Madan Lal Arora vs Uoi
2009 Latest Caselaw 1849 Del

4
*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                     Date of judgment: 04.05.2009


+      W.P.(C) 16775/2006, C.M. Nos. 13837/2006, 2646/2008, 16520/2008 & 5364/2009


       MADAN LAL ARORA                                     ..... Petitioner
                     Through : Mr. Ashok Bhasin, Sr. Advocate with Mr. Shantanu
                     Rastogi and Mr. A.K. Sham, Advocates.

                       versus

       UOI                                                                  ..... Respondent

Through : Mr. Gaurav Duggal, Advocate.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT

1. Whether the Reporters of local papers

may be allowed to see the judgment?

2. To be referred to Reporter or not?

3. Whether the judgment should be

reported in the Digest?

S.RAVINDRA BHAT, J. (OPEN COURT)

1. Issue Rule. Mr. Gaurav Duggal, Advocate accepts notice of rule. With consent of counsel

for parties, the matter was heard finally for disposal. The writ petitioner seeks a direction to the

respondent (hereafter called "L&DO") to convert the Suit property, i.e. no. 57/14, Old Rajinder

Nagar into freehold, from leasehold.

2. The facts which are not in dispute are that the Suit property, which measures 85.90

square metres was allotted on 02.12.1964 to one Dharam Pal. The said allottee transferred the

property to Mr. Madan Lal Arora, through a registered sale deed dated 31.08.1966; the mutation

was permitted in his favor on 31.08.1968. He applied for conversion of property into freehold on

13.10.2005. The conversion sought for from leasehold into freehold was in terms of a policy

announced through the office of the L&DO in June, 2003. The guidelines and conditions for

entertaining such requests and grant of such relief were indicated in the brochure. Certain

portions of the conditions, couched in question and answer form are relevant for the purpose of

this case. They are extracted below:

"11. WHETHER CONVERSION WILL BE GRANTED EVEN IF THERE IS A MISUSE OF THE PROPERTY?

Yes, Conversion will be granted even where a portion of residential property is being put to Non residential use, subject to payment of misuse charges, whether earlier demanded or not.

12. WHETHER CONVERSION WILL BE GRANTED EVEN IF THERE IS UNAUTHORISED CONSTRUCTION?

Conversion will be granted to the leasehold properties even if there is unauthorized construction, subject to payment of damages charges, whether earlier demanded or not. However, the applicant will be liable for action under Municipal Bye-Laws. The conversion to freehold in the presence of misuse/unauthorized construction does not act as a waiver of any action which is liable to be taken under the building bye-laws by the Local Body.

13. IF PAST MISUSE AND UNAUTHORISED CONSTRUCTION WERE TAKEN COGNIZANCE OF BY THE LESSOR HOW THESE CASES WILL BE HANDLED?

In respect of these properties where any amount earlier claimed by the lessor and not paid by the lessees will have to be paid before the application for conversion can be considered. In respect of those properties where misuse and/or unauthorized construction exists, conversion may be allowed only after recovering the misuse charges and/or damages charges, irrespective of whether earlier demanded or not."

3. Though originally, when the writ petition was filed, the dispute pertained to certain other

issues, with regard to the kind of documents sought by the L&DO and so on, as on date, the only

objection to the conversion concededly is a demand made to the petitioner on 09.02.2007 for

Rs.8,14,921/-. This demand was issued by the L&DO requiring him to deposit the amount

towards damages for unauthorized construction. The period-wise break-up right from 1971 has

also been indicated in the said demand. The same is as follows:

Demand Letter Demand Id: 814 Date:09-February-

Property Id: 10583 Computer Code: Inspection Id:

Earlier Date From Date To Interest Rate (Rs.) Amount Demand PA (Rs.) Sub Head

Current Date From Date To Interest Rate Amount Charges Sub PA (Rs.) (Rs.) head Damage 28-Oct-1971 13-Apr-1974 - 910.00 2239 charges for u/a Constructions Damage 14-Apr-1974 31-Mar-1979 - 2133.00 10589 charges for u/a Constructions Damage 01-Apr-1979 31-Mar-1981 - 3252.00 6504 charges for u/a Constructions Damage 01-Apr-1981 09-Aug-1983 - 8730.00 20593 charges for u/a Constructions Damage 10-Aug-1983 31-Mar-1985 - 8006.00 13139 charges for u/a Constructions Damage 01-Apr-1985 31-Mar-1987 - 8807.00 17614 charges for u/a Constructions Damage 01-Apr-1987 31-Mar-1989 - 24820.00 49640 charges for u/a Constructions Damage 01-Apr-1989 31-Jul-1990 - 43433.00 57950 charges for u/a Constructions Damage 01-Aug-1990 31-Mar-1991 - 32493.00 24961 charges for

u/a Constructions Damage 01-Apr-1991 31-Mar-1998 - 44992.00 314944 charges for u/a Constructions Damage 01-Apr-1998 22-Jul-1998 - 49492.00 15322 charges for u/a Constructions Damage 23-Jul-1998 31-Mar-2000 - 31306.00 53006 charges for u/a Constructions Damage 01-Apr-2000 14-Jul-2007 - 31306.00 228148 charges for u/a Constructions Additional 12-Nov-1968 14-Jan-1970 - 210.00 247 Ground for u/a Construction 10th Penalty - 0.00 25 814921 Current Damage Charges Breach use Date from Date to Area Rate PA Amount (Rs.) (Rs.)

4. The petitioner contends through learned senior counsel that the demand as made is

unsustainable, as a condition for the conversion. He relied upon the Division Bench ruling in

Union of India v. Vinay Kumar Agarwal 2005 (I) AD (DELHI) 634. It was submitted that in that

decision, the writ petitioner's lease was determined in 1970 and the after a consideration of the

relevant brochure conditions - governing conversion, the Court held that the charges as claimed

could not be enforced by the L&DO since it would be unreasonable. Instead, the Court had

directed L&DO to accept Rs.87,000/- in terms of para 4(c) of the circular subject to which the

conversion had to be carried out.

5. The respondents contend that correctness of the decision in Vinay Kumar Agarwal

(supra) is pending appeal of the Supreme Court. They submit besides that even though in this

case, the lease was not determined, yet the conversion application was made in terms of a later

policy framed in 2003 which granted liberty to the authorities to recover damages for

unauthorized construction, misuse charges, as the case may be, despite pendency and even after

the filing of a conversion application. It was submitted that the writ petition should fail on this

narrow ground.

6. The Court has considered the submissions. As to the basic facts with regard to the

petitioner's existing status as a lessor, his eligibility to be considered for conversion of the

leasehold rights into freehold etc., there is no dispute. The narrow question is whether the L&DO

can insist upon payment of the charges demanded from the petitioner in February 2007 (after the

filing of this petition, in November 2006) as a condition precedent for the grant of the relief of

conversion.

7. The respondent is undoubtedly correct when they argue that the Vinay Kumar Agarwal

case (supra) was decided in the context of a previously existing policy - of 1999. Yet, the Court

cannot be unmindful of the fact that the relevant conditions with regard to who can be denied

conversion remain unaffected in both the policies; they are substantially the same. In Vinay

Kumar Agarwal case (supra), the objection to conversion was far more substantial; the lease had

stood determined as on 1970. Yet, this Court did not feel inhibited from granting the relief. The

Court reasoned as follows:

"23.It is true that the appellant acts as a lessor, with all the attendant rights and privileges, when it frames policies, and negotiates with individual lessees for conferment of benefits in relation to property. Nevertheless, the peculiar position it enjoys, as a State within the meaning of Article 12 places certain inherent limitations upon its conduct. As a State or state agency, it is entitled to adopt a rational policy having universal application. However, in dealing with individuals or classes of persons, it has to keep within the bounds of Article 14, which makes non-arbitrary behavior imperative.

24.If one sees the power of the appellant in the perspective explained above, it would be apparent that there is no rationale why a person who has suffered re- entry should be denied the facility of conversion of his property from lease hold into freehold, whereas a General Power of Attorney holder or even a lessor who sells the property, (when there is no authority to do so) can nevertheless be

relieved of the rigors of such determination/re-entry of lease, and be permitted to enjoy the benefit of conversion into freehold. We are conscious of the fact that the respondent has not attacked clause 18.1. We therefore cannot say that the condition is arbitrary or unreasonable. However, while construing the provisions of a policy, the court is bound to give it a reasonable, and non-arbitrary interpretation. It is settled that when confronted with two interpretations, one which leads to the action becoming Unconstitutional, and the other which, even while furthering the object of the measure, saves it the court must adopt the latter (U.P. Avas Evam Vikas Parishad Vs. Jainul Islam and Maharashtra SRTC Vs. State of Maharashtra)

25.The stand taken by the appellant that it can restore leases only in respect of those cases which relate to transfer, while not restoring the leases of those who seek no such transfers, is arbitrary. If it is possible to proceed and convert the leasehold rights of leases which have been determined, but where the lessees have transferred their rights, the ground of denial of such benefit in cases where there is no transfer, is indefeasible. The proper construction therefore, of Para 18.1 would be to read it down so as to extend the benefit of conversion in those cases of reentry like the present, where the original lessor continues in possession, and applies in time, as per the Brochure of 1999.

26.As far as the issue of damages or payment of amounts aggregating Rs.60 lakhs is concerned, a further justification was sought to be made by way of another affidavit, filed in appeal, which relied upon circulars issued on 31.3.1976, 24.4.1981 and 29.6.1993. All these are in the form of circulars. There is no assertion, or averment that they can be the basis of claiming damages in respect of the eventuality we are concerned with. Nothing was brought to our notice that such circulars, or the basis of those circulars had been published, or otherwise made known to lessees, or that they had general application. We cannot therefore accept the plea that damages were leviable in accordance with those circulars. Furthermore, as noticed by the learned single judge, the amounts claimed in the additional affidavit were never sought from the respondent as charges payable by him."

8. The Division Bench considered and directed the writ petitioner to deposit Rs.61,705/-

since in that case, demands had been made in 1969, 1971 and thereafter at regular intervals.

Concededly, in this case, there was no demand or claim by L&DO for unauthorized construction

or damage charges for the period 1971-2007.

9. In C.M. No.16520/2008, the writ petitioner states that the amount demanded, i.e.

Rs.8,14,921/- may be permitted to be deposited with L&DO but on without prejudice basis and

subject to the final outcome of the appeal pending before the Supreme Court against the Vinay

Kumar Agarwal case (supra). He also seeks conversion of the property subject to an appropriate

clause being added in regard to the above aspect.

10. This Court has considered the submissions of the parties. As stated earlier, till 2007, the

respondent did not indicate or demand any amount towards damage charges. Whether the

respondent could have done so or not is something this Court is not inclined to examine in light

of statement made on behalf of the petitioner. However, at the same time, the Court cannot be

unmindful of the fact that if the entire matter is left at large and even in the event of the L&DO

not succeeding before the Supreme Court, the practical aspect as to the relief, (as in Vinay Kumar

Agarwal case (supra) itself, the Court had directed conversion subject to payment of some

amount) would still remain unresolved. In the circumstances, following directions are issued:

(a) The petitioner shall, in tune with offer made in C.M. No. 16520/2008 deposit the sum of

Rs.8,14,921/- with the L&DO within four weeks from today.

(b) The L&DO is at liberty to appropriate the sum of Rs.2,28,148/-being the amount claimed

for damages for the period 2000-2007.

(c) The balance amount, i.e. the difference between Rs. 8,14,921/- and Rs. 2,28,148/- shall

be maintained in an interest bearing account renewed from time to time and shall be subject to

the final outcome of the L&DO's appeal before the Supreme Court in Vinay Kumar Agarwal

case (supra). In the event, the appeal succeeds, i.e. the Division Bench judgment is set aside, that

amount of Rs.5,86,773/-with interest can be appropriated by L&DO. In case, the appeal is

rejected, the said amount with interest shall be refunded to the petitioner within six weeks of the

Supreme Court's judgment.

(d) On the petitioner depositing the said amount in terms of directions (1) above, the

respondent L&DO shall execute conveyance deed within 10 weeks.

11. The writ petition is allowed in the above terms. There shall be no costs to the order.

Order dasti.

                                                                      S. RAVINDRA BHAT
                                                                            JUDGE
       MAY        04, 2009
       'ajk'