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2006 DIGILAW 2745 (MAD)

V. Muralidharan v. State of Tamil Nadu

2006-10-16

P.K.MISRA, R.SUDHAKAR

body2006
Judgment :- Common Order: (R. Sudhakar, J.) The majority of the Writ Petitions have been filed by the individual allottees challenging the demand, by the Housing Board authorities in the month of January, 2002 to pay certain amount claimed as final land cost and capitalisation charges and other charges in respect of Ellis Nagar Housing Board Scheme. 2. In most of the cases the impugned order is dated 29.1.2002. In some other cases, the very same impugned order is dated 18.2.2002, 25.2.2002 and 27.2.2002. In a few cases the impugned order/letter is dated 15.3.2001, 19.3.2001 2.8.2001, 12.12.2001 and 20.12.2001. The petitioners pray for quashing the above impugned orders/letters/ communications, by whatever nomenclature it has been issued. In some cases in addition to quashing the impugned orders, petitioners also pray for issuance of sale deeds without demanding any further amount. All the impugned orders/notices/letters are subsequent to G.O.Ms.No.63 dated 2.2.2001. Therefore, all the above writ petitions are disposed by this common order. 3. The scope of the present litigation between the allottees and the Housing Board is an effort to determine the final cost of the land and building. It has seen several rounds of litigation and is pending for more than two decades. As to how the final cost should be determined is the vexed issue in all these writ petitions. The present batch of writ petitions, however, fall under a limited scope in view of the earlier decision of this Court which concluded some of the issues leaving a few issues to be reconsidered by the Board and the allottees. Since a finality could not be reached, the present writ petitions have been filed. 4. The relevant and necessary fssacts of the cases are as follows:- The Tamil Nadu Housing Board is a Board created under the Provisions of Tamil Nadu Housing Board Act No.17/1961 and the object of the Board is to acquire lands in the neighbourhood areas of developed cities at reasonable cost and develop the lands for house-sites and also construct buildings and to allot the same either as house sites or constructed houses to the needs of the different income groups and categories of persons, such as Ex-servicemen, State Government servants and Central Government servants, S.C., S.T. and the like. In furtherance of the above object, the Board formed Ellis Nagar Neighbourhood Scheme at Madurai in the year 1979 and acquired certain lands and constructed HIG, MIG, Row Type houses, Twin Type houses, buildings, etc. In the batch of writ petitions, some of the petitioners are allottees of houses under the various categories stated above. 5. The process of land acquisition started in the year 1979 and it continued for several years. The award of the competent authority was challenged before the District Court, High Court and Supreme Court and the final verdict was given by the Apex Court on 16.4.1992 in S.L.P.Nos.14919/92, 14456/92, 14607/92 and 15317/92. The final land cost per ground was determined as Rs.6,87,700/- in the year 1993-94, when a finality was reached in respect of the land acquisition cases. Even though the land acquisition proceedings were going on till the year 1992, the Board started promoting the project from the year 1982-83 and applications were invited for allotment of the various types of houses. As mentioned in the counter-affidavit, different types of houses were built and allotted as hereunder: Sl.No. Type Nos. 1 HIG "B' Type flats 366 2 HIG "C" Type flats 258 3 MIG "D2" Type flats 264 4 MIG Row Type Houses 304 5 LIG Row Type Houses 77 6 HIG D2 Type flats 660 7 HIG Row Type Houses 355 8 HIG Twin Type Houses 330 Total 2614 In the schemes announced for the aforesaid purpose it was specifically stated that the cost of construction is firm and the cost of land is tentative. The allotment were also made under two categories, viz., one on hire purchase scheme and other on outright sale basis. A lease-cum-sale agreement was entered into between the allottees and the Board under the hire purchase scheme where under Clauses 10, 14(a), 14(b) and 18 are relevant and it reads as follows:- "10. The allotment were also made under two categories, viz., one on hire purchase scheme and other on outright sale basis. A lease-cum-sale agreement was entered into between the allottees and the Board under the hire purchase scheme where under Clauses 10, 14(a), 14(b) and 18 are relevant and it reads as follows:- "10. The Lessee shall pay interest at 18 per cent per annum to the Lessor or any payments made on behalf of the Lessee by the Lessor and which under the terms of this indenture Lessee is bound to pay and also on any arrears of rent and service charges which might be due and outstanding by the Lessee without prejudice to other remedies open to the Lessor." (emphasis supplied) "14(a) The Lessor agrees to sell the flat more particularly described in the Schedule hereunder to the Lessee for such price as the Chairman or Executive Engineer and Administrative Officer of the Lessor may at any time in his sole discretion finally fix, at which time the Chairman of Executive Engineer and Administrative Officer of the Lessor is entitled to consider whether the price of the land acquired under the Land Acquisition Act together with suitable modifications thereto by the Local laws has become finality a conclusive adjudication thereon by the concerned Tribunals and Courts, and also the cost of construction after the finalisation of the Accounts. The decision of the Chairman or Executive Engineer and Administrative Officer of the Lessor as to the price or the Flat is Final and binding on the Lessee agrees to purchase the Flat from the Lessor at the said price on the terms and conditions hereinafter mentioned. (emphasis supplied) (b) In the event of the Lessee paying the tentative costs of the land and Flat within the period of this Lease, the Lessor will execute the sale deed in respect of the Schedule mentioned Flat in his/her favour only after the expiry of a period of FIVE years (from the date of possession) or after the final cost of the land and the Flat are duly determined by member of the respective Co-operative Housing Society of ... area/colony and such Co-operative Society should take over the entire maintenance and other common amenities enjoyed by the Lessee." (emphasis supplied) "18. area/colony and such Co-operative Society should take over the entire maintenance and other common amenities enjoyed by the Lessee." (emphasis supplied) "18. After the purchase price has been duly determined by the Lessor – Vendor the Lessee shall pay the difference in cost if any between the tentative cost and final cost of the flat and land within a month from the date of such demand." Likewise the agreement with regard to the scheme on outright purchase has been entered into between the allottees and the Board whereunder Clauses 12, 16, 17 and 19 which are relevant are as follows:- "12. The purchaser shall pay interest at 15% per annum to the vendor on any payments made on behalf of the purchaser by the Vendor and which under the terms of his Indenture the Purchaser is bound to pay and on any arrears of service or maintenance charges which might to be due and outstanding by the Purchaser without prejudice to other remedies open to the Vendor." (emphasis supplied) "16. The Vendor agrees to sell the flat more particularly described in the schedule hereunder to the Purchaser for such price as the Chairman of the Vendor may at any time in his sole discretion fix, at which time the Chairman of the Vendor is entitled to consider whether the price of the land acquired under the Land Acquisition Act together with suitable modification thereto by the Local laws has become final by a conclusive adjudication thereon by the concerned Tribunals and Courts, also the cost of construction after the finalisation of the Accounts. The decision of the Chairman of the Vendor as to the price of Flat is final and binding on the Purchaser and the Purchaser agrees to Purchase the Flat from the Vendor at the said price on the terms and conditions hereinafter mentioned." "17. The decision of the Chairman of the Vendor as to the price of Flat is final and binding on the Purchaser and the Purchaser agrees to Purchase the Flat from the Vendor at the said price on the terms and conditions hereinafter mentioned." "17. It is expressly agreed between both the parties herein that the Vendor will execute the Sale Deed in favour of the Purchaser only after the expiry of a period of FIVE years(from the date of possession) or after the final cost of the land and the cost of constructions of the flat are duly determined by the Vendor which ever is later and the same is paid by the Purchaser and subject to the condition that the Purchaser is a member of the co-operative Housing Society of Ellis Nagar area/colony and such Society shall take over the entire maintenance of land and other common amenities enjoyed by the purchasers the above said payments made by the purchaser, will not carry any interest." "19. It is expressly agreed between the both the parties that after the finalisation of the total cost of construction of the flat and value of the land in accordance with the award of compensation declared by the Tribunals and Courts the Purchaser shall pay to the Vendor, on demand before the registration of the Sale Deed the difference between the amount already paid by the Purchaser as per clause 2 above and the price amount finally fixed by the Chairman of the Vendor." (emphasis supplied) Based on the above stated agreements entered into between the parties, allotment confirmation letter, regular allotment order and letter intimating that the flat is ready for occupation have been issued to various allottees, on the completion of the construction. For different types of houses different dates of "allotment confirmation letter", "cost fixation letter", "regular allotment order" and "date of ready for occupation letter" have been issued. Based on such proceedings, the petitioners have taken possession of the properties. After a period of time, since the final cost was not determined, series of correspondence ensued between the allottees and the Housing Board. 6. Since the final land acquisition cost came to be determined only on 16.4.1992, pursuant to the order of Supreme Court in S.L.P. as stated above, the Housing Board could not finalise the land cost earlier. After a period of time, since the final cost was not determined, series of correspondence ensued between the allottees and the Housing Board. 6. Since the final land acquisition cost came to be determined only on 16.4.1992, pursuant to the order of Supreme Court in S.L.P. as stated above, the Housing Board could not finalise the land cost earlier. However, in the year 1993-94, the Board fixed the land cost at Rs.6,87,700/- per ground and informed the allottees. The allottees challenged such determination in W.P.No.11065 of 1995 which was dismissed by order dated 13.8.1999. Though the final land cost was fixed pursuant to the decision of the Apex Court and even inspite of the challenge to such determination was dismissed, it is not clear either from the counter-affidavit or from the arguments of the counsel for the respondents as to why the final land cost determined in the year 1993-94 was not collected from the allottees. However from the counter-affidavit it appears that the allottees appealed to the Government to examine the issue of final land cost once again and it was acceded. Based on the request of the allottees, the Government issued G.O.Ms.No.407 Housing and Urban Development HB 5(1) Department dated 30.9.1999 and appointed High Level Committee to go into the issue of fixation of the land and development cost. Based on the report, Government issued G.O.Ms.No.63 Housing and Urban Development (HB.5.1) Department dated 2.2.2001 fixing the final land cost at Rs.6.32,630/- per ground as on 31.12.2000. The method as to how the land cost was determined is given in the annexure to the G.O. In terms of the aforesaid G.O., the land cost as of the year of allotment was determined in respect of each allottee and they were informed in March, 2001 accordingly. In such demand, the cost of land and capitalisation cost was also indicated. 7. Not satisfied with the land cost determined in terms of G.O.Ms.No.63 dated 2.2.2001, and the consequent demand made in March, 2001 a batch of writ petitions were filed challenging the aforesaid G.O. and connected proceedings. The batch of cases were listed before a Division Bench of this Court. By order dated 31.10.2001, the Division Bench of this Court dismissed the writ petitions and gave certain directions. It will be useful to refer to the relevant portions of the Division Bench order dated 31.10.2001 for better appreciation. The batch of cases were listed before a Division Bench of this Court. By order dated 31.10.2001, the Division Bench of this Court dismissed the writ petitions and gave certain directions. It will be useful to refer to the relevant portions of the Division Bench order dated 31.10.2001 for better appreciation. In para 23 it held as follows:- "23. With regard to the right of the housing board to increase the cost of the land is concerned, the learned counsel for the petitioners did not dispute the same." However, relying upon the various clauses of the agreement, the court came to the conclusion that the allottees cannot dispute their liability in paying the revised cost of land/building. Further in para 25 of the judgment, it was clearly stated that the right of the Housing Board to claim the enhanced price cannot be disputed and the petitioner cannot deny their liability to pay the revised cost which always depends upon the finalisation of the proceedings by the civil court. In para 26, the court held as follows:- "26. The petitioners are liable to pay the compensation awarded by the court to the land owners. So far as that aspect is concerned, it is not open to the petitioners to raise any dispute." However, as regards the fixation of the land price as on 31.12.2000, the court held in para 31 as follows:- "31. So far as the delay is concerned, that cannot be a ground to totally accept the plea of the allottees; especially when the delay has not caused any prejudice to the fixation of the cost of the land of the allottees. If it is established by the allottees/petitioners that the cost of the land had been determined as on 31.12.2000 irrespective of the enhanced compensation awarded by the courts, then there is something to appreciate the contention of the learned counsel for the petitioners. But there is no material to that effect before the court. It is also not the case of the petitioners that the cost of the land had been determined as on 31.12.2000 taking into consideration of the prevailing market value of the land as on that date. Hence the delay in determining the cost of the land will not deprive the housing board from making their claim. It is also not the case of the petitioners that the cost of the land had been determined as on 31.12.2000 taking into consideration of the prevailing market value of the land as on that date. Hence the delay in determining the cost of the land will not deprive the housing board from making their claim. Virtually the question of limitation do not arise, since in the agreement entered into between the parties there is no specific stipulation with regard to the time within which the housing board has to determine the cost of the land, after the land acquisition proceedings in respect of the compensation were over in the civil courts. When irrespective of the delay, the cost of the land had been fixed only on the basis of the enhanced compensation awarded by the courts, the petitioners cannot have any grievance. Hence the cost of the land is concerned, the petitioners cannot raise any objection, unless it is established that the authorities have not determined the final cost on the basis of the enhanced compensation awarded by the civil courts." (emphasis supplied) Therefore, while holding that the final cost was correctly determined, the court went further to deal with the other issues, viz., compound interest, rate of interest, period of interest, development expenses and capitalisation cost, which are found at paragraph 33, 34, 36 and 37 thus:- "33. So far as the claim, of the housing board regarding the compounding interest is concerned, it is a question for debate. So far as that is concerned, we do not want to enter into the question at this stage. The allottees want to enforce the terms of the agreement on the question of payment of interest. Hence, it is open to them to raise their objection with regard to the question of the rate of interest as well as the period of interest and after considering the objections of the petitioners, the housing board may pass final orders and include the same in the final cost of the flat." "34. Hence, it is open to them to raise their objection with regard to the question of the rate of interest as well as the period of interest and after considering the objections of the petitioners, the housing board may pass final orders and include the same in the final cost of the flat." "34. So far as the betterment charges is concerned, it is the contention of the learned counsel for the petitioners that the report of the committee refers that the development expenditure has become more or less a regular feature from the beginning of this scheme till date and the circumstances under which the Division was constrained to spend regularly in order to keep the development expenditure regular as the biggest continuous process is not clear and in any case having incurred the development expenditure every year it seems proper to take into consideration the actual development expenditure incurred by the Division for the purpose of working out the final cost." "36. So far as the fixation of the cost is concerned, it will be useful to refer to the Delhi High Court judgment AIR 2001 Delhi 39 in respect of the several factors which are involved as follows:- "The price of a flat depends upon variety of factors including price of land, labour charges, price of material which goes into construction thereof, supervision and management charges and the cost incurred for providing amenities to the buyers. All these factors are not constant and are liable to change. It has been asserted by the DDA therein that while DDA is not precluded from making some profits from the disposal of flats. It has in fact not earned any profit whatsoever from the disposal of flats situate at Besant Enclave." "37. While these facts are to be taken into consideration and admittedly the development has been done, we are of the opinion that there is nothing wrong on the part of the housing board to demand the expenses so incurred from the beneficiaries. It has been repeatedly held by the Apex Court in the case of fixation of price, the High Courts while exercising the writ jurisdiction, cannot examined every detail of the construction with reference to the cost incurred. It is for the High Court to take into consideration of the overall expenses incurred by the housing board and the liability of the allottees. It is for the High Court to take into consideration of the overall expenses incurred by the housing board and the liability of the allottees. When there is no dispute with regard to the betterment expenses incurred by the housing board, it is for the allottees, the beneficiaries, to share the burden. Hence, so far as the betterment charges are concerned, it is not open to the petitioners to raise any objection." (emphasis supplied) The Division Bench while rejecting the contention of the allottees on several aspects in paragraph 43 gave liberty to the allottees to submit their objections regarding compound interest, interest on legal expenses and development charges alone. Para 43 reads as follows:- "43. Since we have accepted the fair statement of the learned Additional Advocate General that the impugned G.O. is only a recommendatory and on the basis of the demand notice issued to the petitioners, it is open to them to submit their objections and the housing board will consider the same, we are dismissing the writ petitions, giving liberty to the petitioners to make their objections with regard to the claim of compounding interest, as well as interest on legal expenses and the development charges alone by the housing board. The housing board is bound to furnish the details as to whether they confined to the enhanced compensation awarded by the courts while calculating the value of the land. In other respects, it is not open to the petitioners to raise any objection. The petitioners are directed to submit their objections within eight weeks from today and on receipt of those objections, the housing board is directed to consider the same and pass final orders within four months thereafter." In para 48 this court concluded as follows:- "48. The writ petitions are dismissed with the following directions: (i) the Housing Board shall furnish the break up figures with regard to the actual compensation paid as per the orders of the court to the land owners and the interest thereon along with the details of the capitalisation charges. (ii) similarly the Housing Board shall furnish the break up figures in respect of the actual betterment and development charges incurred and the interest thereon as well as the actual legal expenses and the interest thereon. (ii) similarly the Housing Board shall furnish the break up figures in respect of the actual betterment and development charges incurred and the interest thereon as well as the actual legal expenses and the interest thereon. The Housing Board is directed to furnish the same within four weeks from the date of receipt of the copy of this order. (iii) It is open to the allottees to raise objections within two weeks on receipt of the details of break up figures only with regard to the compounding interest and the period of interest and capitalisation charges where the delay of allotment is on the Housing Board. It is not open to the petitioners to raise any objection with regard to the actual expenses incurred by the Housing Board. (emphasis supplied) (iv) The Housing Board shall consider the objections and pass final orders within two months after the receipt of the objections and communicate the same to the allottees. (v) It would be then open to the petitioners to avail such remedy as is open to them in law." Thereafter, the Housing Board furnished the particulars to the various allottees as directed by the Division Bench of this Court in its judgment dated 31.10.2001. Many of the allottees submitted their objections on various issues. The Housing Board passed final orders on 29.1.2002 and on other dates and communicated the same to the various allottees, determining the final land cost at Rs.6,32,630/- per ground. 8. The majority of the writ petitions challenge the proceedings dated on 29.1.2002 and similar proceedings issued on other dates, viz., 18.2.2002, 25.2.2002, 27.2.2002. It has to be mentioned that W.P.Nos.13775 to 13785 of 2001 have been filed challenging the notice-cum-demand issued during the month of August, 2001 to December, 2001 based on G.O.Ms.No.63 dated 2.2.2001. The said G.O. and the demand notices issued in the month of March, 2001 were challenged in the batch of writ petitions and the Division Bench of this Court by order dated 31.10.2001 referred to earlier dismissed the writ petitions giving liberty to the writ petitioners therein to give their objections with regard to three issues, viz., (i) compounding interest, (ii) the period of interest and (3) capitalisation charges where the delay of allotment is on the Housing Board. Inspite of the Division Bench Judgment dated 31.10.2001 and in addition to giving the details to the allottees pursuant to the direction of the Division Bench order dated 31.10.2001, the respondent Housing Board were issuing demand notices during the month of August 2001 till December, 2001 demanding the land cost as determined in G.O.Ms.No.63 dated 2.2.2001. Therefore many of the allottees were constrained to file writ petitions challenging such notices. Some of the allottees who had received the demand notices of March, 2001 filed writ petitions belatedly in the year 2002 after the Division Bench disposed of the batch of writ petitions on 31.10.2001. All the writ petitions have been bunched together. On going through the affidavits filed in support of the writ petitions, it is clear that in view of the direction of the Division Bench dated 31.10.2001, the relief sought for by the writ petitioners are to be restricted with regard to the three issues left open by the Division Bench in its order dated 31.10.2001. However, in all the cases the pending issues have to be considered in the light of the subsequent events which will be discussed hereinafter. 9. The order dated 29.1.2002 impugned dealt with the issue as follows:- (a) In terms of clause 16 of the agreement, the final cost fixed by the Board is final and conclusive and the allottees are liable to make the payment and get the sale deed executed, (b) Though the original land cost of Rs.6,87,700/- in the year 1993-94 and the challenge to such determination was dismissed by the High Court, the Government had revised the cost at Rs.6,32,630/- in the year 1999-2000 and was informed to the allottees and therefore such amount has become final. (c) The above said cost includes the interest. The Board has calculated the simple interest so as to reduce the burden on the allottees. (d) According to the rules of the Board, the capitalisation of interest will be on the total cost fixed by the Board and such determination will be from the date of fixing the cost till date of allotment or ready for occupation whichever is later. (d) According to the rules of the Board, the capitalisation of interest will be on the total cost fixed by the Board and such determination will be from the date of fixing the cost till date of allotment or ready for occupation whichever is later. At the request of allottees the committee had recommended simple interest for capitalisation on the cost of construction and the interest will be from the date of fixation of the cost to date of ready for occupation (date of obtaining E.B. Connection which is later). This was communicated by the G.O.Ms.nO.63 dated 2l.2.2001. (e) Since simple interest was granted in respect of the claims, further reduction on capitalisation was not possible. (f) Instead of taking the entire cost of the building for the purpose of capitalisation, only the cost of construction and the interest for the period of construction alone will be taken into consideration. 10. The aforesaid determination are challenged in the present batch of writ petitions. A counter has been filed supporting the case of the department, in particular, reference can be made to para 16 of the counter which reads as follows:- "16. Regarding para No.10, it is submitted that, the compound interest, as the EC (enhanced compensation) amount awarded by the various Courts were paid by the Housing Board by borrowing funds for interest from the financial institutions and which is not so far collected from the allottees. For the loan received from the financial institutions and paid to the land owners for Enhanced Compensation, the loan amount is repaid along with interest. Hence, the compound interest to the expenditure for every year only up to the date of allotment is charged. But for the collection of difference amount from the allottee between date of allotment and up to the date of payment for the difference of land cost between final and tentative cost only simple interest is collected. Regarding the period of interest, as the Enhanced Compensation amount has not been paid by the allottee till date, the Board has paid the principal with interest to the land owners which has to be paid by the allottee with interest till he pays the amount. Regarding the capitalisation, it is stated that the price of the house/flats are fixed with cut off date only. Regarding the capitalisation, it is stated that the price of the house/flats are fixed with cut off date only. Apart from the cut off date price of the house has to be increased by capitalisation and the house/flats cannot be sold to the same price indefinitely. Hence, capitalisation is correct. The petitioners need not have approached the Honourable Apex Court since the orders of the High Court are clear and the respondents have adhered the same." 11. While the matter was pending before this Court, some developments took place at the instance of the petitioners and the respondents. The matter was referred to the Lok Adalath for its consideration. There were several rounds of talks. The Housing Board submitted a letter to the Secretary, High Court Legal Service Committee, Chennai whereunder the Department had revised the final land cost from Rs.6,32,630/- per ground as calculated under G.O.Ms.No.63 dated 2.2.2002 to Rs.3,49,100/- per ground. For determining the above said revised figure of Rs.3,49,100/-, a break up figure was given as follows:- Rs. in lakhs Land cost spent 738.84 Simple interest upto 31.12.2000 846.76 E.C. amount to be paid 898.14 Govt. land cost 321.65 Legal expenses 15.92 Estt. charges for award at 14.5% 6.40 Estt. charges for E.C. at 5% 144.56 Difference in land cost to be paid to the land owners 227.64 Total 3,199.91 Development expenditure spent 276.58 Simple interest upto 31.;12.2000 683.11 Development expenditure to be incurred 125.49 Total 1,085.18 Saleable area 67.63 acres or 1227.48 grounds 4,285.09 Land cost 3.199.91/1.227.48 Rs.2,60,690 Development cost 1.085.18/1.227.48 Rs. 88,408 Rs.3,49,098 (or) Cost fixed as on 31.12.2000/ 31.3.2001 Rs.3,49,100 per ground Based on such revision of the land cost and as per year of allotment the actual land cost was determined as hereunder:- (Rs. 88,408 Rs.3,49,098 (or) Cost fixed as on 31.12.2000/ 31.3.2001 Rs.3,49,100 per ground Based on such revision of the land cost and as per year of allotment the actual land cost was determined as hereunder:- (Rs. Cost as on 31.3.1983 90,860 Cost as on 31.3.1984 1,04,490 Cost as on 31.3.1985 1,18,120 Cost as on 31.3.1986 1,31,750 Cost as on 31.3.1987 1,45,380 Cost as on 31.3.1988 1,59,010 Cost as on 31.3.1989 1,72,640 Cost as on 31.3.1990 1,86,270 Cost as on 31.3.1991 1,99,900 Cost as on 31.3.1992 2,13,530 Cost as on 31.3.1993 2,23,980 Cost as on 31.3.1994 2,44,430 Cost as on 31.3.1995 2,59,880 Cost as on 31.3.1996 2,75,330 Cost as on 31.3.1997 2,91,690 Cost as on 31.3.1998 3,08,050 Cost as on 31.3.1999 3,24,410 Cost as on 31.3.2000 3,38,950 Cost as on 31.3.2001 3,49,100 Subsequent to this, the housing Board passed resolution dated 21.5.2004 the relevant portion reads as follows:- "TAMIL NADU HOUSING BOARD. NOTE FOR THE BOARD. ITEM NO.5/04 Sub: Tamil Nadu Housing Board – Ellis Nagar Madurai – Fixation of final land and development cost to Ellis Nagar Scheme- Madurai – certain suggestions made by Lok Adalat in case No.1 to 449/HC/03 and 658/HC/03 regarding – Final cost fixation - Matter placed before the Board with additional particulars for taking decision. (Hudco-6/15548/03) ----- The Board in its resolution No.6.03 dated 28.8.03 has approved the Final Land and Development cost for Ellis Nagar, Madurai at Rs.3,49,100/- per ground as on 31.12.2000 subject to the condition that the final cost to be arrived at adding 15% profit margin and resolved to send the proposal to Government. Accordingly, the proposal was sent to Government for their approval and orders of the Government are awaited. In the mean time on 9.9.03 the Lok Adalat dealing with settlement of writ petitions relating to Ellis Nagar Scheme has suggested the following: 1) The Housing Board and the Government may give up the claim of 15% profit in the final cost, as the element of profit has already been taken into account in the initial cost. 2) Recommended to charge 9% interest for the period of 5 years prior to 31.12.2000 and for subsequent period till the date of payment and the said amount should be payable in instalments for the period of 5 years. 3) The capitalisation of interest charges from the date of ready for occupation and not from the cut off date. 2) Recommended to charge 9% interest for the period of 5 years prior to 31.12.2000 and for subsequent period till the date of payment and the said amount should be payable in instalments for the period of 5 years. 3) The capitalisation of interest charges from the date of ready for occupation and not from the cut off date. The Lok Adalat was informed during the meeting on 14.10.03 has given the following recommendations with some modification for their earlier suggestions for consideration and Board is taking appropriate action. 1) The capitalisation should be done from the date of notification by the Housing Board "for ready for occupation" houses/flats with reference to G.O.Ms.No.1666, dated 16.12.88. 2) The Housing Board is not to charge any interest upon this amount, till the notice is given. 3) The interest of 10.5% may be charged instead of 9% on the difference of cost, as suggested already. 4) The Adalat has also suggested that a profit of 6% on the difference amount between the tentative cost and final cost can be collected and no interest need be charged on this profit. The above recommendations were placed in the Board meeting held on 22.10.03. The Board has deferred the subject by Resolution No.6.11 dated 22.10.03. Copy of the Note for the Board is enclosed. In the meantime, the Hon'ble District Judge/Secretary, High Court Legal Services Committee, Chennai-104 in his letter dated 5.11.03 has forwarded the following suggestions for consideration and placing before the Board and making the counsel on record to enter into a settlement on behalf of the Board. 1) The final cost per ground as on 31.12.2000 is Rs.3,49,100/-. The above said amount, should be going back upto 82-83 as done earlier in Ellis Nagar Scheme. 2) The allottee should pay the simple interest at 12% per annum for the differential amount for 5 years prior to 31.12.2000 and from 31.12.2000 to till the final payment is made. In case where the allotment is later to 31.12.1995 the actual period will count for interest. 3) The allottees should pay 8% profit on differential cost which will not attract any interest. 4) The capitalisation should be from the date of notification by the Housing Board for ready for occupation of houses/flats with reference to G.O.Ms.No.1666, dated 16.12.88. The Housing Board is not to charge any interest upon this amount till the notice is given. 3) The allottees should pay 8% profit on differential cost which will not attract any interest. 4) The capitalisation should be from the date of notification by the Housing Board for ready for occupation of houses/flats with reference to G.O.Ms.No.1666, dated 16.12.88. The Housing Board is not to charge any interest upon this amount till the notice is given. As regards the above suggestions of Lok Adalat, the following details are furnished: 1) The suggestions that the final cost per ground as on 31.12.2000 has to be fixed as Rs.3,49,100/- and it should be going back upto 1982-83 can be considered, provided wherever tentative cost in the respective year is higher than the final cost now arrived, the tentative cost may be treated as final cost. Otherwise a sum of Rs.2.02 crores, has to be refunded if the suggestion of Lok Adalat is accepted as it is. 2) Regarding the suggestions on interest of 12% and period of 5 years plus 3 years it is stated that the TNHB is paying the enhanced compensation amount at 12% interest rate for acquired lands from the date of 4(1) Notification to till the date of possession of land and at 9% interest for further period of year and at 15% interest till the payment is made to the land owners. The E.C. amount with interest, charge are being paid to the land owners, on behalf of allotees of the board from the borrowed funds. Hence the difference amount in final cost are collected from the allottees of all schemes from the date of allotment till the date of payment at the ruling rate of interest fixed by the Board every year. Hence, the change in the rate of interest and change in period may lead to a revenue deficit to the tune of Rs.6.70 crores after taking 8% profit into account. 3) The board in resolution No.6.03 dated 28.8.2003 has resolved that the total cost to be arrived at by adding 15% profit margin. Now the Lok Adalat suggests 8% profit as differential cost which will not attach any interest. The matter was placed before the Board in its resolution No.6.01, dated 27.11.03 has resolved to fix the ruling rate + 5% nominal profits as a special case. The Board also resolved to take opinion of the Special Secretary, Finance before filing affidavit. Now the Lok Adalat suggests 8% profit as differential cost which will not attach any interest. The matter was placed before the Board in its resolution No.6.01, dated 27.11.03 has resolved to fix the ruling rate + 5% nominal profits as a special case. The Board also resolved to take opinion of the Special Secretary, Finance before filing affidavit. The Board has communicated, the offer to the Lok Adalat vide DO letter No.Hudco/6/15548/2003, dated 23.2.04 (copy enclosed). The subject was discussed with the Lok Adalat held on 9.3.2004. The petitioner have not accepted the Board's proposal and hence the Lok Adalat has finally decided to refer the matter to the High Court. Since the petitioner have not accepted the proposal given by the Government. In order to issue sale deed to those allottees who come forward to accept the terms and conditions of the Housing Board. The Board may be authorised to issue sale deed so that the Board will get revenue and also sale deeds may be issued. The matter is placed before the Board for issuing sale deed with the following conditions: 1) The final cost per ground as on 31.12.2000 Rs.3,49,100/- + 5% nominal profit as a special case. 2) Interest has to be charged as per the Housing Board rules. SURJIT K.CHAUDHARY, 20.5.2004 MANAGING DIRECTOR Resolution No.6.06 Dated 21.5.2004 "Approved" LAL RAWNASAILO CHAIRMAN TAMIL NADU HOUSING BOARD 24.5.04 /True Copy/ Sd/ xxxx Divisional Accountant" Therefore, the Board revised the earlier land cost of Rs.6,32,630/- to Rs.3,49,100/- as on 31.12.2000/31.3.2001 and from the proceedings it is stated that such resolution was approved by the competent authority. Pursuant to the Boards resolution, the respondent official sent individual letter to the allottees. One such letter dated 10.6.2004 in respect of the allottee in W.P.No.15442 of 2002, which is very relevant and important for the present issue, reads as follows:- "From A.Renganathan,B.E.,M.I.E., Madurai Housing Unit Exec. Engr. & Admn. Officer, Ellis Nagar, Madurai-10. Phone No.0452-600835 ------------------------------------------------------------- Lr.No.SD11/9787/2004 Dated 10.6.2004 Thiru/Tmt.Gnaneswaran, T.S., H-653, Ellis Nagar, Madurai-10. Sir, Sub: Madurai Housing Unit-Tamil Nadu Housing Board Allotment of House/Flat No.H-653 at Ellis Nagar Land cost revised – intimation – reg. Ref: Board's U.O. note Hudco 6/15548/2003 dated 27.5.2004. You are informed that the House/Flat No.H-653 at Ellis Nagar was allotted to you on 18.09.1987 at tentative cost basis. Sir, Sub: Madurai Housing Unit-Tamil Nadu Housing Board Allotment of House/Flat No.H-653 at Ellis Nagar Land cost revised – intimation – reg. Ref: Board's U.O. note Hudco 6/15548/2003 dated 27.5.2004. You are informed that the House/Flat No.H-653 at Ellis Nagar was allotted to you on 18.09.1987 at tentative cost basis. The difference in land cost was informed to you at the rate of Rs.6,32,630/- per ground based on the G.O.Ms.No.63 during 2001-2002. But you did not remit the informed amount towards the land cost. You are now informed that the final land cost as on 31.12.2000 has been abnormally reduced to Rs.3,49,100/- plus 5% nominal profit as a special case against Rs.6,32,630/- per ground. Based on the revised price, the difference in land cost and capitalisation amount are arrived as follows:- 1. Difference in land cost : Rs. 64,677 2. Capitalisation amount : Rs. 63,466 Total : Rs.1,28,143 You are requested to remit the above said amount on or before 10.06.2004 otherwise interest will be charged up to the date of payment. On receipt of the amount, the sale deed for the house/flat will be executed and handed over to you immediately. If you have filed any case in the courts, kindly withdraw the case from the court for executing the sale deed. Please utilise the opportunity, settle the dues to TNHB and get the sale deed." Thereafter some of the allottees paid the amount and obtained the sale deeds. The present batch of writ petitioners are those who are agitating the issues and these cases are taken up for final disposal. 12. The following contentions were submitted on behalf of the petitioners: The learned senior counsel arguing on behalf of the allottees submitted that only by board's proceedings dated 21.5.2004 the final cost was determined at Rs.3,49,100/- + 5% nominal profit. Therefore, referring clause 19 of the agreement which has been extracted above, it is vehemently contended that only after finalisation of the total cost of construction, and value of the land, the difference amount can be paid on demand. However, clause 19 does not specify any interest. Therefore, there is no question of paying interest. The writ petitioners/ allottees and the respondents Housing Board have entered into agreements and there is no dispute that they are bound with the terms of agreement. However, clause 19 does not specify any interest. Therefore, there is no question of paying interest. The writ petitioners/ allottees and the respondents Housing Board have entered into agreements and there is no dispute that they are bound with the terms of agreement. The contention of the petitioners is that the Housing Board, which is a statutory body, has not discharged its functions fairly. The contention of the writ petitioners is that the Board has decided the issue of land cost without application of mind arbitrarily and without considering the relevant facts and circumstances. That is why based on the representation, the Government has been modifying the final land cost from time to time. The fact that the final land cost fixed in the year 1993-94 at Rs.6,87,700/- has been modified to Rs.6,32,630/- and subsequently brought down to Rs.3,49,100/-, would go to show that the fixation of land cost was not done keeping in mind the interest of the allottees. The downward revision was done only after the grievances of the allottees were made known to the authorities. In all these proceedings the final land cost came to be revised again and again. The further contention is that the demand for interest for the inaction on the part of the Board in finalising the land cost and demanding capitalisation charges belatedly cannot be justified. Since the authorities were not acting in a fair and equitable manner and there is an unexplained and inordinate delay in demanding the amounts, the petitioners/allottees were put to great prejudice and hardship besides financial loss. Because of the non- conclusion of the issues, they are not able to get the sale deed executed. In such view of the matter, it was submitted that the impugned demands have to be set aside and the writ petition under Article 226 of Constitution of India is the appropriate remedy in the facts and circumstances of the present cases. The claim of the petitioners is on the ground that the authorities have not taken proper care to determine the final cost of the land, even though the Supreme Court decided the matter in the year 1992. The Division Bench of this Court headed by in the case of Krishnan.K.V. - v. - The Chairman and Managing Director, TNHB reported in 2004(1) CTC 178 observed in paragraphs 12 and 14 as follows:- "12. The Division Bench of this Court headed by in the case of Krishnan.K.V. - v. - The Chairman and Managing Director, TNHB reported in 2004(1) CTC 178 observed in paragraphs 12 and 14 as follows:- "12. Numerous cases have come up before the Courts wherein the statutory bodies like the respondent before us had made allotments of lands or buildings and the rates at which the allotments were made or the escalation as claimed by them have had to be examined by the Courts. One recent decision brought to the notice of the Court by the counsel for the Housing Board is the decision of the Supreme Court in the case of Delhi Development Authority – v. - Ashok Kumar Behal and Others, 2005(5) S.C.C. 398." "14. It is evident that the statutory bodies which are engaged in the task of formulating housing schemes and allotting the same to the members of the public have a duty to satisfy the Court, when called upon, that their action was neither arbitrary nor illegal. The fixation of the price for the plots or the houses allotted by them is no exception to this rule. If it is found, after a scrutiny of the data placed before the Court by such a body, that the price fixed by it or the price sought to be revised is a result of arbitrary and illegal action, such action is amenable to correction by this Court." In this case also the petitioners are before this Court praying to set aside the demand of amounts by the respondent pursuant to belated determination of the final land cost and the belated claim of capitalisation charges. Though other issues were raised at the time of filing the writ petitions, due to changed circumstances and subsequent events, which happened after filing of the writ petitions, many of the issues have become redundant except a few which alone are taken up for consideration. 13. The learned Additional Advocate General argued on behalf of the respondents relied on para 12 of the same agreement wherein, it has been stated that the purchaser/allottee shall pay 15% interest on any payments made on behalf of the purchaser by the vendor. According to the Housing Board, the interest on land cost has to be demanded from the year of allotment, viz., from 1982, 1983 onwards. According to the Housing Board, the interest on land cost has to be demanded from the year of allotment, viz., from 1982, 1983 onwards. On the contrary, the claim of the petitioner is that the liability to pay interest if any, should be only from 21.5.2004 when the final cost has been determined as on 31.12.2000/31.3.2001. The learned counsel for the petitioner would submit that even for the purpose of arriving at the final cost at Rs.3,49,100/- + 5% profit, the Department has taken into consideration the interest component as on 31.12.2000 both in respect of land cost and for the development expenditure. Therefore, calling upon the petitioner to pay the interest once again from the date of original allotment will be unreasonable. When the interest portion has already gone into the cost fixation as on 31.12.2000, there is no justification for demanding further interest from the date of order of allotment. The allottees are agreeable for payment of interest from 21.5.2004 (i.e.) the date of the Board's resolution. 14. Learned Additional Advocate General further submitted that assuming that the land cost was determined at Rs.6,32,630/- as per G.O.Ms.No.63 dated 2.2.2001 and the intimation to the allottees were given in the month of March, 2001 to pay the land cost, the allottees have been put on notice with regard to payment in the year 2001 itself and therefore they are liable to pay interest at least from March, 2001. From the narration of events as above, it is clear that the final land cost though determined earlier was not actually finalised. In the year 1993-94 the final land cost was determined at Rs.6,87,700/- after the decision of the Apex Court in the year 1992, however, it was not acted upon by the respondents inspite of the writ petition challenging the determination being dismissed. The land cost was thereafter fixed at Rs.6,32,630/- per ground as per G.O.MS.No.63 dated 2.2.2001 and the challenge to the G.O.Ms.No.63 dated 2.2.2001 and the consequent demands were dismissed by the Division Bench of this Court on 31.10.2001. Thereafter the respondents once again revised the land cost to Rs.3,49,100/- per ground as on 31.12.2000 as per the Board's resolution dated 21.5.2004. The final cost at Rs.3,49,100/- was arrived, at an almost near consensus before the Lok Adalat on 9.3.2004, though such determination was not acted upon. Thereafter the respondents once again revised the land cost to Rs.3,49,100/- per ground as on 31.12.2000 as per the Board's resolution dated 21.5.2004. The final cost at Rs.3,49,100/- was arrived, at an almost near consensus before the Lok Adalat on 9.3.2004, though such determination was not acted upon. However, such final determination has been subsequently accepted by the Board by its resolution dated 21.5.2004 and communicated by the authorities to the allottees by various letters and one such letter dated 10.6.2004 has been extracted above. 15. At the time of final hearing of the present batch of writ petitions, the Board resolution dated 21.5.2004 was relied upon to state that the final land cost was fixed duly in May, 2004 and therefore the allottees should be made liable to pay interest only from that date. Some of the counsel for petitioners challenged the inclusions of certain amounts in the final cost. It will be pertinent to note that the claim of the petitioners were restricted by the Division Bench order dated 31.10.2001 to three issues. One issue is compounding interest. On going through the working sheet relating to final land cost, it is clear that the respondents have adopted simple interest in respect of all payments to arrive at the final land cost. Therefore, the major grievance of the petitioners/allottees that compound interest should not be adopted has been given up and consequently the land cost has come down drastically. The Board is entitled to fix the final land cost as per the terms of the agreement. It has finally fixed the land cost and that has been communicated to the petitioners. Therefore, the allottees cannot once agitate the final land cost. In fact the Division Bench of this Court by order dated 31.10.2001 has upheld the final land cost at Rs.6,32,630/- and it has become final. The Board has shown further concession in interest and the final land cost has been further reduced. The final land cost has been determined in terms of the agreement and after mutual discussion in various forums. It is not open to the petitioners to agitate the issue over and over again and reopen the issue already decided. In this case, since the respondents have shown further concession in the interest and worked out the final land cost at Rs.3,49,100/-, there is no need to go into the final land cost once again. It is not open to the petitioners to agitate the issue over and over again and reopen the issue already decided. In this case, since the respondents have shown further concession in the interest and worked out the final land cost at Rs.3,49,100/-, there is no need to go into the final land cost once again. The compound interest issue also does not merit consideration since the Board themselves have worked out the final land cost based on simple interest. Further, as regards the final land cost the Division Bench of this Court in its judgment dated 31.12.2001 in para 31 held that the petitioners/allottees cannot raise any objection on the same. Further, the right of the Board to finalise the land cost is specified in the agreement itself. The petitioners/allottees are bound by the terms of the agreement. Hence, the petitioners/allottees cannot challenge the final land cost in this batch of writ petitions once again. Therefore, the further issues for consideration are relating to interest and capitalisation charges. 16. As far as the capitalisation cost is concerned, the respondents claim that the amount demanded by them was left out and the Department is entitled to capitalise the interest on the cost of construction for certain period. As to how the capitalisation will be made generally, both sides refer to G.O.Ms.No.1666 dated 16.12.1988 as a matter of principle and it reads as follows:- "ABSTRACT Housing – TNHB – Allotment of flats/ Houses constructed by TNHB – Allotment under Government Discretionary quota – Allotment of surrender/cancelled/declined vacancies – Collection of interest from the date of ready for occupation to the date of actual allotment – orders – issued. ------------------------------------------------------------ HOUSING AND URBAN DEVELOPMENT (K1) DEPARTMENT G.O.Ms.No.1666 Dated: 16th Dec. 88 Read again, i) Govt. letter (MS)No.1214, Housing and Urban Development Department dated 18.11.1985. ii) Govt. letter (MS)No.542, Housing and Urban Development Department dated 11.04.1986. iii) From the Chairperson & M.D. TNHB Lr.No.F3/87256/87 dated 02.06.1987. iv) Govt., D.O.Lr.No.8150/K1/85-14 Housing & Urban Development dated 06.07.1987. v) From the Chairperson on and M.D., TNHB D.O.Lr.No.P3/87256/86 dated 26.02.1988. ----- Order: At present in respect of flats/Houses allotted by the Government, (under Government, Disc. Quota/Surrendered/cancelled/declined vacancies) and by the Board (From the waiting list) interest charges for the periods from the date of ready for occupation, till the date of allotment order is capitalised and collected from the allottees concerned. 2. ----- Order: At present in respect of flats/Houses allotted by the Government, (under Government, Disc. Quota/Surrendered/cancelled/declined vacancies) and by the Board (From the waiting list) interest charges for the periods from the date of ready for occupation, till the date of allotment order is capitalised and collected from the allottees concerned. 2. The Government have received several representations from the allottees that it is not fair to collect the interest charges from them for the period of belated allotments, as it is not a fault of theirs. However, as the flats/houses are constructed by the TNHB by obtaining loan from other agencies, especially, the Housing and Urban Development Corporation and as the Board has a commitment to pay the interest charges on the loan amount obtained from such agencies, besides payment of principal, the 'Capitalisation of interest charges' cannot be completely dispenses with. If this request is complied with, the Board will incur a very heavy loss. Therefore, with a view to see that the Board do not incur any loss, and the allottees are not unnecessarily penalised by the 'Capitalisation of interest charges' the Government in consultation with TNHB have considered various measures. The TNHB in its Resolution No.29 dated 29.01.1988, have agreed with the suggestion of the Government to collect the interest from the allottees on the amount of the initial cost and the monthly instalments that would have been paid from the date of ready for occupation till the date of allotment order. 3. The Government in suppression of all the previous orders on the subject direct that in respect of TNHB flats/houses/surrendered/ cancelled etc., and allotment made from the waiting list, interest at the prevailing market rate should be collected from the allottees for the period from the date of ready for occupation till the date of allotment order on 1/3 or ¼ of the initial cost as the case may be. Besides interest at the same rate on the monthly instalments that would have become due from the date of ready for occupation till the date of allotment should also be collected at the prevailing market rate for the said period. 4. This procedure should be adopted in respect of all allotments made on or after 1st January 1985. The Chairperson and M.D., TNHB is requested to issue suitable instructions to the subordinates, authorities to carry out the above instructions. 5. 4. This procedure should be adopted in respect of all allotments made on or after 1st January 1985. The Chairperson and M.D., TNHB is requested to issue suitable instructions to the subordinates, authorities to carry out the above instructions. 5. The Chairperson and M.D., TNHB is requested that the new procedure for 'Capitalisation of interest charges' should be incorporated on the advertisements calling for applications and in the application forms also. (By order of the Governor) Sd/- Commissioner & Secretary" 17. Though the aforesaid G.O. is of the year 1988 and relates to certain category, the principle of capitalisation is in built, in a transaction of this nature. Capitalisation forms a component in the transaction between the allottees and the Housing Board where the flat/house is built for the allottees and the Board spends the money by taking loan from financial institutions. Capitalisation is done in respect of the interest portion on the cost of construction or the value of the building from the date when it is made ready for occupation till the date of allotment. Such interest is capitalised and recovered from the allottees. This amount has to be necessarily borne by the allottees, since it is at his behest that the house has been constructed. In respect of Government servant and allottees under G.O.Ms.No.1666 dated 16.12.1988, certain benefits are extended in so far as the capitalisation charges are concerned. Even in G.O.Ms.No.63 dated 2.2.22001 and in the notices issued thereafter, the allottees were informed about the capitalisation charges. However, the Division Bench while dismissing the writ petition, granted liberty to the allottees, some of whom are the present writ petitioners, to raise objections only with regard to the break up figures, viz., (1) compound interest, (2) period of interest and (3) capitalisation charges where the delay of allotment is on the Housing Board. Para 5(2) of G.O.Ms.No.63 deals with capitalisation. 18. The earlier Division Bench in its judgment dated 31.10.2001 in paragraph 24 relying upon clause 18 of the agreement came to hold that the allottees cannot dispute their liability to pay the revised cost of land/building. Such finding was based on the decision of another Division Bench in the case of Ragunathan – vs. - Tamil Nadu Housing Board reported in 1997 Writ Law Reporter 25. Such finding was based on the decision of another Division Bench in the case of Ragunathan – vs. - Tamil Nadu Housing Board reported in 1997 Writ Law Reporter 25. Further, the earlier Division Bench of this Court has relied upon the decision of the Delhi High Court reported in DDA Self Finance Flats Owners Society – vs. - U.O.I. AIR 2001 Delhi 39 with regard to fixation of cost. Therefore it held that the housing Board is entitled to determine the final flat cost which would also include the capitalisation of the interest portion for the aforesaid period. This is the reason why the Division Bench reserved the right of the petitioners/allottees to challenge the capitalisation charges where there was a delay in allotment, in view of a specific plea raised by a counsel whose contention is set out in paragraph 6 of the judgment of the Division Bench dated 31.10.2001 which is as follows:- "The claim made under the head of 'capitalisation' also cannot be sustained, since the delay is not on the part of the allottees in getting the allotment. Hence the allottees cannot be made liable to pay the capitalisation charges from the date of their building was ready for occupation till the date of allotment. The liability of the allottee will come into play only after the allotment is made." Therefore, it is clear that the claim for capitalisation of interest was not in dispute. The dispute is whether the capitalisation charge is payable where there is a delay on the part of the Housing Board in making allotment. At present the contention of the counsel for all the petitioners is that interest on the capitalised amount is payable only from the date of demand and it cannot be claimed from the date of allotment. 19. Further, the reason for the Division Bench giving liberty to the allottees to make their objection relating to capitalisation where there is a delay in allotment, is apparent from the proceedings of the Housing Board which is extracted below:- "From To L.Navaneethan,B.E., Tmt.S.Lakshmi, Executive Engineer & W/o Rahavan, Administrative Officer, T.197, Ellisnagar, Madurai Special Division, Madurai-16. Tamilnadu Housing Board, Ellisnagar,P.B.No.4, Madurai-635010. ---------------------------------------------------Letter No.SD9/7575/986 Dated 11.12.89 Sir, Sub: Madurai Special Division – T.197 – revision of Building cost – Reg. Tamilnadu Housing Board, Ellisnagar,P.B.No.4, Madurai-635010. ---------------------------------------------------Letter No.SD9/7575/986 Dated 11.12.89 Sir, Sub: Madurai Special Division – T.197 – revision of Building cost – Reg. Ref: 1) Your lr.dated 2) This office allotment order No.SD9/7575/86 dated 30.5.86 ----- In the allotment order issued in the reference 2nd cited, the Building cost for T.197 has been informed as Rs.1,38,337/- having capitalised the firm cost for the period from 3/86 to 30.5.88 during which period your house was not ready for occupation. In view of belated readiness of your house on 8.7.88, the capitalisation added in the allotment order is deleted. Hence the building cost Rs.1,19,000/- is confirmed instead of Rs.1,38,337/-. Sd/L.Navaneethan, Exe.Engr.& Adm.Officer, /by order/ Sd/- Superintendent." 20. Therefore, the power to capitalise the interest portion of building cost was tacitly admitted. The only issue was with regard to the claim for relief where there was delay in allotment by the Housing Board. Except one case of the year 2000 none of the counsel appearing for the allottees/petitioners have argued that there was delay in allotment and therefore capitalisation charge cannot be made. The grievance of almost all allottees/writ petitioners is that on the capitalised amount, interest is charged from the date of allotment of flat/house till date of payment which is more than the capitalised amount. They pleaded that interest if at all will be payable in default of payment on demand. Further, a reading of G.O.Ms.No.1666 dated 16.12.1988 would clearly go to show that the capitalisation charges has to determine from the date when the flat or house are made ready for occupation till date of allotment. Therefore, the power of the Housing Board to demand the capitalisation charges, particularly in view of the various terms of the agreement relating to the right of the Board to determine the final cost, cannot be disputed. The capitalisation charges, will be determined for the period from the date when flat/house was made ready for occupation till date of allotment. Where the allottee has raised a specific plea of inordinate delay of allotment after the building is made ready for occupation that will have to be dealt with separately. In this batch of writ petitions, the abovesaid issue does not arise, since none of the counsel has raised the issue, except the writ petitioner, viz., W.P.No.11838 of 2000, which is dealt with separately. 21. In this batch of writ petitions, the abovesaid issue does not arise, since none of the counsel has raised the issue, except the writ petitioner, viz., W.P.No.11838 of 2000, which is dealt with separately. 21. The question now to be decided is what is the period from which interest is payable both in respect of final land cost and capitalisation charge. As for the period from which interest can be claimed is concerned, the final determination of land cost was made on 21.5.2004 with effect from 31.12.2000 as per Board's resolution and it is agreeable to the writ petitioners/allottees. When the demand was made in March, 2001, the final land cost did not reach a finality. It came up for further consideration before the authorities from time to time and only before the Lok Adalat, the parties came to an almost near agreement on the final cost. Even thereafter respondents did not approve and finalise the land cost and it is only pursuant to the Board's resolution dated 21.5.2004, the final land cost was determined by the respondent and demand notices have been issued from June, 2004. The tenor of the notice dated 10.6.2004 clearly states that the land cost and capitalisation cost should be paid within a particular date, failing which interest will be calculated. It is, therefore, clear that the demand itself is prospective. The respondents wanted to conclude the issue only after the Board's resolution and such decision has been communicated in June, 2004 and thereafter. Therefore, the liability of the allottees to pay interest would arise only in default of payment of the amount as demanded by the respondents in June, 2004 pursuant to the Board's resolution dated 21.5.2004. So, the Department cannot charge interest from the date of allotment. Eventhough logically interest should be charged depending upon the date of service of notice, in order to avoid any unnecessary confusion and complication in such matter, on the basis of the fair concession made by the counsel appearing for the petitioners/allottees to the effect that interest can be charged from the date of Board's resolution dated 21.5.2004, we make it clear that interest on the revised land cost as well as capitalisation charges would be payable with effect from 21.5.2004. As already indicated the counsel appearing for the petitioners have fairly conceded that interest can be charged from 21.5.2004. As already indicated the counsel appearing for the petitioners have fairly conceded that interest can be charged from 21.5.2004. Therefore, the allottees are liable to pay the interest on and from 21.5.2004. 22. In respect of pending cases, respondents will rework the capitalisation charges based on the above stated direction and the petitioners/allottees will pay the amount so determined together with interest. If no notice or demand had been made so far in respect of capitalisation charges, the respondents will work out the capitalisation charges as set out in para 20 and notice/demand will be issued to the allottee concerned to pay the amount with interest from 21.5.2004. 23. As regards the rate of interest that is payable, the allottees have already entered into agreement with the Housing Board. The allottees and the respondents are bound by the terms of the contract. In fact in several decisions of this Court, it has been held conclusively that the allottees are bound by the lease-cum-sale agreement and they cannot resile from the contract. The following decision of the Apex Court can usefully be referred:- In Bareilly Development Authority – v. - Ajay Pal Singh reported in AIR 1989 Supreme Court 1076, the Supreme Court held in paragraph 21 thus:- "21. There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple : Radhakrishna Agarwal v. State of Bihar (1977)3 SCR 249 : ( AIR 1977 SC 1496 ), Premji Bhai Parmar v. Delhi Development Authority (1980)2 SCR 704 : ( AIR 1980 SC 738 ) and D.F.O. v. Biswanath Tea Company Ltd. (1981)3 SCR 662 : ( AIR 1981 SC 1368 )." This view of the Apex Court is reiterated in the case of Bareilly Development Authority - v. - Vrinda Gujarati (SC) reported in 2004(1) CTC 785. Therefore the petitioners/ allottees are liable to pay interest on the final land cost as per the terms of lease-cum-sale agreement entered with the respondents. 24. Therefore the petitioners/ allottees are liable to pay interest on the final land cost as per the terms of lease-cum-sale agreement entered with the respondents. 24. As stated earlier some of the writ petitions now pending for consideration by this Court are challenge to demand notices demanding land cost and capitalisation cost issued in the month of March, 2001, based on G.O.Ms.No.63 dated 2.2.2001. G.O.Ms.No.63 dated 2.2.2001 and the demand notices were challenged in a batch of writ petitions and the same were dismissed by a Division Bench of this Court by order dated 31.10.2001. Based on this, demand notices were issued and some of the allottees have paid the amount and obtained the sale deeds and closed the issue, there is no need to deal with these cases past and concluded and it is treated as closed. Therefore, in respect of writ petitions challenging the demand notices issued in the month of March, 2001 and August to December, 2001, there is no need to set aside the same in view of the subsequent events. The impugned notices in the writ petitions which are issued pursuant to G.O.Ms.No.63 dated 2.2.2001 does not require to be set aside or modified as the respondent themselves have reworked the land cost and capitalisation charges in June, 2004 after the final land cost was fixed and approved by the Board. However, as discussed earlier, the Board has reconsidered the final land cost and arrived at the figure at Rs.3,49,100/- + 5% nominal profit pending the present batch of writ petitions. Therefore, if allottees have accepted such demand and paid the land cost and capitalisation charges pursuant to demand notices issued in the month of June 2004, no further adjudication is required. However, in the pending writ petitions, based on the Board's resolution, where demand notices were issued on the writ petitioners and the payments are due, respondents will have to proceed in accordance with the directions of this Court issued in the present batch of writ petitions. It is made clear that except the issue relating to the final land cost and capitalisation charges, all other issues were not contested by the respective writ petitioners and the respondents are entitled to proceed in the matter pursuant to notices or demand issued claiming other amounts in accordance with the terms of the agreement entered into between the parties. 25. 25. In the result, all the writ petitions are disposed of with the following directions:- (a) The petitioners/allottees will pay the final land cost at the rate of Rs.3,49,100/- per ground with 5% nominal profit. The actual amount determined by the respondents in respect of each allottee shall be paid together with interest as per the rate set out in the agreement from 21.5.2004 till date of payment. (b) The capitalisation charges will be determined for the period from the date when flat or house was made ready for occupation till date of allotment for occupation and such amount will be indicated separately. The interest on such amount will be payable from 21.5.2004. (c) If the respondents have not intimated the petitioners/allottees about the capitalisation charges so far, it is open to the respondents to specify the amount as stated in clause (b) and demand the same with interest from 21.5.2004. On complying with the above directions and satisfying any other requirement as per law, the petitioners/allottees, who have prayed for execution of sale deeds in their favour, are entitled to get the sale deeds executed. No costs.