Judgment M.M.Kumar, J. 1. The dispute in this case pertains to payment of development charges in respect of the land purchased by the petitioner as farback as in 1960. The demand of development charges have been raised by the Haryana Urban Development Authority (for brevity the HUDA) from time to time which culminated into the passing of orders dated 13.12.2001 (Annexure P.20) and 17.1.2002 (Annexure P.21). The petitioner has prayed for quashing of the afore-mentioned two orders in this petition filed under Article 226 of the Constitution of India. 2. Facts in brief are that the petitioner purchased land measuring 3.7 acres in Sector 27-C. Faridabad for the purposes of setting up of an industry for manufacturing of industrial welding gasses i.e. Oxygen and Dissolved Acetylene. In order to obtain permission for change of user of the land for industrial purposes, the petitioner applied to the Erstwhile State of Punjab on 29.6.1963 through the Department of Town and Country Planning. An affidavit dated 19.12.1963 (Annexure P2) has also been placed on record showing that the petitioner was to pay the development charges as and when levied by the Town and Country Planning Department for developing the area near the plot purchased by the petitioner. It was further undertaken in the afore-mentioned affidavit that the petitioner-shall abide by the usual building restrictions like set back-line, floor space, height etc. as imposed by the Town and Country Planning Department from time to time. The successor State through the Administrator, Urban Estate, HUDA, Faridabad sent a communication conveying the decision of the Government that all industries whose land falls in various specified areas including the land of the petitioner were to pay @ Rs. 15/- per sq. yard towards the temporary development charges. The total demand raised in respect of the land of the petitioner was Rs. 2,68,620/- and 25 percent of the total amount of Rs. 67,155/- was required to be paid by bank draft for the afore mentioned amount and the balance amount of 75 percent was to be recovered in 6 equal instalments with 7 percent annual interest. The agreement was to be executed after the receipt of 25 percent of the total amount. On 7.8.1975, the petitioner addressed a communication to the HUDA intimating that on account of the absence of drainage system the factory of the petitioner was flooded. The agreement was to be executed after the receipt of 25 percent of the total amount. On 7.8.1975, the petitioner addressed a communication to the HUDA intimating that on account of the absence of drainage system the factory of the petitioner was flooded. As the development charges were not paid, respondent No. 2 sent a revised demand by reducing the rate from Rs. 15/- per sq. yard to Rs. 10/- per sq. yard and on 26.5.1976 an amount of Rs. 44,770/- which was 25 percent of the total amount was demanded. 3. On 25.11.1976, respondent Nos. 1 and 2 again raised a demand for payment of development charges asking the petitioner to pay a sum of Rs. 35,816/- being 20 percent instead of 25 percent. Further demand was also raised by including the first instalment of Rs. 20,397.57P. The total demand raised was for Rs. 56,213.57P. It was further made clear that in case of non payment of the demanded amount by the date fixed action was to be taken to revoke the permission of releasing the land and initiate proceedings under Rule 26-D (Clause II) of the Punjab Scheduled Roads and Controlled Area Restrictions of Unregulated Development Rules, 1965. The petitioner contested the demand raised by submitting a communication dated 15.12.1976 that they were not covered under the Punjab Scheduled Roads and Controlled Area Restriction of Unregulated Development Act, 1963 (for brevity the 1963 Act) and, therefore, they were not liable to pay any development charges to the respondents. On 14.1.1977, respondent No. 1 issued a show cause notice to the petitioner asking it to show cause within a period of 15 days from the date of issue of the notice as to why action be not taken for rejection of the permission granted to the petitioner releasing the land from change of user. On 18.2.1977, respondent No. 3 announced certain further concessions and required the petitioner to pay @ 50p. per sq. yard. The payment was to be made by 2.3.1977. The petitioner sent a demand draft for an amount of Rs. 8,954/- representing payment for the year 1977-78. As the talks between the industrialists and the Government were going on no final agreement with regard to imposition of development charges could be reached and the government dropped the proposal as agreed on 18.2.1977 (Annexure P.9). 4. On 24.11.1977 again a demand of Rs. 35,816/- @ Rs. 8,954/- representing payment for the year 1977-78. As the talks between the industrialists and the Government were going on no final agreement with regard to imposition of development charges could be reached and the government dropped the proposal as agreed on 18.2.1977 (Annexure P.9). 4. On 24.11.1977 again a demand of Rs. 35,816/- @ Rs. 10/- per sq.yd. was raised which was required to be deposited on or before 9.12.1977 and the balance amount was required to be paid in 10 annual instalments of Rs. 20,397.57P. Each one of the instalments was payable on or before 1st of December of each year. The petitioner again contested the raising of the afore-mentioned demand. 5. On 9.9.1983 a demand draft of Rs. 17,908/- was sent by the petitioner under pro-text. On 17.11.1987, the petitioner was directed to deposit a sum of Rs. 1,52,219/- plus 10 percent interest. A show notice was issued by respondent Nos. 1 to the petitioner as to why a penalty of Rs. 1,67,445/- with interest @ 10 percent be not imposed on it. The petitioners were to grant personal hearing on 9.7.2001. The petitioner were to grant personal hearing on 9.7.2001. The petitioner sent a request that it has not been able to locate the file pertaining to development charges as its office had been flooded in the year 1981-82 and many files were destroyed. On that basis a request was made to furnish the details of the demand and relevant papers. The request was repeated by sending reminder on 1.12.2001. However, on 13.12.2001 respondent No. 1 passed an order raising demand of payment till 15.1.2002 and in the event of failure to do so, the Estate Officer, HUDA was to send an order for necessary and appropriate action to the higher authorities. Another order dated 17.1.2002 was passed requiring the petitioner to pay the development charges amounting to Rs. 45,72,000/- failing which the sewerage and water connections were to be disconnected and the case for cancellation of the permission was to be sent to the Government. The petitioner sent a demand draft in favour of respondent Nos. 1 and 2 for an amount of Rs. 3,67,622/- which the respondents have refused to accept because it was based on the erroneous calculations made by the petitioner. 6. In the written statement filed by respondent Nos. The petitioner sent a demand draft in favour of respondent Nos. 1 and 2 for an amount of Rs. 3,67,622/- which the respondents have refused to accept because it was based on the erroneous calculations made by the petitioner. 6. In the written statement filed by respondent Nos. 1 and 2 the stand taken is that the petitioner has bound itself by the affidavit dated 19.12.1963 (Annexure P2) that the development charges levied by the Town and Country Planning Department developing the area near the plot of the petitioner were to be paid by it. In the affidavit it was further undertaken that usual building restrictions like set back line, floor space, height etc. as imposed by the Town and Country Planning Department were to be observed by it. The petitioners have failed to pay the development charges despite the issuance of various notices in this behalf. Therefore, the prayer has been made the demand raised vide impugned orders dated 13.12.2001 (Annexure P20) and 17.1.2002 (Annexure P21) is absolutely in order and does not suffer from any legal infirmity. 7. Shri R.K.Chhibbar, learned counsel for the petitioner has argued that proposals dated 26.5.1976 (Annexure P5), dated 25.11.1976 (Annexure P.6) and dated 17.11.1987 (Annexure P15) would reveal that an amount of Rs. 1,79,080/- with interest @ 10 percent was demanded as external development charges. This amount by no stretch of imagination could become Rs. forty five lacs plus. According to the learned counsel the calculations made by the petitioner in Annexure P22 depicts the correct amount. If the amount of Rs. 1,79,080/- is to be counted with interest @ 7 percent from 1.4.1982 then the petitioner is not liable to pay more than Rs. 3,67,622/- which was actually deposited vide demand draft dated 18.7.2002 a copy of which is appended as Annexure P23. Learned counsel has attacked the impugned orders Annexures P20 and P21 by urging that respondents appear to have made calculations on the basis of compound interest and the rate of interest according to the order dated 13.12.2001 (Annexure P20) is 18 percent from 15.1.1987. According to the learned counsel rate of interest cannot be more than 10 percent simple interest. Learned counsel has attacked the impugned orders Annexures P20 and P21 by urging that respondents appear to have made calculations on the basis of compound interest and the rate of interest according to the order dated 13.12.2001 (Annexure P20) is 18 percent from 15.1.1987. According to the learned counsel rate of interest cannot be more than 10 percent simple interest. In support of his submission, the learned counsel has placed reliance on a judgment of the Supreme Court in the case of Roochira Ceramics v. HUDA and Ors., A.I.R. 2002 S.C. 2380 and argued that simple interest @ 10 percent could only be charged. 8. Ms. Raminder Gadhoke, learned counsel for respondent Nos. 1 and 2 has argued that despite the fact that demand has been raised calling upon the petitioner to pay from 1976 the amount of development charges have not been paid. According to the learned counsel on 26.5.1976, respondents were asked to pay Rs. 1,79,080/- @ Rs. 10/- per sq.yd. towards development charges. Similar demand was raised by issuing order dated 25.11.1976 (Annexure P6). However, the petitioners have been deferring the payment on one excuse or the other. Learned counsel has maintained that the petitioners are bound by the affidavit dated 19.12.1963 (Annexure P2) wherein it has undertaken to pay the development charges as and when levied by the Town and Country Planning Department for developing the area near the plot of the petitioner. The petitioner having failed to make the payment is liable to pay compounded penal interest. 9. After hearing the learned counsel for the parties and perusing the documents placed on the record, we are of the view that there is a specific prohibition on the use of land falling in the zone of controlled area. Once a declaration of controlled are under Section 4 of the Act had been issued then permission is required to be obtained from the competent authority for change of user as there is a specific prohibition under Section 7 of the Act on the use of the land covered by the controlled area. For granting permission for change of land user in the controlled area a provision has been made in Part IVA of the 1965 Act. Rules 26A and 26F of the Rules which are relevant for deciding the controversy in issue reads as under: "26A. For granting permission for change of land user in the controlled area a provision has been made in Part IVA of the 1965 Act. Rules 26A and 26F of the Rules which are relevant for deciding the controversy in issue reads as under: "26A. Application for permission under Section 7 in case of a person other than colonizer. Every person other than coloniser intending to change the existing use of the land in a controlled area for the purpose of developing the said land into buildings for residential, industrial, commercial or other purposes shall make an application in writing to the Director in Form CLU-1, accompanied by- (1) a survey plan of the land on scale of 1, to forty feet showing the existing means of access to the land for the nearest public road and building and their nature falling within 100 yards of the said land on its four sides: and (2) a copy of the deed showing the title of the applicant to the said land. 26D. Conditions required to be fulfilled by the applicant. The applicant shall.- (a) furnish to the Director a bank guarantee in the amount equal to twenty five percent of proportionate estimated cost of the development works as certified by the Director and enter into an agreement in Form CLU II for fulfilling the conditions contained herein in accordance with the permission finally granted. (b) undertake to pay proportionate development charges which shall be a first charge of the said land as and when required and as determined by the Director in respect of external development works which may be carried out in the area for the benefit of the said land. (c) undertake to be responsible for making arrangement for the disposal of affluent to the satisfaction of the Director. (d) undertake to get the plan approved from the Director before commencing any construction on the said land. (e) undertake not to sell the said land or portion thereof unless the said land has been put to use permitted by the Director and to use the said land only for the purposes permitted by the Director, and (f) undertake to start construction on the said land within a period of six months and complete the construction within a period of two years from the date of issue of order permitting the change of land use. Provided that where the existing use of the land in a Controlled Area is to be changed for the purpose of developing the said land into buildings for industrial purposes, no bank guarantee referred to change (a) shall be required to be furnished and in such a case paragraph 3 of the agreement in form CLU-II shall not apply." 10. According to Rule 26A, the applicant seeking permission to change the existing use of land in the controlled area for the purposes of developing the land into residential/industrial use etc. is required to make an application to the Director, Town and Country Planning alongwith certain other documents like survey plan and sale deed etc. etc. Under Rule 26D numerous conditions have been laid down which are required to be fulfilled by an applicant. Condition No. (b) of the Sub-rule 26(D) expressly provides that the applicant is to undertake to pay proportionate development charges and the same shall be a first charge on the land as and when required and determined by the Director in respect of external development works which may be carried in the area for the benefit of the said land. Therefore, the demand of development charges by the respondents is rooted in statutory rules. 11. In the present case, there is no dispute that respondents are entitled to charge external development charges @ Rs. 10/- per sq. yard nor there is any dispute that the petitioners are liable to pay the same because the permission for change of land use has been granted on that condition. The dispute, however, revolves around the rate of interest and penalty imposed on the petitioner. A perusal of Annexures P5 and P6 dated 26.5.1976 and 25.11.1976 clearly shows that development charges @ Rs. 10/- per sq. yard were demanded and the total sum specified in the impugned order is Rs. 1,79,080/-. It is further clear that the Department has allowed payment of development charges in easy instalments after paying the lump sum to the extent of 25/20 percent of the total amount. It is further clear that some negotiations with the association of the Chambers of Commerce and Industry and Industrial Manufactures Association were held. At one stage it was proposed to charge 50 ps. per sq. yd. as is clear from the communication Annexure P.9. It is further clear that some negotiations with the association of the Chambers of Commerce and Industry and Industrial Manufactures Association were held. At one stage it was proposed to charge 50 ps. per sq. yd. as is clear from the communication Annexure P.9. However, formal order of the Government were yet to be passed and the meeting was convened on 26.2.1977. Eventually the afore mentioned proposal did not mature and the department raised the demand on 24.11.1977 @ Rs. 10/- per sq. yard as was ordered earlier vide Annexure P5 and P6. Some payment appears to have been made on 17.11.1987. The petitioner was intimated that recovery in according with the decision of the HUDA is to be made at the first instance and for the remaining amount bank guarantee was required to be furnished. In old cases if development charges have not been paid then proceedings under Section 4 of the Land Acquisition Act were to be undertaken. In the wake of the aforesaid decisions the petitioners were again asked to deposit a sum of Rs. 1,52,219/- alongwith 10 percent interest failing which necessary action was to be initiated. However, nothing was paid by the petitioner and as a result the show cause notice under Section 17(1) of the HUDA Act was issued to the petitioner for showing cause as to why a penalty of Rs. 1,67,445/- with ten percent interest be not imposed upon the petitioner as he was required to submit the bank draft of Rs. 1,67,445/-On the pretext of loss of documents, the petitioner failed to file the reply which resulted into passing of the order dated 13.12.2001 directing the petitioner to pay a sum of Rs. 45,72,000/- calculating the interest @ 18 percent w.e.f. 15.1.1987. Again a reminder was sent on 17.1.2002. 12. Having gone through the documents placed on the record, we are satisfied that the petitioner has been successfully delaying the payment of development charges on one pretext or the other. After the issuance of order Annexure P.5 on 26.5.1976 and P6 on 25.11.1976 there was no legal excuse with the petitioner to defer the payment of development charges as demanded therein. In any case, the decision taken to adhere to the previous formula as mentioned in the order dated 26.5.1976 (Annexure P5) and 25.11.1976 (Annexure P6) should have been complied with by the petitioner and the payment should have been made. In any case, the decision taken to adhere to the previous formula as mentioned in the order dated 26.5.1976 (Annexure P5) and 25.11.1976 (Annexure P6) should have been complied with by the petitioner and the payment should have been made. We are further of the view that the rate of interest @ 18 percent levied by the respondents is on the higher side as held by the Supreme Court in Roochira Ceramics case (supra), It has been held that in case of default of payment interest @ 10 percent as against 18 percent has to be charged. The observations of the Supreme Court in this regard reads as under:- "Learned counsel, appearing for the appellant, urged that the consistent view of the High Court has been that where an allottee has committed default in payment of instalment, the Authority was made to charge interest at the rate of 10 percent and not 18 percent. It is also urged that the judgment of the High Court has been upheld by this Court. Learned counsel, appearing for the appellant, referred the judgment of the High Court of Punjab and Haryana passed in CWP No. 12975794 decided on 25.8.1996 wherein the Division Bench of the High Court held that the Authority is entitled to charge interest at the rate of 10% and not 18% when there is default in payment of instalment. The Special Leave Petition No. 23203796 preferred by the authority against the said judgment was dismissed on 9.12.1996. The decision of the High Court of Punjab and Haryana in CWP No. 16487791 Harish Kumar Virja v.State of Haryana and another, which was followed in other cases, laid down that the Authority in cases of default in payment of instalments is entitled to charge interest at the rate of 10%. Learned counsel, appearing for the respondents, conceded that no special leave petition was filed against the said judgment and the said judgment has attained finality. In view of the afore-said decision, we are of the view that the respondents were entitled to charge interest @ 10% only and not 18%. Since the appellant had deposited interest @ 18%, the Authority under law is required to refund the excess of the interest released from the appellant. For the aforesaid reason, the judgment under appeal is set aside. Since the appellant had deposited interest @ 18%, the Authority under law is required to refund the excess of the interest released from the appellant. For the aforesaid reason, the judgment under appeal is set aside. The respondent-Authority is directed to refund excess interest realised from the appellant within three months from the date of service of certified copy of this order." 13. When the rate of interest as laid down by the Supreme Court is applied to the facts of the instant case it becomes evident that the orders Annexures P.20 and P.21 are liable to be partially quashed to the extent interest @ 18 percent has been charged. Accordingly, respondent Nos. 1 and 2 are directed to recalculate the amount by charging simple interest @ 10 percent instead of 18 percent. The respondents shall serve the demand notice on the petitioner and thereafter the petitioner shall pay the sum demanded within 15 days of the issuance of the notice. 14. In the meanwhile, the petitioner shall pay a sum of Rs. 5,00,000/- to the respondents within two weeks from today without waiting for the calculations and the fresh order. The afore-mentioned amount of Rs. 5,00,000/- shall be adjusted in the final calculations along with any other amount already paid. 15. With the above order and direction, the writ petition stands disposed of.