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PETITIONER: JAGDISH CHAND RADHEY SHYAM

       Vs.

RESPONDENT: THE STATE OF PUNJAB AND OTHERS

DATE OF JUDGMENT06/09/1972

BENCH: RAY, A.N. BENCH: RAY, A.N. DUA, I.D. MATHEW, KUTTYIL KURIEN

CITATION:  1972 AIR 2587            1973 SCR  (2)  97

ACT: Constitution  of India-Articles 14 and 19(1) (f) Capital  of Punjab  (Development  and Regulation)  Act  1952-Section  9, forfeiture  of the whole or any part of consideration  money for  breach of non-payment of the balance-Whether  violative of Art. 14 of the Constitution of India-- Resumption of site for unpaid consideration money--Whether violates Article  14 of the Constitution. Section  9,  resumption  of site  for  unpaid  consideration amount   whether   violates   Article   19(1)(f)   of    the Constitution.

HEADNOTE: The  appellant purchased a site at a public auction for  Rs. 94,000,-.  25% of the price, i.e. Rs. 23,500/- was  paid  at the  site  and  the balance was to be paid  in  three  equal installments.   The  appellant  paid a further  sum  of  Rs. 21,992/-  towards the first instalment.  Two instalments  of Rs.  25,615/- each and sum of Rs. 3,623/- being the  balance sum of the first instalment were not paid by the  appellant. The Estate Officer, in exercise of powers under section 9 of the  Capital  of Punjab (Development  and  Regulation)  Act, 1952,  resumed  the  site and forfeited  the  amount  of  Rs 42,728.01  paid  by  the appellant.   After  exhausting  his remedies  under  the  Act,  the  appellant  challenged   the validity of the orders and vires of Section 9 of the Act  on the ground that provisions of Section 9 regarding forfeiture of  the instalments paid and the resumption of  the  auction site were violative of Article 14.  The power of  resumption of  site under section 9 was also challenged as  unconstitu- tional   on   the  ground  that  it   imposed   unreasonable restriction  on  the  right to  property  violating  Article 19(1)(f)  of the Constitution.  The Punjab High  Court  held that  the  Government had right to resume the site  as  they were the owners and till all the instalments were not  paid, the  title did not pass to the auction purchaser.  The  High Court also held that is the Government have power to recover the  due  amount as arrears of land revenue,  resumption  of site was not illegal. HELD : The Prohibition in Section 3 of the Act against sale. mortgage  or transfer, by the auction purchaser except  with the previous permission of the Estate Officer of any  right,

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title  or interest in the site or building,  recognises  the ownership  rights of the purchaser.. The Government is  only entitled, to a charge on the property for the unpaid portion of  the consideration money.  A charge on property is  under the Transfer of Property Act enforced by instituting a  suit and  bringing  property  to  sale.  Section  8  of  the  Act provides  another  power to the Government  to  recover  the unpai d money as arrears of land revenue. [100 E-101-A] Section 9 of the Act empowers the Government to forfeit  the whole  or  any part of the money in case of  non-payment  of consideration  money or instalments or other dues or  breach of  covenant,-,.  Under the ordinary law of the land,  there is  relief  against  forfeiture  for  breach  of   covenant. Section 9 does not offer any relief against forfeiture.  The Government  can  proceed  eitheir  under  the  Transfer   of Property Act 8-L348Sup.C.I./73 98 or under the present Act without any guidelines provided  in the  statute.  This feature makes section  9  discriminatory and violative of Article 14 of the Constitution of India. Section  9  also confers power to resume  the  site.   Where there is a charge, the same can be enforced by instituting a suit in a court of law under Transfer of Property Act.   The owner  will  have  an opportunity of paying  the  money  and clearing the property of the charge.  No such opportunity of clearing the charge is possible under section 9 of the  Act. There  is no guideline in the Act as to when the  Government will  resort to resumption of site or forfeiture of  monies. The Government choose without any guideline and discriminate in proceeding against one person in one manner and a  second one in other manner. In the teeth of statutory security and enforceability of the Government  charge  in preference to others, it  is  totally unreasonable  restriction  on the enjoyment of  property  by resuming  site  for  defaults  in  payments  of  money   and forfeiting  the  monies paid by the transferee.   Section  9 violates Article 19(1)(f). [101 C-102A]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1099  of 1967. Appeal by certificate from the judgment and order dated 21st February  1966  of  the Punjab  High  Court,  Chandigarh  in Letters Patent Appeal No. 218 of 1965. Mahendrajit Singh and K. B. Mehta for the appellant. Harbans Singh and R. N. Sachthey for respondents. The Judgment of the Court was delivered by RAY,  J.  This appeal is by certificate  from  the  judgment dated  21  February, 1966 of the High Court  of  Punjab  and Haryana it Chandigarh. The  appellant  at  a  public auction  held  by  the  Estate Officer.   Capital Project, Chandigarh on 21 December,  1958 purchased site No. 43 in the Grain Market, Chandigarh.   The purchase  price  was Rs. 94,000. 25% of the sale  price  was payable at the fall of the hammer.  The balance  sum  with interest was payable in three equalinstallments of  Rs. 25,615 each.  The appellant paid 23, 500 being  25%   of the  sale  price at the fall of the hammer.   The  appellant paid  a  further  sum  of  Rs.  21,992  towards  the   first instalment.  A sum of Rs. 3,623 was outstanding on the first instalment.   The appellant made improvements on  the  site. The  appellant  raised  construction  thereon  at  his   own

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expense.   He  invested about Rs. 1,50,000 in the  shape  of building  and  machinery.  The appellant could  not  pay  Rs 3,623  being  the balance of the first. instalment  and  the second  and the third instalments. amounting to  Rs.  25,615 each. 99 The  appellant asked for instalments because  the  appellant was in financial difficulty.  Eventually, the Estate Officer on 2 January, 1962 resumed the site and forfeited the amount of  Rs.  42,728.01  paid by the  appellant.   The  order  of resumption  and  forfeiture was made by the  Estate  Officer (Capital  Project), Cliandigarh in exercise of powers  under section  9  of  the  Capital  of  Punjab  (Development   and Regulation) Act, 1952 referred to as the 1952 Act. The  appellant filed an appeal under section 10 of the  1952 Act.   The appellant’s appeal was accepted by the  Appellate Authority,   the  Chief  Administrator,   Chandigarh.    The appellant was given time for the payment of instalments with interest at the rate of 4 1/2% per annum and a penalty of 10 per  cent  of the amount in arrears was ordered to  be  paid within  30 days from the date of the Appellate  order.   The conveyance  deed  in  respect of the site  was  also  to  be executed immediately. The appellant thereafter made a representation to the  Chief Minister  and asked for further instalments and prayed  that steps  be  not taken to resume the  site.   The  appellant’s representation was rejected. The  appellant then filed a revision application before  the Financial Commissioner.  On 14 September, 1964 the Financial Commissioner rejected the revision application.  The  ground was   that  the  appellant  had  filed  a   first   revision application.   The  second  application  was  therefore  not competent.  It may be stated here that section 10  aforesaid provides  an appeal to the Chief Administrator  against  the order of the Estate Officer.  Section 10 also states that  a revision  application  can  be presented  before  the  State Government against the order of the Chief Administrator. The appellant filed a writ petition in the High Court.   The appellant  challenged  the  validity of the  orders  of  the respondents.  The grounds for challenge were these.   First, section 9 of the 1952 Act which provides for the  resumption of  property  by  the  Estate Officer  is  ultra  vires  and unconstitutional.    Secondly,   section  9   provides   for resumption  of property and forfeiture of money  paid  which are  unconstitutional and unreasonable restrictions  on  the right to hold property.  Thirdly, the power conferred on the Estate Officer to take action under section 9 for resumption is unregulated and arbitrary. In the High Court is was contended that the appellant became owner of the site, and, therefore, no resumption of the site could  be  taken  by  proceeding  under  the  Punjab  Public Premises  and  Land (Eviction and Rent Recovery  Act,  1959. Secondly,  it was contended that section 9 of the  1952  Act violated Article 14 100 inasmuch as sections 8 and 9 of the 1952 Act provide for the same  matter  and there is no indication as to  when  action will  be  taken under either of the sections.  It  was  also said   that  the  sections  offended  Article  14   of   the Constitution by reason of unregulated conferment of power. The  High  Court held that title would pass only  when  full price  was  paid and till then the Government  remained  the owner and could resume possession.  The High Court held that sections 8 and 9 of the 1952 Act were supplementary to  each other  and if recovery of the amount due as arrears of  land

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revenue  was provided tat there could be, resumption of  the site. Counsel for the appellant repeated the contentions which had been made before the High Court. Broadly stated section 3 of the 1952 Act indicate these fea- tures.   The  Government  has  power  to  sell  by  auction, allotment   or   otherwise  any  land  or   building.    The consideration  money  is to be paid in such  manner  as  the Government  may  prescribe.   The  unpaid  portion  of   the consideration  money will be a first charge on the  site  or the  building.   The  transferee except  with  the  previous permission  in  writing of the Estate Officer shall  not  be entitled to sell, mortgage or otherwise transfer any  right, title  or interest in the site or building until the  amount which  is a first charge has been paid in full.   Section  3 totally  repels the conclusion arrived at by the High  Court that  the  Government  remains the owner  until  the  entire Consideration  money is paid.  A charge  is created for  the unpaid portion of the consideration money.  The  prohibition against sale, mortgage or transfer by the transferee  except with  the previous permission of the Estate Officer  of  any right, title or interest in the site or building establishes the  ownership  and  rights  of  the  transferee.   If   the Government  were  the owner it could not be  said  that  the transferee could sell, mortgage or transfer any right, title or interest.  The statute speaks of payment of consideration money by and sale to the transferee.  The Government  cannot after  sale  remain  the owner.  The  Statute  forbids  such construction.  If the Government is the owner the Government cannot  at  the  same time be entitled to a  charge  on  the property  for  the balance of the  consideration  money.   A charge  on a property is under the Transfer of Property  Act enforced by instituting a suit and bringing the property  to sale.   If the property yields a higher price then what  the charge represents, the owner is entitled to the excess sum. Section  8 of the 1952 Act deals with imposition of  penalty and mode of recovery of arrears.  If there is any default in payment  of consideration money or instalment or  any  other money 101 due  on  account of transfer or if there is default  in  the payment of fee or tax levied the Estate Officer may direct a sum not exceeding that amount due to be recovered by way  of penalty.   The  amount  due together with  the  penalty  may recovered as an arrears of land revenue. Section  9 speaks of resumption of the site or  building  by the  Estate Officer and forfeiture of the whole or  part  of the  money paid on account of consideration in the  case  of non-payment  of consideration money or instalment or  breach of any condition of transfer or breach of any rule. Under the ordinary law of the land it is open to the Govern- ment  to  enforce  the  charge and to  recover  the  due  on consideration  money, instahnents or any other due from  the transferee.  It is also open to the Government under section 8  of the Act to proceed against the transferee  to  realise the  amount due on consideration money or on  instalment  or any  other  due  as an arrear of land  revenue.   Section  8 provides  penalty  for default in payment of money  and  the recovery  of the same as an arrear of land  revenue.   These remedies are deterrent and drastic. Section 9 of the 1952 Act empowers the Government to forfeit the whole or any part of the, money in case of nonpayment of consideration money or instalments or other dues for  breach of  covenants, Under the ordinary law of the land  there  is relief   against  forfeiture  for  breach  of  covenant   or

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provisions.   Section  9 does not offer any  relief  against forfeiture.   This feature that the Government  can  proceed either under the ordinary law of the land or under the  1952 Act shows that there is discrimination.  There is nothing in the statute to guide the exercise of power by the Government as to when and how one of the methods will be chosen. Section  9 confers power to resume site.  There is a  charge on the land for the unpaid consideration money.  This charge can  be  enforced by instituting a suit in a court  of  law. The owner will have the opportunity of paying the money  and clearing the property of the charge. on the other hand  when the Government proceeds under section 9 of the Act to resume the  land  or  building the Government  proceeds  under  the Punjab public Premises and Land (Eviction and Rent Recovery) Act, 1959.  There is no guidance in the Act as to when  the, Government will resort to either of the remedies. Again in all these cases of recovery of money or resumption of  land  or  building and forfeiture  of  monies  paid  the Government  may  choose  and  discriminate,  in   proceeding against  one  person  in one manner and  another  person  in another manner. 102 The  Act creates a charge on the property.  The Act  forbids creation  of a third part right by the transferee until  the amount  represented by the charge is paid in full.   In  the teeth of statutory security and enforceability it is totally unreasonable  restriction  on the enjoyment of  property  by resuming  the  site for defaults in payments  of  money  and forfeiting the monies paid by the transferee. For these reasons, we are of opinion that the Government  is not entitled to forfeit the monies paid and resume the  site under the provision contained in section 9 of the 1952  Act. These  provisions violate Articles 14 and  19(1)(f).   These provisions are unconstitutional. The judgment of the High Court is set aside.  The appeal  is allowed.   In view of the fact that there is no order as  to costs in the High Court the parties will pay and bear  their own costs. S.B.W.                                                Appeal allowed.. 103