Civil Writ Petition No. 18542 of 1991 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No. 18542 of 1991 Date of decision : 26.07.2011 Darshan Lal Sachdeva ...Petitioner Versus U.T., Chandigarh others ...Respondents CORAM: HON'BLE MR. JUSTICE RANJIT SINGH Present: Mr. Rakesh Gupta, Advocate, for the petitioner. Mr. Sanjeev Ghai, Advocate for the respondents. RANJIT SINGH J. The petitioner is aggrieved against the order whereby allotment of SCO site No. 413-414, Sector 35-C, Chandigarh was cancelled besides forfeiting 10% amount of the premium vide impugned order. The petitioner alongwith Smt. Savitri Devi, Dinesh Kumar and Munit Kaur had purchased SCO site No. 413-414, Sector 35-C, in an open auction held on 28.10.1979. At that time, the site was sold at the premium of ` 3,30,000/-. The petitioner paid 25% of the amount. The Estate Officer, Chandigarh issued an allotment letter confirming the lease of the site in favour of the petitioner containing all terms and conditions mentioned in the allotment letter. Copy of the allotment letter is annexed with the petitioner as Annexure P-1. The balance amount of 75% of the premium together with interest and ground rent was payable in three equated annual instalments each amounting to ` 94,309.88p. The site carried the Civil Writ Petition No. 18542 of 1991 2 ground rent of ` 8250/- per annum. On 18.05.1983, the Estate Officer issued a show cause notice under Rule 12 (3) of the Chandigarh Lease Hold of Sites and Building Rules 1973 (hereinafter referred to as 'Rules') due to non payment of first, second and third instalments and ground rent. The petitioner was, therefore, called upon to pay the amount of instalments together with ground rent and interest at the rate of 12% per annum within a period of 30 days. In the Show Cause Notice, it was also proposed as to why penalty, which may extend upto 10% of the amount due may not be recovered besides the outstanding instalments/ground rent. Thus, the petitioner was specifically required to show cause to explain as to why penalty be not imposed and that if he failed to do so it shall be presumed that he has nothing to say in the matter and further action should follow. The petitioner would have a grievance that instead of proceeding to impose some penalty as proposed in the show cause, the respondents passed the order of cancellation of lease site and imposed 10% of the premium and ground rent and interest upto the date of cancellation i.e. 26.08.1983. The petitioner has explained that he had to bear a heavy amount of ground rent and interest after purchase of site and for construction of the building. The petitioner has further stated that he could not get the expected rent. The petitioner also suffered the financial set back due to outbreak of fire in the building (Basement) and the entire building was heavily damaged. Still the petitioner was able to arrange sum of ` 40,000/- which he paid by way of demand drafts dated 19.09.1983 and 20.09.1983 but the Estate Officer had Civil Writ Petition No. 18542 of 1991 3 still proceeded under Rule 12 (3) of the Rules for cancellation of the sites without affording any fair opportunity of being heard. The petitioner pleads that the Estate Officer acted against the provisions of rule in cancelling the lease of the site. The petitioner filed an appeal against this order before the Chief Administrator, Chandigarh who conditionally restored the lease of the site and granted time to the petitioner to make payment. He, however, maintained part of the order passed by the Estate Officer, Chandigarh relating to award of forfeiture of amount as ordered. The petitioner went in revision against this order before the Chief Commissioner, Chandigarh. This came up for hearing before the Advisor to the Administrator exercising the powers of the State Government under the Rules. The Advisor, however, dismissed the revision petition. As per the petitioner, his legal submissions were completely ignored which were based on the proviso of Rule 12 (3) of the rules. The petitioner would also aver that during the pendency of the appeal before the Chief Administrator, the petitioner had deposited sum of ` 1,80,000/- vide demand draft on 15.04.1989 and ` 50,000/- vide demand draft on 05.12.1989. These amounts were accepted by the Estate Officer even during the subsistence of cancellation order. The receipts for the amount was duly issued. The petitioner had then filed a review petition before the Chief Administrator to grant him time to clear the dues but it was dismissed on 18.10.1991. The petitioner has made reference to his further sufferings for which he could not deposit the entire amount. The Civil Writ Petition No. 18542 of 1991 4 petitioner states that still he had deposited sum of ` 2,30,000/- which had been accepted. It is against these orders that the petitioner filed the present writ petition before this Court. Initially, the writ petition filed by the petitioner was dismissed by this Court on 17.12.1991. The petitioner had subsequently filed a review application mainly pleading that the Estate Officer had only proposed penalty in the show cause notice and had not proposed cancellation of lease. Without any notice, the lease was cancelled when the petitioner had failed to deposit the amount. While making submission in support of the review petition, the counsel had pointed out at that stage of hearing of the writ petition proxy counsel had appeared when writ petition was dismissed and so he could not properly assist the court about the correct legal and factual position. Notice in the review application, accordingly, was issued on 07.05.1992 and dispossession of the petitioner was stayed. The case then came up for hearing on 23.10.1992 when the Court had observed as under:- “ The main contention of Mr. J.R.Mittal, learned counsel for the petitioner, is that at no stage was any notice in terms of Rule 12(3) of the Chandigarh Leasehold of Sites and Building Rules, 1973, proposing to cancel the lease was served on the petitioner. Instead, notice Annexure P-2 only called upon the petitioner to show cause why penalty not exceeding 10 per cent be not imposed on him. Mr. Majithia referred to a number of notices served on the petitioner, which have been detailed in the appellate order Annexure P-4. Civil Writ Petition No. 18542 of 1991 5 In order to get to the bottom of the matter, Mr. Majithia seeks time to produce copies of the relevant notices. To come up for further hearing on November 13, 1992.” Thereafter, the record was produced and perused by the Court during the hearing of the case on 11.12.1992. The Court was pleased to recall the order dated 17.12.1991 and admitted the writ petition for regular hearing. The stay granted, as an interim measure, was continued and writ petition was directed to be listed for hearing within three months. At that stage, the petitioner had tendered drafts of amounts in favour of the Estate Officer, Chandigarh to discharge the entire outstanding liability but the counsel for the Chandigarh Administration expressed his unwillingness to accept the amount. On being so directed by the Court, the counsel accepted the drafts without prejudice to the rights of the parties. The order in this regard is as under:- “ We have perused the records produced by Mr.Majithia and have heard learned counsel for both the parties. We recall our order dated December 17, 1991, and direct that the petition shall stand admitted for regular hearing. Stay to continue. We further direct that the writ petition shall be listed for final hearing before an appropriate Bench within three months. Mr. J.R.Mittal, learned counsel for the petitioner, has tendered bank drafts bearing Nos. 043101 dated 5.2.1992 for Rs. 1,50,000/-, 195061 dated 5.2.1992 for Rs.50,000/-, 672031 dated 11.11.1992 for Rs.56,321/-, 8015778 dated 12.11.1992 for Rs.1,25,000/- and 045690 dated 12.11.1992 for Rs.1,81,000/- in favour of the Estate Officer, Chandigarh Administration. Mr.Majithia is not willing to accept the amount. On our Civil Writ Petition No. 18542 of 1991 6 direction, however, Mr.Majithia has received the said drafts without prejudice to the rights of the parties.” The writ petition has, thus, remained pending and has now come up for hearing. No written statement has been filed in this case. The counsel for the Union Territory, however, says that the stand of the Chandigarh Administration was duly reflected in the reply filed to the review application and that would stand good as a response to the challenge raised in the writ petition as well. Accordingly, the defence as projected to the challenge made in the writ petition is being noted from the said stand projected by the Union Territory, Chandigarh. The defence projected is a usual and the rigid stand is reiterated. While responding to the review application, the petitioner is described as a persistent and habitual defaulter, who was afforded number of opportunities to clear the outstanding dues, which he failed to do. It is stated that the petitioner did not pay any instalment within stipulated period and, thus, should not be heard through the present writ petition. The facts relating to allotment and the premium etc. are not disputed in any manner and so also the fact that the petitioner was required to discharge the entire liability in instalments. Reliance is placed on Clause 8-A of allotment letter, which provides that Estate Officer may either allow payment of instalment/rent with penalty which may extend to 100% of the amount due and the interest @ 12% per annum and shall order cancellation of the lease and forfeit the whole part of the amount already paid. Reliance is also placed on Clause 17 of the allotment letter, which stipulates that in Civil Writ Petition No. 18542 of 1991 7 the event of default, breach or non compliance of any of the conditions of the lease, the lease may be cancelled and the whole amount paid to the Government towards the premium and rent of the site may be forfeited. After making reference to these provisions, it is urged that show cause notice was issued under Rule 12 (3) of the rules on 18.05.1983 as according to the terms and conditions of the allotment letter, the first, second and third instalments have not been paid. Still the petitioner failed to clear the outstanding dues. It is, thus, stated that the lease, thereafter, was cancalled besides forfeiting 10% of the premium and of the ground rent dues. Reference is also made to the order passed in appeal filed by the petitioner whereby he was asked to deposit amount of ` 5,22,665/- but the petitioner deposited only sum of ` 1,80,000/- . Thereafter, the petitioner had filed an appeal against this order, which was dismissed. Making reference to the case of Vipul Rai Sharma and others versus The Ludhiana Improvement Trust, Ludhiana 1991 PLJ 761, it is urged that when ample time and opportunity was afforded to the petitioner to pay the amount but the amount had remained unpaid and is not paid after the time fixed, the allotment letter would lapse. Accordingly, submission is that no case for any indulgence to the petitioner, at this stage, is made out. I have heard the counsel for the parties. The counsel for the petitioner has made an attempt to explain the difficulties on his part to make the requisite payment in time. The counsel does not dispute the factual position as is reflected in the pleadings. However, it is highlighted that entire amount due, as per the demand, had been paid though with delay. The same was not Civil Writ Petition No. 18542 of 1991 8 being accepted but the counsel was asked to accept the amount which he had accepted on being asked to do so by this Court. The demand draft, which the petitioner, had tendered before the Court have since been encashed. Counsel for the respondents, on the other hand, has highlighted those very pleas that were raised on behalf of respondents at the time of admission of the writ petition. Counsel as such has submitted that mere acceptance or encashment of a draft cannot lead to any change in situation or equity in favour of the petitioner because the right of the respondents was protected as per the orders passed by the Court while admitting the writ petition. This may be so but the fact remains that the petitioner has continued to remain in possession of the SCO and has completed construction a long ago and presently he is running business at the said premises as confirmed by the counsel for the petitioner. Counsel for the respondent has highlighted the aspect of profit that the administration will earn if the property/site is put to auction. Should the equities and the position change at this stage, just on the ground that the resumption now would make the administration to earn some profit. On very many occasions, it is stressed and so is the plea of the counsel for the petitioner that resumption should be the last resort. This plea cannot be lightly ignored. The observations made by the Division Bench of this Court in Anil Kumar verus Union of Territory 2006 (2) RCR (Civil) 212 are very significant and can be so noted here. This was also a case of resumption of the property by the State due to non-payment Civil Writ Petition No. 18542 of 1991 9 of instalment. The petitioner therein had thereafter paid the amount due alongwith the interest and ground rent. While setting aside the order of resumption, the Court observed that profiteering from a citizen can never be the aim and object of the welfare state. 'The action of depriving of a citizen of his property, therefore, has to be the matter of last resort', the court has observed. How true it would sound. Is it fair on the part of the welfare State to plead profit motive to deprive its citizens who had successfully made a bid for the property in auction? Agreed that the petitioner had defaulted in making the payment of some instalments in time. Such was also the situation when Division Bench had made the above observation which would equally apply to the present case. It is not without reason that the Court has observed that the resumption should be a last resort. Infact that was a primary plea raised by the petitioner, while seeking review of the order, when the order dismissing this writ petition was recalled and the writ was admitted for hearing. The submission was that the notice was not for resumption but for penalty and without affording any further opportunity and serving any notice to the petitioner for resumption, the impugned order was passed. If the notice issued to the petitioner is perused, it would show that the petitioner was asked to show cause as to why the penalty which may extend upto to 10% of the amount due may not be recovered besides the said outstanding instalment amount/ground rent. The petitioner, thus, was not put to notice that the property shall be resumed. What all is stated is that if the petitioner failed to do so, it shall be presumed that he had nothing to say in the matter Civil Writ Petition No. 18542 of 1991 10 and action will proceed further accordingly. It cannot be said that the petitioner was put to notice of resumption. To say that the resumption was intended through this notice, counsel for the respondents has made reference to Rule 12 (3) of the rules. This rule makes a provision for payment of premium and consequences of non-payment or late payment. Sub Rule 3 stipulates that 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% 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% of the total amount of the consideration money, interest and other dues payable in respect of the lease. There is yet another proviso under the rule which states that no order of cancellation or forfeiture shall be made without giving the lessee a reasonable opportunity of being heard and that if the order of cancellation is for non-payment of penalty, the lessee may show cause why the penalty should not have been levied. No doubt, this proviso is enabling power to the respondents to cancel the lease but it is not to follow as must in all cases. The very use of word 'may' will indicate that the authorities are required to exercise discretion on the basis of all settled judicial norms. The discretion given under a statute is a judicial discretion and is required to be exercised on the basis of well settled principles and cannot be so exercised in an arbitrary or discriminatory manner. Civil Writ Petition No. 18542 of 1991 11 Rule 12 of the Rules regulates payment of premium and consequences of non-payment or late payment. Rule 12.1 provides that premium may be paid within 30 days from the date of allotment without any interest. Once the payment is not made in accordance with this sub-rule, then the balance amount of 75% premium is to be paid in 3 annual equated instalments alongwith interest @ 10% per annum or at any such higher rate as may be fixed by Chief Administrator. There are certain provisos to Rule 12 of the Rules with which one is not concerned in the present case. Rule 12(3) of the Rules regulates those cases where any instalment is not paid by the lessee by the date it is payable. As per this Rule, a notice may be served on the lessee, calling upon him to pay the instalments within a period of three months together with penalty, which may extend upto 10% of the amount due. If the payment is still 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% of the total consideration amount of money, interest etc. thereof. As per the proviso, the forfeiture will not be made in addition to penalty. As per the second proviso, no order of cancellation or forfeiture shall be made without giving the lessee a reasonable opportunity of being heard, if the order of cancellation is for non-payment of penalty, the lessee may show cause why penalty should not have been levied. The relevant Rule 12(3) of the Rules is as under:- “12. Payment of premium and consequences of non- payment of late payment:- 1 & 2 xx xx xx xx xx xx xx xx xx Civil Writ Petition No. 18542 of 1991 12 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 consideratio 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 a 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 be have been levied.]” In the light of above provisions and the law laid down by this Court, it is to be seen if the order of resumption is fair, just and reasonable. In Anil Kumar's case (supra), this Court has held that an offer of payment of the entire amount alongwith interest, costs, ground rent, which is made before the High Court during the pendency of the writ petition itself would be a sufficient to recall the order of resumption. Court had, thus, examined the whole issue of resumption in a larger social context of the State action being guided by welfare concept and so had held that the profiteering from a Civil Writ Petition No. 18542 of 1991 13 citizen could never be the aim of welfare State. The Court, thus, held that depriving a citizen of the property has to be a matter of last resort. The Hon'ble Supreme Court in Jasbir Singh Bakshi Vs. Union Territory, Chandigarh and others, AIR 2004 Supreme Court 2660, though found that the petitioner in the said case had only been gaining time on one pretext or the other and was not interested in depositing the amount, yet was liberal enough to give some more time to the petitioner to clear the outstanding dues. The observations in this regard are as under:- “These facts clearly show that the petitioner has only been gaining time, on one pretext or the other, and is not interested in depositing the amount. He got possession of the plot in April, 1990 after deposit of only one-fourth amount. Though the conduct of the petitioner is such that he does not deserve any sympathy, we are of the opinion that some more time may be given to enable him to clear the entire outstanding dues. The petition is accordingly disposed of with a direction that if the petitioner deposits the entire outstanding dues within three months, the order cancelling the lease shall stand set aside, failing which it will be open to the authorities to take appropriate steps in accordance with law.” In Ajay Singh Mann Vs. State of Haryana and others, 2009 (1) RCR (Civil) 474, this Court was of the view that an allottee should be given an opportunity to clear all the payments in accordance with the terms and conditions of the allotment and a mere default in itself will not entail resumption of the plot. In this Civil Writ Petition No. 18542 of 1991 14 case also, the Court observed that the power of resumption should be exercised only as a last resort keeping in mind the doctrine of proportionality of penalty and maintaining a proper balance between administrative order and the rights and interest of an individual. A minute reading of Rule 12(3) of the Rules would show that it envisages a notice calling upon a lessee to pay the instalments within three months together with penalty, which may extend upto 10% of the amount due. The show cause notice issued to the petitioner was precisely to this effect. The consequences of non- payment are also given in the Rules and the Rules provide that if the payment is not made, then the Estate Officer may cancel the lease and/or forfeit the whole or any part of the money paid. Apparently, the petitioner was not put to notice as to the consequence of non- payment of the instalment within a period of three months. The petitioner was called upon to pay the amount of instalment together with the ground rent and interest within a period of 30 days whereas the petitioner was entitled to 3 months period for this purpose, as per the Rules. The show cause notice required of the petitioner to appear before the Estate Officer and explain as to why penalty, which may extend to 10% of the amount due, may not be recovered besides