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CASE NO.:

Appeal (civil) 1781 of 2000

Appeal (civil) 1782 of 2000

PETITIONER:

D.D.A. and Ors..

RESPONDENT:

Joginder S. Monga and Ors.

DATE OF JUDGMENT: 12/12/2003

BENCH:

Ashok Bhan & S.B. Sinha

JUDGMENT:

J U D G M E N T

S.B. SINHA, J :

These appeals involving common questions of law and fact were

taken up for hearing together and are being disposed of by this common

judgment.

BACKGROUND FACTS :

The admitted facts are : the lands in question being Nazul lands

are governed by the provisions of the Delhi Development Act, 1957 (The

Act) and the Delhi Development Authority (Disposal of Developed Nazul

Land) Rules, 1981 (The Rules) framed thereunder. Pursuant to or in

furtherance of the provisions of 'The Act' and 'The Rules', the

appellant herein granted lease in favour of a Cooperative Society

known as the Government Servants Cooperative House Building Society

Limited, Shri Mangal Singh Monga, Shri N.R. Pillai and Shri Satish

Chander Malhotra were the members of the said Cooperative Society. They

in terms of the provisions of 'The Rules' were required to execute deeds

of sub-lease in favour of the lessee as also the President of India.

The factual matrix of the matter is being considered from the case

involved in Civil Appeal No.1781 of 2000.

On 13.12.1968, a statutory sub-lease was executed in favour of

Shri Mangal Singh Monga in respect of residential plot of 1568 sq. yards

in Vasant Vihar on payment of Rs.17560/- towards premium and Rs.26656/-

towards the cost of development. In terms of proviso appended to sub

clause (b) of clause 6 of the dead of sub lease, the lessor was entitled

to recover a portion of the unearned increase in the value i.e. "the

difference between the premium paid and the market value of the

residential plot at the time of sale". Determination of the lessor in

respect of the market value therefor was to be final and binding.

By reason of clause X(a), of the said deed the President delegated

his power to the Chief Commissioner of Delhi who is now the Lt. Governor

of Delhi. The said Mangal Singh Monga died on 13.11.1983. Purported to

be in exercise of such delgated power, the Delhi Administration fixed

the market price of the nazul lands situated in different localities for

the purpose of recovery of increase in the cost of the land upon sale

for the periods from 1.4.1988 to 31.3.1990, 1.4.1990 to 31.3.1991 and

1.4.1991 to 31.3.1992 in terms whereof the price of the land in Vasant

Vihar area was determined at Rs.10500/- per sq. metre. Admittedly, the

said circular letter was communicated to the concerned officers.

Although there appears to be some notings in the file by some officers

to the effect that actual market value of the land should be recovered

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from the parties but it does not appear that any concrete decision was

taken in that behalf. Respondent No.1 herein being heir of the

original sub lessee entered into an agreement for sale with Respondent

Nos. 8 and 9 wherein the amount of consideration was shown as

Rs.5,00,00,000/-. The proposed purchaser, however, besides the said

amount and other expenses also agreed to bear 50% of the amount towards

unearned increase. The Income Tax Department also granted a No

Objection Certificate on or about 12.5.1994 showing the consideration of

Rs.5,00,00,000/- in respect of the plot in question. Respondent No.1

herein thereafter filed an application before the competent authority of

the Appellant on or about 23.5.1994 for sale of the leasehold property

indicating the cost of construction and price of the plot as

Rs.5,00,00,000/-.

The Government of India, however, without enforcing any increase

in the sale price of the land extended the validity of the land rates in

force till 31.3.1992 for a further period from 1.4.1994 to 31.3.1996 by

a circular letter dated 11.11.1994. The appellant herein despite the

same proceeded on the basis that having regard to the fact that the

purchaser had agreed to pay the consideration of Rs.5,00,00,000/- and

further agreed to bear the cost of difference in unearned increase, the

market value of the land would be Rs.7,50,00,000/- and on that basis

demanded a sum of Rs.3,62,44,420/- as a condition of grant of permission

by a demand letter dated 22.2.1995. Such amount was to be paid within a

period of sixty days.

The respondents thereafter filed writ petitions before the Delhi

High Court questioning the said demand letter dated 22.2.1995. During

the pendency of the aforementioned proceedings, however, a purported

resolution was passed by the D.D.A. to the effect that unearned increase

should be worked out on the basis of sale consideration shown in the

agreement of sale or income tax clearance certificate, as the case may

be, if it is higher than the floor level rate of D.D.A.

HIGH COURT JUDGMENT :

The High Court in its impugned judgment referring to the circular

letters issued by the Lt. Governor as also the Union of India and upon

taking notice of the fact that only the difference in increase price on

the basis of such circular letters had been demanded from the persons

similarly situated allowed the writ petition directing :

"We are of the view that the DDA , had no

power to issue the demands in these writ

petitions. Accordingly, the writ petitions are

allowed and following directions are issued :

The DDA shall issue fresh demand to the

petitioners in all these three writ petitions on

the basis of Order dated 24.6.1992. In case any

amount had been paid on the basis of the

impugned demand, the DDA shall be entitled to

appropriate only that portion of the amount

calculated in accordance with fixation of market

rate of land as issued by the Delhi

Administration on the 24th of June, 1992 and

accepted by the DDA on the 11th of August, 1992

and shall pay back the balance with interest @

18% p.a. from the date of payment by the

petitioner concerned."

The Division Bench in its impugned judgment noticed various orders

passed by the authorities of the appellant herein, inter alia, in of the

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writ petition being C.W. No.350 of 1995 wherein it was noted :

"It is further stated that 50% of the unearned

increase was also calculated on the basis of the

market value/rate of Rs.5,400/- per sq. meter,

which was the rate notified by the Government of

India by letter dated 1.6.1987 and the said

rates were considered for 100 FAR and since

total FAR is 824 sq. meter, the amount of 50% of

the unearned increase was worked out to

Rs.15,04,300/-".

In another case relating to Plot No. S-23, Panchshila CHBS Ltd.,

it was noted by the authorities of the Appellant :

"...On the basis of those rates i.e. Rs.15,120/-

per sq. mtrs, the 50% unearned increase comes

to Rs.48,54,764.00. As stated above, this is

the second sale, but the 50% unearned increase

deposited at the time of first sale permission

has not been deducted from the amount of 50%

unearned increase calculated now for the second

sale because, though, the issue regarding

deduction of unearned increase paid earlier has

been approved by the Authority, but this matter

is under consideration of the Ministry. The

approval or otherwise, of Ministry in this

regard has not been received as yet. If

approved, this amount may be conveyed to the

appellant. Further, it may also be communicated

to him that this demand is provisionally subject

to revision on receipt of rates for the period

93-94 from Delhi Admn. For this, management

shall be asked to obtain an affidavit from the

legatee."

Relying on or on the basis of the practice adopted by the D.D.A.

and having regard to the orders dated 24.6.1992 issued by the Delhi

Administration and that of the Government of India as also the

resolution dated 28.11.1995, it was held :

"It does not require any argument to say

that the DDA was well aware of this clause and

had issued the Order dated 11.8.92 on the basis

of the Order issued by the Delhi Administration

on the 24th of June, 1992. In the light of this,

it is not open to the DDA to put forth the case

that the market value, within the meaning of the

clause (6) of the perpetual sub-lease deed could

be what is stated in the agreement for sale."

SUBSEQUENT EVENTS :

When the matter was taken up for hearing, before different

Division Benches, the respondents herein sought to bring to this Court's

notice certain subsequent event, namely, adoption of a purported policy

by reason of a circular letter dated 28.6.1999 purported to have been

given a prospective effect in terms whereof the leasehold was sought to

be converted into freehold. The relevant portion of the said scheme

reads as under :

"1. COVERAGE OF THE SCHEME:

i) The existing scheme of freehold conversion

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is extended to all residential leasehold

built up properties irrespective of size.

As such, leased properties, situated on

land, for which the land use prescribed in

the Master Plan/Zonal Development Plan in

force is residential, will be covered

under the scheme, irrespective of size.

ii) The scheme will also extend to premium

free leases i.e. leases where premium has

not been charged by agencies administering

the leases.

2. COMPUTATION OF CONVERSION FEE:

i) In respect of properties with land area

upto 500 sq. meters, the conversion fee

will be charged on the basis of already

approved graded scale circulated vide

Ministry's letter dated 14.2.1992 and land

rates as applicable with effect from

1.4.1987, as indicated in the Annexure.

ii) In respect of properties with areas above

500 sq. meters, the conversion fee will be

charged on the basis of slab rates as per

Annexure and land rates as applicable with

effect from 1.4.1987.

iii) In respect of premium free leases, the

conversion fee will be computable on the

basis of the prevailing land rates as

notified by the Government, from time to

time, on a graded basis as applicable to

other leases."

It is not in dispute that one Rajeev Gupta also filed a writ

petition before the High Court acting on the basis of a power of

attorney executed by Smt. Kaushalya Rani Bhusari on similar grounds. In

the case of J.S. Monga, Abdul Rasool Virji as well as Rajeev Gupta, the

High Court passed interim orders directing them to deposit the entire

amount/part amount demanded by the D.D.A. Rajiv Gupta, however, did not

pay the said amount and as such no sale deed was executed. The

respondents herein, however, complied with the directions of the High

Court.

Relying on clause (3) of the said scheme which is to the

following effect :

3. "It is further clarified that these orders will

have prospective effect and the cases already

decided will not be re-opened.

Note: In respect of pending applications, where

conveyance deeds are yet to be

executed/registered, refund in respect of

conversion fee paid, if any, on account of these

instructions should be allowed.

4. This issues with the approval of Finance

Division's U.O. No.1066-F dated 21.6.99."

Rajeev Gupta was permitted to execute the aforementioned deed by

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paying only the conversion charges, i.e. without payment of even 50% of

the unearned increase. It is not disputed that Civil Appeal No. 1783 of

2000 titled D.D.A. vs. Rajeev Gupta was disposed of on 30.4.2003 in

terms of a signed order as the case was said to be covered by the policy

of conversion from leasehold to freehold and the proposal of the D.D.A.

to compromise was noted. The respondents herein thereafter filed an

application for raising additional pleas, inter alia, on the ground that

having regard to the interim order passed in the writ petition by the

High Court of Delhi, the deed of sale having been executed by them

pursuant to or in furtherance thereof, they were entitled to be treated

similarly as Rajeev Gupta. An objection to the said application had

been filed by the appellant, inter alia, on the ground that subject

matter of the writ petition leading to filing of these appeals has no

nexus with the aforementioned scheme dated 28.6.1999.

SUBMISSIONS :

Mr. P.P. Rao, learned senior counsel appearing on behalf of the

appellant, inter alia, would submit that: (1) As the statutory sub lease

refers to the market value of the residential plot, the circular letters

cannot override the same and, thus, are illegal. Strong reliance in

this behalf has been placed on Sant Ram Sharma vs. State of Rajsthan &

Anr. [(1968) 1 SCR 111] and State of M.P. & Anr. etc. vs. G.S. Dall &

Four Mills etc. [(1992) Supp. 1 SCC 150]. (2) Notings made in different

files would show that except in one of the three cases, the fact

situation prevailing in other cases were different. (3) As the

circular letter dated 24.6.1992 showed locality wise market rates for

the earlier period, the fixation of market rates was retrospective and

not prospective. (4) Such a circular letter in any event having not been

issued by the Lt. Governor, was illegal. (5) Resolution No.98/1995 dated

28.11.1995 being applicable to pending cases, the High Court committed

a manifest error in not giving an effect thereto and in any event, any

past transaction on the basis of the said circular could not have been

made the basis for determination by the High Court by applying the

principle of estoppel as there is no estoppel against the statute. (6)

In any event, only because a mistake has been committed in other cases,

the same by itself would not entitle the respondents to claim any

benefit on the basis thereof as in such an event Article 14 would have

no application (7) The interim order having been passed by the High

Court on the asking of the respondents whereby and whereunder an option

was given to them to deposit the amount in the event they intend to get

the sale deed executed registered, upon execution and registration

thereof on the exercise of option by the respondents, the subsequent

policy decision which has been given a prospective effect cannot have

any application.

Mr. A.N. Haskar, learned senior counsel, appearing on behalf of

the respondents, on the other hand, would submit : (1) The fact of the

matter in pending cases as also in the case of Rajeev Gupta would

clearly demonstrate that they stood on a common footing and as such the

respondents herein cannot be treated differently to that of Rajeev

Gupta. (2) The market value as determined by the Central Government or

the Delhi Administration refers to the market value and the same do not

say that thereby any benchmark has been provided. (3) The submissions

raised hereinbefore on behalf of the appellant were not raised before

the High Court nor had been adverted to in the counter affidavit. (4)

Any mistake on the part of the Delhi Administration had never been

pleaded nor urged. (5) As three opportunities had been granted to the

respondents to clarify their stand as regard the existing policy

decision and they having failed and/or neglected to do so, it is not

open to them to raise the plea of inequities before this Court. (6) Even

in the form of application required to be filed for conversion of

leasehold into freehold, it having been stated that unearned increase

would be recoverable, the same cannot be recovered from case of the

respondents only because the sale deeds had been executed by them

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pursuant to the interim order granted by the High Court. (7) The

interim order passed by the High Court must be construed in such a

manner so as to have a bearing in the pending appeals.

ARE THESE TWO CASES SIMILAR TO THAT OF RAJEEV GUPTA :

The following chart will show that the cases of J.S. Monga and

Shri Abdul Rasool Virji stand on a similar footing as that Rajeev Gupta

:

S.

No.

Particulars

J.S. MONGA

Plot No.A-5/3, Vasant

Vihar, N. Delhi

ABDUL RASOOL

VIRJI

Plot No.A-1,

Maharani Bagh, N.D.

RAJIV GUPTA

Plot No.4, Palam

Marg, Vasant

Vihar, N.D.

1.

Date of Execution of

Sub Lease Deed

13.12.1968

1.1.1965

27.4.1971

2.

Name of Sub Lessee

Sh. Mangal Singh

Monga & after his

death mutation allowed

in the joint names of

his legal heirs :

1. Smt. Harbans

Monga (wife)

2. Smt. Prabha Sehgal

(daughters)

3. Smt. Indira Batra "

4. Smt. Ella Bajaj "

5. Sh. Joginder Singh

Monga (son)

6. Sh. Mohinder Singh

Monga (son)

7. Sh. Jagjit Singh

Monga (son)

8. Sh. Upjeet Singh

Monga (son)

Sh. N.R. Pillai.

After his death

mutated in favour of

(1) Sh. R.A. Pillai

(2) Sh. R.S. Pillai.

Mutated on 28.5.93

(in the names of sons

of sub lessee)

Sh. Satish

Chander

Malhotra.

Transferred on

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the basis of Sale

Permission, in

favour of Smt.

Kaushalya Rani

Bhusari w/o Sh.

Sampuran Singh,

on dated

2.12.1988

3.

Name of Purchaser

1. Sh. Rattan Chand

Burman 2. Smt. Brij

Rani Burman

Sh. Abdul Rasool

Virji

Sh. Rajiv Gupta

4.

Date of Agreement of

Sale

19.2.1994

16.1.1994

24.10.1993

5.

Date on which Sale

Permission applied

23.5.1994

17.4.1994

30.4.1994

6.

Amount of 50% UEI

demanded

Rs.3,62,44,420/-

Dt. 22.2.1995

Rs.2,23,34,725/-

Dt. 12.6.1996

Rs. 4.13 crores

Dt. 1.12.1994

7.

Date & amount of 50%

UEI paid

Dt. 16.5.1995

Rs.3,62,44,420/-

Dt. 12.6.1996

Rs.1,49,72,225 paid

as per the Order of

the High Court of

Delhi, Dt. 22.5.1996

Not paid

8.

Date of execution of

Sale Deed/Registration

of the same

6.6.1995

17.1.1997

Not executed

9.

Date on which Sale

Permission

granted/Transfer

allowed

25.1.1996 (Transfer

allowed)

30.7.1996

Not granted

10.

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Date on which

conversion from lease

hold to freehold applied

24.12.1999

24.12.1999

17.12.1999

From the aforementioned chart it would appear that not only the

application of Rajeev Gupta was contemporaneous, all other relevant

facts are almost identical. Rajeev Gupta was to pay a sum of Rs.

4,13,00,000/-, whereas J.S. Monga and Abdul Rasool Virji were to pay

sums of Rs.3,62,44,420 and Rs.2,23,34,725/- respectively, pursuant to

interim order passed by the High Court. Whereas J.S. Monga deposited

the entire amount as demanded, Abdul Rasool Virji deposited a sum of

Rs.1,49,72,225/-, as per the directions of the High Court.

The contention of the learned counsel appearing on behalf of the

respondents, therefore, must be held to have some substance that

whereas Rajeev Gupta has received the benefit of the purported new

policy of conversion from lease hold to free hold, the respondents

herein were deprived therefrom for no fault on their part.

STATUTORY PROVISIONS :

Section 22 of the D.D.A. Act reads as under :

"22. Nazul lands

(1) xxx xxx xxx

(2) xxx xxx xxx

(3) After any such nazul land has been

developed by, or under the control and

supervision of, the Authority, it shall be dealt

with by the Authority in accordance with rules

made and directions given by the Central

Government in this behalf."

Section 56 of the Act reads as under :

"56 Power to make rules

(1) The Central Government, after consultation

with the Authority may, by notification in the

Official Gazette, make rules to carry out the

purposes of this Act :

Provided that consultation with the Authority

shall not be necessary on the first occasion of

the making of rules under this section, but the

Central Government shall take into consideration

any suggestions which the Authority may make in

relation to the amendment of such rules after

they are made.

(2) In particular and without prejudice to the

generality of the foregoing power, such rules

may provide for all or any of the following

matters, namely \026

... ... ..."

Rule 23 of the Delhi Development Authority (Disposal of Developed

Nazul Land) Rules, 1961, provides as under :

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"23. Agreements between the cooperative

societies and their members. \026 Where Nazul land

has been allotted to a cooperative society, such

members of the society who are allotted a plot

or flat by such society shall execute a sub-

lease in favour of the society in respect of

each plot or flat allotted to them. The terms

and conditions of such sub-lease shall, as

nearly as circumstances permit, be in accordance

with Form 'A' and Form 'B' appended to these

rules. In addition, such sub-lease may contain

such covenants, clauses or conditions, not

inconsistent with the provisions of Form 'A' or

Form 'B' as may be considered necessary and

advisable by the society, having regard to the

nature of a particular sub-lease."

Sub-lease is granted in Form 'B'. Sub clauses (a) and (b)

Clause (6) of the Perpetual Sub Lease read as under :

"(a) The sub-Lessee shall not sell, transfer,

assign or otherwise part with the

possession of the whole or any part of the

residential plot in any form or manner,

benami or otherwise, to a person who is

not a member of the Lessee.

(b) The Sub-Lessee shall not sell transfer

assign or otherwise part with the

possession of the whole or any part of the

residential plot to any other member of

the Lessee except with the previous

consent in writing of the Lessor which he

shall be entitled to refuse in his

absolute discretion.

Provided that the Lt. Governor reserves

the right to resume, Lessor may impose

such terms and conditions as he thinks fit

and the Lessor shall be entitled to claim

and recover a portion of the unearned

increase in the value (i.e., the

difference between the premium paid and

the market value) of the residential plot

at the time of sale, transfer, assignment,

or parting with the possession, the amount

to be recovered being fifty per cent of

the unearned increase and the decision of

the Lessor in respect of the market value

shall be final and binding :

Provided further that the Lessor shall

have the pre-emptive right to purchase the

property after deducting fifty per cent of

the unearned increase as aforesaid."

Clauses X(a) and (b) of Sub-Lease reads as under :

"X.(a) All powers exercisable by the Lessor under this

Sub Lease may be exercised by the Lt. Governor,

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the Lessor may also authorize any other officer

or officers to exercise all or any of the powers

exercisable by him under this Sub-Lease"

(b) The Lt. Governor may authorize any officer

or officers to exercise all or any of the powers

which he is empowered to exercise under this

Sub-lease except the powers of the Lessor

exercisable by him by virtue of Sub-Clause (a)

above."

Clause XI of the Sub Lease reads as under :

"In this Sub-Lease, the expression "the Lt.

Governor" means the Lt. Governor of Delhi for

the time being or, in case his designation is

changed or his office is abolished, the officer

who for the time being is entrusted, whether or

not in addition to other , of the Lt. Governor

by whatever designation such officer may be

called. The said expression shall further

include such officer as may be designated by the

Lessor to perform the functions of the

Lieutenant Governor under this Sub-Lease."

EFFECT OF THE CIRCULARS :

It is not in dispute that the grant of lease or sub-lease is in

consonance with the provisions of the D.D.A. Act and the rules framed

thereunder. The sub-lease had been executed in Form 'B'. Delhi was an

Union Territory. It used to be governed by the Chief Commissioner on

behalf of the Governor General in Council. The Chief Commissioner is now

designated as the Lt. Governor. Delhi has now also become a Part 'B'

State. The authority of the Lt. Governor, therefore, is to be exercised

by the Delhi Administration but such an authority being delegated one,

the Union of India cannot be said to have denuded of its power to issue

statutory directions as and when necessary or to issue policy decision

in terms of the said Act or the rules. The power to fix market value is

that of the lessor. Whereas the Chief Commissioner has been delegated

with the power of the lessor, he in terms of clause X(a)(b) of the deed

of sub-lease cannot sub delegate the same to any officer or officers to

exercise such power.

When a market value is fixed in case of a locality by the lessor

or his delegated authority, the same would be binding on them. Although

the sub-lease is a statutory one, the rules provide for suitable

modifications. In terms of Rule 23, the terms and conditions of the

sub-lease shall as nearly as circumstances permit be in accordance with

Forms 'A' and 'B'. The lessor or lessee, therefore, not only could

have agreed to vary the terms and conditions, any unilateral action

taken by the lessor and accepted by the lessee cannot be questioned as

they are not imperative in character. From a perusal of the order dated

24.6.1992, it appears that the practice of fixation of such market value

for the purpose of recovery of unearned increase had been in vogue for a

long time. The relevant portion of the said order is as under :

"ORDER

"Subject : Fixation of Market rate of land for the

purpose of recovery of unearned increase

in the value of land/plot consequent upon

Sale/Transfer of residential plots

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allotted under the Scheme of Large Scale

Acquisition, Development & Disposal of

land in Delhi.

Lt. Governor of National Capital Territory

of Delhi is pleased to revise the market rates

of land for the purpose of recovery of unearned

increase in the cost of land/plot consequent

upon the transfer/sale of residential plots

allotted under the Scheme of Large Scale

Acquisition, Development & Disposal of land in

Delhi, superseding his previous orders conveyed

vide order No. F.R. 16(7)/82-L&B/3026-34 dated

31.1.92, as given below :-

xxx xxx xxx"

The appellant itself issued the following circular, relevant

portion of which reads as under :

"Sub: Fixation of market rate of land for the

purpose of Recovery of unearned increase

in the value of land/plot consequent upon

the Transfer or Sale of residential plots

allotted under the "Scheme of large Scale

Acquisition Development and Disposal of

land in Delhi" for the period from 1.4.90

to 31.3.91 and 1.4.91 to 31.3.92.

A copy of the Joint Secretary (Admn.) L&B

Deptt. Delhi Admn. Letter No. F-16

(7)/82/L&B/20369-75 dated 24.6.92 conveying the

market rates of land in different areas of Delhi

for computation of unearned increase recoverable

in case of transfer/sale of Resdl. Plots

allotted under the scheme of Large Scale

Acquisition Development and Disposal of land in

Delhi is enclosed :

1. These rates would be applicable to the

plots measuring upto 500 sq. meters. In respect

of Sale/Transfer of plots measuring more than

500 sq. meters., a rebate of 15% on the market

price of area in excess of 500 sq. meters. would

be allowed."

It is not in dispute that the question as regard enhancement of

the market value @ 20% per year was under consideration of the Central

Government and it by a circular letter dated 11.11.1994 issued the

following directions :

"Subject : Schedule of Market Rate

Sir,

The question of fixation of market rates

of land in different areas of Delhi/New Delhi

w.e.f. 1.4.1994 has been under consideration of

the Government and it has been decided not to

increase the land rates w.e.f. 1.4.1994 but to

extend the validity of the land rates of

commercial/residential purposes as well as the

guidelines/principles laid down in this

Ministry's letter No.J-22011/1/91-LD dated 3rd

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March, 1993 for two more years i.e. w.e.f. 1st

April, 1994 till March, 1996 as per schedule

attached."

In terms of clause 6(a), a sub-lessee is prohibited from making

any sale, transfer, assign or otherwise part with possession of the

whole or any part of the residential plot in any form or manner, benami

or otherwise, to a person who is not a member of the lessee, but such

sale, transfer, assignment and parting with possession is permissible

with the previous consent in writing of the lessor. The proviso

appended thereto states that in the event such consent is given, the

lessor would be entitled to impose such terms and conditions as it may

think fit and shall furthermore be entitled to claim and recover a

portion of the unearned increase in the value.

Sub clause (b) of Clause (6) of the deed of sub-lease and the

proviso appended thereto, therefore, confers a discretion upon the

lessor. The decision of the lessor in respect of the market value is to

be final and binding. A market value, thus, fixed by the lessor in

exercise of such power either in general or in particular case, would,

therefore, be binding on it. The lessor in a case of this nature cannot

be said to be inhibited in any manner to fix the market value for a

locality which would be applicable to all the plots of lands situated

therein. As the market value has to be fixed in terms of the provisions

contained in the statutory lease, the lessor is not precluded from

fixing it for an area in question and thereby avoid any arbitrary or

unreasonable action by any of its officers. Market values are fixed by

the authority for different purposes. Fixation of such market value,

therefore, for the purpose of recovery of unearned increase cannot be

said to be de' hors the D.D.A. Act and the Rules framed thereunder.

It is not a case where a conflict has arisen between a statute or

a statutory rule on the one hand and an executive instruction, on the

other. Only in a case where a conflict arises between a statute and an

executive instruction, indisputably, the former will prevail over the

latter. The lessor under the deed of lease is to fix the market value.

It could do it areawise or plotwise. Once it does it area wise which

being final and binding, it cannot resile therefrom at a later stage and

take stand that in a particular case it will fix the market value on the

basis of the price disclosed in the agreement of sale.

Reliance placed by Mr. Rao on the decision in Jawajee Nagnatham

vs. Revenue Divisional Officer, Adilabad, A.P. and Others [(1994) 4 SCC

595] is wholly misplaced. Therein the question which arose for

consideration as to whether the compensation should be awarded for

acquisition of land on the basis of Basic Valuation Register maintained

by registering authority for collection of stamp duty which had been

fixed by the revenue authority at the market value for commercial as

also residential area. Keeping in view the provisions contained in

Section 23(1) of the Land Acquisition Act, it was held that in

determining such market value, the Court has to take into account either

one or the other of the three methods laid down therein, keeping in view

the date of issuance of notification under Section 4(1) of the Act and,

thus, Basic Valuation Register prepared and maintained for the purpose

of collecting stamp duty has no statutory base or force and cannot form

a foundation to determine the market value mentioned thereunder.

In Land Acquisition Officer, Eluru and Others vs. Jasti Rohini

(Smt.) and Another [(1995) 1 SCC 717] it was held :

"The question of fixation of market value is a

paradox which lies at the heart of the law of

compulsory purchase of land. The paradox lies

in the facts that the market value concept is

purely a phenomenon evolved by the courts to fix

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the price of land arrived between the

hypothetical willing buyer and willing seller

bargaining as prudent persons without a medium

(sic modicum) of constraints or without any

extraordinary circumstances. But the condition

of free market is the very opposite of the

condition of the compulsory purchase which is ex

hypothesi, a situation of constraints.

Therefore, to say, that for compulsory purchase,

compensation is to be assessed and market value

is to be determined in that state of affairs has

to be visualized in terms by its direct

opposite. To solve the riddle, courts have

consistently evolved the principle that the

present value as on the date of the compulsory

acquisition comprised of all utility reached in

a competitive field as on the date of the

notification and the price on which a prudent

and willing vendor and a similar purchaser

would agree. The value of the land shall be

taken to be the amount that the land if sold in

the open market by a willing seller might be

expected to realise from a willing purchaser. A

willing seller is a person who is a free agent

to offer his land for sale with all its existing

advantages and potentialities as on the date of

the sale and willing purchaser taking all

factors into consideration would offer to

purchase the land as on the date of the

sale...."

In State of Punjab and Others vs. Mahabir Singh and Others [(1996)

1 SCC 609], this Court observed that the guidelines provided under

Section 47A of the Stamp Act would only serve as prima facie material

available before the Registering Authority to alert him regarding the

value, holding :

"...It is common knowledge that the value of the

property varies from place to place or even from

locality to locality in the same place. No

absolute higher or minimum value can be

predetermined. It would depend on prevailing

prices in the locality in which the land covered

by the instrument is situated. It will be only

on objective satisfaction that the Authority has

to reach a reasonable belief that the instrument

relating to the transfer of property has not

been truly set forth or valued or consideration

mentioned when it is presented for registration.

The ultimate decision would be with the

Collector subject to the decision on an appeal

before the District Court as provided under sub-

section (4) of Section 47-A."

(See also R. Sai Bharathi Vs. J. Jayalalitha &

Ors. [JT 2003 (9) SC 343])

The aforementioned decisions have no application in the instant

case. In those cases, registers of land acquisition was being

maintained for the purpose of evasion of stamp duty. In the instant

case, not only, as rightly submitted by Mr. Haksar, it was not only

remained unsaid in the impugned circular, but have been issued for the

very purpose of recovery of unearned increase in the market value of the

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property on a general basis to which the Union of India or the Lt.

Governor was entitled in law.

In Sant Ram (supra), this Court has categorically stated :

"...It is true that Government cannot amend or

supersede statutory rules by administrative

instructions, but if the rules are silent on any

particular point, Government can fill up the

gaps and supplement the rules and issue

instructions not inconsistent with the rules

already framed."

Yet again in G.S. Dall & Four Mills (supra), this Court observed

as under :

"...Executive instructions can supplement a

statute or cover areas to which the statute does

not extend. But they cannot run contrary to

statutory provisions or whittle down their

effect..."

The matter may be considered from another angle. Nazul lands had

been leased out to a cooperative society formed by the persons who

intended to have roofs over their heads. The society in question was

formed by the Government servants; the premium of which, having regard

to the fact that the sub-lease was to be a perpetual one for all intent

and purport, would denote the amount of consideration for transfer.

The undeveloped lands had been developed by the appellant wherefor also

the Appellant had realized the development charges.

The appellant becomes entitled to invoke clause 6(b) of the sub-

lease at the time of each and every transaction in relation to sale,

transfer and assignment of the lands in question by a member of a

cooperative society to a non-member. Such subsequent purchaser

indisputably would have to become a member of the cooperative society.

It was, therefore, not unusual on the part of the lessor to fix the

market price for the entire area which had been developed by it keeping

in view the fact that save and except some cases, the market value of

the land would be same or similar.

It is also not in dispute that the Central Government was the

ultimate authority for determination of the market value. The proposal

of the appellant before the Union of India to enhance such market value

@ 20% per annum did not receive any favourable response. They thought

it fit to continue with the same valuation till 1996. Such a decision

on the part of the Union of India was a conscious one. It is really

surprising that on the one hand a stand is taken that clause 6(b) of the

sub-lease contain a statutory provision and, thus, cannot be altered

either by the Union of India or by the Lt. Governor, recourse is sought

to be taken to the provisions of Sections 2 and 3 of the Government

Grants Act in terms whereof the term of any grant or term of any

transfer of land made by the Government would stand insulated from the

tentacles of any statutory law as thereby unfettered discretion of the

Government has been conferred to enforce any condition or limitations or

restrictions in all types of grants and the right, privilege and

obligations of the grantee would be regulated thereunder.

It is all the more surprising that the appellant being a delegatee

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has even questioned the policy decision of the delegator, namely, the

Union of India. Furthermore, such a stand is being taken despite the

fact that the circular letter dated 28.6.1999 as contained in Annexure

R-3 to I.A. 6 of 2003 which has also not been issued by the Union of

India in terms of the D.D.A. Act or the rules framed thereunder has been

relied and acted upon by the D.D.A. despite ex facie the same steers on

the face of the condition of the statutory lease to the effect that

lease cannot be transferred without consent of the lessor.

Clause 6(b), as noticed hereinbefore, if construed to be

imperative in terms thereof a member of the society is prohibited from

transferring his interest in any manner whatsoever. Even delivery of

possession of the premises pursuant to or in furtherance of the

agreement is prohibited. But by reason of the said circular letter

dated 28.6.1999, which has not been issued even in terms of Article 77

of the Constitution, not only such permission is not required to be

taken but even the right to recover 50% of the unearned increase is

waived and only on payment of conversion charges a leasehold is made

freehold, pursuant whereto or in furtherance whereof only upon payment

of conversion charges any member of the society would become entitled to

transfer or assign his interest in the land or the building constructed

thereupon without even obtaining any prior consent of the lessor.

We, therefore, are of the opinion that the said circular letters

are valid. Determination of market value by reason of such circular

letters, thus, became a part of the terms of the lease having regard to

the finality clause attached thereto.

MISTAKE :

A mistake is not a fraud. It may be discovered and in a given

case it must be pleaded. Such plea must lead to a fundamental error.

It can be a subject matter of acquiescence. In Kerr on the Law of

Fraud and Mistake, 7th Edn. at page 599, it is stated

"Where one party makes a mistake either of law

or fact and the other party to a transaction

allows him to act upon it, then (even though

such other party may himself not know of the

mistake) he may be estopped from setting up the

mistake for having in effect ratified it. In

one case where parties had acted on one

construction of a deed for forty years the House

of Lords held that neither party was estopped

from setting up the mistake, and that rent

underpaid for so long as it was not barred by

the Statute of Limitation could be recovered."

It is not disputed that the said question had not been raised in

the counter affidavit; on the other hand, it appears that the High Court

specifically granted three opportunities to the respondents to place on

its records any other policy decision whereupon it intended to place

reliance as would appear from the following :

"16.10.1996

Present : Mr. A.N. Haksar, Sr. Advocate with Mr.

R.K. Virmani for the Petitioner.

Ms Sudha Bhandari for Counsel for the

Respondents

CW. No.3948/95

There is no counter filed on behalf of the

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Respondents. There is no appearance on behalf

of the Union of India today. Learned Counsel

for the Petitioner has invited the attention of

the Court to the averments made in paragraph 23

of the petition and the documents Annexure-1 at

page 50 of the paper book which according to him

is the policy governing unearned increase during

the relevant period. Reply to this paragraph 23

of the counter is evasive.

Learned Counsel for the petitioner has also

invited the attention of the Court to yet

another circular issued by the DDA on unearned

increase calculations which is dated 28th

November, 1995. Let Counsel for the Respondents

seek specific instructions and make clear

statement preferably on affidavit as to whether

they admit or deny the policy dated 11th

November, 1994 Annexure-1 and the circular dated

28th November, 1995. If there be any other

policy operating, let Respondent DDA disclose

it.

Compliance within six weeks.

To come up for hearing on 24th February, 1997.

R.C. Lahoti, J.

S.N. Kapur, J."

"24.02.1997

Present : Mr. A.N. Haksar, Senior Advocate with

Mr. R.K. Virmani for the Petitioner.

Mr. Sumit Bansal fore the Respondent/DDA

CW 3948/95

On October 16, 1996, six weeks time allowed to

the DDA to make a clear statement on affidavit

as to whether it admits or denies the policy

dated November 11, 1984 and the circular dated

November 28, 1995. it was also directed that if

there be any other policy operating, the same

should also be disclosed by DDA. The said order

has not been complied with. Two weeks further

time by way of last opportunity is allowed to

the DDA to comply with these directions.

To be taken up for disposal towards the end of

the short matters on April 10, 1997.

Within a period of four weeks the parties will

also place on record short synopsis or notes.

Devinder Gupta, J.

K.S. Gupta, J."

"10.04.1997

President : Mr. A.N. Haksar Senior Advocate with

Mr. R.K. Virmani for the Petitioner.

Mr. Ravinder Sethi, Senior Advocate

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with Mr. Sumit Bansal for the Respondent/DDA

Mr. Sethi states that additional affidavit of

Shri Jagdish Chandra, Director (R) DDA., has

been filed pursuant to the last order. Learned

counsel for the petitioner states that

information contained in the affidavit does not

comply with the court's order. List on August

21, 1997, at the end of the "after Notice

Miscellaneous matters". Synopsis will be filed

by the parties within four weeks from today.

Devinder Gupta, J.

K.S. Gupta, J."

NEW POINTS :

The instances relied upon by the High Court in its judgment had

not been distinguished. Such an attempt has been made only before us

for the first time. Even in relation to A-14, Anand Lok, no distinction

is to be found as it is stated :

"In the case of A-14, Anand Lok, New Delhi, the

date of application is 26.6.1989 and the

permission was granted on 26.7.1989 by receiving

unearned increase calculated with reference to

the market rate of the land in the locality

contained in the relevant circulars but not on

the basis of the Circular dated 24.6.1992 relied

on by the High Court."

Keeping in view of the fact that the Appellant despite being given

several opportunities by the High Court did not disclose its policy, we

do not think that they should otherwise also be given an opportunity to

raise new grounds.

DETERMINATION OF THE AMOUNT OF UNEARNED INCREASE BY THE APPELLANT:

The Appellants proceeded on the premise in the case of the

Respondents, that the Circular letters issued by it or the Union of

India need not be given effect to and the valuation of the land should

be worked as Rs. 7,50,00,000/- for the purpose of computing the unearned

increase. However, it must be presumed that the vendees proceeded on

the basis that the amount of unearned increase would be determined in

terms of the said circulars. Furthermore, 50% of the unearned increase

was to be paid to the Appellant as a condition of lease. While

determining the amount, the Appellant was required to take into account

the amount of consideration specified in the agreement and/or clearance

certificate issued by the Income Tax Officer. They even did not do so.

INTERIM ORDER \026 EFFECT OF :

The respondents herein questioned the demand of Rs.3,62,44,420/-

made by the DDA. The DDA calculated the aforementioned demand on the

basis that the total consideration for the transaction was

Rs.7,50,00,000/-. The calculation was made having regard to the fact

that Respondent Nos.8 and 9 agreed to pay 50% of the unearned increase,

the total amount of Rs.7,50,00,000/-. It failed to notice that after

circulars are to be applied, the unearned increase must be calculated on

the basis thereof and no demand can be raised hypothetically that the

purchaser would be agreeable to pay a further sum of Rs.7,50,00,000/-.

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Such an assumption is wholly on wrong premise.

A prayer therefore was made before the High Court that sale deed

be permitted to be executed. Keeping in view the stand taken by the

parties before it, it was directed :

"...In case the Petitioner are interested in the

grant of sale permission the adjournment of the

matter in any case before the 13.7.1995 they may

pay the demanded sum lf Rs.3,62,44,420/- under

to DDA. In case ultimately it is held that

amount payable is less, the excess amount can be

ordered to be refunded to the Petitioner with

interest at the rate of interest (sic for 18%)

per annum. In case the payment is made under

protest it is subject to fulfillment of other

formalities would consider application for sale

permission."

The respondents complied with the order of the High Court whereas

Rajeev Gupta did not. Having regard to the subsequent events, he got

the benefit of 1999 Circular and as indicated hereinbefore, the D.D.A.

ignoring the fact that he was a power of attorney-holder and had already

entered into possession and, thus, clause 6(b) stood attracted. It may

be true that by such an action, the respondents herein stood

discriminated.

The appellant being a State, it was required to act fairly and

reasonably in all circumstances even in the matter of eviction of a

tenant. [See M/s Dwarkadas Marfatia and Sons vs. Board of Trustees of

the Port of Bombay, AIR 1989 SC 1462]. But the respondents herein are

victims of situation. Stricto sensu they cannot take advantage of the

order passed by the High Court. The High Court gave them opportunities

to get their deed registered. They could have refused to do so and in

that event like Rajeev Gupta they were not required to deposit the

amount. The parties did not contemplate that the Central Government

would come out with another policy decision, which would be more

beneficial to the sub-lessee. A fortuitous circumstance like the

issuance of the said circular dated 28.6.1999 was not in contemplation.

The appellant, therefore, cannot, keeping in view the prospective effect

given to the said circular, take any benefit thereof. Furthermore, they

have not filed any application to amend their writ petition. They

merely have urged additional grounds. It is no doubt true that this

Court can take into consideration subsequent events and mould relief

accordingly but thereby it cannot substitute a new relief based on a

fresh cause of action. We are, therefore, of the opinion that the

interim order passed by the High Court does not come to the aid of the

respondents.

RATE OF INTEREST :

By reason of the aforementioned interim order, the High Court

directed payment of 18% interest. The rate of interest which was

prevailing at the relevant time was 18%. However, the bank rate of

interest has since gone down drastically. Grant of interest pendente

lite and for future is a discretionary remedy. The court of appeal

can, therefore, exercise the same power while finally disposing the lis

as that of the High Court keeping in view the principle engrafted in

Section 34 of the Code of Civil Procedure. The rate of interest may

have to be fixed having regard to the principle of restitution.

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Recently, this Court has examined this principle in South Eastern

Coalfields Ltd. vs. State of M.P. & Ors. [(JT 2003 (supp. 2) SC 443]

stating :

"Interest is also payable in equity in

certain circumstances. The rule in equity is

that interest is payable even in the absence of

any agreement or custom to that effect though

subject, of course, to a contrary agreement (See

: Chitty on Contracts, Edition 1999, Vol. II,

Para 38-248, at page 712). Interest in equity

has been held to be payable on a market rate

even though the deed contains no mention of

interest. Applicability of the rule to award

interest in equity is attracted on the existence

of a state of circumstances being established

which justify the exercise of such equitable

jurisdiction and such circumstances can be

many."

Despite the same, the Court reduced the statutory rate of interest

from 24% to 12% stating :

"So far as the appeal filed by the State of

Madhya Pradesh seeking substitution of rate of

interest by 24% per annum in place of 12% per

annum as awarded by the High Court is concerned,

we are not inclined to grant that relief in

exercise of our discretionary jurisdiction under

Article 136 of the Constitution especially in

view of the opinion formed by the High Court in

the impugned decision. The litigation has

lasted for a long period of time. Multiple

commercial transactions have taken place and

much time has been lost in between. The

commercial rates of interest (including bank

rates) have undergone substantial variations and

for quite sometime the bank rate of interest has

been below 12%. The High Court has, therefore,

rightly (and reasonably) opined that upholding

entitlement to payment of interest at the rate

of 24% per annum would be excessive and it would

meet the ends of justice if the rate of interest

is reduced from 24% per annum to 12% per annum

on the facts and in the circumstances of the

case. We are not inclined to interfere with

that view of the High Court but make it clear

that this concession is confined to the facts of

this case and to the parties herein and shall

not be construed as a precedent for overriding

Rule 64A of the Mineral Concession Rules, 1960.

It is also clarified that the payment of dues

should be cleared within six weeks from today

(if not already cleared) to get the benefit of

reduced rate of interest of 12%; failing the

payment in six weeks from today the liability

to pay interest @ 24% per annum shall stand."

In K.T. Venkatagiri and Others vs. State of Karnataka and Others

[(2003) 9 SCC 1], it is stated :

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"We are, therefore, of the opinion that with a

view to do complete justice between the parties

and having regard to the order passed by this

Court in Khoday Distilleries case, the following

directions should be issued :

(1) xxx xxx xxx

(2) xxx xxx xxx

(3) xxx xxx xxx

(4) xxx xxx xxx

(5) xxx xxx xxx

(6) xxx xxx xxx

(7) On the amount found to be due and owing to

MSIL by any of the appellants the same shall be

paid and interest at the rate of 18% per annum

shall be leviable from the date of realisation

till 12.2.1997 and thereafter at the rate of 9%

per annum, within twelve weeks from the date of

final determination."

We may notice that in Pure Helium India Pvt. Ltd. vs. Oil &

Natural Gas Commission [2003 (8) SCALE 553], the rate of interest

awarded by the arbitrator was reduced to 6% in exercise of its power

under Article 142 of the Constitution of India.

CONCLUSION :

In the facts and circumstances of this case, we are of the opinion

that grant of 9% interest shall meet the ends of justice. We,

therefore, while dismissing the appeals direct that in stead and place

of 18% interest, the appellant shall be liable to pay interest @ 9% per

annum. The amount payable to the respondents must be paid within a

period of six weeks from this date together with interest failing which

the respondents would be entitled to claim 18% interest on the expiry of

the said period till actual payment is made.

We, keeping in view the facts and circumstances of the case, also

direct that the application for conversion filed by the respondents

herein should be disposed of expeditiously. Keeping in view the conduct

of the appellant herein, we think that they should bear the costs of the

respondents. Counsel's fee is assessed at Rs.25,000/- in each appeal.