N.R.I. Developers vs State of Punjab and Others

G.S. Singhvi, J.—The common issue which arises for adjudication in these petitions relates to the validly of the orders passed by the Additional Chief Administrator (Mohali), exercising the powers of the competent authority, and the notification dated 30.1.1997, issued u/s 2(1) of the Punjab Apartment and Property Regulation Act, 1995 (hereinafter referred to as ''the Act).

The facts necessary for deciding the aforementioned issue needs a brief narration.

C.W.P. No. 14564 of 1997.

N.R.I. Developers is a partnership firm constituted for development of colonies and sale of plots. After securing the certificate of registration under the Act, the petitioner submitted an application before the Additional Chief Administrator, Punjab Urban Development Authority, Mohali u/s 5 of the Act read with Rule 10(1) of the Punjab Apartment and Property Regulation Rules, 1995 (for short ''the Rules). Along with the application, two of its partners submitted a declaration that they are owners of the land. By notification dated 27 9.1996 issued u/s 2(1) of the Act, the Governor of Punjab appointed the Additional Chief Administrators of Punjab Urban Planning and Development Authority, S.A.S. Nagar (Mohali), Patiala and Ludhiana as competent authority to exercise all the powers and perform the functions under the Act within their respective jurisdiction. Thereafter the petitioner''s application for grant of licence was considered by a committee consisting of the Chief Town Planner, Superintending Engineer (C), P.U.D.A., Ludhiana and District town Planner, P.U.D.A., Mohali, Annexures P.8 to P.12 are the documents exchanged between the petitioner and the authorities of the P.U.D.A. with regard to the grant of licence. Finally, licence no. LDH/97/7 dated 19.2.1997 was granted to the petitioner by the Additional Chief Administrator, P.U.D.A., Ludhiana. However, after 2 months and 6 days, the respondent No. 2 issued the impugned order cancelling the said licence on the ground that in view of the notification dated 30.1.1996 issued by the Government, the Additional Chief Administrator Ludhiana was not competent to grant licence to the petitioner. The petitioner has challenged the notification dated 30.1.1997 on the ground of malafide and arbitrariness. Its plea is that the power u/s 2(1) cannot be exercised for arbitrary change of competent authority. The order dated 25.4.1997 has been challenged on the ground of violation of the principles of natural justice and non-application of mind. According to the petitioner, the impugned notification withdrawing the powers of competent authority from the Additional Chief Administrator is ineffective and redundant qua it because the proceedings for grant of licence had been completed by the competent authority before the issuance of that notification. The petitioner has also pleaded that the Additional Chief Administrator, Ludhiana was not even aware of the notification by which his power had been withdrawn and as such, the cancellation of the licence should be invalidated.

The respondent No. 2 has defended the cancellation of licence granted by the Additional Chief Administrator, Ludhiana on the ground that the said officer did not have the jurisdiction or authority to grant licence on 19.2.1997. The respondent has pleaded that the Additional Chief Administrator had acted beyond his brief in spite of knowing that he was not the competent authority after 30.1.1997. Reference has also been made to the notification dated 21.5.1997 vide which the Chief Administrator, P.U.D.A., has been declared as the sole competent authority. In its replication, the petitioner has made an attempt to derive support from the fact that like the Additional Chief Administrator, Ludhiana other Additional Chief Administrators had also granted licenses for development of colonies in the areas beyond their territorial jurisdiction. The petitioner has quoted the examples of Chhabra Land and Housing Ltd. Ludhiana, Vikas House Building Co. Ludhiana, St. Soldier Properties and Industries Ltd., New Delhi, S. Balkar Singh son of Mihan Singh, Amritsar Sant Sunder Singh Nagar Co-op. House Building Society Ltd. and Vikas House O. (P) Ltd. Ludhiana who have been granted licences for development of colonies at Ludhiana, Jalandhar, Amritsar and Moga by the Additional Chief Administrator, Mohali.

Civil Writ Petition No. 7105 of 1997.

Barfanni Developers is a registered company. After having got itself registered under the Act, the petitioner applied u/s 5 of the Act read with Rule 10 of the Rules for grant of licence. After processing its application, the Additional Chief Administrator, Ludhiana granted licence No.LDH 97/5 dated 13.2.1997 to the petitioner for development of residential-cum-commercial colony at Phagwara Road, Hoshiarpur. However, vide Annexure P- 14, the Additional Chief Administrator (Mohali) cancelled the licence on the ground that the authority which granted the licence was not competent to do so.

We have heard Shri R.S. Mittal, Senior Advocate and Shri K.S. Dadwal, counsel for the petitioners, Shri Rupinder Khosla, Deputy Advocate General, Punjab and Shri Rajan Gupta, Counsel representing P.U.D.A. and its authorities.

The Act of 1995 has been enacted with a view to regulate the promotion of the construction, transfer and management of apartments on ownership basis, to regulate colonies and property transactions and to provide for registration of promoters and estate agents and enforcement of obligations on promoters and estate agents and for matters connected therewith or incidental thereto. Before the enactment of 1995 Act, the Punjab Regulation of Colonies Act, 1975 occupied the field. However, it was felt that the private colonisers were operating in the State with the sole motive of making profits with out regard to the interest and rights of individual buyers of plots/flats. In order to check, control and regulate the activities of private colonisers and protect the interest of the consumers keeping in view the National Housing Policy, the Legislature enacted the 1995 Act. Section 2(1) of the Act, which is the center of controversy, Section 5(1 to 3) and Rule 13 of the Rules, which are relevant to the subject matter of these petitioners read as under :

Section 2(1) of the Act.

"2(1) "competent authority" means any person or authority appointed by the State Government, by notification in the Official Gazette, to exercise and perform all or any of the powers and functions of the competent authority under this Act and the rules made thereunder."

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Section 5 (1 to 3) of the Act.

"5. Development of land into colony. - (1) Any promoter, who desires to develop a land into a colony, shall make an application in the prescribed form along with the prescribed information and with the prescribed fee to the competent authority for grant of permission for the same and separate permission will be necessary for each colony.

(2) On receipt of the application under Sub-section (1), the competent authority after making enquiry into the title of the land, extent and situation of the land, capacity of the promoter to develop the colony, layout of the colony, conformity of the development of the colony with the neighbouring areas, plan of development works to be executed in the colony and such other matters as it may deem fit, and after affording the applicant an opportunity of being heard and also taking into consideration the opinion of the prescribed authority, shall pass an order, in writing recording reasons either granting or refusing to grant such permission.

(3) Where an order is passed granting permission under Sub-section (2) the competent authority shall grant a licence in the prescribed form, after the promoter has furnished a bank guarantee equal to twenty five per cent of the estimated cost of the development works certified by the competent authority and the promoter has undertaken to enter into an agreement in the prescribed form for carrying out completion of development works in accordance with the conditions of the licence so granted."

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Rule 13 of the Rules.

"13. Grant of licence (Sections 5(3) and 45(2) (e). - The competent authority shall grant a licence in form APR-V after the promoter has furnished a bank guarantee equal to twenty five per cent of estimated cost of the development works duly certified by the competent authority and the promoter has under taken to enter into an agreement in Form APR IV for the completion of development work as per conditions of the licence so granted and agrees to deposit the service charges as provided u/s 32."

A careful reading of the provisions quoted above shows that the power to grant licence vests with the person appointed as the ''competent authority'' u/s 2(1). The inquiry envisaged by Section 5(2) has to be made by the competent authority and the licence has also to be granted by the said authority. Thus, no person or authority other than the one who is appointed by the State Government by notification in the official gazette as the competent authority can exercise the powers and functions earmarked for the competent authority under the Act and the Rules.

In the light of these statutory provisions it is to be seen whether the Additional Chief Administrator. P.U.D.A., Ludhiana was entitled to exercise the power of the competent authority on 13.2.1997 or 19.2.1997, the dates on which the licences were granted to Barfanni Developers and Housing Private Ltd, and N.R.I. Developers respectively. Vide notification No. 2/3/92-2HGII/3965 dated 13.6.1996 (Annexure P-3) the government conferred the power of competent authority u/s 21 to grant certificate of registration to the estate agents and Under Sections 31, 38 and 39 to the Additional Chief Administrators, P.U.D.A., S.A.S. Nagar, Ludhiana and Patiala in the areas indicated in the notification. On 27.9.19%, the government issued another notification and appointed the above mentioned 3 Additional Chief Administrators as the competent authority to exercise all the powers and perform all the functions of the competent authority under the Act within their respective areas of jurisdiction. A copy of this notification was forwarded to the Chief Administrator, P.U.D.A., Chandigarh, all the Additional Chief Administrators etc on 30.1.1997, the government withdrew the notification dated 27.9.19% and declared that the Additional Chief Administrator, P.U.D.A., S.A.S. Nagar (Mohali) will exercise all the powers and perform all the functions of the competent authority for the State. Copies of this notification were also forwarded to the Chief Administrators and all the Additional Chief Administrators of P.U.D.A. Soon thereafter the Additional Chief Administrator (Headquarter) wrote letter, Annexure P.16, dated 5.2.1997 on behalf of the Chief Administrator to the Principal Secretary to the Government, Department of Housing and Urban Development, Chandigarh to reconsider the issue of appointment of the competent authority. Copies of this letter were also forwarded to all the Additional Chief Administrators. Therefore, it must be held that although on the date of submission of applications by the petitioners, the Additional Chief Administrator, P.U.D.A., Mohali and the Additional Chief Administrator, P.U.D.A., Ludhiana were entitled to exercise the power of the competent authority, on 13.2.1997 or 19.2.1997 the Additional Chief Administrator, P.U.D.A., Ludhiana did not have the power of the competent authority and he had no jurisdiction to grant licences to the petitioners u/s 5 read with Rules 10 and 13. As a logical corollary, it must be held that the action of the Additional Chief Administrator, P.U.D.A. Ludhiana to grant licences to the petitioners was null and void. The person who held the office of the Chief Administrator, P.U.D.A., Ludhiana exercised the power of the competent authority although he had been denuded to this power on 30.1.1997.

Although Shri Mittal and Shri Dadwal made valiant efforts to convince us that the officer concerned was not aware of the notification dated 30.1.1997, we are not prepared to agree with them in view of the fact that the copy of the notification was widely circulated and published and the copy of the letter dated 5.2.1997 written on behalf of the Chief Administrator was also circulated to all the Additional Chief Administrators.

The argument of Shri Mittal that the notification dated 30.1.1997 is vitiated due to malafide exercise of power merits rejection on the short ground that the impugned notification is legislative in character and the exercise of such power by the government cannot be invalidated on the ground of malafides or arbitrariness.

This leaves us with the question whether the orders passed by the respondent No. 2 cancelling the licences granted to the petitioners are liable to be set aside on account of violation of the principles of natural justice. Shri Mittal and Shri Dadwal forcefully, argued that even though the Additional Chief Administrator, P.U.D.A., Ludhiana may have acted beyond his authority, the licences granted to the petitioners have created a vested right in them and the Additional Chief Administrator, P.U.D.A., Mohali could not have deprived them of the right to develop colonies in accordance with the licence by cancellation thereof without giving action-oriented notice and opportunity of hearing. Learned counsel laid emphasis on the fact that the necessary formalities for grant of licences had been completed at a time when the Additional Chief Administrator, P.U.D.A., Ludhiana was empowered to exercise the power of the competent authority and as such the irregularities, if any, committed in the exercise of ministerial function of issuance of licence should not have been made a ground to nullify the licences.

In its abstract form, the argument of the learned counsel built up on the edifice of violation of natural justice appears attractive but on a closer scrutiny we do not find any merit in it because the authority which granted licences to the petitioners did not have the power to do so. Rather, the grant of licences to the petitioners was null and void and keeping in view one of the salutary principles of law that the jurisdiction under Article 226 cannot be exercised for restoring an illegal or void order, we cannot issue a writ in favour of the writ petitioners. Issuance of the writ to quash the orders dated 15.4.1997 and 25.4.1997 would directly result in restoration of the void licences granted to the petitioners. Therefore, we do not find any logic or justification to accept the plea that the impugned orders should be quashed on the ground of violation of the rule of audi alteram partem.

We are also of the opinion that the issuance of notice to the petitioners would have been an empty formality because it is an admitted fact that the Additional Chief Administrator, P.U.D.A., Ludhiana did not have jurisdiction to grant licences to the petitioners. Before us the learned counsel could not put forward any tangible plea to show as to how that officer could act as the competent authority after 30.1.1997. Thus no injustice has been caused to the petitioner due to violation of the rule of audi altrem partem.

This takes us to the last submission of the learned counsel, namely, a direction should be issued to the competent authority to decide the applications filed by the petitioners for grant of licences afresh. Learned counsel appearing for the Punjab Urban Planning and Development Authority has not been able to show that there is any impediment in the consideration and decision of the applications submitted by petitioners. The fact that the petitioners had completed the required formalities has not been disputed by the respondents. Therefore, it is appropriate to direct the competent authority to pass appropriate order on the applications submitted by the petitioners for grant of licence.

Accordingly, the writ petitions are dismissed subject to the direction to the competent authority to decide the applications submitted by the petitioners for grant of licence within a period of 2 months from the date of submission of certified copy of this order.

Before parting with the case, we consider it appropriate to record our displeasure over the lopsided approach adopted by the government in taking disciplinary action against the officer(s) who acted beyond their jurisdiction. It is a matter of grave concern that even though the respondents cancelled the licences granted to the petitioners and others as early as in April, 1997, the officers(s) who mis-used their powers have been left untouched. We, therefore, direct the government to initiate appropriate action against the defaulting official(s) within a period of 2 months and we hope that the government will not give an impression to the public at large that it wants to shield the guilty officers.