Mr. Rekha Lall Vs. the Bihar State Housing Board and ors. - Court Judgment

Excerpt:
- - it was because of the failure of the petitioner to deposit the additional amount as called for by the communication dated 11.3.1992 that the building could not be completed in time. 7. this court on facts is satisfied that the promise to complete the construction within two years was independent of the cost escalation clause. 1,20,000/-.palpably it was the board which failed to procure its share of the contribution or otherwise defaulted in completing construction within two years. the board admittedly failed to construct within two years, for reasons attributable to it alone. this court is satisfied that regulations 33(3) and 36(3) in any event cannot be read in a manner so as to provide a premium to the board for its own lapses. ) referred to on behalf of the petitioner this court is satisfied that justice will be done if the respondent board is directed to refund 20% amount withheld along with annual compounded interest @10% from date of payment to the date of actual refund. navin sinha, j.1. heard learned counsel for the petitioner and the learned counsel appearing on behalf of the bihar state housing board.2. the petitioner seeks a direction for refund with interest of the 20% of the purchase price wrongly withheld by the respondents while returning the balance sale price of rs. 96,000/- paid by him. the additional prayer is for payment of interest on the balance amount of rs. 96,000/- refunded by the board to the petitioner.3. the respondent board advertised on 20.2.1985 inviting applications for construction of 384 residential apartment blocks in bahadurpur in the town of patna. the applicants were required to deposit a sum of rs. 15,000/- as earnest money. the petitioner deposited the same. on 20.1.1987 the board came out with a consequential advertisement it proposed to construct 384 hig flats of four floors. the ad-hoc price of the flat was estimated at rs. 1,90,000/-. the board proposed to finance it with a loan from 'hudco' and the instalments to be paid by the purchasers. the construction was to be completed in two years. a lottery was proposed to be held for the purpose of allotment. the successful allottees after the draw of lots were required to deposit a sum of rs. 1,05,000/- in the manner prescribed and within the time specified in the advertisement. the first installment of rs. 30,000/- was to be paid within one week and balance within next six months. in the manner prescribed. the petitioner was successful in the draw of lots. the petitioner then deposited the sum of rs. 1,05,000/- within time. the petitioner thus deposited the total amount of rs. 1,20,000/- as required by the terms and conditions of the advertisement. the balance of rs. 70,000/- was to be deposited by the allottees in monthly instalments after completion of construction and execution of agreement.4. learned counsel for the petitioner submitted that the petitioner had deposited within time the sum of rs. 1,20,000/- being part of the deposit to be made by the allottee. the rest of the funds for construction were to be obtained by the respondents from 'hudco'. the construction was not made in the time period of two years leading to cost escalation. the petitioner never consented to the terms and conditions at annexure 6 by which in the year 1992 the board after having not completed the construction within time, altered the price, and the terms and conditions of the allotment. the contention of the petitioner is that even till the year 2000 the construction was incomplete. the petitioner was therefore fully justified in terminating the contract on 5.6.2000 and asking for the refund of the deposits made by him. on facts the board cannot deduct 20% of the amount paid by the petitioner while refunding the balance. reliance was placed upon regulation 45 of the bihar state housing board regulation, 1983, to submit that grant of 5% interest mentioned therein was applicable to the earnest money deposited by the applicant only and not the part of the purchase price paid. the petitioner having deposited her entire contribution was not answerable for the lapses of the board. she was therefore entitled to refund of the entire amount with interest on termination of the contract by her on 5.6.2000.5. learned counsel for the board submitted that the price fixed by the board was tentative. there was a cost escalation clause. it was because of the failure of the petitioner to deposit the additional amount as called for by the communication dated 11.3.1992 that the building could not be completed in time. the petitioner was not entitled to any interest on the amount refunded. the board had rightly in terms of regulation 33 and regulation 36 of the bihar state housing board regulations 1983 deducted 20% of the price deposited by the petitioner which was liable to be forfeited under the regulations while refunding the balance sale price of rs. 96,000/-.6. this court has considered the respective submissions and the materials on record. the tentative price of the flat was fixed at rs. 1,90,000/- in the year 1987. the petitioner had deposited his share of the cost/contribution i.e., rs. 1,20,000/- in time. the balance cost of construction was the responsibility of the board when it promised to complete construction in two years and thereafter recover cost escalation if any. the balance rs. 70,000/- was to be paid by the petitioner in 84 monthly instalments after completion of construction and execution of agreement. the cost escalation clause was not intended to be a safety valve for the respondent board to enable it to take advantage of its own lapses.7. this court on facts is satisfied that the promise to complete the construction within two years was independent of the cost escalation clause. it is not that the petitioner was required to pay at stages as the construction progressed and defaulted leading to cost escalation. the petitioner had performed his part of the contract and paid rs. 1,20,000/-. palpably it was the board which failed to procure its share of the contribution or otherwise defaulted in completing construction within two years. thereafter the option lay with the petitioner to either terminate the agreement or waive the breach. she opted for the former and terminated the contract on 5.6.2000 not willing to bear the additional burden and the cost overrun apart from the alteration of the terms for reasons attributable to the respondents alone.8. the writ application was filed in 2001. this court cannot but help take notice of the fact that there is no denial in the counter affidavit of the board filed on 4.10.2001 that the construction was still incomplete.9. the question which arises for consideration is whether the respondents would be justified in withholding 20% of the sale amount of rs. 1,20,000/- paid by the petitioner. this court finds from regulation 33(3) and 36(3) of the bihar state housing board regulation 1983, that the board was entitled to deduct 20% of the deposit in the event that the petitioner did not pay the amount within the specified period from allotment, which is not the case here. no hire purchase agreement having been executed regulation 36(3) has no application. the board admittedly failed to construct within two years, for reasons attributable to it alone. in such circumstances the question of deducting 20% of the amount paid, thus giving an advantage to the board for its own lapses, simply does not arise. this court is satisfied that regulations 33(3) and 36(3) in any event cannot be read in a manner so as to provide a premium to the board for its own lapses. this court therefore holds that the petitioner will be entitled to refund with interest of the 20% of the sum of rs. 1,20,000/- illegally withheld by the board.10. coming to the question of interest to be paid to the petitioner on the amount of rs. 96,000/- refunded, this court finds substance in the submission advanced on behalf of the petitioner that under regulation 45 of the bihar state housing board regulation 1983 simple interest was payable on the earnest money at 5% had she withdrawn at the stage after draw of lots. in the present case, the controversy is not with regard to the. earnest money advanced but of the same as part of the purchase price of rs. 1,20,000/- paid by the petitioner within the time and manner prescribed by the board. the regulations are silent on this aspect. the respondents have a scheme in place where they do levy interest for delayed payment. this interest is calculated to be roughly at 11%. relying upon a judgment of this court reported in 2001 (3) pljr 809 (smt. mira mishra v. state of bihar and ors.) referred to on behalf of the petitioner this court is satisfied that justice will be done if the respondent board is directed to refund 20% amount withheld along with annual compounded interest @ 10% from date of payment to the date of actual refund. likewise the petitioner shall also be entitled to annual compounded interest @ 10% on the sum of rs. 96,000/- refunded by the board from the date of payment till the date of refund made.11. before concluding with the case, this court cannot but take help take notice of the actions of the board which also fell for criticism by this court in the judgment referred to above viz 2001 (3) pljr 809, about the manner in which it acted and then sought to impose burden for its own inaction on the allotees.12. in the result, this writ application is allowed. the board is directed to calculate the dues of the petitioner and pay the same within a period of two months from today.13. no costs.

Judgment:

Navin Sinha, J.

1. Heard learned Counsel for the petitioner and the learned Counsel appearing on behalf of the Bihar State Housing Board.

2. The petitioner seeks a direction for refund with interest of the 20% of the purchase price wrongly withheld by the respondents while returning the balance sale price of Rs. 96,000/- paid by him. The additional prayer is for payment of interest on the balance amount of Rs. 96,000/- refunded by the Board to the petitioner.

3. The respondent Board advertised on 20.2.1985 inviting applications for construction of 384 residential apartment blocks in Bahadurpur in the town of Patna. The Applicants were required to deposit a sum of Rs. 15,000/- as earnest money. The petitioner deposited the same. On 20.1.1987 the Board came out with a consequential advertisement it proposed to construct 384 HIG Flats of four floors. The ad-hoc price of the flat was estimated at Rs. 1,90,000/-. The Board proposed to finance it with a loan from 'HUDCO' and the instalments to be paid by the purchasers. The construction was to be completed in two years. A lottery was proposed to be held for the purpose of allotment. The successful allottees after the draw of lots were required to deposit a sum of Rs. 1,05,000/- in the manner prescribed and within the time specified in the advertisement. The first installment of Rs. 30,000/- was to be paid within one week and balance within next six months. In the manner prescribed. The petitioner was successful in the draw of lots. The petitioner then deposited the sum of Rs. 1,05,000/- within time. The petitioner thus deposited the total amount of Rs. 1,20,000/- as required by the terms and conditions of the advertisement. The balance of Rs. 70,000/- was to be deposited by the allottees in monthly instalments after completion of construction and execution of agreement.

4. Learned Counsel for the petitioner submitted that the petitioner had deposited within time the sum of Rs. 1,20,000/- being part of the deposit to be made by the allottee. The rest of the funds for construction were to be obtained by the Respondents from 'HUDCO'. The construction was not made in the time period of two years leading to cost escalation. The petitioner never consented to the terms and conditions at Annexure 6 by which in the year 1992 the Board after having not completed the construction within time, altered the price, and the terms and conditions of the allotment. The contention of the petitioner is that even till the year 2000 the construction was incomplete. The petitioner was therefore fully justified in terminating the contract on 5.6.2000 and asking for the refund of the deposits made by him. On facts the Board cannot deduct 20% of the amount paid by the petitioner while refunding the balance. Reliance was placed upon Regulation 45 of the Bihar State Housing Board Regulation, 1983, to submit that grant of 5% interest mentioned therein was applicable to the earnest money deposited by the applicant only and not the part of the purchase price paid. The petitioner having deposited her entire contribution was not answerable for the lapses of the Board. She was therefore entitled to refund of the entire amount with interest on termination of the contract by her on 5.6.2000.

5. Learned Counsel for the Board submitted that the price fixed by the Board was tentative. There was a cost escalation clause. It was because of the failure of the petitioner to deposit the additional amount as called for by the communication dated 11.3.1992 that the building could not be completed in time. The petitioner was not entitled to any interest on the amount refunded. The Board had rightly in terms of Regulation 33 and Regulation 36 of the Bihar State Housing Board Regulations 1983 deducted 20% of the price deposited by the petitioner which was liable to be forfeited under the Regulations while refunding the balance sale price of Rs. 96,000/-.

6. This Court has considered the respective submissions and the materials on record. The tentative price of the flat was fixed at Rs. 1,90,000/- in the year 1987. The petitioner had deposited his share of the cost/contribution i.e., Rs. 1,20,000/- in time. The balance cost of construction was the responsibility of the Board when it promised to complete construction in two years and thereafter recover cost escalation if any. The balance Rs. 70,000/- was to be paid by the petitioner in 84 monthly instalments after completion of construction and execution of agreement. The cost escalation clause was not intended to be a safety valve for the respondent Board to enable it to take advantage of its own lapses.

7. This Court on facts is satisfied that the promise to complete the construction within two years was independent of the cost escalation clause. It is not that the petitioner was required to pay at stages as the construction progressed and defaulted leading to cost escalation. The petitioner had performed his part of the contract and paid Rs. 1,20,000/-. Palpably it was the Board which failed to procure its share of the contribution or otherwise defaulted in completing construction within two years. Thereafter the option lay with the petitioner to either terminate the agreement or waive the breach. She opted for the former and terminated the contract on 5.6.2000 not willing to bear the additional burden and the cost overrun apart from the alteration of the terms for reasons attributable to the respondents alone.

8. The writ application was filed in 2001. This Court cannot but help take notice of the fact that there is no denial in the counter affidavit of the Board filed on 4.10.2001 that the construction was still incomplete.

9. The question which arises for consideration is whether the respondents would be justified in withholding 20% of the sale amount of Rs. 1,20,000/- paid by the petitioner. This Court finds from Regulation 33(3) and 36(3) of the Bihar State Housing Board Regulation 1983, that the Board was entitled to deduct 20% of the deposit in the event that the petitioner did not pay the amount within the specified period from allotment, which is not the case here. No hire purchase agreement having been executed Regulation 36(3) has no application. The Board admittedly failed to construct within two years, for reasons attributable to it alone. In such circumstances the question of deducting 20% of the amount paid, thus giving an advantage to the Board for its own lapses, simply does not arise. This Court is satisfied that Regulations 33(3) and 36(3) in any event cannot be read in a manner so as to provide a premium to the Board for its own lapses. This Court therefore holds that the petitioner will be entitled to refund with interest of the 20% of the sum of Rs. 1,20,000/- illegally withheld by the Board.

10. Coming to the question of interest to be paid to the petitioner on the amount of Rs. 96,000/- refunded, this Court finds substance in the submission advanced on behalf of the petitioner that under Regulation 45 of the Bihar State Housing Board Regulation 1983 simple interest was payable on the earnest money at 5% had she withdrawn at the stage after draw of lots. In the present case, the controversy is not with regard to the. earnest money advanced but of the same as part of the purchase price of Rs. 1,20,000/- paid by the petitioner within the time and manner prescribed by the Board. The regulations are silent on this aspect. The respondents have a scheme in place where they do levy interest for delayed payment. This interest is calculated to be roughly at 11%. Relying upon a judgment of this Court reported in 2001 (3) PLJR 809 (Smt. Mira Mishra v. State of Bihar and Ors.) referred to on behalf of the petitioner this Court is satisfied that justice will be done if the respondent Board is directed to refund 20% amount withheld along with annual compounded interest @ 10% from date of payment to the date of actual refund. Likewise the petitioner shall also be entitled to annual compounded interest @ 10% on the sum of Rs. 96,000/- refunded by the Board from the date of payment till the date of refund made.

11. Before concluding with the case, this Court cannot but take help take notice of the actions of the Board which also fell for criticism by this Court in the judgment referred to above viz 2001 (3) PLJR 809, about the manner in which it acted and then sought to impose burden for its own inaction on the allotees.

12. In the result, this writ application is allowed. The Board is directed to calculate the dues of the petitioner and pay the same within a period of two months from today.

13. No costs.