of India, Faridabad.
case of failure to deposit the said amount within the above sepecified period,
the allotment shall be cancelled and the deposit of 10 per cent Earnest money
paid with the application shall be forfeited against which you will have no
balance of 80 per cent tentative price can be paid lumpsum without interest
within 60 days from date of issue of this allotment letter or in the annual
equated instalments with 7 per cent interest as laid down in Rule No.12 framed
under section 23(2) (b) (3) (3) of the Punjab Urban Estates (Development and
Regulation) Act, 1964.
first instalment shall fall due after the expiry of one year from the date of
issue of this allotment order".
per condition No.5 aforesaid, the first instalment became due on 9.8.1973, that
is, after expiry of one year from the date of issue of the allotment order. On
the instalment not having been paid, respondent No.2, the Estate Officer, sent
notices to the members of the appellant- Association to pay the instalments
including 7% interest on the total price of the plot. Failing which, it was
stated, that action under section 10 of the Punjab Act would be taken which visualises
resumption and forfeiture. The members of the Association acted as required by
the notices but without actually taking possession of the plots. It was so
because the plots had not been developed as visualised by the advertisement
seeking applications. Various representations were made to respondent No.2 for
early development and for delivering the possession of the plots.
also represented that the members of the Association were being charged
interest without actual delivery of possession of the plots which according to
the members was not permissible.
Despite the aforesaid representations, as the plots were not developed,
appellant No.2 approached the High Court of Punjab & Haryana by invoking
its jurisdiction under Article 226 of the Constitution. The High Court has held
in the impugned order that interest was chargeable. As regards possession, the
following observation was made in para 4 :
As regards possession, it may be noticed that the stand of the respondents was
that development is still taking place and as soon as the development is
completed, possession of the plot would be offered to petitioner No.1. It was
further stated at the bar that in case the petitioner is interested in taking
possession of the undeveloped plot, they are prepared.
for the petitioner was not prepared to accept this offer." Feeling
aggrieved at the view taken by the High Court this appeal has been preferred
under Article 136.
Bhandare, learned senior counsel for the appellants, has strenuously contended
that what was offered for allotment was developed plots and not undeveloped
follow up submission is that as the plots are yet to be developed fully, the
respondents could not have charged interest because possession of developed plots
is yet to be given. The stand of the respondents on the other hand is that
charging of interest is not co-related to the delivery of possession, as is in
case of allotments under the provisions of Haryana Urban Development Authority
Act, 1977 in view of what has been mentioned in Rule 5(7) of the Haryana Urban
Development Authority (Disposal of Land and Buildings) Regulations, 1978, (brevi
mani Haryana Regulations) provision in which would not apply to the case at
hand in as much as the same is not the requirement of the Punjab Rules. Ms. Nisha,
appearing for the respondents, submitted that as per Rule 12(2) of the Punjab
Rules, interest accrues from the date of the issue of the allotment order as
has been mentioned in the aforesaid condition No.5.
allotment in the present case being under the Punjab Rules, we are satisfied
that the provisions of the Haryana Regulations cannot be called in aid and it
is because of this that terms and conditions mentioned in the allotment order
of other persons, an instance of which is the allotment to one Surat Singh by
memo No.23 dated 28.2.1979, can be of no assistance to the appellants. Shri Bhandare's
alternative submission is that in any case as possession of developed plots has
yet not been given, interest cannot be demanded, even as per the scheme visualised
by the Punjab Rules. A perusal of the Rules shows that after applications are
made for allotment and the same are accepted, possession of the site is
required to be delivered to the transferee, as mentioned in Rule 7, after he
has paid 25% of the price. Another provision of the Rules which is required to
be noted is that the transferee is required to complete the building within
three years from the date of issue of allotment order as per Rule 14, though this
time limit may be extended by the Estate Officer, if he is satisfied that the
failure to complete the building within the period of three years was due to
causes beyond the control of the transferee.
are thus satisfied that if the Rules are read as a whole, possession of the
allotted plot is required to be given within reasonable time after payment of
25% of the price. Rule 14 itself would indicate that possession has to be
delivered soon after the allotment order to enable the transferee to complete
the building within three years from the date of issue of allotment order. The
submission of Ms. Nisha is that Rule 14 having visualised extension of the time
limit, this Rule would not require delivery of possession soon after the
payment of the 25% of the price.
to us, this submission cannot be accepted because the power of extension given
to the Estate Officer is really meant to be exercised when the transferee,
after receipt of possession of the land, is not in a position to complete the
building. We, therefore, hold that interest cannot be demanded till offer of
possession is made. There is no dispute that appellant No.2 had paid the
required amount. It is also not in dispute that the possession of the plot was
not delivered within reasonable time thereafter.
Bhandare has taken pains to persuade us to hold that it is incumbent on the
part of the Estate Officer to deliver possession of developed plots and as even
by 1985 such plots had not been offered for delivery, as would appear from the
order passed by this Court itself on 14.1.1985, there can be no justification
in demanding payment of interest. As per the learned counsel, full development
is yet to take place in as much as the statements made by the respondents in
their application for vacation of stay, which was registered as I.A. No.2 of
1992, were as below :
that the Sector-6, Bahadurgarh is almost fully developed.
That 150 houses are constructed for which the completion certificates have been
That near about 250 houses are under construction.
That water supply work is completed.
That road works in the sector is also completed.
That the internal sewerage line S.W.D. (Storm Water drainage) have been laid
down and temporary disposal has been completed." Ms. Nisha, however,
states that this position was in 1992; by now, she has instruction to stay that
plots have been fully developed.
decide the aforesaid submission of Shri Bhandare we would really be required to
find out as to whether the offer was of developed plots or undeveloped plots.
As the offer had stated that modern amenities noted above "will 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 undeveloped plot was not accepted by the counsel of the
appellant. That order being of 17th October, 1980, we are of the view that interest did become payable from that date.
The fact that 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 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. The provision in a cognate rule cannot alter the
consequence which has to follow from the rule which holds the field. In the
present case it being the Punjab Rules under which the allotment was made, we
are not in a position to agree with Shri Bhandare, despite his forceful
submission, that the appellants may not be asked to pay interest, despite their
having been no offer of delivery of possession of fully developed plots.
therefore, hold that the interest in the present and similar cases had become
due from 17th October,
1980. We understand
from Shri Bhandare that most of the members of the appellant-Association had
paid the instalments with interest as per the notice of the respondent No.2.
According to us, as interest became chargeable from 17th October, 1980, it would be open to the members of the Association to
claim refund if they had paid interest, as claimed in the notices issued by the
do not propose to leave the matter at this. The allotments having been made
about two decades ago, there can be no justification in not fully developing
the plots even by 1992. The statement in I.A. No.2 of 1992 that the sector is
"almost fully developed" and that "temporary disposal has been
completed" do speak about lack of proper interest and attention on the
part of the respondents. In this connection we would state that a statement had
been made on behalf of the respondents before this Court on 14.1.1985 that
possession of the developed plots would be given to the appellants within a
period of six months, and so such a direction was given. Shri Bhandare states
that direction is yet to be complied with in letter and spirit. It is this
complaint which has given rise to Contempt Petition No.22 of 1989. On the facts
and circumstances of the case, we do not propose to pursue the contempt
application and would direct the respondents once again to develop the sector
fully, and not, "almost fully". This would be done within a period of
six months, failing which the respondents would not only be liable for contempt
but the allottees would be exonerated from the liability to pay any interest
The appeal is disposed of accordingly, without any order as to costs.