Krishan Lal and Others vs The Housing Board

G.C. Garg, J.—The Housing Board, Haryana invited application by the end of December, 1980 for allotment of constructed flats of various categories in Sector 29, Faridabad. These flats were to be allotted on hire-purchase basis and the allotment was to be made by draw of lots in case the number of applicants exceeded the number of flats available. Petitioners whose monthly income was between Rs. 601 and 1500 applied for allotment of ground floor and first floor of Middle Income Group (for short MIG) flats, in pursuance to the advertisement. In the brochure, the proposed sale price and the instalments payable by the petitioners of MIG category flats were as under:-

MIG (Ground Floor) Rs. 39,400/- Payable in 10 years monthly instalments of Rs. 410/- MIG (First Floor) Rs. 37,800/- Payable in 10 years monthly instalments of Rs. 400/-

At the time of entertaining application in the year 1980, the petitioners deposited Rs. 1970/- for the ground floor and Rs. 1890/- for the first floor. Thereafter on demand by the respondent-Board in March/April, 1982, the petitioners further deposited Rs. 3940/- for the ground floor and Rs. 3780/-for the first floor. The remaining difference of 25% of the proposed total cost was to be deposited at the time of allotment.

Some flats were constructed by the respondent-Board in the year 1983 and allotted to the applicants at the rate of Rs. 68,000/- per flat. The construction of some of the remaining flats was completed in the year 1986 and these flats were allotted at the rate of Rs. 72,400/- per flat for the ground floor and Rs. 68,500/- per flat for the first floor subsequently enhanced to Rs. 77,100/- and Rs. 72,900/- respectively. The further allegation of the petitioners that the respondent-Board completed construction of more flats in the year 1986 but these flats were allotted to the petitioners in the year 1989. The tentative price per flat was mentioned at Rs. 1,00,200/- with additional cost of the land to the tune of Rs. 6,265/-. The allottees were further required to deposit a sum of Rs. 25,740.25 paise on account of cost of additional land and initial instalment. Further, the monthly instalment was fixed at Rs. 1266/- spread over a period of eight years. Similar letters were issued regarding flats on the first floor with minor variations in the allotment prices. One of the allotment letters relating to ground floor is Annexure P-5 & that of the first floor is Annexure P-6. Similar allotment letter were issued in favour of other petitioners. The petitioners deposited the amounts as mentioned in the allotment letters Annexures P-5 and P-6 and got possession of the flats allotted to them. The allegation of the petitioners is that they accepted allotment under compelling circumstances as while seeking possession, they were made to sign certain documents in good faith. The petitioners thereafter received letters dated May 30, 1991 informing them that the cost of the flats has been finalised subject to subsequent enhancement of land compensation and escalation due to judicial orders or arbitration awards payable by the allottees as and when demanded by the Board. The petitioners by the said letter were thus, informed about the final cost of the flats to the tune of Rs. 1,20,700/- for the ground floor and Rs. 1,15,700/- for the first floor, thus requiring them to pay the balance amount of Rs. 20,500/- and Rs. 19,600/- respectively. It is this demand made by the respondents which has been challenged in the present writ petition on various counts.

The respondent controverted the claim of the petitioners by filing written statement.

Clause 7 of the advertisement issued by the Board reads as under:-

"No interest will be payable on the deposits. In case the board failed to allot houses within two years'' then interest will be given on the deposited amount as are being paid in Saving Bank Account by the Nationalized Banks."

The petitioners herein deposited some amounts in the year 1980 and again in the year 1982. Flats having not been allotted within a period of two years, they are clearly entitled to interest on their deposits at the rate which is paid by the Nationalized Banks in Saving Bank accounts, the flats having been allotted to the petitioners in the year 1989. Learned counsel for the respondents could not refer to any part of the written statement or bring any act to my notice disentitling the petitioners to this relief. It was. rather conceded that the petitioners are entitled to this relief and the same has been accounted for in the account of the allottees. He, however, could not refer to any document on the record showing that the petitioners have been granted such benefit. In para 8 of the written statement, it is rather the case of the respondents that no amount of interest was to be adjusted as claimed by the petitioners. Again nothing is indicated in the written statement as to why the petitioners are not entitled to this interest. Clause 7 of the advertisement clearly entitles the petitioners to interest and it has thus to be concluded that the stand of the respondents is not correct and that the petitioners are entitled to interest in terms of Clause 7 of the advertisement.

Coming to the monthly instalments and the number of years in which the balance amount is payable, I am of the view that the parties are bound by the terms contained in the advertisement. A reference to the advertisement would show that the tentative cost of ground floor of MIG flats was Rs. 39,400/- payable in 10 years monthly instalments of Rs. 410/- each & in case of first floor of MIG flats the tentative cost was 37,800/- again payable in ten years monthly instalments of Rs. 400/- each. These flats were meant for the families whose monthly income was ranging between Rs. 601/- and Rs. 1500/-. Under the agreement, the respondent-Board is entitled to revise the cost of the flats and make a demand in that behalf from the allottees. It is so clearly provided in the agreement and spread over this amount for a period of ten years in monthly instalments. The respondent-Board, however, could not reduce the period of instalments from 10 years to 8 years. No justification whatsoever has been shown either during the course of arguments or in the written statement as to why and on what basis the period of ten years has been reduced to eight years. Simply because the final cost of the flats has gone to be higher than the one anticipated at the time of advertisement, it cannot be a just ground to reduce the period of instalments from 10 years to 8 years. Flats were, as already noticed, meant for the families having a monthly income between Rs. 601/- to Rs. 1500/-. By reducing the period of instalments from 10 years to 8 years the monthly instalments would substantially increase not only on account of reduction of period of instalments but also on account of enhanced price of the flats. Once the advertisement had been issued and the petitioners accepted the same, the parties in my view would be bound by the same and the spread over period would continue to be 10 years and could not be reduced to 8 years, though the prices could be revised in terms of the advertisement. Thus, the action of the respondents reducing the period of monthly instalments from 10 years to 8 years has to be held illegal and not binding on the petitioners. In almost a similar situation this matter came up for consideration before this court in Civil Writ Petition No. 381 of 1981 Ravinder Rastogi and Ors. v. The Housing Board, Haryana,1 decided on January 15, 1982 wherein also the period of instalments was reduced from 10 years to 8 years on account of policy decision dated September 12, 1980. It was held that even if the cost of the flats increased beyond Rs. 45,000/- still in pursuance of letter dated July 25, 1980 the parties would be bound by the same and the spread over period for MIG group flats would be ten years.

The other contention of the learned counsel of the petitioners is that demand notices Annexures P-8 and P-9 and similar notices issued to the other petitioners are arbitrary and deserve to be quashed. It was submitted that these notices mechanically mentioned the increased cost of the flats without mentioning the heads of expenditure on which the increase could possibly be made. It was further contended that no effort was made to show how the increase had been made under any particular head of expenditure and for what reason. The notices do not contain any understandable reason justifying the increase under any head of expenditure. The Board failed to furnish any reason in the written statement itself or during the course of arguments. It was contended that the increase of Rs. 20,500/- for ground floor and Rs. 19,600/- for the first floor on account of costs of construction and Rs. 6,265/- for the ground floor and Rs. 2,905/- for the first floor on account of land compensation detailed in Annexure P-8 and P-9 was incorrect in respect of the categories of flats allotted to the petitioners. It was ultimately contended that the increase was totally arbitrary for which no justification has been offered. The action is subject to judicial review and liable to be set aside being in contravention of Article 14 of the Constitution of India.

The only justification for such enhancement as is available from the written statement is to the effect that the earlier contractor of the flats in question had left the work incomplete and the respondent-Board got the work completed in the year 1989 at the risk and cost of the contractor. It was further submitted that at the time of finalisation of cost of the flats allotted to the petitioners the claim for the contractor amounting to Rs. 9,10,659.37 paise plus interest of Rs. 5,08,058.88 paise and arbitration award of Rs. 81,917.81 paise had been added in making final calculations. The further stand of the respondents in the written statement is that the petitioners were not entitled to receive any notice or final opportunity of being heard in the matter of calculation of final price. There is no averment in the written statement with regard to challenge in the writ petition regarding enhanced compensation in respect of land in the sum of Rs. 6,265/- for the ground floor and Rs. 2,906/-for the first floor. No justification whatsoever is available from the written statement for demanding the enhanced amount from the petitioners on account of increased cost of the land. There is no difficulty in holding that the demands made as contained in Annexures P-8 and P-9 must be quashed being arbitrary, and in violation of principle of natural justice and Article 14 of the Constitution. Suffice to say that even according to averments made in the written statement, the amounts claimed do not adhere to any principle of law and no justification therefore has been indicated even in broad terms. Though the respondents were within their right to claim enhanced cost of construction in terms of the advertisement but the respondents were in law liable to account for and demonstrate as to how the additional cost and on what basis and under which heads of expenditure is being claimed. The petitioners were in my view, entitled to an opportunity to challenge the same and show to the authorities that the demand was not justified. A reference to the written statement as already noticed, would show that the respondents while making demand of enhanced amount took into consideration the claim of the contractor in the sum of Rs. 9,10,675.37 paise plus interest of Rs. 5,08,058.88 paise. It is not shown that this claim had ultimately been allowed to the contractor by the arbitrator or any other court including interest or it continued only to be a claim of the contractor. Again it is the clear stand of the respondents that the earlier contractor left the work incomplete and the respondents got the work completed at the risk and cost of the contractor. If the work was to be completed at the risk and cost of the contractor then question of asking for the enhanced compensation did not arise. Whether any step was taken by the Board to recover the amount from the contractor after the work was got completed at the risk and cost of the contractor remains to be clarified if the work was got done at the risk and cost of the contractor the question of claiming enhanced compensation or final calculations would perhaps have not arisen. Thus the stand of the respondents in the written statement on the face of it is contrary and confusing in itself. As already observed, there cannot be any manner of doubt that the respondent-Board was within its right to re-determine the final cost of flats on completion of work in terms of Clause 2-W of the hire-purchase agreement executed between the parties. But that amount could be claimed only after justifying that the increase was liable to be recovered under any permissible head. It has already been held in Baldev Singh v. The Chandigarh Housing Board,2 1991 P.L.J. 146, that the price cannot be fixed arbitrarily and has to be fixed by taking into consideration various heads as detailed therein. Even demand on account of enhanced compensation of land is also required to be justified before the same is claimed from the allottees.

For the above discussion and conclusions, the demand made by the respondents as contained in Annexure P-8 and P-9 and in similar notices issued to other petitioners deserves to be quashed as it suffers from the vice of arbitrariness.

There is, however, no dispute that the price of the flats indicated in the advertisement or in the letter of acceptance was tentative. The petitioners also appear to have undertaken to pay the price as finally worked out at the time of allotment. It is not the case of the petitioners that they are not liable to pay any enhanced price and are only entitled to allotment at the price indicated in Annexures P-5 and P-6. In the circumstances, this writ petition is disposed of by quashing demand notices Annexures P-8 and P-9 and similar other notices issued to the petitioners by the respondents leaving it open to the respondent-Board to re-determine and finalise the price of the flats in question in accordance with law as per the terms and conditions of agreement and in the light of the observations made above. In the circumstances, I would leave the parties to bear their own costs.