THE BELGAUM URBAN DEVELOPMENT AUTHORITY versus DHRUVA & ANR. on 28 April 2023

1. This order will dispose of bunch of appeals bearing Civil AppealNos. 2950-2952 of 2023. The common judgment of the High Court videwhich five Regular Second Appeals were decided has been impugned.

From the matters listed before this Court, it is evident that thejudgment of the High Court has been challenged only in R.S.A. Nos.759, 760 and 864 of 2008 and there are no appeals filed in R.S.A. No.758and 863 of 2008. The learned counsel for the appellant did not point outat the time of hearing that there is any other appeal pending in this Courtchallenging the common judgment of the High Court with reference tothe aforesaid two appeals.

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FACTSOFTHECASE:

3. The particulars regarding the present appeals and the respectiveplot numbers in the individual cases are stated as under:

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A4. As common legal issues are involved, the facts have beenextracted from Civil Appeal No.2950 of 2023. The undisputed facts ofthis case are that, Respondent/ Plaintiff in the present appeal madeapplication to Appellant/Defendant No.2 (Belgaum Urban DevelopmentAuthority, in short ‘BUDA’) for allotment of residential site. The appellantallotted site to the plaintiff. The allotment letter was issued on 12.11.1990.BPossession of the site was handed over to the plaintiff. Thereafter, lease-cum-sale agreement was executed on 10.05.1991 in favour of plaintiff/respondent.

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5. As demand of additional price for the plot was raised from therespondent, suit was filed. The Trial Court decreed the suit. In appeal,Cthe judgment and decree of the Trial Court was reversed. In secondappeal filed by the appellant, the judgment and decree of the lowerappellate court was reversed. The same is under challenge before thisCourt. The High Court, in second appeal, directed the appellant to executethe sale deed in favour of respondents in RSA Nos. 864,758 and 863 ofD2008 and further directed to refund the additional price paid by therespondents in RSA Nos. 759 and 760 of 2008.

ARGUMENTS:

6. Mr. S.N. Bhat, learned Senior Counsel appearing on behalf ofthe appellant submitted that plots were allotted to the Respondents-EPlaintiffs vide allotment letter dated 12.11.1990. The clause containedin the Allotment letter mentions that the cost of the plot is tentative.Hence, demand of additional price cannot be said to be illegal. It was onaccount of enhancement of compensation of the land which was utilizedfor carving out the plots allotted to the Respondents-Plaintiffs. He furtherFreferred to the lease-cum-sale agreements executed in favour ofRespondent dated 10.05.1991 where no specific amount as such hasbeen mentioned as consideration. It only mentions that the price wasnegotiated and the Respondents have been allowed to occupy the plottill such time payment of full price is made. The lease-cum-sale agreementfurther provided that the parties thereto agreed to abide by the termsGand conditions as specified in Karnataka Improvement Boards Rules,1976. While relying upon the judgment of this Court in ShimlaDevelopment Authority v. Asha Rani[1]it was submitted that in theaforesaid case, this Court had allowed the Shimla Development Authority to charge additional amount from the allottees on account ofenhancement of compensation for the land acquired.

7. The judgment of this Court in Tamil Nadu Housing Boardand Others v. Sea Shore Apartments Owner’s Welfare Association[2]has also been relied upon to submit that if price mentioned is tentative,additional amount can be demanded.

8. In the case at hand the demand of additional price is fully justifiedfor the reason that the same was on account of enhancement ofcompensation by the Court for the acquisition of land utilized for carvingout the plots. It is further submitted that except the five allottees whowere before the High Court, all others had deposited additional pricedemanded from them on account of enhanced compensation.

9. On the other hand, learned counsel for the Respondents-Plaintiffssubmits that neither in the allotment letter nor in the lease-cum-saleagreement there is any clause in terms of which the Appellant coulddemand additional price from the allottees except on account of variationof size. Clause 5 of the allotment letter only gives an option to the Appellantto re-determine the price in case the size of the plot is finally found to bedifferent than the allotted. To demand additional price from an allotteeon any other ground, there has to be specific clause in the allotmentletter otherwise the price mentioned is final. Even the clause as mentionedin the lease- cum-sale agreement also does not come to the rescue ofthe Appellant for the reason that it talks about the negotiated price betweenthe vendor and the vendee. The same is clearly mentioned in allotmentletter otherwise the agreement would be vague with reference to thesale consideration.

DISCUSSION:

10. Heard learned counsel for the parties and perused the relevantreferred record.

11. The relevant clauses of the allotment letter and the Lease-cum-Sale Agreement, as have been referred to by the Appellant, areextracted below:

“Allotment Letter:

“Clause 5: The dimensions noted are approximate subjectto verification at the time of handing over possession and 2 (2008) 3 SCC 21

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Aallottees will have to pay proportionate increase priceaccording to actual measurements.

The value of the site is Rs.50,000/-+10% Augmentation ofwater supply charges is Rs.5,000/- Tentatively =Rs.55,000/-.”

B“Lease-cum-Sale Agreement:

“whereas there were negotiations between the lessee/purchaser on the one hand and the lessor/ vendor on theother for allowing the lessee/ purchaser to occupy theschedule property as lessee until the payment in full of theCprice of the schedule property as might be fixed by thelessor/ vendor as hereinafter provided;”

12. In Ishwar Dass Nassa & Ors. v. State of Haryana & Ors.[3]this Court considered similar issue. There was hire- purchase agreementexecuted by Haryana Housing Board in favour of the allottee. The clauseDas contained in hire-purchase tenancy agreement, as referred to in parano.3 of the judgment, is extracted below:

“2. (w) If after the receipt of the final bills for the constructionof tenements or as the result of land award or arbitrationproceeding or enhancement in cost of land on any account,Ethe Board considers it necessary to revise the price, alreadyspecified, it may do so and determine the final price payableby the hirer who shall be bound by this determination andshall pay dues, if any, between final price so determinedand price paid by him including the price paid in lump sum,Fprovided that no change in the price shall be made after 7years from the date of allotment.”

13. Demand was raised by the Estate Manager, Housing BoardHaryana, Sonepat after about 10 years directing them to pay additionalprice on account of enhanced compensation pertaining to the land onwhich the tenements were constructed. Interpreting the aforesaid clause,Gthis Court held that as per the condition provided for in the hire-purchasetenancy agreement, the cost of the tenements can be increased eitheron account of cost of construction or enhancement of compensation foracquisition of land. However, interpreting the clause further it was held H3 (2012) 1 SCC 753

THE BELGAUM URBAN DEVELOPMENT AUTHORITY V.DHRUVA & ANR. [RAJESH BINDAL, J.]

that the demand raised from the allottees was not justified for the reasonthat the clause itself provided that such a demand could be raised withinseven years of allotment. Relevant paragraphs therefrom are extractedbelow:

“10. A conjoint reading of the allotment letter and Clause2(w) of the hire-purchase tenancy agreement, which everyallottee is required to execute makes it clear that the price of the tenement specified in the allotment letter is tentative andthe Board can revise the price after receiving final billsrepresenting the cost of construction or if as a result of anorder of the court or an award made by the arbitrator it isrequired to pay higher cost for the land used for constructionof the tenements. In either case, the allottee is bound to paythe additional amount whichwouldrepresentthefinalpriceofthe tenement. If the cost of land is enhanced forany othersimilar reason then too the Board can revise the price andask the allottees topayadditionalprice.Inagivencase, theBoardmayrevisethetentativepricemorethanonceandtheallotteesarebound tosharetheburdenofadditionalcost.

11-12. x x x x x x x x x x

11-12. x x x x x x x x x x

13. Unfortunately, the learned Single Judge and the DivisionBench of the High Court did not give due weightage to theprohibition contained in Clause 2(w) of the hire-purchasetenancy agreement and negatived the appellants’ challengeto the demand of additional price by assuming that the Boardis vested with the power to revise the price at any time. Theuse of the expression “or enhancement in cost of land onany account” after the expression “the receipt of the final billfor the construction of tenements or as the result of land awardor arbitration proceeding” shows that while framing theRegulations, the Board had kept in view all the eventualitieswhich could lead to an increase in the cost of land madeavailable for construction of the tenements and yet thought itproper to put an embargo against the revision of price after 7years. Therefore, the learned Single Judge and the DivisionBench of the High Court were not right in deciding the writpetitions and the writ appeals on the premise that once thecost of land gets increased on account of payment of higher A

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868SUPREME COURT REPORTS

Acompensation to the landowners the Board is entitled todemand additional price from the allottees.”

(emphasissupplied)

14. The issue was also considered by this Court in Preeta Singh(Km) and others v. Haryana Urban Development Authority andBOthers[4]. The challenge in the aforesaid case was also regarding thedemand of additional price on account of enhanced compensation forthe land. Referring to the Section 2(aa) of the Punjab Urban Estate(Sale of Sites) Rules, 1965 which defines “additional price”, as theallotment was in terms of the aforesaid rules, demand of additional priceCon account of enhanced compensation for the acquisition of land whichwas utilized for carving of the plots was upheld by this Court.

15. In Tamil Nadu Housing Board’s case (supra), Clause 18 ofthe Agreement therein clearly provided that after the finalization of thetotal cost of construction of flats in case the value of the land is increasedDin terms of the enhancement of compensation by the Court, the allotteeshall be liable to pay the difference. The relevant clause as referred to inthe aforesaid judgment is extracted below:

“19. Clause 18 of the agreement entered into between theparties and signed by all allottees is extremely importantand reads thus:E

“18. It is expressly agreed between both the parties thatafter the finalisation of the total cost of construction of flatsand the value of the land in accordance with the award ofcompensation declared by the Tribunals and courts, theFpurchaser shall pay to the vendor on demand before theregistration of the sale deed the difference between the amountalready paid by the purchaser as per Clause 2 above and theprice amount finally fixed by the Chairman, the vendor.”

16. There is no such clause in the allotment letter or the lease-cum-sale agreement signed between the parties.G

17. Coming to the judgment cited by learned counsel for theAppellant. In Shimla Development Authority’s case (supra), allotmentof flat was made under the ‘Self Finance Scheme’. The price informedwas tentative. The first demand was raised on account of increase in H4 (1996) 8 SCC 756

the cost of construction and the second demand was raised on accountof increase of compensation for the acquired land utilized for constructionof flats. This Court held that the land of a private owner was acquiredfor construction of flats under the Self Finance Scheme, hence, theallottees are bound to pay the increased cost on account of acquisition ofland. In addition, the allottees are also bound to bear the burden ofescalation in the cost of construction.

18. The relevant clause of the allotment letter for the hire- purchasetenancy agreement entered into between allottee and ShimlaDevelopment Authority as such has not been extracted in the aforesaidorder passed by this Court. However, we have perused the paper bookin that case. The allotment letter dated 14.07.1995 which is in favour ofthe Respondent therein contains a specific clause regarding payment ofenhanced compensation in terms of decision of this Court. The relevantclause is extracted below:

“The amount of enhanced compensation shall be payable asper decision of court. 30,780/-”

19. It was in terms of the aforesaid clause in the agreementspecifically providing for payment of enhanced compensation by theallottee that demand thereof was upheld by this Court.

20. A perusal of clause-5 in the allotment letter shows that optionhas been given to vary the price of the plot in case there is change in thesize of plot. The entire clause has to be read in totality and no part inisolation. This clause does not talk about demand of additional price onaccount of any other factor specially the one raised in the present appeals,namely, on account of enhancement of compensation on account ofacquisition of land for carving of the plots.

21. Even the clauses as contained in the lease-cum-sale agreementalso does not come to the rescue of the Appellant for the reason that ittalks about the negotiated price between the vendor and the vendee.The vendor in the case at hand is the Appellant and the vendee is theRespondent. Sale consideration as such has not been mentioned in thelease-cum-sale agreement, however, the price as negotiated betweenthe parties is clearly mentioned in the letter of allotment and the samehas to be read as partof the lease-cum-sale agreement.

22. For the reasons mentioned above, we do not find any merit inthe appeals. The same are dismissed. However, we make it clear that in AB

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Acase any other allottee who has deposited the amount, initiates any litigationnow, the same shall be considered keeping in view the delay and lachesand principles of acquiescence.

Divya Pandey

B(Assisted by : Pooja Mishra and Shevali Monga, LCRAs)

Appeals dismissed.

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