Sachin J. Joshi vs Lt. Governor
2008 Latest Caselaw 1844 Del

       IN THE HIGH COURT OF DELHI AT NEW DELHI

                    LPA No. 210 of 2008

                                     Reserved on: August 14, 2008
                                     Date of decision: October 20, 2008

       SACHIN J. JOSHI & ANOTHER                  ... Appellants
                       Through: Mr. Ravi Shankar Prasad, Senior
                       Advocate with Ms. Pinki Anand, Advocate.

                            versus

       LIEUTENANT GOVERNOR & ANOTHER .... Respondents
                    Through : Mr. Ajay Verma, Advocate

       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE DR. JUSTICE S. MURALIDHAR

       1.     Whether Reporters of local papers may be
              allowed to see the judgment?                       Yes
       2.     To be referred to the Reporter or not?             Yes
       3.     Whether the judgment should be reported            Yes
              in Digest?

                            JUDGMENT

DR. S. MURALIDHAR

1. This appeal is directed against the impugned order dated 8 th April 2008

passed by the learned Single Judge, dismissing the appellants‟ Writ Petition

(Civil) No. 8101 of 2007.

2. The appellant No. 2 Asrani Inns and Resorts Pvt. Ltd., in which the

appellant No.1 holds 25.36% shares and is a Director, is in the real estate and

construction business. The appellant No. 2 purchased two adjacent hotel plots

measuring 7220.40 sq. mts. (plot No. 1) and 7030 sq. mts. (plot No. 2) at the

Wazirpur District Centre, Delhi for Rs. 127 crores and Rs. 102.40 crores

respectively in an auction held by the Respondent No.2 Delhi Development

Authority (DDA) on 4th May 2006. The permissible built up area or Floor

Area Ratio (FAR) as regards plot No. 1 was 15,500 sq. mts. and as regards

plot No. 2 it was 14,500 sq. mts. Two bank guarantees in the sum of Rs. 6.53

crores for plot No. 1 and Rs. 5.12 crores for plot No.2 were furnished by the

appellants to the DDA. These bank guarantees were liable to be invoked in

case there was a delay on the part of the appellants in completing the

construction of the plots. There were two separate conveyance deeds dated 3rd

November 2006 executed by the DDA in favour of the appellant No. 2.

3. On 14th December 2006 the appellant No. 2 Company wrote to the DDA

seeking permission for amalgamation of the two plots. The appellants relied

upon a Resolution dated 7th January 1991 passed by the DDA which permitted

amalgamation of commercial plots. Reliance was also placed on a letter dated

29th January 1992 of the Union of India, Ministry of Urban Development

(MOUD), which permitted amalgamation subject to payment of 10% of the

market value prevalent at the time of application or the market value of the

extra floor space generated by the amalgamation whichever was higher.

4. According to the appellants, theirs was a Rs. 500 crore project of building a

hotel in North Delhi to meet the requirements of the forthcoming

Commonwealth Games in Delhi in 2010. The hotel project had to be

completed within 42 months of the allotment of the plots. The appellants

submitted for approval to the DDA a plan for the construction of a hotel on

the two plots combined. According to the appellants they were initially given

to understand by the DDA that the permission for amalgamation would be

granted. The DDA in fact granted permission to start digging and excavation

on the two plots by its letters dated 12th February 2007 and 22nd February

2007 respectively. On 8th March 2007, the appellant No.2 Company requested

the DDA for issuance of a no objection certificate (NOC)/approval of the

plans and drawings submitted to it. Reminders were sent on 20th March 2007,

9th April 2007 and 26th April 2007. It is contended that whereas permission

for amalgamation of plots were given in respect of certain other plots in

Kalkaji, Vasantkunj and Mandawali Faizalpur, as far as the appellants were

concerned, the DDA failed to respond to the numerous letters written to it.

Accordingly, the appellants approached this Court by filing Writ Petition

(Civil) No. 4251 of 2007. In the said writ petition, the following order was

passed by a learned Single Judge of this Court:-

"The question here is whether the request of the petitioner for combining the two plots which have been purchased by it in an auction for the purpose of constructing a hotel for the Commonwealth Games, can be considered and accepted by the DDA. It appears that the petitioner made its request first to the DDA on 14.12.2006. The counsel for petitioner states that till date the DDA has not conveyed to the petitioner its decision on that request.

2. Mr. Verma, learned counsel for the DDA appearing on advance notice, states that without prejudice to its rights and contentions, the DDA will communicate to the petitioner within a period of 15 days from today and in any event not later than 15.6.2007 it decision on the request of the petitioner made by its letter dated 14.12.2006. He further states that the DDA will take

into account the submissions made in this behalf by the petitioner in this writ petition and the documents placed along with it.

3. The decision taken by the DDA will be placed on record with an affidavit.

4. List on 13.7.2007. Copy of the order be given dasti to the parties, under the signatures of the Court Master."

5. By a letter dated 13th June 2007, the DDA informed appellant No. 2 that its

request for amalgamation was being processed and that "Finance has raised

certain queries, which has to be replied by Architectural Branch and after this

finance has to calculate the amalgamation charges." It was further informed

that "After calculation of amalgamation charges, file will be put up to the

competent authority/Hon‟ble Lt. Governor for approval." The DDA also

informed the appellant No. 2 that the amalgamation charges had to be paid

subject to the procedure outlined in the letter dated 20 th January 1992 of the

MOUD as well as the Resolution dated 7th January 1991 of the DDA.

Meanwhile, by a further order dated 13th July 2007 a direction was issued by

the learned Single that the decision of the Lt. Governor on the proposal of the

appellants, should be communicated to the appellants not later than 13th

August 2007.

6. It appears that thereafter the file was placed before the Lt. Governor, who

is the Chairman of the DDA, on 30th July 2007 and the following order was

passed by him:-

"The proposal of DDA to allow amalgamation of two hotel plots sold independently, is in contradiction to the conditions

mentioned in auction document at 3.10(vii). If the decision was taken to auction the plots as smaller size plots, there should not be an occasion to allow post-auction amalgamation of two plots particularly when it violates the auction conditions. The proposal is rejected.

VC may also conduct an inquiry and fix responsibility at the supervisory level, as to how this case was processed for approval."

7. The above decision led to the appellants‟ filing Writ Petition (Civil) No.

8101 of 2007 in this Court seeking the quashing of the said decision dated 30th

July 2007 passed by the Lt. Governor and for direction to the DDA granting

the permission of the amalgamation of hotel plot Nos. 1 and 2 purchased by

the appellants in the Wazirpur District Centre, New Delhi.

8. In the writ petition, it was contended that the two plots on freehold belong

exclusively to the appellants and that since the plots were adjacent to each

other the appellants did not gain any additional built up area by virtue of the

amalgamation. The permissible built up area was 30,000 sq.mts. even as a

result of amalgamation and therefore no extra floor space would be generated

by virtue of such amalgamation. It was specifically pointed out that in 1994

when the same plots were sought to be sold as a single plot they did not fetch

more than Rs.15 crores and the auction was therefore abandoned at that time

by the DDA. Examples of grant of permission to amalgamate commercial

plots in certain other areas were cited.

9. In its reply to the writ petition, it was contended by the DDA "that

amalgamation of two hotel plots would completely change the type of hotel

that can be constructed on the amalgamated plot as opposed that on two

smaller plots." It was further contended as follows:

"From a planning point of view, a conscious decision was taken to bifurcate the available land into two hotel plots. If subsequently, the two smaller plots were again allowed to be amalgamated, it would undo the planning effort. Moreover, it would also undermine as if a larger plot (as available by amalgamation) has been put for auction, the process would have attracted larger hospitality players as well as more financially attractive bids. Having contractually acquired the same with full understanding of the said terms, the attempt by petitioner to undo the provision of the Conveyance Deed is not only misconceived but has no bearing on the contractual provisions."

The comparison with other instances was denied by the DDA as being

irrelevant on the ground that those were commercial plots whereas in the

instant case the two plots were hotel plots.

10. The learned Single Judge negatived the contentions of the appellants AND

dismissed the writ petition essentially on the following grounds:-

(a) The statutory norms under Rule 42 of the DDA (Disposal of

Developed Nazul Land) Rules, 1981, [Nazul Rules] did not

permit amalgamation of two or more plots.

(b) The letter dated 29th January 1992 of the MOUD could not

modify or amend the terms and conditions of the statutory

forms/leases and that in any event it would apply only to leases

executed prior to 1989 when amalgamation of plots were

allowed with prior permission. After the amendment of Nazul

Rules the notification did not apply.

(c) The forms of the lease executed by the DDA had to be in

conformity with Rules 42 and 43 of the Nazul Rules. Since the

auction was of freehold plots conveyance deed in Form BA had

to be executed and its format was different from the format

prescribed for lease deeds. The form did not have any specific

clause as regards amalgamation of plots. However, it was

stipulated that the terms of the auction would be binding.

Clause 3.10(vii) of the General Terms and Conditions of the

Auction prohibited amalgamation of the plots.

(d) Clauses 6 and 7 of Form BA mandated that the purchaser

would be bind by the terms of the allotment/auction/tender and

that the vendor reserve the right to cancel the deed in event of

breach of the conditions of the allotment.

11. The learned Single Judge finally held as follows:-

"amalgamation of plots cannot be permitted in the present case and letter dated 29th January, 1992 is not applicable as it applies to lease deeds which permit amalgamation and not to freehold plots or lease deeds which do not permit amalgamation. The petitioner has not challenged the terms of auction or the terms of

the conveyance deed. Circular dated 29th January, 1992 is the edifice of the petitioners‟ case but the said circular is not applicable. The terms of auction on the basis of which the petitioner had given his bids, which have been accepted cannot be modified. They have been given statutory incorporation in the form BA prescribed under the Nazul Rules. DDA cannot modify and amend terms of form BA and allow amalgamation of two plots contrary to Nazul Rules."

12. We have heard the submissions of Mr. Ravi Shankar Prasad, the learned

Senior Counsel, appearing for the appellants and Mr. Ajay Verma, the learned

counsel, appearing for the DDA. We have also perused the original file of the

DDA relating to the case.

13. It appears from the records on file that as regards the plot at Wazirpur

District Centre, Pitampura, it was originally envisaged to be used as a single

plot for the purposes of construction of a five star hotel. In fact what was

envisaged was that the plot would be used "exclusively for the construction of

a four/five star hotel with ancillary facilities. No portion of the plot of the

building thereupon shall be permitted for any other use except the hotel and

other functional components of the hotel." The area of the plot was indicated

as 18070 sq.mts. The total floor area was 30000 sq.mts. and the maximum

ground coverage permissible was 30%. Therefore, what was envisaged

initially was that the plot in question would be sold as a single plot.

14. There is no denial by the DDA that when the plot was sought to be sold as

a single plot in 1994 it did not fetch an adequate price. It was then decided to

split up the single plot into two plots. The letter written by the Director (CL)

of the DDA to the Commissioner (Planning), DDA on 27th November 2001 in

this regard is instructive. The said letter reads as under:-

       "No. F.100(121)99/CL/105                        27.11.01

      To

       The Commissioner (Planning),
       DDA, Vikas Minar, New Delhi.

Sub: Disposal of hotel site - follow up of report of Consultants.

Sir,

On the subject above, I am to mention that M/s. C.B. Richard Ellis, Real Estate Consultants were given the consultancy for advising the DDA on disposal strategy for a few hotel sites. You would recall that the draft report was discussed in a number of meetings held which was attended among others also by you and other officers of the Panning and Architecture Wing of DDA. In accordance with the discussions, the Consultants have suggested that the hotel plots at CBD Shahdara and Wazirpur may be disposed off as hotel-cum-commercial plots as the DDA is finding it difficult to dispose them off as hotel plot keeping in view the limited demand. It has been decided in the first phase, we may modify the controls of the hotel plot at Wazirpur District Centre and put it to auction.

In this, the following changes which so far as a hotel plot in District Centre Wazirpur is concerned, architectural control as of now are -

       Area         FSI           Ground    Usage              No. of rooms
       (Acres)                    coverage%                    permissible


         4.45        1.67            25%        Hotel         540

Modifications suggested by the Real Estate Consultants

Area FSI Ground Retail (% of Usages Minimum (Acres) Coverage built up no. of area) rooms 4.45 1.67 25% 15% (not Min. 80 80 including room hotel the club and and banquet additional hall) facilities as under:

Club 30,000 sq.ft.

Banquet Hall 10,000 sq.ft.

You are requested to kindly approve the above modifications and finalise the controls in consultation with the Chief Architect so that the plot can be put to auction immediately.

Yours faithfully,

Sd/-

(Surajit Roy) Director (CL)"

15. It was this suggestion which was accepted when the plot was split into

two plots which were auctioned in 2006. It is not, therefore, as if the plots

were always intended to be sold as two separate plots.

16. The central issue that arises is whether the request made by the appellants

for amalgamation of the two adjacent plots was maintainable or as opined by

the Lt. Governor, no such request could be considered since amalgamation of

the plots was prohibited in terms of condition 3.10(vii) of the auction

document.

17. It requires to be noticed that the aforementioned Condition 3.10(vii)

forms part of the general terms and conditions of the auction and it reads as

under:-

"3.10(vii) The successful bidder/allottee shall not deviate in any manner from the layout plan nor alter the size of the plot for the said purpose either by sub-division, amalgamation or otherwise."

18. However, the plot being a freehold one the relevant statutory rule is Rule

42 of the Nazul Rules which reads as under:

"Rule 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 premium per lot, for the first five years from the date of allotment.

Provided that in 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 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.

Provided that notwithstanding anything contained in this rule, the Authority may allot Nazul land on free hold basis either through auction or by tender for residential purpose or commercial purpose.

Provided further that the case allotment on free hold basis, the allottee shall execute a conveyance deed in Form BA."

19. It is significant that the two provisos under Rule 42 (4) were inserted by a

Notification effective 19th April 2006. The first proviso reads like a non

obstante clause and permits the DDA to allot Nazul land on freehold basis

"either by auction or by tender for residential purpose or commercial

purpose." The second proviso mandates that in the case of allotment on

freehold basis "the allottee shall execute a conveyance deed in Form BA.

Form BA which was first introduced with effect from 19 th April 2006 as an

appendix to the Nazul Rules, and therefore forms part thereof, sets out the

proforma of the conveyance deed which has been executed in the instant case.

Clauses 2, 4 and 6 of the said conveyance deed which are relevant for the

present case, read as under:

"(2) That notwithstanding execution of this Deed, use of the property in contravention of the provisions of Master Plan/Zonal Development Plan/Layout Plan shall not be deemed to have been condoned in any manner and Delhi Development Authority shall be entitled to take appropriate action for contravention of Section 14 of Delhi Development Act or any other law for the time being in force.

(4) The said plot is allotted on the basis of „as is‟ and the purchaser cannot make any alteration/addition/encroachment/ unauthorized construction in or around the same without written permission of Vendor (DDA) who may refuse or grant the same subject to such terms and conditions as deems proper.

All fees, taxes, charges, assessments Municipal or otherwise and other levies of whatsoever nature shall be borne by the allottee/purchaser.

(6) That the purchaser shall abide by the terms and conditions of allotment/auction/tender, which shall be treated as a part of these presents."

20. It is significant that none of the clauses in Form BA contain any

prohibition against amalgamation. By contrast, Form C which sets out a

proforma for a perpetual lease has clause (II)(4) which contains such a

prohibition. It is this identical clause which has been incorporated as condition

3.10(vii) of the general terms and conditions.

21. The learned Single Judge in the instant case has proceeded on the footing

that these general terms and conditions would govern the clauses contained in

the Form BA by virtue of clauses (6) and (7) of the said Form which read as

under:

"6.That the purchaser shall abide by the terms and conditions of allotment/auction/tender, which shall be treated as a part of these presents.

7. That the Vendor reserves the right to cancel this deed in event of breach of conditions of allotment/auction/tender and of this deed."

22. Consequently, the learned Single Judge has opined that amalgamatioin of

the plots cannot be permitted as that would be contrary to the Nazul Rules

which

23. By virtue of Clause (6) of Form BA incorporate the general terms and

conditions of auction. Additionally, the learned Single Judge has opined that

the Resolution dated 7th January 1991 of the DDA and the letter dated 29th

January 1992 of the MOUD permitting amalgamation of the commercial plots

on certain conditions cannot hold the field after 1989, once the Nazul Rules

became effective.

24. We are unable to agree with the above conclusions of the learned Single

Judge. In the first place, it is clear from a plain reading of the rules that it is

Rule 42 which governs the plots in question in the instant case. Form BA

which is statutorily incorporated in the Nazul Rules by virtue of the second

proviso to Rule 42 thereof, contains no clause prohibiting amalgamation. The

reliance by the learned Single Judge on Clause (II)(7) of Form C (which is

relatable to leasehold plots governed by Rule 43) was therefore misplaced.

Secondly, even if one were to accept that Clause 3.10(vii) of the general terms

and conditions would apply by virtue of Clause (6) of Form BA it is a

prohibition against the allottee unilaterally altering the plot. It is not a fetter

on the DDA as is evident from clause (4) of Form BA which is unfortunately

has not at all been noticed by the learned Single Judge. Neither Rule 42 nor

any of the clauses in Form BA fetter the power of the DDA to grant

permission for amalgamation of the plots. Clause 3.10(vii) in the context of a

freehold plot, is certainly not a fetter on the power of the DDA to exercise its

discretion while an application is made in terms of clause (4) of Form BA.

DDA‟s own Resolution dated 7th January 1991 and MOUD letter dated 29th

January 1992 provide guidance to the exercise of this power. Therefore, these

two documents are also not inconsistent with the power of the DDA to grant

amalgamation of commercial plots in terms of clause (4) of Form BA. We are,

therefore unable to agree with the learned Single Judge that the Resolution

dated 7th January 1991 of the DDA and the letter dated 29th January 1992 of

the MOUD no longer hold a field of that they cannot be relied upon while

considering an application seeking amalgamation of commercial plot.

25. It must be stated that learned counsel for the DDA inform the court no

argument was in fact advanced before the learned Single Judge on the aspect

of Resolution dated 7th January 1991 or the letter dated 29th January 1992 of

the MOUD and that the DDA was not in agreement with that conclusion.

Nevertheless, on the interpretation that we have taken, it is clear that the said

point did not arise for consideration since clause (4) of Form BA, which is

part of Rule 42 itself, clearly permits the DDA to consider an application for

amalgamation of commercial plots. It may also be stated that counsel for the

DDA also did not seriously pursue the argument that hotel plots are not

commercial plots and therefore would not be governed by the aforementioned

documents. Considering that what has been executed in this case is the

conveyance deed in form BA, and clause 4 thereof envisages the purchaser

seeking written prior permission of the DDA for making any

alteration/addition. It is clear that request can be considered even for a hotel

plot.

26. In the considered view of this Court, the Lt. Governor‟s opinion that

clause 3.10(vii) of the general terms and conditions of the auction constituted

a prohibition against permitting amalgamation of the two hotel plots, is based

on an incorrect interpretations of the relevant statutory rule as well as the

clauses of the conveyance deed. While the learned counsel for the DDA may

be right in contending that there was no vested right in the appellants to seek

amalgamation, as far as this Court is concerned, the factor that has weighed

with the Lt. Governor in rejecting the request for amalgamation, was not a

relevant one. The decision is therefore unsustainable in law.

27. The question that arises next is the consequential relief that should be

granted. At this juncture we may refer to the submission made by Mr. Verma,

based on the decision in Hajee S.V.M. Mohamed Jamaludeen Bros. & Co. v.

Govt. of Tamil Nadu (1997) 3 SCC 466 that the rights, privileges and

obligations of any grantee of the Government would be completely regulated

by the terms of the grant, even if such terms are inconsistent with the

provisions of any other law. There the dispute was concerned with the effect

of the Government Grants Act, 1895 on the clauses of the conveyance deed.

As far as the present case is concerned, Clause 4 of the conveyance deed

executed in favour of the appellants is certainly not inconsistent with Rule 42

of the DDA Nazul Rules. Also, the reliance placed by Mr. Verma on the

decision in State of Rajasthan v. H.V. Hotels (P) Ltd. (2007) 2 SCC 468 is to

no avail. It was held in the said decision that a change in the building bye-

laws permitting a higher FAR after the date of the auction, should not be

permitted to be taken advantage of by the successful bidder. As far as the

present case is concerned, there is no change in any auction condition which is

sought to be taken advantage of by the appellants. Therefore, we do not see

how this case can help the case of the DDA.

28. Mr. Verma referred to the decision in Haryana Financial Corporation v.

Jagdamba Oil Mills (2002) 3 SCC 496 to contend that the court in its writ

jurisdiction would not sit as an appellate authority over the decisions of the

quasi-judicial authorities. While this proposition is unexceptionable, the scope

of judicial review to correct a decision based on a material which is not

relevant is well recognized. We may reiterate that interference is called for in

the instant case because the Lt. Governor appears to have proceeded on the

erroneous footing that clause 3.10(vii) of the general terms and conditions of

the auction constituted a fetter on the power of the DDA to consider the

application of the appellant for amalgamation of the plots.

29. The matter will have to go back to the Lt. Governor for a fresh decision on

the application of the appellant seeking amalgamation. In our view, it would

be necessary for the Lt. Governor, while considering the matter afresh, to also

consider the certain other relevant factors which have emerged during the

course of the hearing of this appeal. The appellants contended that the

amalgamation is sought of adjacent plots and as a result of the amalgamation

no additional FAR would be gained by them. Learned Senior Counsel for the

appellants also desired that this Court should place on record the offer of the

appellants to pay an additional sum of Rs. 23 crores, or the amount that may

be calculated by the DDA in terms of its Resolution dated 7th January 1991

and the MOUD letter dated 29th January 1992 (as a condition for grant of

permission for amalgamation) of the plots. Further, it is submitted that having

a single hotel on the combined plots would be beneficial from an architectural

standpoint and from the point of lesser consumption of electricity and

availability of larger parking space. While this Court would not like to express

any opinion on these submissions, it would be for the Lt. Governor to consider

them well taking a fresh decision on the application of the appellants for

amalgamation.

30. Accordingly, the impugned judgment of the learned Single Judge and the

decision dated 30th July 2007 of the Lt. Governor are hereby set aside. The

appellant‟s application for permission for amalgamation is directed to be again

placed before the Lt. Governor for a fresh decision in accordance with law and

in light of this judgment. The Lt. Governor will take a fresh decision and pass

a reasoned order within a period of three weeks from today and communicate

the said order to the appellants in writing within a further period of one week

thereafter.

31. During the pendency of this appeal, by an order dated 26th May 2008, the

appellants‟ were permitted to construct up to the plinth level on the basis of

the amalgamated plot on condition that the appellants will not claim any

equity on account of such construction in case they fail in this appeal. Further,

the appellants were asked to deposit a sum of Rs. 4 crores without prejudice to

the rights and contentions of either parties. Since the appellants have

succeeded in this appeal, it is directed that the status quo would be maintained

by both the parties till the decision is rendered afresh by the Lt. Governor

pursuant to this judgment. If the decision of the Lt. Governor is one of refusal

of permission then the consequential action will not be taken for a period of

ten days thereafter to enable the appellants to seek appropriate remedies.

32. With the above directions, the appeal is allowed with no orders as to costs.

S. Muralidhar, J.

Chief Justice

20th October 2008 ak