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Industrial Assistance Group, Govt. Of Haryana And Another v. Ashutosh Ahluwalia And Another
Factual and Procedural Background
Sometime in September/October 1994 the second respondent issued a public advertisement inviting applications for industrial plots in the Electronic Hardware Technology Park, Sector 34, Gurgaon at the rate of Rs 750 per square metre. The first respondent applied for a ½-acre plot and deposited earnest money of Rs 1,57,500.
After personal interview and evaluation, the appellants offered the first respondent an alternative plot measuring 500 sq m at Udyog Vihar, Phase 6, Gurgaon, which he accepted on 10-7-1995. On 19-2-1996 the earnest money was formally transferred to the appellants and the specific Plot No. 74 (456 sq m, later discovered to be smaller than 500 sq m) was allotted, thereby completing the allotment process.
On 15-7-1996 the Government of Haryana issued a new policy mandating that plots in “High Potential Zones,” including Gurgaon, be sold only through open auction wherever “the process of allotment had not been completed.” Acting on this policy, the appellants cancelled the allotment and returned the earnest money without interest. The first respondent declined to encash the refund and filed a complaint under Sections 12-B and 36-A of the Monopolies & Restrictive Trade Practices Act, 1969 before the MRTP Commission.
By order dated 24-12-1998 the Commission directed the appellants to (i) offer the complainant a plot not less than 500 sq m in Udyog Vihar, Phase 6 at Rs 750 per sq m and (ii) pay interest at 18% p.a. on earnest money exceeding 10% of the plot value. The present appeal challenges that order.
Legal Issues Presented
- Whether the Government of Haryana’s policy change of 15-7-1996, requiring auction of plots, could lawfully override a concluded allotment made prior to that date.
- Whether the MRTP Commission was justified in directing allotment of the plot at the original rate of Rs 750 per sq m and awarding interest on excess earnest money.
Arguments of the Parties
Appellants' Arguments
- The appellants were bound by the Government directions dated 15-7-1996 that mandated sale of plots in High Potential Zones only through open auction where allotment was “not yet completed.” Because no conveyance deed had been executed, the allotment was said to be incomplete; hence only a refund, not allotment, was permissible.
- Judicial interference in matters of governmental policy is inappropriate. Reliance was placed on:
- M.P. Ration Vikreta Sangh Society v. State of M.P. (1981) 4 SCC 535
- Principal, Madhav Institute of Technology & Science v. Rajendra Singh Yadav (2000) 6 SCC 608
- In the alternative, if allotment had to stand, the respondent should at least pay the currently prevailing market rate, or some enhanced rate, drawing support from Haryana Urban Development Authority v. Sunita Rekhi, 1989 Supp (2) SCC 169.
The opinion does not contain a detailed account of the respondents’ counter-arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| M.P. Ration Vikreta Sangh Society v. State of M.P., (1981) 4 SCC 535 | Courts should refrain from interfering with government policy decisions. | The Court noted the citation but found the principle inapplicable because the allotment to the first respondent was already complete before the policy shift. |
| Principal, Madhav Institute of Technology & Science v. Rajendra Singh Yadav, (2000) 6 SCC 608 | Same proposition as above regarding non-interference with policy matters. | Similarly distinguished; the Court held that a concluded contract cannot be unsettled by a subsequent policy change. |
| Haryana Urban Development Authority v. Sunita Rekhi, 1989 Supp (2) SCC 169 | In circumstances where most allottees repurchased plots at higher auction prices, equity justified requiring remaining allottees to pay 50% extra. | The Court held this ruling was dictated by its unique facts and “had no application” to the present case; therefore no enhanced price was warranted. |
Court's Reasoning and Analysis
The Court held that the allotment process for the first respondent had already been concluded once the specific plot was allotted and earnest money transferred. The subsequent government policy requiring auction could not retrospectively vitiate an existing and concluded contract.
It rejected the appellants’ reliance on decisions discouraging judicial intervention in policy matters, reasoning that those cases dealt with policy formation, whereas this case concerned contractual rights already crystallised. Because the allotment was complete, demanding a higher price would be unjustified.
The Supreme Court therefore affirmed the MRTP Commission’s directions for allotment of a plot measuring not less than 500 sq m at the original rate and payment of interest on excess earnest money.
Holding and Implications
APPEAL DISMISSED. The MRTP Commission’s order dated 24-12-1998 stands affirmed.
Implications: The decision compels the appellants to honour the original allotment terms and pay compensatory interest, thereby reinforcing that a concluded allotment cannot be nullified by a later change in government policy. The ruling is confined to the specific contractual circumstances and does not formulate a new general precedent.
S.N Variava, J.— This appeal is against an order dated 24-12-1998 passed by the Monopolies & Restrictive Trade Practices Commission (hereinafter referred to as “the Commission”).
2. Briefly stated the facts are as follows:
Sometime in September/October 1994, the 2nd respondent issued an advertisement inviting applications from prospective entrepreneurs for allotment of industrial plots of 1, 1/2, 1/4 acre at Rs 750 per sq metre in the Electronic Hardware Technology Part, Sector 34, Gurgaon. The 1st respondent applied on a prescribed form for allotment of a 1/2 acre plot. Along with his application he paid a sum of Rs 1,57,500.
3. On 8-11-1994 the Plot Allotment Committee called the 1st respondent for personal discussion and evaluation of his project report. The 1st respondent attended the personal discussion and discussed the viability of his project with the authorities concerned. Thereafter the appellants asked the 1st respondent to submit his project report to them. The 1st respondent did so. By a letter dated 29-6-1995 the appellants informed the 1st respondent that it was decided that he would be offered an industrial plot measuring 500 sq metres at Udyog Vihar, Phase 6, Gurgaon or 1/8 acre industrial plot at Industrial State, Bahadurgarh and that he should give his acceptance to one of the two plots. The 1st respondent by a letter dated 10-7-1995 conveyed his acceptance of the plot of 500 sq metres at Udyog Vihar, Phase 6, Gurgaon.
4. The 1st respondent was then informed that he had been allotted Plot No. 74 measuring 500 sq metres at Udyog Vihar, Gurgaon. He was also told by the 2nd respondent that he should give his consent to have his application and earnest money transferred to the appellants. The 1st respondent gave his consent on 19-2-1996 and the earnest money of Rs 1,57,500 was transferred to the appellants. Thus the offer of 500 sq metre plot at Udyog Vihar, Gurgaon was accepted and in pursuance of such concluded contract an allotment was made. In spite of allotment of a specific plot the appellants did nothing.
5. The Government of Haryana issued directions on 15-7-1996. By these it was directed that plots in High Potential Zone, which included Gurgaon, could only be sold by an open auction and where the process of allotment had not been completed the application money should be returned and such plot should be put to auction in terms of the new policy. As a result of this the 1st respondent was informed that his allotment stood cancelled. The earnest money deposited by him, which had been kept by the 2nd respondent and then by the appellants from 1994 onwards, was returned without any interest. The 1st respondent refused to encash the bank draft sent to him. He represented that he had already been allotted a plot and the same should be given to him. As his representation was not considered the 1st respondent filed a complaint under Section 12-B read with Section 36-A of the Monopolies & Restrictive Trade Practices Act, 1969 before the Commission. In the course of hearing before the Commission it was discovered that Plot No. 74, which had been allotted to the 1st respondent was 456 sq m and not 500 sq m.
6. The Commission after hearing the parties has passed the impugned order dated 24-12-1998. The Commission has inter alia directed as follows:
“It is also directed that the applicant/complainant be given a plot measuring not less than 500 sq m in Udyog Vihar, Phase 6 for his project @ Rs 750 per sq m. We also direct that the respondents compensate the complainant by paying interest @ 18% per annum on the amount of earnest money in excess of 10% of the value of the plot of 500 sq m. The value of the plot shall be calculated @ Rs 750 per sq m which was the prevailing rate at the relevant time.”
7. Mr Mahabir Singh submitted that the appellants were bound to comply with the directions of the Government issued on 15-7-1996. He submitted that as per these directions the plot could only be sold in an open auction and as the process of allotment had been completed inasmuch as the deed had not been executed in favour of the 1st respondent the appellants were bound to refund the application money and put up the plot for auction. He relied upon the case of M.P Ration Vikreta Sangh Society v. State of M.P (1981) 4 SCC 535 for the proposition that the framing of a scheme is a matter of government policy in which court's interference could not be called for. He also relied upon the case of Principal, Madhav Institute of Technology & Science v. Rajendra Singh Yadav (2000) 6 SCC 608 for the same proposition. He submitted that therefore the impugned order could not be sustained and should be set aside. Alternatively, he submitted that if an allotment had to be made to the 1st respondent, then it should be at the rates now prevailing. He submitted that even if the Court is not willing to direct the 1st respondent to pay the rates now prevailing, the Court should direct payment of some higher rate. In support of this submission he relied upon the case of Haryana Urban Development Authority v. Sunita Rekhi 1989 Supp (2) SCC 169. In this case there has been a sale of a large number of plots by the Development Authority. Subsequently, the allotments were sought to be set aside and the plots were proposed to be sold by fresh auction. Majority of the old allottees purchased the plots in the fresh auction at a higher rate. Some of the old allottees did not accept this and filed a writ petition. This Court ultimately held that as the majority had paid a higher rate it would be unfair to allow the minority to get the plots at old rates and directed payment of 50% more than the old rate. Those directions were given on the peculiar facts of that case and not as a matter of principle. Such a direction can have no application to the facts of the present case.
8. In our view, the impugned order suffers from no infirmity. The appellants could not have, on the basis of the changed policy of 15-7-1996, refused to complete the formalities so far as the 1st respondent is concerned. In the case of the 1st respondent there had already been an allotment. Thus the process of allotment had been completed. In this view of the matter the Commission was right in issuing the directions that it did. As the allotment was completed the 1st respondent could not be asked to pay any rate higher than the one on which he had been allotted the plot. We see no reason to interfere.
9. The appeal stands dismissed. There will be no order as to costs.
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