Mr. D.M. Talwar vs Delhi Development Authority
2004 Latest Caselaw 47 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. This Judgment shall dispose of 22 writ petitions. All these writ petitions question the escalation in prices of commercial flats offered by the Delhi Development Authority (DDA) under the First and Second Self-Financing Schemes (SFS) of 1984 and 1985 respectively. The common grievance of the petitioners is that the price being charged for the flats allotted to them is much higher than the price indicated at the time of application and that there was no justification on the part of the DDA for charging such an escalated price.

THE QUESTIONS

2. The questions that arise for determination are:-

1. Whether the costing/pricing of flats and of escalation of such prices of flats is in the realm of contract and, if so, whether a challenge to the same by way of a writ petition under article 226 of the Constitution would be maintanable?

2. If such a writ petition was maintanable, whether the escalation in prices of flats under said two schemes were at all justified?

THE FACTS

3.The facts are as follows. There are two sets of petitions: one, dealing with the First SFS Scheme of 1984 and the other dealing with the Second SFS Scheme of 1985. Although the questions are common, the fact situation is slightly different in the two sets and, therefore, need to be dealt with separately.

The 1984 SFS Scheme

3.1 By consensus of the parties, CW 3594/1999 was taken as the representative writ petition for the 1984 Scheme, and I shall refer to the facts of this petition. The DDA brought out its first Self-Financing Scheme for commercial flats in 1984. The opening page of the brochure which contains the scheme reads as under:-

''For the first time book commercial space in area of your choice Now DDA offers exclusive commercial flats in the latest upcoming commercial complexes under its Self-Financing Scheme (Commercial Flats). The flats offered under the first scheme are located in the prestigious district centres - Nehru Place, Janakpuri, Bhikaji Cama Place and Laxmi Nagar. Aimed to benefit the actual user, this scheme brings commercial accommodation within easy reach of entrepreneurs and professionals.

Under this scheme, flats will be offered for advance sale as soon as the construction of a building in a commercial complex is taken up.''

3.2 The mode of allocation that was specified in the scheme was that the allotment would be made by draw of lots and the floor of the building on which the allotment was to be made would also be determined by draw of lots. The stipulated mode of payment was as under:-

''Mode of payment:

The following schedule of payment has been prescribed:-

a) Individuals/firms companies etc. applying under the Scheme would deposit Rs. 20,000/- in any of the branches of the respective banks mentioned earlier, as earnest money Along with the application for registration.

b) 25% (including the earnest money deposited with the application) as initial deposit on allocation of the flat.

c) 15% as second Installment after six months of the date of allocation.

d) 15% as third Installment after six months of the date of second Installment.

e) 15% as fourth Installment after six months of the date of third Installment.

f) 15% as fifth Installment after six months of the date of fourth Installment.

g) 15% as sixth Installment after six months of the date of fifth Installment.

Delayed payments will attract interest @ 18% p.a. in addition to the allocation being liable to be cancelled on account of default in payment.

In case the construction is completed earlier, the DDA reserves the right to recover balance payments earlier.

Possession shall be given within six months of the last Installment, failing which, interest @ 12% p.a. will be paid by the Authority on the amount deposited by the Allottee for the period beyond six months till the date of handing over the possession.

The demand-cum-allocation letter issued will indicate the above schedule of payments. It will be obligatory for the allottee to make the payment by due dates indicated therein. In the event of default, the allocation of floor space under the Scheme will be liable to be cancelled. The payment of Installments can be made before the due dates.''

3.3 Under the head - ''Likely changes in designs and costs'' - the 1984 scheme provided as follows:-

''The design of flats, their areas etc. are liable to change on finalisation of drawings or during construction for which no objections will be entertained. Consequently increase or decrease in the cost on the basis of covered area (including proportionate area of common portions) will be adjusted after payment of the last Installment.''

By a letter dated 8.1.1985, the DDA informed the petitioner that she had been declared successful for allocation of a flat under the First Self-Financing Scheme (Commercial Flats), 1984 in the draw held on 6.9.1984 and that she was entitled to a flat in Janakpuri Commercial Complex having an area of 40 Sq. Meters of category Type-I. The payment terms clearly indicated that the total estimated cost of the flat would be Rs.2,36,808/- and the first five installment amounts were also indicated. The said latter dated 8.1.1985, inter alia, carried a Note which reads as under:

''Note: The 6th and final Installment will be of 15% cost of the flat. This may however be added that these (sic) may variation in the cost of flat occasioned by the variation in the area of the flat. The final calculation will be made on the basis of actual construction. The due adjustment would be made in this Installment.''

The petitioner had paid all the five installments by 1986 as per the schedule indicated in the said letter. Only the 6th and final installment remained. By a letter dated 12.2.1998 the DDA informed the petitioner that on the basis of draw of lots held on 14.1.1998 she had been allotted a specific flat bearing No. 5/F/204 on the Second Floor having an area of 40.42 Sq. Meter in Janakpuri District Centre. It was also indicated that the demand-cum-allotment letter would be issued in due course. Thereafter, the demand-cum-allotment letter was issued on 3.5.1999 whereby the total cost of the flat was indicated as Rs. 18,34,785/- as against the earlier estimated cost of Rs. 2,36,808/-. The net amount shown to be payable by the petitioner towards cost of the flat was Rs. 13,06,489/- after adjusting an amount of Rs 5,28,296/- towards the amount already deposited with interest accrued thereon. The petitioner is aggrieved by the fact that though she was allotted a commercial flat under the scheme at a total estimated cost of Rs. 2,36,808/- and she had deposited the five installments with the DDA by 1.9.1986 as per the schedule and there was no lapse on her part, a sum of Rs 18,34,785/- as cost of the flat was sought to be charged from her. She had applied in 1984-85 and DDA allotted the flat to her only in 1999: 14-15 years later. The delay in completing the construction of the flat was on the part of the DDA for which, according to the petitioner, she cannot be penalised. The petitioner is further aggrieved by the fact that as per the said ''Note'' contained in the letter dated 8.1.1985, there could be variation in the cost of the flat only on account of variation in the area actually allotted after construction was completed. There was no other escalation clause contained in the 1984 scheme. The variation in area allocated and actual area allotted was only 0.42 sq.mtrs, hence, according to the petitioner, additional charges towards the increase in area of 0.42 sq.mtrs alone could be recovered from the petitioner. No other escalation could be foisted on the petitioner. Apart from this, it is also the grievance of the petitioner that, in any event, the cost of construction was not such as would entitle the DDA to charge Rs. 18,34,785/- for a flat having in area of 40.42 Sq. Meters. As such, the Petitioner sent a letter dated 17.5.1999 through her advocate to the DDA asking the DDA to withdraw the demand letter and deliver possession of the allotted flat to the petitioner on the basis of the cost indicated in the scheme and the amount already paid by the petitioner. The DDA revised the demand and, by a letter dated 10.2.2000, the amount demanded as cost of the said flat was reduced to Rs. 10,89,440/-. Thus, the original estimation of Rs. 2,36,808/- as been hiked up to almost 460% (Rs. 10,89,440/-).

3.4 Generalising, the situation that emerges with regard to the 1984 scheme is this -

(1) In 1984 the scheme was introduced;

(2) The scheme clearly provided that the design of flats, their areas etc. were liable to change on finalisation of drawings or during construction for which no objections would be entertained;

(3) Consequent to change in flat areas there could be increase or decrease in the cost on the basis of covered area (including proportionate area of common portions) which would be adjusted after payment of the last Installment;

(4) Petitioners registered under the said scheme in 1984-85;

(5) They were successful in the draw of lots and flats were allocated to them in 1985;

(6) The allocation letters specified the flat areas and the estimated costs thereof;

(7) These allocation letters carried a note, inter alia, to the effect that there may be variation in the cost of the flat ''occasioned by the variation in the area of the flat'' and that the final calculation would be made on the basis of actual construction and the due adjustment would be made in the 6th and last Installment;

(8) No other escalation clause was provided for in the scheme;

(9) The petitioners made payments of their first five installments in 1985 and waited for the final allotment;

(10) Final allotment letters were issued by the DDA in 1999, 14-15 years later;

(11) There were some variations in the areas of flats allotted but the price hike was far beyond these variations, in fact, the prices of the flats allotted were about 450% of the estimated prices. It is this disproportionate and steep rise in the costs of the flats that the petitioners are aggrieved by.

1985 SFS Scheme

3.5 The DDA came up with the Second SFS Scheme for commercial flats in 1985. As in the first scheme, the object of the second scheme was also to provide commercial flats to individuals, firms, companies etc. in the commercial buildings to be constructed by the DDA in its Commercial Centres through financial participation of the intending purchasers.

3.6 The 1985 Scheme provided that flats which were to be constructed under this Scheme would be released in due course and options would be taken from the registered applicants. As regards cost of the flats, it was also stipulated as under:

''The estimated cost, size and locality of commercial flats, however, would be announced from time to time whenever specific schemes have been prepared taking into consideration the location of each scheme, specification and design of the commercial flats, cost of construction prevailing at the time of start of the scheme, fluctuation in cost factors etc.''

3.7 The mode of payment under the 1985 scheme was as under:-

''Mode of Payment

The following schedule of payment has been prescribed:

''(a) 25% (including the earnest money deposited with the application) as initial deposit on allocation of the flat.

(b) 15% as second Installment after six months of the date of allocation.

(c) 15% as third Installment after six months of the date of second Installment.

(d) 15% as fourth Installment after six months of the date of third Installment.

(e) 15% as fifth Installment after six months of the date of fourth Installment.

(f) 15% + any additional amount which may have to be paid due to variation in actual cost and estimated cost. As sixth Installment after six months of the date of fifth Installment.''

3.8 In this group of petitions (i.e., which relate to the 1985 Scheme), CWP 7011/2000 was taken as the representative petition and I shall refer to the facts of that petition. On 18.12.1991 the DDA issued a letter to the petitioner under the subject - ''registration for allotment of SFS Commercial Flats under 1985 Scheme''. By this letter, the DDA indicated that the petitioner had registered under the said Scheme and that there had been a delay in the progress of the scheme and that the DDA sincerely regretted the inconvenience caused to the petitioner on account of the said delay. However, the DDA brought it to the notice of the petitioner that there were office flats available in the locations mentioned in the said letter for which allocation and allotment in favor of the petitioner could be made subject to the petitioner specifically opting for the same. The allocation/allotment was to be made through draw of lots. The areas specified were: (1) District Centre, Janakpuri and (2) Laxmi Nagar District Centre. It was clearly indicated in the said letter of 18.12.1991 that in case the petitioner was unsuccessful in the allocation and he desired to cancel the registration forthwith, the registration deposit would be refunded along with 7% interest till date.

3.9 By a letter dated 8.1.1992, the petitioner indicated his option in the proforma received. The petitioner also stated that he was not interested in cancelling his registration and sought allotment of a commercial flat and clearly indicated that he would like to keep the registration alive till a flat was allotted in his favor. The petitioner also stated that over six years had elapsed and, as such, he requested that early action be taken. By a letter dated 31.12.1992 which was issued in supersession of the earlier letter dated 18.12.1991 the DDA informed the petitioner, inter alia, as under:

''In this context it is to intimate that no specific building project/scheme under the 1985, 2nd SFS scheme has yet been taken up. However, DDA is in a position to provide some built flats in Janakpuri Distt. Centre and Laxmi Nagar Distt. Centre which are being constructed independently of the scheme under which you are registered. These flats are likely to be available for possession in August, 1993. The sizes of the flats that would be available at the above mentioned locations would be in three categories:

i) Category-I up to 50 sq. mtrs plinth area.

ii) Category-II above 50 and up to 100 sq. mtrs.

iii) Category-III above 100 sq. mtrs.

Since the ready possession of these flats is likely to be possible from August, 1993 onwards, it has been decided that the mode of payment of premium payable will be as follows:

1. 20% premium will be payable within 60 days of the issue of allocation-cum-demand letter after allocations have been made.

2. The balance 50% would be payable in two equal Installments of 25% each at three monthly intervals; the three months period shall be reckoned w.e.f. the expiry of 60 days of the issue of allocation-cum-demand letter.

The estimated price per sq. mtrs is likely to be Rs. 16448/- for S. F. S. Building for plot No. 5 and Rs.18145/- for SFS building on plot No.1 and 2 in Janakpuri Distt. Centre and Rs. 14,839/- in Laxmi Nagar District Centre. These prices are tentative an actual price may vary from the tentative price.''

By this very letter, the petitioner was required to send his option as under:-

''In case you want to be considered for allotment of a built up flat on the above referred terms and conditions, you are required to send your option Along with area-wise and size-wise preference in the enclosed proforma, by hand or by registered post, so as to reach the undersigned latest by within 30 days. In case the number of registrants opted for these built up flats is more than the number of flats available, allotment shall be made by draw of lots. Please note that if any does not reach the undersigned latest by 30 days, you will have to wait till construction of flats is taken up under the scheme in which you are registered. It may also be noted that in case allotment of ready built up flat is made to you, your registration shall stand exhausted.''

3.10 What is relevant to note is that this letter of 31.12.1992 discloses that no construction whatsoever had been carried out under the 1985 Scheme. However, the DDA was in a position to provide some built flats in Janakpuri District Centre and Laxmi Nagar District Centre which were being constructed independently of the scheme of 1985 and that such flats were likely to be available for possession in August, 1993. In addition to the mode of payment, the estimated prices per sq. meter were also specified as under:-

1. SFS building in Janakpuri District Centre:

Plot No. 5 -- Rs. 16,488/-.

Plot No. 1 and 2 -- Rs. 18,145/-

2. SFS building in Laxmi Nagar District Centre: Rs.14,839/-.

3.11 The petitioner indicated that he would like to be considered for allotment. Thereafter, draw of lots took place and the petitioner became entitled to allotment/allocation of a flat in the District Centre, Janakpuri. The DDA sent a letter dated 4.5.1995 to the petitioner informing him that he had been declared successful for allocation of a flat under the SFS (Commercial Flat) at Janakpuri District Centre under Category-I. The petitioner was further informed that the demand-cum-allotment letter would be issued in due course. However, nothing happened for another five years and only on 6.3.2000 the DDA issued the demand notice in respect of the commercial flat allotted to the petitioner. The price demanded for the said flat of size 26.13 Sq. Mete was Rs. 7,39,479/- which worked out to roughly Rs. 28,300 per Sq. Meter as against the earlier estimated price of Rs. 18,145/- per Sq. Meter. The petitioner was also required to pay the entire amount in one lump sum payment against the earlier indicated Schedule which provided for payment in installments. The petitioner, being aggrieved by the escalation in the price as well as the fact that no installment had been provided for, sent a letter to the DDA on 4.4.2000. The contents of the letter clearly indicated the essence of the grievance of the petitioner and, therefore, it would be pertinent to set out the same in detail:-

''Dear Sir,

I invite your kind attention to your Demand Notice No. F 14 (340)91/CE/1118 dated 6.3.2000 wherein I have been asked to pay Rs. 7,21,758.00 within 30 days. I invite your kind personal attention to the facts given below:

(i) I applied for a commercial flat vide my application No. 1260 dated 6.9.1985 along with Rs. 20,000/- which was duly acknowledged vide your receipt No. 1555 dated 6.9.85.

(ii) I was informed vide your letter dated 31.12.1992 that the DDA was in a position to allot a few built up flats in Janak Puri Distt. Centre, on the following terms and conditions:

(a) Payment: 50% within 30 days of demand letter and Balance 50% in two equal installments of 25% each at three monthly intervals.

(b) Tentative Price: Rs. 18,145/- PSM, for SFS Flats in Plot No.1

(c) It was further intimated that these flats shall be available for possession by July, 1993 and that, in case the afore-mentioned terms and conditions were acceptable to me, I should send my option. Accordingly, I had duly sent my option conveyingly acceptance.

(iii) While I have been awaiting to receive the possession by August, 1993, you informed vide your letter No. 201 dated 4.5.1995 that I had been declared successful for allocation of a Flat, for which Demand-cum-Allotment letter shall be issued in due course.

(iv) After about four and a half years, I was informed vide your letter No. 4255 dated 31.12.1999 that I had been allotted Flat No. 1/F/104 in Janak Puri Distt. Centre.

(v) The provisional demand notice issued vide your letter No. 1118 dated 6.3.2000 has come as a rude shock, because:

(a) The rate at which cost has been worked out is Rs. 28,300/- PSM, contrary to the agreed tentative rate of Rs. 18,145/- . Tentative price always allows a reasonable variation of up to + 10-15% and not beyond. Moreover, I am not at fault, for the entire delay from August, 1993 till the date of this allotment.

(b) The payment period also has been reduced from 8 months to one month which is a great hardship to me, being a retired govt. employee unable to make lump-sum payment.

In view of the foregoing submission, I earnestly request you to kindly reconsider the rates and payment terms and inform me of your decision. On my part, I am still prepared to make payment at the rate and payment terms, outlined by you in your letter dated 31.12.1992 and accepted by me. Kindly convey your decision at once. In case, however, my request is not acceded to, kindly refund Rs. 39,950/- to me within 30 days.

 

Thanking you, 
          Yours faithrully, 
DATED 4.4.2000         Sd/- D.M. TALWAR.''  
 

On the basis of the representation made by the petitioner, the DDA issued a revised demand letter dated 26.6.2000 whereby the DDA accepted the petitioner's plea with regard to installments but did not accept the petitioner's contention with regard to price escalation. Insofar as installments were concerned, the petitioner was required to make payment of the said sum of Rs.7,39,479 in three installments (50%, 25% and 25%) as indicated in the earlier letter of offer dated 31.12.1992. The petitioner on 2.8.2000 made the payment of 50% of the demand raised. According to the petitioner, the cost of a flat in respect of plot Nos. 1 and 2, Janakpuri District Centre would be around Rs. 18,250/- per sq.m. An elaborate costing sheet to this effect was handed over in the course of the hearing. It will not be necessary to go into these details. It would suffice to note that while the estimated cost for flats in Plots Nos.1 and 2 at the Janakpuri District Centre was Rs. 18,145/- per sq.m. and the actual cost according to the petitioner's calculations was around Rs. 18,125/- per sq.m. (not very much different from the estimated costs of DDA), the actual cost being demanded by the DDA was about Rs 28,300/- per sq.m. (i.e., roughly 1.5 times the estimated cost).

3.12 Thus, insofar as the 1985 scheme is concerned, generally speaking, the facts are:-

(1) In 1985 the scheme was introduced;

(2) The scheme clearly provided that the estimated cost, size and locality of commercial flats, would be announced from time to time taking into consideration the location, specification and design of the commercial flats, cost of construction prevailing at the time of start of the scheme, fluctuation in cost factors etc.;

(3) The mode of payment envisaged under the scheme clearly provided that the last Installment would include ''any additional amount which may have to be paid due to variation in actual cost and estimated cost'';

(4) In 1991 the DDA issued letters to the applicants under the 1985 scheme, acknowledging that there had been a delay in the progress of the scheme and that the DDA sincerely regretted the inconvenience caused to the petitioners on account of the said delay;

(5) However, the DDA brought it to the notice of the petitioners that there were office flats available in the locations mentioned in the said letters for which allocation and allotment in favor of the petitioner could be made subject to the petitioner specifically opting for the same. The allocation/allotment was to be made through draw of lots.;

(5) The petitioners opted for allotment in the locations specified.

(6) In supersession of the 1991 letters, DDA issued letters in December 1992 in similar vein asking for the options of the applicants. In these letters it was indicated that the estimated prices per sq. mtrs was likely to be Rs. 16,448/- for S. F. S. Building for plot No. 5 and Rs.18145/- for SFS building on plot No.1 and 2 in Janakpuri Distt. Centre and Rs. 14,839/- in Laxmi Nagar District Centre.

(7) It was clearly stated in these letters of 1992 that the estimated prices were tentative and that the actual prices could vary from the tentative price.

(8) The petitioners specified their options. They were successful in the draw of lots and flats were allocated to them in 1995;

(9) Five years later, in the year 2000, allotment-cum-demand letters were issued to the petitioners with escalated prices, roughly 1.5 times the estimated prices;

(10) It is this hike in the cost of the flats that the petitioners are aggrieved by.

3.13 It is the petitioners' case that the price which is sought to be charged from the petitioners is far in excess of the actual costing and also in excess of the prices indicated to them and as such, the DDA ought not to be allowed to charge such an exorbitant price and profiteer at their costs and expenses. Furthermore, the petitioners' case is that any escalation in costs which may have occurred, is a direct consequence of the delay on the part of the DDA. Accordingly, such increases cannot be foilted upon the petitioners for no fault of theirs. In this respect, it is pertinent to note that in the reply filed on behalf of the DDA in CW 7011/2000, the reasons given for delay were as under:-

''The reason of delay in the construction of may be seen from the report of S.F. of the respondent as under:-

''After going through the records, it is seen that through the private consultants, M/s. Design Group were appointed in Dec. 1982, but the Actual construction at site was taken up much later completing the caudal formalities like Administrative approval and Expenditure Sanction of the Competent Authority.

The construction of multi-storied building on plot No. 5 at Janak Puri Distt. Centre was taken up in August 1987 whereas the construction on plot no. 1 and 2 was taken up in November 1989. The construction of the multi-storeyed building was competed in July-95 and the costing detail was sent to Finance/Management Wing of the respondent in August-96.

From the record, it is further seen that the construction was delayed due to constractual difficulties like rescission of the contract. Initially the work was awarded to M/s Hans Construction Co. in Feb. 1990. However, the agency failed to complete the work and it was rescinded and the work re-awarded to M/s. D.K. Construction Co. in September 1993 and it was finally completed in July, 1995.''

4. While, in the case of the petitioners under the 1985 Scheme there was an escalation clause which provided for variations in costs, in the case of the petitioners under the 1984 Scheme the only clause governing change in prices was the one under the heading ''Likely changes in designs and costs'' which has been set out earlier. According to that provision, the petitioners under the 1984 Scheme contend that any increase or decrease in the cost of flat would only be relatable to the increase or decrease in covered area (including proportionate area of common portions) which would ultimately fall within the share of the petitioners and it is only that adjustment which was required to be made in the payment of the last installment. For all other purposes, the cost which was indicated in 1985 was the cost which would ultimately hold the field. It is, therefore, urged that the DDA could not escalate the prices of the flats on the ground that the cost of construction had gone up. The respondents have attempted to explain the increase in costs in paragraphs 12, 13 and 14 of their counter affidavit which reads as under:-

''12. I say that the revised cost per square meter has two components as set out hereinbefore, namely, the cost of construction including overheads and the cost of land including interest.

Under the first head the cost of construction per square meter has remained the same i.e. Rs. 11,219/- per square meter. The departmental charges have also remained the same i.e. 10% of the aforesaid amount amounting to Rs. 1121/- per square meter, the total of both being Rs. 12,340/- per square meter. To this interest at the rate of 20% per annum on the aforesaid amount amounting to Rs. 4,114/- per square meter has been added, the total of which amounts to Rs. 15,454/-. On this administrative charges at the rate of 2% per annum have been charged which brings the total of Rs.16,783/- per square meter. To this charges on account of weaker sections has been added at the rate of 7% on the aforesaid amount, amounting to Rs. 1175/- per square meter amounting to Rs. 17,958/- per square meter. To this amount pension contribution charges at the rate of 0.25% on the aforesaid has been added amounting to Rs. 18,003/- per square meter. The cost of land has remained the same, namely, Rs. 8950/- per square meter which was the rate prevailing in the year 1984, in which year the scheme was floated. Thus adding the cost of construction and the cost of land as per revised calculations, the cost of the flat per square meter comes to Rs. 26,953/-. It may be added that the charging of rate of interest is as per policy and to benefit of the allottees no amount of interest is charged on blocked capital as per revised costing though the same was charged at per earlier costing.

13. Since the flat in question allotted to the petitioner is on the 2nd floor, the petitioner has been charged the base price of Rs. 26,953/- per square meter. Since the flat of the petitioner is 40.42 sq. meter the total cost for construction and land comes to Rs. 10,89,440/-. Added to this are documentation charges of Rs. 45/-; ground rent charges per annum Rs. 16,342/-; service charges Rs. 16,342 per annum; totaling to Rs. 11,22,169/-. Since the petitioner had deposited a total of Rs. 2,00,719/ with this respondent on which he has earned interest at the rate of 12% per annum from dates of deposits to 15.02.2000 which amounts to Rs. 3,47,650/- and therefore the net amount payable by the petitioner is Rs. 5,73,800/-, the amount payable by him in the revised demand letter dated 10.02.2000.

14. It would therefore be evident that the respondent has reduced the net demand of the commercial flat in question by Rs.7,87,778/-. No further reduction is possible. If the petitioner is not desirous of taking the allotment of the commercial flat in question, this respondent is willing to refund the amount deposited by the petitioner with it.''

4.1 Thus, it appears that the DDA, in respect of cases of both the Schemes, has an explanation to offer both, in respect of the delay and, in respect of the escalation in actual costs. The explanation on offer cannot be thrown out as being whimsical or being bereft of any substance. The DDA has also given credit for interest on deposits made by the petitioners and has adjusted the same in the final demand raised on the petitioners. It has also given the option to the petitioners to withdraw from the allotments and take refunds of the deposits instead.

4.2 It is the contention of the petitioners that the explanations of the DDA are untenable. The DDA was responsible for the delay. The Delay resulted in escalation of costs. It is, therefore, submitted that the petitioners cannot be asked to pay for the lapses on the part of the DDA. There are two aspects to this issue of escalation. The first is the question whether the escalation was in-built in the Schemes or not? The second is the question of the quantum of the escalation and the actual calculate on of the figures themselves. Insofar as the latter question is concerned, it is clear that courts are loathe to interfere as they do not possess the expertise to assess and determine the actual costing of flats. As regards the former, one does get the impression that under the 1984 Scheme only variation in costs consequent upon variation in the area ultimately allotted was permissible while, under the 1985 Scheme there was provision for escalation in costs dependant on various factors. Be that as it my, the legitimacy of DDA's action in demanding escalated amounts from the petitioners under both the Schemes would clearly depend upon the contractual terms between them and the DDA. What is the effect of this is examined below in the context of the rival contentions of the parties and in answer to the questions posed in paragraph 2 above.

5.The petitioners relied upon the decision of the Supreme Court in the case of Indore Development Authority v. Sadhana Agarwal and Others: wherein the Supreme Court observed that although, it had, from time to time upheld the excess charge by the development authorities over the costs initially announced as estimated costs, it should not also be understood that the Supreme Court has held that the development authorities had an absolute right to hike the cost of flats, initially announce as approximate or estimated cost for such flats. It was also clearly indicated in the said judgment that it is well known that persons belonging to middle and lower income groups, before registering themselves for such flats, had to take their financial capacity into consideration and in some cases it results in great hardship when the development authorities announce an estimated or approximate cost and deliver the same at twice or thrice of the said amount. The Supreme Court categorically observed that ''final cost should be proportionate to the approximate or estimated cost mentioned in the offers or agreements.'' The Supreme Court in particular observed as under:-

''The High Court was justified in saying that in such circumstances, the Authority owed a duty to explain and to satisfy the Court, the reasons for such high escalation. We may add that this does not mean that the High Court in such disputes, while exercising the writ jurisdiction, has to examine every detail of the construction with reference to the cost incurred. The High Court has to be satisfied on the materials on record that the Authority has not acted in an arbitrary or erratic manner.''

The petitioners also referred to the judgment of a Division Bench of the High Court at Allahabad in the case of Dwarika Prasad Pandey, v. Allahabad Development Authority: AIR 1999 ALLAHABAD 11. The petitioner in particular relied on the following observations:-

''In a Housing Promotion Scheme escalation is always estimated in advance and under no circumstances the price could be varied so that double the amount of estimated costs is demanded from the purchaser of the housing scheme flats. At least if due to the inefficiency, laches and negligence of the respondents the costs of construction and development charges are refixed revising the costs to be double the amount of the estimated costs it only shows that either the estimated cost was incorrect or that the escalation in the cost was due to mismanagement or misappropriation or laches and negligence of the supervisory staff. An escalation of the price of the flat could be refixed or redetermined but the same could not be double of the estimated costs. The final costing must have a rationale to the estimated costs and could not be excessive, arbitrary, exhorbitant and beyond limits. The price could not be fixed as double the amount of estimated costs.''

6. Mr. J.M. Sabharwal, the learned Senior Counsel who appeared on behalf of the DDA made two submissions. His first submission was that escalation of prices of flats was in the realm of contract and the Courts ought not to go into the question of costing/pricing of flats. As such, the writ petition was not maintainable. His second submission was that the escalation on account of delay in construction had, in any event, been provided for in the Schemes themselves. In support of his first contention Mr. Sabharwal sought to rely upon the following decisions:-

1. Premji Bhai Parmar v. Delhi Development Authority: .

2. Smt. Sheelawanti and another v. DDA and another: .

3. Delhi Development Authority v. Ashok Kumar Behal and Others:

4. Bareilly Development Authority v. Ajai Pal Singh:

5. J.P. Gupta v. DDA: .

With regard to the second submission, Mr. Sabharwal, submitted that, at least, insofar as the 1985 Scheme was concerned, it was clearly indicated that the flats were to be constructed and would be released in due course. There were no flats at the point of time when the scheme was floated. Therefore, there was no question of any price being indicated. In fact, no flat whatsoever had been constructed under 1985 scheme. Furthermore, the estimated cost provision in the scheme itself provided for cost of construction prevailing at the time of start of the scheme subject to fluctuation in costs factor etc. Therefore, escalation and fluctuation in costs was provided for under the scheme itself. The mode of payment of the scheme also indicated under the 6th installment that the balance 15% plus ''any additional amount which may have to be paid due to variation in actual cost and estimated cost.'' This also made it clear that the scheme provided for variation in costs and that there was nothing sacrosanct about the estimated cost. It was subject to variations as indicated in the scheme itself. Under the same head of ''Mode of payment'', it was also indicated that in case DDA was not in a position to hand over possession to an allottee within a period of three and a half years from the date of the allocation then DDA would be liable to pay interest at the rate of 7% after three and a half years period on the amount deposited by the allottee. Thus, even the consequence of delay in construction and handing over of possession on the part of the DDA was provided for under the scheme itself.

QUESTION No.1

7.1 Let me examine the the question of maintainability of a writ petition in the context of the challenge to price escalation of flats. As noted above, Mr Sabharwal cited several decisions on this point and the same need to be considered. In Premji Bhai Parmar (supra) the Supreme Court while considering the question of pricing of flats by the DDA in Rajouri Gardens, New Delhi for persons belonging to the ''Middle Income Group'' (MIG), observed (in para 8) that ''how the seller works out his price is a mater of his own choice unless it is subject to statutory control. Price of property is in the realm of contract between a seller and buyer. There is no obligation on the purchaser to purchase the flat at the price offered. Even after registration the registered applicants may opt for other schemes.'' Then, again, in the same paragraph (para 8) the Supreme Court observes:-

''But after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se.

No question arises of violation of Article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are found by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract'' (see Radhakrishna Agarwal v. State of Bihar ).''

With regard to area of price fixation and the very limited role of courts in this sphere, the Supreme Court held (in para 9):-

''In price fixation executive has a wide discretion and is only answerable provided there is any statutory control over its policy of price fixation and it is not the function of the Court to sit in judgment over such matters of economic policy as must be necessarily left to the government of the day to decide. The experts alone can work out the mechanics of price determination; Court can certainly not be expected to decide without the assistance of the experts (see Prag Ice and Oil Mills v. Union of India [(1978) 3 SCR 293, 330 : (1978) 3 SCC 459, 495]). In the leading judgment it has been observed that mechanics of price fixation have necessarily to be left to the executive and unless it is patent that there is hostile discrimination against a class the rocessual basis of price fixation has to be accepted in the generality of cases as valid.''

7.2 The next case relied upon (in chronological order) by Mr Sabharwal was the case of Bareilly Development Authority (supra) where the Supreme Court reinforced the aforesaid views:-

''19. The respondents were under no obligation to seek allotment of houses/flats even after they had registered themselves. Notwithstanding, they voluntarily registered themselves as applicants, only after fully understanding the terms and conditions of the brochure inclusive of clauses 12 and 13 and Notes 1 and 2 of the General Information Table which we have reproduced above, they are now trying to obtain the houses/flats at the price indicated in the brochure at the initial stage conveniently ignoring the other express conditions by and under which the BDA has reserved its right to change the terms and conditions as and when felt necessary, evidently depending upon the escalation of the prices. One should not lose sight of the fact that the BDA did not compel anyone of the applicants to purchase the flat at the rates subsequently fixed by it and pay the increased monthly Installments. On the contrary, the option was left over only to the allottees. In fact, the respondents in Civil Appeal No. 2809 of 196. except the four above-mentioned have unconditionally accepted the changed terms and conditions.

20. Thus the factual position in this case clearly and unambiguously reveals that the respondents after voluntarily accepting the conditions imposed by the BDA have entered into the realm of concluded contract pure and simple with the BDA and hence the respondents can only claim the right conferred upon them by the said contract and are bound by the terms of the contract unless some statute steps in and confers some special statutory obligations on the part of the BDA in the contractual field. In the case before us, the contract between the respondents and the BDA does not contain any statutory terms and/or conditions. When the factual position is so, the High Court placing reliance on the decision in Ramana Dayaram Shetty case has erroseously held :

''It has not been disputed that the contesting opposite party is included within the term 'other authority' mentioned under Article 12 of the Constitution. Therefore, the contesting opposite parties cannot be permitted to act arbitrarily with the principle which meets the test of reason and relevance. Where an authority appears acting unreasonably this Court is not powerless and a .writ of mandamus can be issued for performing its duty free from arbitrariness or unreasonableness.''

21. This finding, in our view, is not correct in the light of the facts and circumstances of this case because in Ramana Dayaram Shetty case there was no concluded contract as in this case. Even conceding that the BDA has the trapping of a State or would be comprehended in 'other authority' for the purpose of Article 12 of the Constitution, while determining price of the houses/flats constructed by it and the rate of monthly Installments to be paid, the 'authority' or its agent after entering into the field of ordinary contract acts purely in its executive capacity. Thereafter the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se. In this sphere, they can only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the authority (i.e. BDA in this case) in the said contractual field.

22. There is a line of decisions where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple - Radhakrishna Agarwal v. State of Bihar , Premji Bhai Parmar v. Delhi Development Authority and DFO v. Biswanath Tea Company Ltd. .

23. In view of the authoritative judicial pronouncements of this Court in the series of cases dealing with the scope of interference of a High Court while exercising its writ jurisdiction under Article 226 of the Constitution of India in cases of non-statutory concluded contracts like the one in hand, we are constrained to hold that the High Court in the present case has gone wrong in its finding that there is arbitrariness and unreasonableness on the part of the appellants herein in increasing the cost of the houses/flats and the rate of monthly Installments and giving directions in the writ petitions as prayed for.''

7.3 In the case of Smt Sheelawanti (supra), a Full Bench of this court was considering a batch of writ petitions under Article 226 of the Constitution of India assailing the price demanded from the intending purchasers of the flats allotted under the ''Registration Scheme on New Pattern 1979'' sponsored by the Delhi Development Authority. One of the key questions that arose for consideration of the Full Bench was with regard to the scope of judicial review in cases involving fixation of price for flats under the schemes floated by local authorities such as the Delhi Development Authority. After referring to various judgments, and, in particular the Supreme Court decision in the case of Bareilly Development Authority (supra) the Full Bench observed :-

''17. It was thus held that the contract entered into between the B.D.A. and the registrants was non-statutory, purely contractual and the rates were governed only by the terms of the contract and no writ or order could be issued under Article 226 of the Constitution.

18. Following the decision in the B.D.A.'s case a number of Benches of this Court declined to go into the question of the costing of flats and of land and upheld the pricing of the flats even under the present scheme as well. These judgments are Veena Saxena v. D.D.A. (1992) 47 Delhi LT 266; Abhimanyu Kumar Sethi v. D.D.A. (1992) 47 Delhi LT 295; Mahanand Sharma v. D.D.A. (CVV No. 1327 of 1991, dated 15 January 1992); Vinod Kumar Gupta v. D.D.A. (CW No. 778 of 1992, dated 22 October 1991 (sic)); J. K. Dhingra v. D.D.A. (CW No. 2787 of 1990, dated 16 May 1991); and Puran Chand v. U.O.I. (CW No. 3876 of 1992, dated 24 May 1993).

19. The consistent view of this Court, thus, was that escalation in prices of the flats constructed by the D.D.A. under different schemes, including the present scheme, could not be challenged under Article 226 of the Constitution till the decision in Ashok Kumar Behl v. D.D.A., (1993) 52 Delhi LT 153: (AIR 1994 Delhi 149), in which the court went into the question of pricing and quashed the escalated price of the flats allotted under the scheme. It appears that the Court did so apparently for the reason that despite specific directions in that behalf the D.D.A. had failed to place the relevant material before the Court to explain how the price fixation had been done and on what basis. Court queries in this behalf were not answered, which led to the belief that the D.D.A. was suppressing some thing and had acted arbitrarily to the pre judice of the writ petitioners. These significant factors put the case out of the ambit of the ratio of the Bareilly Development Authority's case.

20. From the above, it is clear that the scope of judicial review in the cases involving costing and fixation of prices is very much limited. Apart from the observations and the findings recorded in B.D.A.'s case (Page 126), extracted above, that a public body entering in the realm of contract acts merely in its' executive capacity and thereafter the relations are no longer governed by constitutional provisions but by contract, which apply in this case as even otherwise, what has to be seen and examinedly the writ court is whether the pricing of flats demanded by the D.D.A, for different categories of allottees is whimsical or arbitrary.''

Accordingly, the Full Bench, on the question of scope of judicial review concluded thus (para 36):-

''In keeping with our observations and findings recorded above, we are of the opinion that, in view of Clauses (13) and (14) of the brochure and the transaction being contractual, this Court cannot interfere under Art. 226 of the Constitution in the matter of pricing/costing of flats, including escalation of cost of land, etc.''

The decision in J.P. Gupta v. DDA (supra) merely follows the Full Bench decision in Smt Sheelawanti (supra) and, therefore, need not be discussed in detail.

7.4 A Special Leave Petition was filed in the Supreme Court against the division bench decision in Ashok Kumar Behl v. D.D.A.: (1993) 52 DLT 153 which was referred to in the said Full Bench judgment. The said Special leave Petition was pending before the Supreme Court, when, to put an end to the conflicting views of division benches of this court, the said Full Bench was constituted. When the said special leave petition came up for admission before the Supreme Court on 7.2.1994, it adjourned the caseine die to await the decision of the Full Bench and passed the following order:

''We are told at the Bar that the instant decision under appeal has been doubted by another Division Bench of the High Court. Apparently there exists a conflict of opinion raging in the High Court on the question raised herein. It appears that CWP No. 112 of 1991 Sheela Wanti v. Delhi Development Authority and other batch of cases stands referred to a Full Bench by an order of a Division Bench dated 22-9-1993. We feel that in this situation it would be appropriate that the High Court itself puts to order its own views. We, therefore, send a request to the Chief Justice of the High Court to constitute a Full Bench, if possible, within 3 weeks and have the matter listed and heard as expeditiously as possible. We on our part hold over this matter awaiting the decision of the Full Bench.

The matter is adjourned sine die with the liberty to mention.''

The Full Bench pronounced its decision in Smt Sheelawanti's case (supra). This was also challenged in the Supreme Court by filing Special Leave Petition (C) No. 13508 of 1995 and the same was dismissed on 14-7-1995. Thereafter, the Supreme Court gave it is decision in the case of Delhi Development Authority v. Ashok Kumar Behal : wherein it specifically approved the Full Bench decision in the following words:-

''19. We put an end to the controversy by setting aside the impugned judgment and dispose of the writ petitions filed by the respondents in terms of the order passed by the Full Bench of the Delhi High Court in Sheela Wanti decided on 3-2-1995. We agree with the view expressed by the larger Bench in Sheela Wanti case (supra).''

7.5 Clearly, the mechanics of price fixation have necessarily to be left to the executive and unless it is patent that there is hostile discrimination against a class the processual basis of price fixation has to be accepted in the generality of cases as valid. In this case such no hostile discrimination is pointed out. Moreover, where the contract entered into between the State or a statutory authority and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple. In the present case, what are the petitioners asking of this court? The petitioners require this court to interpret the contractual terms and to arrive at a conclusion that these terms do not permit escalation. Consequently, they expect this court to return a finding that the DDA has breached its contractual obligation in demanding escalated prices. These are questions within the four corners of contract, pure and simple. The scope of judicial review under article 226 in the cases involving costing and fixation of prices is very limited. Unless, the action on the part of DDA suffers from hostile discrimination or arbitrariness impinging upon public law elements, the remedy of article 226, in such situations would not be available. Here, the clauses of the brochure spelling out the DDA Schemes and the consequent transactions themselves being contractual, the settled position is that this Court cannot interfere under Art. 226 of the Constitution in the matter of pricing/costing of flats, including escalation of cost of land, etc.

7.6 The following decisions of the Supreme Court may also be noticed in the context of scope of judicial review under article 226 and particularly in relation to private law disputes as distinct from disputes having elements of public law or of a public nature. In Dwarka Prasad Agarwal v. B.D. Agarwal: held:-

''28. A writ petition is filed in public law remedy. The High Court while exercising a power of judicial review is concerned with illegality, irrationality and procedural impropriety of an order passed by the State or a statutory authority. Remedy under Article 226 of the Constitution of India cannot be invoked for resolution of a private law dispute as contradistinguished from a dispute involving public law character.''

And, in Kerala SEB v. Kurien E. Kalathil: the Supreme Court observed (in para 10):-

''...The interpretation and implementation of a clause in a contract cannot be the subject-matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a term of a contract is violated, ordinarily the remedy is not the writ petition under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body....''

Elaborating further, on the nature of contracts made or entered into by statutory bodies, the Supreme Court held:-

''11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to the usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory. The contract between the parties is in the realm of private law. It is not a statutory contract. The disputes relating to interpretation of the terms and conditions of such a contract could not have been agitated in a petition under Article 226 of the Constitution of India. That is a matter for adjudication by a civil court or in arbitration if provided for in the contract. Whether any amount is due and if so, how much and refusal of the appellant to pay it is justified or not, are not the matters which could have been agitated and decided in a writ petition. The contractor should have relegated to other remedies.''

What is meant by a statutory contract has been clearly stated by the Supreme Court in India Thermal Power Ltd. v. State of M.P.: ( at page 387) as under:-

''Merely because a contract is entered into in exercise of an enabling power conferred by a statute that by itself cannot render the contract a statutory contract. If entering into a contract containing the prescribed terms and conditions is a must under the statute then that contract becomes a statutory contract. If a contract incorporates certain terms and conditions in it which are statutory then the said contract to that extent is statutory. A contract may contain certain other terms and conditions which may not be of a statutory character and which have been incorporated therein as a result of mutual agreement between the parties.''

7.7 The relationship between the petitioners and the DDA under both the Schemes (1984 and 1985) are contractual. These, however, are not statutory contracts. Merely because the DDA, which is a statutory authority, has entered into these contracts, does not make them statutory. As explained by the Supreme Court in Kerala SEB (supra), statutory bodies, like private parties, have power to contract or deal with property. Only where entering into a contract containing prescribed terms and conditions is a just under the statute, does it become a statutory contract (See: India Thermal Power Ltd [supra]). This is not the case here. The contracts are not statutory contracts. The disputes herein are not in the field of public law but purely in the realm of private law. As such, the same have to be decided under general principles of contract. A writ petition under article 226 would not be maintainable.

8. In view of the fact that these writ petitions would not be maintainable, this question does not arise.

9. As indicated above, the writ petitions would not be maintainable and are dismissed as such. No order as to costs.