Union Of India (Uoi) And Anr. vs Siddharth Nagpal
2008 Latest Caselaw 101 Del

JUDGMENT

Mukundakam Sharma, C.J.

1. This appeal is directed against the judgment and order dated 29th November, 2006 passed by the learned Single Judge whereby the learned Single Judge allowed the writ petition filed by the respondent herein.

2. Briefly stated, the facts of the case are that properties bearing No. J-3(B) and J-3(C), Lajpat Nagar, New Delhi were allotted to Shri Jairam Dass, grandfather of the respondent herein by virtue of perpetual lease deed dated 18th February, 1971. It is stated by the counsel for the respondent that after the demise of Shri Jairam Dass, rights in the property devolved upon the respondent herein and the property was mutated in his name in 1983, under the guardianship of his father, as the respondent herein was minor at that time. It is further stated that some construction work was carried out on plot bearing No.J-3(B) whereas no construction was carried out on plot bearing No.J-3(C). On attainment of majority, when the respondent was in a position to carry out construction on plot bearing No.J-3(C), he requested the LandDO for issuance of No Objection Certificate vide letter dated 9th March, 2004 so as to enable him to get the building plans sanctioned from the Municipal Corporation of Delhi. However, instead of issuing No Objection Certificate, the appellant No. 2-LandDO issued a letter dated 21st June, 2004 whereby a sum of Rs.10,15,895/- was demanded allegedly by way of penalty for non-construction on the property for the period from 1st January, 1976 to 30th June, 2005. An amount of Rs.102/- was also demanded towards ground rent. The said penalty was levied giving effect to the Office Order dated 15th July, 1998, bearing No. 7/1998.

3. It is the contention of the respondent that until he applied for No Objection Certificate, no such demand was made nor any intimation of any penalty being levied against him was given. However, the respondent made the aforesaid payment, under protest and without prejudice to his rights, which was received by the appellants on 5th July, 2004 Subsequently, a No Objection Certificate was issued vide letter dated 26th July, 2004 Thereafter the respondent herein made a representation dated 8th September, 2004 requesting for withdrawal of the penalty. The said representation was rejected by the appellants herein vide letter dated 14th December, 2004 Again a request was made on 5th April, 2005, which again was turned down. The respondent thereafter challenged the said action of the appellants by filing a writ petition in this Court. The plea taken by the respondent is that the case of the respondent is one for extension of time for construction and should be governed by the rates of penalty applicable as per the office order of the appellants dated 31st March, 1976, bearing No. 24/76. The contention of the respondent is that the office order issued in 1998 cannot be given retrospective effect.

4. The learned Single Judge considered the submissions of the counsel for the parties and thereafter allowed the writ petition and quashed the letter dated 21st June, 2004 to the extent demanding penalty on the basis of the office order dated 15th July, 1998 for the period 1st January, 1976 till the said office order came into force in 1998. The learned Single Judge held that the office order dated 15th July, 1998 is prospective in effect and for the period prior to that date the appellant cannot charge penalty at the rates prescribed in the policy dated 15th July, 1998. The learned Single Judge has relied upon the decisions of the Supreme Court in Govind Das and Ors. v. The Income Tax Officer and Anr. and Sri Vijayalakshmi Rice Mills, New Contractors Co. and Ors. v. State of Andhra Pradesh to hold that the office order dated 15th July, 1988 does not have retrospective effect. A direction was also issued to the appellants herein to charge penalty on the basis of the office order dated 31st March, 1976 bearing No. 24/76 for the period 1st January, 1976 till office order No. 7/98 dated 15th July, 1998 came into force and to return the excess penalty recovered from the respondent herein. It was also directed that on failure to return the excess penalty so recovered within four weeks from the date of the impugned order, the same would carry simple interest @ 12% per annum.

5. Being aggrieved by the said order, the appellants have filed the present appeal on which we have heard learned Counsel for the parties.

6. The appellants have challenged the impugned judgment and order on the ground that the learned Single Judge failed to appreciate that since the respondent had applied for No Objection Certificate only in the year 2004, the policy and the rates applicable would be the one prevailing at the time of such application. It was also contended that the respondent is not entitled to challenge the terms and conditions for regularisation after accepting the same and is legally estopped from claiming any remedy which was available to him prior to making of payment of the penalty amount.

7. The counsel appearing for the respondent on the other hand submitted that while respondent's liability to pay penalty for non-construction is not denied but higher penalty in terms of office order dated 15th July, 1998 cannot be recovered as the said office order has only prospective effect and prior to 15th July, 1998 office order 24/76 dated 31st March, 1976 was in existence and for the period prior to 15th July, 1998 respondent's liability is in terms of the office order dated 31st March, 1976. It was further submitted by the counsel for the respondent that no other office order was produced by the appellants before the learned Single Judge for levy of penalty for a period of non- construction of more than 12 months.

8. We have to interpret the office order dated 15th July, 1998, in order to examine whether the said Office Order would apply.

9. The lease is executed by Land and Development Office requiring construction within the stipulated time. On failure, the LandDO has a right to re-enter the property. Right of re-entry can be waived and default in construction can be condoned by LandDO. Default in construction is normally condoned on payment of compounding charges or penalty. To ensure that there is uniformity, Ministry of Works and Housing has from time to time issued Office Orders fixing compounded rates. As it normally happens, the Office Orders fixing compounding rate / penalty are modified and amended from time to time. One such order available on record is dated 31st March, 1976. The said order prescribes penalty or compounding fee equal to 5% of the premium for defaults of nine to twelve months. On 15th July, 1998, Ministry of Urban Affairs and Employment issued new guidelines for compounding default / delay in construction. These guidelines replaced earlier instructions dated 1st March, 1993. The guidelines state that the compounding fee mentioned in the schedule / annexure is relatable to the years of the default and shall progressively increase with the length of the period of default. For three years of default, no compounding fee is payable and for the 4th year penalty at the rate of Rs. 5 per sq. meter is payable, but this compounding fee increases to Rs.195 per sq. mtr in the 22nd year of the default.

10. The question is as to whether the guidelines dated 15th July, 1998 and the rates prescribed in the said guidelines will apply to the respondent. On 9th March, 2004, the respondent had applied for No Objection Certificate for getting sanction of the building plans from the local authorities. At that stage, it was noticed by the appellant that there was delay in construction and for obtaining No Objection Certificate, the respondent was asked to pay compounding fee for the period 1st January, 1976 to 30th June, 2005 based upon the Office Order dated 15th July, 1998. It is, therefore, clear that the respondent had not applied for waiver of compounding fee and condensation of delay in construction before Office Order dated 15th July, 1998 had been issued.

Application for condensation of delay and issuance of No Objection Certificate was made on 9th March, 2004, which is after the Office Order dated 15th July, 1998 had been issued. Clause 3 of the Office Order dated 15th July, 1998 reads as under:

3. All Branch Officers and Sections are directed to follow the above procedure strictly and process the cases accordingly. All pending requests for extension of time for carrying out construction in respect of residential as well as institutional plots shall be processed in accordance with the above instructions.

11. A bare perusal of the aforesaid clause indicates that the Office Order dated 15th July, 1998 will apply to all requests for extension of time for carrying out constructions, which were pending on the date when the above order was issued or are received subsequently. In view of Clause 3, Office Order dated 15th July, 1998 will apply to the case of the respondent as in the present case application seeking No Objection Certificate for construction was made only on 9th March, 2004 The Office Order dated 15th July, 1998 is applicable to all pending applications and all applications, which are filed after 15th July, 1998. The fact that the allottee is seeking condensation of delay for the period prior to 15th July, 1998 is not relevant and material. What is relevant is whether the application was pending on the date when Office Order dated 15th July, 1998 was enforced and whether an application has been filed after the order dated 15th July, 1998. To this extent it may be said that Clause 3 of the Office Order dated 15th July, 1998 has been given retrospective or retroactive operation. Even for the default period prior to 15th July, 1998, an allottee will be liable to pay compounding charges as mentioned in the Office Order dated 15th July, 1998.

12. The respondent in the writ petition did not challenge the Office Order dated 15th July, 1998 or the retrospective or retroactive operation of the Clause 3 of the aforesaid order. Therefore, we have to proceed and decide this appeal on the basis that the Clause 3 of Office Order dated 15th July, 1998 is valid and legal.

13. On interpretation of Clause 3, we are of the view that the calculation made in the letter dated 21st June, 2004 by the appellant in terms of the Office Order dated 15th July, 1998 is legal and valid.

14. Executive has right to amend and modify the policy at any time. A policy does not become retrospective merely because a part of the requisites for its actions is drawn from a time antecedent to its passing. (See Halsburys Laws of England - 4th Edition, Vol. 44 at paragraph 921). Nor a policy becomes retrospective merely because it changes an earlier policy.

15. A statute or policy is normally regarded as retrospective when it affects vested rights acquired under the earlier laws or creates a new obligation or imposes a new duty or attaches a new disability in respect to transactions or considerations already past. In State Bank's staff Union (Madras Circle) v. Union of India and Ors. , the Supreme Court has observed thus:

A statute is to be deemed to be retrospective, which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect to transactions or considerations already past.

20. Judicial Dictionary (13th Edn.) by K.J. Aiyar, Butterworth, p.857, states that the word 'retrospective' when used with reference to an enactment may mean (i) affecting an existing contract; or (ii) reopening up of past, closed and completed transaction; or (iii) affecting accrued rights and remedies; or (iv) affecting procedure. Words and Phrases, Permanent Edn., Vol. 37-A, pp. 224-25, defines a 'retrospective or retroactive law' as one which takes away or impairs vested or accrued rights acquired under existing laws. A retroactive law takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past.

21. In Advanced Law Lexicon by P. Ramanath Aiyar (3rd Edn., 2005) the expressions 'retroactive' and 'retrospective' have been defined as follows at p.4124, Vol. 4:

Retroactive.- Acting backward; affecting what is past. (Of a statute, ruling, etc.) extending in scope or effect to matters that have occurred in the past.

Also termed retrospective. (Black's Law Dictionary, 7th Edn., 1999) 'Retroactivity' is a term often used by lawyers but rarely defined. On analysis it soon becomes apparent, moreover, that it is used to cover at least two distinct concepts. The first, which may be called 'true retroactivity', consists in the application of a new rule of law to an act or transaction which was completed before the rule was promulgated. The second concept, which will be referred to as 'quasi-retroactivity', occurs when a new rule of law is applied to an act or transaction in the process of completion.... The foundation of these concepts is the distinction between completed and pending transactions....

T.C. Hartley, Foundations of European Community Law , p.129 (1981).

16. The respondent did not acquire any vested right under the policy dated 31st March, 1976. The respondent had never applied for condensation of delay and waiver of right of re-entry during the period policy was applicable. As long as policy dated 31st March, 1976 was in force, the respondent could have applied under the said policy and claimed right to be treated as per the terms of the policy. The respondent applied and sought No Objection Certificate after policy dated 31st March, 1976 had already lapsed and ceased to be in force as Office Order dated 15th July, 1998 had been enforced.

17. The term 'vested right' has been defined in Black's Law Dictionary (6th Edn.) at p1age 1563 as:

Vested; fixed; accrued; settled; absolute; complete. Having the character or given the rights of absolute ownership; not contingent; not subject to be defeated by a condition precedent.

18. The said definition was quoted with approval by the Supreme Court in Bibi Sayeeda and Ors. v. State of Bihar and Ors. and it was observed as under:

Rights are 'vested' when right to enjoyment, present or prospective, has become property of some particular person or persons as present interest; mere expectancy of future benefits, or contingent interest in property founded on anticipated continuance of existing laws, does not constitute vested rights. In Webster's Comprehensive Dictionary, (International Edn.) at page 1397 'vested' is defined as:

[L]aw held by a tenure subject to no contingency; complete; established by law as a permanent right; vested interests.

19. The judgments of the Supreme Court in Govind Das and Ors. v. The Income Tax Officer and Anr. and Sri Vijayalakshmi Rice Mills, New Contractors Co. and Ors. v. State of Andhra Pradesh relied upon by the learned Single Judge are not applicable to the facts of the present case in view of the clear and plain language of Clause 3 of the Office Order dated 15th July, 1998. In Govind Das (supra), it was observed that retrospective operation should not be given to a statute unless the enactment specifically provides for retrospective operation. Similarly, in the case of Sri Vijayalakshmi Rice Mills (supra), it was held that a notification normally takes effect from the date of issue and not from a prior date. In the present case Clause 3 makes Office Order applicable to all requests pending or received after 15th July, 1998. The present case cannot be compared with penalty imposed under the Income Tax Act for concealment of the income. The offence of concealment is committed when return of income is filed. In fact in the present case, it is the respondent who had approached the appellant for waiver and condensation of default in non-construction. Normally, therefore, and subject to the terms of the policy, the policy prevailing on the date when the application seeking waiver and condensation of delay is filed will be relevant. Composition fee payable in terms of the prevailing policy will be payable. We may also add that there is difference between composition fee payable for waiver and the default in non-construction and penalty for concealment of income, which is imposed under the Income Tax Act.

20. In view of the aforesaid, the Office Order dated 15th July, 1998 has to be given retroactive effect. Accordingly, the order dated 29th November, 2006 passed by the learned Single Judge is set aside and the appeal filed by appellant is allowed.