IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
C.W.P. No. 413 of 2008
DATE OF DECISION: October 24, 2008
Rakesh Kumar and others
...Petitioners
Versus
Financial Commissioner/Revenue, Punjab and others
...Respondents
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE JORA SINGH
Present: Mr. Arun Jain, Senior Advocate, with
Mr. Amit Jain, Advocate,
for the petitioners.
Mr. Suvir Sehgal, Addl. AG, Punjab,
for respondent Nos. 1 and 2.
Mr. P.S. Dhaliwal, Advocate,
for respondent Nos. 3 and 4.
1. Whether Reporters of local papers may be Yes
allowed to see the judgment?
2. To be referred to the Reporters or not? Yes
3. Whether the judgment should be reported in Yes
the Digest?
M.M. KUMAR, J.
The principal issue raised in the instant petition centers
around the power of respondent Nos. 3 and 4 to resume the property
purchased by the petitioners in the open auction under the terms and
conditions of the allotment letter as also under the Pepsu Townships
C.W.P. No. 413 of 2008 2
Development Board Disposal of Property Rules, 2003 (for brevity,
‘the Rules’)
Facts in brief are that the petitioners purchased site No.
106-A, Guru Nanak Colony, Rajpura, District Patiala, in the open
auction being the highest bidder. The offer of the petitioners was
accepted by the Pepsu Townships Development Board (for brevity,
‘the Board’). They deposited a sum of Rs. 6,32,000/- being 25% of
the sale price. The balance of Rs. 18,93,000/- was payable in six half
yearly instalments. On the issuance of acceptance letter on 19.4.2004
(P-1) they deposited the requisite charges required for sanction of
building plans, development charges, vide receipt dated 27.5.2004.
After sanction of the site plans they started raising construction on the
site in question. On 6.7.204, the Board issued a show cause notice to
the petitioners under Rule 22 of the Rules to show cause as to why
the building in question be not resumed alleging that the petitioners
had changed the land use of the site by constructing shops in
violation of the building plans approved by the Municipal Council,
Rajpura. The petitioners filed a detailed reply on 6.7.2004 (P-4).
However, the Board passed an order of resumption on 2.8.2004 (P-5),
which is the primary order challenged in the instant petition. The
appeal filed by the petitioners before the Divisional Commissioner,
Patiala Division, Patiala, was accepted and the order of resumption
dated 2.8.2004 (P-5) was set aside by holding that it was a non-
speaking order which has been passed in a hasty manner without
affording any opportunity to the petitioners to adduce evidence in
support of their plea reflected in their reply dated 6.7.2004 (P-4).
C.W.P. No. 413 of 2008 3
However, the Financial Commissioner-respondent No. 1 set aside the
order passed by the Divisional Commissioner by entertaining the
revision petition filed under Rule 13(2) of the Rules. The operative
part of the order dated 13.8.2007 (P-8) is being extracted for a ready
reference, which reads thus:-
“4. I have heard counsel for both the parties and gone
through the record of the lower courts. There is no
dispute that the plot No. 106-A in Guru Nanak Colony
Rajpura auctioned on 26.2.2004 is meant for residential
purpose only. The counsel for the petitioner has placed
on record photographs showing that the respondents
have constructed ten shops adjoining each other in a row,
whereas it is clearly provided under clause (iii) of
Acceptance Letter that the respondent will not use the
site for the purpose other than for which it has been sold
to them only for residential purpose. I fail to understand
why the Commissioner has ignored this sold proof of
photographs. I do not agree with the counsel for the
respondents that the Administrator passed resumption
order dated 02.08.04 without considering reply of the
respondents to the show cause notice. A cursory glance
over the Administrator’s order shows that the reply of
the respondents was very well considered before passing
final orders by Administrator. I, therefore, accept the
revision petition and set aside the impugned order dated
31.5.05 of the Commissioner and uphold the order dated
C.W.P. No. 413 of 2008 42.8.2004 of Administrator whereby of plot No. 106-A in
Guru Nanak Colony, Rajpura including structure built on
it was resumed and the initial amount deposited by the
respondents was forfeited.”
In the written statement filed by respondent Nos. 3 and 4
the stand taken is that there was flagrant violation of the letter of
allotment and the Rules. It has been pointed out that construction of
shops at the site was in clear violation of clause (iii) of the
Acceptance Letter (P-1). It has also been asserted that before passing
the order of resumption, the principles of natural justice have been
complied with by affording opportunity to the petitioners to show
cause. Respondent Nos. 3 and 4 have also placed reliance on the
photographs of the structure to substantiate their view that on the site
in question no residential accommodation has been constructed but
10 shops have been constructed there.
Mr. Arun Jain, learned Senior counsel for the petitioners
at the outset has made an offer that the petitioners undertake to
demolish the whole construction and to further construct the building
strictly in accordance with the sanctioned building plans. On merit,
learned counsel has argued that the order of resumption cannot be
passed so easily and if there was any violation of sanctioned building
plans then notice for demolition of illegal structure should have been
issued. He has also submitted that the respondents were under
obligation to adopt the fair procedure before resuming the property of
the petitioners and passing order of forfeiture of the amount. In
support of his submission, learned counsel has placed reliance on a
C.W.P. No. 413 of 2008 5
Full Bench judgment of this Court in the case of Ram Puri v. Chief
Commissioner, Chandigarh, AIR 1982 P.& H. 301. He has
maintained that the power of resumption is only a remedial power
and, therefore, this power should not be used arbitrarily and
whimsically. Mr. Jain has also submitted that for a small violation
the extreme step of resumption would be wholly unwarranted and
violate the principles of proportionality. He has then placed reliance
on Rule 22 of the Rules which does not provide for resumption of the
site on the ground of violation of site plans.
Mr. P.S. Dhaliwal, learned counsel for the Board has
supported the impugned orders and argued that in the allotment letter
a number of conditions have been laid down. According to the
learned counsel clause (iii) of the allotment letter clearly stipulates
that the petitioners were not to use the site in question for a purpose
other than for which it has been sold to them. He has then placed
reliance on clause (ix) dealing with resumption of property and
argued that resumption can be resorted to not only for non-payment
of dues to the Board in accordance with the Rules but also in case of
violation of any provision of the Pepsu Townships Development
Board Act, 1954 (for brevity, ‘the Act’). In such a case the Board
could refund the amount by forfeiting initial deposit and recover a
penalty @ 15% per annum.
After hearing learned counsel for the parties and perusal
of the paper book with their able assistance we are of the considered
view that this petition deserves to succeed. The petitioners had
succeeded in the Open Auction for purchase of site No. 106-A, Guru
C.W.P. No. 413 of 2008 6
Nanak Colony, Rajpura, District Patiala, for a sum of Rs. 25,25,000/-
on 19.4.2004. They have already paid substantial amount. They
commence raising of construction which is found to be in violation of
the site plans sanctioned by the Municipal Council. The site plan was
sanctioned on 10.6.2004 and the petitioners started raising
construction thereafter. It was on 6.7.2004 that a show cause notice
was issued to the petitioners (P-3) for resumption of the site by citing
violation of Rule 22 of the Rules. It was also alleged that the
petitioners have violated condition No. (iii) of the letter of acceptance
by changing the use of the site. Accordingly, order of resumption
was passed on 2.8.2004 (P-5) by exercising power under Rule 22 of
the Rules and also the initial amount deposited by the petitioners was
forfeited. It would be appropriate to read Rule 22 of the Rules and
condition No. (iii) of the letter of acceptance, which are as under:-
“Rule 22 of the Rules:
22. Resumption of property.- In case, the transferee
fails to make payments due to the Board in the manner as
specified in these rules or violates any provision of the
Act or these rules, such property may be resumed by the
Board. The Board shall refund the amount, which may
have been made by the transferee after forfeiting initial
deposit and recovering a penalty at the rate of fifteen per
cent per annum on defaulted amount. If for any reason
the amount deposited by the transferee falls short, the
same shall be recovered from the transferee as arrears of
land revenue.”
C.W.P. No. 413 of 2008 7
xxx xxx xxx
Condition No. (iii) of letter of acceptance:
“(iii) Use of site: You will not use the site for a purpose
other than for which it has been sold to him and
shall keep the property in good condition.”
A perusal of Rule 22 of the Rules would show that in
case an allottee fails to make payment due to the Board then the
property allotted to him can be resumed by the Board. Likewise, if
there is a violation of any of the conditions of allotment then
resumption can be made. The provision regarding resumption can be
invoked as per clause (ix) of the letter of acceptance, which reads
thus:-
“(ix) Resumption of Property:- In case you fail to
make payment due to the board in the manner as
specified in the Pepsu Townships Development
Board Disposal of Property Rules 2003 or violate
any provision of the Act or these rules such
property may be resumed by the Board. The
Board will refund the amount which may have
been made by you after forfeiting initial deposit
and recovering a penalty at the rate of fifteen
percent per annum on defaulted amount. If for any
reasons the amount deposited by you falls short,
the same shall be recovered from you as arrears of
land revenue.”
C.W.P. No. 413 of 2008 8
The case of the respondents is that since there was
violation of clause (iii) as the use of the site for a purpose other than
for which it was sold, has been changed it was liable to be resumed.
In somewhat similar circumstances a Full Bench of this
Court considered the provisions of Section 8-A of the Capital of
Punjab (Development and Regulation) Act, 1952 (for brevity, ‘the
1952 Act’), which clothed the Estate Officer with the power to
resume building or site and to forfeit the money paid by the allottee.
Section 8-A of the 1952 Act in sum and substance postulate a similar
situation as has been provided by Rule 22 of the Rules. The Full
Bench came to the conclusion that although it does not violate
fundamental rights of a citizen guaranteed under Article 19(1)(f) of
the Constitution, however, the same has to be used as a measure of
last resort (See paras 86 and 87 of the judgment). A similar issued
has arisen before Hon’ble the Supreme Court in the case of Teri Oat
Estates (P) Ltd. v. U.T. Chandigarh, (2004) 2 SCC 130. In that
case also the view taken by the Full Bench of this Court in Ram
Puri’s case (supra) has been approved. In para 57 it has been
observed that the drastic step of resumption should be taken as a last
resort. Hon’ble the Supreme Court also placed reliance on the
principle of proportionality which have been applied to legislative
and administrative action in India and went on to observe in para 49
as under:-
48. Ever since 1952, the principle of proportionality
has been applied vigorously to legislative and
administrative action in India. While dealing with the
C.W.P. No. 413 of 2008 9validity of legislation infringing fundamental freedoms
enumerated in Article 19(1) of the Constitution of India,
this Court had occasion to consider whether the
restrictions imposed by legislation were disproportionate
to the situation and were not the least restrictive of the
choices. In cases where such legislation is made and the
restrictions are reasonable; yet, if the statute concerned
permitted administrative authorities to exercise power or
discretion while imposing restrictions in individual
situations, question frequently arises whether a wrong
choice is made by the administrator for imposing the
restriction or whether the administrator has not properly
balanced the fundamental right and the need for the
restriction or whether he has imposed the least of the
restrictions or the reasonable quantum of restrictions etc.
in such cases, the administrative action in our country
has to be tested on the principle of proportionality, just
as it is done in the case of main legislation. This, in fact,
is being done by the courts. Administrative action in
India affecting the Fundamental Freedoms has always
been tested on the anvil of the proportionality in the last
50 years even though it has not been expressly stated that
the principle that is applied in the proportionality
principle. [See Om Kumar v Union of India (2001) 2
SCC 386)].”
C.W.P. No. 413 of 2008 10
As a sequel to the above discussion, this petition is
allowed. The impugned orders dated 2.8.2004 (P-5) and 13.8.2007
(P-8) are set aside. Consequently the Site No. 106-A, Guru Nanak
Colony, Rajpura, District Patiala, is restored back to the petitioners.
The petitioners as per their undertaking given through their counsel,
shall demolish the illegal construction and raise construction of the
building strictly in accordance with building plans sanctioned by the
Municipal Council, Rajpura within a period of six months. The
instalments payable by the petitioners are over due as they were to
pay the balance amount in six half yearly instalments commencing
from 2004. The petitioners shall make the payment of balance
amount in four half yearly instalments with simple interest at the rate
of 8% per annum from the date amount was payable in 2004 till the
date of payment.
The writ petition stands disposed of in the above terms.
(M.M. KUMAR)
JUDGE
(JORA SINGH)
October 24, 2008 JUDGE
Pkapoor