AI Structured Summary
Not yet generated for this judgment
Judgment
A.M. Khanwilkar, J.—Heard Counsel for the parties. Rule. Ms. Joglekar waives notice for Respondents. Rule made returnable forthwith by consent. As short question is involved, Petition is finally heard at admission stage.
By this Petition under Article 226 of the Constitution of India, the Petitioners are questioning the demand of the Respondent Corporation calling upon the Petitioners to pay the balance amount of 90% of the capitalized value for utilisation of the surplus area as per the Scheme of redevelopment and more so, along with interest thereon at the rate of 18% per annum as condition precedent for considering their proposal to grant additional 0.5 FSI on the sale component of the Scheme.
Briefly stated, the tenants in the structure standing on the Corporation property known as Janata Nagar, M.P. Mill Compound on C.S. No. 1/725 and 725 (Part) of Malabar Hill Division in D-Ward, formed a Co-operative Society in the name of Janata Nagar Co-operative Housing Society Limited. The said Society submitted a proposal for development of the said property to the Respondent No. 1 Corporation under the provisions of Regulation 33(7) of Development Control Regulations for Greater Bombay, 1991 in force at the relevant time. After scrutiny of the said proposal, Letter of Intent was issued by the Corporation on 5th August 1996. The Letter of Intent was to be valid for a period of one year from the date of issuance, which, however, could be extended for a maximum period of revalidation charges of Rs. 1,000/-per year. The proposal was then considered by the Improvement Committee of the Corporation in its meeting dated 15th October 1996. The Improvement Committee, after considering the proposal and the recommendation of the Commissioner, accorded approval to the redevelopment scheme and leasing of the plot to the Society on certain terms and conditions. The proposal was considered on the basis of the then existing Regulation 33(7) of the D.C. Regulations which provided 2.0 FSI for such Schemes. For the time being, we may advert to two conditions specified by the Improvement Committee. Condition No. (9) reads thus :
9) Society/Developer will also enter into agreement with Municipal Commissioner agreeing to pay 10% of the capitalized value before grant of commencement certificates and balance amount of 90% before final occupation of the sale buildings in one installment. Draft of the agreement will be prepared by legal Department.
In condition No. 29, it is plainly provided that the construction work of redevelopment project shall be completed within two years from the demolition of the old structure. Indeed, it also provides that the period may be extended by the Municipal Commissioner wherever necessary. Besides the above said conditions, it may be relevant to refer to the recommendation of the Improvement Committee in its meeting on 30th September 1996, which in turn is founded on the opinion of the Municipal Commissioner in his letter dated 18th September 1996 (as reproduced at page 65 of the paper- book). It refers to the recovery of capitalized value of the surplus area from the Society/Developer. The relevant extract thereof reads thus:
...(v) to recover from the Society/Developer the capitalized value of the surplus area, i.e. 33,860 sq.ft. (3145.67 sq.mtrs.) which comes to Rs. 18,62,30,000/-the final installment of 10% amount being recovered before commencement of the construction of rehabilitation building and balance 90% amount before final occupation of the saleable building as detailed in para 17 of letter, as proposed.
The Society had initially appointed M/s. Mebsons Builders who, however, later on expressed inability to carry on the redevelopment work. The Society then appointed M/s. Shapoorji Palanji as 3rd Developers/Construction Contractors. On February 1997, the Corporation issued a continuation Letter of Intent in respect of the Redevelopment Scheme with certain conditions. The Ward Officer by his communication dated 3rd February 1997 called upon the Secretary of the Society to comply with certain requirements before issuance of grant of N.O.C. for Commencement Certificate. The same reads thus:
You are now requested to comply with the following requirements after which, the matter will be processed further for grant of NOC for commencement certificate:
To pay Rs. 44,150/-(Rs.Forty four thousand one hundred fifty only) being non-refundable security deposit equal to 5 years lease rent of the land as required as per condition No. 5.
To pay Rs. 7000/-(Rs.Seven thousand only) as deposit towards cost of preparation of lease document as required as per condition No. 4.
To pay an amount of Rs. 1,86,23,000/-being 10% of the capitalized value of Rs. 18,62,30,000/-of surplus tenements to be handed over to BMC before grant of Commencement Certificate and balance of 90% i.e. 16,76,07,000/- before final occupation in one installment.
To enter into tripartite agreement along with developer with Municipal Commissioner agreeing to various terms and conditions of redevelopment.
To submit Indemnity Bond indemnifying the Municipal Corporation from any charges, claims, damages, etc. jointly signed by the society and the developer.
To submit regular proposal through architect with two sets of plans and copy of the IOD issued by E.E.B.P. City) and to pay Rs. 210/-as scrutiny fee for the proposal.
The Petitioners came on the scene consequent to the Tripartite Agreement executed between the Corporation, the Society and the Petitioners on 16th July 1998. This Tripartite Agreement refers to the obligation of the Society/Petitioners to comply with certain conditions referred to therein. In the recitals, it is mentioned that the redevelopment proposal was submitted by the Society of tenants which was considered by the Committee. It is further mentioned that the Developers (Petitioners) have agreed to comply with all the obligations of the Society under the Redevelopment Scheme. The broad features of the Scheme as sanctioned have been highlighted in Clause (1) of the Agreement. Sub-clause (d) thereof which is relevant, which reads thus:
(d) The developers is allowed to retain this surplus area on payment of aforesaid capitalized value of Rs. 18,62,30,000/-payable to MCGM as under:
i) Amount of Rs. 86,23,000/-to be paid on or before execution of this presents. (Receipt of which has acknowledged by MCGM).
ii) Balance Amount so as to make 10% of the capitalized value i.e. Rs.1,00,00,000/-payable on or before 1998 along with simple interest at the rate of 15% till the date of payment.
iii) And the balance amount of 90% amounting Rs. 16,76,07,000/-to be paid on or before grant of Occupation Certificate of Last wing of Building for sale.
It is expressly made clear that the aforesaid features are mentioned only to illustrate the salient features of the sanctioned scheme. The sanctioned scheme as modified by Municipal Commissioner shall prevail over for other details in respect of the development and reconstruction work.
(emphasis supplied)
Clause 23 of the Agreement envisages as to how the redevelopment work should be progressed in a phased manner and that the developer would become entitled to obtain Occupation Certificate for the proportionate sale area only on complying with the prescribed requirements. Clause 28 of the Agreement mandates that the Society/Developer shall not abandon the execution of the project and shall complete the project as approved. The same reads thus:
(28) The society/developer shall not abandon the execution of the project and shall complete the project as approved by the Municipal Commissioner. In case the project is abandoned before completion, Jt.Municipal Commissioner/Dy.Municipal Commissioner (I) shall give one month notice calling upon them to complete the project as per the schedule time and if the society fails to recommence the abandoned work within the stipulated period in the notice, the society/developer hereby agrees that the partly constructed structures shall vest in Corporation and the Corporation shall not be liable to pay any damages or cost to the society/developer and it will be open for the Corporation to complete the project in a manner as it deems fit and at the risk and cost of the society/developer.
Clause 43 of the Agreement stipulates that in all cases of dispute, the Municipal Commissioner�s decision shall be final and binding upon the Society.
Suffice it to observe that as per the Tripartite Agreement, the Petitioners/Developers were obliged to undertake development work as follows:
Housing the municipal tenants in tenements admeasuring 225 sq.ft. each.
Provide Transit accommodation during the period of reconstruction.
Accommodating the three VLTs.
Construct 10 PAP tenements and hand them over to the Corporation.
Carryout essential repairs to two buildings in the neighbourhood.
Construct a Municipal Primary School of 20,000 sq.ft.
Demolish the existing two chawls on the plot admeasuring 2300 sq.yards area earmarked for the lessee Bhausaheb Hire Vidyalaya Nagrik Shikshan Sanstha after accommodating the 150 tenants in the rehab buildings.
Undertake the widening of the 40� D.P. Road.
Construct a retaining wall on the west side of the plot along the hill slope.
Deposit a total capitalized value of Rs. 18,62,30,000/-for surplus area of 33,807 sq.ft. (i.e. 3145.67 sq.m.) out of which 10% of the capitalized value was to be paid before grant of Commencement Certificate and balance 90% was to be paid before occupation of the Sale Building.
Time period allowed for completion of the project was stipulated as two years as specified by the Improvement Committee. The project was sanctioned vide Resolution 259 of 11th October 1996 and No. 752 of 15th October 1996 respectively. The Developers, however, completed the rehabilitation component on 20th November 2001 in respect of `B�, `C� and `D� Wings of A/Building and on 26th March 2003 in respect of `A� wing of Building `A�. It is also noticed that the Occupation Certificate of rehabilitation component was issued vide B.P.Departments letter No. EEBPR/5437/D/AR of 20th November 2001 in respect of `B�, `C� and `D� wings and 26th March 2003 in respect of `A� Wing. The Petitioners have completed part of the project by providing :
1) Permanent accommodation has been provided to 308 tenants of the Corporation in the Rehab Building at a cost of about Rs. 25 Crores.
2) 10 PAP tenements have been given to the Corporation.
3) Work of construction of Primary School is going on at a cost of Rs. 3.0 Crores and will be completed very soon.
4) Retaining Wall has been constructed as per the I.O.D. condition at a cost of Rs. 3.0 crores.
5) Capitalized value of Rs. 1,86,23,000/-has already been paid to the Corporation being 10% of the total capitalized value of Rs. 18,62,30,000/-.
However, in relation to sale component of the Scheme, the Petitioners applied for N.O.C. to the Corporation only in 2006. By letter dated 24th February 2006, the Architects of the Petitioners requested the Assistant Commissioner (Estates) to issue N.O.C. for Commencement Certificate. The N.O.C. and Commencement Certificate in respect of sale component was issued by the Assistant Commissioner (Estates) vide letter no: AC/Estates/3448/AO (SOC) dated 26th June 2006 and Commencement Certificate to commence sale component was issued by the Deputy Chief Engineer (B.P.)(City) vide letter No. EEBP/7160/D/AR dated 24th January 2006.
Notwithstanding issuance of N.O.C. and Commencement Certificate in relation to the sale component in 2006, the work thereof was not completed by the Petitioners in time. In the meantime, however, the State of Maharashtra issued Notification, whereby, Regulation 33(7) of DC Regulations, 1991 came to be modified vide Notification dated 25th January 1999. By the said Notification, it is provided that in respect of new projects to be undertaken and in relation to ongoing projects where Occupation Certificate has not been granted so far, the FSI would be to the extent of 2.5 FSI. Consequent to the said Government Notification, the Respondent No. 1 Corporation issued Circular dated 14th June 2000 regarding guidelines for grant of additional 0.5 FSI in respect of ongoing projects. It is noticed that the amended plan which covered the sale component of the Scheme submitted by the Petitioners was sanctioned by the Corporation on 27th July 2006. Relying on the amendment to Regulation 33(7), the Petitioners submitted proposal for grant of total 2.5 FSI in respect of sale component building as they intended to build a high rise building to go up to 36 floors. The said amended plan was sanctioned. The Architect of the Petitioners then submitted representation on 3rd November 2006 to Respondent No. 3 Joint Municipal Commissioner requesting for permission to the Petitioners to consume 2.5 FSI. However, the Petitioners received notice from the Assistant Commissioner (Estates) dated 17th April 2008 which reads thus:
Brihanmumbai Mahanagarpalika No. AC/Estates/20414/AO (SOC) � 17-4-2008 Show Cause Notice
Sub : Redevelopment scheme of Municipal properties known as Janata Nagar, M.P. Mill compound on C.S.No. 1/725 and 725(pt) of Malbar Hill Division Tardeo under D.C.R. 33(7) Delay in implementation of project thereby delaying 90% capitalized value.
Sir,
Whereas the Janata Nagar Co.op.Housing Society formed by the tenants on the under subject property have appointed you as the developer for redevelopment of the property.
Whereas your Architect has submitted the proposal for redevelopment of above property has been approved by Improvement Committee/Corporation under their Resolution No. 269 dtd. 11/10/96 & No. 752 dtd. 15/10/96 respective. As per sanction total capitalized value amounting to Rs. 18,62,30,000/-in the scheme is required to be paid by you to M.C.G.M.
Whereas the Letter of Intent has been issued to you on 5/8/96 & after paying 10% of capitalized value amounting to Rs. 18,62,3000/-C.C. Has been issued to you on 20/1/98.
Whereas as per conditions of Letter of Intent, you were required to complete the project within 3 years & also to pay remaining 90% capitalized value to M.C.G.M. Before O.C. To sale component.
Whereas you have failed to complete the project as the project completion period is already over on 20/1/2001 & caused delay for payment of 90% capitalized value till this date.
Whereas it is the failure on your part to complete the project within stipulated period you are liable to pay 90% capitalized value Rs. 167607000/ with interest as decided by M.C.G.M.
You are hereby directed to show cause within 7 days on receipt hereof why the 90% capitalized value amounting to Rs. 16,76,07,000/-should not be recovered from you with interest for your failure to complete schemes.
Yours faithfully, Sd/Asstt. Commissioner (Estates).
The Petitioners through their Architects made representation to the concerned Officials of the Corporation on 9/5/2008, 16/9/2008, 14/10/2008, 23/10/2008, 3/11/2008, 7/11/2008 and 17/11/2008. It is the case of the Petitioners that they have completed the sale component building up to 19 floors, which consumes up to 2.0 FSI. According to the Petitioners, the work of the construction of building, however, has come to standstill awaiting the decision of the Corporation with regard to grant of additional 0.5 FSI in terms of the amended Regulation.
Besides the above said show-cause notice, Assistant Engineer (B.P.) City-II issued notice on 17th May 2008 u/s 354A of the Mumbai Municipal Corporation Act on the ground that he was satisfied that the Petitioners had unlawfully commenced/been unlawfully carrying on erection of building/execution of work described in the Schedule to the said notice. However, the subsequent notice issued on 17th May 2008 was withdrawn in the context of the demand made by the Corporation calling upon the Petitioners to pay balance 90% capitalized value of Rs. 16,76,07,000/-with interest as may be decided by the Municipal Commissioner. The Petitioners have filed the present Petition essentially challenging the said demand.
This Court on 4th May 2009, called upon the Competent Officer of the Corporation to consider the grievance of the Petitioners and pass a speaking order. Consequent to the said directions, the Deputy Municipal Commissioner (General Administration and Improvement) after giving opportunity to the Petitioners has now passed a speaking order on 8th June 2009. He proceeded to examine two points. Firstly, whether Petitioners were eligible to get additional FSI of 0.5. Secondly, can the additional FSI of 0.5 be granted to the Petitioners without payment of remaining 90% capitalized value amounting to Rs. 16,76,07,000/-as well as completing the other formalities. The first point has been answered in favour of the Petitioners. With regard to the second point, the same is answered against the Petitioners. The Deputy Municipal Commissioner has found that the Petitioners were expected to complete the �entire project� within two years from 1996. That has not happened. The Petitioners, however, were able to complete only the rehabilitation component up to November 2001 in respect of which Occupation Certificate has been issued in March 2003. Whereas, the Scheme obliged the Petitioners to complete even the construction of sale component within two years from the sanction of the Scheme. But N.O.C. for the sale component was obtained only in June 2006. The Commencement Certificate to start the construction of sale component was issued by the Deputy Chief Engineer (B.P.) City on 24th January 2006. The sale component was still not fully complete. It is, however, noted that the Petitioners have almost completed the construction of sale component, i.e. up to 19 floors which would exhaust the 2.0 FSI granted as per the sanctioned Scheme in terms of the then existing provisions. He then found that the Petitioners want to take advantage of the amended Regulation 33(7) without fulfilling their obligation of completing the construction as per the old proposal within time nor have shown willingness to pay the balance capitalized value. On the other hand, the Petitioners were insisting for grant of further FSI of 0.5 in relation to sale component relying on the amended provision. It is also noticed in the said order that any variance in the FSI and built up area of the Scheme is a matter which will have to be decided only by the Improvement Committee. The Competent Authority has found that the Petitioners were obliged to complete the construction within two years from August 1996. Indeed, the Petitioners could have requested for extension, however, no formal request for extension of time has been made. The Commissioner has also noted that although the time period can be extended upon submission of an application, the payment of the remaining 90% of the capitalized value cannot be further delayed because of the inordinate delay in construction of the sale component. That would result in depriving public exchequer of the remaining capitalized value to the extent of Rs. 16,76,07,000/-, notwithstanding the fact that the construction of the sale component as per the sanctioned scheme was almost complete. Having recorded this finding, the Deputy Municipal Commissioner then proceeded to determine the period from which the Petitioners would become liable to pay interest on the outstanding payment of capitalized value and the rate of interest therefor. He has held that even if benefit is given to the Petitioners for the period up to January 2006 when the Commencement Certificate for the sale component was issued on 24th January 2006, the Petitioners were expected to complete the said project within two years therefrom i.e. up to 25th January 2008. For that reason, the liability of the Petitioners to pay the balance capitalized value would commence from 25th January 2008 and having failed to pay the amount inspite of such demand, the Petitioners were liable to pay interest on the outstanding amount at the rate of 18% with effect from 25th January 2008. On this finding, the Deputy Municipal Commissioner proceeded to pass the following operative order. The same reads thus:
ORDER
I hereby direct the Petitioners/Developers viz. M/s. Crescent Builders to pay the remaining 90% of the Capitalized value amounting to Rs. 16,76,07,000/along with 18% interest thereon with effect from 25th January 2008 to the A.C. (Estates). The issuance of N.O.C. for granting of extra F.S.I. To the Developers can be considered only after the capitalized value has been paid as above.
The Petitioners have now challenged even the speaking order dated 8th June 2009 passed by Respondent No. 7. The reliefs claimed in the amended Petition read thus:
(a) That this Honorable Court may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ order or direction directing the respondents to grant to the petitioner the benefit of 0.5 FSI more as per the Notification dated 25th January 1999 issued by the Urban Development Department of Govt. of Maharashtra and the Circular of the Respondent No. 1 Corporation dated 14th June 2000 in respect of redevelopment scheme at Plot No. C.S. No. 1/725 and 725 (Part) of Malabar Hill Division, M.P.Mills Compound, Tardeo, Mumbai 400 034 on payment of 10% of the capitalized value on grant of commencement certificate in respect of o.5 FSI and balance 90% on grant of occupation certificate. (a-i) That this Honourable Court be pleased to issue appropriate writ, order and direction calling for the records and proceedings of the impugned order passed by the respondent No. 7 received by the Petitioners on 8th June 2009 being Ex.Q hereto and after examining the legality, validity and propriety thereof be pleased to quash and set aside the impugned order.�
(b) That pending the hearing and final disposal of the present petition this Honorable Court may be pleased to issue a mandatory order and direction directing the respondents to grant permission/commencement certificate to the petitioner for construction beyond 19th Floors of the Sale Building situate on Plot bearing City Survey No. 1/725 and 725 (Part) of Malabar Hill Division, M.P. Mills Compound, Tardeo, Mumbai 400 034 on payment of 10% of the capitalized value on grant of commencement certificate in respect of 0.5 FSI and balance 90% on grant of occupation certificate, or on such terms and conditions as this Honorable Court deem fit and proper in the circumstances of the case;
(c) Ad interim reliefs in terms of prayer (b) above;
(d) For costs of the present petition;
(e) For such other and further reliefs as the nature and circumstances of the case may require.
The principal submission of the Petitioners is that, there is no legal provision either in the Act or the Regulations which empowers the Corporation to charge interest on the balance capitalized value amount. In any case, the liability to pay the balance capitalized value amount would accrue only at the time of grant of Occupation Certificate of last wing of building for sale. That would be possible only after the construction of sale component is completed. In other words, since the liability to pay the balance amount of 90% has not accrued, the question of paying any interest on the said amount or for that matter, to pay the said balance amount of 90% of capitalized value in the sum of Rs. 16,76,07,000/-does not arise at all. Besides, it was contended that there was good justification for the non- completion of the project in time. According to the Petitioners, the delay in completion of the project was inevitable and not attributable to the Petitioners. Moreover, the Petitioners were willing to keep lien of the Corporation on the flats to be constructed upon utilisation of 0.5 additional FSI, until full capitalized value is paid. On the other hand, Counsel for the Corporation supports the view taken by the Deputy Municipal Commissioner and justifies the demand of the Corporation requiring the Petitioners to forthwith pay the balance capitalized value amount along with interest at the rate of 18% p.a. from 25th January 2008.
Having considered the rival submissions, we find that the grievance of the Petitioners that the amount had not become payable and that no interest could be demanded, is devoid of merits. Although the Respondent have not raised the plea of maintainability of this Petition, we find that the proposal for redevelopment was mooted by the Society of tenants. The sanction to the Scheme so moved was accorded by the Competent Authority in favour of the Society. On the basis of the said sanction, a Tripartite Agreement was executed between the Corporation on the one hand and the Society on the other. Indeed, the Petitioners are also party to the said Agreement. But, considering the tenor of the sanction and the terms of the said Agreement, there is little doubt that the primary obligation to complete the project is on the Society. Thus understood, the Society of tenants, for and on whose behalf the Petitioners have associated with the venture, would be necessary party to this Petition. However, the Petitioners have not impleaded the Society as party to this Petition for reasons best known to them. Since it is a curable defect and we will assume that the Society is supporting the cause of the Petitioners, we would decide the matter on its own merits.
Reverting to the argument of the Petitioners that the balance capitalized value amount has not become due and payable and in any case there is no express provision authorising the Commissioner to charge interest on the balance capitalized value amount, thereby disentitling the Corporation from claiming interest thereon, will have to be stated to be rejected. This argument clearly overlooks that the Petitioners have submitted to the Redevelopment Scheme as sanctioned under Regulation 33(7). The Regulation 33(7) as was in force at the relevant time in 1996, when the Scheme was sanctioned read thus :
Notification No. FSI-1192/2896/CR-326/UD-11, Dt. the 7th February 1994.
....
Regulation 33(7) : Reconstruction or redevelopment by Co-operative Housing Societies, or of old buildings belonging to the Corporation:
For reconstruction/redevelopment to be undertaken by the Cooperative Housing Societies in respect of cessed properties located in the island City which attract the provisions of the Maharashtra Housing and Area Development Authority Act, 1976 or by Co-operative Societies of landlord and occupiers of a cessed building subject to the provisions of the said Act and for reconstruction/redevelopment of buildings of the Corporation constructed before 1940, the floor space index shall be 2.00 on gross plot area or the consumed floor space index that is the total built- up area of the existing old building whichever is more. This floor space index will be subject to the Regulations in Appendix III so far as construction or redevelopment by such Co-operative Societies is concerned.
Indubitably, this Regulation enabled the Society of tenants to redevelop the Corporation property. But that was possible only on the basis of the terms and conditions on which the scheme/proposal is sanctioned. There is no dispute that in the present case the Scheme was approved on clear understanding that the Society/Developer were obliged to pay capitalized value in relation to the surplus area. It is not the case of the Petitioners that the Corporation cannot demand the capitalized value amount for utilisation of surplus area at all. The Improvement Committee imposed condition requiring the Society/Developer to enter into agreement with Municipal Commissioner agreeing to pay 10% of the capitalized value before grant of Commencement Certificate and the balance amount of 90% to be paid on or before final occupation of the sale component building. Consequent to approval of the proposal by the Improvement Committee, the Society and Petitioners executed a Tripartite Agreement with the Corporation agreeing to abide by the terms and conditions for sanction of the Scheme. We have no hesitation in taking the view that the condition requiring the Society/Developer to pay capitalized value to utilise the surplus area cannot be read in isolation to answer the controversy on hand. Instead, the Petitioners, as much as the Society, would be bound by the other terms specified not only in the Tripartite Agreement but also by the Improvement Committee and the NOC, IOD and Commencement Certificates, etc., which are the basis to permit them to redevelop the property. Significantly, the Petitioners did not challenge the terms and conditions therein at any point of time but, in fact, acted upon the same without any demurrer. On conjoint reading of the terms and conditions specified in the above mentioned documents, it is amply clear that the Society/Developer besides being liable to pay the capitalized value for utilisation of surplus area were also obliged to complete the entire project within two years from the date of demolition of the old structures. Upon completion of the development within two years, the Petitioners would necessarily become liable to pay the amount of specified capitalized value.
It is not in dispute that the Tripartite Agreement was executed on 16th July, 1998 between the Joint Municipal Commissioner/Deputy Municipal Commissioner (Improvements), the Society and the Petitioners (Developers). As per the said Agreement, the Society/Developer were allowed to retain surplus area on payment of capitalized value of Rs. 18,62,30,000/-payable to the Corporation. Out of the said amount, a sum of Rs.86,23,000/-was to be paid on or before execution of the Agreement and the balance amount of Rs.One Crore was payable on or before 1998 along with simple interest at the rate of 15% till the date of payment. Indeed, the Petitioners have complied with this obligation. The Agreement, however, records that the balance amount of capitalized value of 90% -amount of Rs.16,76,07,000/-, to be paid on or before grant of Occupation Certificate of last wing of building for sale. Taking clue from this provision, it is contended that as of now the Petitioners were not liable to pay the balance amount towards capitalized value. In that, the stage of issuance of Occupation Certificate in relation to the last wing of building for sale has not matured. The argument though attractive, does not commend to us. In the first place, the Agreement plainly provides that the balance amount of 90% amount of Rs. 16,76,07,000/-would become payable �on or before� grant of Occupation Certificate of last wing of building for sale. The expression �on or before� will have to be read as �not later than� or � at any time before the day of� grant of Occupation Certificate of last wing of building for sale. So read, it is an enabling provision authorising the Corporation to demand the amount �at any time before the grant of Occupation Certificate.
In our opinion, on conjoint and fair interpretation of the terms and conditions specified for sanctioning the scheme, the Society/Developer is liable to pay the balance capitalized value not later than grant of occupation certificate of last wing of building for sale or within two years from the date of demolition of the old structures being the period specified for completion of the project, which ever was earlier. Indeed, in case the period for completion of project were to be extended by the appropriate authority, the liability of the Society/Developer to pay the amount would also be deferred commensurate with such extended period, unless the Corporation were to invoke its authority to demand the whole or part of balance amount in earlier point of time as a condition to entertain the request for extension of time to complete the project. Such interpretation would subserve the overriding public interest as it would predicate certainty of payment of the amount within a reasonable time and the Corporation would not be required to wait indefinitely to recover the balance capitalized value which indeed is a public exchequer. On the other hand, if the payment were to be delayed as in this case almost for over ten years, the amount ultimately recovered from the Society/Developer would not be the real consideration for the capitalised value of the surplus area. For, the Corporation would receive the same amount without any interest accrued thereon which was determined on the basis of rates prevailing ten years back. Taking any other view would benefit a private party-Society/Developer-at the cost of the Corporation. That would be both unreasonable and contrary to public interest. Indubitably, the overriding public interest ought to out weigh the private interest. The legal maxim: �salus populi est suprema lex: regard for the public welfare is the highest law� can usefully be called in aid. 21. Notably, the Petitioners were expected to complete the entire project within two years i.e. up to 1998. If they had fulfilled that obligation, the Corporation would have recovered around Rs. 16.76 Crores before October, 1998. The Petitioners, however, completed only the rehabilitation component till 2001. There was no sign of any construction work of the sale component between 2001 till 2006. The Petitioners moved the Authority for issuance of N.O.C. and Commencement Certificate in respect of sale component only after January 2006. Issuance of such N.O.C. and Commencement Certificate even if were to be considered as giving further time to the Petitioners for completion of the project, the Petitioners were then expected to complete the construction of the sale component within two years from January 2006. That has not happened. As per the view expressed hitherto, the Petitioners were expected to pay the balance capitalised value amount on expiry of two years from January 2006. Admittedly, the Petitioners have constructed the sale component up to 19 floors, which would exhaust the 2.0 FSI granted to the Petitioners on the basis of the then existing provisions. Suffice it to note that even though two years period for completion of sale component expired in January 2008, admittedly, the Society/Petitioners did not apply for extension of time.
As aforesaid, on conjoint reading of the conditions imposed by the Improvement Committee, including the terms provided in the Tripartite Agreement, there can be no doubt that the Petitioners had undertaken twin liability -firstly, to pay capitalized value to avail of the surplus area and secondly, to complete the construction within specified time. Implicit in these obligations was to pay the balance capitalized value for availing of the surplus area to the Corporation within such time. The Petitioners cannot take advantage of the fact that the stage for issuance of Occupation Certificate of the last wing of building for sale has not matured. That situation is attributable to the Petitioners themselves. However, taking advantage of the changed Regulation, the Petitioners now intend to continue with further construction up to 36 floors. In such situation, there is nothing wrong if the Corporation were to take the stand that the proposal for additional FSI can be considered only after the Petitioners were to fulfill their obligation of paying the balance capitalized value on the basis of 2.0 FSI already determined by the Authorities. There is nothing in the Act or the Regulations so as to preclude the Corporation from demanding the payment of balance amount of capitalized value in respect of the surplus area by the Society/Developers as condition for considering the proposal for additional FSI. In our opinion, the stand of the Corporation that the Society/Developers were obliged to complete the construction within specified time and apply for Occupation Certificate within such time, is not only reasonable but replete with public interest. We would safely presume that the demand of the Corporation is reasonable and in public interest. The onus is on the Petitioner to show as to how the demand of the Corporation lacks reasonableness or is not informed with public interest. This burden is a heavy one and is required to be discharged to the satisfaction of the Court by proper and adequate material. We cannot lightly assume against the Corporation. The Petitioner has miserably failed to discharge that burden. The only grievance of the Petitioner is that the amount had not become due and payable and for that reason the Petitioner was not even liable to pay interest on that amount. That plea has been elaborately considered and negatived by us on the finding that non-issuance of Occupation Certificate of last wing of building for sale would not extricate the Society/Developer from payment of balance amount of capitalized value, if so demanded by the Corporation, unless the Corporation were to extend the completion period of the project unconditionally on being satisfied with the cause for non-completion of the project in time. Without such extension, the Petitioners would not be in a position to lawfully continue with the project. Inasmuch as, it may be open to the Corporation to initiate action to take over the partly constructed building as if it had vested in it or to invoke Clause 28 of the Agreement. Such view would further the public interest, as the Corporation would become entitled to receive the amount towards capitalized value within a reasonable period and not be made to wait indefinitely till the Society/Developers were to apply for Occupation Certificate of the last wing of building for sale.
Incidentally, the Deputy Municipal Commissioner in his order has rightly highlighted the seriousness of the situation arising on account of similar stand taken by the other Builders. The Corporation has been deprived of the capitalized value to the extent of over Rs. 783 crores. Resultantly, the Corporation has now modified its Policy which provides that 20% of the capitalized value becomes payable initially i.e. after issuance of Letter of Intent and 60% becomes payable at the time of issuance of Commencement Certificate to the sale component and 20% to be paid towards end at the time of issuance of Occupation Certificate to the sale component.
Be that as it may, there is nothing wrong if the Corporation were to insist that the Petitioners shall first pay the balance capitalized value amount of Rs. 16,76,07,000/-as condition precedent for considering their request to grant further 0.5 FSI in relation to the sale component. Admittedly, the Assistant Commissioner (Estates) called upon the Petitioners to pay the remaining 90% capitalized value vide show-cause notice dated 17th April 2008. However, the Petitioners neither bothered to apply for extension of time nor applied for Occupation Certificate in respect of construction which has reached up to 19 floors and almost complete in the context of 2.0 FSI granted as per the Scheme approved on the basis of the then existing provisions. A priori, the Corporation was well within its authority to call upon the Petitioners to pay the balance capitalized value amount which indeed is a concession shown to the Petitioners inspite of having failed to complete the project within time specified in the original Scheme. Hence, there is no infirmity in the demand issued by the Corporation calling upon the Petitioners to pay the said amount forthwith. The Petitioners having failed to fulfill the said demand, would be obliged to compensate the Corporation by paying interest on the outstanding amount.
The question is from what date the Petitioners would become liable to pay the balance amount of capitalized value. Ordinarily, we would have agreed with the opinion of the Deputy Municipal Commissioner that it would become payable from 25th January 2008 when the two years period for completion of the project from 24th January 2006 expired. However, in the present case, the demand was issued by the Assistant Commissioner (Estates) only on 17th April 2008. The Petitioners were therefore put to notice for the first time about their liability to pay the balance capitalized value amount forthwith consequent to service of the said show-cause notice dated 17th April 2008. This notice also informs the Petitioners that failure to comply with the said demand within seven days, the Petitioners would be liable to pay interest as may be decided by the Municipal Commissioner. The Petitioners, therefore, were liable to pay the outstanding capitalized value amount within seven days from 17th April 2008. Failure to comply with the said demand, the Petitioners became liable to pay interest on the outstanding amount after 24th April 2008 i.e. seven days on and after receipt of the notice.
The next question is what is the quantum of interest payable by the Petitioners. The Deputy Municipal Commissioner has determined the said amount at the rate of 18% per annum. Ordinarily, we would have no reason to disagree with the said determination. Inasmuch as, it cannot be disputed that the Petitioners would be exploiting the sale component commercially. The Petitioners cannot be allowed to withhold the amount which had become due and payable by them to the Corporation, which is quite substantial. The Commissioner has rightly noted that the delay in payment of this amount is loss to public exchequer. The Tripartite Agreement clearly provides that in all cases of dispute, the Municipal Commissioner''s decision shall be final and binding. Besides, the show-cause notice issued by the Assistant Commissioner (Estates) dated 17th April 2008 also informs the Petitioners that if the Petitioners fail to pay the amount within seven days from the receipt of notice, they would be liable to pay interest as would be decided by the Municipal Commissioner. The Deputy Municipal Commissioner has now determined the quantum of interest payable by the Petitioners on the outstanding amount. Ordinarily, we would not have interfered with the quantum of interest specified by the Deputy Municipal Commissioner. However, it is noticed that the Tripartite Agreement has provided for interest rate only at 15% per annum in the event of nonpayment of balance amount of 10% of the capitalized value. We are conscious of the fact that there is no corresponding condition in respect of delay in payment of balance 90% of the capitalized value. However, to observe consistency, we would hold that the Petitioners are liable to pay interest on the outstanding amount of capitalized value from 24th April 2008 at the rate of 15% per annum till the date of payment.
Counsel appearing for the Petitioners vehemently submitted that the Petitioners be allowed to offer lien of the Corporation on the flats to be constructed upon utilisation of 0.5 additional FSI until full capitalized value is paid. This offer was made by the Petitioners even before the Deputy Municipal Commissioner. We are not impressed by this offer. The Corporation cannot be expected to run on the basis of such lien or surety. Since the amount has become payable as is rightly observed by the Commissioner, any delay would be loss to public exchequer. The question of acceding to the request of the Petitioners to place lien on the flats to be constructed, does not arise.
Taking overall view of the matter, therefore, we partly uphold the view of by the Deputy Municipal Commissioner. We hold that the Petitioners were liable to pay the balance amount of capitalized value on or before 24th April 2008 and further liable to pay interest on the outstanding amount as on that date at the rate of 15% per annum till payment thereof. The operative order passed by the Deputy Municipal Commissioner would stand modified to the above extent.
Rule is made partly absolute on the above terms with no order as to costs.