Holding

The DDA’s exclusive power to fix market value and recover the unearned increase under the Delhi Development Act and the sub‑lease deed is final and binding, and subsequent policy circulars cannot be applied retrospectively to grant the respondents the benefit of the conversion scheme, leading to dismissal of the appeals.

Summary

The Delhi Development Authority (DDA) fixed a market value of Rs 7,50,00,000 for a leasehold plot and demanded Rs 3,62,44,420 as 50% of the unearned increase, which the respondents (heirs of the original sub‑lessee) challenged, arguing that later circulars issued by the Central Government and the DDA in 1999 waived the unearned increase and should apply to them as they had been treated similarly in other cases. The Supreme Court held that the power to fix market value and recover unearned increase rests exclusively with the lessor under the Delhi Development Act and the sub‑lease deed, that the circulars are valid but cannot be applied retrospectively, and therefore the respondents are not entitled to the benefit of the conversion scheme. The Court dismissed the appeals, reduced the interest rate from 18% to 9%, and ordered payment of the demanded amount with the reduced interest.

Issues considered

The DDA’s authority to fix market value and recover unearned increase under the Delhi Development Act and the sub‑lease deed.
Whether circular letters issued by the Central Government/Lt. Governor fixing market rates can override the statutory provisions.
Whether the 1999 conversion scheme circular, which waived the 50% unearned increase, can be applied retrospectively to the respondents.
Whether the respondents are entitled to the same benefit as Rajiv Gupta under the conversion scheme.
The correctness of the High Court’s interim order directing 18% interest and the appropriate rate of interest.

Legislation cited

Code of Civil Procedures. 34
Delhi Development Act, 1957s. 22, s. 56
Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1981s. 23
Government Grants Acts. 2, s. 3
Land Acquisition Acts. 23(1)

Subjects

leaseholdunearned increasemarket valueDelhi Development Authoritysub‑leaseconversion schemeArticle 14interest ratestatutory interpretation

Judgment

A D.D.A. AND ORS.
v.
JOGINDER S. MONGA AND ORS.

DECEMBER 12, 2003

B [ASHOK BHAN AND S.B. SINHA, JJ.]

Delhi Development Act, 1957-Sections 22 and 56-Delhi Develop-
m_ent Authority (Disposal of Developed Nazul Land) Rules, 1981-Rule
23-Sale of leasehold property by lessee-Determ(nation of market value
C for calculation of unearned increase in value payable-Circular Letters ·
issued by Central Government under the Act fixing market value for the
purpose-State fzxing higher market value on the basis of agreement for
sale-Correctness of-Held, not correct-Circular letters of the Central
Government bjnding on the State.
D '
Respondent No. 1, a legal heir of original sub-lessee of appellant,
entered into an agreement ~or sale of the aHutted leasehold plot with
respondents 8 and 9 for a sale consideration of Rs. 5,00,00,000 plus
50% of the unearned increase in the value of the plot. Respondent No.
1 made an application before the appellant seeking grant of permission
E for sale of the leasehold property indicating the sale consideration. The
appellant included the 50% unearned increase in the sale consideration
and fixed the market value of the plot at Rs. 7,50,00,000 and demanded
Rs. 3,62,44,420 for transfer.

F The respondents filed Writ Petitions before High Court challeng-
ing the arbitrary fixation of market value of the plot by the appellant
contrary to the market value fixed by the Government of India/
Lieutenant Governor in Circular letters issued for the purpose of
determining unearned increase. The High Court allowed the Writ
G Petitions -of the respondents.
I
Meanwhile, the appellant introduced a scheme for conversion of
leasehold into freehold property. The appellant permitted execution of
sale deed by payment of conversion charges without payment of 50%
of the unearned incrt:ase in some cases. The respondents filed an
H application raising additional pleas before this Court claiming similar
786
D.D.A. v. J.S. MONGA 787
relief from the appellant which were granted to others. A
In appeal to this Court, the appellant contended that the benefit
given to others was a mistake which does not entitle the respondents
to claim similar benefit under Article 14 of the Constitution of India;
that the Circular letters of the Government of India fixing market
value cannot override the statutory sub-lease and hence illegal; that the B
Circular letter not issued by the Lt. Governor is illegal;. and that the
subsequent policy decision of the appellant cannot be applied to the
respondents who have already opted to deposit the demanded amount
and got the sale deed executed and registered.
c
The respondents contended that the respondents stood on a
common footing with others who were given the _benefit and hence the
respondents cannot be treated differently; that the Circular letters lay
down the market value and not the benchmarks; and that any mistake
on the part of the Deihl Administration had never been pleaded nor D
urged earlier.

Dismissing the appeals, the Court

HELD : 1. The application of others were not only contempora-
neous but also identical in all other relevant facts. The contention of E
the respondents has some substance that whereas others have received
the benefit of the purported new policy of.conversion from lease hold
to Tree hold, the respondents herein deprived therefrom for no fault
on their part. (798-F-GJ

2.1. The authority of the U. Governor, exercised by the Delhi F
Administration, is a 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 Delhi Development
Act, 1957 and the Delhi Development Auth~rity (Disposal of Developed
Nazul Land) Rules, 1981. The power to fix market value is that of the G
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. H
788 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A Although the sub-lease is a statutory one, the Rules provide for suitable
modification·s. [801-F-HJ

2.2. Sub-clause (b) of Clause (6) of the deed of sub-lease and the
proviso appended thereto confers a discretion upon the lessor. The
B decision of the lessor in respect of the market value is final and binding.
A market value, fixed by the lessor in exercise of such power, either
in general or in particular case, would be binding on it. The lessor
cannot be s$id to be ilfhibited 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 ·
c contained in the statutory lease, the lessor is not precluded from fixing
it for au area in question and thereby avoid any arbitrary or unrea-
sonable 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
D said to be de hors the D.D.A. Act and the Rules framed thereunder.
The lessor under the deed of lease is to fix the market value. It could
do it area wise or plot wise. 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
E · price disclosed in the agreement of sale~ [804-A-D]
Jawajee Nagnatham v. Revenue Divisional Officer, Adilabad, A:P. &
Ors., (1994) 4 SCC 595; Land Acquisition Officer, Eluru & Ors. v. Jasti
Rohini (Smt.) & Anr., (1995) 1 SCC 717; State of Punjab & Ors. v.
F Mahabir Singh & Ors., (1996) 1 SCC 609 and R Sai Bharathi v. J.
Jayalaliltha & Ors., JT (2003) 9 SC 343, distinguished.

2.3. The appellant is entitled to invoke clause 6(b) of the sub-lease
deed 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
G cooperative society to a non-member. Such subsequent purchaser
would have to become a member of the cooperative society. Hence, the
lessor fixed the market price for the entire area which ·bad 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. Under
H Clause 6(b) of the sub-lease deed, a member of the society is prohibited
D.D.A. v. J.S. MONGA 789
from transferring his interest in any manner whatsoever. Even deliv- A
ery of possession of the premises pursuant to or in furtherance of the
agreement is prohibited. Under Circular letter dated 28.6.1999, the
permission of the lessor is not required and the right of the lessor to
recover 50% of the unearned increase is waived. Upon payment of
conversion charges, any member of the society would become entitled B
to transfer or assign his interest in the land or the building constructed
thereupon without even obtaining any prior consent of the lessor.
Hence, the said Circular 1etters are valid. [807-B-C; 808-A-C]

2.4. The appellant, being a State, was required to act fairly and C
reasonably in all circumstances even in the matter of eviction of a tenant.
But the respondents herein are victims of situation. The High Court gave
the respondents opportunities to get their deed registered. They could
have refused to do so and in that event they were not required to deposit
the amount. The respondents did not contemplate that the Central
Government would come out with another policy decision, which would D
be more beneficial to the sub-lessee. A fortuitous circumstance like the
issuance of the Circular dated 28.6.1999 was not in contemplation. The
respondents, 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 E
have urged additional grounds. This Court can take into consideration
subsequent events and mould relief accordingly but it cannot substitute
a new relief based on a fresh cause of action. [812-F-H; 813-A-B]

Mis. Dwarkadas Marfatia & Sons v. Board of Trustees of the Port F
of Bombay, AIR (1989) SC 1462, referred to.

3. The High Court directed payment of 18% interest. However,
the bank rate of interest has since gone down drastically. Grant of
interest pendent lite and for future is a discretionary remedy. The
court of appeal can, therefore, exercise the same power while finally G
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. In the facts and circumstances of this case, grant of 9%
interest shall me·et the ends of justice. (813-C-D; 815-D] H
790 SUPREME COURT REPORTS [2003) SUPP. 6 S.C.R.

A South Eastern Coalfields Ltd. v. State of MP. & Ors., JT (2003)
Supp. 2 SC 443; K. T. Venkatagiri & Ors. v. State of Karnataka & Ors.,
(2003) 9 SCC 1 and Pure Helium India Pvt. Ltd.•v. Oil-& Natural Gas
Commission, (2003) 8 SCALE 553, referred to.

B CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1781 of
2000.

From the Judgment and Order dated 22.1.99 of the Delhi High Court
in C.W. No. 883 of 1995. -=~- -

WITH
c
C.A. No. I 782 of 2000.

P.P. Rao, A.N. Haskar, S. Balakrishnan, Ms. Indu Malhotra, Ms. V.
Deepa, Arvind ·Kumar Sharm~ S.U.K. Sagar, Rajeev K. Virmani, Ms.
D Rashmi Virmani, S. Prasad and S.N. Jha for the appearing parties.

The Judgment of the Court was del.ivered by

S.B. SINHA, J. : These appeals involvi.ng common questions of law
and fact were taken up for hearing together and are being disposed of by
E 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, I 957 (The Act)
F and the Delhi Development Authority (Disposal of Developed Nazul Land)
Rules, I 981 (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
G 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 Jessee as also the President of India.

The factual matrix of the matter is being considered from the case
H involved in Civil Appeal No. 1781 of 2000.
D.D.A. v. J.S. MONGA [SINHA, J.] 791

On 13.12.1968, a statutory sub-lease was executed in favour of Shri A
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 B
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 C
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, l.4.1990 to 31.3.1991 and 1.4.1991 D
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 from the parties but it does E
not appear that any concrete decision was taken in that behalf. Respondent
No. l 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, hc.wever, 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 F
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. l
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. G

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 H
792 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.
A 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.
B Such amount was to be paid within a period of sixty days.

The respondents thereafter fried 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
resoiution was passed by the D.D.A. to the effect that unearned increase
C 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 :
D
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 :
E
"We are of the view that the ODA, had no power to issue
the demands in these writ petitions. Accordingly, the writ petitions
are allowed and following directions are issued :

The ODA shall issue fresh demand to the petitioners in all
F
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 DOA shall be entitled to appro.priate only thatpoi:tion
of the amount calculated in accordance with fixation of market
rate of land as issued by the Delhi Administration on the 24th of
G June, 1992 and accepted by the DOA 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 con~erned."

The Division Bench in its impugned judgment noticed various orders
H passed by the authorities of the appellant herein, inter alia, in of the writ
D.D.A. v. J.S. MONGA [SINHA, J.] 793

petition being C.W. No. 350 of 1995 wherein it was noted A
"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 B
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 :
c
" ... 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 pennission has not been deducted from
the amount of 50% unearned increase calculated now for the D
second sale because, though, the issue regarding deduction of
unearned increase paid earlier has been approved by the Author-
ity, 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 E
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 F
having regard to the orders dated 24.6.1992 issued by the Delhi Admin-
istration 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 G
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." H
794 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A 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 ofa purported policy by reason
of a circular letter dated 28.6.1999 purported to have been given a
B prospective effect in terms whereof the leasehold was sought to be
converted into freehold. The relevant portion of the said scheme reads as
under :

"l. COVERAGE OF THE SCHEME :
c (i) The existing scheme of freehold co.nversion 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 Develop-
ment Plan in force is residential, will be covered under the
D scheme, irrespective of size.

(ii) The scheme will also extend to premium free lP.ases i.e.
leases where premium has not been charged by agencies
administering th.e leases.
E 2. COMPUTATION OF CONVERSION FEE:

(i) In respect of properties with land area 11pto 500 sq. meters,
the conversion fee will be charged on the basis _of already
approved graded scale circulated vide Ministry's letter dated
F 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 Annexu~e and land rates as applicable with effect from
G 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
H basis as applicable to other leases."
D.D.A. v. J.S. MONGA [SINHA, J.) 795

It is not in dispute that one Rajeev Gupta also filed a writ petition A
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 B
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 :
c
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 D
conversion fee paid, if any, on account of these instructions
should be allowed.

4. This issues with the approval ofFinance Division's U.O. No.
1066-F dated 21.6.99."
E
Rajeev Gupta w~s permitted to execute the aforementioned deed by
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. v. 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 F
conversion from leasehold to freehold and the proposal of the D.D.A. to
compromise was noted. The' respondents herein thereafter filed an appli-
cation for raising additional pleas, inter alia, on the ground that having
~egard to the interim order passeq in the writ petition by the High Court
... of Delhi, the deed of sale having b~en executed by them pursuant to or G
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
2&.6.1999.
H
796 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A SUBMISSIONS
Mr. P.P. Rao, learned senior counsel appearing on behalf of the
appellant, inter alia, would submit that: ( l) As the statutory sub lease refers
to the market value of the residential plot, the circular letters cannot
B override the same and, thus, are illegal. Strong reliance in this behalf has
been placed o.n Sant Ram Sharma v. State of Rajsthan & Anr., [1968] l
SCR 111 and State of MP. & Anr. etc. v. G.S. Dall & Four Mills etc.,
[1992] Supp. l 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
C 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
D 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
E 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
F a prospective effect cannot have any application.

Mr. A.N. Haskar, learned senior counsd, 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
G 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
H herein before on behalf of the appellant were not raised before the High
D.D.A. v. J.S. MONGA [SINHA, J.] 797

Couit nor had been adverted to in the counter affidavit. (4) Any mistake A
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 B
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 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 C
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 Vi1ji stand on a similar footing as that Rajeev Gupta :
J.S. MONGA ABDUL RASOOL RAJIV GUPTA
D
S. Particulars
No. Plot No.A-5/3. VIRJI, Plot No.A-I, Plot No.4, Palam
Vasant Vihar, Maharani Bagh, Marg, Vasant Vihar,
N. Delhi. N. Delhi N.D.

I. Date of Execution 13.12.1968 1.1.1965 27.4.1971
of Sub Lease Deed

2. Name of Sub Sh. Mangal Singh Sh. N.R.-Pillai. Sh. Satish Chander
E
Lessee Monga & after his After his death Malhotra
death m4tation mutated in favour of Transferred on
allowed in the joint (I) Sh. R.A. Pillai the basis of Sale
names of his legal (2) Sh. Rs. Pillai. Permission, in
heirs : Mutated on 28.5.93 favour of Smt.
I. Smt. Harbans (in the names of Kaushalya Rani
Monga (wife) sons of sub lessee) Bhusari W/o Sh. F
2. Smt. Prabha Sampuran Singh,
Sehgal (daughter) on dated
3. Smt. Indira 2.12.1988.
Batra (daughter)
4. Smt. Ella
Bajaj (daughter)
5. Sh. Joginder
Singh Monga (son)
G
6. Sh. Mohinder
Singh Monga (son)
7. Sh. Jagjit Singh
Monga (son)
8. Sh. Upjeet Singh
' Monga (son)
H

i
798 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A 3. Name of Purchaser I. Sh. Rattan Chand Sh. Abdul Rasool Sh. Rajiv Gupta
Burman 2.Smt. Brij Virji
Rani Burman

4. Date of Agreement 19.2.1994 16.1.1994 24.10.1993
of Sale

5. Date on which Sale 23.5.1994 17.4.1994 30.4.1994
B Permission applied

6. Amount of 50% Rs.3,62,44,420 Rs.2,23,34,725 Rs. 4.13 crores
UEI demanded Dt. 22.2.1995 Dt. 12.6.1996 Dt. 1.12.1994

7. Date & amount of Dt. 16.5.1995 Dt. 12.6.1996 Not paid
50% UEI paid Rs.3,62,44,420 Rs.1,49,72,225 paid
as per the Order of
c the High Court of
Delhi, Dt. 22.5.1996

8. Date of execution 6.6.1995 17.1.1997 Not executed
of Sale Deed/
Registration of ~he
same

D 9. Date on which Sale 25.1.1996 (Transfer 30.7.1996
'
Not granted
Permission granted/ allowed)
Transfer allowed

IO. Date on which 24.12.1999 24.12.1999 17.12.1999
conversion from
lease hold to
freehold applied
E f.

From the aforementioned chart it would appear that not only the
application ofRajeev 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
F 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
G 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:

H Section~ of the D.D,A. Act reads as under :
D.D.A. v. J.S. MONGA [SINHA, J.] 799

"22. Nazul lands A
(1) xxx xxx xxx

(2) xxx xxx xxx

(3) After any such nazul land has been developed by, or under B
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 : c
"56 Power to make rules

(1) The Central Government, after consultation with the Author-
ity may, by notification in the Official Gazette, make rules to carry
out the purposes of this Act : D
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 E
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 ,:1e
following matters, namely-
F
"

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

"23. Agreements betv 1een the cooperative societies and their G
members. - 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 H
800 SUPREME COURT REPORTS (2003) SUPP. 6 S.C.R.

A 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 provi-
sions 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."
B
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
c 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
D 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
E
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, assign-
ment, or parting with the possession, the amount to be
F 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
G
of the unearned increase as aforesaid."

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

"X. (a) All powers exercisable by ~he Lessor under this Sub Lease
H may be exercised by the Lt. Governor, the Lessor may also
D.D.A. v. J.S. MONGA [SINHA, J.] 801

authorize any other officer or officers to exercise all or any A
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 B
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 C
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 D
designated by the Lessor to perform the functions of the Lieuten-
ant Governor under this Sub-Lease."

EFFECT OF THE CIRCULARS :

It is not in dispute that the grant oflease or sub-lease is in consonance E
with the p··ovisions 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 t;.e
Governor General in Council. The Chief Commissioner is now designated
as the Lt. Governor. Delhi has now also become a Part 'B' State. The F
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 "Vith the power of G
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 H
802 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.
A sub-lease is a statut9ry 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 Jessee, therefore, not only could have agreed to vary the
terms and conditions, any unilateral action taken by the lessor and accepted
B 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 :

c "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 al-
D lotted 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
E 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. l 6(7)/82-L&B/3026-34 dated 31.1.92, as given
. below :-
F
xxx xxx xxx"

The. appellant itself issued the following circular, relevant portion of
which reads as under

G "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
H 31.3.91 and 1.4.91 to 31.3.92.
D.D.A. v. J.S. MONGA [SINHA, J.] 803

A copy of the Joint Secretary (Admn.) L&B Deptt. Delhi A
Admn. Letter -No. F-16 (7)/82/L&B/20369-75 dated 24.6.92
conveying the market rates of larul~fferent areas of D.elhi 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 en- B
closed : ~

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." c
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. I 994. issued the
following directions :
D
"Subject : Schedule of Market Rate

Sir,

The question of fixation of market rates of land in different E
areas of Delhi/New Delhi w.e.f. 1.4.1994 has been under consid-
eration of the Government and it has been decided not to increase
the land rates w.e.f. I .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 March, 1993 far two more years i.e. w.e.f. 1st April, F
1994 till March, 1996 as per schedule attached."

In terms of clause 6(a), a sub-lessee is prohibited from making any
saie, 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, G
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 writi~g 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 co~ditions as it may think fit and shall furthermore be
entitled to claim and recover a portion of the unearned increase in the value. H
804 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A Sub olause (b) of Clause (6) of the deed of sub-I.ease and the proviso
appended thereto, therefore, confers a discretion upon the lessor. The
decision of the Iess9r 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.
B The less,or 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
C 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 recoyery 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
D 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
E 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
v. Revenue Divisional Officer, Adilabad, A.P. and Others, [1994] 4 SCC
F 595 is wholly misplaced. Therein the question which arose for considera-
tion 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 s~amp duty which had been fixe4 by the revenue
authority at the market value for commercial as also residential area.
G Keeping
. '· .
in view the provisions
'
contained in Section 23(1) of the Land
, '
A~quisition Act, it Wl;!S held that in determining such qiarket value, the
Court has to take into account either one or the other of the three methods
'1 ' .

laid down ther~in, keeping in 'v'.iew the date of issuance of notification
under Section 4(1) of the Act and, thus, B¥ic Valuation Register prepared
H and maintained for the purp.ose of collecting stamp duty has no statutory
D.D.A. v. J.S. MONGA [SINHA, J.] 805

base or force and cannot form a foundation to determine the market value A
mentioned thereunder.

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

"The question of fixation of market value is a paradox which lies B
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 the price of land
arrived between the hypothetical willing buyer and willing seller
bargaining as prudent persons without a medium (sic modicum) C
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 D
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 E
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 p
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 v. Mahabir Singh and Others,
[1996] l SCC 609, this Court observed that the guidelines provided under
Section 47 A of the Stamp Act would only serve as prima facie material G
. 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 H
806 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A place. No· absolute higher or minimum value can be predeter-
mined. 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
B 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."

C [See also R. Sai Bharathi v. 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
D 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 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 :
E
" .. .It is true that Government cannot amend or supersede statutory
rules by admi_nistrative 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
F 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
G 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
H formed by the Government servants; the premium of which, having regard
D.D.A. v. J.S. MONGA [SINHA, J.] 807

to the fact that the sub-lease was to be a perpetual one for all intent and A
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 B
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 C
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% D
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 oflndia
or by the Lt. Governor, recourse is sought to be taken to the provisions E
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, F
privilege and obligations of the grantee would be regulated thereunder.

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 G
2003 which has also not been issued by the Union oflndia 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 exfacie the same steers on the face of the condition
Df the statutory lease to the effect that lease cannot be transferred without
consent of the lessor. H
808 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.
A 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
B 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 leaseho.ld 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
C 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,
I) became a part c;fthe terms of the lease having regard to the finality clause
attached 'thereto.

MISTAKE:

A 1nista'ke is not a fraud. It may be discovered and in a given case
E it must be pleaded. Such plea tnust 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
F
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'pa'rties 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
I
G 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
1H specifically granted three opportunities to the respondents to place on its
. 0.0.A. v. J.S. MONGA [SINHA, J.] 809

records any other policy decision whereupon it intended to place reliance A
as would appear from the following :

"16.10.1996

Present : Mr. A.N. Haksar, Sr. Advocate with Mr. R.K. Virmani
for the Petitioner. B
Ms Sudha Bhandari for Counsel for the Respondents

CW. No. 3948/95

There is no counter filed on behalf of the Respondents. There is C
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 D
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 DOA on E
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 DOA disclose it. F

Compliance within six weeks.

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

R.C. Lahoti, J. G
S.N. Kapur, J."
"24.02.1997

Present : Mr. A.N. Haksar, Senior Advocate with Mr. R.K.
Virmani for the Petitioner. H
810 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A Mr. Sumit Bansal fore the Respondent/DOA

cw 3948/95
On October 16, ! 996, six weeks time allowed to the DDA to make
a clear statement on affidavit as to whether it admits or denies the
B 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
c these directions.

To be taken up for disposal towards the end of the short matters
on April l 0, 1997.

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

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

"10.04.1997
E
President : Mr. A.N. Haksar Senior Advocate with Mr. R.K.
Virmani for the Petitioner.

Mr. Ravinder Sethi, Senior Advocate with Mr. Sumit Bansal for
· the Respondent/DOA
F
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 con-
tained in the affidavit does not comply with the court's order. List
G 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."
H
D.D.A. v. J.S. MONGA [SINHA, J.] 811

NEW POINTS: A
The instances relied upon by the High Comt 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 :
B
"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 refer-
ence to the market rate of the land in the locality contained in the
relevant circulars but not on the basis of the Circular dated C
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 D
new grounds.

DETERMINATION OF THE AMOUNT OF UNEARNED INCREASE
BY THE APPELLANT:

The Appellants proceeded on the premise in the case of the E
Respondents, that the Circular letters issued by it or the Union oflndia 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 F
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.
G
INTERIM ORDER - EFFECT OF:

The r~spondents herein questioned the demand of Rs. 3,62,44,420
made by the DDA. The ODA 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 H
812 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A 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 fu1ther sum of Rs. 7 ,50,00,000. Such an assumption is wholly on
B wrong premise.

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

c " .. .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 the) may pay the demanded sum of 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
D annum. In case the payment is made under protest it is subject
to fulfilment of other formalities would consider application for
sale permission."

The respondents complied with the order of the High Court whereas
E 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.
F 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 Mis Dwarkadas Mmfatia and Sons v. 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
G 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.
H A fortuitous circumstance like the issuance of the said circular dated
D.D.A. v. J.S. MONGA [SINHA, J.] 813

28.6.1999 was not in contemplation. The appellant, therefore, cannot, A
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 B
on a fresh cause ofaction. We are, therefore, of the opinion that the interim
order passed by the High Court does not come to the aid of the respondents.

RA TE OF INTEREST :

By reason of the aforementioned interim order, the High Court C
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 !is as that of the High Court keeping D
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.

Recently, this Court has examined this principle in South Eastern
Coalfields Ltd. v. State of MP. & Ors., JT (2003) supp. 2 SC 443 stating: E
"Interest is also payable in equity in certain ~ircumstances.
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 F
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 G
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 H
,•

814 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A 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.
B 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
c 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
D 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
E payment in six weeks from today the liability to pay interest @
24% per annum shall stand."

In K.T Venkatagiri and Others v. State of Karnataka and Others
[2003] 9 sec 1, it is stated :
F
"We are, therefore, of the opir.ion 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 :
G (1) xxx xxx xxx

(2) xxx xxx xxx

(3) xxx xxx xxx
H
D.D.A. v. J.S. MONGA (SINHA, J.] 815

(4) xxx xxx xxx A
(5) xxx xxx xxx

(6) xxx xxx xxx

(7) On the amount found to be due and owing to MSIL by any B
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. v. Qi/ & Natural
c
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 : D
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 E
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 act· 1al
payment is made.

We, keeping in view the facts and circumstances of the case, also F
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 respond-
ents. Counsel's fee is assessed at Rs. 25,000 in each appeal.

B.S. Appeals dismissed. G