Supreme Court of India
DLF UNIVERSAL LTD. AND ANR.versusDIRECTOR, T & C. PLANNING HARYANA AND ORS.
- Citation
- 2010 INSC 793
- Decided
- 19 November 2010
- Disposal
- Appeal(s) allowed
Holding
The Director’s directions to delete extension and maintenance fee clauses, to stop charging such fees, and to prohibit transfer of plots are ultra vires; the Act does not empower the Director to interfere with private agreements, to ban these fees, or to fix sale prices.
Summary
The appellants, DLF Universal Ltd. and another, were licensed under the Haryana Development and Regulation of Urban Areas Act, 1975 to develop residential colonies and entered into private agreements with plot and flat buyers that included clauses for extension fees and maintenance charges. The Director, Town and Country Planning, issued a memo directing the appellants to delete those clauses, stop collecting the fees, and prohibit the transfer of plots to nominees, which the appellants challenged before the High Court. The Supreme Court examined whether the Director had statutory authority to interfere with the terms of private contracts, to deem extension and maintenance fees prohibited, to control transfer rights, and to fix sale prices. It held that the Act and its Rules do not empower the Director to meddle in private agreements, to ban extension or maintenance fees, or to regulate transfer of plots, and that the profit‑limit provision applies only after final completion. Consequently, the impugned memo was declared ultra vires and set aside, and the appeals were allowed.
Issues considered
- The Director’s statutory power to direct deletion of extension fee and maintenance fee clauses in private agreements.
- Whether the Director can prohibit the collection of extension fees for delayed construction.
- Whether the Director can prohibit the collection of maintenance fees and deem them part of internal development works.
- Whether the Director can restrict the transfer of plots to nominees after full payment.
- Whether the Director can fix the sale price of plots or flats.
- Whether the 15% profit limit applies before issuance of the final completion certificate.
- Whether the impugned memo issued by the Director is ultra vires of the Act.
Legislation cited
- Haryana Development and Regulation of Urban Areas Act, 1975s. 15, s. 2(i), s. 3(3)(a)(ii), s. 3(3)(a)(iii), s. 3(3)(a)(iv), s. 5
- Haryana Development and Regulation of Urban Areas Rules, 1976s. Rule 11, s. Rule 2, s. Rule 26(2), s. Rule 5
- Indian Stamp Act
- Registration Act, 1908s. 17(1)(b)
Subjects
extension feemaintenance feetransfer of plotdirector powersurban development actcontract interpretationprofit limitultra viresprivate law vs public lawHaryana real estate
Judgment
[2010] 15 (ADDL.) S.C.R. 85
DLF UNIVERSAL LTD. AND ANR. A
v.
DIRECTOR, T & C. PLANNING HARYANA AND ORS.
(Civil Appeal No. 550 of 2003)
NOVEMBER 19, 2010
B
[B. SUDERSHAN REDDY AND SURINDER SINGH
NIJJAR, JJ.]
Haryana Development and Regulation of Urban Areas
Act, 1975: c
Scheme of the Act - Held: The Act intends to regulate
the use of land in order to prevent ill planned and haphazard
urbanization in or around towns in the State of Haryana -
Urban development.
D
ss.2(i), 5; r.118 r.w. r.26(2) of Haryana Development and
Regulation of Urban Areas Rules, 1976 - Extension fee and
maintenance fee - Power of Director (Town and Country
Planning) to prohibit the colonizer/owner of the land to collect
the extension fee and the maintenance fee from plot/flat E
holders - Held: There is nothing in the Act, Rules and
Regulations prohibiting the colonizer/owner of the land to
collect additional amount on account of non-completion of the
construction by the purchaser within the period stipulated in
the agreement - The licence granted by the Director do not F
prohibit incorporation of such a clause in the agreement to
be entered between the owners and the purchasers - The Act
also does not suggest that the owner is required to provide
the maintenance services free of cost - The Director has no
authority under the Act to issue directions to the owners/ G
colonizers to incur maintenance expenses, by deeming the
same to be part of the internal development works covered
by s.2(i).
85 H
86 SUPREME COURT REPORTS [2010) 15 (ADDL.) S.C.R.
A Transfer fee - Allottee's right to nominate another person
as purchaser of property whether can be denied by colonizer
- Held: There is no provision whatsoever in the Stamp Act or
Registration Act imposing any restriction on the assignment
or transfer of rights under a sale/purchase agreement by the
8 purchaser to a third party, before the execution of any
conveyance deed in respect of any immovable property- The
conveyance deed executed by the owner is the one which is
executed either in favour of the allottee or his nominee as the
case may be on which a proper stamp duty and registration
fee is required to be paid - Director (Town and Country
C Planning) has no power under the Act or the Rules to issue
direction prohibiting such nomination of another person
thereby substituting the al/ottee.
Jurisdiction of the Director (Town and Country Planning)
D to meddle with the terms of agreements entered into by and
between the owner and the purchasers of flat/plots - Held:
There is no provision in the Act or the Rules empowering the
Director to sit in judgment on the perceived fairness of any
clauses incorporated in the agreement entered by the parties.
E
Sale price of plots/flats - Determination of - Held: The
sale price charged by the owner from the buyers for the sale
of the plots/flats is a market driven sale price and is not based
on any particular figure of cost - The provisions of the Act or
F the Rules in no manner impose any price control directly or
indirectly in respect of plots/flats sold by the colonizer/owner
- The question as to whether the cost of the plot includes the
maintenance charges has to be decided on a proper
interpretation of the terms and conditions of the agreement.
G Functions and duties of Director of Town and Country
Planning - Held: The Director plays vital role and is
authorized to issue appropriate directions from time to time
concerning the execution of layout and development works
in the colony and every such direction issued is required to
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 87
PLANNING HARYANA
be complied with by the licencee - He is is not authorized to A
interfere with agreements voluntarily entered into by and
between the owner/colonizer and the purchasers of plots/flats
- The agreed terms and conditions by and between the
parties do not require the approval or ratification by the
Director;, nor is the Director authorized to issue any direction s
to amend, modify or alter any of the clauses in the agreement
entered into by and between the parties.
Profit - Limit of 15% profit - The question as to whether
the owner made any profit over and above 15% would arise ·
for consideration only after the grant of final completion C
certificate in respect of the entire colony/development - In
case, it is found that the owners had exceeded the said 15%
limit on the profit, it is always open to the authorities to take
appropriate action in accordance with law.
D
Deeds and documents: Contract - Interpretation of -
Held: A contract is to be interpreted according to its purpose
- Every contract expresses the autonomy of the contractual
parties' private will - The court is required to determine the
ultimate purpose of a contract primarily by the joint intent of E
the parties at the time the contract so formed - It is not the
intent of a single party; it is the joint intent of both parties which
is to be discovered from the entirety of the contract and the
circumstances surrounding its formation - Purposive
construction. F
Contract: Public law remedy - Held: The court in a public
law remedy cannot undertake the task of resolving disputes
arising out of a contract for such disputes as they essentially
lie in the private law domain.
G
The appellants were granted licence under the
provisions of Haryana Development and Regulation of
Urban Areas Act, 1975 and the rules framed thereunder
for setting up the residential colonies. They entered into
the required agreements with the Governor of Haryana H
88 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A through the respondent-authority and commenced
setting up colonies by dividing the lands into plots. The
plots were sold to various buyers. The plot buyers were
required to make construction on such plots to be used
for the purpose for which the layout was approved. The
8 appellants also allotted flats to various persons and
entered into the agreements on the conditions and
covenants mutually agreed between them. In respect of
certain areas even completion certificate was granted as
early as in the year 1991-92.
c The respondent, without any notice to the appellants,
issued the impugned memo whereby he directed the
appellants to delete the provision in the agreements
which were entered into between the appellants and the
plot/flat owners relating to the extension fee and
D maintenance fee; and stop the charging of the extension
fee and the maintenance fee from the plot/flat holders and
refund the amount so recovered to the Government
immediately; to stop allowing the transfer of plots after
obtaining full payment for the same and to ensure
E immediate registration of conveyance deed on receipt of
full payments of the plot/flats. Aggrieved, the appellants
filed the writ petitions before the High Court. The High
Court upheld the validity of impugned memo and
dismissed the writ petitions. The instant appeals were
F · filed challenging the order of the High Court.
Allowing the appeals with certain observations, the
Court
HELD:
G
1. Scheme of the Act : The Haryana Development and
Regulation of Urban Areas Act, 1975 intends to regulate
the use of land in order to prevent ill planned and
haphazard urbanization in or around towns in the State
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 89
PLANNING HARYANA
of Haryana. The Act applies to all urban areas in the State A
of Haryana. [Para 8] [101-A-B]
2.1. Interpretation of Contract: It is a settled principle
in law that a contract is interpreted according to its
purpose. The purpose of a contract is the interests, B
objectives, values, policy that the contract is designed to
actualize. It comprises joint intent of the parties. Every
such contract expresses the autonomy of the contractual
parties' private will. It creates reasonable, legally protected
expectations between the parties and reliance on its C
results. Consistent with the character of purposive
interpretation, the court is required to determine the
ultimate purpose of a contract primarily by the joint intent
of the parties at the time the contract is so formed. It is
not the intent of a single party; it is the joint intent of both
parties which is to be discovered from the entirety of the D
contract and the circumstances surrounding its
formation. In a contract between the joint intent of the
parties and the intent of the reasonable person, joint
ir.tent trumps, and the Judge should interpret the contract
accordingly. A party who claims otherwise, violates the E
principle of good faith. [Para 11] [115-G-H; 116-A-F]
Anson's Law of Contract, "a basic principle of the
Common Law of Contract; Purposive Interpretation in Law by
Aharon Barak 2005 Princeton University Press - referred F
to.
2.2. The validity of impugned memo is required to be
decided with reference to the scheme of the Act, Rules
and the Regulations framed thereunder. The agreement
with the Governor required to be entered by owners of G
land intending to set up a colony is structured and
regulated by Rule 11 of the Haryana Development and
Regulation of Urban Areas Rules, 1976. The agreement
by and between the owners/colonizers, agreed terms and
conditions and covenant therein are purely under private H
90 SUPREME COURT REPORTS [2010) 15 (ADDL.) S.C.R.
A law domain. The terms and conditions of the agreement
and the obligations of the owner of land and covenants
thereof are prescribed by Statutory Rules. The contract
between the owner of land and its buyers, unlike the
agreement entered by the owner of the land with the
8 government, is not required to be in any statutory form.
It is a contract between the two willing contracting
parties whereunder the terms and conditions are
mutually agreed upon. The covenants decide the mutual
obligations between the owner of the land and the
C buyers thereof. [Paras 9, 10, 31] [115-D-G; 125-F-G]
3.1. Extension Fee: The agreement entered into by
the owners and purchasers inter-alia provided that the
purchaser shall, after approval of his building plans from
the competent authority, "be bound to commence
D construction of the house on the plot not later than three
years from the date the sale deed is executed in his
favour" and in case the purchaser fails to commence
construction within the stipulated period, the seller shall
be entitled to resume the plot, refund the amount paid
E by the purchaser and to resell the plot to somebody else.
However, the seller in its sole discretion may extend the
said period of construction "provided the purchaser
pays additional charges to the owner." It was mutually
agreed that a provision to this effect may have to be
F incorporated in the sale deed and the purchaser "shall
be bound by the same." This clause enabled the owner
to charge additional amount for the non-completion of
the construction by the purchaser within the period
stipulated in the agreement. There is nothing in the Act,
G the Rules and Regulations prohibiting the owner of the
land to collect such charges from the buyer. The said
provision for payment of "extension fee" has been
provided for in the agreement, according to the
appellants, only in the interest of speedy development
H of each colony, and also in order to prevent purchase
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 91
PLANNINC3 HARYANA
of plots by speculators who may keep the plot vacant A
without making any construction with the only object to
earn profit by selling the same at a future date and such
an act may prove detrimental to other purchasers as
such acts obstruct the all round development of the area
which is pre-eminently/ predominantly in the public B
interest. [Para 13] [116-H; 117-A-F]
3.2. The Act does not confer any authority or
jurisdiction upon the Director to meddle with the terms
of agreement entered into by and between the owners
and the purchasers of the plots/flats. The Director's C
functions and duties are well structured by the Act and
the Rules. There is no provision in the Act or the Rules
empowering the Director to sit in judgment on the
perceived fairness of any clauses incorporated in the
agreement entered by the parties. The terms and D
conditions in the licence granted by the Director do not
prohibit incorporation of such a clause in the agreement
to be entered between the owners and the purchasers.
Nor there is any clause in the agreement entered by the
owner with the Governor through the Director E
empowering the Director to sit in appeal over the
agreement entered by the owners with the purchasers
of the plots. There is no explanation forthcoming as to
the source of power under which the Director could have
issued the impugned directions directing the owner to F
delete such clauses from the agreement entered with the
purchasers. [Paras 14, 15] [117-G-H; 118-A]
3.3. Section 5 of the Act and Rule 11 B r.w. Rule 26
do not in any manner restrain or prohibit the colonizer/ G
owner to insist buyers of the plots to complete
construction in time bound manner and charge extra
amounts as may be agreed between the parties for
failure to do so. These provisions do not empower the
Director to issue the impugned directions prohibiting the
H
92 SUPREME COURT REPORTS [2010) 15 (ADDL.) S.C.R.
A owners to collect the extension fee for the delayed
construction of buildings by the purchasers of the plots.
The dispute, if any, between the parties to the agreement,
may have to be resolved in a properly constituted
proceeding in private law domain. [Para 17] [119-B-F]
B
4. Transfer Fee: The prevailing practice of permitting
transfer of plots before registration of conveyance deed
to the allottee is not contrary to the provisions of the Act
or the Rules. Section 17(1)(b) of the Registration Act
requires that where the Conveyance Deed has been
C prepared for effecting the transfer of a plot or other
immovable property, such deed should be registered
within a period of 4 months after its execution. It does not,
however, contain any provision whatsoever requiring that
a Conveyance Deed should be executed within any
D period of time after the execution of sale agreement
between the buyer and the seller. There is no provision
whatsoever in the Stamp Act or Registration Act imposing
any restriction on the assignment or transfer of rights
under a sale/purchase agreement by the purchaser to a
E third party, before the execution of any conveyance deed
in respect of any immovable property. The parties in the
agreement had agreed for the substitution of the name
of allottees at the sole discretion of the owner. The
conveyance deed executed by the owner is the one
F which is executed either in favour of the allottee or his
. nominee as the case may be on which a proper stamp
duty and registration fee is required to be paid. In any
event the Director has no power under the Act or the
Rules to issue any such direction altogether prohibiting
G such nomination of another person thereby substituting
the allottee. [Para 19] [120-A-F]
5.1. Maintenance Fee: The Act, no doubt, imposes
certain obligations upon the colonizers/owners and
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 93
PLANNING HARYANA
specifies certain items of expenses to be borne by them. A
Section 3(3)(a)(ii) of the Act requires the colonizer/owner
to pay proportionate development charges if the external
development works as defined under Section 2(g) of the
Act are to be carried out by the Government or any other
local authority. Similarly Section 3(3)(a)(iv) requires the B
.. owner to construct at his own cost the schools, hospitals,
community centres and other community buildings on
the lands set apart for the said purposes. Further, Section
5 of the Act read with Rule 11 (1 )(b) imposes obligation
and requires the owner to meet the cost of internal c
development works as defined in Section 2(i) of the Act.
It is no doubt true that Section 3(3)(a)(iii) imposes
responsibility for the maintenance and upkeep of all
roads, open spaces, public parks and public health
services for a period of five years from the date of issue D
of the completion certificate unless earlier relieved of this
responsibility and thereupon to transfer all such roads,
open spaces, public parks and public health services free
of cost to the Government or the authority, as the case
may be. A bare reading of the provisions does not E
suggest that the owner is required to provide the said
maintenance services free of cost. On the other hand, the
latter part of Section 3(3)(a)(iii) provides that on the expiry
of the said period of five years the owner is required to
transfer all such roads, open spaces etc. free of cost to
the government or the local authority, as the case may F
be. [Paras 21- 22] [121-C-H]
5.2. There is no dispute whatsoever that any
maintenance fee or charges are being collected by the
owners/colonizers in respect of any of the internal G ,
development works mentioned in Section 2 (i). The
appellants are rendering the following additional services,
which are not in any manner whatsoever covered by
Section 3(3)(a)(iii) or any provisions of the Act or the
H
94 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A Rules. a) Round the clock security b) Electricity
consumption of street lights, which shall include
replacement of bulbs, tubes etc., maintenance of electrical
system and its upgradation. c) Repairing and
strengthening of boundary walls and fencing. d)
B Conservancy and general upkeep, which shall include
sweeping of roads, door to door garbage collection and
its disposal, clearing of unwanted growth of plants in
vacant plots, repair/replacement/painting of signages,
guide maps and gates etc. e) Upgradation of Roads/
c parks. f) Establishment/administrative charges for
rendering the aforesaid services, which shall include
salaries of staff, rent of the building, telephone, printing,
stationery, electricity, computer expenses etc. incurred in
running complaint centre in DLF City. The maintenance
fee/charges levied and collected are clearly not in respect
0
of any of the internal development works defined under
clause (i) to (v) of Section 2 (i). Clause (i) to (v) of Section
2 (i) refers to "Works" which are erected within the colony
as an integral part of the internal development of the
colony. The residuary clause (vi) of Section 2 (i) also
E refers to "work" which means and implies activities akin
to that of which constitute an 'internal development of
the colony'. Providing services of the kind for which the
maintenance charges/fee are collected, are in no manner
in respect of a "work" of "internal development" which
F is required to be carried out within the licenced area. The
expression "work" in Section (i) (vi) cannot be interpreted
in isolation ignoring the clauses (i) to (v) in Section 2 (i).
Such a construction is impermissible in law. It is,
therefore, clear that the Director has no authority or
G power under the Act to issue any directions directing the
owners/colonizers to incur maintenance expenses, by
deeming the same to be part of the internal development
works covered by Section 2(i). The maintenance of
services specifies in Section 3(3)(a)(iii) cannot be
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 95
PLANNING HARYANA
considered to be part of the internal development works A
as defined by Section 2 (i). Though this plea has not been
taken by the Director in the High Court nor any such point
is urged on his behalf in these appeals, the material
available on record suggested that the Director has never
considered the maintenance expenses to be part of B
internal development works as specified in Section 2 (i).
Section 3(3)(a) of the Act mandates the colonizer/,owner
to furnish a bank guarantee equal to 25% of the
estimated cost of the development works. It is an admitted
case that the Director has not taken into consideration c
the said maintenance expenses for the purpose of
computing the amount of the bank guarantee, which is
25% of the total cost of the internal development works.
[Paras 24-27] [122-F-H; 123-H; 124-A-E]
6.1. There is no price fixation formula devised under D
the provisions of the Act, Rules and Regulations framed
thereunder. The Statutory Authorities have no role to play
in the fixation of price and costs of land and rate at which
the plots/flats are to be sold. The price charged by the
owner for the plot is fixed and covered by clauses (1) and E
(2) of plot sale agreement entered into by and between
the parties. The agreed sale price of the plot includes
external development charges. The payment of
maintenance charges by the plot buyer is provided for in
clause (14) of the said agreement. The Act, Rules and the F
Regulations framed thereunder do not provide for any
approval or ratification of the agreements so entered into
by and between the owners/colonizers. The Director of
the Country and Town Planning is not required to put his
seal of approval on the agreements so entered. The G
Director is not authorized or empowered to review or
evaluate the terms of contract and resolve the disputes,
if any, between the owners/colonizers and the
purchasers of plots/flats. [Paras 29] [124-G-H; 125-A-C]
H
96 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 6.2. The sale price charged by the owner from the
buyers for the sale of the plots/flats is a market driven
sale price and is not based on any particular figure of
cost. The provisions of the Act or the Rules in no manner
impose any price control directly or indirectly in respect
B of plots/flats sold by the colonizer/owner. The sale and
purchase of the plots/flats is between a willing vendor and
a willing vendee. The Director is not empowered to
meddle with the transactions and put any restriction on
the rights of the owner/colonizer in the matter of sale and
c purchase of plots/flats. [Para 30] [125-D-E]
7. The Director plays a vital role and is authorised to
issue appropriate directions from time to time concerning
the execution of layout and development works in the
colony and every such directions issued are required to
D be complied with by the licensee. The Director is not
authorized to interfere with agreements voluntarily
entered into by and between the owner/colonizer and the
purchasers of plots/flats. The agreed terms and
conditions by and between the parties do not require the
E approval or ratification by the Director nor is the Director
authorized to issue any direction to amend, modify or alter
any of the clauses in the agreement entered into by and
between the parties. It is thus clear that there is no
provision in the Act, Rules or in the licence that
F empowers the Director to fix the sale price of the plots
or the cost of flats. The impugned directions issued by
the Director are beyond the limits provided by the
empowering Act. The directions so issued by the Director
suffer from lack of power. Any order which is ultra vires
G or outside jurisdiction is void in law, i.e. deprived of its
legal effect. An order which is not within the powers given
by the ernpowering Act, it has no legal leg to stand on.
Order which is ultra vires is a nullity, utterly without
existence or effect in law. Thus while Act and Rules may
H impose many restrictions on profit percentages etc. time
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 97
PLANNING HARYANA
limit on construction and handing over of such A
construction, such power does not encompass within
itself the right to exercise power in manner that inhibits
terms and contracts and freedom granted therein. [Paras
35, 36, 37, 40] [127-C-H; 128-H; 129-A]
B
Khargram Panchayat Samiti and another v. State of W 8.
and others (1987) 3 SCC 82; D.L.F. Qutab Enclave Complex
Educational Charitable Trust vs. State of Haryana and others
(2003) 5 sec 622 - relied on.
c
8. Limit of 15% Profit: The question as to whether
appellants made any profit over and above 15% would
arise for consideration only after the grant of final
completion certificate in respect of the entire colony/
development. The application for grant of final completion D
certificate remained pending with the authorities since
long time. The complete accounts are to be finalized to
determine whether the 15% limit on the profit has been
exceeded and whether the colonizers/owners made
profits over and above that. Further steps may have to
be taken in accordance with law only thereafter. It would E
be appropriate to direct the authorities to decide the
application so filed by the developers/colonizers for grant
of final completion certificate as expeditiously as possible
preferably within six months. In case if it is found that the
owners had exceeded the said 15% limit on the profit, it F
shall always be open to the authorities to take
appropriate action in accordance with law. For the said
reasons, the impugned memo of the Director is not
sustainable and the same is set aside. But this order shall
not preclude owners of plots/flats to avail such remedies G
as may be available to them in law and raise any dispute
that had arisen or may arise and for the enforcement of
contractual terms and conditions in which event the
matters have to be decided on its own merits
uninfluenced by the observation, if any, made in the order H
98 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A of the High Court and in this order. The question as to
whether the cost of the plot includes the maintenance
charges may have to be decided on a proper
interpretation of the terms and conditions of the
agreement. The court in a public law remedy cannot
B undertake the task of resolving disputes arising out of a
contract for such disputes as they essentially lie in the
private law domain. [Paras 41, 42] [129-8-H]
Case Law Reference:
c
(1987) 3 sec 02 relied on Para 38
(2003) s sec s22 relied on Para 39
D CIVIL APPELLATE JURISDICTION: Civil Appeal No. 550
of 2003.
From the Judgment & Order dated 31.5.2001 of the High
Court of Punjab & Haryana at Chandigarh in W.P. No. 6704 of
E 1999.
WITH
C.A.Nos. 551, 1611 of 2003.
F Contmt. Pet. (C) Nos. 215 of 2005 in C.A. No. 550 of 2003.
Contmt. Pet. (C) Nos. 106 of 2006 in C.A. No. 550 of 2003.
S. Ganesh, Harish Malhotra, Uday U. Lalit, Pravin
G Bahadur, Kanika Gomber, Rajeshwari Shukla, Mallika Joshi,
Rajan Narain, Rohina, Nath, Priyadeep, Umesh Kumar Khaitan,
Chanchal Kumar Ganguli, M.K. Michael, Sudarsh Menon,
Jitender Choudhary, Shila Chohan, Rajesh Singh, Kamal Mohan
Gupta, C.S. Ashri, Sanjeev Anand, Manoj Swarup, Vinay Kumar
Garg, Madhu Tewatia, Sidhi Arora for the appearing parties.
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 99
PLANNING HARYANA
The Judgment of the Court was delivered by A
B.SUDERSHAN REDDY, J. 1. These appeals are
directed against the orders of Punjab and Haryana High Court
dismissing the Writ Petitions filed by the appellants herein
challenging the impugned order dated 05.05.1999 passed by
8
the Director, Town and Country Planning, Chandigarh, Haryana.
The High Court upheld the validity of the impugned memo and
accordingly dismissed the Writ Petitions. The same is
challenged in these appeals on various grounds.
2. We have heard the learned senior counsel Shri Harish C
Salve, Shri S. Ganesh, Shri Harish Malhotra and the learned
counsel Shri Rajiv Vermani for the appellants and Shri U.U.
Lalit, learned senior counsel for the respondEmts. We have also
heard the learned counsel appearing on behalf of the
interveners-applicants. D
3. The central question that arises for our consideration in
this group of appeals is whether the Director, Town and Country
Planning, is empowered to pass the impugned order? Whether
the impugned order is ultra vires?
E
4. By the impugned memo the Director had purported to
give the following directions:
(a) the provision in the agreement between the
appellant and the plot/flat buyers regarding F
extension fee and maintenance fee should be
deleted from the agreement as the same is not
permissible under the law;
(b) further directed to stop charging of extension fee G
and maintenance fee from the plot/flat holders
henceforth and the charges recovered on account
of both from the plot/flat holders "may be refunded
to the Government immediately."
H
100 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A (c) stop allowing the transfer of plots after obtaining full
payment for the same and to ensure immediate
registration of Conveyance Deed "where the full
payments of the ploUflats have been received."
5. In order to consider the question as to the validity of the
8
impugned memo few relevant facts may have to be noticed.
BACKGROUND FACTS :
6. The appellants were granted licence under the
c provisions of Haryana Development and Regulation of Urban
Areas Act, 1975 (for short 'the Act') and the Rules framed
thereunder, i.e. Haryana Development and Regulation of Urban
Area Rules, 1976 (for short 'the Rules') for setting up residential
colonies. The appellants entered into required agreements with
D the Governor of Haryana acting through Director Town and
Country Planning, Haryana. The appellants acting under the
licence so granted and the agreements commenced setting up
colonies by dividing the land into plots. The plots were sold to
various buyers. The plot buyers are required to make
E construction on such plots to be used for the purpose for which
the lay out was approved. The appellants have also allotted flats
to various persons and have entered into agreements. Mutual
rights and obligations between the appellants and the ploUflat
buyers is structured by the agreements voluntarily entered into
by them and all terms and conditions, covenants were mutually
F agreed by and between the parties. In respect of certain areas
even completion certificates were granted as early as in the year
1991-92. The Director all of a sudden without any notice
whatsoever to any of the appellants issued the impugned
directions which were challenged on various grounds in the High
G Court.
7. In order to consider the central question as to whether
the impugned order is void and unenforceable, it is just and
necessary to notice the relevant provisions of the Act.
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 101
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
SCHEME OF THE ACT : A
8. The Act intends to regulate the use oi land in order to
prevent ill planned and haphazard urbanization in or around
towns in the State of Haryana. The Act applies to all urban areas
in the State of Haryana. We shall notice the relevant provisions
8
of the Act and the Rules which are as under :
" Section 2. Definitions
(a) .......... , ................. ..
(aa) ............................ .
c
(b) ............................. .
(c) "colony" means an area of land divided or proposed
to be divided into plots or flats for residential, commercial, D
industrial, cyber city or cyber park purposes or for the
construction of flats in the form of group housing or for the
construction of integrated commercial complexes, but an
area of land divided or proposed to be divided-
(i) for the purpose of agriculture ; or E
(ii) as a result of family partition, inheritance,
succession or partition of joint holding not with the
motive of earning profit ; or
F
(iii) in furtherance of any scheme sanction under any
other law; or
(iv) by the owner of a factory for setting up of a housing
colony for the labourers or the employees working
in the factory; provided there is no profit motive ; G
or
{v) when it does not exceed one thousand square
metres or such less area as may be decided from
time to time in an urban area to be notified by H
102 SUPREME COURT REPORTS (201 OJ 15 (ADDL.) S.C.R.
A Government for the purposes of this sub-clause.
shall not be a colony ,
(d) "colonizer" means an individual, company or
assoi::iation or body of individuals, whether
incorporated or not, owning land for converting it
B
into a colony and to whom a licence has been
granted under this Act ;
(dd) "cyber city" means self contained intelligent city with
high quality of infrastructure, attractive surrounding
c and high speed communication access to be
developed for nucleating the Information Technology
concept germination of medium and large software
companies and Information Technology enabled
services, wherein no manufaturing units shall be
D permitted ;
(ddd) "cyber park" means an area developed exclusively
for locating software development activities and
Information Technology Enabled Services, wherein
no manufacturing of any kind (including assembling
E
activities) shall be permitted ;
(e) "development works" means internal and external
development works ;
F (f)
(g) "external development works" include water supply,
sewerage, drains, necessary provisions of
treatment and disposal of sewage, sullage and
storm water, roads, electrical works, solid waste
G management and disposal, slaughter houses,
colleges, hospitals, stadium/sports complex, fire
stations, grid sub-stations etc. and any other work
which the Director may specify to be executed in
the periphery of or outside colony/area for the
H benefit of the colony/area;
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 103
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
(gg) "flat" means a part of any property, intended to be A
used for residential purposes, including one or .
more rooms with enclosed spaces located on one
or more floors, with direct exit to a public r.treet or
road or to a common area leading to such streets
or road and includes any garage or room whether B
or not adjacent to the building in which such flat is
located provided by the coloniser/owner of such
property for use by the owner of such flat for parking
any vehicle or for residence of any person employed
in such flat, as the case may be ; c
(h)
(i) "internal development works" mean-
(i) metalling of roads and paving of footpaths; D
(ii) turfing and plantation with trees of open spaces;
(iii) street lighting ;
(iv) adequate and wholesome water-supply ; E
(v) sewers and drains both for storm and sullage
water and necessary provision for their treatment
and disposal ; and
(vi) any other work that the Director may think F
necessary in the interest of proper development of
a colony;
0)
(k) "owner" includes a person in whose favour a lease G
of land in an urban area for a period of not less than
ninety nine years has been granted ;
(I)
H
104 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A (m) "plot/flat holder" means a person in whose favour a
plot/flat i11 a colony has been transferred or agreed
to be transferred by the coloniser ;
(n)
B (o)
Section 3 Application for licence :
(1) Any owner desiring to convert his land into a colony
shall, unless exempted under section 9, make an
c application to the Director, for the grant of a licence
to develop a colony in the prescribed from and pay
for it such fee and conversion charges as may be
prescribed. The application shall be accompanied
by an income-tax clearance certificate :
D
Provided that if the conversion charges have
already been paid under the provisions of the
Punjab Scheduled Roads and Controlled Areas
Restriction of Unregulated Development Act, 1963
E (41 of 1963), no such charges shall be payable
under this section.]
(2) On receipt of the application under sub-section (1),
the Director shall, among other things, enquire into
the following matters, namely :-
F
(a} title to the land ;
(b) extent and situation of the land ;
(c) capacity to develop a colony ;
G
(d) the layout of a colony ;
(e) plan regarding the development works to be
executed in a colony ; and
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 105
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
(f) conformity of the development schemes of the A
colony land to those of the neighbouring areas
(3) After the enquiry under sub-section (2), the Director,
by an order in writing, shall-
(a) grant a licence in the prescribed form, after the B
applicant has furnished to the Director a bank
guarantee equal to twenty-five per centum of the
estimated cost of development works in case of
area of land divided or proposed to be divided into
plots or flats for residential, commercial or industrial c
purposes and a bank guarantee equal to thirty-
seven and a half per centum of the estimated cost
of development works in case of cyber city or cyber
park purposes as certified by the Director and has
undertaken- D
(i) to enter into an agreement in the prescribed form
for carrying out and completion of development
works in accordance with the licence granted ;
(ii) to pay proportionate development charges in the E
external development works as defined in clause(g)
of section 2 are to be carried out by the
government or any other local authority. The
proportion in which and the time within which, such
payment is to be made shall be determined by the
F
Director ;
(iii) the responsibility for the maintenance and upkeep
of all roads, open spaces, public parks and public
health services for a period of five years from the
date of issue of the completion certificate unless G
earlier relieved of this responsibility and thereupon
to transfer all such roads, open spaces, public
parks and public health services free of cost to the
Government or the local authority, as the case may
be; H
106 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A (iv) to construct at his own cost, or get constructed by
any other institution or individual at its cost, schools,
hospitals, community centres and other community
buildings on the lands set apart for this purpose, or
to transfer to the Government at any time, if so
B desired by the Government, free of cost the land set
apart for schools, hospitals, community centres and
community buildings, in which case the Government
shall be at liberty to transfer such land to any person
or institutions including a local authority on such
c terms and conditions as it may deem fit ;
{v) to permit the Director or any other officer authorized
by him to inspect the execution of the layout and the
development works in the colony and to carry out
all directions issued by him for ensuring due
D compliance of the execution of the layout and
development works in accordance with the licence
granted :
(4) The licence so granted shall be for a period of 2
E years and will be renewable from time to time for a
period of one year, on payment of prescribed fee.
Provided that the Director, having regard to the
amenities which exist or are proposed to be
provided in the locality, is of the opinion that it is
F not necessary or possible to provide one or more
such amenities, may exempt the licencee from
providing such amenities either wholly or in part ;
(b) refuse to grant a licence, by means of a speaking
G order, after affording the applicant an opportunity of
being heard.
[Provided that in the licensed colony permitted as
a special project by the Government, the licence
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 107
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
shall be valid for a maximum period of five years A
and shall be renewable for a period as decided by
the Government.]
(5) A separate licence shall be required for each
colony.
B
3-A . Establishment of Fund
(1) Any colonizer whom a licence has been given under
this Act shall deposit as service charges a sum [at
such rate as may be prescribed by the Government c
from time to time, per square metre of the gross
area and of the covered area of all the floors in case
of flats proposed to be developed by him into a
colony] in two equal instalments. The first instalment
shall be deposited within 60 days from the date of
D
the grant of the licence and the second instalment
to be deposited within six months from the date of
grant of the licence.
(2) The Haryana Urban Development Authority local
1 -''' authorities, firms, undertakings of Government and E
other authorities involved in land development shall
also be liable to deposit the ,service charges and
shall be deemed to be colonizers for this purpose
only. The date of first inviting applications for sale
of plots in any colony by it shall be deemed to be F
the date of granting of licence under this Act for the
purpose of deposit of service charges.
(3) The service charges shall be deposited by the
colonizer with such officer or person as may be
G
appointed by the Government in this behalf.
(4) The colonizer shall in turn be entitled to pass on the
service charges paid by him to the plot holder.
(5) The amount of service charges if not paid within the H
108 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A prescribed period shall be recoverable as arrears
of land revenue.
(6) The amount of service charges so deposited by the
colonizer shall constitute a fund called the Haryana
Urban Development Fund (hereinafter referred to
B as the Fund) which shall vest in the State
Government.
(7) The Fund shall be administered by such officers of
the State Government as may be appointed by it
c for this purpose.
(8) The amount of service charges deposited by the
colonizers and grants from the Government or the
local authority shall be credited to the Fund.
D (9) The Fund shall be utilized by the State Government
for the benefit of the urban development and for
creation and improvement of urban infrastructure in
the State of Haryana. The Fund may also be utilized
to meet the cost of administering the Fund.
E
(10) The Government shall publish annually in the Official
Gazette the report of the activities financed from the
fund and the statement of accounts.
Section 3 ............... .
F
Section 4 ................. .
Section 5. Cost of Development Works
(1) The colonizer shall deposit thirty per centum of the
G amount realised, from time to time, by him, from the
plot-holders within a period of ten days of its
realisation in a separate account to be maintained
in a scheduled bank. This amount shall only be
utilised by him towards meeting the cost of internal
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 109
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
development works in the colony. After the internal A
development works of the colony have been
completed to the satisfaction of the Director, the
coloniser shall be at liberty to withdraw the balance
amount. The remaining seventy per centum of the
said amount shall be deemed to have been B
retained by the coloniser, inter alia, to meet the cost
of land and external development works.
(2) The colonizer shall maintain accounts of the amount
kept in the scheduled bank, in such manner as may C
be prescribed :
Provided that where the licence under section 3 is
granted for setting up a colony for cyber city or
cyber park purposes, the provisions of sub-sections
(1) and (2) shall not be applicable. D
Rule 2. Definitions
E
(a) ...................... ..
(b) "amenity" includes roads, water supply, street lighting,
drainage, sewerage, public parks, schools, play
grounds, hospitals, community centers and other F
community buildings , horticulture, land scaping and
any other public utility service;
Rule 3.............. ·
Rule 4 ............ .. G
Rule 5. Development works to be provided in colony
[Section 3(3))-
The designs and specifications of the development works
to be provided in a colony shall include- H
110 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A (a) metalling of roads and paving of footpaths;
(b) turfing and plantation of trees in open spaces;
(c) street lighting;
B (d) adequate and wholesome water supply;
(e) sewers and drains both for storm and sullage water and
necessary provision for the:r treatment and disposal; and
(f) any other works that the Director may think necessary
c in the interest of proper development of the colony.
11. Conditions required to be fulfilled by applicant
[Section 3 (3)]-
D (1) the applicant shall-
(a) furnish to the Director a bank guarantee equal to
twenty five percent of the estimated cost of the
development works as certified by the Director and
E enter into an agreement in form LC-IV for carrying
out and completion of development works in
accordance with the licence finally granted;
(b) undertake to deposit fifty percent of the amount to
be realized by him from the plot-holders, from time
F to time, within ten days of its realization in a
separate account to be maintained in a scheduled
bank and this amount shall only be utilized towards
meeting the cost of internal development works in
the colony;
G
(c) undertake to pay proportior.ate development
charges if the main lines of roads, drainage,
sewerage, water supply and electricity are to be laid
out and constructed by the Government or any other
H local authority. The proportion in which and the time
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 111
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
within which such payment is to be made shall be A
determined by the Director;
(d) undertake responsibility for the maintenance and
upkeep of all roads, open spaces, public parks and
public health services for a period of five years from
B
the date of issue of the completion certificate under
rule 16 unless earlier relieved of this responsibility
and there upon to transfer all such roads, open
spaces, public parks and public health services
free of cost to the Government or the local authority,
as the case may be; c
(e) undertake to construct at his own cost or get
constructed by any other institution or individual at
its cost, schools, hospitals, community centers and
other community buildings on the land set apart for D
this purpose, or undertake to transfer to the
government at any time, if so desired by the
Government free of cost, the land set apart for
schools, hospitals, community centers and
community buildings, in which case the Government E
shall be at liberty to transfer such land to any person
or institution including a local authority on such
terms and conditions as it may deem fit; and
(f) undertake to permit the Director or any other officer
authorized by him to inspect the execution of the F
layout and the development works in the colony
and to carry out all directions issued by him for
ensuring due compliance of the execution of the
layout and development works in accordance with
the licence granted. G
(2) If the Director, having regard to the amenities which
exist or are proposed to be provided in the locality,
.decides that it is not necessary or possible to
provide such amenity or amenities, the applicant H
112 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A will be informed thereof and clauses (c), (d) and (e)
of sub-rule (1) shall be deemed to have been
modified to that extent.
12. Grant of licence [Section 3 (3) and (4)]-
8
(1) After the applicant has fulfilled all the conditions laid
down in rule 11 to the satisfaction of the Director ,
the Director shall grant the licence in form LC-V.
(2) The licence granted under sub-rule (1) shall be valid
c for a period of two years from the date of its grant
during which period all development works in the
colony shall be completed and certificate of
completion obtained from the Director as provided
in rule 16.
D
16. Completion certificate/Part Completion Certificate
[Section 24]-
(1) After the colony has been laid out according to
approved layout plans and development works have
E been executed according to the approved designs
and specifications the colonizer shall make an
application to the Director in form LC-VIII.
(2) After such (scrutiny), as may be necessary, the
F Director may issue a completion certificate/part
completion certificate in form LC-IX or refuse to
issue such certificate stating the reasons for such
refusal;
Provided that the colonizer shall be afforded an
G opportunity of being heard before such refusal.
18. Cancellation of licence [Section 8(1)]-
(1) If the Director determines at any time that the
execution of the layout plans and the construction
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 113
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
or other works is not proceeding according to the A
licence granted under rule 12 or is below
specification or is in violation of the provisions of
these rules or of any law or rules for the time being
in force, he shall by notice in form LC-X require the
colonizer to remove the various defects within the B
time specified in the notice.
(2) If the colonizer fails to comply with the requirements
detailed in the notice issued under sub-rule (1 ), the
Director shall issue him a further notice in form LC- C
XI to afford him an opportunity to show cause within
a period of one month why the licence granted
should not be cancelled.
(3) After hearing the colonizer and considering such
representation as he may make the Director may D
either cancel the licence or grant him further time
for complying with the requirements of the notice
issued under sub-rule (1). If, however, the colonizer
does not comply with the said requirements within
such extended period, the Director shall cancel the E
licence and thereafter, within one month, shall
cause a proclamation made in the locality about
the cancellation of the licence by beat of drum
within thirty days of cancellation of licence.
F
(4) On cancellation of the licence, no further work shall
be undertaken or carried out by the colonizer,
[(5) Deleted.]
20. Release of Bank guarantee [Section 24)- G
After the layout and development works or part thereof in
respect of the colony or part thereof have been completed
and a completion certificate in respect thereof issued, the
Director may, on an application in this behalf from the
H
114 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A colonizer, release bank guarantee or part thereof as the
case may be;
Provided that if the completion of the colony is taken in
parts only , the part of the bank guarantee corresponding
to the part to the colony completed shall be released;
B
Provided further that the bank guarantee equivalent to 1/
15th amount thereof shall be kept unreleased to ensure
upkeep and maintenance of the colony or part thereof, as
the case may be, for a period of five years from the date
c of issue of the completion certificate under rule 16 or
earlier, in case the colonizer is relieved of the
responsibilities in this behalf.
21 .......................... .
D 22 ............................... .
23 ................................ .
24 ................................ .
E 25 ................................... .
26. maintenance and submission of accounts [Section 5
and 6]-
F (1) The colonizer shall-
(i) issue regular receipts to the plot holders in respect
of the money received by him and maintain
counterfoils of the receipts so issued;
G (ii) maintain separate ledger account of each plot-
holder;
(iii) maintain a register containing authenticated copies
of each of the agreements entered into between
him and each of the plot holders; and
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 115
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
(iv) maintain accounts books showing details of A
expenses incurred by him on various development
works in the colony.
(2) The colonizer shall within a period of three months
after the close of every financial year, submit to the
8
director through registered post with
acknowledgement due a statement of accounts
indicating the amount realized from each plot-
holders, the expenditure incurred on internal and
external development works separately of the
colony with details thereof together with the amount C
due from each plot holder indicating their postal
address. This statement should be duly audited,
certified and signed by a chartered accountant.
9. The validity of the impugned memo is required to be D
decided with reference to the scheme of the Act, Rules and the
Regulations framed thereunder.
10. The agreement with the Governor required to be
entered by owners of land intending to set up a colony is
E
structured and regulated by Rule 11 of the Rules. The terms and
conditions of the agreement and the obligations of the owner
of land and covenants thereof are prescribed by Statutory
Rules. The contract between the owner of land and its buyers,
unlike the agreement entered by the owner of the land with the
F
government, is not required to be in any statutory form. It is a
contract between the two willing contracting parties whereunder
the terms and conditions are mutually agreed upon. The
covenants decide the mutual obligations between the owner of
the land and the buyers thereof.
G
Interpretation of Contract:
11. It is settled principle in law that a contract is interpreted
according to its purpose. The purpose of a contract is the
interests, objectives, values, policy that the contract is designed
H
116 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A to actualize. It comprises joint intent of the parties. Every such
contract expresses the autonomy of the contractual parties'
private will. It creates reasonable, legally protected expectations
between the parties and reliance on its results. Consistent with
the character of purposive interpretation, the court is required
B to determine the ultimate purpose of a contract primarily by the
joint intent of the parties at the time the contract so formed. It
is not the intent of a single party; it is the joint intent of both
parties and the joint intent of the parties is to be discovered
from the entirety of the contract and the circumstances
c surrounding its formation. As is stated in Anson's Law of
Contract, "a basic principle of the Common Law of Contract is
that the parties are free to determine for themselves what
primary obligations they will accept.. .. Today, the position is
seen in a different light. Freedom of contract is generally
regarded as a reasonable, social, ideal only to the extent that
0
equality of bargaining poweir between the contracting parties
can be assumed and no injury is done to the interests of the
community at large." The Court assumes "that the parties to the
contract are reasonable persons who seek to achieve
reasonable results, fairness and efficiency .... In a contract
E between the joint intent of the parties and the intent of the
reasonable person, joint intent trumps, and the Judge should
interpret the contract accordingly. A party who claims otherwise,
violates the principle of good faith. ( See Purposive
Interpretation in Law by Aharon Barak : 2005 Princeton
F University Press].
Extension Fee:
12. Whether the Director is empowered to issue any
G direction, directing the appellants not to collect the extension
fee with further direction to delete the relevant clauses from the
agreement?
13. The agreement entered into by the owners and
purchasers inter-alia provides that the purchaser shall, after
H approval of his building plans from the competent authority, "be
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 117
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
bound to commence construction of the house on the plot not A
later than three years from the date the sale deed is executed
in his favour .... in case the purchaser fails to commence
construction within the stipulated period, the seller shall be
entitled to resume the plot, refund the amount paid by the
purchaser and to resell the plot to somebody else provided that B
the seller in its sole discretion may extend the aforesaid period
of construction "provided the purchaser pays additional charges
to the owner." It was mutually agreed that a provision to this
effect may have to be incorporated in the sale deed and the
purchaser "shall be bound by the same." This clause enables c
the owner to charge additional amount for the non completion
of the construction by the purchaser within the period stipulated
in the agreement. There is nothing in the Act, the Rules and
Regulations prohibiting the owner of the land to collect such
charges from the buyer. The said provision for payment of.· D
"extension fee" has been provided for in the agreement,
according to the appellants, only in the interest of speedy
development of each colony, and also in order to prevent
purchase of plots by speculators who may keep the plot vacant
without making any construction with the only object to earn E
profit by selling the same at a future date and such an act may
prove detrimental to other purchasers as such acts obstruct the
all round development of the area which is pre-eminently/
·- predominantly in the public interest. It is not necessary for us
to express any firm opinion with regard to the plea so taken by
the appellants in this proceeding. It may altogether be a F
different matter if the purchasers raise objection as regards the
very covenants incorporated into the agreement entered into
by and between the parties in a properly constituted
proceedings on such grounds as may be available to them in
law. G
14. The question that arises for our consideration is
whether the Director was justified in issuing directions asking
the licensee/owner to virtually amend the clauses/covenants in
the agreement? Whether the statute confers any authority or H
118 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A jurisdiction upon the Director to meddle with the terms of
agreement entered into by and between the owners and the
purchasers of plots/flats?
15. The Director's functions and duties are well structured
by the Act and the Rules. There is no provision in the Act or
8
the Rules empowering the Director to sit in judgment on the
perceived fairness of any clauses incorporated in the agreement
entered by the parties. The terms and conditions in the licence
granted by the Director do not prohibit incorporation of such a
C clause in the agreement to be entered between the owners and
the purchasers. Nor there is any clause in the agreement
entered by the owner with the Governor through the Director
empowering the Director to sit in appeal over the agreement
entered by the owners with the purchasers of the plots. There
is no explanation forthcoming as to the source of power under
D which the Director could have issued the impugned directions
directing the owner to delete such clauses from the agreement
entered with the purchasers.
16. Whether Section 5 of the Act and Rule 11 B read with
E Rule 26(2) of the Rules in any manner prohibit collection of
additional charges characterized as 'extension fee' by the
owner/colonizer?
17. Section 5 of the Act merely requires the colonizer to
F deposit 30% of the amount realised, from time to time, from
the plot holders in a separate account to be maintained in a
scheduled bank and the said amount is to be utilised by him
only for meeting the cost of internal development works in the
colony. After the completion of the internal development works
to the satisfaction of the Director, the colonizer is entitled to
G withdraw the balance amount. The remaining 70% of the said
amount shall be deemed to have been retained by the colonizer
to meet the cost of the land and the external development
works. There is no doubt that accounts are required to be
maintained by the colonizer in the prescribed manner.
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 119
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
Rule 11 (b) merely reiterates as to what has been provided A
for in Section 5 of the Act.
Rule 26 obligates the colonizer to issue regular receipts
to the plot holders in respect of the money received by him and
maintain counterfoils of the receipts so issued; maintain B
separate ledger of each plot holder, maintain a Register
containing authenticated copies of each of the agreements
entered into between him and each of the plot holders; and
maintain account books showing details of expenses incurred
on various developmental works in the colony. We fail to C
appreciate as to how and in what manner these provisions
restrain or prohibit the colonizer/owner to insist buyers of the
plots to complete construction in time bound manner and charge
extra amounts as may be agreed between the parties for failure
to do so. It shall always be open for the Director to insist the
colonizer/owner to submit a statement of accounts indicating D
the amount realized from each plot holders, the expenditure
incurred on internal and external development works. We do
not find anything in these provisions empowering the Director
to issue the impugned directions prohibiting the owners to
collect the extension fee for the delayed construction of E
buildings by the purchasers of the plots. We are essentially
dealing with the question as to the authority of the Director and
as to whether he is empowered to pass such an order and not
with regard to the question as to whether the clauses dealing
with this aspect of the matter suffer from any infirmity. The F
dispute, if any, between the parties to the agreement, may have
to be resolved in a properly constituted proceeding in private
law domain.
Transfer Fee: G
18. Whether the owner/colonizer in law after obtaining full
payments from the allottees is prohibited from transferring the
plots to the nominees of the allottees? Whether the allottees'
right to nominate another person as purchaser of the property
can be denied by the colonizer? H
120 SUPREME COURT REPORTS [2010] 15 (ADDL.) $.C.R.
A 19. The prevailing practice of permitting transfer of plots
before registration of conveyance deed to the allottee is not
contrary to the provisions of the Act or the Rules. The only
justification sought to be given by the respondent in this regard
is that the State would like a separate set of stamp duty paid
B to it in respect of each transaction, even though there is no
conveyance deed executed as yet in respect of the land in
question. This argument is wholly devoid of any merit. Section
17 (1)(b) of the Registration Act requires that where the
Conveyance Deed has been prepared for effecting the transfer
c of a plot or other immovable property, such deed should be
registered within a period of 4 months after its execution. It does
not, however, contain any provision whatsoever requiring that
a Conveyance Deed should be executed within any period of
time after the execution of sale agreement between the buyer
D and the seller. Nor there is any provision whatsoever in the
Stamp Act or Registration Act imposing any restriction on the
assignment or transfer of rights under a sale/purchase
agreement by the purchaser to a third party, before the
execution of any conveyance deed in respect of any immovable
property. The parties in the agreement had agreed for the
E substitution of the name of allottees at the sole discretion of the
owner. The conveyance deed executed by the owner is the one
which is executed either in favour of the allottee or his nominee
as the case may be on which a proper stamp duty and
registration fee is required to be paid. In any event the Director
F has no power under the Act or the Rules to issue any such
direction altogether prohibiting such nomination of another
person thereby substituting the allottee.
MAINTENANCE FEE:
G
20. The crucial question that arises for our consideration
is whether the Director of Country and Town Planning is
empowered to issue any directions, directing the appellants to
stop charging maintenance fee from the plot/flat holders and
also "delete the relevant clauses from the agreement" and
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 121
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
refund the amounts so far collected to the Government A
immediately. Whether the Act imposes any obligation upon the
colonizers or owners to incur maintenance charges out of their
own resources? Whether the colonizers/owners are prohibited
from recovering the amounts spent towards the maintenance
charges from the plots/flats buyers? Whether the clause B
incorporated in the sale agreement enabling the owners to
collect the mainte'nance charges is void?
zti
21. The Act no doubt imposes certain obligations upon the
colonizers/owners and specifies certain items of expenses to C
be borne by them. Section 3(3)(a)(ii) of the Act requires the
colonizer/owner to pay proportionate development charges if
the external development works as defined under Section 2 (g)
of the Act are to be carried out by the Government or any other
local authority. Similarly Section 3 (3) (a) (iv) requires the owner
to construct at his own cost schools, hospitals, community D
centres and other community buildings on the lands set apart
for the said purposes. Further Section 5 of the Act read with
Rule 11 (1) (b) imposes obligation and requires the owner to
meet the cost of internal development works as defined in
Section 2 (i) of the Act. E
22. It is no doubt true that Section 3 (3) (a) (iii) imposes
responsibility for the maintenance and upkeep of all roads, open
spaces, public parks and public health services for a period of
five years from the date of issue of the completion certificate F
unless earlier relieved of this responsibility and thereupon to
transfer all such roads, open spaces, public parks and public
health services free of cost to the Government or the authority,
as the case may be. That a bare reading of the provisions does
not suggest that the owner is required to provide the said G
maintenance services free of cost. On the other hand, the latter
part of Section 3 (3) (a) (iii) provides that on the expiry of the
said period of five years the owner is required to transfer all
such roads, open spaces etc. free of cost to the government
or the local authority, as the case may be.
H
122 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 23. The learned senior counsel for the respondents relying
on Section 2 (i) (vi) contended that maintenance expenses are
covered by the said provisions and, therefore, they are required
to be borne by the owner/colonizer. Let us test the submission
so made by the learned senior counsel. The question that
B requires to be considered whether providing services of the kind
by the owner/colonizer for which maintenance charges are
imposed is a "work" of "internal development" which has to be
carried out within the colony. Section 2 (i) defines "Internal
Development Works" as under:
c (a) metalling of roads and paving of footpaths;
(b) turfing and plantation of trees in open spaces;
(c) street lighting;
D (d) adequate and wholesome water supply;
(e) sewers and drains both for storm and sullage water
and necessary provision for their treatment and
disposal; and
E
(f) any other works that the Director may think
necessary in the interest of proper development of
the colony.
24. There is no dispute whatsoever that any maintenance
F fee or charges are being collected by the owners/colonizers in
respect of any of the internal development works mentioned in
Section 2 (i). It is not disputed that the appellants are rendering
the following additional services, which are not in any manner
whatsoever covered by Section 3 (3) (a) (iii) or any provisions
G of the Act or the Rules.
(a) Round the clock security
(b} Electricity consumption of street lights, which shall
include replacement of bulbs, tubes etc., maintenance of
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 123
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
electrical system and its upgradation. A
(c) Reparing and strengthening of boundary walls and
fencing.
(d) Conservancy and general upkeep, which shall include
sweeping of roads, door to door garbage collection and B
its disposal, clearing of unwanted growth of plants in vacant
plots, repair/replacement/painting of signages, guide
maps and gates etc.
(e) Upgradation of Roads/parks. c
(f) Establishment/administrative charges for rendering the
aforesaid services, which shall include salaries of staff, rent
of the building, telephone, printing, stationery, electricity,
computer expenses etc. incurred in running complaint D
centre in DLF City.
25. In our considered opinion the maintenance fee/charges
levied and collected are clearly not in respect of any of the
internal development works defined under clause (i) to (v) of
Section 2 (i). Perhaps, the learned senior counsel conscious E
of the difficulty to bring it under Section 2 (i) (i) to (v) urged that
maintenance expenses can be considered to be covered by
Section 2 (i) (vi}, which refers to "any other work that the
Director may think necessary in the interest of proper
development of a colony". We find no merit in the submission. F
Clause (i) to (v) of Section 2 (i) refers to "Works" which are
erected within the colony as an integral part of the internal
development of the colony. The residuary clause (vi) of Section
2 (i) also refers to "work" which means and implies activities
akin to that of which constitute an 'internal development of the G
colony'. We have already noticed that providing services of the
kind for which the maintenance charges/fee are collected, are
in no manner in respect of a "work" of "internal development"
which is required to be carried out within the licenced area. The
expression "work" in Section (i) (vi) cannot be interpreted in
H
124 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A isolation ignoring the clauses (i) to (v) in Section 2 (i). Such a
construction is impermissible in law.
26. It is, therefore, clear that Director has no authority or
power under the Act to issue any directions directing the
owners/colonizers to incur maintenance expenses, by deeming
8
the same to be part of the internal development works covered
by Section 2 (i). It is needless to reiterate that the maintenance
of services specifies in Section 3 (3) (a) (iii) cannot be
considered to be part of the internal development works as
C defined by Section 2 (i).
27. Be it noted that this plea has not been taken by the
Director in the High Court nor any such point is urged on his
behalf in these appeals before us. On the other hand the
material available on record suggests that the Director has
D never considered the maintenance expenses to be part of
internal development works as specified in Section 2 (i).
Section 3 (3) (a) of the Act mandates the colonizer/owner to
furnish a bank guarantee equal to 25% of the estimated cost
of the development works. It is an admitted case that the
E Director has not taken into consideration the said maintenance
expenses for the purpose of computing the amount of the bank
guarantee, which is 25% of the total cost of the internal
development works.
28. Whether the amount of maintenance service charges
F was already included in the sale price of the plots/flats?
29. There is no price fixation formula devised under the
provisions of the Act, Rules and Regulations framed
thereunder. The Statutory Authorities have no role to play in the
G fixation of price and costs of land and rate at which the plots/
flats are to be sold. The price charged by the owner for the plot
is fixed and covered by clauses (1) and (2) of plot sale
agreement entered into by and between the parties. The
agreed sale price of the plot includes external development
H charges. The payment of maintenance charges by the plot buyer
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 125
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
is provided for in clause (14) of the said agreement. The sale A
price charged by the owner from the plot buyers includes
maintenance of service charges at the most could be a
bonafide contention between the owners/colonizers and the
purchasers of plots/flats. The Act, Rules and the Regulations
framed thereunder do not provide for any approval or B
ratification of the agreements so entered into by and between
the owners/colonizers. The Director of the Country and Town
Planning is not required to put his seal of approval on the
agreements so entered. The Director is not authorized or
empowered to review or evaluate the terms of contract and c
resolve the disputes, if any, between the owners/colonizers and
the purchasers of plots/flats.
30. The sale price charged by the owner from the buyers
for the sale of the plots/flats is a market driven sale price and
is not based on any particular figure of cost. The provisions of D
the Act or the Rules in no manner impose any price control
directly or indirectly in respect of plots/flats sold by the colonizer/
owner. The sale and purchase of the plots/flats is between a
willing vendor and a willing vendee. The Director is not
empowered to meddle with the transactions and put any E
restriction on the rights of the owner/colonizer in the matter of
sale and purchase of plots/flats. _,
31. Now what remains for our consideration is whether a
direction could have been issued by the Director to delete the F
clause or relevant clauses from the agreements mutually
entered by and between the parties. The agreement by and
between the owners/colonizers, agreed terms and conditions
and covenant therein are purely under private law domain.
32. Let us now examine what are the functions and duties G
of the Director and the power conferred upon him under the
provisions of the Act and Rules. Section 3(1) of the Act
provides that any owner of land desirous of setting up a colony
shall make an application in writing to the Director in the
prescribed Form LC-I alongwith the required particulars H
126 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A mentioned therein which are not required to be noticed in detail.
Section 3 (3) (a) provides that after making a proper enquiry
under sub-section (2), the Director, by an order in writing, shall
grant a licence in the prescribed form, after the application is
furnished to the Director, a bank guarantee equal to 25 per
B centum of the estimated cost of development works in case of
area of land divided or proposed to be divided into the plots
or flats for residential, commercial or industrial purpose and a
bank guarantee equal to thirty-seven and a half per centum of
the estimated cost of development works in case of cyber city
c or cyber park. The owner is required to enter into an agreement
in the prescribed form for carrying out and for the completion
of development works in accordance with the licence granted.
Section 3(3}(a)(v) permits the Director or any other officer
authorized by him to inspect the execution of the layout and the
D development works in the colony and to carry out all the
directions issued by him for ensuring due compliance of the
execution of the layout and development works in accordance
with the licence granted. It is thus clear that the Director is
entitled to inspect the execution of the lay out and internal and
external development works in the colony and to issue
E appropriate directions which he may consider necessary and
proper for ensuring due compliance of the execution of the
layout and development works in accordance with the licence
granted. This is to be read along with the condition of licence
which requires "that the colony is laid out to conform to the
F approved layout plans and development works are executed
according to the designs and specifications shown in the
approved plan accompanying the licence." The Director thus
is empowered to issue appropriate directions in order to
ensure strict compliance of the terms and conditions of licence
G subject to which the colony is to be set up by the owner or
colonizer. Rule 5 provides that the designs and specifications
of the development works to be provided in a colony which is
nothing but reproduction of Section 2 (i) which we have noticed
in the preceding paragraphs.
H
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 127
PLANNING HARYANA [8. SUDERSHAN REDDY, J.]
33. Section 8 speaks about cancellation of licence by the A
Director if the colonizer contravenes any of the conditions of
the licence or the provisions of the Act or the Rules made
thereunder; provided that before such cancellation the colonizer
shall be given an opportunity of being heard.
B
34. It further provides for the consequences that may flow
after the cancellation of the licence.
35. From a fair analysis of these provisions, it becomes
clear that the Director's functions and duties and as well as
power is completely structured by the statute and the Rules. He C
undoubtedly plays a vital role and is authorised to issue
appropriate directions from time to time concerning the
execution of layout and development works in the colony and
every such directions issued are required to be complied with
by the licensee. D
36. In our considered opinion the Director is not authorized
to interfere with agreements voluntarily entered into by and
between the owner/colonizer and the purchasers of plots/flats.
The agreed terms and conditions by and between the parties E
do not require the approval or ratification by the Director nor is
the Director authorized to issue any direction to amend, modify
or alter any of the clauses in the agreement entered into by and
between the parties.
37. It is thus clear that there is no provision in the Act, Rules F
or in the licence that empowers the Director to fix the sale price
of the plots or the cost of flats. The impugned directions issued
by the Director are beyond the limits provided by the
empowering Act. The directions so issued by the Director suffer
from lack of power. It needs no restatement that any order which G
is ultra vires or outside jurisdiction is void in law, i.e. deprived
of its legal effect. An order which is not within the powers given
by the empowering Act, it has no legal leg to stand on. Order
which is ultra vires is a nullity, utterly without existence or effect
in law: H
128 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 38. In khargram Panchayat Samiti and another vs. State
of WB. and others [(1987) 3 SCC 82] upon which reliance has
been placed by the leaned senior counsel for the second
respondent in no manner supports the impugned directions
issued by the Director. The only issue which arose was,
B whether, in the absence of any specific statutory provision, the
authority conferred with a statutory power to issue licence for
holding "hats" or "fairs" also possessed any incidental powers
to fix the date on which the 'hat' or 'fair' would take place. It
was held that such power to fix the date was necessarily
c incidental to the power of the grant of the licence, in the absence
of any provision in the statute. In the very nature of things this
court came to the conclusion that it is impossible to separate
the power to grant a licence to hold the "fairs" from that of the
fixation of the date thereof, because the two are inseparably
and intrinsically interconnected. The provisions of the 1975 Act
0
and the Rules enumerates in detail the powers of Director and
arms him with jurisdiction to issue appropriate directions from
time to time for ensuring due compliance in the execution of
the layout and the development works in accordance with the
E licence granted. The impugned directions issued result in far-
reaching consequences and they cannot be considered to be
incidental or ancillary to the power conferred under the Act and
Rules. The submission made in this regard is totally devoid of
merit.
F 39. In D.~.F. Qutab Enclave Complex Educational
Charitable Trust vs. State of Haryana and others [(2003) 5
sec 622 ], it is held by this court :
"38. A regulatory Act must be construed having regard to
the purpose it seeks to achieve. The State as a statutory
G
authority cannot ask for something which is not
contemplated under the Act."
40. Thus while Act and Rules may impose many
restrictions on profit percentages etc. time limit on construction
H and handing over of such construction, such power does not
DLF UNIVERSAL LTD. v. DIRECTOR, T & C. 129
PLANNING HARYANA [B. SUDERSHAN REDDY, J.]
encompass within itself the right to exercise power in manner A
that inhibits terms andcontracts and freedom granted therein.
LIMIT OF 15% PROFIT :
. 41. The question as to whether appellants made any profit
over and above 15% would arise for consideration only after 8
the grant of final completion certificate in respect of the entire
colony/development. The application for grant of final completion
certificate remained pending with the authorities since long
time. The complete accounts are to be finalized to determine
whether the 15% limit on the profit has been exceeded and C
whether the colonizers/owners made profits over and above
that. Further steps may have to be taken in accordance with
law only thereafter. It would be appropriate to direct the
authorities to decide the application so filed by the developers/
colonizers for grant of final completion certificate as D
expeditiously as possible preferably within six months. In case
if it is found that the owners had exceeded the said 15% limit
on the profit, it shall always be open to the authorities to take
appropriate action in accordance with law.
E
42. For the aforesaid reasons, we find it difficult to sustain
the impugned memo of the Director and the same is set aside.
But this order of ours shall not preclude owners of plots/flats to
avail such remedies as may be available to them in law and
raise any dispute that had arisen or may arise and for the
F
enforcement of contractual terms and conditions in which event
the matters have to be decided on its own merits uninfluenced
by the observation, if any, made in the order of the High Court
of Punjab and Haryana and in this order. The question as to
whether the cost of the plot includes the maintenance charges
rhay have to be decided on a proper interpretation of the terms G
and conditions of the agreement. The court in a public law
remedy cannot undertake the task of resolving disputes arising
out of a contract for such disputes as they essentially lie in the
private law domain.
H
130 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 43. In the circumstances, we find it very difficult to sustain
the view taken by the High Court for upholding the impugned
memo issued by the Director, Town and Country Planning. The
judgment of the High court is, accordingly, set aside. The
appeals are, accordingly, allowed subject to the observations
B made hereinabove.
44. All interlocutory applications and contempt cases are,
accordingly, disposed of in terms of this order.
D.G. Appeals allowed.
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