2007 (12) TMI 457 - SC - Indian Laws

Whether the action of the Development Authority in levying 20% surcharge from the registrants of the South Delhi is justified ? Whether demand for payment of current cost as calculated by the Delhi Development Authority from the defaulter registrants could be said to be justified?

Summary

Issues Involved:
1. Legality of levying 20% surcharge by the Delhi Development Authority (DDA) on registrants of South Delhi flats.
2. Justification of demanding payment of current cost from defaulter registrants.

Issue-wise Detailed Analysis:

1. Legality of Levying 20% Surcharge:
The Full Bench of the Delhi High Court upheld the levy of 20% surcharge by DDA, considering it within the competence of the Authority under Regulation 2(13) of the Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968. The relationship between the parties was deemed contractual, and the surcharge was seen as a component of the flat's price. The Full Bench referred to various precedents, including Premji Bhai Parmar v. DDA and DDA v. Ashok Kumar Behl, to support this view. However, the Supreme Court found that the surcharge, being a compulsory exaction to augment revenue, could not be part of the contract without the registrants' consent and was thus invalid.

2. Justification of Demanding Payment of Current Cost:
The Full Bench justified DDA's demand for current cost from defaulter registrants, stating that the Authority had the jurisdiction to fix the price, including adjustments for delays in payment. The Full Bench relied on the interpretation of "disposal price" under Regulation 2(13) and previous judgments like P.N. Verma v. Union of India, which allowed for adjustments based on cost escalations. However, the Supreme Court noted that the current cost calculation included additional factors not contemplated in the original contract, making it arbitrary and ultra vires. The Court emphasized that any change in terms must be communicated to and accepted by the registrants, which was not done in this case.

Statutory Provisions and Interpretation:
The Delhi Development Act, 1957, and the Regulations framed under it were examined. Section 6 outlines the DDA's powers, including the disposal of land and property. Section 52 allows delegation of powers, but not the power to make regulations. Regulation 2(13) defines "disposal price," and Regulation 5 allows the Authority to decide the terms of disposal. The Supreme Court highlighted that any executive order or policy decision must align with these statutory provisions and cannot retrospectively alter the contract terms.

Conduct and Notifications:
The Supreme Court scrutinized the conduct of DDA, particularly in the case of Manjit Singh, where DDA restored the allocation without imposing the 20% surcharge initially but later included it in the final demand. The Court found that such retrospective imposition without prior notice or consent was unjustified. The office orders dated 16.8.1996, 27.8.1996, and 31.3.1999, which introduced the surcharge and current cost adjustments, were not published in the Gazette or communicated to the registrants, further invalidating their application.

Judicial Review of Policy Decisions:
The Supreme Court reiterated that policy decisions are subject to judicial review if they are unconstitutional, de hors the Act and Regulations, beyond delegated powers, or contrary to statutory or larger policies. The Court found that the impugned policy decisions of DDA failed these tests, as they altered the contract terms unilaterally and retrospectively.

Conclusion:
The Supreme Court set aside the Full Bench's judgment, declaring the levy of 20% surcharge and the demand for current cost from defaulter registrants as invalid. The appeals were allowed with costs, and the appeals filed by DDA were dismissed. The Court emphasized the importance of adhering to the original contract terms and statutory provisions, ensuring fairness and reasonableness in administrative actions.