Delhi Development Authority, N.D. & Anr.
Vs. Joint Action Committee,Allottee of Sfs Flats & Ors.  Insc 1275 (13 December 2007)
Sinha & Harjit Singh Bedi
NOS.6700-6732 OF 2000 WITH
CIVIL APPEAL NOS. 6666, 6667 & 6733 OF 2000 AND CIVIL APPEAL NOS. 5881,
5867, 5882, 5876 and 5870 OF 2007 [S.L.P. (C) NOS. 25385 OF 2005, 1003, 8033,
8262 & 13512 OF 2006] S.B. SINHA, J :
Leave granted in all the Special Leave Petitions.
APPEAL NOS. 6666, 6667, 6668-6698, 6799-6732 & 6733 of 2000 CIVIL APPEALS @
SLP (CIVIL) NOS. 25385 OF 2005, 1003, 8033 OF 2006 AND 13512 OF 2006 :
This batch of appeals arising out of a judgment and order dated 23.07.1999
passed by a Division Bench of the Delhi High Court, inter alia, in Writ
Petitions No. 793 of 1993 as also a judgment and order dated 22.07.2005 passed
by a Full Bench of the Delhi High Court in Letters Patent Appeal Nos. 844 of
2003 etc. were heard together and are being disposed of by this common
Delhi Development Authority (for short, the Authority) has been
constituted under the Delhi Development Act, 1957 (for short, the
it develops different areas in the town of Delhi and constructs houses for all groups of people.
Principally it allocates flats under six different schemes viz :
Self Financing Scheme (SFS);
Higher Income Group Scheme (HIG Scheme);
Middle Income Group Scheme (MIG Scheme);
Lower Income Group Scheme (LIG Scheme),
Expandable Housing Scheme.
flats constructed and allocated under the SFS Scheme are distinct and different
from the other five schemes launched by the Authority. We shall advert to the
said distinction a little later.
Suffice, however, it to say that not only costs of such schemes are calculated
on different basis but the rights and stipulated liabilities thereunder are
also different. Cost of flats vary from scheme to scheme.
one of the schemes, applications were invited by the Authority from 22.12.1992
may notice some of the provisions containing the terms and conditions on the
basis whereof such an offer was made.
the details of the flats and tentative cost etc. are available in Annexure-B.
The cost of the flats mentioned therein is tentative and subject to revision on
account of escalation in the value of land and cost of construction. Please
note that there is a possibility of upward revision of the tentative cost.
Those who are successful for a ready built flat will be called upon to make the
payment in lump sum within 60 days. Others who are successful for a flat where
the work is already in progress will be asked to deposit within 30 days a
specified percentage anything upto 90% of the estimated disposal price representing
the expenditure already made and the amount required for construction of flats
in next 3 to 4 months.
successful for new allocations are asked to pay 25% the estimated cost of the
flat by way of 1st instalment payable within 30 days. In each of the case 60
days time is further given to remit the amount with prescribed interest.
The demand-cum-allocation letters issued will indicate the prescribed dates by
which the payments will be required to be made. The demand letter for final instalment
for the flats in progress and new allocations will be issued separately and
this may also include the possible increase in the cost of the flat. No
separate letters will be issued for any of the subsequent instalments. It will
be obligatory on the part of the allocatees to make the payments and deposit
the requisite documents before the due dates indicated.
event of default the allocation/allotment of the flat in the scheme will be
liable to be cancelled.
submission of documents as demanded are delayed, maintenance charges will be leviable
provided the delay in submission of documents is regularized.
If the allotment of flat is cancelled (either on the allottees own request
or due to the non- fulfilment of the terms and conditions of allocation by the allottee)
after the expiry of 1, 2, 3 and 4 months from the date of issue of demand-cum-
allocation letter, interest calculated @ 12% p.a. for the 1st month and 18%
p.a. for the 2nd, 3rd and 4th month on the amount demanded in the demand letter
shall be charged in addition to the amount of penalty specified above.
The allottee shall be entitled to take delivery of the possession only after he
has completed all the formalities, paid all dues and furnished/executed all the
documents as required in the allotment-cum-demand letter of the Delhi
Appellants in the first batch of cases and the respondents in the second batch
(hereinafter referred to as the registrants) applied for allocation
of flats under the SFS Scheme. The said scheme was floated in terms of Item
No.112 of 1992. For the said purpose, brochures are issued. Those who desired
to have allocation of such flats were asked to opt therefor at three different
places. Allocation of flats under the said Scheme is made upon 90% payment of
the estimated costs. However, allotment is made on draw of specific number of
flats. Allocation of flats may be made in respect of areas, floors and/or the
pockets. On receipt of the letter of demand-cum- allocation by the registrant,
the schedule of payment commences.
cost for construction is calculated on the basis of the value of the land and
likely cost of constructions.
letter of demand-cum-allocation issued to successful registrants contains a condition
which may be noticed for the purpose of these cases and read as under :
The amount demanded should be paid on or before the due date mentioned in para
2 and 3 above. Extension of time for making payment of the amount demanded in
column 7 of para 3 above upto a maximum period of 90 days from the due date is
admissible. An allottee need not apply for extension but he will have to pay
interest @ 12% p.a. for the first month and @ 18% p.a. for the subsequent
period. In case payment of the amount asked for in the demand letter is not
made within 90 days of the due date, the allotment shall stand cancelled
automatically. However, cancellation due to non-payment of first 4 instalments
during the stipulated period can be got restored on payment of dues with
interest along with cancellation and restoration charges for each cancellation
due to non-payment, subject to availability of the allocated flat. The
cancellation due to non-payment of final instalment within 120 days of the date
of issue (letter of the block date) of the demand letter for 5th instalment
shall not be restored under any circumstances.
may be useful to notice some other clauses containing terms and conditions of
allocation, which are as under :
No separate demand letters will be issued for 2nd, 3rd and 4th instalments. It
will be obligatory on your part to make the payment before the due date
indicated at page-1; failing which the allocation is liable to be cancelled.
estimated cost of the flats as given in this letter is provisional and subject
to revision on the completion of the flat. Any price difference between the
estimated cost and the cost as it comes out on completion as per costing
formula then in vogue would have to be paid along with the 5th and final instalment.
There would be no review of the cost of the flat in the intermining period.
Interest @ 7% on the amount deposited will be payable for the period beyond 3=
years to the date of issue of possession letter if the construction of the
houses is not completed by then.
amount demanded should be paid on or before the stipulated due date failing
which the allotment shall be liable to be cancelled without notice. In case,
due to unavoidable reasons, the allottee is not able to make the payment within
the due time, then he must ensure that his acceptance of the allotment reaches
the Housing Department before the due date of payment with a request for
Registrants are said to have defaulted resulting in purported automatic
cancellation of their allotments. Show cause notices were issued to them.
of them allegedly expressed their difficulties in regard thereto.
The Vice-Chairman of the appellant who is said to be delegated with the power
of the Authority to which reference would be made hereinafter took a policy
decision which is reflected from Office Order issued on 16.8.1996, the relevant
clauses whereof are :
With the approval of L.G. a decision was taken that the current price for South Delhi flats will be worked out by adding
a surcharge of 20% from the price worked out as per old formula. The approval
of L.G. to this decision was granted on 12.07.1996.
There are presently cases in the Housing Department where there have been
delays in the making of the payments of the flats allocated/allotted in South Delhi under SFS.
the aforesaid revision took place, delays of one year or so were being regularised
with usual charges, i.e., on payment of 18% interest per annum and restoration
charges, etc. in few cases where delays are unusually long, current price has
also been demanded.
The aforementioned Office Order dated 16.8.1996 was reiterated in a resolution
dated 27.8.1996 wherein a further decision was taken to impose a surcharge of
20% over and above disposal price only in respect of registrants who
had been allotted flats in South Delhi.
The said decision was taken to balance the reduced cash flow of the Authority.
It reads as under :
On the basis of the aforesaid resolutions of the Authority, 50% flats are
proposed to be offered to the public. It is also being proposed to offer to
public the unavailed flats if any out of the 50% flats being reserved for Govt.
organisations/PSUs. In this manner, number of flats to be offered to the public
can be beyond 50%.
balance the reduced cash in-flow because of the proposed discount it will be
necessary to charge premium in the areas where the real value in the market of
DDA flats is much more than what DDA is charging as per its costing formula in
the demand letters.
would be in the fitness of thing to charge premium of 20% over the disposal
cost worked out for the flats in South Delhi SFS.
Yet again, on 5.11.1998, a purported clarification was issued in regard to regularization
of flats where there had been delay in payment of first four instalments, stating
issuing allocation/allotment letters to the registrants of various schemes
announced by DDA, a demand is raised from the concerned allottees specifying
the amounts to be paid with due date of payment. However, sometimes on account
of the problem faced by the concerned allottees the payment received by the DDA
are later than the scheduled date. Such cases are usually examined on merits
and the delay is regularised if there is merit in the case as non- regularisation
of delays in deserving cases may be resulted by the allottees. The following
shall be the rules applicable to the allottees of all category of flats in case
there payments are delayed and are regularised by the competent authority.
Competent Authority to regularise the delay:
of delay Designation
30 days Jt./Dy. Directors
Beyond 30 days but upto 90 days Director (Housing)
Beyond 90 days but Commissioner upto 1 year (Housing)
Beyond 1 year but upto Principal 1 year 6 months Commissioner
More than 1 year 6 months Vice-Chairman B. Price of the Flat :
the allocated/allotted flat is in South Delhi where the construction has been undertaken by the South East Zone and
South West Zone of the Engineering Wing Except Dwarka (being in West Delhi) the Price of the flat if restored,
would be Old Cost interest or current cost whichever is higher.
case where allottees of the localities mentioned (i) above default a small
percentage of demand amount upto 10% beyond the due date, this delay, if regularised
would be on Old Cost- interest.
In other cases of all category flats i.e. where the construction of flats has
been undertaken by other zones of Engineering Wing the restoration shall be at
decision exists that while working out the current cost for flats in South Delhi, a surcharge of 20% from the price
worked out as per old formula, will be added. This surcharge will continue to
be added for South
Delhi flats. The
interest rates in the above case shall be @ 18% per annum on the default
addition to the above, the allottees/allocatees whose allotment is restored by
the competent authority, shall be liable to pay Restoration Charges @ 2.5% of
the registration money of the respective scheme.
Another office order dated 31.3.1999 was issued in regard to imposition of 20%
surcharge over and above disposal price only in respect of registrants in South
Delhi, relevant portion whereof reads as under :
Price of the flat
cases (pertaining to any locality) where demanded amounts were received prior
to 22.08.1996 by DDA, the restoration of allotment/regularisation of delay, if
considered would be on old cost interest.
case where allottees default a small percentage of total demanded amount upto
10% beyond the due date, the delay if regularised, would be on old cost +
If the allocated/allotted flat is in South Delhi i.e. where the construction
has been undertaken by the South East Zone and South West Zone of the
Engineering Wing except Dwarka (being in West Delhi), the price of the flat, if
restored, would be old cost + interest or current cost, whichever is
higher. This clause will be applicable in cases for which demanded amount by
DDA is received after 22.08.1996 and the delay is regularised.
other cases of all category flats i.e. where the construction of flats has been
undertaken by other zones of Engineering Wing, the restoration shall be at
old cost + interest.
Charge The premium of 20% over the disposal cost worked out on current cost or
old cost for the SFS flats in South Delhi,
where the real value in the market of DDA flats is much more than DDA is
charging as per its costing formula, shall be charged.
The said orders were issued in purported supersession of the previous orders on
the subject and were to come into force with immediate effect.
of the registrants made payments pursuant thereto or in furtherance thereof.
Some had made payments although, according to them, aforementioned resolution
will have no application to their case.
The said resolution was given a retrospective effect and retroactive operation.
Several writ petitions were filed at that stage questioning the legality and/or
validity of the said purported resolutions.
learned Single Judge of the Delhi High Court allowed the said writ petitions in
part quashing the policy of charging current cost and upholding the policy of
charging 20% surcharge. Letters Patent Appeals were preferred thereagainst. A
Division Bench of the High Court, having regard to conflict in decisions
operating in the field referred the matter to a larger Bench.
The Full Bench of the said Court by reason of the impugned judgment modified
the judgment and order of the learned Single Judge in respect of current
cost holding that the Authority had the requisite jurisdiction also in
respect thereof. The validity of levy of 20% surcharge was also upheld.
before the Full Bench:
Before the Full Bench, the registrants, inter alia, raised a contention that
levy of an additional amount over and above the disposal price on the allocatees
or flats in South Delhi was wholly unjustified. It was also
urged that adoption of current cost formula being contrary to the regulations
was also not sustainable in law inasmuch as rights of the writ petitioners
crystallized on issuance of the allocation letter and not when the actual
allotment of flat took place. Levy of surcharge amounts to a levy of tax or cess,
wherefor there is no authority in law.
Relying on or on the basis of a decision of this Court in Premji Bhai Parmar
and Others v. Delhi Development Authority [AIR 1980 SC 738] as also on Delhi
Development Authority v. Pushpendra Kumar Jain [AIR 1995 SC 1], the
respondents, on the other hand, contended that the right of registrants gets
crystallized only upon final allotment and not at the stage of issuance of
allocation letter. Relying furthermore upon a Full Bench decision of the High
Court in Smt. Sheelawant v. Delhi Development Authority [1995 (1) AD (Delhi) 725], its jurisdiction to delve
into the price fixation policy was also questioned.
raised before the Full Bench:
Two principal issues which were raised before the High Court are :
Whether the action of the Development Authority in levying 20% surcharge from
the registrants of the South
Delhi is justified ?
(ii) Whether demand for payment of current cost as calculated by the Delhi
Development Authority from the defaulter registrants could be said to be
justified? Findings of the Full Bench :
Levy of 20% surcharge is within the competence of the Authority in view of the
definition of the disposal price as contained in Regulation 2(13) of
the Delhi Development Authority (Management and Disposal of Housing Estates)
Regulations, 1968 (for short, the Regulations), in respect whereof a
decision was taken by the Vice- Chairman on 22.08.1996.
The said Regulations governing the field exclusively permits the Authority to
decide and fix the price which would include surcharge being in the realm of
contract, the relationship between the parties was clearly contractual; surcharge
being a component of the price of the flat.
It is also to be noted that most of the Appellants were defaulter who had
defaulted in making payments of the first four instalments on time and
therefore there was delay in making payments in their cases.
there was an automatic cancellation clause in the agreement the original
contracts stood cancelled.
Regulation 2(13) of the DDA Regulations defined disposal price or hire purchase
price in relation to a property to mean such price as may be fixed by the
authority. Hence the levy of surcharge was within the competence of the
DDA could include surcharge in its pricing formula which would be in the realm
of contract as the relationship was purely contractual.
The meaning of the word cost and price has been settled by the Full
Bench of the Delhi High Court in Sheelawant v. DDA which was upheld by the
Supreme Court and reaffirmed in DDA v. Ashok Kumar Behl [(2002) 7 SCC 135].
The present case was different from the case of P.N. Verma v. Union of India
[AIR 1985 (Delhi) 417] Submissions of the learned
counsel on behalf of the registrants :
Mr. Rungta, Mr. Maninder Singh and Mr. Shekhar, learned counsel, submitted :
Having regard to the admitted fact that all allocations were made during the
period 1991 and 1994 and all of them having paid the instalments except the
fourth one, prior to taking of the purported policy decision dated 22.08.1996,
the Authority had no jurisdiction either to recalculate the current cost or
impose a levy of 20% surcharge.
As the impugned Levy comprises of three elements, namely,
current cost which is determined; whereover
20% over the actual cost is taken into consideration, and again
20% surcharge is required to be paid, the same is unreasonable.
The Full Bench wrongly applied P.N. Verma (supra), R.K. Sacher (supra) and Premji
Bhai Parmar (supra), which were decided on wholly different set of facts as the
scheme(s) involved therein was for low income group of people in terms whereof
payments were to be made on completion of construction; whereas in the case of
SFS, instalments of payment is sought for immediately after the allocation.
Restoration of allotment in the case of defaulter having been the
subject-matter of contract, the terms and conditions thereof could not have
been altered or modified by the Authority unilaterally.
any event, the impugned policy decision can not be given retrospective effect
or retrospective operation.
Classification for value of flats being income-wise, area-wise, time- wise and
scheme-wise as has been laid down in Premji Bhai Parmar (supra), any micro
classification introduced by the impugned policy decision insofar as the
registrants of South Delhi alone had been asked to pay a higher amount must be
held to be discriminatory in nature.
The purported cut-off date being 22.08.1996 creates a class between those whose
allotments, although cancelled, had been restored on the terms of the contract and
those who had applied for restoration thereafter.
As policy did not prescribe any rational basis and the same having wrongly been
applied, the same is wholly without jurisdiction and, thus, a nullity.
Clause 5.10 of the brochure has wrongly been applied by the Full Bench insofar
as value of the land and cost of construction were also existing in P.N. Verma
(supra), R.K. Sacher (supra) and Premji Bhai Parmar (supra).
The policy decision having been taken on the basis of lack of cash flow,
the stand taken by the Authority in its counter affidavit, that a large sum of
money was invested for rehabilitation of the migrants from Jammu & Kashmir
and Punjab is wholly untenable.
As the current cost of the flat was required to be determined in terms of the
definition contained in Regulation 2(13) of the Regulation, any other mode or
method adopted in respect thereof was wholly illegal.
Had such value been required to be arrived at having regard to the nature and
time of the project when it was launched, the impugned policy decision is
barred under the principle of promissory estoppel.
By reason of an Executive Order, levy cannot be imposed with retrospective
The Full Bench of the High Court misconstrued and misinterpreted the decision
of the Division Bench of the Delhi High Court in P.N. Verma (supra), which
covered the case of registrants.
Mr. Arun Jaitley and Mr. Sunil Gupta, learned senior counsel, appearing on
behalf of the respondents, on the other hand, submitted :
The relationship between the parties being contractual, the writ petitions were
Price fixation of flats being within the exclusive domain of the Authority, the
High Court has rightly refused to interfere therewith.
The findings arrived at in P.N. Verma (supra) falling in the line of Pushpendra
Kumar Jain (supra), on the one hand, and Premji Bhai Parmar (supra), on the
other, are strictly not applicable in this case as the policy decision adopted
by the Authority on 22.08.1996 was a new one in terms whereof having regard to
the equitable principle in mind, the Authority adopted a policy dehors
clause (4) of the letter of allotment.
This Court not only in Premji Bhai Parmar (supra) but also subsequently having
upheld the decisions of the Delhi High Court in P.N. Verma (supra) and Sheelawanti
(supra) and in D.D.A. v. Ashok Kumar Behl [(2002 (7) SCC 135], the same
constituted a binding precedent.
Sections 5 and 6 of the Act read with Regulation 5 having authorised the
Authority to fix the price of the flats, the validity of impugned restoration
policy comprising payment of surcharge of 20% and the interest on the said rate
or current cost whichever is higher, could not have been questioned in writ proceedings.
As the policy was formulated on the representations made by the registrants,
the registrants are estopped and precluded from questioning the validity of the
In a case of this nature where interpretation of clause of contract is
involved, judicial review is not permissible.
Levy of surcharge for the subsidised schemes for weaker sections of the society
having, inter alia, been upheld in Premji Bhai Parmar (supra), the impugned
policy decision must be held to be reasonable so as to satisfy the tests of
Article 14 of the Constitution of India.
Cost of the land even in South
Delhi having been
worked out on the valuation of the land situated in Dwarka, classification made
in respect of the allocation at South Delhi where market rates were much higher from the actual cost, the scheme
for restoration of flats in that area cannot be held to be arbitrary or
The Act was enacted to provide for the development of Delhi according to plan and for matters
connected therewith or ancillary thereto.
clause is contained in Section 2 of the Act. Section 2(h) defines the term
Regulation to mean a Regulation made under this Act.
3 provides for constitution of the Authority consisting of a Chairman, who
shall be the Lieutenant Governor of the National Capital Territory of Delhi,
ex-officio, a Vice-Chairman to be appointed by the Central Government, amongst
others. Section 4 provides for staff of the Authority. Section 5-A provides for
constitution of Committee in the following terms :
Constitution of Committee.-
The Authority may 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.
Committee constituted under this Section shall meet at such time and place and
shall observe such Rules of procedure in regard to the transaction of business
at its meetings as may be determined by Regulations made in this behalf.
The members of a Committee (other than the members of the Authority) shall be
paid such fees and allowances for attending its meetings and for attending to
any other work of the Authority, as may be determined by Regulations made in
this behalf. Section 6 provides for objects of the Authority, in the
Objects of the Authority.- The objects of the Authority shall be to promote and
secure the development of Delhi according to plan and for that purpose the
Authority shall have the power to acquire, hold, manage and dispose of land and
other property, to carry out building, engineering, and manage and dispose of
land and property, to execute works in connection with supply of water and
electricity, disposal of sewage and other services and amenities and generally
to do anything necessary or expedient for purposes of such development for
purposes incidental thereto :
that save as provided in this Act, nothing contained in this act shall be construed
as authorizing the disregard by the Authority of any law for the time being in
force. Section 52 of the Act reads as under :
Power to delegate .-
The Authority may, by notification in the Official Gazette, direct that any
power exercisable by it under this Act except the power to make Regulations may
also be exercised by such officer or local Authority or committee constituted
under Section 5-A as may be mentioned therein, in such cases and subject to
such conditions, if any, as may be specified therein.
The Central Government may, by notification in the Official Gazette, direct
that any power exercisable by it under this Act, except the power to make Rules
may also be exercised by such officer as may be mentioned therein, in such cases
and subject to such conditions, if any, as may be specified therein.
The Lieutenant Governor of the National Capital Territory of Delhi may, by
notification in the Official Gazette, direct that any power exercisable by him
under this Act, except the power to hear appeals, may also be exercised by such
officer as may be mentioned therein, in such cases and subject to such
conditions, if any, as may be specified therein. Section 57 (1)(f) of the
Act reads as under :
Power to make Regulations. (1) The Authority, with the previous approval of the
Central Government, may, by notification in the Official Gazette, make
Regulations consistent with this Act and the Rules made thereunder, to carry
out the purposes of this Act, and without prejudice to the generality of this
power, such Regulations may provide for (f) The terms and conditions
subject to which user of lands and buildings in contravention of plans may be
Indisputably, in exercise of its regulation making power contained in Section
57 of the Act, the Central Government made regulations known as Delhi
Development Authority (Management and Disposal of Housing Estates) Regulations,
2(13) thereof defines disposal price in the following terms :
disposal price or hire purchase price in relation to
property means such price as may be fixed by the Authority for such
property. Sub-sections (25) and (30) of Section 2 of the Act define
penalty and Scheme respectively, as under :
penalty means an additional amount as laid down in the relevant
agreement payable by the allottee or hirer as a consequence of his default in
the payment of prescribed dues; 2(30) scheme means a scheme
prepared by the Authority for the creation of one or more housing estates;
Regulation 3 empowers the Vice-Chairman to administer the Act subject to
general guidance and resolutions of the Authority, who may delegate his powers
to any officer of the Authority. Regulation 5 provides for disposal of the property
which may be effected by either hire-purchase or sale or in such other manner
and subject to such terms and conditions as may be decided by the Authority
from time to time.
6 provides for fixation of price to be one which may be determined by the
8 provides for the manner of payment of disposal price.
III of the Regulations provides for the procedure for disposal of property. In
terms of Regulation 30 of the Regulations, the Authority is mandated to prepare
an allotment register in which names and other particulars of the registrants
are to be entered. The names of the persons on the waiting list should also be
entered in a separate section of the same register in the order in which their
names appear in the draw of lots. Power to decide representations has been
conferred upon the Committee in regard to the selection of applicants for
allotment of property.
37 provides for handing over of possession of the property.
59 provides for delegation of all or any of the powers of the authority under
the Regulations to the Vice-Chairman or to a whole time member.
Premji Bhai Parmar (supra), a Bench of this Court noticed that the Authority
had adopted a resolution delegating its power to the Vice- Chairman and the
power to fix disposal price was said to have been delegated to the
the outset, we may notice that the stand taken before us by Mr. Jaitely that
the scheme in question was a new one which had to be framed keeping in view the
exigencies of the situation arising out of the representations made by the
registrants, whose allotment had been cancelled, had not been raised before the
High Court. Such a stand, in fact, had never been taken.
Authority issues an invitation through its brochure.
The 5th SFS Scheme was announced in the year 1982. Any person could himself get
registered upon payment of fees prescribed therefor. The brochure published by
the Authority indicated the tentative cost of different flats in different
scheme category-wise. Pursuant thereto, an intending allocattee applies thereunder,
and if in the draw of lots he is declared successful, an allocation-cum-demand
letter specifying the locality and the floor is communicated to him. It is not
the case of the parties that the estimated cost or the tentative cost was the
final one. The Authority indisputably has the jurisdiction to fix the disposal
price finally upon taking into consideration all relevant factors. In terms of
the letter of allotment the estimated price is to be paid in four equal instalments.
Admittedly, question of the final cost is communicated to the registrants who
is asked to pay the balance amount after deducting the payment made in four instalments
together with the 5th instalment. The estimated cost, according to the
Authority, itself should be worked out having regard to the following
Cost of construction
Community facility charges
Floor equilization for ground floor and subsidised for upper floors
Cost of land (Land Rate on the date of allocation letter is taken).
land rates of the project area are determined on the basis of break even rates
arrived on cost benefit analysis which includes cost of acquisition, enhanced
compensation and future realisations.
rate is approved by the Government of India.
land rates approved by the Government of India for Dwarka is also applied on
flats in South Delhi. They are predetermined rates on actual break even basis.
Surcharge @ 20% w.e.f. 16.8.96.
Indisputably again, other components for determining the cost remains the same
every year. The only change which was effected, is the change in the land rate,
which is approved by the Government. Other parameters for calculating the
material cost were approved by the Vice- Chairman of the Authority.
Delhi Development Authority has been created under a Parliamentary Act. It, indisputedly,
is a State within the meaning of Article 12 of the Constitution of India. Being
so, the provisions of Part III of the Constitution of India must be applied by
it. Undisputedly, again, it has also the duty to strive hard for giving effect
to the Directive Principles of State Policy as contained in Part IV of the
Constitution of India.
Objects of the DDA is stated in Section 6 of the Act. We may notice that
although the heading of Section 6 states about the object of the Act, the main
provision contain both its objects and powers. It is also curious to notice
that its power to constitute a scheme so as to provide housing facilities to
the citizens of India and, in particular, those belonging to lower income group
as also coming from lower strata of the society has not been mentioned which we
would find pari materia in statutes framed by other States. [See Chairman, Indore
Vikas Pradhikaran v. M/s. Pure Industrial Cock & Chem. Ltd. & Ors. 2007
(8) SCALE 110]
is accepted that although the Act was enacted in the year 1957, the idea of
providing for implementation of such housing scheme started much later. The
Rules, as noticed hereinbefore, were framed only in the year 1968 and
implementation of actual housing schemes are said to have been started in late
seventies or early eighties.
While acting as a State within the meaning of Article 12 of the
Constitution of India, it is imperative that D.D.A., while implementing its
statutory power, upholds the fundamental rights of the citizens and strive hard
to give effect to their Directive Principles of the State Policy. We, however,
cannot also shut our eyes to the fact that in terms of Article 37 of the
Constitution of India whereas the provisions of Part III are justiciable, the
provisions of Part IV are not. Only when an action of the State is taken to
give effect to any of the provision of Part IV of the Constitution of India
which is not otherwise ultra vires the Constitution or offends the principles
embodied in Part III of the Constitution of India, the same may be upheld,
having regard to the provisions contained in Part III thereof. The action of
the State, therefore, must at the first instance be adjudged on the touchstone
of the principles of Fundamental Rights and then the provisions contained in
the Parliamentary Act, the regulations framed thereunder as also the terms of
the contract entered into by and between the parties.
may or may not agree with the submission of learned counsel for the appellants
that the right of housing arising out of such a scheme is a fundamental right
within the meaning of Articles 19(1)(e) and 21 of the Constitution of India,
but there cannot be any doubt whatsoever that the action of a State must
satisfy the principal requirements of Article 14, viz., treating persons
similarly situated equally and grant of equal protection to them.
Reasonableness and fairness is the heart and soul of Article 14 of the
Constitution of India. Keeping the aforementioned principles in mind, we may
consider the points involved herein.
The basic fact that the scheme was floated in the year 1991 being SFS is not in
dispute. It has also not been denied or disputed before us that the said scheme
in its application is fundamentally different from those of the others schemes,
viz., MIG, LIG, Janta and Expandable Housing Scheme.
is also not much dispute as regards the fact that in terms of the said scheme,
estimated costs as well as rights and liabilities of the parties are laid down
in the invitation to offer. Allocation of the area, floor etc. ought to be
notified on acceptance of the offer by the registrants. Such allocation again
undisputedly is made on the basis of draw of lot having regard to the specific
number of flats available. The registrants have no choice in that behalf.
he might have exercised his right of option in relation to the area or the
floor but then he, in fact, has no hands thereover. The letter of allotment
contains the schedule of payment as also other terms and conditions in support
We, in this batch of appeals, are principally concerned, inter alia, with the
interpretation of clause 4 of the Letters of Allotment.
This scheme, ordinarily, was to operate within a time frame. DDA was expected
to complete the constructions within a period of 2= years.
six-monthly instalments were required to be paid by the registrants within the
aforementioned period which would include the grace period.
Whereas ninety days time is not taken into consideration for the purpose
of computing the default clause, indisputably, again the power of the authority
to regularize the default on receipt of interest @ 18% per annum on the amount
due to and owing to an allottee is specifically provided for. The period of 2=
years vis-`-vis the six-monthly interest must have been laid down keeping in
view the fact that whereas the amount deposited by the registrants by instalments
would be invested for construction of the flats. 18% interest is prescribed for
default both on the part of the DDA as also on the part of the registrants. No
time limit is fixed for completion of the scheme. The only penalty which the
scheme prescribes is payment of interest. So far as area of SFS is concerned, a
registrant has no role to play.
constructions have been completed in the year 2000.
For interpretation of clause 4 of the scheme, the aforementioned background is
required to be borne in mind.
of clause 4 are :
The allotment letter would indicate the four due dates on which the first four
installments are to be paid. The fifth installment would be paid on demand.
days delay in the first four installments is condonable subject to payment of
After the expiry of 90 days if payment is not made for first four installments
there would be automatic cancellation.
This automatic cancellation can be restored on payment of interest and other
charges subject to availability of the flat.
The cancellation due to non-payment of final installment will be made if the
payment is not made within 120 days with no provision of any further
has not been denied or disputed that although the registrants defaulted in
making payments but the flats were available. In fact, when the default took
place, the flats were not constructed. They have, thus, not been allotted to
the persons on the wait list.
may be true that recourse to clause (d) should be undertaken by the allocattees
within a reasonable time. What would be a reasonable time would, however, depend
on the facts and circumstances of each case. No hard and fast rule can be laid
a given case, it may be a few months but in another having regard to the
conduct of DDA, it may be one year or more. What would constitute a reasonable period
must also be considered keeping in view the rights of the parties as also the
fact that in terms of clause 4 of the offer of allotment there does not exist
any prohibition to pray for regularization upon default, even after a period of
120 days. In a situation of this nature, it may not be unjustified to arrive at
the conclusion that such a right can be exercised, if not, when the flats were
ready for handing over actual possession, but at least when there has been a
substantial progress. We must also take into consideration that the scheme, the
letter of allotment, the contract between the parties to pay interest in case
of default to each other leads to a conclusion that DDA in its wisdom thought
that payment of 18% interest shall subserve the purpose. We, however, hasten to
add that it does not mean that DDA must entertain such an application for
restoration and/or condonation of default despite lapse of time. It has its own
right in relation thereto which may be invoked. The right to allot the flat to
a person who is on the wait-list as a result whereof a seal of finality can be
put, the right of the registrants or registrants even the whole or a part of
the advance or other amounts deposited by him stand forfeited.
of the Act:
DDA functions through the Committees constituted in terms of Section 5A of the
Act. Power has been delegated in favour of its Chairman and the Vice-Chairman.
Such delegation of power, however, as provided for under Section 52 of the Act
does not extend to make regulations. What, therefore, cannot be done by way of
regulation, cannot be done by executive order.
has not been denied or disputed that having regard to clause 5.10 of the
brochure and clause 4 of the letter of allotment, the term tentative
cost must be given its natural meaning.
varies from time to time as it is not a one time process. The price difference
between the estimated cost and the initial cost as it worked out on the
completion as per costing formula in vogue would have to be paid along
with the 5th and final instalment.
The impugned circulars have three distinct elements :
Price of South Delhi flats would be worked out by adding
20% surcharge in terms of the office order dated 16.8.1996 duly approved on
surcharge will have to be paid in case where there is a small delay, in which
case only interest has to be paid.
all other cases original cost + 18% or the current cost whichever is higher
would be payable.
Legality and/or validity of the said circulars is in question. We may, at the
outset, notice that there is nothing on record to show that the Office Orders
dated 16.8.1996, 27.8.1996 and 21.3.1999 were published in the Gazette or were
otherwise brought to the notice of the registrants.
Conduct of the parties may be noticed from the case of Manjit Singh.
the registrants failed to pay instalments within the stipulated period. A
notice dated 23.4.1997 was served on him which is in the following terms :
you had been allocated a second floor category II, SFS flat in Pkt. F, Sheikh Saria
Residential Scheme vide allocation cum demand letter dated 31.3.93 under the
DDA (Management & Disposal of Housing Estates) Regulations 1968 against
your registration under the 5th SFS 1982.
WHEREAS as per the allocation cum demand letter the following installments were
to be paid as per the following schedule :- Installments Amount Due Date
Installment Challan paid on No.
Rs.1,35,867/- 30.4.93 24.5.93 032601 (Rs.1,35,867) IInd Rs.1,25,060/- 30.10.93 30.10.93
112025 31.05.94 (Rs.43,675) (Rs.50,000) IIIrd Rs.1,56,325/- 30.4.94 24.11.94
010243 (Rs.50,000) IVth Rs.1,25,060 30.10.96 25.07.96 010245 (Rs.50,000) From
the perusal of the above chart, it can be seen that you have not deposited the
installment as per schedule indicated in the allocation cum demand letter.
WHEREAS as per the terms and conditions of the allocation cum demand letter as
contained in Clause 4 the allocation was liable to be cancelled if the
installments are not made as per the schedule.
WHEREAS it is evident that you failed to deposit the installments as per the
schedule and thus have committed the breach of the terms and conditions of the
allocation cum demand letter dated 31.3.1993 Therefore, I, Dy. Director (SFS)
hereby inform you that the allocation made to you vide letter dated 26.3.93 31.3.1993
stands automatically cancelled due to the breach of the terms and conditions of
further inform (sic) that the 5th SFS Scheme 1982 stands already closed,
therefore, you are advised to return all the original FDR, Demand cum
allocation letter and third copy of challan so that your case can be processed
for the refund of the amount deposited by you.
submitted a representation praying for condonation of default. In his
representation, he stated:
on receipt of the DDA letter I ran hither and thither for financial loans from
relatives, friends, and well wishes and was able to deposit Rs.2,12,770/- vide challan
No.039576 dated 12.5.97 (Annexure F) bringing the total payment to DDA to 90%
of the cost of flat. The flats are yet to be completed.
therefore, humbly APPEAL to you to condone the delay in the payment of installments
for reasons stated above, on humanitarian and compassionate grounds and to regularise
the allocation of the flat for which act of kindness I shall ever pray. I am
also ready to pay any amount yet due in the form of interest.
The said representation was accepted by DDA in terms of a letter dated
10.12.1998 which reads as under :
is our pleasure to inform that you have been allotted SFS Flat with the
following details through a computerized draw held on __/10/1998:- Flat No. 61
Floor SEC Category II Sector Block Pocket Type Locality SHEIKH SARAI We are
advising the Housing Acts Department to issue the 5th and Final Demand Letter
to you at the earliest.
allotted the flat. No condition therefor was put. It did not ask for payment of
any surcharge. The original terms were not deviated from. It did not ask for
any extra-cost. The delay in payment of instalments was condoned and the
allocation of flat which stood cancelled in terms of the aforementioned notice
dated 23.4.1997 stood restored. DDA, thus, acted strictly in terms of the
original scheme. The offer of the allocattee was accepted relying on or on the
basis of clause 4, viz., the amount of default and an interest charged
thereupon @ 18% per annum. It is only when the 5th and final instalment was
directed to be paid in terms of demand letter dated 15.2.1999, the current cost
computed in terms of the office order dated 16.8.1996 and subsequent office
orders was included. The allocattee at that stage might not have any other
option but to pay the same for obtaining possession. But by reason thereof, he
never gave up his right to question the action on the part of DDA. Rule of estoppel,
therefore, has no application.
was, on the other hand, DDA who having accepted the offer of the allocattee by
restoring the allotment, in our opinion, is estopped and precluded from raising
a plea as regards application of office order dated 16.8.1996. It may be
noticed that even contents of those letters were not disclosed to the allocattee.
a Restoration Scheme ?
The office orders, on the basis whereof the purported impugned policy had been
taken, do not refer to the scheme as a restoration scheme. The resolutions do
not say so. Had it been so, DDA would have issued a fresh notification or at
least made its stand clear to the allocattees either by way of public notice or
by informing each of such defaulters individually. Had such conditions for the
purpose of restoration being made known, the allocattees would have accepted it
or rejected it. Evidently, it is a part of the original scheme. It is not a new
one. It is well known principle of law that a person would be bound by the
terms of the contract subject of course to its validity.
contract in certain situations may also be avoided. With a view to make novation
of a contract binding and in particular some of the terms and conditions
thereof, the offeree must be made known thereabout. A party to the contract
cannot at a later stage, while the contract was being performed, impose terms
and conditions which were not part of the offer and which were based upon
unilateral issuance of office orders, but not communicated to the other party
to the contract and which were not even the subject matter of a public notice.
Apart from the fact that the parties rightly or wrongly proceeded on the basis
that the demand by way of 5th instalment was a part of the original scheme, DDA
in its counter affidavit either before the High Court or before us did not
raise any contra plea. Submissions of Mr. Jaitley in this behalf could have
been taken into consideration only if they were pleaded in the counter
affidavit filed by DDA before the High Court.
have also reservations that in absence of any provision contained in the Act or
the Regulations, the delegatee on its own could frame such a new scheme. If
not, the purported restoration policy would be ultra vires.
therefore, cannot persuade ourselves to agree with the contention of DDA that
the restoration policy cannot be tested on grounds of terms and conditions of
the original scheme. If it is a new scheme, it would bear repetition to state,
the terms contained therein should have been known to the allocattees. We,
thus, have no other option but to proceed to consider the legality and/or
validity of such imposition on the premise that the impugned policy decision is
a part of the original scheme and does not contain any new policy.
executive order termed as a policy decision is not beyond the pale of judicial
review. Whereas the superior courts may not interfere with the nitty gritties
of the policy, or substitute one by the other but it will not be correct to
contend that the court shall like its judicial hands off, when a plea is raised
that the impugned decision is a policy decision. Interference therewith on the
part of the superior court would not be without jurisdiction as it is subject
to judicial review.
Broadly, a policy decision is subject to judicial review on the following grounds
it is unconstitutional;
it is dehors the provisions of the Act and the Regulations;
the delegatee has acted beyond its power of delegation;
the executive policy is contrary to the statutory or a larger policy.
The stand taken by DDA itself is that the relationship between the parties
arises out of the contract. The terms and conditions therefor were, therefore,
required to be complied with by both the parties. Terms and conditions of the
contract can indisputably be altered or modified. They cannot, however, be done
unilaterally unless there exists any provision either in contract itself or in
law. Novation of contract in terms of Section 60 of the Contract Act must
precede the contract making process. The parties thereto must be ad idem so far
as the terms and conditions are concerned. If DDA, a contracting party,
intended to alter or modify the terms of contract, it was obligatory on its
part to bring the same to the notice of the allocate.
not done so, it, relying on or on the basis of the purported office orders
which is not backed by any statute, new terms of contract could thrust upon the
other party to the contract. The said purported policy is, therefore, not
beyond the pale of judicial review. In fact, being in the realm of contract, it
cannot be stated to be a policy decision as such.
would assume that the office orders were issued by DDA keeping in view the
representations made by a large number of defaulters. The plea taken by DDA
gives rise to a dichotomy. If it is a case of contract qua contract, the
provisions of the Contract Act must be taken recourse to. If DDA was exercising
a statutory power, the same must be tested on application of doctrine of ultra vires.
Floating a scheme for providing housing facilities to a group of people,
although is governed by statute, power under the statute by an executive not
only can be tested on the touchstone of Article 14 of the Constitution of
India, but can also be tested on the touchstone of source of the power under
the statute. No provision either in the Act or the Regulations was brought to
our notice which makes the allocattee bound by the purported policy decision
taken by DDA. Even if it is so, the superior courts may exercise its power of
judicial review as the power which is sought to be exercised by a statutory
authority is not under the contract but under a statute. When a contract
emanates from a statute or is otherwise governed by the provisions thereof, the
superior court can also exercise the power of judicial review.
Gujarat State Financial Corporation v. M/s. Lotus Hotels Pvt. Ltd. [(1983)
3 SCC 379 : AIR 1983 SC 848], it is stated that such contracts can be subject
to judicial review.
Regulations 5 and 6 should not be very liberally construed.
the manner in which power is to be exercised is governed by the past practice.
Norms have been fixed for computing the disposal cost.
the superior courts ordinarily would not interfere in the price fixation but
there does not exist any absolute ban. In a case where fixation of price is
required to be made in a particular manner and upon taking into consideration
the factors prescribed and if price is fixed de hors the statutory
provisions, judicial review would be permissible.
Strong reliance has been placed upon the residuary power conferred upon the
Authority to determine the cost of construction.
When the same is done having regard to the relevant factors on the basis of
which brochure as well as the notice inviting tender was issued, the superior
courts may not interfere; but the same must be done in terms of the original
contract and not de hors the same. The authority, even while exercising
its residuary power, is required to act within the four corners of the
contract. While doing so, the terms of the contract cannot be altered to
include any other factors which were contemplated thereunder. While computing
the extra cost, no additional factor, thus, can be taken into consideration. If
such a power is conceded in the authority, the same would give rise to exercise
of arbitrary power. It is not contemplated in law. When construing a provision
delegates a power on an authority under a statute, the constitutional
provisions must be kept in mind.
the time of calculation of the amount which would be the subject matter of
demand of 5th and final instalment, the jurisdiction of DDA is to keep itself
confined only to the factors on the basis whereof, the brochure has been issued
and offer was made. No additional factor, thus, could be taken into
consideration at the time of issuing notice other than the ones on the basis
whereof offer was made by the registrants. Imposition of equalization charge
also falls within the said purview.
There may be some charges like conversion charges which per se may or may not
be bad. Conversion charges levied by the DDA pursuant to the directions issued
by the Central Government which in terms of Section 41 of the Act is binding on
DDA for converting the leasehold into freehold.
such a power also must be exercised reasonably and fairly.
of the property from leasehold to freehold is a separate transaction. The same
has nothing to do with the actions, qua contract.
of conversion charges, therefore, even if, per se, may not be held to be bad,
the said factor cannot be taken into consideration for the purpose of computing
construction costs. The High Court has struck down the inclusion of such
conversion charges in the costing of the flats. After 1996, the ordinary cost
of construction of a flat was Rs.2,00,000/-, in South Delhi but not only it
framed the basis for computing the final cost but also 20% additional amount as
also 20% surcharge were claimed thereupon.
interest also was charged as and when applicable. Thus, so long the conversion
charge is charged by way of a separate transaction, no exception can be taken.
But, purported price fixation as has been done in the instant case cannot
receive our approval. The same is, thus, in our opinion, bad in law.
The scheme in question was floated in 1992-93. The purported default on the
part of the registrants took place prior to the purported adoption of the
policy decision. The purported office order dated 16.8.1996 discloses shows
that an internal decision had been taken to condone the delay in making
payments of first four instalments. The authorities mentioned therein had been
delegated with the power for the period(s) mentioned as under:
(H)-1 Upto 3 months Commissioner (Housing) Upto 1 year Principal Commissioner
From 1 year to 1 = year Vice-Chairman Full powers Clause 3 of the said office
order reads as under :
are presently cases in the Housing Department where there have been delays in
the making of the payments of the flats allocated/allotted in South Delhi under SFS.
the aforesaid revision took place, delays of one year or so were being
regularized with usual charges, i.e., on payment of 18% interest per annum and
restoration charges, etc. in few cases where delays are unusually long, current
price has also been demanded.
Thus, a decision in that behalf had not only been taken but also was made
applicable both in the case where the delay is of one year or so and the delay
which was unusually long. By reason of the said circular, delay in making
payments of instalment was to be condoned on payment of either current price or
old price whichever is higher. From a perusal of the Resolution dated
27.8.1996, it appears that 20% surcharge was levied over the disposal cost
worked out for the flats in South Delhi SFS. It does not show that any subsidy
was proposed to be granted for the migrants from Jammu and Kashmir or Punjab. The
policy was taken only with a view to balance the reduced cash in-flow. DDA,
thus, had in view commercial aspect of the matter and not the social justice
Again, by reason of the office order dated 31.3.1999, the delegation of power
in favour of various authorities was redefined. The Vice-Chairman could deal
with delay or default even if it exceeds one year and six months.
was prescribed as the cut off date for the purpose thereof. Price of the flat
was to be calculated on the basis of either current price or old price
whichever is higher. It was sought to be applied irrespective of the extent of
delay. On what basis 22.8.1996 was taken to be the cut off date has not been
disclosed. We would, however, assume that the said date was taken into
consideration in view of the Resolution dated 27.8.1996.
executive officer, in absence of any provision of a statute, cannot apply his
own decision with a retrospective effect. A delegatee is bound to act within
the four corners of the delegation and not beyond the same.
Delegation of power in favour of an authority under a statute must also be
tested in terms of the statutory provisions. No provision under the Act or the
Regulations has been brought to our notice which empowers the delegatee to
alter the terms and conditions of the contract with retrospective effect. The
purported policy decision must, therefore, be tested not only having regard to
the provisions of the statute but also having regard to clause 4 of the offer.
Current cost has been calculated upon computing 20% over and above the actual
cost. A provision for surcharge had also been made in terms whereof a premium
of 20% over the disposal cost was worked out on current cost for the SFS flats
in South Delhi. Imposition of surcharge is subject to the condition that the
real value in the market of DDA flats would be much more than it had been
charging as per the cost formula. Parameters of computation of disposal price
have been laid down which we have noticed supra. The authority having itself
adopted a formula for computing the disposal cost, the same was binding upon
the delegatees. A delegatee cannot take any action contrary to or inconsistent
with the factors laid down for computation of disposal cost as defined in
Section 2(30) of the Act.
5 and 6 do not authorize the delegatee to apply a formula which was not
contemplated by the Authority itself. If an Executive Authority in absence of
any statutory provision cannot apply a decision with retrospective effect, the
same would be ultra vires.
Vice Chancellor, M.D. University, Rohtak v. Jahan Singh [2007 (4) SCALE 226],
this Court observed:
Act does not confer any power on the Executive Council to make a regulation
with retrospective effect. The purported regulations, thus, could not have been
given retrospective effect or retro-active operation as it is now well- settled
that in absence of any provision contained in the legislative Act, a delegatee
cannot make a delegated legislation with retrospective effect. [See also Ashok
Lanka and Another v. Rishi Dixit and Others, (2005) 5 SCC 598]
definite price is an essential element of binding agreement. A definite price
although need not be stated in the contract but it must be worked out on some
premise as was laid down in the contract. A contract cannot be uncertain. It
must not be vague. Section 29 of the Indian Contract Act reads as under :
29 - Agreements void for uncertainty Agreements, the meaning of which is not
certain, or capable of being made certain, are void.
contract, therefore, must be construed so as to lead to a conclusion that the
parties understood the meaning thereof. The terms of agreement cannot be vague
or indefinite. No mechanism has been provided for interpretation of the terms
of the contract. When a contract has been worked out, a fresh liability cannot
thrust upon a contracting party.
is well settled that a definite price is an essential element of a binding
agreement. Although a definite price need not be stated in the contract, but
assertion thereof either expressly or impliedly is imperative.
The Full Bench of the Delhi High Court has placed strong reliance on P.N. Verma
(supra). One of the fundamental errors which has been committed by the Full
Bench, with respect, is applying P.N. Verma (supra) without noticing the
distinction between the provisions contained in the clauses of the Brochure in
the present case and those obtaining therein. In the present case Clause 5.10
of the DDA Brochure stipulates that the price mentioned in the allocation
letter is only the estimated price and it could be changed only on the basis of
escalations in the price to be determined by DDA on the completion of flats. In
P.N. Verma (supra), however, the price was to be fixed on allotment of flats. It
gives rise to a lot of difference in determining the issue.
P.N. Verma (supra), the High Court observed:
If the stand of the DDA is that the price they demand is only on the same
formula as was announced and that the increased price demanded is only due to
escalation in cost of construction and fluctuation in other cost factors, then
the issue will only be whether the fixation of price is in accordance with the
contract and that can be gone into, both by reason of principle and because it
will involve complicated factual investigations, only in a suit. This is the
alternative stand of the DDA which we will discuss later. But if the DDA says,
whatever we may have said earlier, we can fix the price or any basis and that
cannot be questioned at all because it is a contractual matter, the argument is
fallacious because this stand of the DDA means going behind the contract and
revising the earlier formula of price fixation which means travelling back to
the pre-contractual statutory stage It was also stated:
actual cost was tentatively fixed at a figure 'which was announced subject,
however, to variations in cost factors. It is not open to the DDA to alter this
basis for the determination of the disposal cost. So long as the DDA adheres to
this basis in fixing the disposal cost, court will not interfere. It will not
interfere even if there should be some mistakes or exaggerations in the
calculation of the components of the figure arrived at, as that would be a
matter for determination after evidence and investigation in a suit. Even if an
item should be included in the cost components, about the inclusion of which as
one of the cost factors there could be some doubt, the writ court may not
interfere and may leave the parties to fight out their battle in a regular
suit. But where the disposal cost is fixed on a basis totally different from
that announced earlier or where the components taken into account cannot be
described by any stretch of imagination as cost factors or where a component of
the cost is shown to have been fixed arbitrarily and without any basis
whatsoever, the Court has no option but to quash the determination of the
disposal cost so fixed and direct the DDA to undertake afresh a proper
determination thereof in accordance with the terms of the original contract or
after excluding the items unwarrantedly included therein or after re-
determining the value of any component on a proper and reasoned basis On
legal principle, therefore, ratio of P.N. Verma (supra) is not very different
from what has been held herein.
Another fundamental error committed by the Full Bench was to approve para 29 of
the judgment of the Division Bench of the Delhi High Court in R.K. Sachar v.
DDA (LPA No. 727 of 2002 decided on 15.12.2003) opining that this Court had
already approved the contention of the DDA that it was entitled to recover such
a charge in the light of the decision in Premji Bhai Parmar (supra).
The Full Bench failed to notice that in P.N. Verma (supra) surcharge over and
above the disposal price titled equalization charge purporting to
provide subsidy for construction of flats for weaker sections of the society in
trans Yamuna area was held to be ultra vires and that the said decision has
been approved by this Court. P.N. Verma (supra), therefore, was misread and
Premji Bhai Parmar (supra), surcharge was a component of the disposal price.
The disposal price was known to the registrants at the time of conclusion of
contract. As the contract was found to be binding on the parties, levy of
surcharge, thus, was held to be vitiated in law.
this case, the case of the appellant is not that they are not bound to pay the
binding contractual stipulation as contained in Clause 4 of the letter of
allotment. They are and they must. But what cannot be thrust on them is the
price determined on the basis of factors which were not contemplated in the
Premji Bhai Parmar (supra), this Court did not record a finding that even if a
surcharge was not a part of Brochure, still the same could be imposed without
any sanction in law so as to bind the allocates to pay the same although
neither they were made aware thereof nor did they give their consent for
payment of surcharge as a part of the contract. The Full Bench of the High
Court wrongly relied upon R.K. Sachar (supra). In the light of the decision of
this Court in Premji Bhai Parmar (supra), the nature of levy should have been
held to be completely distinct and, thus, Premji Bhai Parmar (supra) had no
application to the fact of the present case.
The Full Bench also misdirected itself insofar as it failed to take into
consideration that levy of 20% surcharge was in effect and substance a
compulsory exaction to augment the revenue requirements of the DDA and, thus,
could not have been a part of the contract. Any compulsory exaction should be
viewed in the light of Article 265 of the Constitution of India, unless it
comes within the sphere of contract.
may be reiterated that it is only those components which fall within the
Brochure of the DDA or within the purview of the statutory requirements can be
included in the exercise of price fixation. To the said extent are the decision
of the Delhi High Court in P.N. Verma (supra), Narsingh Jain v. Union of India
[(80) 1999 DLT 742] and DDA SFS Flat Owners Society v. UOI [AIR 2001 Del 39].
Against the said judgment of the Division Bench of the High Court in P.N. Verma
(supra), an appeal was preferred by the DDA before this Court.
in the said appeal titled as DDA v. SFS Assn. and Ors. [Civil Appeal No. 4402
of 1985] rejected the contention of the DDA that under the terms of the
Brochure related to the said scheme it was empowered to recover from the
registrants an additional amount over and above the disposal price by way of
equalization charges in the following terms:
lengthy and elaborate judgment of the High Court under appeal makes instructive
reading in prohibiting the DDA from adding to the prices of the named flats on
escalation termed as equalisation and ad hoc charges. From the terms
of the model contract entered into by the DDA with the people who opted for the
self-financing scheme, charging of the said equalization and ad hoc charges is
evidently totally missing. The DDA in support thereof has banked upon the
justness of its cause and demand, and has no where been able to project that to
begin with, it was part and parcel of the cost factor. The High Court has seen
through its design and has termed the venture as a camouflage. We see no reason
to take a different view than the one taken by the High Court. The said
decision of this Court is binding upon the DDA.
the reasons aforementioned, the impugned judgment cannot be sustained which is
set aside accordingly. The appeals are allowed with costs. Counsels fee
assessed at Rs. 25,000/- in each case. Appeals filed by the DDA are dismissed.