Municipal Corporation Chandigarh & Ors. Etc. Vs. M/s. Shantikunj Investment Pvt. Ltd. Etc.
Email(Arising out of SLP (C.) No. 12794/2001)
With
Civil Appeal Nos. 1343, 1344, 1345, 1346, 1347, 1348, 1349, 1350, 1351, 1352, 1353, 1354, 1355, 1356, 1357, 1358, 1359 and 1360 of 2006
(Arising out of SLP (C) Nos. 12935/2001, 12987/2001, 12995/2002, 13449/2001, 14289/2003, 16503/2001, 18353/2002, 18911/2002, 18978/2002, 22515/2002, 23737/2002, 23738/2002, 23941/2002, 2948/2003, 3601/2003, 5748/2003, 9178/2003 & 13640-13641/2004)
(With SLP (C.) No. 22517/2002)
(From the Judgment and Final Order dated 2.2.2001 of the Punjab and Haryana High Court in C.W.P. No. 959/1999)
(Arising out of SLP (C.) No. 12794/2001)
With
Civil Appeal Nos. 1343, 1344, 1345, 1346, 1347, 1348, 1349, 1350, 1351, 1352, 1353, 1354, 1355, 1356, 1357, 1358, 1359 and 1360 of 2006
(Arising out of SLP (C) Nos. 12935/2001, 12987/2001, 12995/2002, 13449/2001, 14289/2003, 16503/2001, 18353/2002, 18911/2002, 18978/2002, 22515/2002, 23737/2002, 23738/2002, 23941/2002, 2948/2003, 3601/2003, 5748/2003, 9178/2003 & 13640-13641/2004)
(With SLP (C.) No. 22517/2002)
(From the Judgment and Final Order dated 2.2.2001 of the Punjab and Haryana High Court in C.W.P. No. 959/1999)
Capital of Punjab (Development and Regulation) Act, 1952
Sections 2(b), 2(f) 2(k), 6, 7 and 8A – Chandigarh Lease-Hold of Sites and Buildings Rules, 1973 – Rules 3(2), 4, 5, 6, 8, 9, 10, 11, 12, 13, and 14 – Indian Contract Act, 1872 – Section 67 – Transfer of Property Act, 1882 – Sections 105 and 108 – Land Development – Auction of commercial and residential plots by Chandigarh Municipality and Chandigarh Administration – Allotment on lease for 99 years – Some of the purchasers on finding absence of amenities like roads, water supply, landscaping, sewerage etc. filing writ contending that since the basic amenities had not been provided the Municipality and Administration cannot charge interest on installments, ground rent etc. and that penalty also cannot be levied for nonpayment of installments or ground rent – One Division Bench of Punjab High Court in Shanti Kunj Investment case holding that providing of basic amenities is a condition precedent for payment of interest and penalty – Two other Division Benches of the same High Court in Khurana’s case and DLG builder’s case taking a contrary view – In view of divergent judicial views matter coming up before Supreme Court – Whether providing basic amenities is a condition precedent for recovering the installments of sale consideration, ground rent interest thereon and penalty – Whether Section 67 of the Contract Act applicable. Held since there was no specific promise that providing of facilities shall be condition precedent, Section 67 of the Contract Act was inapplicable. View taken by the High Court in Shanti Kunj Investment case therefore not sustainable and therefore set aside. Decisions which followed the said ruling also set aside. Though providing the amenities was not a condition precedent, nevertheless there is an obligation on the part of the Administration to provide the necessary facilities for full enjoyment of the same by the allottees. Since there was nothing in the lease deed regarding the amenities there was no question of enforcing them by way of a mandamus. Matter remitted to High Court for providing proportionate relief to allottees where facilities like kutcha road, drainage, drinking water, sewerage, street lighting have not been provided. Where such facilities have not been provided it would be open to the High Court to grant relief but payment of installment being part of the contract allottees were under obligation to pay the same irrespective of the provision of amenities.
Therefore, the term amenity in the context of real estate is to mean the facilities as provided under Section 2(b) of the Act but it can never be treated to mean that this is a condition precedent. It is for the better use of the allotted piece of land but that does not mean that it should be provided first as a condition precedent in the matter in the present case. (Para 26)
Once allotment of the land has been made in favour of the allottee, he can take possession of the property and use the same in accordance with the Rules. That does not mean that all the facilities should be provided first for so called enjoyment of the property this was not the condition of auction. Party knew the location & condition prevailing thereon. The interpretation given by the Division Bench of the High Court of Punjab & Haryana and contended before us cannot be accepted as a settled proposition of law. In the present case, as per the Act and the Rules it is never a condition precedent of the auction or as per the lease that all the facilities like, road, water-supply, street lighting, drainage, sewerage, public building, horticulture, landscaping shall be a condition precedent. Nowhere in the conditions of lease or in the auction it is provided that this will be done first though it had been contended by the Administration that the basic amenities have already been provided. Be that as it may, in the present context it cannot be construed that it is a condition precedent. (Para 26)
There was no specific promise on the part of the Administration that providing of facilities shall be condition precedent. Therefore, Section 67 of the Indian Contract Act, 1872 has no application in the present case. Learned counsel for the respondents referred to Section 2(a) of the Specific Relief Act, 1963. Section 2(a) of the Specific Relief Act, 1963 says that obligation includes every duty enforceable by law. As we have already noted that this was not the obligation on the part of the Administration that they will necessary provide the amenities before handing over of the possession of the allotted plots. Therefore, there is no question of obligation being enforceable by any mandamus as there is no such obligation as per the terms and conditions of the lease or by the Act or the Rules. Similarly, our attention was drawn to Sections 105 and 108 of the Transfer of Property Act, 1882. Section 105 of the Act defines lease and Section 108 lays down the rights and liabilities of lessor and lessee. There is neither any condition in the lease nor any obligation under the auction. If the parties have given their bids and with their eyes wide open they have to blame themselves. It cannot be enforced by any mandamus as there is no obligation contained in the lease deed or in the auction notice. It is true that according to the provisions of the Act, the Administration is under the obligation to provide the amenities but there is no such condition precedent for that matter. In this connection, our attention was also invited that the provisions of the Act should be interpreted in a manner which advances the cause of the public. There is no two opinion in the matter that the statute should be interpreted in the manner which advance the cause of the public. But when the issue comes where there is any statutory obligation then certainly this Court will not hesitate to do so. But in the absence of such, to lay down that this was a condition precedent and allow the allottees to waive their obligation to pay the installments with interest, is not correct. (Para 26)
In this background, we are of the opinion that the interpretation of the Act and the Rules given by the Division Bench of the Punjab & Haryana High Court in the impugned judgment (M/s Shanti Kunj Investment Pvt. Ltd.) cannot be sustained. It has been contended by the counsel for the Chandigarh Administration that all necessary facilities have been provided and some of the allottees have already constructed their buildings and have rented out the same and some allottees have applied for construction of Hotels also. It is not possible for us to examine all these facts individually. Some of the sectors have been fully developed and some sectors have been less developed. Therefore, it is not possible to work out that in one case it has been fully developed and in the other case it is still not developed. However, in some cases full payment has been made, in some cases two installments have been made. Therefore, all these disputed facts have to be adequately dealt with by the High Court. We make it clear that though it was not a condition precedent but there is obligation on the part of the Administration to provide necessary facilities for full enjoyment of the same by the allottees. We therefore, remit the matter to the High Court for a very limited purpose to see that in cases where facilities like kutcha road, drainage, drinking water, sewerage, street lighting have not been provided, then in that case, the High Court may grant the allottees some proportionate relief. Therefore, we direct that all these cases be remitted to the High Court and the High Court may consider that in case where Kutcha road, drainage, sewerage, drinking water facilities have been provided, no relief shall be granted but in case, any of the facilities had not been provided, then the High Court may examine the same and consider grant of proportionate relief in the matter of payment of penalty under Rule 12(3) and delay in payment of equated instalment or ground rent or part thereof under Rule ( 12(3A) only.
We repeat again that in case the above facilities had not been granted then in that case consider grant of proportionate relief and if the facilities have been provided then it will be the open on the part of the allottees to deny payment of interest and penalty. So far as payment of instalment is concerned, this is a part of the contract and therefore, the allottees are under obligation to pay the same. However, so far as the question of payment of penalty & penal interest is concerned, that shall depend on facts of each case to be examined by the High Court. The High Court shall examine each individual case and consider grant of the proportionate relief. (Para 33)
2. Collector of Central Excise, Calcutta v. Alnoori Tobacco Products & Anr (JT 2004 (5) SC 593) (Para 23)
3. Megh Singh v. State of Punjab (JT 2003 (Suppl.1) SC 257) (Para 23)
4. Divisional Controller, KSRTC v. Mahadeva Shetty & Anr. (JT 2003 (6) SC 519) (Para 23)
5. Sector-6, Bahadurgarh Plot Holders’ Association (Regd.) & Ors. v. State of Haryana & Anr. (JT 1995 (9) SC 167) (Para 25)
6. C.B. Gautam v. Union of India & Ors. (JT 1992 (6) SC 678) (Para 24)
7. Commissioner of Income Tax v. Sun Engineering Works (P) Ltd. (JT 1992 (5) SC 543) (Para 23)
8. State of Haryana & Ors. v. Bhajan Lal & Ors. (JT 1990 (4) SC 650) (Para 24)
9. Kumari Shrilekha Vidyarthi & Ors. v. State of U.P. & Ors. (JT 1990 (4) SC 211) (Para 23)
10. K.P. Varghese v. Income Tax Officer, Ernakulam & Anr. (1982 (1) SCR 629) (Para 24)
10. M/s.Shanti Kunj Investment (Pvt) Ltd. v. U.T. Administration Chandigarh & Ors. (C.W.P. No. 959 of 1999) (Paras 4, 38)
11. M/s. DLG Builders Pvt. Ltd. v. The Advisor to the Chandigarh Administration ( CWP No.13695 of 2001) (Paras 3, 7)
12. Municipal Corporation, Chandigarh & Ors. v. M/s. Shanti Kunj Investment Pvt. Ltd. (SLP (Civil) No. 12794/2001) (Para 8)
1. Leave granted.
2. All these petitions involve common question of law, therefore, these are taken up together for disposal by the common judgment.
3. In all these petitions, there are two class of petitions, one filed by the private parties/individuals against the Division Bench judgment of the Punjab & Haryana High Court whereby the Division Bench has not given any relief following its judgment passed in CWP No.13695 of 2001 dated 18.2,2002 (M/s. D.L.G. Builders Private Limited v. The Advisor to the Administrator, Chandigarh Administration & Ors.). The relevant portion of that judgment reads as under:
” In our considered view, the allottee is bound to pay the premium and other charges in accordance with the conditions of allotment. If the judgment of M/s. Shanti Kunj Investments Pvt. Ltd. (supra) is read as laying down a proposition that the allottee is not obliged to pay the balance of premium even after raising construction of the building and occupying it on the pretext that beautification of the site has not been done or land-scaping has not been provided or payment of the tiles has not been done, extremely anomalous consequences would follow inasmuch as, the allottee would construct building and utilize the same by renting out or otherwise and hereby reap huge benefits, but would not pay a single penny towards balance of premium and ground rent etc. Therefore, while examining the complaint of the allottee about the lack of amenities, what the court is required to consider is whether the basic amenities, electricity, approach road, sewerage and drainage have been provided in the area so as to facilitate construction of the building within the specified time. If such amenities have been provided, the court will not interdict in the matter and facilitate withholding of the balance of premium, ground rent etc. Rather, it would insist that all the dues of public money are paid by the allottee in accordance with the relevant rules/ regulations and conditions of allotment.”
4. Another class of cases in which the Municipal Corporation of Chandigarh and the Chandigarh Administration have filed the special leave petitions against the order passed by the Division Bench of the Punjab & Haryana High Court against the judgment dated 2.2.2002 (was?) passed in M/s. Shantikunj Investment Pvt. Ltd. and batch. Relevant portion of the judgment reads as under :
” They having failed to provide the basic amenities, the order of resumption and forfeiture cannot be sustained. The impugned orders are, consequently set aside. The respondents are directed to provide the amenities in accordance with law. The needful shall be done within three months. No interest shall be chargeable from the petitioners if they make the entire outstanding amount within three months from the date of the provision of the amenities.”
5. It would not be proper to refer to all individual cases because various orders have been passed by the High Court from time to time but largely, the cases have been divided into two class of cases i.e. one governed by M/s. Shantikunj Investment Pvt. Ltd. and the other governed by M/s. D.L.G. Builders Private Limited. We are only deciding the question in principle and leaving the rest to be decided by the High Court.
6. In all these petitions, the common question is whether grant of the amenities is a condition precedent or not. All the plots in question were allotted by the Chandigarh Administration as well as the Municipal Corporation of Chandigarh on certain terms and conditions of the sale of residential and commercial sites & buildings by auction on lease for 99 years and certain terms and conditions were laid down therein. But the challenge in these various petitions filed before the Punjab & Haryana High Court was that the basic amenities were not provided and, therefore, the Chandigarh Administration and the Municipal Corporation of Chandigarh were not entitled to charge interest @ 18% or 10%, as the case may be, on the installment as well as non-payment of installment and non-payment of the ground rents. Likewise, they cannot charge the penalty for delayed payment at the rate of 10% and at the rate of 24% interest on the amount falling short of equated instalment or part thereof and likewise on the ground rents.
7. So far as the Division Bench of Punjab & Haryana High Court in the case of Shanti Kunj Investment (supra) held that providing of amenities is a condition precedent to the payment of the interest and penalty. As against this, two Division Bench in the case of G.S. Khurana v. Chandigarh Administration by order dated 18.2.2002 and in the case of DLG Builders Pvt. Ltd. v. The Advisor to the Chandigarh Administration have taken a different view in the matter. In Shanti Kunj, the Division Bench held that grant of amenities is a condition precedent whereas, in the case of DLG Builders and G.S. Khurana, it took a contrary view to the effect that it is not a condition precedent. This apparent contrary view has given rise to all the litigation before this Court. In order to resolve the inconsistent view of the two Division Bench, we shall deal with the issue involved in the matter in a great detail hereinafter.
8. In order to appreciate the controversy involved in the matter, we may refer to few bare facts in the case of Municipal Corporation, Chandigarh & Ors. v. M/s. Shanti Kunj Investment Pvt. Ltd. in SLP (Civil) No. 12794/2001. Seven petitioners in the aforesaid petition were the allottees of different commercial sites. The grievance was that the Chandigarh Administration has failed to provide basic amenities/facilities for use and occupation of the sites sold to them. It is alleged that they are guilty of mal-administration. They have arbitrarily charged the ground rent, interest and penal interest and they are resorting to the resumption of the sites for non-payment thereof. Therefore, all these petitioners filed joint petitions in the High Court for redressal of their grievances.
9. On February 12, 1989 the Chandigarh Administration auctioned a godown site no. 290, Sector 26, Chandigarh. The petitioner, along with two brothers gave a bid for a premium of Rs. 22,10,000/-. It was accepted and they deposited 25% of the bid money, viz. Rs. 5,52,500/-. The letter of allotment was issued on March 16, 1989. The site was given for 99 years on lease-hold basis. As per the terms of allotment, the petitioner had to pay the amount along with interest @ 7% in three equal yearly installments of Rs. 6,31,590/-. This payment had to commence from the date of auction. Besides that, the allottee had also to pay an annual ground rent @
55,250/- for the first 33 years. The petitioner commenced the construction, but he found that there were high voltage electric wires passing over the site. The sewerage system had not been laid on the site. There were a large number of Jhuggies adjacent to the place. The petitioner submitted representation to the Estate Officer with a request to remove the unauthorized Jhuggies and to take necessary steps for providing the amenities. But no amenities such as roads, water supply, landscaping etc. were provided. It was alleged that since the petitioner had paid the entire premium as provided under the Act and Rules, therefore, no interest or ground rent can be charged till all the amenities, as required under the Act and Rules, are provided. Hence, with this grievance, the petitioner approached the High Court. The High Court examined all the provisions and came to the conclusion that Chandigarh Administration cannot charge interest @ 18%. Though, initially the interest was charged as 7%, but ultimately by notification it was increased to 10%. It was held by the Division Bench that there was no notification for charging the interest @ 18% and it was conceded before us that so far as this part of the order is concerned, the Administration does not challenge and the petitioner will be charged @ 10%.
10. The other aspect was also examined by the Division Bench and they gave an extended meaning to the definition as provided under Section 2(b) ‘amenities’ of the Capital of Punjab (Development and Regulation) Act, 1952 (hereinafter referred to as the ‘Act’). As against this, another Division Bench in the case of DLG Builders (supra) took a contrary view and held that no extended meaning of ‘amenities’ as defined in Section 2(b) of the Act can be given that providing of facilities is a condition precedent for charging of the interest.
11. In order to appreciate the whole controversy involved in these cases, it will be useful to refer to the necessary provisions of the Act and Rules bearing on the subject. The allotment of the site in question was given under the Act and the Rules framed thereunder known as ‘Chandigarh Lease-Hold of Sites and Buildings Rules, 1973. These provisions are applicable to both sets of cases i.e. allotment of commercial sites as well as residential, made by the Chandigarh Administration and Chandigarh Municipal Corporation. Section 2 of the Act deals with definition. Section 2(b) defines ‘amenity’ as under:
“2(b). ‘amenity’ includes roads, water-supply, street lighting, drainage, sewerage, public building, horticulture, landscaping and any other public utility service provided at Chandigarh.”
12. Section 2(f) defines ‘erect a building’ which reads as under:
“2(f). ‘erect a building’ has the same meaning as ‘erect or re-erect any building’ in the Punjab Municipal Act, 1911 (Punjab Act III of 1911).”
13. Section 2(i) defines ‘prescribed’ which means prescribed by rules made under this Act.
14. Section 2(j) defines ‘site’ which means any land which is transferred by the Central Government under Section 3.
15. Section 2(k) defines ‘transferee’, which reads as under:
“2(k). ‘transferee’ means a person (including a firm or other body of individuals, whether incorporated or not) to whom a site or building is transferred in any manner whatsoever, under this Act and includes his successors and assigns.”
16. Section 5 of the Act provides a bar to erection of buildings in contravention of buildings rules.
17. Section 6 lays down power to require proper maintenance of site or building which reads as under:
“6. Power to require proper maintenance of site or building. If it appears to the Chief Administrator that the condition or use of any site or building is prejudicially affecting the proper planning of, or the amenities in, any part of Chandigarh or the interest of the general public there, he may serve on the transferee or occupier of that site or building a notice requiring him to take such steps and within such period as may be specified in the notice and thereafter to maintain it in such a manner as may be specified therein.”
18. Section 7 provides for Levy of fee or tax for amenities which reads as under:
“7. Levy of fee or tax for amenities. (1) For the purposes of providing maintaining or continuing any amenity at Chandigarh the (Central Government) may levy such fees or taxes as it may consider necessary which shall be in addition to any fee or tax for the time being leviable under any other law in respect of any site or building on the transferee or occupier thereof.”
19. Section 8 provides for imposition of penalty and mode of recovery of arrears. Section 8A provides for resumption and forfeiture for breach of conditions of transfer which reads as under:
“8A. Resumption and forfeiture for breach of conditions of transfer. (1) If any transferee has failed to pay the consideration money or any instalment thereof on account of the sale of any site or building or both, under Section 3 or has committed a breach of any other conditions of such sale, the Estate Officer may, by notice in writing, call upon the transferee to show cause why an order of resumption of the site or building, or both, as the case may be, and forfeiture of the whole or any part of the money, if any, paid in respect thereof which in no case shall exceed ten per cent of the total amount of the consideration money, interest and other dues payable in respect of the sale or the site or building, or both should not be made.
(2) After considering the cause, if any, shown by the transferee in pursuance of a notice under sub-section (1) and any evidence he may produce in support of the same and after giving him a reasonable opportunity of being heard in the matter, the Estate Officer may, for reasons to be recorded in writing, make an order resuming the site or building or both, as the case may be, so sold and directing the forfeiture as provided in sub-section (1), of the whole or any part of the money paid in respect of such sale.”
20. The relevant rules which have been framed in exercise of this Act under power conferred by Sections 3 and 22 by the Act of 1952 are known as ‘Chandigarh Lease-Hold of Sites and Buildings Rules, 1973’ (hereinafter referred to as the ‘Rules’).
21. Rule 3(2) defines ‘premium’ which reads as under:
“3(2). ‘Premium’ means the price paid or promised for the transfer of a right to enjoy immovable property under these rules”
22. Some of the relevant Rules are quoted as under:
“4. The Chandigarh Administration may demise sites and buildings at Chandigarh on lease for 99 years. Such leases may be given by allotment or by auction in accordance with these rules.
5. For the purpose of proper planning and development and for the implementation of any scheme framed by the Chandigarh Administration, the Chief Administrator may reserve sites/buildings for groups of individuals or for persons practicing any profession or carrying on any occupation, trade or business, or for the implementation of any scheme framed by the Chandigarh Administration.
6. Commencement and period of lease. The lease shall commence from the date of allotment or auction as the case may be, and shall be for a period of 99 years. After the expiry of said period of 99 years the lease may be renewed for such further period and on such terms and conditions as the Government may decide.
8. Lease by allotment, Procedure for. (1) In case of allotment of site of building the intending lessee shall make an application to the Estate Officer in Form ‘A’.
(2) No application under sub-rule (1) shall be valid unless it is accompanied by 10 per cent of the premium as earnest money in the prescribed mode of payment.
(3) When 10 per cent of the premium has been so tendered the Estate Officer shall, subject to such directions as may be issued by the Chief Administration in this behalf, allot a site of the size applied for or a building of which particulars are given in the application and shall intimate, by registered post the number, sector, approximate area, premium and the rent of the site or building allotted to the applicant.
(4) The applicant shall, unless he refuses to accept the allotment within 30 days of the date of the receipt of the allotment order, deposit within that period and in the prescribed mode of payment, further 15 per cent of the premium. The remaining 75 per cent of the premium shall be paid as provided in Rule 12.
(5) If the applicant refuses to accept the allotment within said period of 30 days, he will be entitled to the refund of the amount paid by him. The refusal shall be communicated to the Estate Officer by a registered letter (acknowledgement due). The refund shall be made by means of a cheque payable at the State Bank of India at Chandigarh and the applicant shall bear the collection charges for the same.
(6) If the applicant fails to communicate his refusal to accept the allotment within 30 days and also fails to deposit 15 per cent of the premium under sub-rule (4) the Estate Officer may forfeit the whole or part of the earnest money.
9. Lease by auction, Procedure for. In case of auction at least 25 per cent of the bid accepted by the Auctioning Officer shall be paid on the spot by the intending lessee in the prescribed mode of payment in accordance with Rule 12.
Provided that the Estate Officer may, in his absolute discretion, allow the successful bidder to deposit in the prescribed mode or payment not less than 10 per cent of the bid on the condition that the difference between the amount deposited and 25 per cent of the bid shall be deposited in the same manner within 30 days of auction.
10. Delivery of Possession. Actual possession of the site/building shall be delivered to the lessee on payment of 25 per cent of the premium in accordance with Rule 8 or Rule 9 as the case may be.
Provided that no ground rent payable under Rule 13 and interest on the installments of premium payable under sub-rule (2) of the Rule 12 shall be paid by the lessee till the actual and physical possession of the site/building is delivered or offered to be delivered to him, whichever is earlier.
11. Premium. (1) In case of allotment, the premium shall be such amount as may be determined by Chandigarh Administration.
(2) In case of auction, the premium shall be the bid accepted by the Estate Officer, as a result of bidding in open auction.
12. Payment of premium and consequences of non-payment or late payment. (1) In addition to payment of 25 per cent premium under Rule 8 or 9 as the case may be, the remaining 75 per cent premium may be paid in lump sum within 30 days from the date of allotment/auction without any interest.
(2) If payment is not made in accordance with sub-rule (1) of this Rule, the balance of the 75 per cent premium shall be paid in three annual equated installments or more as the Chief Administrator may in exceptional circumstances of a case fix within prior approval of the Chief Commissioner along with interest at the rate of 10 per cent per annum or at such higher rate of interest as may be fixed by the Chief Administrator by a notification in the official Gazette before the commencement of the lease. The first instalment shall become payable after one year from the date of allotment/auction.
Provided that in the case of allotment of site or building of small scale industries as defined by Chandigarh Administration from time to time in the Industrial area, the balance of the 75 per cent of the premium may be paid in ten annual equated installments or such other number of annual equated installments as may from time to time be fixed by the Chief Administrator along with interest at the rate of 10 per cent per annum or such higher rate of interest as may be fixed by the Chief Administrator by a notification before the commencement of the lease.
(3) In case any instalment is not paid by the lessee by the date on which it is payable, a notice may be served on the lessee calling upon him to pay the instalment within a period of 3 months together with a penalty which may extend upto 10 per cent of the amount due. If the payment is not made within the said period, the Estate Officer may cancel the lease and or forfeit the whole or any part of the money if paid in respect thereof which, in no case, shall exceed 10 per cent of the total amount of the consideration money, interest and other dues payable in respect of the lease:
Provided that forfeiture will not be made in
addition to penalty.
Provided further that no order of cancellation or forfeiture shall be made without giving the lessee reasonable opportunity of being heard. If the order of cancellation is for non-payment of penalty, the lessee may show cause why the penalty should not have been levied.
(3-A) In case any equated instalment or ground rent or part thereof is not paid by the lessee by the date on which it became payable he shall be liable to pay in respect of that instalment or ground rent or part thereof as the case may be, interest calculated at the rate of twenty four per cent per annum from the date on which the instalment or ground rent became payable till such date it is actually paid.
(4) Each instalment shall be remitted to the Estate Officer by the prescribed mode of payment. Every such remittance shall be accompanied by a letter showing full particulars of the site or building to which the payment pertains or a statement giving reference to the number and date of the allotment referred to in Rule 8. In the absence of these particulars, the amount remitted shall be deemed to have been received only on the date when the remitter supplies correct and complete information.
13. Rent and consequences of non-payment. In addition to the premium, whether in respect of site or building, the lessee shall pay rent as under:-
(i) Annual rent shall be 2-1/2 per cent of the premium for the first 33 years which may be enhanced by the Chandigarh Administration to 3-3/4 per cent of the premium for the next 33 years and to 5 per cent of the premium for the remaining period of the lease.
(ii) Rent shall be payable annually on the due date without any demand from the Estate Officer.
Provided that the Estate Officer may for good and sufficient reasons extend the time for payment of rent upto six months on the whole on further payment of 6 per cent per annum interest from the due date upto the date of actual payment.
(iii) If rent is not paid by the due date, the lessee shall be liable to pay a penalty not exceeding 100 per cent of the amount due which may be imposed and recovered in the manner laid down in Section 8 of the Capital of Punjab (Development and Regulation) Act, 1952, as amended by Act No. 17 of 1973.
14. Execution of lease deed. (1) After payment of 25 per cent premium the lessee shall execute a lease deed in Form B, B-I, B-II, or C, as the case may be, in such manner as may be directed by the Estate Officer within six months of the date of allotment/auction or within such further period as the Estate Officer may, for good and sufficient reasons, allow.
(2) If the lessee fails to execute a lease deed in accordance with sub-rule (1) of this rule, the State Officer may cancel the lease and forfeit a sum up to 25 per cent of the premium.
Provided that before taking action under sub-rule (2) of this rule, the Estate Officer shall afford a reasonable opportunity to the lessee of being heard.”
23. In this background of the Act and the Rules, the question before us is whether the grant of amenities is a condition precedent or not. Learned counsel for the respondents contended that Rule 12(2) of the Rules should be interpreted in the sense that when staggering instalment has been paid, then the allottee is required to deposit the balance 75 per cent of the premium in three annual equated installments and the first instalment falling due after one year from the date of allotment, it should be construed that the authorities were supposed to provide all the necessary amenities in the meantime. In that connection, learned counsel has submitted that it was legitimate expectation of the allottee that within one year all the basic amenities shall be provided. It was further submitted by learned counsel that Rule 12(2) of the Rules should be interpreted to mean that there is implied covenant that the authorities will provide all the amenities within one year. In this connection, learned counsel referred to a decision of this Court in the case of Kumari Shrilekha Vidyarthi & Ors. v. State of U.P. & Ors.1 and in the case of Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai & Anr.2. It was also contended that the authorities should not charge compound interest. It was also contended that the word “amenities” should be given extended meaning and “amenities” as defined in Section 2(b) read with Rule 11, that the amenities should be provided first otherwise the expression ” enjoy” appearing in Rule 3(2) will be redundant. In this connection, learned counsel has referred to Section 67 of the Indian Contract Act, 1872 that promisee has failed to perform its promise and further submitted that by virtue of Section 2(a) of the Specific Relief Act, 1963; when the property had been leased out it presupposes that the amenities should be provided when the premium is paid. In this connection, learned counsel for the respondents has invited our attention to Sections 105 and 108 of the Transfer of Property Act, 1882 with specific reference to rights and liabilities of lessor and lessee. It was contended that both should be co-terminus. In this connection, the following decisions of this Court were cited by learned counsel.
1. Commissioner of Income Tax v. Sun Engineering Works (P) Ltd.3
2. Divisional Controller, KSRTC v. Mahadeva Shetty & Anr.4
3. Megh Singh v. State of Punjab5
4. Collector of Central Excise, Calcutta v. Alnoori Tobacco Products & Anr.6
24. It was also contended that the statute should be interpreted in the manner which advanced the cause of the public. In this connection, the following decisions of this Court were cited by learned counsel for the respondents.
1. K.P. Varghese v. Income Tax Officer, Ernakulam & Anr.1
2. State of Haryana & Ors. v. Bhajan Lal & Ors.2
3. C.B. Gautam v. Union of India & Ors.3
25. As against this learned counsel appearing for the appellant submitted that in fact the expression, “amenities” cannot be given extended meaning and the consistent case of the Administration was that necessary amenities had already been provided and in some of the plots, the buildings had been constructed. In some cases, the premises had been let out. Therefore, it was the case of the appellant throughout before the High Court as well as before this Court that providing amenities was never a condition precedent and whatever necessary facilities/ amenities which were required in the matter had already been provided. Learned counsel for the Chandigarh Administration and for the Municipal Corporation submitted that the Corporation/ Administration are not running away from their legal obligation to provide necessary facilities, which have already been provided and whatever remains to be provided, shall be provided. It was contended that tar road could not be constructed because on most of the places construction was in progress and the construction materials were lying on the road. Therefore, it was not possible to proceed with the construction of tar road. However, the Administration is under obligation to provide necessary facilities as per the provisions of the Act and the Rules. It was also submitted that in the case of
M/s. DLG Builders, the High Court has already dismissed large number of writ petitions holding that providing of amenities is not a condition precedent. In this connection, learned counsel for the appellant-Administration has invited our attention to a decision of this Court in the case of Sector-6, Bahadurgarh Plot Holders’ Association (Regd.) & Ors. v. State of Haryana & Anr.4 wherein a three Judge Bench of this Court in no uncertain terms has held that providing of the amenities is not a condition precedent. Therefore, it was contended by learned counsel for the appellant- Administration that it cannot be constructed to be a condition precedent in the matter.
26. We have bestowed our best of the attention to the provisions of the Act and the Rules. On a plain reading of the definition “amenities” read with Rule 11(2) and Rule 12, it cannot be construed to mean that the allottees could take upon themselves not to pay the lease amount and take recourse to say that since all the facilities were not provided, therefore, they are not under any obligation to pay the instalment, interest and penalty, if any, as provided under the Act and the Rules. It is not possible to accept a sweeping proposition that if all the facilities or amenities are not provided, then the allottees/ lessees can take upon themselves not to pay the lease amount, interest and penalty would be going too far. It has never been the condition precedent. It is true that in order to fully enjoy the allotment, proper linkage is necessary. But to say that this is a condition precedent, that
is not the correct approach in the matter. “Amenity” has been defined under Section 2(b) of the Act which includes roads, water-supply, street lighting, drainage, sewerage, public building, horticulture, landscaping and any other public utility service provided at Chandigarh. That is a statutory obligation but it is not a condition precedent as contended by learned counsel for the respondents. It is true the word, “enjoy” appearing in the definition of the word “premium” in Rule 3(2) of the Rules, means the price paid or promised for the transfer of a right to enjoy immovable property under the Rules. It was very seriously contended before us that the word, enjoy immovable property necessarily means that the Administration should provide all the basic amenities as appearing under Section 2(b) of the Act for enjoying that allotment. The expression “premium” appearing in the present context does not mean that the allottees/ lessees cannot enjoy the immovable property without those amenities being provided. The word “enjoy” here in the present context means that the allottees have a right to use the immovable property which has been leased out to them on payment of premium i.e. the price. This is only the price to enjoy that allotted/leased property. Otherwise, walking over to that property will mean to trespass. This is only a permissive possession. Since the allottees had paid the price or promised to pay after the transfer of the right to enjoy the immovable property, this cannot be construed that the property cannot be enjoyed without providing the basic amenities. It is the common experience that for full development of an area it takes years. It is not possible in every case that the whole area is developed first and allotment is served on a platter. Allotment of the plot was made, as is where is basis and the Administration promised that the basic amenities will be provided in due course of time. It cannot be made a condition precedent. This has never been a condition of the auction or of the lease. As per the terms of allotment upon payment of the 25 per cent, possession will be handed over and rest of the 75 per cent of the leased amount to be paid in a staggered manner i.e. in three annual equated installments along with interest at the rate of 10 per cent. If someone wants to deposit the whole of the 75 per cent of the amount he can do so. In that case, he will not be required to pay any interest. But if a party wants to make payment within a period of three years then he is under the obligation to pay 10 per cent interest on the amount of instalment. This is the obligation on the part of the allottee as per the condition of lease and he cannot get out of it by saying that the basic amenities have not been provided for enjoying the allotted land, therefore he is not entitled to pay the interest. This construction is not borne out from the scheme of the Act and the Rules. It is true that the Administration has an obligation but it is not a condition precedent in the present case. “Amenity” has been interpreted in the Advanced Law Lexicon (3rd Edition, 2005 at page 237) as follows:
” IN REAL PROPERTY LAW, such circumstances, in regard to situation, view, location, access to a water course, or the like, enhance the pleasantness or desirability of the property for purposes of residence, or contribute to the pleasure and enjoyment of the occupants, rather than to their indispensable needs. Extras or intangible items often associated with property. They may be tangible. Often amenities in a condominium include swimming pools, landscaping, and tennis court.”
Therefore, the term amenity in the context of real estate is to mean the facilities as provided under Section 2(b) of the Act but it can never be treated to mean that this is a condition precedent. It is for the better use of the allotted piece of land but that does not mean that it should be provided first as a condition precedent in the matter in the present case. Learned counsel invited our attention to the expression , ” enjoy” as per the Webster’s Dictionary, which means as follows:
” to have, possess, and use with satisfaction; to have, hold, or occupy, as a good or profitable thing, or as something desirable; as, we enjoy many privileges.”
It is true that once allotment of the land has been made in favour of the allottee, he can take possession of the property and use the same in accordance with the Rules. That does not mean that all the facilities should be provided first for so called enjoyment of the property this was not the condition of auction. Party knew the location & condition prevailing thereon. The interpretation given by the Division Bench of the High Court of Punjab & Haryana and contended before us cannot be accepted as a settled proposition of law. In the present case, as per the Act and the Rules it is never a condition precedent of the auction or as per the lease that all the facilities like, road, water-supply, street lighting, drainage, sewerage, public building, horticulture, landscaping shall be a condition precedent. Nowhere in the conditions of lease or in the auction it is provided that this will be done first though it had been contended by the Administration that the basic amenities have already been provided. Be that as it may, in the present context it cannot be construed that it is a condition precedent. In this connection, our attention was drawn to a decision of this Court in the case of Sector-6, Bahadurgarh Plot Holders’ Association (Regd.) & Ors. v. State of Haryana & Ors. (supra), which has an important bearing. In this case, the Punjab Urban Estates (Sales of Sites) Rules, 1965, Punjab Urban Estates (Development and Regulation) Act, 1964 and Haryana Urban Development Authority ( Disposal of Land and Buildings) Regulations, 1978, came up for consideration and in that context, a three Judge Bench of this Court categorically held as follows:
” To 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 17-10-1980, we are of the view that interest did become payable from that date. The fact that the plot has not yet been fully developed, as is the case of the appellant, has, therefore, no significance insofar 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 inasmuch 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 submissions, that the appellants may not be asked to pay interest, despite their having been no offer of delivery of possession of fully developed plots.”
Similar is the position here also though the Rules are not almost identical but somewhat similar. In the present case, the effort of learned counsel to interpret this provision to mean that the amenity was sine qua non is far from correct. All the forceful efforts made by learned counsel does not persuade us to take the view, in the present auction notice and the general terms and conditions of the lease that providing of all the amenities as appearing in Section 2(b) of the Act was a condition precedent. In this connection, learned counsel referred to necessary provisions of Section 67 of the Indian Contract Act, 1872. Section 67 of the Act provides that if any promisee neglects or refuses to afford the promisor reasonable facilities for the performance of his promise, the promisor is excused by such neglect or refusal as to non-performance caused thereby. This provision has no application in the present case. There was no specific promise on the part of the Administration that providing of facilities shall be condition precedent. Therefore, Section 67 of the Indian Contract Act, 1872 has no application in the present case. Learned counsel for the respondents referred to Section 2(a) of the Specific Relief Act, 1963. Section 2(a) of the Specific Relief Act, 1963 says that obligation includes every duty enforceable by law. As we have already noted that this was not the obligation on the part of the Administration that they will necessary provide the amenities before handing over of the possession of the allotted plots. Therefore, there is no question of obligation being enforceable by any mandamus as there is no such obligation as per the terms and conditions of the lease or by the Act or the Rules. Similarly, our attention was drawn to Sections 105 and 108 of the Transfer of Property Act, 1882. Section 105 of the Act defines lease and Section 108 lays down the rights and liabilities of lessor and lessee. We asked learned counsel for the parties to tell us which is the obligation of the lessor in the lease deed which says that they will not charge interest on the installments before providing the amenities. There is neither any condition in the lease nor any obligation under the auction. If the parties have given their bids and with their eyes wide open they have to blame themselves. It cannot be enforced by any mandamus as there is no obligation contained in the lease deed or in the auction notice. It is true that according to the provisions of the Act, the Administration is under the obligation to provide the amenities but there is no such condition precedent for that matter. In this connection, our attention was also invited that the provisions of the Act should be interpreted in a manner which advances the cause of the public. There is no two opinion in the matter that the statute should be interpreted in the manner which advance the cause of the public. But when the issue comes where there is any statutory obligation then certainly this Court will not hesitate to do so. But in the absence of such, to lay down that this was a condition precedent and allow the allottees to waive their obligation to pay the installments with interest, is not correct. In the case of K.P. Varghese (supra), under the Income-tax Act, 1961, Their Lordships have considered the matter and have held that Circular issued under Section 119 of the Act by the Central Board of Direct Taxes explaining the scope and object of a provision, is binding because it gives contemporanea exposition and hence the provision must be construed in accordance with the terms of the circulars. Thus, the rule of construction by reference to contemporanea exposition is a well-established rule of interpretation of statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. This is not the case here.
27. In the case of State of Haryana & Ors. v. Bhajan Lal & Ors. (supra), the question of invoking inherent power under Section 482 of the Code of Criminal Procedure came up for consideration before this Court. This case is also of no help for the respondents in any manner. In the case of C.B. Gautam v. Union of India & Ors. (supra), the provisions of Section 269-UD (1) came up for interpretation before this Court and this Court held that the provision does not give any unfettered discretion to appropriate authority for pre-emptive purchase of the property which was agreed to be sold by assessee on a consideration significantly lower than the fair market value and they further considered one of the methods for interpretation of the statute i.e. reading down provision if necessary. This also does not help the respondent in any manner as there is no need of reading down the provisions in any manner, as provisions are very clear.
28. It was next contended by learned counsel for the respondents that the decision rendered in the case of Sector-6, Bahadurgarh Plot Holders’ Association (Regd.) (supra) should be read in the context in which it has been given & should not be read as laying down a universal proposition. In this connection a reference was made to the decision of this Court in the case of Commissioner of Income Tax v. Sun Engineering Works (P) Ltd. (supra). In that case, this Court observed as follows :
” It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Court, divorced from the context of the question under consideration and treat it to be the complete ‘law’ declared by the Supreme Court.”
This is not the case here. We have considered the matter independent of the facts of the case Sector-6 Bahadurgarh Plot Holders’ Association (Regd.) (supra) and we have come to the conclusion that the amenities cannot be made a condition precedent. In the case of Sector-6, Bahadurgarh Plot Holders’ Association (Regd.) (supra) similar argument was raised that the allottee could refuse to take possession of the plot and deny payment of interest because the plot had not been developed. Similar provision appears in the present case i.e. the balance of the 75 per cent premium may be paid in three annual equated installments along with interest without condition of providing amenities in advance.
29. Similarly, in the case of Divisional Controller, KSRTC v. Mahadeva Shetty & Anr. (supra), this Court observed as follows :
” The decision ordinarily is a decision on the case before the Court, while the principle underlying the decision would be binding as a precedent in a case which comes up for decision subsequently.”
Therefore the decision in the case of Sector-6, Bahadurgarh Plot Holders’ Association (Regd.) (supra) fully applies in the case as the situation is analogous.
30. Learned counsel further invited our attention to a decision of this Court in the case of Megh Singh v. State of Punjab (supra). This was a case under the Narcotic Drugs and Psychotropic Substances Act, 1985. In that context, their Lordships held as follows:
” Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases or between two accused in the same case.”
It is true that in criminal matters even one single significant detail may alter the decision. But that is not the case here.
31. A reference was made to a decision of this Court in the case of Collector of Central Excise, Calcutta v. Alnoori Tobacco Products & Anr (supra). In this case, it was held that observations in judgments should be read in the context in which it is stated and the same should not be construed as statutes. There is no doubt about this proposition of law. Therefore, this decision also does not advance the case of the respondents. In the case of Kumari Shrilekha Vidyarthi & Ors. v. State of U.P. & Ors. (supra), their Lordships propounded the theory of legitimate expectation. Legitimate expectation does not mean illegitimate flight of fancy. Legitimate expectation means that what has been held out in the terms and conditions of the auction and the lease deed. Legitimate expectation and the provisions of the Act cannot be read together to mean that the terms of the auction and the lease deed should be ignored.
32. Learned counsel invited our attention to a decision of this Court in the case of Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai & Anr (supra). This was a case where the question was whether the Board of Trustees, Port of Mumbai is a State within the meaning of Article 12 of the Constitution or not. Their Lordships have observed that the instrumentality of the State cannot act in an arbitrary or capricious manner. All the State action must be for public good for which it exists. This does not mean that public can take up on itself to ignore to abide by condition of auction & refuse to pay State its dues.
33. In this background, we are of the opinion that the interpretation of the Act and the Rules given by the Division Bench of the Punjab & Haryana High Court in the impugned judgment (M/s Shanti Kunj Investment Pvt. Ltd.) cannot be sustained. It has been contended by the counsel for the Chandigarh Administration that all necessary facilities have been provided and some of the allottees have already constructed their buildings and have rented out the same and some allottees have applied for construction of Hotels also. It is not possible for us to examine all these facts individually. Some of the sectors have been fully developed and some sectors have been less developed. Therefore, it is not possible to work out that in one case it has been fully developed and in the other case it is still not developed. However, in some cases full payment has been made, in some cases two installments have been made. Therefore, all these disputed facts have to be adequately dealt with by the High Court. We make it clear that though it was not a condition precedent but there is obligation on the part of the Administration to provide necessary facilities for full enjoyment of the same by the allottees. We therefore, remit the matter to the High Court for a very limited purpose to see that in cases where facilities like kutcha road, drainage, drinking water, sewerage, street lighting have not been provided, then in that case, the High Court may grant the allottees some proportionate relief. Therefore, we direct that all these cases be remitted to the High Court and the High Court may consider that in case where Kutcha road, drainage, sewerage, drinking water facilities have been provided, no relief shall be granted but in case, any of the facilities had not been provided, then the High Court may examine the same and consider grant of proportionate relief in the matter of payment of penalty under Rule 12(3) and delay in payment of equated instalment or ground rent or part thereof under Rule ( 12(3A) only. We repeat again that in case the above facilities had not been granted then in that case consider grant of proportionate relief and if the facilities have been provided then it will be the open on the part of the allottees to deny payment of interest and penalty. So far as payment of instalment is concerned, this is a part of the contract and therefore, the allottees are under obligation to pay the same. However, so far as the question of payment of penalty & penal interest is concerned, that shall depend on facts of each case to be examined by the High Court. The High Court shall examine each individual case and consider grant of the proportionate relief.
34. SLP (Civil) No. 22517/2002. No allotment was made and no payment was deposited except the initial payment of 10%. Therefore, this petition is misconceived and the same is accordingly dismissed.
35. In SLP (c) No.23738 of 2002, the lease has been cancelled. Therefore, whether such cancellation was legal or otherwise, the High Court will examine the same in the light of the above observations. In SLP (c) No.23941 of 2002, in fact the possession of the plot had been given on 17.1.2000. The allottee had a grievance that there was a mango tree on his plot which was to be removed. The High Court may decide as to what extent the relief should be granted.
36. In SLP (c) No.14289 of 2003, SLP (c) No. 2948 of 2003 and SLP (c) Nos.13640-13641 of 2004, the grievance of the writ petitioners was that sewerage line was passing through the allottees’ building. Therefore, possession could not be handed over and the same was handed over only after removal of that sewerage line from the allotted plot. This aspect may also be examined by the High Court.
37. This Court also called for a report by appointing a Commission. The report of the Commissioner has been placed on record. The High Court while deciding the question of facilities provided may look into the aforesaid report.
38. As a result of our above discussion, the order dated 2.2.2001 passed by the Division Bench of the High Court of Punjab & Haryana in C.W.P. No.959 of 1999 (M/s. Shanti Kunj Investment (Pvt) Ltd. v. U.T. Administration Chandigarh & Ors.) which has been followed in C.W.P. 960 & 5874 of 1999 and C.W.P. No. 5009 of 1998 is set aside and orders dated 10.5.2001, 13.11.2000 & 13.9.2001 passed in C.W.P.No.5561 of 2000, W.P.No. 19356 of 1998 & C.W.P. No. 10233 of 2000 are also set aside. Consequently, the appeals arising out of SLP (c) Nos. 12794, 12987, 12935& 13449 of 2001; SLP (c) No. 12995 of 2002, SLP (c) No.16503 of 2001 and SLP (c) No.18911 of 2002 are allowed and the cases are remitted back to the High Court for deciding each case on its own merit. Rest of the cases excepting SLP (c) No.22517 of 2002 i.e. appeals arising out of SLP (c) Nos. 22515, 18978, 18353, 23941, 23737 & 23738 of 2002; SLP (c) Nos. 14289, 2948, 3601, 9178& 5748 of 2003 and SLP (c) Nos.13640-13641 of 2004 are accordingly disposed of and are also remitted back to the High Court for being decided in the light of the observations made above. No costs.
