2005 Supreme(SC) 468

2005(4) Supreme 380
Supreme Court of India
(From Madhya Pradesh High Court)
Arijit Pasayat & S.H. Kapadia, JJ.
M.P. Housing Board —Appellant
versus
Anil Kumar Khiwani —Respondent
Civil Appeal No. 1731 of 2005
(Arising out of SLP (C) No. 22560 of 2004)
With
Civil Appeal No. 1732 of 2005
(Arising out of SLP (C) No. 22616 of 2004)
Decided on 14-3-2005
Counsel for the Parties :
For the Appellant : Ravindra Shrivastava, Sr. Advocate, B.S. Banthia, Naveen Sharma and Kunal Verma, Advocates.
For the Respondent : Sudhir Chandra, Sr. Advocate, P.K. Bansal, Akshay Arora, Pankaj Kumar Singh, J.P.N. Gupta and K. Janjani, Advocates.

Important point
Courts should be slow in interfering at interim stage with housing schemes which are based on costing.

Headnote:Civil Procedure Code, 1908—­Order 39 Rules 1 and 2—Self Financing Scheme for construction of a commercial complex—Interim injunction—Courts should be slow in interfering at interim stage with schemes which are based on costing—Booking of a showroom in a commer­cial complex—According to the advertisement, estimated cost of a showroom and departmental store in the commercial complex having built up area of 3550 sq. ft. on upper ground level was Rs. 39 lacs—Respond­ent submitted an application in the prescribed form enclosing his cheque for Rs. 3.90 lacs, being 10% of the estimated cost of the showroom—On 25.9.2000, a temporary registration was made in favour of the respondent—Escalation of prices—Each of the contributors includ­ing respondent was given an option to withdraw from the scheme if he did not agree to the proposed actual cost of Rs. 2000/- per sq. ft.—Housing Board called upon the respondent to pay an amount of Rs. 71 lacs for the showroom on the upper ground floor—This was objected to by respondent—Ultimately, on 29.6.2002, appellant cancelled the registration—Respondent filed civil suit for declaration and injunc­tion—Whether trial Court was justified in ­restraining the board from allotting the showroom in question to any other person till the dis­posal of the suit—(No).

       Held : Normally, this Court is reluctant to interfere with the interim orders passed under order 39 rules 1 & 2 CPC. However, in the present case, we are concerned with construction of a seven storeyed commer­cial premises under a self-financing scheme floated by the appellant. In the said complex, there are showrooms, departmental stores and halls for commercial uses. The question involved in this case is - whether the offer contained in the above advertisement was for a fixed amount of Rs. 39 lacs? (Paras 11 and 12)

       In this case, we are concerned with a self-financing scheme under which a commercial complex is constructed. In a self-financing scheme, costing plays an important role. The building in question comprises of various units. These units are self-financed. A buyer of the unit has to fund the cost of construction. A buyer under such a scheme cannot be permitted to buy a unit at a price which is less than the cost of construction. In a self-financing scheme, pricing is generally based on cost of construction unlike sale of houses after they are complet­ed, in which cases pricing is generally market related. In the case of a self-financing scheme, no buyer can claim a right to purchase any unit at a price lower than the actual construction cost, as the board raises its funds in turn from the banks and other financial institu­tions to whom the board is required to pay interest periodically. In the case of a self-financing scheme, even if there is failure on the part of one contributor to pay the costs, the entire scheme falls in jeopardy and, therefore, there is no merit in the contention advanced on behalf of the respondent that the impugned orders should not be interfered with as they are confined only to a particular unit pur­chased by the respondent. (Para 15)

       Time has come when the Courts should be slow in interfering at interim stage with schemes which are based on costing. India is having cost-push economy. In a self-financing scheme based on costing, an interim injunction has a cascading effect. Failure on the part of even one contributory in contributing the amount to the cost results in total failure of the project. The developer, like the housing board, makes an initial investment by borrowing funds from the market. Therefore, an interim injunction at the initial stage of the project would result in the total collapse of the entire project. It would also affect the contributions made by other co-purchasers. Several components go into costing, including the lease rent payable to the State Government. These aspects have not been considered by the trial Court. (Para 18)

       Our observations herein however should not be read to mean that the developer in the present case has an absolute right to increase the cost of flats initially announced as estimated cost. The final cost should be proportionate to the estimated cost mentioned in the offer keeping in mind the rate of inflation, escalation of the prices of inputs, escalation in the prices of the construction material and labour charges. These factors have got to be taken into account on the basis of the evidence which may be considered at the time of final hearing of the suit. In the present case, however, the appellant has not placed before the trial Court the documents mentioned hereinabove and, therefore, we are remitting the matter to the trial Court for fresh decision, in accordance with law. (Para 19)