IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.12598 of 2001 PURNANAND PRASAD Versus THE BIHAR STATE HOUSING BOARD&ORS ----------- 6 23/4/2009 Heard counsel for the parties. In this writ application the petitioner has made prayer to the following effect:- “(A)The respondents be directed to execute the registered final deed of conveyance in favour of the petitioner in respect of the Flat allotted to him for which the petitioner has paid the full price in prescribed installments as mentioned in the Hire Purchase Agreement. (B)To quash the order of the Committee constituted by the Board and communicated to the petitioner vide Memo No. 4171 dated 5.9.01 contained in Annexure-3.” With reference to the aforementioned pleadings counsel for the petitioner has high lighted that the flat in question was allotted in the year 1984 on a tentative price of Rs. 43,000/- and therefore the impugned order raising any further demand of Rs. 1,00,569/- is wholly arbitrary and thus should be quashed by this Court. This Court would find that this is second round of litigation for the same cause of action. Earlier when the petitioner had approached this Court, this Court by order dated 2.8.2000 in C.W.J.C. No. 6843 of 2000 following the orders passed by the Division Bench in C.W.J.C. No. 47 of 1994 and C.W.J.C. No. 2724 of 1994 had remitted the matter back to the Committee constituted by the State Government to look into grievance of the allottee of the Housing Board as with regard to escalation of price. 2 It is no doubt that the petitioner thereafter had appeared before the Committee and had filed an affidavited petition which was disposed of by passing a speaking order dated 5.9.2001. The relevant portion of finding of the Committee in the case of the petitioner reads as follows:- “After having gone through the submission made by the parties we committee find that the Board executed the scheme from the borrowings of different financial institutions. The revaluation of the flat is to be done on the basis of expenditure incurred on the scheme and financial liabilities such as interest occurred on borrowing. The allottee has bound to pay cost that was fixed initially and interest occurred on that cost. In this case increase in price was occurred due to interest charged by Board. In view of Cl. (4) of the agreement that the Board shall recovered the increased cost of construction or development or due to increase in cost of land acquisition etc., it is obligating on the part of the allottees to pay the same. Further as per allotment letter/agreement the allottees were understood the price was only tentative and not final. Further having full knowledge of Cl. (3) and (7) of the agreement the petitioner entered with the Board and agreed to pay the increased price of the said flat. The petitioner has also been shown the calculation chart. The petitioner has raised that there was no water supply, windows etc. when he took possession of the flat. This committee does not find any material evidence on record to show the aforesaid submissions correct. The petitioner has stated that he has no capacity to pay the additional demand as aforesaid. This submission of the petitioner may be correct but the organization can’t run if this is considered. In view of submission made above by both the parties we find that the opposite party has force in his argument and hence, the petitioner’s application is rejected and it is held that the additional impugned demand made by the Board is correct and justified which the petitioner is directed to pay the 3 same.” The petitioner has of course assailed the aforementioned findings and decision of the committee and his only line of attack is confined to increase of more than 25% in the demand as against the original tentative price. He would submit that it was never expected that the tentative price will go by such an enormous proportion and in this context he has specifically assailed charging of interest by the Board. The Board defending order of the decision of the three men committee has summarized its case in the counter affidavit in paragraph 21 to 24 and also referred to the judgment of the Division Bench of this Court dated 19.8.1992 in C.W.J.C. No. 941 of 1992 wherein identical question of charging interest has been answered. For better appreciation paragraph nos. 21 to 24 of the counter affidavit is quoted hereinbelow:- “21.That, as a matter of fact, tentative cost/price of single unit of its housing property is made by the Board at the very threshold on the basis of the estimate prepared for execution of that particular housing scheme and, as such, the same is indicated in the letter of allotment as tentative cost/price with condition to revise the same after taking into account the actual cost incurred by the Board in execution of the said scheme and after execution of the same final evaluation of the single unit of the allotted housing property is done by the Board on the basis of the actual expenses made by it towards the acquisition of the land utilized for the said scheme and development thereof as well as the actual cost incurred in construction of the houses/flats. 22.That in the backdrop as explained above coupled with the authority granted by the allottee/petitioner to the Board vide said Clause- 4 of the said Agreement dated 19.8.1987 4 (Annexure07), the Board made final evaluation/revision of the tentative cost/price of the flats constructed by it at Bahadurpur, Patna including the flat in question in the year 1998 at Rs. 2,03,200/- as on 31.3.1998 after taking into account the following factors:- (i) The actual expenditure incurred towards the acquisition of the land. (ii) The actual expenditure made towards construction of the 576 LIG flats. (iii) The actual cost incurred/tobe incurred towards development works like construction of roads, drainage, sewerage, water supply, external electrification, etc. (iv) Interest and other financial charges paid/payable by the Board to the financial institutions from where the Board had taken loan for execution of the said Housing scheme along with 0.5% administrative charges. 23.That the Board taking into account its liability to make repayment by it for execution of the Housing Scheme under the said flat has been constructed along with the agreed rate of interest to the concerned financial institution, decided to charge weightage average interest @ 12.25% per annum over the amount of the cost/price of the allotted flats from the concerned allottees including the petitioner till the date of final payment of the same. 24.That on account of the said final evaluation/revision of the cost/price of the flat at Rs.2,03,200/- as on 31.3.1998, made by the Board, the cost/price of the flat allotted to the petitioner was calculated at Rs. 39,490.51 paise say Rs. 39,491/- as on 31.1.1984 i.e, the month of allotment of the flat in question was made in favour of the petitioner in place of Rs. 43,000/- as indicated in the said letter of allotment dated 17.1.1984 as well as in the said Agreement dated 19.8.1987 (Annexures- 6 and 7 to the writ application under reply) by deducting the interest charged @ 12.25% per annum retrospectively with effect from 31.3.1998 to 31.1.1984.” The point in issue for decision of this Court would be whether the Board has acted in violation of terms and conditions of the agreement in issuing demand notice or any portion of the 5 demand made by the Board is beyond the terms and conditions of the agreement. Clause 4 (a) of the agreement between the petitioner and the Board had envisages as follows:- “That the total disposal price indicated above is according to the present estimate and hence tentative. Increase in the cost of the construction or development or due to increase in cost of land acquisition due to any decision/award of Court of law or legislation or due to increase in the cost due to final valuation or calculation or otherwise as per the decision of the Board shall be payable by the settlee either in installments thereof or in lump sum within the period decided by the Board. The settlee shall under no circumstances be entitled to demand any accounts relating to the cost or question or dispute it and this shall be fixed by the Board in its sole discretion.” Obviously, if the petitioner has any grievance in terms of the aforementioned Clause 4 (a) of the Agreement or its interpretation by the Board, remedy for the same also would be provided in Clause 25 of the Agreement which reads as follows:- “That on matters not specifically stipulated in the agreement or provided for in the relevant rules and regulations of the Board or in case any dispute, doubt or question arises between the settlee and the Board, then and in such event every such case shall be referred for arbitration to the Managing Director of the Board acting as such at that time and his decision in this regard shall be final and binding on both parties and shall not be liable to be question in any Court of law.” As a matter of fact in presence of such an arbitration clause the writ petition will not be not maintainable as has been held by Apex Court in the case of State of U.P. vs. Bridge & Roof Co. (India) Ltd., reported in (1996) 6 SCC 22, and again in the 6 case of ABL International Ltd. & anor. vs. Export Credit Guarantee Corporation of India Ltd. & ors., reported in (2004) 3 SCC 553 and this Court in an order dated 19th April, 2007 in L.P.A. No. 1157 of 2001 (Bihar State Housing Board Vs. Akhileshwar Kumar) disposed of on 19th April, 2007 (Annexure ‘B’ to the counter affidavit. The refusal of writ jurisdiction under Article 226 of the Constitution in a case where the parties are bound by an earlier agreement providing for arbitration by now is a well settled law. The Apex Court in the case of State of U.P. vs. Bridge & Roof Co. (India) Ltd. (supra) has held as follows: “ Further, the contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration. The arbitrators can decide both question of fact as well as questions of law. When the contract itself provides for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy- in this case, 7 provided in the contract itself- is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226.” The same law in fact has been reiterated by the Apex Court even in the case of ABL International Ltd. (supra) wherein it had been held as follows: “ It is well known that if the parties to a dispute had agreed to settle their dispute by arbitration and if there is an agreement in that regard, the courts will not permit recourse to any other remedy without invoking the remedy by way of arbitration, unless of course both the parties to the dispute agree on another mode of dispute resolution.” In fact in an exactly identical matter arising out of a similar agreement and demand of the Board itself the Division Bench of this Court in Akhileshwar Kumar (supra) had clearly held the writ application to be not maintainable in presence of same arbitration clause. The relevant portion of the order of the Division Bench in Akhileshwar Kumar (supra) is quoted hereinbelow: “ … … … In a very recent judgment rendered by the 8 Hon’ble Supreme Court, the Supreme Court has upheld the right of the appellant Board to claim increase in price due to increase in the cost of land acquisition or due to increase in the cost of construction and accordingly, we are of the view that the writ court was not correct in holding that the clause authorizing tentative price to be revised due to increase in cost of land acquisition or due to increase in cost of construction is unfair or unreasonable. In consequence thereof, since the conclusion is that the demands, as were challenged in the writ petition, were raised on the basis of the authority granted by the said clause, the same cannot be treated as stale claims lodged belatedly. Further more, the subject demands were bare claims and admittedly no steps had been taken subsequent to lodgment of such claims to enforce the same. The writ petitioner is contending that such claims are arbitrary claims. He is, therefore, contending that such claims sare unjustified claims. In other words, he is contending that such claims cannot be made in terms of the provisions of the subject contract. 9 Admittedly, the contract contains an arbitration clause. In the counter affidavit, as was filed by the appellant Board, which was over looked by the writ Court, it was specifically stated that inasmuch as the contract contains an arbitration clause the writ Court cannot decide whether the claims lodged by the appellant Board are correct or incorrect. We think that parties having chosen to take recourse to arbitration to sort out their disputes and differences pertaining to claims and counter claims arising out of the subject contract, they were not entitled to approach the writ Court to sort out the same, as was done in the instant case. In those circumstances, we would interfere with the judgment and order under appeal and would set aside the same and relegate the parties to arbitration. Accordingly, the judgment under appeal is set aside and the writ petition is dismissed with liberty to the parties to take recourse to arbitration in accordance with the arbitration clause contained in the said agreement.” Counsel for the petitioner as with regard to such 10 question of maintainability of the writ application vis-à-vis arbitration clause would submit that since the Board in the first round of litigation had never raised this question of arbitration, the Board is now stopped from raising this plea. In the opinion of this Court such submission of learned counsel for the petitioner has to be noticed for its being rejected. In the earlier round of litigation when the petitioner disputed the amount of the flat in question, this Court considering direction of the earlier Division Bench judgment concerning the similar grievances of a large number of allottees with regard to fixation of price had, in fact, observed that such grievance of the allottees should be looked into by the Committee who would be in a better position to examine the same. The State Government, in fact, had only implemented direction of the Committee and therefore, if earlier writ application was disposed of by giving liberty to the petitioner to approach the Committee that never meant that any terms and conditions of the agreement were obliterated/ annulled much less waived by the Board. The petitioner does not want to go into arbitration and has therefore tried to impress upon this Court that the element of cost on account of increase in interest is beyond the scope of Clause 4 (a) of the Agreement. The answer to such submission of the learned counsel for the petitioner lies not only in the counter affidavit but also in the earlier Division Bench judgment in C.W.J.C. No. 2724 of 1994, wherein the Division Bench itself had 11 held that since the Board has to arrange finance from the financial institution, the rate of interest charged by such financial institution and the liability created on account of such demand by the financial institution has to be born by the allottees. As a matter of fact, this very dispute was again considered by a Division Bench of this Court in order dated 19.8.1992 in C.W.J.C. No. 941 of 1992 (Annexure A to the counter affidavit) wherein this Court had held that charging of interest by the Board is not to earn profit but it has been done to meet its financial liability. Thus for the reasons indicated above, this writ application is dismissed with a liberty to the petitioner to take recourse to arbitration in accordance with the arbitration clause contained in the said Agreement. Abhay Kumar/Surendra. (Mihir Kumar Jha, J.)