1 f 66 e RSA No31of2009 111 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No310f2009 DateofDecision October 2009 HaryanaUrban DevelopmentAuthorityand another m Versus 0 C Pawan Kumar Bhalla I t5 CORAM HONBLE Nn2 JUSTICE HEMANT GUPTA I Z 1 e Whether Reporters of local papers may be allowed to see the r 2 To be referredto the or not2 3 Whether shouldbe reported in theDigest2 08 Present Ms Preeti Khanna Advocate for the W2 Shri MK Sood Advocate for the Z HEMANT GUPTA J OraO The defendant 1S 111 second appealaggrievedagainstthe judgment and decree passedby the Courts below wherebysuit for declarationchallenging the order of of kiosk No1270 Sector7 Faridabad vide orderdated 202001 was decreed PlaintifPawan Kumar Bhalla was allotted above said kiosk in an open auction for a total sum ofRs910001 vide allotment IV letter dated 24 01 988 The physicalpossessionof the booth was handed over on 52 1996 on depositof 250Io of the total sale Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 67 RSAN0310f2009 121 consideration The plaintiffwas to depositthe balance 75Io of allotmentpricein ten halfyearlyinstalment alongwith interest 10Io but the same was not which led to the order of resumption on 201 2001 The plaintiffallegedthat such is without following the mandatory under HaryanaUrban AuthorityAct 1977 for short the Act l and that no 0 of hearing was ever grantedbythe defendants It was also C contendedthatthe defendants have illegally and wronglycalculated C5 the amount due by imposing interest which is againstthe I termsofthe letterofallotment The defendantsraised an objection that the Civil Court has r no jurisdiction to entertain and decide the suit in terms of Section50629 08 of the Act It was also pleadedthat the plaintiffdid not pay the amount due relatingto the site in disputewillinglyand that interest m7 Z 10 has been imposedin accordancewith the terms of the letter of allotment The learned trial Court decreed the suit holdingthat the defendants never served notices under Section 17 of the Act before passingof the order Therefore the order of was set aside However the leamed first Appellate COUrt found that the documents Marlo2 Markm8and Mark Exhibit DGI producedby the plaintiffshow that the plaintiffhas been recelvlng notices from the respondents from tlme to time The plaintiffwas 11 givenampleopportunities to make paymentofthe balanceamount vide 4 Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 68 C C1 RSAN0310f2009 131 1 notlces but still the plaintifffailed to avail the of hearingexcept depositing a sum of RsA00001 on 29 1996 However it found that interest demandedat the compound rate and for the periodeven when possession was not deliveredto the plaintiff rend6rsthe order of illegal It was found that since the m C bylaw is not followed therefore the Civil Coun 0 has to entertainthesuit C It is the case ofthe plaintiffin theplaintitselfthat he could C5 not deposittheamount in timedue to unavoidablecircumstancesin the I familyThe plaintiffhas claim of interest 18Io by the defendants as the same was said to be againstthe Policy of the r defendants The letterof allotment produced bytheplaintiffis Mark I a5 Clause 5 of such letter of allotment paymentof balance amount ofRs682501 within 60 daysor in ten half yearlyinstalments 7 Z alongwith interest 10Io Vide a handwrittennote a condition was that in case of delayed paymentinterest 18Io pa shall be The handwrittennote also recitesthat the ofthe site can be had on any workingday I have heard leamed counsel for the partieson the followingsubstantial questions oflawl 1 Whether the defendants can claim interest 18Io on the balance 75Io of the sale consideration2 2 Whether the order of resumptionpassedby the Estate Offlcer under the Act can be said to be illegalbythe Civil Court in exerciseofits power of Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 69 ID RSAN031of2009 41 judicialreview for the reason that the interest claimed 18Iois unfair or not 3 Whether the jurisdictionof the Civil Court 1S barredin terms ofSection 50 ofthe HaryanaUrban AuthorityAct 19777 Learnedcounsel for the has argued thattheclaim of interest 18Io 1S 111terms of condition of allotment 0 Evenif such condition is not taken into considerationthen such rate of C3 interestis claimedfrom an allottee so as to mitigatethe hardship which C5 I the allottee may suffer on account of of booth which is a 1 natural consequence of the noloayment of the balance sale Z consideration Since the of the booth has serious civil consequences therefore before order of 1S passedan I 08 is givento an allotteeto pay the balance amount alongwith interest at a rate higherthan the rate of interest for the 7 Z paymentregularlySuch claim of interest is to ensure timely Qm of the paymentof scheduleof instalments Claim of such interestcannot be said to be in view ofthe Honble Court judgment ln Secv BhubaneshwarDevelopment Authoritv V Susanta Kumar Mishra 20094 Court Cases 684 wherein it was held to the followingeffectl 13 It is no doubt true that when the defaulted instalment lll entirety1S subjectto interest the 1 interest componentof the defaulted instalment 1S also tO interest To that limited extent 11 there may be chargingof interest upon interest Chargingof such interest on the interest partof the Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 70 1 RSAN031of2009 51 instalmenton default in paymentofthe instalment at a reasonablerate from the dateof default cannot be termedas chargingof interest in regard to the entire dues It is onlya provisionto ensure that the dues are paidpromptly and to avoid misuse of the concession given by pennitting paymentin instalments But for such a provision lesseeslallotteeswho have already been given 0 will be temptedto delay payments C therebyleadingto continuous defaults A statutory I CD authorityworkingon nofltmno4oss I basis Call ill afford to permitsuch continuous defaultsby the lesseeslallotteeswhich will paralyse Z their very inctioningtherebyaffectingfuture activities for the benefit of other membersofthe generalpublic 53 I 08 It is also contendedthat a Division Bench of this Court lIl JagdishParsad Ve Stateof Harvanaandothers 1CivilWrit Petition No 7 Z 17046 of 2006 decided on 2502007 1 has rlsed to interfereagainst the order of resumptionpassedin the year 1993 It was held to the followingeffectl Having heard the leamed counsel for the partieswe areofthe opinionthat the law laid down bythe Apex Court does not in any way helpthe petitioner as the facts of this case reveal that even thoughthe booth Slte was allotted to him in the year 1987 he failed to make payment owardsits pricefrom 1988 to 1995 Even thereafter as per the petitioners own showing he madepaymentofthe instalments in the year1995 1996 and 2000 The stood resumed in the year 1993 Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 71 1 RSA No 31 0f2009 61 and it was in theyear 2000 that the petitioner assailed theorder byway ofa civil suit In view of thesepeculiarfacts as also the fact that the site alreadystood resumed 111 the year 1993 on valid ground ofnon paymentofdues there is no reason for us to exercise our equitablejurisdictionunder Articles 2261227 of the Constitution of India r when the order of assumed 0 finalityin 1993 itself with the flrst challengebeing C madein 2000 muchbelatedly 0 Hence the writ petitionis dismissed Learned counselfor the also pointsout that vide Z the judgmentrendered in Mohan and others Ve Haryana Urban 0 DevelopmentAuthority Panchkula and another f Civil Writ Petition I No 3737 of 2007 decided 852007 a Division Bench of this court 08 disposedof number of writ petitionschallengingchargingof 7 Z compound lnterest on the delayedpaymentof additional priceof the plotsThe said writ petitions were disposed ofwith the directionto the HaryanaUrban Authorityto uniformlyapplyguidelines issued in the case of Gian Inder Sharma Ve Haryana Urban DevelopmentAuthoritv and another 200319PLR 140 Followingthe aforesaidorder a Division Bench of this Court in Smt Aniu Bala and another v Harvana Urban Development Authority Panchkula and another Civil Writ Petition No 3916 of2008 decided on 14320081 allowed the writ petitionThe challenge ltl the aforesaidwrit petition YV was also to the claim of compoundinterest However in SLP No 18595 of 2008 preferredagainstthe order dated 1432008 in Smt Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 72 1 RSA No 31 0f2009 1 AniuBalas case supralthe order passedby this Coun has been stayedbythe Honble Supreme Court On the other hand learnedcounsel for the has relied upon Shri Brii Bhushan Sharmaand another v The Estate Officer U T Chandigarh and others2000619 PLR 94 Teri Oat Estates 1 P9 Ltd v U T Chandigarhand others 000492Supreme Court Cases 0 130 Glvl Worsted Spinning Mills OPl Ltd Ve Haryana Urban C Develotoment Authoritv 199419PLR 268 and Roochira Ceramics V C5 I HUDA and others 9 Court Cases599 Z I have heard learnedcounsel for the partiesat some length and have also gone through the record ofthe case lhe learned counsel for the hasreferred to letter I 08 of allotment wherein there is a hand written note to the effect that tnterest 18Io pa would be payablebut the matter is being em Z examined as if such condition was not in existence in the letter of ll allotment As per the facts on record it is apparentthat the plaintiff has failed to complywith the terms and conditions of the allotmentas he has not deposited any instalment which falls due in respectof the balance 750Io of the sale consideration The only and necessary is that the defendantsbecame entitled to resume the plot But since of plot has been held to be a recourse as a last resort as it affects the civil rightsof the allottee therefore an 1S grantedto an allottee to depositthe balance sale Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 73 RSAN0 31 of2009 considerationalongwith interest which is at a rate higher the agreedrate of interest in the letter of allotment The agreedrate of interest 1S for the intalmentsto be paidon due dates But if thereis default lIl of instalmentsthe claim of interest at a rate higherthan the rate of interest providedfor paymentof instalments 1 cannot be said to be unjustifiedThe rate of interest for paymentof 0 balance intalments ls a concession givento an allottee to make the C n depositof the balance sale considerationwhereasinterest 18Io is I C5 beingclaimed to ensure the due of the termsof allotment and also to compensatethe defendant for delayedpaymentof the Z instalments C A Full Bench ofthis Court in Bakshish Kaur Saini v Union a5 Territory Chandigarhand others 199362PLR 378 was seized of an that if unauthorised constructionis not demolishedwithin six wma months in terms of Section 15 of the Capitalof Punjab and Act 1952 such constructlOll stands It was held that the contraventionof the Rules lead to different and distinct The first was issuanceof a notice to alter or demolish the buildingin terms of Section 15 of the Act and on failure the Chief Administrator was authorised to have the buildingdemolished Secondlythe contravention of the BuildingRules has been made a punishableoffence in terms of Section 15 and finally there 1S of site or buildingand forfeiture of whole or part of the 991 moneypaid in terms of Section 8A of the Act It was held to the Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 74 RSAN0 310f2009 followingeffect 15 It is no doubt true that in terms of the first provisoto Section 15 of the Act a time limit has been imposedfor the issuance of notice upon the owner for demotion of the allegedunauthorised constructionand no such notice can therefore be 1 issued alter this time limit has expiredbut as pointedout earlier issuanceof such notice is but one 0 of the three consequences that can flow from C contravention of the provisions of the Act and the C5 rules to erectlon of building The I defaulting owners liabilityfor action againsthim Z under Sections8A and 15 namely ofthe site forfeiture and fine would still subsist It cannot r therefore be said that by mere lapseof time namely I SlX months after the of the unauthorised 08 constructionthatit would stand legalised In view of the aforesaid judgmentit can safelybe 7 Z concluded that ifthere is violation ofterms and conditions ofthe leuer of allotment the Haryana Urban Authority can impose penaltyand recover the defaultedamount in terms of Section 16 of the Act and also resume the plotand buildingin terms ofSection 17 ofthe Act The fact that instead of of plot the interest on the defaultedamount is claimed which cannot be said to be unreasonable and unjustified In fact a Division Bench ofthis Court in Smt Kanta Devi Budhira v State ofHarvanathroughtheCommissionerand Secretary Vv to Government Harvana and others 2000 PLR 698 has considered Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 65 75 1 RSAN0310f2009 the claim of interest 18Io on the defaulted amount and found the same to be within the scope of the powers of HaryanaUrban Authority In Ram Kishan Gulati Ve Stateof Haryana PLR 119 a Division Bench ofthis Court hasconsideredthe circular dated m 15 1987 issued by I4UDA interest on instalments of 0 plotholder The said circular which is in the aforesaid 3 judgment reads as underl C5 HaryanaUrban Authority I SCO No 841 Manimajra No HUDAAcctts7113981408 Datedl15187 Z To f All the Estate Offlcers HUDA in the Statel c6 Subjectl Revised rates of intereston instalmentsof plotholder 7 It was under the active consideration of the Authorityto chargehigherrate of interest on the CL delayedpaymentsIt was observed that the recovery of enhanced and instalmentsare not beingeffectedfrom the in time because of Oower rate of interest The matter has been examined in detail and it has been decided that followingrates of interest may be chargedfrom the who do not make the paymentin tlme a Normal rate of interest 10Io Pee b9 interest for delayedpayment of instalments 18IoPee 6whichinclude 10Io pa normal interest Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 76 1 1 RSAN0 310f2009 111 J Due date means the last day on which the falls due Thus interest 18Io pa is to be if paymentis made after even one dayafter the due date However after the expiryof the one yearfrom the due date the maybe initiated In the case of amount due in account of 1 Enhanced the interest patternof 0 charging10Io interest from the due date will C continue as such I C5 One notice should be issued to the plotholder I regardingchargingof this interest This notice may e be issued after the due date if instalment has not been received These instructionswill come into force with immediateeffect I Please its receipt Sdl a5 Controller ofFinance for ChiefAdministrator HUDA 99 7 Z The decision contained in the above circular tl was reiteratedin the 37 meeting ofthe HUDA held on 2931988 The relevant extract ofthat decision is reoroduced belov It was further decidedthat the paymentschedule 111 respectof residentiallindustrial plots will be as under i910Iobid money at the fall ofhammer ii9150Io within 30 daysfrom the date of issue of allotment letter and iiibalance 75Io ln SlX half yearly instalments However for paymentln instalments interest 141 10Io per annum may be chargedfrom the date of offer of with provisionto charge18Io Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 77 Iel RSAN031of2009 1121 1 delayed payments 99 interest on The said Bench also consideredthe judgment in Haryana UrbanDevelopmentAuthorityv Mls Roochira Ceramics 99792116 PLR 512 SC9 and the memo dated l2A 1999 issued by the Chief Administratorin respectof directionto charge10Io tnterest on delayed 1 r paymentThe validityof said circular was consideredon the basis of 0 earlier of the Court in Aruna Luthra v State of Haryana C 199829 PLR 687 and Manu Jain v HUD A 1CWPNo 4405 of 1998 C9 decided on 2A1998 1 It was held to the followingeffect I 641t may be mentionedthat the SLP filed by the Z HUDA againstthe order in Ashwani Puris case was dismissed lll limine by the Supreme I Court on 7A997 None ofthese decisions have any 08 bearing on the issue of rate of interest payableby the defaultersor those whose plotsare resumeddue to e nolfulfillment of the conditions of allotment Z Therefore the Chief Administrator was clearly in error when he issued the memo dated 12A 999 In any case that memo cannot be made basis for grantingrelief to the by ignoringthe policyframed by the A and also the fact that chargingof interest 18Io will be deemedto have beenupheldbythe Supreme Court in the case ofMls Roochira Ceramics 6supra9 39 The said view was reiterated in Smt Kanta Devi Budhiraiascase supralwherein it was held to thefollowingeffectl 16 By applyingthe ratio of Ram Kishan Gulatis case supra to the case of the we hold Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 78 RSAN0 310f2009 131 that the decision of the to chargelnterest 18Io from the alltotees for the periodof default doesnot suffer from any legalinfirmity 17 However there is ment 111the argumentof Shri Singh that the cannot charge interest from the petitionerNeither 1 the Act nor the 1978 nor the resolutions passedby the FA empower No 2 0 and 3 to chargecompound interestfrom the allottees C lIl respect of the periodof defauIt Therefore to this I C5 extent reliefdeservesto be givento the allottees 77 I In Haryana Builders Limited v The Harvana Urban Z DevelotomentAuthoritv and others AIR 2003 Punjaband Haryana48 n tr followingthejudgment in Smt Kaiita Devi Budhiraiascase and RC I Gulatis case supra9it has been held to the followingeffect by a a5 Division Bench 7 10 We have consideredthe submissions Z and have gone through the judgment in Kanta Devi Qm Budhirajas case supra In our opinionthe levyof compound intereston the instalmentsof the balance priceis liable to be declaredas void becausethe Act and theRegulations do not providefor the same l l In Kanta Devi Budhirajas case 6 2000 125J Pun LR 6989supra9the Court referred to the two decisions in Ram Kishan Gulati V State of Haryana 20009125 Pun LR 119and Aruna Luthra v State of Haryana 19989119 Pun LR 687 and upheldthe decision of HUDA to charge18Io interest on the 101 delayedpaymentof instalmentsof pricebut declared that in the absence of any statutoryprovisionthe Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 1 79 r RSAN0 310f2009 1141 cannot chargecompound 12 There is no disputebetweenthe thatthe specialLeave Petition flled by A in Kanta Devi Budhirajascase supra was dismissed by the Supreme Court Therefore the order passedby the HighCourt will have to be deemed to have become 1 final the levyofcompound interest on the amount due from the petitioner is liable to be 0 declaredillegalandquashed 91 C in Mohans case Gian Inder Shannascase C5 and Smt Aniu Balas case supra are the judgmentswhere the challenge wasto the levyofinterest and ofthe same and Z not the ordersof In Roochira Ceranlics v HllDA and 0 others20029 9 SupremeCourt Cases 599 on a I 08 application the interest 10Io was found to be leviabIe inview ofan earlier order in Harish Kumar Viria v State ofHaryana RCR a7 Z 6Civil9168 6PtH9 The said order 1S lIl the peculiarfacts of that case Qm and in exercise of the powers conferred under Article 142 of the Constitutionof India In Brii Bhushan Sharmas case supra L the alloee had made paymentof substzntialamountof instalmentand the full premiumof the plot was received by the authorities therefore lt was found thatthe order IS harsh In Teri Oat Estates Pl Ltds case supralwhile noticingthe power it was held whether the extreme power of and forfeiture has rightly been appliedor not will depend upon the factual matrix obtaining 111 each case Each case may therefore haveto be viewed separately and Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 80 RSAN0 31 of2009 1 no hardand fast rule can be laid down therefor It needs to be examined whether the factual matrix attracts the wrath Article 14 of the ConstitutionofIndia It was also held that ifthe intentionofthe allouee 1S dishonestor with an ill motive and if the allottee does not makeany payment in terms of the allotment or the statute with a dishonestview 1 or any dishonest motive then power of can be taken 0 recourse to C Tested on the aforesaidprinciples of law presentis a case C5 wherethe plaintiffwas to depositthe balance sale considerationin ten half yearlyinstalments It was only the interest part which was Z from the date of offer of The plaintiffhas not any instalment as per the schedule givenin the letter of 08 allotment He has only RsAO0001 upto 29 1996 The possession has been taken in February1996 Thus the plaintiffwas in 7 Z of the propertyallotted but has not paidthe balance sale 0 considerationtill the order of was passedThe order of resumptionwas passedafter givinghim of hearingwhich flndinghas been retumed by the learned first AppellateCourt Thus before passingofthe order an opportunitywas given to the plaintiffto pay the defaultedamount alongwith instalments Such claim was to mitigatethe consequence of Therefore on the first substantialquestion of law it is held that the appellant cannot claim compound interest on account of nonoaymentof balance sale v consideration but simpleinterest 18Io can be claimed from the Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 81 RSAN0 310f2009 161 allottee Anotheraspectthat needs to be examinedis the extent of powerof the judicialreview of the Civil Court Does the Civil Court acts as a Court of appealand thus could sit over the decision as an Authority and to exercise the powers ofAuthorities under the 1 r Act or will onlyexaminethe decisionmakingprocess2 0 It is well settledthat the scope of the judicialreview 1S C3 I limited to the deficiencyln decision makingprocess and not the C5 decision itself The Honble SupremeCourt while dealingwith such aspectin Union of India and anotherv KG Soni 200616 Z Court Cases794 has held to the followingeffec 14 The common thread runningthroughin all these decisions is that the court should not interfere 08 with the administrators decision unless it was illogicalor suffers from or 7 Z was shocking to the conscience of the court in the sense that it was in defiance of logic or moral standards In view of what has been stated in Associated Provincial Picture Houses Ltd V Corporation 1 KB 223 the coun would not go into the correctness of the choice made bythe administratoropen to him and the court should not substitute its decision to that of the administrator The scope of judicialreview is limited to the deficiency in thedecision makingprocess and notthe decision 95 11 Similar is the decision of the Honble SupremeCourt in Bachan Singh Ve Union of India and others 620089 SupremeCourt Gupta Suruchi 2012.11.21 12: 51 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:00 I attest to the accuracy and integrity of this document 82 RSAN0 31 of2009 171 Cases 161 wherein it hasbeen held to the followingeffect1 64eeeItis