IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 01.03.2010 CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMY Second Appeal No.2142 of 2003 & C.M.P.Nos. 15368 and 19886 of 2003 Kovaipudur Self Finance House Owners and Residents Welfare Association Rep. By its Secretary Coimbatore .. Appellant/Plaintiff Vs 1.The Chairman, Tamil Nadu Housing Board, Nandanam, chennai – 600 035. 2.The Managing Director, Tamil Nadu Housing Board, Nandanam, Chenani – 600 035. 3.The Executive Engineer and Administrative Officer, Coimbatore Housing Unit Tatabad, Hutco Colony Coimbatore – 641 012 4.The Allottee Service Manager Coimbatore Housing Unit Tatabad, Hutco Colony Coimbatore – 641 012. .. Respondents/Defendants SECOND APPEAL filed under Section 100 of the Code of Civil Procedure judgment and decree dated 21.1.2003 made in A.S.No.124 of 2002 on the file of II Additional District Court, Coimbatore confirming the Judgment and Decree dated 15.10.2001 made in O.S.No.1054 of 1997 on the file of II Additional Sub Court, Coimbatore. https://hcservices.ecourts.gov.in/hcservices/ For Appellants : Mr.R.Subramanian For Respondents : Mr. Adi Narayana Rao J U D G M E N T The above Second Appeal arises against the judgment and decree in A.S.No.124 of 2002 on the file of II Additional District Court, Coimbatore confirming the Judgment and Decree in O.S.No.1054 of 1997 on the file of II Additional Sub Court, Coimbatore. 2. The plaintiff in the suit is the appellant in the above second appeal and the respondents are the defendants in the suit. 3. The plaintiff filed the suit in O.S.No.1054 of 1997 on the file of II Additional Sub Court, Coimbatore for permanent injunction restraining the defendants from demanding any amount from the owners of the houses in Kovaipudur Neighbourhood Scheme under Self Financing Scheme and to deliver the sale deeds to the owners of the houses in Kovaipudur Neighbourhood Scheme under Self Financing Scheme. 4. The brief case of the plaintiff in the suit is as follows:- (i) According to the plaintiff-Association, the members of the plaintiff-Association are the allottees of houses in the plots belonging to the Tamil Nadu Housing Board in Kovaipudur Neighbourhood Scheme under self financing scheme. Under the self financing scheme, the cost of the construction is completely borne out by the allottees. The construction work would be done by the Housing Board through its contractors in the plots provided by the Housing Board. In other words, houses are built by the Housing Board with the money provided by the allottees. In the month of November 1995, provisional allotment order was issued to some members. (ii) According to the plaintiff-Association, in the provisional allotment order, the tentative cost of the house including the tentative land cost is given. In para 3 of the order, it is mentioned that 'the land cost is only tentative and any increase in the land cost at a later date consequent on the finalisation of the court cases will have to be borne by the allottees based on the extent of plot allotted to them'. As per the provisional order of allotment, the allottees have paid the instalments. Consequently, the allottees have become the https://hcservices.ecourts.gov.in/hcservices/ absolute owners of the houses. The completed houses were handed over to the allottees. The possession certificates were delivered to the owners. (iii) According to the plaintiff-Association, After having paid all the instalments and having taken possession of the houses, the allottees demanded documents of ownership namely, the sale deeds. The Housing Board authorities have failed to deliver the sale deeds in spite of several demands. The authorities, instead of delivering the sale deeds, sent notices demanding heavy amounts over and above the tentative cost mentioned in the provisional order of allotment. In all the notices issued on 17.3.1999, in respect of LIG, MIG and HIG houses, the reason given for escalation of cost is one and the same. The reason for escalation of cost was due to increase in land cost, since the plot is facing 100'/80'/60' road and situated in corner. After the receipt of the notice dated 17.3.1999, the plaintiff-Association requested the Tamil Nadu Housing Board to reconsider their demand and delIver the documents without further delay. On 1.6.1999, the Board sent another notice calling upon the allottees to pay the final cost of the house on or before 30.6.1999. The final cost claimed in the notice dated 1.6.1999 is much more than what was claimed in the notice dated 17.3.1999. (iv) According to the plaintiff-Association, the only reason given by the authorities for escalation of the cost is the alleged increase in the land cost. The other reason given for the alleged escalation of cost is stated to be, due to the facing of some plots to roads measuring 100'/80'/60' width. Yet another reason given is that some plots are corner plots. In almost all cases, the provisional allotment was made on 23.11.1995 but the final cost of the house was arrived on 1.6.1999. Therefore, the plaintiff-Association filed the suit. 5. The brief case of the defendants are as follows: (i) According to the defendants, the suit is not maintainable, since the plaintiff-Association has not followed the mandatory provision of Tamil Nadu State Housing Board Act. The suit filed without issuing proper and valid notice and without giving the statutory period as contemplated under the Tamil Nadu State Housing Board Act, is untenable. Out of the 30 allotments, 4 of the allottees have paid the amount as fixed by defendants' Board and obtained their respective sale deeds and few of them paid the amount towards final cost. (ii) According to the defendants, at the time of https://hcservices.ecourts.gov.in/hcservices/ allotment of site, the cost was fixed only tentatively and the allottees were informed about the tentative cost of the house including tentative land cost. The allottees were specifically informed that the land cost was only tentative and any increase in the land cost, at a later date, will have to be borne by them, based on the extent of plot allotted to them. The agreement executed by the allottees are binding on them. The allottees having entered into the agreement are bound to act as agreed and they cannot go back since the allottees have not come to the court challenging the agreement and not sought for any declaratory decree in respect of the said agreement. The allottees are not the absolute owners of the houses. (iii) According to the defendants, the allottees without paying the lawful amount due i.e., the final cost, demanded the sale deeds, that was rightly refused by the requisitioning board. The Board fixed the final cost during April 1999 and informed about it to all the allottees and the allottees instead of paying the amount, filed the suit. (iv) According to the defendants, as per the agreement rules and regulations, the allottees are bound to pay the interest as agreed. The plaintiff-Association instead of filing of suit for specific performance on payment of proper and valid court fees, to circumvent court fees provisions in a stealthy manner, has filed the present suit in order to escape from payment of court fees. The Tamil Nadu Housing Board is a statutory body implementing social welfare scheme with the public money and borrowed money. Therefore, defendants prayed for dismissal of the suit. 6. Before the trial court, on the side the plaintiff, P.W.1 was examined and 12 documents, Ex.A-1 to Ex.A-12 were marked and on the side of the defendants, D.W.1 was examined and 14 documents, Ex.B-1 to Ex.B-14 were marked. 7. The trial court after taking into consideration the oral and documentary evidences of both sides, dismissed the suit. 8. Aggrieved over the judgment and decree of the trial court, the plaintiff preferred appeal in A.S.No.124 of 2002 on the file of II Additional District Court, Coimbatore and the lower appellate court, after taking into consideration the materials available on record, confirmed the judgment and decree of the trial court and dismissed the appeal. 9. Aggrieved over the judgments and decrees of the https://hcservices.ecourts.gov.in/hcservices/ courts below, the plaintiff has filed the above second appeal. 10. Heard Mr.R.Subramanian, learned counsel appearing for the appellant and Mr.Adi Narayana Rao learned counsel for the respondents. 11. The appellant have raised the following substantial questions of law in the above Second Appeal:- "i) Whether in law, have not the Courts below failed to see that when admittedly the appellant has been allotted under Self Finance Scheme, they are not liable to pay any extra cost? ii) Whether in law are not the courts below wrong in overlooking that when there is no escalation of land cost due to any court proceedings and the constructions had been done by the contractors on tender basis from the money paid by the allottees, there is no question of increase in cost incurred by the board? iii) Have not the courts below failed to see that the allotment being in 1995/Jan.1996, the claim in March/June 1999 is barred by limitation vide 2003(3)CTC 603? iv) Whether in law is not the lower appellate court wrong in holding that the association is not a registered body when the factum of registration was neither disputed in the statement nor raised before the trial court? v) Whether in law has not the lower appellate court misconstrued Ex.A4 as allotment letter overlooking that clause 7 in the same agreement gives the date of allotment as being 22.1.1996?" 12. On a careful consideration of the materials available on record and the submissions made by both the learned counsels, it could be seen that the appellant- Association applied to the respondents for allotment of houses under Self Financing Scheme. As per the said scheme, the applicants have to pay 25% of cost on allotment and the balance 75% in 3 equal instalments, once in four months. The allotments were made by lots in 1995 and the members of the appellant- Association were called upon, to pay the tentative cost. The entire amount of tentative cost was paid and possession was handed over in 1997. https://hcservices.ecourts.gov.in/hcservices/ 13. As per the lease cum sale agreement clause 15, the Chairman of Housing Board is empowered to fix the final cost taking into consideration the development charges, cost of amenities, cost of buildings, etc. Clause 15 also provides that the Board has to fix the price within 3 years from the date of allotment except when the price has to be increased on account of compensation/award by the concerned court, in land acquisition proceedings. 14. Clause 10 of the agreement empowers levying of interest at 18% per annum on any arrears of rent or instalments, which might be due and outstanding by the purchaser to be calculated from the dates, when the dues arose for payment until the date of discharge in full, without prejudice to the other remedies open to the Board. 15. The third respondent issued a demand notice dated 17.3.1999, demanding additional tentative cost due to the increase in land cost for the plots abutting 100'/80'/60' road and for plots situated in the corner. Subsequently on 1.6.1999, the respondents sent another demand stating that the allottees are liable to pay interest for the belated payment of instalments already paid. 16. Learned counsel appearing for the appellant submitted that the appellant-Association are prepared to pay the enhanced cost of the plot claimed by the Tamil Nadu Housing Board. However, submitted that the Board cannot claim interest at 18% on the said amount, from the date of demand. 17. Learned counsel appearing for the appellant, in support of his contentions, relied upon the following judgments: (i) 2002(5) Supreme) 351 (Ratanlan Vachhani v. The Jabalpur Development Authority and anr.), wherein, the Apex Court held as follows: "9. Therefore, it is ordered that the appellant will pay the cost of the extra floor area at the same rate as fixed for calculating the cost of the property which will be done by respondent No.1 or any officer competent to deal with the matter and on the calculation being made, the amount will be deducted from the extra amount of Rs.44,000/- stated to have been paid by the appellant in pursuance of the order of the High Court. After making the said adjustment, the balance sum will be refunded to the appellant within a period of one month." https://hcservices.ecourts.gov.in/hcservices/ (ii) 2004(1) LW 428 (K.V.Krishnan v. The Chairman and Managing Director, etc.), wherein it is held as follows: "There is no explanation as to how interest and penal interest could be charged for the period when the board was very much in possession of the property. It had not parted with the same and no obligation had been cast on the allottee to make any payment on the value of the site." (iii) AIR 2002 SUPREME COURT 2380 (Roochira Ceramics v. H.U.D.A. and others.), wherein, the Apex Court held as follows: "We are of the view that the respondents were entitled to charge interest @ 10% only and not 18%. The authority under law is required to refund the excess of the interest realised from the appellant. For the aforesaid reason, the judgment under appeal is set aside. The respondent-Authority is directed to refund excess interest realised from the appellant within three months from the date of service of certified copy of this order." 18. Countering the submission made by the learned counsel appearing for the appellant, learned counsel for the respondents submitted that as per clause 10 of the agreement, the appellant-Association is liable to pay interest at 18% and they having executed the agreement, are bound by the terms and conditions stipulated therein. 19. On a perusal of clause 10 of the lease-cum-sale agreement, it could be seen that the allottees are liable to pay interest at 18% per annum to the board on any such payments made or expenditure incurred on behalf of the purchaser by the board and which is under the terms of the deed and the purchaser is bound to pay or incur and also on any arrears of rent or instalments, which might be due and outstanding by the purchaser to be calculated from the dates when the dues arose for payment until the date of discharge in full, without prejudice to the other remedies open to the Board. Therefore, by clause-10 of the said agreement, the members of the appellant-Association agreed to pay 18% on the amount due to the board. 20. Under clause 11 of the agreement, it is made clear by the Board that the cost fixed on the date of agreement is only tentative. 21. Under clause 15 of the agreement, the Board https://hcservices.ecourts.gov.in/hcservices/ agreed to sell the property to the allottees for such price as the Chairman of the Board may at any time in his sole discretion fix. 22. Therefore, from the agreement, it is clear that the members of the appellant-Association had agreed to pay interest at 18% on the amounts due. It is not in dispute that under the Self Financing Scheme, the members of the appellant-Association paid the tentative cost of the plot within time. Since the demand for the escalated cost was made and the said amount remained unpaid within the time stipulated in the demand, the members of the appellant-Association are liable to pay interest on the escalated amount. That apart, the appellant-Association has not challenged the relevant clause in the lease-cum-sale agreement. Without challenging the relevant clause in the agreement, it cannot be said that the claim of interest on the escalated amount is arbitrary or unreasonable. The appellant- Association having agreed to the clauses mentioned in the agreement, is bound by the said clauses. 23. Further, it could be seen that the plot was allotted in the year 1995 and possession of the building was handed over in April 1997 and subsequently the demands Exs. A-8 and A-10, dated 17.3.1999 and 1.6.1999, were sent to the allottees. 24. Though the trial court found that the Housing Board should fix the value of the land correctly giving details of the same to the allottees, the said point, need not be taken into consideration for the reason that now the appellant-Association is willing to pay the escalated amount to the Housing Board. 25. With regard to the demand made by the Housing Board, the lower appellate court has rightly come to the conclusion that the possession of the house was given to the allottees on 28.2.1997 and the demand for the escalated cost was made on 17.3.1999 and 1.6.1999. Since the demand for escalated cost was made within three years from the date of handing over possession, the same are just and proper. Therefore, the appellant-Association is liable to pay the amounts as demanded by the respondent-Board under Exs.A-8 and A-10 notices dated 17.3.1999 and 1.6.1999 respectively together with interest at 18% and get the sale deed registered in their name by the Tamil Nadu Housing Board. https://hcservices.ecourts.gov.in/hcservices/ 26. In these circumstances, I find no ground much less any substantial question of law to interfere with the concurrent findings of the courts below. The above second appeal is liable to be dismissed. Accordingly, the above Second Appeal is dismissed. Consequently, connected miscellaneous petitions are closed. However, there shall be no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar rj To 1.II Additional District Judge, Coimbatore. 2.II Additional Subordinate Judge, Coimbatore. 3.The Section Officer, VR Section, High Court,Madras. +2cc to Mr.R.Subramanian,Advocate Sr 13932,14312 NG(CO) km/10.3. S.A. No.2142 of 2003 https://hcservices.ecourts.gov.in/hcservices/