Griha Sathapna Cooperative vs Delhi Development Authority
1994 Latest Caselaw 508 Del

JUDGMENT

D.K. Jain, J.

(1) Since we have heard learned counsel for the parties at length, with their consent, we propose to dispose of both the writ petitions at this stage itself.

(2) By these petitions under Article 226 of the Constitution, the petitioners seek a direction to the respondent Delhi Development Authority (for short the DDA) to refund with interest the amounts which the petitioners had paid to it for allotment of land at Dwarka Phase-I1, New Delhi. In order to appreciate the controversy involved in these petitions, it would be necessary and appropriate to give a little background of the matter, relevant to the case.

(3) The Delhi Development Authority conceived and undertook the project named as 'Dwarka Project', also known as Papankalan, to develop about 5000 hectares of land for allotment to Co-operative Group Housing Societies to accommodate a population of over one million people. A number of Cooperative Croup Housing Societies, including the petitioners, after registration with the register of Cooperative Societies. Delhi, applied and got registered with the Delhi Development Authority for allotment of land in the said project. Under instructions by the Registrar of Cooperative Societies, after fulfillling codal formalities the societies prepared list of members which were approved by the Registrar from time to time. Meanwhile the Government to India on 20 January\ 1990 issued Office Memorandum containing guidelines regarding the procedure for allotment of land. These guidelines, inter alia, provided that the date (it seniority for allotment of land for Cooperative Group Housing Societies will he the date on which the papers of the society were found to be in order and approved by the office of the Registrar, Cooperative Societies, Delhi. The petitioner societies, found within the zone of consideration for allotment of land in the Project, were asked vide DDA's letter dated I October 1990 to deposit Rs.5 lakhs each as Earnest Money. The cost at which the land was proposed to be allotted was Rs.975.00 per Sq. Mtr. The said amount was duly deposited by the petitioner societies.

(4) On the basis of the aforesaid memorandum dated 20 January 1990, the Registrar prepared a seniority list of approximately 400 Cooperative Group Housing Societies and a draw of lots took place on 17 Janaury 1991 for allotting land amongst the first 260 societies in the said Project. It seems that the petitioners' seniority was amongst the first 260 societies and, therefore, vide DDA's letter dated 21 January 1991, 'they were informed that land admeasuring 9500 Sq. mtr each was proposed to be allotted to them @'Rs.975.00 per Sq. mtr. They were asked to make payment of the amounts demanded in the said letters, which were duly paid.

(5) In the meantime, the said memorandum dated 20 January 1990, containing the guidelines for the .preparation of the seniority list of the Cooperative Group Housing Societies was challenged in a number of writ petitions, primarily on the ground that the seniority list should be prepared according to the date of registration of the societies and not according to the date when the list of members was finalised and approved by the Registrar. Vide judgment dated 10 May 1991 in Cwp No. 2885/90 (Kaveri Cooperative Group Housing Society Ltd. & Others Vs. Union of India & Others), the writ petitions were allowed and the said guidelines quashed. Consequently the list prepared by the Registrar, Cooperative Societies pursuant to the said memorandum of 20 January 1990 was quashed and all the allotments made were set aside. The Registrar was directed to prepare a fresh seniority list. While doing so, the Court also observed that it will be open to the Delhi Development Authority to refund the money to all the 260 societies to whom allotments had been made and who had paid the allotment money pursuant to the allotments which had been quashed by it. But it appears that the refunds were neither claimed nor made.

(6) Again in the revised seniority list, the petitioners qualified for allotment of land in the said Project. Accordingly vide letter dated 2 November 1992, they were informed that it had been proposed to allot them land in Dwarka Phase-I at the predetermined rate of Rs.l650.65 paise per Sq. mtr. on payment of: (i) 25% of the total premium Along with Earnest Money @ 10% of the total premium at the time of submitting the application in the prescribed form within 45 days of the issue of the said letters, (ii) 50% of the premium within 60 days of the issue of the Demand-cum-Allotment letter and (ni) the balance premium after adjusting the Harnest Money belore taking over possession of the land or within two months of receipt of communication from the Authority offering possession, whichever is earlier. The allotment letters, which were stated to be in supersession of the earlier aforesaid letter dated 21 January 1991, also prescribed the following condition in clause 4 : "II. In case you fail to deposit the part premium and earnest money as demanded above, and/or the balance premium as and when demanded as para 2 above, the earnest money deposited by you shall stand forfeited." It was also mentioned in the letter that if the application form, complete in all respects and accompanied by the bank challan for the payment in terms of the said letter was not received within 45 days from the date of issue of the said letter, it shall be presumed that the society was not interested in obtaining the allotment of land from the Delhi Development Authority and the Delhi Development Authority shall be competent to allot the land to any other person including the Cooperative Society.

(7) As the petitioners were aggrieved of the enhancement in the land premium from Rs.975.00 per Sq.mtr, at which rate they were initially offered the same land in the year 1990 but the allotments were quashed by this Court (as mentioned above), to Rs.1650.65 paise per Sq. mtr in 1992, the petitioners, on 17 December 1992, Along with other similarly situated societies, challenged the aforesaid allotment proposals by filing writ petitions in this Court. The stand of the petitioners, inter alia, was that in the earlier letters of allotment the rate was fixed at Rs.975.00 per sq. mtr and the Notification dated 21 October 1992, issued by the Government of India, increasing the land rate to Rs.l650.65p. per sq. mtr. and being enforced by the Dda, was not retrospective and, in any case, could not affect their rights which stood crystallised as per the Nazul Land Rules under the earlier letters of allotment. The very basis for the fixation of the land rate at Rs.1650.65 per sq. mtr was also sought to be challenged. Fearing withdrawal of the offer of allotment on account of non-payment of the amounts demanded in the letters of allotment, the petitioners moved miscellaneous applications, seeking stay of operation of the Notification dated 21 October 1992 and for restraining the Dda from cancelling the allotment of land made in favor of the petitioners.

(8) While issuing show cause notice to the Delhi Development Authority the Court passed the following interim orders: "FOLLOWING order in Cwp 4276/92 we direct that without prejudice to the rights and contentions of the parties, in our opinion, it would be equitable and just at this stage to direct the petitioners to pay the amount of their first Installment calculated at the rate of Rs.975.00 per sq. metre within ten days from today, as it is stated that due to disturbances in the city they are unable to encash their cheques. It is ordered accordingly. The balance amount, which is to be paid, by the petitioners to the respondent shall be decided on the next date of hearing and which shall be subject to the further orders of this Court."

(9) The petitioners thereupon filed the requisite applications for allotment of land in the prescribed form on 24 December 1992 Along with challans for payment of the first Installment of the land premium calculated at the rate of Rs.975.00 per sq. mtr.

(10) All the writ petitions were ultimately dismissed vide judgment dated 31 March 1993, since reported as Federation of Cooperative Group Housing Societies & Others Vs. Union of India & Others, 1993 (2) Delhi Lawyer 117.

(11) Having failed to get any relief in the land premium, the petitioners wrote to the Delhi Development Authority in July 1993 seeking refund of the amounts deposited by them Along with interest @ 18% per month as the land rate at Rs. 1650.65 per sq. mtr was exhorbitant and beyond the reach of their members. The offer for allotment of land was accordingly withdrawn/cancelled by the Delhi Development Authority and the petitioners were informed that a sum equivalent to 10% as earnest money (Rs.15,68,117.50 in Cwp No.4607/93 and Rs.l4,85,585 in Cwp No.4608/93) in terms of Clause 4(11), extracted above, of the aforesaid offer of allotment, had been forfeited. It is this communication to the petitioners, which has been as sailed in these two writ petitions and the petitioners claim refund of the entire amount deposited by them Along with interest @ 18% per annum from the dates of deposit till the date of actual payment.

(12) In response to the show cause notice, answer has been filed on behalf of the Dda and grant of any relief to the petitioners is opposed and the action of the Dda in forfeiting 10% as earnest money is sought to be justified on the ground that the petitioners having accepted the fresh allotment by making the requisite applications Along with further payments in addition to the payments already made, they bound themselves by the terms and conditions of the offer, including the forfeiture clause 4(11) in the letter of allotment.

(13) We have heard Mr. Bishwajit Bhattacharya for the petitioners and Mr. Jayant Bhushan for the DDA. Mr. Bhattacharya has submitted that: (1) at no stage the petitioners had accepted the offer of allotment of land made vide DDA's letter dated 2 November 1992 at the enhanced rate of Rs.1650.65 per sq. mtr; the additional payment after the issue of the said allotment letters was made only in terms of the above extracted interim order passed by this Court and, therefore, there was no concluded contract between the petitioners and the Delhi Development Authority binding them under clause 4(11); and (2) the Delhi Development Authority is liable to pay interest to the petitioners under Section 80 of the Negotiable Instruments Act, 1881. On the other hand, Mr. Bhushan, while reiterating the stand of the Delhi Development Authority in its answer to the show cause notice has urged that Rule 24(2) of the Nazul Land Rules, in terms whereof clause 4(11) has been incorporated in the letters of allotment, is mandatory and the Delhi Development Authority is bound to forfeit 10% as earnest money.

(14) The points which fall for determination thus, are : (i) whether the Delhi Development Authority is entitled to forfeit the earnest money, deposited by the petitioners, under clause 4(11) of the letters of allotment and (ii) whether the petitioners are entitled to interest on the amounts to be refunded to them.

(15) From the aforesaid resume of facts, it appears to us that no concluded contract, inviting operation of clause 4(11) cited above, came into being. The DDA's offer for allotment of land required: (i) applying for allotment and (ii) agreeing to pay at the rate of Rs.1650.65p per sq. mtr. in stated Installments and making deposit on that basis. Though the petitioners did make the requisite applications for allotment of land to them but their filing the writ petitions, assailing the said rate and not complying with the payment part at the stipulated rate fell short of acceptance of the DDA's offer for allotment and no concluded contract between the parties came into existence. Clause 4(11), stipulating forfeiture of the earnest money, thus, could not operate or be set up against the petitioners. They having not complied with the terms of offer contained in DDA's letters dated 2 November 1992 in their entirety, are not bound by it and in our view the forfeiture clause cannot be invoked against them.

(16) As noted above, forfeiture of earnest money is sought to be justified on the plea that new Rule 24(2) of the Nazul Land Rules, substituted vide Notification dated Ii November 1991, being mandatory in nature, the Delhi Development Authority has no option but to forfeit the earnest money deposited by the petitioners for failure on their part in not depositing the premium of the land as per the stipulated Installments.

(17) Rule 24 of the Nazul Land Rules prescribes the manner of realisation of premium or price of plots and is as under: "24.Manner of realisation of premium or price of plots : (1) Save as otherwise provided in rules 29,36 and 40, premium or price of plots of Nazul land chargeable in accordance with the provisions of these rules shall be realised in Installments in the following manner, namely:- (a) 25 per cent of the total land premium for the plot, Along with such earnest money, not exceeding 10 per cent of the premium, as may be decided by the Authority, shall be deposited at the time of submitting the application for allotment of land, (b) 50 per cent of the premium shall be deposited within 60 days of the issue of demand-cum-allotment letter; and (c) balance premium after adjusting the earnest money shall be deposited before taking over possession of the land or within two months of the receipt of the communication from the Authority offering possession, whichever is earlier. (2) If the premium or price of land as provided in sub-ruled) is not deposited, the earnest money deposited shall be forfeited and it shall be competent for the Authority to allot the land to any other person including a Co-operative Society in accordance with the prescribed procedure."

(18) It is no doubt true that sub-rule (2) does provide that if the premium or price of land in terms of sub-ruled) is not deposited, the earnest money deposited has to be forfeited but the question of realisation of the land premium in the manner prescribed in sub-ruled) would arise only when the offer of allotment of land is accepted by the allottee. At no stage did the petitioners agree to allotment or made payment at the enhanced rate of Rs.l650.65p per sq. metre. There was, therefore, no unqualified acceptance of DDA's offer by the petitioners. They were not ad idem. We feel that DDA's reliance on Rule 24(2) of Nazul Land Rules on the facts in hand is misplaced.

(19) We are, therefore, of the opinion that the Delhi Development Authority is not entitled to forfeit the earnest money deposited by the petitioners and it was liable to refund the same to them on demand.

(20) As for claim o interest by the petitioners, reliance is placed on Section 80 of the Negotiable Instruments Act, 1881. Section 80 of the said Act provides for payment of interest in a case relating to a negotiable instrument in which no rate of interest is specified. Obviously the present cases do not fall within the ambit of the said Section and, therefore, no relief can be granted to the petitioners on that score.

(21) Consequently the petitioners are entitled to the refund of the entire amounts without any deduction, deposited by them with the Delhi Development Authority for allotment of land. We would accordingly set aside the impugned action of the Delhi Development Authority forfeiting the aforementioned two amounts, being 10% as earnest money deposited by the petitioners and direct the Delhi Development Authority to refund the entire amount (Rs. 32,41,875.00 by the petitioner in Cwp No-4607/93 and Rs.30,71,250.00 by the petitioner in Cwp No. 4608/93) to the petitioners within four weeks from today failing which the petitioners will be entitled to interest @ 18% per annum from the date of this judgment till payment. To the extent aforesaid, the Rule is made absolute.

(22) There will be, however, no order as to costs.