PETITIONER:
PREMJI BHAI PARMAR & OTHERS ETC.
Vs.
RESPONDENT:
DELHI DEVELOPMENT AUTHORITY & OTHERS
DATE OF JUDGMENT21/12/1979
BENCH:
DESAI, D.A.
BENCH:
DESAI, D.A.
KRISHNAIYER, V.R.
CITATION:
1980 AIR 738 1980 SCR (2) 704
1980 SCC (2) 129
ACT:
Constitution of India 1950 Articles 14 & 32 & Delhi
Development Authority Act 1957-Authority constructing flats
and selling them to public-Levy and collection of surcharge
as price of flat in addition to the construction cost-
Authority to work on ‘no profit no loss’ basis-Such
surcharge-Whether illegal-Discriminatory.
HEADNOTE:
The Delhi Development Authority Act was enacted to
provide for the development of Delhi through Master and
Zonal Plans. The authority undertakes constructions of
dwelling units for people belonging to different income
groups styled as Middle Income, Low Income, Janata and
Community Personnel Service. In 1971, the authority
commenced registration of intending applicants desirous of
having dwelling units in different Income Groups. Some of
the petitioners got themselves registered with the authority
in accordance with the terms and conditions laid down by it,
for allotment of flats in deposits as required by the terms
and conditions for MIG Scheme at Lawrence Road, Prasad Nagar
and Rajouri Garden and made the initial deposit. The number
of available flats being less in each scheme compared to the
number of applicants registered, lots were drawn and the
petitioners were informed that each of them should deposit
the amount mentioned in the letter of allotment. The
Petitioners paid the amount as intimated and consequently a
flat was allotted to each of them and they entered into
possession.
In their writ petitions under Article 32, the
petitioners assailed the levy and collection of surcharge in
addition to the cost price of the flats. It was con tended
on their behalf that; (i) The treatment meted by the
Authority is discriminatory inasmuch as no surcharge was
levied on flats in MIG schemes constructed and allotted
prior to November, 1976 and after January, 1977; (ii) As the
authority formulates income-wise, area-wise schemes for
constructing flats, there should be only income-wise
classification wholly ignoring area and time factor for
classification; (iii) Levying of surcharge runs counter to
the object for which the authority was set-up namely to make
available housing accommodation on “no profit no loss”
basis; (iv) Surcharge is arbitrary inasmuch as how the
surcharge is worked out in each case does not conform to any
rational, tangible, scientific or understandable formula;
(v) The Vice-Chairman had no authority to levy surcharge and
that even if he has authorised the same, it runs counter to
the principle of fixing disposal price incorporated in
resolution No. 209 dated November 26, 1974; (vi) Even if the
Vice-Chairman had such power there is nothing to show that
he has exercised this power and given direction for adding
the surcharge to the disposal price and that therefore, the
levy of surcharge is unauthorised; and (vii) that the
authority has made a, huge profit by levy of surcharge.
The respondents raised a preliminary objection that the
petitions were not maintainable under Article 32 of the
Constitution inasmuch as the petitioners have not come to
the Court. fol enforcement of a fundamental right conferred
upon.
705
them under Part III of the Constitution but that the
petitioners have invoked the jurisdiction of the Court for
the relief of reopening concluded contracts, and that if the
court accepts the contentions, the petitioners would derive
an unfair advantage over others who may not have applied for
flats because of the price set out in the brochure and if
surcharge is excluded they may have applied for Flats at a
lower price. The Court should not therefore entertain the
petitions.
Dismissing the petitions,
^
HELD: 1. As the Court has heard the petitions on merits
it is not inclined to reject them on the preliminary
objections. It is undeniable that camouflage of Art. 14
cannot conceal the real purpose motivating the petitions,
namely to get back a part of the purchase price of flats
paid by the petitioners with wide open eyes after flats have
been securely obtained. Petition to this Court under Art. 32
is not a proper remedy nor is the Supreme Court a proper
forum for re-opening concluded contracts with a view to
getting back a part of the purchase price paid after the
benefit is taken. [712 D-E]
In the instant case it is difficult to appreciate how
Art. 14 can be attracted. Cost price of a property offered
for Sale is determined according to the volition of the
owner who has constructed the property unless it is shown
that he is under any statutory obligation to determine cost
price according to certain statutory formula. The authority
is under no obligation to fix price of different flats in
different schemes albeit in the same income group at the
same level or by any particular statutory or binding
formula. Those who opt to take flats in a particular income-
wise, area-wise scheme in which all flats came up together
as one project, may form a class and any discriminatory
treatment In the same class may attract Art. 14. But to say
that the Authority would be bound to offer flats income-
group-wise according to the same price formula is to expect
the Authority to ignore time, situation, location and other
relevant factors which all enter the price structure. [713
E, 715 A-F]
Radhakrishna Agarwal & Ors. v. State of Bihar & Ors.
[1977] 3 S.C.R. 249 at 255; Har Shankar & Ors. etc. v. The
Dy. Excise & Taxation Commr. & Ors. [1975] 3 S.C.R. 254,
referred to.
2. In price fixation executive has a wide discretion
and is only answerable provided there is any statutory
control over its policy of price fixation and it is not the
function of the Court to sit in judgment over such matters
of economic policy as must be necessarily left to the
Government of the day to decide. The experts alone can work
out the mechanics of price determination, Court can
certainly not be expected to decide without the assistance
of the experts. [715 F-G]
Prag Ice & Oil Mills and Anr. etc. v. Union of India,
[1978] 3 S.C.R, 293 at 330; Avinder Singh v. State of Punjab
[1979] 1 S.C.R. 845; State of Gujarat & another v. Shri
Ambica Mills Ltd. Ahmedabad, etc. [974] 3 S.C.R 760 at 782;
referred to.
3. Price of land, building, material, labour charges
and cost of transport, quality and availability of land,
supervision and management charges are all variable factors
that enter into price fixation. Their cost varies time-wise,
place wise and availability-wise. All these uncertain
factors cannot be overlooked for the purpose of
classification. It is not possible therefore to hold that
allottees of
706
flats in MIG scheme at any place and executed at any time
will form one class for the purpose of pricing policy. The
only valid basis for classification would be income-wise,
area-wise, time-wise, scheme-wise, meaning all flats
constructed at or about the same time in same area in one
project for particular income-group will form a class, and
there is no discrimination amongst them. [716 G-H. 717 A-B]
4. Pricing policy is an executive policy. If the
Authority was set up for making available dwelling units at
reasonable prices to persons belonging to different groups
it would not be precluded from devising its own price
formula for different income-groups. If in so doing it
uniformally collects something more than cost price from
those with cushion to benefit those who are less fortunate
it cannot be accused of discrimination. In this country
where weaker and poorer sections are unable to enjoy the
basic necessities, namely, food, shelter and clothing, a
body like the Authority undertaking, a comprehensive policy
of providing shelter to those who cannot afford to have the
same in the competitive albeit harsh market of demand and
supply nor can afford on their own meagre emoluments or
income, a little more from those who can afford for the
benefit of those who need succour, can by no stretch of
imagination attract Art. 14. [717 B-D]
5. It is a well recognised policy underlying tax law
that the State has a wide discretion in selecting the
persons or objects it will tax and that the statute is not
open to attack on the ground that it taxes some persons or
objects and not others. It is only when within the range of
its selection the law operates unequally, and this cannot be
justified on the basis of a valid classification, that there
would be a. violation of Art. 14. [717 E-F]
East India Tobacco Co. v. State of Andhra Pradesh,
[1963] 1 S.C.R. 404.
6. The principle of “no profit no loss” cannot apply
either to every flat or to every scheme or to every piece of
land developed by the Authority. It would be impossible for
the Authority lo function on such fragmented basis and such
a policy statement has not been made by the Authority. [718
D-E]
7. There is not the slightest or even a remote
reference to “no profit no loss” formula for determining the
cost price. A survey of the Regulations do not spell out any
formula for price determination on the basis of “no profit
no loss”. Project-wise price fixation cannot be dubbed as
arbitrary or discriminatory by comparing it with other
projects at different places or at different times. [719 A-B
JUDGMENT:
In the instant case after the work commenced and the
actual cost estimate started coming in the revised estimate
for 304 flats was of the order of Rs. 2,07,33,000/- which
was approved by the Vice-Chairman on September 18, 1976.
According to the revised estimate the approximate disposal
cost for each flat. came tc Rs. 68.202/- and the cost of
land per dwelling; unit was Rs. 7008/-. The revised estimate
showed the disposal price of each flat as Rs. 75.200/-. The
Commissioner of Income Tax who wanted to acquire 40 MIG
flats in Prasad Nagar area offered the price of Rs. 75,000/-
per flat which price was accepted. The difference between
the cost price and the disposal price of Rs. 75,000/- per
flat was treated as surcharge and the purpose was to use the
extra money for extending price reduction benefit to The
allottees of flats in LIG, Janata and CPS schemes. It is
therefore difficult to entertain the contention that even if
surcharge could be justified its actual computation is
arbitrary and irrational. [720 B-E, E-F]
707
8 . The Vice-Chairman is appointed by the Central
Government as per Section. 3(3)(b) of the Act. He is a whole
time officer and the Chief Executive of the Authority. The
composition of the Authority as set out in section 3 would
include such persons as Finance and Accounts Member,
Engineering Member, representatives of Municipal Corporation
of Delhi and representatives of Metropolitan Council. Three
other persons, were to be nominated by Central Government of
whom one shall be person with experience of planning. It is
a high power body. Yet it completely abdicated its power and
authority in favour of Housing Committee. The Housing
Committee will practically supplant the Authority. By a
process of elimination the Housing Committee would supplant
the Authority and the Chairman could constitute the Housing
Committee. Therefore, the Chairman enjoyed a very wide
discretionary power. However once the power to delegate is
given by the Regulations, the challenge to validity on the
ground of delegation must fail. [720 G-H; 721 E-H, 722 A]
9. Resolution No. 209 is the one adopted by the Housing
Committee. It takes note of the delegation of powers to fix
disposal and hire-purchase price of flats to the Vice-
Chairman and further provides that if there is a marginal
saving in any scheme the amount be diverted to subsidies
cost of Janata and CPS houses. The Resolution No. 200 of the
Authority read with Resolution No. 709 of the Housing
Committee sets out clearly that the power to fix the
disposal price was delegated to the Vice-Chairman and
ordinarily such excessive delegation to one man may be
galling to a judicial body yet the scheme of regulations and
the provisions contained in Regulation 3 read with Section
59 clearly envisages such delegation of powers. [722 C-E]
10. The note of Accounts Officer (Housing) dated
September 8, 1976, submitted to the Financial Advisor
(Housing) shows that the flats have been offered at the rate
of Rs. 75,000/- to the Commissioner of Income Tax for the
Income Tax Department and that should be the disposal price.
This note was approved by the Financial Advisor (Housing)
and ultimately countersigned by the Vice-Chairman Even if it
includes surcharge it cannot be said with confidence that
the Vice-Chairman has not approved has not approved the
surcharge as a component of disposal price. [722 G-H]
11. The contention that the Authority has made a huge
profit by levy of surcharge is without merits. On the
contrary it appears that the overall working of the
Authority is deficit ridden. [723 A-B]
&
ORIGINAL JURISDICTION: Writ Petitions Nos. 4660/78 &
562/79 (Under Article 32 of the Constitution).
Y. S. Chitale and R. B. Datar for the Petitioner in
W.P. No. 4660/78.
L. M. Singhvi, Sardar Bahadur Sahariya, Vishnu Bahadur
Sahariya and L. K. Pandey for the Respondent No. 1 in both
the Writ Petitions.
F. S. Nariman and B. Datta and K. K. Manchanda for the
Petitioner in W.P. No. 562/79.
The Judgment of the Court was delivered by
DESAI, J. Allottees of flats, constructed by the Delhi
Development Authority (‘Authority’ for short), located at
Rajouri, Garden,
708
Prasad Nagar and Lawrence Road comprised in Middle Income
Group scheme, question the decision of first respondent
(Delhi Development. Authority) to collect surcharge as part
of the sale price of each flat from each of them as
unauthorized and discriminatory i character, in there two
petitions under Article 32 of tho Constitution. Both the
petitions raise identical contentions and i was said that
Writ Petition No. 562 of 1979 is more comprehensive in
character and, therefore, the facts alleged therein may be
taken as representative character. They may be briefly
stated.
Delhi Development Authority was set up under the Delhi
Development Act, 1957. The Act was enacted to provide for
the development of Delhi according to plan and for matters
ancillary thereto and for carrying out the objects
underlying the Act, the Authority has prepared Master and
Zonal development plans for Delhi. With a view to easing the
acute housing problems in the capital city the Authority
undertakes construction of dwelling units for people
belonging to different income groups styled as Middle Income
Group (‘MIG’ for short), Low Income Group (‘LIG’ for short),
Janta and Community Personnel Service (‘CPS’ for short). In
1971 the Authority commenced registration of intending
applicants desirous of having n dwelling unit in different
income groups. Some of the petitioners got themselves
registered with the authority in accordance with the terms
and conditions laid down by it and made the initial deposits
as required by the terms and conditions. Petitioners had
applied and got themselves registered for allotment of flats
in MIG scheme situated at Lawrence Road. As the number of
available flats in this scheme were less than the number of
allottees registered, lots were drawn and the petitioners
were informed that they have been allotted flats and that
each of them should deposit the amount mentioned in the
letter of allotment. It appears that the petitioners paid
the amount they were called upon to pay and a flat was
allotted to each of them and they have entered into
possession. Petitioners now contend that the Authority being
a statutory body formed with an object of working on ‘no
profit no loss’ basis and having prescribed a formula for
working out the cost price of flats has levied and collected
a surcharge from each of the petitioner. According to the
petitioners the cost price worked out in accordance with the
formula prescribed by the Authority cost of each flat would
be between Rs. 51,800 and Rs. 55,600 depending upon the
area, extra balcony etc. However, each one of them had to
pay between Rs. 56,000 to Rs. 60,000 and that according to
the petitioners a surcharge varying from Rs. 3,400 to Rs.
6,000 for a flat has been illegally and unlawfully collected
by way of premium or profit. It is further alleged that the
709
Authority has not levied and collected such surcharge from
other A allottees of flats in some other MIG Schemes and
that this action of levying and collecting surcharge is
violative of Art. 14 inasmuch as persons belonging to the
same class, namely, allottees of flats in MIG Scheme have
been unequally treated. It is also alleged that there was no
valid or understandable justification of levying and
collecting surcharge as price of flats comprised in MIG
Schemes, between 1976 and 1977, and that from May 10, 1978,
this unauthorised surcharge has been abolished. Petitioners
also contend that the assertion of the Authority that this
surcharge was levied and collected with a view to financing
housing projects for lower income groups, Janta and CPS
dwelling units so as to provide these weaker sections of the
society, houses at a price lower than cost price with a view
to making them affordable by such members of the weaker
sections of the society, is belied by facts undisputed and
that the whole attempt of the Authority, in violation of its
avowed policy, was to make profit by levying such illegal
surcharge. The petitioners, therefore, prayed for issue of a
writ or order or direction declaring the levy of surcharge
as illegal and unconstitutional and for a direction for
refund thereof together with the interest at the rate of 12%
per annum from the date of levy and collection till the date
of refund.
In the cognate petition the petitioners are allottees
of flats situated at Prasad Nagar and Rajouri Garden under
MIG scheme and they complain that in their case surcharge
varies from Rs. 19,200 to . 22,600.
Respondents to the petition are Delhi Development
Authority, No. 1 and Chairman and Vice-Chairman of the
Authoring, Nos. 2 and 3 respectively. In Writ Petition No.
4660/78 the Authority is respondent 1 and Union of India,
respondent 2. Petitions were mainly contested by and on
behalf of the Authority.
The Delhi Development Act, 1957 (‘Act’ for short), was
enacted as its long title shows with the a view to providing
for the development of Delhi according to the plan and for
arresting haphazard growth and for matters ancillary
thereto. It envisages the setting up of an Authority to be
styled as Delhi Development Authority which would be a body
corporate by the name aforesaid having perpetual succession
and a common seal with power ‘o acquire, hold and dispose of
property, both movable and immovable, and to contract and
shall by the said name, sue and be sued. The composition of
the Authority is set out in sub-section (iii) of s. 3.
Amongst others, Administrator of Union Territory of Delhi
would be an ex-officio Chairman and a Vice-Chairman to be
appointed by the Central Government. The
710
Vice-Chairman may be either a whole-time or part-time
officer as the Central Government may think fit. Section S
contemplates the constitution of an Advisory Council for the
purpose of advising, the Authority on the preparation of the
master plan and on such matters relating to the planning of
development or arising out of or in connection with the
administration of the Act. Section 5A which was added by
amending Act 56 of 1963 confers power on the Authority to
constitute as many committees consisting wholly of members
or wholly of other persons or partly of members and partly
of other persons and for such purpose or purposes as it may
think fit. Chapter Ill-A which was inserted by the Amending
Act of 1963 confers power for modification of the master
plain once prepared. Chapter IV provides for development of
lands. Chapter V confers power on the Central Government to
acquire land for the purposes of development or for any
other purpose under the Act under the provisions to the Land
Acquisition Act, 1894, and further authorises the Central
Government to transfer the land so acquired to he Authority.
Chapter VI provides for finances and audit of the accounts
of the Authority Chapter VII provides for supplemental and
miscellaneous provisions. Section 52 confers power on the
Authority to delegate any power exercisable by it under the
Act, except the power to make regulations, on such officer
or local authority or committee constitued under s. 5A as
may be mentioned, by a notification to be published in the
Official Gazette in such cases and subject to such
conditions, if any, as may be specified therein. One more
section of which notice should be taken is s. 57 which
confers power on the Authority with the previous approval of
the Central Government by notification in the official
Gazette to make regulations consistent; with the Act and the
rules made thereunder to carry out the purposes of this Act.
Sub-s. provides that until the Authority is established
under the Act any regulation which may be made under. sub-s.
may be made by the Central Government and any regulation so
made may be altered or rescinded by the Authority in
exercise of its powers under sub-s. Section 58 makes it
obligatory to lay every rule and regulation made under this
Act before each House of Parliament in session for a period
of 30 days and subject to any alteration or modification
therein the rule or regulation shall after expiry of the
prescribed period mentioned have effect only in such
modified form or be of no effect as the case may be, so
however that any such modification or annulment shall be
without prejudice to the validity of anything previously
done under the rule or regulation.
Petitioners belong to MIG, each of whom registered
himself as an intending applicant for a flat in MIG scheme
and each of whom has
711
been allotted a flat either in Rajouri Garden, Prasad Nagar
or Lawrence Road. Number of persons desirous of having a
flat registered with the Authority far outnumbered the
available flats with the result that lots had to be drawn
and the lucky ones got a letter of allotment to pay the
price set out in the brochure in respect of each scheme and
to obtain a flat. Each petitioner had paid the price and has
entered into possession of the allotted flat. All the
petitioners now contend that the Authority has levied and
collected a surcharge as part o: purchase price of flat
arbitrarily and without the authority of law and has
collected the same from them in violation of its object of
functioning on ’no profit no loss’ basis and thereby made a
huge profit. They further contend that they have been
subjected to discriminatory treatment in contravention of
Art. 14 of the Constitution inasmuch as no surcharge has
been collected from allottees of flats in MIG schemes prior
to November 1976 and subsequent to January 1977 except these
three schemes and one Wazirpur MIG scheme. Further, no other
MIG scheme flats have been subjected to such unauthorised
levy of surcharge. It is pointed out that the levy of
surcharge has been scrapped in 1978. The petitioners contend
that levy of surcharge has no nexus to the object for which
the Authority was set up namely, providing housing
accommodation at reasonable price by the Authority whose
declared policy is ‘no profit no loss’. It was said on
behalf of the petitioners that even if the Authority was set
up for providing housing accommodation to the people in
different income groups (keeping in view their financial
capacity/affordability) yet a statutory body like the
Authority operating on ‘no profit no, loss’ basis must have
a scientifically prescribed formula for working out its
price structure and that must be uniformly applied to all
those who apply for flats and to whom they are allotted and
such a statutory Authority cannot discriminate in working
out the disposal price of the flats by including surcharge
in respect of some MIG schemes within a certain specified
period, a surcharge not authorised by law and not sanctioned
by the Authority as a component of price and unknown to
pricing of flats, while others similarly situated and
similarly circumstanced and belonging to the same income
group enjoyed the benefit cf getting flats at cost price
and, therefore, petitioners have been accorded
discriminatory treatment in the matter of price of flats
allotted to them. Petitioners, therefore, contend that even
if they applied for flats anc got registered and were
offered flats and accepted the same at the price stated in
the brochure and even if it has resulted in a concluded
contract yet the Court should not turn a blind eye to such
gross discrimination by a statutory authority charged with a
duty to provide housing accommodation acting on the declared
policy of ‘no profit no
712
loss’. It was simultaneously contended that the Vice-
Chairman of the Authority authorised to determine the prices
of flats in each income group has not made any order or has
not given any direction for levy of surcharge and that the
levy of surcharge was wholly unauthorised.
A preliminary objection was raised by the Authority
that the petitions are not maintainable under Art. 32 of the
Constitution inasmuch as The petitioners have not come to
the Court for enforcement of a t fundamental right conferred
upon the petitioners under Part III of the Constitution but
the petitioners have invoked jurisdiction of this Court for
a relief of re-opening concluded contracts. It was also
submitted that if the Court accepts the contention of the
petitioners they would derive an unfair advantage over
others who may not have applied for flats because of the
price set out in the brochure and if surcharge is excluded
they may have applied for flats at a lower price and, there
fore, also the Court should not entertain the petitions.
Though we are not inclined to reject the petitions on
this preliminary objection as we have heard them on merits
it is undeniable that camouflage of Art. 14 cannot conceal
the real purpose motivating these petitions, namely, to get
back a part of the purchase price of flats paid by the
petitioners with wide open eyes after flats have been
securely obtained and petition to this Court under Art. 32
is not a proper remedy nor is this Court a proper forum for
re-opening the concluded contracts with a view to getting
back a part of the purchase price paid and the benefit
taken. The undisputed facts are that petitioners offered
themselves for registration for allotment of flats that may
be constructed by the, Authority for MIG scheme. After the
registration and when the flats were constructed and ready
for occupation brochures were issued by the Authority. One
such brochure for ‘, allotment of MIG flats in Lawrence Road
residential scheme is Annexure R-1. This brochure specifies
the terms and conditions including price on which flat will
be offered. It also reserved the right to surrender or
cancel the registration, the mode and method of paying the
price and handing over the possession. There is an
application form annexed to the brochure. Annexure ‘A’ to
the brochure sets out the price of flat on the ground floor,
first floor and second floor respectively. It sets out the
premium amount payable for land as also the total cost in
respect of the flats on the ground floor, first floor and
second floor. The statement also shows the earnest money
deposited at the time of the registration and the balance
payable. It is on the basis of these brochures that the
applicants applied for the flats in Lawrence Road and other
MIG schemes. They knew and are presumed to know the contents
of the brochure and particularly the price
713
payable. They offered to purchase the flats at the price on
which the Authority offered to sell the same. After the lots
were drawn and they were lucky enough to be found eligible
for allotment of flats, each one of them paid the price set
out in the brochure and took possession of the flat, and
thus sale became complete. There is no suggestion that there
was a mis-statement or incorrect statement or any fraudulent
concealment in the information supplied in the brochure
published by the Authority on the strength of which they
applied and obtained flats. How the seller works out his
price is a matter of his own choice unless it is subject to
statutory control. Price of property is in the realm of
contract between a seller and buyer. There is no obligation
on the purchaser to purchase the flat at the price offered.
Even afar registration the registered applicants may opt for
other schemes. His light to enter into-other scheme opting
out of present offer is not thereby jeopardised or negatived
and applicants so outnumbered the available flats that lots
had to be drawn. With this background the petitioners now
contend that the Authority has collected surcharge as
component of price which the Authority was not authorised or
entitled to collect. Even if there may be any merit in this
contention, though there is none, such a relief of refund
cannot be the subject-matter of a petition under Art. 32.
And Art. 14 cannot camouflage the real bone of contention.
Conceding for this submission that the Authority has the
trappings of a State or would be comprehended in ‘other
authority’ for the purpose of Art. 12, while determining
price of flats constructed by it, it acts purely in its
executive capacity and “is bound by the obligations which
dealings of the State with the individual citizens import
into every transacting entered into the exercise of its
constitutional powers But after the State or its agents have
entered into the field of ordinary contract, the relations
are no longer governed by the Constitutional provisions but
by the legally valid contract which determines rights and
obligations of the parties inter se. No question arises of
violation of Art. 14 or of any other constitutional
provision when the State or its agents, purporting to act
within this field, perform any act. In this sphere, they can
only claim rights conferred upon them by contract and are
bound by the. terms of the contract only unless some statute
steps in and confers some special statutory power or
obligation on the State in the contractual field which is
apart from contract” (see Radhakrishna Agarwal & Ors. v.
State of Bihar & Ors.) Petitioners were under no obligation
to seek allotment of flats even after they had registered
themselves. They looked at the price and flats and applied
for the flats. This they did voluntarily. hey were advised
by the brochures to look at the flats before going
714
in for the same. They were lucky enough to get allotment
when the lots were drawn. Each one of them was allotted a
flat and he paid the price voluntarily. They are now trying
to wriggle out by an invidious method so as to get back a
part of the purchase price not offering to return the
benefit under the contract, namely, surrender of flat. I The
Authority in its affidavit in reply in terms stated that it
is. willing to take back the fiats and to repay them the
full price. The transaction is complete, viz., possession of
the flat is taken and price is paid. At a later stage when
they are secure in possession with title, petitioners are
trying to get back a part of the purchase price and thus
trying to re-open and wriggle out of a concluded contract
only partially. In a similar and identical situation a
Constitution Bench of this Court in Har Shankar & ors. etc.
etc. v. The Dy. Excise & Taxation Commr. & ors. has observed
that those who contract with open eyes must accept the
burdens of the contract along with its benefits. Reciprocal
rights and obligations arising out of contract do not depend
for their enforceability upon whether a contracting party
finds it prudent to abide by the terms of the contract. By
such a test no contract would ever have a binding force. The
jurisdiction of this Court under Art. 32 of the Constitution
is not intended to facilitate avoidance of obligations
voluntarily incurred. It would thus appear that petitions
ought not to have been entertained. However, as the
petitions were heard on merits, the contentions canvassed on
behalf of the petitioners may as well be examined
The principal contention canvassed on behalf of the
petitioners is that the treatment meted to them by the
Authority is discriminatory inasmuch as no surcharge was
levied on flats in MIG scheme constructed and allotted prior
to November 1976 and after January 1977. MIG flats involved
in these petitions were constructed and were available for
allotment in November 1976 and the lots were drawn in
January 1977. There is one more MIG scheme at Munirka where
the allotment took place at or about the same time but in
which case no surcharge was levied. The contention is that
once for the purpose of eligibility to acquire a flat, the
criterion is grounded in income brackets, MIG, LIG, et .
those in the same income bracket form one class even for the
purpose of determining disposal price of flat allotable to
them irrespective of situation, location or other relevant
determinants which enter into price calculation and
therefore, in the same income group there cannot be
differentiation by levying of surcharge in some cases and
charging only the cost price in other cases and that the
discrimination is thus writ large on the face of the record
715
because by levying surcharge in case of petitioners they
have been treated unequally and with an evil eye. It is
difficult to appreciate how Art. 14 can be attracted in the
circumstances hereinabove mentioned. Cost price of a
property offered for sale is determined according to the
volition of the owner who has constructed the property
unless it is shown that he is under any statutory obligation
to determine cost price according to certain statutory
formula. Except the submission that the Authority has a
proclaimed policy of constructing and offering flats on ‘no
profit no loss’ basis which according to Mr. Nariman has a
statutory flavour in the regulations enacted under the Act,
the Authority is under no statutory obligation about its
pricing policy of the flats constructed by it. When the
flats were offered to the petitioners the price in round
figure in respect of each flat was mentioned and surcharge
was not separately set out and this price has been accepted
by the petitioners. The obligation that regulations are
binding on the Authority and have provided for a statutory
price fixation formula on ‘no profit no loss’ basis will be
presently examined but save this the Authority is under no
obligation to fix price of different flats in differed.
schemes albeit in the same income group at the same level or
by any particular statutory or binding formula. The
Authority having the trappings of a State might be covered
by the expression ‘other authority’ in Art. 12 and would
certainly be precluded from according discriminatory
treatment to persons offering to purchase flats in the same
scheme. Those who opt to take flats in a particular income-
wise area-wise scheme in which all flats came up together as
one project, may form a class and any discriminatory
treatment in the same class may attract Art. 14. But to say
that throughout its course of existence the Authority would
be bound to offer flats income-groupwise according to the
same price formula is to expect the Authority to ignore
time, situation, location and other relevant factors which
all enter the price structure. In price fixation executive
has a wide discretion and is only answerable provided there
is any statutory control over its policy of price fixation
and it is not the function of the Court to sit in judgment
over such matters of economic policy as must be necessarily
left to the Government of the day to decide. The experts
alone can work out the mechanics of price determination;
Court can certainly not be expected to decide without’ the
assistance of the experts (See Prag Ice & oil Mills and Anr.
etc. v. Union of India) In the leading judgment it has been
observed that mechanics of price fixation have necessarily
to be left to the executive and unless it is patent that
there is hostile discrimination against a class the
processual basis of price fixation has to be accepted in the
generality of cases as valid.
716
This Court in Avinder Singh v. State of Punjab,(l) approved
the following dictum of Willis on Constitutional Law, page
587:
“The State does not have to tax everything in
order to tax something. It is allowed to pick and
choose districts, objects, persons, methods and even
rates for taxation if it does so reasonably . . . The
Supreme Court has been practical and has permitted a
very wide latitude in classification for taxation.
What is forbidden by Art. 14 is discrimination amongst
persons of the same class and for the purposes of allotment
of flats scheme-wise, allottees of flats in the same scheme,
not different schemes in the same income bracket, will have
to be treated as a class and unless in each such class there
is unequal treatment or unreasonable or arbitrary treatment,
the complaint that Art. 14 is violated cannot be
entertained. Therefore, in the State of Gujarat & Another v.
Shri Ambica Mills Ltd., Ahmedabad, etc., Mathew, J.,
speaking for the Court observed as under:
“A reasonable classification is one which includes
all who are similarly situated and none who are not.
The question then is what does the phrase ‘similarly
situated’ mean ? The answer to the question is that we
must look beyond the classification to the purpose of
the law. A reasonable classification is one which
includes all persons who are similarly situated with
respect to the purpose of the law. The purpose of a law
may be either the elimination of a public mischief or
the achievement of some positive public good.”
Is the classification income-wise scheme-wise violative
of Art. 14 in any manner ? The Authority formulates income-
wise area-wise schemes for constructing flats. Petitioners
contend that there should be only income-wise classification
wholly ignoring area and time factor for classification.
They say that allottees of flats in all MIG schemes
irrespective of area and location and irrespective of when
the flats were constructed form one class for determining
price of flats. There. is no merit in this contenting. What
are price determinants ? Price of land, building material,
labour charges and cost of transport, quality and
availability of land, supervision and management charges are
all variable factors that enter into price fixation. Their
cost varies time-wise, place-wise, availability-wise. All
these uncertain factors cannot
717
be overlooked for the purpose of classification. Therefore,
it is not possible to hold that allottees of flats in MIG
scheme at any place and executed at any time will form one
class for the purpose of pricing policy. only valid basis
for classification would be income-wise, area-wise, time-
wise, scheme-wise, meaning all flats constructed at or about
the same time in same area in one project for particular
income-group will form a class. And there is no
discrimination amongst them.
Pricing policy is an executive policy. If the Authority
was set up for making available dwelling units at reasonable
price to persons belonging to different income-groups it
would not be precluded from devising its own price formula
for different income-groups. If in so doing it uniformally
collects something more than cost price from those with
cushion to benefit those who are less fortunate it cannot be
accused of discrimination. In this country where weaker and
poorer sections are unable to enjoy the basic necessities,
namely, food, shelter and clothing, a body like the
Authority undertaking a comprehensive policy of providing
shelter to those who cannot afford to have the same in the
competitive albeit harsh market of demand and supply or can
afford it on their own meagre emoluments or income, a little
more from those who can afford for the benefit of those who
need succour, can by no stretch of imagination attract Art.
14. People in, the MIG can be charged more than the actual
cost price so as to give benefit to allottees of flats in
LIG, Janata and CPS. And yet record shows that those better
off got flats comparatively cheaper to such flats in open
market. It is a well recognised policy underlying tax law
that the State has wide discretion in selecting the persons
or objects it will tax and that the statute is not open to
attack on the ground that it taxes some persons or objects
and not others. It is only when within the range of its
selection the law operates unequally, and this cannot be
justified on the basis of a valid classification, that there
would be a violation of Art. 14, (see East India Tobacco Co.
v. State of Andhra Pradesh). Can it be said that
classification, income-wise-cum-scheme-wise is unreasonable
? The answer is a firm no. Even the petitioners could not
point out unequal treatment in same class. However, a feeble
attempt was made to urge that allottees of flats in MIG
scheme at Munirka which project came up at or about the same
time were not subjected to surcharge. This will be presently
examined but aside from that, contention is that why within
a particular period, namely, November 1976 to January 1977
the policy of levying surcharge was resorted to and t-hat in
MIG schemes pertaining to period prior to November 1976 and
later April 1977 no surcharge was levied.
718
If a certain pricing policy was adopted for a certain period
and was uniformly applied to projects coming up during that
period, it cannot be the foundation for a submission why
such policy was not adopted earlier or abandoned later.
It was, however, said that levying of surcharge runs
counter to object for which the Authority was set up,
namely, to make available housing accommodation on ‘no
profit no loss’ basis. The argument proceeds on the
assumption that the principle of ‘no profit no loss’ implies
that in respect of each flat the cost of its construction
must be worked out and that alone can be the disposal price
of each flat. Principle of ‘no profit no loss’ has been
explained by the respondents. It IS said that in the over-
all working, planning and execution of projects which the
Authority undertakes as part of development of Delhi, the
integral part of it being construction of flats for
different income-groups the motives and working of it would
not be profit oriented but would work on ‘no profit no loss’
economic doctrine. This would not for a moment suggest that
the principle of ‘no profit no loss’ should apply either to
every flat or to every scheme or to every piece of land
developed by the Authority. It would be impossible for the
Authority to function on such fragmented basis and such a
policy statement has not been made by the Authority. Of
course, some public statement appears to have been made that
the overall working of the Authority is on “no profit no
loss’ basis. Respondent 1 has been able to point out that
the Authority’s housing scheme, as a whole has been running
in a heavy deficit because flats including such as those of
the petitioners actually cost much more than the initially
determined estimates and by the time flats are ready for
occupation initial estimates founded on prevalent market
prices of materials and labour escalate and revised
estimates have to be made. It is also shown that till
Municipal authority takes over municipal services the
Authority spends for the same and incurs cost. Apart from
that petitioners have not been able to show that the
Authority is actuated by commercial profit oriented approach
in its overall working.
It is, however, necessary to examine the contention
whether this ‘no profit no loss’ policy statement has any
statutory flavour as contended by Mr Nariman. The
regulations styled as the Delhi Development Authority
(Management and Disposal of Housing Estates) Regulations,
1968, (‘Regulations’ for short) are framed in exercise of
the powers conferred by s. 57 and were laid before the
Houses of Parliament as required by s. 58. Disposal price
has been defined in Regulation 2(13) to mean in relation to
a property such price as may be fixed by the Authority for
such property. There is not the slightest or even a remote
reference to ‘no profit no loss’ formula for
719
determining the cost price. A quick survey of the
Regulations do A not spell out any formula for price
determination on the basis of ‘no profit no loss’. Whether
the power to determine disposal price is in the Housing
Committee will be presently examined. Regulations, however,
on the contrary indicate that the power to determine the
disposal price is vested in the Authority and as price has
been fixed by the delegate of the Authority even if it is
inclusive of surcharge it cannot be said that it runs
counter to the declared policy of the Authority.
It is at this stage necessary to examine the contention
that in the case of Wazirpur and Munirka LIG schemes which
came up during this very period no surcharge was levied and,
therefore, there is invidious discrimination amongst members
of the same class. Again the argument proceeds that income-
wise classification alone is valid. Here time-wise (November
1976 to January 1977) classification is relied upon. It is
an admitted position that no surcharge is levied on MIG
flats at Munirka. The affidavit in reply shows that the land
on which flats are constructed in Munirka MIG scheme turned
out to be very rocky with the result that the construction
cost in respect of flats at Munirka MIG scheme worked out at
Rs. 456 per plinth area per metre whereas in respect of
Lawrence Road it came to Rs. 401.54 p. Only. The Authority,
therefore, thought that if surcharge is levied on flats
under MIG scheme in Munirka area the disposal price would be
very high and would be beyond the reach of MIG. It is in
this background of the special facts that ‘no surcharge was
levied in respect of any flat in MIG in Munirka area.
Project-wise price fixation cannot be dubbed as arbitrary or
discriminatory in comparison with other projects at
different places.
It was, however, pointed out that 132 flats in Rajouri
Garden MIG scheme were disposed of- without levying
surcharge as component of sale price. It is pointed out in
affidavit in reply that those flats were handed over to the
Government of India for meeting their needs for staff
quarters and that was done in the year 1978. It is also
pointed out that the Government charged half the price of
the land in respect of these 132 flats and, therefore,
surcharge was not levied. There is two-fold fallacy in this
submission. Government ordinarily is in a class by itself
and its needs of staff quarters deserve to be met in large
public interest. Government has not got any undeserved
benefit at the cost and risk of petitioners. Hence their
complaint in this behalf is without merits.
It was next contended that surcharge is arbitrary
inasmuch as how the surcharge is worked out in each case
does not answer any
720
rational, tangible, scientific cr understandable formula.
How the figure of surcharge has been worked out has been
explained in detail in affidavit in reply. Briefly
recapitulating the same, it may be mentioned that initial
estimates for 304 MIG flats in Prasad Nagar area were
prepared in or about 1971 and the estimated cost was Rs.
1,17,83,200 and that on March 21, 1972, an estimate of Rs
1,09,97,100 was sanctioned. After the work commenced and the
actual cost started coming in the revised estimate for 304
flats was of the order of Rs. 2,07,33,000 which was approved
by the Vice-Chairman on September 18, 1976. According to the
revised estimate the approximate disposal cost for each flat
came to Rs. 68,202 and the cost of land per dwelling unit
was Rs. 7,008. Extracts of original notes of Financial
Adviser (Housing) and the approval of the same by the Vice-
Chairman have been set out in the affidavit in reply. The
subsequent revised estimates show that disposal price of
each flat would be Rs. 75,200. In the meantime the Income
Tax Department wanted to acquire 40 MIG flats in Prasad
Nagar area and the same were offered at the price of Rs.
75,000, per flat. Commissioner of Income Tax accepted the
price. This became the starting point for working out the
disposal price in that period. The difference between the
cost price and the disposal price of Rs. 75,000 per flat was
treated as surcharge and the purpose was to use the extra
money for extending cost reduction benefit to the allottees
of flats in LIG, Janata and CPS schemes. Affidavit in reply
of the Secretary of Respondent 1 provides further
information which show that the cost price would be Rs.
78,000. Therefore, at best the component of surcharge would
be between Rs. 1700 to Rs. 2200 in Rajouri Garden MIG flats.
Similarly, with regard to MIG flats at Lawrence Road the
actual cost price would be in close proximity of the
disposal price would be in close proximity of the disposal
price charged from the petitioners. It is, therefore,
difficult to entertain the contention that even if surcharge
could be justified its actual computation is arbitrary and
irrational.
The next contention is that Vice-Chairman had no
authority to levy surcharge and that even if he has
authorised the same it runs counter to the principle of
fixing disposal price incorporated in Resolution No. 209
dated November 26, 1974. The Vice-Chairman is to be
appointed by the Central Government as per s. 3(3)(b) of the
Act. It appears that this Vice-Chairman is whole-time
officer and will be the Chief Executive of the Authority.
This becomes clear from regulation 3 of the Regulations
which provides as under:
“3. These regulations shall be administered by the
Vice-Chairman, subject to general guidance and
resolutions of the
721
Authority, who may delegate his powers to any officer
of the Authority”.
Thus the Vice-Chairman, subject to general guidance and
resolutions cf the Authority, shall administer the
regulations. He can delegate the functions to any officer of
the Authority. Regulation 59 is important which reads as
under:-
“59. The Authority may delegate all or any of its
powers under these regulations to the Vice-Chairman or
to a whole time member”.
Armed with this power of delegation the Authority adopted
Resolution No. 60 dated February 21, 1970 which reads as
under:
“Resolved that the recommendations of the
Committee be approved and all the powers of Delhi
Development Authority be exercised by the Housing
Committee and the Chairman, Delhi Development Authority
be authorised to constitute the said committee,
determine the organisational set-up and take (sic) all
efforts for implementing the housing and allied
schemes”.
Serious exception was taken to this gross abdication of its
powers and functions by the Authority. The composition of
the Authority as set out in s. 3 would include such persons
as Finance and Accounts Member, Engineering Member,
representatives of Municipal Corporations of Delhi and
representatives of Metropolitan Council as and when set up.
Three other persons were to be nominated by Central
Government of whom one shall be person with experience of
planning. It is a high power body. Yet it completely
abdicated its power and authority in favour of Housing
Committee. The Housing Committee will practically supplant
the Authority. But the more objectionable part of Resolution
No. 60 is that such Housing Committee which is to enjoy all
powers and functions of the Authority was to be constituted
by the Chairman at his sole discretion because he was
authorised not only to constitute the Housing Committee but
to determine organisational set up and then make all efforts
for implementing the housing and allied schemes. It is
really difficult to appreciate such whole-sale abdication or
delegation of powers by a statutory authority in favour of a
Committee whose composition would be determined by one man,
the Chairman. By a process of elimination the Housing
Committee could supplant the Authority and the Chairman
could constitute Housing Committee. Therefore, the Chairman
enjoyed
722
a very wide discretionary power. Though Mr. Nariman did
challenge the validity of Resolution No. 60, Mr. Chitaley in
cognate petition refrained from doing so. Once the power to
delegate is given by the Regulations the challenge to
validity on the ground of delegation must fail
It is, however, necessary to examine the submission
whether Vice-Chairman could have permitted levy of surcharge
as a component of the price of flats in MIG schemes. In this
connection it would be advantageous to refer to Resolution
No. 20 dated June 18, 1968. Of the Authority by which the
recommendations of the Standing Committee, inter alia,
empowering the Vice-Chairman to approve forms of application
as well as to fix the disposal and hire-purchase price were
accepted. Resolution No. 209 is the one adopted by the
Housing Committee. It takes note of the delegation of powers
to fix disposal and hire-purchase price of flats to the
Vice-Chairman and further provides that if there is a
marginal saving in any scheme the amount is always diverted
to subsidies cost of Janata and CPS houses. It seems the
Resolution is for information of the Housing Committee and
the Housing Committee has merely resolved that the
information be noted. The Resolution No. 200 of the
Authority with Resolution No. 209 of the Housing Committee
sets out clearly that the power to fix the disposal price
was delegated to the Vice-Chairman and ordinarily such
excessive delegation to one man may be galling to a judicial
body yet the scheme of regulations and the provisions
contained in Regulation 3 read with s. 59 clearly envisages
such delegation of powers. It is, therefore, idle to contend
that the Vice-Chairman had no authority to levy the
surcharge as component of disposal price of flats.
It was next contended that even if Vice-Chairman had
such power there is nothing to show that he has exercised
this power and that, therefore, somewhere without any
authority someone has added the surcharge to the disposal
price and that, therefore, the levy of surcharge is
unauthorised. The submission seems to be factually
incorrect. The note of Accounts officer (Housing) dated
September 8, 1976, submitted to the Financial Advisor
(Housing) shows that the flats have been offered at the rate
of Rs. 75,000 to the Commissioner of Income Tax for the
Income Tax Department and that should be the disposal price
This note was approved by the Financial Advisor (Housing)
and ultimately countersigned by the Vice-Chairman. There
fore, the price of Rs. 75,000 as the disposal price is
approved by the Vice-Chairman. Even if it includes surcharge
it cannot be said with confidence that the Vice-Chairman has
not approved the surcharge as a component of disposal price.
723
The last contention is that the Authority has made a huge
profit by levy of surcharge. In this connection statistical
table was annexed to the petition and there was serious
controversy about the facts and figures set out therein, by
the other side. Having gone through the detailed affidavit
in reply it transpires that the contention is without
merits. Therefore, there is no substance in the contention
that the Authority has made a huge profit. On the contrary
it appears that the overall working of the Authority is
deficit ridden.
These were all the contentions in these petitions and
as there is no Merit in any of them the petitions are
dismissed. There will be no order as to cost
N.K.A Petitions dismissed.
724