DELHI DEVELOPMENT AUTHORITY, N.D. & ANR. v. JOINT ACTION COMMITTEE, ALLOTTEE OF SFS FLATS & ORS

Citation: [2007] 13 S.C.R. 811

Court: Supreme Court of India

Bench: S.B. SINHA, H.S. BEDI

Case summary

DELHI DEVELOPMENT AUTHORITY, N.D. & ANR. v. JOINT ACTION COMMITTEE, ALLOTTEE OF SFS FLATS & ORS.pdf

Judgment text

t DELHI DEVELOPMENT AUTHORITY, N. D. & ANR. v. - . JOINT ACTION COMMITTEE, ALLOTTEE OF SFS FLATS & ORS. DECEMBER 13, 2007 [S. B. SINHA AND HARJIT SINGH BEDI, JJ. ) '"... - Delhi Development Act, 1957-ss.

2 (13), 5A and 52-Allotment offlats under SelfFinancing Scheme (SFS)-By Delhi Development Authority-Default in payment of instalments-Condoned by Authority in terms oforiginal contract-Subsequent policy decision by delegatee ofthe 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 restoration policy -Held: The policy is ultra vires-Imposition of f 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-Thepolicy, being in the realm ofcontract, cannot be stated to be a policy decision as such-It was dehors the original terms and conditions ofthe contract-The contract could not have been novated in absence ofprovisions under the contract or law-The Authority having condoned the default as per ...

_ J. terms of original contact, estopped from seeking application of subsequent restoration policy- Disposal price was permissible to be fixed within the purview of original terms ofthe contract and the statutory requirements-Action ofa State must treatpersons similarly situated equally and grant equal protection to them-Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968-Regulations 5 and 6- Constitution of v India, 1950-Articles 14 and 265-Contract- Estoppel. . 4. Contract Act, 1872-ss. 29 and 60-Novation of contract- Conditions for-Held: Terms and conditions of contract cannot be . + altered unilaterally without notice to the other party ofthe contract- . - When a contract has been worked out. aji·esh liability cannot be thrust upon contracting party.

Administrative Law-Delegation ofpower-Power ofdelegatee -Held: A delegatee is bound to act within four corners of the delegation and not beyond the same-Delegation ofpower must be tested in terms ofstatutory provisions. -... ,. :'- Judicial Review: Judicial review ofpolicy decision-Scope of-Held: Policy decision is subject to judicial review-An executive order termed as policy decision is not beyond pale ofjudicial review-Grounds for interference with-Discussed. Judicial review ofContract-Permissibility-Held: Permissible, When a contract emanatesfiwn a statute or is otherwise governed by l ~ provisions thereof Judicial review ofprice fixation-Permissibility-Held: Though ordinarily not permissible-But where the price is fixed de hors the statutoryprovisions, it is permissible. Constitution ofIndia, 1950-Parts !

JIand IV, Articles 12, 14 and 37-Vaiidity ofan action ofState-Ascertainment of-Held: Action ofState giving effect to provisions ofPart IV to be upheld only when it is not ultra vires Fundamental Rights-The act ofthe State must at ,• ·• .. the first instance be adjudged on the touchstone ofprinciples of Fundamental Rights and then of the provisions ofthe Parliamentary Act, or the regulations ji-amed thereunder or the terms ofcontract between the parties-Action of State must satisfy the principal requirements ofArticle 14. Doctrines-Doctrine ofultra vires-Applicability of y ~ Flats under a Self Financing Scheme (SFS) flooted in the year 1991, were allocated by Delhi Development Authority. Registrants defaulted in payment of instalments resulting in automatic DELHI DEVELOPMENT AUTHORITY,N. D. v. JOINT 813 ACTION COMMITTEE, ALLOTTEE OF SFS FLATS + cancellation oftheir allotments. Vice-Chairman ofthe Authority, delegated with the power ofAuthority, 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 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 ofthe resolution. Single Judge ofHigh Court allowed the petitions in part quashing the policy ofcharging current cost upholding the policy of charging 20% surcharge. Letters patent appeals were referred to larger Bench ofHigh Court, by the Division Bench. The Full Bench upheld the levy of20% surcharge and further held thatthe Authority had requisite jurisdiction also in respect ofimposition of'current cost'. Hence the present appeals.

Allowing the appeals filed by the registrants and dismissing those filed by the Authority, the Court HELD: 1. 1. Delhi Development Authority (DDA) has been created under a Parliamentary Act. It, indisputedly, is a State within the meaning ofArticle 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 ofthe citizens and strives hard to give effect to the Directive Principles ofthe State Policy. [Paras 34 and 37] [839-A; E-F) 1. 2. It is true that in terms ofArticle 37 of the Constitution of India, whereas the provisions of Part III arc justiciable, the provisions ofPart IV arc not.

However, only when an action ofthe State is taken to give effect to any ofthe provision ofPart IV ofthe Constitution of India which is not otherwise ultra vires the Constitution or offends the principles embodied in Part III ofthe 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 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 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 ofthe DDA orwithin the purview ofthe 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 of5th and final instalment, the jurisdiction ofDDA is to keep itselfconfined 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 ofissuing 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 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, disapproved. Narsingh Jain v. Union ofIndia, 80 (1999) DLT 742 and DDA SFS Flat Owners Society v.

UOl AIR (2001) Del 39, referred to. 2. 2. The Full Bench ofHigh Court misdirected itselfinsofar as it failed to take into consideration that the levy of20% surcharge y was in effect and substance a compulsory exaction to augment the r revenue requirements ofthe DDA and, thus, could not have been a part ofthe contract. Any compulsory exaction should be viewed in the light ofArticle 265 ofthe Constitution oflndia, unless it comes DELHI DEVELOPMENT AUTHORITY,N. D. v. JOINT 815 ACTION COMMITTEE, ALLOTTEE OF SFS FLATS .. within the sphere of contract. [Para 85) (855-G] ,.. _- 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 ofautomatic 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 considered keeping in view the rights ofthe parties as also the fact that in terms ofclause 4 ofthe offer ofallotment 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 unjustified to arrive at the conclusion that such a right can be ~exercised, ifnot, 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 the stipulated period. A notice was served. Representation praying for condonation ofdefault 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 condoned and the allocation of flat which got cancelled, stood restored. DDA, thus, acted strictly in terms ofthe 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. 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. Itwas, on the other hand, DDA which, having accepted the offer of the allocattee by restoring the allotment, is estopped and precluded from raising a plea as regards application ofOffice 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 delegated in favour ofits Chairman and the Vice-Chairman. Such delegation ofpower, 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] 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 conditions ofthe original scheme. The legality and/or validity ofsuch imposition would be considered on the premise that the impugned policy decision is a part ofthe 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 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 statute must also be tested in terms ofthe statutory provisions. No provision under the Act or the Regulations has been brought to notice ofthe 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 regard to the provisions of the statute but also having regard to clause 4 ofthe offer. [Para 73) (851-G-H; 852-A) .. 4. 5. The authority having itselfadopted 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 the factors laid down for computation ofdisposal cost as defined in DELHI DEVELOPMENT AUTHORITY, N. D. v. JOINT 817 ACTION COMMITTEE, ALLOTTEE OF SFS FLATS ~ . Section 2(13) ofthe Act. Regulations 5 and 6 ofDclhi Development '"" 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. Ifan Executive Authority in absence of any statutory provision cannot apply a decision with retrospective effect, the same would be ultra vires. [Para 74] [852-C-D] ~·~ Vice Chancellor, MD. University, Rohtakv. Jahan Singh (2007) 4 SCALE 226, relied on. AshokLanka andAnr. v. Rishi Dixit and Ors. , [2005] 5 SCC 598, 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 and 21. 3. 1999 were published in the Gazette or were otherwise brought to the notice ofthe registrants. [Paras 51and57) (846-D; 843-D] 5. 2. A person would be bound by the terms of the contract subject ofcourse to its validity. A contract in certain situations may also be avoided. With a view to make novation ofa 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 were based upon unilateral issuance ofoffice orders, and were not communicated to the other party to the contract and which were not even the subject matter ofa public notice.

Apart from the fact that the parties rightly orwrongly proceeded on the basis that the demand by way of5th instalment was a part ofthe original scheme, DDA in . ,, 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 ofthe 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 law. Novation ofcontract in terms ofSection 60 ofthe Contract Act must precede the contract making process. The parties thereto must be adidem so far as the terms and conditions are concerned. IfDDA, · a contracting party, intended to alter or modify the terms ofcontract, it was obligatory on its part to bring the same to the notice of the 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 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 ofagreement cannot be vague or indefinite. No mechanism has been provided for interpretation ofthe terms ofthe 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 beyond the pale ofjudicial review.

Whereas the superior courts may not interfere with the nitty gritties ofthe policy, or substitute one by the other, but it can not be said that the court shall like its judicial hands offwhen a plea is raised that the impugned decision is a policy decision. Interference therewith on the part of the superior court 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) ifit is de 'hors the provisions of the Act and the Regulations; (c) if the delegatee has acted beyond its power ofdelegation; (d) ifthe executive policy is contrary to the statutory or a larger policy. [Para 60) [847-F-G) 6. 3. The purported policy ofintroducing new terms ofcontract unilaterally is, therefore, not beyond the pale ofjudicial review. In fact, being in the realm of contract, it cannot be stated to be a policy DELHI DEVELOPMENTAUTHORITY,N. D. v.

JOINTACTION 819 COMMITTEE,ALLOTTEEOFSFSFLATS ~ decision as such. [Para 61] [848-C) ~ 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 executive, not only can be tested on the touchstone ofArticle 14 of the Constitution oflndia, but can also be tested on the touchstone -7 ofsource ofthe 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 ofjudicial 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 ofjudicial review. [Para 62] [848-E-G] :j i- Gujarat 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 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 exist any absolute ban. In a case where fixation ofprice is required .... . l / -!. to be made in a particular manner and upon taking into consideration 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 factors on the basis ofwhich 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 ofthe originalcontract and not de' hors the same. The authority, even while exercising its residuary power, is required to act within the four corners ofthe contract. While doing 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. Ifsuch a power is conceded in the authority, the same would give rise to exercise of arbitrary power. It is not contemplated in law. 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]- CIViL APPELLATE JURISDICTION : Civil Appeal Nos.

6668- 6698 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 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 J- 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, 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 S. B. SINHA, . J. l. Leave granted in all the Special Leave Petitions. DELHIDEVELOPMENTAUTHORITY,ND. v. JOINTACTION 821 C0tv1MITTEE,ALLOTTEEOFSFSFLATS[SINHA,J. ] ,. CIVIL APPEAL NOS. 6666, 6667, 6668-6698, 6700-6732 & • 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 ajudgment and order dated 23. 07. 1999 passed by a Division Bench ofthe Delhi High Court, inter 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 ofby this common judgment. FACTS: 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 ofDelhi and constructs houses for all groups ofpeople. :) 4. Principally it allocates flats under six different schemes viz : (i) )'- SelfFinancing 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. 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 are calculated on different basis but the rights and stipulated liabilities thereunder are also different. Cost offlats vary from scheme to scheme. Under one ofthe schemes, applications were invited by the Authority from 22. 12. 1992 to 11. 01. 1993. 7. We may notice some ofthe provisions containing the terms and . ,- conditions on the basis whereof such an offer was made. x "5. 10 the details ofthe flats and tentative cost etc. are available in Annexure-B. The cost ofthe flats mentioned therein is tentative and subject to revision on account ofescalation in the value ofland f and cost ofconstruction. Please note that there is a possibility of upward revision ofthe 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 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% ofthe 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 allocations are asked to pay 25% the estimated cost ofthe flat by way of 1st instalment payable within 30 days. In each ofthe 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 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 include the possible increase in the cost ofthe flat. No separate letters will be issued for any ofthe subsequent instalments.

It will be obligatory on the part ofthe 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. Ifsubmission ofdocuments as demanded are delayed, maintenance charges will be leviable ... _ ,. provided the delay in submission ofdocuments is regularized. . ! - ~ 12. 2. Ifthe allotment of flat is cancelled (either on the allottee's own request or due to the non-fulfilment ofthe terms and conditions ofallocation by the allottee) after the expiry of I, 2, 3 and 4 months from the date of issue of demand-cum-allocation letter, interest 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 ofpenalty specified • above. 14. 1. The allottee shall be entitled to take delivery ofthe possession DELHIDEVELOPMENTAUTHORITY,N. D. v.

JOINTACTION 823 COMMITTEE,ALLOTTEEOFSFS FLATS [SINHA,J. ] ~ only after he has completed all the formalities, paid all dues and t furnished/executed all the documents as required in the allotmentcum-demand letter ofthe 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 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, allotment is made on draw of specific number offlats. Allocation offlats may be made in respect of areas, floors and/or the pockets. On receipt ofthe letter ofdemand-cum-allocation by the registrant, the schedule of payment commences.

Estimated cost for construction is calculated on the basis ofthe value ofthe land and likely cost ofconstructions. ; 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 making payment ofthe amount demanded in column 7 ofpara 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 ofthe amount asked for in the demand letter is not made within 90 days ofthe 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 '>-- cancellation due to non-payment, subject to availability ofthe j allocated flat. The cancellation due to non-payment of final instalment within 120 days ofthe date ofissue (letter ofthe block date) ofthe demand letter for 5th instalment shall not be restored under any circumstances. " I0. It may be useful to notice some other clauses containing terms and conditions ofallocation, 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 ofthe flats as given in this letter is provisional . ,1and subject to revision on the completion ofthe flat.

Any price difference between the estimated cost and the cost as it comes out 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 ofthe cost ofthe flat in the intermining period. Interest@ 7% on the amount deposited will be payable for the period beyond 3Yz years to the date ofissue ofpossession letter ifthe construction of the houses is not completed by then. 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 ofpayment with a request for exiension. " 11. Registrants are said to have defaulted resulting in purported automatic cancellation oftheir allotments.

Show cause notices were issued to them. Some of them allegedly expressed their difficulties in regard thereto. Decisions impugned 12. TI1e Vice-Chairman ofthe appellant who is said to be delegated with the power of the Authority to which reference would be made -1 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 price for South Delhi flats will be worked out by adding a DELHIDEVELOPMENTAUTHORJTY,N. D. v. JOINTACTION 825 COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J. ] ;. surcharge of 20% from the price worked out as per old 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 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. " 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 ofregistrants who had been allotted flats in South Delhi. The said decision was taken to balance the reduced cash flow of the t Authority. It reads as under: "I. On the basis ofthe aforesaid resolutions ofthe 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 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%. :xxx xxx xxx 1, ~ 4.

To balance the reduced cash in-flow because ofthe 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 ofthing to charge 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 offirst four instalments, stating: ~ "While issuing allocation/allotment letters to the registrants ofvarious schemes announced by DDA, a demand is raised from the concerned allottees specifying the amounts to be paid with due date ofpayment. However, sometimes on account ofthe problem faced by the concerned allottees the payment received by the DDA are later than the scheduled date.

Such cases are usually examined on merits and the delay is regularised ifthere is merit in the case as non-regularisation ofdelays in deserving cases may be resulted by ;, ~ the allottees. The following shall be the rules applicable to the allottees ofall category offlats in case there payments are delayed and are regularised by the competent authority. A. Competent Authority to regularise the delay: Period ofdelay Designation (i) Upto 30 days Jt. /Dy. Directors (ri) Beyond 30 days but , upto 90 days Director (Housing) (rii) Beyond 90 days but Commissioner upto 1year (Housing) (iv) Beyond 1year but upto Principal l. year 6 months Commissioner (v) More than 1year r , 6months Vice-Chainnan B.

Price ofthe Flat : (i) If the allocated/allotted flat is in South Delhi where the construction has been undertaken by the South East Zone and South West Zone ofthe Engineering Wing Except Dwarka (being in West Delhi) the Price ofthe flat ifrestored, would be "Old Cost" " ~ interest or current cost whichever is higher. (ii) In case where allottees ofthe localities mentioned (i) above default a small percentage of demand amount upto 10% beyond DELHIDEVELOPMENTAUTHORITY,N. D. v. JOINTACTION 827 COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J. ] .... ~ the due date, this delay, if regularised would be on "Old Costinterest. " (iii) In other cases ofall category flats i. e. where the construction offlats has been undertaken by other zones ofEngineering Wing the restoration shall be at "Old Cost-interest". 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. 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 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 ofregistrants in South Delhi, relevant portion whereof reads as under: "2. Price ofthe flat (i) In cases (pertaining to any locality) where demanded amounts were received prior to 22. 08. 1996 by DDA, the restoration ~ ~ ofallotment/regularisation ofdelay, ifconsider~d would be on "old cost interest". (ii) In case where allottees default a small percentage of total demanded amount upto 10% beyond the due date, the delay ifregularised, would be on "old cost+ interest".

(lii) Ifthe allocated/allotted flat is in South Delhi i. e. where the y· construction has been undertaken by the South East Zone and South West Zone ofthe Engineering Wing except Dwarka (being in West Delhi), the price ofthe flat, ifrestored, would be "old cost+ interest or current cost", whichever is higher. 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 ofall 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 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 ofthe previous orders on the subject and were to come into force with immediate 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. 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 ofthe said purported resolutions. 19. A learned Single Judge ofthe Delhi High Court allowed the said ~ , writ petitions in part quashing the policy of charging current cost and upholding the policy ofcharging 20% surcharge. Letters Patent Appeals were preferred thereagainst. A Division Bench ofthe 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 ofthe 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 was also upheld. DELffiDEVELOPMENTAUTHORITY,N. D. v. JOINTACTION COMMITTEE,ALLOTTEEOFSFS FLATS [SINHA,J. ] ~ ; Contention before the Full Bench : 21. Before the Full Bench, the registrants, inter alia, raised a contention that levy ofan 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 ofthe . -,,,. writ petitioners crystalliz. ed on issuance ofthe allocation letter and not when the actual allotment of flat took place. Levy ofsurcharge amounts to levy oftax or cess, wherefor there is no authority in law. 22.

Relying on or on the basis ofa decision ofthis 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 ofregistrants 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) 1AD (Delhi) 725, its jurisdiction to delve into the price fixation policy was also questioned. Issues raised before the Full Bench : 23. Two principal issues which were raised before the High Court are: (i) Whether the action ofthe Development Authorityin levying . \ -+ 20% surcharge from the registrants ofthe South Delhi is justified ?

(ii) Whether demand for payment ofcurrent cost as calculated by the Delhi Development Authority from the defaulter registrants could be said to be justified? " Findings ofthe Full Bench : ~ ~ 24. (i) Levy of 20% surcharge is within the competence of the Authority in view of the definition ofthe 'disposal price' as contained in Regulation 2(13) of the Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968 (for short, 'the Regulations'), in respect whereof a decision was taken by the Vice-Chairman on 22. 08. 1996. (ii) The said Regulations governing the field exclusively permits the Authority to decide and fix the price which would include surcharge being in the realm of contract, the relationship between the parties was clearly contractual; surcharge being a component of the price ofthe flat.

(iii) It is also to be noted that most ofthe Appellants were defaulter who had defaulted in making payments of the first four instalments on time and therefore there was delay in making payments in their cases. Since there was an automatic cancellation clause in the agreement the original contracts stood cancelled. (iv) Regulation 2(13) ofthe DDA Regulations defined disposal price or hire purchase price in relation to a property to mean such price as may be fixed by the authority. Hence the levy of surcharge was within the competence ofthe authority. (v) DOA could include surcharge in its pricing formula which would be in the realm ofcontract as the relationship was purely contractual. (vi) The meaning ofthe word "cost and price" has been settled by the Full Bench ofthe Delhi High Court in Sheelawant v. ODA which was upheld by the Supreme Court and reaffirmed in DDA v. Ashok Kumar Behl [2002] 7 SCC 1352. (vii) The present case was different from the case ofP. N Verma v.

Union ofIndia, AIR (1985) (Delhi) 417] Submissions ofthe learned counsel on behalfofthe registrants: 25. Mr. Rungta, Mr. Maninder Singh and Mr. Shekhar, learned DEUilDEVELOPMENTAUTHORITY,N. D. v. JOINTACTION 831 COMMITTEE,ALLOTTEEOFSFSFLATS [SINHA,J. ] ~ counsel, submitted : (i) Having regard to the admitted fact that all allocations were made during the period 1991 and 1994 and all ofthem having paid the instalments except the fourth one, prior to taking of the purported policy decision dated 22. 08. 1996, the Authority had no jurisdiction either to recalculate the current cost or impose a levy of20% surcharge. • ·')>- (ii) As the impugned 'Levy' comprises ofthree elements, namely, (i) the current cost which is determined; whereover (ii) 20% over the actual cost is taken into consideration, and again (iii) 20% surcharge is required to be paid, the same is unreasonable. (iii) The Full Bench wrongly applied P. N Verma (supra), R.

K Sacher (supra) and Premji Bhai Parmar (supra), which were decided on wholly different set of facts as the scheme(s) involved therein was for low income group ofpeople in terms r whereof payments were to be made on completion of construction; whereas in the case of SFS, instalments of payment is sought for immediately after the allocation. (iv) Restoration ofallotment in the case of defaulter having been the subject-matter ofcontract, the terms and conditions thereof could not have been altered or modified by the Authority unilaterally. 4. 4 (v) In any event, the impugned policy decision can not be given retrospective effect or retrospective operation. (vi) Classification for value offlats being income-wise, area-wise, time-wise and scheme-wise as has been laid down in Premji Bhai Parmar (supra), any micro classification introduced by the impugned policy decision insofar as the registrants ofSouth Delhi alone had been.

asked to pay a higher amount must be I'- ) held to be discriminatory in nature. (vii) The purported cut-offdate being 22. 08. 1996 creates a class between those whose allotments, although cancelled, had been restored on the terms of the contract and those who had ). applied for restoration thereafter. (viii) As policy did not prescribe any rational basis and the same having wrongly been applied, the same is wholly without jurisdiction and, thus, a nullity. (ix) Clause 5. 10 of the brochure has wrongly been applied by the Full Bench insofar as value of the land and cost of construction were also existing in P. N Verma (supra), R. K '( . Sacher (supra) and Premji Bhai Parmar (supra). (x) The policy decision having been taken on the basis of 'lack ofcash flow', the stand taken by the Authority in its counter affidavit, that a large sum of money was invested for rehabilitation ofthe migrants from Jarnmu & Kashmir and Punjab is wholly untenable.

(xi) As the current cost ofthe flat was required to be determined in terms ofthe definition contained in Regulation 2(13) ofthe Regulation, any other mode or method adopted in respect thereofwas wholly illegal. (xii) Had such value been required to be arrived at having regard to the nature and time of the project when it was launched, the impugned policy decision is barred under the principle of promissory estoppel. (xiii) By reason of an Executive Order, levy cannot be imposed with retrospective effect. t- > (xiv)The Full Bench of the High Court misconstrued and misinterpreted the decision ofthe Division Bench ofthe Delhi High Court in P. N Verma (supra), which covered the case ofregistrants. 26. Mr. Arun Jaitley and Mr. Sunil Gupta, learned senior counsel, appearing on behalfofthe respondents, on the other hand, submitted : ... (i) The relationship between the parties being contractual, the writ petitions were not maintainable. DELHIDEVELOPMENTAUTHORITY,N. D. v.

JOINTACTION 833 COMMITTEE,ALLOTTEEOFSFSFLATS(SINHA,J. ] :. (ii) Price fixation offlats being within the exclusive domain ofthe Authority, the High Court has rightly refused to interfere therewith. (iii) The findings arrived at in P. N Verma (supra) falling in the line of Pushpendra Kumar Jain (supra), on the one hand, and Premji Bhai Parmar (supra), on the other, are strictly not applicable in this case as the policy decision adopted by the . ~t Authority on 22. 08. 1996 was a new one in terms whereof having regard to the equitable principle in mind, the Authority adopted a policy de'hors clause (4) ofthe letter of allotment. (iv) This Court not only in Premji Bhai Parmar (supra) but also subsequently having upheld the decisions ofthe Delhi High Court in P. N Verma (supra) and Sheelawanti (supra) and in D. D. A. v. Ashok Kumar Behl [2002] 7 SCC 135], the same constituted a binding precedent.

(v) r Sections 5 and 6 of the Act read with Regulation 5 having authorised the Authority to fix the price ofthe flats, the validity of impugned restoration policy comprising payment of surcharge of 20% and the interest on the said rate or current cost whichever is higher, could not have been questioned in writ proceedings. (vi) As the policy was formulated on the representations made by the registrants, the registrants are estopped and precluded from questioning the validity ofthe same. 4 -+ (vii) In a case of this nature where interpretation of clause of contract is involved, judicial review is not permissible. (viii) Levy of surcharge for the subsidised schemes for weaker sections ofthe society having, inter alia, been upheld in Premji Bhai Parmar (supra), the impugned policy decision must be held to be reasonable so as to satisfy the tests of Article 14 )r ) ofthe Constitution oflndia.

(ix) Cost ofthe land even in South Delhi having been worked out on the valuation ofthe land situated in Dwarka, classification i made in respect ofthe allocation at South Delhi where market rates were much higher from the actual cost, the scheme for restoration of flats in that area cannot be held to be arbitrary or discriminatory. Statutory provisions : 27. The Act was enacted to provide for the development of Delhi according to plan and for matters connected therewith or ancillary thereto. . - Interpretation clause is contained in Section 2 of the Act. Section 2(h) defines the term 'Regulation' to mean a Regulation made under this Act. Section 3 provides for constitution ofthe Authority consisting ofa Chairman, who shall be the Lieutenant Governor ofthe National Capital ... Territory of Delhi, ex-officio, a Vice-Chairman to be appointed by the Central Government, amongst others. Section 4 provides for staffofthe Authority.

Section 5-A provides for constitution of Committee in the following terms : "5-A. Constitution ofCommittee. -(1) The Authority may constitute as many Committees consisting wholly ofmembers or wholly of other persons or partly of members and partly of other persons and for such purpose or purposes as it may think fit. (2) A Committee constituted under this Section shall meet at such time and place and shall observe such Rules ofprocedure in \. -I regard to the transaction of business at its meetings as may be determined by Regulations made in this behalf. (3) The members ofa Committee (other than the member~ of the Authority) shall be paid such fees and allowances for attetldipg its meetings and for attending to any other work ofthe Authority, as may be determined by Regulations made in this behalf. " " ~ Section 6provides for objects ofthe Authority, in the following terms: "6. Objects ofthe Authority.

- The objects ofthe Authority shall be to promote and secure the development of Delhi according to DELIDDEVELOPrvi:ENTAUTHORITY,N. D. v. JOINTACTION 835 COMMITIEE,ALLOTIEEOF SFSFLATS [SINHA,J. ] plan and for that purpose the Authority shall have the power to acquire, hold, manage and dispose ofland and other property, to carry out building, engineering, and manage and dispose of land and property, to execute works in connection with supply ofwater and electricity, disposal ofsewage and other services and amenities and generally to do anything necessary or expedient for purposes ofsuch development for purposes incidental thereto : Provided that save as provided in this Act, nothing contained in this act shall be construed as authorizing the disregard by the Authority ofany law for the time being in force. " Section 52 ofthe Act reads as under: "52. Power to delegate .

- (1) The Authority may, by notification in the Official Gazette, direct that any power exercisable by it under this Act except the power to make Regulations may also be exercised by such officer or local Authority or committee constituted under Section 5-A as may be mentioned therein, in such cases and subject to such conditions, ifany, as may be specified therein. (2) The Central Government may, by notification in the Official Gazette, direct that any power exercisable by it under this Act, except the power to make Rules may also be exercised by such officer as may be mentioned therein, in such cases and subject to such conditions, ifany, as may be specified therein.

(3) The Lieutenant Governor ofthe National Capital Territory of Delhi may, by notification in the Official Gazette, direct that any power exercisable by him under this Act, except the power to hear appeals, may also be exercised by such officer as may be mentioned therein, in such cases and subject to such conditions, if any, as may be specified therein. " ) ! ' Section 57 (l)(f) ofthe Act reads as under: "57. Power to make Regulations. (1) The Authority, with the previous approval ofthe Central Government, may, by notification ~. in the Official Gazette, make Regulations consistent with this Act and the Rules made thereunder, to carry out the purposes ofthis Act, and without prejudice to ·the generality ofthis power, such Regulations may provide for - ......... (f) The terms and conditions subject to which user oflands and buildings in contravention ofplans may be continued. " ' ~ 28.

Indisputably, in exercise of its regulation making power contained in Section 57 of the Act, the Central Government made regulations kno\'. n as 'Delhi Development Authority (Management and Disposal ofHousing Estates) Regulations, 1968'. Regulation 2(13) thereofdefines 'disposal price' in the following terms: "2(13) "disposal price" or "hire purchase price" in relation to property means such price as may be fixed by the Authority for such property. " Sub-sections (25) and (30) ofSection 2 ofthe Act define "penalty" and "Scheme" respectively, as under: "2(25) "penalty" means an additional amount as laid do"-TI in the relevant agreement payable by the allottee or hirer as a consequence ofhis default in the payment ofprescribed dues;" , . ,.

"2(30) "scheme" means a scheme prepared by the Authority for the creation ofone or more housing estates;" Regulation 3 empowers the Vice-Chairman to administer the Act subject to general guidance and resolutions ofthe Authority, who may delegate his powers to any officer ofthe Authority. Regulation 5provides for disposal ofthe property which may be effected by either hire-purchase -,j or sale or in such other manner and subject to such terms and conditions as may be decided by the Authority from time to time. Regulation 6 provides for fixation ofprice to be one which may be determined by the Authority. ,_ DELHIDEVELOPMENTAUTHORITY,N. D. v. JOINTACTION 837 COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J. ] l' Regulation 8 provides for the manner ofpayment ofdisposal price. 'I Chapter III of the Regulations provides for the procedure for disposal ofproperty.

In terms ofRegulation 30 ofthe Regulations, the Authority is mandated to prepare an allotment register in which names and other particulars ofthe registrants are to be entered. The names of the persons on the waiting list should also be entered in a separate section ofthe same register in the order in which their names appear in the draw .. '; of lots. Power to decide representations has been conferred upon the Committee in regard to the selection of applicants for allotment of property. Regulation 37 provides for handing over of possession of the property. Regulation 59 provides for delegation ofall or any ofthe powers of the authority under the Regulations to the Vice-Chairman or to a whole time member. Functions ofDDA : 29. In Premji Bhai Parmar (supra), a Bench'ofthis Court noticed that the Authority had adopted a resolution delegating its power to the Vice-Chairman and the power to fix disposal price was said to have been delegated to the Vice-Chairman. 30.

At the outset, we may notice that the stand taken before us by Mr. Jaitely that the scheme in question was a new one which had to be ' -+ framed keeping in view the exigencies ofthe situation arising out ofthe representations made by the registrants, whose allotment had been cancelled, had not been raised before the High Court. Such a stand, in fact, had never been taken. 31. The Authority issues an invitation through its brochure. 32. The 5th SFS Scheme was announced in the year 1982. Any } r- person could himself get registered upon payment of fees prescribed therefor. The brochure published by the Authority indicated the tentative cost ofdifferent flats in different scheme category-wise. Pursuant thereto, an intending allocattee applies thereunder, and ifin the draw oflots he is declared successful, an allocation-cum-demand letter specifying the locality and the floor is communicated to him.

It is not the case ofthe parties that the estimated cost or the tentative cost was the final one. The Authority indisputably has thejurisdiction to fix the disposal price finally upon taking into consideration all relevant factors. In terms ofthe Jetter ofallotment the estimated price is to be paid in four equal instalments. Admittedly, question ofthe final cost is communicated to the registrants who is asked to pay the balance amount after deducting the payment made in four instalments together with the 5th instalment. The estimated cost, according to the Authority, itselfshould be worked out having regard to the following parameters. l. Cost ofconstruction 2. Community facility charges 3. Floor equilization for ground floor and subsidised for upper floors 4. Departmental charges 5. Administrative charges 6. Cost of land (Land Rate on the date of allocation letter is taken).

The land rates ofthe project area are determined on the basis of break even rates arrived on cost benefit analysis which includes cost ofacquisition, enhanced compensation and future realisations. This rate is approved by the Government oflndia. The land rates approved by the Government oflndia for Dwarka is also applied on flats in South Delhi. They are predetermined rates on actual break even basis. 7. Surcharge@20% w. e. f. 16. 8. 96. " 33. Indisputably again, other components for determining the cost remains the same every year. The only change which was effected, is the change in the land rate, which is approved by the Government. Other parameters for calculating the material cost were approved by the Vice- Chairman ofthe Authority. DELHIDEVELOPMENTAUTHORITY,ND. v. JOINTACTION 839 COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J. ] r 34. Delhi Development Authority has been created under a " ' Parliamentary Act.

It, indisputedly, is a State within the meaning ofArticle 12 ofthe Constitution ofIndia. Being so, the provisions ofPart III ofthe Constitution oflndia must be applied by it. Undisputedly, again, it has also the duty to strive hard for giving effect to the Directive Principles of State Policy as contained in Part IV ofthe Constitution oflndia. 35. Objects ofthe DDA is stated in Section 6 ofthe Act. We may "( f notice that although the heading of Section 6 states about the object of the Act, the main provision contain both its objects and powers. It is also curious to notice that its power to constitute a scheme so as to provide housing facilities to the citizens ofIndia and, in particular, those belonging to lower income group as also coming from lower strata ofthe society has not been mentioned which we would find pari materia in statutes framed by other States. [See Chairman, Indore Vikas Pradhikaran v. Mis. Pure Industrial Cock & Chem. Ltd. & Ors. , (2007) 8 SCALE 110] t 36.

It is accepted that although the Act was enacted in the year 1957, the idea ofproviding for implementation of such housing scheme started much later. The Rules, as noticed hereinbefore, were framed only in the year 1968 and implementation ofactual housing schemes are said to have been started in late seventies or early eighties. 37. While acting as a 'State' within the meaning ofArticle 12 ofthe Constitution oflndia, it is imperative that DD. A. , while inlplementing its ; statutory power, upholds the fundamental rights ofthe citizens and strive ·-1 hard to give effect to their Directive Principles ofthe State Policy. We, however, cannot also shut our eyes to the fact that in terms ofArticle 37 of the Constitution of India whereas the provisions of Part III are justiciable, the provisions ofPart IV are not. Only when an action ofthe State is taken to give effect to any of the provision of Part IV of the Constitution oflndia which is not otherwise ultra vires the Constitution . ,..

or offends the principles embodied in Part III ofthe Constitution oflndia, .. ) the same may be upheld, having regard to the provisions contained in Part III thereof. The action ofthe State, therefore, must at the first instance ba ii. djudged on the touchstone ofthe principles ofFundamental Rights and then the provisions contained in the Parliamentary Act, the regulations framed thereunder as also the terms ofthe contract entered into by and between the parties. 38. We may or may not agree with the submission oflearned counsel for the appellants that the right ofhousing arising out ofsuch a scheme is fundamental right within the meaning ofArticles 19(l)(e) and 21 ofthe Constitution ofIndia, but there cannot be any doubt whatsoever that the action ofa State must satisfy the principal requirements ofArticle 14, viz. , treating persons similarly situated equally and grant ofequal protection to them.

Reasonableness and fairness is the heart and soul ofArticle 14 of the Constitution ofIndia. Keeping the aforementioned principles in mind, we may consider the points involved herein. Scheme 39. The basic fact that the scheme was floated in the year 1991 being SFS is not in dispute. It has also not been denied or disputed before us that the said scheme in its application is fundamentally different from those ofthe others schemes, viz. , MIG, LIG, Janta and Expandable Housing Scheme. There is also not much dispute as regards the fact that in terms ofthe said scheme, estimated costs as well as rights and liabilities ofthe parties are laid down in the invitation to offer. Allocation ofthe area, floor etc. ought to be notified on acceptance ofthe offer by the registrants. Such allocation again undisputedly is made on the basis ofdraw oflot having regard to the specific number offlats available. The registrants have no choice in that behalf.

Although he might have exercised his right of option in relation to the area or the floor but then he, in fact, has no hands thereover. The letter ofallotment contains the schedule ofpayment as also other terms and conditions in support thereof. 40. We, in this batch of appeals, are principally concerned, inter alia, with the interpretation ofclause 4 ofthe Letters ofAllotment. 41. This scheme, ordinarily, was to operate within a time frame. DDA was expected to complete the constructions within a period of2Yi years. ·- Four six-monthly instalments were required to be paid by the registrants within the aforementioned period which would include, the gr! ice period. 42. Whereas ninety days' time is not taken into consideration for DELHIDEVELOPMENTAUTHORITY,N. D. v. JOINTACTION 841 COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J. ] ,.

the purpose ofcomputing the default clause, indisputably, again the power " ofthe authority to regularize the default on receipt of interest@ 18% per annum on the amount due to and owing to an allottee is specifically provided for. The period of2Yz years vis-a-vis the six-monthly interest must have been laid down keeping in view the fact that whereas the amount deposited by the registrants by instalments would be invested for construction ofthe flats. 18% interest is prescribed for default both on the part ofthe DDA as also on the part ofthe registrants. No time limit / f is fixed for completion ofthe scheme. The only penalty which the scheme prescribes is payment of interest. So far as area ofSFS is concerned, registrant has no role to play. Admittedly, constructions have been completed in the year 2000. 43. For interpretation ofclause 4 ofthe scheme, the aforementioned background is required to be borne in mind.

Ingredients of clause 4 are : "(a) The allotment letter would indicate the four due dates on which the first four installments are to be paid. The fifth installment would be paid on demand. (b) 90 days delay in the first four instalL111ents is condonable subject to payment ofprescribed interest. (c) After the expiry of 90 days if payment is not made for first four installments there would be automatic cancellation. (d) This automatic cancellation can be restored on payment of ~ interest and other charges subject to availability ofthe flat. (e) The cancellation due to non-payment offinal installment will be made ifthe payment is not made within 120 days with no provision ofany further extension. " 44. It has not been denied or disputed that 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. 45.

It may be true that recourse to clause (d) should be undertaken by the a! locattees within a reasonable time. What would be a reasonable time would, however, depend on the facts and circumstances ofeach case. No hard and fast mle can be laid down therefor. 46. In a given case, it may be a few months but in another having regard to the conduct ofDDA, it may be one year or more. What would constitute a reasonable period must also be considered keeping in view the rights ofthe 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 aperiod of 120 days. In a situation ofthis nature, it may not be unjustified to arrive at the conclusion that such right can be exercised, ifnot, when the flats were ready for handing over actual possession, but at least when there has been a substantial progress.

We must also take into consideration that the scheme, the letter of allotment, the contract between the parties to pay interest in case of default to each other leads to a conclusion that DDA in its wisdom thought that payment of 18% interest shall subserve the purpose. We, however, hasten to add that it does not mean that DDA must entertain such an application for restoration and/or condonation ofdefault despite lapse of time. It has its own right in relation thereto which may be invoked. The right to allot the flat to a person who is on the wait-list as a result whereof E a seal offinality can be put, the right ofthe registrants or registrants even the whole or a part ofthe advance or other amounts deposited by him stand forfeited. Interpretation ofthe Act : 47. DDA functions through the Committees constituted in terms of Section 5A of the Act. Power has been delegated in favour of its Chairman and the Vice-Chairman.

Such delegation ofpower, however, as provided for under Section 52 ofthe Act does not extend to make regulations. What, therefore, cannot be done by way ofregulation, cannot be done by executive order. 48. It has not been denied or disputed that having regard to clause 5. 10 of the brochure and clause 4 ofthe letter of allotment, the term "tentative cost" must be given its natural meaning. DELHIDEVELOPMENTAUlHORITY,N. D. v. JOINTACTION 843 COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J. ] r 49. It varies from time to time as it is not a one time process. The ... price difference between the estimated cost and the initial cost "as it worked out on the completion as per costing formula in vogue" would have to be paid along with the 5th and final instalment. Notifications : 50. The impugned circulars have three distinct elements : ~· 1. Price ofSouth Delhi flats would be worked out by adding 20% ' surcharge in terms ofthe office order dated 16. 8. 1996 duly approved on 22. 8. 1996. 2.

20% surcharge will have to be paid in case where there is small delay, in which case only interest has to be paid. 3. In all other cases original cost + 18% or the current cost whichever is higher would be payable. 51. Legality and/or validity ofthe said circulars is in question. We may, at the outset, notice that there is nothing on record to show that the Office Orders dated 16. 8. 1996, 27. 8. 1996 and 21. 3. 1999 were published in the Gazette or were otherwise brought to the notice ofthe registrants. Conduct: 52. Conduct ofthe parties may be noticed from the case ofManjit Singh. Admittedly, the registrants failed to pay instalments within the stipulated period. A notice dated 23. 4. 1997 was served on him which is ,;-, , ,,.. in the following terms : -f "WHEREAS you had been allocated a second floor category - II, SFS flat in Pkt. F, Sheikh Saria Residential Scheme vide allocation - cum demand letter dated 31. 3.

93 under the DDA (Management & Disposal ofHousing Estates) Regulations 1968 against your registration under the 5th SFS - 1982. AND WHEREAS as per the allocation cum demand letter the 1following installments were to be paid as per the following schedule:- Installments Amount Due Date Installment Challan 1 ~ paid on No. I. st Rs. 1,35,867/- 30. 4. 93 24. 5. 93 032601 (Rs. 1,35,867) Ilnd Rs. 1,25,060/- 30. 10. 93 30. 10. 93 112025 31. 05. 94 (Rs. 43,675) (Rs. 50,000) -... • IIIrd Rs. 1,56,325/- 30. 4. 94 24. 11. 94 010243 (Rs. 50,000) IVth Rs. 1,25,060 30. 10. 96 25. 07. 96 010245 (Rs. 50,000) From the perusal ofthe above chart, it can be seen that you have not deposited the installment as per schedule indicated in the allocation cum demand letter. AND WHEREAS as per the terms and conditions of the , allocation cum demand letter as contained in Clause - 4 the allocation was liable to be cancelled ifthe installments are not made as per the schedule.

AND WHEREAS it is evident that you failed to deposit the installments as per the schedule and thus have committed the breach ofthe terms and conditions ofthe allocation cum demand letter dated 31. 3. 1993 . ~-, Therefore, I, Dy. Director (SFS) hereby inform you that the " " allocation made to you vide letter dated 26. 3. 93 - 31. 3. 1993 stands automatically cancelled due to the breach ofthe terms and conditions ofallocation. It is further inform (sic) that the 5th SFS Scheme 1982 stands already closed, therefore, you are advised to return all the original FDR, Demand cum allocation letter and third copy ofchallan so ~ that your case can be processed for the refund of the amount deposited by you. " DELHIDEVELOPMENTAUIBORITY,N. D. v. JOINTACTION 845 COMMJTTEE,ALLOTTEEOFSFSFLATS[SINHA,J. ] , 53. He submitted a representation praying for condonation ofdefault.

'I In his representation, he stated: "Immediately on receipt ofthe DDA letter I ran hither and thither for financial loans from relatives, friends, and well wishes and was able to deposit Rs. 2,12,770/- vide challan No. 039576 dated - 12. 5. 97 (Annexure F) bringing the total payment to DDA to 90% ofthe cost of flat. The flats are yet to be completed. > /- I now, therefore, humbly APPEAL to you to condone the delay in the payment of installments for reasons stated above, on humanitarian and compassionate grounds and to regularise the allocation ofthe flat for which act ofkindness I shall ever pray. I am also ready to pay any amount yet due in the form ofinterest. " 54. The said representation was accepted by DDA in terms of a letter dated 10. 12. 1998 which reads as under : "It is our pleasure to inform that you have been allotted SFS Flat with the following details through a computerized draw held on _j 10/1998:- Flat No.

61 Floor SEC Category II Sector Block Pocket "' Type Locality SHEIKH SARAI We are advising the Housing Acts Department to issue the 5th and Final Demand Letter to you at the earli\:st. " 55. It allotted the flat. No condition therefor was put. It did not ask I" for payment ofany surcharge. The original terms were not deviated from. .. > It did not ask for any extra-cost. The delay in payment ofinstalments was condoned and the allocation offlat which stood cancelled in terms ofthe aforementioned notice dated 23. 4. 1997 stood restored. DDA, thus, acted strictly in terms ofthe original scheme. The offer ofthe allocattee was accepted relying on or on the basis ofclause 4, viz. , the amount ofdefault " and an interest charged thereupon@ 18% per annum. It is only when the 5th and final instalment was directed to be paid in tenns of demand letter dated 15. 2. 1999, the current cost computed in tenns ofthe office order dated 16. 8. 1996 and subsequent office orders was included.

The allocattee at that stage might not have any other option but to pay the same for obtaining possession. But by reason thereof, he never gave up his right to question the action on the part of DDA. Rule of estoppel, _. "therefore, has no application. 56. It was, on the other hand, DDA who having accepted the offer C ofthe allocattee by restoring the allotment, in our opinion, is estopped and precluded from raising a plea as regards application ofoffice order dated 16. 8. 1996. It may be noticed that even contents of those letters were not disclosed to the allocattee. Was it a Restoration Scheme ? 57. The office orders, on the basis whereofthe purported impugned policy had been taken, do not refer to the scheme as a restoration scheme. The resolutions do not say so. Had it been so, DDA would have issued fresh notification or at least made its stand clear to the allocattees either by way ofpublic notice or by informing each ofsuch defaulters individually.

Had such conditions for the purpose of restoration being made known, the allocattees would have accepted it or rejected it. Evidently, it is a part ofthe original scheme. It is not a new one. It is well known principle of law that a person would be bound by the tenns ofthe contract subject F of course to its validity. A contract in certain situations may also be avoided. With a view to make novation of a contract binding and in particular some ofthe tenns 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 perfonned, impose tenns and conditions which were not part ofthe offer and which were based upon unilateral issuance ofoffice orders, but 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 ofthe original DELHIDEVELOPMENTAUTHORITY,ND. v. JOINTACTION 847 COMMITTEE,ALLOTTEEOFSFSFLATS[SlNHA,J. ] >- scheme, DDA in its counter affidavit either before the High Court or before • us did not raise any contra plea. Submissions ofMr. Jaitley in this behalf could have been taken into consideration only ifthey were pleaded in the counter affidavit filed by DDA before the High Court. 58. We have also reservations that in absence of any provision contained in the Act or the Regulations, the delegatee on its own could frame such a new scheme. Ifnot, the purported restoration policy would . ,. be ultra vires. We, therefore, cannot persuade ourselves to agree with + the contention ofDDA that the restoration policy cannot be tested on grounds ofterms and conditions of the original scheme.

If it is a new scheme, it would bear repetition to state, the terms contained therein should have been known to the allocattees. We, thus, have no other option but to proceed to consider the legality and/or validity of such imposition on the premise that the impugned policy decision is a part ofthe original scheme and does not contain any new policy. Policy Decision : •• 59. An executive order termed as a policy decision is not beyond the pale ofjudicial review. Whereas the superior courts may not interfere with the nitty gritties ofthe policy, or substitute one by the other but it will not be correct to contend 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 would not be without jurisdiction as it is subject to judicial review. 60.

Broadly, a policy decision is subject to judicial review on the i following grounds : (a) ifit is lll1constitutional; (b) ifit is de'hors the provisions ofthe Act and the Regulations; (c) ifthe delegatee has acted beyond its power of delegation; (d) ifthe executive policy is contrary to the statutory or a larger )o. . > policy. 61. The stand taken by DDA itself is that the relationship between the parties arises out ofthe contract. The terms and conditions therefor were, therefore, required to be complied with by both the parties. Tenns ~ and conditions ofthe contract can indisputably be altered or modified. They cannot, however, be done unilaterally unless there exists any provision either in contract itselfor in law. Novation ofcontract in tenns of Section 60 of the Contract Act must precede the contract making process. The parties thereto must be ad idem so far as the tenns and conditions are concerned.

IfDDA, a contracting party, intended to alter or modify the tenns ofcontract, it was obligatory on its part to bring the same to the notice ofthe allocate. Having not done so, it, relying on or -t "' on the basis of the purported office orders which is not backed by any statute, new tenns of contract could thrust upon the other party to the contract. The said purported policy is, therefore, not beyond the pale of judicial review. In fact, being in the realm ofcontract, it cannot be stated to be a policy decision as such. Price Fixation 62. We would assume that the office orders were issued by DDA keeping in view the representations made by a large number ofdefaulters. The plea taken by DDA gives rise to a dichotomy. If it is a case of contract qua contract, the provisions ofthe Contract Act must be taken recourse to. 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 ofpeople, although is governed by statute, power under the statute by an executive not only can be tested on the touchstone ofArticle 14 ofthe Constitution ofIndia, but can also be tested on the touchstone of source of the power under the statute. + No provision either in the Act or the Regulations was brought to our notice which makes the allocattee bound by the purported policy decision taken by DDA. Even if it is so, the superior courts may exercise its power 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 ofjudicial review. 63. In Gujarat State Financial Corporation v. Mis. Lotus Hotels Pvt. Ltd.

, [1983] 3 SCC 379: AIR (1983) SC 848], it is stated that such contracts can be subject to judicial review. DELHIDEVELOPMENTAUTHORITY,N. D. v. JOINTACTION 849 COMMIITEE,ALLOITEEOFSFSFLATS(SINHA,J. ] ~ / 64. Regulations 5 and 6 should not be very liberally construed. " Concededly, the manner in which power is to be 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 exist any absolute ban. In a case where fixation ofprice is required to be made in a particular manner and upon taking into consideration the factors prescribed and ifprice is fixed de' '. ;'. f hors the statutory provisions, judicial review would be permissible. 65. Strong reliance has been placed upon the residuary power conferred upon the Authority to determine the cost ofconstruction. ~ 66.

When the same is done having regard to the relevant factors on the basis ofwhich brochure as well as the notice inviting tender was issued, ...... the superior courts may not interfere; but the same must be done in terms of the original contract and not de' hors the same. The authority, even while exercising its residuary power, is required to act within the four comers ofthe contract. While doing so, the terms ofthe 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. Ifsuch a power is conceded in the authority, the same would give rise to exercise of arbitrary power. It is not contemplated in law. When construing a provision delegates a power on an authority under a statute, the constitutional provisions must be kept in mind _. 67.

At the time of calculation ofthe amount which would be the subject matter ofdemand of5th and final instalment, the jurisdiction of DDA is to keep itselfconfined only to the factors on the basis whereof, the brochure has been issued and offer was made. No additional factor, thus, could be taken into consideration at the time ofissuing notice other than the ones on the basis whereof offer was made by the registrants. Imposition ofequalization charge also falls within the said purview. ;=a. "' 68. There may be some charges like conversion charges which per se may or may not be bad. Conversion charges levied by the DDA pursuant to the directions issued by the Central Government which in tenns ofSection 41 ofthe Act is binding on DDA for converting the leasehold into freehold. However, such a power also must be exercised reasonably and fairly. Conversion ofthe property from leasehold to freehold is a separate transaction. The same has nothing to do with the actions, qua contract.

Imposition ofconversion charges, therefore, even if, per se, may not be held to be bad, the said factor cannot be taken into consideration for the purpose of computing construction costs. The High Court has struck down the inclusion ofsuch conversion charges in the costing of the flats. After 1996, the ordinary cost of construction of a flat was Rs. 2,00,000/-, in South Delhi but not only it framed the basis for computing the final cost but also 20% additional amount as also 20% surcharge were claimed thereupon. Sometimes interest also was charged as and when applicable. Thus, so long the conversion charge is charged by way of a separate transaction, no exception can be taken. But, purpo1ted price fixation as has been done in the instant case cannot receive our approval. The same is, thus, in our opinion, bad in law. Applicability : 69. The scheme in question was floated in 1992-93.

The purported default on the part ofthe registrants took place prior to the purported adoption of the policy decision. The purported office order dated 16. 8. 1996 discloses shows that an internal decision had been taken to condone the delay in making payments of first four instalments. The authorities mentioned therein had been delegated with the power for the period(s) mentioned as under: Director (H)-1 Upto 3 months Commissioner (Housing) Upto 1year Principal Commissioner From 1 year to 1 Yz year Vice-Chairman Full powers Clause 3 ofthe said office order reads as under: "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 aforesaid revision took place, delays ofone year or so were being regularized DELHI DEVELOPMENTAUTHORITY,N. D. v. JOINTACTION 851 COMMITTEE,ALLOTTEEOFSFSFLATS[SlNHA,J. ] with usual charges, i. e.

, on payment of 18% interest per annum and resto