TaxTMI 
TaxTMI 
2003 (12) TMI 655
X X X X Extracts X X X X
X X X X Extracts X X X X
....ri Satish Chander Malhotra were the members of the said Cooperative Society. They in terms of the provisions of 'The Rules' were required to execute deeds of sub-lease in favour of the lessee as also the President of India. 3. The factual matrix of the matter is being considered from the case involved in civil Appeal No. 1781 of 2000. 4. On 13.12.1968, a statutory sub-lease was executed in favour of Shri Mangal Singh Monga in respect of residential plot of 1568 sq. yards in Vasant Vihar on payment of Rs. 17560/- towards premium and Rs. 26656/- towards the cost of development. In terms of proviso appended to sub Clause (b) of Clause 6 of the dead of sub lease, the lessor was entitled to recover a portion of the unearned increase in the value i.e. "the difference between the premium paid and the market value of the residential plot at the time of sale". Determination of the lessor in respect of the market value therefore was to be final and binding. 5. By reason of Clause X(a), of the said deed the President delegated his power to the Chief Commissioner of Delhi who is now the Lt. Governor of Delhi. The said Mangal Singh Monga died on 13.11.1983. Purported to be in exercis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... resolution was passed by the D.D.A. to the effect that unearned increase should be worked out on the basis of sale consideration shown in the agreement of sale or income tax clearance certificate, as the case may be, if it is higher than the floor level rate of D.D.A. HIGH COURT JUDGMENT : 8. The High Court in its impugned judgment referring to the circular letters issued by the Lt. Governor as also the Union of India and upon taking notice of the fact that only the difference in increase price on the basis of such circular letters had been demanded from the persons similarly situated allowed the writ petition directing : "We are of the view that the DDA, had no power to issue the demands in these writ petitions. Accordingly, the writ petitions are allowed and following directions are issued : The DDA shall issue fresh demand to the petitioners in all these three writ petitions on the basis of Order dated 24.6.1992. In case any amount had been paid on the basis of the impugned demand, the DDA shall be entitled to appropriate only that portion of the amount calculated in accordance with fixation of market rate of land as issued by the Delhi Administration on the 24th of June,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....what is stated in the agreement for sale." SUBSEQUENT EVENTS : 12. When the matter was taken up for hearing, before different Division Benches, the respondents herein sought to bring to this Court's notice certain subsequent event, namely, adoption of a purported policy by reason of a circular letter dated 28.6.1999 purported to have been given a prospective effect in terms whereof the leasehold was sought to be converted into freehold. The relevant portion of the said scheme reads as under : "1. COVERAGE OF THE SCHEME: i) The existing scheme of freehold conversion is extended to all residential leasehold built up properties irrespective of size. As such, leased properties, situated on land, for which the land use prescribed in the Master Plan/Zonal Development Plan in force is residential, will be covered under the scheme, irrespective of size. ii) The scheme will also extend to premium free leases i.e. leases where premium has not been charged by agencies administering the leases. 2. COMPUTATION OF CONVERSION FEE: i) In respect of properties with land area upto 500 sq. meters, the conversion fee will be charged on the basis of already approved graded scale circula....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rly as Rajeev Gupta. An objection to the said application had been filed by the appellant, inter alia, on the ground that subject matter of the writ petition leading to filing of these appeals has no nexus with the aforementioned scheme dated 28.6.1999. SUBMISSIONS : 16. Mr. P.P. Rao, learned senior counsel appearing on behalf of the appellant, inter alia, would submit that: (1) As the statutory sub lease refers to the market value of the residential plot, the circular letters cannot override the same and, thus, are illegal. Strong reliance in this behalf has been placed on Sant Ram Sharma v. State of Rajasthan and Anr. (1968)IILLJ830SC and State of M.P. and Anr. etc. v. G.S. Dall & Four Mills etc. [1991]187ITR478(SC) . (2) Notings made in different files would show that except in one of the three cases, the fact situation prevailing in other cases were different. (3) As the circular letter dated 24.6.1992 showed locality wise market rates for the earlier period, the fixation of market rates was retrospective and not prospective. (4) Such a circular letter in any event having not been issued by the Lt. Governor, was illegal. (5) Resolution No. 98/1995 dated 28.11.1995 being appli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e construed in such a manner so as to have a bearing in the pending appeals. ARE THESE TWO CASES SIMILAR TO THAT OF RAJEEV GUPTA : 18. The following chart will show that the cases of J.S. Monga and Shri Abdul Rasool Virji stand on a similar footing as that Rajeev Gupta : S. No. Particulars J.S. MONGA Plot No.A-5/3, Vasant Vihar, N. Delhi ABDUL RASOOL VIRJI Plot No.A-1, Maharani Bagh, N.D. RAJIV GUPTA Plot No.4, Palam Marg, Vasant Vihar. N.D. 1 Date of Execution of Sub Lease Deed 13.12.1968 1.1.1965 27.4.1971 2 Name of Sub Lessee Sh. Mangal Singh Monga & after his death mutation allowed in the joint names of his legal heirs : 1. Smt. Harbans Monga (wife) 2. Smt. Prabha Sehgal (daughters) 3. Smt. Indira Batra " 4. Smt. Ella Bajaj " 5. Sh. Joginder Singh Monga (son) 6. Sh. Mohinder Singh Monga (son) 7. Sh. Jagjit Singh Monga (son) 8. Sh. Upjeet Singh Monga (son) Sh. N.R. Pillai. After his death mutated in favour of (l) Sh. R.A Pillai (2) Sh.R.S. Pillai. Mutated on 28.5.93 (in the names of sons of sub lessee) Sh. Satish Chander Malhotra. Transferred on the basis of Sale Permission, in favour of Smt. Kaushalya Rani Bhusari w/o Sh. Sampuran Singh, on dated 2.12.1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cessary on the first occasion of the making of rules under this section, but the Central Government shall take into consideration any suggestions which the Authority may make in relation to the amendment of such rules after they are made. (2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely- . . . 23. Rule 23 of the Delhi Development Authority (Disposal of Developed Nazul Land) Rules, 1961, provides as under : "23. Agreements between the cooperative societies and their members. - Where Nazul land has been allotted to a cooperative society, such members of the society who are allotted a plot or flat by such society shall execute a sublease in favour of the society in respect of each plot or flat allotted to them. The terms and conditions of such sub-lease shall, as nearly as circumstances permit, be in accordance with Form 'A' and Form 'B' appended to these rules. In addition, such sublease may contain such covenants, clauses or conditions, not inconsistent with the provisions of Form 'A' or Form 'B' as may be considered necessary and advisable b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such officer as may be designated by the Lessor to perform the functions of the Lieutenant Governor under this Sub-Lease." EFFECT OF THE CIRCULARS : 25. It is not in dispute that the grant of lease or sublease is in consonance with the provisions of the D.D.A. Act and the rules framed thereunder. The sub-lease had been executed in Form 'B'. Delhi was an Union Territory. It used to be governed by the Chief Commissioner on behalf of the Governor General in Council. The Chief Commissioner is now designated as the Lt. Governor. Delhi has now also become a Part 'B' State. The authority of the Lt. Governor, therefore, is to be exercised by the Delhi Administration but such an authority being delegated one, the Union of India cannot be said to have denuded of its power to issue statutory directions as and when necessary or to issue policy decision in terms of the said Act or the rules. The power to fix market value is that of the lessor. Whereas the Chief Commissioner has been delegated with the power of the lessor, he in terms of Clause X(a)(b) of the deed of sublease cannot sub delegate the same to any officer or officers to exercise such power. 26. When a market valu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plots measuring upto 500 sq. meters. In respect of Sale/Transfer of plots measuring more than 500 sq. meters., a rebate of 15% on the market price of area in excess of 500 sq. meters. would be allowed." 28. It is not in dispute that the question as regard enhancement of the market value @ 20% per year was under consideration of the Central Government and it by a circular letter dated 11.11.1994 issued the following directions : "Subject : Schedule of Market Rate Sir, The question of fixation of market rates of land in different areas of Delhi/New Delhi w.e.f. 1.4.1994 has been under consideration of the Government and it has been decided not to increase the land rates w.e.f. 1.4.1994 but to extend the validity of the land rates of commercial/residential purposes as well as the guidelines/principles laid down in this Ministry's letter No.J-22011/1/91-LD dated 3rd March, 1993 for two more years i.e. w.e.f. 1st April, 1994 till March, 1996 as per schedule attached." 29. In terms of Clause 6(a), a sub-lessee is prohibited from making any sale, transfer, assign or otherwise part with possession of the whole or any part of the residential plot in any form or manner, benami ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of land on the basis of Basic Valuation Register - maintained by registering authority for collection of stamp duty which had been fixed by the revenue authority at the market value for commercial as also residential area. Keeping in view the provisions contained in Section 23(1) of the Land Acquisition Act, it was held that in determining such market value, the Court has to take into account either one or the other of the three methods laid down therein, keeping in view the date of issuance of notification under Section 4(1) of the Act and, thus, Basic Valuation Register prepared and maintained for the purpose of collecting stamp duty has no statutory base or force and cannot form a foundation to determine the market value mentioned thereunder. 33. In Land Acquisition Officer, Eluru and Ors. v. Jasti Rohini (Smt.) and Anr. (1995)1SCC717 it was held : "The question of fixation of market value is a paradox which lies at the heart of the law of compulsory purchase of land. The paradox lies in the facts that the market value concept is purely a phenomenon evolved by the courts to fix the price of land arrived between the hypothetical willing buyer and willing seller bargainin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses, registers of land acquisition was being maintained for the purpose of evasion of stamp duty. In the instant case, not only, as rightly submitted by Mr. Haksar, it was not only remained unsaid in the impugned circular, but have been issued for the very purpose of recovery of unearned increase in the market value of the property on a general basis to which the Union of India or the Lt. Governor was entitled in law. 36. In Sant Ram (supra), this Court has categorically stated : "...It is true that Government cannot amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point, Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed." 37. Yet again In G.S. Dall & Four Mills (supra), this Court observed as under : ".cutive instructions can supplement a statute or cover areas to which the statute does not extend. But they cannot run contrary to statutory provisions or whittle down their effect. 38. The matter may be considered from another angle. Nazul lands had been leased out to a cooperative society formed by the persons who intended to have ro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en issued by the Union of India in terms of the D.D.A. Act or the rules framed thereunder has been relied and acted upon by the D.D.A. despite ex facie the same steers on the face of the condition of the statutory Tease to the effect that lease cannot be transferred without consent of the lessor. 42. Clause 6(b), as noticed hereinbefore, if construed to be imperative in terms thereof a member of the society is prohibited from transferring his interest in any manner whatsoever. Even delivery of possession of the premises pursuant to or in furtherance of the agreement is prohibited. But by reason of the said circular letter dated 28.6.1999, which has not been issued even in terms of Article 77 of the Constitution, not only such permission is not required to be taken but even the right to recover 50% of the unearned increase is waived and only on payment of conversion charges a leasehold is made freehold, pursuant whereto or in furtherance whereof only upon payment of conversion charges any member of the society would become entitled to transfer or assign his interest in the land or the building constructed thereupon without even obtaining any prior consent of the lessor. 43. We, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcular dated 28th November, 1995. If there be any other policy operating, let Respondent DDA disclose it. Compliance within six weeks. To come up for hearing on 24th February, 1997. R.C. Lahoti, J. S.N. Kapur, J." "24.02.1997 Present : Mr. A.N. Haksar, Senior Advocate with Mr. R.K. Virmani for the Petitioner. Mr. Sumit Bansal fore the Respondent/DDA CW 3943/95 On October 16, 1996, six weeks time allowed to the DDA to make a clear statement on affidavit as to whether it admits or denies the policy dated November 11, 1984 and the circular dated November 28, 1995, it was also directed that if there be any other policy operating, the same should also be disclosed by DDA. The said, order has not been complied with. Two weeks further time by way of last opportunity is allowed to the DDA to comply with these directions. To be taken up for disposal towards the end of the short matters on April 10, 1997. Within a period of four weeks the parties will also place on record short synopsis or notes. Devinder Gupta, J. K.S. Gupta, J." "10.04.1997 President : Mr. A.N. Haksar Senior Advocate with Mr. R.K. Virmani for the Petitioner. Mr. Ravinder Sethi, Senior Advocate wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 7,50,00,000/-. The calculation was made having regard to the fact that Respondent Nos. 8 and 9 agreed to pay 50% of the unearned increase, the total amount of Rs. 7,50,00,000/-. It failed to notice that after circulars are to be applied, the unearned increase must be calculated on the basis thereof and no demand can be raised hypothetically that the purchaser would be agreeable to pay a further sum of Rs. 7,50,00,000/-. Such an assumption is wholly on wrong premise. 50. A prayer therefore was made before the High Court that sale deed be permitted to be executed. Keeping in view the stand taken by the parties before it, it was directed : "...In case the Petitioner are interested in the grant of sale permission the adjournment of the matter in any case before the 13.7.1995 they may pay the demanded sum (sic) Rs. 3,62,44,420/- under to DDA. In case ultimately it is held that amount payable is less, the excess amount can be ordered to be refunded to the Petitioner with interest at the rate of interest (sic for 18%) per annum. In case the payment is made under protest it is subject to fulfillment of other formalities would consider application for sale permission." 51. The res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....regard to the principle of restitution. 54. Recently, this Court has examined this principle in South Eastern Coalfields Ltd. v. State of M.P. and Ors. AIR 2003 SC 4482 stating : "Interest is also payable, in equity in certain circumstances. The rule in equity is that interest is payable even in the absence of any agreement or custom to that effect though subject, of course, to a contrary agreement (See: Chitty on Contracts, Edition 1999, Vol. II, Para 38-248, at page 712). Interest in equity has been held to be payable on a market rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the exercise of such equitable jurisdiction and such circumstances can be many." 55. Despite the same, the Court reduced the statutory rate of interest from 24% to 12% stating : "So far as the appeal filed by the State of Madhya Pradesh seeking substitution of rate of interest by 24% per annum in place of 12% per annum as awarded by the High Court is concerned, we are not inclined to grant that relief in exercise of our discretionary jurisdiction ....