S. Ravindra Bhat, J.

In this petition under Article 226 of the Constitution of India two letters of the respondent (hereafter referred to as "L&DO") dated 16.3.1992 and 9.3.1994 have been challenged. A quashing order has been claimed.

2. The facts briefly are that one Shri K.N. Ahuja was the original allottee of property being I-G/26, Lajpat Nagar, New Delhi (hereafter called "Suit property"). He transferred/ sold his rights to one Smt. Sita Devi by a deed dated 13.9.1972. The original term of allotment contained a stipulation that permission had to be sought for transfers, Smt. Sita Devi applied for permission, through her Attorney Ms. Ranu Thukral by letter dated 22.6.1990 for transfer to the petitioners. The L&DO by its letter dated 6.8.1991 granted permission on condition that unearned increase of Rs. 42,669/- was to be paid. Para 6 of the letter also required the intending purchaser (i.e. the Petitioner) to furnish an undertaking that the difference of 50% unearned increase on revised terms would be paid as and when demanded. This was followed by letter dated 11.10.1991 to Ms. Sita Devi permitting her to transfer and sell the suit property to the intending purchaser, i.e. the Petitioners.

3. On 30.12.1991 the Vendor, Smt. Sita Devi executed the sale deed in favour of the petitioner which was duly registered. By the first impugned letter dated 16.3.1992 the L&DO raised a fresh demand for Rs. 2,42,476/- towards unearned increase on revised rates. The petitioners protested the demand, stating that the sale deed had already been executed in December, 1991, further to the letter dated 11.10.1991. On 9.3.1994 the L&DO issued the following letter:

"Government of India Ministry of Urban Development Land & Development Office Nirman Bhawan, New Delhi.

No. L&DO/PSII/133

To Shri Bhawnesh Thukral,

GI/26, Lajpat Nagar,

NEW DELHI.

Sub: Mutation of Property No. G-I/26, Lajpat Nagar, New Delhi.

dated the 9.3.1974

Sir,

I am to invite reference to this office letter No. L&DO PSII/ 888 dated 6.7.1992 on the subject cited above wherein you were requested to make the payment as demanded vide this office letter No. PSII/243 dated 16.3.1992 to enable this office to process the case further for mutation of the said property but you have failed to make the payment so far."

4. In the meanwhile, in April, 1992 the Central Government had announced its Policy for conversion of lease hold property (under the control of L&DO) into free hold. The Petitioners applied for such benefit and sought for conveyance of the property by an application on 22.9.1994.

They deposited Rs. 10,320/- as conversion charges.

5. It is alleged that the respondents did not act upon the application despite its presentation. The inaction of the respondents in processing the application for conversion on the one hand and in purporting to deny mutation of the property in favour of the petitioners, after having approved the sale on the other, are challenged as arbitrary and unreasonable.

6. The L&DO in its counter affidavit has relied upon Para 6 in the letter dated 6.8.1991 and contended that the petitioners as vendees were duty bound to pay the differential amount of unearned increase on the basis of revised terms. Reliance has also been placed upon the fact that it was on this understanding that the sale permission was granted on 11.10.1991.

7.The L&DO denies obligation to accede to any request for conversion of property. It alleges that the letter dated 9.3.1994 was justified in the circumstances. As regards the question of conversion, it is alleged that the petitioners cannot take advantage of the Scheme as the case for mutation was pending when the Scheme was announced and further that they had furnished undertakings to pay the amounts as and when demanded.

8. Learned Counsel for the petitioner relied on the terms of Conversion Scheme and submitted that whatever be the nature of pre-existing disputes about mutation, there could be no quarrel with the petitioners right to claim that