Malli Nath Sharma and Others vs Punjab Housing Development Board and Others

Hemant Gupta, J.—This order shall dispose of aforementioned two writ petitions i.e. CWP No. 12605 of 1996 preferred by 37 petitioners and CWP No. 6497 of 1999 preferred by one petitioner, challenging the price of Rs. 3,81,800/-, as the allotment price of MIG flats at Jalandhar under Partial Self Financing Scheme. However, for the facility of reference, the facts are taken from CWP No. 12605 of 1996.

The petitioners in both the writ petitions applied for MIG flats on Hire Purchase Basis advertised by the Punjab Housing Development Board (for short ''the Board'') on payment of earnest money of Rs. 5000/-. However, they remained unsuccessful in the allotment of flats. In the year 1994, an advertisement (Annexure P-1) was issued to the effect that the Board is constructing 72 MIG flats at Jalandhar, Urban Estate, Phase-II, Part (B) under Partial Self Financing Scheme. The approximate cost of such flat was Rs. 2.15 lacs. The closing date for receiving the options for conversion of registration for allotment of MIG flat from Hire Purchase Scheme to Partial Self Financing Scheme was 15.07.1994. One of the conditions in the advertisement was that the price quoted is purely tentative and is based on the present cost of construction. It is likely to be revised upward by the time the houses are completed. Apart from the advertisement, individual letters were also addressed to each of the registered applicants of the MIG flats on Hire Purchase basis. One of the communications is attached with the writ petition as Annexure P-3.

In pursuance of such advertisement, the petitioners opted to opt Partial Self Financing Scheme and made up the deficiency in the earnest money to make it Rs. 10,000/-. On 29.11.1994, draw of lots for allotment of FIG flats under Partial Self Financing Scheme was held. All the petitioners were successful in the draw of lots. The petitioners were informed on 21.12.1994 vide Annexure P-4 about the draw of lots and the fact that they are successful. The tentative cost of the flat was stated to be Rs. 2.15 lacs. The relevant extract from the communication reads as under:

"2. We write to inform you that consequent upon the draw held on 29-1194 you have been allocated an MIG House/Flat under PEFS at U/E, Jalandhar. The exact house number will be allotted subsequently through another draw of lots after completion of the houses in the scheme.

The tentative cost of the house is Rs. 2.15 lacs. You are required to make the payments through crossed Bank Draft payable to Estate Officer, Punjab Housing Dev. Board, Jalandhar drawn on any Bank at Jalandhar as indicated below:-

You are also required to submit an affidavit on stamp paper worth Rs. 3/- in the enclosed format at the time of depositing 1st instalment of 15% of the tentative cost of the flat, to the effect that you will abide by the terms and conditions of ALLOC ATION.

NOTE:-

i) The houses/flats are likely to be completed by June, 1995. This date is however tentative and may change.

ii) The aforesaid price is purely tentative. The actual price shall be determined on completion of House/Flat revised price of these Houses/Flats, if any, at the time of allotment.

xx xx "

It was, thereafter, on 27.06.1996, the letter of allotments were issued allotting dwelling unit Numbers to each of the petitioners. In the said letter of allotment, the total price of house/flat/dwelling unit was said to be Rs. 3,81,800/-. The amount payable before possession was 45% of the price and the remaining amount was payable in monthly installments. If the allotment was acceptable, the petitioners were required to communicate their acceptance by registered post alongwith amount of balance 45% of price within 60 days from the date of receipt of allotment letter. The balance 55% was to be paid keeping in view the rate of interest charged by the Housing and Development Corporation in respect of loans granted by it to the respondent authorities. The petitioners have challenged the requirement of filing of an affidavit before delivery of possession to the effect that the petitioners will not make any complaint in the form of writ petition or civil suit with regard to structural, constructional, design/planning, defect or omission of any item or variation from drawing etc. and for price of the dwelling unit.

Aggrieved against the allotment price of Rs. 3,81,800/- instead of Rs. 2,15,000/- meant in the advertisement, an association of the petitioners submitted representations on 10.07.1996 and 12.07.1996. The association has sought details of basis of calculations of original price of Rs. 2,15,000/- and enhanced price of Rs. 3,81,800/-. Thereafter, the present writ petition was filed.

In the present writ petition, an interim order was passed on 01.10.1996 restraining the Board from cancelling the allotment made in favour of the petitioners subject to the condition that petitioners deposit 50% of the enhanced price in three equated installments. Subsequently, there was an order that respondent Nos. 2 and 3 shall re-schedule the installments to be paid by the petitioners in terms of the allotment in view of the stay of 50% of the enhanced price. The writ petition was admitted to final hearing on 23.04.1997, when the following order was passed:

"Heard learned counsel for the parties.

Admitted.

In view of the fact that all the petitioners have been given possession of the plots except petitioner No. 27, qua whom there appears to be some dispute, we direct that in case the petitioners fall in the writ petition, they shall pay the remaining amount to the respondents alongwith interest at the rate of 24% per annum calculated from the date of allotment."

In the short reply earlier filed, it is averred that vide advertisement dated 14.06.1994, the Punjab Housing Development Board, now the Punjab Urban Planning and Development Authority, invited options from the old registered applicants to convey their acceptance for allotment of flats as per details mentioned in the advertisement in respect of Urban Estate, Phase-II, Jalandhar at a approximate cost of Rs. 2,15,000/-. The price quoted was purely tentative. While issuing allocation letters pursuant to draw of lots held on 29.11.1994, the petitioners were again informed that the price of Rs. 2,15,000/- is purely tentative and the actual price will be determined on completion of house/flat and that the petitioners shall be liable to make payment of the revised price of these flats, if any, at the time of allotment. It is also pointed out that on 17.11.1995, the Administrator, Punjab Urban Planning and Development Authority, Jalandhar communicated to the Estate Officer, Jalandhar that the construction of 72 MIG flats is reported to be complete and draw of lots be held for allotment of the flats. Subsequently, draw of lots was held. In the meeting held on 07.06.1995, the saleable cost of 72 MIG flats, which were tentatively scheduled to be ready for allotment by 31.08.1995, was decided to be worked out. It was reported that the construction of the said flats was stated to have been completed in November, 1995. It is further pointed out that saleable cost of one flat worked out to Rs. 3,68,500/- on the basis of interest liability calculated up to 30.09.1995; saleable cost of one flat worked out to Rs. 3,78,100/- on the basis of interest liability calculated up to 31.12.1995 and saleable cost of one flat worked out to Rs. 3,81,800/- on the basis of interest liability calculated up to 30.06.1996. It is pointed out that authority itself has borrowed money from the Housing Urban Development Corporation (HUDCO) on interest. The rate of interest levied by the said Corporation was 15% in September, 1995, which was increased to 17% per annum in June, 1996. Half per cent rebate is granted by the Corporation in case of timely returns of payments of sums advanced. It is specifically mentioned that in respect of the cost work out from September, 1995 up to June, 1996, the respondents are not considering any escalation in construction cost or hike of land value. It is only the interest liability on the amount to be paid by the the respondents to HUDCO, which has increased the cost to be paid at the time of allotment. The respondents have attached the cost worked out up to 30.09.1995 and 30.06.1995 as Annexure R-1 and R-2 respectively. Therefore, the liability of interest incurred is to be passed on to the allottee for whose purpose the flat is being constructed.

In another written statement dated 15.12.2014, it is again pointed out that the cost in the advertisement was approximate cost and the date of completion was anticipated completion. Thus, the price quoted was not the final price. So is the date of completion. It is also pointed out that enhancement of price was not only directly related to the period of delay by which the flats were ready, but also to the rate of interest which was being charged by the financial institutions from whom the respondents had raised loan. It is further pleaded that 72 houses were not allotted out of an ongoing project. The price has to be worked out and examined before finalizing the same and intimating to the allottees. Such process itself has taken some time. There was no deliberate delay on the part of the respondents. It was submitted that the respondents are justified in revising the cost of flats proportionately with a margin of profit to meet the overhead administrative expenses. It is averred that the motive of the respondents is not earning maximum profit, but it cannot afford to incur losses in the matter of process of fixation of price. It is denied that the respondents have deliberately not handed over the possession for six months or revision of the price of the flats is arbitrary or irrational.

Learned counsel for the petitioners has vehemently argued that representation of the respondents was that the price of flats shall be Rs. 2,15,000/-, but the same has been increased arbitrarily by 79% to Rs. 3,81,800/-. The calculations given by the respondents show that not only the respondents have added 10% administrative charges, but also 12% profit not only on the amount of interest payable, but also on the cost of land on which the respondents have not incurred any additional cost. The detailed calculations to determine the price payable on 22.06.1996 reads as under:

It is further contended that charging of 10% administrative charges and then 12% profit thereon is wholly arbitrary, illegal or irrational and that the respondents could not charge firstly the administrative charges and then the profit. It is also argued that in Column 10, the respondents have given benefit of Rs. 64,500/- i.e. 30% of Rs. 2,15,000/- deposited by the allottee and not another sum of Rs. 10,000/- deposited by the petitioners as earnest money.

On the other hand, learned counsel for the respondents contended that the respondents have taken loan on interest from Housing Urban Development Corporation (HUDCO) and, therefore, liability of interest has to be passed on to the petitioners. It is pointed out that if there is any error in the calculations, the same can be pointed out to the respondents, who shall take into consideration to correct any such mistake. It is contended that the price was tentative in Advertisement (Annexure P-1) and in the subsequent communication dated 06.07.1994 (Annexure P-3). The same has been worked out as mentioned in Annexure R-1 and R-2.

We have heard learned counsel for the parties and find that the price of Rs. 2,15,000/- was tentative, which is apparent from the conditions in the Advertisement (Annexure P-1). The date of completion was also tentative in nature and could extend beyond the stated date. In the letter of allotment (Annexure P-4) again, the cost of Rs. 2,15,000/- is stated to be tentative and also that the completion date by June, 1995 is tentative and may change. Therefore, the respondents have clearly communicated that not only the price is tentative, but even the date of completion is also tentative. It is while making allotment on 27.06.1996, the price communicated was Rs. 3,81,800/- with further stipulation that the allottee shall be liable to pay enhanced price of the dwelling unit within 30 days from the date of demand or if the Chief Administrator allows then within 90 days of such demand or in the alternative to pay enhanced price in three equal monthly installments alongwith interest payable at the rate of 12% per annum from the date of demand.

Since the price communicated to the petitioners was tentative not only in the Advertisement, but also in the offer of allotment, therefore, the petitioners cannot insist that they are liable to pay only such price as is communicated in the advertisement or in the offer of allotment.

However, the question which requires to be examined is, whether the price of Rs. 3,81,800/- demanded from the petitioners is arbitrary, irrational, unjust and, therefore, could it be interfered with in exercise of powers of judicial review by this Court.

We do not find any merit in the argued raised that the flats were completed in December 1995, but the letters of allotment were issued in June, 1996, thus, the interest on account of the delayed issuance of letters of allotment cannot fall on the petitioners. The respondent-Board has raised loan from Housing Urban Development Corporation (HUDCO) and is paying interest on the loan advanced by it. The respondents have tried to explain that the delay in issuing letters of allotment was to determine the cost of a dwelling unit. We find that the period of six months after completion of flats is not such a period, which can be said to be wholly illegal and unwarranted. The respondent-Board is a State Government undertaking and the decision making process in respect of determination of price is long. Therefore, mere fact that letters of allotment were issued after six months, is not a reason to burden the respondents with interest liability of the loan amount. Though one would wish that the State Authorities are as vigilant as private individual, but merely because they have taken six months time for issuing letters of allotment cannot be a ground to say that the petitioners shall not be liable to pay interest. The interest liability on the loan amount has been rightly passed on to the petitioners, who are allottee of the dwelling units.

The grievance in respect of 10% administrative charges in Column 8 cannot be said to be justified. The process of allotment and the maintenance of record require man power. Therefore, adding of 10% administrative charges cannot be said to be out of hat and illegal. The interest has been charged from 01.05.1994 till 30.06.1996 at the varying rates, which as per written statement is a rate charged by Housing Urban Development Corporation. Such interest claimed from the petitioners is to off-set the interest payable by the respondents to Housing Urban Development Corporation and cannot be said to be unjustified.

The Corporation has added 12% profit. Such profit is towards unforeseen expenses. Therefore, such profit cannot be said to be unjustified. In Fuljit Kaur Vs. State of Punjab and Others, (2010) 6 JT 210 : (2010) 6 SCALE 134 : (2010) 11 SCC 455 , the calculations for arriving at the price to be charged from the allottees of the land located in Sector 70, SAS Nagar, Mohali, by adding sale price, provisional price, additional price and tentative price have not been interfered with by the Hon''ble Supreme Court. Therefore, we find that charging of 12% profit, which is in the nature of unforeseen expenses cannot be said to be arbitrary and unjust.

However, we find merit in the argument that the amount of earnest money has not been taken into consideration, towards the cost of construction of flat, as such earnest money became available to the respondents in July, 1994. Therefore, against Column 10, in respect of Rs. 64,500/- the Corporation is required to count the entire amount of Rs. 74,500/- or such other amount, which has been deposited by each of the allottee.

Though by virtue of interim order dated 23.04.1997, the petitioners are liable to pay interest at the rate of 24%, but keeping in view the fact that the petitioners are not found to be wholly unjustified, we direct the respondents to charge simple interest at the rate of 15% from the date of issuance of letter of allotment i.e. 27.06.1996 on the amount not paid by the petitioners. The petitioners shall also be liable to pay interest payable to Housing Urban Development Corporation, which will be reimbursed by the petitioners to the Housing Urban Development Corporation on the same terms on which the respondents have availed loan.

Consequently, we do not find any merit in both the writ petitions except to the extent of granting benefit of the amount of earnest money deposited by the petitioners. The respondents shall recalculate the amount due and communicate the same within two months from today.

With the discussion and observations made above, both the writ petitions are dismissed.