Case title:
The Belgaum Urban Development Authority v Dhruva & Anr
Date of Order:
28 April 2023
Bench:
Hon’ble Justice Abhay S. Oka and Hon’ble Justice Rajesh Bindal
Parties:
Appellant: The Belgaum Urban Development Authority
Respondent: Dhruva & Anr
SUBJECT:
The Supreme Court held, if there is no such language in the letter of allotment or the lease-cum-sale agreement that the parties have signed indicating additional payment, the same cannot be demanded for the allotment of the plot. The Belgaum Urban Development Authority's appeal was dismissed by the court while upholding this position. Noting that, while the sale consideration is not included in the lease-cum-sale agreement, the price agreed upon by the parties is plainly stated in the letter of allocation, the court observed that "the price as negotiated between the parties has to be read as part of the lease-cum-sale-agreement".
OVERVIEW:
- The facts of this case are that Respondent in the present appeal made application to the Appellant for allotment of a residential site. The appellant allotted site to the plaintiff. The allotment letter was issued on 12.11.1990. Possession of the site was handed over to the plaintiff. Thereafter, lease-cum-sale agreement was executed on 10.05.1991 in favour of plaintiff/respondent.
- As demand of additional price for the plot was raised from the respondent, suit was filed.
- The Trial Court decreed the suit.
- In appeal, the judgment and decree of the Trial Court was reversed.
- The High Court, in second appeal, reversed the judgment and decree of the lower appellate court. It directed the appellant to execute the sale deed in favour of respondents and further directed to refund the additional price paid by the respondents. The same is under challenge before the Supreme Court.
ISSUES RAISED
- Whether additional price for an allotted plot may be demanded after lease-cum-sale agreement has already been executed if no such clause exists in the agreement?
ARGUMENTS ADVANCED BY THE APPELLANT
- “The learned Counsel appearing on behalf of the Appellant submitted the clause contained in the Allotment letter dated 12.11.1990 mentions that the cost of the plot is tentative. Hence, demand of additional price cannot be said to be illegal as it was on account of enhancement of compensation of the land which was used to carve out the plots assigned to the Respondents-Plaintiffs.
- He also cited the lease-cum-sale agreements dated 10.05.1991 which did not specify a specific amount as payment. It merely states that the price was negotiated and that the Respondents have been permitted to occupy the property until the entire sum has been paid.
- While relying upon the judgment of this Court in Shimla Development Authority v. Asha Rani it was shown that the Supreme Court had allowed the Shimla Development Authority to charge additional amount from the allottees on account of enhancement of compensation for the land acquired. The judgment of this Court in Tamil Nadu Housing Board and Others v. Sea Shore Apartments Owner’s Welfare Association has also been relied upon to submit that if price mentioned is tentative, additional amount can be demanded.
- In the instant case, the Appellant contended that the demand of additional price is fully justified since the same was on account of enhancement of compensation by the Court for the acquisition of land utilized for carving out the plots.”
- ARGUMENTS ADVANCED BY THE RESPONDENT
- “The learned counsel for the Respondents-Plaintiffs argued that when we look at the allotment letter or the lease-cum-sale agreement, there is no clause which says the Appellant can demand additional price from the allottees except on account of variation of size.
- The opportunity to redetermine the price is only provided by Clause 5 of the allocation letter if the plot's size turns out to be different from what was originally estimated.
- To demand additional price from an allottee on any other ground there must be specific clause in the allotment letter, otherwise the price mentioned is final. Which is not the case here. Even the lease-cum-sale agreement, which talks about the negotiated price between the vendor and the vendee, does not help the appellant.
JUDGEMENT ANALYSIS
- “Clause 5 of the allotment letter says if the dimensions of the allotted land vary from allotment to handing over possession, then the allotee must pay the proportionate price increase while the clause in the lease-cum-sale agreement says that the allotted land may be occupied till payment has been made and that the price was negotiated.
- In Ishwar Dass Nassa & Ors. v. State of Haryana & Ors. the Supreme Court considered similar issue where a hire-purchase agreement executed by Haryana Housing Board in favour of the allottee. After ten years, the Estate Manager, Housing Board of Haryana in Sonepat issued a demand ordering the appellants to pay additional price on account of enhanced compensation in connection to the land on which the tenements were constructed. The Court concluded that, in accordance with the terms of the hire-purchase tenancy agreement, the cost of the tenements may increase due to building costs or an increase in compensation for land acquisition. However, the agreement explicitly stipulated that such a claim could only be made within seven years of allocation, hence the demand made from the allottees was unjustified.
- In Preeta Singh (Km) and others v. Haryana Urban Development Authority and Others there was also a dispute over the demand of additional price on account of enhanced compensation for the land. This Court upheld the demand for an additional price due to increased compensation for the acquisition of land that was used to carve out the plots of land, citing Section 2(aa) of the Punjab Urban Estate (Sale of Sites) Rules, 1965, which defines "additional price" as the allotment was in accordance with the rules. In Tamil Nadu Housing Board’s case (supra), Clause 18 of the Agreement made it clear that the allottee would be responsible for making up any difference if the value of the land increased after the total cost of building the flats. There is no such clause in the allotment letter or the lease-cum-sale agreement in the instant case.
- In Shimla Development Authority’s case (supra), the allotment of flats was done under the Self Finance Scheme, where price informed was tentative. The demands of additional price were raised due to increase in construction costs and increase of compensation for land utilized. The Supreme Court ruled that because a private owner's land was purchased under the Self Finance Scheme for the purpose of building apartments, the allottees are responsible for the additional cost associated with the purchase of the land. Additionally, the burden of rising construction costs must be shared by the allottees. The terms of the agreement also specifically provided for payment of enhanced compensation by the allottee. Hence demand of additional price was upheld by the Court.
CONCLUSION
An examination of Clause 5 in the allotment letter shows that the price of the plot may vary in case there is change in the size. The clause must be read in its complete form only. This clause makes no mention of the demand of additional price due to any other element including the one raised in the instant case, namely, which is the enhancement of compensation for the land purchase necessary to carve out the plots. The lease-cum-sale agreement also does not mention the same as because it talks about the negotiated price between the vendor and the vendee who are the Appellant and the Respondent respectively. The lease-cum-sale agreement does not specifically include sale consideration as such, but the price as negotiated by the parties is stated in the letter of allotment and must be interpreted as a part of the lease-cum-sale agreement. The appeal therefore has no merits and is dismissed.
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