# DELHI DEVELOPMENT AUTHORITY,N.D v. JOINT

- **Citation:** [2007] 13 S.C.R. 811
- **Court:** Supreme Court of India
- **Decided:** 2007-12-13
- **Case number:** Civil Appeal Nos. 66686698 of 2006
- **Bench:** S.B. Sinha, Harjit Singh Bedi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/delhi-development-authority-n-d-v-joint-22382
- **Pages:** 46

## Headnote

'"...-
Delhi Development Act, 1957-ss. 2 (13), 5A and 52-Allotment
of flats under Self Financing Scheme (SFS)-By Delhi Development c
Authority-Default in payment of instalments-Condoned by
Authority in terms of original contract-Subsequent policy decision
by delegatee of the Authority, imposing 20% surcharge on the flats of
South Delhi and recovery of current price on condonation of the
default-Policy made effective with retrospective effect-Validity of D
f
restoration policy -Held: The policy is ultra vires-Imposition of
t
surcharge was in effect a compulsory exaction-The delegatee having
no power to fi'ame such scheme under the Act or the Regulations
framed thereunder, or to apply the same with retrospective effect, could
not have done so by an executive order-The policy, being in the realm E
of contract, cannot be stated to be a policy decision as such-It was
dehors the original terms and conditions of the contract-The contract
could not have been novated in absence of provisions under the
contract or law-The Authority having condoned the default as per
..._ J.
terms of original contact, estopped from seeking application of F
subsequent restoration policy- Disposal price was permissible to be
fixed within the purview of original terms of the contract and the
statutory requirements-Action of a State must treat persons similarly
situated equally and grant equal protection to them-Delhi
Development Authority (Management and Disposal of Housing G
Estates) Regulations, 1968-Regulations 5 and 6- Constitution of
v
India, 19 50-Articles 14 and 265-Contract- Estoppel.
.4.
Contract Act, 1872-ss. 29 and 60-Novation of contract811
H
812 SUPREME COURT REPORTS
[2007] 13 (Add!.) S.C.R.
A Conditions for-Held: Terms and conditions of contract cannot be
.+
altered unilaterally without notice to the other party oft he contract-
. -
When a contract has been worked out. aji·esh liability cannot be thrust
upon contracting party.
B
Administrative Law-Delegation of power-Power of de legatee
-Held: A de legatee is bound to act within four corners of the
delegation and not beyond the same-Delegation of power must be
tested in terms of statutory provisions.
-.. .,.:'-
Judicial Review:
c
Judicial review of policy decision-Scope of-Held: Policy
decision is subject to judicial review-An executive order termed as
policy decision is not beyond pale of judicial review-Grounds for
interference with-Discussed.
D
Judicial review of Contract-Permissibility-Held: Permissible,
When a contract emanates fiwn a statute or is otherwise governed by
l
provisions thereof
~
Judicial review ofprice fixation-Permissibility-Held: Though
E
ordinarily not permissible-But where the price is fixed de hors the
statutory provisions, it is permissible.
Constitution of India, 1950-Parts !JI and IV, Articles 12, 14 and
3 7-Vaiidity of an action of State-Ascertainment of-Held: Action
of State giving effect to provisions of Part IV to be upheld only when
F it is not ultra vires Fundamental Rights-The act of the State must at
·•
,•
..
the first instance be adjudged on the touchstone of principles of
Fundamental Rights and then of the provisions of the Parliamentary
Act, or the regulations ji-amed thereunder or the terms of contract
between the parties-Action of State must satisfy the principal
G requirements of Article 14.
Doctrines-Doctrine of ultra vires-Applicability of
y
Flats under a Self Financing Scheme (SFS) flooted in the year
~
1991, were allocated by Delhi Development Authority. Registrants
H defaulted in payment of instalments resulting in automatic
+
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT
813
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
cancellation of their allotments. Vice-Chairman of the Authority, A
delegated with the power of Authority, took a policy decision by order
dated 16.8.1996 levying 20% surcharge over and above disposal
price in respect ofregistrants who had been allotted flats in South
Delhi; and that defaulting registrants were required to pay current
cost

## Text

_Characters 0–38,759 of 95,514. This is a partial read: ask again with offset=38759 for what follows._

t
DELHI DEVELOPMENT AUTHORITY, N.D. & ANR.
A
-.
v.
JOINT ACTION COMMITTEE, ALLOTTEE OF SFS FLATS &
ORS.
DECEMBER 13, 2007
B
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.)
'"...-
Delhi Development Act, 1957-ss. 2 (13), 5A and 52-Allotment
of flats under Self Financing Scheme (SFS)-By Delhi Development c
Authority-Default in payment of instalments-Condoned by
Authority in terms of original contract-Subsequent policy decision
by delegatee of the Authority, imposing 20% surcharge on the flats of
South Delhi and recovery of current price on condonation of the
default-Policy made effective with retrospective effect-Validity of D
f
restoration policy -Held: The policy is ultra vires-Imposition of
t
surcharge was in effect a compulsory exaction-The delegatee having
no power to fi'ame such scheme under the Act or the Regulations
framed thereunder, or to apply the same with retrospective effect, could
not have done so by an executive order-The policy, being in the realm E
of contract, cannot be stated to be a policy decision as such-It was
dehors the original terms and conditions of the contract-The contract
could not have been novated in absence of provisions under the
contract or law-The Authority having condoned the default as per
..._ J.
terms of original contact, estopped from seeking application of F
subsequent restoration policy- Disposal price was permissible to be
fixed within the purview of original terms of the contract and the
statutory requirements-Action of a State must treat persons similarly
situated equally and grant equal protection to them-Delhi
Development Authority (Management and Disposal of Housing G
Estates) Regulations, 1968-Regulations 5 and 6- Constitution of
v
India, 19 50-Articles 14 and 265-Contract- Estoppel.
.4.
Contract Act, 1872-ss. 29 and 60-Novation of contract811
H
812 SUPREME COURT REPORTS
[2007] 13 (Add!.) S.C.R.
A Conditions for-Held: Terms and conditions of contract cannot be
.+
altered unilaterally without notice to the other party oft he contract-
. -
When a contract has been worked out. aji·esh liability cannot be thrust
upon contracting party.
B
Administrative Law-Delegation of power-Power of de legatee
-Held: A de legatee is bound to act within four corners of the
delegation and not beyond the same-Delegation of power must be
tested in terms of statutory provisions.
-.. .,.:'-
Judicial Review:
c
Judicial review of policy decision-Scope of-Held: Policy
decision is subject to judicial review-An executive order termed as
policy decision is not beyond pale of judicial review-Grounds for
interference with-Discussed.
D
Judicial review of Contract-Permissibility-Held: Permissible,
When a contract emanates fiwn a statute or is otherwise governed by
l
provisions thereof
~
Judicial review ofprice fixation-Permissibility-Held: Though
E
ordinarily not permissible-But where the price is fixed de hors the
statutory provisions, it is permissible.
Constitution of India, 1950-Parts !JI and IV, Articles 12, 14 and
3 7-Vaiidity of an action of State-Ascertainment of-Held: Action
of State giving effect to provisions of Part IV to be upheld only when
F it is not ultra vires Fundamental Rights-The act of the State must at
·•
,•
..
the first instance be adjudged on the touchstone of principles of
Fundamental Rights and then of the provisions of the Parliamentary
Act, or the regulations ji-amed thereunder or the terms of contract
between the parties-Action of State must satisfy the principal
G requirements of Article 14.
Doctrines-Doctrine of ultra vires-Applicability of
y
Flats under a Self Financing Scheme (SFS) flooted in the year
~
1991, were allocated by Delhi Development Authority. Registrants
H defaulted in payment of instalments resulting in automatic
+
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT
813
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
cancellation of their allotments. Vice-Chairman of the Authority, A
delegated with the power of Authority, took a policy decision by order
dated 16.8.1996 levying 20% surcharge over and above disposal
price in respect ofregistrants who had been allotted flats in South
Delhi; and that defaulting registrants were required to pay current
cost on regularization of the default. A resolution was passed and B
an executive order was also passed to that effect. The resolution
was given retrospective effect and retroactive operation. Several
writ petitions were filed questioning the legality and validity of the
resolution. Single Judge of High Court allowed the petitions in part
quashing the policy of charging current cost upholding the policy of c
charging 20% surcharge. Letters patent appeals were referred to
larger Bench of High Court, by the Division Bench. The Full Bench
up held the levy of20% surcharge and further held thatthe Authority
had requisite jurisdiction also in respect of imposition of'current
cost'. Hence the present appeals.
Allowing the appeals filed by the registrants and dismissing
those filed by the Authority, the Court
D
HELD: 1.1. Delhi Development Authority (DDA) has been
created under a Parliamentary Act. It, indisputedly, is a State within E
the meaning of Article 12 of the Constitution oflndia. Therefore,
acting as a 'State', it is imperative that D.D.A., while implementing
its statutory power, upholds the fundamental rights of the citizens
and strives hard to give effect to the Directive Principles of the State
Policy. [Paras 34 and 37] [839-A; E-F)
F
1.2. It is true that in terms of Article 37 of the Constitution of
India, whereas the provisions of Part III arc justiciable, the
provisions of Part IV arc not. However, only when an action of the
State is taken to give effect to any of the provision of Part IV of the
Constitution of India which is not otherwise ultra vires the G
Constitution or offends the principles embodied in Part III of the
Constitution oflndia, the same may be upheld, having regard to the
provisions contained in Part III thereof. The action of the State,
therefore, must at the first instance be adjudged on the touchstone
of the principles of Fundamental Rights and then the provisions H
814 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A contained in the Parliamentary Act, the regulations framed
thereunder as also the terms of the contract entered into by and
between the parties. [Para 37) [839-F-H; 840-A)
1.3. Action of a State must satisfy the principal requirements
B of Article 14, viz., treating persons similarly situated equally and
granting equal protection to them. Reasonableness and fairness is
the heart and soul of Article 14 of the Constitution of
India. [Para38] [840-B]
2.1. lt is only those components which fall within the Brochure
C of the DDA or within the purview of the statutory requirements which
can be included in the exercise of price fixation. At the time of
calculation of the amount which would be the subject matter of
demand of 5th and final instalment, the jurisdiction of DD A is to keep
itself confined only to the factors on the basis whereof, the brochure
D was issued and offer was made. No additional factor, thus, could be
taken into consideration at the time of issuing notice other than the
~ t
ones on the basis whereof offer was made by the registrants.
[Paras 86 and 67] [855-H; 856-A; 849-F)
Jud~:ment passed by Supreme Court in DDA v. SFS Assn. and
E Ors. Civil Appeal No. 4402of1985, relied on.
Premji Bhai Parmar and Ors. v. Delhi Development Authority,
AIR (1980) SC 738, distinguished.
P.N. Verma v. Union of India, AIR (1985) (Delhi) 417,
F disapproved.
Narsingh Jain v. Union of India, 80 (1999) DLT 742 and DDA
SFS Flat Owners Society v. UOl AIR (2001) Del 39, referred to.
2.2. The Full Bench of High Court misdirected itselfinsofar as
G it failed to take into consideration that the levy of20% surcharge
was in effect and substance a compulsory exaction to augment the
revenue requirements of the DDA and, thus, could not have been a
part of the contract. Any compulsory exaction should be viewed in
the light of Article 265 of the Constitution oflndia, unless it comes
H
y
r
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT
815
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
..
-
within the sphere of contract. [Para 85) (855-G]
A
,.._
2.3. Although the registrants defaulted in making payments but
the flats were available. In fact, when the default took place, the flats
were not constructed. They have, thus, not been allotted to the
persons on the wait list. It may be true that recourse to restoration
B
of automatic cancellation should be undertaken by the allocattees
within a reasonable time. What would be a reasonable time would,
however, depend on the facts and circumstances of each case. No
hard and fast rule can be laid down therefor.
[Paras 44 and 45) (841-G-H; 842-A)
2.4. What would constitute a reasonable period must also be c
considered keeping in view the rights of the parties as also the fact
that in terms of clause 4 of the offer of allotment there does not exist
any prohibition to pray for regularization upon default, even after a
period of 120 days. In a situation of this nature, it may not be D
unjustified to arrive at the conclusion that such a right can be
~-
exercised, if not, when the flats were ready for handing over actual
possession, but at least when there has been a substantial
progress. [Para 46) [842-B-C]
3.1. Admittedly, the registrants failed to pay instalments within E
the stipulated period. A notice was served. Representation praying
for condonation of default was accepted by DDA. It allotted the flat.
No condition therefor was put. It did not ask for payment of any
surcharge. The original terms were not deviated from. It did not ask
for any extra-cost. The delay in payment of instalments was F
condoned and the allocation of flat which got cancelled, stood
restored. DDA, thus, acted strictly in terms of the original scheme.
It is only when the 5th and final instal_ment was directed to be paid,
the current cost was included. The allocattee at that stage might not
have any other option but to pay the same for obtaining possession. G
But by reason thereof, he never gave up his right to question the
y
action on the part of DDA. Rule of estoppel, therefore, has no
'"I
application, so far as the registrants are concerned.
[Paras 52, 53, 54 and 55) (843-E; 845-D-G-H; 846-A-B)
3.2. It was, on the other hand, DDA which, having accepted the H
816 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A offer of the allocattee by restoring the allotment, is estopped and
precluded from raising a plea as regards application of Office Order
dated 16.8.1996. [Para 56) (846-C)
4.1. DDA functions through the Committees constituted in terms
of Section SA of Delhi Development Act, 1957. Power has been
B delegated in favour ofits Chairman and the Vice-Chairman. Such
delegation of power, however, as provided for under Section 52 of
the Act does not extend to make regulations. What, therefore, cannot
be done by way of regulation, cannot be done by executive
order. [Para 47) [842-F-G]
c
4.2. In absence of any provision contained in the Act or the
Regulations, the delegatee on its own could not frame such a new
scheme. Thus, the purported restoration policy would be ultra vires.
The restoration policy has to be tested on grounds of terms and
D conditions of the original scheme. The legality and/or validity of such
imposition would be considered on the premise that the impugned
policy decision is a part of the original scheme and does not contain
any new policy. [Para 58) (847-B-C)
4.3. An executive officer, in absence of any provision of a
E statute, cannot apply his own decision with a retrospective effect. A
delegatee is bound to act within the four corners of the delegation
and not beyond the same. [Para 72) (851-F)
4.4. Delegation of power in favour of an authority under a
F statute must also be tested in terms of the statutory provisions. No
provision under the Act or the Regulations has been brought to
notice of the Court which empowers the delegatee to alter the terms
and conditions of the contract with retrospective effect. The
purported policy decision must, therefore, be tested not only having
G regard to the provisions of the statute but also having regard to
clause 4 of the offer. [Para 73) (851-G-H; 852-A)
4.5. The authority having itself adopted a formula for computing
the disposal cost, the same was binding upon the delegatees. The
delegatee cannot take any action contrary to or inconsistent with
H the factors laid down for computation of disposal cost as defined in
..
DELHI DEVELOPMENT AUTHORITY, N.D. v. JOINT
817
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
~
.
Section 2(13) of the Act. Regulations 5 and 6 ofDclhi Development A
'""
Authority (Management and Disposal of Housing Estates)
Regulations, 1968 do not authorize the delegatee to apply a formula
which was not contemplated by the Authority itself. If an Executive
Authority in absence of any statutory provision cannot apply a
decision with retrospective effect, the same would be ultra B
vires. [Para 74] [852-C-D]
~·~
Vice Chancellor, MD. University, Rohtakv. Jahan Singh (2007)
4 SCALE 226, relied on.
Ashok Lanka and Anr. v. Rishi Dixit and Ors., [2005] 5 SCC 598, c
referred to.
5.1. The office orders, on the basis whereof the purported
impugned policy had been taken, do not refer to the scheme as a
restoration scheme. The resolutions do not say so. There is nothing
on record to show that the Office Orders dated 16.8.1996, 27.8.1996 D
and 21.3.1999 were published in the Gazette or were otherwise
brought to the notice of the registrants.
[Paras 51and57) (846-D; 843-D]
5.2. A person would be bound by the terms of the contract
subject of course to its validity. A contract in certain situations may E
also be avoided. With a view to make novation of a contract binding
and in particular, some of the terms and conditions thereof, the
offeree must be made known thereabout. A party to the contract
cannot at a later stage, while the contract was being performed,
impose terms and conditions which were not part of the offer but F
were based upon unilateral issuance of office orders, and were not
communicated to the other party to the contract and which were not
even the subject matter of a public notice. Apart from the fact that
the parties rightly or wrongly proceeded on the basis that the demand
by way of 5th instalment was a part of the original scheme, DDA in G
.,,
its counter affidavit either before the High Court or before this Court
-
did not raise any contra plea. [Para 57] [846-F-H; 847-A]
5.3. Terms and conditions of the contract can indisputably be
altered or modified. They cannot, however, be done unilaterally
unless there exists any provision either in the contract itself or in H
818 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A law. Novation of contract in terms of Section 60 of the Contract Act
must precede the contract making process. The parties thereto must
be ad idem so far as the terms and conditions are concerned. IfDDA, ·
a contracting party, intended to alter or modify the terms of contract,
it was obligatory on its part to bring the same to the notice of the
B allocatee. Having not done so, it, relying on or on the basis of the
purported office order which is not backed by any statute, could not
thrust new terms of contract upon the other party to the
contract. [Para 61] [848-A-C]
5.4. A definite price is an essential element of binding
C agreement. A definite price although need not be stated in the
contract but it must be worked out on some premise as was laid down
in the contract. A contract cannot be uncertain; it must be construed
so as to lead to a conclusion that the parties understood the meaning
thereof. The terms of agreement cannot be vague or indefinite. No
D mechanism has been provided for interpretation of the terms of the
contract. \Vhen a contract has been worked out, a fresh liability
cannot be thrust upon a contracting party.
[Paras 76 and 77) [852-G; 853-B)
6.1. An executive order termed as a policy decision is not
E beyond the pale of judicial review. Whereas the superior courts may
not interfere with the nitty gritties of the policy, or substitute one by
the other, but it can not be said that the court shall like its judicial
hands off when a plea is raised that the impugned decision is a policy
decision. Interference therewith on the part of the superior court
F would not be without jurisdiction as it is subject to judicial
review. [Para 59) [847-D-E)
6.2. Broadly, a policy decision is subject to judicial review on
the following grounds: (a) if it is unconstitutional; (b) if it is de 'hors
the provisions of the Act and the Regulations; (c) if the delegatee
G has acted beyond its power of delegation; (d) ifthe executive policy
is contrary to the statutory or a larger policy. [Para 60) [847-F-G)
6.3. The purported policy of introducing new terms of contract
unilaterally is, therefore, not beyond the pale of judicial review. In
H fact, being in the realm of contract, it cannot be stated to be a policy
-
DELHI DEVELOPMENT AUTHORITY, N.D. v. JOINT ACTION 819
COMMITTEE,ALLOTTEEOFSFSFLATS
~
~
decision as such. [Para 61] [848-C)
A
6.4. IfDDA was exercising a statutory power, the same must
be tested on application of doctrine of ultra vires. Floating a scheme
for providing housing facilities to a group of people, although is
governed by statute, exercise of power under the statute by an
B
executive, not only can be tested on the touchstone of Article 14 of
the Constitution oflndia, but can also be tested on the touchstone
-7
of source of the power under the statute. No provision either in the
Act or the Regulations was brought to notice of the Court which
makes the allocattee bound by the purported policy decision taken
by DDA. Even ifit is so, the superior courts may exercise its power c
of judicial review as the power which is sought to be exercised by a
statutory authority is not under the contract but under a statute.
When a contract emanates from a statute or is otherwise governed
by the provisions thereof, the superior court can also exercise the
power of judicial review. [Para 62] [848-E-G]
D
:j
iGujarat State Financial Corporation v. Mis. Lotus Hotels Pvt.
Ltd., [1983] 3 SCC 379, relied on.
7.1. Regulations 5 and 6 of Regulations should not be very
liberally construed. Concededly, the manner in which power is to be E
exercised is governed by the past practice. Norms have been fixed
for computing the disposal cost. Although, the superior courts
ordinarily would not interfere in the price fixation but there does not
..... .l
exist any absolute ban. In a case where fixation of price is required
/
-!.
to be made in a particular manner and upon taking into consideration F
the factors prescribed and if price is fixed de' hors the statutory
provisions, judicial review would be permissible.
[Para 64] [849-A-B]
7.2. When the Authority determines tl.te cost of construction
under residuary power conferred on it having regard to the relevant G
""
factors on the basis of which brochure as well as the notice inviting
.i,:
tender was issued, the superior courts may not interfere; but the
same must be done in terms of the originalcontract and not de' hors
the same. The authority, even while exercising its residuary power,
is required to act within the four corners of the contract. While doing H
820 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A so, the terms of the contract cannot be altered to include any other
factors which were contemplated thereunder. While computing the
extra cost, no additional factor, thus, can be taken into consideration.
If such a power is conceded in the authority, the same would give
rise to exercise of arbitrary power. It is not contemplated in law.
B While construing a provision delegating a power on an authority
under a statute, the constitutional provisions must be kept in
mind. [Para 66] [849-C-E]-
c
CIViL APPELLATE JURISDICTION : Civil Appeal Nos. 66686698 of 2006 & 6700-6732 of 2000.
From the common Judgment and final Order dated 23.7.1999 of
the High Court of Delhi at New Delhi in C.W.P. Nos. 793, 1118, 2209,
3423, 4163, 4306, 4436, 4542, 4976, 5402/93, 166 637, 756, 858,
1206, 1208, 1283, 1496, 1514, 1570, 1683, 1685, 1752, 1786, 1787,
1803, 1808, 1843, 1867, 1874,2005,2090,2102,2175,2331,2333,
}) 2334,2367,2374,2463,2504,2505,2569,2570,2581,2619,2766,
2776,3106,3126,3624,3652,3696,3767,3799,3951,4365,4415,
4416/94, 1305, 1306, 1819, 2074, 2075 and 3825/95.
WITH
E
C.A. Nos. 6666, 6667 & 6733 of2000 and 5881, 5869, 5882,
5880 and 5872 of2007.
Sunil Gupta, V. Shekar, Gopal Shankamaayanana, Indu Malhotra,
S.K. Rungta, AP. Dhamija, Madhu Sudan Bhayana, Pratibha Jain, C.S.
Ashri, S. Ganesh, Pradeep K. Dubey, Sudhir, K. Sajwan, Zangpo
F Sherpa, Abhigya, Ashok Kumar Sharma, Madhu Moolchandani,
Maninder Singh, Pratibha M. Singh, Surbhi Mehta, Gaurav Sharma,
Sumeet Bhatia, Deba5is Misra, Kuldip Singh, Anyusuya Selvan, S. Janani,
Rajeev Sharma, Sarad Kumar Singhania, E.C. Agrawala, Mahesh
Agarwal, Rishi Agrawala, Gaurav Goel, Amit Sharma, Neha Aggarwal,
G T.L. Garg, J.S. Attri, Surya Kant, Subramanyam Prasad, Kamlendra
Mishra and Kum Kum Sen with them for the appearing parties. and
Jayabrata Bhattachai:jee, Respondent-in-Person.
The Judgment of the Court was delivered by
H
S.B. SINHA, .J. l. Leave granted in all the Special Leave Petitions.
J-
DELHIDEVELOPMENT AUTHORITY, ND. v. JOINT ACTION 821
C0tv1MITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
,.
CIVIL APPEAL NOS. 6666, 6667, 6668-6698, 6700-6732 & A
•
6733 of 2000 CIVIL APPEALS@ SLP (CIVIL) NOS. 25385 OF
2005, 1003, 8033 OF 2006 AND 13512 OF 2006:
2. This batch of appeals arising out of a judgment and order dated
23.07.1999 passed by a Division Bench of the Delhi High Court, inter B
alia, in Writ Petitions No. 793of1993 as also a judgment and order
dated 22.07.2005 passed by a Full Bench of the Delhi High Court in
_... --.,.
Letters Patent Appeal Nos. 844 of2003 etc. were heard together and
are being disposed of by this common judgment.
FACTS:
c
3. Delhi Development Authority (for short, 'the Authority) has been
constituted under the Delhi Development Act, 1957 (for short, 'the Act').
Indisputably, it develops different areas in the town of Delhi and constructs
houses for all groups of people.
D
:)
)'-
4. Principally it allocates flats under six different schemes viz : (i)
Self Financing Scheme (SFS); (ii) Higher Income Group Scheme (HIG
Scheme); (iii) Middle Income Group Scheme (MIG Scheme); (iv) Lower
Income Group Scheme (LIG Scheme), (v) Janata Scheme; and (vi)
Expandable Housing Scheme.
E
5. The flats constructed and allocated under the SFS Scheme are
distinct and different from the other five schemes launched by the
Authority. We shall advert to the said distinction a little later.
~ J,_
6. Suffice, however, it to say that not only costs of such schemes
~
F
are calculated on different basis but the rights and stipulated liabilities
thereunder are also different. Cost of flats vary from scheme to scheme.
Under one of the schemes, applications were invited by the Authority from
22.12.1992 to 11.01.1993.
7. We may notice some of the provisions containing the terms and G
.,-
conditions on the basis whereof such an offer was made .
x
"5.10 the details of the flats and tentative cost etc. are available in
Annexure-B. The cost of the flats mentioned therein is tentative
and subject to revision on account of escalation in the value ofland H
-
822 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A
and cost of construction. Please note that there is a possibility of
f
upward revision of the tentative cost.
•
5 .11. Those who are successful for a ready built flat will be called
upon to make the payment in lump sum within 60 days. Others
B
who are successful for a flat where the work is already in progress
will be asked to deposit within 30 days a specified percentage
anything upto 90% of the estimated disposal price representing the
expenditure already made and the amount required for construction
f"
of flats in next 3 to 4 months. Applicants successful for new
c
allocations are asked to pay 25% the estimated cost of the flat by
way of 1st instalment payable within 30 days. In each of the case
60 days time is further given to remit the amount with prescribed
interest.
11.2. The demand-cum-allocation letters issued will indicate the
D
prescribed dates by which the payments will be required to be
made. The demand letter for final instalment for the flats in progress
and new allocations will be issued separately and this may also
-'\
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include the possible increase in the cost of the flat. No separate
letters will be issued for any of the subsequent instalments. It will
E
be obligatory on the part of the allocatees to make the payments
and deposit the requisite documents before the due dates indicated.
In the event of default the allocation/allotment of the flat in the
scheme will be liable to be cancelled. If submission of documents
as demanded are delayed, maintenance charges will be leviable
provided the delay in submission of documents is regularized.
,. ... _.
F
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12.2. If the allotment of flat is cancelled (either on the allottee's
own request or due to the non-fulfilment of the terms and conditions
of allocation by the allottee) after the expiry of I, 2, 3 and 4 months
from the date of issue of demand-cum-allocation letter, interest
G
calculated@ 12% p.a. for the 1st month and 18% p.a. for the
2nd, 3rd and 4th month on the amount demanded in the demand
-..,
letter shall be charged in addition to the amount of penalty specified
•
above.
H
14.1. The allottee shall be entitled to take delivery of the possession
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 823
COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J.]
~
only after he has completed all the formalities, paid all dues and A
t
furnished/executed all the documents as required in the allotmentcum-demand letter of the Delhi Development Authority."
8. Appellants in the first batch of cases and the respondents in the
second batch (hereinafter referred to as 'the registrants') applied for B
allocation of flats under the SFS Scheme. The said scheme was floated
, \,.
in terms ofltem No.112of1992. For the said purpose, brochures are
issued. Those who desired to have allocation of such flats were asked to
opt therefor at three different places. Allocation of flats under the said
Scheme is made upon 90% payment of the estimated costs. However, c
allotment is made on draw of specific number of flats. Allocation of flats
may be made in respect of areas, floors and/or the pockets. On receipt
of the letter of demand-cum-allocation by the registrant, the schedule of
payment commences. Estimated cost for construction is calculated on the
basis of the value of the land and likely cost of constructions.
D
;
9. The letter of demand-cum-allocation issued to successful
tregistrants contains a condition which may be noticed for the purpose of
these cases and read as under :
"4. The amount demanded should be paid on or before the due
date mentioned in para 2 and 3 above. Extension of time for E
making payment of the amount demanded in column 7 of para 3
above upto a maximum period of 90 days from the due date is
admissible. An allottee need not apply for extension but he will have
" ~
to pay interest @ 12% p.a. for the first month and @ 18% p.a.
for the subsequent period. In case payment of the amount asked F
for in the demand letter is not made within 90 days of the due date,
the allotment shall stand cancelled automatically. However,
cancellation due to non-payment of first 4 instalments during the
stipulated period can be got restored on payment of dues with
interest along with cancellation and restoration charges for each G
'>--
cancellation due to non-payment, subject to availability of the
j
allocated flat. The cancellation due to non-payment of final
instalment within 120 days of the date of issue (letter of the block
date) of the demand letter for 5th instalment shall not be restored
under any circumstances."
H
824 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
A
I 0. It may be useful to notice some other clauses containing terms
B
and conditions of allocation, which are as under :
"!.No separate demand letters will be issued for 2nd, 3rd and
4th instalments. It will be obligatory on your part to make the
payment before the due date indicated at page-I; failing which the
allocation is liable to be cancelled.
2. The estimated cost of the flats as given in this letter is provisional
.,1and subject to revision on the completion of the flat. Any price
difference between the estimated cost and the cost as it comes out
c
on completion as per costing formula then in vogue would have to
be paid along with the 5th and final instalment. There would be no
review of the cost of the flat in the intermining period. Interest@
7% on the amount deposited will be payable for the period beyond
3 Yz years to the date of issue of possession letter if the construction
D
of the houses is not completed by then.
E
3. The amount demanded should be paid on or before the
stipulated due date failing which the allotment shall be liable to be
cancelled without notice. In case, due to unavoidable reasons, the
allottee is not able to make the payment within the due time, then
he must ensure that his acceptance of the allotment reaches the
Housing Department before the due date of payment with a request
for exiension."
11. Registrants are said to have defaulted resulting in purported
F automatic cancellation of their allotments. Show cause notices were issued
to them. Some of them allegedly expressed their difficulties in regard
thereto.
Decisions impugned
G
12. TI1e Vice-Chairman of the appellant who is said to be delegated
with the power of the Authority to which reference would be made
hereinafter took a policy decision which is reflected from Office Order
issued on 16.8.1996, the relevant clauses whereof are :
"2. With the approval ofL.G. a decision was taken that the current
H
price for South Delhi flats will be worked out by adding a
-1
DELHI DEVELOPMENT AUTHORJTY,N.D. v. JOINT ACTION 825
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
;.
surcharge of 20% from the price worked out as per old A
formula. The approval ofL.G. to this decision was granted
on 12.07.1996.
~
There are presently cases in the Housing Department where
.) .
there have been delays in the making of the payments of the
flats allocated/allotted in South Delhi under SFS. Before the B
aforesaid revision took place, delays of one year or so were
being regularised with usual charges, i.e., on payment of 18%
interest per annum and restoration charges, etc. in few cases
where delays are unusually long, current price has also been
demanded."
c
13. The aforementioned Office Order dated 16.8.1996 was
reiterated in a resolution dated 27.8.1996 wherein a further decision was
taken to impose a surcharge of 20% "over and above" disposal price
only in respect of registrants who had been allotted flats in South Delhi. D
The said decision was taken to balance the reduced cash flow of the
t
Authority. It reads as under:
"I. On the basis of the aforesaid resolutions of the Authority, 50%
flats are proposed to be offered to the public. It is also being
proposed to offer to public the unavailed flats if any out of E
the 50% flats being reserved for Govt. organisations/PSUs.
In this manner, number of flats to be offered to the public can
be beyond 50%.
1,
~
:xxx
xxx
xxx
F
4.
To balance the reduced cash in-flow because of the proposed
discount it will be necessary to charge premium in the areas
where the real value in the market ofDDA flats is much more
than what DDA is charging as per its costing formula in the
demand letters. It would be in the fitness of thing to charge G
premium of 20% over the disposal cost worked out for the
,_
flats in South Delhi SFS."
;(
14. Yet again, on 5.11.1998, a purported clarification was issued in
regard to regularization of flats where there had been delay in payment
of first four instalments, stating:
H
826 SUPREME COURT REPORTS
[2007] 13 (Addl.) S.C.R.
A
"While issuing allocation/allotment letters to the registrants of various
~
schemes announced by DDA, a demand is raised from the
concerned allottees specifying the amounts to be paid with due date
of payment. However, sometimes on account of the problem faced
by the concerned allottees the payment received by the DDA are
B
later than the scheduled date. Such cases are usually examined on
merits and the delay is regularised if there is merit in the case as
non-regularisation of delays in deserving cases may be resulted by
;,
the allottees. The following shall be the rules applicable to the
~
allottees of all category of flats in case there payments are delayed
c
and are regularised by the competent authority.
A. Competent Authority to regularise the delay:
Period of delay
Designation
D
(i) Upto 30 days
Jt./Dy. Directors
(ri) Beyond 30 days but
upto 90 days
Director (Housing)
,
(rii) Beyond 90 days but
Commissioner
E
upto 1 year
(Housing)
(iv) Beyond 1 year but upto Principal
l. year 6 months
Commissioner
(v) More than 1 year
F
6months
Vice-Chainnan
r ,
B. Price of the Flat :
(i) If the allocated/allotted flat is in South Delhi where the
G
construction has been undertaken by the South East Zone and
South West Zone of the Engineering Wing Except Dwarka (being
in West Delhi) the Price of the flat if restored, would be "Old Cost"
"
interest or current cost whichever is higher.
~
(ii) In case where allottees of the localities mentioned (i) above
H
default a small percentage of demand amount upto 10% beyond
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 827
COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J.]
.... ~
the due date, this delay, if regularised would be on "Old CostA
interest."
(iii) In other cases of all category flats i.e. where the construction
of flats has been undertaken by other zones ofEngineering Wing
the restoration shall be at "Old Cost-interest".
B
2. A decision exists that while working out the current cost for flats
in South Delhi, a surcharge of20% from the price worked out as
per old formula, will be added. This surcharge will continue to be
added for South Delhi flats. The interest rates in the above case
shall be@ 18% per annum on the default amount.
c
C. RESTORATION CHARGES:
In addition to the above, the allottees/allocatees whose allotment
is restored by the competent authority, shall be liable to pay
Restoration Charges @ 2.5% of the registration money of the D
respective scheme."
15. Another office order dated 31.3 .1999 was issued in regard to
imposition of 20% surcharge over and above disposal price only in
respect of registrants in South Delhi, relevant portion whereof reads as E
under:
"2. Price of the flat
(i) In cases (pertaining to any locality) where demanded amounts
~ ~
were received prior to 22.08.1996 by DDA, the restoration
of allotment/regularisation of delay, if consider~d would be on F
"old cost interest".
(ii) In case where allottees default a small percentage of total
demanded amount upto 10% beyond the due date, the delay
if regularised, would be on "old cost+ interest".
G
y·
(lii) If the allocated/allotted flat is in South Delhi i.e. where the
construction has been undertaken by the South East Zone and
South West Zone of the Engineering Wing except Dwarka
(being in West Delhi), the price of the flat, if restored, would
be "old cost+ interest or current cost", whichever is higher. H
A
B
828 SUPREME COURT REPORTS
[2007] 13 (Addi.) S.C.R.
This clause will be applicable in cases for which demanded
amount by DDA is received after 22.08.1996 and the delay
is regularised.
(iv) In other cases of all category flats i.e. where the construction
of flats has been undertaken by other zones of Engineering
Wing, the restoration shall be at "old cost+ interest".
3. Sur Charge
The premium of20% over the disposal cost worked out on
current cost or old cost for the SFS flats in South Delhi, where
C
the real value in the market ofDDA flats is much more than DDA
is charging as per its costing formula, shall be charged."
16. The said orders were issued in purported supersession of the
previous orders on the subject and were to come into force with immediate
D effect. Some of the registrants made payments pursuant thereto or in
furtherance thereof. Some had made payments although, according to
them, aforementioned resolution will have no application to their case.
E
17. The said resolution was given a retrospective effect and
retroactive operation.
Proceedings :
18. Several writ petitions were filed at that stage questioning the
legality and/or validity of the said purported resolutions.
F
19. A learned Single Judge of the Delhi High Court allowed the said
~ ,
writ petitions in part quashing the policy of charging current cost and
upholding the policy of charging 20% surcharge. Letters Patent Appeals
were preferred thereagainst. A Division Bench of the High Court, having
regard to conflict in decisions operating in the field referred the matter to
G a larger Bench.
20·. The Full Bench of the said Court by reason of the impugned
judgment modified the judgment and order of the learned Single Judge in
respect of 'current cost' holding that the Authority had the requisite
jurisdiction also in respect thereof. The validity oflevy of20% surcharge
H was also upheld.
~
;
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,
.\ -+
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DELffiDEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 829
COMMITTEE,ALLOTTEE OF SFS FLATS [SINHA,J.]
Contention before the Full Bench :
21. Before the Full Bench, the registrants, inter alia, raised a
contention that levy of an additional amount over and above the disposal
price on the allocatees or flats in South Delhi was wholly unjustified. It
was also urged that adoption of current cost formula being contrary to
the regulations was also not sustainable in law inasmuch as rights of the
writ petitioners crystalliz.ed on issuance of the allocation letter and not when
the actual allotment of flat took place. Levy of surcharge amounts to a
levy of tax or cess, wherefor there is no authority in law.
22. Relying on or on the basis of a decision of this Court in Premji
Bhai Parmar and Ors. v. Delhi Development Authority, AIR (1980)
SC 738 as also on Delhi Development Authority v. Pushpendra
Kumar Jain, AIR (1995) SC 1, the respondents, on the other hand,
contended that the right of registrants gets crystallized only upon final
allotment and not at the stage of issuance of allocation letter. Relying
furthermore upon a Full Bench decision of the High Court in Smt.
Sheelawant v. Delhi Development Authority, (1995) 1 AD (Delhi) 725,
its jurisdiction to delve into the price fixation policy was also questioned.
are:
Issues raised before the Full Bench :
23.