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2007 DIGILAW 1858 (PAT)

Shanti Verma v. State Of Bihar

2007-12-05

NAVANITI PRASAD SINGH

body2007
Judgment Navaniti Prasad Singh, J. 1. The original writ petitioner Chandra Deo Prasad Verma died on 30.04.2005 and has since been substituted by his three daughters, namely, Smt Shanti Verma, Smt Kamla Devi and Smt Prem Sheela. 2. The original petitioner was allotted on 11.02.1981 (Annexure-1) a Middle Income Group House constructed by the Bihar State Housing Board being House No. 165 at Lohianagar, Kankerbagh, Patna. The said allotment letter indicated that the tentative price of the building alongwith the land was calculated at Rs. 61,292/- but the same was subject to revision on basis of cost of acquisition escalating or cost of development escalating or cost of building escalating. If there be any such escalation, the same would be payable by the petitioner and the demand thereof would be binding on the petitioner, who would not demand any justification for the same. The petitioner was required to pay Rs. 38,650/- within thirty days in a single instalment and the balance of Rs. 42,042/- shall be paid in ten years alongwith interest of Rs. 6,407.55 P per month if the same instalment is deposited in the beginning of every month. Petitioner immediately deposited the amount as demanded and on the very next day, agreement (Annexure-2) was executed in relation to the said House No. MIG 165. The said agreement clearly showed that the petitioner had already been a tenant of the said premises since 26.04.1978 which indicates that the house was ready and occupied by the petitioner since 1978 itself. This agreement reiterated the terms of letter of allotment including the escalation clause in the contingencies mentioned therein. It was stated therein that on full payment being made as per the agreement the Board would execute renewable lease of ninety years. The petitioner, accordingly, having deposited the initial amount as demanded and the monthly instalments with due interest as fixed, demanded registration of lease as per the agreement. This went on for some tine. In between, petitioners received communications that huge amounts were due to it but obviously as petitioner had made timely payments, they were not pursued by the respondent-Board. 3. From this, it would be seen that the house in question had already been constructed on the acquired land by the respondent-Housing Board several years prior to the allotment to the petitioner in 1981. 3. From this, it would be seen that the house in question had already been constructed on the acquired land by the respondent-Housing Board several years prior to the allotment to the petitioner in 1981. Petitioner complied with all his liabilities in due time as per the letter of allotment and the consequential agreement in this regard as stipulated by the respondent-Housing Board. There was no default of any kind on part of the petitioner. No default has even been alleged by the respondent-Housing Board on part of the petitioner in making any payment in due time but still final registration was not being done even though all payments had been made. The apparent reason for this was that the Board could not finalise the calculations for final cost of the land and the house thereon. As noticed above, agreement stipulated tentative cost of the house and the land which was subject to escalation on the three conditions mentioned in the letter of allotment which were the same as mentioned in Clause-4 of the agreement. Petitioner had nothing to do with the delay. The delay in finalizing the cost of building constructed over a decade back lays exclusive at the hands of the respondent-Housing Board. 4. Now in 1999 that is almost two decades after the house was constructed on the already acquired lands and almost two decades after petitioners occupation thereof and almost two decades after its allotment to the petitioner, the impugned communications are issued by the respondent-Housing Board informing the petitioner that as on 30.04.1999, the final dues of the petitioner in respect of the house allotted to him is about Rs. 1,70,641/- which the petitioner was required to deposit immediately. As noted above, in 1981 when the house was allotted to the petitioner, the tentative cost, as disclosed, was about Rs. 61,000/- which having been paid, a further sum of over Rs. 1,71,000/- was being demanded. This prima facie unreasonable demand brought the petitioner to this Court. 5. It may be mentioned that the petitioner has annexed a calculation (Annexure-7) in which it is shown that in fact the cost escalation as on the date of allotment of house to him in 1981 was about Rs. 39,224.87 P only as against which the demand now is of over Rs. 1,71,000/-. 6. 5. It may be mentioned that the petitioner has annexed a calculation (Annexure-7) in which it is shown that in fact the cost escalation as on the date of allotment of house to him in 1981 was about Rs. 39,224.87 P only as against which the demand now is of over Rs. 1,71,000/-. 6. It was urged that the difference between the two figures is nothing but the interest that has been charged by the Board over the said amount from 1981 to 1999. It is not in dispute that this demand of escalated price or any part thereof was ever earlier made from the petitioner. It is not disputed that this cost escalation is being demanded for the first time in the year 1999. Ultimately, the question is whether the demand is justified, is it fair and equitable? The petitioner submits that for the inordinate delay caused by the Housing Board exclusively in finalizing the demand, the petitioner, who was not at any fault whatsoever, cannot be burdened with the phenomenal interest burden as if the demand was made in 1981 itself and the petitioner neglected to pay the same. 7. On the other hand, the respondent-Housing Board has sought to justify the same first by stating that it is a non-profit making organization and works on no profit no loss basis. It has to recompensate itself for expenses incurred and money unrealized. Secondly, it is stated that they have only calculated the actual cost as on the date of allotment and as payment is being made by the petitioner after eighteen years that is the demand pertains to the year 1981 and is being sought to be communicated for recovery in the year 1999, the respondent-Board has to recompensate itself for the eighteen years it remained out of the amount which was due to it from the petitioner and, hence, it charged interest. Lastly, it was submitted that petitioner having agreed to pay the final cost as determined and had agreed not to question the same, the petitioner was disentitled to any explanation for the demand so raised or its justifiability. In substance, what is submitted, is that the Board had authority to raise a final demand, it raised it, the petitioner cannot question either the authority, legality or the wisdom even though the petitioner is burdened with heavy cost. 8. In substance, what is submitted, is that the Board had authority to raise a final demand, it raised it, the petitioner cannot question either the authority, legality or the wisdom even though the petitioner is burdened with heavy cost. 8. It may also be relevant to note one important fact at this stage. As noted above, petitioner enclosed a chart (Annexure-7) alleging that the cost of escalation was in fact only about Rs. 39,000/- as on 1981 and the rest amount of the demand as being made in the year 1999 out of about Rs. 1,71,000/- was interest but these facts have not been disputed or denied much less specifically by the respondent-Board. They have accepted that the actual cost was marginal but the balance was interest which is also evident from the submissions made on behalf of respondent-Board as noted above. 9. First coming to the submission of the respondent-Board that it is a non-profit making organization working on no profit no loss basis and, as such, its actions in charging interest as aforesaid in respect of a demand raised for the first time in 1999, interest being demanded from 1981 to 1999 is, thus, justified, I have only to say that if such a stand is permitted and accepted by the Court as just, fair and reasonable, it will only put premium on delay and inefficiency to the detriment of citizens who have no say in the matter. The Housing Board could have slept over the matter for another decade and then raised the demand adding another decades interest and forced petitioners to pay the same leaving them no alternative but to pay. This, to my mind, is neither just nor fair. It is for the respondent-Housing Board to manage its affairs in an efficient manner and it cannot make the citizens pay for its gross inefficiencies. Holding otherwise would be making citizens pay for not what they have done but for the mistakes committed by someone else who would benefit from his own mistakes to the detriment of the innocent citizen. This Court cannot permit such a situation. If Housing Board seeks equity then it is well established it must do equity as well. It cannot say that my acts have been iniquitous the detriment of the citizen, but citizens must recompensate it even though they are not at fault or have committed no breach. This Court cannot permit such a situation. If Housing Board seeks equity then it is well established it must do equity as well. It cannot say that my acts have been iniquitous the detriment of the citizen, but citizens must recompensate it even though they are not at fault or have committed no breach. It is like punishing another for fault of yet another over whom the punished has no control. 10. The respondents have sought to place reliance on the Division Bench judgment of this Court in the case of Raj Mohan Prasad Singh V/s. State of Bihar being CWJC No. 941 of 1992 which was dismissed on 19.08.1992 wherein the petitioner had prayed that the Housing Board be directed not to charge any interest on the price of plot for the period December 1980 to February 1989. In my view, the said case is totally different in facts and is distinguishable as such. It has no application to the present case. In that case, the petitioner though was entitled to a flat in 1981 he was allotted the same only in 1989. His right to the flat materialized and crystallized on the issuance of allotment letter in 1989. The price as on 1989 was, thus, being demanded. This contention of petitioner was rightly rejected by the Court as the price was to be determined on the date of allotment and as allotment was issued to and accepted by the petitioner in 1989, the cost as on 1981 could not be the basis for such an allotment. Thus, any interest which had been capitalised in respect of the value of the property till allotment could be charged. This is not the fact situation in the present case. The allotment was done and possession delivered in 1981 on a tentative cost. The Housing Board then slept for almost two decades and now wants to burden the citizen with interest for the period after allotment. Such was not the case in the decision as cited and, therefore, it has no application. The next decision relied on by the respondents is in the case of Smt Suniti Sahay and analogous cases being CWJCs No. 47 and 2724 of 1994 which was disposed of by a Division Bench by judgment and order dated 20th October, 1995. Such was not the case in the decision as cited and, therefore, it has no application. The next decision relied on by the respondents is in the case of Smt Suniti Sahay and analogous cases being CWJCs No. 47 and 2724 of 1994 which was disposed of by a Division Bench by judgment and order dated 20th October, 1995. By this judgment, the Division Bench holding that in matters of fixing cost, there are many facts and factors which have to be looked into which the Writ Court cannot do and, as such, relegated the persons challenging the cost escalations etc to a Committee constituted by the Court. On basis of this judgment, the respondent-Board submits that the petitioner should not be permitted to challenge the demand and must be relegated to such a Committee. In my view, this argument is to be noticed only to be rejected for the simple reason that here in the present case, there is no dispute. The question is of justifiability or legality of the charge. The demand of Rs. 1,71,000/- is in two parts. One the cost escalation which is about Rs. 39,000/- and is not disputed by the respondent-Board and the rest of about Rs. 1,30,000/- is interest over the said amount for the period 1981, the date of allotment to 1999 the date when the demand is or the first time being raise by the respondent-Board. This demand of interest from an anterior date is questioned. Thus, the decision aforesaid has no application. 11. The petitioners have relied on a judgment of Hon ble Single Judge of this Court in the case of Smt Bina Singh @ Sinha V/s. Bihar State Housing Board and Ors. being CWJC No. 236 of 2001 which was allowed by judgment and order dated 07.07.2006 by this Court. In my view, the facts are virtually the same. That related to MIG House No. 172 at Lohianagar, Kankerbagh, Patna. Most of the submissions as advanced before this Court were also raised therein and they were considered and the stand of the Board was rejected. Ultimately, this Court directed in that case that the respondent-Housing Board could lay a demand only in respect of actual price escalation as on the date of allotment and not any interest thereon, thereafter, till demand was made. Ultimately, this Court directed in that case that the respondent-Housing Board could lay a demand only in respect of actual price escalation as on the date of allotment and not any interest thereon, thereafter, till demand was made. The petitioners have also placed reliance on judgment of this Court in CWJC No. 10818 of 2000 disposed of on 15.09.2003 which is similar to the case of Smt Bina Singh (supra) and in this case also similar view was taken that interest for anterior period to the demand could not be charged. Against that judgment, it is stated at the Bar and not disputed that Boards Letters Patent Appeal and then Special Leave Petition to the Apex Court were dismissed in limine. While delivering the said judgment in CWJC No. 10818 of 2000, this Court placed reliance on a Division Bench judgment of this Court in the case of Bihar State Housing Board and Ors. V/s. Sardar Singh since 1999 1 BLJR 694 . In that case, Division Bench of this Court in the Letters Patent Appeal by the Board challenging the judgment of the Single Judge held that no interest could be charged for the period prior to demand being made. There, it was found that when the house was allotted in 1980 it was allotted at a particular price and it was only in 1994 additional demand was sought to be made for additional amount and interest thereon. This demand was for the first time being made by the Board. The respondent (writ petitioner) it was held was not responsible for the delay and it cannot be punished for the negligence on part of the Board. The Division Bench then held that the learned Single Judge was fully justified in striking off the interest from the demand raised by the Board. No exception was taken to the judgment delivered by the learned Single Judge. The Letters Patent Appeal was dismissed. The said Division Bench judgment of this Court still holds the field. 12. Thus, in view of the judgments aforesaid, it is clear that the interest component of the demand cannot be sustained. No exception was taken to the judgment delivered by the learned Single Judge. The Letters Patent Appeal was dismissed. The said Division Bench judgment of this Court still holds the field. 12. Thus, in view of the judgments aforesaid, it is clear that the interest component of the demand cannot be sustained. The petitioner is, thus, liable to pay only the actual cost escalation as on 1981 and not interest thereon upto the date when finally the demand has been raised because the delay in raising the demand is squarely on part of the Board with which the petitioner had nothing to do. Petitioner cannot be permitted to suffer because of negligence, inefficiency or otherwise of the Board. 13. The last contention of the Board was that the petitioners had agreed to pay without demur charges demanded by the Board. To my mind, it is too late in the day to take such stand. It is not that the petitioners intend to wriggle out of their contractual obligations. Merely because the petitioner agreed to pay amount as demanded by the Board they cannot be precluded to challenge the same for alongwith the obligation on the petitioner not to question there is an obligation on the Board to be reasonable, fair and not arbitrary. The two obligations are hand-in-hand. One cannot say that one party to agreement is bound by the agreement but the other party who is the dominant partner in the agreement is relieved of all his obligations more so when the dominant party is a "State" within the meaning of Article 12 of the Constitution. It cannot be and it has not been disputed that respondent-Housing Board is "State" within the meaning of Article 12 of the Constitution and, as such, even in contractual matters, the respondent-Board cannot escape the rigors under Article 14 of the Constitution. It has to act fairly, reasonably and in a non-discriminatory manner. It cannot be permitted to take shelter of contractual terms to behave in an arbitrary and an unfair manner. If what is submitted by the Board is to be accepted then it would be putting premium on inefficiency. It has to act fairly, reasonably and in a non-discriminatory manner. It cannot be permitted to take shelter of contractual terms to behave in an arbitrary and an unfair manner. If what is submitted by the Board is to be accepted then it would be putting premium on inefficiency. I am here reminded of the often referred to passage from judgment of Chief (sic) technicalities, for we maintain that in a democratic society governed by the rule of law, it is the duty of the State to do what is fair and just to the citizen, and the State should not seek to defeat the legitimate claim of the citizen by adopting a legalistic attitude but should do what fairness and justice demand. 14. So far as interference in contractual matters are concerned one may only make a reference to the decision of Apex Court in the case of ABL International Ltd and Anr. V/s. Export Credit Guarantee Corporation of India Ltd and Ors., 2004 3 SCC 553 wherein on review of the case law in this regard, their Lordships have held that merely because a matter arises out of contractual relationship, Writ Court is not precluded from interfering in those matters. The Apex Court held that when an instrumentality of State acts contrary to public good and public interest, unfairly, unjustly and unreasonably in its contractual, constitutional or statutory obligation, it really acts contrary to the constitutional guarantee founded in Article 14 of the Constitution. Therefore, once the State or an instrumentality of the State is a party to contract, it has an obligation in law to act fairly, justly and reasonably which is a requirement of Article 14 of the Constitution. The Court found that if the impugned repudiation of claim of the appellant in that case by the first respondent who was an instrumentality of the State had acted in contravention of the aforesaid requirement of Article 14 then it is held, without hesitation, that a Writ Court can issue suitable directions to set right the arbitrary action of the first respondent. That in my view would be the obligation and duty of this Court to do. 15. That in my view would be the obligation and duty of this Court to do. 15. Thus, in the facts as noted above and in view of the law as discussed above, I find that the demand as raised by the respondent-Housing Board was wholly unjustified and unsustainable in fact or in law in so far as it related to the interest component on the escalated cost as determined with effect from 1981 which is the date of allotment of the house to the petitioner. The petitioners would, thus, be liable to pay only the cost of escalation as calculated as on 1981 and as the demand was for the first time raised in 1999, no interest can be charged for the period in between that is from 1981 to 1999 and, thus, the impugned letter of the year 1981 is quashed to the extent indicated above. The petitioner would now, thus, be liable to pay only the cost of escalation calculated with effect on 1981 when allotment was made to him and he came in possession pursuant to the said allotment. The writ application, with the aforesaid direction, is allowed.