IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 7909 of 2010 DATE OF DECISION : 08.11.2011 Estate Officer, Greater Mohali Area Development Authority, SAS Nagar, Sector 62, Mohali .... PETITIONER Versus Harpal Singh and another ..... RESPONDENTS CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE PARAMJEET SINGH Present: Mr. H.S. Brar, Advocate, for the petitioner. Mr. G.S. Sidhu, Advocate, for respondent No.1. * * * SATISH KUMAR MITTAL , J. The Estate Officer, Greater Mohali Area Development Authority, SAS Nagar, Sector 62, Mohali (hereinafter referred to as `the GMADA') has filed the instant writ petition for quashing the order dated 19.1.2010 (Annexure P-5), passed by the Joint Secretary to Government of Punjab, Department of Housing and Urban Development, who is the revisional authority under the Punjab Regional and Town Planning and Development Act, 1995 (hereinafter referred to as `the Act'). Vide the said order, the revision petition filed by respondent No.1 against the orders dated CWP No. 7909 of 2010 -2- 24.4.2009 and 12.8.2009 (Annexures P-3 and P4), passed by the Estate Officer; and the Additional Chief Administrator, GMADA, respectively, was partly accepted and the order dated 24.4.2009 (Annexure P-3), passed by of the Estate Officer, GMADA was modified to the extent that the amount of forfeiture was reduced from 10% to 4% of the total sale consideration. In this case, respondent No.1 had purchased SCF No. 18, Phase 9, Mohali, in an open auction held by the GMADA on 2.9.2008, by giving the highest bid of ` 3,92,00,000/-. On the fall of the hammer, respondent No.1 paid ` 39,20,000/- being 10% of the auction price. As per the terms of the auction, he was required to pay another 15% of the sale price within thirty days from the day of auction. Respondent No.1 paid the said amount within time. Thus, on payment of 25% of the sale price, i.e. ` 98,00,000/-, the allotment letter (Annexure P-1) was issued to respondent No.1 vide memo dated 4.11.2008. As per the allotment letter, 75% balance amount was to be paid in four yearly equal instalments, as per the schedule annexed with the allotment letter. Respondent No.1 was supposed to make payment of the first instalment on or before 2.9.2009. However, due to economic crunch and suffering of heavy loss in the business, and finding himself to be incapable to pay the first instalment, respondent No.1 moved an application (Annexure P-2) to the Estate Officer, GMADA, on 16.4.2009 (well before the due date of payment of first instalment), for surrender of the site and refund of the 25% amount, paid by him. CWP No. 7909 of 2010 -3- Vide order dated 24.4.2009 (Annexure P-3), the Estate Officer, GMADA, while considering the request of respondent No.1, ordered the resumption of the site along with forfeiture of 10% of the total sale consideration, including interest and penalty in favour of the GMADA under Section 45 (3) of the Act. Feeling aggrieved against the aforesaid order dated 24.4.2009, respondent No.1 filed appeal under Section 45 (5) of the Act. The Additional Chief Administrator, GMADA, vide his order dated 12.8.2009 (Annexure P-4) dismissed the appeal, while observing as under :- “Both the parties were heard and their contentions were considered and record perused. The contention of the appellant of being in financial crisis in order to avoid the payment of instalment is not sustainable. The appellant has failed to fulfill the conditions of the allotment letter. Accordingly the Estate Officer, GMADA, has passed the order dated 24.4.2009 keeping in view the conditions of the allotment letter. There is no merit in the case which warrants interference. As such the present appeal is dismissed.” Against the aforesaid orders, respondent No.1 filed revision petition under Section 45 (8) of the Act before the State Government, which has been partly accepted by the revisional authority, while observing as under : “I have heard both the parties in length and perused the record of the case placed before me during the course of hearing and gone through the facts and circumstances of the case. I have also gone through the list of cases submitted by the petitioner where the Revisional Authority has reduced the CWP No. 7909 of 2010 -4- forfeited amount of commercial sites sold through auction. The argument of the learned counsel for the petitioner has some force that the auction property is with the GMADA and moreover the GMADA has also utilised 10% of the forfeited amount for more than one and half year, the petitioner under the compelled circumstances surrendered the site because of losses suffered due to global recession. I have no doubt in accepting that the petitioner surrendered the site sincerely and honestly and there is no default on the part of the petitoiner and no instalment was due when the site was surrendered. No prejudice has been caused to the GMADA in accepting surrender of the present site. The Estate Officer in his order has no where justified the imposition of maximum forfeiture of 10% while accepting surrender. Keeping in view the facts and circumstances of the case I partially accept the present Revision Petition and set aside the orders of the authorities below. Keeping in view the heavy involvement of amount, the end of justice would meet by forfeiting 4% amount instead of total of 10% amount as forfeited by the Estate Officer while accepting the surrender. The Estate Officer, GMADA is thus directed to refund 6% and forfeit 4% amount deposited by the petitioner against SCF No. 18, Phase 9, Mohali.” The said order of the revisional authority has been challenged by the Estate Officer, GMADA, in this writ petition. We have heard learned counsel for the parties and perused the impugned order as well as the orders passed by the authorities below. Learned counsel for the petitioner – GMADA argued that respondent No.1 is bound by the terms and conditions of the allotment letter CWP No. 7909 of 2010 -5- (Annexure P-1). In Condition No. (viii) of the allotment letter, it was clearly mentioned that in case of breach of any condition of allotment or non- payment of any amount due together with the penalty, the plot or building, as the case may be, shall be liable to be resumed and an amount not exceeding 10% of the total amount of sale consideration, interest and other fees payable in respect of plot shall be forfeited as per the provision of Section 45 (3) of the Act. Learned counsel further argued that the said condition, which is in consonance with the provision of Section 45 (3) of the Act, is mandatory and in case, the allottee/transferee fails to make payment of instalments within time and in case, the order of resumption is passed, then forfeiture of 10% of the total sale consideration, including interest and penalty, is a necessary consequence. Learned counsel submits that merely because respondent No.1 has suffered loss in business due to financial crunch is no ground to reduce the forfeited amount from 10% to 4% of the total sale consideration. Therefore, the revisional authority has acted illegally, arbitrarily and without jurisdiction, while modifying the order of the Estate Officer, GMADA. Learned counsel further argued that such power of resumption and forfeiture, in case of default of payment by the allottee or transferee, has been upheld by various decisions of this Court and the Hon'ble Supreme Court. On the other hand, learned counsel for respondent No.1 argued that the extreme power of resumption and forfeiture is to be applied as a last resort, depending on the facts and circumstances of each case. While CWP No. 7909 of 2010 -6- exercising such power, the authority should take care of the intention, motive and hardship of the allottee/transferee in not making the payment. He further argued that merely on resumption of the auction site or its surrender by the allottee on account of financial hardship, 10% amount of the total sale consideration is not to be forfeited automatically. Before taking the decision regarding forfeiture of the amount, the allottee not only must be heard by the authority, but his intention, motive and hardship has also to be taken care of and considered. Learned counsel further argued that forfeiture of 10% of the total sale consideration, provided by the statute is the maximum limit. To that extent, the authority can forfeit the amount. But it is not mandatory that in each and every case, 10% amount of the total sale consideration has to be forfeited. The forfeiture amount can be less, but it cannot be more than 10%, which is the maximum limit. Learned counsel argued that in this case, the revisional authority while taking into consideration the facts and circumstances of the case, intention and motive of respondent No.1, particularly that when he surrendered the SCF, even the first instalment was not due and possession of the site was not offered to him, came to the conclusion that respondent No.1 has surrenderd the site in compelling circumstances, and has reduced the forfeiture amount from 10% to 4% of the total sale consideration. According to the learned counsel, when the revisional authority has exercised its discretion while reducing the penalty in a fair and reasonable manner and that too, by taking into consideration the facts and circumstances of the case, then such an order CWP No. 7909 of 2010 -7- should not be interfered in the writ jurisdiction of this court, particularly when no prejudice has been shown to have been caused to the GMADA on surrender of the site, because the GMADA has not only utilised 25% of the amount for more than one and half years, but even as per the order of the revisional authority, the GMADA will also get 4% of the total sale consideration, which comes out to be ` 15,68,000/-. After considering the submissions made by learned counsel for the parties, we do not find any ground to interfere in the impugned order. Undisputedly, in the present case, 25% (10% on the fall of hammer and 15% within thirty days from the day of auction) of the total sale consideration was deposited by respondent No.1 within time. Thereafter, as per the terms of the allotment letter, he was required to make payment of the remaining 75% amount in four yearly equal instalments, and the first instalment was due on 2.9.2009. However, on 16.4.2009, i.e. well before the date due for making payment of the first instalment and even before taking of possession of the auction site, when due to his weak financial position it was not possible for respondent No.1 to pay the remaining instalments, he surrendered the site to the authorities by moving an application to the Estate Officer, GMADA, with a request to accept the surrender and refund the amount already deposited by respondent No.1. His application was accepted and without providing him an opportunity of hearing, the order of resumption along with forfeiture of 10% of the total sale consideration including interest and penalty was passed by the Estate Officer, GMADA, CWP No. 7909 of 2010 -8- under Section 45 (3) of the Act, on 24.4.2009. In the order, it was mentioned that there is no provision of surrender of the site, therefore, the order of resumption was passed. A perusal of the order reveals that the Estate Officer, GMADA, has not given any reason for forfeiting 10% of the total sale consideration, which is the maximum amount of forfeiture prescribed in Section 45 (3) of the Act. This provision, in exercise of which the order of resumption and forfeiture was passed, reads as under :- 45 (3) If the transferee fails to pay the amount due together with the penalty in accordance with the order made under sub- section (2) or commits a breach of any other condition of transfer, the Estate Officer may, by notice in writing, call upon the transferee to show cause within a period of thirty days, why an order of resumption of the land 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 transfer of the land or building or both, should not be made.” (Emphasis added) Condition No. (viii) of the General Condition of the allotment letter is the re-production of this provision. A perusal of the aforesaid provision reveals that if the transferee fails to pay the due amount within time or commits a breach of any other condition of transfer, the Estate Officer may order for resumption of the land 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 CWP No. 7909 of 2010 -9- amount of sale consideration, interest and other dues payable in respect of the transfer. The order of resumption and forfeiture has to be passed after providing an opportunity of hearing to the transferee. When an order of resumption is passed in a given circumstance, the authority can also order the forfeiture of the whole or any part of the money paid in respect thereof, but such amount shall not exceed 10% of the total sale consideration. Thus, 10% amount of the total sale consideration is the `maximum' limit of forfeiture. The authority, in a given case, may order for forfeiture of less amount or even, in a given case, may not order for forfeiture of any amount. The Estate Officer is required to exercise the discretion reasonably and pass the order of forfeiture, after full application of mind and taking into consideration the facts and circumstances of each case. While dealing with such provision, provided in the Capital of Punjab (Development and Regulation) Act, 1952, the Hon'ble Supreme Court in Teri Oat Estates (P) Ltd. Versus U.T., Chandigarh and others, (2004) 2 Supreme Court Cases 130 has observed that the drastic power of resumption and forfeiture should be exercised only as a last resort. The question as to whether the extreme power of resumption and forfeiture has rightly been applied or not will depend upon the factual matrix of each case. Each case may, therefore, has to be viewed separately. The action of the Estate Officer and other statutory authorities having regard to the factual matrix of each case must be viewed from the angle as to whether the same attracts the wrath of Article 14 of the Constitution of India or not. It was CWP No. 7909 of 2010 -10- further held that before passing such an order, it is mandatory to establish dishonest intention or motive on the part of the allottee/transferee in not making due payment and where such fact has not been established, recourse to the drastic power of resumption and forfeiture should not be resorted. It was further held that while passing the order of resumption and forfeiture in exercise of the statutory power, hardship faced by the parties should be considered, while applying the doctrine of proportionality. It was held that “By proportionality, it is meant that the question whether while regulating exercise of fundamental rights, the appropriate or least restrictive choice of measures has been made by the legislature or the administrator so as to achieve the object of the legislation or the purpose of the administrative order, as the case may be.” Under this principle, the Court is required to maintain a proper balance between the adverse effects on the rights, liberties or interests of the parties. In Jagmohan Singh Versus State of Punjab and others, (2008) 7 Supreme Court Cases 38, the Hon'ble Apex Court again while dealing with Section 45 (3) of the Act has held that the power of resumption and forfeiture should be taken recourse as a last resort and action of the statutory authority is required to be judged on the touchstone of Article 14 of the Constitution of India. The principle laid down in Teri Oat Estates (P) Ltd.'s case (supra), i.e. the doctrine of proportionality, has also been followed by the Hon'ble Apex Court in Sandeep Subhash Parate Versus State of Maharashtra, (2006) 7 SCC 501, Jitendra Kumar Versus State of Haryana, (2008) 2 SCC 161 and Managing Director, Haryana CWP No. 7909 of 2010 -11- State Industrial Development Corporation and others Versus Hari Om Enterprises and another, (2009) 16 SCC 208. In the light of the aforesaid principles, if we examine the impugned order, passed by the revisional authority, in the facts and circumstances of the case, we find that it is neither illegal, irrational or suffering from procedural impropriety, nor is exceeding the jurisdiction. As indicated above, when the order of resumption and forfeiture was passed by the Estate Officer, GMADA, respondent No.1 was not a defaulter. In the life of a person, there may be hundreds circumstances, when he fails to fulfill his commitment due to financial hardship. In the present case, due to financial crunch and suffering of loss in the business, when respondent No.1 was not able to fulfill the commitment of the agreement with the GMADA, then without taking possession of the site and without making default in making payment of any instalment, he approached the Estate Officer, GMADA, by moving an application explaining his circumstances to surrender the site. The said application was accepted and the order of resumption and forfeiting 10% of the total sale consideration, including interest and penalty in favour of the GMADA was passed under Section 45 (3) of the Act. In this case, the Estate Officer had passed this order, without affording opportunity of hearing to respondent No.1 and without giving any reason. In the given circumstance, the statute provides a discretion to the Estate Officer to order for forfeiture of the amount upto to the extent of 10% of the total sale consideration. In the present case, the Estate Officer has failed to exercise CWP No. 7909 of 2010 -12- his discretion in a reasonable manner. It is neither the case of the GMADA that respondent No.1 has dishonestly surrendered the plot with an ulterior motive nor there is any such evidence. Therefore, the revisional authority, by keeping in view the facts and circumstances of the case as well as the heavy amount of the total sale consideration, has exercised the said discretion, while reducing the amount of forfeiture from 10% to 4% of the total sale consideration. In this case, respondent No.1 has surrendered the site within one year without any loss caused to the other side, as noticed by the revisional authority. He was not handed over possession of the auction site and thus, he has not enjoyed the fruits of the site even for a single day. Learned counsel for the petitioner could not point out that the forfeiture of 4% of the total sale consideration is less than the damage suffered by the GMADA due to surrender of the site by respondent No.1. The Estate Officer neither in his order nor in the pleadings before this Court has given any fact or figure with regard to suffering of any damage by the GMADA. Thus, in the absence of any material, the Estate Officer was not justified in forfeiting the maximum 10% of the total sale consideration. Learned counsel for the petitioner further argued that forfeiture of 10% amount, as provided in the statute as well as the terms and conditions, is automatic and is a necessary consequence of the order of resumption. We do not accept this contention. In the statute, a discretion has been given to the Estate Officer to pass an order of forfeiture in case of resumption of a plot due to non-payment of the amount, but the forfeiture CWP No. 7909 of 2010 -13- amount in no case shall exceed 10% of the total amount of sale consideration. Therefore, it cannot be accepted that with the passing of the resumption order, the Estate Officer is bound to order for forfeiture of 10% of the sale consideration as a necessary consequence of the order of resumption. In Peteti Subba Rao Versus Anumala S. Narendra, (2002) 10 SCC 427, the Hon'ble Supreme Court, while interpreting the similar clause contained in Section 40 (1) of the Stamp Act, 1899, has held that the restriction imposed on the Collector in imposing the penalty amount is that under no circumstances the penalty amount shall go beyond ten times the duty or the deficient portion thereof. That is the farthest limit which means that only in very extreme situations the penalty need be imposed up to that limit. The Collector is not required by law to impose the maximum rate of penalty as a matter of course whenever an impounded document is sent to him. He has to take into account various aspects including the financial position of the person concerned. In our opinion, in the present case, the Estate Officer, without providing an opportunity of hearing to respondent No.1 and without applying his mind, has straight-way ordered for forfeiture of 10% of the sale consideration. In the given facts and circumstances of the case, the said order has been modified by the revisional authority by reducing the forfeiture amount from 10% to 4%. In our view, the said order is a reasonable one, which has been passed by the revisional authority while taking into consideration the doctrine of proportionality and the facts and CWP No. 7909 of 2010 -14- circumstances of the case. In our opinion, the said impugned order does not require any interference by this Court in the writ jurisdiction. Dismissed. ( SATISH KUMAR MITTAL ) JUDGE November 08, 2011 ( PARAMJEET SINGH ) reena/ndj JUDGE