The determination of cost of house/flat or escalation of cost cannot be arbitrary or erratic. The authority has to broadly satisfy by placing material on record to justify the escalation of cost of a house/flat. Whether the delay was caused by the allottee or the authority itself is also a factor which has bearing in determination of the cost of house/flat.

Shivaraj V. Patil, J.—Kanpur Development Authority (KDA) has filed these appeals challenging the correctness and validity of the common order dated 21.5.1997 made by the Division Bench of the High Court in Writ Petitions.

2. Three schemes were floated by KDA in September, 1978 with financial support of ‘HUDCO’ “on no profit no loss basis”. The three Schemes were: (1) For Economically Weaker Section; (2) For Lower Income Group and (3) Middle Income Group. Applications were invited in the prescribed form fixing the last date as 29.9.1978. The applications were to be made in the prescribed form alongwith the earnest money for each category. A brochure was issued showing the cost of each house and terms and conditions of the Schemes. In these cases, we are not concerned with the houses constructed in two other schemes which were allotted to the applicants on the basis of lottery on 25.10.1980 and cost specified in the brochure and the possession of the houses was delivered to them. However, the applicants (respondents herein) in the Middle Income Group were not allotted the houses and their applications were kept pending for more than 18 years for no fault of them.

3. As per the terms and conditions mentioned in the brochure in the MIG Category, the applications were to be made alongwith the earnest money by 29.9.1978. The estimated cost of each house was specified in the brochure as Rs. 48,000/-. The persons whose income was between Rs. 601/- to Rs. 1,500/- per month were eligible for Middle Income Group Houses. The houses were to be allotted among the valid applicants by lottery. After the lottery was drawn and on receipt of letter of information of allotment, the applicants had to deposit balance of the 1/4th of the cost of the house. Thereafter, physical possession of the houses was to be delivered to the allottees and the remaining 3/4th of the cost of the house i.e. Rs. 36,000/- was to be paid by the allottees in 48 quarterly instalments in 12 years with 11.5% interest as per the brochure. Since there were only 108 valid applications altogether for 111 MIG houses, all the applicants could have been allotted MIG houses when 1/4th cost of the house was deposited by the applicants as on 31.3.1979, what remained was only to draw a lottery among the 108 valid applicants for the specific houses to each one of the applicants. And thereafter the possession of specified house was to be delivered to each allottee as the constructions of 111 MIG houses were completed in 1980.

4. However, KDA chose to include names of some more applicants after the last date i.e. 29.9.1978, which gave rise to disputes. Some affected applicants filed suits in 1981/1982. None of these respondents were parties in those suits.

5. The Court finding fault with the KDA decreed the suit and directed it to allot the houses to 108 valid applicants keeping 8 houses reserved for the persons who are plaintiffs in those two suits. The appeals filed by the KDA against the decree passed by the Trial Court were also dismissed. Instead of complying with the decree, KDA increased the cost of each house from Rs. 48,000/- to Rs. 2,08,000/- by the Notification dated 24.12.1994 stating that each applicant had to deposit a further sum of Rs. 40,000/- and in case of default the name of the applicant would not be included in the list of lottery for allotment of houses. In these circumstances, some of the respondents were compelled to file writ petitions.

6. The writ petitions were admitted and interim orders were issued to include the names of 85 general category applicants in the lottery. In spite of the interim order dated 4.1.1995, KDA again issued a notification on 10.1.1995 stating that the date of lottery had been extended to 17.1.1995.

7. The lottery was drawn among the 108 valid applications, keeping 8 houses reserved to the plaintiffs in the two suits. In February, 1995, information of allotment was issued to all the allottees along with demand for Rs. 24,000/- from e