The Belgaum Urban Development Authority vs Dhruva & Anr.

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No.2950 of 2023

The Belgaum Urban Development Authority … Appellant Versus Dhruva & Anr. … Respondents WITH Civil Appeal No.2951 of 2023

Civil Appeal No.2952 of 2023

JUDGMENT

Rajesh Bindal, J.

1. This order will dispose of bunch of appeals bearing

Civil Appeal Nos. 2950-2952 of 2023. The common judgment of

the High Court vide which five Regular Second Appeals were

decided has been impugned.

Signature Not Verified

2. Digitally signed by Anita Malhotra Date: 2023.04.28 From the matters listed before this Court, it is evident 17:20:11 IST Reason:

that the judgment of the High Court has been challenged only

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in R.S.A. Nos. 759, 760 and 864 of 2008 and there are no

appeals filed in R.S.A. No.758 and 863 of 2008. The learned

counsel for the appellant did not point out at the time of

hearing that there is any other appeal pending in this Court

challenging the common judgment of the High Court with

reference to the aforesaid two appeals.

FACTS OF THE CASE:

3. The particulars regarding the present appeals and

the respective plot numbers in the individual cases are stated

as under:

S.No. Civil R.S.A No. Regular O.S. No. Plot Appeal No. Appeal No. No.

1. 2950/2023 760/2008 154/2006 527/2003 550

2. 2951/2023 864/2008 144/2006 525/2003 211

3. 2952/2023 759/2008 146/2006 526/2003 552

4. As common legal issues are involved, the facts have

been extracted from Civil Appeal No.2950 of 2023. The

undisputed facts of this case are that, Respondent/ Plaintiff in

the present appeal made application to Appellant/Defendant

No.2 (Belgaum Urban Development Authority, in short ‘BUDA’)

for allotment of residential site. The appellant allotted site to

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the plaintiff. The allotment letter was issued on 12.11.1990.

Possession of the site was handed over to the plaintiff.

Thereafter, lease-cum-sale agreement was executed on

10.05.1991 in favour of plaintiff/respondent.

5. As demand of additional price for the plot was raised

from the respondent, suit was filed. The Trial Court decreed the

suit. In appeal, the judgment and decree of the Trial Court was

reversed. In second appeal filed by the appellant, the

judgment and decree of the lower appellate court was

reversed. The same is under challenge before this Court. The

High Court, in second appeal, directed the appellant to execute

the sale deed in favour of respondents in RSA Nos. 864,758

and 863 of 2008 and further directed to refund the additional

price paid by the respondents in RSA Nos. 759 and 760 of 2008.

ARGUMENTS:

6. Mr. S.N. Bhat, learned Senior Counsel appearing on

behalf of the appellant submitted that plots were allotted to the

Respondents-Plaintiffs vide allotment letter dated 12.11.1990.

The clause contained in the Allotment letter mentions that the

cost of the plot is tentative. Hence, demand of additional price

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cannot be said to be illegal. It was on account of enhancement

of compensation of the land which was utilized for carving out

the plots allotted to the Respondents-Plaintiffs. He further

referred to the lease-cum-sale agreements executed in favour

of Respondent dated 10.05.1991 where no specific amount as

such has been mentioned as consideration. It only mentions

that the price was negotiated and the Respondents have been

allowed to occupy the plot till such time payment of full price is

made. The lease-cum-sale agreement further provided that the

parties thereto agreed to abide by the terms and conditions as

specified in Karnataka Improvement Boards Rules, 1976. While

relying upon the judgment of this Court in Shimla

Development Authority v. Asha Rani1 it was submitted that

in the aforesaid case, this Court had allowed the Shimla

Development Authority to charge additional amount from the

allottees on account of enhancement of compensation for the

land acquired.

7. The judgment of this Court in Tamil Nadu Housing

Board and Others v. Sea Shore Apartments Owner’s

Welfare Association2 has also been relied upon to submit that

1 (1996) 8 SCC 487 2 (2008) 3 SCC 21

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if price mentioned is tentative, additional amount can be

demanded.

8. In the case at hand the demand of additional price is

fully justified for the reason that the same was on account of

enhancement of compensation by the Court for the acquisition

of land utilized for carving out the plots. It is further submitted

that except the five allottees who were before the High Court,

all others had deposited additional price demanded from them

on account of enhanced compensation.

9. On the other hand, learned counsel for the

Respondents-Plaintiffs submits that neither in the allotment

letter nor in the lease-cum-sale agreement there is any clause

in terms of which the Appellant could demand additional price

from the allottees except on account of variation of size.

Clause 5 of the allotment letter only gives an option to the

Appellant to re-determine the price in case the size of the plot

is finally found to be different than the allotted. To demand

additional price from an allottee on any other ground, there has

to be specific clause in the allotment letter otherwise the price

mentioned is final. Even the clause as mentioned in the lease-

cum-sale agreement also does not come to the rescue of the

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Appellant for the reason that it talks about the negotiated price

between the vendor and the vendee. The same is clearly

mentioned in allotment letter otherwise the agreement would

be vague with reference to the sale consideration.

DISCUSSION:

10. Heard learned counsel for the parties and perused

the relevant referred record.

11. The relevant clauses of the allotment letter and the

Lease-cum-Sale Agreement, as have been referred to by the

Appellant, are extracted below:

“Allotment Letter:

“Clause 5: The dimensions noted are approximate subject to verification at the time of handing over possession and allottees will have to pay proportionate increase price according to actual measurements.

The value of the site is Rs.50,000/-+10% Augmentation of water supply charges is Rs.5,000/- Tentatively =Rs.55,000/-.”

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“Lease-cum-Sale Agreement:

“whereas there were negotiations between the lessee/purchaser on the one hand and the lessor/ vendor on the other for allowing the lessee/ purchaser to occupy the schedule property as lessee until the payment in full of the price of the schedule property as might be fixed by the lessor/ vendor as hereinafter provided;”

12. In Ishwar Dass Nassa & Ors. v. State of Haryana

& Ors.3 this Court considered similar issue. There was hire-

purchase agreement executed by Haryana Housing Board in

favour of the allottee. The clause as contained in hire-purchase

tenancy agreement, as referred to in para no.3 of the

judgment, is extracted below:

“2. (w) If after the receipt of the final bills for the construction of tenements or as the result of land award or arbitration proceeding or enhancement in cost of land on any account, the Board considers it necessary to revise the price, already specified, it may do so and determine the final price payable by the hirer who shall be bound by this determination and

3 (2012) 1 SCC 753

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shall pay dues, if any, between final price so determined and price paid by him including the price paid in lump sum, provided that no change in the price shall be made after 7 years from the date of allotment.”

13. Demand was raised by the Estate Manager, Housing

Board Haryana, Sonepat after about 10 years directing them to

pay additional price on account of enhanced compensation

pertaining to the land on which the tenements were

constructed. Interpreting the aforesaid clause, this Court held

that as per the condition provided for in the hire-purchase

tenancy agreement, the cost of the tenements can be

increased either on account of cost of construction or

enhancement of compensation for acquisition of land.

However, interpreting the clause further it was held that the

demand raised from the allottees was not justified for the

reason that the clause itself provided that such a demand could

be raised within seven years of allotment. Relevant paragraphs

therefrom are extracted below:

“10. A conjoint reading of the allotment letter and Clause 2(w) of the hire-purchase tenancy agreement, which every allottee is

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required to execute makes it clear that the price of the tenement specified in the allotment letter is tentative and the Board can revise the price after receiving final bills representing the cost of construction or if as a result of an order of the court or an award made by the arbitrator it is required to pay higher cost for the land used for construction of the tenements. In either case, the allottee is bound to pay the additional amount which would represent the final price of the tenement. If the cost of land is enhanced for any other similar reason then too the Board can revise the price and ask the allottees to pay additional price. In a given case, the Board may revise the tentative price more than once and the allottees are bound to share the burden of additional cost.

11-12. xxxxxxxxxx

13. Unfortunately, the learned Single Judge and the Division Bench of the High Court did not give due weightage to the prohibition contained in Clause 2(w) of the hire-purchase tenancy agreement and negatived the appellants' challenge to the demand of additional price by assuming that the Board is vested with the power to revise the price at any time. The use of the

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expression “or enhancement in cost of land on any account” after the expression “the receipt of the final bill for the construction of tenements or as the result of land award or arbitration proceeding” shows that while framing the Regulations, the Board had kept in view all the eventualities which could lead to an increase in the cost of land made available for construction of the tenements and yet thought it proper to put an embargo against the revision of price after 7 years.

Therefore, the learned Single Judge and the Division Bench of the High Court were not right in deciding the writ petitions and the writ appeals on the premise that once the cost of land gets increased on account of payment of higher compensation to the landowners the Board is entitled to demand additional price from the allottees.”

(emphasis supplied)

14. The issue was also considered by this Court in

Preeta Singh (Km) and others v. Haryana Urban

Development Authority and Others4. The challenge in the

aforesaid case was also regarding the demand of additional

4 (1996) 8 SCC 756

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price on account of enhanced compensation for the land.

Referring to the Section 2(aa) of the Punjab Urban Estate (Sale

of Sites) Rules, 1965 which defines “additional price”, as the

allotment was in terms of the aforesaid rules, demand of

additional price on account of enhanced compensation for the

acquisition of land which was utilized for carving of the plots

was upheld by this Court.

15. In Tamil Nadu Housing Board’s case (supra),

Clause 18 of the Agreement therein clearly provided that after

the finalization of the total cost of construction of flats in case

the value of the land is increased in terms of the enhancement

of compensation by the Court, the allottee shall be liable to pay

the difference. The relevant clause as referred to in the

aforesaid judgment is extracted below:

“19. Clause 18 of the agreement entered into between the parties and signed by all allottees is extremely important and reads thus:

“18. It is expressly agreed between both the parties that after the finalisation of the total cost of construction of flats and the value of the land in accordance with the award

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of compensation declared by the Tribunals and courts, the purchaser shall pay to the vendor on demand before the registration of the sale deed the difference between the amount already paid by the purchaser as per Clause 2 above and the price amount finally fixed by the Chairman, the vendor.”

16. There is no such clause in the allotment letter or the

lease-cum-sale agreement signed between the parties.

17. Coming to the judgment cited by learned counsel for

the Appellant. In Shimla Development Authority’s case

(supra), allotment of flat was made under the ‘Self Finance

Scheme’. The price informed was tentative. The first demand

was raised on account of increase in the cost of construction

and the second demand was raised on account of increase of

compensation for the acquired land utilized for construction of

flats. This Court held that the land of a private owner was

acquired for construction of flats under the Self Finance

Scheme, hence, the allottees are bound to pay the increased

cost on account of acquisition of land. In addition, the allottees

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are also bound to bear the burden of escalation in the cost of

construction.

18. The relevant clause of the allotment letter for the

hire- purchase tenancy agreement entered into between

allottee and Shimla Development Authority as such has not

been extracted in the aforesaid order passed by this Court.

However, we have perused the paper book in that case. The

allotment letter dated 14.07.1995 which is in favour of the

Respondent therein contains a specific clause regarding

payment of enhanced compensation in terms of decision of this

Court. The relevant clause is extracted below:

“The amount of enhanced compensation shall be payable as per decision of court.

30,780/-”

19. It was in terms of the aforesaid clause in the

agreement specifically providing for payment of enhanced

compensation by the allottee that demand thereof was upheld

by this Court.

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20. A perusal of clause-5 in the allotment letter shows

that option has been given to vary the price of the plot in case

there is change in the size of plot. The entire clause has to be

read in totality and no part in isolation. This clause does not

talk about demand of additional price on account of any other

factor specially the one raised in the present appeals, namely,

on account of enhancement of compensation on account of

acquisition of land for carving of the plots.

21. Even the clauses as contained in the lease-cum-sale

agreement also does not come to the rescue of the Appellant

for the reason that it talks about the negotiated price between

the vendor and the vendee. The vendor in the case at hand is

the Appellant and the vendee is the Respondent. Sale

consideration as such has not been mentioned in the lease-

cum-sale agreement, however, the price as negotiated between

the parties is clearly mentioned in the letter of allotment and

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the same has to be read as part of the lease-cum-sale

agreement.

22. For the reasons mentioned above, we do not find any

merit in the appeals. The same are dismissed. However, we

make it clear that in case any other allottee who has deposited

the amount, initiates any litigation now, the same shall be

considered keeping in view the delay and laches and principles

of acquiescence.

______________, J.

(Abhay S. Oka)

______________, J.

(Rajesh Bindal) New Delhi April 28, 2023

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