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2000 DIGILAW 932 (AP)

M. v. B. Sarma VS A. P. Housing Board

2000-12-15

B.SUDERSHAN REDDY

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B. SUDERSHAN REDDY, J. ( 1 ) THE respondent-Andhra Pradesh housing. Board invited applications from the interested persons in the year 1979 for allotment of MIG houses in Phases I and II near Kukatpally, Hyderabad. The tentative amount of Rs. 41,800. 00 per each house was specified at that time. However, the price was revised to Rs. 65,000. 00 eventually during the progress of the construction of the houses. The houses were finally allotted and handed over to the petitioners in the year 1985. The allottees were required to deposit 30% of the amount towards tentative cost and execute the Lease-cum- sale Agreement and also undertake the schedule of payment. There is no dispute whatsoever that all the petitioners herein have paid 30% of the tentative cost and accordingly entered into an agreement with the respondent-Housing Board. We need not, in detail, notice the terms and conditions of the Lease-cum-Sale agreement. ( 2 ) IT is an admitted fact that after a period of almost nine years of the allotment, the Housing Board issued a notice in the year 1994 increasing the cost of each of the house to Rs. 94,800. 00. The petitioners were accordingly asked to deposit 30% of the demand of Rs. 94,800. 00 as if the demand was made in 1985, that is to say, the date of allotment. The petitioners and other allottees were asked to pay Rs. 30,000. 00 and another sum of Rs. 16,000. 00 towards the deposit on the ground that there were certain arbitration cases pending between the Board and the contractors. The said decision of the Board is challenged in this writ petition. ( 3 ) THE respondent-Housing Board in its counter-affidavit sought to justify its action stating that the cost of the land was finally fixed by the Supreme Court some time in february, 1994 and thereafter the final cost of each of the house was/fixed by the housing Board and the allottees were accordingly intimated at the earliest in June, 1994. ( 3 ) THE respondent-Housing Board in its counter-affidavit sought to justify its action stating that the cost of the land was finally fixed by the Supreme Court some time in february, 1994 and thereafter the final cost of each of the house was/fixed by the housing Board and the allottees were accordingly intimated at the earliest in June, 1994. It is submitted that the arbitration cases filed by the contractors are still pending and in order to mitigate and not to deprive the allottees of their legitimate right to get the houses registered in their names, the Housing Board decided to execute the registered sale deeds on payment of final cost and by takin a joint deposit in the name of allottee and the Executive Engineer (Housing) in the shape of fixed deposit for rs. 11,600/- in case of MIG-I Houses and rs. 16,000/- for MIG-II Houses. ( 4 ) IT is submitted by the Housing Board that the factors governing the fixation of final cost are many, and among them there are two variables; cost of land and contractors bills. It is the case of the housing Board that both these factors are prone to litigations in Court cases, resulting in delay in fixing the final cost. The escalation in the cost is anticipated by the provisions of the Act and rules and accordingly discretion is conferred upon the vice-Chairman and Managing Director of the Board to determine the final cost of the house after receiving final bills of construction, the interest payable on the loans taken for the construction of houses, the final cost of land and the expenditure for development etc. ( 5 ) IT is the case of the respondent-Housing board that the decision is neither arbitrary nor irrational. It is explained in the counter-affidavit that the final cost of the houses is worked out after taking the factors into consideration and the actual amounts spent and utilized by the Housing board for the purpose of providing houses to the allottees. It is explained that due to pendency of cases relating to acquisition of land, the final cost could not be fixed within two years. The acquisition cases were settled finally by the Supreme Court in february, 1994 and immediately after disposal of the cases, the final cost was fixed, which worked out to Rs. 78,600. 00 for mig-I houses and Rs. 94,800. The acquisition cases were settled finally by the Supreme Court in february, 1994 and immediately after disposal of the cases, the final cost was fixed, which worked out to Rs. 78,600. 00 for mig-I houses and Rs. 94,800. 00 for MIG-II houses. The allottees were accordingly intimated in June, 1994 itself. It is explained that the arbitration cases filed by the contractors are still pending and not yet finalized. The arbitration claim amount per each house is worked out at Rs. 11,600. 00 for mig-I and Rs. 16,000. 00 for MIG-II houses. It is under those circumstances, the allottees were requested to deposit FDR for an amount of Rs. 11,600. 00 and Rs. 16,000. 00 respectively if they want to get the houses registered in their names. The interest that may accrue to the said amount may be payable to the said allottees. ( 6 ) THE learned Counsel for the petitioners made a short submission contending that under Regulation 23 of andhra Pradesh Housing Board MIGH regulations, 1975, the final fixation of sale price is required to be done within two years from the date of allotment of the house. It is contended that in the instant case the final fixation of sale price is done by the respondent-Housing Board after a period of more than nine years and the same is impermissible in law. It is contended that it is not open to the respondent-Housing Board to deviate from the procedure specified under regulation 23 of the said Regulations. ( 7 ) IT is required to notice that the respondent-Andhra Pradesh Housing board in exercise of powers conferred under Section 71 of the A. P. Housing Board act, 1956, with the previous sanction of the government, made regulations known as"the Andhra Pradesh Housing Board (Allotment, Management and Sale of middle Income Group Houses) regulations, 1975. The said regulations apply to the allotment and sale of houses and flats constructed by the Housing Board under Middle Income Group Housing schemes. The said Regulations inter alia provide for the terms and conditions of agreement for sale in case of allotment by outright sale in Form 5 to be executed by the allottee within thirty days from the date of receipt of the allotment letter. The said Regulations inter alia provide for the terms and conditions of agreement for sale in case of allotment by outright sale in Form 5 to be executed by the allottee within thirty days from the date of receipt of the allotment letter. In case of allotment under hire-purchase system, allottee is required to execute lease-cum-sale agreement with the Board in Form 6 on non-judicial stamp paper prescribed for agreements within thirty days from the date of receipt of allotment letter. ( 8 ) THERE is no dispute whatsoever that all the allottees herein have executed the agreements for sale inter alia agreeing for various terms and conditions as provided for in the agreement for sale of houses. Clause (16) of the said agreement provides that the purchaser should undertake to pay any increase in the cost price as has been fixed by the Chairman arising out of the increase in compensation of land which is to be decided after the allotment. Such payment shall be proportional amount of such increase the corpus of which will be fixed by the Chairman, which will be final and binding on the purchaser. The amount thus fixed by the Chairman shall be paid by the purchaser within one month of the demand made. Clause (17) of the said agreement inter alia provides requiring the purchaser to agree to pay any increase in the estimated cost price as has been fixed by the Chairman, arising out of this increase in contractors bills as a consequence of the contractor going to the Court of law or due to the mutual settlement of the dispute between the Board and the Contractor due to any other contingencies which may be decided after the allotment of the houses. Such payments shall be proportional amount of such increase the corpus of which will be fixed by the Chairman. ( 9 ) IT is an admitted case that all the petitioners herein and other allottees have agreed for all the terms and conditions and accordingly entered into the agreements at the time of allotment of the houses. Such payments shall be proportional amount of such increase the corpus of which will be fixed by the Chairman. ( 9 ) IT is an admitted case that all the petitioners herein and other allottees have agreed for all the terms and conditions and accordingly entered into the agreements at the time of allotment of the houses. The terms and conditions of the said agreement entered into by the petitioners at the time of allotment of the houses would make it clear that each of the allottee is bound to pay the escalated and revised cost that may have become necessary due to the exigencies of the situation arising out of the various factors including the revision in the land cost and the contractors bills. Thus, it is clear that the petitioners are bound by the terms and conditions of the agreement entered into by them voluntarily. The terms and conditions are specified by the regulations. ( 10 ) THE Supreme Court in similar circumstances in Bareilly Development authority vs. Ajay Pal Singh observed that"while determining price of the houses/ flats constructed by Bareilly Development authority and the rate of monthly instalments to be paid, the authority or its agent after entering into the field of ordinary contract acts purely in its executive capacity. Thereafter, the relations are no longer governed by the constitutional provisions but by the legally valid contract, which determines the rights and obligations of the parties inter se, In this sphere, they can only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the authority (i. e. , BDA in this case) in the said contractual field". The Supreme Court observed that in such a situation, the public law remedy would not be available. ( 11 ) IN Indore Development Authority vs. Smt. Sadhana Agarwal and others, the supreme Court observed that the development Authorities (in the instant case, the Housing Board) have no absolute right to hike the cost of flats, initially announced as approximate or estimated cost for such flats. ( 11 ) IN Indore Development Authority vs. Smt. Sadhana Agarwal and others, the supreme Court observed that the development Authorities (in the instant case, the Housing Board) have no absolute right to hike the cost of flats, initially announced as approximate or estimated cost for such flats. The Supreme Court further observed:"it is well known that persons belonging to Middle and Lower income Groups, before registering themselves for such flats, have to take their financial capacity into consideration and in some cases it results into great hardship when the development authorities announce an estimated or approximate cost and deliver the same at twice or thrice of the said amount. The final cost should be proportionate to the approximate or estimated cost mentioned in the offers or agreements. With the high rate of inflation, escalation of the prices of construction materials and labour charges, if the scheme is not ready wihin the time frame, then it is not possible to deliver the flats or houses in question at the cost so announced. It will be advisable that before offering the flats to the public such development authorities should fix the estimated cost of the flats taking into consideration the escalation of the cost during the period the scheme is to be completed. In the instant case, the estimated cost for the LIG flat was given out at Rs. 45,000. 00. But by the impugned communication, the appellant informed the respondents that the actual cost of the flat shall be rs. 1,16,000/- i. e. , the escalation is more than 100%. The High Court was justified in saying that in such circumstances, the Authority owed a duty to explain and to satisfy the court, the reasons for such high escalation. We may add that this does not mean that the High Court in such disputes, while exercising the writ jurisdiction, has to examine every detail of the construction with reference to the cost incurred. The high Court has to be satisfied on the materials on record that the authority has not acted in an arbitrary or erratic manner. " ( 12 ) THUS, it is clear that this Court cannot examine in detail the allegations levelled by the petitioners challenging the action of the housing Board as arbitrary. The high Court has to be satisfied on the materials on record that the authority has not acted in an arbitrary or erratic manner. " ( 12 ) THUS, it is clear that this Court cannot examine in detail the allegations levelled by the petitioners challenging the action of the housing Board as arbitrary. The only question that falls for consideration is as to whether, on the material on record and averments made in the counter-affidavit, could it be said that the Housing Board acted in arbitrary and erratic manner? The answer, in my considered opinion, would be an emphatic no . Admittedly, the cases relating to acquisition of land went up to the Supreme Court and were disposed of only in the month of February, 1994. The cases filed by the contractors are still awaiting final verdict. It is clearly-evident from the record that due to exigencies of the situation and reasons beyond control of the housing Board, the cost was revised. Additional amounts were directed to be put in fixed deposit only to meet the eventuality of payment of further amounts to the contractors. In the circumstances, the decision of the Housing Board cannot be held to be a mala fide or arbitrary one. The same cannot be characterized as an erratic decision. ( 13 ) HOWEVER, the learned Counsel for the petitioners rested her submission completely on Regulation 23, which requires the Housing Board to fix the final sale price within two years from the date of allotment of the house. It may be necessary to read whole of the Regulation 23, which is as follows: 23. (1) The estimated cost price of a house shall comprise of (i) The cost of land. (ii) The cost of development which shall include external amenities such as formation of roads, provision of dust proof surfacing, open space, parks, play grounds, etc. , and laying of mains for water supply, drainage and electricity and places for community use, etc. (iii) The cost of civil works. (iv) The cost of internal amenities such s water supply, drainage and electricity. (v) Supervision charges on construction and provision of amenities etc. , and laying of mains for water supply, drainage and electricity and places for community use, etc. (iii) The cost of civil works. (iv) The cost of internal amenities such s water supply, drainage and electricity. (v) Supervision charges on construction and provision of amenities etc. , at such rates as the board may fix from time to time; and (vi) Interest at such rate and for such period as may be fixed by Board on the total of clauses (i) to (iv) from the date of drawal of loan for construction of the house. (2) Notwithstanding anything contained in the notices inviting application or the agreement executed by the allottee, if after receipt of final bills for the construction houses or payment of interest on the amount of loans taken for construction of such houses or after final determination of the cost of land, and development of land or for expenditure incurred for supervision the Chairman or any office authorised by him in that behalf considers it necessary to revise the estimated cost price, already specified in the notice or agreement, he may do so and determine the final cost price payable on allotment and all allottees in relation to the houses of aforesaid shall be bound by such determination and they shall pay the difference if any between the final cost price as determined and the price paid by them including price paid in lumpsum. "provided that it shall be open to the vice-Chairman and Housing commissioner, Andhra Pradesh housing Board to call upon the allottee, through a notice to pay a particular amount, over and above the initial deposit or instalments already paid or payable to meet the escalation in the cost and price (either due to increase in the cost of labour or materials etc. , or due to delay in the execution of the scheme or even otherwise) pending the determination of final cost price before a particular date specified in the notice. The Vice- chairman and Housing Commissioner shall have the discretion to issue, any such notice, at any time either during the execution or after the completion of the scheme. Any failure to pay the amount specified in the notice shall entail cancellation of the allotment and resumption of the premises". (3) The final fixation of sale price should be done within two years from the date of allotment of the house. Any failure to pay the amount specified in the notice shall entail cancellation of the allotment and resumption of the premises". (3) The final fixation of sale price should be done within two years from the date of allotment of the house. The said period may however be extended by Government in the case of such of the houses whose final cost cannot be fixed within two years prescribed because the matters relating to land compensation to the payment of final bills to the Contractors are pending in the Court. ( 14 ) IT is nobody s case that the Housing board took into consideration any factors other than the factors mentioned in regulation 23 itself in estimating the cost price. It is true, sub-clause (3) of regulation 23 says that final fixation of sale price should be done within two years from the date of allotment of the house. But at the same time, it also provides for extension of period by the Government in case where the final cost cannot be fixed within the prescribed period because the matters relating to land compensation for payment and the final bills to the Contractors are pending in the Court. The power is given to the Government to extend the period for final fixation of sale price. In my considered opinion, the prescribed period of two years is not mandatory. Sub-clause (3) of regulation 23 cannot be held to be a mandatory one. It does not prescribe any consequences, if the final fixation of sale price is not done within two years from the date of allotment of the houses. On the other hand, the very fact that the provision is made for extension of the period by the government would make it clear that the provision is not a mandatory one. At any rate, in the instant case, there is no plea that the Housing Board did not obtain the requisite extension from the Government. The affidavit filed by the petitioners is silent on that aspect of the matter. Therefore, the impugned decision of the respondent- housing Board cannot be held to be ultra vires regulation 23 of the Regulations. ( 15 ) NO other point is urged. ( 16 ) FOR all the aforesaid reasons, I do not find any merit in this writ petition and the same shall accordingly stand dismissed. No order as to costs. Therefore, the impugned decision of the respondent- housing Board cannot be held to be ultra vires regulation 23 of the Regulations. ( 15 ) NO other point is urged. ( 16 ) FOR all the aforesaid reasons, I do not find any merit in this writ petition and the same shall accordingly stand dismissed. No order as to costs. ( 17 ) CONSEQUENTLY, the interim stay earlier granted by this Court shall stand vacated.