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SUPREME COURT OF INDIA
J.S. Verma and N.P. Singh, JJ.
Civil Appeal No. 2734 of 1985
Decided On: 07.03.1995
Indore Development Authority Appellants
Vs.
Sadhana Agarwal (Smt) and Ors. Respondent
Counsel for the Parties
For State of Madhya Pradesh: B.S. Banthia, Adv.
For Appellant/Petitioner/Plaintiff: A.M. Singhvi, Senior Adv., A.K. Roy, S.S. Shroff and Monika Sharma, Advs.
For Respondents/Defendant: Sushil Kumar Jain, Adv.
M.P. Nagar Tatha Gram Nivesh Adhiniyam, 1973 - Indore Development Authority - advertisement - Inviting applications from persons interested in purchase of flats in multi-storeyed buildings on hire-purchase basis - Advertisement was issued by Development Authority inviting applications from persons interested in purchase of flats in multi-storeyed buildings on hire-purchase basis - As per said advertisement a deposit for Lower Income Group residential flat and a deposit of Middle Income Grouop residential flat was to be made - It was also said that plinth area for MIG Flat shall be and that of LIG flat shall be - It was further said that at time of allotment of flat a deposit of was to be made by hire-purchaser for MIG flat and for LIG flat - Rest of amount was to be paid in instalments - Details of such instalments were mentioned - At foot, it was said that cost of flats aforesaid was based on estimate and that definite cost would be intimated at time of allotment - Estimated period for completion of said scheme was mentioned as two years - Pursuant to aforesaid offer made by Development Authority in resepet of MIG and LIG flats respondents and Ors got themselves registered as prospective hire-purchasers and made prescribed deposits for purpose of allotment of flats - After a lapse of about two years Development Authority by its letter intimated that according to plan approved for advance of loan by HUDCO flats of plinth area of flats plinth area of each would be constructed in four blocks from floor to floor of building in Navlakha Housing Scheme - Probable and estimated cost of MIG and LIG flats were given out at and respectively - There was modification also in respect of payment of instalments so far cost of flats on hire-purchase was concerned - Registration fee to be deposited was also revised as in place for MIG flat and in place of in respect of LIG flat - Held, Court has from time to time taking special facts and circumstances of cases in question has upheld excess charged by development authorities over cost initially announced as estimated cost but it should not be understood that this Court has that such development authorities have absolute right to hike cost of flats initially announced as approximate or estimated cost for such flats - It is well known that persons belonging to Middle and Lower Income Groups before registering themselves for such flats have to take their financial capacity into consideration and in some cases it results into great hardship when development authorities announce an estimated or approximate cost and deliver same at twice or thrice of said amount - Final cost should be proportionate to approximate or estimated cost mentioned in offers or agreements - With high rate of inflation escalation of prices of construction materials and labour charges if scheme is not ready within time frame then it is not possible to deliver flats or houses in question at cost so announced - It will be advisable that before offering flats to public such development authorities should fix estimated cost of flats taking into consideration escalation of cost during period scheme is to be completed - In instant case estimated cost for LIG flat was given out at - But by impugned communication appellant informed respondents that actual cost of flat shall be escalation is more than - High Court was justified in saying that in such circumstances Authority owed a duty to explain and to satisfy Court reasons for such high escalation - Court may add that this does not mean that High Court in such disputes while exercising writ jurisdiction has to examine every detail of construction with reference to cost incurred - High Court has to be satisfied on materials on record that authority has not acted in an arbitrary or erratic manner - Appeal Allowed
JUDGMENT
N.P. Singh, J.
1. The Appellant, Indore Development Authority (hereinafter referred to as the Development Authority) has been constituted under the provisions of the M.P. Nagar Tatha Gram Nivesh Adhiniyam, 1973 (hereinafter referred to as the Act). The writ-petitioners/respondents (hereinafter referred to as the respondents) are the intended, allottees of flats in the Navlakha Housing Complex Scheme No. 31 in the town of Indore, on hire-purchase basis.
2. It appears that in the year 1977, an advertisement was issued by the Development Authority, inviting applications from the persons interested in purchase of flats in multi-storeyed buildings on hire-purchase basis. As per the said advertisement, a deposit of Rs. 1,000 for Lower Income Group (hereinafter referred to as the LIG) residential flat and a deposit of Rs. 2,000 for Middle Income Grouop (hereinafter referred to as the MIG) residential flat was to be made. It was also said that the plinth area for the MIG Flat shall be 805 sq. ft. and that of the LIG flat shall be 500 sq. ft. It was further said that at the time of the allotment of the flat a deposit of Rs. 11,000 was to be made by the hire-purchaser for the MIG flat and Rs. 7,500 for the LIG flat. The rest of the amount was to be paid in instalments. Details of such instalments were mentioned. At the foot, it was said that the cost of the flats aforesaid was based on estimate and that the definite cost would be intimated at the time of allotment. The estimated period for completion of the said scheme was mentioned as two years.
3. Pursuant to the aforesaid offer made by the Development Authority, in resepet of MIG and LIG flats, the respondents and Ors. got themselves registered as prospective hire-purchasers and made the prescribed deposits for the purpose of the allotment of the flats. After a lapse of about two years, the Development Authority by its letter dated 5.11.1979 intimated that according to the plan approved for advance of loan by HUDCO (a financing instituion) 162 MIG flats of plinth area of 750 sq. ft., 12 LIG flats of plinth area of 500 sq.ft. each would be constructed in the four blocks from 3rd floor to 7th floor of the building in the Navlakha Housing Scheme. The probable and estimated cost of MIG and LIG flats were given out at Rs. 70,000 and Rs. 45,000 respectively. There was modification also in respect of payment of instalments, so far the cost of flats on hire-purchase was concerned. The registration fee to be deposited was also revised as Rs. 5,000 in place of Rs. 2,000 for MIG flat and Rs. 3,000 in place of Rs. 1,000 in respect of LIG flat.
4. Once again by letters dated 7.10.1980 and 25.10.1980 the respondents were intimated that due to the increase in the prices of the materials the estimated cost of LIG flats shall be Rs. 60,000 instead of Rs. 45,000 and that of the MIG flats shall be Rs. 95,000 instead of Rs. 70,000. It was said in the communication that the revision had been made on basis of the prevailing market rates of the construction materials. According to the respondents, they had no option but to concede to the aforesaid arbitrary and unilateral demand made by the Development Authority. By letters dated 26.1.1984 and 26.12.1984, the Development Authority again intimated to the respondents a further hike in the cost of the flats. It was said that the cost of LIG flat had been raised to Rs. 1,16,000 and the cost of MIG flat had been raised to Rs. 1,30,000. In the letter aforesaid dated 26.1.1984, respondents were informed that the area of the LIG flat which had already been constructed was 714.94 sq.ft. in place of 500 sq.ft. as initially intimated in the year 1977. From the records, it appears that the construction of the building had been completed in the year 1982 and the flats were ready for allotment. But possession could not be delivered to the respondents because of a writ petition filed in respect of alleged irregular allotments of 56 flats.
5. After receipt of communica
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