Paragraph numbers below are the court’s original numbering, recovered from the source text.
51. Legality and/or validity of the said circulars is in question. We D may, at the outset, notice that there is nothing on record to show that the Office Orders dated 16.8.1996, 27.8.1996 and 21.3.1999 were published in the Gazette or were otherwise brought to the notice of the registrants. Conduct:
52. Conduct of the parties may be noticed from the case ofManjit Singh. Admittedly, the registrants failed to pay instalments within the stipulated period. A notice dated 23.4.1997 was served on him which is ,;-, , in the following terms : ,,.. -f "WHEREAS you had been allocated a second floor category – II, SFS flat in Pkt. F, Sheikh Saria Residential Scheme vide allocation – cum demand letter dated 31.3.93 under the DDA (Management & Disposal of Housing Estates) Regulations 1968 against your registration under the 5th SFS – 1982. 1- AND WHEREAS as per the allocation cum demand letter the following installments were to be paid as per the following schedule:- [2007] 13 (Addi.) S.C.R. Installments Amount Due Date Installment Challan paid on No. I.st Rs.1,35,867/- 30.4.93 24.5.93 032601 (Rs.1,35,867) Ilnd Rs.1,25,060/- 30.10.93 30.10.93 112025 31.05.94 (Rs.43,675) (Rs.50,000) III rd Rs.1,56,325/- 30.4.94 24.11.94 -… • 010243 (Rs.50,000) c IV th Rs.1,25,060 30.10.96 25.07.96 010245 (Rs.50,000) From the perusal of the above chart, it can be seen that you have not deposited the installment as per schedule indicated in the allocation cum demand letter. AND WHEREAS as per the terms and conditions of the allocation cum demand letter as contained in Clause – 4 the allocation was liable to be cancelled if the installments are not made as per the schedule. AND WHEREAS it is evident that you failed to deposit the installments as per the schedule and thus have committed the breach of the terms and conditions of the allocation cum demand letter dated 31.3 .1993 . ~-, Therefore, I, Dy. Director (SFS) hereby inform you that the allocation made to you vide letter dated 26.3 .93 – 31.3 .1993 stands automatically cancelled due to the breach of the terms and conditions of allocation. It is further inform (sic) that the 5th SFS Scheme 1982 stands already closed, therefore, you are advised to return all the original FDR, Demand cum allocation letter and third copy of challan so that your case can be processed for the refund of the amount deposited by you." DELHI DEVELOPMENT AUIBORITY,N.D. v. JOINT ACTION 845 COMMJTTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
53. He submitted a representation praying for condonation of default. A 'I In his representation, he stated: "Immediately on receipt of the DDA letter I ran hither and thither for financial loans from relatives, friends, and well wishes and was able to deposit Rs.2,12,770/- vide challan No.039576 dated – 12.5.97 (Annexure F) bringing the total payment to DDA to 90% B > /- of the cost of flat. The flats are yet to be completed. I now, therefore, humbly APPEAL to you to condone the delay in the payment of installments for reasons stated above, on humanitarian and compassionate grounds and to regularise the c allocation of the flat for which act of kindness I shall ever pray. I am also ready to pay any amount yet due in the form ofinterest."
54. The said representation was accepted by DDA in terms of a letter dated 10.12.1998 which reads as under : "It is our pleasure to inform that you have been allotted SFS Flat with the following details through a computerized draw held on _j 10/1998:- Flat No. Floor SEC Category II Sector Block Pocket Type Locality SHEIKH SARAI We are advising the Housing Acts Department to issue the 5th and Final Demand Letter to you at the earli\:st."
55. It allotted the flat. No condition therefor was put. It did not ask G for payment of any surcharge. The original terms were not deviated from . It did not ask for any extra-cost. The delay in payment of instalments was condoned and the allocation of flat which stood cancelled in terms of the aforementioned notice dated 23.4.1997 stood restored. DDA, thus, acted strictly in terms of the original scheme. The offer of the allocattee was H [2007] 13 (Addi.) S.C.R. A accepted relying on or on the basis of clause 4, viz., the amount of default and an interest charged thereupon@ 18% per annum. It is only when the 5th and final instalment was directed to be paid in tenns of demand letter dated 15.2.1999, the current cost computed in tenns of the office order dated 16.8.1996 and subsequent office orders was included. The B allocattee at that stage might not have any other option but to pay the same for obtaining possession. But by reason thereof, he never gave up his right to question the action on the part of DDA. Rule of estoppel, _. therefore, has no application.
56. It was, on the other hand, DDA who having accepted the offer C of the allocattee by restoring the allotment, in our opinion, is estopped and precluded from raising a plea as regards application of office order dated 16.8.1996. It may be noticed that even contents of those letters were not disclosed to the allocattee. Was it a Restoration Scheme ?
57. The office orders, on the basis whereof the purported impugned policy had been taken, do not refer to the scheme as a restoration scheme. The resolutions do not say so. Had it been so, DDA would have issued a fresh notification or at least made its stand clear to the allocattees either E by way of public notice or by informing each of such defaulters individually. Had such conditions for the purpose of restoration being made known, the allocattees would have accepted it or rejected it. Evidently, it is a part of the original scheme. It is not a new one. It is well known principle of law that a person would be bound by the tenns of the contract subject F of course to its validity. A contract in certain situations may also be avoided. With a view to make novation of a contract binding and in particular some of the tenns and conditions thereof, the offeree must be made known thereabout. A party to the contract cannot at a later stage, while the contract was being perfonned, impose tenns and conditions G which were not part of the offer and which were based upon unilateral issuance of office orders, but not communicated to the other party to the contract and which were not even the subject matter of a public notice. Apart from the fact that the parties rightly or wrongly proceeded on the basis that the demand by way of 5th instalment was a part of the original DELHI DEVELOPMENT AUTHORITY, ND. v. JOINT ACTION 847 COMMITTEE,ALLOTTEEOFSFSFLATS[SlNHA,J.] scheme, DDA in its counter affidavit either before the High Court or before A us did not raise any contra plea. Submissions of Mr. Jaitley in this behalf could have been taken into consideration only if they were pleaded in the counter affidavit filed by DDA before the High Court.
58. We have also reservations that in absence of any provision contained in the Act or the Regulations, the delegatee on its own could frame such a new scheme. If not, the purported restoration policy would be ultra vires. We, therefore, cannot persuade ourselves to agree with the contention ofDDA that the restoration policy cannot be tested on grounds of terms and conditions of the original scheme. If it is a new scheme, it would bear repetition to state, the terms contained therein should have been known to the allocattees. We, thus, have no other option but to proceed to consider the legality and/or validity of such imposition on the premise that the impugned policy decision is a part of the original scheme and does not contain any new policy. Policy Decision :
59. An executive order termed as a policy decision is not beyond the pale of judicial review. Whereas the superior courts may not interfere with the nitty gritties of the policy, or substitute one by the other but it will not be correct to contend that the court shall like its judicial hands off, when a plea is raised that the impugned decision is a policy decision. Interference therewith on the part of the superior court would not be without jurisdiction as it is subject to judicial review. i
60. Broadly, a policy decision is subject to judicial review on the following grounds : (a) if it is lll1constitutional; (b) ifit is de'hors the provisions of the Act and the Regulations; (c) if the delegatee has acted beyond its power of delegation; )o. (d) ifthe executive policy is contrary to the statutory or a larger policy .
61. The stand taken by DDA itself is that the relationship between c the parties arises out of the contract. The terms and conditions therefor H [2007] 13 (Addl.) S.C.R. A were, therefore, required to be complied with by both the parties. Tenns and conditions of the contract can indisputably be altered or modified. They cannot, however, be done unilaterally unless there exists any provision either in contract itself or in law. Novation of contract in tenns of Section 60 of the Contract Act must precede the contract making B process. The parties thereto must be ad idem so far as the tenns and conditions are concerned. IfDDA, a contracting party, intended to alter or modify the tenns of contract, it was obligatory on its part to bring the same to the notice of the allocate. Having not done so, it, relying on or -t on the basis of the purported office orders which is not backed by any C statute, new tenns of contract could thrust upon the other party to the contract. The said purported policy is, therefore, not beyond the pale of judicial review. In fact, being in the realm of contract, it cannot be stated to be a policy decision as such. Price Fixation
62. We would assume that the office orders were issued by DDA keeping in view the representations made by a large number of defaulters. The plea taken by DDA gives rise to a dichotomy. If it is a case of contract qua contract, the provisions of the Contract Act must be taken recourse to. IfDDA was exercising a statutory power, the same must be E tested on application of doctrine of ultra vires. Floating a scheme for providing housing facilities to a group of people, although is governed by statute, power under the statute by an executive not only can be tested on the touchstone of Article 14 of the Constitution of India, but can also be tested on the touchstone of source of the power under the statute. F No provision either in the Act or the Regulations was brought to our notice which makes the allocattee bound by the purported policy decision taken by DDA. Even if it is so, the superior courts may exercise its power of judicial review as the power which is sought to be exercised by a statutory authority is not under the contract but under a statute. When a contract G emanates from a statute or is otherwise governed by the provisions thereof, the superior court can also exercise the power of judicial review.
63. In Gujarat State Financial Corporation v. Mis. Lotus Hotels Pvt. Ltd., [1983] 3 SCC 379: AIR (1983) SC 848], it is stated that H such contracts can be subject to judicial review. DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 849 COMMIITEE,ALLOITEEOFSFSFLATS(SINHA,J.]
64. Regulations 5 and 6 should not be very liberally construed. A Concededly, the manner in which power is to be exercised is governed by the past practice. Norms have been fixed for computing the disposal cost. Although, the superior courts ordinarily would not interfere in the price fixation but there does not exist any absolute ban. In a case where fixation of price is required to be made in a particular manner and upon B taking into consideration the factors prescribed and if price is fixed de' '.;'. f hors the statutory provisions, judicial review would be permissible.
65. Strong reliance has been placed upon the residuary power conferred upon the Authority to determine the cost of construction. c
66. When the same is done having regard to the relevant factors on the basis of which brochure as well as the notice inviting tender was issued, ……. the superior courts may not interfere; but the same must be done in terms of the original contract and not de' hors the same. The authority, even while exercising its residuary power, is required to act within the four D comers of the contract. While doing so, the terms of the contract cannot be altered to include any other factors which were contemplated thereunder. While computing the extra cost, no additional factor, thus, can be taken into consideration. If such a power is conceded in the authority, the same would give rise to exercise of arbitrary power. It is not E contemplated in law. When construing a provision delegates a power on an authority under a statute, the constitutional provisions must be kept in mind _.
67. At the time of calculation of the amount which would be the subject matter of demand of 5th and final instalment, the jurisdiction of F DDA is to keep itself confined only to the factors on the basis whereof, the brochure has been issued and offer was made. No additional factor, thus, could be taken into consideration at the time of issuing notice other than the ones on the basis whereof offer was made by the registrants. Imposition of equalization charge also falls within the said purview. ;=a. "'
68. There may be some charges like conversion charges which per se may or may not be bad. Conversion charges levied by the DDA pursuant to the directions issued by the Central Government which in tenns of Section 41 of the Act is binding on DDA for converting the leasehold H [2007] 13 (Addl.) S.C.R. A into freehold. However, such a power also must be exercised reasonably and fairly. Conversion of the property from leasehold to freehold is a separate transaction. The same has nothing to do with the actions, qua contract. Imposition of conversion charges, therefore, even if, per se, may not be held to be bad, the said factor cannot be taken into consideration B for the purpose of computing construction costs. The High Court has struck down the inclusion of such conversion charges in the costing of the flats. After 1996, the ordinary cost of construction of a flat was Rs.2,00,000/-, in South Delhi but not only it framed the basis for computing the final cost but also 20% additional amount as also 20% C surcharge were claimed thereupon. Sometimes interest also was charged as and when applicable. Thus, so long the conversion charge is charged by way of a separate transaction, no exception can be taken. But, purpo1ted price fixation as has been done in the instant case cannot receive our approval. The same is, thus, in our opinion, bad in law. Applicability :
69. The scheme in question was floated in 1992-93. The purported default on the part of the registrants took place prior to the purported adoption of the policy decision. The purported office order dated E 16.8.1996 discloses shows that an internal decision had been taken to condone the delay in making payments of first four instalments. The authorities mentioned therein had been delegated with the power for the period(s) mentioned as under: Director (H)-1 Commissioner (Housing) Principal Commissioner Vice-Chairman Upto 3 months Upto 1 year From 1 year to 1 Yz year Full powers Clause 3 of the said office order reads as under: "There are presently cases in the Housing Department where there have been delays in the making of the payments of the flats allocated/allotted in South Delhi under SFS. Before the aforesaid revision took place, delays of one year or so were being regularized DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 851 COMMITTEE,ALLOTTEEOFSFSFLATS[SlNHA,J.] with usual charges, i.e., on payment of 18% interest per annum A and restoration charges, etc. in few cases where delays are unusually long, current price has also been demanded."
70. Thus, a decision in that behalf had not only been taken but also was made applicable both in the case where the delay is of one year or so and the delay which was unusually long. By reason of the said circular, delay in making payments of instalment was to be condoned on payment of either current price or old price whichever is higher. From a perusal of the Resolution dated 27 .8.1996, it appears that 20% surcharge was levied over the disposal cost worked out for the flats in South Delhi SFS. It c does not show that any subsidy was proposed to be granted for the migrants from Jammu and Kashmir or Punjab. The policy was taken only with a view to balance the reduced cash in-flow. DDA, thus, had in view commercial aspect of the matter and not the social justice aspect.
71. Again, by reason of the office order dated 31.3 .1999, the D delegation of power in favour of various authorities was redefined. The Vice-Chairman could deal with delay or default even if it exceeds one year and six months. 22.8.1996 was prescribed as the cut off date for the purpose thereof. Price of the flat was to be calculated on the basis of either current price or old price whichever is higher. It was sought to be applied irrespective of the extent of delay. On what basis 22.8.1996 was taken to be the cut off date has not been disclosed. We would, however, assume that the said date was taken into consideration in view of the Resolution dated 27.8.1996.
72. An executive officer, in absence of any provision of a statute, cannot apply his own decision with a retrospective effect. A delegatee is bound to act within the four comers of the delegation and not beyond the same.
73. Delegation of power in favour of an authority under a statute G must also be tested in terms of the statutory provisions. No provision under the Act or the Regulations has been brought to our notice which empowers the delegatee to alter the terms and conditions of the contract with retrospective effect. The purported policy decision must, therefore, be tested not only having regard to the provisions of the statute but also H [2007] 13 (Addi.) S.C.R. A having regard to clause 4 of the offer.
74. Current cost has been calculated upon computing 20% over and above the actual cost. A provision for surcharge had also been made in terms whereof a premium of 20% over the disposal cost was worked out on current cost for the SFS flats in South Delhi. Imposition of B surch<rrge is subject to the condition that the real value in the market of DDA flats would be much more than it had been charging as per the cost formula. Parameters of computation of disposal price have been laid down which we have noticed supra. The authority having itself adopted a formula for computing the disposal cost, the same was binding upon C the delegatees. A delegatee cannot take any action contrary to or inconsistent with the factors laid down for computation of disposal cost as defined in Section 2(30) of the Act. Regulations 5 and 6 do not authorize the delegatee to apply a formula which was not contemplated by the Authority itself If an Executive Authority in absence of any statutory D provision cannot apply a decision with retrospective effect, the same would be ultra vires.
75. In Vice Chancellor, MD. University, Rohtak v. Jahan Singh, (2007) 4 SCALE 226, this Court observed: 'The Act does not confer any power on the Executive Council to make a regulation with retrospective effect. The purported regulations, thus, could not have been given retrospective effect or retro-active operation as it is now well-settled that in absence of any provision contained in the legislative Act, a delegatee cannot make a delegated legislation with retrospective effect." [See also Ashok Lanka and Anr. v. Rishi Dixit and Ors., [2005] 5 sec 598]
76. A definite price is an essential element of binding agreement. A G definite price although need not be stated in the contract but it must be worked out on some premise as was laid down in the contract. A contract cannot be uncertain. It must not be vague. Section 29 of the Indian Contract Act reads as under : "Section 29 – Agreements void for uncertainty DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 853 COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.] Agreements, the meaning of which is not certain, or capable of A being made certain, are void."
77. A contract, therefore, must be construed so as to lead to a conclusion that the parties understood the meaning thereof The terms of agreement cannot be vague or indefinite. No mechanism has been provided B for interpretation of the terms of the contract. When a contract has been worked out, a fresh liability cannot thrust upon a contracting party. ~ f
78. It is well settled that a definite price is an essential element of a binding agreement. Although a definite price need not be stated in the contract, but assertion thereof either expressly or impliedly is imperative. c Impugned Judgment :
79. The Full Bench of the Delhi High Court has placed strong reliance on P.N Verma (supra). One of the fundamental errors which has been committed by the Full Bench, with respect, is applying P.N Verma D (supra) without noticing the distinction between the provisions contained in the clauses of the Brochure in the present case and those obtaining therein. In the present case Clause 5.10 of the DDA Brochure stipulates that the price mentioned in the allocation letter is only the estimated price and it could be changed only on the basis of escalations in the price to E be determined by DDA on the completion of flats. lnP.N Verma (supra), however, the price was to be fixed on allotment of flats. It gives rise to a lot of difference in determining the issue. In P.N Verma (supra), the High Court observed: "24 … If the stand of the DDA is that the price they demand is only on the same formula as was announced and that the increased price demanded is only due to escalation in cost of construction and fluctuation in other cost factors, then the issue will only be whether the fixation of price is in accordance with the contract and G that can be gone into, both by reason of principle and because it will involve complicated factual investigations, only in a suit. This is the alternative stand of the DDA which we will discuss later. But if the DDA says, whatever we may have said earlier, we can fix the price or any basis and that cannot be questioned at all because H c [2007] 13 (Addi.) S.C.R. it is a contractual matter, the argument is fallacious because this stand of the DDA means going behind the contract and revising the earlier fonnula of price fixation which means travelling back to the pre-contractual statutory stage … " It was also stated: "46 … That actual cost was tentatively fixed at a figure 'which was announced subject, however, to variations in cost factors. It is not open to the DDA to alter this basis for the determination of the disposal cost. So long as the DDA adheres to this basis in fixing the disposal cost, court will not interfere. It will not interfere even if there should be some mistakes or exaggerations in the calculation of the components of the figure arrived at, as that would be a matter for detennination after evidence and investigation in a suit. Even if an item should be included in the cost components, about the inclusion of which as one of the cost factors there could be some doubt, the writ court may not interfere and may leave the parties to fight out their battle in a regular suit. But where the disposal cost is fixed on a basis totally different from that announced earlier or where the components taken into account cannot be described by any stretch of imagination as cost factors or where a component of the cost is shown to have been fixed arbitrarily and without any basis whatsoever, the Court has no option but to quash the detennination of the disposal cost so fixed and direct the DDA to undertake afresh a proper detennination thereof in accordance with the terms of the original contract or after excluding the items ur1warrantedly included therein or after re-detennining the value of any component on a proper and reasoned basis … " On legal principle, therefore, ratio of P.N Verma (supra) is not very different from what has been held herein.
80. Another fundamental error committed by the Full Bench was to approve para 29 of the judgment of the Division Bench of the Delhi High Court in R.K. Sachar v. DDA (LPA No. 727 of 2002 decided on 15.12.2003) opining that this Court had already approved the contention H of the DDA that it was entitled to recover such a charge in the light of DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 855 COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.] ·1 the decision in Premji Bhai Parmar (supra).
81. The Full Bench failed to notice that in P.N. Verma (supra) surcharge over and above the disposal price titled "equalization charge" purporting to provide subsidy for construction of flats for weaker sections of the society in trans Y arnuna area was held to be ultra vires and that B the said decision has been approved by this Court. P.N. Verma (supra), therefore, was misread and misconstrued.
82. In Premji Bhai Parmar (supra), surcharge was a component of the disposal price. The disposal price was known to the registrants at the time of conclusion of contract. As the contract was found to be binding c on the parties, levy of surcharge, thus, was held to be vitiated in law.
83. In this case, the case of the appellant is not that they are not bound to pay the binding contractual stipulation as contained in Clause 4 of the letter of allotment. They are and they must. But what cannot be D thrust on them is the price determined on the basis of factors which were )I not contemplated in the original contract.
84. In Premji Bhai Parmar (supra), this Court did not record a finding that even if a surcharge was not a part of Brochure, still the same could be imposed without any sanction in law so as to bind the allocates E to pay the same although neither they were made aware thereof nor did they give their consent for payment of surcharge as a part of the contract. The Full Bench of the High Court wrongly relied upon R.K. Sachar ,…. (supra). In the light of the decision of this Court in Premji Bhai Parmar (supra), the nature oflevy should have been held to be completely distinct F and, thus, Premji Bhai Parmar (supra) had no application to the fact of the present case.
85. The Full Bench also misdirected itself insofar as it failed to take into consideration that levy of20% surcharge was in effect and substance a compulsory exaction to augment the revenue requirements of the DDA G and, thus, could not have been a part of the contract. Any compulsory exaction should be viewed in the light of Article 265 of the Constitution oflndia, unless it comes within the sphere of contract.
86. It may be reiterated that it is only those components which fall c [2007) 13 (Addi.) S.C.R. within the Brochure of the DDA or within the purview of the statutory requirements can be included in the exercise of price fixation. To the said extent are the decision of the Delhi High Court in P.N Verma (supra), Narsingh Jain v. Union of India [(80) (1999) DLT 742) and DDA SFS Flat Owners Society v. UOI, AIR (2001) Del 39).
87. Against the said judgment of the Division Bench of the High Court in P.N Verma (supra), an appeal was preferred by the DDA before this Court. This Court in the said appeal titled as DDA v. SFS Assn. and Ors. [Civil Appeal No. 4402of1985) rejected the contention of the DDA that under the terms of the Brochure related to the said scheme it was empowered to recover from the registrants an additional amount over and above the disposal price by way of equalization charges in the following terms: "The lengthy and elaborate judgment of the High Court under appeal makes instructive reading in prohibiting the DDA from adding to the prices of the named flats on escalation termed as 'equalisation and ad hoc charges'. From the terms of the model contract entered into by the DDA with the people who opted for the self-financing scheme, charging of the said equalization and ad hoc charges is evidently totally missing. The DDA in support thereof has banked upon the justness of its cause and demand, and has no where been able to project that to begin with, it was part and parcel of the cost factor. The High Court has seen through its design and has termed the venture as a camouflage. We see no reason to take a different view than the one taken by the High Court." The said decision of this Court is binding upon the DDA. Conclusion :
88. For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. The appeals are allowed with costs. Counsel's fee assessed at Rs. 25,000/- in each case. Appeals filed by the DDA are dismissed. K.K.T. Appeals filed by registrants allowed. Appeals filed by DDA dismissed. _. • ..— ….