IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P. No. 10814 of 2008 DATE OF DECISION: February 24, 2009 M/s James Hotels Ltd. …Petitioner Versus Union Territory, Chandigarh and others …Respondents CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE JORA SINGH Present: Mr. Rajive Atma Ram, Senior Advocate, with Mr. Sunish Bindlish, Advocate, and Mr. Daman Dhir, Advocate, for the petitioner. Mr. Anupam Gupta, Sr. Standing Counsel U.T. Chandigarh, with Mr. Ashish Rawal, Advocate, for the respondents. 1. Whether Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporters or not? Yes 3. Whether the judgment should be reported in the Digest? Yes M.M. KUMAR, J. After availing statutory remedies of appeal and revision and various rounds of litigation before the statutory departmental authorities, the petitioner Company has filed the instant petition under C.W.P. No. 10814 of 2008 Article 226 of the Constitution challenging orders dated 23.5.2008 (P-13 & P-14), 26.5.2007 (P-15), 5.6.2008 (P-16) and 25.6.2008 (P-14/A). A further prayer has been made for commanding the revisional authority to pass orders granting extension of time for completing construction at site in question or in the alternative to quash the offending portion of order dated 2.5.2007 (P-3) passed by the revisional authority fixing one year period for completion of construction of the building. Still further another prayer has been made for issuance of direction to decide the appeal and application for stay filed by the petitioner Company. 2. Brief facts of the case are that in pursuance to an auction held on 1.8.1985, Hotel Site No. 10, Sector 17, Chandigarh (for brevity, ‘the site’), was allotted in favour of the petitioner Company on lease hold basis for a period of 99 years, vide allotment letter dated 23.1.1986. As per conditions of the allotment letter, 75% of the balance price was to be paid in three equal annual instalments alongwith interest @ 7% per annum. The construction of the building was to be accomplished within three years from the date of auction. The possession of the site was handed over to the petitioner Company on 24.1.1986. On 25.1.1986, a lease deed was also executed between the parties. The petitioner Company could not pay the instalments and ground rent within the stipulated time. On 13.12.2001, the Estate Officer-respondent No. 3 after issuance of show cause notice etc. passed orders of cancellation of the lease of the site. The appeal preferred by the petitioner Company was dismissed by the Chief 2 C.W.P. No. 10814 of 2008 Administrator-cum-Appellate Authority-respondent No. 2 on 7.5.2004. 3. Feeling aggrieved, the petitioner Company filed a revision petition before the Advisor to the Administrator-respondent No. 1, which was allowed vide order dated 8.12.2004 (P-1). The revisional authority-respondent No. 1 restored the site subject to the condition that the petitioner Company would deposit the outstanding amount within one month of the supply of account statement by the Estate Officer failing which the order of the Chief Administrator was to spring back in operation. It was also directed to accept two demand drafts of Rs. 80,00,000/-, which were presented by the petitioner Company during the course of revision petition. Since the issue of non-construction/non-completion of the building was not covered in the order dated 8.12.2004 (P-1), the petitioner Company preferred a review application before respondent No. 1, which was dismissed. 4. On 5.9.2005, the Estate Officer-respondent No. 3 issued a notice under Rule 20 of the Chandigarh Lease Hold of Site and Building Rules, 1973 (for brevity, ‘the Rules’). According to the notice the petitioner Company was to show cause why the lease of the plot be not cancelled by pleading the ground that the building has not been completed within three years from the date of auction. The petitioner Company sought extension of time uptil 31.3.2006 enabling it to complete the construction. For the purpose of grant of extension, the Estate Officer-respondent No. 3 raised a demand of Rs. 3 C.W.P. No. 10814 of 2008 1.37 crore as extension fee on 24.10.2005, which was challenged by the petitioner Company by filing an appeal. During the pendency of appeal, the Estate Officer again resumed the site, vide order dated 15.2.2006 (P-1/A). The petitioner Company then filed yet another appeal against the order dated 15.2.2006, which was dismissed by the Chief Administrator-respondent No. 2 on 7.3.2007 (P-2). 5. Challenging order dated 7.3.2007 (P-2), the petitioner company preferred a revision petition before the Advisor-respondent No. 1, which was allowed vide order dated 2.5.2007 (P-3). The site was restored back subject to the condition that the building was to be completed within one year from the date of order failing which the site was to be resumed. The petitioner Company was also directed to pay the extension fee as determined by the Estate Officer. The petitioner Company deposited a sum of Rs. 1,99,82,655/- on account of extension fee on 2.5.2007 itself. On 3.5.2007, the petitioner Company requested to the Estate Officer to intimate any other dues pending against it so that the same could also be deposited (P-4). 6. The Site Plans earlier submitted by the petitioner Company were not found answering the latest building bye-laws, therefore, the petitioner Company submitted the revised building plans for sanction on 18.5.2007. It is claimed that the revised building plans were not accepted, which were sent through Speed Post on 19.5.2007 alongwith a covering letter (P-5). On 23.5.2007 (P-6), a reminder was sent by the petitioner Company to the Estate Officer regarding sanctioning of revised building plans at the earliest. 4 C.W.P. No. 10814 of 2008 It was also requested to allow the time limit of one year from the date of approval of the building plans and not from the date of passing of order dated 2.5.2007 passed by the Advisor. Another letter was sent by the architect of the petitioner Company on 9.8.2007 (P-6A). On 28.9.2007 i.e. after four and half months the respondents approved the revised building plans and sanction was granted for erection of the building (P-7). The Estate Officer-respondent No. 3 also required the petitioner Company to deposit another sum of Rs. 80,28,876/- towards extension fee, which was payable upto 31.3.2008, vide order dated 28.9.2007 (P-8). The amount was paid by the petitioner Company vide Cheque No. 182201 drawn on State Bank of India on 28.9.2007 itself. 7. It is claimed that despite severe financial crunch, debts and various rounds of litigation, the promoters of the petitioner Company raised approximately Rs. 20 crores from their personal resources and repaid all of its debts. The petitioner Company also raised a loan of Rs. 45 crores from the State Bank of India in the month of August 2007 for which sanction was granted. The Estate Officer granted permission to mortgage the hotel site to State Bank of India vide order dated 2.11.2007 (P-9). Thereafter, the petitioner Company proceeded for completion of the building at site by setting in operation in full swing. In para 24 of the petition, the petitioner Company has given the details regarding engagement of consultants, civil works status from 2.9.2007 to 15.11.2007 and also placed on 5 C.W.P. No. 10814 of 2008 record some photographs of interior and exterior of the building (P-10/A). 8. In February 2008, the petitioner Company again submitted revised building plans for approval by adding 6th floor and double basements at the rear block. The approval and sanction for erection of building as per the aforementioned revised building plans was accorded by the respondents on 31.3.2008 (P-10). It is claimed that in the month of March 2008 building was almost near completion except for furnishing and minor works. Therefore, the petitioner Company applied for grant of ‘partial occupation certificate’ as per Rule 18(c) of the Rules. 9. On 29.4.2008, the Assistant Estate Officer was requested to carry out inspection of the building (P-11). It has been asserted that after the site was inspected the matter was considered by the Advisory Committee of the respondents and it was decided to grant ‘partial occupation certificate’ for one year only. On 22.5.2008, the Estate Officer exercising the powers of Chief Administrator also granted permission for sewerage connection and permission for occupation and use of the building as per Rule 18(6) of the Rules (P- 12). The partial occupation certificate was granted for one year in respect of ground floor of Block-B, ground floor of first floor and second floor of Block-A. The petitioner Company also deposited a sum of Rs. 10,82,250/- towards composition fee. 10. However, on 23.5.2008 (P-13), the Estate Officer passed an order under Rule 117(2) of the Rules, withdrawing the ‘partial 6 C.W.P. No. 10814 of 2008 occupation certificate’ dated 22.5.2008 (P-12). No reasons for withdrawal were assigned nor any show cause notice in this regard was issued. On the same date, another cancellation order was passed by the Estate Officer-respondent No. 3 on the ground that the petitioner Company has failed to complete the site in terms of order dated 2.5.2007 passed by the Advisor to the Administrator (P-14). The order reads thus:- “ Reference orders of the Adviser to the Administrator dated 02.05.2007. You were required to complete the construction of the building by 01.05.2008 in compliance to the above orders. However, you failed to complete the construction within the stipulated time period. Therefore, the cancellation orders passed by the Estate Officer dated 15.02.2006 have become operative.” 11. The petitioner Company immediately filed an appeal alongwith an application for stay against the order dated 23.5.2008, which is stated to be pending and listed before the Appellate Authority for 28.1.2009. The application filed by the petitioner Company before the Appellate Authority for preponing the date of hearing has been rejected vide order dated 25.6.2008 (P-14/A). 12. The composition fee of Rs. 10,82,250/- has also been refunded back to the petitioner Company, vide letter dated 26.5.2008 (P-15). On 5.6.2008, the petitioner Company was directed to stop construction with immediate effect failing which action would be taken under the Public Premises Act (P-16). 7 C.W.P. No. 10814 of 2008 13. The petitioner Company has filed the instant petition claiming that delay in decision of the appeal would adversely affect its rights and it would also suffer monetary loss @ Rs. 63 lacs per month on account of re-payment of loans etc. The petitioner Company has also cited the example of adjoining hotel site which was initially allotted to M/s Indian Tourism Development Corporation Ltd. (a Government of India Undertaking), vide allotment letter dated 24.6.1981. On 12.10.1984, the lease of the said plot/hotel site was cancelled on the ground of non-construction. On 27.3.1986, the revisional authority set aside the cancellation order, which was challenged in this Court by the Union Territory, Chandigarh by filing C.W.P. No. 15993 of 1996 (Union Territory, Chandigarh v. Indian Tourism Development Corporation Ltd. and another). The writ petition was dismissed on 5.12.1997. Thereafter, period for construction was extended from time to time on payment of extension fee. Without even raising construction M/s ITDC Ltd. transferred the site to M/s Taj Group of Hotels, who raised the construction and became functional only in the year 2005. In this manner, the ground of discrimination has been raised by the petitioner Company. 14. When the petitioner Company originally filed the instant petition, this Court has passed an interim order dated 1.7.2008 that proceedings under the Public Premises Act shall remain in abeyance till the matter is heard and decided. On 22.7.2008, a short reply by way of affidavit was filed by the Assistant Estate Officer (P-17/A). 8 C.W.P. No. 10814 of 2008 After giving exhaustive status report of the site, it has been asserted that it was not possible for the petitioner Company to complete the building in a period of 7 to 8 months even if the work is to be carried out on war footing in two shifts by engaging separate work forces for different item of work on each floor. It was further mentioned that any further extension would completely impair and erode the sanctity of town planning in the city, more particularly in the City Centre, which was envisioned by Le Corbusier himself. It has been further emphasised that order dated 2.5.2007, was never challenged by the petitioner Company and the same is final between the parties. With regard to allegation of delay of 4½ months in approving the revised building plans it has been submitted that during this period the petitioner Company did not stop its construction activities at site and continued with the same and even made proposed changes without even waiting for the approval of the revised site plans. For this reason also composition fee was also imposed on the petitioner Company under Rule 5 of the Rules. Regarding issuance of ‘partial occupation certificate’ dated 22.5.2008, it has been mentioned that the same was issued inadvertently, overlooking the order dated 2.5.2007 passed by the Advisor-respondent No. 1 (P-3) and accordingly withdrawn on the very next day, vide order dated 23.5.2008 (P-13). 15. Controverting the assertions made in the aforementioned affidavit, a replication was filed by the petitioner Company on 7.8.2008 projecting the efforts made and the actual status, which 9 C.W.P. No. 10814 of 2008 according to them is existing at the site. In sum and substance the petitioner Company has prayed that if some reasonable time is granted, it would complete the project (P-17/B). Since the issue of non-challenge of order dated 2.5.2007 passed by the Advisor has been raised in the aforementioned affidavit filed by the Assistant Estate Officer, the petitioner Company after permission of this Court filed amended writ petition challenging aforementioned order. The petitioner Company has also placed on record an application filed by it before the revisional authority seeking extension in time for raising construction (P-18). 16. Short reply to the amended writ petition, dated 8.11.2008 by the respondents and replication thereof dated 10.11.2008 by the petitioner Company have also been filed. Apart from the factual position which has already been narrated above, only legal issues and various provisions of the Rules have been highlighted in the aforementioned short reply and replication, therefore, we deem it appropriate to deal with the same at appropriate stage in the succeeding paras. 17. Mr. Rajive Atma Ram, learned senior counsel for the petitioner Company has raised various submissions before us. His first submission is that resumption of a property in respect of which possession has been delivered to the allottee is a measure which should be taken in rare cases, as has been laid down by a Full Bench of this Court in the case of Ram Puri v. Chief Commissioner, Chandigarh, AIR 1982 P&H 301 and a Division Bench judgment of 10 C.W.P. No. 10814 of 2008 this Court in the case of Mai Ram Jain v. U.T., Chandigarh, 1989 PLJ 537. He has pointed out that the view taken by the Full Bench that principle of proportionality would apply and one must avoid use of hammer to swat a fly, has also been favoured by Hon’ble the Supreme Court in the case of Teri Oat Estates (P) Ltd. v. U.T., Chandigarh, (2004) 2 SCC 130. Learned counsel has also placed reliance on a judgment of Hon’ble the Supreme Court rendered in the case of M/s Gagan Food Processors v. U.T., Chandigarh, JT 2002 (Suppl. 1) SC 88 and argued that the power of resumption is not mandatory for the authority to be exercised in each and every case. In the aforesaid case, Hon’ble the Supreme Court has held that the respondent should have given more time in that case to the allottee to deposit the deficit amount. He has also placed reliance on a Single Bench judgment of this Court rendered in the case of Brij Bhushan v. U.T. Administration, 1987 (1) PLR 598 (P&H), to argue that delay in completion of construction could not be imputed to the petitioner alone and according to the aforesaid judgment it is on account of un-certain future of the city that such a delay has occurred. He has also submitted that the rules have carved out adequate room for adjusting delays by incorporating the formulas of extension fee, which are aimed at avoiding extreme and harsh action of resumption and forfeiture of the price paid. The aforesaid view is discernible from the judgment of this Court given by the learned Single Judge in the case of Mrs. Sita Rani Gupta v. State of Haryana, 1992 (2) 11 C.W.P. No. 10814 of 2008 RRR 417 and a Division Bench judgment rendered in the case of M/s Rashmani Exports v. State of Haryana, 1992 (2) RRR 96. 18. Highlighting the facts of the present case, learned counsel has submitted that the whole price of the plot stand paid off and various charges on account of extension fee or building fee etc. have been deposited, which runs in crores of rupees. 19. The second submission made by the leaned counsel is that Rule 16 of the 1973 Rules, which contemplate the maximum time that could be granted for erection of building, is not mandatory. It is true that the initial period of completion of building given in the rule is three years but still the period could be extended. He has maintained that the date of completion of the building would be the date of receipt of application for permission to occupy the building as per the provisions of Rule 16 of the 1973 Rules. He has also submitted that according to the last proviso, the Administrator, U.T. in exceptional cases of hardship is competent to grant extension beyond the stipulated period on such conditions as he may consider fit and proper. Once the position of Rule 16 of the 1973 Rules is so elastic, learned counsel has maintained that grant of further period in the facts and circumstances of the present case would be well within the statutory power of the respondents and in any case extension in time for completion of construction was available as a matter of right up to 31.3.2008 in terms of Rule 16 of the 1973 Rules and no resumption order could have been passed prior to that date. 12 C.W.P. No. 10814 of 2008 20. He has then contended that the Advisor to the Administrator while exercising power of revisional authority, vide order dated 2.5.2007 (P-3) has extended the time for a period of one year, which was wholly un-realistic and sticking to time schedule of one year was not mandatory. According to the learned counsel, a period of five and a half months was consumed by the Estate Officer and other authorities in sanctioning the revised building plans submitted by the petitioner Company. The site plans were submitted on 19.5.2007, which could be sanctioned only on 28.9.2007 (P-7). He has maintained that the sanction accorded to the revised building plans is valid for five years as per the provisions of Rule 17 of the Punjab Capital (Development and Regulation) Building Rules, 1952 (for brevity, ‘the 1952 Rules’). He has, thus, argued that period of four and a half months consumed by the respondents in sanctioning of site plans has to be set off from the period of one year, which have been illegally counted by the respondents from the date of the order i.e. 2.5.2007. As a second limb of the same very argument, learned counsel has submitted that the petitioner Company submitted the revised plans in February, 2008 but the same could be sanctioned after a period of one month. The aforesaid facts were brought to the notice of the respondents in the reminders sent by the petitioner Company on 23.5.2007 and 9.8.2007. Moreover, the application of the petitioner Company for grant in extension of time is still pending consideration of the Advisor-respondent No. 1 (P-18), who is sitting tight over the matter without deciding the same. 13 C.W.P. No. 10814 of 2008 21. He has also argued that before passing the orders cancelling the lease deed on 23.5.2008 (P-14) and withdrawing the partial occupation certificate (P-13) by exercising the power under Rule 117(2) of the 1952 Rules, no opportunity of hearing was granted. 22. Mr. Atma Ram has also maintained that the petitioner Company is committed beyond recall by mortgaging the plot to the State Bank of Patiala with the prior permission of the Estate Officer when it obtained loan amounting to Rs. Forty-five crores. More than Rs. Twenty-eight crores have already been spent on the hotel site after passing of order by the Advisor on 2.5.2007 (P-3). The petitioner Company is stated to have spent a total amount of Rs. 51- 0028=00 crores on the hotel project till date including a sum of Rs. 3,90,33,831/-, which stand paid to the Estate Officer on account of extension fee. He has maintained that the bona fide of the petitioner Company cannot be doubted. The petitioner Company has already completed substantial part of construction by spending huge amount and in such a case allotment of plot should not be cancelled. In that regard he has placed reliance on the judgment of Hon’ble the Supreme Court in the case of Banarasidass Musadilal v. State of U.P., AIR 1984 SC 408. He has gone to the extent of submitting that in cases where 25% of the consideration amount was paid without paying any further instalment and allotment was cancelled, Hon’ble the Supreme Court has allowed the restoration of allotment on payment of the entire amount in the case of Jasbir Singh Bakshi v. 14 C.W.P. No. 10814 of 2008 U.T., Chandigarh, 2004 (3) RCR (Civil) 232 SC. According to the learned counsel the State should not be permitted to indulge in profiteering from a citizen, which cannot be the aim and object of a welfare State. In that regard, he has placed reliance on a Division Bench judgment of this Court in the case of Anil Kumar v. U.T., Chandigarh, 2006 (2) RCR (Civil) 211. 23. He has then submitted that the construction of additional seventh floor in Block ‘A’ and an additional Block ‘C’, which comprised in twin basements and ground floor for parking were undertaken after passing of the orders, which cannot be included for fixing the time frame of one year in accordance with order dated 2.5.2007. Therefore, the aforesaid items have to be either viewed separately and if they are to be included as a part of the project then the period ought to be extended. He has also submitted that the petitioner Company is entitled to the benefit of Rule 8 of the Chandigarh Estate Rules, 2007 (for brevity, ‘the 2007 Rules’), which do not prescribe maximum time limit for grant of extension and, therefore, there is adequate room left for grant of extension. In any case, learned counsel has submitted that Rule 21A of the 1973 Rules should have been invoked for granting relaxation because relaxing rule would be justified on account of exceptional circumstances operating in the present case and would serve larger public interest because if the lease of the site has been cancelled then under Rule 21 of the 1973 Rules the building has to be demolished, which would 15 C.W.P. No. 10814 of 2008 result into wastage of more than Rs. 51 crores spent by the petitioner Company on the site. 24. His last submission is that the petitioner Company has been subjected to hostile discrimination as in the case of Indian Tourism Development Corporation huge time was granted for erection of the hotel by Taj Group of Hotels. He has drawn out attention to the attempt made by the U.T. Administration to challenge the orders passed by the Advisor and the petition was dismissed by a Division Bench (P-4A). 25. Mr. Anupam Gupta, learned counsel for the respondents has vehemently opposed the submissions made by the learned counsel for the petitioner Company. He has argued that the order of Advisor to the Administrator, dated 2.5.2007 9P-3), passed in exercise of the revisional jurisdiction under the Capital of Punjab (Development and Regulation) Act, 1952