R. S. A. No. 2369 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : R. S. A. No. 2369 of 2009 Date of Decision : February 11, 2011 Secretary, Market Committee, Ismilabad, District Kurukshetra .... Appellant Vs. Mehar Singh and others .... Respondents CORAM : HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Mr. Raman B. Garg, Advocate for the appellant. Mr. Ashish Pannu, Advocate for the respondents. * * * L. N. MITTAL, J. (Oral) : Defendant no.2 – Secretary, Market Committee, Ismilabad has filed the instant second appeal after remaining unsuccessful in both the courts below. Respondents/plaintiffs filed suit against Market Committee, Ismilabad through its Chairman/Administrator (defendant no.1) and Secretary, Market Committee, Ismilabad (defendant no.2). In open auction held on 24.07.1998 by the defendants, plaintiffs were successful bidders for R. S. A. No. 2369 of 2009 2 one booth plot each. Allotment letters dated 01.05.1999 were issued to the plaintiffs. They deposited 25% of the auction money within the stipulated period. They had option of depositing the balance 75% in lump sum without interest or in six half yearly instalments. First instalment was due on 01.11.1999 and was paid in time. Second instalment was due on 01.05.2000, but prior to it, the plaintiffs filed suit on 29.04.2000. The plaintiffs alleged that the defendants agreed that the site of the plots, which was a pond, would be converted into plots and possession would be delivered to the plaintiffs immediately. Dimensions of the plots could vary at the time of actual delivery of possession. According to Clause 12 of the allotment letters, plaintiffs were required to complete construction over the plots within two years from the date of letters of allotment, failing which they were liable to pay penalty (in fact, extension fee). The plaintiffs pleaded that they approached the defendants to carve out the plots and to deliver them possession so that they could start their construction, but the defendants did not do so. The defendants had not deliver the possession of the plots to the plaintiffs till the filing of the suit. The defendants were also to lay roads etc. in accordance with plan, but they did not do so. The plaintiffs were ready to pay the entire price subject to delivery of possession. The plaintiffs accordingly sought mandatory injunction directing the defendants to convert the pond site into plots along with roads etc. and to deliver possession of the respective plots to the plaintiffs by R. S. A. No. 2369 of 2009 3 making demarcation along with dimensions of the plots. The plaintiffs also sought injunction against demand of interest and penalty by the defendants from the plaintiffs and not to cancel the allotment of the plots to the plaintiffs. Injunction against resumption of plots was also claimed. Injunction against demand of due instalments till delivery of possession was also sought. In the alternative, plaintiffs sought return of their deposited amount with interest @ 18% per annum. The defendants pleaded that according to the terms and conditions of the auction, they were not liable to level the uneven site. The plaintiffs never approached the defendants for delivery of physical possession of the plots. The defendants claimed their right to charge interest along with due amount of instalments because the defendants were always ready to give physical possession of the plots. Various other pleas were also raised. Learned Additional Civil Judge (Senior Division), Pehowa, vide judgment and decree dated 21.07.2005, partly decreed the plaintiffs' suit directing the defendants not to resume the plots, not to enforce Clause No.12 of the allotment letters (requiring the allottees to complete construction within two years of the date of allotment letters) for two years from the date of delivery of possession and not to charge penal interest on the instalments that became due during pendency of the suit. First appeal preferred by defendant no.2 has been dismissed by learned Additional R. S. A. No. 2369 of 2009 4 District Judge (Adhoc), Fast Track Court, Kurukshetra, vide judgment and decree dated 22.09.2008. Feeling aggrieved, defendant no.2 has filed the instant second appeal. I have heard learned counsel for the parties and perused the case file. Learned lower appellate court, besides dismissing the first appeal on merits, also observed that the appeal had not been validly filed as Secretary of the Market Committee was not authorized by resolution of the Market Committee to file the said appeal. In this context, learned counsel for the appellant contended that vide resolution dated 24.08.2005, which was also placed before the lower appellate court, Secretary of the Market Committee was authorized to pursue the court cases of the Market Committee. Learned counsel for the appellant also contended that vide resolution dated 13.08.2010, aforesaid act of the Secretary in filing first appeal as well as the instant second appeal has been ratified by the Market Committee. Consequently, neither first appeal could be dismissed on this ground nor the instant second appeal can be said to be non-competent on this ground. Reliance in support of this contention has been placed on a judgment of Hon'ble Supreme Court in the case of United Bank of India vs. Naresh Kumar and others reported as 1997 AIR (SC) 3; followed by this Court in two judgments namely Municipal Corporation, R. S. A. No. 2369 of 2009 5 Ludhiana vs. M/s Preet Builders Pvt. Ltd. reported as 1998 (3) P. L. R. 352 and Municipal Committee, or Municipality, Sirhind vs. Bawa Uttam Gir Chela Parshotam Girmohtmin reported as 2002 (1) R. C. R. (Civil) 316. In the case of United Bank of India (supra), it was held that dismissal of suit filed by Public Corporation like Bank, on the ground that plaint is not signed and verified by competent person, is not proper because public interest cannot be defeated on mere technicalities. In the case of Municipal Corporation, Ludhiana (supra), suit was filed against Municipal Corporation along with its officers. Appeal was filed by Municipal Corporation alone against interim injunction order. It was held that the appeal could not be dismissed on technical ground and the appellate court could call upon the appellant to cure the defect. In the case of Municipal Committee, or Municipality, Sirhind (supra), appeal was filed by the same Officer, who had been authorized to defend the suit, without passing of fresh resolution. There was subsequent resolution ratifying the said act of the Officer in filing the appeal. It was held that the technical defect was curable. No judgment to the contrary has been cited. In the instant case, Secretary of the Market Committee was authorized to pursue the suit on behalf of Market Committee vide resolution dated 14.08.2005. Moreover, act of the Secretary in filing first appeal as well as the instant second appeal has been ratified by the Market Committee vide R. S. A. No. 2369 of 2009 6 resolution dated 13.08.2010. Consequently, defect, if any, in filing first appeal and second appeal, stands ratified. In addition to it, Secretary, Market Committee himself was party to the suit as defendant no.2 and consequently, being defendant no.2, Secretary could file the first appeal as well as the second appeal. Consequently, aforesaid finding of the lower appellate court that the first appeal suffered from technical flaw cannot be accepted. Coming to the merits of the appeal, learned counsel for the appellant contended that the lower appellate court has relied on a Division Bench judgment of this Court namely M/s Shanti Kunj Investment (Pvt.) Ltd. vs. U. T. Administration, Chandigarh and others reported as 2001 (1) P. L. R. 838, but this judgment was overruled and set aside by Hon'ble Supreme Court in the case of Municipal Corporation, Chandigarh and others vs. Shantikunj Investment (P) Ltd. and others reported as (2006) 4 Supreme Court Cases 109. It was held by the Supreme Court that allottees are not exonerated of their obligation to pay the instalments on the ground of omission on the part of administration to provide statutory amenities. Learned counsel for the appellant has also cited two unreported judgments of this Court namely M/s Amar Singh Pritam Singh vs. State of Haryana and others (CWP No. 2029 of 2001 – decided on 01.05.2009) and Pawan Kumar vs. State of Haryana and R. S. A. No. 2369 of 2009 7 another (CWP No. 8129 of 2008 – decided on 12.05.2009), wherein it has been laid down in similar cases that allottee is liable to pay penal as well as compound interest as per terms and conditions of the allotment letter. Learned counsel for the appellant also contended that the defendants have been permanently injuncted from resuming the plots, which is impermissible. It was contended that now, if the plaintiffs do not pay the balance price or violate other conditions of allotment, even then the defendants would be debarred from resuming the plots, if decrees of the courts below are allowed to stand. Learned counsel for the appellant also contended that as per terms and conditions of the allotment letters, plaintiffs were required to complete the construction within two years of the date of allotment letters and not within two years from the delivery of possession. On the other hand, learned counsel for the respondents contended that as per conditions in the allotment letters, dimensions of the plots mentioned therein, were subject to variation at the time of demarcation and delivery of possession at the spot and consequently, without demarcation with exact dimensions and delivery of possession, plaintiffs could not even start the construction. It was also contended that without delivery of possession, the defendants are not entitled to charge interest. Reference in this regard was made to observations of Hon'ble Supreme Court in the case of Municipal Corporation, Chandigarh (supra), R. S. A. No. 2369 of 2009 8 whereby the High Court was required to examine individual cases. It was observed that omission on the part of Chandigarh Administration to provide statutory amenities would entitle the allottee to proportionate relief in respect of interest and penalty for delay in payment. Learned counsel for respondents also relying on an unreported judgment of this Court in the case of Market Committee, Ismilabad and another vs. Sham Sunder (RSA No. 3948 of 2005 – decided on 28.01.2009) contended that in similar case, Market Committee, Ismilabad lost the appeal. I have carefully considered the rival contentions. In so far as absolute injunction against resumption has been issued by the courts below, the same is patently perverse and illegal and therefore, unsustainable in law. If the said injunction is allowed to stand, the plaintiffs would be able to violate all the terms and conditions of the allotment with impunity and the defendants would be unable to take any action against the plaintiffs. This cannot be permitted. The defendants do have a right to resume the plots in accordance with law, if the plaintiffs violate the terms and conditions of the allotment or any other terms and conditions governing the allotment. Obviously, defendants cannot resume the plots except in accordance with law. Consequently, decrees of the courts below have to be modified to this extent. As regards period of construction and charging of interest, it R. S. A. No. 2369 of 2009 9 has come in evidence that the defendants, for the first time, offered delivery of possession of the plots to the plaintiffs vide different letters including one letter dated 14.08.2000 requiring one plaintiff to take possession on 17.08.2000. Obviously, prior to offer of possession (offered on different dates to different plaintiffs), the plaintiffs could not commence construction on the plots, when the plots were not even carved out and exact dimensions of the plots were also not known. Vide letter Ex.D-2, whereby possession was offered to one plaintiff, it was stated that plot is ready for delivery of possession. It would depict that prior to it, the plots were not ready for delivery of possession. Consequently, plaintiffs could not raise construction before the possession of the plots was offered to them. It is, therefore, manifest that condition no.12 in the allotment letters that construction has to be completed within two years of the date of allotment letters is patently arbitrary and unenforceable and the same has to be read down to mean that the construction shall be completed within two years of the offer of possession. Otherwise, the period of two years from letter of allotment could even expire even before offer of possession, thereby making the plaintiffs liable to penal action without any fault on their part. Accordingly, in the instant case, the plaintiffs were obliged to complete the construction within two years commencing from the respective dates of offer of possession and not from date of allotment letters. In not doing so, they are liable to pay extension fee in accordance with law. R. S. A. No. 2369 of 2009 10 As regards interest, the defendants cannot charge interest for the period before offer of possession of the plots to the plaintiffs. However, defendants can charge interest on overdue instalments i.e. the instalments which were not paid in time. However, the first instalment was paid in time and therefore, defendants have no right to charge interest on amount of first instalment because by then, possession of plots was not offered. The plaintiffs were liable to pay subsequent instalments on due dates without interest till when the possession had not been offered, but they did not pay the same in time. Consequently, plaintiffs are liable to pay interest for the defaulted period on the instalments, which became due before offer of possession. Since after the dates of offer of possession, the defendants are entitled to charge interest in accordance with terms and conditions of the allotment letters. There is no justification for the courts below to have debarred the defendants from charging penal interest on the instalments which became due during the pendency of the suit. Judgments in the cases of M/s Amar Singh Pritam Singh (supra) and Pawan Kumar (supra) support the right of defendants to charge penal interest in accordance with terms and conditions of allotment. Learned counsel for the respondents contended that the respondents/plaintiffs approached the defendants to pay the amount of due instalments, but they refused to receive the same. The contention has been R. S. A. No. 2369 of 2009 11 noticed simply to be rejected because there is neither any pleading to this effect nor any material on record to substantiate the same. Following substantial question of law arises for determination in the instant second appeal :- “Whether direction by mandatory injunction given by courts below is perverse and illegal and therefore unsustainable in the facts and circumstances of the case?” For the reasons already recorded, the aforesaid substantial question of law is answered in favour of appellant to the extent indicated herein before. As a necessary upshot of the aforesaid discussion, the instant second appeal is allowed partly. Judgments and decrees of the courts below are modified and suit of the plaintiffs is decreed partly to the effect that plaintiffs were entitled to complete construction within two years from the dates of offer of possession instead of from the date of allotment letters and necessary consequences shall follow accordingly. The defendants shall not resume the plots except in accordance with law. The defendants shall not charge interest on the instalments which became due before offer of possession. Defendants shall be entitled to charge interest on such overdue instalments for the period of default. However, since after offer of R. S. A. No. 2369 of 2009 12 possession, the defendants shall be liable to charge interest in accordance with terms and conditions of allotment letters. February 11, 2011 ( L. N. MITTAL ) monika JUDGE