C.W.P NO. 10494 OF 1988 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P NO. 10494 OF 1988 DECIDED ON : 24.02.2009 Rohtash ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 1531 OF 1989 Madan Lal and others ...Petitioners versus State of Haryana and others ...Respondents C.W.P NO. 2213 OF 1989 Subhash Garg ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 4075 OF 1989 Ashok Kumar and another ...Petitioners versus State of Haryana and another ...Respondents C.W.P NO. 5581 OF 1989 Sulochna and others ...Petitioners versus C.W.P NO. 10494 OF 1988 -2- State of Haryana and another ...Respondents C.W.P NO. 6594 OF 1989 Suresh Kumar Mehta ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6595 OF 1989 Sujan Singh ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6596 OF 1989 Janak Raj and another ...Petitioners versus State of Haryana and another ...Respondents C.W.P NO. 6598 OF 1989 Om Prakash and others ...Petitioners versus C.W.P NO. 10494 OF 1988 -3- State of Haryana and another ...Respondents C.W.P NO. 6599 OF 1989 Kamal Preet Garg ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6600 OF 1989 Raj Kumar ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6601 OF 1989 Dhana Bhagat ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6602 OF 1989 Koshila ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6603 OF 1989 Ram Nath ...Petitioner versus C.W.P NO. 10494 OF 1988 -4- State of Haryana and another ...Respondents C.W.P NO. 6604 OF 1989 Parkash Chand ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6605 OF 1989 Khazan Singh ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6606 OF 1989 Surinder Kumar ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6607 OF 1989 Soni Ram ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6608 OF 1989 Maghar Mal ...Petitioner versus C.W.P NO. 10494 OF 1988 -5- State of Haryana and another ...Respondents C.W.P NO. 6609 OF 1989 Hans Raj ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 6610 OF 1989 Maghar Mal ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 13102 OF 1989 Pawan Kumar ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 13103 OF 1989 Bharat Bhushan ...Petitioner versus State of Haryana and another ...Respondents C.W.P NO. 13104 OF 1989 Suresh Kumar ...Petitioner versus C.W.P NO. 10494 OF 1988 -6- State of Haryana and another ...Respondents CORAM : HON'BLE MR. JUSTICE SURYA KANT Present : Mr. Mohan Jain, Senior Advocate with Mr. Jaswant Jain, Advocate and Mr. Vikram Jain, Advocate and Mr. Dinesh Thakur, for the petitioner (s). Mr. Mohan Jain, Senior Advocate with Mr. Vikram Jain, Advocate and Mr. Dinesh Thakur, for the petitioners. (in CWP No. 1531 of 1989). Mr. Mohan Jain, Senior Advocate with Mr. Vikram Jain, Advocate and Mr. Dinesh Thakur, for the petitioner. (in CWP No. 6595 of 1989). Mr. C. B. Kaushik, Advocate and Mr. Raman Gaur, Advocate, for HUDA. SURYA KANT, J. (ORAL) This order shall dispose of C.W.P Nos. 10494 of 1988, 1531 of 1989, 2213 of 1989, 4075 of 1989, 5581 of 1989, 6594 of 1989, 6595 of 1989, 6596 of 1989, 6598 of 1989, 6599 of 1989, 6600 of 1989, 6601 of 1989, 6602 of 1989, 6603 of 1989, 6604 of 1989, 6605 of 1989, 6606 of 1989, 6607 of 1989, 6608 of 1989, 6609 of 1989, 6610 of 1989, 13102 of 1989, 13103 of 1989 and 13104 of 1989, as common question of law and facts are involved in these writ petitions. For brevity, the facts are C.W.P NO. 10494 OF 1988 -7- being taken from C.W.P No. 10494 of 1988. The petitioner seeks a mandamus to direct the respondent - HUDA authorities to comply with the terms and conditions of the allotment letter dated 31.03.1982 (Annexure P-1), deliver possession of the allotted plot to him and charge interest from the date of delivery of possession only. He has also sought a direction for providing basic amenities in the New Mandi Township at Ratia. The petitioner purchased the Industrial Plot No.3 measuring 4 kanals in an open auction held on 04.02.1982 at Ratia. According to him, it was announced at the time of auction that possession of the plot will be delivered within six months. It was for the reasons only that Clause 11 of the allotment letter stipulated that the petitioner shall complete the building within two years from the date of issue of allotment letter, which could further be extended for another six months only. The petitioner's grievance is that on one hand no development work, whatsoever, has taken place and the basic amenities like roads, sewerage, electricity were not being provided nor the possession being offered to enable him and on the other hand, the petitioner was being subjected to penal interest on the delayed installments. Notice of motion was issued and in response thereto, the respondents have filed their counter-affidavit. Though it has been denied that any assurance to deliver possession of the plot within six months from the date of C.W.P NO. 10494 OF 1988 -8- auction was given at the time of auction, however, paras 4 and 10 of the reply read as follows : “4. That the contents of para No.4 of the writ petition are wrong and hence denied. It is submitted that the terms and conditions of allotment letter are binding upon the allottee if the site of possession is undeveloped. Then the condition No.11 of the allotment letter may be followed by the answering respondent. In the case of the petitioner these conditions are not followed, by the competent authority. The case of the petitioner does not fall in the condition No.11 of the allotment letter. The possession of the plot was never offered to the petitioner by the answering respondent as the development work was not completed of the site allotted to the petitioner. 10. In reply to para No.10 of the petition, it is submitted that the Clause 6 and 7 as mentioned in the petitioner mainly related to the case of building or undeveloped land. The possession shall be delivered within 90 days from the date of allotment letter. The possession of the Industrial Plot of the petitioner can only be given after the construction of road, sewerage and provision of lighting etc.” (emphasis applied) C.W.P NO. 10494 OF 1988 -9- When this matter came up for hearing before the learned Single Judge of this Court on 01.12.2004, the following order was passed : “ Mr. Mohan Jain relies on a judgment of the Supreme Court in the case of Roochira Ceramics vs. HUDA and others, (2002) 9 Supreme Court Cases 599 and submits that the respondents could only charge, the rate of interest which was agreed upon between the parties in the contract. That interest could also only be charged from the date when the respondents have completed the development work and given the possession to the allottees. In support of the second submission, Mr. Jain relies on the judgment of this Court in the case of Aruna Luthra vs. State of Haryana, PLJ 1997 (2) Page 1. Learned counsel for the respondent-HUDA seeks time to inform the Court the date when the development was completed and the possession was handed over to the petitioner (s).” On January 19, 2005, the learned Single Judge, passed another order in the following terms : C.W.P NO. 10494 OF 1988 -10- “ The respondents are directed to place on record complete details as to when the possession was offered to all the petitioners and as to when the development of the area was completed. The respondents shall also state that in case the development work will be completed, the maximum period the development work will be completed. The respondents shall indicate a proposal for re-scheduling of the installments to be paid by the petitioners from the date of possession is offered to them. The amount of interest shall also be calculated in accordance with law settled by the Supreme Court as well as by the High Court. Copy of the order be given dasti on payment of usual charges.” During the course of hearing, it transpires that most of the development works except the electrification stood completed in the April, 1994, whereas the electrification work has also been completed in the year 1995. It further appears that most of the petitioners have already deposited 25% of the allotment price and due to delay on the payment of the balance installments on their part, the respondents are insisting to charge penal interest @ 15%. The petitioner's contention is that they are liable to pay interest @ C.W.P NO. 10494 OF 1988 -11- 10% per annum on the delayed payments. In order to appreciate the rival contentions regarding the rate of interest, it would be relevant to refer to Clauses 4, 5 and 11 of the allotment letter which read as under : “4. For your guidance the due date of installments and its amount is given in the schedule below.” the payment may be made through a Demand Draft/ drawn in favour of Administrator, New Mandi Township, Haryana on any scheduled bank in the State where there is a branch of the State Bank of India. The Demand Draft may be sent to this office giving full particulars of the remittance in the covering letter for adjustment in your account in this office. -.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-. No. of The date Amount of Interest Total Rem of of Instal- Installment arks, Instal- -lment if any lment. -.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-. Date Month/Year 01. 9/82 being 12565-00 3391-83 15956-88 02. 3/83 the 12562-00 2326-45 15388-45 03. 9/83 same 12562-00 2261-16 14823-16 04. 3/84 as of 12562-00 1695-87 14257-87 05. 9/84 issue 12562-00 1130-58 13692-58 06. 3/85 of this 12562-00 565-29 13127-29 letter of allotment -.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-. N. B : In case of failure to deposit the installments by the 10th of the month following the month in which the installment falls due, penalty upto 10% of the due C.W.P NO. 10494 OF 1988 -12- installment will be charged under Section 12 of the Act ibid. The area and dimension shown above are as given in the respect layout plan and subject to variation at the time of actual possession. 5. You are requested to please remit a sum of Rs.75375/- on account of 75% balance sale price either 30 days of receipt of this allotment letter without interest of six half yearly installments together with interest of 9% per annum accruing from the date of issue of this letter. The first installment shall be payable at the expiry of six months from the issue of this letter. 11. The transferee shall complete the building within two years from the date of issue of the allotment order. The time limit may be extended for a period not exceeding six months by the Administrator if he is satisfied that the failure to complete the building within the said period was due to reasons beyond the control of the transferee beyond that, sanction of the State Government be required on an application for an extension of time”. The petitioners had purchased the plots in an open auction for industrial or residential purposes. Even if there was no C.W.P NO. 10494 OF 1988 -13- assurance for carrying out the development activities within some stipulated period, the respondents were expected to complete the development works within a reasonable period as is discernible from Clause 11 of the allotment letter. An allottee could not have constructed the premises within two years of the allotment letter unless the basic amenities like metaled roads, sewerage, water supply and electricity were provided. Contrary to it, the admitted and undisputed facts on record reveal that though the allotments were made in the year 1982, the basic amenities were provided after a long period of over 13 years in the year 1994-95 only. It was in this back drop that this Court vide order dated January 19, 2005, having regard to the principles laid down in a previous judgment titled as, “ Aruna Luthra vs. State of Haryana, PLJ 1997 (2) Page 1” directed the respondents to calculate the interest at the rate approved by the Supreme Court in “Roochira Ceramics vs. HUDA and others”, (2002) 9 Supreme Court Cases 599 and only from the date of giving possession to the allottees. As regards the rate of interest chargeable by the HUDA authorities, the controversy has been set at rest by a recent judgment of the Supreme Court in the case of “HUDA vs. Raj Singh Rana” AIR 2008 SC 3035 (Annexure P-27). It has been held by their Lordships that wherever there is a bilateral agreement between the parties prescribing the rate of interest, the parties shall be bound by the same and the HUDA authorities C.W.P NO. 10494 OF 1988 -14- shall be entitled to recover the interest accordingly. However, if no such agreed rate is prescribed, in that event, the HUDA shall be entitled to levy interest in accordance with the provisions of Section 3 of the Interest Act, 1978. The Apex Court's judgment in Raj Singh Rana's case (supra) has been further explained by a Division Bench of this Court in C.W.P No. 17354 of 2007 (Ram Gopal vs. HUDA and another) in the following terms : “15. In view of the above, the writ petition is disposed of with a direction to the respondents to calculate interest by applying current rate of interest which means the highest of the maximum rates at which interest may be paid on different classes of deposits by different classes of scheduled banks in accordance with the directions issued to the banking companies by the Reserve Bank of India under the Banking Regulation Act, 1949. It would necessarily exclude the rate of interest on the accounts maintained in saving or those maintained by charitable or religious institutions. The afore- mentioned calculations shall be in respect of default in payment of installment as well as in respect of the additional price required to be paid on account of increase of the acquisition cost. However, it is further held that the petitioner shall not be liable to pay any C.W.P NO. 10494 OF 1988 -15- penalty after he has been subjected to payment of interest. The writ petition stands disposed of in the above terms”. Adverting to the facts of the present case, suffice it to say that had the respondents fulfilled their part of obligation arising out of the allotment letter dated 31.03.1982 (Annexure P-1) and offered possession to the petitioner within a reasonable period after providing basic amenities, this Court would have no difficulty to hold that in the event of delay in payment of the due installments, the petitioner would be liable to pay the penal interest upto 10%, as incorporated in Clause 4 of the allotment letter as that would be the bilaterally agreed rate of interest/penalty. However, as noticed earlier, the respondents themselves have failed to discharge their obligations, therefore, it will be wholly unjust and unfair for them to insist that the petitioner must pay the due installments along with the interest/penal interest. Such a predicament can be resolved by striking balance between the competing claims, by permitting the respondents to charge simple interest at the rate of 10%, as was permitted by the Supreme Court in “Roochira Ceramics vs. HUDA and others” (2002) 9 Supreme Court Cases 599 and by further permitting them to invoke the penalty clause, if the allottee fails to make the payment of due installments even when C.W.P NO. 10494 OF 1988 -16- all the development activities have been carried out and possession offered. No such situation arose in the present case prior to the year 1994-95, as admittedly the development of the area could be completed by the HUDA authorities in the year 1995 only. The HUDA has its own statutory regulations known as the 'Haryana Urban Development Authority (Disposal of Land and Buildings) Regulations, 1978'. Regulation 5 of these regulations lays down the “procedure in case of sale or lease of land or building by allotment”. Clause (7) thereof reads as follows : “ (7) Each installment would be recoverable together with interest on the balance price/premium, at the rate as may be decided by the Authority at the time of allotment. The interest shall, however, accrue from the date of offer of possession of land/building. No interest shall be payable if the whole of the balance price/premium is paid in full within sixty days of the offer of possession. If at any time the transferee opts to make the balance payment in full, he shall be entitled to do so and interest shall be charged on the balance amount only for the period from the date the last installment was due tot he date he makes full payment”. (emphasis added). Similarly, Regulation 6 deals with “sale or lease of C.W.P NO. 10494 OF 1988 -17- land or building by auction”. Clause (3) provides that “the payment of balance of the price/premium, rate of interest chargeable and the recovery of interest shall be in the same manner as provided in sub-regulations (6) and (7) of Regulation 5.” It would, thus, be seen that as per their own regulations, the respondent authorities are entitled to charge interest from the date of offer of possession of the land/building and not prior thereto. Relying upon these provisions, a Division Bench of this Court in “Aruna Luthra vs. State of Haryana”, PLJ 1997 (2) Page 1 has held that the HUDA authorities are entitled to charge interest as per the rate submitted in the letter of allotment, only from the date of offer of possession to the allottee. In the instant case, it is the respondents' own stand in the written statement that possession could not be offered to the petitioner as development works are still incomplete. Those works were completed in the year 1994-95. There was, thus, no occasion to offer or deliver the possession to the petitioner prior to the year 1995. In that event, even if the petitioners have defaulted in payment of due installments no penal interest as per the 'note' given below clause No.4 of the allotment letter could be charged. The petitioners could at the best be held liable to pay interest as per Clause 5 of the allotment letter for the reason that they were given an option to make the payment either in lump- sum or in six half yearly installments together with interest. For the reasons afore-stated, these writ petitions are C.W.P NO. 10494 OF 1988 -18- allowed; it is directed that no penal interest shall be recoverable from the petitioners till 31.12.1995 on the delayed payment of installments. During the said period, the petitioners shall be liable to pay the simple interest at the rate of 10%. However, if the petitioners have failed to deposit the due installments even after the possession was offered on completion of development works, in that event, the respondents shall be entitled to charge the penal interest as per the 'note' given below Clause 4 of the allotment letter dated 31.03.1982. In case the petitioners have already been asked to pay the penal interest, the excess payment, if any, shall be refunded within a period of three months from date of receipt of certified copy of this order. Those petitioners who are yet to deposit the due installments shall be given two months' period to deposit the entire arrears from the date of receipt of certified copy of this order. In the peculiar facts and circumstances, it is further directed that the petitioners shall be granted a period of one year for completion of construction, failing which, they shall be liable to pay the extension fee/non-construction charges. No costs. FEBRUARY 24, 2009 (SURYA KANT) shalini JUDGE