Smt. Maya Sharma vs State Of U.P. And Others
2019 Latest Caselaw 3572 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

RESERVED
 
AFR
 
Court No. - 21 
 

 
Case :- WRIT - C No. - 5579 of 2009 
 

 
Petitioner :- Smt. Maya Sharma 
 
Respondent :- State Of U.P. And Others 
 
Counsel for Petitioner :- Ramesh Chandra Agrahari,Sudhir Kumar Srivastava 
 
Counsel for Respondent :- C.S.C.,M.C.Tripathi,S.K. Mishra,Shivam Yadav 
 

 
Hon'ble Pradeep Kumar Singh Baghel,J. 

Hon'ble Pankaj Bhatia,J.

(Delivered by Hon'ble Pankaj Bhatia,J.)

Heard learned counsel for the parties.

The petitioner has filed the present petition seeking quashing of the impugned notice dated 19.9.2008, (Annexure-5 to the writ petition), whereby the respondent-authorities had issued advertisement calling for applications for allotment of Flat No. 514 (LIG), E-Block, Shyam Nagar (Sujat Ganj), Kanpur Nagar, which was allotted to the petitioner.

The facts in brief are as under:

The respondent-Kanpur Development Authority (hereinafter referred to 'Authority') floated Scheme known as 'Sujat Ganj Scheme' for allotment of LIG houses. The petitioner desirous of getting a flat and belonging to the lower income group segments applied for allotment of flat under the aforesaid Scheme and deposited Rs. 15,000/- as registration fees on 08.09.1998. In pursuance of the said application, filed by the petitioner, the Authority allotted the petitioner one LIG Flat No. 514 (LIG), E-Block, Shyam Nagar (Sujat Ganj), Kanpur Nagar vide allotment order dated 01.12.1998. In terms of the said allotment order, the petitioner was informed that the total cost of flat would be Rs. 1,27,526/-. The petitioner was also informed that he has deposited Rs. 15,000/- and he was required to further deposit a sum of Rs. 16,882/- on or before 31.12.1998 which would be 1/4 of the total cost of the flat. It was also indicated that the flat, in terms of the allotment order shall be given on free hold basis and the petitioner was also called upon to pay Rs. 1104/- as lease rent. The petitioner was further called upon to pay Rs. 320/- towards stamp papers on or before 31.12.1998. As regards the balance 3/4 of the amount payable, it was stated that the same is payable in 60 quarterly installments alongwith interest at the rate of 18%, each installment quantified at Rs. 4,634.35. It was also indicated that on failure to deposit any installment 6% additional penal interest would be payable. It was also indicated that failure to pay the installment within six months when the installment fell due would lead to automatic cancellation of the allotment and the amount deposited with the Authority shall be refunded after deducting 5% of the deposits. The installments were payable w.e.f. 01.01.1999.

It is stated that in terms of the said allotment order the petitioner deposited Rs. 18,306 on 31.12.1998. The petitioner also deposited Rs. 4,635/- on 15.3.1999 and 31.8.1999. Thus, the petitioner had deposited an amount of Rs. 42,576/- till 31.8.1999 out of the total cost of flat which was Rs. 1,27,526/-. The petitioner is in actual and physical possession of the flat in question. It is further stated that on account of ill health and poverty the petitioner could not deposit the balance installments as and when they fell due and as such the registered document could not be executed in her favour. It is stated that on 19.9.2008 the respondent-Authority issued an advertisement in the newspaper calling for applications for allotment of the Flat No. 514 (LIG), E-Block, Shyam Nagar (Sujat Ganj), Kanpur Nagar (the flat which were already allotted to the petitioner). The petitioner claimed that she moved an application before the Vice-Chairman, Kanpur Development Authority requesting for execution of the sale deed as she had arranged the required money, however, nothing was done, as such, the petitioner has filed the present petition for the following reliefs:

"(i) issue a writ, order or direction in the nature of certiorari quashing the impugned notice dated 19.9.2008 issued by Kanpur Development Authority, Kanpur Nagar contained in (Annexure-5 to the writ petition)

(ii) issue a writ, order or direction in the nature of mandamus restrain the respondents from dispossessing the petitioner from Flat No. 514 (LIG), E-Block, Shyam Nagar (Sujat Ganj Scheme), Kanpur Nagar, District Kanpur Nagar;

(iii) issue any other and further suitable writ order or direction as this Hon'ble Court may deem fit and proper under the facts and circumstances of the present case."

This Court while entertaining the writ petition had passed the following order on 17.2.2009 which is as under:

"We have heard learned counsel for the petitioner, learned standing counsel appearing for respondent no. 1 and Shri S.K. Mishra, learned counsel appearing for respondents no. 2 and 3. They are allowed one month time to file counter affidavit. Three weeks thereafter is allowed to the petitioner for filing rejoinder affidavit.

List thereafter.

Until further orders of this court, the petitioner shall not be dispossessed from the plot no. 514, E Block, Shyam Nagar (Sugat Ganj Scheme), Kanpur Nagar."

The counsel for the petitioner has argued that the action of the respondent-Authority for proceeding to allot the flat which was allotted to the petitioner is wholly arbitrary and illegal more so when the petitioner is ready and willing to pay balance installments along with interest thereupon, the petitioner states that the petitioner belongs to marginalised section of the society and on account of her poverty she could not deposit the installments within time. In fact, it has been argued that the rate of interest of 18% and further penal interest at the rate of 6% is wholly arbitrary and illegal. It is argued that the Authority which is a State within the meaning of Article 12 of the Constitution of India is bound to act in a fair and reasonable manner even in its contractual dealings and one sided levy of such high interest that too in the Scheme related to allotment of flats to the lower income group is arbitrary and illegal. It is argued that the petitioner being very poor persons do not have any Authority or say in drafting of the allotment letters/contracts and such one sided contract is against the spirit of welfare State which is enshrined as a constitutional philosophy.

The petitioner has placed reliance upon the judgement of Hon'ble Supreme Court in the case of Allotees Service Manager, Tamil Nadu Housing Board and others vs. R. Chinnathambi, 2012 (12) SCC 213 and a recent judgement of Hon'ble Supreme Court in the case of Pioneer Urban Land & Infrastructure Ltd. vs. Govindan Raghavan, decided on 02.04.2019 in Civil Appeal No. 12238 of 2018.

Learned counsel for the respondent, on the other hand, has tried to justify the action of the Authority arguing that in terms of the allotment order the petitioner was required to deposit the installments within the time indicated in the allotment letter and having failed to do so has no right to come to this Court and seek the reliefs as prayed by the petitioner. The Authority has also highlighted the terms and conditions of the allotment letter to argue that having failed to comply with the said conditions, the right of the petitioner had come to an end and the present petition was not maintainable. In para 9 of the counter affidavit the respondent-Authority has requested this Court for issuance of a mandamus to the petitioner to deposit the complete amount towards the house in question as per the terms and conditions of the allotment letter. Based upon the said averments the learned counsel for the Development Authority argued that the writ petition is devoid of merit and is liable to be dismissed. Para 9 of the counter affidavit filed by the respondent-Authority is quoted here-in-below:

"That the contents of paragraph Nos. 14, 15, 16, 17 and 18 of the writ petition are not admitted hence vehemently denied. It is further submitted that a mandamus may be issued to the petitioner to deposit the complete amount towards house in question as per terms and condition of the initial allotment letter. The grounds taken by the petitioner are not cogent and liable to be rejected."

The petitioner has brought on record by means of an affidavit of compliance filed on 20.3.2017 that the petitioner in terms of the order dated 22.2.2017 requested the respondent-Authority to inform the balance amount due and payable by the petitioner. The petitioner has filed an affidavit stating that the petitioner has deposited the entire amount along with over due interest at the rate of 18% per annum and total amount of Rs. 3,72,000/- has been deposited by the petitioner, a receipt of the said deposit is also enclosed. On 10.3.2017, the petitioner informed the respondent no. 3 that she has deposited the balance amount with regard to aforesaid Flat No. in the following manner:

(i) Real Value of the Flat No. 514, LIG, E Block, Shyam Nagar (Sujat Ganj Scheme) District Kanpur Nagar

Rs. 1,27,526/-

(ii) Deposits made by the deponent on 08.09.1998

31.12.1998

15.3.1999

31.8.1999

Rs. 15,000/-

Rs. 16,882/-

Rs. 4,635/-

Rs. 4,635/-

Total deposit

Rs. 41,152/-

Due to incorrect calculation the deposited money is shown as Rs. 41,112/-

(iii) Balance amount of Flat No. 514 LIG, E-Block, Shyam Nagar, Sujat Ganj Scheme, District Kanpur Nagar

Rs. 86,374/-

(iv) Due to incorrect calculation the deponent calculated 18% per annum interest on the balance amount of Rs. 86,414/- whereas the correct balance amount is Rs. 86,374/- since the order or allotment i.e. 1.12.1998 upto March 30, 2017

Rs. 2,85,167/-

Total deposit

Rs. 3,71,581/-

A copy of Banker's Cheque No. 092621 of the bank of Barooda, Branch Shyam Nagar, District Kanpur Nagar dated 9.3.2017 to the tune of Rs. 3,72,000/- in favour of the Kanpur Development Authority in the Housing Development Finance Corporation Bank on 10.3.2017 as well as application dated 10.3.2017 are on record annexed as Annexure No. 3 to the affidavit filed in this Court.

The respondent-Authority, on the other hand, has admitted that the petitioner has deposited Rs. 4,08,517/- till date which included the deposit of 3,72,000/- which was deposited in terms of the calculations as made by the Development Authority, however, the penal interest has not been deposited which according to the Development Authority amounts to Rs. 5,31,770/- as on 15.6.2017.

The respondent-Authority has argued that the current market value of the flat is Rs. 8,40,515/- and thus the flat can be restored to the petitioner on payment of restoration charges amounting to Rs. 9,40,287/-. The said amounts as indicated by the Development Authority in sum and substance state that Rs. 5,31,770/- is still due and payable towards penal interest and towards restoration charges and if the said amount is paid the flat can be restored to the petitioner.

We have considered the submissions made by the learned counsel for the petitioner as well as counsel for the Development Authority at the bar and have perused the judgements of the Hon'ble Supreme Court as cited by the counsel for the petitioner.

From the pleadings exchanged and the arguments raised at the bar it is clear that the petitioner has deposited the entire amount along with 18% interest in terms of the allotment order, however, the question to be determined by this Court is whether the respondent-Authority is justified in demanding the penal interest at the rate of 6% over and above the 18% charged by the respondent-Authority and whether the Development Authority is justified in demanding the restoration charges as has been pleaded by the counsel for the respondent-Authority. The Hon'ble Supreme Court in the case of Pioneer Urban Land & Infrastructure Ltd. (supra) referred to the reports of the Law Commission and while interpreting an Apartment buyer agreement observed as under:

6.3. The National Commission in the Impugned Order dated 23.10.2018 held that the Clauses relied upon by the Builder were wholly one-sided, unfair and unreasonable, and could not be relied upon.

The Law Commission of India in its 199th Report, addressed the issue of 'Unfair (Procedural & Substantive) Terms in Contract'. The Law Commission inter-alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that :

"A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties."

6.4. A perusal of the Apartment Buyer's Agreement dated 08.05.2012 reveals stark incongruities between the remedies available to both the parties.

For instance, Clause 6.4 (ii) of the Agreement entitles the Appellant - Builder to charge Interest @18% p.a. on account of any delay in payment of installments from the Respondent - Flat Purchaser.

Clause 6.4 (iii) of the Agreement entitles the Appellant - Builder to cancel the allotment and terminate the Agreement, if any installment remains in arrears for more than 30 days.

On the other hand, as per Clause 11.5 of the Agreement, if the Appellant - Builder fails to deliver possession of the apartment within the stipulated period, the Respondent - Flat Purchaser has to wait for a period of 12 months after the end of the grace period, before serving a Termination Notice of 90 days on the Appellant - Builder, and even thereafter, the Appellant - Builder gets 90 days to refund only the actual installment paid by the Respondent - Flat Purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the Appellant - Builder is liable to pay Interest @9% p.a. only.

6.5. Another instance is Clause 23.4 of the Agreement which entitles the Appellant - Builder to serve a Termination Notice upon the Respondent - Flat Purchaser for breach of any contractual obligation. If the Respondent - Flat Purchaser fails to rectify the default within 30 days of the Termination Notice, then the Agreement automatically stands cancelled, and the Appellant - Builder has the right to forfeit the entire amount of Earnest Money towards liquidated damages.

On the other hand, as Clause 11.5 (v) of the Agreement, if the Respondent - Flat Purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the Agreement thereafter, and shall be bound by the provisions of the Agreement.

6.6. Section 2 (r) of the Consumer Protection Act, 1986 defines 'unfair trade practices' in the following words :

"'unfair trade practice' means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice ...", and includes any of the practices enumerated therein. The provision is illustrative, and not exhaustive.

In Central Inland Water Transport Corporation Limited and Ors. v. Brojo Nath Ganguly and Ors.,4 this Court held that :

"89. ... Our judges are bound by their oath to 'uphold the Constitution and the laws'. The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and equal protection of the laws. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations.

For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them.

It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. ...

... These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances."

6.7. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder.

The contractual terms of the Agreement dated 08.05.2012 are ex-facie one-sided, unfair, and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.

The judgement of the Hon'ble Supreme Court clearly applies to the facts of the present case and with more force, in view of the fact that in the present case one of the parties to the allotment letter is a Development Authority and it being a limb of the State is bound to act in a reasonable and fair manner more so when the other party to the agreement (the allottee) is a person of marginalized section of the society and belonging to lower income group who is in no position to dictate his terms. The allotment letter in question providing for 18% interest on the unpaid amount itself is onerous that too being in respect to a flat belonging to and made for lower income group. The provision for 6% penal interest on the unpaid amount over and above 18% interest being charged is totally onerous and arbitrary besides being unfair to the allottee who belongs to the lower income group. We fail to understand as to how a limb of State, the Development Authority can provide for such onerous condition in the allotment letter that too in respect of the flats proposed to be allotted to the lower income group. The constitutional philosophy of a welfare State, we are sorry to hold, has been given a complete go by by the Development Authority in issuing such an allotment letter. The Authority has even failed to justify the restoration charges as pleaded in the affidavit dated July 2017 without there being any statutory frame work or any such charge being indicated in the allotment letter of the respondent-Authority itself. We have no hesitation in holding that stipulation of such high interest and penal charges in the allotment letter is ex facie unfair, arbitrary unreasonable and one sided.

There is one more aspect to be considered with regard to one sided nature of the allotment letter, the Development Authority has provided for payment of 18% interest and 6% penal interest in the event of any default of payment by the allottee whereas while refunding the Development Authority has provided for refund of the amount after deducting 5% and without any interest whatsoever. The above acts of the Development Authority, we are constrained to hold smack of arbitrariness and unfairness and cannot be allowed to stand. The Hon'ble Supreme Court in the case of Tamil Nadu Housing Board (supra) while considering some what similar question directed the payment of the outstanding amount with interest at the rate of 12%, however, the claim of penal interest was not allowed although the said judgement was delivered in peculiar facts of the case, none the less the Supreme Court balanced the equities.

In the present case, we are not going into the questions whether charging of 18% interest by the Development Authority can be justified as the petitioner claims to have already deposited the amounts along with 18%. The said question is left open.

In view of the findings recorded above, we direct the respondent-Authority to immediately execute the sale deeds of the property allotted to the petitioner without insisting on any penal interest or restoration charges as claimed by the respondent authorities within a period of four months from the date of production of certified copy of this order. Thus, we make it clear that the petitioner was bound to pay the outstanding installment alongwith interest at the rate of 18% per annum when the installment fell due up to date of actual payment which the petitioner claims to have paid the amounts along with interest at the rate of 18% per annum.

The respondent authorities shall work out the total amount payable by the petitioner on the over due installments from the date when they fell due up to the date of actual payment at the rate of 18% per annum simple interest and give a detailed account calculating the outstanding balance as indicated above within a period of two months from today. The petitioner is directed to pay the balance amount, if any, indicated by the Development Authority based upon the calculations as indicated in our order, the same shall be paid by the petitioner within a period of one month from the date of communication. If the respondent-Authority finds that any excess amount has been paid by the petitioner on the basis of the amounts to be calculated in terms of our order the same shall be refunded to the petitioner. After the completion of this exercise the respondent-Authority shall proceed to execute the requisite deeds in favour of the petitioner within a period of one month from the date of deposit, if any, however, the petitioner will have to pay the necessary stamp and registration charges as applicable under law.

The writ petition is disposed off in terms of the order passed above.

Order Date :- 26.4.2019

Puspendra