Brij Lal Garg vs Haryana Urban Development Authority and Another

M.M. Kumar, J.—The transferee of the original allottee has filed C.W.P. No. 12126 of 2007 and the original owner has filed C.W.P. No. 14139 of 2007 by invoking Article 226 of the Constitution. Both the writ petitions are proposed to be decided by this common order as the question of law is in respect of the same property. However, facts are being referred from C.W.P. No. 12126 of 2007.

In the instant petition the petitioner has prayed for quashing a condition incorporated in the letter dated 17.4.2007 (P.4) while granting him permission to transfer property. According to the condition the petitioner is required to submit an affidavit that the petitioner has not filed any case in a Court against HUDA. A further prayer for quashing resumption order dated 9.7.2007 (Annexure P.11) has also been made.

Brief facts of the case are the petitioner is purchaser of property i.e. DS Suit No. 18 and S.C.O. site No. 131 Mahila Ashram Complex Karnal through General Power of Attorney from its original allottee namely Narinder Pal Singh, Smt. Kamlesh Garg and Smt. Aruna. Some amount was paid by the allottees at the time of allotment and the remaining amount was to be paid either in lump sum without interest within 60 days or in installments. It is averred in the petition that subsequent proceedings u/s 17 of the Haryana Urban Development Authority Act, 1977 (for brevity ''the Act'') were carried out and the respondents informed the petitioner regarding payment of amount in which exorbitant rate was charged under different heads i.e. amount regarding due installments, extension fee alongwith interest and penalty, compound interest on delayed installments and even compound interest on enhanced amount. He submitted a detailed representation and when no action was taken he alongwith others filed C.W.P. No. 5388 of 2005 in this Court which was disposed of by this Court with a direction to the respondents to decide the representation of the petitioners. Thereafter the matter was processed by the respondents and recommendations (Annexure P.1) were sent by the Estate Officer, HUDA, Karnal to the Administrator, HUDA Panchkula who vide order dated 11.8.2005 (Annexure P.2) took the decision whereby some relief was granted. The petitioners in the meantime deposited the entire amount of the plots in question and also made a representation (Annexure P.3). Thereafter petitioner applied for grant of permission for transfer and the same was granted and a copy of provisional transfer permissions in respect of DS No. 18 is Annexure P.4 and with regard to S.C.O. 131 it is Annexure P.5.

In permission Annexure P.4 there is a condition that the petitioner should withdrew his representation and qua DS site No. 18 a condition has been incorporated that the petitioner should withdraw his appeal pending before the Chief Administrator. It is submitted that infact the representation and the appeal has been made with reference to the provisional transfer letter and that entire amount has been paid. The question raised in this petition is only regarding refund. It is claimed that the conditions imposed by the respondents is perverse and against the mandate of law.

The grievance of the petitioner is that respondents are charging compound and penal interest on delayed payment from the allottees. It is averred that no compound interest or penal interest could be charged in view of the judgment of Hon''ble the Supreme Court in the case of Ruchirca Ceremics v. HUDA (2001)128 P.L.R. 218 (S.C.) and that of this Court in the case of Gian Inder Sharma Vs. Haryana Urban Development Authority and Another, . As the representation of the petitioner which was already subjudice before the authority and no decision was being taken thereon the petitioner was compelled to file C.W.P. No. 7050 of 2007 in this Court. The petition was disposed of on 11.5.2007 in terms of the orders passed on 8.5.2007 in C.W.P. No. 3737 of 2007 (Annexure P.6). Thereafter vide letter dated 6.6.2007 (Annexure P.7) the respondents recommended the case of the petitioner with the observation that the orders of the High Court are to be meticulously complied with. Apart from this, the petitioner paid the entire amount on 14.3.2007 and 22.3.2007 (Annexure P.8 and P.9). The petitioner again submitted a representation dated 25.6.2007 (Annexure P. 10) asserting that no compound interest can be charged from the allottee in respect of the period of default. However, in a haphazard manner the entire directions have been disobeyed and the impugned order dated 9.7.2007 (Annexure P.11) has been passed in utter defiance of the directions issued by this Court and for that purpose the petitioner filed COCP 1069 of 2007. This Court was of the view that since the order has been passed and the remedy is to challenge the same. The contempt petition was withdrawn on 31.7.2007 with liberty to challenge the order.

In the reply filed on behalf of the respondents the factual position has not been disputed. However, in reply in para 3 it is submitted that the allottees defaulted in making the outstanding payment. It has been pointed out that time and again several notices u/s 17 of the Act were issued but the allottees did not bother to make the outstanding payment and therefore DS Site No. 18 was resumed in the year 2003. It is also submitted that before passing order of resumption notices u/s 17(1)(2), 17(3) and 17(4) were issued as per law and the plots were resumed because no reply was received to the notices.

A further stand taken by the respondents is that the petitioner did not disclose material facts when he filed C.W.P. No. 7050 of 2007. According to them when, in pursuance to the directions issued by this Court on 11.5.2007 in C.W.P. No. 7050 of 2007, the file was taken up for consideration it was revealed that the plot was already resumed by the Estate Officer on 17.1.2003 and an appeal was pending before the Administrator, HUDA u/s 17(5) of the Act. Site No. 18 Mahila Ashram Complex, Karnal was already restored by the Administrator HUDA while exercising power of the Chief Administrator vide order dated 11.1.2004.

It was further informed that the Estate Officer, HUDA, Karnal had raised demand of Rs. 8,58,203/- vide letter dated 9.3.2005 (R.6). However, the petitioner had deposited a sum of Rs. 1,00,000/- on 25.2.2005 and failed to deposit any amount towards outstanding dues except Rs. 8,50,000/- on 14.3.2007 and Rs. 77,800/- on 22.3.2007. Therefore, on account of non compliance of the order dated 9.3.2005 a speaking order dated 9.7.2007 (Annexure P.11) was passed and conveyed to the petitioner. It has also been claimed that a different view could not be taken because in other three cases of Booth No. 16, S.C.O. No. 127, Mahila Ashram, Karnal and S.C.F. No. 94, Sector 16, Karnal the properties have also been resumed on the same ground. After the order of resumption, the appeal pending before the Chief Administrator, HUDA u/s 17(5) of the Act could not be taken up. The respondents have also asserted that the condition in the provisional transfer permission dated 17.4.2007 (Annexure P.4) cannot be set aside because it is the result of the undertaking tendered by the petitioner himself vide affidavit dated 31.1.2007 (P.5) and he cannot go beyond the afore-mentioned undertaking. The respondents have further stated that site No. 131 Mahila Ashram Complex, Karnal has been realloted to M/s Ekta Automobiles vide allotment letter dated 7.10.2005 (R/8).

With regard to the allegation of condition concerning withdrawal of the appeal it is averred that petitioner on his own with his free will had tendered undertaking in the shape of affidavit that he wants to withdraw the concerned appeal and he was not to file any case in the Court in this regard. It is submitted that in view of this the petitioner cannot challenge the condition imposed on the basis of his own undertaking.

We have heard learned Counsel for the parties at a considerable length and have perused the record with their able assistance.

It has remained undisputed that the petitioner has purchased DS Site No. 18 and SCO 131, Mahila Ashram Complex, Kamal from the original allottee namely Shri Narinder Pal Singh son of Baldev Krishan, Smt. Kamlesh Garg and Smt. Aruna. There was default committed by the allottee/petitioner who is general power of attorney in making payment of installments which has been recovered by the respondents by imposing compound and penal interest. The dispute raised is that compound or penal cannot be charged. It is true that the petitioner had faced a resumption order on 17.10.2003 passed by the Estate Officer, Karnal resuming property No. 18 Mahila Ashram, Karnal. An appeal against the afore-mentioned order was pending before the Administrator, HUDA, Panchkula u/s 17(5) of the Act. In the appeal he noticed the fact that Estate Officer, HUDA, Karnal had imposed penalty of Rs. 80,274/- on 4.10.2001 and notices u/s 17(3) and (4) of the Act were issued. It was thereafter that the plot in question was resumed and 10 percent of the consideration amount plus other dues payable at the time of resumption were forfeited vide order dated 17.16. 2003. After noticing the aforementioned facts, the Administrator proceeded to pass the following order on 11.1.2004 in respect of site No. 18 Mahila Ashram Complex, Karnal:

I have heard both the parties and have gone through the record carefully. The counsel for the appellant has submitted that the appellants have not deposited the installments due to financial difficulties and other unavoidable circumstances. The counsel further give an undertaking that the allottee will deposit all the outstanding dues as per HUDA policy within the time granted to him. The counsel cited judgment of Hon''ble Punjab and Haryana High Court (Jasbir Singh v. U.T.) to support his case. D.D.A. appearing on behalf of Estate Officer has stated that the appellant has failed to deposit the installment as per schedule given in the allotment letter and the order of resumption passed by the Estate Officer is legal and valid.

I have carefully examined the record also. The counsel for the appellant has given an undertaking to deposit the balance installments alongwith penalty and interest etc. within time granted to her. A lenient view is taken and the orders of resumption are set aside. The allottee is directed to pay the outstanding amount alongwith penalty imposed by the Estate Officer and interest etc. within 30 days from the receipt of this order. This appeal is decided accordingly.

On 9.3.2005 the Estate Officer, HUDA Karnal sent a letter to the petitioner that balance outstanding dues were payable within 30 days from the receipt of the order dated 11.1.2005 and he was requested to deposit the total amount of Rs. 8,58,293/- which included the extension fee upto the year 2005 amounting to Rs. 48,890/-. When the petitioner furnished no information, property No. 131 Mahila Ashram, Karnal, was reallotted on 7.10.2005 to M/s Ekta automobiles with various conditions. The aforementioned developments had taken place yet the petitioner filed C.W.P. No. 7050 of 2007 which was disposed of 11.5.2007. The Division Bench of this Court has issued directions in terms of order dated 8.5.2007 passed in C.W.P. No. 3737 of 2007. The Division Bench in its order dated 8.5.2007 has in unequivocal terms observed that respondent HUDA was not entitled to charge interest on the delayed payment of price of the plot in question and it could have charged only simple interest @ 15 per cent p.a. on the amount. The Division Bench further observed that the matter was squarely covered by another judgment of this Court rendered in the case of Bhatia Brothers v. Haryana Urban Development Authority C.W.P. No. 2278 of 1999, decided on 14.2.2000. The aforementioned Division Bench was also relied upon by another Division Bench in the case of Gian Inder Sharma Vs. Haryana Urban Development Authority and Another, . Accordingly, the writ petition was disposed of with a direction to HUDA to uniformly apply the guide lines issued in Gian Inder Sharma''s case (supra) to all the affected parties and also to the case of the petitioner. However, the case of the petitioner has been rejected merely on the ground that already conditional order of resumption was passed and according to the undertaking suffered by the petitioner he was not to file any petition and therefore no relief could be granted. The Estate Officer, HUDA Karnal, after noticing the directions issued in the order passed in C.W.P. No. 7050 of 2007 on 1.5.2007 proceeded to consider the case of the petitioner with the condition that the appeal/representation pending before the Chief Administrator, HUDA Panchkula would be withdrawn by the allottee/petitioner. It is appropriate to mention that resumption order by the Estate Officer was passed in respect of site No. 18 on 17.10.2003 and appeal against the order of the Estate Officer had already been decided on 11.1.2004. The Estate Officer proceeded to notice the operative part of the order dated 11.1.2004, which has been reproduced in the preceding para and observed that General Power of Attorney of the allottee/petitioner deposited only a sum of rupees one lac as against the original demand of much higher amount. The office has further raised demand of Rs. 8,58,293/- on 9.3.2005. The order of the Estate Officer was challenged before the Chief Administrator. It was during the pendency of the appeal filed u/s 17(4) of the Act before the Chief Administrator that an application for transfer of the shop site was filed and permission was granted on 21.1.2007 on the condition that the applicant was to withdraw the appeal pending before the Chief Administrator and the outstanding amount was to be deposited within 30 days of the receipt of the order failing which resumption order was to operate. The aforesaid stand of the learned Counsel cannot be accepted because firstly there is no estoppel against the statute. A remedy of appeal is a statutory right which cannot be snatched from the petitioner. Secondly, the directions issued by this Court to consider the case of petitioner in the light of the Division Bench judgment of this Court in Gian Inder Sharma''s case (supra) continues to operate. According to the directions issued in the order dated 8.5.2007 (C.W.P. No. 3737 of 2007) the benefit of the order was to be given to all the affected persons. The guidelines issued in Gian Inder Sharma''s case (supra) were to be uniformly applied to all affected persons including the petitioner. The authorities of HUDA therefore were under an obligation to grant the benefit of the order passed by this Court on 8.5.2007. Despite the general directions issued, the petitioner had filed C.W.P. No. 7050 of 2007 which was also disposed of in terms of order passed in C.W.P. No. 3737 of 2007 on 8.5.2007. It is, therefore, evident that the decision taken by the respondents has avoided to address the real issue of compound and penal interest. The respondents in fact has by-passed the orders passed by this Court on 11.5.2007 in C.W.P. No. 7050 of 2007.

The question then is what relief the petitioner would be entitled to. One course open to us is to pass directions in terms of the Division Bench judgment rendered in Gian Inder Sharma''s case (supra). However, those directions are deemed to have been modified on account of a recent judgment of the Hon''ble Supreme Court rendered in the case of H.U.D.A. Vs. Raj Singh Rana, where the issue of charging of interest has been considered. The Hon''ble Supreme Court has resorted to statutory guidelines available u/s 3 of the Interest Act, 1978 (for brevity ''the Act''). Section 3 of the Act clearly marks a distinction between the ''agreed rate of interest'' and ''rate of interest'' to be imposed in the absence of concurrence of the parties. It has been laid down in the following two paras that in the absence of agreed rate of interest the current rate of interest would be applicable as per the provisions of Section 3 of the Act.

The concept of levying or allowing interest is available in almost all statutes involving financial deals and commercial transactions, but the provision empowering courts to allow interest is contained in the Interest Act, 1978, which succeeded and repealed the Interest Act, 1839. Section 3 of the said Act, inter alia, provides that in any proceeding for the recovery of any debt or damages or in any proceeding in which a claim for interest in respect of debt or damage already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the periods indicated in the said section.

What is important is the mention of allowing the interest at a rate not exceeding the current rate of interest. Such a provision is, however, excluded in respect of the interest payable as of right by virtue of any agreement as indicated in Sub-section (3) of Section 3. In other words, where there is an agreement between the parties to payment of interest at a certain stipulated rate, the same will have the precedence over the provisions contained in Sub-section (1) which provides for the court to allow interest at a rate not exceeding the current rate of interest.

In the aforementioned paras, two principles with regard to charging of interest have been laid down (a) in any proceeding for recovery of any debt or damage or any proceedings in which claim for interest is made the court may allow interest to the person entitled to the debt or damages at a rate not exceeding the current rate; (b) the above principle would not be applicable in a case where the parties have concurred for charging of interest at a specified rate which flows from Sub-section 3 of Section 3 of the Act. This provision has to have precedence over the principle noted above.

However, it does not mean that there cannot be any variation in the rate of interest to be awarded in a proceeding where such a claim is made. The Hon''ble Supreme Court in the case of Raj Singh Rana (supra) has placed reliance on para 8 of the judgment rendered in the case of Ghaziabad Development Authority Vs. Balbir Singh, which in terms applies the principle that facts of each case have to be taken into account and interest should not be imposed mechanically at a uniform rate of interest. In para 15 of the judgment it has been concluded as under:

...the rate of interest is to be fixed in the circumstances of each case and it should not be imposed at a uniform rate without looking into the circumstances leading to a situation where compensation was required to be paid.

Applying the principles laid down in Raj Singh Rana''s case (supra) the petitioner is liable to pay interest in terms of Section 3(1) of the Act and the same reads thus:

Power of Court to allow interest.- (1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say, (a) if the proceedings relates to a debt payable by virtue of a written instrument at a certain time, then from the date when the debt is payable to the date of institution of the proceedings; (b) if the proceedings do not relate to any such debt, them from the date mentioned in this regard in a written notice given by the person liable that interest will be claimed, to the date of institution of the proceedings; Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.

The expression ''rate of interest'' has not been left to any guess work but has also been defined in Section 2(b) of the Act and the same reads thus:

(b) "current rate of interest" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained in savings account or those maintained by charitable or religious institutions) by different classes of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949.

A perusal of the aforementioned provisions makes it clear that current rate of interest would mean 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 given or issued to the banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949. Therefore, the issue with regard to payment of interest is answered in the above terms. There is however, yet another issue as to whether the respondents could charge interest on the additional price on account of increase of the acquisition cost. The aforementioned question also stands answered in para 18 of the judgment in Raj Singh Rana''s case (supra) wherein it has been held that such imposition has to be kept in view with the provisions of the Act and not in an unreasonable manner. It would be appropriate to extract para 18 which reads thus:

In the aforesaid circumstances, even though the rate of interest indicated in the allotment letter dated 22.3.1974 may not have application as far as payment of the additional price is concerned, the district forum has erred on the site of reason and has allowed interest at the rate of 7 per cent per annum upon holding that the demand made by the appellant at a higher rate was contrary to the mutual agreement contained in the allotment letter. In our view, even though a policy may have been adopted by the appellant for imposing a deterrent rate of interest on defaults committed by allottees in payment of their dues, such imposition has to be in keeping with the provisions of Section 3 of the Interest Act, 1978 and not in a unreasonable manner. It may perhaps be even more pragmatic if a condition regarding charging of interest at the prevailing banking rates were included in the allotment letters, having regard to the provisions of Sub-section (3) of Section 3 of the said Act.

In the instant case, there would be no application of agreed rate of interest as the original allottee has already entered into an agreement of sale with the general power of attorney although the transfer is yet to take place by execution of transfer deed. Even the schedule for payment of installments has not been adhered to and on that account also the clause providing for agreed rate of interest would not continue to apply. 19. In view of the above, we are of the view that the writ petition deserves to be allowed and the impugned order dated 9.7.2007 (P. 11) is liable to be set aside. The respondents cannot demand compound interest on the delayed payment which is held to be unreasonable and arbitrary nor they can ask for compound interest on the enhanced amount of compensation Accordingly, a direction is issued to the respondents to calculate interest on the delayed payment of installments/additional price of the property in question by applying the current rate of interest which means the highest of the maximum rate 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 Regulations Act, 1949. It would necessarily exclude the rate of interest on the accounts maintained in saving or those maintained by charitable or religious institutions. It has come on record that the petitioner had already deposited the demand amount under protest which shall be set of as per the law and calculations be made accordingly. If respondents find that excess payment has been made by the petitioner then the same be refunded to him within a period of two months from the date of receipt of copy of this order. We make it further clear that no penalty can be charged from the petitioner on account of delayed payment of installments/additional price. However, the respondents shall be entitled to deduct any other amount due to them.

Both the petitions stands disposed of in the above terms.