AJN 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.194 OF 2006 IN WRIT PETITION NO.952 OF 2001 Apsara Development Corporation & Anr. .... Appellants Vs. Municipal Corporation of Greater Bombay & Anr. .... Respondents Mr. S.I. Memon for the appellants. Mr. N.A. Shaikh for respondent 1-BMC. None for respondent 2. CORAM : SMT. RANJANA DESAI & K.K. TATED, JJ. DATED : 19TH DECEMBER, 2008. ORAL JUDGMENT :- (Per Smt. Ranjana Desai, J.) 1. The appellants are the original petitioners in Writ Petition No.952 of 2001. They have challenged in this appeal order dated 7/2/2005 passed by learned Single Judge of this court disposing of Writ Petition No.952 of 2001. Respondent 1 is the AJN 2 Municipal Corporation of Greater Bombay and respondent 2 is the State of Maharashtra. 2. It is necessary to narrate a few facts. Appellant 1 is a partnership firm. Appellant 2 is it's partner. Appellant 1 is a developer. Appellant 1 entered into a development agreement with one Mr. Gawde – owner of plots of land situate at Dahisar (East). 3. It is the case of the appellants that they constructed building bearing No.G situate at Gawde Nagar, Dahisar (W), Bombay. The plans for the said building were approved by respondent 1 on 19/11/1981. The commencement certificate was issued on 20/2/1982 and layout was approved on 28/7/1984. The appellants appointed Architect Mr. K.I.Momin as their Architect whose appointment was accepted by respondent 1 on 21/5/1998. Mr. Momin submitted the commencement certificate on 22/7/1998. 4. A demand notice dated 5/3/1999 was issued by respondent 1 calling upon the appellants to pay the regularization penalty of Rs.6,88,450/-. The appellants made a AJN 3 representation dated 23/11/1999 to respondent 1 stating that the regularization premium was challenged keeping in view the market rates of 1998 and 1999. However, the work was carried out in 1990 to 1994 and, as such, the land rate of 1994 should be taken into account. The representation of the appellants was rejected. Respondent 1 issued a notice under Section 53(1) of the Maharashtra Regional Town Planning Act, (for short, “the MRTP Act”) dated 9/11/2000 threatening demolition of the said building on account of non-payment of penalty. It appears that flat purchasers of the said building filed a suit in the Bombay City Civil Court being Suit No.7368 of 2000 challenging the said notice. Ad-interim order was passed against respondent 1 on 22/12/2000 by the City Civil Court. Appellant 1 was joined as defendant 2 in the said suit. During the course of the hearing of the suit, learned Trial Judge directed the appellants to deposit an amount of Rs.1,00,000/- in the court within 8 days from the date of the order i.e. 30/1/2001. Learned Trial Judge restrained respondent 1 from enforcing notice dated 9/11/2000 for a period of 8 days. 5. The appellants accordingly deposited an amount of AJN 4 Rs.1,00,000/- in the Bombay City Civil Court on 9/2/2001. We are informed that the said amount has been invested by the City Civil Court in a nationalized bank at 8.5 % interest per annum. 6. By order dated 3/4/2001, the City Civil Court extended the interim protection for a period of two weeks after recording the statement of learned counsel for the appellants that the appellants would be challenging the Commissioner's order dated 29/3/2001 rejecting the appellant's representation. 7. On 18/4/2001 the appellants filed Writ Petition No.952 of 2001 challenging demand notice dated 5/3/1999 and notice issued under Section 53(1) of the MRTP Act dated 9/11/2000 and also letter dated 29/3/2001 sent by respondent 1 rejecting the appellants' representation. 8. The writ petition was admitted by this court on 23/4/2001. At the time of admission, learned Single Judge directed the appellants to pay an amount of Rs.2,00,000/- to respondent 1. We are informed that accordingly an amount of Rs.2,00,000/- has been paid to respondent 1 on 31/5/2001. AJN 5 9. On 7/2/2005, learned Single Judge disposed of Writ Petition No.951 of 2001. Learned Single Judge did not interfere with the demand notice as he felt that no case was made out for interference. Learned Single Judge noted that at interim stage respondent 1 was injuncted by an interim order in terms of prayer clause (b) from acting in pursuance of notice issued under Section 53(1) of the MRTP Act subject to the appellants depositing a sum of Rs.2,00,000/- with respondent 1. Learned Single Judge recorded the statement made by learned counsel for respondent 1 that the said amount has been deposited. He gave time only till 21/2/2005 to the appellants to deposit the balance of the charges demanded for regularization by respondent 1 vide notice dated 5/3/1999. Learned Single Judge observed that in the event the charges are paid respondent 1 should accept them and proceed to deal with regularization of the matter in accordance with law. He further directed that the appellants shall pay to respondent 1 interest at the rate of 12% per annum on the amount which has been demanded from 5/3/1999 until the date on which payment is effected. Since the facts of the present case are almost identical, learned Single Judge AJN 6 disposed of Writ Petition No.952 of 2001 in terms of his order in Writ Petition No.951 of 2001. It must be noted here that respondent 1 has not challenged the impugned order to the extent it grants 12% interest per annum. 10. We have heard learned counsel for the appellants at some length. He submitted that appellant 2 who is partner of appellant 1 is a senior citizen. His health is deteriorating and, therefore, he does not want to prosecute this appeal any further. He states that he wants to pay the amount as directed by learned Single Judge. In view of this, we asked learned counsel for respondent 1 to take instructions from his client. On instructions from his client, Mr. Shaikh, learned counsel for respondent 1 submitted that objection of respondent 1 is to the rate of interest. He submitted that a circular issued in 1996 requires that interest at 18% should be charged. We are not impressed by this submission. Admittedly, this circular has not been cited anywhere in any of the proceedings. In the affidavit in reply filed in the writ petition, there is no mention of this circular. A copy of this circular is not produced anywhere. It is not produced in this court also. Besides, part of the impugned order, which relates to 12% AJN 7 interest is not challenged by respondent 1. Therefore, we are not inclined to permit respondent 1 to raise this issue at this stage. 11. Since the appellants have accepted the impugned order it is now only a matter of calculation. We feel that calculation should be done and the appellants must be directed to pay to respondent 1 amount outstanding as on 31/12/2008. 12. The amount mentioned in demand notice dated 5/3/1999 is Rs.6,88,450/-. As per the impugned order, respondent 1 is entitled to interest at the rate of 12% per annum. Admittedly, on 9/2/2001, as directed by the City Civil Court, the appellants have deposited an amount of Rs.1,00,000/- in the City Civil Court. Thus, from 5/3/1999 till 9/2/2001, respondent 1 must get interest on Rs.6,88,450/- at 12% per annum. That comes to Rs.1,60,022/-. Since Rs.1,00,000/- were deposited in the City Civil Court on 9/2/2001, penalty amount got reduced to Rs.5,88,450/- as on 9/2/2001. As directed by this court an amount of Rs.2,00,000/- was handed over by the appellants to respondent 1 on 31/5/2001. Obviously, therefore, on that amount, interest stopped running from 31/5/2001. In any case, on Rs.5,88,450/-, respondent 1 is entitled AJN 8 to interest at the rate of 12% per annum upto 31/5/2001. That comes to Rs.21,474/-. Since, that amount of Rs.2,00,000/- was paid by the appellants to respondent 1, the penalty amount got reduced to Rs.3,88,450/- on 31/5/2001. Therefore, on that amount of Rs.3,88,450/- from 1/6/2001 till 31/12/2008, respondent 1 must get interest at 12% per annum. That amount comes to Rs.3,53,500/-. The amount of Rs.1,00,000/- which is deposited by the appellants in the City Civil Court has been invested by the City Civil Court in a nationalized bank. We are informed that interest is accruing on that amount at the rate of 8.5% per annum. Respondent 1 is entitled to interest at the rate of 12% per annum. Hence, the appellants will have to make good the difference. The amount of Rs.1,00,000/- was invested in the nationalized bank. Hence, on that amount till 31/12/2008, respondent 1 must get additional interest at 3.5% per annum. That comes to Rs.34,386/-. If the interest amounts are added to the balance penalty amount, the total comes to Rs.9,57,832/-. Respondent 1 will, therefore, be entitled to that amount. These calculations which we have made are reflected in the following chart. PENALTY & INTEREST COMPUTATION IN APPEAL NO.194 OF 2006 IN WRIT PETITION NO.952 OF 2001 AJN 9 AMOUNT DUE SINCE 05/03/99 Rs. 688,450.00 INTEREST @ 12% P.A. FROM 05/03/1999 TO 09/02/2001 707 DAYS 23 MONTHS 4 DAYS ON Rs.688,450/- 160,022.00 LESS: DEPOSIT WITH B.C.C.C. ON 09/02/2001 100,000.00 BALANCE 588,450.00 INTEREST @ 12% P.A. FROM 10/02/2001 TO 31/05/01 111 DAYS 3 MONTHS 2 DAYS ON Rs.588,450/- 21,474.00 LESS : DEPOSIT WITH MCGM ON 31/05/01 200,000.00 BALANCE 388,450.00 INTEREST @ 12% P.A. FROM 01/06/01 TO 31/12/08 2768 DAYS 7 YEARS & 7 MONTHS ON Rs.388,450/- 353,500.00 INTEREST @ 3.5% P.A. (i.e. DIFF BETWEEN 12% P.A. LEVIABLE INTEREST & INTEREST EARNED ON FD @ 8.5% P.A. PLACED THROUGH B.C.C.C.) ON Rs.1,00,000/- FROM 05/03/99 TO 31/12/08 3586 DAYS AJN 10 AMOUNT DUE SINCE 05/03/99 Rs. 9 YEARS 10 MONTHS APPROX. 34,386.00 TOTAL INTEREST PAYABLE 569,382.00 SUMMARY BALANCE PENALTY 388,450.00 ADD INTEREST UPTO 09/02/01 ON 688,450 160,022.00 ADD INTEREST UPTO 31/05/01 ON 588,450 21,474.00 ADD INTEREST UPTO 31/12/08 ON 388,450 353,500.00 ADD DIFF ON INTEREST ON 1,00,000 FROM 05/03/99 TO 31/12/08 34,386.00 957,832.00 The above chart has been accepted by learned counsel for the appellants and learned counsel for respondent 1 and they have signed on the same to the effect that the calculations are approved by their respective clients. The said chart is taken on record by us and marked “X”. 13. Learned counsel for the appellants says that the payment will be made by 31/12/2008. This statement is accepted. Needless to say that on the said payment being made, respondent 1 shall proceed to deal with the matter of regularization in accordance with law. 14. Respondent 1 will be entitled to withdraw the amount AJN 11 which is invested by the City Civil Court in Suit No.7368 of 2000 in a nationalized bank with interest accrued thereon without furnishing any security. Needless to say that if the appellants fail to pay the amount as directed by us today, to respondent 1, respondent 1 shall be at liberty to proceed against the appellants in accordance with law. 15. Appeal is disposed of. [SMT. RANJANA DESAI, J.] [K.K. TATED, J.]