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Cites 3 docs
Article 226 in The Constitution Of India 1949
Indore Development Authority vs Smt. Sadhana Agarwal & Ors on 7 March, 1995
Bareilly Development Authority & ... vs Ajai Pal Singh & Ors on 17 February, 1989

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Andhra High Court
Bagh Lingamapalli Hig-Ii Flats ... vs A.P. Housing Board, Hyd. And ... on 3 March, 2000
Equivalent citations: 2000 (2) ALD 743, 2000 (2) ALT 473
Author: V Rao
Bench: N Hanumanthappa, V Rao

ORDER Vaman Rao, J.

1. These writ appeals filed under Clause 15 of the Letters Patent seeks to challenge the common order dated 17-4-1998 passed by the leaned single Judge in Writ Petition Nos.9869 of 1997, 25037 of 1997 and Batch.

2. The respondent in Writ Appeal No. 999 of 1998 is the petitioner in Writ Petition No.9869 of 1997. The appellant in Writ Appeal No.901 of 1998 is the petitioner in Writ Petition No.25037 of 1997. The petitioners in these two writ petitions challenged the escalation and revision of cost of flats offered for sale to them by the Andhra Pradesh Housing Board, which is respondent in these writ petitions, under self financing scheme. The learned single Judge in the judgment under appeal, while partly accepting the contentions of the petitioners/ allottees, scaled down the cost to some extent under some components of cost and refused to interfere in respect of other components. Not satisfied with this partial scaling down, the petitioner in Writ Petition No.25037 of 1997 filed the writ appeal in Writ Appeal No.901 of 1998. The A.P. Housing Board which is the respondent in the writ petitions also being aggrieved by the said common judgment of scaling down of costs has filed the other two writ appeals in Writ Appeal Nos.998 and 999 of 1998 against the orders in Writ Petition Nos.25037 and 9869 of 1997 respectively.

3. The brief facts of the case are, the Andhra Pradesh Housing Board issued a notification calling for the applications for the allotment of flats to be constructed under self-financing scheme. The Board has indicated the cost of each flat at Rs.3,27,000/ - for 900 sq.ft. plinth area. The said notification was said to have been issued in view of the scheme governed by A.P. Housing Board Self-Financing Scheme Regulations, 1975. Under the notification, 10 per cent of the cost was to be deposited along with the application, 30 per cent of estimated cost was to be paid at the time of execution of the agreement by the applicants with the Board and the remaining 60 per cent of the cost was to be paid in two installments with an interval of six months each. According to the notification, the total estimated cost comprises of land cost, development cost, civil work, supervision charges etc. Thus the notified cost included all these items. The applicants deposited their 10 per cent of the cost along with the applications. But the Board did not follow the procedure prescribed under the Regulations. The applicants were not informed about the progress of work and drawls of lots for more than four years. Though there were 172 applicants, the flats proposed to be constructed were only 60, but the Board has constructed only 118 flats. At that stage, some writ petitions were filed and some interim directions were given. The Bagh Lingampalli HIG II Flats (SFHS) Allottees Association, Hyderabad, i.e., the appellant in Writ Appeal No.901 of 1998, Pavani Naga Pradeep son of P. Sreedhara Rao, i.e., the respondent in Writ Appeal No.999 of 1998 and some others were the successful applicants in the draw and they were asked to pay the two instalments of 40 per cent and 60 per cent. But the Board has increased the cost to double the notified cost. The allottees challenged the quantum of escalation on the ground that the revision of rates was unreasonable under various items.

4. The learned Standing Counsel for the A.P. Housing Board Sri A.K. Jaya Prakash Rao contended that it was a matter of contract between the allottees and the Board and escalation admittedly was provided for, as one of the terms in the contract and, therefore, the grievance as to escalation cannot be agitated in a proceedings under Article 226 of the Constitution of India in this Court. Relying on the judgment of the Supreme Court reported in Bareilly Development Authority v. Ajay Pal Singh, , the learned Standing Counsel contended that when the contract entered into by the State was non-statutory and purely contractual, the relationships are no longer governed by the constitutional provisions, but by the legally valid contract which determines the rights and obligations of the parties inter se. He further contended that in the said judgment the Supreme Court further observed that the parties can claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the authority in the said contractual field and the Supreme Court has also further held that no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple. Accordingly he submitted that the exercise undertaken by the learned single Judge to revise the escalated cost as arrived at by the Board and to peg it at a lower level was erroneous and beyond the scope of proceedings tinder Article 226 of the Constitution of India and as such the impugned judgment deserves to be set aside.

5. On behalf of the respondents-Allottees Association, the learned Counsel Sri Y. Venkata Sastry contends that the learned single Judge relying on the later judgment of the Supreme Court in Indore Development Authority v. Sadhana Agarwal, (1995) 3 SCC 1, has examined the issue. But, it is contended that the findings as to cost of flats is erroneous.

6. The Supreme Court in the above said judgment has held that the development authorities have no absolute right to hike the cost initially announced as approximate or estimated cost of such flats. It was further observed that the authority owes a duty to explain and satisfy the Court the reasons for such high escalation. In this case, the learned Judge examined the various components of the cost of construction of flats and upheld the revised cost in respect of number of such components. In the light of the judgment of the Supreme Court Indore Development Authority v. Sadhana Agarwal (cited supra), the Board was required to show the break up of the final cost determined for the flats and justify the same. Accordingly the Board has filed a statement. The learned Judge took up each component of cost for consideration. In regard to cost of the land the Board has fixed at Rs.140/- per sf.t. on the basis of total cost of the land at Rs.1,67,61,600/-, which was divided by the total plinth area of 1169 sq.ft., to arrive at Rs.140/- per sf.t. It was pointed out on behalf of the allottees that in some blocks there were 16 flats, in some blocks there were only 12 flats and in some blocks, no flats were constructed at all, It was, therefore, suggested that the total cost should be divided by number of blocks to arrive at the figure of Rs. 16,70,160/-, for each block and thereafter in each block the average cost for each of the allottees must be taken by dividing it by the plinth area of that block. In fact, the learned Judge has recorded a finding that the learned Counsel for the Board has accepted this suggestion as reasonable, inasmuch as no construction was made with regard to nine blocks. The only difference for the Board is that the recovery of the land cost in respect of nine blocks in which no flats have been constructed would be deferred until constructed is completed in those blocks and allotments were made. The finding of the learned Judge on this aspect cannot be found fault with, particularly in view of the consent of the Board itself.

7. In respect of other components like development charges at Rs.35.50 per sft. cost of civil works at Rs.282.13 per sft. and the fourth component being the cost of amenities at Rs.32/- per sft., the learned Judge has left them untouched inasmuch as the allottees were unable to challenge those items. Nothing has been pointed out by the learned Counsel for allottees (Appellant in Writ Appeal No.901 of 1998) to show that escalation under these heads in palpably unrelated to actual costs.

8. The next component of the cost was said to be charge of 3 per cent for contingencies. It was stated on behalf of the Board that it represents the amount paid for contingent employees. The learned Judge also took note of another item of centage charges at 16.5 per cent, which is said to represent the overhead charges. The learned Judge also considered the G.O. Ms. No.82, Housing, dated 28-5-1970, under which the Government sanctioned a block grant and permitted the Board to recover from the hire purchasers the centage charges at 12 1/2 per cent of the cost of construction for the purpose of meeting the establishment charges. Admittedly, there was no similar GO in respect of flats to be constructed under self-financing scheme. It was thus explained that for these reasons centage charges at 16.5 per cent was adopted, which was the same as adopted by PWD for its own projects. The learned Judge considered the objection on behalf of the allottees that centage charges should be computed only on the basis of cost of work but not on the basis of the cost of the land, apart from the centage charges included being on a high side. The learned Judge proceeding on the basis that the centage charges represent a mode of recovery of overhead and administrative expenses, held that these expenses must include contingent charges also. The learned Judge also held that centage charges need not change from scheme to scheme as the functions of any scheme are similar. The learned Judge also took note of the fact that centage charges were not specifically informed to the allottees by notifying the same. Taking into consideration the fact that the Board had itself charged centage charges at 12 1/2% on construction under hire purchase scheme, the learned Judge held that centage charges should be calculated at 12 1/2 per cent on the cost of the flat, excluding the land value component and also held that recovery of separate contingent charges at 3 per cent shall be desisted in arriving at the final cost.

9. The other component of the cost is relating to interest. Interest was calculated at Rs.80/- per sft. On behalf of the Board, it was stated that an amount of Rs.38,586/-was collected as earnest money deposit. As the period of construction was not to exceed 24 months, the balance expenditure of Rs.25l.912 lakhs with interest at the rate of 19 per cent was calculated to arrive at Rs.95.72 lakhs and this was divided on the total plinth area to arrive at Rs.80/- per sft. On behalf of the allottees, it was pointed out that since the scheme provided payment of amount in three instalments, fiat rate of interest cannot be charged and that it was mistake on the part of the Board in not collecting the amount in advance and the allottees should not be made to bear the burden in full and must be charged a concessional rate of interest, such as 6 per cent. They pointed out that this was the rate of interest charged by the Hon'ble Supreme Court in the decision Indore Development Authority v. Sadhana Agarwal (cited supra). The learned single Judge observed that if the Board had adhered to the scheme as notified, there would have been no occasion to incur any expenditure towards interest as the scheme was self-financing one, and as the Board has unilaterally decided to construct with borrowed funds, it is not fair to pass on the entire burden to the allottees. Taking a balanced view of the matter, the learned single Judge held that interest shall be charged at 19 per cent on 30 per cent of the notified cost namely Rs.3,27,000/- for a period of six months, another 30 per cent for a period of 12 months and balance 30 per cent for a period of 18 months. The learned Judge was guided by the fact that it was not a case where the demand for payment of amounts was made on the allottees and the allottees had neglected or failed to pay them. In this back ground, the learned Judge held that interest shall be charged as stated above and as indicated at Page No. 18 of the impugned judgment.

10. The learned Standing Counsel for the Board Sri Jayaprakasha Rao contended that unless the revised cost arrived at by the Board could be said to be arbitrary, the same cannot be challenged in a proceedings under Article 226 of the Constitution of India. The contention is that this Court on the basis of a detailed examination of the various factors came to its own conclusion as to the estimation of costs and substituted it for the costs arrived at by the Board. The learned Counsel for the allottees on the other hand contended that to ensure that the estimation of the costs was not arbitrary, the Court can examine the various components of the costs to ascertain that they are based on reasonable criteria. It is true that while exercising the writ jurisdiction, this Court is not expected to examine every detail of the construction with reference to the costs incurred and arrived at in substitution of the costs arrived at by the Board.

11. As seen above, the only components of the expenditure in which the learned Judge has directed modification is in respect of centage charges, contingency charges and interest charges on the amounts to be paid by the allottees. A careful examination of the manner in which the learned Judge arrived at modifications under these heads would show that he has not acted beyond the scope of the proceedings under Article 226 of the Constitution of India.

12. In respect of component and centage charges, it is seen that the exerciser undertaken by the learned Judge did not amount to a general and detailed review of the costs but was confined to an appraisal and on application of the principle on which centage charges could be arrived at. Thus, the learned Judge by adopting the parametres of principles ensured that such charges are not levied excessively or arbitrarily.

13. In regard to modification of the burden of interest to be passed on to the allottees, it is pertinent to note that the exercise undertaken by the learned Judge did not involve any meticulous and microscopic examination and review of the facts. The review of the costs under interest charges by the learned Judge is indicative of a balanced approach. It strikes a balance between penalising the allottees for the lapse and inaction on the part of the Board on the one hand and weighing down the Board with the burden of interest costs actually incurred by borrowing. Thus, the finding of the learned Judge cannot be said to be unreasonable. They are not based on a pervasive dissection of the minute involved in the matter but are based on application of broad principles. Further, the finding is based on undisputed material available on record.

14. The only other modification that the learned Judge directed was with regard to the manner of demand and the time to be given for payment of the amounts due by the allottees. The learned Judge was also keen to safeguard the interest of Board inasmuch as he rejected the plea of the allottees that they may be given possession of the flats even without paying the full amount. The learned Judge directed mode of payment, which is reasonable and he directed the delivery of possession only after full payment. Considering these circumstances, the learned Judge cannot be said to have exceeded the scope of proceedings under Article 226 of the Constitution of India, especially in view of what has been held by the Supreme Court in Indore Development Authority v. Sadhana Agarwal (supra).

15. In the result, we do not find any infirmity or illegality in the judgment of the learned single Judge and accordingly we dismiss all these writ appeals. No costs.