Videocon Industries Ltd. vs D.D.A. And Anr.
2007 Latest Caselaw 176 Del

JUDGMENT

S. Ravindra Bhat, J.

1. In this proceeding under Article 226 of the Constitution of India, the petitioner claims directions for quashing of two orders/notices dated 22.08.03 and 25.08.03 issued by the Delhi Development Authority ("DDA"). By the impugned demand dated 22.8.2003, the DDA had directed the petitioner to pay Rs. 15,09,31,495/- towards un-earned increase (hereafter referred to as "the impugned UEI demand"); by the second demand dated 25-8-2005, it demanded Rs. 10,74,00,000/- towards ground rent and Rs. 3,56,00,000/- due to interest charges for belated payment on ground rent, both for the period from 28.11.1997 to 14.01.04 (hereafter referred to as "the impugned ground rent demand").

2. One M/s Skipper Constructions (Pvt). Ltd had purchased a commercial plot, being No. E-1, Jhandewalan Extention, New Delhi, measuring 2548 sq.mts.(hereafter referred to as "the plot"), for constructing a multi-storeyed commercial complex, sometime in 1980. Some construction was carried out but later, the structure was left un-finished. After protracted litigation and under directions of the Supreme Court, the DDA floated a tender for re-auctioning of the plot with super structure, in 1994.

3. M/s Banganga Investments Pvt. Ltd. (hereafter "BIPL") participated in the auction and submitted its tender, offering to pay Rs. 70.1 crores for the plot. Since the bid was highest, it was accepted and eventually confirmed by the Supreme Court. The acceptance of the tender was communicated by the DDA to BIPL on 06.12.94.

4. The conditions which had been put to the bidder and had been agreed upon by BIPL, to the extent they are relevant, are re-produced below:

3. GROUND RENT

i) Every successful tenderer/allottee shall be liable to pay, in addition to the premium payable, ground rent for holding Nazul land allotted to him at the rate of rupee one per annum per plot for the first three years from the date of allotment i.e. the date of issue of the allotment letter, and thereafter it shall be payable at the rate of two and half percent (2 1/2%) of the premium originally payable per annum.

ii) The rate of ground rent shall be subject to enhancement after a period of thirty years from the date of allotment.

iii) An interest @ 10% per annum or such other rate, as the DDA/Lesser may in its absolute discretion decide from time to time will, without prejudice to the right of re-entry under the lease, be charged on all delayed payments in respect of ground rent. Such interest will be calculated for full fortnight on month, as the case may be, and not for fraction thereof.

4. EXECUTION OF LEASE DEED AND OTHER MAIN CONDITIONS OFLEASE:

(i) xxx xxx xxx

(ii) xxx xxx xxx

(iii) xxx xxx xxx

(iv) xxx xxx xxx

(v)(a) The successful tenderer/allottee shall not sell, transfer, assign or otherwise part with th e possession of the whole or any part of the Commercial plot except with the previous consent in writ of the Lesser which he shall be entitled to refuse in his absolute discretion.

Provided that in the event of the consent being given, the Lesser may impose such terms and conditions as he thinks fit and the Lesser shall be entitled to claim and recover a portion of the unearned increase in the value (i.e. the difference between the premium paid and the market value) of the commercial plot at the time of sale, transfer assignment, or parting with the possession, the amount to be recovered being fifty percent of the unearned increase and the decision of the Lesser in respect of the market value shall be final and binding.

Provided Further that the Lesser shall have the pre-emptive right to purchase the whole property or any part thereof that may be subject of sale, transfer, assignment or otherwise parting with the possession as the case may be, after deducting fifty percent of the unearned increase as aforesaid.

PROVIDED FURTHER that not withstanding the limitation and conditions as mentioned in Sub-clause vi(a), the successful tenderer/allottee may sell or transfer the floor space constructed on the plot subject to the permission of the Lesser in writing on payment of Rs. 100/- for each flat/floor space for the first sale/transfer. For subsequent sale/transfer the Lesser may on payment of proportionate between the premium already paid by the purchaser/transferer and the market price at the time of sale transfer towards the portion of the land) grant permission to the sub-lessee/transferer for such subsequent sale/transfer of floor space shall be subject to the conditions of getting the Deed of Apartment and the sub-lease (as defined under the Delhi Apartment ownership Act, 1986) executed by the Lessee in favor of such floor space buyer/transferee.

5. The entire consideration amount was paid by BIPL. Physical possession of the plot was handed over to it on 07.04.95. On 04.05.95, the Perpetual lease deed was executed, by the DDA, leasing the plot to the BIPL. The relevant conditions of the lease deed are extracted below:

...TO HOLD the premises unto the lessee in perpetuity from 29th day of November one thousand nine hundred and ninety four YIELDING AND PAYING therefore yearly rent payable in advance of Rs. 3/- (Rupees three only) up to the 28th day of November one thousand nine hundred and ninety seven and thereafter at the rate of two and and a half percent of the premium (the sums already paid and such other sum on sums hereafter to be paid towards premium under the covenants and conditions hereinafter contained) or such other enhanced rent as may hereafter be assessed under the covenants and conditions hereinafter contained clear of all deductions by equal half-yearly payments on the 15th day of January and 15th day of July in each year at the Reserve Bank of India, New Delhi on at such other place as may be notified by the Lesser for this purpose from time to time, the first of such payments to be made on 15th day of July one thousand nine hundred and ninety seven and rent amounting to Rs. 3/- (Rupees three only) from the date of commencement of the Lease to the last mentioned date having been paid before the execution of these presents.

(2) The yearly rent of two and a half per cent of the premium hereby reserved shall be calculated on the sum received towards premium by the Lesser before the execution of these presents and on such additional sum of sums payable towards premium as provided herein from 29th day of November one thousand nine hundred and ninety seven.

X X X X

(6)(a) The Lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the Commercial Plot except with the previous consent in writing of the Lesser which he shall be entitled to refuse in his absolute discretion.

PROVIDED that in the event of the consent being given the Lesser may impose such terms and conditions as he thinks fit and the Lesser shall be entitled to claim and recover a portion of the unearned increase in the value (i.e. the difference between the premium paid and the market value) of the commercial plot at the time of sale, transfer ....ment, or parting with the possession, the amount to be recovered being fifty percent of the unearned increase and the decision of the Lesser in respect of the market value shall be final and binding.

PROVIDED FURTHER that the Lesser shall have the pre-emptive right to purchase the whole property or any part thereof that may be subject of sale, transfer, assignment or otherwise parting with the possession as the case may be, after deducting fifty percent of the unearned increase as aforesaid.

PROVIDED FURTHER that notwithstanding the limitations and conditions as mentioned in Sub-clause 6(a) the lessee may sell or transfer the floor space constructed on the plot subject to the permission of the Lesser in writing on payment of Rs. 100/- for each flat/floor space for the first sale/transfer. For subsequent sale/transfer the Lesser may on payment of proportionate 50% of the unearned increase (i.e. the difference between the premium already paid by the purchaser/transferor and the market price at the time of sale transfer towards the portion of the land) grant permission to the sub-lessee/transferor for such subsequent sale/transfer of the floor space to be transferred. Prior permission of the Lesser for such second and subsequent sale/transfer of floor space shall be subject to the conditions of getting the Deed of Apartment and the sub-lease (as defined under the Delhi Apartment ownership Act, 1986) executed by the lessee in favor of such floor space buyers/transferee.

6. It is alleged that BIPL applied to the DDA for sanction of the plans on 04.08.95; the request was granted on 05.02.98. The completion certificate was thereafter applied for on 09.06.1998; the DDA issued the certificate on 08.03.99. The BIPL apparently had sought for merger/amalgamation with M/s Videocon Leasing and Industrial Finance Ltd ( renamed subsequently as M/s Videocon Industries Ltd., the petitioner in these proceedings). This Court by its order dated 10.05.99 had permitted the merger/ amalgamation. On 12.05.99, the DDA wrote to the BIPL claiming the sums of Rs. 2,85,92,158/- on account of ground rent and Rs. 40,89,167/- as belated interest charges for payment of ground rent up to 14.07.99. The BIPL denied that liability and contended that in terms of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981, (hereafter called "the Nazul Rules") the liability towards ground rent was Rs. 1/- per annum for the first five years instead of Rs. 1/- per annum for the first three years and 2 1/2 per cent of the total premium of the plot, for subsequent years.

7. It alleged that while executing the lease deed, there was an inadvertent error and, therefore, the DDA should have brought the conditions in the lease deed in conformity with the Rules. For this purpose, Rule 42(2) of the Nazul Land Rules, was relied upon. A similar demand was made for the sum of Rs. 6,36,42,161/- plus Rs. 40,89,167/- as overdue interest by another letter of DDA dated 22.06.01; this was resisted again by the BIPL. Later, similar notices were sent by DDA which were denied on the same ground by the lessee/petitioner. Finally, by letter dated 22.08.03, the impugned UEI demand was made by the DDA, conceding to the request for change of name of the lessee, on account of merger/amalgamation of BIPL with the petitioner subject to payment of Rs. 15,09,31,495/-. On 25.08.05, the DDA, by the impugned ground rent demand, claimed two sums of Rs. 10,74,00,000/- towards arrears of ground rent w.e.f. 28.11.97 and Rs. 3,56,00,000/- on account of interest for belated payment of said ground rent. Both these have been challenged as unlawful and illegal.

8. The petitioners have challenged the impugned ground rent demand as contrary to Rule 42 of the Nazul Rules which mandate that nominal ground rent would be payable for five year period from date of lease as opposed to the three year period, stipulated in the lease deed. It is also claimed that the possession of the property was handed over on 07.04.95. Though the lease had been registered earlier on 24.02.95 and though the sanction of plans for the property was applied for on 04.08.95, yet DDA sanctioned the plans only on 05.02.1998 which was an unreasonable period and was responsible for a further delay in issuing the occupancy certificate, which was actually furnished on 08.03.99. It is claimed that since the DDA was responsible for the delay, the petitioner could not be saddled with the liability, although it had done everything within its power in paying, the consideration as demanded, applied for sanction of the plan and the occupancy certificate within the time. It is also claimed that the DDA was under an obligation to bifurcate the cost paid by the petitioner while demanding ground rent i.e. towards the land and super structure separately. According to the petitioner's allegations, the land could be valued only at Rs. 12,84,19,20/- at Rs. 50,400/- per sq. mtr. for an area of 2548 sq.mtr. of the plot on the basis of the published lease rates, on such areas, by the Land and Development Office, Central Government. Hence, the basis for calculating ground rent, it is claimed could not be Rs. 70.1 crores is a much smaller value at Rs. 12,84,19,200/-.

9. The petitioners have attacked the impugned demand for un-earned increase on the premise that BIPL and the transferor company, namely, Videocon Leasing and Financial Ltd. had merged in 1999 and immediately upon the documents becoming available, the DDA had been informed about the merger on 22.11.99 with a request to correct the mutation. It is claimed that such a merger does not amount to transfer either in the eye of law or according to the terms and conditions of the lease deed. It is also claimed that even assuming the merger/amalgamation was a transfer though not admitting such to be the legal position, on a proper consideration of clause 6 (a) of the lease deed, first transfer/sale attracted payment of Rs. 100/- per flat/floor space and, therefore, the DDA could not have claimed more than Rs. 1400/- as transfer charges, since the building contained only 14 floors. It is also alleged that the demands are arbitrary and violative of Article 14 of the Constitution of India.

10. In its counter affidavit, the DDA has not disputed the essential facts about the publication of the tender, BIPL being the highest tenderer, acceptance of its bid and issuance of allotment letter dated 06.12.94, the area of the plot etc. It, however, disputes the allegation that the impugned ground rent demand was untenable. For the purpose it relies upon the allotment letter dated 06.12.94 which stated as follows:

  (e) Ground rent for first 3 years
@ Rs. 1/- PA (thereafter @ two &
half per cent of the total premium offered)         : Rs. 3/-

 

Ground Rent for first three years will be charged @ Rs. 1/- per annum and thereafter @ 2.5% of the total premium offered to the Respondent DDA. M/s. Banganga Investment Pvt. Ltd. accepted the terms and conditions of tenders and allotment letter and deposited the balance amount. Based on these terms and conditions, which were clear to both the parties from the very beginning, the possession was handed over to M/S Banganga Investment Pvt. Ltd. and the super structure was completed thereafter.

11. It is averred by DDA that the original purchaser of the plot, BIPL which was a separate legal entity being a company and the plot in question was its asset. After the merger between BIPL and M/s. Videocon Leasing and Industrial Finance the plot became the property of M/s. Videocon Leasing and Industrial Finance thus it is a matter of fact that the plot was transferred from one company to another. As per the policy of the Respondent DDA if a Private Ltd. Company is converted into a Public Limited Company by the voluntary act of the company, 50% Unearned increase is chargeable for such transfer. The Unearned increase as calculated by the DDA, it is claimed, is as per the guidelines given in the booklet of Unearned increase. It is sought to be explained as follows:

UNEARNED INCREASE

a) The Unearned increase has been charged as per guidelines given in the booklet of Unearned increase. The rate for the year 95-96 for central zone is Rs. 51,000/- per sq.m. for 200 FAR. The undated rate for the year 99-2000 is Rs. 88,128/- for 200 FAR i.e. Rs. 44,064/- per sq.m. for 100 FAR. The plaintiff has worked out the Unearned increase by taking plot area rate as Rs. 57,960/- per sq.m. In fact in all commercial properties the rates are based on FAR basis and not on plot area basis. In this case plot area is 2548 sq.m. and FAR is 20498.43 sq.m. the rate for the year 99-000 for central zone works out to Rs. 88,128/- per sq.m. for 200 FAR i.e. Rs. 44,064/- per sq.m. for 100 FAR as under:

 Year           Rate     Remarks
95-96  Rs. 51,000/-(for 200 FAR)     Given in the booklet of
                                     UNEARNED INCREASE
96-97 Rs. 61,220/-       -do-               By updating 20% as approved
                                            by VC/DDA
97-98 Rs. 73,440/-       -do-                   -do-
98-99 Rs. 88,128/-       -do-                   -do-
99-2000 Rs. 88,128/-     -do-              No updation -do-

 

12. The DDA contends that the basis of calculation for the ground rent as demanded by the Respondent DDA are as per the terms and conditions of the tender excepted and perpetual lease deed as signed by the lessee. Ground rent recovery for the plot was w.e.f. 6.12.94 to 5.12.97 @ Rs. 1/- and after 6.12.97 2 1/2% on premium paid. The Respondent issued the demands to the petitioner, for payment of ground rent as per the agreed terms and conditions between the parties. The Respondents had raised a demand of ground rent vide letter dated 12.5.99. The petitioner did not make payment to the same and in fact till date has not paid a penny towards ground rent.

13. It is further alleged by DDA that the petitioner was aware about its liability towards ground rent, under the perpetual lease deed. Hence it was under a duty to suo moto, deposit the ground rent with the DDA; it, however, deliberately did not deposit the ground rent, leading to loss to DDA. The DDA denies that was any delay on its part to sanction the plans it also denies that the petitioners were being penalised by imposition of ground rent. It is submitted that it was an agreed term that the petitioners are liable to pay ground rent and therefore there is no reason why that liability was not discharged. The petitioners' linkage of payment of ground rent with the development of the property is denied as misconceived.

14. The DDA also asserts that the merger between BIPL and the petitioner was a transfer in accordance with the terms and conditions of the lease deed/tender document; hence the petitioner was liable to pay unearned increase as demanded by the respondent DDA. Clause 6(a), it is asserted, is inapplicable, because it refers to transfer of floors/ flats. The DDA therefore denies that only a sum of Rs. 100/- is payable for each flat/floor space.

15. Mr. B.S. Nagar, learned Counsel for the petitioner, placed reliance on clause 3 of the tender conditions and submitted that what was allotted in the auction was, Nazul land; that expression is defined in Rule 2(1) of the Nazul Rules as land placed at the disposal of the DDA and developed by or under its control and supervision under Section 22 of the Act. Section 22, it was further contended, enables the Central Government, to place, on such terms and conditions as it may agree with the DDA, developed and under-developed lands, vested in the Union, for the purpose of development in accordance with the provisions of the Act. Section 22(3) enjoins the DDA to deal with the developed Nazul Lands in accordance with Rules made and directions issued by the Central Government.

16. Counsel contended that in conformity with Section 22(3) the DDA, being a creature of statute had to ensure that the conditions imposed by it while disposing of such lands after development, were on a uniform basis, by adhering to Nazul Rules. Developing this argument, it was submitted that both parties are bound by the terms and conditions of auction, the lease deed, the Delhi Development Act, 1957 (hereafter "the Act") and the Nazul Rules. The Rules were framed in exercise of powers under Section 57 of the Act. In these circumstances, it was not open to the DDA to contend that conditions in the lease deed vis-a-vis the ground rent, which were not in conformity with such Rules, could nevertheless be applied.

17. Learned Counsel relied upon the judgment of the Supreme Court reported as Delhi Development Authority and Ors. v. Ambitious Enterprises and Anr. ; Delhi Development Authority v. Grihsthapana Cooperative Group Housing Society Ltd. 1995 Suppl. (1) SCC 751 and the judgments of this Court in Delhi Development Authority v. Atul Gupta ; Surender Nath v. Delhi Development Authority AIR 1998 Delhi 276; V.N. Gupta Charitable Trust v. DDA , K.K. Birla Academy v. DDA 2004 (115) DLT 361; Delhi Development Authority v. Lala Amarnath Educational and Human Society and Prem Lata and Ors. v. Union of India .

18. It was contended that all the judgments had taken into consideration the compulsive and unequivocal nature of the Rules which applied equally to the lessees/purchasers and the DDA, alike. Counsel submitted that a perpetual lease is not an ordinary contract but that its format is as prescribed by the Rules. It is, in other words, a statutory document. Counsel submitted that neither did the DDA nor did the individual allottee/lessee possess the power to stray outside the conditions mandated by the Rules. Thus, it was not open to the DDA to claim that the period for payment of ground rent at a nominal rate was restricted to only three years whereas the Rules, enjoined that it should to be for five years.

19. Learned Counsel submitted that even if for any reason the terms and conditions of lease deed and auction were to be considered, the same could not prevail over the Rules, which prescribed the conditions. DDA had no authority to reduce or increase the fixed period of five years for the token or nominal ground rent. It was also urged that the DDA did not have any authority to charge ground rent on any additional consideration apart from the value of the Nazul Land, as per Rule 42(2). Therefore, the ground rent was payable at the nominal rate only for the land, for the period of five years after which it could be claimed on 2 1/2 per cent of the consideration of the land.

20. Learned Counsel for the petitioner further urged that the position taken by the DDA during the course of the hearing about the applicability of the Government Grants Act in so far as the perpetual lease deed in question is concerned, is not legally tenable. He relied upon the judgment of the Supreme Court reported as DDA v. Joginder S. Monga . He further submitted that the DDA cannot fall back upon the terms and conditions of auction in order to claim the amounts as per the impugned demand for ground rent because with the advent of the Rules and the Act, such policies, to the extent they conflicted with expressed statutory provisions were un-enforceable. He relied upon the judgment of this Court in Kaveri Cooperative Group Housing Society Ltd. v. Union of India AIR 1991 SC 217 and Raj Nagar Cooperative House Building Society Ltd. v. DDA .

21. On the issue of the impugned UEI increase demand, counsel submitted that no such liability arises under the Rules. It was claimed that amalgamation or merger of two companies did not amount to transfer and, therefore, the DDA had no authority to claim un-earned increase on an assumed transfer.

22. Learned Counsel alternatively submitted that the third proviso to clause 6 (a) of the perpetual lease deed specifically restricted the liability, even assuming the amalgamation to be a transfer payment of Rs. 100/- per floor; since there were only 14 floors, the entire liability towards so-called un-earned increase could not exceed Rs. 1400/-. It was submitted that the DDA erred in demanding excessive and unreasonable amounts because 50 per cent UEI amounts can be claimed only in the event of a second sale after the transfer which attracts Rs. 100/- per floor/ flat.

23. Ms. Anusuya Salwan, learned Counsel for the DDA submitted that the claim of the petitioner has no merit. She contended, on the issue of ground rent that the terms and conditions of allotment as well as the perpetual lease deed were willingly and voluntarily accepted by BIPL, and were binding on it. In accordance with its stipulation, ground rent for holding the land was payable at Rs. 1/- per annum for the first three years from the date of the allotment i.e. date of issue of the allotment letter after which it was chargeable on the basis of 2 1/2 per cent of the premium originally payable per annum. It was contended that as far as Nazul Rules are concerned, which state that ground rent has to be paid for 5 years Rs. 1/-, those provisions are inapplicable to this case, as the land is classified as Nazul land-I, which is old acquired land and given to the DDA as successor body of the Delhi Improvement Trust. The Nazul Rules apply to Nazul Land-II, which has been placed at the disposal of DDA under Section 22 of DDA Act. Hence, it is argued that there is no violation of Nazul Rules.

24. Counsel next contends that in the case, special terms and conditions for tender were finalized by the competent authority, (which was accepted by the tenderers before bidding),and in fact the whole process was monitored by the Supreme Court. The allotment was only made after the Supreme Court granted clearance for accepting the highest bid. There is clear-cut contract between the DDA and the bidder and lease deed was executed on the same terms and conditions. The bidder, therefore, cannot challenge the same, and there is no discrimination by the DDA. In fact, the Earnest Money which has been asked in this regard was only 10% in place of 25% which has been prescribed in the Nazul Rules. It is also submitted that if DDA would have given the conditions of Rs. 1/- for 5 years ground rent, it might have been secured a higher bid. Hence, the bidder cannot now challenge the terms and conditions on which he placed his bid.

25. Learned Counsel contended that the conditions had been spelt out clearly at the time of auction and were accepted by BIPL when it executed the perpetual lease deed. Therefore, they were matters of contract binding upon both the parties. Such being the situation, the Courts would not adjudicate the disputes pertaining to contract. She relied upon the decision reported as Sita Ram Suger Mills v. Union of Indian ; Sheelawanti v. DDA AIR 1995 Delhi 272. It was also contended that having bid or submitted its tender in the auction with full knowledge of terms and conditions, the petitioner cannot be permitted to wriggle out the obligation. Reliance was placed upon the decision reported as State of Harayana v. Jage Ram .

26. Learned Counsel next urged that on an interpretation of clause 6 the merger or amalgamation of one company with another amounted to transfer and, therefore, the petitioner was liable to pay 50 per cent un-earned increase on the premium originally paid by it. Learned Counsel contended that the petitioner could not take advantage of the third proviso in clause 6 (a) since ownership had change from M/s BIPL to M/s Videocon Industries Ltd. She submitted that un-earned increase was calculated on land value as per the prescribed rules, after taking the zonal rate of the central zone. There was no arbitrariness on this. Learned Counsel relied upon the decision reported as Indian Shaving Products Ltd. v. DDA to say that the amalgamation and mergers amounted to transfer attracting payment of unearned increase, as demanded.

27. The above discussion would show that two points require determination in this case. One, the legality and correctness of the DDA's action in demanding ground rent at 2.5% of the Lease premium, after 3 years, instead of 5 years; two, whether 50% unearned increase is payable, towards transfer of the plot, after amalgamation of M/s BIPL with the petitioner.

Re: Ground Rent

28. Section 22 of the Delhi Development Act, 1957 regulates development and disposal of Nazul land. Sub-section (1) authorises the Central Government to place at the disposal of DDA Nazul lands for the purposes of development. Sub-section (2) prohibits development of Nazul lands except by or under the control and supervision of DDA. Sub-section (3) stipulates that after the said land has been developed, it shall be dealt by DDA in accordance with rules made and directions given by the Central Government. Section 56 of Delhi Development Act, 1957 empowers the Central Government to make rules to carry out the purposes of the Act. Section 56(2) provides, among others, that the Central Government may makes rules stipulating the manner in which Nazul lands shall be dealt with after development.

29. In 1981, the Central Government notified the Nazul Rules. Rule 2(i) of the Rules define 'Nazul land' as follows:

Nazul land means the land placed at the disposal of the authority and developed by or under the control and supervision of the Authority under Section 22 of the Act.

30. There can be no gainsaying that the plot is a part of Nazul Rules; the contention of DDA in this regard, in my opinion, is unacceptable. The Nazul Rules make no distinction as to the manner in which lands are placed at its disposal. Rule 4 of the Nazul Rules specifies the category of persons to whom Nazul land could be allotted. Following are entitled to Nazul land in terms of Rule 4: (a) individuals, (b) body of persons, (c) public and private institutions, (d) cooperative house building societies, (e) other cooperative societies of individuals, (f) cooperative societies of industrialists, (g) departments of the Central Government, State Government and Union Territories, (h) company, (i) firm and (j) trust. Rule 5 of the Rules requires the authority to allot Nazul land at premia which may be determined by the Central Government from time-to-time. Rule 20 stipulates the condition precedent to be complied with before Nazul land could be allotted under Rule 5. Rules 42 and 43 of the Nazul Rules read as follows:

42. Allottee to be lessee of the Central Government -

(1) Save as otherwise provided in Rule 44, all Nazul land allotted under these rules, whether at predetermined rates or at fixed premium under Rule 7, or by auction or by tender, shall be held by the allottee as lessee of the President of India on the terms and conditions prescribed by these rules and contained in the lease-deed to be executed by the allottee.

(2) Every such allottee shall be liable to pay, in addition to the premium payable in accordance with these rules, ground rent, for holding the Nazul land allotted to him under these rules, at the rate of rupee one per annum per plot, for the first five years from the date of allotment:

Provided that in the case of Nazul land allotted to group housing cooperative societies; the ground rent shall be charged at the rate of rupee one per flat for the first five years from the date of allotment.

(3) The annual ground rent payable after the first five years referred to in Sub-rule (2) shall be at the rate of two and half per cent of the premium originally payable.

(4) The rate of ground rent in all cases shall be subject to enhancement after a period of thirty years from the date of allotment.

43. Lease to be executed by the allottee - Every allottee of Nazul land shall execute a lease-deed in accordance with Form 'C' appended to these rules. In addition, a lease deed may contain such other covenants, clauses or conditions nor inconsistent with the provisions of Form 'C' as may be considered necessary in the circumstances of each case.

31. The decisions cited in support of the petitioner's contentions are instances where the court was called upon to determine, whether the DDA or the Union of India could impose conditions such as charging of premia, etc in excess of, or above what was prescribed in policies, at the time of allotment of land, under the Nazul Rules (Ref Ambitious Enterprises; Grihsthapana Cooperative Group Housing Society Ltd.; Atul Gupta Surender Nath; V.N. Gupta Charitable Trust ; K.K. Birla Academy; Lala Amarnath Educational and Human Society and Prem Lata and Ors. Supra). However, none of those cases involved facts where the lessee obtained the lands, by allotment, after an auction, where the conditions had been spelt out clearly, as in this case. Further, here, the allotment letter also stipulated that the nominal ground rent of Re 1/- was payable for 3 years, from the date of the letter; the perpetual lease deed even stipulated the date from which the ground rent at 2-1/2 per cent per annum was payable, in 1997.

32. One other significant factor, which, to my mind distinguishes this case from the other reported decisions is that the manner of conducting auctions was not as per the Nazul Rules. The Rules prescribe for deposit of 25% of earnest money deposit; here the petitioner had to deposit only 10%. Further, the ultimate approval or sanction for the sale was accorded by the Supreme Court, and not the DDA itself, since the plot was being sold under its directions. These, coupled with the fact that had the auction notice, and terms of allotment contained a condition that the nominal ground rent was for 5 years instead of 3 years, the petitioner may well have not been the highest tenderer, but someone else, to my mind, undermine the argument on its behalf that the DDA was at all times, bound to follow the Nazul Rules, and charge 2-1/2 per cent of the premium after 5 years, and not after 3 years.

33. In Guntaiah v. Hambamma the Supreme Court held that unless a condition of grant, governing a lease or other right relating to land is specifically challenged by the concerned grantee/lessee at the relevant time, a later challenge cannot be maintained, on the ground that it contravenes a statutory term or condition. Likewise, in Laxmikant v. Satyawan , the Supreme Court held that once a bidder participates in an auction, he cannot resile from the condition or term agreed to at the time, on the ground that it violates a rule or statute.

34. Quite apart from the considerations discussed above, the petitioner has not shown how, and when, before 1999, it ever made any effort or attempt to have the matter clarified; it disputed liability, when undoubtedly such liability arose immediately after expiry of three years from the allotment letter. It has also chosen to approach the court even later, in 2003, after the disputes boiled over, without even paying any amount even as per its own contention.

35. As far as the other contention of the petitioner with regard to the date of payment of ground rent is concerned, I am of the opinion that there is no merit in those submissions. The terms of auction, and the allotment letter, as also the perpetual lease deed categorically and unambiguously stipulated that the higher ground rent of 2.5% of the premium was payable three years from the date of issuance of the allotment letter, i.e 6-12-1997. On the face of such a clear stipulation, the petitioner cannot contend that either possession was given later, or that sanction was applied for early, but granted late, or that the occupancy certificate was granted late. These contentions are hopeful, not convincing, ungrounded on facts, and legally merit-less. The last submission with regard to calculation of ground rent only on the land value, is similarly devoid of merit.

Re: Unearned Increase

36. The Division Bench, in its judgment reported as Indian Shaving Products Ltd. v. Delhi Development Authority had held that amalgamation of two companies, would amount to transfer, and that the DDA, not a party to the scheme, would not be bound by stipulations inter se between the two companies, to the contrary. Therefore, it is no longer open to contend that such amalgamation schemes do not amount to transfer. This Court is bound by the ratio in that decision.

37. The next question is what is the unearned increase payable. Clause 6(a) of the Lease Deed enjoins the lessee not to sell, transfer, assign or otherwise part with the possession of the whole or any part of the Commercial Plot except with the previous consent in writing of the Lesser (DDA) which it is be entitled to refuse in its absolute discretion. The first proviso to this clause empowers the DDA to grant consent, subject to its recovering fifty per cent of the unearned increase. i.e difference between the market value of the property and the premium paid at the time of acquiring the property. The second proviso empowers the DDA to pre-emptively purchase the property. The third proviso reads as follows:

PROVIDED FURTHER that notwithstanding the limitations and conditions as mentioned in Sub-clause 6(a) the lessee may sell or transfer the floor space constructed on the plot subject to the permission of the Lesser in writing on payment of Rs. 100/- for each flat/floor space for the first sale/transfer. For subsequent sale/transfer the Lesser may on payment of proportionate 50% of the unearned increase (i.e. the difference between the premium already paid by the purchaser/transferor and the market price at the time of sale transfer towards the portion of the land) grant permission to the sub-lessee/transferor for such subsequent sale/transfer of the floor space to be transferred. Prior permission of the Lesser for such second and subsequent sale/transfer of floor space shall be subject to the conditions of getting the Deed of Apartment and the sub-lease (as defined under the Delhi Apartment ownership Act, 1986) executed by the lessee in favor of such floor space buyers/transferee.

38. The specific nature of the above condition, which is by way of an exception to the first proviso, is evident from the non-obstante clause used. The object of this limited exception from the rule of requiring the lessee to pay 50% UEI in all cases appears to be to relieve the first sale/ transaction of built up property. DDA urges that this cannot apply to the transfer through amalgamation.

39. The normal rule, in the case of transfer, as per the lease deed, is that the Lesser/ DDA has to be paid 50% unearned increase, as defined. However, the third proviso carves out an exception, and reinforces the idea, with a non-obstante condition, that if floors/ flats are sold, such transactions would attract only Rs. 100/- per floor/ flat. This condition, like the one relating to three years' nominal ground rent, does not figure in Form A to C appended to the Nazul Rules. It is equally binding upon the DDA and the petitioner. I see no reason why the benefit of this condition cannot apply to the transfer pursuant to the amalgamation between BIPL and the petitioner.

40. For the above reasons, the petition has to partly succeed. The DDA is directed to charge the unearned increase as per the third proviso to clause 6(a) of the perpetual lease deed, at the rate of Rs. 100/- per floor/ flat. It shall revise the impugned demand for unearned increase (dated 22-8-2003) and accordingly charge on such basis, instead of the Rs. 15,09,31,495/- towards un-earned increase, which is hereby quashed. The demand as per the impugned letter dated 25-8-2003, is upheld.

41. The petition is partly allowed, to the above extent, with no order as to costs.