Narain Dass Mahen vs Union Territory and Others

G.S. Singhvi, J.—This is a petition for quashing of the orders dated 24.8.1987, 11.10.1988 and 4.9.1991 passed by the Assistant Estate Officer (exercising the powers of the Estate Officer), the Chief Administrator and the Adviser to the Administrator, Union Territory, Chandigarh under the Capital of Punjab (Development and Regulation) Act, 1952 (for short the Act) read with the Chandigarh Lease Hold of Sites and Building Rules, 1973 (hereinafter described as ''the 1973 Rules'').

The Facts:

S.C.O. Site Nos. 116-117, Sector 34 (City Centre) as allotted to Master Nitin Mahen and Master Nipun Mahen sons of Shri Shashi Bhushan Mahen and Master Salil Mahen and Master Vaibhav Mahen Sons of Shri Vijay Mahen (all minors) and petitioner - Shri Narain Dass Mahen in September 1985 at a premium of Rs. 23,00,000/-. After one year and two months of the issue of allotment letter dated 6.9.1985 (Annexure-P. 1), notice under Rule 12(3) of the 1973 Rules was issued to the allottees requiring them to pay first instalment of Rs. 6,57,311.25 with ground rent and interest together with penalty of Rs. 71,481/- within a period of three months with the rider that if they failed to do so the proceedings for cancellation of the lease would be taken. The notice was duly served upon the allottees but they did not pay the instalment, ground rent etc. Therefore, by an order dated 24.8,1987, the Assistant Estate Officer cancelled the lease of the site and forfeited Rs. 1,15,000/- towards 5% of the premium, ground rent and interest. The operative part of that order reads as under :-

"Whereas they have made the following default in making the payment.

No. of instalment Amount Due date Date by which instalment payable 1st instalment 2,86,292.25 9.7.86 10.8.86 (Besides the interest at 12% is also chargeable on late payment Whereas the Lessee (s) have not paid the instalment in question, Whereas the said Lessee(s) were served with show cause notice on 6.4,87 under rule 12(3) of the Chandigarh Lease Hold of Sites and Building Rules, 1973 and were afforded an opportunity of being heard in person on 6.9.87/7.7.87 and 28.7.87.

As the party has failed to clear the outstanding dues though many opportunities were given to him. I am of the view that the Lessees are not in a position to liquidate the arrears. Besides this 2nd instalment has also become due on 9.7.87.

Therefore, in exercise of the powers vested under Rule 12(3) of the Chandigarh Lease Hold Sites and Building Rules, 1973 the lease of the said site is hereby cancelled as a last resort and further 5% of the premium of the site i.e. Rs. 1,15,000/(Rupees One lac and fifteen thousand only) and ground rent and interest to the date of cancellation is forfeited. None present on behalf of the lessee in spite of valid service.

The allottees filed appeal under Rule 22 of the 1973 Rules against the order of resumption. During the pendency of the appeal, the allottees paid Rs. 14,30,000/- as against the total amount of Rs. 15,12,584.50 due towards the first and second instalments of premium and also gave an undertaking to pay the third instalment. After taking note of the deposit made by them and undertaking given on their behalf, the Chief Administrator passed order dated 11.10.1988 and restored the site subject to the condition of payment of amount due within three months. He waived the forfeiture of the ground rent and interest but maintained the forfeiture of 5% of the premium. The relevant extract of the appellate order is reproduced below :-

"I have considered the arguments of both the parties and have gone through and apprised the appeal file. The original record and parawise comments of the Estate Officer have not been received, in spite of directions to the Estate Officer to send the same. The lease of S.C.O. site No. 116-117, Sector 34, Chandigarh was cancelled by the Estate Officer, Chandigarh in default of payment of the amount of first instalment of premium which fell due on 9.7.1986. The total amount of premium was Rs. 23,00,000/-. This appeal was filed on 15.2.1988 and an application for the grant of ad interim stay of the order of cancellation of lease was also filed with the appeal. During proceedings before me, the appellants made payments of a sum of Rs. 14,30,000/- as against the total amount of Rs. 15,12,584.50 representing the amount of first and second instalment of premium. The third instalment of premium which became due on 9.7.1989 is unpaid. The counsel for the appellants have undertaken to pay this instalment. The amount of which is Rs. 7,86,292.25 and to give other amount which may be outstanding against the appellants within a period of four months. Since the appellants have paid 15% of the premium and only 25% is left which they are prepared to pay. 1 restore the lease of the said site to the appellants subject to the condition that they deposited entire amount outstanding against them until now within a period of three months. The amount of forfeiture of premium shall stand against the appellants who had committed default in making payment of the first and second instalment of premium. There shall, however, no forfeiture of the amount of ground-rent and interest. The period of three months referred to above shall start running from the date of despatch of this order. Non-compliance with this order will bring into operation the impugned order of the Estate Officer."

This did not satisfy the allottees, who filed revision which was disposed of by the Adviser to the Administrator on 4.9.1991 with the following direction:-

"The learned Chief Administrator has already given due consideration while passing the impugned order and I do not find any ground to interfere with the orders of the Chief Administrator. The petitioners are directed to clear the entire outstanding dues within a period of one month: failing which the order of the Estate Officer as originally passed shall come into operation. No penalty shall, however, be charged from the petitioners. The site in question is ordered to be restored to the petitioners on the above conditions,'' and the revision petition is disposed of accordingly."

It is borne out from the record that the allottees did not deposit the amount in terms of the order passed by the revisional authority and, therefore; vide letter Annexure-P.9 dated 25.8.1992, the Estate Officer conveyed to them that the lease of site stands cancelled due to non-compliance of the orders passed by the Advisor to the Administrator.

The petitioner, who claims to be the general power of attorney holder of the remaining allottees, has challenged resumption of the site and forfeiture of the premium etc. on the following grounds:-

(i) the order of resumption as well as the appellate and the revisional orders are violative of the fundamental right of the allottees guaranteed to them under Article 14 read with Article 19 of the Constitution of India.

(ii) The impugned orders are ultra vires to the provisions of the Act and the 1973 Rules.

(iii) the Assistant Estate Officer did not have the authority to forfeit the amount of premium, ground rent and interest and, at the same time, levy penalty on the ground of alleged non-payment of instalments.

The respondents have relied on the conditions of allotment and the provisions of the 1973 Rules, to justify resumption of the site and forfeiture of a part of the premium. In the written statement filed on their behalf, it has been averred that the allottees did not deposit the dues of instalments in spite of the com passionate orders passed by the appellate and the revisional authorities and, therefore, they are not entitled to seek invalidation of the order of resumption. The respondents have further averred that Sector 34 is fully developed and amenities like road, parking place, water, electricity etc. have already been provided to the allottees who have leased out the shops on rent and, therefore, they could not have avoided their contractual obligation to pay the instalments of premium together with ground rent.

We have heard learned counsel for the parties. The question as to whether the non-payment of instalments can lead to cancellation of the lease and consequential resumption of site can no longer he regarded as res integra. In Civil Writ Petition No. 9503 of 1996, Ajit Singh v. Chandigarh Administration through Administrator, Union Territory decided on 29.8.1996: Civil Writ Petition No. 6990 of 1996, Joginder Singh Sidhu v. Union Territory, Chandigarh, decided on 9.4.1997: Civil Writ Petition No. 15104 of 1997, Tejbir Singh Sibia v. Union Territory, Chandigarh decided on 22.10.1997; Civil Writ Petition No. 9031 of 1996, Gurcharan Singh v. Union Territory, Chandigarh, decided on 24.10.1997 and Sukhpal Singh Kang and Ors. v. Chandigarh Administration and Anr. (1999)120 P.L.R. 54, it has been held that the resumption for the site on account of non-payment of the instalment of premium and ground rent does not violate any fundamental or legal right of the allottees.

In C.W.P. No. 9505, Ajil Singh and Ors. v. Chandigarh Administration through Administrator, Union Territory and Ors., decided on 29.8.1996, the order of cancellation as well as the orders passed by the ap pellate and the revisional authorities were challenged on various grounds set out in the writ petition, one of which was that the petitioners could not carry out their business effectively because the basic amenities had not been provided by the Administration. While dismissing the writ petition, this Court held as under :-

There is another important reason why no indulgence should be shown to the petitioners. The allotment letter, Annexure-P.1 contains a clear stipulation regarding the schedule of payment. Para 8 of the allotment letter postulates cancellation of lease on account of non-payment of instalment money. Para 8-A empowers the Estate Officer to allow payment of instalments with penalty up to 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 by 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 along with 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-P. 1 and R. 1. 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 Administrations providing basic amenities to the petitioner. Rather the conditions incorporated in Annexures-P. 1 and R. 1 made it obligatory for 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 of contract of allotment."

In Sukhpal Singh Kang''s case (supra) a similar argument was rejected with the following observations:-

"The argument of the learned counsel that the respondents are estopped from making recovery of the instalments of premium etc. because they have violated the terms and conditions of contract entered into with the petitioners by not providing the amenities is wholly untenable. At the cost" of repetition, we deem it appropriate to observe that neither in the conditions of auction nor in the terms of allotment any indication was given to the peti tioners that the respondents will be giving possession of the fully developed sites or that the availability of amenities like approach roads, street lights, parking places etc. would constitute a condition precedent for payment of instalments. Therefore, the petitioners cannot avoid their liability to pay the instalments of premium and ground rent. That apart, after having taken part in the auction with full knowledge of the terms and conditions notified by. the respondents and having accepted the leases of the sites on the basis of terms and conditions incorporated in the letters of allotment without any protest, the petitioners will be deemed to have agreed to pay the amount of premium along with interest and ground rent in terms of Rules 12 and 13 of the 1973 Rules. In our considered opinion, the petitioners cannot seek intervention of the Court for getting themselves relieved of their obligation to pay the amount due to the respondents in accordance with the terms of contract."

The levy of interest at a rate higher than the one stipulated in the letter of allotment has been upheld in Civil Writ Petition No. 699 of 1996, Joginder Singh Sidhu v. Union Territoiy, Chandigarh, decided on 9.4.1999: Civil Writ Petition No. 15104 of 1997, Tejbir Singh Sibia v. Union Territory, Chandigarh (supra): Civil Writ Petition No. 9031 of 1996, Gurcharan Singh v. Union Territory, Chandigarh (supra). Some.of the observations made in Joginder Singh Sidhu''s case (supra), which have bearing on the plea raised by the petitioner read as under:-

"......A careful reading of clause (3) of the allotment letter shows that the lease granted to the petitioner and others is governed by the provisions contained in Capital of Punjab (Development and Regulation) Act, 1952 as amended upto date and the rules made thereunder. By virtue of clause (29) of the allotment letter, it was made clear that the terms and conditions of allotment were in addition to the provisions of the Act of 1952 and the rules made thereunder which shall be binding on the lessee. It is thus clear that the rules framed under the Act of 1952 were made part and parcel of the contract entered into between the petitioner and the administration. Having accepted those conditions, the petitioner and other allottees were bound to comply with the same. Rule 12(2) provides for payment of interest in case of the failure of the lessee to pay the balance of the 75% premium in three annual equated instalments. Rule 12(3) empowers the competent authority to call upon the lessee to pay the instalment within a period of three months with penalty which may extend upto 10% of the amount due. Under this clause, the Estate Officer is also empowered to cancel the lease. By virtue of Rule 12(3-A) the lessee has been made liable to pay interest @ 24% per annum from the date on which the instalment or the ground rent became payable. The object underlying Rule 12(3-A) is to compel the lessee to make payment of instalment by due date. In case of the failure of lessee to make payment he/she/they are liable to pay interest @ 24%. In view of the clear provision incorporated in Rule 12(3-A), we do not find any error in the decision of the respondents to recover interest from the petitioner in terms of that clause. As this sub-rule stood upto 21.7.1993, the rate of interest was 15%. There after, the rate of interest has been raised to 24% and thus the petitioner is liable to pay interest in order to fulfil his obligation in terms of the contract.

Although the petitioners has challenged the constitutional validity and vires and Rule 12(3) and Rule 12(3-A), the learned counsel for the petitioner has not been able to persuade us to find any fault or infirmity in these rules. In this regard it has to be remembered that in the normal circumstances no exception could be taken to the demand of the entire price of the land by the administration. As in the case of other individual the administration could ask the allottee to pay the total price in one instalment before handing over the possession of the site allotted to him. The provision regarding delivery of possession on payment of 25% of the premium with a condition that the remaining amount of premium shall be payable in 3 annual equated instalments is intended to relieve the allottee to the rigour of the requirement of the payment of the entire price. However, in order to safeguard the public money the rule making authority has legitimately incorporat ed the requirement of payment of interest on the instalment with a further provision to charge higher interest in case of the failure of the lessee to pay the instalment money. These provisions are, in our opinion, unexceptionable. A person who wants to take public property without paying instalment money cannot complain of any arbitrariness against the provision regarding levy of interest. In our considered view. These provisions are neither uncon stitutional nor arbitrary nor do they suffer from any other legal infirmity."

The plea that the impugned orders are violative of the petitioners fundamental right guaranteed under Articles 14 and 19 does not merit acceptance in view of the decision of the Supreme Court in Babu Singh Bains v. Union of India 1997(1) P.L.R. 250.

The argument of Shri Ram Saran Dass that the Assistant Estate Officer .could not have forfeited the amount of premium and ground rent along with interest and, at the same time, imposed penalty, does not merit detailed consideration because that part of the order has already been set aside by the appellate authority.

Before concluding, we deal with the submissions of Shri Ram Saran Dass that the allottees have already paid substantial amount and, therefore, the deemed resumption of the site should be invalidated. In our opinion, there is no merit in this submission. A similar plea was considered and rejected by the Supreme Court in Haryana Urban Development Authority and Another Vs. Roochira Ceramics and Another, . The facts of that case show that the Estate Officer, H.U.D.A. allotted industrial plot to the petitioner for Rs. 2,61,360/- (tentative price). Due to the failure of the allottee to pay the instalments, proceedings u/s 17 of the Haryana Urban Development Authority Act, 1977 were initiated by the Estate Officer, who passed the order of resumption on the ''ground of default. The petitioner challenged the order of resumption in C.W.P. No. 14676 of 1995. A Division Bench of this Court allowed the petition and passed the following order:-

"Keeping in view the financial stringency of the petitioner, interest of the parties, readiness and willingness of the petitioner to pay the remaining unpaid amount and to set the controversy at rest, orders Annexures-P.5 to P.8 are quashed. The petitioner shall deposit the balance amount of instalments including enhancement of price alongwith interest at the rate of 10% per annum on the unpaid amount within a period of three months. The respondents shall calculate and convey to the petitioner the total amount payable by it within two weeks from the date of receipt of copy of judgment. After the receipt of intimation regarding the total amount of its liability, the petitioner shall deposit the said amount within two months thereafter positively. In case, the petitioner fails to deposit the amount within the time specified despite intimation in terms of our judgment, he shall be liable to pay whole of the amount to the respondents as per the demand and the calculations made by the respondents according to the order impugned and he shall not be held entitled to any further time to make the payment. It is relevant to mention here that as per stipulation in the allotment letter, copy Annexure-P. 1 to the writ petition, interest at the rate of 10% per annum is being charged from the petitioner."

The Haryana Urban Development Authority challenged the order of the Division Bench in SLP No. 15110 of 1996 (Civil Appeal No. 13187 of 1996), The Haryana Urban Development Authority and Anr. v. Roochira Ceramics and Anr., on 23.10.1996 (1992 )116 P.L.R. 512 (S.C.) the Supreme Court accepted the appeal filed by the respondents and passed the following order:-

"The respondent was allotted an industrial plot. He has to pay 25% of the price in the beginning and the balance in 6 equal instalments. He only paid the first instalment but not the rest. A show cause notice was given to him on 5.9.94 u/s 17(3) of the HUDA Act. A notice proposing imposition of penalty was also issued. These notices could not be served upon him and, therefore, notices were served by affixture. A notice dated 10.1.95 was also given providing personal hearing. The respondent never appeared. Accordingly, the plot was resumed u/s 17(4) of the Act and the amount deposited was forfeited. The appeal preferred by the respondent was dismissed by the Appellate Authority who held that though several notices were issued to the respondent, he has been evading service. It dismissed the appeal holding that in view of the persistent defaults made by the respondent, there was no ground for interference in appeal. The respondent therefore approached Punjab & Haryana High Court by way of a writ petition. He pleaded certain financial difficulties. Without recording a finding as to the correctness of the said plea assuming for the sake of argument that such a course was permissible in a writ petition the High Court allowed the writ petition "keeping in view the financial stringency of the petitioner, interest of the parties, readiness and willingness of the petitioner to pay the remaining unpaid amount and to set the controversy at rest." The High Court further directed that interest shall be charged only at 10% per annum on the amount due and not at the rate of 18% as calculated by the authority for a part of the period.

We are of the opinion that in a writ petition it was not open to the High Court to entertain the plea of financial stringency for the first time. The respondent who had not responded to repeated notices and had not availed of the personal hearing offered to him. could not be allowed to plead such financial stringency for the first time before the High Court. Indeed the High Court could not have entertained such a plea. It has been held repeatedly by this Court that the power under Article 226 is the power of judicial review. The High Court can only examine the procedural correctness. It cannot get into the merits of the controversy like an appellate authority. No finding is recorded by the High Court in this case that the procedure adopted by the Estate Officer was either not in accordance with the statutory provisions or was in violation of the principles of natural justice. The High Court obviously acted as an appellate authority. There is no room for any benevolence. The-perils and pitfalls are too many to recount. There will be no objective standards of judging, Justice becomes personalised. It would vary from Judge to Judge. In the absence of any procedural irregularity, the High Court had no jurisdiction to interfere in the matter. The High Court also failed to notice that the respondent is guilty of not paying the instalments as undertaken by him. By interfering on the basis of unverified and unsub stantiated plea of financial stringency, the Court would be encouraging contumacious conduct and breach of undertakings."

For the reasons mentioned above, the writ petition is dismissed. However, as has been done in a large number of other cases, we give liberty to the petitioner and other co-allottees to make application under Rule 21-A(ii) of the 1973 Rules and direct that the competent authority of the Chandigarh Administration shall pass order for restoration of the site subject to the fulfilment of the conditions stipulated in the said rule. This shall be done within one moth of the submission of application by the allottees.