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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.”

REPORTABLE

IN THE SUPREME COURT OF INDIA

La Puda, antic balneari 04

La Puda, antic balneari 04 (Photo credit: Albert M Dorca)

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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