TaxTMI 
TaxTMI 
2003 (12) TMI 655
X X X X Extracts X X X X
X X X X Extracts X X X X
....hri Mangal Singh Monga, Shri N.R. Pillai and Shri 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y of the aforementioned proceedings, however, a purported 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 mar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the market value, within the meaning of the Clause (6) of the perpetual sub-lease deed could be 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 respe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r passed in the writ petition by the High Court of Delhi, the deed of sale having been executed by them pursuant to or in furtherance thereof, they were entitled to be treated similarly 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case of the respondents only because the sale deeds had been executed by them pursuant to the interim order granted by the High Court. (7) The interim order passed by the High Court must be 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 Pi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rections given by the Central Government in this behalf." 22. Section 56 of the Act reads as under : "56 Power to make rules (1) The Central Government, after consultation with the Authority may, by notification in the Official Gazette, make rules to carry out the purposes of this Act : Provided that consultation with the Authority shall not be necessary 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue of Sub-clause (a) above." Clause XI of the Sub Lease reads as under : "In this Sub-Lease, the expression "the Lt. Governor" means the Lt. Governor of Delhi for the time being or, in case his designation is changed or his office is abolished, the officer who for the time being is entrusted, whether or not in addition to other, of the Lt. Governor by whatever designation such officer may be cabled. The said expression shall further include 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l of land in Delhi" for the period from 1.4.90 to 31.3.91 and 1.4.91 to 31.3.92. A copy of the Joint Secretary (Admn.) L&B Deptt. Delhi Admn. Letter No. F-16 (7)/82/L&B/20369-75 dated 24.6.92 conveying the market rates of land in different areas of Delhi for computation of unearned increase recoverable in case of transfer/sale of Resdl. Plots allotted under the scheme of Large Scale Acquisition Development and Disposal of land in Delhi is enclosed : 1. These rates would be applicable to the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is to fix the market value. It could do it areawise or plotwise. Once it does it area wise which being final and binding, it cannot resile therefrom at a later stage and take stand that in a particular case it will fix the market value on the basis of the price disclosed in the agreement of sale. 32. Reliance placed by Mr. Rao on the decision in Jawajee Nagnatham v. Revenue Divisional Officer, Adilabad. A.P. and Ors. [1994]1SCR368 is wholly misplaced. Therein the question which arose for consideration as to whether the compensation should be awarded for acquisition 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... instrument is situated. It will be only on objective satisfaction that the Authority has to reach a reasonable belief that the instrument relating to the transfer of property has not been truly set forth or valued or consideration mentioned when it is presented for registration. The ultimate decision would be with the Collector subject to the decision on an appeal before the District Court as provided under Sub-section (4) of Section 47-A." (See also R. Sai Bharathi v. J. Jayalalita and Ors. 2004 Cri LJ 286 ) 35. The aforementioned decisions have no application in the instant case. In those cases, 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 ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any transfer of land made by the Government would stand insulated from the tentacles of any statutory law as thereby unfettered discretion of the Government has been conferred to enforce any condition or limitations or restrictions in all types of grants and the right, privilege and obligations of the grantee would be regulated thereunder. 41. It is all the more surprising that the appellant being a delegatee has even questioned the policy decision of the delegator, namely, the Union of India. Furthermore, such a stand is being taken despite the fact that the circular letter dated 28.6.1999 as contained in Annexure R-3 to I.A. 6 of 2003 which has also not been 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Union of India today. Learned Counsel for the Petitioner has invited the attention of the Court to the averments made in paragraph 23 of the petition and the documents Annexure-1 at page 50 of the paper book which according to him is the policy governing unearned increase during the relevant period. Reply to this paragraph 23 of the counter is evasive. Learned Counsel for the petitioner has also invited the attention of the Court to yet another circular issued by the DDA on unearned increase calculations which is dated 28th November, 1995. Let Counsel for the Respondents seek specific instructions and make clear statement preferably on affidavit as to whether they admit or deny the policy dated 11th November, 1994 Annexure-1 and the circular 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, 199....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etters issued by it or the Union of India need not be given effect to and the valuation of the land should be worked as Rs. 7,50,00,000/-for the purpose of computing the unearned increase. However, it must be presumed that the vendees proceeded on the basis that the amount of unearned increase would be determined in terms of the said circulars. Furthermore, 50% of the unearned increase was to be paid to the Appellant as a condition of lease. While determining the amount, the Appellant was required to take into account the amount of consideration specified in the agreement and/or clearance certificate issued by the Income Tax Officer. They even did not do so. INTERIM ORDER - EFFECT OF : 49. The respondents herein questioned the demand of Rs. 3,62,44,420/- made by the DDA. The DDA calculated the aforementioned demand on the basis that the total consideration for the transaction was 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have urged additional grounds. It is no doubt true that this Court can take into consideration subsequent events and mould relief accordingly but thereby it cannot substitute a new relief based on a fresh cause of action. We are, therefore, of the opinion that the interim order passed by the High Court does not come to the aid of the respondents. RATE OF INTEREST : 53. By reason of the aforementioned Interim order, the High Court directed payment of 18% interest. The rate of interest which was prevailing at the relevant time was 18%. However, the bank rate of interest has since gone down drastically. Grant of interest pendente lite and for future is a discretionary remedy. The court of appeal can, therefore, exercise the same power while finally disposing the lis as that of the High Court keeping in view the principle engrafted in Section 34 of the Code of civil Procedure. The rate of interest may have to be fixed having 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 ci....