ORDER
M.R. Agnihotri, J.
1. This petition has been filed by M/s. Urban Improvement Company (P) Ltd., (hereinafter referred to as ‘the Company’) registered under the Companies Act, 1956, through Shri K. S Bhat-nagar, Chairman of the Company, and formerly Chairman of the Company Law Board and Secretary to Government of India petitioner No. 1, and Green Fields Plotholders’ Association (Regd.) petitioner No. 2. The company was formed in 1953 and in 1961-62, it purchased about 440 acres of land from the District Board, Gurgaon, for developing a residential complex called “Green Fields Colony”. The approval of develop the colony was obtained from the District Board Gurgaon in March, 1961. About 3,500 plots were carved out and most of them were sold out soon thereafter. In 1963, the Company applied for grant of permission to develop the Colony under the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963, which permission was granted in 1969 by the present State of Haryana, after it came into existence with effect from 1st November, 1966. In 1971, the Haryana Restrictions of (Development and Regulation of Colonies) Act, 1971, was enacted and the petitioner Company sought permission for developing the colony under that Act. The same was also granted in 1973. However, the said Act of 1971 was later on struck down by the- Punjab and Haryana High Court which necessitated the enactment of the new Act, called, the Haryana Development and Regulation of Urban Areas
Act, 1975 (Haryana Act No.8 of 1975), which is in force today.
2. Now, under the Act of 1975, the Company was required to seek exemption from obtaining license in terms of Section 9(2) of the said Act. This application of the Company for the grant of exemption was still pending when on 23rd June, 1976, the Company Law Board of the Government of India, Ministry of Law and Justice (Department of Companies Affairs), in exercise of the powers conferred by sub-section (1) of Sectioin 408 of the Companies Act, 1956, appointed the following persons to hold the office of Directors of the Company for a period of three years to effectively safeguard the interests of the Company and the public interest :–
1. Lt. Genl. R. N. Batra, President, Plo-
tholders Association.
2. Sh. R. K. Khanna, Chartered Accountant, New Delhi.
3. Sh. Lalit Bhasin, Advocate, Supreme Court, 10, Haily Road, New Delhi.
4. Sh. S. P. Mitra, Advocate, Supreme Court, K. 57, Jangpura Extn., New Delhi-14.
5. Sh. O. P. Bhardwaj, Addl. Director, Urban Estate, Govt. of Haryana, Chandigarh.
Thereafter, the Government of Haryana granted the necessary exemption to the Company on 5th April, 1982, under Section 23 of the Act of 1975, for setting up the residential colony, namely, Green Fields Colony, in the urban area of Faridabad, on certain terms and conditions. The petitioner company was also required to execute an undertaking regarding furnishing of Bank guarantee towards the cost of development work, and pay for external water supply, etc., which it accordingly did pay on 12th April, 1982. Thereafter in 1983, the Company deposited a sum of Rs. 65,00,000/- towards service charges and water charges by way of first instalment, along with furnishing of the Bank guarantee to the tune of Rs. 15 lacs. The zoning and other service plans which were also submitted by the Company, were also accepted by
the State Government, being found technically in order. Despite all this, the external development work was not initiated by the State Government nor were the zoning and other service plans approved. In the meantime, on 20th April, 1988, the State Government demanded an unconditiona! undertaking from the Company to pay the revised external development charges as and when they were to be worked out. The State Government further intimated to the petitioner company that the zoning and service plans would be approved only after the payment of the revised external development charges was made. When repeated representations made by the Company for the approval of the zoning and other service plans did not bring any result, the Company approached this Court by filing the present writ petition.
3. During the pendency of the writ petition, the State Government on 7th January, 1992. intimated to the petitioner the revised external development charges at the rate of Rs. 3.68 lacs per gross acre. On receipt of the aforesaid communication, the Company requested for reconsideration of the decision. Tt was thereupon that the State Government on 14th September, 1992, agreed to accept the payment of external development charges in eight equal six monthly instalments of Rs. 12.5 per cent each, along with 21 (18+3) per cent. The petitioner company on 13th October, 1992, moved a Civil Miscellaneous Application seeking permission to deposit Rs. 3,75,34,900/ – towards the first and second instalments at the rate of 25 per cent of the net amount payable through Fixed Deposit Receipt in the name of the Register of the High Court. Soon thereafter, another Civil Miscellaneous Application (No. 362 of 1993) was filed by the Company on 6th January, 1993. seeking permission to deposit the second instalment of Rs. 1,87,68,000/-through the Fixed Deposit Receipt in the name of the Registrar. These amounts stand deposited as aforesaid.
4. Though reply to the miscellaneous application was filed by the State, yet on 15th April, 1993, a notice was issued by the Director, Town and Country Planning, Haryana, Chandigarh, respondent No. 3, to the Company, requiring it to show cause as to why the exemption granted to it under S. 23 of the Haryana Development and Regulation of Urban Areas Act, 1975, be not withdrawn for not complying with the directions regarding payment of external development charges, including the interest on the unpaid instalments which were to become payable by the Company in due course of time, including the non-furnishing of the Bank guarantee, etc. The petitioner Company submitted its reply to the show-cause notice on 26th April, 1993, reiterating their request for the sanctioning of the zoning and other service plans of the colony and for the grant of permission to the plotholders to commence the construction of their dwelling units forthwith. By moving a separate Civil Miscellaneous Application (No. 3103 of 1993), the petitioner Company prayed for stay of operation of the impugned show-cause notice dated 15th April, 1993. Instead of deciding the miscellaneous application, we thought it appropriate to hear at length the counsel for the parties and decide the main writ petition itself.
5. Separate written statements have been filed by respondent No. 3 — the Director, Town and Country Planning Government of Haryana, Chandigarh, and respondent No. 4 — the Haryana Urban Development Authority, in which though the factual position stands admitted, yet the writ peittion has been contested mainly by raising technical objections e.g., non-maintainability of the petition, availability of alternative remedy, petition being pre-mature as terms and conditions still remain to be complied with, suffering from delay and laches as the petition has been filed after three years of passing of the impugned order, disputed questions of law and fact being involved, the matter being purely of interpretation of terms and being of contractual nature, etc. etc.
6. On merits it has been pleaded that external development charges relating to the site where the petitioner Company is situated are to be worked out by the working group, and even though the petitioner Company has been granted exemption for about 440 acres of land in District Faridabad, strictly speaking, the exemption could not be granted as the land exceeded 4,000 sq. metres. However, immediately thereafter it has been added that “at this stage, this issue is not relevant for the purpose of determination of issues involved in the present writ petition”. So far as sanctioning of the zoning and other service plans is concerned, the submission of these plans by the petitioner Company has been admitted. It has further been admitted that though technically these plans may be sound, but the main dispute is regarding payment of enhanced external development charges, which alone is standing in the way of sanctioning of the zoning and other service plans submitted by the petitioner company. It has then been pleaded in the written statement that the State Government was apprehending that “once the zoning/service plans of the colony are approved, the building activity will start and the Department would have no other alternative to recover the external development charges”. The respondents have again reitereated in their written statement that no doubt the proportionate external development charges to be recovered from the Company were yet to be finalised by the Working Group constituted for this purpose, but the petitioner Company was duty bound to furnish an undertaking for the payment thereof.
7. We have heard the learned counsel at length and have gone through the record of the case with their assistance. After hearing them, we have come to the conclusion that the only reason for which the zoning and other service plans submitted by the petitioner company have not been sanctioned by the respondents is, the non-payment of external development charges and the non-furnishing of the undertaking for the future instalments, including the interest amount on the unpaid instalments, payments whereof have yet to accrue in times to come. Apart from this, no technical infirmity in the sanctioning of the plans or any violation of the terms and conditions of the exemption granted in favour of the petitioner-Company has been pointed out by the respondents. This stand of the respondents, in our considered view, is wholly arbitrary and untenable in law. The respondents are bound by the statutory provisions contained in the Act known as the Haryana Development and Regulation of Urban Areas Act, 1975, which has been enacted to regulate the use of land in order to prevent ill-planning and haphazard urbanisation in or around the towns in the State of Haryana.
8. So far as the planning and urbanisation of the colony proposed to be developed by the petitioner Company is concerned, its technical aspect already stands vouchsafed and no defect whatsoever has been pointed out by the respondents so far. The special status of the Company, its peculiar position and the operation-aspect of ‘No Profit No Loss Basis’, being managed by the persons of status appointed by the Company Law Board, Ministry of Law and Justice (Department of Company Affairs), extend ample credibility to the fair functioning of the Company on the basis whereof necessary exemption was granted by the respondent authorities under the Act. The petitioner Company has already complied with terms and conditions of the exemption granted to it and the undertaking attached therewith by making payments to the respondents direct by way of instalments arid by tendering/ depositing crores of rupees by way of Deposit Receipts with the Registrar of this High Court, that is, Rs. 3,75,34,900/-on 12th October, 1992, and Rs. 1,87,68,000/-on 2nd January, 1992. Therefore, to compel the petitioner Company to deposit the probable amount of interest in advance, which amount has yet to accrue on the instalments of the external development charges, which the Company may be required to pay in future, and to furnish Bank guarantee against the same at this stage, is nothing else but to hold the entire development activity of the Company to ransom. The petitioner company which has alreay carved out and sold plots in favour of retired Government servants, lawyers, and other middle class employees, who have already parted with lakhs of rupees of their life’s savings, in the form of instalments, and have received nothing so far except the fear of alarming increase in the cost of construction. In this situation, to compel the petitioner Company, of which they are members, to further deposit huge amount,
and furnish Bank guarantee for the future payments, is nothing short of extortion on the part of respondents. Such an act cannot be countenanced, in a welfare State governed by the rule of law.
9.Consequently, we allow this petition and quash the impugned communications dated 20th April, 1988 (Annexure P. 10 with the writ petition), and dated 7th January, 1992, 14th September, 1992, by which the petitioner company is required to execute fresh undertaking, furnish Bank guarantee and deposit fresh amount by way of instalments, as also the show-cause notice dated 15th April, 1993, being arbitrary and travelling beyond the scope of the Act of 1975, and by issuing a writ of mandamus direct the respondents to sanction the zoning and other service plans submitted by the petitioner company within a period of two months.
10. Petition allowed.