PREMJI BHAI PARMAR & OTHERS ETC. v. DELHI DEVELOPMENT AUTHORITY & OTHERS (2)

Citation: [1980] 2 S.C.R. 704

Court: Supreme Court of India

Bench: V.R. KRISHNA IYER, D.A. DESAI

Case summary

It is also alleged that there • was no valid or understandable justification of levying and collecting surchar~e as price cf fiats compr18ed in MIG Schemes, between 19 76 and 1977, and that from May 10, 1978, this unauthorised surcharge has been abolished....

Judgment text

PREMJI BHAI PARMAR & OTHERS ETC. v. DELHI DEVELOPMENT AUTHORITY & OTHERS December 21, 1979 [V. R. KRISHNA IYER AND D. A. DESAI, JJ. ] Constitution of India 1950 Artic. 'es 14 & 32 & Delhi De~'elop1nent Autlwrity Act 1957-Authority cunstr11cting flats and selling thc111 to public-Levy and collection of surcharge as, price of fiat in addition to the construction cost- Authority to work on 'no p1ofit no loss' basis-Such surcharge-Whether illegal -Dijcritninatory. The Delhi Development . -\uthority Act was enacted to provide for the development of IJelhi through ? \faster and Zonal Plans. 'the authority un4ertakes constructions of d'welling units for peopl'e belonging to different income groups styled as Middle Income, Lovv Income, Jaoa1. a and Ccmn1unity Personnel Service. In 1971, the authority '. :Ornmenced registration of intending applicants desirous of having dwelling units in d:ffere;nt Incom'e- Groups.

Some of the petitioners got themselves registered with the authority in accordance with the terms and condition~ laid down by it, for allotment of flats in deposits as required hy the terms and cond. itions for ~tIG Scheme at Lawrence Road, Prasad Na_Pdr and Rajouri Garden . and made the initial deposit. Th~ number of available flats being less in each scheme compared to the number of applicants registered, lots Were drawn and the petitioners were i1;1formcd that each of them should deposit the amourrt mentioned in the letter of allotment. The Petitioners paid the amount a3 intimated and Consequently a flat was aUotted to each of them and they entered into possession. Jn their \Vrit petitions under Article 32, the petitioners assailed the levy and collection of surcharge in zddition to the cost price of the flats.

It was contended on th'eir behalf that; (i) The treatment meted by the Authority is discriminatory inasmuch as no surch:_:irge was levied on flats in Ml(J schemes constructed and allotted plior to November. 1976 and after January, 1977; (ii) As the authority f0r1nulates income-wise, area-wise schemes for constructing fiats, there 8hould be only income-wise classification wholly ignoring area and time factor for classification; (iii) Levying of surcharge runs counter to the object for which th'e authority was set-up namely to make available housing accomn1odation on "no profit no loss" basis; (iv) Surcharge is arbitrary inasmuch as how the surcharge i;;; worked out in each case does not conform to any rational, • t&ngible, sch::ntifi\. ' or understandable formula; (v) The Vice-Chairrnan bad no authority to levy surcharge and that even if he has authorised the same, it runs ccuntcr to the principle of fixing disposal price incorporated in resolution No.

209 dated Nov'ember 26, 1974; (vi) Even if the Vice-Chairman had such power there is nothing to show that he has exercised this power and given direction for adding the surcharge to the disposal price and that therefore, the levy of surcharge is unauthorised; and (vii) that the nuthority has mad'e a. huge profit by levy of surcharge. The respondents raised a preliminary objection that the petitions were not maintainable under Article 32 of the Constitution inasmuch&<> the petitioners have not come to lhe Court for enforcement of a fundamental right conferred upon. P. B. PARMAR V.

DELHI DEVELOPMENT AUTHORITY 705 them under P&t Ill of the Constitution but that the petition'ers have invoked the jurisdicion of the Court for the t'elief of reopening concluded contracts, and that if the court accepts the contentions, the petitioners would deriv'e an unfair ad'vantage ovt'r ethers who may not have applied for fiats because of the price set out in the brochur'e· and if surcharge is excluded they may have applied for ! lats at a lov. :er price. The Court should not therefore entertain the petitions. Dismissing the petitions, HELD : I. 1\s the Court has heard the petitions on m constructed the property unless it is shown that he is. under any statutor~' obligati:Jn to determine cost price according to certain statutory fu1n1uJa. The authority is under no obligation to fix price of diil'erent flats in different schemes albeit in the s'1me income group at the same level or by any particular statutory or binding formulrJ.

Those who opt to take flats in a particular income-wise, ar'.. ::a-wise scheme in which all flats came up together as one project, may forn1 a 'Class and any discrsillinatory treatn1ent in the same class may attract Art. 14. But to say that the Authority would be bound to oif'er flats • income-group-wise according to the same price formula is to expect the Authority to ignore time, situation, location and other releva•nt factors which all enter the price structure. [713 F, 715 A-F] Radhakrishna Agarwal & Ors. v. State of Bi/1ar & Ors. [1977j 3 S. C. R. 249 at 255; Har Slwnkar & Ors. etc. etc. v. The Dy. Excise & Taxation Com1nr. & Ors, [1975] 3 S. C. R. 254, referred to. 2. In price fixation cxt·cutivc has a wide discretion and is only answerable provid'ed there is any statutory control over itS policy of price fixation and it is not the function of the Court to sit in judgment over such mattero; of econon1ic policy as must be necessarily left to the Government of the day to decide.

The exi:erts alone can \ sification would be income-wise, area-wise, time-wise, scherne-\vise, meaning 2. 11 flats con5tructed t at or about the same time in same area in one project for particular income-group vvill fo1m a class. nnd there is no discrimination a1nongst them. [716 G-H_. 717 A-B] 4. Pricing policy is ;:;n executive policy. Jf the :\uthority \\:ls set up for making available dweJling units at reason<>bie prices to person·; belonging to different groups it would not be precluded from devising its 'J\'. :n price formula for different income-groups. If in so doing it uniformally collects something more than cost price from tho lightest or e\'en a remote reference to "no profit no Joss" formula for determining the cost price. A survey of the Regulations do not spell out any formula for price determination on the basis of "no profit no loss".

Proj~t-wise price fixation cannot b'e dubbed as arbitrary or djscriminatory by comparing it with other projects at different places or at different times. [719 A-B & E-F] In the instant case after the work commenced and the actual cost estimate started coming in t:he revised estimate for 304 fiats was of the order of • Rs. 2,07,33,000/- which was approved by the Vice-Chairman on Septen1ber 18, 1976. According to the revised estimate the approximate disposal cost for each flat rame tc Rs. 68. 202/- and. the cost of laond per d¥lelling unit was Rs. 7008/-. The revised estimate s110,ved the disposal price of each flat as Rs. 75. 200/-. The Commissioner of Income Tax \\·ho wanted to acquire 40 1flG flats in Prasad Nagar area offered the price of Rs. 75. 000/- per flat which prlce was accepted. The difference between the cost price and th~ dispo. ~al price of Rs.

75,000/- per Jlat \Vas treated as snrchargc and the purpose ,·vas to use the- extra n1oney for extending pnc'e reduction benefit to the allottees of flats in LlG, Jana. ta and CPS schen1es. It is therefore difficult to entertain the contention that even if surch&rge could be justifi'ed its actual computation is arbitrary and irrational. [720 B-E, E-FJ P. B. PARMAR v. DELHI DEVELOPMENT AUTHORITY 707 8 . The Vice-Chairman is appointed by the Central Government as per Section ' 3(3 )(b) of the Act. He is a whole time officer and the Chief Executive of the . ( Authority. The contposition of the Authority as set out in section 3 would include su•. ::h persons as Finance and Accounts Member, Engine'ering Member. representatives of Municipal Corporation of Delhi a. nd representatives of Metropolitan Coun~il. Three other persons, were to be nominated by Central Government of whom one shall be person with experience of planning. It is a high power body.

Yet it completely abdicated its power and authority . i. n favour of ! lousing Comm! ttee. The ! --lousing Committee \Vil! practivally the • Central Gover,;nment may think ftt. Section 5 contemplates the ', constitution of an Advisory Conncil for the purpose of advising the Authority on the preparation of the master plan and on such matters relating to the planning of development or arising out of or in connection with the administration of :he Act. Section 5A which was added by am~nding Act 56 of 1963 confers power on the Authority to constitute as many committees con,isting wholly of members or wholly of other persons or partly of membens and parly of other persons and for such purpose or purposes as it may think fit. Chapter III-A which was inserted by the Amending Act of 1963 confern power for moJification of the master phfn once prepared. Chapter JV providog for development of lands.

Chapter V confers power on the Central Government to acq uirc land (or the purposes of development or for any other purpose under the Act under the provisions ot tho Land Acquisition Act, I 894, and further authorises the LtUtral Governmeht to transfer the :and so acquired to he Authority. Chapc·er VI provides for finances and audit of the accounts of the Authority. ll Ch8pter VII provides for supplemental and miscellaneous provisions. Section 52 confers power on the Au:hority to delega:e any power exercisable by it under the Act, except the power to make regulations, on such officer or local authority or committee constitucd under s. .. SA as may be mentiohe ed. A preliminary objection was raised by the Authority that the petitions are not maintai·nable under Art.

32 of the Constitution inasmuch as the petitioners hav•2 not come to the Court for enforcement of a fundamental right con(erred upon tbe petitioners under Part III of the Constitution but the petitioners have invoked jurisdiction of this. C::ourt for ~ relief of re-opening concluded contracts. It was also submitted that if the Court accepts the contention of the petitioners they would derive an unf"ir advantage over others who may not have applied for \ . / flats because of the price set out in the brochure and if surcharge is exc:uded they may have applied for flats at a lower price and, therefore, also the Court should not entertain the petitions. Though we are not inclined to reject the petitio"ns on this preliminary objection as we have heard them on merits it is undeniable that camouflage of Art.

14 cannot conceal tbc real purpose motivating these petitions, namely, to get back a part of the purchase price of flats paicl by the petitioners with wide open eyes after flats have been securely obtained and petitio·n to this Court under Art. 32 is not a proper remedy nor is this Court a proper forum for re-opening the ,ified on the basis of a valid classification, that there would be a violation of Art. 14, (see East India Tobacco Co. v. State of A11dhra 1 Pradesh). ( ) Can it be said that classification, income-wise-cumscheme-wise is unreasonable? The answer is a firm no. Even the petilioners could not point out unequal treatment in same class. However, a feeble attempt was made to urge that allottees of flats in MlG schoome at Munirka which project came up at or about the same time were uot subjected to surcharge.

This will be presently examined but aside from that, contention is that why within a particular period, namely, November 1976 to January 1977 th•o policy of levying surch~rge was resorted to and that in MIG schemes pertaining to period pnor to November 1976 and later April 1977 no surcharge was levied. t (! ) [1963] I S. C. R. 404. If a ce11ain pricing policy was adopted for a certain period and was uniformly applied to projects coming up during that period, it canno'. be the foundation for a submission why such policy was not adopted earlier or abandoned later. It was, however, said that J. "vying of surcharge runs counter to object for which the Authority was set up, namely, to make available housing accommodation on 'no profit no Joss' basis. The argument proceeds o'n the assumption that the principle of 'no profit no loss' implies that in re~pect of each fiat the cost of its construction musti be worked out and that alone can be the disposal price of each fiat.

Principle of 'no profit no loss' bas been explained by the respondents. It is said that in tho over-al! working, planning and executio'n of projects which the Authority undertakes as part of development of Delhi, the integral part of it being construction of fiats for different incomegroups the motives and working of it would not be profit oriented but would work on 'no profit no loss' economic doctrine. This would not for a moment suggest that the principle of 'no profit no Joss' should apply either to every fiat or to every scheme or to •overy piece of land developed by the Authority. It would be impossible for the Authority to function on such fragmented basis and such a policy cta•emcnt has not been made by the Authority. Of course, som~ public statement appears to have been made that the overall working of the Authority is on "no profit no Joss' basis.

Respondent 1 has been able to point out that the Authority's housing scheme as a whole has been running in a heavy deficit because fiats including such as those of the petitioners actually cost much more than the initiaily determined estimates and by the time fiats are ready for occupation initial estimates founded o'n prevalent market prices of materials and labour escalate and revised estimates have to be made. It is also shown that till Municipal authority . talo~s over municipal services the Authority spends for the same and incurs cost. Apart from that p~litioners have not been able to show that the Authority is actuated by commercial profit oriented approach in its overall working. It is, however, neoossary to examine the contention whether this "no profit no Joss' policy statement has any statutory flavour as contended by Mr. Nariman.

The regulations styled as the Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968, ('Regulations' for short) are f~amed in exercise of the powers conferred by s. 57 and were laid before the Houses of Parliament as required by s. 58. Disposal price has been defined in Regulation 2 (13) to mean in relation to a property such price as may be fixed by the Authority for such property. There is not the slight- ' est or even a remote reference to 'no profit no loss' formula for • ~- B. PARMAR v. DELHI DEVELOPMENT AUTHORITY (Desai, !. ) 71 9 . ' determini~g tho cost price. A quick survey of the Regulatio'ns do not spell out any formula for price determination on the basis of 'no profit no Joss'. Whether the power to determine disposal price is in the Housing Commi:tee will bo presently examined.

Regulations, however, on the contrary indicate that the power to determine the disposal price is vested in the Authority and as price has b"en fixed by the delegate of the Authority even if it is inclusive of surcharge it cannot be said that it runs counter to the declared policy of the Authority. It is at this stage necessary to examine the contention that in the ,J ·case of Wazirpur and Munirka LIG schemes which came up during this very period no surchar(lo was levied and, therefore, there is invidious discriminatio'n amongst members of the same class. Again ·the argument proceeds that income-wise classification alone is valid. Here time-wise (November 1976 to January 1977) classification is relied upon. It is an admitted position that no surcharge is levied 0n MIG fiats at Munirka. The affidavit. in reply shows that the land -on which fiats are constructed in Mu'nirka MIG scheme turned out lo be very rocky with the result that the construction cost in respect -Of fiats at .

Munirka MIGs scheme worked out at Rs. 456 per plinth area per metp;, whereas in respect of Lawrence Road it came to Rs. 401. 54 p. only. The Authority, therefore, thought that if sur- -eharge is levied on fiats under MIG scheme in Munirka area the disposal price would be very high and would be beyond the reach of MIG. It is in this background of the special facts that no surcharge was levied in respect of any fiat in MIG in Munirka area. Project- ·~· wise price fixation cannot be dnbbed as arbitrary or discriminatory in comparison with other projects at diffurent places. It was, however, pointed out that 132 flats in Rajouri Garden MIG scheme were disposed of- without levying surcharge as component of sale price. It is pointed out in affidavit in reply that these flats were handed over to the Government of India for meeting their needs for staff quarters and that was done in the year 1978. It is ~!

so pointed out that the Government charged half the price of the fand in respect of these 132 fiats and, therefore, surcharge was not levied. There is two-fold fallacy in this submission. Government ordinarily is in a class by itself and its needs of staff quarters deserve to be met in large public inters!. Government has not got any undeserved benefit at the cost and risk of petitiomrs. Hence their complaint in this behalf is without merits. 1 It was 'next contended tha: surcharge is arbitrary inasmuch as how the surcharge is worked out in each case does not answer any 720 SUPRE1'1E CO. URT REPORTS [1980] 2 S. C. R. rational, tangible, scientific er understandable formula. '"How th" figure of surcharge has been worked out has been explain~d in detail in. affidavit in reply. Briefly recapitulating the same, it may be mentioned that initial estimates for 304 MIG flats i:n Prasad Nagar area were prepared in or about 1971 and the estimated cost was Rs.

1,17,83,200 and that on March 21, 1972, an estimate of Rs. 1,09,97,100 was sanctioned. After the work commenced and the actual cost started coming in the revised estimate for 304 flats was of the order of Rs. 2. 07,33,000 which was approved by the Vice- Chairman on September 18, 1976. According to :he revised estimate the approximate disposal cost for each flat came to Rs. 68,202 and the cost of land per dwdli"ng unit was Rs. 7,008. Extracts of original notes of Financial Adviser (Housing) and the approval of the same by the Vice-Chairman have been set out in the affidavit in reply. The subsequent r-"vised estimates show that disposal price of each flat would be Rs. 75,200. In the meantime the Income Tax Department wanted to acquire 40 MIG flats in Prasad Nagar area a'nd the same w~re offered at the price of Rs. 75,000, per flat. Commissioner of Income Tax accepted the price. This became the starting point for working out the disposal price in that period.

The difference h~tween the cost price and the disposal price of Rs. 75,000 per flat was treated as surcharge and the purpose was to use the extra money for extending cost reduction benefit to the allottees of flats in LIG, Janata and CPS schemes. Affidavit in reply of the Secretary of Respondent 1 provides further information which shows tha:t the cost price would be Rs. 78,000. Therefore, at best the component of surcharge would be between Rs. 1700 to Rs. 2200 in Rajouri Garden MIG flats. Similarly, with ""gard to MIG flats at Lawrence Road the actual cost price would be in close proximity of the disposal price· would be in close proximity of the disposal price charged from the petitioners. It is, therefore, difficult to ent·~rtain the contention that even if surcharge could be justified its actual computation is arbitrary and irrational.

The next contention is that Vice-Chairman had no authority to levy surcharge and that even if he has authorised the same it runs counter to the principle of fixing disposal price incorporated in Resolution No. 209 dated November 26, 1974. The Vice-Chairman is to be appointed by the Central GoV'~rnment as per s. 3 (3) (b) of the Act. It appears that this Vice-Chairman is whole-time offic•er and will be the Chief Executive of the Authority. This becomes clear from regubt,lon 3 of the Regulations which provides as under : "3. These regulations shall be administered by the Vice- Chairman, snbject to general guidance and rcsolutio"ns of the ' .. Authority, who may delegate his powers to any officer of the Authority". Thus the Vice-Chairman, subject to general guidance and resolutions of the Authority, shall administer the regulations. He can delegate the functions to any officer of the Authority. Regulation 59 is important which reads as under: "59.

The Authority may delegate all or any of its powers under these regulations to the Vice-Chairman or to a wholetirne men1~r". Armed with this power of delegation the Authority adopted Resolution No. 60 dated Febrnary 21, 1970 w'hich reads as under : "Reoolved that the recommendations of the Committee be approved and all the powers of Delhi Development Authority be exercised by the Housing Committee and the Chairman, Delhi Development Authority be authorised to constitute the said committee, determine the organisational set-up and take (sic) all efforts for implementing the housing and allied schemesn. Serious exception was taken to this gross abdication of its powers and functions by the Authority. The composition of the Authority as set out in s. 3 would include such persons as Finance ahd Accounts Member, Engineering Member, representatives of Municipal Corporation of Delhi and representative. s of Metropolitan Council as and when set up.

Three o,ther persons were to be nominated by Central Govern- ·"'. ment of whom one shall be person with experience of planning. It is a high power body. Yet it completely abdicated its power and authority in favour of Housing Committee. The Housing Committee will practically supplant the Authority. But the more objectionable part of Resolution No. 60 is that such Housing. Committee which is to enjoy all pcwers and fu'nctions of the Authority was to be constituted by the ' Chairman at his sole discretion because he was authorised not only to constitute the Housing Committee but to determine organisationa~ set up and then make all efforts for implementing the housing and allied schemes. It is really difficn;t to appreciate sru:h whole-sale abdication or d•clegation of powers by a :statutory authority in favour of a Committee whose composition would be determined by one man, the Chairma'n.

By a process of elimination the Housing Committee could supplant the Authority and the Chairman > could constitute Housing Committee. Therefore, the Chairman enjoyed [1980] 1 S. C. R. a very . "". ide discretionary power. Though Mr. Nariman did challenge the ~ahd1ty of R~solution No. 60, Mr. Chitaley in cognate petition reframe~ from domg so. Once the power to delegate is given by the Regulattons the challenge to validity on th~ ground of delegation must fail. ·1l It is, however, necessary to examine the submission whether Vice-Chairman could have permitted levy of surcharge as a component of the price of flats in MIG schemes. In this connection it would be advantageous to refer to Resolution No. 200 dated June 18, 1968, of the Authority by which the recommendations of the Standing Committee, inter alia, empowerrng the Vice-Chairman to approve forms of application as well as to fix the disposal and hire-purchase price were accepted. Resolution No.

209 is th~ one adopted by the Horning Committee. It takes note of the delegation of powers to fix disposal and hire-purchase price of flats to the Vice-Chairman and further provides that if there is a marginal saving in any scheme the amount is always diverted to subsidise cost of Janata and CPS houses. It seems the Resolution is for rnformation of the Housing Committee and the Housing Committee has merely resolved that the information be noted. The Resolution No. 200 of 'the Authority with Resolution No. 209 of the Housing Committee sets out clearly that the power to fix the disposal price was delegated to the Vice-Chairman and ordinarily such excessive delegation to one man may be galling to a judicial body yet the scheme of regulations and the provisions contained in Regulation 3 read with s. 59 clearly envisages such delgation of powers. It is, therefore, idle to contend that the Vice-Chairman had no authority to levy the surcharge as component of disposal price of flats.

It was next contended that even if Vice-Chairma'n had such power 'F there is nothing to show that he has exercised this power and that, therefore, somewhere without any authority someone has added the surcharge to the disposal price and that, therefore, the levy of surcharge is unauthorised. The submission seems to be factually incorrect. The note of Accounts Officer (Housing) dated September 8, 1976, submitted to the Financial Advisor (Housing) shows that the fiats have been offered at the rate of Rs. 75,000 to th~ Commissioner of Income Tax for the Income Tax Department nnd that should be the -disposal price. This note was approved by the Financial · Advisor (Housing) and ultimately countersigned by the Vice-Chairman. Therefore, the price of Rs. 75,000 as the disposal price is approved by the Vice-Chairman. Even if it includes surcharge it cannot be said with confidence that the Vice-Chairma'n has not approved the surcharge as a compr:nent of disposal price.

The last contention is that the Anthority has made a huge profit A by levy of surcharge. In this connection statistical table was annexed to . ; the petition and there was serious controversy about the facts and figures set out therein, by the other side. Having gone through the , detailed ·affidavit in reply it transpires that the contention is without merits. Therefore, there is no substance in the contention that the ' " Authority has made a huge profit. On the contrary it appears that the B. overall working of the Authority is deficit ridden. These were all the contentions in these petitions and as there is no merit in any of them the petitions are dismissed. There will be no order as to cost. c Petitions dismissed. N. K. A • •