IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1805 OF 2007

Chairman & Managing Director    ... Appellant (s) Tamil Nadu Housing Board & Anr.  

Vs.

S. Raghavan & Ors. ... Respondent (s)

WITH

Civil Appeal Nos.1807, 2180, 2181, 2182, 2183, 2184, 2185, 2186, 2187, 2188, 2189, 2190, 2191, and 2192 of 2007, 2193/2007, 2194/2007.   

O R D E R   

These appeals by the Tamil Nadu Housing Board (‘Board’ for short)

by special  leave are directed against the common order dated 16.10.2006

made by the Madras High Court, allowing in part the writ petitions filed by

the respondents (allottees of flats/houses). The said writ petitions were filed

challenging the determination of the final  cost  of the land,  capitalization

charges and interest in regard to Ellisnagar Housing Board Scheme and the

consequential demands made by the appellant Board in the years 2001 and

2002. The said demands were based on the final land cost determined by the

Board  as  Rs.6,32,630/-  per  ground  as  also  the  capitalization  amount

charged,  as  per  GO (MS)  No.63  dated  2.2.2001.  The  allottees  had  also

sought  a direction  to  the Board  to  execute  deeds  of  conveyance  in  their

favour, on receipt of the amounts legally due.  

2. After a detailed consideration of the long-standing disputes between

the Board and the allottees,  in  the light  of  calculations  furnished by the

Board,  and  decisions  taken by the  Board during the  pendency of  earlier

legal  proceedings  on  the  suggestions  of  Lok  Adalat,  the  High  Court

disposed of the writ petitions with following directions :  

(a) The allottees (petitioners in the writ petitions) will pay the final land cost at the rate of Rs.349100/- per ground with 5% nominal profit. The actual amount determined by the appellant in respect of each allottee shall be paid together with interest as per the rate set out in the agreement from 21.5.2004 till date of payment.  

(b) The capitalization charges will be determined for the period from the date when flat or house was made ready for occupation till date of allotment for occupation and such amount will be indicated separately. The interest on such amount will be payable from 21.5.2004.  

(c) If  the  Housing  Board  has  not  intimated  the  allottees  about  the  capitalization charges so far, it is open to the Housing Board to specify the amount as stated in clause (b) and demand the same with interest from 21.5.2004.  

On complying with the above directions and satisfying any other requirement as per law, the allottees who have prayed for execution of sale deeds in their favour are entitled to get the sale deeds executed.  

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3. The Appellant Board had contended before the High Court that the

interest on the difference in land cost should be from the date of allotment.

On the other hand, the allottees had contended that liability to pay interest

would arise only from 21.5.2004 when the final cost was determined. The

High Court accepted the contention of the allottees and directed that interest

should be claimed only from 21.5.2004 -- the date of determination of the

final  cost.  The  appellant  is  aggrieved  by  the  restriction  of  liability  of

allottees in regard to interest from 21.5.2004 instead of the respective dates

of allotment.  

4. The  Board  also  stated  that  it  had  borrowed  funds  from financial

institutions for construction; that in regard to the allotments made after the

cut off date, (the date up to which interest is charged while fixing/approving

the selling price under the scheme), the Board had capitalized the interest on

the cost of construction only till  the cut off date; and that the Board was

therefore entitled to further capitalization amount from the cut off date to

the date of allotment or ‘ready for occupation date’,  whichever was later.

But the High Court however directed that the capitalization amount should

be charged only for the period from the date when the flat/house was made

‘ready for occupation’ till the ‘date of allotment’. The Board contends that

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the capitalization amount claimed in accordance with its standard practice

ought to have been accepted by the High Court.  

5. When the matter was heard for some time on 27.8.2008 and the issues

were crystalised, both counsel took time to ascertain whether the long drawn

multi-round litigations could be put an end by modifying the direction of the

High Court in regard to interest on the difference in land cost, by altering

the  date  of  commencement  of  interest  as  1.1.2001  instead  of  21.5.2004,

having regard to the fact that interest upto 31.12.2000 had been taken into

account while calculating the land cost as on 31.12.2000 as Rs.349100/- per

ground.  

6. When  the  matter  came  up  today,  both  counsel  submitted  that  the

parties  were agreeable  for  modification  of the date  of  commencement  of

interest as 1.1.2001 instead of 21.5.2004 with reference to the final land cost

of Rs.349100/- (with 5% profit) per ground as on 31.12.2000.

7. In regard to capitalization, it was submitted on behalf of the Board

that the standard procedure adopted for arriving at the price for all schemes

of the Board, where the allotment was made after the cut off date was to add

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capitalization charges on the cost of construction (that is, approved selling

price less land cost, profit and collection charge) from the ‘cut off date’ to

date of allotment or ready for occupation date whichever was later. It was

submitted that in Ellisnagar Scheme, all allotments were made after the cut

off date, but the aforesaid procedure of adding capitalization charges was

not  followed in  arriving at  the  selling  price;  and that  therefore,  later  on,

based  on  the  GO dated  2.2.2001,  the  capitalization  amount  and  interest

thereon from allotment date was intimated to the allottees. It was contended

that the standard method of capitalization adopted by the Board ought not to

have been disturbed by the High Court and that the decision will affect the

right of the appellant-Board to capitalize the interest component on the cost

of construction, under other schemes.  

8. We have carefully considered the contention regarding capitalization.

We find that on the peculiar facts of these cases, the High Court has directed

that the capitalization should be done only from the date when the flat/house

was made ready for occupation till date of allotment, instead of from the cut

off date. On the facts and circumstances of the Ellisnagar scheme, it may not

be necessary to modify the direction relating to the manner of calculation of

capitalization charges. As the capitalization directed by the High Court is

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with reference to the special facts of the scheme and its implementation, the

various orders of High Court passed from time to time in various litigations,

and  the  Lok  Adalat  negotiations  and  broad  understandings,  the  said

direction regarding the manner of calculating capitalization charges, will not

be  a  precedent  for  any  other  scheme  where  the  Board  has  adopted  or

proposes  to  adopt  the  standard  method  of  capitalization.  The  interest

payable by the allottees on the capitalization amount shall however be with

effect from the date of GOM No.63, dated 2.2.2001 and not 21.5.2004.  

9. We accordingly dispose  of  these appeals  by making  the following

modifications to the operative part of common order dated 16.10.2006 of

the High Court :  

(i) In  Para  25(a),  the  date  ‘1.1.2001’  should  be  substituted  for ‘21.5.2004’.   

(ii) In  Para  25(b)  and  (c),  the  date  ‘2.2.2001’  shall  be  substituted  for ‘21.5.2004’.  

(iii) To substitute the following in place of last sub-para of Para 25 :            The Board shall intimate the respondents-allottees, the amount due by them as per the order of the High Court  as modified above,  within three months from today.  The respondents  –  allottees  shall  pay the amount  so demanded within three months of the date of demand. On payment of the amounts due by the allottee, the Board shall execute the deed of conveyance in favour of the allottee. No costs.

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……………………..J [R. V. Raveendran]

……………………….J [Dalveer Bhandari]

New Delhi; September 2, 2008.  

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