IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No.6671 of 1989 Date of decision:15.03.2010 Harjinder Singh Saggu ....Petitioner versus The Financial Commissioner, Taxation, Punjab and others. ....Respondents CORAM: HON’BLE MR. JUSTICE K. KANNAN ---- Present: Mr. Aman Choudhary, Advocate, for the petitioner. Mr. Manohar Lall, Additional Advocate General, Punjab. ---- 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. ---- K.Kannan, J. 1. The validity of an order of resumption of a property over which a cinema theater complex has been put up by the petitioner is the subject that falls for consideration in the writ petition. 2. At an auction held on 16.08.1982, the petitioner had bid for the higher price for Rs.10 lakhs for a size of plot measuring 270 x 195 square feet and an amount of Rs.2,50,000/- which had been paid as earnest had been adjusted towards the amount payable and the balance of Rs.2,75,000/- was required to be paid within 30 days of the letter of allotment or 6 half yearly instalments together with interest at 6% per annum accruing from the date of issue of the allotment letter. One of the Civil Writ Petition No.6671 of 1989 - 2 - clauses in the auction notice provided for an additional penalty of 10% for non-payment of any instalment that fell due on or before the date. Clause 12 of the auction notice provided that the allottee should complete the building within a period of two years from the date of the issue of the allotment letter and that the time limit could be extended for a period not exceeding 6 months by the Administrator if he was satisfied that the failure to complete the building was due to reasons beyond the control of the individual. Clause 20 is most crucial, which is what gives rise to the cause for this action and, therefore, requires to be reproduced verbatim:- “20. Should any transferee fail to observe or comply with any of the foregoing conditions or fail to construct the plot within time specified the plot will be resumed and his deposit which in no case shall exceed ten per cent of the total amount of the considerations money interest and other dues payable in respect of the sale of the site or building, or both shall be forfeited to the State Government which may have the property resold by the public auction.” Yet another clause is general but just as well important that the sale brought through the auction shall be governed by the provisions of the New Mandi Township Act of 1960. 3. That the petitioner had taken possession of the plot and that he had completed the construction within the stipulated period, is not in dispute. The petitioner, who had opted to make the payment in instalments, however, failed to do so and there had been repeated notices at various intervals. Some of the notable dates are that the possession was given on 01.09.1982, the allotment letter was issued on 16.08.1982 Civil Writ Petition No.6671 of 1989 - 3 - and the 1st notice under Section 13(1) of the 1960 Act was issued on 30.05.1983. The 2nd notice was issued on 23.02.1983 and in the meanwhile, 2nd and 3rd instalments had already fallen due. Yet another notice was issued on 15.05.1985 imposing a penalty as provided under Section 13(2) and consequently a notice under Section 13(3) on 23.01.1986 calling upon the petitioner to pay all the instalments i.e. 1 to 6 which had fallen due at that time. The petitioner was put on notice of resumption and forfeiture and, therefore, as a final step towards resumption, a show cause notice was issued and it was set down for hearing on 05.05.1986. The petitioner sought for an extension which was turned down and the hearing was adjourned to 05.06.1986. Three more instances had been given and the last notice for the hearing date was on 25.12.1987, when the Administrator ultimately passed an order of resumption finding that the petitioner had persistent in default and the resumption therefore became inevitable as provided under the terms of the auction notice, the source of power however being the New Mandi Township (Development and Regulation) Act of 1960. 4. The petitioner had preferred an appeal against the order of resumption which was passed by the Administrator on 01.03.1988 and the Land Commissioner, Patiala Division affirmed the decision of the Administrator in the appeal that was heard and disposed of on 26.07.1988. The revision had been filed before the Financial Commissioner, who recorded the fact of how all the requisite formalities of the Act had been followed and how the default of the petitioner left no room for reconsideration of the issue. Accordingly, the revision was Civil Writ Petition No.6671 of 1989 - 4 - dismissed on 06.02.1989. It is this order that is in challenge before this Court. 5. If we must only go by the terms of the auction notice and the consequence of a default despite notices, the petitioner could have no remedy. The attempt of the petitioner was, therefore, to show that (i) the power of resumption is an extraordinary power which should be used sparingly and authorities cannot be guided merely by the fact of default and the terms of the auction notice; (ii) The general condition obtaining in Punjab about that time when it was at the peak of militancy and the public had been living in constant fear and when all the businesses had been at low levels of operations. The strict application of the terms would be unjust; (iii) the petitioner had at all times been offering to make the payments of instalments, although belatedly and he had not completely defaulted as was made to appear. The respondents had deliberately refused to receive the tender and returned the amounts. Even during the pendency of the petition, the petitioner had at all times affirmed that he was willing to pay the interest for the delayed payments as well as the penalty as provided under the auction notice, but the tenders were not accepted by the respondents; (iv) the statutory clause which was invoked for exercising the right of resumption was itself quashed by the Hon'ble High Court in a decision as ultra vires and, therefore, the justification for resumption stood without any legal foundation. 6. The learned counsel appearing for the petitioner would, therefore, rely on the decision in Dharam Pal and others Versus State Civil Writ Petition No.6671 of 1989 - 5 - of Punjab and another-1978 PLJ 396, which held that Section 13 of the Act was ultra vires and the section that set down no guidelines as to when the Government would resort to the remedies of resumption was bound to be quashed. The Section which the decision quashed as ultra vires is reproduced:- “13. Time within which the building is to be erected: [Section 25(a)]- The transferee shall complete the building within two years from the date of the issue of the order of allotment in accordance with the conditions prescribed by the State Government in this behalf, if any. This time limit may be extended by the Administrator for a period not exceeding six months 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 shall be required on an application for extension of time.” 7. The learned counsel appearing for the respondents is quick to point out that after the decision of the Division Bench, the Act was amended with reference to Section 13 and it was only the amended provision which was resorted to by the authorities. The amended provision took into account the objections which the Division Bench found in its judgment and it had given various stages before final order of resumption could be made. The amended provision of the Act as substituted vide Punjab Act 16 of 1981 reads as under :- “13. Imposition of penalty for failure to pay consideration money and resumption and forfeiture in certain cases- (1) If any transferee fails to pay the consideration money or any instalment thereof on account Civil Writ Petition No.6671 of 1989 - 6 - of sale of any site or building, or both, under Section 3, the Administrator may, by notice in writing, call upon the transferee to show cause within a period of thirty days, why a penalty (which shall not exceed ten per centum of the amount due from the transferee) be not imposed upon him. (2) After considering the cause, if any, shown by the transferee and after giving him a reasonable opportunity of being heard in the matter, the Administrator may, for reasons to be recorded in writing, make an order imposing the penalty and direct that the amount due along with the penalty shall be paid by the transferee within such period as may be specified in the order. (3) If the transferee fails to pay the amount due along with the penalty, in accordance with the order made under sub-section (2), or commits a breach of any other condition of sale, the Administrator may, by notice in writing, call upon the transferee to show cause within a period of thirty days, why an order of resumption of the site or building, or both, as the case may be, and forfeiture of the whole or any part of the money, if any, paid in respect thereof (which in o case shall exceed ten per centum of the total amount of the consideration money, interest and other dues payable in respect of the sale of the site or building, or both) should not be made. (4) After considering the cause, if any, shown by the transferee in pursuance of a notice under sub-section (3) and any evidence that he may produce in support of the same and after giving him a reasonable opportunity of being heard in the matter, the Administrator may, for reasons to be recorded in writing, make an order resuming the site or building or both, as the case may be, so sold and directing the forfeiture as provided in sub-section (3) of the whole or any part of the money paid in respect of such sale.” Civil Writ Petition No.6671 of 1989 - 7 - 8. It could be noticed that the order of resumption has been made only invoking the amended provisions of Section 13 which has four sub-sections. I have already elicited the relevant text of the order of resumption when several notices under one or other of the sub-section of Section 13 was invoked by the authorities. The objection therefore that the authorities could not have ordered resumption on the basis of a provision which was struck down by the Court, does not merit acceptance. 9. The consideration shall therefore be whether the authorities were still justified in ordering resumption or whether there was any mitigating circumstances which could have come to the succor of the petitioner. The learned counsel appearing for the petitioner relies on the judgment in Sunil Kumar Versus State of Punjab-1993(1) RRR 405. which referred to the decision in Dharam Pal but does not make reference of the amendment that had come about Section 13. The case was dealing with a pre-amendment situation of an order of resumption made on 14.10.1976 and the decision, therefore, cannot offer any guidance to us. The learned counsel also refers to the decision in Smt. Satya Devi Versus The Financial Commissioner, Haryana-1997(1) PLR 235 which again dealt with the situation of an pre-amendment order of resumption made on 25.09.1978. The Court was dealing with the case when the entire amount had already been paid and the Court looked at the issue of equitable considerations and held when the amount had already been paid, it was quite unjust to eject a person from the plot and house built thereon after a lapse of more than 20 years. The Court, Civil Writ Petition No.6671 of 1989 - 8 - therefore, set aside the order of resumption. This judgment has value to us, although it refers to a pre-amendment situation to the extent that it allowed for equitable considerations to visit the decision making process before a resumption could be made although by strict application of the provisions, the resumption could have been justified. The learned counsel also refers to the decision in M/s Teri Oat Estate (P) Limited Versus U.T., Chandigarh and others-2004(2) SCC 130, where the Hon'ble Supreme Court dealing with the power of resumption not under the above Act but under the Capital of Punjab (Development and Regulation) Act of 1952. The Court held that the power of resumption was to be used only as a last resort in the rarest case where the allottee had no intention at all to pay and it should not be used in the case of mere failure. A willingness to pay, when the default was not willful, was definitely a relevant consideration and the exercise of power ought not to be seen as arbitrary or violative of Article 14 of the Constitution. The Hon'ble Supreme Court also sounded a word of caution that mere sympathy or sentiment by itself would be no ground for passing an order by a Court in exercising of its jurisdiction under Article 226 or Article 142. The Court however underscored the need for maintaining a proper balance between the adverse effects which the legislation or order may have on the rights, liberties or interests of persons, keeping in mind the purpose which they were intended to serve. The Hon'ble Supreme Court hastened to add that they were not laying down the law that the statutory right conferring the right of public authorities to order resumption should not be resorted. They had illustrated the occasions when the exercise of Civil Writ Petition No.6671 of 1989 - 9 - such power could be seen to be arbitrary. If the intention of the allottee was dishonest or with an ill-motive or an allottee did not make any payment in terms of the allotment or the statute with a dishonest view or with a business motive, a resort to a power of resumption under Section 8-A (under the Punjab Act of 1952) could be resorted to. Deprecating the conduct of the appellants in not making the endeavour to pay the instalments within a reasonable period, the Court had directed a payment of Rs.15 lakhs as additional amount within a period of 10 weeks, while still setting aside the order of resumption. 10. Against the weight of the authorities relied on by the petitioner, the counsel for the respondent relied on Parshotam Dass Versus State of Punjab-1997(1) RCR (Civil) 179, which dealt with the provisions of the amended Act when the Court held that a resumption order passed in due compliance with Section 13 could not be interfered with, only because the proceedings had been initiated under the unamended provisions of Section 13. The strict application of the decision may not be necessary for the principle which this decision lays down is not attracted to this case for both the pre-resumption notices and the ultimate order of resumption had been taken only under the amended provisions of the Act. 11. If the decision of the Hon'ble Supreme Court should be understood as making possible equitable considerations to be applied while still ensuring that such a hand of equity could not be extended to a person, who was deliberately dishonest, it could be noticed in this case that the petitioner had set out several attenuating circumstances. The Civil Writ Petition No.6671 of 1989 - 10 - petitioner in his application-CM No.13287 of 2008 filed for fixing an early date sets out the circumstances which had not been denied that after the initial deposit of Rs.2,50,000/-, the petitioner had made a further deposit of Rs.1,65,000/- but the repayment of instalments within the time due fell into rough weather due to several factors, one among them being that the petitioner had constituted a partnership with 5 others and they had also availed a loan of Rs.10.60 lakhs from PNB, Mullanpur to construct the building of cinema hall. Although the construction was completed and the petitioner along with his partners had spent Rs.24 lakhs, the partners have left the business leaving him alone to fend for himself. The repayments became difficult in view of the deteriorating law and order situation in Punjab. The petitioner had to return the shares of other partners and even when he was torturing to find the resources to make the payment, the petitioner had suffered a heart-attack during the pendency of the proceedings in the year 1997. The petitioner would contend, apart from Rs.2,50,000/- and Rs.1,65,000/-, he had also sent a draft of Rs.1 lakh on 04.09.1989 immediately after the order of resumption and when he had approached the Court through this writ petition. The petitioner had sent yet another draft even during the proceedings on 05.09.2000 for Rs.5,85,000/- being the principal due as on that date. 12. By the cumulative circumstances, I have no doubt in my mind that the petitioner was not being dishonest. He was overwhelmed by several circumstances that made the repayment within the time unworkable. The petitioner shall be allowed to retain possession of the Civil Writ Petition No.6671 of 1989 - 11 - property if the petitioner deposits the balance of principal amount of Rs.5,85,000/- with interest at 18% (6% as provided under the contract for delay in instalment, 10% as penalty as provided under the terms of auction and additional 2% for the benefit that the petitioner has obtained by having the order of resumption cancelled through this order) from the date when the last instalment fell due namely 15.05.1985 till the date of payment. This payment shall be done within a period of 12 weeks from the date of the receipt of the copy of the order. The amount which is now directed to be paid by setting aside the orders of resumption is made to afford to the petitioner one last opportunity and the petitioner shall not be entitled to any further extension or indulgence. If the amount is not paid, the petitioner will lose the right of the property and the order of resumption already passed shall become operative. The petitioner shall also be liable to forfeit all the amounts already paid and shall also become liable for the cost of taking back the possession by the respondent if such an occasion arises. 13. The impugned orders are set aside and the writ petition is allowed on the above terms. (K.KANNAN) JUDGE 15.03.2010 sanjeev