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K.V. Krishnan v. The Chairman and - Writ Appeal No. 2355 of 2001 [2003] RD-TN 926 (21 October 2003)

In the High Court of Judicature at Madras

Dated: 21/10/2003


The Hon'ble Mr. Justice R. Jayasimha Babu
The Hon'ble Mr. Justice S.K. Krishnan

Writ Appeal No. 2355 of 2001

K.V. Krishnan
M-117, 2nd Phase,
Santhosh Niwas,
New Housing Board Colony,
Tirunelveli - 7. ... Appellant


1. The Chairman and
Managing Director,
Tamil Nadu Housing Board,
Anna Salai,

2. The Executive Engineer,
Administrative Officer,
Tirunelveli Housing Unit,
E.B. Colony,
Tirunelveli - 627 011. ... Respondents

Appeal under clause 15 of the Letters patent against the order of a
learned single Judge of this Court dated 14.9.2001 made in W.P. No: 9 246 of

For appellant : Mr. G.R. Swaminathan and
Mr. K.K. Muralitharan

For respondents : Mr. D. Veerasekaran,
Standing Counsel for TNHB.

:J U D G M E N T

(Judgment of the Court was

delivered by R. Jayasimha Babu, J.)

The appellant is the allottee of a ready built house. He was allotted the house in the middle income group M-117, Phase II, Santhosh Niwas, New Housing Colony, Perumalpuram, Tirunelveli - 7, by the Tamil Nadu Housing Board. The letter of allotment is dated 12.07.1988. The cost of house as mentioned in that letter, described as "tentative cost" of house and building is Rs.80,000/-. The appellant, being a Government servant, was permitted to pay only the interest for some time and to pay the full cost of Rs.80,000/after he secured a loan from the Government. He secured the loan and paid the sum of Rs.80,000/- to the Housing Board on 15.04.1990.

2. Between 03.08.1988 and 14.03.1991 he had also paid to the housing board a sum of Rs.14,960/- as interest, Rs.560/- as maintenance charges and Rs.36.35 as penal interest. On 12.6.91 the Board refunded to the allottee the sum of Rs. 7,862/- being the amount excess paid towards interest.

3. The lease cum sale agreement which was executed between the parties on 25.10.1988 permitted the appellant to secure a sale deed for that property on payment of the conclusive fixation of the cost of the property. The appellant waited till he completed the repayment of the loan of Rs.80,000/- that he had obtained from the Government and after discharging that loan, he applied to the housing board for his sale deed. That was in the year 1998. The appellant was informed in February 2000 that he should pay a further sum of Rs.29,360/-. The appellant not having paid that sum, a further letter of demand was sent to him on 11.05.2000 demanding a sum of Rs.35,750/inclusive of penal interest.

4. Being aggrieved by that demand, the appellant filed a writ petition which petition having been dismissed, he is now in appeal before us.

5. For the Housing Board it was submitted by its learned counsel that in this scheme there were 780 allottees, 500 of whom have paid the amounts as determined by the housing board. It was submitted by him that the revised cost was intimated to this allottee only in the year 2000 because of the fact that he had approached the housing board for the sale deed only in the year 1998 and not earlier. There is no explanation as to why even after the Board was asked to give the sale deed in the year 1998, the Housing Board waited till the year 2000 to intimate the allottee about the additional amount which he was liable to pay.

6. The basis for the demand of the additional amount, according to the housing board, is the interest on the sum of Rs.80,000/- which was the selling price announced by the housing board on 30.06.1987 till the date of allotment namely 12.07.1988. There is no explanation forthcoming as to why when the letter of allotment was issued on 12.07.1988, that selling price was not revised to include interest from 30.6.87 to 12.07.88 if the housing board was of the view that the selling price should be enhanced from that notified on 30.6.87 to include the interest on that sum from the date of the announcement till the date of allotment namely 12.7.88. It is not the case of the Board that when the selling price was announced, prospective applicants had been put on notice that they would have to pay interest on that price till the date of allotment.

7. A sum of Rs.12,133/- has been calculated by the Housing Board as the amount of interest and penal interest on the sum of Rs.80,000/- for that period. This calculation proceeds on an assumption as if Rs.80,000/- had been lent by the Board to the allottee which amount the allottee had utilised from 30.6.87 to 12.7.88 and on which he had defaulted in payment of interest and, therefore, had become liable to pay interest at the rate of 14 as also penal interest at the rate of 12. To this sum of Rs.12,133/-, as calculated by the Board, the Board has added penal interest at the rate of 12 from April 1990 to July 2000.

8. There is no explanation as to how interest and penal interest could be charged for the period when the board was very much in possession of the property. It had not parted with the same and no obligation had been cast on the allottee to make any payment on the value of the site.

9. After the date of allotment there has been no escalation whatsoever in the cost of the land or in the cost of the structure, as admittedly the lands belong to the Housing Board and there is no further liability on the land and construction had been completed and the cost of the construction had been fully taken note of in the figure of Rs.80,000/- which was the figure at which the Board had offered to sell the houses and on the basis of which offer th e allottees had applied for allotment.

10. In the lease cum sale agreement executed between the parties, it is provided in Class 14 (a) that the Board would sell the property to the lessee for such price as the Executive Engineer and the Administrative Officer of the lessor may, at any time in his sole discretion finally fix and at which time that officer would be entitled to consider whether the price of the land acquired under the Land Acquisition Act has become final by a conclusive adjudication, and also the cost of the construction after the finalisation of the accounts. The decision of the Executive Engineer and Administrative Officer or the lessor as to the price of the property is to be final and binding on the lesseee.

11. The contract no doubt provides that the Housing Board is entitled to revise the price and that price, as revised by it, will be binding on the allottee. The Housing Board itself being a creature of the statute, it is the statutory duty of the Board to periodically formulate schemes and make available flats and houses to the public. It is in discharge of that duty that the Board had formulated a scheme and had invited applications from those eligible and thereafter had proceeded to make allotments. The Board being a statutory body is required to act in a manner which is non-arbitrary. The conferment of discretion on an officer of the Board in terms of the contract does not relieve the board of the duty to act fairly and in a non-arbitrary way, although the discretion so exercised will not be subject to too close a scrutiny, having regard to the fact that it is a power which flows from the contract.

12. Numerous cases have come up before the Courts wherein the statutory bodies like the respondent before us had made allotments of lands or buildings and the rates at which the allotments were made or the escalation as claimed by them have had to be examined by the Courts. One recent decision brought to the notice of the Court by the counsel for the Housing Board is the decision of the Supreme Court in the case of Delhi Development Authority vs. Ashok Kumar Behal and Others (2000 (5) S.C.C. 398).

13. The Supreme Court in that case allowed an appeal against a decision of a Division Bench of the Delhi High Court which had given certain directions to the Delhi Development Authority to revise the cost of the lands as also the cost of construction after having an expert committee go into the relevant figures. While doing so, the Supreme Court referred to the decision rendered by the Full Bench of the Delhi High Court which had, after examining in detail data which had been placed before it by the Delhi Development Authority with regard to that housing scheme, held that the price fixed by the authority was neither arbitrary nor illegal. The Supreme Court, at paragraph 17 of the judgment, observed thus,

" The relevant material had been placed before the Larger Bench and the Bench after taking into consideration the materials placed before it came to the conclusion that the price fixed by the Lt.Governor of Delhi was neither arbitrary nor illegal."

14. It is evident that the statutory bodies which are engaged in the task of formulating housing schemes and allotting the same to the members of the public have a duty to satisfy the Court, when called upon, that their action was neither arbitrary nor illegal. The fixation of the price for the plots or the houses allotted by them is no exception to this rule. If it is found, after a scrutiny of the data placed before the Court by such a body, that the price fixed by it or the price sought to be revised is a result of arbitrary and illegal action, such action is amenable to correction by this Court.

15. The facts that we have already set out speak for themselves. The allotment was made on 12.7.88. The amount which the respondent now seeks to recover is an amount which, even according to it, is an amount which should have been included in the cost as on 12.7.88 but had omitted to be included. The amount which it says should have been included is the amount determined by it as interest on the sum of Rs.80,000/-, the tentative cost fixed as on 30.06.87 till 12.7.88 at the rate of 14 plus penal interest on the same sum for the same period at the rate of 12. As to how penal interest can be levied for this period and passed on to the allottee has not at all been explained. Going by the calculations made by the Housing Board, the price of the house instead of being Rs.80,000/- could have been Rs.91,200/- as on 12.7.88. That figure would include interest on Rs.80,000/- at the rate of 14 for the period from 30.6.87 to 12.07.88. The Board however did not choose to include that in the cost of the house when it made the allotment.

16. It did not even consider that such an additional amount should have been claimed for a long number of years thereafter, as is evident from its conduct. It refunded to the allottee here on 12.6.91, nearly three years after the date of allotment, a sum of Rs.7,862/- which would have been wholly unwarranted had the allottee been regarded as a person who was liable to pay sums in excess of the amount of that refund. It chose to intimate the allottee about this additional amount only 13 years later, in the year 2001. There is no explanation forthcoming for this extraordinarily long delay.

17. The only excuse that has been offered is that the allottee had not, in this period, asked for the sale deed. If the housing board was entitled to the sum it was duty bound to inform the allottee of that demand so that the allottee could pay it at the earliest possible time. The Board cannot by remaining silent regard the additional amount as a loan given to the allottee on which it was entitled to receive interest as also penal interest. According to the Board calculations a sum of Rs.17,817/- as interest plus a sum of Rs.1,273/- is being claimed as penal interest on the sum of Rs. 12,133/- for the period from April 1990 to July 2000. The Board has also demanded further interest for the period subsequent to 2000.

18. This manner of penalising the allottees can only be regarded as arbitrary. It is apparent that the people who dealt with the finances of the Board at the time the plot was allotted had not regarded that any amount was required to be added to the sum of Rs.80,000/- which was the selling price that had been already announced and that it was not their view that price was required to be revised upwards because the date of allotment was about one year subsequent to the date of the announcement of the sale price. This idea that interest should be claimed for that period and added to the sale price appears to have occurred to the Board more than a decade later. The revision sought to be made in that sale price by reason of such a notion entertained by the Board about 12 years after the date of allotment cannot be regarded as something which is fair to the allottee.

19. Having regard to these facts, the Housing Board is directed to execute the sale deed in favour of the appellant after collecting from him the sum of Rs. 11,200/- being the amount of interest at the rate of 14 on the sum of Rs.80,000/- from 30.6.87 to 12.7.88 together with interest thereon at 8 from 1.6.2001 till the date of payment.

Index : Yes

Website : Yes



1. The Chairman and

Managing Director,

Tamil Nadu Housing Board,

Anna Salai,



2. The Executive Engineer,

Administrative Officer,

Tirunelveli Housing Unit,

E.B. Colony,

Tirunelveli - 627 011.


Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites


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