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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Arun Jain, Advocate,
  • Anand Swaroop, Sr. Advocate with Ajay Tiwari, Advocate,
Judges
  • A.L Bahri
  • H.S Bedi, JJ.
Acts
  • Rule 12(3-A) of the aforesaid Rules
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Arun Jain, Advocate,
  • Anand Swaroop, Sr. Advocate with Ajay Tiwari, Advocate,
Judges
  • A.L Bahri
  • H.S Bedi, JJ.
Acts
  • Rule 12(3-A) of the aforesaid Rules
See more information ...
Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

Jaswant Singh (petitioner) was allotted a commercial leasehold site (SCF No. 3035-3036, Sector 22-D, Chandigarh) in an open auction held on September 28, 1975, at a premium of Rs. 1,07,000/-. The allotment was governed by the Chandigarh Leasehold of Sites and Building Rules, 1973 ("the Rules of 1973"). The petitioner paid 25% of the premium and the first installment on time. The second installment of Rs. 35,579/- fell due on September 28, 1977, but was paid late on October 10, 1977.

The Estate Officer (respondent No. 3) canceled the lease by order dated November 20, 1978, imposing a 10% forfeiture (Annexure P-1). The petitioner appealed to the Chief Administrator, who accepted the appeal on February 12, 1982, and restored the lease (Annexure P-2), but increased the forfeiture to 25% to be paid within 30 days. A revision to the Advisor to the Administrator, Union Territory, Chandigarh, was dismissed on October 10, 1988 (Annexure P-3), and a further revision petition filed by the petitioner was dismissed on March 22, 1991 (Annexure P-4). The Chief Administrator had allowed 30 days to deposit the forfeiture, and the petitioner was informed by letter dated March 4, 1982 to pay Rs. 67,681/- within 30 days. The Chief Commissioner stayed operation of the Chief Administrator's order on March 11, 1982 while disposing of the revision. The petitioner deposited Rs. 70,000/- on February 3, 1989 (receipt No. 3788, Annexure P-5). The present writ petition challenges the orders Annexures P-1 to P-4.

Legal Issues Presented

  1. Whether the authorities under the Act had jurisdiction to order forfeiture of 25% of the premium (i.e., whether such a forfeiture was authorized under the Act or the Rules of 1973).
  2. Whether, where the Chief Administrator had allowed time to deposit the forfeiture and a revision filed stayed the operation of that order, the appellate/revisional authority was obliged to grant fresh or additional time to the petitioner to comply with the order while disposing of the revision.

Arguments of the Parties

Petitioner's Arguments

  • The authorities lacked jurisdiction under the Act or the Rules to order forfeiture of 25% of the premium; orders imposing 25% forfeiture were therefore void for lack of authority.
  • When the Chief Administrator had allowed 30 days to deposit the forfeiture, and the Chief Commissioner subsequently stayed the operation of that order in revision, the appellate/revisional authority should have granted fresh time to the petitioner to comply with the deposit requirement while disposing of the revision.
  • The petitioner had made substantial payments (25% of premium, first installment, later installments, and Rs. 70,000 during pendency) and had constructed a three-storeyed building on the site—factors relevant to the appropriateness of resumption.

Respondents' Arguments

  • Multiple notices were issued to the petitioner to pay the due installments; the Estate Officer was justified in canceling the allotment for non-payment.
  • In case of re-allotment the authorities could impose forfeiture/penalty up to 30% of the difference between the premium on which the site was allotted and the prevalent market price; thus a 25% forfeiture is less than the maximum penalty contemplated under the rules.
  • The Chandigarh Administration relied upon Pratibha Cooperative Housing Society Ltd. v. State of Maharashtra (1991) to support the contention that recovery of 25% of the premium could be ordered (the respondents' counsel advanced this authority before the Court).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Shri Ram Puri v. The Chief Commissioner, Chandigarh ((1982) 84 PLR 388 : AIR 1982 P&H 301) (Full Bench) Explains the discretionary and enabling nature of the power of resumption under S. 8-A: the authority "may" resume and resumption is an extreme remedial power to be used when other sanctions fail. The Court relied on this Full Bench decision to emphasize that resumption is discretionary and should be applied only in extreme cases; the decision's rule was followed and used to assess the propriety of resumption for delayed payments in the present case.
Shri Brij Bhushan v. The Union Territory, Chandigarh Administration ((1987-1) 91 PLR 598) Followed as subsequent authority construing the scope of powers under the Act and Rules (as noted by the Court). The Court cited it as one of the decisions following Shri Ram Puri; it contributed to the body of precedents supporting restraint in exercising resumption powers.
Col. Ramesh Mehta v. The Chandigarh Administration, Union Territory (1989 (2) PLR 668) Followed as subsequent authority construing the statutory scheme governing allotments and resumption. Referenced as one of the authorities that follow the Full Bench's approach; used to situate the present case within existing jurisprudence.
Das Raj v. Chandigarh Administration (Civil Writ Petition No. 2640 of 1990) Directed that for delayed payments interest at the rate of 12% under Rule 12(3-A) be charged rather than resumption and forfeiture beyond prescribed limits. The Court relied on this decision to support charging interest (12%) for delayed payment instead of taking extreme step of resumption; it informed the remedy ordered here.
M/s. Mannu and Association v. Chandigarh Administration (Civil Writ Petition No. 6443 of 1990) Considered along with Das Raj; part of the jurisprudence restraining resort to resumption and directing interest for delayed payments. Used alongside Das Raj to justify awarding interest at 12% as the appropriate response to delayed payments rather than resumption.
Romesh Kumar v. Union Territory, Chandigarh (Civil Writ Petition No. 11593 of 1990) Upheld an order of resumption in a factual scenario distinguishable from the present case. The Court distinguished Romesh Kumar on facts (not applied here) because the present petitioner had made several payments and constructed substantial building; Romesh Kumar's ratio was held inapplicable.
Pratibha Cooperative Housing Society Ltd. v. State of Maharashtra (1991 (3) SCC 341 : AIR 1991 SC 1453) Authority relied upon by respondents for the proposition that up to one-third (1/3rd) of the difference between premium and prevalent price could be charged at the stage of re-transfer under Rule 21A of Rules, 1973. The Court held this decision inapplicable to the present case because Pratibha dealt with re-transfer under Rule 21A, whereas the present case concerned resumption under S. 8 (or S. 8-A) and appeal/revision arising from resumption; R.21A was not applicable at the resumption stage.

Court's Reasoning and Analysis

The Court proceeded by examining the statutory scheme, the scope of the power of resumption, the sanctions available for delayed payment and the proportionality of the measures taken by the authorities in the facts of this case.

Key points in the reasoning:

  • The Court relied on the Full Bench decision in Shri Ram Puri to restate that the power of resumption (discussed under S. 8-A in that decision) is discretionary and an extreme remedial power: the statute uses "may" and does not mandate resumption as the necessary response to default. Therefore resumption should be a last resort after other remedies and sanctions have failed.
  • Applying the existing line of authority (including decisions such as Das Raj and Mannu), the Court held that for delayed payment of installments the appropriate sanction under the Rules is to charge interest at the rate of 12% (reference to Rule 12(3-A) as cited in the opinion), and in appellate or revisional proceedings arising from resumption forfeiture should be limited to a maximum of 10% of the premium.
  • The Court distinguished authority relied upon by the respondents (Pratibha Cooperative) because that case concerned re-transfer under Rule 21A (where up to one-third of the difference between premium and prevalent price could be charged), whereas the present case concerned resumption under S. 8 (or S. 8-A). The Court concluded that Rule 21A is not applicable at the stage of resumption or in appeals/revisions from resumption orders.
  • On the facts, the Court observed the petitioner had made substantial payments (25% of the premium, at least one full installment earlier and later payment of Rs. 70,000) and had constructed a three-storeyed building on the site. Given these circumstances and the principle that resumption is an extreme remedy, the Court found the Estate Officer's cancellation and the imposition of a 25% forfeiture (when restoring the site) unjustified.
  • The Court noted procedural irregularity or insufficiency of consideration: when an authority had previously allowed time for deposit and a later revisional stay was operative, it was incumbent on the appellate/revisional authority to grant additional time while disposing of the revision. This factor weighed against upholding the 25% forfeiture imposed while restoring the site.

Based on the statutory construction, precedents and the case facts, the Court constrained the permissible sanctions to charging interest (12%) and a maximum forfeiture of 10% upon restoration, rather than the 25% forfeiture that had been ordered.

Holding and Implications

Holding:

The writ petition is allowed.

The Court's specific rulings and directives were:

  • The impugned orders (Annexures P-1 to P-4) are set aside to the extent that they charged a forfeiture of 25% of the premium while restoring the site.
  • The respondents are directed instead to charge interest at the rate of 12% for delayed payment of installments and to impose forfeiture not exceeding 10% of the premium for restoring the site.
  • After adjusting amounts already paid (including the Rs. 70,000 deposited by the petitioner), the Estate Officer (respondent No. 3) shall inform the petitioner of the amount still due. The petitioner is directed to pay that amount within one month from service of the notice of payment.
  • The writ petition is disposed of with costs assessed at Rs. 1,000/- (ordered to be awarded accordingly).

Implications: The decision's direct effect is limited to the parties — setting aside the 25% forfeiture and directing a 12% interest charge plus a maximum 10% forfeiture on restoration. The opinion frames and applies existing authorities (particularly the Full Bench in Shri Ram Puri and subsequent decisions) to restrict the use of resumption and to outline the permissible financial sanctions. The opinion does not purport to announce a novel legal doctrine beyond its application of those authorities to the facts of this case.

Show full summary ...

    Jaswant Singh v. Chandigarh Administration And Others

    1. Jaswant Singh petitioner was allotted a commercial site known as SCF No. 3035-3036, Sector 22-D, Chandigarh, on leasehold basis in an open auction held on September 28,1975, at a premium of Rs. 1,07,000/-. This allotment was done under the Chandigarh Leasehold of Sites and Building Rules, 1973, (hereinafter called 'the Rules of 1973"), As per terms and conditions of the allotment 25% of the premium and also the first installment was paid in time. The second installment of Rs. 35,579/-fell due on September 28,1977, but was paid on October 10,1977, The Estate Officer-respondent No. 3 proceeded to cancel the lease vide order dated November 20, 1978, by imposing 10% forfeiture of Rs. 10,700/-. Copy of the order is Annexure P-1. An appeal was preferred before the Chief Administrator against the aforesaid order which was accepted on February 12,1982, (Annexure P-2). The lease of the site was restored. However, the amount of forfeiture was raised from 10% to 25% and the same was to be paid within 30 days. Against the said order a revision was taken to the Advisor to the Administrator, Union Territory, Chandigarh, which was dismissed on October 10, 1988, in the order it was noticed that there was no legal provision regarding forfeiture of 25% of the premium. Further revision petition filed by the petitioner was dismissed on March 22, 1991. Copies of these orders are Annexure P.3 and P.4 respectively.

    2. The Chief Administrator had allowed 30 days time to deposit the amount of forfeiture. The petitioner was informed about this order vide letter dated March 4, 1982 by the Estate Officer to make payment of Rs.67681/- within 30 days. On March 11, 1982 the Chief Commissioner in its revisional jurisdiction had stayed operation of order of the Chief Administrator. While disposing of the revision, the Chief Commissioner should have granted fresh time to the petitioner to comply with the order of the Chief Administrator. In spite of that a sum of Rs. 70,000/-was deposited on February 3, 1989 vide receipt No. 3788 (Annexure P.5). In this manner the petitioner claimed to have paid the entire amount to the Administration. The challenge in this writ petition is to the aforesaid orders of the authorities (An-nexures P.1 to P.4).

    3. The grounds taken up to challenge the aforesaid orders of the authorities primarily are :--

    i) The authorities under the Act have no jurisdiction to order forfeiture of 25% of the premium.

    ii) That when during the time allowed by the Chief Administrator to deposit the amount of forfeiture the revision had been filed and the Chief Commissioner had ordered stay of the operation of the order, while disposing of the revision petition it was incumbent upon the Chief Administrator to grant time for deposit of the amount due.

    4. The stand of the respondents in the written statement is that several notices were issued to the petitioner to pay the amount of installments which had fallen due. Since the same was not paid, the Estate Officer was justified in taking the step of canceling the allotment. In the case of re-allotment the authorities could impose forfeiture in the form of penalty to the extent of 30% of the difference of the premium on which the site was allotted and the prevalent market-price. In the present case when forfeiture has been ordered only to the extent of 25% of the premium the same is far less than the penalty provided under the rules.

    5. After hearing learned counsel for the parties we are of the view that the action of the respondents in canceling the allotment is not justified. Furthermore, as per rules on account of delayed payment of installment the authorities could charge interest at the rate of 12% and while restoring the site in appeal or revision filed against the order of resumption, forfeiture to the extent of maximum of 10% of the premium could be ordered. Furthermore, when one of the authorities under the Act had allowed time for deposit of the amount due, while restoring the site aforesaid and operation of the aforesaid order having been stayed, it was incumbent upon the appellate/ revisional authority to grant more time while dismissing the revision.

    6. The scope of the provision of the capital of Punjab (Development & Regulation) Act and the different Rules framed there under for the sale of plots or allotment of plots on leasehold basis was considered by the Full Bench of this Court in Shri Ram Puri v. The Chief Commissioner, Chandigarh, (1982) 84 PLR 388 : (AIR 1982 P&H 301) (FB), following rule of law was laid down at page 331 (of AIR):-

    Power of resumption under S. 8-A is merely a discretionary and an enabling power. The statute does not lay down any mandate that it must necessarily be exercised in a particular situation. In sub-section (1) thereof it is first in the discretion of the Estate Officer that he may issue a notice to show cause why an order of resumption of site or building may not be made. Equally under sub-section (2) after considering the cause shown against such a notice it is optional for the Estate Officer to order such resumption or not. The word used in both the sub-sections is 'may' and not 'shall'. To put it in plain language it is not mandatory, for the authority to order resumption but only in extreme cases it enables it to do so when the other powers and sanctions to enforce the purpose of the Act have failed, or in the circumstances it is the only remedial power which can be applied. Therefore, it is farcical and imaginary to assume that the authority would necessarily use this power arbitrarily and whimsically and that they will use this hammer to swat a fly.

    The aforesaid decision has subsequently been followed in several decisions of this Court. To name a few: Shri Brij Bhushan v. The Union Territory, Chandigarh Administration, (1987-1) 91 PLR 598 and Col. Ramesh Mehta v. The Chandigarh Administration, Union Territory, Chandigarh, 1989 (2) PLR 668. The present is a case where after allotment of the leasehold rights the petitioner has raised 3-storeyed building and if there was some delay in the payment of some of the installments, the extreme step of resumption of the site was not at all called for. The fact that in spite of some notices having been issued the petitioner was unable to make arrangement for payment of the installments per se is not enough to take the extreme step of resuming the site. The fact cannot be lost sight of that the Appellate Authority, examining the facts of the case, had set aside the order of resumption but conditionally, i.e, on forfeiture of 25% of the premium amount. Such like matters earlier also came up for consideration of this Court. Civil Writ Petition No.2640 of 1990 (Das Raj v. Chandigarh Administration) decided by the Division Bench on February 26, 1990, was case of allotment by auction of lease hold rights of shop-cum-office in Sector 37-D, Chandigarh. The site was ordered to be resumed for nonpayment of some of the installments even on notice. High Court set aside such orders with the directions that on the delayed payments of dues interest at the rate of 12% in terms of Rule 12(3-A) of the aforesaid Rules be charged. Civil Writ Petition No. 6443 of 1990 (M/ s. Mannu and Association v. Chandigarh Administration) was also decided by the Bench along with the above said case. Shri Anand Swarup, Senior Advocate for the Chandigarh Administration relied upon decision of Division Bench of this Court in Civil Writ Petition No. 11593 of 1990 (Romesh Kumar v. Union Territory, Chandigarh) decided on February 13, 1991, whereby writ petition filed against the order of resumption of lease hold site for non-payment of installments except 25% money, was dismissed. This case is distinguishable on facts from the present case. The petitioner has paid, apart of 25% of the premium, two other installments. He also paid a sum of Rupees 70,000/- during pendency of the appeal/ revision. The petitioner has also raised three storeyed building on the site in dispute. The ratio of the decision in Romesh Kumar's case cannot be applied to the case in hand.

    7. Shri Arun Jain Advocate for the petitioner has rightly argued that there is no provision in the Act or the Rules aforesaid authorising the Authorities under the Act to order forfeiture of 25% of the premium and the orders-impugned to that extent are void being passed without jurisdiction and authority. Shri Anand Swarup, Senior Advocate appearing on behalf of the Chandigarh Administration, has relied upon Pratibha Cooperative Housing Society Ltd. v. State of Maharashtra, 1991 (3) SCC 341 : (AIR 1991 SC 1453) in support of his contention that 25% of premium could be ordered to be recovered. The decision is not at all applicable to the case in hand. It is only for re-transfer of the plot under R. 21A of Rules, 1973, that up to 1/3rd the difference between the premium and the prevalent price could be charged. The present is not a case of re-transfer but is a case of resumption governed by S. 8 of the Act. In appeal or revision filed against order of resumption aforesaid forfeiture of premium to the extent of 10% maximum only could be charged. R.21A, aforesaid, will not be applicable at the stage of proceedings under S. 8, or appeal or revision arising there from.

    8. The net result of the discussion of the relevant provisions aforesaid is that on account of delayed payment of installments of dues of the premium of lease hold or price of the plot allotted would be to charge interest at the rate of 12% and forfeiture maximum to the extent of 10% of the premium or price of the plot. The step to resume the site would be taken only in extreme cases and therein also taking into consideration the facts of each case, i.e, the nature of construction made thereon or other defaults or breach of terms, and conditions. Even thereafter in the case of retransfer of plot, penalty to the extent of 1/3rd of difference of premium and prevalent price could be imposed.

    9. For the reasons recorded above, the writ petition is allowed with costs, which are assessed as Rs. 1,000/-. The impugned orders, Annexure Pl to P4, are set aside to the extent of charging 25% of the premium while restoring the site. Respondents are directed to charge 12% interest on the delayed payment of installments and 10% of the premium for restoring the site. After adjusting the amount already stated above, the Estate Officer, respondent No. 3, will inform the petitioner the amount still due which would be paid by the petitioner within one month from the service of notice of payment, aforesaid.

    10. With the directions aforesaid, this writ petition stands disposed of.

    11. Petition allowed.

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    Comments

    Jaswant Singh v. Chandigarh Administration And Others
    (Nov 14, 1991)