Devinder Singh Pannu vs Chandigarh Administration

G.S. Singhvi, J.—This petition has been filed to quash the order of resumption passed by the Assistant Estate Officer, Chandigarh under Rule 12(3) of the Chandigarh Lease Hold of Sites and Building Rules, 1973 (hereafter referred to as ''the Rules''). The orders passed by the Chief Administrator and the Advisor to the Administrator, Chandigarh dismissing the appeal and the revision filed by the petitioners, as also the order passed by the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and the judgment dated 24.4.1996 passed by the District Judge, Chandigarh dismissing the appeal preferred by the petitioners have also been challenged by the petitioners.

In order to decide whether the impugned orders suffer from any jurisdictional illegality or any other error of law, a brief reference to some of the facts is necessary.

The petitioners gave highest bid of Rs. 20,65,000/ for purchase of commercial site No. 47778, Sector 35C, Chandigarh in the open auction held on 13.3.1988. Their bid was accepted by the Chandigarh Administration and on deposit of 25% of the total premium the possession of the site was handed over to the petitioners and the letter of allotment was issued by the Estate Officer on 25.4.1988 (wrongly typed as 25.4.1985 in Annexure P1). The petitioners did not pay the first instalment of Rs. 5,90,151/ which was payable upto 10.4.1989. The Assistant Estate Officer issued notice dated 26.4.1989 to the petitioners requiring them to deposit the instalment within 15 days. This was followed by a notice under Rule 12(3) of the Rules whereby the petitioners were called upon to explain as to why penalty and interest be not imposed on account of their default. Even then the petitioners did not pay the first instalment. Ultimately, the Assistant Estate Officer issued notice Annexure P2 to the petitioners to show cause why proceedings may not be taken for cancellation of the lease of the site. For similar defaults in the payment of second and third instalments, the notices Annexures P3 and P4 were issued to the petitioners and they were asked to pay the amount of instalments with ground rent and interest together with penalty specified in those notices. Last notice was issued to the petitioners on 27.11.1991. The Assistant Estate Officer afforded opportunity of hearing to the petitioners on 11.12.1991, 21.1.1992, 8.4.1992, 13.5.1992, 17.6.1992 and 12.8.1992. Despite this, the petitioners failed to clear the outstanding dues. Consequently, he passed the order Annexure P5 and cancelled the lease of the site. At the same time, the Assistant Estate Officer ordered forfeiture of 10% of the premium plus ground rent and interest. The appeal filed by the petitioners was allowed by the Chief Administrator subject to the conditions that outstanding amount along with forfeiture of 4% is paid by the petitioners by 31.3.1995. The petitioners did not feel satisfied with the order of the appellate authority and filed a revision petition before the Advisor to the Administrator, who passed the order Annexure P7 and once again restored the site in question subject to the condition that all outstanding dues along with 2% forfeiture are paid by 2.1.1996.

It appears that the petitioners did not comply with the conditions imposed by the appellate and the revisional authorities and, therefore, the order passed by the Assistant Estate Officer for cancellation of the lease became operative. This prompted the Estate Officer to initiate proceedings under the Act of 1971. After giving notice to the petitioners, the Estate Officer passed the order of ejectment. The petitioners appealed against the order of ejectment. Their appeal has been dismissed by the District Judge, Chandigarh on 24.4.1996.

The petitioners have challenged the impugned orders on the ground of violation of the provisions of the Capital of Punjab (Development and Regulation) Act, 1952 and the Rules (of 1973). The petitioners'' contention is that the Assistant Estate Officer has no jurisdiction to impose penalty or to order forfeiture of a part of the premium. Charging of interest at the rate of 24% has also been assailed by the petitioners.

The respondents have contested the writ petition by stating that the order of resumption of the lease site was passed by the Assistant Estate Officer due to persistent failure of the petitioners to pay the amount of instalments despite notices. Charging of interest at the rate of 24% has been justified on the basis of the notifications Annexure R1 dated 29.10.1990 and Annexure R2 dated 2.7.1993 by which Rule 12(3) and Rule 12(3A) of the Rules were amended.

The first contention urged by the learned counsel for the petitioners is that the action taken by the Chandigarh Administration for resumption of the site is per se illegal because on the basis of first default committed by the petitioners the Assistant Estate Officer resorted to Rule 12(3) of the Rules without giving reasonable opportunity to the petitioners to deposit the amount. Learned counsel argued that the resumption of the site tantamounts to depriving the petitioners of their property right and such a drastic step should not have been taken by the respondents hastily. The second contention urged by Shri Jain is that the Assistant Estate Officer had no jurisdiction to impose penalty and at the same time forfeit 10% of the premium because there is no provision in the Rules which authorises the Assistant Estate Officer to make such an order. Shri Ashok Aggarwal argued that the petitioners have by their conduct disentitled themselves from any indulgence by this Court in exercise of its equitable jurisdiction. He argued that the petitioners deliberately refrained from making payment of the instalments'' money even though they raised huge building on the site allotted to them and leased it out to different tenants and earned huge profits. Shri Aggarwal further pointed out that even though the appellate authority reduced the amount of forfeiture from 10% to 4% of the premium already paid and granted time to the petitioners to make the payment and even the revisional authority accepted a similar request made by them and reduced the forfeiture from 4% to 2% and granted further time to make payment, the petitioners did not comply with the orders of the appellate as well as revisional authorities leaving the Assistant Estate Officer with no option but to resume the site. Shri Aggarwal also challenged the locus standi of the petitioners to raise the plea against the charging of interest by arguing that no such point was raised by the petitioners either before the Assistant Estate Officer or before the appellate authority or the revisional authority. According to the learned counsel, the failure of the petitioners to raise this point before the competent authorities should be construed as a conscious waiver of their right to object to the levy of interest at the higher rate.

The Act of 1952 was enacted by the Legislature to reenact and modify the law in relation to the development and regulation of new Capital of Punjab. Section 8A of this Act empowers the Estate Officer to resume the site or building or both and forfeit any part of the money paid in respect thereof provided that such forfeiture shall not exceed 10% of the total consideration money, interest or other dues. Section 10 of the Act of 1952 contains the provisions regarding appeal and revision by the person aggrieved by an order of the Estate Officer made under Section 8 or 8A.

In exercise of the powers conferred by Sections 3 and 22 of the Act of 1952 as adopted by the Punjab Reorganisation (Chandigarh Adaptation of Laws on State and Concurrent Subjects) Order, 1968, the Administrator of the Union Territory, Chandigarh made the Rules (of 1973). Rule 4 of the Rules empowers the Chandigarh Administration to transfer sites and buildings at Chandigarh on lease for 99 years by allotment or by auction in accordance with the provisions of the Rules. Rule 5 empowers the Chief Administrator to reserve sites/buildings for groups of individuals or for persons practicing any profession or carrying on any occupation, trade or business or for the implementation of any scheme framed by the Chandigarh Administration. Rule 9 contains the procedure for grant of lease by auction. Rule 9A empowers the Chief Administrator to extend the period for deposit of 25% of the auction money. Rule 10 provides for delivery of possession. Rule 12 contains the provisions for payment of premium and consequences of nonpayment or late payment. Rule 13 speaks of the rate of rent and consequences of nonpayment. Rule 17 enumerates general conditions of lease. Rule 20 empowers the Estate Officer to cancel the lease and forfeit the whole or part of the ground rent on the ground of default, breach or noncompliance of any of the terms and conditions of the lease or for furnishing in writing incorrect information under Rule 19. There are two rules numbered Rule 21A. First of these empowers the Administrator to relax all or any provisions of the Rules. The second one empowers the Estate Officer to retransfer the site of which the lease has been cancelled under Rules 10, 12 or 20. Rule 22 contains provisions for appeal and revision by any person feeling aggrieved by an order of the Estate Officer made under Rules 10, 12, 13, 20 or 21.

Section 8A of the Act of 1952 and Rules 12 and 20 of the Rules (of 1973) are reproduced below for reference purposes :

"8A of the Act of 1952. Resumption and forfeiture for breach of conditions of transfer. If any transferee has failed to pay the consideration money or any instalment thereof on account of the sale of any site or building or both, under Section 3 or has committed a breach of any other conditions of such sale, the Estate Officer may, by notice in writing, call upon the transferee to show cause 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 no case shall exceed ten per cent 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.

(2) After considering the cause, if any, shown by the transferee in pursuance of a notice under subsection (1) and any evidence he may produce in support of the same and after giving him a reasonable, opportunity of being heard in the matter, the Estate Officer 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 subsection (1), of the whole or any part of the money paid in respect of such sale."

"Rule 12 of the Rules (of 1973) Payment of premium and consequences of non payment or late payment. (1) In addition to payment of 25 per cent premium under Rule 8 or 9 as the case may be, the remaining 75 per cent premium may be paid in lump sum within 30 days from the date of allotment/auction without any interest.

(2) If payment is not made in accordance with subrule (1) of this rule, the balance of the 75 per cent premium shall be paid in three annual equated instalments alongwith interest at the rate of 10 per cent per annum (or at such higher rate of interest as may be fixed by the Chief Administrator by a notification in the official Gazette) before the commencement of the lease. The first instalment shall become payable after one year from the date of allotment/auction :

Provided that in the case of allotment of site or building of Small Scale Industries as defined by Chandigarh Administration from time to time in the Industrial Area, the balance of the 75 per cent of the premium may be paid in ten annual equated instalments or such other number of annual equated instalments as may from time to time be fixed by the Chief Administrator along with interest at the rate of 10 per cent per annum or such higher rate of interest as may be fixed by the Chief Administrator by a notification before the commencement of the lease.

(3) In case any instalment is not paid by the lessee by the date on which it is payable, a notice may be served on the lessee calling upon him to pay the instalment within a period of 3 months together with a penalty which may extend upto 10 per cent of the amount due. If the payment is not made within the said period, the Estate Officer may cancel the lease and/or forfeit the whole or any part of the money paid in respect thereof which, in no case, shall exceed 10 per cent of the total amount of the consideration money, interest and other dues payable in respect of the lease :

Provided that forfeiture will not be made in addition to penalty;

Provided further that no order of cancellation or forfeiture shall be made without giving the lessee a reasonable opportunity of being heard. If the order of cancellation is for nonpayment of penalty, the lessee may show cause why the penalty should not have been levied.

(3A) In case any equated instalment or ground rent or part thereof is not paid by the lessee by the date on which it became payable he shall be liable to pay in respect of that instalment or ground rent or part thereof as the case may be, interest calculated at the rate of twentyfour per cent per annum from the date on which the instalment or ground rent became payable till such date it is actually paid.

(4) Each instalment shall be remitted to the Estate Officer by the prescribed mode of payment. Every such remittance shall be accompanied by a letter showing full particulars of the site or building to which the payment pertains or a statement giving reference to the number and date of the allotment referred to in Rule 8. In the absence of these particulars, the amount remitted shall be deemed to have been received only on the date when the remitter supplies correct and complete information.............

Rule 20. Notwithstanding and without prejudice to other provisions of these Rules the Estate Officer may, by notice in writing, cancel the lease and forfeit the whole or part of the premium and ground rent paid in respect thereof which in no case shall exceed ten per cent of the total amount of premium, interest and other dues payable in respect of the site or building or both as the case may be, on the ground of default, breach or noncompliance of any of the terms and conditions of lease or for furnishing in writing incorrect information under Rule 19 :

Provided that no order regarding cancellation of lease/forfeiture under this rule shall be made unless the lessee has been given a reasonable opportunity of being heard......."

A conjoint reading of the various provisions referred to hereinabove shows that the lease of the sites and buildings allotted or auctioned by the Administration commences from the date of allotment or auction. The tenure of the lease is 99 years. It is renewable on such terms and conditions as the Administration may decide. Where the lease is granted by auction, at least 25 per cent of the bid money is to be paid on the spot. However, proviso to Rule 9 empowers the Estate Officer to accept 10 per cent of the bid money and give 30 days further time to the bidder to deposit the remaining 25 per cent. Rule 9A empowers the Chief Administrator to condone the delay in the deposit 25 per cent of the bid money or to extend the time on such terms and conditions as he thinks fit including the payment of the penalty not exceeding 10 per cent of the amount in default in addition to the interest at the normal rate. Rule 12(1) gives option to the lessee to pay 75 per cent premium in lumpsum within one month from the date of allotment/auction without any interest. Rule 12(2) lays down that if the lessee does not opt for payment in lumpsum then balance of 75 per cent premium has to be paid in three equated yearly instalments along with interest at the rate of 7% per annum or such higher rate of interest as may be fixed by the Chief Administrator by a notification in the official Gazette before the commencement of the lease. The figure ''7'' came to be substituted by ''10'' vide notification dated 29.10.1990. Proviso to Rule 12(2) which relates to the allotment of the site or building for Small Scale Industries is not relevant for the purpose of this case. Rule 12(3) lays down that in case the lessee fails to pay any instalment by the date on which it is payable the Estate Officer may serve a notice on the lessee calling upon him to pay the instalment within a period of three months together with a penalty which may extend to 10 per cent of the amount due and if the payment is not made within the said period, the Estate Officer may cancel the lease and/or forfeit whole or any part of the money paid in respect thereof. However, the forfeiture shall not exceed 10 per cent of the total amount of the consideration money, interest and other dues payable in respect of the lease. The first proviso to Rule 12(3) says that forfeiture will not be in addition to penalty. The second proviso to Rule 12(3) requires giving of a reasonable opportunity of being heard to the lessee before an order of cancellation or forfeiture can be made. Subrule (3A) of this rule which came to be added vide notification No. 5112UTFI(III) dated 15.12.1979 lays down that the lessee shall be liable to pay interest calculated at the rate of 15% in case any equated instalment of ground rent or part thereof is not paid by the lessee by which date it becomes payable. The figure ''15'' has been substituted by ''24'' in subrule (3A) vide notification Annexure R2.

In the light of the above analysis of the provisions of the Act of 1952 and the Rules (of 1973), we shall now consider whether the impugned orders suffer from any error of law or the same are contrary to the provisions of the said Act and the Rules. However, before we do that it is necessary to reiterate that the parties do not have any serious dispute on the factual aspect of the case. Admittedly, the petitioners did not pay the instalments on the due dates and the default in payment of money due to the Administration persisted despite the fact that the Assistant Estate Officer issued notices to them. Even after issuance of the notice proposing cancellation of the lease the petitioners did not care to pay the amount due. The proceedings initiated by the Assistant Estate Officer under Rule 12(3) vide the notice dated 27.11.1991 were adjourned on six different dates in order to enable the petitioners to make the payment. However, they did not avail this opportunity. Their conduct makes us to believe that the petitioners entertained a misconceived notion that they can mould the law to suit them. This must be the reason why the petitioners exhibited total contempt for the law and the truth. Learned counsel who appeared on behalf of the petitioners before the appellate authority made a statement that his clients would make payment of the outstanding dues on or before March 31, 1995. The Chief Administrator relied on the assurance given by the counsel and restored the site to the petitioners. At the same time, he reduced the amount of forfeiture from 10% to 2%. The petitioners could have availed this benefit on payment of dues by 31.3.1995. However the petitioners were in no mood to comply with the conditions imposed by the appellate authority. They did not pay the remaining dues by 31.3.1995. Instead, the petitioners filed a revision petition before the revisional authority i.e. the Advisor to the Administrator. Before the revisional authority also, the counsel appearing for the petitioners requested that some time may be given to his clients to deposit the outstanding dues and persuaded the revisional authority to pass the order for restoration of the site. Vide Annexure P7, the revisional authority directed that the site be restored to the petitioners on the condition of payment of the outstanding dues by 2.1.1996. This time again, the petitioners defaulted in making the payment. After over six months of the expiry of the deadline fixed in the revisional order, the petitioners offered a bank draft of Rs. eight lacs to the Estate Officer. In the background of persistent defaults committed by the petitioners during a period of over four years, the offer made by the petitioners was nothing but a farce. Moreover, the order of resumption passed by the Estate Officer on 18.2.1992 which was put in hibernation on account of the orders passed by the appellate authority and the revisional authority got revived. Therefore, even if the Estate Officer had accepted the draft submitted by the petitioners along with the letter dated 8.7.1996, the petitioners would not have got any benefit. At any rate, the Estate Officer cannot be faulted for not having accepted the draft because as on 8.7.1996 there did not exist any lease in favour of the petitioners.

A look at the clauses No. (5), (8a), (9a), (9b), 17, 29 and 30 of the letter of allotment of the site shows that the petitioners were made aware of their liability to make payment of the instalments either by depositing the remaining 75% of the premium in lumpsum or by making payment in three equated instalments. The petitioners were also made aware of their liability to pay the penalty in case of failure to pay the instalment/rent and of the possibility of the cancellation of the lease of the site and the forfeiture of the premium or a part thereof.

The provisions of the Act of 1952 and the Rules (of 1973) were also made part of the conditions of allotment. Therefore, the same were binding on the petitioners who were under an obligation to comply with the same in order to continue to avail the benefit of allotment made in their favour. Due to their consistent failure to abide by the terms and conditions of the contract entered into between them and the Chandigarh Administration, the petitioners made themselves liable to be proceeded against under Rule 12 of the Rules. They were given ample opportunity to show cause against the proposed action of cancellation of the lease but the petitioners exhibited complete lack of seriousness and did not take steps to comply with the requirement of payment of instalments. We, therefore, do not find any substance in the argument of the learned counsel that the petitioners were denied reasonable opportunity of hearing before passing of the order of resumption.

We also do not find any substance in the argument of the learned counsel that the order of resumption of the site was passed by the Assistant Estate Officer with undue haste. The fact that the Assistant Estate Officer adjourned the hearing on six different dates is sufficient to negative the charge of undue haste levelled against him. If the petitioners failed to avail the opportunity given to them by the Assistant Estate Officer, they have to blame themselves.

We shall now deal with the argument of the learned counsel that the order of resumption results in depriving the petitioners of the right of their property. In this regard, it is necessary to remember that the property vesting in the Chandigarh Administration is a public property and the Administration acts as a trustee of the public property. By enacting the Act of 1952 the Legislature has empowered the Administration to lease out public property by allotment or by auction for augmenting revenue which could be utilized for the benefit of the public of the city. If the rules framed by the competent authority had provided for deposit of the entire amount in one go as a condition precedent to the grant of lease, no exception could have been taken by any body. By making provision for payment of lease money in instalments, a concession has been given to the persons who are desirous of taking the property on lease. The lessees are given option to deposit 75% of the premium in lumpsum within 30 days without any interest. Those who do not want to avail this option are required to pay 75% premium in three annual equated instalments along with interest. Those who want to avail the benefit of paying 75% premium in three equated instalments are required to pay interest. They are also liable to be proceeded against under Rule 12(3) and other provisions in the event of failure to pay the instalments. Before an order of resumption can be passed, the competent authority is required to give notice and opportunity of hearing to the lessee. Thus, the procedure prescribed for resumption of the site/building is consistent with the rules of natural justice. The provisions of Rule 12 do not in any manner offend the concept of the fair procedure which forms an integral part of the scheme of our constitutional system. We, therefore, do not find any ground to accept the contention of the learned counsel that the order of resumption passed under Rule 12(3) or Section 8A amounts to depriving the petitioners of their property.

At this stage, we may refer to some decisions of this Court and of the Supreme Court regarding interpretation of the provisions of the Act of 1952 and the Rules framed thereunder.

Constitutional validity of Section 9 of the Act of 1952 was considered in L.P.A. No. 218 of 1965, Jagdish Chand Radhey Shyam v. State of Punjab and others, 1972 R.C.R.(Rent) 862 decided on 21.2.1966. A Division Bench of this Court rejected the argument that power of resumption conferred upon the Estate Officer is ultra vires to the provisions of the Constitution. That decision was reversed by the Supreme Court in Jagdish Chand Radhey Shyam v. State of Punjab, 1972 R.C.R.(Rent) 862 : AIR 1972 S.C. 2587 : 1972 PLJ 566. While striking down Section 9 of the Act of 1952, their Lordships observed :

".......The Act creates a charge on the property. The Act forbids creation of a third party right by the transferee until the amount represented by the charge is paid in full. In the teeth of statutory security and enforceability it is totally unreasonable restriction on the enjoyment of property by resuming the site for defaults in payments of money and forfeiting the monies paid by the transferee. For these reasons, we are of the opinion that the Government is not entitled to forfeit the monies paid and resume the site under the provisions contained in Section 9 of the 1952 Act. These provisions violate Articles 14 and 19(1)(f). These provisions are unconstitutional."

Thereafter, the Parliament amended the provisions of the Act of 1952 by Act No. XVII of 1973. By virtue of the Amending Act, Section 3 was amended, Section 8 was substituted, Section 8A was introduced and Section 9 was omitted.

In Brij Mohan v. Chief Administrator, AIR 1980 P&H 236 : 1980 PLJ 380, a Full Bench held that the resumption is an incident of deprival of the ownership right concerning the transferee and this course was permissible under Section 8A. However, in Amrit Sagar Kashyap v. Chief Commissioner U.T. Chandigarh, 1982 PLR 441, a Division Bench gave a different meaning to the words ''resume'' and ''resumption''. The correctness of the decision of the Division Bench was doubted in some other cases resulting in reference of the controversy to a larger Bench. In Ram Puri v. Chief Commissioner, Chandigarh, AIR 1982 P&H 301, a Full Bench examined the controversy at great length and by majority decision, it has been held :

"The word ''resumption'' under Sec. 8A means clearly the divestiture of title of a building or the site, as the case may be and not merely a temporary divesting of possession only. It is an error to construe the word ''resumption'' as meaning only a temporary divesting of possession in favour of a trustee who is obliged to restore the same if the default is later rectified. So construed the sanction under the statute far from being in any way effective would render the same totally futile and the misuse sought to be prohibited could be made with absolute impunity. The true import and width of the word ''resumption'' designedly used by the Legislature in Section 8A must be construed in the context in which it is placed for the larger purposes of the Act and not in abstruse isolation. One of the avowed objects of the Act was not only to have a planned city but of creating its capital within the shortest possible time. This was sought to be effectuated by making it a necessary condition of purchase that the site sold would be built upon within a prescribed period. If a violation of the aforesaid condition is made and the transferee recalcitrantly refuses to build thereon then the Estate Officer by taking possession of such a vacant site merely becomes a gratuitous caretaker of the same till the transferee chooses to exercise his option of building thereon. In a situation of this kind the very purpose and the spirit of the Act of creating a view capital speedily would be totally frustrated. Equally it would render the authorities powerless against the terrible evil of profiteering in developed urban sites by unscrupulous transferees who could definitely bide their time till prices escalated sky high whilst the Estate Officer gratuitously guarded their unbuilt sites."

The Full Bench rejected the argument raised on behalf of the petitioner that Section 8A is violative of Articles 14 and 19(1)(f) of the Constitution and held :

".....The subsequent amendments introduced in Ss. 3 and 8 as also the deletion of S. 9 altogether and its substitution by S. 8A of the Act was designed to and has undoubtedly cured the infirmities which their Lordships had discerned in the previous provisions in Jagdish Chand Radhey Shyam''s case (supra). By these legislative changes the charge on the transferred site has been abolished and similarly the clog on the transfer to the third party stands removed. Further there are now inbuilt guarantees and safeguards provided in Section 8A itself by ensuring a reasonable opportunity to show cause against any proposed resumption or forfeiture. A further limitation that forfeiture in no case shall exceed 10 per cent of the total amount of consideration money has been itself laid down therein. The Estate Officer is obliged to record his reasons after giving adequate opportunity including the right to lead evidence to the transferee before passing an order adverse to his interest. Further the statute and the rules thereunder provide for an appeal and revision against such orders. Therefore, it cannot be said that Section 8A suffers from the vide of discrimination or in any way violates the equality clause under Art. 14 of the Constitution..........

The fundamental right under Art. 19(1)(f) to acquire, hold and dispose of property is not an absolute right. It can be hedged in by the imposition of reasonable restrictions on its exercise in the interest of general public. Apart from this express limitation imposed by the Constitution itself, binding precedents of the final Court have authoritatively highlighted that in this context considerations of larger social and public purpose are germane to the construction of this Article.

The challenge to the constitutionality of a statute on the anvil of Art. 19(1)(f) is not merely to be judged from the particular provisions of the section alone. It is permissible and indeed desirable for the Court to take judicial notice of the facts which led to the enactment of the statute and the avowed objects and reason thereof. Again the preamble to the Act may provide a clue to its interpretation. Further the provisions of the impugned section along with the other supplementary provisions of the Act as also the statutory rules made thereunder, have all to be viewed as a whole for testing its constitutionality.........

It is well settled that the taint of unconstitutionality does not attach to a provision of law merely because there may be remote possibilities of the abuse of power conferred thereby. In such a situation it is only the arbitrary or the wrongful exercise of the power which can be struck down but not the statute itself. The entire Act was purposefully directed to provide a reasonable social control of the urbanisation visualised by the creation of an altogether new capital city for the State from scratch. The threefold preeminent ideas underlying the same were the need and incentive to create an altogether new town at a place where none existed and that too within the shortest possible time, and further to ensure that it conformed to an ideal concept of a planned city as against the haphazard urbanisation of the mushroom growth of slums which in the ultimate analysis can even strangulate an existing town to extinction. It is not mandatory for the authority to order resumption, but only in extreme cases it enables it to do so when the other powers and sanctions to enforce the purpose of the Act have failed, or in the circumstances it is the only remedial power which can be applied. Therefore, it is farcical and imaginary to assume that the authority would necessarily use this power arbitrarily and whimsically and that they will use this hammer to swat a fly.

.....In the larger conspectus of the purposes of the Act itself, its preamble, the specific provisions of S. 8A, the setting in which it is placed along with the supplementary sections of the Act and the Rules framed thereunder, it has to be held that the enabling power of resumption conferred thereby is only a reasonable restriction on the fundamental right to hold, acquire and dispose of property and is, therefore, in no way violative of Art. 19(1)(f) .. "

.....The correctness of the majority judgment of the Full Bench has been considered by the Apex Court in Babu Singh Bains etc. v. Union of India etc., JT 1996(9) SC 371 : 1996 PLJ 686 : 1996(3) RCR (Civil) 752. Their Lordships referred to the majority decision and then observed :

"......Accordingly, the Full Bench had held that Section 8A was brought on statute with a view to bring it in conformity with the purpose the Act seeks to subserve. Learned counsel for the appellant relied upon the minority judgment of learned Judge. It would, however, appear that the learned Judge, with due respect, sought to set the clock back to the Amendment by constructing the meaning of the words ''forfeiture'' and ''resumption'' and the consequential effect on general principles of law without giving needed effect to the object of the Amendment. Once the statute occupied the field and gave power to resume the land or building subject to the conditions mentioned therein, the general principles of resumption and other principles considered therein absolutely remained no more relevant. The majority judgment has rightly focused the question in the correct perspective and had held that Section 8A is valid in law and, therefore, not violative of Article 14. In Northern India Caterers (Pvt.) Ltd. v. State of Punjab and another, AIR 1967 S.C. 1581, this Court had held that when there are two modes of procedure, one being more drastic and harsher than the other without any guidelines, invocation of the former was violative of Article 14 which was reversed by a larger Bench in Maganlal Chhaganlal (P) Ltd. v. Municipal Corporation of Greater Bombay and others, AIR 1974 S.C. 2009, knocking the bottom of the plea of constitutional invalidity of Section 8A on the anvil of Article 14. Though softer course under Section 15 was available, Section 8A does not become invalid on that score. Section 9 has been deleted and procedural safeguards have been provided in Section 8A. Therefore, Section 8A, having provided fair procedure, does not become arbitrary and violative of Article 14. For these reasons and also for the reasons given in the majority judgment, we are of the view that Section 8A is not violative of Article 14 since it has prescribed an inbuilt procedure of giving an opportunity and right to adduce evidence and consideration thereof by the Estate Officer before resumption and to pass a reasoned order in support thereof. The order is also subject to an appeal before the Chief Administrator. If permissible, within circumscribed parameters, appellate order may be subject to judicial review under Article 226. Since this procedure was not available under Section 9 of the Act, this Court had declared it as ultra vires of Article 14. The vice pointed out by this Court in Jagdish Chander''s case (supra) has been cured by introducing Section 8A. It would, therefore, be clear that the resumption under Section 8A is not only in case of nonpayment of dues under the sale, the rules, regulations and other relevant conditions applicable in that behalf. Therefore, we do not find any invalidity in Section 8A."

In Jaswant Singh v. Chandigarh Administration and others, 1992 PLJ 522 : 1993(3) RRR 301, a Division Bench of this Court held that there is no provision in the Act or the Rules authorising the authorities to order forfeiture of 25% of the premium. The Division Bench relied on the observations made in Ram Puri''s case (supra) that power of resumption should be exercised in extreme cases and only after taking into consideration the facts of each case. A careful reading of that decision shows that the Division Bench was greatly influenced by the fact that the petitioner had deposited the entire amount of the money soon after the passing of the order by the Chief Commissioner.

In Kulwant Pal v. Union of India, 1993(1) R.R.R. 18 : 1993 HRR 202 : 1992 PLJ 323, this Court interfered with the order of resumption on the ground that the petitioner had paid the amount of instalments within the period allowed by the notice issued by the competent authority. The Division Bench took the view that after deposit of the amount, the competent authority was not entitled to order resumption of the site.

In Sarla Sachdeva v. Estate Officer, 1994 HRR 79 : 1991 PLJ 761 : 1992(1) RRR 479, this Court upheld the order of resumption of the site by observing that the petitioner failed to deposit the amount in spite of the time given by the various authorities. Some of the observations made by the Court in that decision are relevant in the background of the facts of this case. Therefore, the same are quoted below :

"...It will be seen that ample time and opportunity was afforded to the petitioner to pay the amount due even much after the time fixed in the allotment letter (Annexure P1), had elapsed. Not only this, even after stating before the Chief Administrator her willingness to pay the entire amount due, she again failed to avail of the opportunity afforded to her to do so. It is apparent, therefore, that the entire exercise, on the part of the petitioner now, is but an attempt to profiteer, keeping in view the great escalation in the price of residential sites in Chandigarh, which now far exceeds the total amount payable as the sale/lease price of such sites."

In CWP No. 9503 of 1996, Ajit Singh and others v. Chandigarh Administration through the Administrator, Union Territory and others decided on 29.8.1996, a Division Bench considered a case which is similar to the present one. After making reference to the terms and conditions of the letter of allotment, the Court observed :

".......There is another important reason why no indulgence should be shown to the petitioners. The allotment letter, Annexure P1, contains a clear stipulation regarding the schedule of payment. Para 8 of the allotment letter postulates cancellation of lease on account of nonpayment of instalments money. Para 8A empowers the Estate Officer to allow payment of instalments with penalty upto 100 per cent of the amount due and interest at the rate of 12 per cent for the delayed period. Duty to pay fee and taxes etc. was also of the petitioners. In addition to the conditions incorporated in the letter of allotment, the petitioners were bound to abide the provisions of the Act and the Rules. The general terms and conditions laid down by the Administration form part of the contract entered into between the petitioners and the respondents. Paras 11, 12 and 21 of the general conditions also contemplate payment of 25 per cent amount as a condition precedent to the acceptance of bid; remaining 75 per cent in three equated instalments alongwith interest and cancellation of the lease as well as forfeiture of the whole or part of the premium already paid. The petitioners took possession of the property and raised construction thereon after having accepted the conditions incorporated in Annexures P1 and R1. They did so knowing fully the implications and consequences of their failure to pay the instalment money. After having accepted those conditions and taken public property on an assurance that they would faithfully comply with the conditions of payment laid down by the Administration, the petitioners are not entitled to plead that they were not bound to make payment of instalments on the ground that basic amenities were not provided by the Administration. We may add that payment of instalments was not subject to the Administration''s providing basic amenities to the petitioners. Rather the conditions incorporated in Annexures P1 and R1 made it obligatory for the petitioners to pay their dues. Thus the petitioners cannot wriggle out of the contract which they had entered into with the respondents. In matters like the present one, writ jurisdiction cannot be exercised by the High Court to permit a party to commit a breach of the terms and conditions of contract of allotment." (Emphasis supplied)

The power of the Court to interfere with in matters involving breach of the conditions of the contract had been examined in Panna Lal and others v. State of Rajasthan and others, 1975(2) SCC 633. Their Lordships held that a person who enters into a contract with the State and its agencies cannot resile from the express obligation undertaken by him. In that case the licensees had sought quashing of the conditions of contract on the ground that the same were extremely onerous and arbitrary. The High Court of Rajasthan rejected their contention. In appeal, their Lordships of the Supreme Court held :

"The licenes in the present case are contracts between the parties. The licensees voluntarily accepted the contracts. They fully exploited to their advantage the contracts to the exclusion of others. The High Court rightly said that it was not open to the appellants to resile from the contracts on the ground that the terms of payment were onerous. The reasons given by the High Court were that the licensees accepted the licence by excluding their competitors and it would not be open to the licensees to challenge the terms either on the ground of inconvenient consequences of terms or of harshness of terms."

While dealing with a similar issue in Har Shankar and others v. The Deputy Excise and Taxation Commissioner and others, AIR 1975 S.C. 1121, a Constitution Bench of the Supreme Court held :

"On the preliminary objection it was finally urged by the appellants that the objection was misconceived because there was, in fact, no contract between the parties and therefore, they were not attempting to enforce any contractual rights or to wriggle out of contractual obligations. The short answer to this contention is that the bids given by the appellants constitute offers and upon their acceptance by the Government a binding agreement came into existence between the parties. The conditions of auction become the terms of the contract and it is on those terms that licences are granted to the successful bidders in form L. 14A of the Rules. As stated in Cheshire and Fifoot''s Law of Contract (Eighth Edn., 1972; p. 24)

"In order to determine whether, in any given case, it is reasonable to infer the existence of an agreement, it has long been usual to employ the language of offer and acceptance. In other words, the Court examines all the circumstances to see if the one part may be assumed to have made a firm "offer" and if the other may likewise be taken to have "accepted" that offer. These supplementary ideas present a convenient method of analysing a situation, provided that they are not applied too literally and that facts are not sacrificed to phrases."

Analysing the situation here, concluded contract must be held to. have come into existence between the parties. The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations."

In Assistant Excise Commissioner and others v. Issac Peter and others, JT 1994(2) SC 140, the licensees did not get the additional quantities applied for by them. They claimed rebate/remission on the amounts payable by them under the contracts. While rejecting their plea that the State had acted arbitrarily and unreasonably their Lordships of the Supreme Court observed :

"In short, the duty to act fairly is sought to be imported into the contract to modify and alter its terms and to create an obligation upon the State which is not there in the contract. We must confess, we are not aware of any such doctrine of fairness or reasonableness. Nor could the learned counsel bring to our notice any decision laying down such a proposition. Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the Rule of Law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasijudicial, the doctrine of fairness is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the express terms of the contract between the parties. This is so, even if the contract is governed by statutory contract or rather more so...

We are, therefore, of the opinion that in case of contracts freely entered into with the State, like the present ones, there is no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State), for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be the State. In such cases, the mutual rights and liabilities of the parties are governed by the terms of the contracts (which may be statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of tenders or by negotiation. There is no compulsion on any one to enter into these contracts. It is voluntary on both sides. There can be no question of the State power being involved in such contracts. It bears repetition to say that the State does not guarantee profit to the licensees in such contracts. There is no warranty against incurring losses. It is a business for the licensees. Whether they make profit or incur loss is no concern of the State. In law, it is entitled to its money under the contract."

We may also refer to a decision of the Delhi High Court in Delhi State Entrepreneurs Association (Regd.) and others v. Delhi State Industrial Development Corporation and others, 1994(3) Delhi Reported Judgment 609 wherein the Court was examining the issue of the price fixation. While rejecting the argument of the petitioners, the Delhi High Court observed :

".......No public institution can discharge its obligation to the public properly if the amount due to it is not paid by the beneficiaries of welfare schemes. The petitioners have taken the advantage of the writ jurisdiction to continue in possession of the public premises all these years, disregarding their obligation under the lease deeds. For them, equity and fairness have become ''one way street'' where these are to move only towards them and not from them."

In C.W.P. No. 17188 of 1995, M/s. Teri Oat Estates (P) Ltd. v. U.T. Chandigarh and others, decided on 19.11.1996, a Division Bench of this Court upheld the order of resumption by observing that the petitioners had persistently defaulted in payment of instalments and, therefore, the Estate Officer was justified in passing the order of resumption of site.

We may also take notice of the following observations made by the Full Bench in Ram Puri''s case (supra) on which learned counsel for the petitioners strongly relied. These are :

"I must, however, sound a sharp note of caution. It bears repetition that the power of resumption is the ultimate civil sanction and must, therefore, be a weapon of last resort. Inevitably it should be used with great caution and circumspection. The Act and the Rules framed thereunder vest the authority with a variety of wide ranging powers to effectuate and regulate the planned development of the city. Reference in this connection may be made to S. 4 which empowers the Central Government or the Chief Administrator to issue directions in respect of the erection of buildings and also to S. 5 which bars the erection of buildings in contravention of the Building Rules. Again S. 6 empowers the authority to require a proper maintenance of sites and buildings. Section 8 then confers the power to impose penalties and prescribes the mode for the recovery of arrears. More specifically Ss. 13, 14 and 15 provide for penalties for the contravention of directions and the violation of the Trees Preservation Order and the Advertisement Control Order as also for the breach of Rules. Section 17 then warrants an entry into building and land after notice for purposes of survey and verification that the construction thereon is in conformity with the law. A violation of the statutory provisions and the directions given thereunder can also be visited by criminal prosecutions and Section 18 prescribes the procedure therefor. Without pretending to be exhaustive, other sanctions are also spelt out in the Rules framed under the Act. From all this it seems to follow that normally resort would be first made to the lesser sanctions aforesaid and it is only when they are ineffective, or in the extreme cases where resumption may rightly seem to be the only appropriate sanction to the authority, that recourse will be made thereto. I see no genuine basis for the needless apprehension expressed by the learned counsel for the petitioner that the administration would use a hammer to swat a fly or in other words resort to resumption for relatively insignificant infraction of the conditions of sale or the payment of consideration money. Equally it is well to remember that even where resumption has necessarily to be resorted to it should be liberally tempered with the provisions of the recently inserted R. 11D which empowers the authority to retransfer the site to the original transferee in specified situations. I would, therefore, hold that though the judicious and lawful exercise of the powers of resumption must be upheld and in certain situations may be both necessary and desirable, yet any arbitrary or discriminatory application thereof would at once attract the ever vigilant power of the Court under the writ jurisdiction."

We respectfully agree with Sandhawalia, C. J., as he then was, that the power of resumption should not be resorted to lightly. However, we do not find anything in the above quoted observations which may support the cause of the petitioner. Rather we are of the view that the Court must take notice of a pernicious tendency which has gone over the years amongst the haves of the society to grab public property by hook or by crook. Those who get lease etc. of public property by allotment through draw of lots or auction have developed the habit of not paying their dues. The Court can legitimately take notice of huge difference between the rate of interest which one is required to pay under the Act of 1952 and the Rules framed thereunder the similar statutes on the one hand and the interest which one gets on investment in the market on the other hand. People getting allotment of public land do not pay the instalments of lease, rent etc. with the hope that ultimately they will pay the dues along with some penalty and interest after many years and thereby make huge profits. Remedies of appeal and revision provide sufficient time cushion to multiply the profits of those who do not pay the instalments'' money but raise construction over the allotted piece of land and earn substantial rental income. Thus the gain of individuals is a direct loss to the public exchequer. In our considered opinion, the Estate Officer will be fully justified to exercise power of resumption in cases of persistent default in the payment of instalment money etc. and the Courts will not readily interfere with the exercise of discretion by the competent authority in such like matters. Time has come when the Courts must not show any compassion towards those who want to enjoy public property without fulfilling their duty in terms of the conditions of allotment. Indulgence of the Court in such like matters will be contrary to public interest.

The present one is a case in which the competent authority cannot be faulted on any count and the exercise of power under Rule 12(3) of the Rules does not call for interference by the High Court.

In fairness to the learned counsel, we must refer to an order dated 19.2.1996 passed in C.W.P. No. 3030 of 1994, M/s. Sandhu Builders (P) Ltd. v. U.T. Chandigarh. One of us was a party to the Division Bench which decided the aforementioned writ petition. The order passed in that case does show that the Court directed the restoration of the site on payment of the outstanding dues within three months. However, there is nothing in the order dated 19.2.1996 to show that the Court had examined the provisions of Section 8A of the Act of 1952 and Rule 12 of the Rules and recorded a finding that the petitioners had a right to the restoration of the site. Rather, that appears to be a case decided on the basis of the concession and agreement between the parties. Therefore, the same cannot be treated as a precedent for holding that the orders passed under Rule 12(3) can be upset by the Court merely because the petitioner expresses his/its willingness to make the payment. In this regard, we may also take cognizance of Rule 21A (second) of the Rules which entitles an erstwhile lessee to seek retransfer of the site on payment of the amount specified in the rule. That provision empowers the competent authority to entertain and decide an application for retransfer of the property on fulfilment of the conditions enumerated therein. Therefore, it cannot be said that the lessee whose site/building has been resumed is left with no remedy whatsoever.

On the basis of the above discussion, we hold that the order of resumption passed by the Estate Officer as also the orders of the appellate and the revisional authorities do not suffer from any illegality and they are not contrary to the provisions of the Act of 1952 or the Rules or the provisions of the Constitution. In our opinion, these orders cannot be read as depriving the petitioners of their property without the authority of the law and, therefore, they do not offend any provision of the Constitution.

At the cost of repetition, we may mention that the petitioners exhibited an attitude of total contempt for the provisions of law by their failure to deposit the instalments. The consistency shown by the petitioners in committing defaults left the Assistant Estate Officer with no option but to resort to resumption of the site. The Assistant Estate Officer who was exercising the powers of the Estate Officer, Chandigarh was bound to take the extreme step of resumption of the site in view of the recalcitrant attitude exhibited by the petitioners. Being a custodian of the public property, it was the pious duty of the Assistant Estate Officer to take all possible steps to protect the public property and the order passed by him is not only consistent with the provisions of law but is fully compatible with the public interest. The manner in which the petitioners conducted before the appellate and the revisional authorities leaves no scope for any indulgence towards them. The counsel appearing for the petitioners gave assurance to the appellate and the revisional authorities that the petitioners would pay the outstanding amount and persuaded these authorities to restore the site to the petitioners. However, immediately after passing of the order Annexures P6 and P7, the petitioners backed out from their promise of making the payment of the amount due. This they did, notwithstanding the fact that the competent authority reduced the amount of forfeiture from 10% to 2%. Thus, the petitioners cannot take the shelter of equity for invoking the jurisdiction of this Court under Article 226 of the Constitution.

The argument of Shri Jain that the Assistant Estate Officer could not have imposed penalty and forfeiture of the premium is wholly baseless. The Assistant Estate Officer has not subjected the petitioners to double jeopardy. He only ordered forfeiture of 10% of the premium plus ground rent and interest. The amount of premium, as already mentioned above, was reduced from 10% to 2% by the appellate authority. Therefore, the rigour of the order passed by the Assistant Estate Officer was substantially reduced by the appellate authority. We, therefore, do not find any justification to interfere with the orders passed under the Act of 1952 and the Rules (of 1973).

The order passed by the Estate Officer under the Act of 1971 as well as the judgment of the learned District Judge, Chandigarh are based on the order of resumption passed by the Assistant Estate Officer and once we hold that the order of resumption does not suffer from any illegality, the order of ejectment passed under Section 5(1) of the Act of 1971 cannot in any manner be termed as illegal or arbitrary.

In the result, the writ petition fails and the same is dismissed with costs of Rs. 10,000/.