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2012 DIGILAW 1267 (PAT)

Rajeev Kumar v. Bihar State Housing Board

2012-09-07

CHAKRADHARI SHARAN SINGH

body2012
Judgment : Whether the Bihar State Housing Board, Patna (hereinafter referred to as the "Board") can enhance the price of a plot allotted to the petitioner invoking Clause-4 of the Hire-Purchase Agreement dated 23.2.1981 (Annexure-1) on the basis of the price received by the Board in an auction-sale of another plot is the primary issue which needs adjudication in the present case. Maintainability of the writ petition has been questioned on behalf of the Respondent Board on the ground of availability of alternative remedy of resolution of the dispute through arbitration as per the conditions of the said Hire-Purchase Agreement as also on the ground that the dispute is purely contractual in nature; and is thus a peripheral issue which also requires consideration in the present case. 2. There is absolutely no dispute with regard to the facts. The present lis is to be decided on the basis of the admitted facts by interpreting Clause-4 of the Hire-Purchase Agreement dated 23.2.1981 between petitioner's father (original petitioner, since deceased) and the Board which is Annexure-1 to the writ application. 3. As per the pleadings in the writ application, the facts of which are not disputed in the counter affidavit, the Bihar State Housing Board vide its letter No.1117 dated 21.2.1981 allotted commercial plot of land bearing No. P/540 for residential purpose at Commercial rate of total cost determined at Rs. 37,985.00 in favour of the petitioner's father late Ram Pradarath Sharma (original petitioner). It has been pleaded that he had deposited initial payment of Rs. 9,497.00 towards cost or premium of the said commercial plot. 4. On 23.2.1981, the petitioner and the Housing Board entered into a Hire-Purchase Agreement for the said plot of land. The relevant portion of opening paragraph of the said agreement is being quoted hereinbelow:- "WHEREAS on an application made by the settlee, the Board has vide its letter No. 1117, dated 21.2.1981 allotted commercial plot of land bearing No. P. 540 for residential purpose to the settlee, the full particulars of which have been given in schedule hereunder at a total cost presently determined at Rs. 37,985/- (Rupees Thirty seven thousand nine hundred eighty five) only, and WHEREAS the settlee in acceptance of the terms and conditions laid down in the aforesaid allotment order of the Board, has made an initial payment of Rs. 37,985/- (Rupees Thirty seven thousand nine hundred eighty five) only, and WHEREAS the settlee in acceptance of the terms and conditions laid down in the aforesaid allotment order of the Board, has made an initial payment of Rs. 9,497/- (Rupees Nine thousand four hundred ninety seven) only, towards the cost/premium of the said commercial plot of land and has further promised to pay the remaining balance amount of premium/cost of the said plot of land allotted to the settlee in the manner hereinafter appearing." 5. Clause-4 of the said agreement provides that the cost indicated as above was tentative in nature and was liable to increase in certain circumstance as mentioned therein. As the present dispute between the petitioner and the Board revolves around the interpretation of this clause, I think it proper to reproduce the same as under:- "4. That the total cost/premium indicated above is according to present estimate and hence purely tentative. Increase in the cost of development or due to increase in cost of land acquisition or due to any decision/award of court of law or legislation or due to final valuation or otherwise shall be payable by the settlee either in installments or in lump sum within the period decided by the Board. (emphasis mine). The settlee shall under no circumstances be entitled to demand any accounts relating to the cost or to question or dispute it and this shall be fixed by the Board in its sole direction and the cost of the commercial plot of land so fixed shall be binding on the settlee." 6. Clause-3 of the agreement describes that the settlee (the original petitioner in this case) will pay to the Board without waiting for any demand, the balance rest beginning from the first day of the month of March, 1981 in sixty monthly equated installments of Rs. 619.45.. Clause-7 of the agreement made it obligatory for the settlee to pay interest at the rate of one per cent per month on all dues either in respect of premium, installment or rent for the period of default. Clause-8 of the Agreement contemplated that after full payments had been made and all dues clear if there was no violation of the terms of this Agreement or Board's regulation in this regard, a ninety years lease shall be executed in favour of the settlee. 7. Clause-8 of the Agreement contemplated that after full payments had been made and all dues clear if there was no violation of the terms of this Agreement or Board's regulation in this regard, a ninety years lease shall be executed in favour of the settlee. 7. The petitioner's case is that after allotment of the said plot and execution of Hire-Purchase Agreement, the Board handed over possession of plot to the original petitioner on 26.2.1981, a house was constructed over there and the settlee are in continuous peaceful possession over the plot from 26.2.1981. The original petitioner (since deceased) paid a total sum of Rs. 78,597.00 as on 22.11.1996. From Annexure-2 of the writ application dated 3.2.1997 written by the Executive Engineer to the Board addressed to the Manager-cum-Joint Secretary of the Board it appears that the petitioner did not pay equal monthly installments as he was required to do as per the conditions of the Hire-Purchase Agreement. However, as on 22.11.1996, the total amount paid i.e., 78,597.00 was much more than the determined price of the land in question being Rs. 37,985.00. 8. This is to be noted here that there is no calculation on record to substantiate or deny as to whether the excess amount paid by the petitioner satisfied the conditions of Clause-7 of the Hire-Purchase Agreement. The fact remains that he paid this amount and there was no further demand by the Board from the petitioner being interest on the amount due for the period during which the petitioner defaulted in making payment. 9. It is further case of the petitioner that the Board was approached for registration of the deed as contemplated in Clause-7 of the Hire-Purchase Agreement but the Board did not respond. A legal notice was issued on 7.9.2000 (Annexure-4) requesting the Managing Director of the Board for execution of final deed in respect of the commercial plot No. P/540. 10. In response to this legal notice dated 7.9.2000 (Annexure-4), officer of the Board gave reply to the following effect:- "Regarding cost of the plot and dues derived therefrom it is to be stated that the Board in its meeting dated 14.9.84 decided to charge auction rate of plot no. G.C. 1 with a view to regularise such commercially earmarked plots which was allotted by the then Chairman. G.C. 1 with a view to regularise such commercially earmarked plots which was allotted by the then Chairman. In compliance of the Board's above decision the cost of the plot No. P/540 is to be charged at auction rate of plot no. G.C. 1, Lohianagar, Patna. Therefore, the cost of the plot at the time of allotment comes to Rs. 81,344.00 at the rate of Rs. 24.80 per sft. instead of Rs. 37,985.00 which was communicated earlier vide letter of allotment and agreement. Under the above circumstances the computation of cost was done at auction rate Rs. 81,344.00 and with a re-suit of that the due amount arrived at Rs. 1,80,189.00 upto 31.5.97. The above due amount is due after adjustment of amount paid by the allottee towards cost." 11. It was communicated in the said reply that as per the terms of agreement the cost indicated therein was tentative and was subject to increase. In view of the response of the Board in reply to the petitioner's legal notice, the present application was filed on behalf of late Ram Padarath Sharma seeking a direction to Board not to revise the price of the plot on the basis of the price received by the Board in an auction sale of a different plot and also for a direction to the respondents to execute a registered deed in favour of the petitioner in respect of the said plot. Ram Padarath Sharma died during the pendency of the writ application and was substituted by his wife Parwati Devi and Rajeev Kumar Singh (present petitioner). Parwati Devi, also died and her name has been ordered to be expunged and thus Rajeev Kumar, the son of the original allottee is the sale petitioner in this case. 12. A counter affidavit has been filed on behalf of the Board. There is no denial to the averments made in the writ application with respect to the allotment of plot in petitioner's favour or with regard to the said Hire-Purchase Agreement and the payment of amount by the petitioner to the Board as claimed by the petitioner. The gist of the case of the Board as contained in the counter affidavit is that Clause-4 authorises the Board to increase the cost and the cost as indicated in the Hire-Purchase Agreement was only tentative. The gist of the case of the Board as contained in the counter affidavit is that Clause-4 authorises the Board to increase the cost and the cost as indicated in the Hire-Purchase Agreement was only tentative. It has been stated in the counter affidavit that the Board in its meeting dated 14.9.1984 decided to determine the cost of the plot in question at auction rate with a view to regularize such commercially earmarked plots which were allotted by the then Chairman of the Board in the year 1981. In compliance of the said decision the price of the said allotted plot of the land had been determined at auction rate (as of plot no. G.C.-1 of the same locality) which upon calculation came to Rs. 81,344.00 at the rate of Rs. 24.80 per sq. ft. as on the date of allotment i.e. 21.2.1981, in place of earlier communicated tentative cost of Rs. 37,985.00 as mentioned in the allotment order and in the Hire-Purchase Agreement. It is further plea of the Board that accordingly calculation of cost of land alongwith interest was made treating tentative price of the same as Rs. 81,344.00 as on 21.2.1981 as a result of which, the cost of the plot came to be Rs. 1,80,189.00 as on 31.5.1997 after adjusting the payment already made by the petitioner towards the cost of the land. 13. From the averments made in the counter affidavit, it appears that the sale reason for enhancing the cost of the land was that another plot bearing No. G.C. 1 in the same locality was auction sold by the Board which fetched higher price and on that basis only the cost of the plot in question was determined and increased. The decision of the Board taken on 14.9.1984 has been mentioned in the Order No. 9056 dated 11.12.1984 of the Board, issued under the signature of the Secretary of the Board. This order, inter alia, contemplates that the allotment of plots in several sectors in Lohianagar is to be regularized on the basis of determining its costs at the rate on which Plot no. G.C. 1 was auction sold. 14. Learned counsel appearing on behalf of the Board firstly contends that there is an arbitration clause in the Hire-Purchase Agreement and the petitioner should have invoked the same instead of coming to this Court under Article 226 of the Constitution of India. G.C. 1 was auction sold. 14. Learned counsel appearing on behalf of the Board firstly contends that there is an arbitration clause in the Hire-Purchase Agreement and the petitioner should have invoked the same instead of coming to this Court under Article 226 of the Constitution of India. He further submits that under an order passed by this Court in C.W.J.C. No. 47 of 1994 and C.W.J.C. No. 2724 of 1994, a Committee was constituted to look into such grievances. The said Committee was constituted in the year 1997 and he submits that the Committee is functioning at the present and the petitioner can raise his grievance before the said Committee also. He further submits that the dispute being contractual in nature the same should not be entertained in exercise of power under Article 226 of Constitution of India. 15. This writ petition cannot be rejected on the ground of availability of the alternative remedies as abovementioned firstly for the reason that the present writ petition was filed in the year 2001 and was admitted for hearing on 3.2.2004. The interim order was passed while admitting the writ application to the effect that no coercive steps shall be taken by the respondent Board for evicting the petitioner from the plot in question. The interim order has continued so far. In view of the long pendency of the writ application before this Court, I do not consider it proper .to insist upon the petitioner to avail the alternative remedy as mentioned by learned counsel appearing on behalf of the Board. So far as the Committee constituted under the orders of this Court is concerned, it has been fairly stated at the bar that though it was constituted in the year 1997, it did not function for at least ten years and has now started functioning for the last one and a half years. Learned counsel for the petitioner has rightly placed reliance on a Division Bench judgment of this Court reported in 2011 (4) P.L.J.R. 219, Dr. Nitendra Prasad Sinha Vs. Chairman-cum-Managing Director, wherein the similar plea against the maintainability was rejected. In the present case there being no dispute over the facts and the lis being based on pure interpretation of terms of the Hire-Purchase Agreement, it will be an exercise in futility to relegate the dispute to the arbitrator. 16. Nitendra Prasad Sinha Vs. Chairman-cum-Managing Director, wherein the similar plea against the maintainability was rejected. In the present case there being no dispute over the facts and the lis being based on pure interpretation of terms of the Hire-Purchase Agreement, it will be an exercise in futility to relegate the dispute to the arbitrator. 16. Exclusion of remedy under Article 226 of the Constitution of India on the ground of availability of alternative remedy is a rule of discretion and not of compulsion and is self-imposed restraint. 17. Now coming to Clause-4 of the Hire-Purchase Agreement. As per the condition contained therein following are the circumstances in which there can be increase in the cost of the plot:- (a) Increase in the cost of development (b) Increase in the cost of land acquisition (c) Increase because of any decision/award of the Court of law or legislation (d) Increase because of final valuation (e) Otherwise 18. Apparently, reason assigned for increase in the price of the plot is not one of the first four as mentioned above. So far the term "otherwise" is concerned, I am of the view that there must be some valid reason which has impact on the "cost" of the land in order to determine its cost at higher rate than that mentioned as tentative price in the Hire-Purchase Agreement. 19. I consider it unreasonable and improper to fix the price/cost of land on the basis that some other plot in the same locality was auction sold at higher rate. The demand raised for fixation of price on such basis is illegal and contrary to the terms of Hire-Purchase Agreement. Learned counsel appearing on behalf of the petitioner contends that there was no communication of the Board's decision taken on 14.9.1984 nor any demand was raised on that basis and accordingly, the decision of the Board to charge interest on enhanced price is wholly arbitrary and illegal. He places reliance on the judgment of this Court reported in 2001(1) P.L.J.R. 144 , Manju Singh vs. The Bihar State Housing Board and Others, wherein this Court dealing with somewhat similar matter deprecated the conduct of the Board. 20. Further, reliance has also been placed on a Supreme Court judgment reported in A.I.R. 1997 S.C. 1732, Haryana Urban Development Authority and Anr. vs. Rajan Dhamina and Anr. 20. Further, reliance has also been placed on a Supreme Court judgment reported in A.I.R. 1997 S.C. 1732, Haryana Urban Development Authority and Anr. vs. Rajan Dhamina and Anr. The Supreme Court in paragraph-5 of its judgment, while dealing with the escalation Clause to the effect that if there had been any enhancement in the cost of the land on the ground of the award by the competent authority under the Land Acquisition Act then the said enhancement would be payable; held that the Clause did not authorise the allotting authority to raise an additional demand on account of any other escalation. The petitioner's case is on the better footing in the present case for the reason that there was no ground of escalation at all and it was only because of the fact that a plot in the same locality fetched the Board higher price. This, in my opinion, cannot be a ground for re-determining the cost of the plot. 21. Accordingly, the Board is restrained from realizing from the petitioner the differences of cost of the land on the basis of auction sold price of the plot G.C. 1 in the same locality. The Board is also restrained from calculating interest on such ground. The Board is directed to re-determine the liability of the petitioner on basis of the cost price indicated in the Hire-Purchase Agreement dated 23.2.1981 read with the provisions as contained in Clause-3 and Clause-7 of the said Hire-Purchase Agreement as on 22.11.1996. If the Board is of the view on such calculation that some amount remained due with the petitioner, the Board will issue a fresh demand letter to this effect to the petitioner within two months from the date of receipt/production of a copy of this order. If the amount so demanded by the Board is paid by the petitioner, the Board will be under obligation to execute deed as contemplated under Clause-8 of the Hire-Purchase Agreement within a period of two months from the date of payment of such arrears. If the amount so demanded by the Board is paid by the petitioner, the Board will be under obligation to execute deed as contemplated under Clause-8 of the Hire-Purchase Agreement within a period of two months from the date of payment of such arrears. It is made clear that the Board will provide to the petitioner the details of calculation and if it is found that the payment made by the petitioner is more than what he was required to pay in terms of the Hire-Purchase Agreement, the same shall be refunded to him with interest at the rate of 12 per cent per annum within the aforesaid period of two months. In the situation that the Board finds that no amount is payable over and above what have already been paid by the petitioner, the Board shall take steps for execution of the deed within two months from the date such calculation is finalized. 22. With this direction and observation, this writ application is allowed. 23. No order as to costs.