http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 20  

CASE NO.: Appeal (civil)  1781 of 2000 Appeal (civil)  1782 of 2000

PETITIONER: D.D.A. and Ors..                                                 

RESPONDENT: Joginder S. Monga and Ors.       

DATE OF JUDGMENT: 12/12/2003

BENCH: Ashok Bhan & S.B. Sinha

JUDGMENT: J U D G M E N T

S.B. SINHA,  J :  

       These appeals involving common questions of law and fact were  taken up for hearing together and are being disposed of by this common  judgment.          BACKGROUND FACTS :

The admitted facts are : the lands in question being Nazul lands  are governed by the provisions of the Delhi Development Act, 1957 (The  Act) and the Delhi Development Authority (Disposal of Developed Nazul  Land) Rules, 1981 (The Rules) framed thereunder.  Pursuant to or in  furtherance of the provisions of ’The Act’  and  ’The  Rules’, the  appellant herein  granted lease in favour of  a Cooperative Society  known as the Government Servants Cooperative House Building Society  Limited,  Shri Mangal Singh Monga, Shri N.R. Pillai and Shri Satish  Chander Malhotra were the members of the said Cooperative Society.  They  in terms of the provisions of ’The Rules’ were required to execute deeds  of sub-lease in favour of the lessee as also the President of India.

       The factual matrix of the matter is being considered from the case  involved in Civil Appeal No.1781 of 2000.   

On 13.12.1968, a statutory sub-lease was executed in favour of   Shri Mangal Singh Monga in respect of residential plot of 1568 sq. yards  in Vasant Vihar on payment of Rs.17560/- towards premium and Rs.26656/-  towards the cost of development.  In terms of proviso appended to sub  clause (b) of clause 6 of the dead of sub lease, the lessor was entitled  to recover a portion of the unearned increase in the value i.e. "the  difference between the premium paid and the market value of the  residential plot at the time of sale".  Determination of the lessor in  respect of the market value therefor was to be final and binding.   

By reason of clause X(a), of the said deed the President delegated  his power to the Chief Commissioner of Delhi who is now the Lt. Governor  of Delhi.  The said Mangal Singh Monga died on 13.11.1983.  Purported to  be in exercise of such delgated power, the Delhi Administration fixed  the market price of the nazul lands situated in different localities for  the purpose of recovery of increase in the cost of the land upon sale  for the periods from 1.4.1988 to 31.3.1990, 1.4.1990 to 31.3.1991 and   1.4.1991 to 31.3.1992 in terms whereof the price of  the land in Vasant  Vihar area was determined at Rs.10500/- per sq. metre.  Admittedly, the  said circular letter was communicated to the concerned officers.   Although there appears to be some notings in the file by some officers  to the effect that actual market value of the land should be recovered

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 20  

from the parties but it does not appear that any concrete decision was  taken in that behalf.   Respondent No.1 herein being heir of the  original sub lessee entered into an agreement for sale with Respondent  Nos. 8 and 9 wherein the amount of consideration was shown as  Rs.5,00,00,000/-.  The proposed purchaser, however, besides the said  amount and other expenses also agreed to bear 50% of the amount towards  unearned increase.  The Income Tax Department also granted a No  Objection Certificate on or about 12.5.1994 showing the consideration of  Rs.5,00,00,000/- in respect of the plot in question.  Respondent No.1  herein thereafter filed an application before the competent authority of  the Appellant on or about 23.5.1994 for sale of the leasehold property  indicating the cost of construction and price of the plot as  Rs.5,00,00,000/-.   

The Government of India, however, without enforcing any increase  in the sale price of the land extended the validity of the land rates in  force till 31.3.1992 for a further period from 1.4.1994 to 31.3.1996 by  a circular letter dated  11.11.1994.  The appellant herein despite the  same proceeded on the basis that having regard to the fact that the  purchaser had agreed to pay the consideration of Rs.5,00,00,000/- and  further agreed to bear the cost of difference in unearned increase,  the  market value of the land would be Rs.7,50,00,000/- and on that basis  demanded a sum of Rs.3,62,44,420/- as a condition of grant of permission  by a demand letter dated 22.2.1995. Such amount was to be paid within a  period of sixty days.  

The respondents thereafter  filed  writ petitions before the Delhi  High Court questioning the said demand letter dated 22.2.1995.  During  the pendency of the aforementioned  proceedings, however, a purported  resolution was passed by the D.D.A. to the effect that unearned increase  should be worked out on the basis of sale consideration shown in the  agreement of sale or  income tax clearance certificate, as the case may  be, if it is higher than the floor level rate of D.D.A.

HIGH COURT JUDGMENT :          

The High Court in its impugned judgment referring to the circular  letters issued by the Lt. Governor as also the Union of India and upon  taking notice of the fact that only the difference in increase price on  the basis of such circular letters had been demanded from the persons  similarly situated allowed the writ petition directing :

"We are of the view that the DDA , had no  power to issue the demands in these writ  petitions.  Accordingly, the writ petitions are  allowed and following directions are issued :

       The DDA shall issue fresh demand to the  petitioners in all these three writ petitions on  the basis of Order dated 24.6.1992.  In case any  amount had been paid on the basis of the  impugned demand, the DDA shall be entitled to  appropriate only that portion of the amount  calculated in accordance with fixation of market  rate of land as issued by the Delhi  Administration on the 24th of June, 1992 and  accepted by the DDA on the 11th of August, 1992  and shall pay back the balance with interest @  18% p.a. from the date of payment by the  petitioner concerned."     

The Division Bench in its impugned judgment noticed various orders  passed by the authorities of the appellant herein, inter alia, in of the  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 20  

writ petition being C.W. No.350 of 1995 wherein it was noted  :

"It is further stated that 50% of the unearned  increase was also calculated on the basis of the  market value/rate of Rs.5,400/- per sq. meter,  which was the rate notified by the Government of  India by letter  dated 1.6.1987 and the said  rates were considered for 100 FAR and since  total FAR is 824 sq. meter, the amount of 50% of  the unearned increase was worked out to  Rs.15,04,300/-".  

In another case relating to Plot No. S-23, Panchshila CHBS Ltd.,  it was noted  by  the authorities of the Appellant :

"...On the basis of those rates i.e. Rs.15,120/-  per sq. mtrs, the 50%  unearned increase comes  to Rs.48,54,764.00.  As stated above, this is  the second sale, but the 50% unearned increase  deposited at the time of first sale permission  has not been deducted from the amount of 50%  unearned increase calculated now for the second  sale because, though, the issue regarding  deduction of unearned increase paid earlier has  been approved by the Authority, but this matter  is under consideration of the Ministry.  The  approval or otherwise, of Ministry in this  regard has not been received as yet.  If  approved, this amount may be conveyed to the  appellant.  Further, it may also be communicated  to him that this demand is provisionally subject  to revision on receipt of rates for the period  93-94 from Delhi Admn.  For this, management  shall be asked to obtain an affidavit from the  legatee."    

Relying on or on the basis of the practice adopted by the D.D.A.  and having regard to the orders dated 24.6.1992 issued by the Delhi  Administration and that of the Government of India as also the  resolution dated 28.11.1995, it was held :

"It does not require any argument to say  that the DDA was well aware of this clause and  had issued the Order dated 11.8.92 on the basis  of the Order issued by the Delhi Administration  on the 24th of June, 1992.  In the light of this,  it is not open to the DDA to put forth the case  that the market value, within the meaning of the  clause (6) of the perpetual sub-lease deed could  be what is stated  in the agreement for sale."              

SUBSEQUENT EVENTS :

       When the matter was taken up for hearing, before  different  Division Benches, the respondents herein sought to bring to this Court’s  notice certain subsequent event, namely, adoption of a purported policy  by reason of a circular letter dated 28.6.1999 purported to have been  given a prospective effect in terms whereof the leasehold was sought to  be converted into freehold.  The relevant portion of the said scheme  reads as under :                  "1.     COVERAGE OF THE SCHEME:          i)      The existing scheme of freehold conversion

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 20  

is extended to all residential leasehold  built up properties irrespective of size.   As such, leased properties, situated on  land, for which the land use prescribed in  the Master Plan/Zonal Development Plan in  force is residential, will be covered  under the scheme, irrespective of size.

ii)     The scheme will also extend to premium  free leases i.e. leases where premium has  not been charged by agencies administering  the leases.

2.      COMPUTATION OF CONVERSION FEE:   i)      In respect of properties with land area  upto 500 sq. meters,  the conversion fee  will be charged on the basis of already  approved graded scale circulated vide  Ministry’s letter dated 14.2.1992 and land  rates as applicable with effect from  1.4.1987, as indicated in the Annexure.

ii)     In respect of properties with areas above  500 sq. meters, the conversion fee will be  charged on the basis of slab rates as per  Annexure and land rates as applicable with  effect from 1.4.1987.

iii)    In respect of premium free leases, the  conversion fee will be computable on the  basis of the prevailing land rates as  notified by the Government, from time to  time, on a graded basis as applicable to  other leases."  

       It is not in dispute that one Rajeev Gupta also filed a writ  petition before the High Court acting on the basis of a power of  attorney executed by Smt. Kaushalya Rani Bhusari on similar grounds.  In  the case of  J.S. Monga, Abdul Rasool Virji as well as Rajeev Gupta, the  High Court passed  interim orders directing them to deposit the entire  amount/part amount demanded by the D.D.A.  Rajiv Gupta, however, did not  pay the said amount and as such no sale deed was executed. The  respondents herein, however, complied with the directions of the High  Court.

Relying on clause (3)  of the said scheme which is to the  following effect :

3.      "It is further clarified that these orders will  have prospective effect and the cases already  decided will not be re-opened.

Note:   In respect of pending applications, where  conveyance deeds are yet to be  executed/registered, refund in respect of  conversion fee paid, if any, on account of these  instructions should be allowed.

4.      This issues with the approval of Finance  Division’s U.O. No.1066-F dated 21.6.99."         

       Rajeev Gupta was permitted to execute the aforementioned deed by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 20  

paying only the conversion charges, i.e. without payment of even 50% of  the unearned increase.  It is not disputed that Civil Appeal No. 1783 of  2000 titled D.D.A. vs. Rajeev Gupta was disposed of on 30.4.2003 in  terms of a signed order as the case was said to be covered by the policy  of conversion from leasehold to freehold and the proposal of the D.D.A.  to compromise was noted. The respondents herein thereafter filed an  application for raising additional pleas, inter alia, on the ground that  having regard to the interim order passed in the writ petition by the  High Court of Delhi, the deed of sale having been executed by them  pursuant to or in furtherance thereof, they were entitled to be treated  similarly as Rajeev Gupta.  An objection to the said application had  been filed by the appellant, inter alia, on the ground that subject  matter of the writ petition leading to filing of these appeals has no  nexus with the aforementioned scheme dated 28.6.1999.

SUBMISSIONS :          Mr. P.P. Rao, learned senior counsel appearing on behalf of the  appellant, inter alia, would submit that: (1) As the statutory sub lease  refers to the market value of the residential plot, the circular letters  cannot override the same and, thus, are illegal.  Strong reliance in  this behalf has been placed on  Sant Ram Sharma vs. State of Rajsthan &  Anr. [(1968) 1 SCR 111] and  State of M.P. & Anr. etc. vs. G.S. Dall &  Four Mills etc. [(1992) Supp. 1 SCC 150]. (2) Notings made in different  files would show that except in one of the three cases, the fact  situation  prevailing  in  other  cases  were  different. (3) As  the  circular letter dated 24.6.1992 showed locality wise market rates for  the earlier period, the fixation of market rates was retrospective and  not prospective. (4) Such a circular letter in any event having not been  issued by the Lt. Governor, was illegal. (5) Resolution No.98/1995 dated  28.11.1995 being applicable to  pending cases, the High Court committed  a manifest error in not giving an effect thereto and in any event, any   past transaction on the basis of the said circular could not have been  made the basis for determination by the High Court by applying the  principle of estoppel as there is no estoppel against the statute. (6)  In any event, only because a mistake has been committed in other cases,  the same by itself would not entitle the respondents to claim any  benefit on the basis thereof as in such an event Article 14 would have  no application (7) The interim order having been  passed by the High  Court on the asking of the respondents whereby and whereunder an option  was given to them to deposit the amount in the event they intend to get  the sale deed executed registered, upon execution and registration  thereof on the exercise of option by  the respondents, the subsequent  policy decision which has been given a prospective effect cannot have  any application.

       Mr. A.N. Haskar, learned senior counsel, appearing on behalf of  the respondents, on the other hand, would submit : (1) The fact of the  matter in  pending cases as also in the case of Rajeev Gupta would  clearly demonstrate that they stood on a common footing and as such the  respondents herein cannot be treated differently to that of Rajeev  Gupta. (2) The market value as determined by the Central Government or  the Delhi Administration refers to the market value and the same do not  say that thereby any benchmark has been provided. (3) The submissions  raised hereinbefore on behalf of the appellant were not raised before  the High Court nor had been adverted to in the counter affidavit. (4)  Any mistake on the part of the Delhi Administration had never been  pleaded nor urged. (5) As three opportunities had been granted to the  respondents to clarify their stand as regard the existing policy  decision and they having failed and/or neglected to do so, it is not  open to them to raise the plea of inequities before this Court. (6) Even  in the form of application required to be filed for conversion of  leasehold into freehold, it having been stated that unearned increase  would be recoverable, the same cannot be recovered from case of the  respondents only because the sale deeds had been executed by them

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 20  

pursuant to the interim order granted by the High Court.  (7) The  interim order passed by the High Court must be construed in such a  manner so as to have a bearing in the pending appeals.   ARE THESE TWO CASES SIMILAR TO THAT OF RAJEEV GUPTA :

The following chart will show that the cases of J.S. Monga and  Shri Abdul Rasool Virji stand on a similar footing as that Rajeev Gupta  :          

S.  No.           Particulars      J.S. MONGA Plot No.A-5/3, Vasant  Vihar, N. Delhi ABDUL RASOOL  VIRJI Plot No.A-1,  Maharani Bagh, N.D. RAJIV GUPTA Plot No.4, Palam  Marg, Vasant  Vihar, N.D. 1. Date of Execution of  Sub Lease Deed 13.12.1968 1.1.1965 27.4.1971 2. Name of Sub Lessee Sh. Mangal Singh  Monga & after his  death mutation allowed  in the joint names of  his legal heirs :

1. Smt. Harbans  Monga                (wife) 2. Smt. Prabha Sehgal                    (daughters)       3. Smt. Indira Batra   "        4. Smt. Ella Bajaj    "         5. Sh. Joginder Singh  Monga               (son) 6. Sh. Mohinder Singh  Monga           (son) 7. Sh. Jagjit Singh  Monga          (son) 8. Sh. Upjeet Singh  Monga         (son) Sh.  N.R. Pillai.    After his death  mutated in favour of  (1) Sh.  R.A. Pillai   (2) Sh. R.S.  Pillai.    Mutated  on 28.5.93   (in  the names of sons  of sub lessee) Sh. Satish  Chander  Malhotra.  Transferred on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 20  

the basis of Sale  Permission, in  favour of Smt.  Kaushalya Rani  Bhusari w/o Sh.  Sampuran Singh,  on dated  2.12.1988  3. Name of Purchaser 1. Sh. Rattan Chand  Burman 2. Smt. Brij  Rani Burman Sh. Abdul Rasool  Virji Sh. Rajiv Gupta 4. Date of Agreement of  Sale 19.2.1994 16.1.1994 24.10.1993 5. Date on which Sale  Permission applied 23.5.1994 17.4.1994 30.4.1994 6. Amount of 50% UEI  demanded Rs.3,62,44,420/- Dt. 22.2.1995 Rs.2,23,34,725/- Dt. 12.6.1996 Rs. 4.13 crores Dt. 1.12.1994 7. Date & amount of 50%  UEI paid Dt. 16.5.1995 Rs.3,62,44,420/- Dt. 12.6.1996 Rs.1,49,72,225 paid  as per the Order of  the High Court of  Delhi, Dt. 22.5.1996 Not paid 8. Date of execution of  Sale Deed/Registration  of the same   6.6.1995 17.1.1997 Not executed 9. Date on which Sale  Permission  granted/Transfer  allowed 25.1.1996 (Transfer  allowed) 30.7.1996 Not granted 10.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 20  

Date on which  conversion from lease  hold to freehold applied 24.12.1999 24.12.1999 17.12.1999

                From the aforementioned chart it would appear that not only the  application of Rajeev Gupta was contemporaneous, all other relevant  facts are almost identical.  Rajeev Gupta was to pay a sum of Rs.  4,13,00,000/-, whereas J.S. Monga and Abdul Rasool Virji were to pay  sums of Rs.3,62,44,420 and Rs.2,23,34,725/- respectively, pursuant to  interim order passed by the High Court.  Whereas J.S. Monga deposited  the entire amount as demanded, Abdul Rasool Virji deposited a sum of  Rs.1,49,72,225/-, as per the directions of the High Court.   The contention of the learned counsel appearing on behalf of the  respondents, therefore, must be held  to have some substance that  whereas Rajeev Gupta has received the benefit of the purported new  policy of conversion from lease hold to free hold, the respondents  herein were deprived therefrom for no fault on their part.

STATUTORY PROVISIONS :         Section 22 of the D.D.A. Act reads as under :

"22. Nazul lands

(1)     xxx             xxx             xxx          (2)     xxx             xxx             xxx

(3)     After any such nazul land has been  developed by, or under the control and  supervision of, the Authority, it shall be dealt  with by the Authority in accordance with rules  made and directions given by the Central  Government in this behalf."

Section 56 of the Act reads as under :         "56 Power to make rules  (1)     The Central Government, after consultation  with the Authority may, by notification in the  Official Gazette, make rules to carry out the  purposes of this Act :

Provided that consultation with the Authority  shall not be necessary on the first occasion of  the making of rules under this section, but the  Central Government shall take into consideration   any suggestions which the Authority may make in  relation to the amendment of such rules after  they are made.

(2)     In particular and without prejudice to the  generality of the foregoing power, such rules  may provide for all or any of the following  matters, namely \026       

...     ...     ..."

Rule 23 of the Delhi Development Authority (Disposal of Developed  Nazul Land) Rules, 1961, provides as under :         

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 20  

        "23. Agreements between the cooperative  societies and their members. \026 Where Nazul land  has been allotted to a cooperative society, such  members of the society who are allotted a plot  or flat by such society shall execute a sub- lease in favour of the society in respect of  each plot or flat allotted to them.  The terms  and conditions of such sub-lease shall, as  nearly as circumstances permit, be in accordance  with Form ’A’ and Form ’B’ appended to these  rules.  In addition, such sub-lease may contain  such covenants, clauses or conditions, not  inconsistent with the provisions of Form ’A’ or  Form ’B’ as may be considered necessary and  advisable by the society, having regard to the  nature of a particular sub-lease."

Sub-lease is granted in Form ’B’.  Sub  clauses  (a) and (b)  Clause (6) of  the Perpetual Sub Lease  read as under :

"(a)    The sub-Lessee shall not sell, transfer,  assign or otherwise part with the  possession of the whole or any part of the  residential plot in any form or manner,  benami or otherwise, to a person who is  not a member of the Lessee.

(b)     The Sub-Lessee shall not sell transfer  assign or otherwise part with the  possession of the whole or any part of the  residential  plot to any other member of  the Lessee except with the previous  consent in writing of the Lessor which he  shall be entitled to refuse in his  absolute discretion.

Provided that the Lt. Governor reserves  the right to resume, Lessor may impose  such terms and conditions as he thinks fit  and the Lessor shall be entitled to claim  and recover a portion of the unearned  increase in the value (i.e., the  difference between the premium paid and  the market value) of the residential plot  at the time of sale, transfer, assignment,  or parting with the possession, the amount  to be recovered being fifty per cent of  the unearned increase and the decision of  the Lessor in respect of the market value  shall be final and binding :

Provided further that the Lessor shall  have the pre-emptive right to purchase the  property after deducting fifty per cent of  the unearned increase as aforesaid."              

Clauses X(a) and (b) of  Sub-Lease reads as under :

"X.(a)  All powers exercisable by the Lessor under this  Sub Lease may be exercised by the Lt. Governor,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 20  

the Lessor may also authorize any other officer  or officers to exercise all or any of the powers  exercisable by him under this Sub-Lease"

    (b)        The Lt. Governor may authorize any officer  or officers to exercise all or any of the powers  which he is empowered to exercise under this  Sub-lease except the powers of the Lessor  exercisable by him by virtue of Sub-Clause (a)  above."

Clause XI of the Sub Lease reads as under :

                "In this Sub-Lease, the expression "the Lt.  Governor" means the Lt. Governor of Delhi for  the time being or, in case his designation is  changed or his office is abolished, the officer  who for the time being is entrusted, whether or  not in addition to other ,  of the Lt. Governor  by whatever designation such officer may be  called.  The said expression shall further  include such officer as may be designated by the  Lessor to perform the functions of the  Lieutenant Governor under this Sub-Lease."

EFFECT OF THE CIRCULARS :

       It is not in dispute that the grant of lease or sub-lease is in  consonance with the provisions of the D.D.A. Act and the rules framed  thereunder.  The sub-lease had been executed in Form ’B’. Delhi was an  Union Territory.  It used to be governed by the  Chief Commissioner on  behalf of the Governor General in Council. The Chief Commissioner is now  designated as the Lt. Governor.  Delhi has now also become a Part ’B’  State.  The authority of the Lt. Governor, therefore, is to be exercised  by the Delhi Administration but such an authority being delegated  one,  the Union of India cannot be said to have denuded of its power to issue  statutory directions as and when necessary or to issue policy decision  in terms of the said Act or the rules.  The power to fix market value is  that of the lessor. Whereas the Chief Commissioner has been delegated  with the power of the lessor, he in terms of clause X(a)(b) of the deed  of sub-lease cannot sub delegate the same to any officer or officers to  exercise such power.          

       When a market value is fixed in case of a locality by the lessor  or his delegated authority, the same would be binding on them.  Although  the sub-lease is a statutory one, the rules provide for suitable  modifications.  In terms of Rule 23, the terms and conditions  of the  sub-lease shall as nearly as circumstances permit be in accordance with  Forms ’A’ and ’B’.   The lessor or lessee,  therefore, not only could  have agreed to vary the terms and conditions, any unilateral action  taken by the lessor and accepted by the lessee cannot be questioned as  they are not imperative in character.  From a perusal of the order dated  24.6.1992, it appears that the practice of fixation of such market value  for the purpose of recovery of unearned increase had been in vogue for a  long time.  The relevant portion of the said order is as under :                                                                     "ORDER  "Subject :      Fixation of Market rate of land for the  purpose of recovery of unearned increase  in the value of land/plot consequent upon  Sale/Transfer of residential plots

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 20  

allotted under the Scheme of Large Scale  Acquisition, Development & Disposal of  land in Delhi.

Lt. Governor of National Capital Territory  of Delhi is pleased to revise the market rates  of land for the purpose of recovery of unearned  increase in the cost of land/plot consequent  upon the transfer/sale of residential plots  allotted under the Scheme of Large Scale  Acquisition, Development & Disposal of land in  Delhi, superseding his previous orders conveyed  vide order No. F.R. 16(7)/82-L&B/3026-34 dated  31.1.92, as given below :-

xxx             xxx             xxx"                          The appellant itself issued the following circular, relevant  portion of which reads as under   :

"Sub: Fixation of market rate of land for the  purpose of Recovery of unearned increase  in the value of land/plot consequent upon  the Transfer or Sale of residential plots  allotted under the "Scheme of large Scale  Acquisition Development and Disposal of  land in Delhi" for the period from 1.4.90  to 31.3.91 and 1.4.91 to 31.3.92.

       A copy of the Joint Secretary (Admn.) L&B  Deptt. Delhi Admn. Letter No. F-16  (7)/82/L&B/20369-75 dated 24.6.92 conveying the  market rates of land in different areas of Delhi  for computation of unearned increase recoverable  in case of transfer/sale of Resdl. Plots  allotted under the scheme of Large Scale  Acquisition Development and Disposal of land in  Delhi is enclosed :

1.      These rates would be applicable to the  plots measuring upto 500 sq. meters.  In respect  of Sale/Transfer of plots measuring more than  500 sq. meters., a rebate of 15% on the market  price of area in excess of 500 sq. meters. would  be allowed."                      

It is not in dispute that the question as regard enhancement of  the market value @ 20% per year was under consideration of the Central  Government and it by a circular letter dated 11.11.1994 issued the  following directions :

"Subject :      Schedule of Market Rate

Sir,

       The question of fixation of market rates  of land in different areas of Delhi/New Delhi  w.e.f. 1.4.1994 has been under consideration of  the Government  and it has been decided not to  increase the land rates w.e.f. 1.4.1994 but to  extend the validity of the land rates of  commercial/residential purposes as well as the  guidelines/principles laid down in this  Ministry’s letter No.J-22011/1/91-LD dated 3rd

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 20  

March, 1993 for two more years i.e. w.e.f. 1st  April, 1994 till March, 1996 as per schedule  attached."

       In terms of clause 6(a), a sub-lessee is prohibited from making  any sale, transfer, assign or otherwise part with possession  of the  whole or any part of the residential plot in any form or manner, benami  or otherwise, to a person who is not a member of the lessee, but such  sale, transfer,  assignment and parting with possession is permissible  with the previous consent in writing of the lessor.  The proviso  appended thereto states that in the event such consent is given, the  lessor would be entitled to impose such terms and conditions as it may  think fit and shall furthermore be entitled to claim and recover a  portion of the unearned increase in the value.   

Sub clause (b) of Clause (6) of the deed of sub-lease and the  proviso appended thereto, therefore, confers a  discretion upon the  lessor.  The decision of the lessor in respect of the market value is to  be final and binding.  A market value, thus, fixed by the lessor in  exercise of such power either in general or in particular case, would,  therefore, be binding on it.  The lessor in a case of this nature cannot  be said to be inhibited in any manner to fix the market value for a  locality which would be applicable to all the plots of lands situated  therein.  As the market value has to be fixed in terms of the provisions  contained in the statutory lease, the lessor is not precluded from  fixing it for an area in question and thereby avoid any arbitrary or  unreasonable action by any of its officers.   Market values are fixed by  the authority for different purposes.  Fixation of such market value,  therefore, for the purpose of recovery of unearned increase cannot be  said to be de’ hors the D.D.A. Act and the Rules framed thereunder.

       It is not a case where a conflict has arisen between a statute or  a statutory rule on the one hand and an executive instruction, on the  other.  Only in a  case where a conflict arises between a statute and an  executive instruction, indisputably, the former will prevail over the  latter.  The lessor under the deed of lease is to fix the market value.   It could do it areawise or plotwise.  Once it does it area wise which  being final and binding, it cannot resile therefrom at a later stage and  take stand that in a particular case it will fix the market value on the  basis of the price disclosed in the agreement of sale.

Reliance placed by Mr. Rao on the decision in Jawajee Nagnatham  vs. Revenue Divisional Officer, Adilabad, A.P. and Others [(1994) 4 SCC  595] is wholly misplaced.  Therein the question which arose for  consideration as to whether the compensation should be awarded for  acquisition of land on the basis of Basic Valuation Register maintained  by registering authority for collection of stamp duty which had been  fixed by the revenue authority at the market value for commercial as  also residential area.  Keeping in view the provisions contained in  Section 23(1) of the Land Acquisition Act, it was held that in  determining such market value, the Court has to take into account either  one or the other of the three methods laid down therein, keeping in view  the date of issuance of notification under Section 4(1) of the Act and,  thus, Basic Valuation Register prepared and maintained for the purpose  of collecting stamp duty has no statutory base or force and cannot form  a foundation to determine the market value mentioned thereunder.

       In Land Acquisition Officer, Eluru and Others vs. Jasti Rohini  (Smt.) and Another [(1995) 1 SCC 717] it was held :

"The question of fixation of  market value is a  paradox which lies at the heart of the law of  compulsory purchase of land.  The paradox lies  in  the facts that the market value concept  is  purely a phenomenon evolved by the courts to fix

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 20  

the price of land arrived between the  hypothetical willing buyer and willing seller  bargaining as prudent persons without a medium  (sic modicum) of constraints or without any  extraordinary circumstances.  But the condition  of free market is the very opposite of the  condition of the compulsory purchase which is ex  hypothesi, a situation of constraints.   Therefore, to say, that for compulsory purchase,   compensation is to be assessed and market value  is to be determined in that state of affairs has  to be visualized in terms by its direct  opposite. To solve the riddle, courts have  consistently evolved the principle that the  present value as on the date of the compulsory  acquisition comprised of all utility reached in  a competitive field as on the date of the  notification and the price on which a prudent  and willing vendor and a similar purchaser   would agree.  The value of the land shall be  taken to be the amount that the land if sold in  the open market by a willing seller  might be  expected to realise from a willing purchaser.  A  willing seller is a person who is a free agent  to offer his land for sale with all its existing  advantages and potentialities as on the date of  the sale and willing purchaser taking all  factors into consideration would offer to  purchase the land  as on the date of the  sale...."

       In State of Punjab and Others vs. Mahabir Singh and Others [(1996)  1 SCC 609], this Court observed that the guidelines provided under  Section 47A of the Stamp Act would only  serve as prima facie material  available before the Registering Authority to alert  him regarding the  value, holding :

"...It is common knowledge that the value of the  property varies from place to place or even from  locality to locality in the same place.  No  absolute higher or minimum value can be  predetermined.  It would depend on prevailing  prices in the locality in which the land covered  by the instrument is situated.  It will be only  on objective satisfaction that the Authority has  to reach a reasonable belief that the instrument  relating to the transfer of property has not  been truly set forth or valued or consideration  mentioned when it is presented for registration.   The ultimate decision would be with  the  Collector subject to the decision on an appeal  before the District Court as provided under sub- section (4) of Section 47-A."

(See also R. Sai Bharathi Vs. J. Jayalalitha &  Ors. [JT 2003 (9) SC 343])       

       The aforementioned decisions have no application in the instant  case.  In those cases, registers of land acquisition was being  maintained for the purpose of evasion of stamp duty.  In the instant  case, not only, as rightly submitted by Mr. Haksar, it was not only  remained unsaid in the impugned circular, but have been issued for the  very purpose of recovery of unearned increase in the market value of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 20  

property on a general basis to which the Union of India or the Lt.  Governor was entitled in law.

       In Sant Ram (supra), this Court has categorically stated :  

"...It is true that Government cannot amend or  supersede statutory rules by administrative  instructions, but if the rules are silent on any  particular point, Government can fill up the  gaps and supplement the rules and issue  instructions not inconsistent with the rules  already framed."

       Yet again in G.S. Dall & Four Mills  (supra), this Court observed  as under :                                          "...Executive instructions can supplement a  statute or cover areas to which the statute does  not extend.  But they cannot run contrary to  statutory provisions or whittle down their  effect..."

       The matter may be considered from another angle.  Nazul lands had  been leased out to a cooperative society formed by the persons who  intended to have roofs over their heads.  The society in question was  formed by the Government servants; the premium of which, having regard  to the fact that the sub-lease was to be a perpetual one for all intent  and purport, would denote the amount of consideration for transfer.    The undeveloped lands had  been developed by the appellant wherefor also  the Appellant had realized the development charges.          The appellant becomes entitled to invoke clause 6(b) of the sub- lease at the time of each and every transaction in relation to sale,  transfer and assignment of the lands in question by a member of a  cooperative society to a non-member.  Such subsequent purchaser  indisputably would have to become a member of the cooperative society.   It was, therefore, not unusual on the part of the lessor to fix the  market price for the entire area which had been developed by it keeping  in view the fact that save and except some cases, the market value of   the land would be same or similar.

       It is also not in dispute that the Central Government was the  ultimate authority for determination of the market value.  The proposal  of the appellant before the Union of India to enhance such market value  @ 20% per annum did not receive any favourable response.  They thought  it fit to continue with the same valuation till 1996.  Such a decision  on the part of the Union of India was a conscious one.  It is really  surprising that on the one hand a stand is taken that clause 6(b) of the  sub-lease contain a statutory provision and, thus, cannot be altered  either by the Union of India or by the Lt. Governor, recourse is sought  to be taken to the provisions of Sections 2 and 3 of the Government  Grants Act in terms whereof  the term of any grant or term of any  transfer of land made by the Government would stand insulated from the  tentacles of any statutory law as thereby unfettered discretion of the  Government has been conferred to enforce any condition or limitations or  restrictions in all types of grants and the right, privilege and  obligations of the grantee would be regulated thereunder.     

       It is all the more surprising that the appellant being a delegatee

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 20  

has even questioned the policy decision of the delegator, namely, the  Union of India. Furthermore, such a stand is being taken despite the  fact that the circular letter dated 28.6.1999 as contained in Annexure  R-3 to I.A. 6 of 2003 which has also not been issued by the Union of  India in terms of the D.D.A. Act or the rules framed thereunder has been  relied and acted upon by the D.D.A. despite ex facie the same steers on  the face of the condition of the statutory lease to the effect that  lease cannot be transferred without consent of the lessor.    

Clause 6(b), as noticed hereinbefore, if construed to be  imperative in terms thereof a member of the society is prohibited from  transferring his interest in any manner whatsoever.  Even delivery of  possession of  the premises pursuant to or in furtherance of  the  agreement is prohibited.  But by reason of the said circular letter  dated 28.6.1999, which has not been issued even in terms of Article 77  of the Constitution, not only such  permission is not required to be  taken but even the right to recover 50% of the unearned increase is  waived and only on payment of conversion charges a leasehold is made  freehold, pursuant whereto or in furtherance whereof only upon payment  of conversion charges any member of the society would become entitled to  transfer or assign his interest in the land or the building constructed  thereupon without even obtaining any prior consent  of the lessor.

       We, therefore, are of the opinion that the said circular letters  are valid.  Determination of market value by reason of such circular  letters, thus, became a part of the terms of the lease having regard to  the finality clause attached thereto.

MISTAKE :                A mistake is not a fraud.  It may be discovered and in a given  case it must be pleaded.  Such plea must lead to a fundamental error.   It can be a subject matter of acquiescence.    In Kerr on the Law of  Fraud and Mistake, 7th Edn. at page 599, it is stated  

"Where one party makes a mistake either of law  or fact and the other party to a transaction  allows him to act upon it, then (even though  such other party may himself not know of the  mistake) he may be estopped from setting up the  mistake for having in effect ratified it.  In  one case where parties had acted on one  construction of a deed for forty years the House  of Lords held that neither party was estopped  from setting up the mistake, and that rent  underpaid for so long as it was not barred by  the Statute of Limitation could be recovered."

       It is not disputed that the said question had not been raised in  the counter affidavit; on the other hand, it appears that the High Court  specifically granted three opportunities to the respondents to place on  its records any other policy decision whereupon it intended to place  reliance as would appear from the following :

"16.10.1996                  Present : Mr. A.N. Haksar, Sr. Advocate with Mr.  R.K. Virmani for the Petitioner.

Ms Sudha Bhandari for Counsel for the  Respondents

CW. No.3948/95

There is no counter filed on behalf of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 20  

Respondents.  There is no appearance on behalf  of the Union of India today.  Learned Counsel  for the Petitioner has invited the attention of  the Court to the averments made in paragraph 23  of the petition and the documents Annexure-1 at  page 50 of the paper book which according to him  is the policy governing unearned increase during  the relevant period.  Reply to this paragraph 23  of the counter is evasive.

Learned Counsel for the petitioner has also  invited the attention of the Court to yet  another circular issued by the DDA on unearned  increase calculations which is dated 28th  November, 1995.  Let Counsel for the Respondents  seek specific instructions and make clear  statement preferably on affidavit as to whether  they admit or deny the policy dated 11th  November, 1994 Annexure-1 and the circular dated  28th November, 1995.  If there be any other  policy operating, let Respondent DDA disclose  it.

Compliance within six weeks.

To come up for hearing on 24th February, 1997.

                               R.C. Lahoti, J.                                 S.N. Kapur, J."

"24.02.1997

Present : Mr. A.N. Haksar, Senior Advocate with  Mr. R.K. Virmani for the Petitioner.

Mr. Sumit Bansal fore the Respondent/DDA

               CW 3948/95

On October 16, 1996, six weeks time allowed to  the DDA to make a clear statement on affidavit  as to whether it admits or denies the policy  dated November 11, 1984 and the circular dated  November 28, 1995.  it was also directed that if  there be any other policy operating, the same  should also be disclosed by DDA.  The said order  has not been complied with.  Two weeks further  time by way of last opportunity is allowed to  the DDA to comply with these directions.

To be taken up for disposal towards the end of  the short matters on April 10, 1997.

Within a period of four weeks the parties will  also place on record short synopsis or notes.

                        Devinder Gupta, J.                                 K.S. Gupta, J."

"10.04.1997

President : Mr. A.N. Haksar Senior Advocate with  Mr. R.K. Virmani for the Petitioner.

Mr. Ravinder Sethi, Senior Advocate          

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 20  

with Mr. Sumit Bansal for the Respondent/DDA          Mr. Sethi states that additional affidavit of  Shri Jagdish Chandra, Director (R) DDA., has  been filed pursuant to the last order.  Learned  counsel for the petitioner states that  information contained in the affidavit does not  comply with the court’s order.  List on August  21, 1997, at the end of the "after Notice  Miscellaneous matters".  Synopsis will be filed  by the parties within four weeks from today.

                        Devinder Gupta, J.                                 K.S. Gupta, J."  NEW POINTS :

       The instances relied upon by the High Court in its judgment had  not been distinguished.  Such an attempt has been made only before us  for the first time.  Even in relation to A-14, Anand Lok, no distinction  is to be found as it is stated :

"In the case of A-14, Anand Lok, New Delhi, the  date of application is 26.6.1989 and the  permission was granted on 26.7.1989 by receiving  unearned increase calculated with reference to  the market rate of the land in the locality  contained in the relevant circulars but not on  the basis of the Circular dated 24.6.1992 relied  on by the High Court."                         Keeping in view of the fact that the Appellant despite being given  several opportunities by the High Court did not disclose its policy, we  do not think that they should otherwise also be given an opportunity to  raise new grounds.

DETERMINATION OF THE AMOUNT OF UNEARNED INCREASE BY THE APPELLANT:

       The Appellants proceeded on the premise in the case of the  Respondents, that the Circular letters issued by it or the Union of  India need not be given effect to and the valuation of the land should  be worked as Rs. 7,50,00,000/- for the purpose of computing the unearned  increase.  However, it must be presumed that the vendees proceeded on  the basis that the amount of unearned increase would be determined in  terms of the said circulars.  Furthermore, 50% of the unearned increase  was to be paid to the Appellant as a condition of lease.  While  determining the amount, the Appellant was required to take into account  the amount of consideration specified in the agreement and/or clearance  certificate issued by the Income Tax Officer.  They even did not do so.  

INTERIM ORDER \026 EFFECT OF :

       The respondents herein questioned the demand of Rs.3,62,44,420/-   made by the DDA.   The DDA calculated the aforementioned demand on the  basis that the total  consideration for the transaction was  Rs.7,50,00,000/-.  The calculation was made having regard to the fact  that Respondent Nos.8 and 9 agreed to pay 50% of the unearned increase,  the total amount of Rs.7,50,00,000/-.  It failed to notice that after  circulars are to be applied, the unearned increase must be calculated on  the basis thereof and no demand can be raised  hypothetically that the  purchaser would be agreeable to pay a further sum of Rs.7,50,00,000/-.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 20  

Such an assumption is wholly on wrong premise.   

       A prayer therefore was made before the High Court that sale deed  be permitted to be executed.  Keeping in view the stand taken by the  parties before it, it was directed :

"...In case the Petitioner are interested in the  grant of sale permission the adjournment of the  matter in any case before the 13.7.1995 they may  pay the demanded sum lf Rs.3,62,44,420/- under   to DDA.  In case ultimately it is held that  amount payable is less, the excess amount can be  ordered to be refunded to the Petitioner with  interest at the rate of  interest (sic for 18%)  per annum.  In case the payment is made under  protest it is subject to fulfillment of other  formalities would consider application for sale  permission."             

       The respondents complied with the order of the High Court whereas  Rajeev Gupta did not.  Having regard to the subsequent events, he got  the benefit of 1999 Circular and as indicated hereinbefore, the D.D.A.  ignoring the fact that he was a power of attorney-holder and had already  entered into possession and, thus, clause 6(b) stood attracted.  It may  be true that by such an action, the respondents herein stood  discriminated.

       The appellant being a State, it was required to act fairly and  reasonably in all circumstances even in the matter of  eviction of a  tenant. [See M/s Dwarkadas Marfatia and Sons vs. Board of Trustees of  the Port of Bombay,  AIR 1989 SC 1462].   But the respondents herein are  victims of situation.  Stricto sensu they cannot take advantage of the  order passed by the High Court.  The High Court gave them opportunities  to get their deed registered.  They could have refused to do so and in  that event like Rajeev Gupta they were not required to deposit the  amount.  The parties did not contemplate that the Central Government  would come out with another policy decision, which would be more  beneficial to the sub-lessee.   A fortuitous  circumstance  like the  issuance of the said  circular dated 28.6.1999 was not in contemplation.   The appellant, therefore, cannot, keeping in view the prospective effect  given to the said circular, take any benefit thereof.  Furthermore, they  have not filed any application to amend their writ petition.  They  merely have urged additional grounds.  It is no doubt true that this  Court can take into consideration subsequent events and mould relief  accordingly but thereby it cannot substitute a new relief based on a  fresh cause of action.  We are, therefore, of the opinion that the  interim order passed by the High Court does not come to the aid of the  respondents.   

RATE OF INTEREST :

By reason of the aforementioned interim order, the High Court  directed payment of 18% interest.  The rate of interest which was  prevailing at the relevant time was 18%.  However, the bank rate of  interest has since gone down drastically.  Grant of interest pendente  lite and  for future is a discretionary remedy.  The court of appeal  can, therefore, exercise the same power while finally disposing the lis  as that of the High Court keeping in view the principle engrafted  in  Section 34 of the Code of Civil Procedure.  The rate of interest may  have to be fixed having regard to the principle of restitution.  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 20  

       Recently, this Court has examined this principle in South Eastern  Coalfields Ltd. vs. State of M.P. & Ors.    [(JT 2003 (supp. 2) SC 443]  stating :

               "Interest is also payable in equity in  certain circumstances.  The rule in equity is  that interest is payable even in the absence of  any agreement or custom to that effect though  subject, of course, to a contrary agreement (See  : Chitty on Contracts, Edition 1999, Vol. II,  Para 38-248, at page 712).  Interest in equity  has been held to be payable on a market rate  even though the deed contains no mention of  interest.  Applicability of the rule to award  interest in equity is attracted on the existence  of a state of circumstances being established  which justify the exercise of such equitable  jurisdiction and such circumstances can be  many."           

       Despite the same, the Court reduced the statutory rate of interest  from 24% to 12% stating :

"So far  as the appeal filed by the State of  Madhya Pradesh seeking substitution of rate of  interest by 24% per annum in place of 12% per  annum as awarded by the High Court is concerned,  we are not inclined to grant that relief in  exercise of our discretionary jurisdiction under  Article 136 of the Constitution especially in  view of the opinion formed by the High Court in  the impugned decision.  The litigation has  lasted for a long period of time.  Multiple  commercial transactions have taken place and  much time has been lost in between.  The  commercial rates of interest (including bank  rates) have undergone substantial variations and  for quite sometime the bank rate of interest has  been below 12%.  The High Court has, therefore,  rightly (and reasonably) opined that upholding  entitlement to payment of interest at the rate  of 24% per annum would be excessive and it would  meet the ends of justice if the rate of interest  is reduced from 24% per annum to 12% per annum  on the facts and in the circumstances of the  case.  We are not inclined to interfere with  that view of the High Court but make it clear  that this concession is confined to the facts of   this case and to the parties herein and shall  not be construed as a precedent for overriding  Rule 64A of the Mineral Concession Rules, 1960.   It is also clarified that the payment of dues  should be cleared within six weeks from today  (if not already cleared) to get the benefit of  reduced rate of interest of 12%; failing the  payment  in six weeks from today the liability  to pay interest @ 24% per annum shall stand."                                

       In  K.T. Venkatagiri and Others vs. State of Karnataka and Others  [(2003) 9 SCC 1], it is stated :                 

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 20  

"We are, therefore, of the opinion that with a  view to do complete justice between the parties  and having regard to the order passed by this  Court in Khoday Distilleries case, the following  directions should be issued :

(1)     xxx             xxx             xxx (2)     xxx             xxx             xxx (3)     xxx             xxx             xxx (4)     xxx             xxx             xxx (5)     xxx             xxx             xxx (6)     xxx             xxx             xxx (7)     On the amount found to be due and owing to  MSIL by any of the appellants the same shall be  paid and interest at the rate of 18% per annum  shall be leviable from the date of realisation  till 12.2.1997 and thereafter at the rate of 9%  per annum, within twelve weeks from the date of  final determination."

       We may notice that in Pure Helium India Pvt.  Ltd. vs. Oil &  Natural Gas Commission [2003 (8) SCALE 553], the rate of interest  awarded by the arbitrator was reduced to 6% in exercise of its power  under Article 142 of the Constitution of India.

CONCLUSION :

       In the facts and circumstances of this case, we are of the opinion  that grant of 9% interest shall meet the ends of justice.   We,  therefore, while dismissing the appeals direct that in stead and place  of 18% interest, the appellant shall be liable to pay interest @ 9% per  annum.  The amount payable to the respondents must be paid within a  period of six weeks from this date together with interest failing which  the respondents would be entitled to claim 18% interest on the expiry of  the said period till actual payment is made.   

       We, keeping in view the facts and circumstances of the case, also  direct that the application for conversion filed by the respondents  herein should be disposed of expeditiously.  Keeping in view the conduct  of the appellant herein, we think that they should bear the costs of the  respondents.  Counsel’s fee is assessed at Rs.25,000/- in each appeal.