2003 (12) TMI 655 - SC - Companies Law

Validity of the circular letters determining market value - Determination of the lessor in respect of the market value - 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 - 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 - HELD THAT - It is all the more surprising that the appellant being a delegatee 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 Tease 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. 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 v. Board of Trustees of the Port of Bombay, 1989 2SCR751 . 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. 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 ₹ 25,000/- in each appeal.

Summary

Issues Involved:
1. Validity of the circular letters determining market value.
2. Similarity of the cases to that of Rajeev Gupta.
3. Statutory provisions and their interpretation.
4. Effect of the circulars on the lease agreements.
5. Mistake and its legal implications.
6. New points raised by the appellant.
7. Determination of the amount of unearned increase.
8. Effect of the interim order.
9. Rate of interest applicable.

Summary:

1. Validity of the Circular Letters Determining Market Value:
The Supreme Court examined the validity of circular letters issued by the Delhi Administration and the Union of India, which fixed market rates for the purpose of recovering unearned increase in the value of Nazul lands. It was held that these circulars were valid and binding on the lessor and lessee, as they became part of the terms of the lease due to the finality clause attached to them.

2. Similarity of the Cases to that of Rajeev Gupta:
The Court found that the cases of J.S. Monga and Abdul Rasool Virji were similar to that of Rajeev Gupta. Despite Rajeev Gupta not paying the demanded amount and benefiting from a new policy of conversion from leasehold to freehold, the respondents were deprived of this benefit for no fault of their own. The Court noted that all relevant facts were almost identical.

3. Statutory Provisions and Their Interpretation:
The Court interpreted Section 22 and Section 56 of the Delhi Development Act, 1957, and Rule 23 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1961. It was held that the lessor had the authority to fix market value either area-wise or plot-wise, and such determination would be final and binding.

4. Effect of the Circulars on the Lease Agreements:
The Court held that the circulars issued by the Delhi Administration and the Union of India for fixing market value were in consonance with the provisions of the D.D.A. Act and the rules framed thereunder. These circulars were not in conflict with the statutory provisions and thus were valid.

5. Mistake and Its Legal Implications:
The Court noted that a mistake is not a fraud and must be pleaded to lead to a fundamental error. The appellant did not raise the issue of mistake in the counter affidavit and failed to disclose its policy despite several opportunities given by the High Court.

6. New Points Raised by the Appellant:
The Court refused to entertain new grounds raised by the appellant for the first time before the Supreme Court, as they were not raised before the High Court despite several opportunities.

7. Determination of the Amount of Unearned Increase:
The appellant's calculation of the unearned increase was based on an incorrect assumption that the market value was Rs. 7,50,00,000/-. The Court held that the unearned increase must be calculated based on the circulars and not on hypothetical assumptions.

8. Effect of the Interim Order:
The respondents complied with the High Court's interim order to deposit the demanded amount, whereas Rajeev Gupta did not. The Court held that the respondents could not take advantage of the interim order to claim benefits under the new policy decision, which had a prospective effect.

9. Rate of Interest Applicable:
The Court reduced the rate of interest from 18% to 9% per annum, considering the principle of restitution and the prevailing bank rates. The appellant was directed to pay the amount within six weeks, failing which the respondents would be entitled to 18% interest.

Conclusion:
The appeals were dismissed, and the appellant was directed to pay the respondents with 9% interest per annum. The application for conversion filed by the respondents was to be disposed of expeditiously. The appellant was also directed to bear the costs of the respondents, assessed at Rs. 25,000/- in each appeal.