# PREMJI BHAI PARMAR & OTHERS ETC v. DELHI DEVELOPMENT AUTHORITY & OTHERS

- **Citation:** [1980] 2 S.C.R. 704
- **Court:** Supreme Court of India
- **Decided:** 1979-12-21
- **Bench:** V. R. Krishna Iyer, D. A. Desai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/premji-bhai-parmar-others-etc-v-delhi-development-authority-others-7925
- **Pages:** 20

## Headnote

Constitution of India 1950 Artic.'es 14 & 32 & Delhi De~'elop1nent Autlwrity
Act 1957-Authority cunstr11cting flats and selling thc111 to public-Levy and
collection of surcharge as, price of fiat in addition to the construction costAuthority to work on 'no p1ofit no loss' basis-Such surcharge-Whether illegal
-Dijcritninatory.
The Delhi Development .-\uthority Act was enacted to provide for the development of IJelhi through ?\faster and Zonal Plans. 'the authority un4ertakes
constructions of d'welling units for peopl'e belonging to different income groups
styled as Middle Income, Lovv Income, Jaoa1.a and Ccmn1unity Personnel Service.
In 1971, the authority '.:Ornmenced registration of intending applicants desirous
of having dwelling units in d:ffere;nt Incom'e- Groups.
Some of the petitioners
got themselves registered with the authority in accordance with the terms and
condition~ laid down by it, for allotment of flats in deposits as required hy the
terms and cond.itions for ~tIG Scheme at Lawrence Road, Prasad Na_Pdr and
Rajouri Garden .and made the initial deposit.
Th~ number of available flats being less in each scheme compared to the number of applicants registered, lots
Were drawn and the petitioners were i1;1formcd that each of them should deposit
the amourrt mentioned in the letter of allotment.
The Petitioners
paid
the
amount a3 intimated and Consequently a flat was aUotted to each of them and
they entered into possession.
Jn their \Vrit petitions under Article 32, the petitioners assailed the levy and
collection of surcharge in zddition to the cost price of the flats.
It was contended on th'eir behalf that; (i) The treatment meted by the Authority is discriminatory inasmuch as no surch:_:irge was levied on flats in Ml(J schemes constructed and allotted plior to November. 1976 and after January, 1977; (ii) As
the authority f0r1nulates income-wise, area-wise schemes for constructing fiats,
there 8hould be only income-wise classification wholly ignoring area and time
factor for classification; (iii) Levying of surcharge runs counter to the object
for which th'e authority was set-up namely to make available housing accomn1odation on "no profit no loss" basis; (iv) Surcharge is arbitrary inasmuch as
how the surcharge i;;; worked out in each case does not conform to any rational,
t&ngible, sch::ntifi\.' or understandable formula; (v) The Vice-Chairrnan bad no
authority to levy surcharge and that even if he has authorised the same, it runs
ccuntcr to the principle of fixing disposal price incorporated in resolution No. 209
dated Nov'ember 26, 1974; (vi) Even if the Vice-Chairman had such power there
is nothing to show that he has exercised this power and given direction for adding
the surcharge to the disposal price and that therefore, the levy of surcharge is
unauthorised; and (vii) that the nuthority has mad'e a. huge profit by levy of
surcharge.
The respondents raised a preliminary objection that the petitions were not
maintainable under Article 32 of the Constitution inasmuch&<> the petitioners have
not come to lhe Court for enforcement of a fundamental right conferred upon.
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P. B. PARMAR V. DELHI DEVELOPMENT AUTHORITY
705
them under P&t Ill of the Constitution but that the petition'ers have invoked the
jurisdicion of the Court for the t'elief of reopening concluded contracts, and
that if the court accepts the contentions, the petitioners would deriv'e an unfair
ad'vantage ovt'r ethers who may not have applied for fiats because of the price
set out in the brochur'e· and if surcharge is excluded they may have applied for
!lats at a lov.:er price. The Court should not therefore entertain the petitions.
Dismissing the petitions,
HELD : I. 1\s the Court has heard the petitions on m<;;rits it is not inclined
to 1 eject then1 on the prdiminary objections. _It is undeniable that can1ouflage of
;\rt. 14 cannot conceal the re<1l purpose motivating the petitions, na1nely to get
back a part of the purchase price of flat

## Text

_Characters 0–39,978 of 57,692. This is a partial read: ask again with offset=39978 for what follows._

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704
PREMJI BHAI PARMAR & OTHERS ETC.
v.
DELHI DEVELOPMENT AUTHORITY & OTHERS
December 21, 1979
[V. R. KRISHNA IYER AND D. A. DESAI, JJ.]
Constitution of India 1950 Artic.'es 14 & 32 & Delhi De~'elop1nent Autlwrity
Act 1957-Authority cunstr11cting flats and selling thc111 to public-Levy and
collection of surcharge as, price of fiat in addition to the construction costAuthority to work on 'no p1ofit no loss' basis-Such surcharge-Whether illegal
-Dijcritninatory.
The Delhi Development .-\uthority Act was enacted to provide for the development of IJelhi through ?\faster and Zonal Plans. 'the authority un4ertakes
constructions of d'welling units for peopl'e belonging to different income groups
styled as Middle Income, Lovv Income, Jaoa1.a and Ccmn1unity Personnel Service.
In 1971, the authority '.:Ornmenced registration of intending applicants desirous
of having dwelling units in d:ffere;nt Incom'e- Groups.
Some of the petitioners
got themselves registered with the authority in accordance with the terms and
condition~ laid down by it, for allotment of flats in deposits as required hy the
terms and cond.itions for ~tIG Scheme at Lawrence Road, Prasad Na_Pdr and
Rajouri Garden .and made the initial deposit.
Th~ number of available flats being less in each scheme compared to the number of applicants registered, lots
Were drawn and the petitioners were i1;1formcd that each of them should deposit
the amourrt mentioned in the letter of allotment.
The Petitioners
paid
the
amount a3 intimated and Consequently a flat was aUotted to each of them and
they entered into possession.
Jn their \Vrit petitions under Article 32, the petitioners assailed the levy and
collection of surcharge in zddition to the cost price of the flats.
It was contended on th'eir behalf that; (i) The treatment meted by the Authority is discriminatory inasmuch as no surch:_:irge was levied on flats in Ml(J schemes constructed and allotted plior to November. 1976 and after January, 1977; (ii) As
the authority f0r1nulates income-wise, area-wise schemes for constructing fiats,
there 8hould be only income-wise classification wholly ignoring area and time
factor for classification; (iii) Levying of surcharge runs counter to the object
for which th'e authority was set-up namely to make available housing accomn1odation on "no profit no loss" basis; (iv) Surcharge is arbitrary inasmuch as
how the surcharge i;;; worked out in each case does not conform to any rational,
t&ngible, sch::ntifi\.' or understandable formula; (v) The Vice-Chairrnan bad no
authority to levy surcharge and that even if he has authorised the same, it runs
ccuntcr to the principle of fixing disposal price incorporated in resolution No. 209
dated Nov'ember 26, 1974; (vi) Even if the Vice-Chairman had such power there
is nothing to show that he has exercised this power and given direction for adding
the surcharge to the disposal price and that therefore, the levy of surcharge is
unauthorised; and (vii) that the nuthority has mad'e a. huge profit by levy of
surcharge.
The respondents raised a preliminary objection that the petitions were not
maintainable under Article 32 of the Constitution inasmuch&<> the petitioners have
not come to lhe Court for enforcement of a fundamental right conferred upon.
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P. B. PARMAR V. DELHI DEVELOPMENT AUTHORITY
705
them under P&t Ill of the Constitution but that the petition'ers have invoked the
jurisdicion of the Court for the t'elief of reopening concluded contracts, and
that if the court accepts the contentions, the petitioners would deriv'e an unfair
ad'vantage ovt'r ethers who may not have applied for fiats because of the price
set out in the brochur'e· and if surcharge is excluded they may have applied for
!lats at a lov.:er price. The Court should not therefore entertain the petitions.
Dismissing the petitions,
HELD : I. 1\s the Court has heard the petitions on m<;;rits it is not inclined
to 1 eject then1 on the prdiminary objections. _It is undeniable that can1ouflage of
;\rt. 14 cannot conceal the re<1l purpose motivating the petitions, na1nely to get
back a part of the purchase price of flats paid by the· petitioners with wide open
eyes after flat'\ have been St'curely obt<i.ined.
Petition to this Court under Art. 32
i~ not a proper rente<ly nor is the Supren1e Court a. proper forum for re-opening
concluded cJ:1tracts with a view to getting back a part cf the purchase price paid
after the benefit is iaktn. [112 l)-E]
I11 the instant case it is difiicult to appreciate ho\.V Art. 14 can be altractctl.
Cost price of a property offer'ed for SrJe is determined according to the volition
of the owr..er who h8'> constructed the property unless it is shown that he is. under
any statutor~' obligati:Jn to determine cost price according to certain statutory
fu1n1uJa.
The authority is under no obligation to fix price of diil'erent flats in
different schemes albeit in the s'1me income group at the same level or by any
particular statutory or binding formulrJ. Those who opt to take flats in a particular income-wise, ar'..::a-wise scheme in which all flats came up together as one
project, may forn1 a 'Class and any discrsillinatory treatn1ent in the same class may
attract Art. 14.
But to say that the Authority would be bound to oif'er flats
income-group-wise according to the same price formula is to expect the Authority
to ignore time, situation, location and other releva•nt factors which all enter the
price structure. [713 F, 715 A-F]
Radhakrishna Agarwal & Ors. v. State of Bi/1ar & Ors. [1977j 3 S.C.R. 249
at 255; Har Slwnkar & Ors. etc. etc. v. The Dy. Excise & Taxation Com1nr. &
Ors, [1975] 3 S.C.R. 254, referred to.
2. In price fixation cxt·cutivc has a wide discretion and is only answerable
provid'ed there is any statutory control over itS policy of price fixation and it is
not the function of the Court to sit in judgment over such mattero; of econon1ic
policy as must be necessarily left to the Government of the day to decide.
The
exi:erts alone can \<;Ork 011t the n1echanics of price determination, Court can cer·
tainly not be expected to decide without the assistance of the experts. [715 F-G]
Priig lee & Oil Mills and A11r. etc. v. Union of India, [19781 3 S.C.R. 293 at
330; Avindcr Singh v. State of Punjab [1979] 1 S.C.R. 845~ State of Gujarat &
another· Sln"i A111bicn ~.fills Lui .. Ahmedabad, etc., f1974] ~ S.C.R 760 at 782;
rrferrcd LO.
3. Price of land, building, material, labour charges and cost of transpcrt,
quality and availability of land, supervision and management charges are all
variable factors that eni·~r into price fix6.•tion.
Their cost varies time-wise, place"
wi~ and aYailabilitv-wisl'.
A.11 these uncertain factors cannot be overlooked for
ii e rnrpose of cla<;5ifirati<1n.
It i-: not possible therefore to hold that allottees of
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786
SUPREME COUU REPORTS
[1980] 2 S.C.R.
fiats in MlG sche1ne a~ any place and executed at any time will form one class
for the purpose of pricing policy.
The only valid basis for cla:>sification would
be income-wise, area-wise, time-wise, scherne-\vise, meaning 2.11 flats con5tructed
at or about the same time in same area in one project for particular income-group
vvill fo1m a class. nnd there is no discrimination a1nongst them. [716 G-H_. 717
A-B]
4. Pricing policy is ;:;n executive policy.
Jf the :\uthority \\:ls set up for
making available dweJling units at reason<>bie prices to person·;
belonging to
different groups it would not be precluded from devising its 'J\'.:n price formula
for different income-groups.
If in so doing it uniformally collects something
more than cost price from tho<;e· with cushion to benefit tilos'c who are less fortu·
nate it cannot be accused of discrimination. In this country \Vhere weaker and
poorer sections are unabl'e to enjoy the basic necessities, namely, food', shelter and
clothing, a body like the ,\nthority undertaking a comprehensiYe policy of providing shelter to those who cannot afford to have the same in the competitive
alho"t harsh niarket of dcn1and and supply nor can aJToTl it on their own meagre
en1oluments or incon1e, a little more from those \Vho can afford for the benefit of
those \Vho need ~nccour, crin by no strckh of in1agination attract Art. 14. [717
B-D]
5. It is a well recognised policy underlying tax law that the State has a wide
D
discretion in selecting the persons or objects it will tax and that the statute is
not open to attack on the ground that it taxes 5on1c persons or objects and not
others.
It is only when within the range or its selection the Ja\v operates unequally, and this cannot be justified on the basis of a valid classification, that
there would be ai violation of Art. 14. [717 E-F]
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East India Tobacco Co. v. State of Andhi"a Pradesh, [1963] 1 S.C.R. 404.
6. The principle of "no profit no loss" c<?.nnot apply either to every fiat or to
cvc1y schcnie or to every 1•icce of land devel0pcd by the 1\uthority. It would
be impossible for the Authority to function on such fragmented basi3 v.nd such
a po!icy statement has not been made by the Authority. [718 D-El
7. 1·hcre is not the f>lightest or e\'en a remote reference to "no profit no Joss"
formula for determining the cost price. A survey of the Regulations do not spell
out any formula for price determination on the basis of "no profit no loss".
Proj~t-wise price fixation cannot b'e dubbed as arbitrary or djscriminatory by
comparing it with other projects at different places or at different times. [719
A-B & E-F]
In the instant case after the work commenced and the actual cost estimate
started coming in t:he revised estimate for 304 fiats was
of
the
order of
Rs. 2,07,33,000/- which was approved by the Vice-Chairman on Septen1ber 18,
1976.
According to the revised estimate the approximate disposal cost for each
flat rame tc Rs. 68.202/- and. the cost of laond per d¥lelling unit was Rs. 7008/-.
The revised estimate s110,ved the disposal price of each flat as Rs. 75.200/-. The
Commissioner of Income Tax \\·ho wanted to acquire 40 1flG flats in Prasad
Nagar area offered the price of Rs. 75.000/- per flat which prlce was accepted.
The difference between the cost price and th~ dispo.~al price of Rs. 75,000/- per
Jlat \Vas treated as snrchargc and the purpose ,·vas to use the- extra n1oney for
extending pnc'e reduction benefit to the allottees of flats in LlG, Jana.ta and CPS
schen1es. It is therefore difficult to entertain the contention that even if surch&rge
could be justifi'ed its actual computation is arbitrary and irrational.
[720 B-E,
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P. B. PARMAR v. DELHI DEVELOPMENT AUTHORITY
707
8 . The Vice-Chairman is appointed by the Central Government as per Section
3 (3 )(b) of the Act. He is a whole time officer and the Chief Executive of the
Authority. The contposition of the Authority as set out in section 3 would
include su•.::h persons as Finance and Accounts Member, Engine'ering
Member.
representatives of Municipal Corporation of Delhi a.nd representatives of Metropolitan Coun~il. Three other persons, were to be nominated by Central Government of whom one shall be person with experience of planning. It is a high
power body. Yet it completely abdicated its power and authority .i.n favour of
!lousing Comm!ttee. The !--lousing Committee \Vil! practivally
<iUpplant
the
Authority.
By n pro;.:css of eli1nination the Hou5ing Co1nmittee 'vould ~up
phint the l\utho1ity r,·nd the Chairn1an could constitute the I-lousing Cornn1:ttee.
ThercfC1re, the Chairman enjoyed a very wide discretionary power.
Ho\\1evcr
once tlle _pcwcr to delegate is given by the Regulations. the ,_;hall'cnge to V<llidity
on the ground of dcie.'.,.'.:1tion nuist fClil. [720 G-H; 721 E-H, 722 A1
9. Resolution No. 209 is the one adopted by the
Housing Conuni.ttc:. It
takes note of the delegation of' powers to fix disp05al and hire-purchase price of
flats to the Vice-Chui1Taan :1nd further provides that if there is a marginal saving
in any scheme th'e amount b~ diverted to subsidise cost of Janata and CPS houses.
The Resolution No. 200 of the A.uthority read with Resolution. No. 209 of the
Housing Cor:,n1ith:e sets out c:learly that the. power to fix the tlisposal price was
de!egated to th~ Vic';:-Chainruin and ordinarily such excessive delegation to one
n1an Dl<'•Y
b~ galling to a judicial body yet the scheinc of regulations and the
provisions containe:l in Regulation 3 read with Section 59 clearly envi.;nge~ such
delegation of prJwcrs. [72:. C-F1
iO. The: n1ltc of .'.cco11nts 0111,,.'er I Housing) dated September S, 197(), ~.ub
rnitted to the Finan·~i'.il .'\dvisur (f-fou<iing) sho"'t3 that the fiats have been offered
at the rate of R~. 75,()(}()/- to the Con1n1is.sion'..::r of Income Tax for th~ Income
Tax Department :;nJ th:it sh0uld be the disposcJ price. This note \vas approveJ
by the Financial Advisor (H0u~i11g) and ultimately countersigned by th;;: \'iccChnirfll<lfl.
!~ver. if it includes snr-ch:1rge it cannot be .-;a:U \Vitll conridenc.::- th<tt the
Vice-Chairn1an has not &pproved the surcharge as a component of dispo~al price.
[722 G-H]
1 l. The contention th~1t tht' Authority has mc1dc a hu;e p o'.'1t by lc\y of
~q;r.:h;lff'C is \vithout nierits. e;,, 1hC' contniry it arpears that the OYerall working
of the J\uthority is dcfilit rithkn. [723 A.-BJ
ORIGINAL JURISDICTION : Writ Petitions Nos. 4660/78 & 562/79
(Under Article 32 of the Constitution).
Y. S. Chita/f and R. R. Datar for the Petitioner in
W.P.
No.
4660/76.
L. M. Sing!!l"i. Sardar B"hudur Sahariya, Vishnu Bahadur Sahariya
antl L. K. Pm;dey for the Respondent No. 1 in both the Writ Petiticns.
F. S. NarimaJZ and B. Datta and K. K. Manchanda for the Petitioner in W.P. No. 562/79.
The Judgment of the Court was delivered by
DESAI, J.
Allottees of fiats, constructed by the Delhi Develop·
men; Authority ('Authority' for short), loca'ed at Rajouri Garden,
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SUPREME COURT REPORTS
[19HJ1 2 S.C.R.
Prasad Nagar and Lawrence Road comprised
in Middle
Income
G10,1p scl,"me, question the decision of first
respondent
(De;hi
Devclopmen: Authority) to collect surcharge as part of the sale price
of eoch flat from each of :hem as unautho,-ised ahtl discriminatory in
character, in thc•se two petitions under Article 32 of th•c Constitution.
_Both the petitions raise idcn'.ical contenLic.as and i_· was said that ,~Vrit
Petiti0n No. 562 o[ 1979 is more cornrrehcnsive in cb~~ractcr and,
therefore, the facts alieged therein may \Jc taken as representative i'n
character.
They may be briefly s'.ated.
Delhi Development Authority was set up under the Delhi Development Act, 1957.
The Act was enac~:ed to provide for the development of Delhi according to plan and for matters ancillary thereto and
for carrying ou: the objects underlyrng the Act, the Authority has
prepared Master and Zonal development p'.ans for Delhi.
W1tb a
view to easing the acute housing problems in the capital city
the
Authority undertakes construction of dwelling units for people belonging to different income groups s"yled as Middle Income Group ('MIG'
for short), Low Income Group ('LIG' for short), Janta and Community Personnel Service ('CPS' for short).
In 1971 the Authority
commenced registration of intending applicants desirous of having a
dwelling unit in different income groups.
Some of the peti"ioners got
themselves registered with the authority in accordance with the terms
and conditions laid down by it and made the initial deposits as required by 1he terms and conditions.
Petitioners had applied and
got
themselves registered for al'.otment of flats in MIG scheme situated
at La\\Tcnoe Road.
As the number of available flats in this scheme
were less than the number of allot:ees registered, lots were drawn and
the pe"itioncrs were informed that they have been allotted flats and
F'
that each of them should deposit the amount men'ioned in the letter
of allotment. It appears that the peti' ionors paid the amount they
were called upon to pay and a flat was allotted to each of them &nd
they have entered into possession.
Petitioners now contend that the
Authority being a statutory body formed with a'n object of working
on 'no profit no loss' basis and having prescribed a formula for workG
in~ out the cost price of flats has ~evied and collec~od a surcharge
from each of the petitioner.
According to the petitioners the cost
price worked out in accordance with the formula prescribod by the
Authority, cost of each flat would be between Rs.
51,800
and
Rs. 55.600 dependinQ upon rhe area. extra bolconv etc.
However,
each one of them had to pay between Rs. 56.000 to Rs. 60.000
H
and that according to" the petitioners a
surcharge
varying
from
Rs. 3.'100 to Rs. 6.000 for a flat has been illeoal\y and unla wfulJy
collected by way of premium or profit. It is further alleged that the
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709
Autl101ity has not levied and collected such surcharg;~ from
other
allottcees of fia's in some other MIG Schemes and that this action of
levying and co;lecting surcharge is violative of Art. 14 inasmuch as
persons belonging to the same class. namely, allottees of fiats in MIG
scheme have been unequally treated.
It is also alleged that there
was no valid or understandable justification of levying and collecting
surchar~e as price cf fiats compr18ed in MIG Schemes, between 19 76
and 1977, and that from May 10, 1978, this unauthorised surcharge
has been abolished. Petitioners also contend that th~ assertion cf
the Authority lhat ·this surcharge was levied and col:ected with a view
to financing housing projects for lower income groups, Janta and
CPS dwelling units so as to provide these weaker sections
of the
society, houses at a price lower than cost price with a view to making
them affordable by such members of the weaker sections of the society,
is mlkd by facts undisputed and that the whole
attempt
of
the
Authority, in violation of its avowed policy, was to make profit by
levybg such illegal surcharge.
The petitioners, therefore, prayed for
issue ol a writ or order or direction declaring the l·~vy of surcharge
"s illegul and unconstitutional and for a direction for refund thereof
togNher with the interest at the ra'.e of 12% per annum from th~
<late of levy and collection till the date of refund.
In the cognate petition the p~'.itioners are allottees of flats situatro
at Prasad Nagar and Rajouri Garden under MIG scheme and they
e-0mrl~in that in their case surcharge varies from Rs. 19,200
to
Rs. 22,600.
Respondents to the petition are Delhi Development Authority, No.
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1 am' Chairman and Vice-Chairman of the AuthorLy, Nos. 2 and 3
respectively. In Writ Petition No. 4660178 the Authority is respondent 1 and Union of India, respondent 2. Petitions were mainly conF
tested by and on behalf of the Authority.
The Delhi Development Act, 1957 ('Act' for short), was enacted
as its ll'ng title shows with the a vkw to providing for the deve:opm.:nt
of Dcln1 according . to the plan and for arresting haphazard growth
and for matters ancillary thereto.
It envisages the set'.ing up of an
G
Authority to be styled as Delhi Development Authority which would
h;, a buly corporate by the name aforesaid having perpetual succci;sioll
and a common seal with power 'o acquire, hold and dispose of property. both movable and immovable, and to contract and shall by the
said name, sue and be sued.
The composition of the Authority is
set out in sub-section (iii) of s. 3.
Amongst others, Administrator
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of Union Territory of D~lhi would be an ex-officio Chairman and a
Vice-Chairman to be appointed by the Central Government. The
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SUPREME COURT REPORTS
(1%0] 2 S.C.R.
Vice-Chairman may be either a who:e-time or part-time officer a> the
Central Gover,;nment may think ftt.
Section 5 contemplates
the
constitution of an Advisory Conncil for the purpose of advising the
Authority on the preparation of the master plan and on such matters
relating to the planning of development or arising out of or in connection with the administration of :he Act.
Section 5A which
was
added by am~nding Act 56 of 1963 confers power on the Authority
to constitute as many committees con,isting wholly of members or
wholly of other persons or partly of membens and parly of
other
persons and for such purpose or purposes as it may think fit.
Chapter
III-A which was inserted by the Amending Act of 1963 confern power
for moJification of the master phfn once prepared.
Chapter
JV
providog for development of lands.
Chapter V confers power on the
Central Government to acq uirc land (or the purposes of development
or for any other purpose under the Act under the provisions ot tho
Land Acquisition Act, I 894, and further authorises
the
LtUtral
Governmeht to transfer the :and so acquired to he Authority.
Chapc·er
VI provides for finances and audit of the accounts of the Authority.
Ch8pter VII provides for supplemental and miscellaneous provisions.
Section 52 confers power on the Au:hority to delega:e any
power
exercisable by it under the Act, except the power to make regulations,
on such officer or local authority or committee constitucd under s.
SA as may be mentiohe<l, by a notifica:ion to be published in the
Official Gazette in such cases and subject to such conditions, if any,
as may be specified therein.
One mar·~ section of which notice should
be taken is s. 57 which confers power on the Authority with
th:
prc;•ious approval of the Central Governmen: by notification m
the
Oflicial Gazette to make regulations consistent with the Act and the
rules made thereunder to carry out the purposes of this Act.
Sub-s.
(2) provides that until the Authority is established under the Act any
regulation which may be made under sub-s. (1) may be made by
the Central Government and any regulation so made may be altered
or rcsc•nded by the Authority in exercise ol its powers under ,ub-s.
(1). Sec'. ion 58 makes it obligatory to lay every rul•c and regulation
made under this Act before each I-louse of Parliame'nt in session f0r
a period of 30 days and subjcc- to any alteration or
modificuuon
therein, the rule or regulation shall after expiry of the
prescnbed
pcricod mentioned have e!Iect only i·n such modified form or be of no
effect as the case may be. so however that any such modification or
an11ulm2nt shall be without prejudice to the validity of any;hing previously cto·ne under the rule or regulation.
Petitioners belong to MIG, each of whom registered himself as an·
intendbg app:ican'. for a flat in MIG scheme and each of whom h"~
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P. B. PARMAR v. DELHI DEVELOPMENT AUTHORITY (Desai, J.)
7 11
been allotted a flat either in Rajouri Garden, Prasad Nagar or
Lawrence Road.
Number of persons desirous of having a flat registered with the Authority far outnumbered the available flats with the
result that lots had to be drawn and the lucky Gile• got a letter of
allotment to pay the price set out in the brochure in respect of each
scheme and to obtain a flat.
Each petitioner had paid the price and
has entered into possession of the allotted fla:t.
All the petitioners
now contend that the Authority has levied and collected a surcharge as
part of purchase price of flat arbitrarily and without the authority of
law and has collected the same from them in vio:ation of its object
of functioning on 'no profit no loss' basis and thereby made a huge
profit.
They further contend that they have been subjected to discrimh;atory treatment in contravention of Art. 14 of the Constitution
inasmuch as no surcharge has been collected from allottees of flats in
MIG schemes prior to November 1976 and subs•:quent to January
1977 except these three schemes and one Wazirpur MIG
scheme.
Further, no other MIG scheme fiats have been subjected to such unauthorised levy ol' surcharge. It is pointed out that the levy of surcharge has been scrapped in 1978. The petitioners contend that levy
of surcharge has no n:xus to the object for which the Au'hority was
set up, namely, providing housing accommodation at reasonable price
by the Authority whose declared policy is 'no profit nu luss'. It was
said on behalf of the petitioners that even if :b: Authority was set
up for providing housing accommodation to the people in dillercnt
income groups (keeping in view their financial capacity/affordab1lity J
yet a statutory body like the Authority operating on 'no profit rm loss'
bas:s must have a scientifically prescribed formula for working out
its price structure and that must be uniformly applied to all those who
apply for flats and to whom they are allotted and such a statutory
Authority cannot discriminate in working out the disposal price of the
flats by including surchar19;, in respect of some MIG schemes within
a certain specified period, a surcharge not authorised by law and not
sanctioned by the Authority as a component of price and unknown to
pricing of fiats, while others similarly situated and similarly circumstanced and belonging to the same income group enjoyed the benefit
of getting flats at cost price and, therefore, pe!itioners have been accorded discriminatory treatment in th;, matter of price of flats allotted
to them.
Petitioners, therefore, contend that even if they applied for
flats and got registered and were offered fiats and accepted the same at
the price stated in the brochure and even if it has resulted in a concluded contract yet the Court should not turn a blind eye to such gross
discrimination by a statutory authority charged with a duty to provide
housing accommodation a~ting on the declared policy of 'no profit no
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SUPREME COURT REPORTS
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lt was simul:aneously co·ntended that the Vice-Chairman of
the Authority authorised to determine the prices of flats in each incom<:
group has not made any order or has not given any direction for levying surcharge and that the levy of surcharge was wholly unauthori>ed.
A preliminary objection was raised by the Authority that the petiB
tions are not maintai·nable under Art. 32 of the Constitution inasmuch
as the petitioners hav•2 not come to the Court for enforcement of a
fundamental right con(erred upon tbe petitioners under Part III of the
Constitution but the petitioners have invoked jurisdiction of this. C::ourt
for ~ relief of re-opening concluded contracts. It was also submitted
that if the Court accepts the contention of the petitioners they would
C
derive an unf"ir advantage over others who may not have applied for
flats because of the price set out in the brochure and if surcharge is
exc:uded they may have applied for flats at a lower price and, therefore, also the Court should not entertain the petitions.
D
Though we are
not inclined to reject the petitio"ns on this preliminary objection as we have heard them on merits it is undeniable
that camouflage of Art. 14 cannot conceal tbc real purpose motivating
these petitions, namely, to get back a part of the purchase price of
flats paicl by the petitioners with wide open eyes after flats have been
securely obtained and petitio·n to this Court under Art. 32 is not a
proper remedy nor is this Court a proper forum for re-opening the
<:oncluded contracts with a view to getting back a part of the purchase
price paid and the benefit taken.
The undisputed facts are that petitioners offered themselves for registration for allotment of flats thai
may be constructed by th2 Authority for MIG scheme.
After the
registration and when the flats were constructed and ready for occupation brochures were issued by the Authority.
One such brochure for
allotment of MIG flats in Lawrence Road residential scheme is Arnexure R-1.
This brochure specifies the terms and conditions including price on which flat will be offered. It also reserved the right
to smTendcr or cancel the registratio"n, the mode and method of paying the price and handing over the poosession.
There is an application form annexed to the brochure.
Annexure 'A' to the brochure
sets out the price of flat on the ground floor, first floor and second floor
respectively. It sets ont the premium amount payable for land as also
the total cost in respect of the flats ou the ground floor, first floor and
second floor.
The statement also shows tho earnest money depooited
at the time of the registration and the balance payable. It is on the
basis ot these. brochures that the applicants applied for the flats in
LawNnce Road and other MIG schemes.
They knew and are presumed :o know the contents of the brochure and particularly the price
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'l'. B. PARMAR v. DELHI DEVELOPMENT AUTHORITY (Desai, J.)
713
payable. They offered to purchase the fiats at the price on which th~
Authority offered to sell the same.
After the lots were drawn and
they were lucky enough to be found eligible for allotment of flats, each
one of them paid the price set out in the brochure and took pos9ossion
of the fiat, and thus sale became complete.
There is no suggestion
that there was a mis-statement or incorrect statement or .any fraudulent
concealme'nt in the information supplied in the brochure
published
by th.: Authority on the strength of which they applied and obtained
:flats.
How the seller works out his price is a matter of his own choice
unless. it is subject to statutory control. Price of property is in the
realm of con!ract between a seller and buyer. There is no obligation
-on the purcha9er to purchase the flat at the price offered. Even after
registration the registered applicants may opt for other schemes. His
right to enter into--other scheme opting out of present offer is
not
thereby jeopardised or negatived a-nd applicants so outnumbered the
available fiats that lots had to be drawn.
With this background the
petitioners now contend that the Authority has collected surcharge as
component of price which the Authority was not authoris•ed or entitled
to collect.
Even if there may be any merit in this contention, though
there is none, such a relief of refund cannot be the subject-matter of
a petition under Art. 32.
And Art. 14 cannot camouflage the real
bnne of contention. Conceding for this submission that the Authority
has the trapplngs of a Stat•:: or would be comprehended in
'other
authority' for the purpose of Art. 12, while determining price of fiats
constructed by it, it acts purely in its executive capacity and "is. bound
by the obligations which dealings of the State with the individual citizens import into every tra:nsaction entered into the
exercise of its
constitutional powers.
Bui after the State or its agents have entered
into the field of ordinary contract, the relations are no longer governed
by th" Constitutional provisions but by the legally valid contract which
determines rights and obligations of the parties iJtter se.
No questio·n
arises of violation of Art. 14 or of any other constitutional provision
when the State or its agents, purporting to act within this field, perform any act.
In this ~phere, thoy can only claim rights conferred
upon them by contract and are bound by the· terms of the contract
-only unless some statute steps in nnd confers some special statutorv
power er obligation on the State in the contractual fold which is apai:t
from contract" (see Radhakrishna Aganval & Ors. v. State of Bihar &
Ors.) . ( l) Petitioners were under no obligation to seek allotment of
fiats even after th::y had registered themselves.
They looked at the
price and flats and applied for the fiats.
This they did voluntarily.
They were advised by the brochures to look at the flats before going
(l) [1977] 3 S.C.R. 249 at 255.
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SUPREME COURT REPORTS
[1980j 2 S.C.R.
in for the same.
They were lucky enough to get allotment when the·
lots were drawn.
Each one of them was allotted a fiat and he paid
the price voluntarily.
They are now trying to wriggle out by an invidious method so as to get back a part of the purchase price not
offering to return the benefit under the contract, namely, surrender of
fiat. , The Authority in its affidavit in reply in terms stated that it is.
willing to take back the fiats and to repay them the full price.
The
transaction is complete, viz., possession of the fiat is taken and price
is paid.
At a later stage when they are secure in possess.ion with title,
petitioners are trying to get back a part of the purchase price and thus
trying to re-open and wriggle out of a concluded cmrtract only partially.
In a similar and identical situation a Constitution Bench of this Court
in Har Shankar & Ors. etc. etc. v. The Dy. Excise & Taxation Commr.
& Ors.(1) has observed that those who contract with open eyes must
accept the burdens of the contract along with its benefits.
Reciprocal
rights mod obligations arising out of contract do not depend for their
enforceability upon whether a contracting party finds it prudent to
abide by the terms of the contract. By such a test no contract. would
ever have a binding force.
The jurisdiction of this Court under Art.
32 of the Constitution is not intended to facilitate avoidance of ob!iga·
lions voluntarily incurred. It would thus appear that petitions ought
not to have b:~en entertained. However, as the petitions were heard
on merits, the contentions canvassed on behalf of the petitioners may
as well be examined.
The principal contention canvassed on behalf of the petitioners is
that the treatment meted to them by the Authority is discriminatory
inasmuch as no surcharge was levied on fiats in MIG scheme coinstructed and allotted prior to November 1976 and after January 1977. MIG
fiats involved in these petitions were constructed and were available
for allctment in November 1976 and the lots were drawn in January
1977. Theroo is one more MIG scheme at Munirka where the allotment took place at or about the same time but in which case no sur-
.:harg~ was levied.
The contention is that once for the purpose of
eligibility to acquire a fiat, the criterion is
grounded
in
income
brackets, MIG, LIG, et et. those in the same income bracket form
one class even for the purpose of determining disposal price of fiat
allotable to them irrespective of sitnation, location or other relevant
determinants which enter into price calculation and therefore, in the
same income group there cannot be differentiation by levying of surcharge in some cases and charging only the cost price in other cases
and that the discrimination is thus writ large on the face of the record
(I) [1975J 3 s.c.R. 254.
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P. B. PARMAR v. DELHI DEVELOPMENT AUTHORITY (Desai, J.) 71 i;
'because by levying surcharge in case of petitioners they have been
treated unequally and with an evil eye. It is difficult to appreciate how
Art. 14 can be attracted in the circumstances he1'.':inabove mentioned.
Cost price of a prope1ty offered for sale is determined according to
the voiition of the owner who has constructed the property unless it is
shown that he is under any statutory obligation to determine cost
price according to certain statutory formula.
Except the submissim
that the Authority has a proclaimed policy of constructing and offering
flats on 'no profit no loss' basis which according to Mr. Nariman has
a statutory flavour in the regulatiohs enacted under the
Act,
the
Au:hcrity is under no statutory obligation about its pricing policy of
the flats constructed by it. When the fiats were offered to the petitioners the price in round figure in respect of each flat was mentiooed
and surcharge was not separately set out and this price has been
acoopted by the petitioners. The obligation that regulations are binding
on the Authority and have provided for a statutory pric•o
fixation
formula on 'no profit no loss' basis will be presently examined but save
this the Authority is under no obligation to fix price of different fiats
in diffcren\ schemes albeit in the same income group at the same level
or by a·ny particular statutory or binding formula.
The
Authority
having the trappings of a State might be covered by the expression
'other authority' in Art. 12 and would certainly be
precluded from
according discriminatory treatment to persons offering to purchase fiats
in tbe same scheme. Those who opt to take flats in "' particular income-wise area-wise scheme in which all flats came up together as
one project, may form a class and any discriminatory treatment in the
same class may attract Art. 14. But to say that throughout its course
of existence tile Authority would be bound to offer fiats income-groupwise according to the same price formula is to expect the Authority
to ignore time, situation, location and other relevant factors which all
enter the price structure. In price fixation eioecutive has a wide discretion and is only ahswerable provided there is any statutory control
over its policy of price fixation and it is not the function of the Court
to sit in judgment over such matters of economic policy as must be
necessarily left to the Gove(mnent of the day to decide. The experts
alone can work out the mechanics of price determi"nation; Court can
certainly not be expected to decide without1 the assistance of the experts
(See Prag Ice & Oil Mills and Anr. etc. v. Union of India)(') In the
leading judgment it has been observed that mechanics qf price fixation
have necessarily to be left to the executive and unless it is pat·~nt that
there is hostile discrimination against a class the processual basis of
price fixation has to be accepted in the generality of cases as valid.
(!) [1978] 3 S.C.R. 293 at 330.
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This Court in Avinder Singh
v.
State of Punjab.( 1) approved the
following dictum of Willis on Constitutional Law, page 587 :
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"The State does not have to tax everything in order to
tax something. It is allowed to pick and choose districts,
objects, persons, methods and even rates for taxation if it
does so reasonably ... The Supreme Court has been practical
and has permitted a very wide latitude in classification for
taxation."
What is forbidden by Art. 14 is discrimination amongst persons of
the same class and for the pnrposes of allotme'nt of flats scheme-wise,
sllottecs of flats in the same scheme, not different schemes in the same
income bracket, will have to be treated as a class and unless in each
such class there is unequal treatment or unreasonable or arbitrary
treatment, the complaint that Art. 14 is violated cannot be entertained.
Therefore, in the State of Gujarat & Another v. Shri Ambica Mills Ltd.,
Ahmedabad, etc.,(') Mathew, J., speaking for the Court observed a$
under :
"A ioeasonablc classification is one which includ·~s all who
are similarly situated and none who are not.
The question
then is what does the phrase 'similarly situated' mean ? The
answer to the qu•estion is that we must look beyond the
classification to the
purpose of the law.
A
reasonable
classification is one which includes all persons who
are
similarly situated with respect to the purpose of the law.
The purpose of a law may be either the elimination of a
public mischief or the achievement of some positive public
good."
Is the classification income-wise scheme-wise violative of Art. 14
in any manner?
The Authority formulates inconro-wise area-wise
schemes for constructing flats.
Petitioners contend that there should
be only income-wise classification wholly ighoring area and time factor
for classification. They say that allottees of flats in all MIG schemes
irrespective of area and location and irrespective of when the flats
were constructed form one class for determining price of flats. There
is no merit in this contention.
Wha: are price determinahts ? Price
of land, building material, labour charges and cost of transport, quality
and availability of land, supervision and management chargos are alf
variable factors that enter into price fixation.