IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID TUESDAY, THE 1ST MARCH 2011 / 10TH PHALGUNA 1932 SA.No. 367 of 2002() -------------------- AS.181/2001 of VI ADDL.DISTRICT COURT, ERNAKULAM OS.703/2000 of PRL. MUNSIFF COURT, ERNAKULAM .................... APPELLANT/RESPONDENT/DEFENDANT: ---------------------------------------------------------- GREATER COCHIN DEVELOPMENT AUTHORITY, KADAVANTHARA, COCHIN-20, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.JIMMY GEORGE RESPONDENT/APPELLANT/PLAINTIFF: ----------------------------------------------------- K.G. GEETHA BAI, GREATER COCHIN DEVELOPMENT AUTHORITY, WIFE OF C.R. RAJARAMAN, RAJ NIVAS, HOUSE NO.7/355/B, B-A/6, GCDA STAFF HOUSING COLONY, KAKKANAD P.O., COCHIN-30. BY ADVS. SRI.P.SANTHALINGAM, SENIOR ADVOCATE SRI.S.SHARAN THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 27.1.2011 THE COURT ON 01/03/2011 DELIVERED THE FOLLOWING: SA.No. 367 of 2002() ----------------------------- ORDER ON IA NO.2564/06 IN SA NO.367/2002 DISMISSED 1.3.2011 Sd/- HARUN-UL-RASHID, JUDGE / TRUE COPY / P.A. TO JUDGE VK HARUN-UL-RASHID,J. ------------------------------- S.A. NO.367 OF 2002 ------------------------------- DATED THIS THE 1ST DAY OF MARCH, 2011 JUDGMENT The substantial questions of law formulated in the appeal are as follows: 1) “The circulars dated 2nd August and 28th September 95 clearly show that the sale price; of he land and building allotted to the respondent was only provisionally fixed and n letter dated 12/3/1998 it was finalised and the Lower Appellate Court has given a wrong interpretation to the word provisionals. 2) 32 House buildings were allotted to the employees and only the plaintiffs in O.S.No.743/98 and O.S.No.70-3/2000 have filed suits.” 2. This Court framed the following substantial question of law at the time of issuance of notice: “ Whether the appellant is entitled under the agreement between the parties to enhance the price of the building allotted to the respondent.” 3. The defendant-Greater Cochin Development -2- S.A..No.367/2002 Authority (for short “GCDA”) in O.S. No.703/2000 on the file of the Principal Munsiff's Court, Ernakulam is the appellant herein. The appeal is directed against the judgment and decree in A.S.No181/2001 on the file of the VI Additional District Court, Ernakulam. The suit was filed for declaration and injunction. The trial court dismissed the suit. The Lower Appellate Court set aside the decree and judgment of the trial court and decreed the suit. The parties hereinafter are referred to as the plaintiff and defendant as arrayed in the suit. 4. The suit is filed by the respondent herein for the following reliefs: “a) To pass a judgment and decree restraining the defendant from realising any amount from the plaintiff, doing any actions whatsoever contrary to and otherwise than what is embodied in circular/letter No.1100/E&R/A1/92/GCDA dated 22/8/1995 and 28/9/1995 as modified in the matter of allotment of house and plot to the plaintiff; b) To declare that the agreement dated 17/4/1998 compelled upon the plaintiff by the defendant is illegal and ab initio void.” -3- S.A..No.367/2002 5. GCDA is a statutory authority constituted under the Town Planning Act, which is governed by the provisions contained in Madras Town Planning Act and Travancore and Cochin Town Planning Act. The Government of Kerala has framed Kerala Development Authorities Rules. 1984 in exercise of the powers conferred under the statute. Plaintiff is an employee of the defendant-GCDA. The GCDA vide its general council's decision dated 31/12/1994 mooted a proposal to allot house buildings in independent plots to its employees. 28 plots at Thrikkakara and 4 plots at Ernakulam were earmarked for allotment. As per the said decision, the GCDA has framed a housing scheme for their staff within Thikkakara DTP scheme for their residential accommodation. GCDA proposed units under various categories. Type 'C ' house allotted to the plaintiff is the subject matter of the suit. On the basis of the said decision the GCDA issued a circular dated 22/8/1995. Ext.A2 is the copy of the said circular issued by the Secretary, GCDA to the plaintiff. (Ext.B1 is the original of -4- S.A..No.367/2002 Ext.A2). Regarding the sale price of each house the circular reads as follows: Type A-I : Rs.2,19,244-00 Type A-II : Rs.2,93,137-00 Type B : Rs.4,21,496-00 Type C : Rs.5,37,165-00 The circular recites that the above cost is purely tentative and the same will be re-fixed as and when the buildings are completed. The GCDA informed the plaintiff by Ext.A2 circular that Building No.C-6 is provisionally allotted subject to the conditions. Condition Nos.3 and 7 reads as follows: 3. “GCDA is competent to claim the value of the land and building due to variation in actual cost/extent of land allotted in any manner. 7. The allottee is entitled to get the possession of the land as soon as the advance amount is paid and the required agreement is executed. The last paragraph of the circular reads as follows: “An agreement in the above terms shall be executed in stamp paper by the allottees as soon as the advance amount is deposited as above.” -5- S.A..No.367/2002 6. The price of the house provisionally allotted to the plaintiff is fixed at Rs.5,37,165/-. Ext.A3 is a copy of the circular dated 28/9/1995 issued to the plaintiff. Ext.B2 produced by the GCDA is another copy of Ext.A3. By Ext.A3 the GCDA intimated the plaintiff that Ext.A2 circular dated 22/8/1995 stands modified by reducing the price of type C house at Rs.3,39,477/- considering the representation of the GCDA staff association. The GCDA staff association, in which the plaintiff is also a member, requested the GCDA to reduce the price of the house. Considering the representation of the staff association Ext.A3 circular was issued. By circular dated 16/6/1997 marked as Ext.A5 the GCDA extended time for payment towards advance without interest upto 15/6/1997 and thereafter on condition of interest. By circular dated 12/3/1998 marked as Ext.A7 GCDA sought to bring changes to the allotment of house plots on the basis of the resolution passed by the executive committee which met on 31/12/1997. Ext.B4 is a copy of the proceedings of the executive committee of the GCDA. -6- S.A..No.367/2002 Ext.B3 and Ext.A7 are the very same documents. By Ext.A7 circular the GCDA has fixed the allotment date of the staff housing scheme as 1/1/1998. It is stated therein that the cost of the land and building was re-fixed charging 15% interest per annum upto 31/12/1997 on the basis of the expenses incurred by the GCDA. It is further stated in Ext.A7 that 15% per annum interest will be given on the amounts already remitted by the allottees from the date of remittances to 31/12/1997 and such amounts will be adjusted towards the cost of the land and building. The payment of the balance amount in instalment is also revised. It is stated therein that if the monthly instalment is not paid on the stipulated date, the same will be recovered charging 21% interest inclusive of penal interest. The cost of the land and building was revised as per Ext.A7 circular. As per the revised rate, the total cost of the land and building of the plaintiff is Rs.5,04,416/-. The cost is less than the original amount of Rs.5,37,165/-. Before issuing Ext.A7 circular dated 12/3/1998 the GCDA issued Ext.A6 circular dated -7- S.A..No.367/2002 20/1/1998 stating that the allottees, who are eligible for the house building advance, may be sanctioned the amount, on the allottees applying for the same. It is also stated in the said circular that the interest at 15% per annum will be charged for the balance amount to be remitted by the allottees directly. Subsequently, the defendant issued Ext.A8 circular dated 3rd April, 1998 fixing the monthly instalments of Rs.7973/- after adjusting the advance amount remitted by her before 1/1/1998. 7. After the construction of the building, the GCDA demanded the plaintiff to execute an agreement before obtaining possession of the building. The plaintiff has executed the agreement. Ext.A9 is the notice dated 4/12/1999 issued by the GCDA to the plaintiff requesting her to return the original agreement of the house forwarded by them within seven days on the date of receipt of the notice. Ext.A10 is a copy of the agreement executed by the plaintiff in favour of the GCDA. Pursuant thereto, the plaintiff sent a letter marked as Ext.A11 -8- S.A..No.367/2002 intimating the GCDA that she took possession of the building and received the key of the building on 23/4/1998 under protest to settle the difference of opinion and other matters in connection with house No.C6 under the Staff Housing Scheme, Thrikkakara. 8. The suit was filed on the allegation that the defendant had made the offer and the plaintiff had accepted the same. Hence, there is a concluded contract and therefore the defendant has no right to alter the conditions in the concluded contract. The said act of the GCDA is illegal and opposed to law. The further case of the plaintiff is that the interest charged is unilaterally revised by the defendant and the rate of interest is unconscionable and cannot be accepted. It is also the case of the plaintiff that she was forced to execute an agreement (Ext.A10) in favour of the GCDA. The defendant took the stand that unless the plaintiff execute an agreement required by the GCDA, the plaintiff will not be given possession of the building. Therefore, she prayed that the said agreement has to be declared as null and void. The said facts are -9- S.A..No.367/2002 contained in the various communications exchanged between the parties. 9. The defendant inter alia contended that the first allotment letter dated 22/8/1995 was not fixed either by general council or the Executive Committee of the defendant, that the decision of the general council was only to allot plots, that the terms and conditions were fixed by the Secretary of the defendant Authority after discussion with the staff association and employees and that the terms and conditions were revised as per the decision of the executive committee on 31/12/1997. It is pointed out in the written statement that in the allotment letter dated 22/8/1995 it was clearly mentioned that the value of the land and building is fixed provisionally and as per the terms and conditions in the allotment letter, the defendant has refixed and revised the terms and conditions, taking into account, the actual expenses incurred by the defendant for development and payment of enhanced compensation for the land comprised in the DTP scheme. It is also averred that -10- S.A..No.367/2002 the construction of the building was completed in December, 1997. So, the cost of the building has been refixed, taking into account the actual expenses incurred by the GCDA. It is further stated that the GCDA being a statutory authority, cannot give bounties to its employees without prior approval and sanction from the Government. It is also averred in the written statement that the value of the land and the house building allotted to the plaintiff is more than Rs.12 lakhs and it is stated in the allotment letter itself that the allottee has to execute an agreement in favour of the defendant and that the possession of the land and building will be handed over only after the agreement is executed. The GCDA also denied the allegation of the plaintiff that she was compelled to execute the agreement. It is further averred that the Executive Committee of the defendant is competent to take a decision regarding the terms and conditions of the allotment of the houses to its employees. Ext.B9 is the letter issued by the Secretary of the GCDA to the Regional Labour Commissioner, Cochin in which it -11- S.A..No.367/2002 is stated that the cost of land amounting to Rs.40,00,000/- for 29.6 cents of land at Pattupurackal Town Planning Scheme may be remitted either by D/D or by pay order drawn in favour of the Secretary of the defendant. Ext.B10 is the letter issued by the Regional Labour Commissioner to the Secretary of the GCDA in which it is stated that the amount of Rs.40,00,000/- for the land measuring 29.6 cents was sanctioned by the Ministry of Labour, Government of India and they would remit the amount. The GCDA had produced Exts.B9 and B10 to show the value of the land covered by the Pattupurackal Town Planning Scheme. 10. I have perused in detail Ext.A2 circular dated 22/8/1985, Ext.A3 letter dated 28/9/1995, Ext.A5 circular dated 16/6/1997 and all other documents, some of which are mentioned supra. Ext.A2 circular is regarding the provisional allotment of plot and house to its employees in which terms and conditions were stated. The allottees were informed that they were provisionally allotted houses. The details of the payments to be made by the -12- S.A..No.367/2002 plaintiffs were also stated. All the conditions for allotment are recited unambiguously. It is stated that the sale price of each unit of the land and building is provisionally fixed for the time being based on the available data, without taking into consideration the question of enhancement of land value as per the decree of the court below and taking into account the tender escalation. It is also stated in Ext.A2 that the cost fixed is purely tentative and the same will be refixed as and when the buildings are completed. It is also stated that the GCDA is competent to claim value of the land and building due to variation in actual cost and that the allottee shall execute an agreement containing the terms recited in Ext.A2 in stamp paper. The above-said clauses show that the GCDA has reserved its right to refix the land value and cost of the building. The price fixed for each unit is a provisional fixation. Subsequent orders were issued by the GCDA modifying Ext.A2 circular by reducing the price. The GCDA staff association requested the GCDA to reduce the price for the beneficial interest of the -13- S.A..No.367/2002 employees. Considering the representation of the staff association, the GCDA revised the price of the land and building and also made some changes regarding the mode of payment of interest. Later, the GCDA revised the price of the land and building, taking into account the actual expenses incurred. They have the right to revise the term and conditions mentioned in the allotment letter, Ext.A2, which contains provisions for making changes in the price of the land and building. Moreover, it is specifically stated that the original fixation made is purely provisional. The fact that the original amount fixed in Ext.A2 was revised at the request of the staff association is an indication that the original fixation of price is only tentative. The GCDA is empowered to revise the terms and conditions including the value of the land and building taking into account the actual expenses incurred by them. It is specifically stated that in Ext.A2 the sale price of each of the unit was fixed for the time being based on the available data without taking into consideration the question of enhancement of the land value. It is -14- S.A..No.367/2002 also recited in Ext.A2 that the GCDA is competent to claim the value of the land and building due to variation of actual cost and extent of land allotted in any manner. In Ext.A2 on the basis of which the allotment was made, the defendant is competent to claim value of the land and building due to variation in the price of land and building. Therefore, the contention of the plaintiff that the GCDA has no right to refix the value of the land and building is without any basis. In Ext.A2 circular it is stated that the plaintiff has to execute an agreement before giving possession of the property. The allegation of the plaintiff is that she was compelled to execute an agreement. There is absolutely no evidence to prove that the plaintiff was compelled to execute an agreement as alleged. In fact, as per the terms and conditions contained in Ext.A2 the plaintiff has to execute an agreement. The trial court, after examining the terms and conditions stipulated in various circulars and the letters exchanged between the parties and other facts and circumstances, held that there is absolutely no evidence to find that -15- S.A..No.367/2002 the plaintiff was compelled to execute the agreement as alleged by her. The trial court in terms of Ext.A2 concluded that the plaintiff has to execute the agreement. The evidence tendered by the GCDA would show that the main source of the GCDA is the loan received from HUDCO and the rate of interest for belated payment to the HUDCO is 17% + penal interest for the belated payment. As per the terms stipulated by the GCDA, the GCDA is demanding only 15% for the belated payment. The trial court observed that the plaintiff has no case that the price of the land and building allotted to her is much more than the actual price of the land and building and that the plaintiff has not raised any allegation of mala fides against the officers of the GCDA. 11. On the basis of the evidence on record, the court below concluded that there is no evidence to show that the defendant has acted in violation of the agreement executed between them or that they have acted in violation of any Rules. The trial court rightly observed that the GCDA has not violated the -16- S.A..No.367/2002 terms of agreement executed between the parties nor there is any violation of the Rules. The trial court also held that the plaintiff has failed to prove that the defendant has done any act contrary to or otherwise than what is embodied in Exts.A2 and A3 circulars. The trial court rightly declined to grant the reliefs sought for in the suit and dismissed the same. 12. The Lower Appellate Court re-appreciated the evidence and considered the contentions of the plaintiff/appellant that the subsequent re-fixation of the price of the land and building is illegal, since the contract is already concluded and the contention of the GCDA that the price is provisionally fixed and after completion of the building, the defendant is entitled to re-fix the price etc., taking into consideration the actual costs of the land and construction of the building. The very same document discussed and appreciated by the trial court is re-appreciated by the Lower Appellate Court. The Lower Appellate Court found that the evidence is not sufficient to show that there is variation in the land -17- S.A..No.367/2002 value and the cost of construction of the building and therefore without the happening of these eventualities, the respondent cannot enhance the price as per Ext.A7. The Appellate Court interpreted Exts.A2 and A3 circulars and held that the respondent cannot enhance the price of the building because already there is a concluded contract between the parties. The Lower Appellate Court held that the appellant is an employee of the GCDA, that there is a fiduciary relationship between the parties and that there is a reasonable apprehension on the part of the appellant that if the agreement is not executed, there is every chance of cancellation of the allotment. For these reasons the Appellate Court held that there is bona fide threat of cancellation of the allotment made to her and therefore she was forced to execute such an agreement and hence the agreement is illegal and void. On the basis of the aforesaid facts, the Lower Appellate Court reversed the findings of the trial court and decreed the suit. 13. Before this Court the appellant filed an affidavit -18- S.A..No.367/2002 dated 16th June, 2006 explaining the circumstances under which the land value and the building cost is revised. It is stated that by notice dated 28/9/1995 marked as Ext.A14, informed the plaintiff that the price was provisionally fixed without taking into consideration the question of enhancement of land cost as per court award and also the tender excess quoted by the contractor towards construction of the building. It is further stated that the tender so quoted was in the year 1996 with 64% excess above the estimated cost and that the estimated cost of the buildings for all the 34 units was Rs.53,52,000/- whereas the probable amount of contract was Rs.85,44,708/-. It is also stated that considering the cost of the building and the value of the land allotted to the plaintiff, the cost per unit in respect of type 'C' building comes to Rs.5,04,416/-. Along with the said affidavit, the GCDA produced a copy of the agreement showing the amount of contract and the estimate. It is further stated that the amount paid to the contractor carries 17% interest as the GCDA raised the fund by borrowings from various -19- S.A..No.367/2002 financial institutions like HUDCO; but the interest claimed from the allottee including the respondent (plaintiff) is only 15%. Annexure-A1 is the agreement executed between the GCDA and the contractor. Annexure-A2 is a statement showing the details of enhanced amount + interest + costs incurred by the GCDA in the land reference cases. Annexures A1 and A2 are produced along with the affidavit. 14. I have perused the documents produced by the parties. In the preceding paragraphs I have discussed various terms enumerated in Exts.A2, A3, A5 and other circulars and also discussed subsequent developments leading to the re-fixation of the price of the land and building. I have also noted that the plaintiff has executed Ext.A10 agreement and she sent a letter to the GCDA regarding her agreement for payment of monthly instalments. The Lower Appellate Court has misread the documents and concluded that the terms and conditions set out in Ext.A2 circular do not empower the GCDA to refix the price. I have narrated in detail the -20- S.A..No.367/2002 terms and conditions set out in Ext.A2 circular and also extracted the relevant terms. Ext.A2 circular evidently show that GCDA had only fixed the price provisionally and reserved their right to revise the terms. The agreement between the parties was also executed later setting out the terms and conditions of allotment and there is no evidence to show that the agreement is executed involuntarily. The evidence in this case shows that the plaintiff has unilaterally consented for executing the agreement and after executing the agreement, she had taken possession of the land and building. The reversal of the judgment and decree of the trial court is unsustainable in law and facts. The Lower Appellate Court misread and misinterpreted the documents and arrived at wrong conclusions. The documents relevant for consideration are read wrongly that lead to the reversal of the judgment and decree passed by the trial court. 15. In these circumstances, the judgment and decree passed by the Appellate Court cannot stand. The relevant -21- S.A..No.367/2002 documents, which are discussed in detail in the preceding paragraphs, which have got a bearing on the rights of the parties, are wrongly construed and reached wrong findings and conclusions by the Lower Appellate Court. The substantial questions of law formulated are answered. In the result, the appeal is allowed. The decree and judgment passed by the Lower Appellate Court is set aside. The decree and judgment passed by the trial court is restored. No order as to costs. HARUN-UL-RASHID, Judge. kcv.