# MUNICIPAL CORPORATION CHANDIGARH AND ORS. ETC v. "( MIS SHANTIKUNJ INVESTMENT PVT. LTD

- **Citation:** [2006] 2 S.C.R. 768
- **Court:** Supreme Court of India
- **Decided:** 2006-02-28
- **Case number:** Civil Appeal No. 1342 of2006
- **Bench:** B.N. Agrawal, A.K. Mathur
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/municipal-corporation-chandigarh-and-ors-etc-v-mis-shantikunj-investment-pvt-ltd-21273
- **Pages:** 25

## Headnote

Chandigarh Lease--Hold of Sites and Buildings Act, 1973; Sections
2(b), 7, 8 and 8-A-Chandigarh Lease-Hold of Sites and Buildings Rules,
... •
1973; Rules 3(2), II, 12 and 13--/ndian Contract Act, 1872; Section 87c Specific Relief Act, 1963; Section 2(a)-Transfer of Property Act, I 882; Sections
/05 and 108-Al/otment of plots by State to allottees on payment of initial
premium with a conditicn to pay remaining amount in instalments-Allottees
refased to pay instalment amounts contending that the State has not provided
amenities under the Act-State initiated steps to levy interest, penalty and
D resumption of plots for non-payment of instalments and ground rent-Writ
Petitions by allottees before High Court-High Court holding contrary views
in different Writ Petitions-Whether provision of basic amenities by the State
is a condition precedent to demand payment of instalment amount and ground
>
rent from the allottees-Held, provision of basic amenities is not a condition
precedent for payment of instalment amounts and ground rent under the Act
E and Rules and under the terms and conditions of auction and lease-Al/ottees
are bound to pay instalment amounts being part of the contract-Matters
remitted back to High Court for fr•~sh disposal on the facts of each case.
Allottees were allotted residential and commercial sites on lease by
F
State on payment of premium. As per the terms and conditions of the
lease, the remaining amount would be required to be paid by the allottees
to the State in instalments. The State demanded payment of interest and
y •
penalty from the allottees for non-payment or short/delayed payment of
instalments and ground rent. The allottees filed Writ Petitions before
High Court challenging the arbitrary demand of payment and resumption
G and forfeiture of allotment of the sites by the State contending that the
State cannot demand the payment on the ground that basic amenities for
use and occupation of the sites have not been provided by the State. One
Division Bench of the High Court allowed the writ petitions of the allottees
~ ..
holding that provision of basic amenities is a condition precedent to the
H
768
MUNI. CORPN. CHANDIGARH v. SHANTIKUNJ INVEST. rvr. LTD.
7 69
payment of instalment and ground rent. Another Division Bench of the A
High Court held a contrary view holding that provision of basic amenities
is not a condition precedent. Hence the appeals by the State and the
allottees.
The allottees contended that the word 'amenities' under section
2(b) of the Chandigarh Lease-Hold of Sites and Buildings Act, 1973 should B
be given an extended meaning; that Rule 12(2) of the Chandigarh LeaseHold of Sites and Buildings Rules, 1973 should be interpreted to mean
that the State should provide basic amenities within the agreed period of
payment of instalments by the allottees; that the expression 'enjoy' under
Rule 3(2) of the Rules would become redundant if all the amenities C
provided under section 2(b) of the Act were not provided first by the
State; that the State has failed to perform its promise under section 67 of
the Indian Contract Act, 1872; that under Section 2(a) of the Specific
Relief Act, 1963, when a property is leased out, it presupposes that the
amenities should be provided on payment of premium; that under sections
105 and 108 of the Transfer of Property Act, 1882, the rights and liabilities D
of lessor and lessee are co-terminus; and that the provisions of a Statute
should be interpre~ed in such a manner that it advances the cause of the
~
public.
The State contended that the 'amenities' under section 2(b) of the
Act, 1973 cannot be given an extended meaning; that providing amenities E
was never a condition precedent and the necessary amenities had already
been provided; and that it is not running away from the legal obligation
in providing remaining amenities.
Disposing of the ·appeals, the Court
HELD: 1.1. On a plain reading of the definition "amenity" under F
section 2(b) of the Chandigarh

## Text

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A
MUNICIPAL CORPORATION CHANDIGARH AND ORS. ETC.
v.
"(
MIS SHANTIKUNJ INVESTMENT PVT. LTD.
FEBRUARY 28, 2006
B
[B.N. AGRAWAL AND A.K. MATHUR, JJ.]
Chandigarh Lease--Hold of Sites and Buildings Act, 1973; Sections
2(b), 7, 8 and 8-A-Chandigarh Lease-Hold of Sites and Buildings Rules,
... •
1973; Rules 3(2), II, 12 and 13--/ndian Contract Act, 1872; Section 87c Specific Relief Act, 1963; Section 2(a)-Transfer of Property Act, I 882; Sections
/05 and 108-Al/otment of plots by State to allottees on payment of initial
premium with a conditicn to pay remaining amount in instalments-Allottees
refased to pay instalment amounts contending that the State has not provided
amenities under the Act-State initiated steps to levy interest, penalty and
D resumption of plots for non-payment of instalments and ground rent-Writ
Petitions by allottees before High Court-High Court holding contrary views
in different Writ Petitions-Whether provision of basic amenities by the State
is a condition precedent to demand payment of instalment amount and ground
>
rent from the allottees-Held, provision of basic amenities is not a condition
precedent for payment of instalment amounts and ground rent under the Act
E and Rules and under the terms and conditions of auction and lease-Al/ottees
are bound to pay instalment amounts being part of the contract-Matters
remitted back to High Court for fr•~sh disposal on the facts of each case.
Allottees were allotted residential and commercial sites on lease by
F
State on payment of premium. As per the terms and conditions of the
lease, the remaining amount would be required to be paid by the allottees
to the State in instalments. The State demanded payment of interest and
y •
penalty from the allottees for non-payment or short/delayed payment of
instalments and ground rent. The allottees filed Writ Petitions before
High Court challenging the arbitrary demand of payment and resumption
G and forfeiture of allotment of the sites by the State contending that the
State cannot demand the payment on the ground that basic amenities for
use and occupation of the sites have not been provided by the State. One
Division Bench of the High Court allowed the writ petitions of the allottees
~ ..
holding that provision of basic amenities is a condition precedent to the
H
768
MUNI. CORPN. CHANDIGARH v. SHANTIKUNJ INVEST. rvr. LTD.
7 69
payment of instalment and ground rent. Another Division Bench of the A
High Court held a contrary view holding that provision of basic amenities
is not a condition precedent. Hence the appeals by the State and the
allottees.
The allottees contended that the word 'amenities' under section
2(b) of the Chandigarh Lease-Hold of Sites and Buildings Act, 1973 should B
be given an extended meaning; that Rule 12(2) of the Chandigarh LeaseHold of Sites and Buildings Rules, 1973 should be interpreted to mean
that the State should provide basic amenities within the agreed period of
payment of instalments by the allottees; that the expression 'enjoy' under
Rule 3(2) of the Rules would become redundant if all the amenities C
provided under section 2(b) of the Act were not provided first by the
State; that the State has failed to perform its promise under section 67 of
the Indian Contract Act, 1872; that under Section 2(a) of the Specific
Relief Act, 1963, when a property is leased out, it presupposes that the
amenities should be provided on payment of premium; that under sections
105 and 108 of the Transfer of Property Act, 1882, the rights and liabilities D
of lessor and lessee are co-terminus; and that the provisions of a Statute
should be interpre~ed in such a manner that it advances the cause of the
~
public.
The State contended that the 'amenities' under section 2(b) of the
Act, 1973 cannot be given an extended meaning; that providing amenities E
was never a condition precedent and the necessary amenities had already
been provided; and that it is not running away from the legal obligation
in providing remaining amenities.
Disposing of the ·appeals, the Court
HELD: 1.1. On a plain reading of the definition "amenity" under F
section 2(b) of the Chandigarh Lease-Hold of Sites and Buildings Act,
1973 read with Rules 11(2) and 12 of the relevant Rules, it cannot be
construed to mean that the allottees can contend that they are not under
any obligation to pay instalment, interest and penalty, if any, under the
Act and the Rules since all the amenities were not provided by the State. G
It cannot be accepted to lay down a sweepi!'g proposition that if all the
facilities or amenities are not provided, then the allottees need not have
to pay the lease amount, interest and penalty. (783-G-H; 784-A-B)
1.2. The word 'enjoy' stated in the definition of "premium" under
Rule 3(2) of the Rules does not mean that the allottees cannot enjoy the H
770
SUPREME COURT REPORTS.
[2006] 2 S.C.R.
A immovable property without the amenities being provided. It means that
the allottees have a right to use the' immovable property which has been
leased out to them on payment of premium. This is only the price to
enjoy the property. Otherwise, walking over to the property will mean a
trespass. This is only a permissive possession. Promise by the State that
the basic amenities will be provided in due course of time cannot be
B made a condition precedent. This ha.s never been a condition of the auction
or of the lease. An allottee is under an obligation to pay the amount as
per the condition of lease and he cannot get out of it on the ground that
the basic amenities have not been provided for enjoying the allotted land.
This construction is not borne out from the scheme of the Act and the
C Rules. The term 'amenity' in the 1:ontext of real estate is to mean the
facilities as provided under Section 2(b) of the Act but it can never be
treated to mean that this is a condition precedent. It is for the better use
of the allotted piece of land but that does not mean that it should be
provided first as a condition precedent. It is a statutory obligation of the
State to provide amenities but not a condition precedent.
D
(784-C-E; F-G; 785-A-B; D-H(
Sector-6, Bahadurgarh Plot Holders' Association (Regd) and Ors. v.
State of Haryana and Anr., (1996) 1 SCC 485, relied on.
Kumari Shrilekha Vidyarthi and Ors. v. State of UP. and Ors., (1991)
E 1 SCC 212; Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai
and Anr., [2004) 3 SCC 214; Commissioner of Income Tax v. Sun Engineering
Works (P) Ltd., [1992) 4 SCC 363; Divisional Controller, KSRTC v. Mahadeva
Shetty and Anr., (2003) 8 SCC 266; (2004) 6 SCC 186; K.P. Varghese v.
Income Tax Officer, Ernakulam and Anr., (1981) 4 SCC 173; State of Haryana
F and Ors. v. Bhajan Lal and Ors., (1992) Supp. 1 SCC 335; C.B. Gautam v.
Union of India, (1993) 1 SCC 78; Megh Singh v. State of Punjab, (2003) 8
SCC 666; Collector of Central Excise, Calcutta v. Alnoori Tobacco Products
and Anr., (2004) 6 SCC 186, referred! to.
Advanced Law Lexico11 (3rd Edition, 2005); Webster's Dictionary
G referred to.
1.3. Section 67 of the Indian Contract Act, 1872 has no application
•
as there was no specific promise on the part of the State that providing of
...._ •
the amenities shall be a condition precedent. Section 2(a) of the Specific
Relief Act, 1963 also has no application as there was not an obligation on
H the part of the State to provide the amenities before handing over of the
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MUNL CORPN. CHANDIGARH"· SHANTIKUNJ INVEST. PVT.LTD.
771
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possession ()f the allotted plots. Therefore, there is no question of any A
obligation being enforceable by any mandamus as there is no such
obligation as per the terms and conditions of the lease or by the Act or
the Rules. Similarly sections 105 and 108 of the Transfer of Property
Act, 1882 also have no application as there is no condition in the lease
deed or any obligation of the lessor in the lease deed that they will not
charge interest on the instalments· before providing the amenities.
B
1787-C-G)
•
>«
1.4. A statute should be interpreted in the manner which advance
... y
the cause of the public. But when the issue comes where there is a sta~utory
obligation, then certainly this Court will not hesitate to do so. But in the C
absence of such obligation, it is not correct to lay down that this was a
condition. precedent and allow the allottees to waive their obligation to
pay the instalments with interest (788-A-B].
1.5. The appeals are remitted back to the High Court for a very
limited purpose to see that in cases where facilities like kutcha road, D
drainage, drinking water, sewerage, street lighting have not been provided,
then the High Court may grant the allottees some proportionate relief in .
the matter of payment of penalty under Rule 12(3) and delay in payment
of equated instalment or ground rent or part thereof under Rule 12(3A)
of the Rules only. Payment of instalment is a part of the contract and
therefore the allottees are under obligation to pay the same. Payment of E
penalty and penal interest shall depend on facts of each case which has to
be examined by the High Court. (790-G; 791-A-C]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1342 of2006.
From the Judgment and Final Order dated 2.2.200 l of the Punjab and F
Haryana High Court in C.W.P. No. 959/1999.
WITH
Civil Appeal Nos. 1343, 1344, 1345, 1346, 1347, 1348, 1349, 1350,
1351, 1352, 1353, 1354, 1355, 1356, 1357, 1358, 1359 and 1360 of 2006. G
A. Sharan, ASG, Amicus Curiae (N.P.), Ranjit Kumar, M.L. Vanna,
Ms. Kamini Jaiswal, Ms. Shomila Bakshi, Ms. Sunita Diwedi, Ms. Rani, S.K.
Jain, Vikas Jain, M.C. Dhingra, Ms. Naresh Bakshi, Pradeep Misra, Neeraj
Kumar Jain, Aditya Kumar Chaudhary, Bharat Singh, Sanjay Singh, U.S.
Prasad, Nidhesh Gupta, Ms. Nidhi Gupta, Vinod Shukla, Ms. S. Janani, A.P. H
.,
772
SUPREME COCRT REPORTS
[2006J 2 S.C.R.
A Bhandari, S.C. Patel, Ms. Meera Mathur, Maninder Singh, Ms. Pratibha M .
Singh, Sunil Fernandes, Saurabh Mishra, Satya Mitra, Daljit Singh Ahluwalia,
Ms. Neelam Kalsi, Vimal Chandra S. Dave, P.N. Puri, A.K. Aggarwal,
Sudershan Goel, B.S. Bedi, Dinesh Verma, J.P. Tripathi, A.P. Mohanty, K.V.
Mohan, K. Datta and R.K. Choudhary for the appearing parties.
B
The Judgment of the Court was delivered by
c
A. K. MATHUR, J. Leaw granted.
All these petitions involve common question of law, therefore, these
are taken up together for disposal by the common judgment.
In all these petitions, there are two class of petitions, one filed by the
private parties/individuals against the Division Bench judgment of the Punjab
& Haryana High Court whereby the Division Bench has not given any relief
following its judgment passed in CWP No.13695 of 200 I dated 18.2,2002
D [Mis. D.L.G. Builders Private Limited v. The Advisor to the Administrator,
Chandigarh Administration & Ors.,]. The relevant portion of that judgment
reads as under:
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H
"In our considered view, the allottee is bound to pay the premium
and other charges in accordance with the conditions of allotment. If
the judgment of Mis. Shanti Kunj Investments Pvt. ltd (supra) is
read as laying down a proposition that the allottee is not obliged to
pay the balance of premium even after raising construction of the
building and occupying it on the pretext that beautification of the site
has not been done or land-scaping has not been provided or payment
of the tiles has not been done, extremely anomalous consequences
would follow inasmuch as, the allottee would construct building and
utilize the same by renting out or otherwise and hereby reap huge
benefits, but would not pay a single penny towards balance of premium
and ground rent etc. Therefore, while examining the complaint of the
allottee about the lack of amenities, what the Court is required to
consider is whether the basic amenities, electricity, approach road,
sewerage and drainage have been provided in the area so as to facilitate
construction of the building within the specified time. If such amenities
have been provided, the Court will not interdict in the matter and
facilitate withholding of the balance of premium, ground rent etc.
Rather, it would insist that all the dues of public money are paid by
the allottee in accordance with the relevant rules/ regulations and
.. .,,.
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MUNL CORPN. CHANDIGARH v. SHANTIKUNJ INVEST. PVT.LTD. [AK. MATHUR, J.] 773
conditions of allotment."
A
Another class of cases in which the Municipal Corporation of Chandigarh
and the Chandigarh Administration have filed the special leave petitions
against the order passed by the Division Bench of the Punjab & Haryana
High Court against the judgment dated 2.2.2002 passed in Mis. Shantikunj
Investment Pvt. Ltd. and batch. Relevant portion of the judgment reads as B
under :
"They having failed to provide the basic amenities, the order of
resumption and forfeiture cannot be sustained. The impugned orders
are, consequently set aside. The respondents are directed to provide
the amenities in accordance with law. The needful shall be done C
within .three months. No interest shall be chargeable from the
petitioners if they make the entire outstanding· amount within three
months from the date of the provision of the amenities."
It would not be proper to refer to all individual cases because various
orders have been passed by the High Court from time to time but largely, the· D
cases have been divided into two class of cases i.e. one governed by Mis.
'"
Shantikunj Investment Pvt. Ltd. and the other governed by M/s. D.L.G.
Builders Private Limited. We are only deciding the question in principle and
leaving the rest to be decided by the High Court.
In all these petitions, the common question is whether grant of the
amenities is a condition precedent or not. All the plots in question were
allotted by the Chandigarh Administration as well as the Municipal Corporation
E
of Chandigarh on certain terms and conditions of the sale of residential and
cQmmercial sites & buildings by auction on lease for 99 years and certain
terms and conditions were laid down therein. But the challenge in these F
various petitions filed before the Punjab & Haryana High Court was that the
basic amenities were not provided and, therefore, the Chandigarh
Administration and the Municipal Corporation of Chandigarh were not entitled
to charge interest @ 18% or 10%, as the case may be, on the installment as
well as non-payment of installment and non-payment of the ground rents. G
Likewise, they cannot charge the penalty for delayed payment at the rate of
l 0% and at the rate of 24 % interest on the amount falling short of equated
instalment or part thereof and likewise on the ground rents.
So far as the Division Bench of Punjab & Haryana High Cm1rt in the
case of Shanti Kunj Investment (supra) held that providing of amenities is a H
A
B
c
D
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774
SUPREME COURT REPORTS
(2006 J 2 S.C.R.
condition precedent to the payment of the interest and penalty. As against
this, two Division Bench in the case of G.S. Khurana v. Chandigarh
Administration by order dated 18.2.2002 and in the case of DU.J Builders
Pvt. Ltd. v. The Advisor to the Chandigarh Administration have taken a
different view in the matter. In Shanti Kunj, the Division Bench held that
grant of amenities is a condition precedent whereas, in the case of DLG
Builders and G .S. Khurana, it took a contrary view to the effect that it is not
a condition precedent. This apparent contrary view has given rise to all the
litigation before this Court. In order to resolve the inconsistent view of the
two Division Bench, we shall <lea.I with the issue involved in the matter in
a great detail hereinafter.
In order to appreciate the controversy involved in the matter, we may
refer to few bare facts in the case of Municipal Corporation, Chandigarh &
Ors. v. Mis. Shanti Kunj Investment Pvt. Ltd. in SLP(Civil) No. 12794/200 I.
Seven petitioners in the aforesaid petition were the allottees of different
commercial sites. The grievance was that the Chandigarh Administration has
failed to provide basic amenities/facilities for use and occupation of the sites
sold to them. It is alleged that they are guilty of mal-administration. They
have arbitrarily charged the ground rent, interest and penal interest and they
are resorting to the resumption of the sites for non-payment thereof. Therefore,
all these petitioners filed joint petitions in the. High Court for redressal of
their grievances.
On February 12, 1989 the Chandigarh Administration auctioned a
godown site No. 290, Sector 26, Chandigarh. The petitioner, along with two
brothers gave a bid for a premium of Rs. 22, I 0,000/-. It was accepted and
they deposited 25% of the bid money, viz. Rs. 5,52,500/-. The letter of
p allotment was issued on March 16, 1989. The site was given for 99 years on
lease-hold basis. As per the terms of allotment, the petitioner had to pay the
amount along with interest @ 7% in three equal yearly installments of Rs.
6,31,590/-, This payment had to commence from the date of auction. Besides
that, the allottee had also to pay an annual ground rent @ 55,2501- for the
G
first 33 years. The petitioner commenced the construction, but he found that
there were high voltage electric wires passing over the site. The sewerage
system had not been laid on the site. There were a large number of Jhuggies
adjacent to the place. The petitioner submitted representation to the Estate
Officer with a request to remove the unauthorized Jhuggies and to take
necessary steps for providing the amenities. But no amenities such as roads,
H water supply, landscaping etc. were provided. It was alleged that since the
y
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MUNI. CORPN. CHANDIGARH v. SHANT!KUNJ INVEST. PVT.LTD. [A.K. MATHUR, J.) 77 5
"f
petitioner had paid the entire premium as provided under the Act and Rules, A
therefore, no interest or ground rent can be charged till all the amenities, as
required under the Act and Rules, are provided. Hence, with this grievance,
the petitioner approached the High Court. The High Court examined all the
provisions and came to the conclusion that Chandigarh Administration cannot
charge interest @ 18%. Though, initially the interest was charged as 7%, but B
ultimately by notification it was increased to I 0%. It was held by the Division
Bench that there was no notification for charging the interest @ 18% and it
was conceded before us that so far as this part of the order is concerned, the
•
7'
Administration does not challenge and the petitioner will be charged @ I 0% .
The other aspect was also examined by the Division Bench and they c
gave an extended meaning to the definition as provided under Section 2(b)
'amenities' of the Capital of Punjab (Development and Regulation) Act, 1952
(hereinafter referred to as the 'Act'). As against this, another Division Bench
in the case of DLG Builders (supra) took a contrary view and held that no
extended meaning of 'amenities' as defined in Section 2(b) of the Act can be
given that providing of facilities is a condition precedent for charging of the D
interest.
.,.
In order to appreciate the whole controversy involved in these cases, it
will be useful to refer to the necessary provisions of the Act and Rules
bearing on the subject. The allotment of the site in question was given under E
the Act and the Rules framed thereunder known as 'Chandigarh Lease-Hold
of Sites and Buildings Rules, 1973. These provisions are applicable to both
sets of cases i.e. allotment of commercial sites as well as residential, made
by the Chandigarh Administration and Chandigarh Municipal Corporation.
Section 2 of the Act deals with definition. Section 2(b) defines 'amenity' as
under:
F
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"2(b ). 'amenity' includes roads, water-supply, street lighting, drainage,
sewerage, public building, horticulture, landscaping and any other
public utility service provided at Chandigarh."
Section 2(t) defines 'erect a building' which reads as under:
G
"2(t). ' erect a building' has the same meaning as 'erect or re-erect
...
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any building' in the Punjab Municipal Act, 1911 (Punjab Act III of
1911)."
Section 2(i) defines 'prescribed' which means prescribed by rules made H
776
SUPREME COURT REPORTS
(2006) 2 S.C.R.
A under this Act.
B
Section 20) defines 'site· which means any land which is transferred by
the Central Government under Section 3.
Section 2(k) defines 'transforee', which reads as under:
"2(k). 'transferee' means a person (including a firm or other body of
individuals, whether incorporated or not) to whom a site or building
is transferred in any manner whatsoever, under this Act and includes
his successors and assigns."
C
Section 5 of the Act provides a bar to erection of buildings in
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contravention of buildings rules.
Section 6 lays down power to require proper maintenance of site or
building which reads as under:
"6. Power to require proper maintenance of site or building. If it
appears to the Chief Adm1inistrator that the condition or use of any
site or building is prejudicially affecting th.: proper planning of, or
the amenities in, any part of Chandigarh or the interest of the general
public there, he may serve on the transferee or occupier of that site
or building a notice requiring him to take such steps and within such
period as may be specified in the notice and thereafter to maintain it
in such a manner as may be specified therein."
Section 7 provides for Levy of fee or tax for amenities which reads as
under:
"7. Levy of fee or tax for amenities. ( 1) For the purposes of providing
maintaining or continuing any amenity at Chandigarh the [Central
Government] may levy such fees or taxes as it may consider necessary
which shall be in addition to any fee or tax for the time being leviable
under any other law in resp1~ct of any site or building on the transferee
or occupier thereof."
Section 8 provides for imposition of penalty and mode of recovery of
arrears. Section 8-A provides for resumption and forfeiture for breach of
conditions of transfer which reads as under:
"8-A. Resumption and forfeiture for breach of conditions of transfer.
(I) If any transferee has failed to pay the consideration money or any
'"( "
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MUNI. CORPN.CHANDIGARHv. SHANTIKUNJINVEST. PVT. LTD. [AK MATHUR,J.] 777
instalment thereof on account of the sale of any site or building or A
both, under section 3 or has committed a breach of any other conditions
of such sale, the Estate Officer may, by notice in writing, call upon
the transferee to show cause why an order of resumption of the site
or building, or both, as the case may be, and forfeiture of the whole
or any part of the money, if any, paid in respect thereof which in no
case shall exceed ten per cent of the total amount of the consideration B
money, interest and other dues payable in respect of the sale or the
site or building, or both should not be made.
(2) After considering the cause, if any, shown by the transferee in
pursuance of a notice under sub-section ( 1) and any evidence he may C
produce in support of the same and after giving him a reasonable
opportunity of being heard in the matter, the Estate Officer may, for
reasons to be recorded in writing, make an order resuming the site or
building or both, as the case may be, so sold and directing the forfeiture
as provided in sub-section (I), of the whole or any part of the money
paid in respect of such sale."
The relevant rules which have been framed in exercise of this Act
under power conferred by Sections 3 and 22 by the Act of 1952 are kno~n
as 'Chandigarh Lease-Hold of Sites and Buildings Rules, 1973' (hereinafter
referred to as the 'Rules').
Rule 3(2) defines 'premium ' which reads as under:
"3(2). 'Premium' means the price paid or promised for the transfer of
a right to enjoy immovable property under these rules"
Some of the relevant Rules are quoted as under:
"4. The Chandigarh Administration may demise sites and buildings at
Chandigarh on lease for 99 years. Such leases may be given by
allotment or by auction in accordance with these rules.
D
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5. For the purpose of proper planning and development and for the G
implementation of any scheme framed by the Chandigarh
Administration, the Chief Administrator may reserve sites/buildings
for groups of individuals or for persons practicing any profession or
carrying on any occupation, trade or business, or for the
implementation of any scheme framed by the Chandigarh
Administration.
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6. Commencement and period of lease. The lease shall commence
from the date of allotment or auction as the case may be, and shall
be for a period of 99 years. After the expiry of said period of 99 years
the lease may be renewed for such further period and on such terms
and conditions as the Govemment may decide.
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8. Lease by allotment, Procedure for. (I) In case of allotment of site
of building the intending lessee shall make an application to the
Estate Officer in Form 'A'.
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(2) No application under sub-rule (I) shall be valid unless it is
accompanied by I 0 per cent of the premium as earnest money in the
prescribed mode of payment.
(3) When I 0 per cent of the premium has been so tendered the Estate
Officer shall, subject to such directions as may be issued by the Chief
Administration in this behalf, allot a site of the size applied for or a
building of which particulars are given in the application and shall
intimate, by registered post the number, sector, approximate area,
premium and the rent of the site or building allotted to the applicant.
( 4) The applicant shall, unless he refuses to accept the allotment
within 30 days of the date of the receipt of the allotment order,
deposit within that period and in the prescribed mode of payment,
further I 5 per cent of the premium. The remaining 75 per cent of the
premium shall be paid as provided in rule 12.
(5) If the applicant refuses to accept the allotment within said period
of 3 0 days, he will be entitkd to the refund of the amount paid by
him. The refusal shall be communicated to the Estate Officer by a
registered letter (acknowledgement due). The refund shall be made
by means of a cheque payable at the State Bank of India at Chandigarh
and the applicant shall bear the collection charges for the same.
(6) If the applicant fails to communicate his refusal to accept the
allotment within 30 days and also fails to deposit I 5 per cent of the
premium under sub-rule ( 4) the Estate Officer may forfeit the whole
or part of the earnest money.
9. Lease by auction, Procedure for.~.[n case of auction at least 25
per cent of the bid accepted by the Auctioning Officer shall be paid
on the spot by the intending lessee in the prescribed mode of payment
(
MUNI. CORPN. CHANDIGARH v. SHANTIKUNJ INVEST. PVT LTD. [A.K. MATHUR, l] 779
in accordance with Rule 12.
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Provided that the Estate Officer .may, in his absolute discretion,
allow the successful bidder to deposit in the prescribed mode or
payment not less than I 0 per cent of the bid on the condition that the
difference between the amount deposited and 25 per cent of the bid
shall be deposited in the same manner within 30 days of auction.
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I 0. Delive0· of Possession. Actual possession of the site/building
shall be delivered to the lessee on payment of 25 per cent of the
premium in accordance with rule 8 or rule 9 as the case may be.
Provided that no ground rent payable under rule 13 and interest C
on the instalments of premium payable under sub-rule (2) of the Rule
12 shall be paid by the lessee till the actua: and physical possession
of the site/building is delivered or offered to be delivered to him,
whichever is earlier.
11. Premium. (I) In case of allotment, the premium shall be such' D
amount as may be determined by Chandigarh Administration.
(2)' In case of auction, the premium shall be the bid accepted by the
Estate Officer, as a result of bidding in open auction.
12. Payment of premium and consequences of non-payment or late
payment. (1) In addition to payment of 25 per cent premium under E
rule 8 or 9 as the case may be, the remaining 75 per cent premium
may be paid in lump sum within 30 days from the date of allotment/
auction without any interest.
(2) If payment is not made in accordance with sub-rule (1) of this F
rule, the balance of the 75 per cent premium shall be paid in three
annual equated instalments or more as the Chief Administrator may
in exceptional circumstances of a case fix within prior approval of
the Chief Commissioner along with interest at the rate of I 0 per cent
per annum or at such higher rate of interest as may be fixed by the
Chief Administrator by a notification in the official Gazette before G
the commencement of the lease. The first instalment shall become
payable after one year from the date of allotment/auction.
Provided that in the case of allotment of site or building of Small
Scale Industries as defined by Chandigarh Administration from time
to time in the Industrial area, the balance of the 7 5 per cent of the H
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SUPREME COURT REPORTS
[2006] 2 S.C.R.
premium may be paid in ten annual equated instalments or such other
number of annual equated instalments as may from time to time be
fixed by the Chief Administrator along with interest at the rate of JO
per cent per annum or such higher rate of interest as may be fixed by
the Chief Administrator by a notification before the commencement
of the lease.
(3) In case any instalment is not paid by the lessee by the date on
which it is payable, a notice may be served on the lessee calling upon
him to pay the instalment within a period of 3 months together with
a penalty which may extend upto I 0 per cent of the amount due. If
the payment is not made within the said period, the Estate Officer
may cancel the lease and or forfeit the whole or any part of the
money if paid in respect thereof which, in no case, shall exceed I 0
per cent of the total amount of the consideration money, interest and
other dues payable in respect of the lease:
Provided that forfeiture will not be made in addition to penalty.
Provided further that no order of cancellation or forfeiture shall
be made without giving the lessee reasonable opportunity of being
heard. If the order of cancellation is for non-payment of penalty, the
lessee may show cause why the penalty should not have been levied.
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(3-A) In case any eqooted instalment or ground rent or part thereof
is not paid by the lessee by the date on which it became payable he
shall be liable to pay in respect of that instalment or ground rent or
part thereof as the case may be, interest calculated at the rate of
twenty four per cent per annum from the date on which the instalment
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or ground rent became payable till such date it is actually paid.
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( 4) Each instalment shall be remitted to the Estate Officer by the
prescribed mode of payment Every such remittance shall be
accompanied by a letter showing full particulars of the site or building
to which the payment pertains or a statement giving reference to the
number and date of the allotment referred to in rule 8. In the absence
of these particulars, the amount remitted shall be deemed to have
been received only on the date when the remitter supplies correct and
complete information.
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13. Rent and consequences of non-payment. In addition to the
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premium, whether in respect of site or building, the lessee shall
;
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MUNI. CORPN. CHANDIGARH v. SHANTIKUNJ INVEST. PVT. LTD. [AK MATHUR, J.] 78 J
pay rent as under:-
(i) Annual rent shall be 2-1/2 per cent of the premium for the
first 33 years which may be enhanced by the Chandigarh
Administration to 3-3/4 per cent of the premium for the next 33
years and to 5 per cent of the premium for the remaining period
A
of the lease.
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(ii) Rent shall be payable annually on the due date without any
demand from the Estate Officer,
Provided that the Estate Officer may for good and sufficient
reasons extend the time for payment of rent upto six months on
the whole on further payment of 6 per cent per annum interest
from the due date upto the date of actual payment.
(iii) If rent is not paid by the due date, the lessee shall be liable
to pay a penalty not exceeding 100 per cent of the amount due
which may be imposed and recovered in the manner laid down
·in section 8 of the Capital of Punjab (Development and
Regulation) Act, 1952, as amended by Act No. 17 of 1.973 .
14. Execution of lease deed. (I) After payment of 25 per cent premium
the lessee shall execute a lease deed in Form B, B-1, B-11, or C, as
the case may be, in such manner as may be directed by the Estate
Officer within six months of the date of allotmenthfuction or within
such further period as the Estate Officer may, for good and sufficient
reasons, allow.
(2) If the lessee fails to execute a lease deed in accordance with subrule (I) of this rule, the State Officer may cancel the lease and forfeit
a sum up to 25 per cent .of the premium.
Provided that before taking action under sub-rule (2) of this rule,
the Estate Officer shall afford a reasonable opportunity to the lessee
of being heard."
In this background of the Act and the Rules, the question before us is
whether the grant of amenities is a condition precedent or not. Learned counsel
for the respondents contended that Rule 12(2) of the Rules should be
interpreted in the sense that when staggering instalment has been paid, then
the allottee is required to deposit the balance 7 5 per cent of the premium in
three annual equated instalments and the first instalment falling due after one
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SUPREME COURT REPORTS
(2006] 2 S.C.R.
A year from the date of allotment, it should be construed that the authorities
were supposed to provide all the necessary amenities in the meantime. In that
connection, learned counsel has submitted that it was legitimate expectation
of the allottee that within one year all the basic amenities shall be provided.
It was further submitted by learned counsel that Rule 12(2) of the Rules
B should be interpreted to mean that there is implied covenant that the authorities
will provide all the amenities within one year. In this connection, learned
counsel referred to a decision of this Court in the case of Kumari Shrilekha
Vidyarthi and Ors. v. State of U. P. & Ors .. reported in ( 199 I] I SCC 212 and
in the case of Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai
& Anr., reported in [2004] 3 SCC 214. It was also contended thatthe authorities
C should not charge compound interest. It was also contended that the word
"amenities" should be given extended meaning and "amenities" as defined in
Section 2(b) read with Rule 11, that the amenities should be provided first
otherwise the expression " enjoy" appe:aring in Rule 3(2) will be redundant.
In this connection. learned counsel has referred to Section 67 of the Indian
Contract Act, 1872 that promisee has failed to perfonn its promise and further
D submitted that by virtue of Section 2(a) of the Specific Relief Act, 1963;
when the property had been leased out it presupposes that the amenities
should be provided when the premium is paid. In this connection, learned
counsel for the respondents has invited our attention to Sections I 05 and l 08
of the Transfer of Property Act, 1882 with specific reference to rights and
E liabilities of lessor and lessee. It was contended that both should be cotenninus. In this connection, the following decisions of this Court were cited
by learned counsel.
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I.
[1992] 4 SCC 363 [Commissioner of Income Tax v. Sun
Engineering Works (P) ltd]
2.
[2003] 7 SCC 197 [Divisional Controller, KSRTC v. Mahadeva
She tty & Anr.,]
3.
[2003] 8 SCC 666 [ Megh Singh v. State of Punjab]
4.
[2004] 6 SCC 186 [Collector of Central Excise, Calcutta v.
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Alnoori Tobacco Products & Anr .. ]
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It was also contended that the statute should be interpreted in the manner
which advanced the cause of the public. ln this connection, the following .
decisions of this Court were cited by learned counsel for the respondents.
I.
[1981] 4 SCC 173 [ KP.Varghese v. Income Tax Officer,
y
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MUNI. CORPN. CHANDIGARH v. SHANT!KUNJ INVEST. PVT. LTD. [A.K. MA THUR, J.] 783
Ernakulam & Anr.,]
2.
[1992] Supp. 1 SCC 335 [State of Haryana & Ors. v. Bhajan
Lal & Ors.,]
3.
[1993] 1 SCC 78 [C.B. Gautam v. Union of India & Ors.,]
A
As against this learned' counsel appearing for the appellant submitted B
that in fact the expression, "amenities" cannot be given extended meaning
and the consistent case of the Administration was that necessary amenities
had already been provided and in some of the plots, the buildings had been
constructed. In some cases, the premises had been let out. Therefore, it was
the case of the appellant throughout before the High Court as well as before
this Court that providing amenities was never a condition precedent and C
whatever necessary facilities/ amenities which were required in the matter
had already been provided. Learned counsel for the Chandigarh Administration
and for the Municipal Corporation submitted that the Corporation/
Administration are not running away from their legal obligation to provide
necessary facilities, which have already been provided and whatever remains D
to be provided, shall be provided. It was contended that tar road could not
be constructed because on most of the places construction was in progress
and the construction materials were lying on the road. Therefore, it was not
possible to proceed with the construction of tar road. However, the
Administration is under obligation to provide necessary facilities as per the
provisions of the Act and the Rules. It was also submitted that in the case of E
M/s.DLG Builders, the High Court has already dismissed large number of
writ petitions holding that providing of amenities is not a condition precedent.
In this connection, learned counsel for the appellant-Administration has invited
our attention to a decision of this Court in the case of Sector-6, Bahadurgarh
Plot Holders' Association (Regd.) & Ors. v. State of Haryana & Anr., reported F
,
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in [ 1996] I SCC 485 wherein a three Judge Bench of this Court in no
uncertain terms has held that providing of the amenities is not a condition
precedent. Therefore, it was contended by learned counsel for the appellantAdministration that it cannot be constructed to be a condition precedent in
the matter.
We have bestowed our best of the attention to the provisions of the Act
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and the Rules. On a plain reading of the definition "amenities" read with
Rule 11(2) and Rule 12, it cannot be construed to mean that the allottees
could take upon themselves not to pay the lease amount and take recourse to
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say that since all the facilities were not provided, therefore, they are not H
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(2006) 2 S.C.R.
A under any obligation to pay the instalment, interest and penalty, if any, as
provided under the Act and the Rules. It is not possible to accept a sweeping
proposition that if all the facilities or amenities are not provided, then the
allottees/ lessees can take upon themselves not to pay the lease amount,
interest and penalty would be going too far. It has never been the condition
B precedent. It is true that in order to fully enjoy the allotment, proper linkage
is necessary. But to say that this is a condition precedent, that is not the
correct approach in the matter. "Amenity" has been defined under Section
2(b) of the Act which includes roads, water-supply, street lighting, drainage,
sewerage, public building, horticulture, landscaping and any other public
"
utility service provided at Chandigairh. That is a statutory obligation but it is
C not a condition precedent as contended by learned counsel for the respondents.
It is true the word, "enjoy" appearing in the definition of the word "premium"
in Rule 3(2) of the Rules, means the price paid or promised for the transfer
of a right to enjoy immovable property under the Rules.