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Sunday, August 19, 2012

whether the respondents are legally obliged to pay the interest, penal interest and penalty on account of the delayed payment of installments after having accepted the allotment of commercial plots by way of auction. - “19. …………In a public auction of sites, the position is completely different. A person interested can inspect the sites offered and choose the site which he wants to acquire and participate in the auction only in regard to such site. Before bidding in the auction, he knows or is in a position to ascertain, the condition and situation of the site. He knows about the existence or lack of amenities. The auction is on `as is where is basis'. With such knowledge, he participates in the auction and offers a particular bid. There is no compulsion that he should offer a particular price. 20. Where there is a public auction without assuring any specific or particular amenities, and the prospective purchaser/lessee participates in the auction after having an opportunity of examining the site, the bid in the auction is made keeping in view the existing situation, position and condition of the site. If all amenities are available, he would offer a higher amount. If there are no amenities, or if the site suffers from any disadvantages, he would offer a lesser amount, or may not participate in the auction. Once with open eyes, a person participates in an auction, he cannot thereafter be heard to say that he would not pay the balance of the price/premium or the stipulated interest on the delayed payment, or the ground rent, on the ground that the site suffers from certain disadvantages or on the ground that amenities are not provided.” We are of the view that the High Court was not justified in holding that the respondents are not liable to pay the interest, penal interest and penalty for the period commencing from 1.6.2001 to 31.12.2002 for the belated payment of installments. Consequently, the judgments of the High Court are set aside and the writ petitions would stand dismissed and the appeals would stand allowed as above. There will be no order as to costs.


                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO. 5887   OF 2012
              @ SPECIAL LEAVE PETITION (CIVIL) NO. 8734 OF 2009


Punjab Urban Planning & Dev. Authority & Ors.           …   Appellants

                                   Versus

Raghu Nath Gupta & Ors.                           … Respondents

                                    WITH

                       CIVIL APPEAL NO.  5888  OF 2012
             @ SPECIAL LEAVE PETITION (CIVIL) NO. 22823 OF 2009


                               J U D G M E N T





K.S. Radhakrishnan, J.



1.    Leave granted.

2.    The questions raised in both these appeals are  the  same,  hence,  we
are disposing of both the appeals by a common judgment.

-

3.    The question that has come up for consideration in  these  appeals  is
whether the respondents are legally  obliged  to  pay  the  interest,  penal
interest and penalty on account  of  the  delayed  payment  of  installments
after having accepted the allotment of commercial plots by way  of  auction.
The High Court has taken the view that since there was delay on the part  of
the Punjab Urban Planning and Development Authority (for  short  “PUDA”)  in
providing the basic amenities like parking, lights,  road,  water,  sewerage
etc. in time, PUDA cannot legally claim  the  interest,  penal  interest  as
well as penalty on account of the delayed  payment  of  installments.    The
High Court placed reliance on  the  judgment  of  this  Court  in  Municipal
Corporation, Chandigarh and Ors. v. Shantikunj Investment (P) Ltd. (2006)  4
SCC 109 to reach that conclusion.

4.    We heard Mrs. Rachna Joshi, learned counsel  appearing  on  behalf  of
PUDA as well as Shri P.S. Patwalia, learned senior counsel assisted  by  Mr.
Tushar Bakshi, appearing for the respondents.

5.    For the disposal of these appeals, we may refer to the facts of  Civil
Appeal No. …… of 2012 [arising out of SLP (Civil)  No.  8732  of  2009],  as
follows:

-

PUDA, on 16.3.2001, conducted a public auction for sale  of  the  commercial
plots. Raghu Nath Gupta, the respondent  was  the  successful  bidder  of  a
single storey shop no. 134 in Phase III BIT, for a  total  consideration  of
Rs.31,75,000/-.  The possession of the said shop  was  handed  over  to  the
respondent on 25.5.2001 on payment of Rs.7,93,750/- being 25% of  the  total
cost of site.  Installment facility  was  extended  to  the  respondent  for
paying the balance 75% of the amount, that was Rs.23,81,250/-  The  relevant
clauses of the Allotment Letter dated  16.3.2011  are  extracted  below  for
easy reference:

      “4.   The sum of Rs.7,93,750/- being 25% of the total cost of the site
           deposited by you after the ….. been adjusted as 25% of the sale.

      5.    The balance amount i.e. Rs.23,81,250/- being 75% of above  piece
           of the writ, can be paid in lump sum without interest within  60
           days  from  the  date  of  auction  or  in  4   equated   yearly
           installments along with interest @ 15 % per annum.

      6.    The annual quoted installment with interest @ 15% per annum will
           be payable as per the following schedule:

|Installment |Due date   |Amount of     |Interest      |Total amount  |
|            |           |Installment   |              |payable       |
|1st         |16.3.2002  |5,95,313/-    |3,57,188/-    |9,52,501/-    |
|2nd         |16.3.2003  |5,95,313/-    |2,67,891/-    |8,52,501/-    |
|3rd         |16.3.2004  |5,95,312/-    |1,78,594/-    |7,73,906/-    |
|4th         |16.3.2005  |5,95,312/-    |89,297/-      |6,84,609/-    |
|            |           |23,81,250/-   |8,92,970/-    |32,74,220/-   |





In case the installment is not paid on the 10th of the month  following  the
month in which it falls due, PUDA can impose penalty.  The penalty Clause  9
reads as follows:

      “9.   In case the installment is not paid by the  10th  of  the  month
           following the month, in which it falls due, the  Estate  Officer
           shall proceed to take action for imposition of penalty charged @
           2% per month of the amount i.e. from the due date in addition to
           normal  simple  interest.   In  case  of  non-payment   of   the
           installment along with interest due  thereon  for  a  continuous
           period of 3 months, the whole or any part of the money  paid  in
           respect of the site shall be forfeited and  the  Estate  Officer
           shall cancel the allotment and resume the site, after giving you
           appropriate notice and  an  opportunity  of  being  heard  shall
           continue to be charged in the whole due amount till the date  of
           payment of amount due.”



6.    Above mentioned conditions were accepted and the  plot  was  allotted.
On getting possession after payment of 25% of  the  total  cost,  respondent
raised construction on the allotted site in the year 2002.   PUDA  completed
the development work by 20.12.2002 and provided all the facilities  for  the
enjoyment of the various commercial plots allotted.

7.    Respondent filed CWP No. 6156 of 2002 before the High Court seeking  a
direction to PUDA not to charge interest on the  balance  installments  till
the basic amenities were provided on the site. The writ -

petition was disposed of by  the  High  Court  on  22.4.2002  directing  the
Estate Officer, PUDA, Mohali to pass a speaking  order.   Consequently,  the
Estate Officer passed the order on 5.9.2002 rejecting  the  demand  made  in
the notice, which was challenged by the respondents by filing CWP No.  18753
of 2002, which was disposed of vide  order  dated  13.7.2006  directing  the
respondents to file detailed representations  before  the  Additional  Chief
Administrator.  Consequently, a detailed representation  was  filed  by  the
respondents on 29.8.2006 before the Additional Chief  Administrator  stating
that since PUDA had failed to provide  the  basic  amenities  like  drinking
water, drainage and public toilets, respondents were not legally obliged  to
pay interest, penal interest, penalty  etc.  on  the  delayed  installments.
PUDA took up the stand before the Additional Chief  Administrator  that  the
basic amenities like parking, lights, roads, water, sewerage etc.  were  not
provided at the site when they were allotted, but the toilet was shown  near
SCF No. 124-125.    PUDA  submitted  that  the  electrical  works  had  been
completed  by  24.12.2002,  public  health  works  had  been  completed   by
22.11.2002 and the development of the commercial pocket had  been  completed
by 20.12.2002.

8.    After having examined the contentions raised by both, respondents  and
PUDA, the Additional Chief Administrator rejected the -

representation vide his order dated 31.3.2007, which was challenged  by  the
respondents before the High Court by filing CWP No. 6929 of 2007.  The  High
Court allowed that CWP vide its judgment dated  5.11.2008  placing  reliance
on the judgment of this Court in Shantikunj  Investment  (supra),  which  is
impugned before this Court.

9.    Mrs. Rachana Joshi  took  us  through  the  terms  and  conditions  of
Auction Notice  and  also  to  the  various  terms  and  conditions  of  the
allotment, as well as the judgment of this Court  in  Shantikunj  Investment
(supra).

10.   Shri P.S. Patwalia submitted that the  High  Court  was  justified  in
allowing the writ petition, since there was a failure on the  part  of  PUDA
in providing the necessary facilities for enjoyment of  the  plots  allotted
to the respondents.   Further, it was also contended by the  learned  senior
counsel that the High Court had rightly applied the principle laid  down  by
this Court in Shantikunj Investment (supra).

11.   We are of the view that the terms and  conditions  stipulated  in  the
auction notification for allotment of commercial plots, published  by  PUDA,
has got considerable bearing in resolving the disputes between the  parties.
  We, therefore, called for the auction notification -

published by PUDA and the same was made available  to  us.    There  was  no
dispute that the plots were auctioned on  16.3.2001  on  the  basis  of  the
terms and conditions stipulated therein.  Clause 25 is  the  most  important
clause, which binds both the parties, reads as follows:

      “25.  The site is offered on “as is where is” basis and the  Authority
           will not be responsible for leveling the site  or  removing  the
           structures, if any, thereon.”



In other words, the plot in question was  auctioned  on  “as  is  where  is”
basis and the same was accepted by  the  respondent  on  “as  is  where  is”
basis.  Plot was allotted to  the  respondent  by  PUDA  vide  Memo  No.  A-
5/2001/3192 dated 25.5.2001.   The relevant  terms  and  conditions  of  the
allotment have already been referred to by us in the  earlier  part  of  the
judgment.   Respondents could have paid  the  entire  amount  in  lump  sum,
however, they availed off the installment facility  offered.   It  was  made
clear in the allotment letter that, in case, there was a failure to pay  the
installment by the 10th of the  month  following  the  month  in  which  the
payment fell due, the Estate Officer  should  proceed  to  take  action  for
imposition of penalty charged @ 2% per month of the  amount  i.e.  from  the
due date in addition to normal  simple  interest.    Further,  it  was  also
stated in the allotment letter that in case of  non-payment  of  installment
along with interest due thereon for a -

continuous period of three months, the whole or any parts of the money  paid
in respect of the site, should be forfeited and  the  Estate  Officer  could
even cancel the allotment.

12.   We notice that the respondents had accepted the commercial plots  with
the open eyes, subject to the above mentioned  conditions.   Evidently,  the
commercial plots were allotted on “as is where  is”  basis.   The  allottees
would have ascertained the facilities available at the time of  auction  and
after having accepted the commercial plots on “as is where is”  basis,  they
cannot be heard to contend that PUDA had not provided  the  basic  amenities
like parking, lights, roads, water, sewerage etc.   If  the  allottees  were
not interested in taking the commercial plots on “as  is  where  is”  basis,
they should not have accepted the allotment and after  having  accepted  the
allotment on “as is where is” basis, they are estopped from contending  that
the basic amenities like parking, lights, roads, water, sewerage  etc.  were
not provided by PUDA when the plots were allotted.     Over and  above,  the
facts would clearly indicate that there was not much delay on  the  part  of
PUDA to provide those facilities as well.   As noted, the  electrical  works
and health works were completed by 24.12.2002  and  22.11.2002  respectively
and all the facilities like parking, lights,  roads,  water,  sewerage  etc.
were also provided.

-

13.   On facts, we find that this is not a case where PUDA  was  callous  or
indifferent or had  caused  an  inordinate  delay  in  providing  the  basic
facilities to allottees.  In our view,  the  High  Court  has  not  properly
comprehended  the  scope  of  the  judgment  of  this  Court  in  Shantikunj
Investment (supra) and the  terms  and  conditions  of  the  auction.   This
Court, in that case, has specifically held as follows:

           “26…….It is the common experience that for full  development  of
      an area it takes years. It is not possible  in  every  case  that  the
      whole area is developed first and allotment is served  on  a  platter.
      Allotment of the plot was made on an as is  where  is  basis  and  the
      Administration promised that the basic amenities will be  provided  in
      due course of time.  It cannot be made a condition precedent………….




           28.   It is true that once allotment of the land has  been  made
      in favour of the allottee, he can take possession of the property  and
      use the same in accordance with the Rules. That does not mean that all
      the facilities should be provided first for so called enjoyment of the
      property as this was not the condition of auction. The party knew  the
      location & condition prevailing thereon. The interpretation  given  by
      the Division Bench of the High Court of Punjab & Haryana and contended
      before us cannot be accepted as a settled proposition of law………….

                                             (emphasis supplied)”



      We may also refer to another judgment of this Court in  UT  Chandigarh
Administration and Anr. v. Amerjeet Singh and Ors. -

(2009) 4 SCC 660, in which, after having referred to the  judgment  of  this
Court in Shantikunj Investment case, this Court held as follows:

           “19.   …………In  a  public  auction  of  sites,  the  position  is
      completely different.  A  person  interested  can  inspect  the  sites
      offered and choose the site which he wants to acquire and  participate
      in the auction only in regard to such  site.  Before  bidding  in  the
      auction, he knows or is in a position to ascertain, the condition  and
      situation of the site.  He  knows  about  the  existence  or  lack  of
      amenities. The auction is  on  `as  is  where  is  basis'.  With  such
      knowledge, he participates in the auction and offers a particular bid.
      There is no compulsion that he should offer a particular price.

           20.   Where there is  a  public  auction  without  assuring  any
      specific or particular amenities, and the prospective purchaser/lessee
      participates in the auction after having an opportunity  of  examining
      the site, the bid in the auction is made keeping in view the  existing
      situation, position and condition of the site. If  all  amenities  are
      available, he would offer a higher amount. If there are no  amenities,
      or if the site suffers from any disadvantages, he would offer a lesser
      amount, or may not participate in the auction. Once with open eyes,  a
      person participates in an auction, he cannot thereafter  be  heard  to
      say that he would not pay the balance  of  the  price/premium  or  the
      stipulated interest on the delayed payment, or the ground rent, on the
      ground that the site suffers from  certain  disadvantages  or  on  the
      ground that amenities are not provided.”


14.   We are of the view that the judgment in Amarjeet Singh  (supra)  is  a
complete answer to the various contentions raised by the  respondents.    We
may reiterate that after having accepted the offer of the  commercial  plots
in a public auction with a super imposed condition i.e. on “as is where  is”
basis and after having accepted the -
terms  and  conditions  of  the  allotment  letter,  including   installment
facility for payment, respondents cannot say that they are not bound by  the
terms and conditions  of  the  auction  notice,  as  well  as  that  of  the
allotment  letter.   On  facts  also,  we  have  found  that  there  was  no
inordinate delay on the part of PUDA in providing those facilities.
15.   We are of the view that the High Court was not  justified  in  holding
that the respondents are not liable to pay the interest, penal interest  and
penalty for the period  commencing  from  1.6.2001  to  31.12.2002  for  the
belated payment of installments.  Consequently, the judgments  of  the  High
Court are set aside and the writ petitions would  stand  dismissed  and  the
appeals would stand allowed as above.  There will be no order as to costs.


                                                               ……………………………J.
                                                 (K.S. Radhakrishnan)



                                                               ……………………………J.
                                                 (Madan B. Lokur)

New Delhi;
August 16, 2012





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