Karnataka High Court

Mysore Urban Development Authority vs Smt Radhika Bhat on 1 October, 2024

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                                       WA No.369 of 2022



  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

       DATED THIS THE 1ST DAY OF OCTOBER, 2024

                        PRESENT
       THE HON'BLE MR JUSTICE V KAMESWAR RAO
                          AND
           THE HON'BLE MR JUSTICE C M JOSHI


                  WA NO. 369 OF 2022


BETWEEN:

MYSORE URBAN DEVELOPMENT AUTHORITY,
JHANSI RANI LAKSHMI BAI ROAD,
K.G. KOPPAL, MYSURU,
KARNATAKA - 570 005.
REPRESENTED BY COMMISSIONER.

                                             ...APPELLANT
(BY SRI. VIVEKANANDA T P, ADVOCATE)


AND:

SMT. RADHIKA BHAT,
AGED ABOUT 53 YEARS,
W/O LATE VENKATESH VISHWANATH BHAT,
R/A NO.907, 10TH CROSS,
24TH MAIN ROAD,
J.P. NAGAR, II PHASE,
BENGALURU - 560 078.
                                           ...RESPONDENT
(BY SRI. ARUN KUMAR, SENIOR COUNSEL FOR
    SMT. RAKSHITHA PAI, ADVOCATE AND
    SRI. SUNDARA RAMAN M V., ADVOCATE)

       THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT, 1961 PRAYING TO ALLOW THE WRIT APPEAL
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                                            WA No.369 of 2022



AND SET ASIDE THE ORDER DATED 20/12/2021 PASSED BY
THE LEARNED SINGLE JUDGE IN WP NO.22550/2019, ETC.

     THIS   WRIT    APPEAL    HAVING     BEEN   RESERVED    FOR
JUDGMENT       ON     08.07.2024,        COMING     ON      FOR
PRONOUNCEMENT       THIS     DAY,    V   KAMESWAR    RAO     J.,
DELIVERED THE FOLLOWING:


CORAM:   THE HON'BLE MR JUSTICE V KAMESWAR RAO
         AND
         THE HON'BLE MR JUSTICE C M JOSHI


                      CAV JUDGMENT

(PER: THE HON'BLE MR JUSTICE V KAMESWAR RAO)

The challenge in this appeal by the appellant-Mysore

Urban Development Authority ('the Authority' for short) is

to an order dated 20.12.2021 passed by the learned

Single Judge in WP No.22550/2019 whereby the learned

Single Judge has allowed the writ petition by stating in

paragraph No.18 of the impugned order as under:

"18. For the aforesaid reasons, I pass the following:

ORDER

(i) Writ Petition is allowed and the impugned endorsement dated 23-11-2016 stands quashed.

(ii) The respondent is directed to refund the entire sum of Rs.6,60,000/- to the petitioner with applicable rate of interest that the said amount has earned with its deposit in the Bank as obtaining from time to time.

(iii) The aforesaid amount of Rs.6,60,000/-

with determined interest shall be refunded to the petitioner within eight weeks' from the date of receipt of a copy of this order, failing which, the petitioner shall become entitled to interest at 12% per annum from the date of this order, till payment."

2. Some of the facts that need to be noted for the

purpose of decision in this appeal are, the father-in-law of

the respondent herein (petitioner before the learned Single

Judge) was allotted site No.7 by Karnataka State Group-D

Employees House Building Co-operative Society on

23.12.1988. Thereafter on 15.11.1991, the appellant-

Authority executed a lease-cum-sale agreement in favour

of the father-in-law. The two clauses on which reliance

has been placed by the counsel for the appellant are,

clause-3 and clause-12 respectively, which are reproduced

as under:

"Clause:3 - The Lessee/Purchaser shall construct the building as per the approved plan under the provisions of Mysore City Municipalities Act, 1969 and the Rules made thereunder and the bye-laws within two years from the date of the lease-cum-sale agreement."

"Clause:12 - If the Lessee/Purchaser performs the conditions stipulated in the agreement without any breach, after expiry of 10 years as stipulated above, the property shall be sold to the Lessee/ Purchaser by exempting stamp duty and registration charges."

The site No.7 was handed over to the father-in-law of the

respondent on 21.08.1992.

3. On 08.11.1998, the father-in-law of the

respondent died and the mother-in-law of the respondent

succeeded to the property. She also died intestate on

21.04.2007 leaving behind her son, the only legal heir.

Thereafter, the husband of the respondent also died on

19.09.2012 leaving behind the respondent and her two

children.

4. During the lifetime of the original allottee i.e.,

father-in-law of the respondent and thereafter, the legal

representatives, no construction was put up on the allotted

site. The respondent approached the appellant-Authority

requesting for execution of absolute sale deed to her

name. In response to which, the Authority issued an

endorsement dated 23.11.2016 calling upon the

respondent to pay a penalty of 25% of the guidance value

i.e., Rs.6,60,000/- since no construction is made on the

allotted site.

5. The respondent paid the amount of Rs.6,60,000/-

under protest and submitted a representation dated

31.08.2017 to the appellant-Authority contending that the

Authority has no power to impose penalty on her under

any provision of law as she had not sold the property, but

she had retained it.

6. On payment of the amount, the appellant

executed the sale deed dated 14.03.2018 conveying title

of site No.7 in favour of the respondent. The aforesaid

sale deed was executed after 9 months from the date of

payment of the aforesaid amount. After one year from the

date of execution of the absolute sale deed, the

respondent approached the learned Single Judge by way

of writ petition challenging the endorsement dated

23.11.2016.

7. The case of the respondent before the learned

Single Judge was that, the appellant by erroneously

interpreting the rules, has charged the penalty of 25% of

the sital value, which is only leviable if the allottee had

sold the site and not retained the site. The case was also

that, after 10 years, the appellant has to come forward to

execute the sale deed or order cancellation of the

allotment, but no such action was taken by the appellant,

therefore it cannot demand penalty from the respondent.

8. The case of the appellant before the learned Single

Judge was that, it is not for the appellant to come forward

for execution of the sale deed but the allottee should come

forward and get the sale deed executed within the

stipulated time. It was also the case that, the appellant

could have even cancelled the allotment and as such, the

respondent cannot contend that she is not liable to pay the

penalty of 25% as till date, the allottee or the respondent

has not constructed the house on the site and kept the

same as a land bank.

9. The learned Single Judge, after referring to Rules

19 and 20 of the Karnataka Urban Development

Authorities (Distribution of Sites) Rules, 1991 ('the Rules'

in short), was of the following view:

"12. Therefore, the said clause was not in existence when the allotment was made in favour of the father-in-law of the petitioner. The proviso itself restricts imposition of 25% upon an allottee of such allotment that has been made between 2001- 2005. It is not in dispute that the subject site was allotted in favour of father-in-law of the petitioner on 15-11- 1991 at which point in time, admittedly the penalty clause aforementioned was not in existence. The Rule also does not direct imposition of penalty upon allottees of sites before 2001 as the amendment for the first time was brought into effect from 23-06- 2005 and the next amendment was on 02.05.2013 wherein the penalty of 25% was introduced.

13. On a coalesce of facts aforesaid, the provisions of the Rules would mandate that an allottee has to construct a building within 5 years from the date of execution of lease-cum- sale agreement; on expiry of 10 years from the date of lease- cum-sale agreement if the allotment has not

been cancelled, MUDA shall execute the sale deed on its own cost after notice to the allottee or if the allottee fails to get the sale deed executed within the time frame stipulated by authority, the authority shall execute the sale deed and recover the cost from the allottee. All these circumstances have never happened in the case at hand. Original allottee never constructed the house, MUDA never issued any notice directing execution of sale deed after 10 years or cancelled the allotment invoking the afore-quoted clauses in the Rules and the penalty clause coming into effect long after the allotment would not empower the respondent/MUDA to impose the penalty in terms of the impugned endorsement as the Rule itself restricts imposition of penalty only to allotments made beyond 2001 and not prior to it.

14. It is trite law that, even a single rupee of penalty cannot be imposed against a citizen, except in accordance with law. The law in the case at hand i.e., the Rules does not permit imposition of such penalty on the allottee.

15. The submission of the learned counsel appearing for MUDA that Government has clarified by way of a communication to MUDA that all the allotments made beyond 1991 would attract penalty for such violation is unacceptable, as any clarification contrary to the Rules by way of an ordinary

communication can hardly be pressed into service as a justification for imposition of penalty.

16. When the Rule prohibits it, the communication cannot permit it, as it is well-worn law that a Circular or a Government order by itself cannot be contrary to law, much less, an ordinary communication of the Government from the Urban Development Department to MUDA. Such a communication cannot be elevated to the status of Circular or order by Government having the effect of amending the Rule. Even circulars or Government orders cannot be contrary to the Act or the Rules.

17. Therefore, imposition of impugned penalty is contrary to law, apart from the fact that the charging section under the Karnataka Urban Development Authorities Act, 1987 itself does not empower framing of such a Rule that imposes penalty, as penal clauses must have a statutory sanction from the charging section. The petitioner has contended and appended documents that she has paid the amount so demanded by MUDA, under protest. Therefore, since the demand itself is contrary to law and the amount is paid under protest, MUDA will have to now refund the amount of Rs.6,60,000/- demanded as penalty for execution of the sale deed in favour of the petitioner along with interest that has accrued on the deposit made by the

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petitioner, as obtaining in the Banks from time to time.

18. For the aforesaid reasons, I pass the following:

ORDER

(1) Writ Petition is allowed and the impugned endorsement dated 23-11-2016 stands quashed.

(ii) The respondent is directed to refund the entire sum of Rs.6,60,000/- to the petitioner with applicable rate of interest that the said amount has earned with its deposit in the Bank as obtaining from time to time.

(iii) The aforesaid amount of Rs.6,60,000/-

10. The submissions of Sri. T.P.Vivekananda, learned

counsel for the appellant are the following:

i) neither the original allottee nor the successors-in-

interest of the site in question have complied with the

terms and conditions of allotment more particularly the

construction of residential house on the allotted site within

a period of two years from the date of allotment;

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ii) merely because the appellant Authority has not

exercised its right to cancel the allotment on the ground of

non-construction of the building on the allotted site, the

allottee would not be entitled to seek execution of absolute

sale deed even though there is a breach of the terms and

conditions of the allotment;

iii) immediately after the expiry of ten years, neither

the allottee nor the successors-in-interest have

approached the appellant to perform its obligation of

execution of absolute sale deed on the ground that no

proceedings have been initiated for cancellation of

allotment on the ground of non-construction of the house;

iv) the request for execution of absolute sale deed

has been made in the year 2018 and the same has been

considered in terms of the amendment to Rule 20 read

with clarification dated 20.12.2013 issued by the State

Government;

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v) Proviso to Rule 20 has been inserted by

notification dated 20.03.2013. The relevant clause of the

said notification is proviso 4(c);

vi) the said proviso stipulates that the allottees of

sites from 2001 to 2005 who have not obtained the sale

deeds, may obtain the sale deed by paying penalty of 25%

of the guidance value;

vii) the proviso inserted in the year 2013 did not

make any provision in respect of the allottees of sites from

the year 1991 till 2001. The appellant received several

requests from the allottees of sites from 1991 to 2001 for

providing the benefit of execution of sale deed with

penalty. In the circumstances, the appellant wrote to the

Government seeking clarification as to whether the

amended provisions to Rule 20 may be applied to the

allottees of sites from 1991 to 2001. In response to which,

the State Government by its communication dated

20.12.2013 clarified that the Authority may consider the

execution of the sale deeds by restricting the amended

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provisions of Rule 20 only to the allotments made from

1991 to 2005;

viii) but for the amendment to Rule 20 brought in the

year 2013 coupled with the clarification of the State

Government dated 20.12.2013, the appellant would not

have considered the request of the petitioner for execution

of absolute sale deed. If the amended provisions of Rule

20 and the communication dated 20.12.2013 were not in

place, the respondent/petitioner was required to construct

the residential house and thereafter seek execution of

absolute sale deed;

ix) after having obtained the benefit of the amended

provisions of Rule 20 and the communication dated

20.12.2013 of the Government, the respondent cannot be

allowed to contend that the amended provisions of Rule 20

and the communication are not applicable to the case on

hand since the amendment to Rule 20 is applicable to the

allottees of sites from 2001 to 2005;

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x) as regards the interpretation to Rule 19(6) and (7)

are concerned, they cannot be read in isolation. If the

entire provisions of Rule 19 and 20 are read together, it is

clear that construction of a building on the allotted site is a

must, in order to obtain the absolute sale deed from the

Authority. The allottees who do not wish to construct the

building and yet seeks the execution of the absolute sale

deed is liable to pay penalty of 25% of the guidance value;

xi) by only placing reliance on the latter part of

Sub-Rule (6) and Sub- Rule (7)(i), the respondent cannot

be allowed to contend that since the appellant has not

exercised its power of cancellation of allotment on the

ground of non-construction of the building, therefore it is

bound to execute the sale deed on its own immediately

after the expiry of ten years and without insisting for

construction of the building, as such an argument if

accepted, shall defeat the very purpose and object of the

allotment of site at a subsidized price by the Development

Authorities;

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xii) even if the appellant has not exercised its power

to cancel the allotment on the ground of non-construction

of the building, the status of the allottee even after expiry

of ten years of lease would continue to be of a Lessee until

the allottee constructs the building and obtains absolute

sale deed, as is clear from Sub-Rules (4) and (5) of Rule

19 which reads as follows:

Sub-rule (4):

"Until the site is conveyed to the allottee, the amount paid by the allottee for the purpose of the site shall be held by the Authority as security deposit for the due performance of the terms and conditions of the allotment and the lease-cum-sale agreement entered into between the Authority and the allottee".

Sub-rule (5):

"The allottee shall comply with the conditions of the agreement executed by him and the buildings and other bye-laws of the Authority or Corporation or Municipality as the case may be for the time being in force".

xiii) that on a combined reading of Sub-Rules (4),

(5), (6) and (7) of Rule 19, it is clear that the allottee has

an obligation under the terms and conditions of the

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allotment as enumerated in the lease-cum-sale agreement

for the purpose of obtaining the absolute sale deed

immediately after completion of the lease period of ten

years to construct the site. The argument that if within a

period of ten years to the allotment is not cancelled, the

appellant Authority is obliged to execute the absolute sale

deed is not legally acceptable and would be contrary to the

purpose of the enactment;

xiv) the execution of lease-cum-sale agreement is a

statutory contract between the Authority and the allottee.

Since the lease-cum-sale agreement is executed in Form-

III as referred to in 2nd proviso to Rule 19(1), therefore

Form-III is part and parcel of the Statutory Rules and the

Clauses contained in the lease-cum-sale agreement are

enforceable by each of the parties. If any one of the

parties commits breach of any one of the conditions of the

lease, the party who breaches the condition has no right to

enforce the other clauses contained in the very same

lease-cum-sale agreement;

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xv) the breach committed by the allottee/respondent

is condoned by imposition of penalty of 25% of the

guidance value and if the respondent was not intending to

pay the penalty of 25% of the guidance value, it was open

for her to construct the building and then seek for absolute

sale deed;

xvi) the allottees of sites cannot, as a matter of

right, seek execution of absolute sale deed in respect of

the vacant sites immediately after completion of lease

period of ten years on the ground that the Authority has

not cancelled the allotment for breach of conditions of

lease agreement as that would be innocuous situation of

executing the sale deeds in favour of the allottees in

respect of vacant sites, which is not the intent of the

registration;

xvii) the amended provisions of Rule 20 and the

clarification of the Government dated 20.12.2013 are in

place since 2013. Hundreds of allottees have obtained the

benefit of the said Rule by paying penalty of 25% of the

guidance value. If at the instance of the respondent if it is

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held otherwise, it would have serious financial

repercussion on the Authority and every allottee who has

obtained the sale deed by paying 25% of the penalty

would approach this Court seeking refund of the amount

paid by them;

xviii) another significant aspect is that even after

bringing it to the notice of the respondent that the demand

of 25% of the guidance value was made in terms of the

amended provisions of Rule 20 and the clarification dated

20.12.2013, no challenge was laid to the said amendment.

Therefore, the respondent cannot be heard to contend that

the amendment and the communication dated 20.12.2013

are not in accordance with law;

xix) that under section 65 of the Karnataka Urban

Development Authorities Act, 1987, the Government is

empowered to issue such directions to the Authority as in

its opinion are necessary or expedient for carrying out the

purpose of the Act and it shall be the duty of the Authority

to comply with such directions. The communication dated

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20.12.2013 could be construed as a direction to the

Authority in terms of section 65 of the KUDA Act, 1987;

xx) the order passed in WP No.1571/2013 dated

18.12.2023 covers the issue in which the learned Single

Judge by taking note of the amendment to Rule 20 and

the conditions stipulated in the lease-cum-sale agreement

has come to the conclusion that the allottee who seeks

for execution of the absolute sale deed without complying

with the requirement of the lease-cum-sale agreement is

liable to pay the penalty of 25% of the guidance value and

accordingly the similar prayer of refund of the amount

already deposited has been rejected.

11. He seeks the prayer made in the appeal.

12. On the other hand, Sri. Arun Kumar, learned

Senior Counsel for the respondent had submitted the

following:

i) Rule 19(6) governs the incidents of non-

compliance with the obligation to construct as required by

the Rules / Lease cum Sale Agreement;

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ii) Rule 20 governs incidents of alienations made in

violation of the conditions against alienation in the Rules /

Lease cum Sale Agreement;

iii) while Rule 19(6) gives the authorities the power

to extend the time fixed for construction, the right vested

in the authorities for cancellation or revocation of

agreement is subject to reasonable notice and

consideration of response of the allottee, power to extend

time fixed and in the case of termination subject to refund

of 88.5% of consideration paid. Cancellation is therefore at

the discretion of the authorities, depending on the facts

and circumstances each case presents;

iv) Rule 19(7) says that if the power under Rule

19(6) is not exercised within a period of ten years, then

the authority is bound to execute a Sale Deed in favour of

the allottee. In fact the mandatory obligation in Rule 19(7)

thrusts an obligation upon the Authority to execute the

Sale Deed at the cost and expense of the Authority,

recoverable from the allottee;

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v) It is therefore clear that under the Rules the

power to cancel under Rule 19(6) has to be exercised

before the expiry of the lease period. In other words it

should be exercised between the 5th and 10th year after

the execution of the lease-cum-sale agreement;

vi) this proposition of law is supported by the

judgments of this Court in the following judgments:

a. Lalithamma -Vs.- Belgaum Urban Development Authority [WP No.72486/2012, decided on 27.10.2022]

b. Sidharth -Vs.- Dayanand Patil and Another [CCC No.200217/2023 connected with WA No.200032/2024, decided on 19.02.2024]

vii) the principle on which Rule 19(6) is based is that

all or any action that the Authority is required to take,

must be taken within a reasonable period of time. In Ram

Chand and Others -Vs.- Union of India and Others

[(1994) 1 SCC 44], the Supreme Court has observed

thus:

"14. ... ... ... It is settled that in a statute where for exercise of power no time-limit is fixed, it has to

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be exercised within a time which can be held to be reasonable. ... ... ..."

viii) the scheme of Rule 19(6) prescribes that the

reasonable time for exercising the power to cancel the

allotment for non-compliance with the obligation to

construct upon the site, is a maximum period of 5 years;

ix) the mandate in Rule 19(7) is clear that a Sale

Deed has to be executed if the Authority has not cancelled

the allotment or determined the lease in accordance with

the Rules or the terms of the Agreement. The conditions

upon which Rule 19(7) operate are definite. The obligation

is mandatory. There is no room to relieve the authority of

this obligation on the ground that the allottee is yet to

undertake the construction;

x) in the instant case the authority has not sought to

exercise any such power for the last 24 years;

xi) Rule 19 does not contemplate the stipulation of

any penalty, as is sought to be done by the appellants;

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xii) a 'proviso' to a rule only embraces the field which

is covered by Rule 20. A proviso to Rule 20 cannot be an

exception to Rule 19, where there is no similar stipulation.

Reference: Tribhovandas Haribhai Tamboli -Vs.-

Gujarat Revenue Tribunal and Others [(1991) 3 SCC

442];

xiii) a penalty cannot be levied except by way of the

authority of statutory law. Reference: Shree Bhagwati

Steel Rolling Mills -Vs.- Commissioner of Central

Excise and Another [(2016) 3 SCC 643];

xiv) A penalty cannot be imposed retrospectively.

Reference: Income Tax Officer, Alleppy -Vs.- M.C.

Ponnoose and Others [(1969) 2 SCC 351];

xv) The payment of penalty was made by the

Petitioner under protest as is evident from Annexure-M at

page 45. As such the judgment of this Court in I.S.

Ponnappa -Vs.- Mysore Urban Development

Authority and Another [WP No.1571/2023, decided

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on 18.12.2023] would not be applicable. He seeks

dismissal of the appeal.

Analysis:

13. Having heard the learned counsel for the parties

and perused the record, the issue which arises for

consideration is whether the learned Single Judge is right

in directing the appellant to refund the amount of

Rs.6,60,000/- to the respondent with interest by quashing

endorsement dated 23.11.2016?

14. By the endorsement dated 23.11.2016, the

appellant had called upon the respondent to pay an

amount of Rs.6,60,000/- for execution of sale deed as the

respondent has not constructed the house on the site in

question which amount is 25% of the rate prescribed.

15. The site was allotted to the father-in-law of the

respondent on 15.11.1991. The terms of the lease

executed includes clauses-3 and 12, which we have

already reproduced above. Rules 19 and 20 of the

Karnataka Urban Development Authorities (Distribution of

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Sites) Rules, 1991 of which the reference is made by the

learned Single Judge, governs the grant of lease to the

respondent have already been reproduced at paragraph

No.12 above.

16. Before we deal with the submissions of the

counsel for the parties, it is necessary to state here that

the State Government had issued a notification dated

20.03.2013 whereby the Government, in exercise of

powers conferred under Section 71 of the Karnataka Urban

Development Authorities Act, 1987, amended Rule 20 of

the Karnataka Urban Development Authorities

(Distribution of Sites) Rules, 1991, thereby adding

"Proviso" clauses after clauses 3(a) and 3(b) in the

following manner (the English Translation as filed by the

counsel for the appellant):

"Provided

In wherein allottees cases who are allotted sites allotted as per Karnataka Urban development authorities site allotment Rules, 1991, have directly alienated/ sold by constructing house/ without constructing the house by violating the allotment condition within 10 years lease period, sale deed

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shall be executed by collecting penalty at the rate of 50% of the registration charges fixed by the government from time to time from the purchasers;

b. In cases wherein allottees who are allotted sites allotted per as Karnataka Urban development authorities site allotment Rules, 1991, have directly alienated/ sold by constructing house/ without constructing the house after completion of 10 years lease period without obtaining the Sale Deed, sale deed shall be executed by collecting penalty at the rate of 25% of the registration charges fixed by the government from time to time from the purchasers;

c. In cases wherein allottees of the sites who are allotted sites during the period from 2001 to 2005 [i.e. during the period from 1991 till amendment rules 2005 under Government notification No.UDD 123 BenRuPra issued as per amendment to Karnataka Urban development Authorities (site allotment) Rules, 1991 under

dated 15/11/2001 have not yet obtained Sale deed, sale deed shall be executed by collecting penalty at the rate of 25% of the registration charges fixed by the government from time to time from the purchasers;

d. Only in cases of purchase of sites/ houses through GPA by entering into GPA before obtaining Sale deed by constructing/ without constructing

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house before completion or after completion of the lease period by the allottees of sites allotted with sites as per Karnataka urban development authorities site allotment Rules, 1991, Sale deed shall be executed by collecting penalty at the rate of 50% of the market value fixed by the Sub-Registrar from the purchasers.

17. For the purpose of this appeal, we are concerned

with proviso (c).

18. It may also be stated here that learned Senior

Counsel for the respondent has also filed translation of

amendment to Rule 20 in the following manner:

"PROVIDED that

(a) Where an allottee of a site allotted under the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 alienates the same either before or after construction of a building thereon, within the lease period of 10 years, the Authority shall execute a sale deed after collecting from the purchaser a penalty of a sum equivalent to 50% of the guideline value fixed by the Government from time to time.

(b) Where an allottee of a site allotted under the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 alienates the site

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after completion of the lease period of 10 years, whether with or without construction of a building thereon, but before the Authority has executed a sale deed in his/her favour, the Authority shall execute a sale deed after collecting from the purchaser a penalty of a sum equivalent to 25% of the guideline value fixed by the Government from time to time.

(c) Where allottees of sites allotted between the years 2001 and 2005 (i.e., between the commencement of the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 as amended vide Government Notification bearing No. 257 98 dated 15-11-2001 AND the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 as amended vide

2005 dated 23-5-2005) have not secured a sale deed of the site in his/her favour, the Authority shall execute a sale deed after collecting from the allottee a penalty of a sum equivalent to 25% of the guideline value fixed by the Government from time to time.

(d) Only in cases where an allottee of a site allotted under the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 has alienated the site by executing a general power of attorney (GPA), either with or without construction of

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a building thereon, whether before or after completion of the lease period of 10 years but before execution of a sale deed by the authority, the Authority shall execute a sale deed after collecting from the purchaser a penalty of a sum equivalent to 50% of the guideline value fixed by the Government from time to time."

19. Pursuant to certain communications of the

appellant-Authority dated 10.09.2019 and 05.11.2013, the

Government of Karnataka has addressed a communication

dated 20.12.2013 to the Commissioner, Mysore Urban

Development Authority, the translation of which reads as

under:

"Sub: Issuing Sale Deed for the sites allotted from the Authority reg.

Ref: 1. Your letter No.MUDA/AaAaSaSha/ 2013-14 dated 11/09/2013.

2. Your letter No.ManUDA /AaDruPa/13/2013-14 dated 05/11/2013.

***

With regard to above subject, on examining the proposal in the letter at reference, the following clarification is issued:

Amended rules published through Government notification dated 20/03/2013 has come into force

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from the date of publication of the notification and it is mentioned that, the said amended rules are applicable only to the sites allotted prior to the said amendment Rules, 2005. In the said amendment order, no amendment is made to the provisions of rule 19 of Karnataka Urban development authorities site allotment Rules, 1991. Amendment inserting new provisions by amending Rule 20 is applicable only to limited extent i.e. for the sites allotted by various authorities from 1991 to 2005. This amendment rule is not applicable to the sites allotted after 2005. Wherefore, whatsoever rule 19 of Karnataka Urban development authorities site allotment Rules, 1991, I am directed to inform you to examine with regard to issuing Sale deed by restricting the amendment to Rule 20 only to the sites allotted between 1991 and 2005."

20. Suffice to state, the English translations filed by

both the counsel are at variance. Sri. Vivekananda did

argue that the proviso inserted in the year 2013 did not

make any provision in respect of the allottees of sites

between the years 1991 to 2001. But, as the appellant

received several requests from the allottees of sites from

1991 to 2001 for providing the benefit of execution of sale

deed with penalty, the appellant sought clarification from

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the State Government; in response to which, the State

Government clarified that the appellant may consider the

execution of sale deeds by restricting the amended

provisions to Rule 20 only to the allotments made from

1991 to 2001.

21. The submission of Sri. Vivekananda that it is in

view of the clarification of the State Government dated

20.12.2013 that the appellant had considered the request

of the respondent for execution of the sale deed, is

appealing, as without construction of the site, the sale

deed could not have been executed.

22. The learned Single Judge held that a single rupee

in penalty cannot be imposed against a citizen except in

accordance with law as the rules do not permit imposition

of such penalty on the allottee. His conclusion is also that

the clarification cannot be relied upon to impose penalty.

The submission is appealing on a first blush. But it is seen

an anomalous position has arisen in as much as an allottee

between the years 2001 to 2005, who has not constructed

the site is fastened with penalty, but not an allottee of the

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prior period between 1991 to 2000. In fact, Sri.

Vivekananda has submitted that hundreds of allottees

have obtained the benefit of the said rule by paying 25%

penalty of the guidance value and if at the insistence of

the respondent, it is held otherwise, there would be

serious financial repercussion on the appellant, as every

allottee who has paid 25% penalty would seek refund.

23. In any case, what is also required to be seen in

the facts of this case is, the conduct of the respondent.

The site in the case in hand, was allotted in the year 1991.

It was not constructed till 2016 when a request for

execution of the sale deed was made. This request was

after 25 years of allotment. So, in other words, the

construction which was to be made within 2 years or for

that matter 10 years was not made; even after 25 years.

There is nothing on record to confirm that construction has

been made as of today. Be that as it may, it is on the

representation of the respondent dated 03.05.2016 for

execution of the sale deed that the appellant had vide its

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endorsement dated 23.11.2016, stated as under (being

the English translation):

"ENDORSEMENT

Sub: Sale deed sought for site No.7/10 measuring 40x60 feet at Saathagalli 'D' Group layout, Mysore city - reg.

Ref: Your application dated 03/05/2016.

***

With regard to above subject, on examining the request made by you, you have sought sale deed for site No.7/10 measuring 40x60 feet of Saathagalli 'D' group layout. You are hereby informed that, as you have not constructed house in the said site, action regarding your request would be taken on submitting the receipt by paying 25% portion at the present rate amounting to Rs.6,60,000/-."

24. The thrust of the communication is that, as the

respondent has not constructed any building in the site,

action on her request would be taken on her submitting

the receipt by paying 25% penalty i.e., Rs.6,60,000/-.

From the contents of the letter, it is clear that it is because

of non-construction of the site that the penalty was

imposed. The respondent had an option, as stated by

Sri. Vivekananda, that she could have constructed the site

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and then approached the appellant for execution of the

sale deed. But the respondent without constructing the

site, by stating without prejudice, has paid the penalty of

Rs.6,60,000/- to the appellant and got executed the sale

deed. In such circumstance, the plea that payment was

without prejudice, shall be of no effect/no consequence

and cannot enure to the benefit of the respondent when

the respondent had the option to construct the site before

approaching the appellant for execution of sale deed. In

fact, even under the rules, the execution of sale deed is

only after the construction of the site.

25. The respondent having opted for execution of

sale deed without construction of site and paid the

penalty, even if it is without prejudice, could not have

resulted in the challenge to the endorsement dated

23.11.2016. In fact we find the appellant had, in its

response to the writ petition, taken a stand, if the

respondent/petitioner had raised the objection on the

demand made by the appellant, the appellant would have

insisted the respondent/petitioner to construct the

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residential house on the site and thereafter approach the

appellant-Authority for execution of the registered sale

deed.

26. So, we are of the view that the learned Single

Judge has erred in not considering the above factual

aspect of the case showing the conduct of the respondent

which shall surely disentitle the respondent the prayer(s)

as sought by her in the writ petition.

27. Sri. Vivekananda is also justified in relying upon

the judgment of learned Single Judge of this Court in the

case of I.S. Ponnappa (supra), wherein the learned

Single Judge has, in paragraph No.8, on identical facts in

respect of the same Rule 20, stated as under:

"8. A perusal of Sub-clause (3) To the said Rule 20, proviso 3 would indicate that in the event of allottee wishing to obtain a sale deed without complying the requirements of lease-cum-sale agreement, 25% penalty would have to be levied. The said proviso (3) would only apply if a allottee were to seek for execution of the sale deed in his favour without complying the requirements of the lease-cum-sale agreement. In the event of the conditions of lease- cum-sale agreement having