Holding

The DDA’s restoration policy imposing a 20% surcharge and current‑cost demand was ultra vires, beyond the delegatee’s authority, and violative of Article 14, and therefore was set aside.

Summary

The Delhi Development Authority (DDA) allotted flats under a Self‑Financing Scheme (SFS) and later, after some allottees defaulted on instalments, the Vice‑Chairman, acting as a delegatee, issued policy orders imposing a 20% surcharge and demanding payment of the current cost of the flats with retrospective effect. The registrants challenged the legality of these orders, arguing that they were beyond DDA’s statutory authority, violated Article 14’s equality principle and amounted to an unconstitutional tax under Article 265. The Supreme Court examined the scope of the delegation of power under the Delhi Development Act, 1957, the contractual nature of the allotment, and the limits of policy‑decision judicial review. It held that the delegatee had no power to alter the terms of the original contract or to impose a surcharge and current‑cost demand without statutory backing, and that the orders were ultra vires and violative of Article 14. Consequently, the Court set aside the DDA’s restoration policy, allowed the registrants’ appeals and dismissed the DDA’s appeals.

Issues considered

Whether the DDA, through its delegatee, had statutory authority to impose a 20% surcharge and demand current cost on defaulting SFS flat registrants.
Whether the policy orders could be given retrospective effect and were within the scope of a policy decision subject to judicial review.
Whether the imposition of the surcharge and current‑cost demand violated Article 14 of the Constitution by treating similarly situated persons unequally.
Whether the surcharge amounted to a compulsory exaction in violation of Article 265.
Whether the delegatee exceeded the limits of delegation under Section 52 of the Delhi Development Act, 1957 and the 1968 Regulations.
Whether the terms of the original allotment contract could be unilaterally altered without notice, invoking the doctrines of estoppel and novation.

Legislation cited

Constitution of Indias. Article 12, s. Article 14, s. Article 19(1)(e), s. Article 21, s. Article 26, s. Article 265, s. Article 37
Delhi Development Act, 1957s. 2(13), s. 52, s. 5A
Indian Contract Act, 1872s. 29, s. 60

Subjects

Ultra viresDelegation of powerContract lawEstoppelArticle 14Article 265Price fixationPolicy decisionJudicial reviewSelf Financing SchemeDelhi Development AuthoritySurchargeRetrospective effect

Judgment

-.
t DELHI DEVELOPMENT AUTHORITY, N.D. & ANR. A
v.
JOINT ACTION COMMITTEE, ALLOTTEE OF SFS FLATS &
ORS.

DECEMBER 13, 2007 B
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.)
'"...-

Delhi Development Act, 1957-ss. 2 (13), 5A and 52-Allotment
offlats under Self Financing Scheme (SFS)-By Delhi Development c
Authority-Default in payment of instalments-Condoned by
Authority in terms of original contract-Subsequent policy decision
by delegatee ofthe Authority, imposing 20% surcharge on the flats of
South Delhi and recovery of current price on condonation of the
default-Policy made effective with retrospective effect-Validity of D
f t restoration policy -Held: The policy is ultra vires-Imposition of
surcharge was in effect a compulsory exaction-The delegatee having
no power to fi'ame such scheme under the Act or the Regulations
framed thereunder, or to apply the same with retrospective effect, could
not have done so by an executive order-The policy, being in the realm E
of contract, cannot be stated to be a policy decision as such-It was
dehors the original terms and conditions ofthe contract-The contract
could not have been novated in absence of provisions under the
contract or law-The Authority having condoned the default as per
..._ J. terms of original contact, estopped from seeking application of F
subsequent restoration policy- Disposal price was permissible to be
fixed within the purview of original terms of the contract and the
statutory requirements-Action ofa State must treat persons similarly
situated equally and grant equal protection to them-Delhi
Development Authority (Management and Disposal of Housing
G
Estates) Regulations, 1968-Regulations 5 and 6- Constitution of
v India, 1950-Articles 14 and 265-Contract- Estoppel.
.4.
Contract Act, 1872-ss. 29 and 60-Novation of contract-

811 H
812 SUPREME COURT REPORTS [2007] 13 (Add!.) S.C.R.

.-
A Conditions for-Held: Terms and conditions of contract cannot be .+
altered unilaterally without notice to the other party oft he contract-
When a contract has been worked out. aji·esh liability cannot be thrust
upon contracting party.

Administrative Law-Delegation ofpower-Power ofde legatee
B
-Held: A de legatee is bound to act within four corners of the
delegation and not beyond the same-Delegation ofpower must be
tested in terms of statutory provisions. ..,.:'-
-

Judicial Review:
c Judicial review of policy decision-Scope of-Held: Policy
decision is subject to judicial review-An executive order termed as
policy decision is not beyond pale ofjudicial review-Grounds for
interference with-Discussed.

D Judicial review ofContract-Permissibility-Held: Permissible,
When a contract emanates fiwn a statute or is otherwise governed by
~
l
provisions thereof

Judicial review ofprice fixation-Permissibility-Held: Though
ordinarily not permissible-But where the price is fixed de hors the
E statutory provisions, it is permissible.

Constitution ofIndia, 1950-Parts !JI and IV, Articles 12, 14 and
3 7-Vaiidity of an action of State-Ascertainment of-Held: Action
ofState giving effect to provisions of Part IV to be upheld only when
F it is not ultra vires Fundamental Rights-The act ofthe State must at
the first instance be adjudged on the touchstone of principles of
.. ·• ,•

Fundamental Rights and then of the provisions ofthe Parliamentary
Act, or the regulations ji-amed thereunder or the terms of contract
between the parties-Action of State must satisfy the principal
G requirements ofArticle 14.

Doctrines-Doctrine ofultra vires-Applicability of
y
~
Flats under a Self Financing Scheme (SFS) flooted in the year
1991, were allocated by Delhi Development Authority. Registrants
H defaulted in payment of instalments resulting in automatic
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT 813
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
+
cancellation of their allotments. Vice-Chairman of the Authority, A
delegated with the power of Authority, took a policy decision by order
dated 16.8.1996 levying 20% surcharge over and above disposal
price in respect ofregistrants who had been allotted flats in South
Delhi; and that defaulting registrants were required to pay current
cost on regularization of the default. A resolution was passed and B
an executive order was also passed to that effect. The resolution
was given retrospective effect and retroactive operation. Several
writ petitions were filed questioning the legality and validity of the
resolution. Single Judge of High Court allowed the petitions in part
quashing the policy of charging current cost upholding the policy of c
charging 20% surcharge. Letters patent appeals were referred to
larger Bench of High Court, by the Division Bench. The Full Bench
up held the levy of20% surcharge and further held thatthe Authority
had requisite jurisdiction also in respect of imposition of'current
cost'. Hence the present appeals.
D
Allowing the appeals filed by the registrants and dismissing
those filed by the Authority, the Court
HELD: 1.1. Delhi Development Authority (DDA) has been
created under a Parliamentary Act. It, indisputedly, is a State within E
the meaning of Article 12 of the Constitution oflndia. Therefore,
acting as a 'State', it is imperative that D.D.A., while implementing
its statutory power, upholds the fundamental rights of the citizens
and strives hard to give effect to the Directive Principles of the State
Policy. [Paras 34 and 37] [839-A; E-F)
F
1.2. It is true that in terms of Article 37 of the Constitution of
India, whereas the provisions of Part III arc justiciable, the
provisions of Part IV arc not. However, only when an action of the
State is taken to give effect to any of the provision of Part IV of the
Constitution of India which is not otherwise ultra vires the G
Constitution or offends the principles embodied in Part III of the
Constitution oflndia, the same may be upheld, having regard to the
provisions contained in Part III thereof. The action of the State,
therefore, must at the first instance be adjudged on the touchstone
of the principles of Fundamental Rights and then the provisions H
814 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A contained in the Parliamentary Act, the regulations framed
thereunder as also the terms of the contract entered into by and
between the parties. [Para 37) [839-F-H; 840-A)

1.3. Action of a State must satisfy the principal requirements
B of Article 14, viz., treating persons similarly situated equally and
granting equal protection to them. Reasonableness and fairness is
the heart and soul of Article 14 of the Constitution of
India. [Para38] [840-B]

2.1. lt is only those components which fall within the Brochure
C of the DDA or within the purview of the statutory requirements which
can be included in the exercise of price fixation. At the time of
calculation of the amount which would be the subject matter of
demand of 5th and final instalment, the jurisdiction of DDA is to keep
itself confined only to the factors on the basis whereof, the brochure
D was issued and offer was made. No additional factor, thus, could be
taken into consideration at the time of issuing notice other than the ~ t
ones on the basis whereof offer was made by the registrants.
[Paras 86 and 67] [855-H; 856-A; 849-F)

Jud~:ment passed by Supreme Court in DDA v. SFS Assn. and
E Ors. Civil Appeal No. 4402of1985, relied on.

Premji Bhai Parmar and Ors. v. Delhi Development Authority,
AIR (1980) SC 738, distinguished.

P.N. Verma v. Union of India, AIR (1985) (Delhi) 417,
F disapproved.

Narsingh Jain v. Union ofIndia, 80 (1999) DLT 742 and DDA
SFS Flat Owners Society v. UOl AIR (2001) Del 39, referred to.
2.2. The Full Bench of High Court misdirected itselfinsofar as
G it failed to take into consideration that the levy of20% surcharge
y
was in effect and substance a compulsory exaction to augment the r
revenue requirements of the DDA and, thus, could not have been a
part of the contract. Any compulsory exaction should be viewed in
the light of Article 265 of the Constitution oflndia, unless it comes
H
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT 815
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
.. within the sphere of contract. [Para 85) (855-G]
,.._
- A
2.3. Although the registrants defaulted in making payments but
the flats were available. In fact, when the default took place, the flats
were not constructed. They have, thus, not been allotted to the
persons on the wait list. It may be true that recourse to restoration
of automatic cancellation should be undertaken by the allocattees B
within a reasonable time. What would be a reasonable time would,
however, depend on the facts and circumstances of each case. No
hard and fast rule can be laid down therefor.
[Paras 44 and 45) (841-G-H; 842-A)
2.4. What would constitute a reasonable period must also be
c
considered keeping in view the rights of the parties as also the fact
that in terms of clause 4 of the offer of allotment there does not exist
any prohibition to pray for regularization upon default, even after a
period of 120 days. In a situation of this nature, it may not be
unjustified to arrive at the conclusion that such a right can be D
~-
exercised, if not, when the flats were ready for handing over actual
possession, but at least when there has been a substantial
progress. [Para 46) [842-B-C]
3.1. Admittedly, the registrants failed to pay instalments within E
the stipulated period. A notice was served. Representation praying
for condonation of default was accepted by DDA. It allotted the flat.
No condition therefor was put. It did not ask for payment of any
surcharge. The original terms were not deviated from. It did not ask
for any extra-cost. The delay in payment of instalments was
F
condoned and the allocation of flat which got cancelled, stood
restored. DDA, thus, acted strictly in terms of the original scheme.
It is only when the 5th and final instal_ment was directed to be paid,
the current cost was included. The allocattee at that stage might not
have any other option but to pay the same for obtaining possession.
But by reason thereof, he never gave up his right to question the G
y action on the part of DDA. Rule of estoppel, therefore, has no
'"I
application, so far as the registrants are concerned.
[Paras 52, 53, 54 and 55) (843-E; 845-D-G-H; 846-A-B)
3.2. It was, on the other hand, DDA which, having accepted the H
816 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A offer of the allocattee by restoring the allotment, is estopped and
precluded from raising a plea as regards application of Office Order
dated 16.8.1996. [Para 56) (846-C)

4.1. DDA functions through the Committees constituted in terms
of Section SA of Delhi Development Act, 1957. Power has been
B delegated in favour ofits Chairman and the Vice-Chairman. Such
delegation of power, however, as provided for under Section 52 of
the Act does not extend to make regulations. What, therefore, cannot
be done by way of regulation, cannot be done by executive
order. [Para 47) [842-F-G]
c
4.2. In absence of any provision contained in the Act or the
Regulations, the delegatee on its own could not frame such a new
scheme. Thus, the purported restoration policy would be ultra vires.
The restoration policy has to be tested on grounds of terms and
D conditions of the original scheme. The legality and/or validity of such
imposition would be considered on the premise that the impugned
policy decision is a part of the original scheme and does not contain
any new policy. [Para 58) (847-B-C)

4.3. An executive officer, in absence of any provision of a
E statute, cannot apply his own decision with a retrospective effect. A
delegatee is bound to act within the four corners of the delegation
and not beyond the same. [Para 72) (851-F)

4.4. Delegation of power in favour of an authority under a
F statute must also be tested in terms of the statutory provisions. No
provision under the Act or the Regulations has been brought to
notice of the Court which empowers the delegatee to alter the terms
and conditions of the contract with retrospective effect. The
purported policy decision must, therefore, be tested not only having
G regard to the provisions of the statute but also having regard to
clause 4 of the offer. [Para 73) (851-G-H; 852-A)
4.5. The authority having itself adopted a formula for computing ..
the disposal cost, the same was binding upon the delegatees. The
delegatee cannot take any action contrary to or inconsistent with
H the factors laid down for computation of disposal cost as defined in
DELHI DEVELOPMENT AUTHORITY, N.D. v. JOINT 817
ACTION COMMITTEE, ALLOTTEE OF SFS FLATS
. ~
Section 2(13) of the Act. Regulations 5 and 6 ofDclhi Development A
'"" Authority (Management and Disposal of Housing Estates)
Regulations, 1968 do not authorize the delegatee to apply a formula
which was not contemplated by the Authority itself. If an Executive
Authority in absence of any statutory provision cannot apply a
decision with retrospective effect, the same would be ultra B
vires. [Para 74] [852-C-D]
~·~
Vice Chancellor, MD. University, Rohtakv. Jahan Singh (2007)
4 SCALE 226, relied on.
Ashok Lanka and Anr. v. Rishi Dixit and Ors., [2005] 5 SCC 598,
referred to.
c
5.1. The office orders, on the basis whereof the purported
impugned policy had been taken, do not refer to the scheme as a
restoration scheme. The resolutions do not say so. There is nothing
on record to show that the Office Orders dated 16.8.1996, 27.8.1996 D
and 21.3.1999 were published in the Gazette or were otherwise
brought to the notice of the registrants.
[Paras 51and57) (846-D; 843-D]
5.2. A person would be bound by the terms of the contract
subject of course to its validity. A contract in certain situations may E
also be avoided. With a view to make novation of a contract binding
and in particular, some of the terms and conditions thereof, the
offeree must be made known thereabout. A party to the contract
cannot at a later stage, while the contract was being performed,
impose terms and conditions which were not part of the offer but F
were based upon unilateral issuance of office orders, and were not
communicated to the other party to the contract and which were not
even the subject matter of a public notice. Apart from the fact that
the parties rightly or wrongly proceeded on the basis that the demand
by way of 5th instalment was a part of the original scheme, DDA in
G
.,, its counter affidavit either before the High Court or before this Court

- did not raise any contra plea. [Para 57] [846-F-H; 847-A]
5.3. Terms and conditions of the contract can indisputably be
altered or modified. They cannot, however, be done unilaterally
unless there exists any provision either in the contract itself or in H
818 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A law. Novation of contract in terms of Section 60 of the Contract Act
must precede the contract making process. The parties thereto must
be ad idem so far as the terms and conditions are concerned. IfDDA, ·
a contracting party, intended to alter or modify the terms of contract,
it was obligatory on its part to bring the same to the notice of the
B allocatee. Having not done so, it, relying on or on the basis of the
purported office order which is not backed by any statute, could not
thrust new terms of contract upon the other party to the
contract. [Para 61] [848-A-C]
5.4. A definite price is an essential element of binding
C agreement. A definite price although need not be stated in the
contract but it must be worked out on some premise as was laid down
in the contract. A contract cannot be uncertain; it must be construed
so as to lead to a conclusion that the parties understood the meaning
thereof. The terms of agreement cannot be vague or indefinite. No
D mechanism has been provided for interpretation of the terms of the
-
contract. \Vhen a contract has been worked out, a fresh liability
cannot be thrust upon a contracting party.
[Paras 76 and 77) [852-G; 853-B)
6.1. An executive order termed as a policy decision is not
E beyond the pale of judicial review. Whereas the superior courts may
not interfere with the nitty gritties of the policy, or substitute one by
the other, but it can not be said that the court shall like its judicial
hands off when a plea is raised that the impugned decision is a policy
decision. Interference therewith on the part of the superior court
F would not be without jurisdiction as it is subject to judicial
review. [Para 59) [847-D-E)
6.2. Broadly, a policy decision is subject to judicial review on
the following grounds: (a) if it is unconstitutional; (b) if it is de 'hors
the provisions of the Act and the Regulations; (c) if the delegatee
G has acted beyond its power of delegation; (d) ifthe executive policy
is contrary to the statutory or a larger policy. [Para 60) [847-F-G)

6.3. The purported policy of introducing new terms of contract
unilaterally is, therefore, not beyond the pale of judicial review. In
H fact, being in the realm of contract, it cannot be stated to be a policy
DELHI DEVELOPMENT AUTHORITY, N.D. v. JOINT ACTION 819
COMMITTEE,ALLOTTEEOFSFSFLATS
~
decision as such. [Para 61] [848-C) A
~

6.4. IfDDA was exercising a statutory power, the same must
be tested on application of doctrine of ultra vires. Floating a scheme
for providing housing facilities to a group of people, although is
governed by statute, exercise of power under the statute by an
executive, not only can be tested on the touchstone of Article 14 of B
the Constitution oflndia, but can also be tested on the touchstone
-7 of source of the power under the statute. No provision either in the
Act or the Regulations was brought to notice of the Court which
makes the allocattee bound by the purported policy decision taken
by DDA. Even ifit is so, the superior courts may exercise its power c
of judicial review as the power which is sought to be exercised by a
statutory authority is not under the contract but under a statute.
When a contract emanates from a statute or is otherwise governed
by the provisions thereof, the superior court can also exercise the
power of judicial review. [Para 62] [848-E-G] D
:j
i-
Gujarat State Financial Corporation v. Mis. Lotus Hotels Pvt.
Ltd., [1983] 3 SCC 379, relied on.
7.1. Regulations 5 and 6 of Regulations should not be very
liberally construed. Concededly, the manner in which power is to be E
exercised is governed by the past practice. Norms have been fixed
for computing the disposal cost. Although, the superior courts
ordinarily would not interfere in the price fixation but there does not
..... .l exist any absolute ban. In a case where fixation of price is required
/ -!. to be made in a particular manner and upon taking into consideration
F
the factors prescribed and if price is fixed de' hors the statutory
provisions, judicial review would be permissible.
[Para 64] [849-A-B]

7.2. When the Authority determines tl.te cost of construction
under residuary power conferred on it having regard to the relevant G
factors on the basis of which brochure as well as the notice inviting
.i,: "" tender was issued, the superior courts may not interfere; but the
same must be done in terms of the originalcontract and not de' hors
the same. The authority, even while exercising its residuary power,
is required to act within the four corners of the contract. While doing H
820 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A so, the terms of the contract cannot be altered to include any other
factors which were contemplated thereunder. While computing the
extra cost, no additional factor, thus, can be taken into consideration.
If such a power is conceded in the authority, the same would give
rise to exercise of arbitrary power. It is not contemplated in law.
B While construing a provision delegating a power on an authority
under a statute, the constitutional provisions must be kept in
mind. [Para 66] [849-C-E]-
CIViL APPELLATE JURISDICTION : Civil Appeal Nos. 6668-
6698 of 2006 & 6700-6732 of 2000.
c From the common Judgment and final Order dated 23.7.1999 of
the High Court of Delhi at New Delhi in C.W.P. Nos. 793, 1118, 2209,
3423, 4163, 4306, 4436, 4542, 4976, 5402/93, 166 637, 756, 858,
1206, 1208, 1283, 1496, 1514, 1570, 1683, 1685, 1752, 1786, 1787,
1803, 1808, 1843, 1867, 1874,2005,2090,2102,2175,2331,2333,
}) 2334,2367,2374,2463,2504,2505,2569,2570,2581,2619,2766,
2776,3106,3126,3624,3652,3696,3767,3799,3951,4365,4415,
4416/94, 1305, 1306, 1819, 2074, 2075 and 3825/95.
WITH
E C.A. Nos. 6666, 6667 & 6733 of2000 and 5881, 5869, 5882,
5880 and 5872 of2007.
Sunil Gupta, V. Shekar, Gopal Shankamaayanana, Indu Malhotra,
S.K. Rungta, AP. Dhamija, Madhu Sudan Bhayana, Pratibha Jain, C.S.
Ashri, S. Ganesh, Pradeep K. Dubey, Sudhir, K. Sajwan, Zangpo J-
F Sherpa, Abhigya, Ashok Kumar Sharma, Madhu Moolchandani,
Maninder Singh, Pratibha M. Singh, Surbhi Mehta, Gaurav Sharma,
Sumeet Bhatia, Deba5is Misra, Kuldip Singh, Anyusuya Selvan, S. Janani,
Rajeev Sharma, Sarad Kumar Singhania, E.C. Agrawala, Mahesh
Agarwal, Rishi Agrawala, Gaurav Goel, Amit Sharma, Neha Aggarwal,
G T.L. Garg, J.S. Attri, Surya Kant, Subramanyam Prasad, Kamlendra
Mishra and Kum Kum Sen with them for the appearing parties. and
Jayabrata Bhattachai:jee, Respondent-in-Person.
The Judgment of the Court was delivered by
H S.B. SINHA, .J. l. Leave granted in all the Special Leave Petitions.
DELHIDEVELOPMENT AUTHORITY, ND. v. JOINT ACTION 821
C0tv1MITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
,.
CIVIL APPEAL NOS. 6666, 6667, 6668-6698, 6700-6732 & A
• 6733 of 2000 CIVIL APPEALS@ SLP (CIVIL) NOS. 25385 OF
2005, 1003, 8033 OF 2006 AND 13512 OF 2006:
2. This batch of appeals arising out of a judgment and order dated
23.07.1999 passed by a Division Bench of the Delhi High Court, inter
alia, in Writ Petitions No. 793of1993 as also a judgment and order B
dated 22.07.2005 passed by a Full Bench of the Delhi High Court in
_... --.,.
Letters Patent Appeal Nos. 844 of2003 etc. were heard together and
are being disposed of by this common judgment.
FACTS: c
3. Delhi Development Authority (for short, 'the Authority) has been
constituted under the Delhi Development Act, 1957 (for short, 'the Act').
Indisputably, it develops different areas in the town of Delhi and constructs
houses for all groups of people.
D
:)
)'-
4. Principally it allocates flats under six different schemes viz : (i)
Self Financing Scheme (SFS); (ii) Higher Income Group Scheme (HIG
Scheme); (iii) Middle Income Group Scheme (MIG Scheme); (iv) Lower
Income Group Scheme (LIG Scheme), (v) Janata Scheme; and (vi)
Expandable Housing Scheme. E
5. The flats constructed and allocated under the SFS Scheme are
distinct and different from the other five schemes launched by the
Authority. We shall advert to the said distinction a little later.
~ J,_
~ 6. Suffice, however, it to say that not only costs of such schemes F
are calculated on different basis but the rights and stipulated liabilities
thereunder are also different. Cost of flats vary from scheme to scheme.
Under one of the schemes, applications were invited by the Authority from
22.12.1992 to 11.01.1993.
7. We may notice some of the provisions containing the terms and G
.,- conditions on the basis whereof such an offer was made .
x
"5.10 the details of the flats and tentative cost etc. are available in
Annexure-B. The cost of the flats mentioned therein is tentative
and subject to revision on account of escalation in the value ofland H
822 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A and cost of construction. Please note that there is a possibility of f

upward revision of the tentative cost. •
5.11. Those who are successful for a ready built flat will be called
upon to make the payment in lump sum within 60 days. Others
who are successful for a flat where the work is already in progress
B
will be asked to deposit within 30 days a specified percentage
anything upto 90% of the estimated disposal price representing the
expenditure already made and the amount required for construction f"
of flats in next 3 to 4 months. Applicants successful for new
allocations are asked to pay 25% the estimated cost of the flat by
c way of 1st instalment payable within 30 days. In each of the case
60 days time is further given to remit the amount with prescribed
interest.
11.2. The demand-cum-allocation letters issued will indicate the
D prescribed dates by which the payments will be required to be
made. The demand letter for final instalment for the flats in progress ~
-'\
and new allocations will be issued separately and this may also
include the possible increase in the cost of the flat. No separate
letters will be issued for any of the subsequent instalments. It will
E be obligatory on the part of the allocatees to make the payments
and deposit the requisite documents before the due dates indicated.
In the event of default the allocation/allotment of the flat in the
scheme will be liable to be cancelled. If submission of documents

F
as demanded are delayed, maintenance charges will be leviable
provided the delay in submission of documents is regularized. !-
,. ... _.
~
12.2. If the allotment of flat is cancelled (either on the allottee's
own request or due to the non-fulfilment of the terms and conditions
of allocation by the allottee) after the expiry of I, 2, 3 and 4 months
from the date of issue of demand-cum-allocation letter, interest
G calculated@ 12% p.a. for the 1st month and 18% p.a. for the
2nd, 3rd and 4th month on the amount demanded in the demand -..,
letter shall be charged in addition to the amount of penalty specified •
above.
14.1. The allottee shall be entitled to take delivery of the possession
H
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 823
COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J.]
~
only after he has completed all the formalities, paid all dues and A
t
furnished/executed all the documents as required in the allotment-
cum-demand letter of the Delhi Development Authority."
8. Appellants in the first batch of cases and the respondents in the
second batch (hereinafter referred to as 'the registrants') applied for
B
allocation of flats under the SFS Scheme. The said scheme was floated
, \,.
in terms ofltem No.112of1992. For the said purpose, brochures are
issued. Those who desired to have allocation of such flats were asked to
opt therefor at three different places. Allocation of flats under the said
Scheme is made upon 90% payment of the estimated costs. However,
allotment is made on draw of specific number of flats. Allocation of flats c
may be made in respect of areas, floors and/or the pockets. On receipt
of the letter of demand-cum-allocation by the registrant, the schedule of
payment commences. Estimated cost for construction is calculated on the
basis of the value of the land and likely cost of constructions.
D
;
t- 9. The letter of demand-cum-allocation issued to successful
registrants contains a condition which may be noticed for the purpose of
these cases and read as under :
"4. The amount demanded should be paid on or before the due
date mentioned in para 2 and 3 above. Extension of time for E
making payment of the amount demanded in column 7 of para 3
above upto a maximum period of 90 days from the due date is
admissible. An allottee need not apply for extension but he will have
to pay interest @ 12% p.a. for the first month and @ 18% p.a.
"~ for the subsequent period. In case payment of the amount asked F
for in the demand letter is not made within 90 days of the due date,
the allotment shall stand cancelled automatically. However,
cancellation due to non-payment of first 4 instalments during the
stipulated period can be got restored on payment of dues with
interest along with cancellation and restoration charges for each G
'>-- cancellation due to non-payment, subject to availability of the
j
allocated flat. The cancellation due to non-payment of final
instalment within 120 days of the date of issue (letter of the block
date) of the demand letter for 5th instalment shall not be restored
under any circumstances." H
824 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A I0. It may be useful to notice some other clauses containing terms
and conditions of allocation, which are as under :
"!.No separate demand letters will be issued for 2nd, 3rd and
4th instalments. It will be obligatory on your part to make the
payment before the due date indicated at page- I; failing which the
B allocation is liable to be cancelled.
2. The estimated cost of the flats as given in this letter is provisional .,1-
and subject to revision on the completion of the flat. Any price
difference between the estimated cost and the cost as it comes out
c on completion as per costing formula then in vogue would have to
be paid along with the 5th and final instalment. There would be no
review of the cost of the flat in the intermining period. Interest@
7% on the amount deposited will be payable for the period beyond
3Yz years to the date of issue of possession letter if the construction
D of the houses is not completed by then.
3. The amount demanded should be paid on or before the
stipulated due date failing which the allotment shall be liable to be
cancelled without notice. In case, due to unavoidable reasons, the
allottee is not able to make the payment within the due time, then
E he must ensure that his acceptance of the allotment reaches the
Housing Department before the due date of payment with a request
for exiension."
11. Registrants are said to have defaulted resulting in purported
F automatic cancellation of their allotments. Show cause notices were issued
to them. Some of them allegedly expressed their difficulties in regard
thereto.
Decisions impugned
G 12. TI1e Vice-Chairman of the appellant who is said to be delegated
with the power of the Authority to which reference would be made -1
hereinafter took a policy decision which is reflected from Office Order
issued on 16.8.1996, the relevant clauses whereof are :
"2. With the approval ofL.G. a decision was taken that the current
H price for South Delhi flats will be worked out by adding a
DELHI DEVELOPMENT AUTHORJTY,N.D. v. JOINT ACTION 825
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
;.
surcharge of 20% from the price worked out as per old A
formula. The approval ofL.G. to this decision was granted
on 12.07.1996.
~
.) . There are presently cases in the Housing Department where
there have been delays in the making of the payments of the
flats allocated/allotted in South Delhi under SFS. Before the B
aforesaid revision took place, delays of one year or so were
being regularised with usual charges, i.e., on payment of 18%
interest per annum and restoration charges, etc. in few cases
where delays are unusually long, current price has also been
demanded." c
13. The aforementioned Office Order dated 16.8.1996 was
reiterated in a resolution dated 27.8.1996 wherein a further decision was
taken to impose a surcharge of 20% "over and above" disposal price
only in respect of registrants who had been allotted flats in South Delhi.
D
The said decision was taken to balance the reduced cash flow of the
t Authority. It reads as under:
"I. On the basis of the aforesaid resolutions of the Authority, 50%
flats are proposed to be offered to the public. It is also being
proposed to offer to public the unavailed flats if any out of E
the 50% flats being reserved for Govt. organisations/PSUs.
In this manner, number of flats to be offered to the public can
be beyond 50%.

1, ~
:xxx xxx xxx
F
4. To balance the reduced cash in-flow because of the proposed
discount it will be necessary to charge premium in the areas
where the real value in the market ofDDA flats is much more
than what DDA is charging as per its costing formula in the
demand letters. It would be in the fitness of thing to charge
G
premium of 20% over the disposal cost worked out for the
,_ flats in South Delhi SFS."
;(

14. Yet again, on 5.11.1998, a purported clarification was issued in
regard to regularization of flats where there had been delay in payment
of first four instalments, stating: H
826 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

~
A "While issuing allocation/allotment letters to the registrants of various
schemes announced by DDA, a demand is raised from the
concerned allottees specifying the amounts to be paid with due date
of payment. However, sometimes on account of the problem faced
by the concerned allottees the payment received by the DDA are
B later than the scheduled date. Such cases are usually examined on
merits and the delay is regularised if there is merit in the case as
non-regularisation of delays in deserving cases may be resulted by ;,
~

the allottees. The following shall be the rules applicable to the
allottees of all category of flats in case there payments are delayed
c and are regularised by the competent authority.
A. Competent Authority to regularise the delay:
Period of delay Designation
(i) Upto 30 days Jt./Dy. Directors
D
(ri) Beyond 30 days but
upto 90 days Director (Housing)
,
(rii) Beyond 90 days but Commissioner
E upto 1 year (Housing)
(iv) Beyond 1 year but upto Principal
l. year 6 months Commissioner
(v) More than 1 year
F r,
6months Vice-Chainnan
B. Price of the Flat :
(i) If the allocated/allotted flat is in South Delhi where the
construction has been undertaken by the South East Zone and
G South West Zone of the Engineering Wing Except Dwarka (being
in West Delhi) the Price of the flat if restored, would be "Old Cost"
interest or current cost whichever is higher. " ~

(ii) In case where allottees of the localities mentioned (i) above
H default a small percentage of demand amount upto 10% beyond
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 827
COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J.]
.... ~ the due date, this delay, if regularised would be on "Old Cost- A
interest."
(iii) In other cases of all category flats i.e. where the construction
of flats has been undertaken by other zones ofEngineering Wing
the restoration shall be at "Old Cost-interest".
B
2. A decision exists that while working out the current cost for flats
in South Delhi, a surcharge of20% from the price worked out as
per old formula, will be added. This surcharge will continue to be
added for South Delhi flats. The interest rates in the above case
shall be@ 18% per annum on the default amount. c
C. RESTORATION CHARGES:
In addition to the above, the allottees/allocatees whose allotment
is restored by the competent authority, shall be liable to pay
Restoration Charges @ 2.5% of the registration money of the D
respective scheme."
15. Another office order dated 31.3 .1999 was issued in regard to
imposition of 20% surcharge over and above disposal price only in
respect of registrants in South Delhi, relevant portion whereof reads as
under: E

"2. Price of the flat
(i) In cases (pertaining to any locality) where demanded amounts
~ ~
were received prior to 22.08.1996 by DDA, the restoration
of allotment/regularisation of delay, if consider~d would be on F
"old cost interest".
(ii) In case where allottees default a small percentage of total
demanded amount upto 10% beyond the due date, the delay
if regularised, would be on "old cost+ interest".
G
y·
(lii) If the allocated/allotted flat is in South Delhi i.e. where the
construction has been undertaken by the South East Zone and
South West Zone of the Engineering Wing except Dwarka
(being in West Delhi), the price of the flat, if restored, would
be "old cost+ interest or current cost", whichever is higher. H
828 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A This clause will be applicable in cases for which demanded
amount by DDA is received after 22.08.1996 and the delay
is regularised.
(iv) In other cases of all category flats i.e. where the construction
of flats has been undertaken by other zones of Engineering
B Wing, the restoration shall be at "old cost+ interest".
3. Sur Charge
The premium of20% over the disposal cost worked out on
current cost or old cost for the SFS flats in South Delhi, where
C the real value in the market ofDDA flats is much more than DDA
is charging as per its costing formula, shall be charged."
16. The said orders were issued in purported supersession of the
previous orders on the subject and were to come into force with immediate
D effect. Some of the registrants made payments pursuant thereto or in
furtherance thereof. Some had made payments although, according to
them, aforementioned resolution will have no application to their case.
17. The said resolution was given a retrospective effect and
retroactive operation.
E
Proceedings :
18. Several writ petitions were filed at that stage questioning the
legality and/or validity of the said purported resolutions.
F 19. A learned Single Judge of the Delhi High Court allowed the said ~,
writ petitions in part quashing the policy of charging current cost and
upholding the policy of charging 20% surcharge. Letters Patent Appeals
were preferred thereagainst. A Division Bench of the High Court, having
regard to conflict in decisions operating in the field referred the matter to
G a larger Bench.
20·. The Full Bench of the said Court by reason of the impugned
judgment modified the judgment and order of the learned Single Judge in
respect of 'current cost' holding that the Authority had the requisite
jurisdiction also in respect thereof. The validity oflevy of20% surcharge
H was also upheld.
DELffiDEVELOPMENTAUTHORITY,N.D. v. JOINT ACTION 829
~
COMMITTEE,ALLOTTEE OF SFS FLATS [SINHA,J.]
; Contention before the Full Bench : A
21. Before the Full Bench, the registrants, inter alia, raised a
contention that levy of an additional amount over and above the disposal
price on the allocatees or flats in South Delhi was wholly unjustified. It
was also urged that adoption of current cost formula being contrary to
the regulations was also not sustainable in law inasmuch as rights of the B
.- ,,,. writ petitioners crystalliz.ed on issuance of the allocation letter and not when
the actual allotment of flat took place. Levy of surcharge amounts to a
levy of tax or cess, wherefor there is no authority in law.
22. Relying on or on the basis of a decision of this Court in Premji c
Bhai Parmar and Ors. v. Delhi Development Authority, AIR (1980)
SC 738 as also on Delhi Development Authority v. Pushpendra
Kumar Jain, AIR (1995) SC 1, the respondents, on the other hand,
contended that the right of registrants gets crystallized only upon final
, allotment and not at the stage of issuance of allocation letter. Relying D
furthermore upon a Full Bench decision of the High Court in Smt.
Sheelawant v. Delhi Development Authority, (1995) 1 AD (Delhi) 725,
its jurisdiction to delve into the price fixation policy was also questioned.
Issues raised before the Full Bench :
E
23. Two principal issues which were raised before the High Court
are:
(i) Whether the action of the Development Authority in levying
.\ -+ 20% surcharge from the registrants of the South Delhi is justified
? F

(ii) Whether demand for payment of current cost as calculated by
the Delhi Development Authority from the defaulter registrants
could be said to be justified?"
Findings of the Full Bench : G
~
~
24.
(i) Levy of 20% surcharge is within the competence of the
Authority in view of the definition of the 'disposal price' as
H
830 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A contained in Regulation 2(13) of the Delhi Development
Authority (Management and Disposal of Housing Estates)
Regulations, 1968 (for short, 'the Regulations'), in respect
whereof a decision was taken by the Vice-Chairman on
22.08.1996.
B (ii) The said Regulations governing the field exclusively permits the
Authority to decide and fix the price which would include
surcharge being in the realm of contract, the relationship
between the parties was clearly contractual; surcharge being
a component of the price of the flat.
c (iii) It is also to be noted that most of the Appellants were defaulter
who had defaulted in making payments of the first four
instalments on time and therefore there was delay in making
payments in their cases. Since there was an automatic
cancellation clause in the agreement the original contracts stood
D
cancelled.
(iv) Regulation 2(13) of the DDA Regulations defined disposal
price or hire purchase price in relation to a property to mean
such price as may be fixed by the authority. Hence the levy of
E surcharge was within the competence of the authority.
(v) DOA could include surcharge in its pricing formula which
would be in the realm of contract as the relationship was purely
contractual.
F (vi) The meaning of the word "cost and price" has been settled
by the Full Bench of the Delhi High Court in Sheelawant v.
ODA which was upheld by the Supreme Court and reaffirmed
in DDA v. Ashok Kumar Behl [2002] 7 SCC 1352.
(vii) The present case was different from the case of P.N Verma
G v. Union ofIndia, AIR (1985) (Delhi) 417]
Submissions of the learned counsel on behalfofthe registrants:
25. Mr. Rungta, Mr. Maninder Singh and Mr. Shekhar, learned
H
DEUilDEVELOPMENTAUTHORITY,N.D. v. JOINT ACTION 831
COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J.]
~
counsel, submitted : A
(i) Having regard to the admitted fact that all allocations were
made during the period 1991 and 1994 and all of them having
paid the instalments except the fourth one, prior to taking of
the purported policy decision dated 22.08.1996, the Authority
had no jurisdiction either to recalculate the current cost or B
impose a levy of20% surcharge .
• ·')>-
(ii) As the impugned 'Levy' comprises of three elements, namely,
(i) the current cost which is determined; whereover (ii) 20%
over the actual cost is taken into consideration, and again (iii)
20% surcharge is required to be paid, the same is
c
unreasonable.
(iii) The Full Bench wrongly applied P.N Verma (supra), R.K
Sacher (supra) and Premji Bhai Parmar (supra), which were
decided on wholly different set of facts as the scheme(s) D
r involved therein was for low income group of people in terms
whereof payments were to be made on completion of
construction; whereas in the case of SFS, instalments of
payment is sought for immediately after the allocation.
(iv) Restoration of allotment in the case of defaulter having been E
the subject-matter of contract, the terms and conditions thereof
could not have been altered or modified by the Authority
unilaterally.
4.4 (v) In any event, the impugned policy decision can not be given
F
retrospective effect or retrospective operation.
(vi) Classification for value of flats being income-wise, area-wise,
time-wise and scheme-wise as has been laid down in Premji
Bhai Parmar (supra), any micro classification introduced by
the impugned policy decision insofar as the registrants of South G
I'-
Delhi alone had been. asked to pay a higher amount must be
)
held to be discriminatory in nature.
(vii) The purported cut-off date being 22.08.1996 creates a class
between those whose allotments, although cancelled, had been
H
832 SUPREME COURT REPORTS (2007] 13 (Addi.) S.C.R.

A restored on the terms of the contract and those who had ).

applied for restoration thereafter.
(viii) As policy did not prescribe any rational basis and the same
having wrongly been applied, the same is wholly without
jurisdiction and, thus, a nullity.
B
(ix) Clause 5.10 of the brochure has wrongly been applied by
the Full Bench insofar as value of the land and cost of
construction were also existing in P.N Verma (supra), R.K '( .
Sacher (supra) and Premji Bhai Parmar (supra).
c (x) The policy decision having been taken on the basis of 'lack
of cash flow', the stand taken by the Authority in its counter
affidavit, that a large sum of money was invested for
rehabilitation of the migrants from Jarnmu & Kashmir and
Punjab is wholly untenable.
D (xi) As the current cost of the flat was required to be determined
in terms of the definition contained in Regulation 2(13) of the
Regulation, any other mode or method adopted in respect
thereof was wholly illegal.
(xii) Had such value been required to be arrived at having regard
E
to the nature and time of the project when it was launched,
the impugned policy decision is barred under the principle of
promissory estoppel.
(xiii) By reason of an Executive Order, levy cannot be imposed
F with retrospective effect. t- >
(xiv) The Full Bench of the High Court misconstrued and
misinterpreted the decision of the Division Bench of the Delhi
High Court in P.N Verma (supra), which covered the case
of registrants.
G
26. Mr. Arun Jaitley and Mr. Sunil Gupta, learned senior counsel,
appearing on behalf of the respondents, on the other hand, submitted : ...
(i) The relationship between the parties being contractual, the writ
petitions were not maintainable.
H
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 833
COMMITTEE,ALLOTTEEOFSFSFLATS(SINHA,J.]
:.
(ii) Price fixation of flats being within the exclusive domain of the A
Authority, the High Court has rightly refused to interfere
therewith.
(iii) The findings arrived at in P.N Verma (supra) falling in the line
of Pushpendra Kumar Jain (supra), on the one hand, and
Premji Bhai Parmar (supra), on the other, are strictly not B
applicable in this case as the policy decision adopted by the
.~t
Authority on 22.08.1996 was a new one in terms whereof
having regard to the equitable principle in mind, the Authority
adopted a policy de'hors clause (4) of the letter of allotment.
(iv) This Court not only in Premji Bhai Parmar (supra) but also
c
subsequently having upheld the decisions of the Delhi High
Court in P.N Verma (supra) and Sheelawanti (supra) and in
D.D.A. v. Ashok Kumar Behl [2002] 7 SCC 135], the same
constituted a binding precedent.
D
r (v) Sections 5 and 6 of the Act read with Regulation 5 having
authorised the Authority to fix the price of the flats, the validity
of impugned restoration policy comprising payment of
surcharge of 20% and the interest on the said rate or current
cost whichever is higher, could not have been questioned in E
writ proceedings.
(vi) As the policy was formulated on the representations made by
the registrants, the registrants are estopped and precluded from
4 -+ questioning the validity of the same.
F
(vii) In a case of this nature where interpretation of clause of
contract is involved, judicial review is not permissible.
(viii) Levy of surcharge for the subsidised schemes for weaker
sections of the society having, inter alia, been upheld in Premji
Bhai Parmar (supra), the impugned policy decision must be G
)r
held to be reasonable so as to satisfy the tests of Article 14
)
of the Constitution oflndia.
(ix) Cost of the land even in South Delhi having been worked out
on the valuation of the land situated in Dwarka, classification
H
834 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

i
A made in respect of the allocation at South Delhi where market
rates were much higher from the actual cost, the scheme for
restoration of flats in that area cannot be held to be arbitrary
or discriminatory.
Statutory provisions :
B
27. The Act was enacted to provide for the development of Delhi
according to plan and for matters connected therewith or ancillary thereto. .-
Interpretation clause is contained in Section 2 of the Act. Section
c 2(h)
Act.
defines the term 'Regulation' to mean a Regulation made under this

Section 3 provides for constitution of the Authority consisting of a
Chairman, who shall be the Lieutenant Governor of the National Capital
Territory of Delhi, ex-officio, a Vice-Chairman to be appointed by the
...
D Central Government, amongst others. Section 4 provides for staff of the
Authority. Section 5-A provides for constitution of Committee in the
following terms :
"5-A. Constitution ofCommittee.-(1) The Authority may constitute
as many Committees consisting wholly of members or wholly of
E other persons or partly of members and partly of other persons
and for such purpose or purposes as it may think fit.
(2) A Committee constituted under this Section shall meet at
such time and place and shall observe such Rules of procedure in
regard to the transaction of business at its meetings as may be \.-I
F
determined by Regulations made in this behalf.
(3) The members of a Committee (other than the member~ of
the Authority) shall be paid such fees and allowances for attetldipg
its meetings and for attending to any other work of the Authority,
G as may be determined by Regulations made in this behalf."
Section 6 provides for objects of the Authority, in the following terms: " ~
"6. Objects of the Authority.- The objects of the Authority shall
be to promote and secure the development of Delhi according to
H
DELIDDEVELOPrvi:ENT AUTHORITY,N.D. v. JOINT ACTION 835
COMMITIEE,ALLOTIEEOF SFS FLATS [SINHA,J.]
plan and for that purpose the Authority shall have the power to A
acquire, hold, manage and dispose ofland and other property, to
carry out building, engineering, and manage and dispose of land
and property, to execute works in connection with supply of water
and electricity, disposal of sewage and other services and amenities
and generally to do anything necessary or expedient for purposes B
of such development for purposes incidental thereto :
Provided that save as provided in this Act, nothing contained
in this act shall be construed as authorizing the disregard by the
Authority of any law for the time being in force."
c
Section 52 of the Act reads as under:
"52. Power to delegate .- (1) The Authority may, by notification
in the Official Gazette, direct that any power exercisable by it under
this Act except the power to make Regulations may also be
exercised by such officer or local Authority or committee D
constituted under Section 5-A as may be mentioned therein, in such
cases and subject to such conditions, if any, as may be specified
therein.
(2) The Central Government may, by notification in the Official E
Gazette, direct that any power exercisable by it under this Act,
except the power to make Rules may also be exercised by such
officer as may be mentioned therein, in such cases and subject to
such conditions, if any, as may be specified therein.
(3) The Lieutenant Governor of the National Capital Territory of F
Delhi may, by notification in the Official Gazette, direct that any
power exercisable by him under this Act, except the power to hear
appeals, may also be exercised by such officer as may be
mentioned therein, in such cases and subject to such conditions, if
any, as may be specified therein." G
) !'
Section 57 (l)(f) of the Act reads as under:
"57. Power to make Regulations. (1) The Authority, with the
previous approval of the Central Government, may, by notification
H
836 SUPREME COURT REPORTS (2007) 13 (Addi.) S.C.R.

~.
A in the Official Gazette, make Regulations consistent with this Act
and the Rules made thereunder, to carry out the purposes of this
Act, and without prejudice to ·the generality of this power, such
Regulations may provide for -
.........
B
(f) The terms and conditions subject to which user oflands
and buildings in contravention of plans may be continued." ' ~
28. Indisputably, in exercise of its regulation making power
c contained in Section 57 of the Act, the Central Government made
regulations kno\'.n as 'Delhi Development Authority (Management and
Disposal of Housing Estates) Regulations, 1968'.
Regulation 2(13) thereof defines 'disposal price' in the following
terms:
D "2( 13) "disposal price" or "hire purchase price" in relation to
property means such price as may be fixed by the Authority for
such property."
Sub-sections (25) and (30) of Section 2 of the Act define "penalty"
E and "Scheme" respectively, as under:
"2(25) "penalty" means an additional amount as laid do"-TI in the
relevant agreement payable by the allottee or hirer as a
consequence of his default in the payment of prescribed dues;"
.,. ,
F "2(30) "scheme" means a scheme prepared by the Authority for
the creation of one or more housing estates;"
Regulation 3 empowers the Vice-Chairman to administer the Act
subject to general guidance and resolutions of the Authority, who may
delegate his powers to any officer of the Authority. Regulation 5 provides
G for disposal of the property which may be effected by either hire-purchase
-,j
or sale or in such other manner and subject to such terms and conditions
as may be decided by the Authority from time to time.
Regulation 6 provides for fixation of price to be one which may be
H determined by the Authority.

,_
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 837
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
l' Regulation 8 provides for the manner of payment of disposal price. A
'I
Chapter III of the Regulations provides for the procedure for
disposal of property. In terms of Regulation 30 of the Regulations, the
Authority is mandated to prepare an allotment register in which names
and other particulars of the registrants are to be entered. The names of
the persons on the waiting list should also be entered in a separate section B
of the same register in the order in which their names appear in the draw
. '; of lots. Power to decide representations has been conferred upon the
Committee in regard to the selection of applicants for allotment of
property.
c
Regulation 37 provides for handing over of possession of the
property.
Regulation 59 provides for delegation of all or any of the powers of
the authority under the Regulations to the Vice-Chairman or to a whole
time member. D

Functions of DDA :
29. In Premji Bhai Parmar (supra), a Bench'ofthis Court noticed
that the Authority had adopted a resolution delegating its power to the
Vice-Chairman and the power to fix disposal price was said to have been E
delegated to the Vice-Chairman.
30. At the outset, we may notice that the stand taken before us by
Mr. Jaitely that the scheme in question was a new one which had to be
' -+ framed keeping in view the exigencies of the situation arising out of the F
representations made by the registrants, whose allotment had been
cancelled, had not been raised before the High Court. Such a stand, in
fact, had never been taken.
31. The Authority issues an invitation through its brochure.
G
32. The 5th SFS Scheme was announced in the year 1982. Any
} r- person could himself get registered upon payment of fees prescribed
therefor. The brochure published by the Authority indicated the tentative
cost of different flats in different scheme category-wise. Pursuant thereto,
an intending allocattee applies thereunder, and if in the draw of lots he is H
838 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A declared successful, an allocation-cum-demand letter specifying the locality
and the floor is communicated to him. It is not the case of the parties that
the estimated cost or the tentative cost was the final one. The Authority
indisputably has the jurisdiction to fix the disposal price finally upon taking
into consideration all relevant factors. In terms of the Jetter of allotment
B the estimated price is to be paid in four equal instalments. Admittedly,
question of the final cost is communicated to the registrants who is asked
to pay the balance amount after deducting the payment made in four
instalments together with the 5th instalment. The estimated cost, according
to the Authority, itself should be worked out having regard to the following
c parameters.
l. Cost of construction
2. Community facility charges
3. Floor equilization for ground floor and subsidised for upper
D floors
4. Departmental charges
5. Administrative charges
6. Cost of land (Land Rate on the date of allocation letter is
E taken).
The land rates of the project area are determined on the basis of
break even rates arrived on cost benefit analysis which includes
cost of acquisition, enhanced compensation and future realisations.
This rate is approved by the Government oflndia. The land rates
F
approved by the Government oflndia for Dwarka is also applied
on flats in South Delhi. They are predetermined rates on actual
break even basis.
7. Surcharge@20% w.e.f. 16.8.96."
G
33. Indisputably again, other components for determining the cost
remains the same every year. The only change which was effected, is the
change in the land rate, which is approved by the Government. Other
parameters for calculating the material cost were approved by the Vice-
H Chairman of the Authority.
DELHI DEVELOPMENT AUTHORITY, ND. v. JOINT ACTION 839
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
r
34. Delhi Development Authority has been created under a A
"' Parliamentary Act. It, indisputedly, is a State within the meaning of Article
12 of the Constitution of India. Being so, the provisions of Part III of the
Constitution oflndia must be applied by it. Undisputedly, again, it has
also the duty to strive hard for giving effect to the Directive Principles of
State Policy as contained in Part IV of the Constitution oflndia. B
35. Objects of the DDA is stated in Section 6 of the Act. We may
"( f
notice that although the heading of Section 6 states about the object of
the Act, the main provision contain both its objects and powers. It is also
curious to notice that its power to constitute a scheme so as to provide
housing facilities to the citizens of India and, in particular, those belonging c
to lower income group as also coming from lower strata of the society
has not been mentioned which we would find pari materia in statutes
framed by other States. [See Chairman, Indore Vikas Pradhikaran v.
Mis. Pure Industrial Cock & Chem. Ltd. & Ors., (2007) 8 SCALE
110] D
t
36. It is accepted that although the Act was enacted in the year
1957, the idea of providing for implementation of such housing scheme
started much later. The Rules, as noticed hereinbefore, were framed only
in the year 1968 and implementation of actual housing schemes are said
E
to have been started in late seventies or early eighties.
37. While acting as a 'State' within the meaning of Article 12 of the
Constitution oflndia, it is imperative that DD.A., while inlplementing its
; statutory power, upholds the fundamental rights of the citizens and strive
·-1
hard to give effect to their Directive Principles of the State Policy. We, F
however, cannot also shut our eyes to the fact that in terms of Article 37
of the Constitution of India whereas the provisions of Part III are
justiciable, the provisions of Part IV are not. Only when an action of the
State is taken to give effect to any of the provision of Part IV of the
Constitution oflndia which is not otherwise ultra vires the Constitution G
.,.. or offends the principles embodied in Part III of the Constitution oflndia,
..) the same may be upheld, having regard to the provisions contained in Part
III thereof. The action of the State, therefore, must at the first instance
ba ii.djudged on the touchstone of the principles of Fundamental Rights
and then the provisions contained in the Parliamentary Act, the regulations H
840 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A framed thereunder as also the terms of the contract entered into by and
between the parties.
38. We may or may not agree with the submission of learned counsel
for the appellants that the right of housing arising out of such a scheme is
a fundamental right within the meaning of Articles 19(l)(e) and 21 of the
B Constitution of India, but there cannot be any doubt whatsoever that the
action of a State must satisfy the principal requirements of Article 14, viz.,
treating persons similarly situated equally and grant of equal protection to
them. Reasonableness and fairness is the heart and soul of Article 14 of
the Constitution of India. Keeping the aforementioned principles in mind,
C we may consider the points involved herein.
Scheme
39. The basic fact that the scheme was floated in the year 1991 being
SFS is not in dispute. It has also not been denied or disputed before us
D that the said scheme in its application is fundamentally different from those
of the others schemes, viz., MIG, LIG, Janta and Expandable Housing
Scheme. There is also not much dispute as regards the fact that in terms
of the said scheme, estimated costs as well as rights and liabilities of the
parties are laid down in the invitation to offer. Allocation of the area, floor
E etc. ought to be notified on acceptance of the offer by the registrants.
Such allocation again undisputedly is made on the basis of draw oflot
having regard to the specific number of flats available. The registrants have
no choice in that behalf. Although he might have exercised his right of
option in relation to the area or the floor but then he, in fact, has no hands
F thereover. The letter of allotment contains the schedule of payment as also
other terms and conditions in support thereof.
40. We, in this batch of appeals, are principally concerned, inter
alia, with the interpretation of clause 4 of the Letters of Allotment.
G 41. This scheme, ordinarily, was to operate within a time frame. DDA
was expected to complete the constructions within a period of2Yi years.
Four six-monthly instalments were required to be paid by the registrants ·-
within the aforementioned period which would include, the gr!ice period.
42. Whereas ninety days' time is not taken into consideration for
H
DELHI DEVELOPMENT AUTHORITY, N.D. v. JOINT ACTION 841
COMMITTEE,ALLOTTEEOF SFS FLATS [SINHA,J.]
,.
the purpose of computing the default clause, indisputably, again the power A
" of the authority to regularize the default on receipt of interest@ 18% per
annum on the amount due to and owing to an allottee is specifically
provided for. The period of2Yz years vis-a-vis the six-monthly interest
must have been laid down keeping in view the fact that whereas the
amount deposited by the registrants by instalments would be invested for B
construction of the flats. 18% interest is prescribed for default both on
/ f
the part of the DDA as also on the part of the registrants. No time limit
is fixed for completion of the scheme. The only penalty which the scheme
prescribes is payment of interest. So far as area of SFS is concerned, a
registrant has no role to play. Admittedly, constructions have been c
completed in the year 2000.
43. For interpretation of clause 4 of the scheme, the aforementioned
background is required to be borne in mind.
Ingredients of clause 4 are : D
"(a) The allotment letter would indicate the four due dates on which
the first four installments are to be paid. The fifth installment
would be paid on demand.
(b) 90 days delay in the first four instalL111ents is condonable subject
to payment of prescribed interest. E

(c) After the expiry of 90 days if payment is not made for first
four installments there would be automatic cancellation.
(d) This automatic cancellation can be restored on payment of
~
interest and other charges subject to availability of the flat. F
(e) The cancellation due to non-payment of final installment will
be made ifthe payment is not made within 120 days with no
provision of any further extension."
44. It has not been denied or disputed that although the registrants G
defaulted in making payments but the flats were available. In fact, when
the default took place, the flats were not constructed. They have, thus,
not been allotted to the persons on the wait list.
45. It may be true that recourse to clause (d) should be undertaken
H
842 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A by the a!locattees within a reasonable time. What would be a reasonable
time would, however, depend on the facts and circumstances of each case.
No hard and fast mle can be laid down therefor.
46. In a given case, it may be a few months but in another having
regard to the conduct ofDDA, it may be one year or more. What would
B constitute a reasonable period must also be considered keeping in view
the rights of the parties as also the fact that in terms of clause 4 of the
offer of allotment there does not exist any prohibition to pray for
regularization upon default, even after a period of 120 days. In a situation
of this nature, it may not be unjustified to arrive at the conclusion that
C such a right can be exercised, if not, when the flats were ready for handing
over actual possession, but at least when there has been a substantial
progress. We must also take into consideration that the scheme, the letter
of allotment, the contract between the parties to pay interest in case of
default to each other leads to a conclusion that DDA in its wisdom thought
D that payment of 18% interest shall subserve the purpose. We, however,
hasten to add that it does not mean that DDA must entertain such an
application for restoration and/or condonation of default despite lapse of
time. It has its own right in relation thereto which may be invoked. The
right to allot the flat to a person who is on the wait-list as a result whereof
E a seal of finality can be put, the right of the registrants or registrants even
the whole or a part of the advance or other amounts deposited by him
stand forfeited.
Interpretation of the Act :
F 47. DDA functions through the Committees constituted in terms of
Section 5A of the Act. Power has been delegated in favour of its
Chairman and the Vice-Chairman. Such delegation of power, however,
as provided for under Section 52 of the Act does not extend to make
regulations. What, therefore, cannot be done by way of regulation, cannot
G be done by executive order.
48. It has not been denied or disputed that having regard to clause
5.10 of the brochure and clause 4 of the letter of allotment, the term
"tentative cost" must be given its natural meaning.
H
DELHI DEVELOPMENT AUlHORITY,N.D. v. JOINT ACTION 843
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]

... r 49. It varies from time to time as it is not a one time process. The A
price difference between the estimated cost and the initial cost "as it
worked out on the completion as per costing formula in vogue" would
have to be paid along with the 5th and final instalment.
Notifications :
B
50. The impugned circulars have three distinct elements :
1. Price of South Delhi flats would be worked out by adding 20%
' ~·

surcharge in terms of the office order dated 16.8.1996 duly
approved on 22.8.1996.
2. 20% surcharge will have to be paid in case where there is a
c
small delay, in which case only interest has to be paid.
3. In all other cases original cost + 18% or the current cost
whichever is higher would be payable.
D
51. Legality and/or validity of the said circulars is in question. We
may, at the outset, notice that there is nothing on record to show that the
Office Orders dated 16.8.1996, 27.8.1996 and 21.3.1999 were published
in the Gazette or were otherwise brought to the notice of the registrants.
Conduct: E
52. Conduct of the parties may be noticed from the case ofManjit
Singh. Admittedly, the registrants failed to pay instalments within the
stipulated period. A notice dated 23.4.1997 was served on him which is
,,..,
,;-,
in the following terms :
-f F
"WHEREAS you had been allocated a second floor category
- II, SFS flat in Pkt. F, Sheikh Saria Residential Scheme vide
allocation - cum demand letter dated 31.3.93 under the DDA
(Management & Disposal of Housing Estates) Regulations 1968
against your registration under the 5th SFS - 1982. G
1- AND WHEREAS as per the allocation cum demand letter the
following installments were to be paid as per the following
schedule:-

H
844 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A Installments Amount Due Date Installment Challan 1
~
paid on No.
I.st Rs.1,35,867/- 30.4.93 24.5.93 032601
(Rs.1,35,867)
Ilnd Rs.1,25,060/- 30.10.93 30.10.93 112025
B
31.05.94 (Rs.43,675)
(Rs.50,000)
III rd Rs.1,56,325/- 30.4.94 24.11.94 010243
-... •
(Rs.50,000)
c IVth Rs.1,25,060 30.10.96 25.07.96 010245
(Rs.50,000)
From the perusal of the above chart, it can be seen that you
have not deposited the installment as per schedule indicated in the
D allocation cum demand letter.
AND WHEREAS as per the terms and conditions of the ,
allocation cum demand letter as contained in Clause - 4 the
allocation was liable to be cancelled ifthe installments are not made
as per the schedule.
E
AND WHEREAS it is evident that you failed to deposit the
installments as per the schedule and thus have committed the
breach of the terms and conditions of the allocation cum demand
letter dated 31.3 .1993
. ~-,

F Therefore, I, Dy. Director (SFS) hereby inform you that the
allocation made to you vide letter dated 26.3 .93 - 31.3 .1993 ""
stands automatically cancelled due to the breach of the terms and
conditions of allocation.
It is further inform (sic) that the 5th SFS Scheme 1982 stands
G
already closed, therefore, you are advised to return all the original
FDR, Demand cum allocation letter and third copy of challan so ~
that your case can be processed for the refund of the amount
deposited by you."
H
DELHI DEVELOPMENT AUIBORITY,N.D. v. JOINT ACTION 845
COMMJTTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
, 53. He submitted a representation praying for condonation of default. A
'I
In his representation, he stated:
"Immediately on receipt of the DDA letter I ran hither and thither
for financial loans from relatives, friends, and well wishes and was
able to deposit Rs.2,12,770/- vide challan No.039576 dated
- 12.5.97 (Annexure F) bringing the total payment to DDA to 90% B
of the cost of flat. The flats are yet to be completed.
> /-
I now, therefore, humbly APPEAL to you to condone the delay
in the payment of installments for reasons stated above, on
humanitarian and compassionate grounds and to regularise the c
allocation of the flat for which act of kindness I shall ever pray. I
am also ready to pay any amount yet due in the form ofinterest."
54. The said representation was accepted by DDA in terms of a
letter dated 10.12.1998 which reads as under :
D
"It is our pleasure to inform that you have been allotted SFS Flat
with the following details through a computerized draw held on _j
10/1998:-
Flat No. 61
Floor SEC E
Category II
Sector
Block
Pocket
"' Type F
Locality SHEIKH SARAI
We are advising the Housing Acts Department to issue the 5th
and Final Demand Letter to you at the earli\:st."
55. It allotted the flat. No condition therefor was put. It did not ask G
I"
..> for payment of any surcharge. The original terms were not deviated from .
It did not ask for any extra-cost. The delay in payment of instalments was
condoned and the allocation of flat which stood cancelled in terms of the
aforementioned notice dated 23.4.1997 stood restored. DDA, thus, acted
strictly in terms of the original scheme. The offer of the allocattee was H
846 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A accepted relying on or on the basis of clause 4, viz., the amount of default "
and an interest charged thereupon@ 18% per annum. It is only when
the 5th and final instalment was directed to be paid in tenns of demand
letter dated 15.2.1999, the current cost computed in tenns of the office
order dated 16.8.1996 and subsequent office orders was included. The
B allocattee at that stage might not have any other option but to pay the
same for obtaining possession. But by reason thereof, he never gave up
his right to question the action on the part of DDA. Rule of estoppel, _. "-
therefore, has no application.
56. It was, on the other hand, DDA who having accepted the offer
C of the allocattee by restoring the allotment, in our opinion, is estopped
and precluded from raising a plea as regards application of office order
dated 16.8.1996. It may be noticed that even contents of those letters
were not disclosed to the allocattee.

D Was it a Restoration Scheme ?
57. The office orders, on the basis whereof the purported impugned
policy had been taken, do not refer to the scheme as a restoration scheme.
The resolutions do not say so. Had it been so, DDA would have issued
a fresh notification or at least made its stand clear to the allocattees either
E by way of public notice or by informing each of such defaulters individually.
Had such conditions for the purpose of restoration being made known,
the allocattees would have accepted it or rejected it. Evidently, it is a part
of the original scheme. It is not a new one. It is well known principle of
law that a person would be bound by the tenns of the contract subject
F of course to its validity. A contract in certain situations may also be
avoided. With a view to make novation of a contract binding and in
particular some of the tenns and conditions thereof, the offeree must be
made known thereabout. A party to the contract cannot at a later stage,
while the contract was being perfonned, impose tenns and conditions
G which were not part of the offer and which were based upon unilateral
issuance of office orders, but not communicated to the other party to the
contract and which were not even the subject matter of a public notice.
Apart from the fact that the parties rightly or wrongly proceeded on the
basis that the demand by way of 5th instalment was a part of the original
H
DELHI DEVELOPMENT AUTHORITY, ND. v. JOINT ACTION 847
COMMITTEE,ALLOTTEEOFSFSFLATS[SlNHA,J.]
>- scheme, DDA in its counter affidavit either before the High Court or before A
• us did not raise any contra plea. Submissions of Mr. Jaitley in this behalf
could have been taken into consideration only if they were pleaded in the
counter affidavit filed by DDA before the High Court.
58. We have also reservations that in absence of any provision
contained in the Act or the Regulations, the delegatee on its own could B
frame such a new scheme. If not, the purported restoration policy would
.,. + be ultra vires. We, therefore, cannot persuade ourselves to agree with
the contention ofDDA that the restoration policy cannot be tested on
grounds of terms and conditions of the original scheme. If it is a new
scheme, it would bear repetition to state, the terms contained therein c
should have been known to the allocattees. We, thus, have no other option
but to proceed to consider the legality and/or validity of such imposition
on the premise that the impugned policy decision is a part of the original
scheme and does not contain any new policy.
D
Policy Decision :
••
59. An executive order termed as a policy decision is not beyond
the pale ofjudicial review. Whereas the superior courts may not interfere
with the nitty gritties of the policy, or substitute one by the other but it
will not be correct to contend that the court shall like its judicial hands E
off, when a plea is raised that the impugned decision is a policy decision.
Interference therewith on the part of the superior court would not be
without jurisdiction as it is subject to judicial review.
60. Broadly, a policy decision is subject to judicial review on the
i F
following grounds :
(a) if it is lll1constitutional;
(b) ifit is de'hors the provisions of the Act and the Regulations;
(c) if the delegatee has acted beyond its power of delegation; G
)o.
(d) ifthe executive policy is contrary to the statutory or a larger
.> policy.
61. The stand taken by DDA itself is that the relationship between
the parties arises out of the contract. The terms and conditions therefor H
848 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A were, therefore, required to be complied with by both the parties. Tenns ~
and conditions of the contract can indisputably be altered or modified.
They cannot, however, be done unilaterally unless there exists any
provision either in contract itself or in law. Novation of contract in tenns
of Section 60 of the Contract Act must precede the contract making
B process. The parties thereto must be ad idem so far as the tenns and
conditions are concerned. IfDDA, a contracting party, intended to alter
or modify the tenns of contract, it was obligatory on its part to bring the
same to the notice of the allocate. Having not done so, it, relying on or -t "'
on the basis of the purported office orders which is not backed by any
C statute, new tenns of contract could thrust upon the other party to the
contract. The said purported policy is, therefore, not beyond the pale of
judicial review. In fact, being in the realm of contract, it cannot be stated
to be a policy decision as such.
Price Fixation
D
62. We would assume that the office orders were issued by DDA
keeping in view the representations made by a large number of defaulters.
The plea taken by DDA gives rise to a dichotomy. If it is a case of
contract qua contract, the provisions of the Contract Act must be taken
recourse to. IfDDA was exercising a statutory power, the same must be
E tested on application of doctrine of ultra vires. Floating a scheme for
providing housing facilities to a group of people, although is governed by
statute, power under the statute by an executive not only can be tested
on the touchstone of Article 14 of the Constitution of India, but can also
be tested on the touchstone of source of the power under the statute.
F No provision either in the Act or the Regulations was brought to our notice +
which makes the allocattee bound by the purported policy decision taken
by DDA. Even if it is so, the superior courts may exercise its power of
judicial review as the power which is sought to be exercised by a statutory
authority is not under the contract but under a statute. When a contract
G emanates from a statute or is otherwise governed by the provisions thereof,
the superior court can also exercise the power of judicial review.
63. In Gujarat State Financial Corporation v. Mis. Lotus Hotels
Pvt. Ltd., [1983] 3 SCC 379: AIR (1983) SC 848], it is stated that
H such contracts can be subject to judicial review.
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 849
COMMIITEE,ALLOITEEOFSFSFLATS(SINHA,J.]
~
/
64. Regulations 5 and 6 should not be very liberally construed. A
" Concededly, the manner in which power is to be exercised is governed
by the past practice. Norms have been fixed for computing the disposal
cost. Although, the superior courts ordinarily would not interfere in the
price fixation but there does not exist any absolute ban. In a case where
fixation of price is required to be made in a particular manner and upon B
taking into consideration the factors prescribed and if price is fixed de'
'.;'. f hors the statutory provisions, judicial review would be permissible.

~ 65. Strong reliance has been placed upon the residuary power
conferred upon the Authority to determine the cost of construction.
66. When the same is done having regard to the relevant factors on
c
the basis of which brochure as well as the notice inviting tender was issued,
....... the superior courts may not interfere; but the same must be done in terms
of the original contract and not de' hors the same. The authority, even
while exercising its residuary power, is required to act within the four D
comers of the contract. While doing so, the terms of the contract cannot
be altered to include any other factors which were contemplated
thereunder. While computing the extra cost, no additional factor, thus, can
be taken into consideration. If such a power is conceded in the authority,
the same would give rise to exercise of arbitrary power. It is not
E
contemplated in law. When construing a provision delegates a power on
an authority under a statute, the constitutional provisions must be kept in
mind
_. 67. At the time of calculation of the amount which would be the
subject matter of demand of 5th and final instalment, the jurisdiction of F
DDA is to keep itself confined only to the factors on the basis whereof,
the brochure has been issued and offer was made. No additional factor,
thus, could be taken into consideration at the time of issuing notice other
than the ones on the basis whereof offer was made by the registrants.
Imposition of equalization charge also falls within the said purview. G
;=a.
"' 68. There may be some charges like conversion charges which per
se may or may not be bad. Conversion charges levied by the DDA
pursuant to the directions issued by the Central Government which in tenns
of Section 41 of the Act is binding on DDA for converting the leasehold
H
850 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A into freehold. However, such a power also must be exercised reasonably
and fairly. Conversion of the property from leasehold to freehold is a
separate transaction. The same has nothing to do with the actions, qua
contract. Imposition of conversion charges, therefore, even if, per se, may
not be held to be bad, the said factor cannot be taken into consideration
B for the purpose of computing construction costs. The High Court has
struck down the inclusion of such conversion charges in the costing of
the flats. After 1996, the ordinary cost of construction of a flat was
Rs.2,00,000/-, in South Delhi but not only it framed the basis for
computing the final cost but also 20% additional amount as also 20%
C surcharge were claimed thereupon. Sometimes interest also was charged
as and when applicable. Thus, so long the conversion charge is charged
by way of a separate transaction, no exception can be taken. But,
purpo1ted price fixation as has been done in the instant case cannot receive
our approval. The same is, thus, in our opinion, bad in law.
D Applicability :
69. The scheme in question was floated in 1992-93. The purported
default on the part of the registrants took place prior to the purported
adoption of the policy decision. The purported office order dated
E 16.8.1996 discloses shows that an internal decision had been taken to
condone the delay in making payments of first four instalments. The
authorities mentioned therein had been delegated with the power for the
period(s) mentioned as under:
Director (H)-1 Upto 3 months
F
Commissioner (Housing) Upto 1 year
Principal Commissioner From 1 year to 1 Yz year
Vice-Chairman Full powers
G Clause 3 of the said office order reads as under:
"There are presently cases in the Housing Department where there
have been delays in the making of the payments of the flats
allocated/allotted in South Delhi under SFS. Before the aforesaid
H
revision took place, delays of one year or so were being regularized
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 851
COMMITTEE,ALLOTTEEOFSFSFLATS[SlNHA,J.]
with usual charges, i.e., on payment of 18% interest per annum A
and restoration charges, etc. in few cases where delays are
unusually long, current price has also been demanded."
70. Thus, a decision in that behalf had not only been taken but also
was made applicable both in the case where the delay is of one year or
so and the delay which was unusually long. By reason of the said circular, B
' , delay in making payments of instalment was to be condoned on payment
of either current price or old price whichever is higher. From a perusal of
the Resolution dated 27 .8.1996, it appears that 20% surcharge was levied
over the disposal cost worked out for the flats in South Delhi SFS. It
does not show that any subsidy was proposed to be granted for the c
migrants from Jammu and Kashmir or Punjab. The policy was taken only
with a view to balance the reduced cash in-flow. DDA, thus, had in view
commercial aspect of the matter and not the social justice aspect.
71. Again, by reason of the office order dated 31.3 .1999, the D
delegation of power in favour of various authorities was redefined. The
Vice-Chairman could deal with delay or default even if it exceeds one
year and six months. 22.8.1996 was prescribed as the cut off date for
the purpose thereof. Price of the flat was to be calculated on the basis of
either current price or old price whichever is higher. It was sought to be E
applied irrespective of the extent of delay. On what basis 22.8.1996 was
taken to be the cut off date has not been disclosed. We would, however,
assume that the said date was taken into consideration in view of the
Resolution dated 27.8.1996.
~
72. An executive officer, in absence of any provision of a statute, F
cannot apply his own decision with a retrospective effect. A delegatee is
bound to act within the four comers of the delegation and not beyond
the same.
73. Delegation of power in favour of an authority under a statute
G
must also be tested in terms of the statutory provisions. No provision
!-
,> under the Act or the Regulations has been brought to our notice which
empowers the delegatee to alter the terms and conditions of the contract
with retrospective effect. The purported policy decision must, therefore,
be tested not only having regard to the provisions of the statute but also
H
852 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A having regard to clause 4 of the offer.
74. Current cost has been calculated upon computing 20% over and
above the actual cost. A provision for surcharge had also been made in
terms whereof a premium of 20% over the disposal cost was worked
out on current cost for the SFS flats in South Delhi. Imposition of
B surch<rrge is subject to the condition that the real value in the market of
DDA flats would be much more than it had been charging as per the cost
formula. Parameters of computation of disposal price have been laid
down which we have noticed supra. The authority having itself adopted
a formula for computing the disposal cost, the same was binding upon
C the delegatees. A delegatee cannot take any action contrary to or
inconsistent with the factors laid down for computation of disposal cost
as defined in Section 2(30) of the Act. Regulations 5 and 6 do not
authorize the delegatee to apply a formula which was not contemplated
by the Authority itself Ifan Executive Authority in absence of any statutory
D provision cannot apply a decision with retrospective effect, the same would
be ultra vires.
75. In Vice Chancellor, MD. University, Rohtak v. Jahan Singh,
(2007) 4 SCALE 226, this Court observed:
E 'The Act does not confer any power on the Executive Council
to make a regulation with retrospective effect. The purported
regulations, thus, could not have been given retrospective effect
or retro-active operation as it is now well-settled that in absence
of any provision contained in the legislative Act, a delegatee cannot
F make a delegated legislation with retrospective effect."
[See also Ashok Lanka and Anr. v. Rishi Dixit and Ors., [2005]
5 sec 598]
76. A definite price is an essential element of binding agreement. A
G definite price although need not be stated in the contract but it must be
worked out on some premise as was laid down in the contract. A contract
cannot be uncertain. It must not be vague. Section 29 of the Indian
Contract Act reads as under :
"Section 29 - Agreements void for uncertainty
H
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 853
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
~
Agreements, the meaning of which is not certain, or capable of A
\
being made certain, are void."

77. A contract, therefore, must be construed so as to lead to a
conclusion that the parties understood the meaning thereof The terms of
agreement cannot be vague or indefinite. No mechanism has been provided
B
for interpretation of the terms of the contract. When a contract has been
worked out, a fresh liability cannot thrust upon a contracting party.
~

f
78. It is well settled that a definite price is an essential element of a
binding agreement. Although a definite price need not be stated in the
contract, but assertion thereof either expressly or impliedly is imperative. c
Impugned Judgment :
79. The Full Bench of the Delhi High Court has placed strong
reliance on P.N Verma (supra). One of the fundamental errors which has
been committed by the Full Bench, with respect, is applying P.N Verma D
(supra) without noticing the distinction between the provisions contained
in the clauses of the Brochure in the present case and those obtaining
therein. In the present case Clause 5.10 of the DDA Brochure stipulates
that the price mentioned in the allocation letter is only the estimated price
and it could be changed only on the basis of escalations in the price to E
be determined by DDA on the completion of flats. lnP.N Verma (supra),
however, the price was to be fixed on allotment of flats. It gives rise to a
lot of difference in determining the issue.
In P.N Verma (supra), the High Court observed:
'( F
"24 ... If the stand of the DDA is that the price they demand is
only on the same formula as was announced and that the increased
price demanded is only due to escalation in cost of construction
and fluctuation in other cost factors, then the issue will only be
whether the fixation of price is in accordance with the contract and G
that can be gone into, both by reason of principle and because it
will involve complicated factual investigations, only in a suit. This
is the alternative stand of the DDA which we will discuss later. But
if the DDA says, whatever we may have said earlier, we can fix
the price or any basis and that cannot be questioned at all because H
854 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A it is a contractual matter, the argument is fallacious because this
stand of the DDA means going behind the contract and revising
the earlier fonnula of price fixation which means travelling back to
the pre-contractual statutory stage ... "

B It was also stated:
"46 ... That actual cost was tentatively fixed at a figure 'which was
announced subject, however, to variations in cost factors. It is not
open to the DDA to alter this basis for the determination of the
disposal cost. So long as the DDA adheres to this basis in fixing
c the disposal cost, court will not interfere. It will not interfere even
if there should be some mistakes or exaggerations in the calculation
of the components of the figure arrived at, as that would be a
matter for detennination after evidence and investigation in a suit.
Even if an item should be included in the cost components, about
D the inclusion of which as one of the cost factors there could be
some doubt, the writ court may not interfere and may leave the
parties to fight out their battle in a regular suit. But where the
disposal cost is fixed on a basis totally different from that announced
earlier or where the components taken into account cannot be
E described by any stretch of imagination as cost factors or where a
component of the cost is shown to have been fixed arbitrarily and
without any basis whatsoever, the Court has no option but to quash
the detennination of the disposal cost so fixed and direct the DDA
to undertake afresh a proper detennination thereof in accordance
F with the terms of the original contract or after excluding the items
ur1warrantedly included therein or after re-detennining the value of
any component on a proper and reasoned basis ... "
On legal principle, therefore, ratio of P.N Verma (supra) is not very
different from what has been held herein.
G
80. Another fundamental error committed by the Full Bench was to
approve para 29 of the judgment of the Division Bench of the Delhi High ~
Court in R.K. Sachar v. DDA (LPA No. 727 of 2002 decided on
15.12.2003) opining that this Court had already approved the contention
H of the DDA that it was entitled to recover such a charge in the light of
DELHI DEVELOPMENT AUTHORITY,N.D. v. JOINT ACTION 855
COMMITTEE,ALLOTTEEOFSFSFLATS[SINHA,J.]
+
·1 the decision in Premji Bhai Parmar (supra). A

81. The Full Bench failed to notice that in P.N. Verma (supra)
surcharge over and above the disposal price titled "equalization charge"
purporting to provide subsidy for construction of flats for weaker sections
of the society in trans Yarnuna area was held to be ultra vires and that
B
the said decision has been approved by this Court. P.N. Verma (supra),
... ~
therefore, was misread and misconstrued.
82. In Premji Bhai Parmar (supra), surcharge was a component
of the disposal price. The disposal price was known to the registrants at
the time of conclusion of contract. As the contract was found to be binding c
on the parties, levy of surcharge, thus, was held to be vitiated in law.
83. In this case, the case of the appellant is not that they are not
bound to pay the binding contractual stipulation as contained in Clause 4
of the letter of allotment. They are and they must. But what cannot be
)I
thrust on them is the price determined on the basis of factors which were D
not contemplated in the original contract.
84. In Premji Bhai Parmar (supra), this Court did not record a
finding that even if a surcharge was not a part of Brochure, still the same
could be imposed without any sanction in law so as to bind the allocates E
to pay the same although neither they were made aware thereof nor did
they give their consent for payment of surcharge as a part of the contract.
The Full Bench of the High Court wrongly relied upon R.K. Sachar
,.... (supra). In the light of the decision of this Court in Premji Bhai Parmar
(supra), the nature oflevy should have been held to be completely distinct F
" and, thus, Premji Bhai Parmar (supra) had no application to the fact of
the present case.
85. The Full Bench also misdirected itself insofar as it failed to take
into consideration that levy of20% surcharge was in effect and substance
a compulsory exaction to augment the revenue requirements of the DDA G
~ and, thus, could not have been a part of the contract. Any compulsory
-- exaction should be viewed in the light of Article 265 of the Constitution
oflndia, unless it comes within the sphere of contract.
86. It may be reiterated that it is only those components which fall
H
856 SUPREME COURT REPORTS [2007) 13 (Addi.) S.C.R.

_.
A within the Brochure of the DDA or within the purview of the statutory
requirements can be included in the exercise of price fixation. To the said
extent are the decision of the Delhi High Court in P.N Verma (supra),
Narsingh Jain v. Union ofIndia [(80) (1999) DLT 742) and DDA SFS
Flat Owners Society v. UOI, AIR (2001) Del 39).
B 87. Against the said judgment of the Division Bench of the High
Court in P.N Verma (supra), an appeal was preferred by the DDA before
this Court. This Court in the said appeal titled as DDA v. SFS Assn. and • ..---
Ors. [Civil Appeal No. 4402of1985) rejected the contention of the DDA
that under the terms of the Brochure related to the said scheme it was
c empowered to recover from the registrants an additional amount over
and above the disposal price by way of equalization charges in the
following terms:
"The lengthy and elaborate judgment of the High Court under
appeal makes instructive reading in prohibiting the DDA from
D
adding to the prices of the named flats on escalation termed as
'equalisation and ad hoc charges'. From the terms of the model
contract entered into by the DDA with the people who opted for
the self-financing scheme, charging of the said equalization and ad
hoc charges is evidently totally missing. The DDA in support
E thereof has banked upon the justness of its cause and demand,
and has no where been able to project that to begin with, it was
part and parcel of the cost factor. The High Court has seen through
its design and has termed the venture as a camouflage. We see
no reason to take a different view than the one taken by the High )>
....
F Court."
The said decision of this Court is binding upon the DDA.
Conclusion :
88. For the reasons aforementioned, the impugned judgment cannot
G be sustained which is set aside accordingly. The appeals are allowed with
costs. Counsel's fee assessed at Rs. 25,000/- in each case. Appeals filed
by the DDA are dismissed.
K.K.T. Appeals filed by registrants allowed.
H Appeals filed by DDA dismissed.