MUNICIPAL CORPORATION CHANDIGARH AND ORS. ETC. v. M-S SHANTIKUNJ INVESTMENT PVT. LTD

Citation: [2006] 2 S.C.R. 768

Court: Supreme Court of India

Bench: B.N. AGRAWAL, A.K. MATHUR

Case summary

MUNICIPAL CORPORATION CHANDIGARH AND ORS. ETC. v. M-S SHANTIKUNJ INVESTMENT PVT. LTD.pdf

Judgment text

MUNICIPAL CORPORATION CHANDIGARH AND ORS. ETC. "( v. MIS SHANTIKUNJ INVESTMENT PVT. LTD. FEBRUARY 28, 2006 [B. N. AGRAWAL AND A. K. MATHUR, JJ. ] Chandigarh Lease--Hold of Sites and Buildings Act, 1973; Sections 2(b), 7, 8 and 8-A-Chandigarh Lease-Hold of Sites and Buildings Rules, ...

• 1973; Rules 3(2), II, 12 and 13--/ndian Contract Act, 1872; Section 87- Specific ReliefAct, 1963; Section 2(a)-Transfer ofProperty Act, I882; Sections /05 and 108-Al/otment ofplots by State to allottees on payment of initial premium with a conditicn to pay remaining amount in instalments-Allottees refased to pay instalment amounts contending that the State has not provided amenities under the Act-State initiated steps to levy interest, penalty and resumption of plots for non-payment of instalments and ground rent-Writ Petitions by allottees before High Court-High Court holding contrary views in different Writ Petitions-Whether provision ofbasic amenities by the State is a condition precedent to demand payment ofinstalment amount and ground > rent from the allottees-Held, provision ofbasic amenities is not a condition precedent for payment of instalment amounts and ground rent under the Act and Rules and under the terms and conditions ofauction and lease-Al/ottees are bound to pay instalment amounts being part of the contract-Matters remitted back to High Court for fr•~sh disposal on the facts ofeach case.

Allottees were allotted residential and commercial sites on lease by State on payment of premium. As per the terms and conditions of the lease, the remaining amount would be required to be paid by the allottees to the State in instalments. The State demanded payment of interest and y • penalty from the allottees for non-payment or short/delayed payment of instalments and ground rent. The allottees filed Writ Petitions before High Court challenging the arbitrary demand of payment and resumption and forfeiture of allotment of the sites by the State contending that the State cannot demand the payment on the ground that basic amenities for use and occupation of the sites have not been provided by the State. One Division Bench of the High Court allowed the writ petitions of the allottees ~ .. holding that provision of basic amenities is a condition precedent to the MUNI. CORPN. CHANDIGARHv. SHANTIKUNJ INVEST. rvr. LTD. 769 payment of instalment and ground rent.

Another Division Bench of the High Court held a contrary view holding that provision of basic amenities is not a condition precedent. Hence the appeals by the State and the allottees.

The allottees contended that the word 'amenities' under section 2(b) of the Chandigarh Lease-Hold of Sites and Buildings Act, 1973 should be given an extended meaning; that Rule 12(2) of the Chandigarh Lease- Hold of Sites and Buildings Rules, 1973 should be interpreted to mean that the State should provide basic amenities within the agreed period of payment of instalments by the allottees; that the expression 'enjoy' under Rule 3(2) of the Rules would become redundant if all the amenities provided under section 2(b) of the Act were not provided first by the State; that the State has failed to perform its promise under section 67 of the Indian Contract Act, 1872; that under Section 2(a) of the Specific Relief Act, 1963, when a property is leased out, it presupposes that the amenities should be provided on payment of premium; that under sections 105 and 108 of the Transfer of Property Act, 1882, the rights and liabilities of lessor and lessee are co-terminus; and that the provisions of a Statute should be interpre~ed in such a manner that it advances the cause of the ~ public.

The State contended that the 'amenities' under section 2(b) of the Act, 1973 cannot be given an extended meaning; that providing amenities was never a condition precedent and the necessary amenities had already been provided; and that it is not running away from the legal obligation in providing remaining amenities. Disposing of the ·appeals, the Court HELD: 1. 1. On a plain reading of the definition "amenity" under section 2(b) of the Chandigarh Lease-Hold of Sites and Buildings Act, 1973 read with Rules 11(2) and 12 of the relevant Rules, it cannot be construed to mean that the allottees can contend that they are not under any obligation to pay instalment, interest and penalty, if any, under the Act and the Rules since all the amenities were not provided by the State. It cannot be accepted to lay down a sweepi! 'g proposition that if all the facilities or amenities are not provided, then the allottees need not have to pay the lease amount, interest and penalty. (783-G-H; 784-A-B) 1.

2. The word 'enjoy' stated in the definition of "premium" under Rule 3(2) of the Rules does not mean that the allottees cannot enjoy the immovable property without the amenities being provided. It means that the allottees have a right to use the' immovable property which has been leased out to them on payment of premium. This is only the price to enjoy the property. Otherwise, walking over to the property will mean a trespass. This is only a permissive possession. Promise by the State that the basic amenities will be provided in due course of time cannot be made a condition precedent. This ha. s never been a condition of the auction or of the lease. An allottee is under an obligation to pay the amount as per the condition of lease and he cannot get out of it on the ground that the basic amenities have not been provided for enjoying the allotted land. This construction is not borne out from the scheme of the Act and the Rules.

The term 'amenity' in the 1:ontext of real estate is to mean the facilities as provided under Section 2(b) of the Act but it can never be treated to mean that this is a condition precedent. It is for the better use of the allotted piece of land but that does not mean that it should be provided first as a condition precedent. It is a statutory obligation of the State to provide amenities but not a condition precedent. (784-C-E; F-G; 785-A-B; D-H( Sector-6, Bahadurgarh Plot Holders' Association (Regd) and Ors. v. State ofHaryana and Anr. , (1996) 1 SCC 485, relied on. • Kumari Shrilekha Vidyarthi and Ors. v. State of UP. and Ors. , (1991) 1 SCC 212; Jamshed Hormusji Wadia v. Board ofTrustees, Port ofMumbai and Anr. , [2004) 3 SCC 214; Commissioner ofIncome Tax v. Sun Engineering Works (P) Ltd. , [1992) 4 SCC 363; Divisional Controller, KSRTC v. Mahadeva Shetty and Anr. , (2003) 8 SCC 266; (2004) 6 SCC 186; K. P. Varghese v. Income Tax Officer, Ernakulam and Anr.

, (1981) 4 SCC 173; State ofHaryana and Ors. v. Bhajan Lal and Ors. , (1992) Supp. 1 SCC 335; C. B. Gautam v. Union ofIndia, (1993) 1 SCC 78; Megh Singh v. State ofPunjab, (2003) 8 SCC 666; Collector ofCentral Excise, Calcutta v. Alnoori Tobacco Products and Anr. , (2004) 6 SCC 186, referred! to. Advanced Law Lexico11 (3rd Edition, 2005); Webster's Dictionary referred to. 1. 3. Section 67 of the Indian Contract Act, 1872 has no application as there was no specific promise on the part of the State that providing of .... _ • the amenities shall be a condition precedent. Section 2(a) of the Specific Relief Act, 1963 also has no application as there was not an obligation on the part of the State to provide the amenities before handing over of the MUNL CORPN. CHANDIGARH"·SHANTIKUNJINVEST. PVT. LTD. 771 "'f possession ()f the allotted plots.

Therefore, there is no question of any obligation being enforceable by any mandamus as there is no such obligation as per the terms and conditions of the lease or by the Act or the Rules. Similarly sections 105 and 108 of the Transfer of Property Act, 1882 also have no application as there is no condition in the lease deed or any obligation of the lessor in the lease deed that they will not charge interest on the instalments ·before providing the amenities. 1787-C-G) • >« 1. 4. A statute should be interpreted in the manner which advance the cause ofthe public. But when the issue comes where there is a sta~utory obligation, then certainly this Court will not hesitate to do so. But in the absence of such obligation, it is not correct to lay down that this was a condition. precedent and allow the allottees to waive their obligation to pay the instalments with interest (788-A-B]. 1. 5.

The appeals are remitted back to the High Court for a very limited purpose to see that in cases where facilities like kutcha road, drainage, drinking water, sewerage, street lighting have not been provided, then the High Court may grant the allottees some proportionate relief in . the matter of payment of penalty under Rule 12(3) and delay in payment of equated instalment or ground rent or part thereof under Rule 12(3A) of the Rules only. Payment of instalment is a part of the contract and therefore the allottees are under obligation to pay the same. Payment of penalty and penal interest shall depend on facts of each case which has to be examined by the High Court. (790-G; 791-A-C] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1342 of2006. From the Judgment and Final Order dated 2. 2. 200l of the Punjab and ... y Haryana High Court in C. W. P. No. 959/1999. WITH Civil Appeal Nos.

1343, 1344, 1345, 1346, 1347, 1348, 1349, 1350, 1351, 1352, 1353, 1354, 1355, 1356, 1357, 1358, 1359 and 1360 of 2006. A. Sharan, ASG, Amicus Curiae (N. P. ), Ranjit Kumar, M. L. Vanna, Ms. Kamini Jaiswal, Ms. Shomila Bakshi, Ms. Sunita Diwedi, Ms. Rani, S. K. Jain, Vikas Jain, M. C. Dhingra, Ms. Naresh Bakshi, Pradeep Misra, Neeraj . , Kumar Jain, Aditya Kumar Chaudhary, Bharat Singh, Sanjay Singh, U. S. Prasad, Nidhesh Gupta, Ms. Nidhi Gupta, Vinod Shukla, Ms. S. Janani, A. P. 772 SUPREME COCRT REPORTS [2006J 2 S. C. R. Bhandari, S. C. Patel, Ms. Meera Mathur, Maninder Singh, Ms. Pratibha M. .. . ,,. Singh, Sunil Fernandes, Saurabh Mishra, Satya Mitra, Daljit Singh Ahluwalia, Ms. Neelam Kalsi, Vimal Chandra S. Dave, P. N. Puri, A. K. Aggarwal, Sudershan Goel, B. S. Bedi, Dinesh Verma, J. P. Tripathi, A. P. Mohanty, K. V. Mohan, K. Datta and R. K. Choudhary for the appearing parties. The Judgment of the Court was delivered by A. K. MATHUR, J. Leaw granted.

All these petitions involve common question of law, therefore, these . . are taken up together for disposal by the common judgment. In all these petitions, there are two class of petitions, one filed by the private parties/individuals against the Division Bench judgment ofthe Punjab & Haryana High Court whereby the Division Bench has not given any relief following its judgment passed in CWP No. 13695 of 200I dated 18. 2,2002 [Mis. D. L. G. Builders Private Limited v. The Advisor to the Administrator, Chandigarh Administration & Ors. ,]. The relevant portion of that judgment reads as under: "In our considered view, the allottee is bound to pay the premium and other charges in accordance with the conditions of allotment. If the judgment of Mis. Shanti Kunj Investments Pvt.

ltd (supra) is read as laying down a proposition that the allottee is not obliged to pay the balance of premium even after raising construction of the building and occupying it on the pretext that beautification ofthe site has not been done or land-scaping has not been provided or payment of the tiles has not been done, extremely anomalous consequences would follow inasmuch as, the allottee would construct building and utilize the same by renting out or otherwise and hereby reap huge benefits, but would not pay a single penny towards balance ofpremium and ground rent etc. Therefore, while examining the complaint ofthe allottee about the lack of amenities, what the Court is required to consider is whether the basic amenities, electricity, approach road, sewerage and drainage have been provided in the area so as to facilitate construction ofthe building within the specified time.

Ifsuch amenities have been provided, the Court will not interdict in the matter and facilitate withholding of the balance of premium, ground rent etc. Rather, it would insist that all the dues of public money are paid by the allottee in accordance with the relevant rules/ regulations and >-.. I MUNL CORPN. CHANDIGARHv. SHANTIKUNJ INVEST. PVT. LTD. [AK. MATHUR, J. ] 773 conditions of allotment. " Another class of cases in which the Municipal Corporation of Chandigarh and the Chandigarh Administration have filed the special leave petitions against the order passed by the Division Bench of the Punjab & Haryana High Court against the judgment dated 2. 2. 2002 passed in Mis. Shantikunj Investment Pvt. Ltd. and batch. Relevant portion of the judgment reads as under : "They having failed to provide the basic amenities, the order of • )I resumption and forfeiture cannot be sustained. The impugned orders are, consequently set aside.

The respondents are directed to provide the amenities in accordance with law. The needful shall be done within . three months. No interest shall be chargeable from the petitioners if they make the entire outstanding· amount within three months from the date of the provision of the amenities. " It would not be proper to refer to all individual cases because various orders have been passed by the High Court from time to time but largely, the· cases have been divided into two class of cases i. e. one governed by Mis. '" Shantikunj Investment Pvt. Ltd. and the other governed by M/s. D. L. G. Builders Private Limited. We are only deciding the question in principle and leaving the rest to be decided by the High Court. In all these petitions, the common question is whether grant of the amenities is a condition precedent or not.

All the plots in question were allotted by the Chandigarh Administration as well as the Municipal Corporation of Chandigarh on certain terms and conditions of the sale of residential and cQmmercial sites & buildings by auction on lease for 99 years and certain terms and conditions were laid down therein. But the challenge in these various petitions filed before the Punjab & Haryana High Court was that the basic amenities were not provided and, therefore, the Chandigarh Administration and the Municipal Corporation of Chandigarh were not entitled to charge interest @ 18% or 10%, as the case may be, on the installment as well as non-payment of installment and non-payment of the ground rents. Likewise, they cannot charge the penalty for delayed payment at the rate of l0% and at the rate of 24% interest on the amount falling short of equated instalment or part thereof and likewise on the ground rents.

So far as the Division Bench of Punjab & Haryana High Cm1rt in the case of Shanti Kunj Investment (supra) held that providing of amenities is condition precedent to the payment of the interest and penalty. As against y this, two Division Bench in the case of G. S. Khurana v. Chandigarh Administration by order dated 18. 2. 2002 and in the case of DU. J Builders Pvt. Ltd. v. The Advisor to the Chandigarh Administration have taken a different view in the matter. In Shanti Kunj, the Division Bench held that grant of amenities is a condition precedent whereas, in the case of DLG Builders and G. S. Khurana, it took a contrary view to the effect that it is not a condition precedent. This apparent contrary view has given rise to all the litigation before this Court. In order to resolve the inconsistent view of the two Division Bench, we shall the decision. But that is not the case here. · A reference was made to a decision of this Court in the case ofCollector ofCentral Excise, Calcutta v.

Alnoori Tobacco Products & Anr. , reported in [2004] 6 sec 186. In this case, it was held that observations in judgments + should be read in the context in which it is stated and the same should not be • construed as statutes. There is no doubt about this proposition of law. Therefore, this decision also does not advance the case of the respondents. In the case of Kumari Shrilekha Vidyarthi & Ors. v. State of U. P. & Ors. , Reported in [1991] I SCC 212, their Lordships propounded the theory of legitimate. expectation. Legitimate expectatio'. 1 does not mean illegitimate flight of fancy. Legitimate expectation means that what has been held out in the terms and conditions of the auction and the lease deed. Legitimate expectation and the provisions of the Act cannot be n~ad together to mean that the terms of the auction and the lease deed should be ignored. Learned counsel invited our attention to a decision of this Court in the case of Jamshed Hormusji Wadia v.

Board of Trustees, Port of Mumbai & Anr. , reported in [2004] 3 SCC 214. This was a case where the question was whether the Board of Trustees, Port of Mumbai is a State within the meaning of Article 12 of the Constitution or not. Their Lordships have observed that the instrumentality of the State cannot act in an arbitrary or capricious manner. All the State action must be for public good for which it exists. This does not mean that public can take up on itself to ignore to abide by condition of auction & refuse to pay State its dues. In this background, we are of the opinion that the interpretation of the Act and the Rules given by the Division Bench of the Punjab & Haryana High Court in the impugned judgment (M/s Shanti Kunj Investment Pvt. Ltd. ) cannot be sustained.

It has been contended by the counsel for the Chandigarh Administration that all necessary facilities have been provided and some of the allottees have already constructed their buildings and have rented out the same and some allottees have applied for construction of Hotels also. It is not possible for us to examine all these facts individually. Some of the sectors have been fully developed and some sectors have been less developed. Therefore, it is not possible to work out that in one case it has been fully developed and in the other case it is still not developed. However, in some cases full payment has been made, in some cases two instalments have been made. Therefore, all these disputed facts have to be adequately dealt with by the High Court. We make it clear that though it was not a condition precedent but there is obligation on the part of the Administration to provide necessary facilities for full enjoyment of the same by the allottees.

We therefore, remit the matter to the High Court for a very limited purpose to see that in cases where facilities like kutcha road, drainage, drinking water, sewerage, street lighting have not been provided, then in that case, the High Court may grant MUNL CORPN. CHANDIGARHi'. SHANTIKUNJINVEST. PVT. LTD. [A. K. MATHUR,J. ] 791 the allottees some proportionate relief. Therefore, we direct that all these cases be remitted to the High Court and the High Court may consider that in case where Kutcha road, drainage, sewerage, drinking water facilities have been provided, no relief shall be granted but in case, any of the facilities had not been provided, then the High Court may examine the same and consider grant of proportionate relief in the matter of payment of penalty under Rule 12(3) and delay in payment of equated instalment or ground rent or part thereof under Rule (12(3A) only.

We repeat again that in case the above facilities had not been granted then in that case consider grant of proportionate relief and if the facilities have been provided then it will be the open on the part ofthe allottees to deny payment of interest and penalty. So far as payment of instalment is concerned, this is a part of the contract and therefore, the allottees are under obligation to pay the same. However, so far as the question of payment of penalty & penal interest is concerned, that shall depend on facts of each case to be examined by the High Court. The High Court shall examine each individual case and consider grant of the proportionate relief. SLP(Civil) No. 22517/2002. No allotment was made and no payment was deposited except the initial payment of I0%. Therefore, this petition is misconceived and the same is accordingly dismissed. In S. L. P. (c) No. 23738 of2002, the lease has been cancelled.

Therefore, whether such cancellation was legal or otherwise, the High Court will examine the same in the light of the above observations. In S. L. P. (c) No. 23941 of 2002, in fact the possession of the plot had been given on 17. 1. 2000. The allottee had a grievance that there was a mango tree on his plot which was to be removed. The High Court may decide as to what extent the relief should be granted. In S. L. P. (c) No. 14289 of2003, S. L. P. (c) No. 2948 of2003 and S. L. P. (c) ; '{ Nos. 13640-13641 of 2004, the grievance of the writ petitioners was that sewerage line was passing through the allottees' building. Therefore, possession could not be handed over and the same was handed over only after removal ofthat sewerage line from the allotted plot. This aspect may also be examined by the High Court. This Court also called for a report by appointing a Commission. The ~ --. report of the Commissioner has been placed on record.

The High Court while deciding the question of facilities provided may look into the aforesaid report. As a result of our above discussion, the order dated 2. 2. 200 I passed by t the Division Bench of the High Court of Punjab & Haryana in C. W. P. No. 959 of 1999 [Mis. Shanti Kun) Investment (Pvt) ltd. v. U. T. Administration Chandigarh & Ors. ,) which has been followed in C. W. P. 960 & 5874 of 1999 and C. W. P. No. 5009 of 1998 is set aside and orders dated 10. 5. 2001, 13. 11. 2000 & 13. 9. 2001 passed in C. W. P. No. 5561 of2000, W. P. No. 19356 of 1998 & C. W. P. No. I0233 of 2000 are also set aside. Consequently, the appeals arising out of S. L. P. (c) Nos. 12794, 12987, 12935& 13449 of 2001; S. L. P. (c) No. 12995 of 2002,S. L. P. (c) No. 16503 of 200 I and S. L. P. (c) No. 18911 of 2002 are allowed and the cases are remitted back to the High Court for deciding each case on its own merit. Rest of the cases excepting S. L. P. (c) No. 22517 of 2002 i. e. appeals arising out of S.

L. P. (c) Nos. 22515, 18978, 18353, 23941, 23737 & 23738 of2002; S. L. P. (c) Nos. 14289, 2948, 3601, 9178& 5748 of 2003 and S. L. P. (c) Nos. 13640-13641 of 2004 are accordingly disposed of and are also remitted back to the High Court for being decided in the light of the observations made above. No costs. B. S. Appeals disposed of. ;.