IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.12.2011 CORAM THE HON'BLE MRS. JUSTICE R.BANUMATHI and THE HON'BLE MS. JUSTICE R.MALA O.S.A.No.252 of 2010 and W.P.No.9768 of 2010 O.S.A.No.252 of 2010: 1.The Tamil Nadu Housing Board, rep. by its Managing Director, No.331, Anna Salai, Chennai-600 035. 2.The Executive Engineer and Administrative officer, Special Division I Tamil Nadu Housing Board Thirumangalam Chennai-600 101. 3.The Manager Marketing and Service, Special Division I Tamil Nadu Housing Board Thirumangalam, Chennai – 600 101. ... Appellants/Defendant Vs. Nolambur Residents Welfare Association, rep. by its President Mr.N.Gangadharan Chennai-602 102. ... Respondent/Plaintiff W.P.No.9768 of 2010: 1.S.Nasiruddeen 2.Nolambur Residents' Welfare Association rep. by its President, MIG-356, Nolambur Neighbourhood Scheme Phase I Chennai-600 037. ... Petitioners https://hcservices.ecourts.gov.in/hcservices/ Vs. 1.The State of Tamilnadu, rep. by its Chief Secretary, Secretariat, Fort St.George, Kamaraj Salai, Chennai-600 009. 2.The Tamil Nadu Housing Board, rep. by its Managing Director, 331, Anna Salai, Nandanam, Chennai-600 035. 3.The Executive Engineer and Administrative Officer, Special Division – I Tamil Nadu Housing Board, Thirumangalam Chennai-600 101. 4.The Allottee Service Manager, Special Division - I Tamil Nadu Housing Board, Thirumangalam Chennai-600 101. ... Respondents Prayer: Original Side Appeal in O.S.A.No.252 of 2010 is filed under Order XXXVI Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent against the decree and judgment dated 25.09.2008 made in C.S.No.783 of 2000 on the file of this Court. Writ Petition in W.P.No.9768 of 2010 is filed under Article 226 of Constitution of India to issue Writ or order or any other direction in the nature of the Writ of Mandamus directing the 2nd Respondent to issue the Sale Deed in favour of the members of the Petitioner Association. For Appellants in the : Mr.Gomathi Nayagam Appeal and Respondents Addl.Advocate General in the Writ Petition for Mr.V.Ananda Moorthy For Respondent in the : Mr.K.M.Vijayan, Appeal and Petitioners Sr.Counsel in the Writ Petition for Mr.B.Harikrishnan https://hcservices.ecourts.gov.in/hcservices/ COMMON JUDGMENT R.BANUMATHI,J. The Original Side Appeal arises out of the decree and judgment dated 25.09.2008 in C.S.No.783 of 2000 in and by which the learned single Judge declared the Proceedings of the Managing Director of Tamil Nadu Housing Board in No.S4/45202/95 dated 19.04.1996 fixing the final cost to the allotments made in favour of members of the Plaintiff Association as null and void and also granting permanent injunction restraining the defendants from demanding the final cost as per the said proceedings. 2. After the disposal of the suit, the Plaintiff Association had filed writ petition – W.P.No.9768 of 2010 seeking for a writ of mandamus to direct the Tamil Nadu Housing Board to issue sale deeds in favour of the members of the Plaintiff Association. On being stated by the respondent/plaintiff, the Writ Petition was posted along with the Original Side Appeal and heard together. By consent of appellants and respondent, both the appeal and writ petition are disposed of by this common judgment. 3. Factual background in nutshell:- Tamil Nadu Housing Board [TNHB] floated Nolambur Neighbourhood Phase – I and II Scheme. In the month of January 1988, TNHB issued notification inviting applications from the public for allotment of Plots at Nolambur. After conducting lot, regular allotment orders were issued to all the selected applicants in their respective categories – HIG-I; HIG-II; MIG; LIG-I and LIG-II. At the time of allotment, cost of the Plot was tentatively worked out to Rs.80,000/- per ground and in the allotment order, it has been mentioned that such tentative price is subject to revision on account of the anticipated increase of the land cost and finalisation of development costs, provision of amenities etc. In the said order, it was also informed that the final price of the site due to the increased cost of development charges and provision of amenities will be determined only after all the suits filed for the determination of the the Land Acquisition Cases are finally settled and after the cost of amenities, development charges etc. are finalised. The allottees have also entered into Lease-cum-Sale Agreement for the allotment and after paying the monthly instalments took over the Plot and also undertaking to pay the final price. In the said Lease-cum-Sale Agreement, a clause was stipulated incorporating condition Nos.5, 6 and 9 regarding payment of final price. In the impugned Proceedings No.S4/45202/95 dated 19.04.1996, final price was fixed at Rs.1,99,000/- per ground as on 31.03.1996 and the same is applicable https://hcservices.ecourts.gov.in/hcservices/ to the allottees to whom the allotment was made up to 1989-90. The price was fixed for allotments made from 1990-91 to 1995-96 as per the statement enclosed thereon. Pursuant to the Proceedings of the Managing Director of TNHB and fixing the final price, demand notice was sent to the individual allottees. Thereafter, allottees have formed an Association and instead of challenging the individual demand notices, Plaintiff Association has filed the suit challenging only the Proceedings of the Managing Director fixing the final price at Rs.1,99,000/- as on 31.03.1996 for the allotments made up to 1989- 90. 4. Briefly stated case of Plaintiff is as follows:- Pursuant to the notification, members of Plaintiff Association applied for allotment and some of the allottees have paid the entire cost in lumpsum and some of them opted for payment by instalments. Allottees have paid the entire tentative cost in one lumpsum or by instalments and they were under the impression that there will not be any further demand of cost from TNHB. But to the surprise and shock of the allottees, 3rd Defendant had sent a communication dated 31.05.1996 under various letters informing the allottees including the members of Plaintiff Association stating that final cost of the land is arrived at Rs.1,99,000/- per ground for the allottes upto 1988-89 as on 31.3.1996 and that they are liable to pay the differential cost either in one lumpsum or by instalments, which is two and half times the tentative cost. Case of Plaintiff is that Defendants ought to have finalised the development charges and the final price even in 1990 itself and fixation of final price cannot be protracted indefinitely. Allottees cannot be held liable for the full expenditure of TNHB. Defendants have no right in asking arbitrarily any amount by way of final cost. Plaintiff Association made repeated representations requesting the Defendants to give details with reference to fixation of final cost. Defendants did not disclose as to how the final cost was arrived at. Plaintiff Association has also filed W.P.No.11879 of 1996 challenging the demand notice. Even during the pendency of the said Writ Petition, Plaintiff Association has filed the suit in the year 2000 praying for the relief of declaration that the Proceedings No.S4/45202/95 dated 19.04.1996 of the 1st Defendant is null and void and for consequential Permanent Injunction restraining the Defendants from demanding any final cost pursuant to the aforesaid Proceedings. 5. Refuting the plaint averments and contending that the suit is not maintainable, TNHB has filed written statement stating that Plaintiff had not issued the mandatory notice under Section 138 of TNHB Act and non-issuance of notice under Section 138 of TNHB Act is fatal for the institution of the suit. Plots at Nolambur Phase-I were allotted during 1988-89 by adopting the tentative cost and after completion of the development work, cost was finalised. Even while https://hcservices.ecourts.gov.in/hcservices/ allotting the Plots at Nolambur, it has been clearly mentioned in the respective allotment orders that cost is purely tentative one and such tentative price is subject to revision on account of the anticipated increase of the land cost and finalisation of development costs and provision of amenities etc. and fixation of final price of the land so fixed is conclusive and final. In Clause 5 of the Lease- cum-Sale agreements, which have been executed by the allottees, it has been specified that the price of the Plot is tentatively fixed and the same is subject to revision. The land cost for Nolambur Phase I Scheme was finalised after taking into consideration of the actual land cost, development charges and interest charges up to 31.3.1996 as Rs.1,99,000/- per ground. This rate was made applicable to the allotments made up to 1989-90. For the allotments made on or after 1990-91, cost was fixed by charging ruling rate in interest on cost fixed as on 31.03.1996 i.e. Rs.1,99,000/- per ground. Hence the fixation of cost is as per the rules and is just and proper. Allottees, who have accepted the conditions and undertaking that they have to pay necessary increase in the cost, cannot raise objection for the fixation of price, which is in clear violation of terms of the agreement. 6. On the above pleadings in the trial Court, ten issues were framed. On the side of Plaintiff Association S.Nazirudeen, the then President of Plaintiff Association was examined as PW1 and Exs.P1 to P36 were marked. On the side of Defendants, M.Ramakrishnan, the then Head of the Nolambur Scheme was examined as DW1. Mr.A.Francis Roche, the then Chief Accounts Officer of 1st Defendant was examined as DW2 and Exs.D1 to D12 were marked. 7. Upon consideration of rival contentions, the learned single Judge recorded the findings answering the issues as under:- https://hcservices.ecourts.gov.in/hcservices/ Issues Findings On Issue Nos.1, 2 and 5: 1) Whether the demand of final cost made by the Defendants is barred by limitation? 2) Whether the Defendants have got right to finalise the final cost of the plots at any point of time notwithstanding the period stipulated in Lease-cum-Sale agreement? 5) Whether the Defendants are justified in demanding the final cost after a period of eight years? ● As per Clause 9 of Lease-cum- Sale agreement, the Managing Director of TNHB is empowered to arrive at the final price after the conclusion of the land acquisition proceedings and after determining of the cost of amenities and Issue Nos. 1 and 2 were answered in favour of the defendants. ● It was held that Defendants are justified in demanding the final cost after a period of eight years and Issue No.5 was answered in favour of the defendants. On Issue Nos.3,6 and 7: 3) Whether the demand of final cost by the Defendants is sustainable? 6) Whether the quantum of final cost arrived at is proper and sustainable? 7) Whether the increase of final cost can be more than 250% of the original tentative cost? ● Defendants received the amount from the National Highways Authority of India and the Defendants had surplus and that the surplus available in the hand without giving credit to the said amount, the working given is not a correct exercise ● Defendants are not justified in capitalisation of interest. ● Increase of final cost by 250% of the original tentative cost is not supported by any material and Issue Nos.3,6 and 7 were answered infavour of the Plaintiff. Answering the Issues 3,4,6,7 and 8 infavour of Plaintiff, learned Judge declared that the Proceedings of 1st Defendant in S4/45202/95 dated 19.04.1996 fixing the final price is null and void and unenforceable and also granted permanent injunction restraining the defendants from in any manner demanding the final price so fixed. 8. In the trial Court, even though the trial Court framed several issues and inter alia contentions and arguments were advanced, during arguments, respondent/plaintiff Association seemed to have emphasised upon only one issue viz., interest and the same is reflected in the judgment as under: https://hcservices.ecourts.gov.in/hcservices/ "19. ...... Learned counsel for the plaintiff is fair enough to state before this Court that the plaintiffs restrict their claim only to the issue of capitalisation interest charges." Before the single judge, since respondent/plaintiff Association restricted their argument only regarding interest, when the matter came up for hearing, this Court asked whether the members of Plaintiff Association would be satisfied if capitalisation of interest is made as a simple interest. The members of Plaintiff Association were not agreeable to such a course and insisted upon advancing the arguments on all the issues and on the merits of the matter. 9. On behalf of the appellants – Tamil Nadu Housing Board (in short, "TNHB"), the learned Additional Advocate General Mr.Gomathinayagam inter alia raised the following submissions:- ●In view of non-compliance of Section 138 of Tamil Nadu Housing Board Act, 1961, the suit is not maintainable. ●Different causes of action of the members of the plaintiff Association cannot be clubbed to file the suit by the Association. ●Instead of challenging the individual demand notices issued to the individual allottees, the plaintiff Association has chosen to challenge Ex.P.21 - Proceedings of Managing Director of Tamil Nadu Housing board in Ref.No.S.4/45202/95 dated 19.4.1996 ●Without seeking for further relief of direction to execute the sale deeds in favour of the individual members of the plaintiff Association and without paying proper court fee, the suit is not maintainable. ●As per the terms of allotment and terms and conditions of Lease cum Sale Agreement, the allottees have agreed to pay the final price fixed by the Managing Director and they are estopped from challenging the impugned proceedings of the Managing Director fixing the final price. ●The calculation adopted by the single Judge is erroneous and the learned Judge erred in saying that there was surplus in the suit Scheme. The learned judge ought not to have taken into account the compensation claimed by the National Highways Authority of India. 10. Refuting the contentions, Mr.K.M.Vijayan, the learned Senior Counsel for respondent/plaintiff has contended that notwithstanding the terms of Lease cum Sale Agreement, Tamil Nadu Housing Board https://hcservices.ecourts.gov.in/hcservices/ cannot fix an exorbitant amount as final price and capitalise the interest. It was further argued that TNHB cannot abuse its dominant position and the Court has to see whether the final price fixed is equitable. Taking us through various calculations reiterating the findings of single Judge, the learned Senior Counsel submitted that the excess amount demanded by the Housing Board is not supported by any materials and the final price fixed at Rs.1,99,000/- per ground is highly excessive and the learned judge rightly decreed the suit and the judgment does not warrant interference. 11. Learned Senior Counsel for respondent placing reliance on a decision of Supreme Court in the case of KANPUR DEVELOPMENT AUTHORITY VS. SHEELA DEVI AND OTHERS, ((2003) 12 SCC 497) contended that determination of cost of house/flat or escalation of cost cannot be arbitrary or erratic and the appellant Housing Board has to broadly satisfy the escalation by placing material on record to justify the escalation. 12. We have given anxious consideration to the pleadings, evidence, materials and the findings of the learned trial Judge and also the submissions. 13. Upon consideration of evidence and submissions, the following points arise for determination in this appeal: "1. Whether Ex.P.17 notice (9.6.2000) is sufficient compliance of Section 138 of Tamil Nadu Housing Board Act and whether in view of non-compliance of Section 138, the suit is maintainable? 2. Whether the suit filed by the plaintiff Association clubbing the causes of action of all its members is maintainable? 3. Whether the suit filed seeking declaration that Ex.P.21 - proceedings of the Managing Director of Tamil Nadu Housing Board in S.4/45202/95 dated 19.4.1996 is null and void without seeking for further relief of obtaining sale deeds in the individual names of the members of the plaintiff Association is maintainable? 4. In the Writ Petition in W.P.No.9768 of 2010, whether the members of plaintiff Association are entitled for the writ of mandamus directing Tamil Nadu Housing Board to execute sale deed in favour of members of plaintiff Association? https://hcservices.ecourts.gov.in/hcservices/ 5. Whether the allottees, having agreed to pay the final price both in the agreement as well as in the Lease cum Sale agreement, can turn round and challenge the fixation of final price? 6. Whether the learned single judge was right in going into the calculation and whether the finding of the learned single judge was right in saying that the final price fixed in the impugned proceedings is excessive? 7. To what relief, the parties are entitled to both in the appeal and in the writ petition? 14. At the outset, certain facts need to be highlighted. Tamil Nadu Housing Board developed under Nolambur Neighbourhood Scheme Phase I Scheme and the total number of plots in Nolambur Phase I are 715 and Phase II are 84. 345 allottees of Nolambur Scheme formed plaintiff Association in August, 2006. By the impugned proceedings of Tamilnadu Housing Board in S.4/45202/95 dated 19.4.1996, the Managing Director fixed the final price per ground at Rs.1,99,000/- per ground as on 31.3.1996 for the allottees for whom allotments were made upto 1989-90. For the subsequent allotments, price was fixed at Rs.2,28,900/-; Rs.2,63,300; Rs.3,08,100/-; Rs.3,60,500/-; Rs.4,20,800/-; Rs.4,93,600/- for the allotment made during the years 1990-91, 1991-92, 1992-93, 1993-94, 1994-95 and 1995-96 respectively. In pursuance to the said proceedings, individual demand notices like Exs.P.11 (No.C3/2721/88 dated 31.5.1996), Ex.P.12 (No.D1/9621/96 dated 3.6.1996) etc., were sent to the individual allottees. Thereafter plaintiff Association was formed and the Association had filed W.P.No.11879 of 1996 seeking for writ of mandamus forbearing the respondents from demanding the difference in land cost re-fixed. Even during the pendency of the said Writ Petition, the suit came to be filed seeking for declaration that the impugned proceedings of the Managing Director of Tamilnadu Housing Board in S.4/45202/95 dated 19.4.1996 is null and void and unenforceable. After filing of the suit, out of 345 allottees, 152 allottees paid the difference and obtained the sale deeds. After filing of the appeal, number of allottees, who are members of plaintiff Association have given undertaking agreeing to pay the final price and take the sale deed and that they would not proceed with the appeal. 15. Point No.1:- Non-compliance of mandatory requirement of Section 138 of Tamil Nadu Housing Board Act:- As pointed out earlier, under Ex.P.21 - proceedings of the Managing Director of Tamil Nadu Housing Board in S.4/45202/95 dated 19.4.1996, the final price was fixed at Rs.1,99,000/- per ground as on 31.3.1996 for allotments which were made upto 1989-90 and in so far as the other allottees, rate per ground for allotments from 1990-91 to 1995-96 were as stated above. In pursuance to Ex.P.21 proceedings, individual demand https://hcservices.ecourts.gov.in/hcservices/ notices were sent. Plaintiff Association has filed W.P.No.11879 of 1996 seeking for a writ of mandamus forbearing the Tamil Nadu Housing Board from demanding the re-fixed price. 16. As pointed out earlier, even during the pendency of the writ petition, the suit came to be filed on 21.6.2000. Before filing the suit, Ex.P.17 notice was issued under Section 138 of Tamil Nadu Housing Board Act on 9.6.2000. Even before expiry of 60 days, suit came to be filed on 21.6.2000. On behalf of the appellant - TNHB, the learned Additional Advocate General contended that even before expiry of two months, the suit came to be filed and in view of non- compliance of the mandatory requirements of Section 138, the suit is barred and non-compliance of Section 138 is fatal for institution of the suit. 17. Per contra, onbehalf of the plaintiffs/respondents, the learned Senior Counsel Mr.K.M.Vijayan has contended that Tamil Nadu Housing Board Act was enacted in exercise of powers under Entry 18 List II of Constitution of India and Tamil Nadu Housing Board Act is a State enactment, whereas the Code of Civil Procedure is passed under List III and the Central Law will prevail. It was further submitted that as per Section 80(2) C.P.C, to obtain any immediate relief, suit could be filed by dispensing with the notice as per Section 80(2) C.P.C. and therefore notwithstanding non-issuance of notice, suit is maintainable. 18. Learned Senior Counsel would further submit that for redressal of any grievance against Tamil Nadu Housing Board, either a suit or a writ petition or petition under Consumer Protection Act could be filed and while so Section 138 only contemplates issuance of notice only for filing of suit against Board. It was further argued that Section 138 does not speak anything about the filing of writ petition or the petition under Consumer Protection Act and therefore Section 138 cannot be resorted to by the appellant to raise objection as to the maintainability of the suit. 19. For filing suit against Tamil Nadu Housing Board, issuance of notice before 60 days of filing the suit is essential under Section 138. No suit against Board could be filed until the expiration of 60 days of notice served at Board's office. Section 138 reads as follows:- "138. Notice of Suit against Board etc.,:- No suit shall be instituted against the Board, or any member, or any officer of servant of the board, or any person acting under the direction of the Board, or of the Chairman or Managing Director of any officer or servant of the Board, in https://hcservices.ecourts.gov.in/hcservices/ respect of any act done or intended to be done under this Act or any rule or regulation made there under until the expiration of sixty days next after written notice has been delivered or left at the board's office or the place of abode of such officer, servant or person, stating the causes of action, the name and place of abode of the intending plaintiff, and the relief which he claims, and the plaint must contain a statement that such notice has been so delivered or left." 20. By a reading of Section 138, it is seen that Section 138 applies not only to past acts done, but also future acts intended to be done under the Act. The object of notice is to give opportunity to Tamil Nadu Housing Board to explain its point or to re-consider its position/decision or settle the matter. 21. The emphatic language of Section 138 makes it clear that notice under Section 138 is mandatory. Section 138 is in pari materia with Section 80(1) C.P.C. In each case, the Court must see (i) whether name, description and place of abode of the intending plaintiff are given; (ii) whether the cause of action and relief are set out; (iii) whether the notice has been delivered to the Board's registered office or appropriate authority; (iv) whether a suit is instituted after expiry of two months and (v) whether plaint contains a statement that such notice has been so delivered or left. 22. By perusal of Ex.P.17 notice, it is seen that notice has been issued under Section 138 of Tamil Nadu Housing Board Act giving the plaintiff's address, defendant's address, cause of action and the relief sought for. Ex.P.17 notice was issued on 9.6.2000 and within 12 days of Ex.P.17 notice, suit came to be filed on 21.6.2000. Even though Ex.P.17 is a notice issued under Section 138 of the Tamil Nadu Housing Board Act, the suit came to be filed even before expiry of two months stipulated in the Act. The mandatory requirement of expiry of two months after the notice has not been complied with. 23. Durational requirement of pre-suit notice under Section 138 of the TNHB Act is mandatory. It is not as if the plaintiff Association filed the suit immediately after the impugned proceedings (Ex.P.21 dated 19.4.1996). The suit came to be filed only in 2000 nearly four years after Ex.P.21 proceedings. In our considered view, there had been non-compliance of mandatory requirement of Section 138. 24. The learned Senior Counsel for respondents/plaintiffs contended that W.P.No.11879 of 1996 was filed by plaintiff Association and the same was pending and in the writ petition, Tamil Nadu Housing Board had filed the counter and thereby it must be deemed to be a constructive notice and therefore non-compliance of issuance of notice under Section 138 of the Tamil Nadu Housing Board Act cannot be said to be fatal. The learned Senior Counsel would https://hcservices.ecourts.gov.in/hcservices/ further submit that regarding the non-compliance of durational requirement of pre-suit notice under Section 138, no issue was framed and no finding was recorded and therefore the appellant Board must be deemed to have waived that right. 25. The above contention does not merit acceptance. The issuance of notice under Section 138 is mandatory and in fact plaintiff Association was conscious about