Holding

The determination of cost of house/flat or escalation of cost cannot be arbitrary or erratic; the authority must justify escalation, and if there is a limit, it cannot exceed that limit; delay caused by the authority cannot be used to burden the allottee.

Summary

The Kanpur Development Authority (KDA) floated a housing scheme in 1978 for Middle Income Group (MIG) with an estimated cost of Rs. 48,000 per house, with a clause that escalation could not exceed 10%. The respondents applied within the deadline, but due to litigation initiated by some other applicants, the KDA delayed allotment. Construction was completed in 1980, but the KDA did not allot the houses. In 1994, the KDA increased the price to Rs. 2,08,000, which was nearly four and a half times the original estimate. The respondents filed writ petitions, and the High Court quashed the price increase and directed delivery at the brochure cost. The Supreme Court upheld the High Court's decision, holding that the delay was attributable to the KDA, and the escalation clause limited any increase to 10%. The Court also noted that the cost should be determined as on the date of completion of construction, not on the date of delivery. The appeals were dismissed.

Issues considered

Whether the KDA could increase the price of houses from Rs. 48,000 to Rs. 2,08,000 despite the brochure limiting escalation to 10%?
Whether the delay in allotment was attributable to the KDA, and if so, whether it could burden the allottees with increased costs?
Whether the High Court was correct in quashing the price increase and directing delivery at the original cost?

Legislation cited

Code of Criminal Procedures. 195, s. 340
Indian Penal Code, 1860s. 120, s. 193, s. 196, s. 199, s. 200, s. 463, s. 464, s. 465, s. 467, s. 468, s. 471

Subjects

Development AuthorityHousing SchemePrice EscalationArbitraryNo Profit No LossAllotmentDelayBrochureConsumer Protection

Judgment

A KANPUR DEVELOPMENT AUTHORITY
v.
SMT. SHEELA DEVI AND ORS. ETC. .'
NOVEMBER 28, 2003

B [SHIVRAJ V. PATIL AND D.M. DHARMADHIKARI, JJ.]

Development Authority-Housing Scheme floated in 19 78-Tentative
cost of MIG Flat fixed at Rs. 48, 000-Applications received for such
scheme less than total number offlats to be constructed under the scheme-
C Brochure containing a clause that the price was not to be escalated in
excess of 10% ofthe tentative cost-Construction offlats under the Scheme
was completed in 1980-However, flats not allotted to eligible applicants
who applied for the scheme-No fault was attributed to the applicants-
In 1994 the price of the Flat was increased from Rs. 48,000 to Rs.
D 2,08,000-Challenge to High Court directing delivery ofpossession offlats
at the cost mentioned in the brochure-Held, valid-The cost ofconstruction
of flats was to be determined on the date of the completion of the
construCtion and not on the date ofdelivering possession - The determination
of cost of house/flat or escalation of cost cannot be arbitrary or erratic~
.E The Development Authority could not enhance the prices for the unforeseen
or/or compelling reasons beyond control of the Development Authority
even as against the terms and conditions contained in. the brochur~'. ·"
t·.

Appellant floated three housing schemes with financial support
from 'HUDCO' "on no profit no loss basis" for Lower Income GFb'up;
F and Middle Income Group. A brochure was issued showing the' cost
of each house and terms and conditions of the scheme. Respondents
applied for Middle Income Group (the "MIG") and were not allMteci
the house after more than 18 years for no fault of theirs. The estimated
cost of each house was specified in the brochure, which was Rs. 48,000.
G The houses were to be allotted among the valid applicants by lottery
and on receipt of letter of information of allotment, the applicants ha'd
to deposit the balance of the I/4th of the cost of the house. Thereafter
the physical possession of the houses was to be delivered to the allottees
and the remaining 3/4th of the cost of the house was to be paid by t'1e
H allottees in 48 quarterly installments in 12 years. Out of 111 MlG flats
374
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI 375

only 108 were valid applications so all the applicants were required to A
be allotted the MIG flats when l/4th of the cost of the flats were
deposited. However, the Appellant chose to include the names of some
more persons after the last date, which gave rise to disputes. Some
affected applicants filed suits and the court finding fault with the
Appellant decreed the suit and directed it to allot the houses to 108 B
valid applicants keeping 8 houses reserved for the persons who were
plaintiffs in those two suits. The appeals filed by the Appellants against
the decree passed by the trial court were also dismissed. Instead of
complying with the decree, Appellant increased the cost of house from
Rs. 48,000 to Rs. 2,08,000 and directed the applicants to deposit further C
sum of Rs. 40,000 and in case of default the name of such applicant
would not be included in the list of lottery for allotment of houses. Some
of the Respondents filed Writ Petitions, which were admitted. The High
Court quashed the order issued by the Appellant and directed the
Appellant to deliver the possession of the houses to the Respondents D
at the cost fixed in the brochure. Hence these appeals.

It was contended by the Appellant that the High Court failed to
appreciate that the Vice Chairman of the Appellant could determine
the cost of the houses and the cost fixed by him was reasonable and
fair; t!iat the Appellant had brought out the scheme for allotment of E
houses on 'no profit no loss basis'; that the cost fixed was based on the
relevant materials and it was not arbitrary so as to interfere with the
same; that it was not open for the High Court to hold that the price
of the house fixed was arbitrary and unreasonable without going into
the method or the basis for calculating the cost of the house; the delay F
in allotment of houses was not deliberate or intentional but was
because of the long pending litigation in court; that the houses were
constructed by raising loans under the HUDCO Scheme; that enor-
mous amount of interest has been paid on the loan amount; and that
the appellant had to pay heavy compensation for the acquisition of
~~ G
It was contended by the Resp'.>ndents that the delay in allotment
of houses and delivering possession of the same to the Respondents was
on account of the Appellant; the Respondents compiled with every
condition of the brochure; the unreasonable stand and the conduct of H
-
376 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A the Appellant was responsible for delay and no blame can be put on
the Respondents; that the suits were filed by 8 Plaintiffs and nothing
prevented the Appellant from allotting the houses to the Respondents
keeping aside eight ·houses for those Plaintiffs as houses were available
in excess of the Apptications; that the interim orders in those suits were
B passed ·in 1981/1982 whereas the Ap,pel1ants moved the court for
vacating the interim order in t990; that the present Respondents were
not parties in those suits; that as .per the br-0chure issued by the
Appellant, escalation of cost of houses could not exceed 10%; that the
cost of tbe house should be determined as on the date of com·pletion
of itbe 1houses and .not on the date of the allotment or delivering
C possession of tbe !10uses; and that ithe Respondents were salaried
employees having fosser income and they had arranged their financial
affairs •With a ho,pe 1to .get the houses; that had they been given the
,possession oftbe·.houses :in 1981, after its construction, they could have
saved money paid by way of rent to houses where they were staying.
D
Dismissing the appeals, the Court

HELD : 1.1. It 'is not in dispute that the Respondents made
applications within the time fixed, satisfied the terms and conditions
E for aUotment of houses and they wer:e not the Plaintiffs in the suits filed
in 1981/1982. Tfie const·ruction of houses was completed in 1980, the
cost ofthe house was determined as on 24.12.1994. Nothing prevented
the Appellant from allotting houses to the Respondents, when the
houses were ready_ for allotment .particularly, when houses available
F were more than the applications received before the last date. For no
fault on the Respondents, they were made to wait for more than 1'8
years. As per the brochure the houses were to be allotted t.hrough
lottery system by drawing lot among the eligible applicants, who got
themselves r:egistered through the pr.escribed format within the time
fixed and paid the required money within time. In the MIG Scheme,
G 111 houses were available but the number of applicants were less
including the Respondents. Only 8 pe1·sons had filed suit in the years
1981/1982. There shou.ld have been no difficulty in allotting the houses
and delivering possession to the Respondents immediately on their
completion in 1980. In that event, the payment of interest on loan said
H to have been taken by the authority would not have arisen. 1386-C-F)

,
»
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI 377

1.2 It cannot also be ignored that the Respondents were I are mostly A
salaried employees having monthly income of Rs. 601 to Rs.1500. They
must also have adjusted and arranged their finance and affairs to make
payment towards the houses. It may also be kept in mind the allottees
were expected to pay the remaining amount after initial deposit in 48
installments. Even having regard to the payment of money in B
installments, the estimated cost which was fixed at Rs. 48,000 with a
clear and express understanding that increase in the cost of the house
could be up to 10% of the cost of the house. Jn the brochure, it is also
mentioned that the price of the house mentioned is totally approximate
and that the final price of the houses would be determined by the Vice
Chairman, on the completion of the houses. Prices of the houses in these C
cases were determined as on 24.12.1994 as against the express clause
that the determination of the final price shall be as on the date of
completion of the construction of the houses i.e. in the year 1980. As can
be seen from the prescribed form of application and rules for payment
the increase of the cost of the house can be up to 10%. Further it is clear D '
from the prescribed form of application as filed by the Respondents
that the estimated cost of the house is Rs. 48,000, which could exceed up
to 10%. (386-F-H; 387-A-CI

1.3. The arguments advanced on behalf of the appellant to the
effect that the Vice Chairman has power to determine the prices of the E
houses and the price determined is binding on the Respondents, runs
contrary to brochure. Hence it cannot be accepted. (387-CJ

1.4. For no fault of the Respondents they cannot be penalized to
pay the cost of construction as determined on 24.12.1994 when the F
houses were ready in 1980. [387-D)

1.5. The High Court rightly concluded that delay in allotting and
in delivering possession of the houses to the Respondents was caused
due to the lapse on the part of the Appellant, and, therefore, in the
fairness of things, the Appellant should not be allowed to determine G
unjust and unfair cost of the houses in an arbitrary ·manner. [388-E]

Delhi Development Authority v. Pushpendra Kumar Jain, (1994]
Supp. 3 SCC 494 and Prashant Kumar Shahi v. Ghaziabad Development
Authority, (2000] 4 sec 120, distinguished. H
378 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A 2. As regards the claim that the Appellant ~orks on no profit no
loss basis and it has raised huge loan under the HUDCO scheme _for
construction of houses and it has to pay heavy interest on the amount
ofloan raised, the Appellant neither urged nor laid any foundation for
this argument before the High Court. No details or particulars were
B given as to the amount of loan raised and the period for which interest
has been paid in respect of the houses constructed which are to be
allotted to the Respondents. (388-F-G]

3. As found, there was delay on account of the Appellant and if
that occasioned payment of interest, the re:opondent cannot be held
c responsible, having regard to the terms and conditions contained in the
brochure. This apart, no justifiable case has been made out for
escalation of price of the houses in these cases, to say that the Appellant
could enhance the prices for the unforeseen or for compelling reasons
beyond its control even as against the terms and conditions contained
D in the brochure. (388-H; 389-A-B]

4. Each case is to be decided in the facts and circumstances of the
case in the light of the scheme published /framed and the terms and
conditions mentioned in the brochure and/or in the prescribed form
E of application in the matter of escalation/determination of cost of house/
flat. However, cases where there is limit for fixing the escalation of cost,
normally the price .of house or flat cannot exceed the limits so fix~d.
The determination of cost of house/flat or escalation of cost cannot be
arbitrary or erratic. The authority has to broadly satisfy by placing
F material on record to justify the escalation of cost of a house/flat.
Whether the delay was caused by the allottee or the authority itself is
also a factor, which has bearing in determination of cost of house/flat.
The unforeseen cause or the reason beyond control of the authority in
a given case may be another factor to be kept in view. (393.;C-E]

G Indore Development Authority v. Sadhana Agarawal (Smt.) and Ors.,
(1995) 3 SCC 1 and Bareilly Development Authority v. Ajay Pal Singh,
(1989] 2 sec 116, referred to.

5. In these cases the tentative cases of houses was fixed at Rs.
H 48,000 but the final cost was determined .at Rs. 2,08,000. This increase
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.] 379

is not mere escalation but it is a multiplication by almost four and half A
times, although escalation could not exceed 10% as is evident from the
contents of the brochure read with prescribed form application for
allotment of house. itself. Contentions of the appellant run contrary to
the contents of its own brochure on which the Respondents acted
adjusting their financial affairs understanding that the cost of the B
houses would be fixed in terms of brochure and that too not exceeding
10% of the estimated cost fixed initially. (393-E-Gl

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 913-914
of 1998.
c
From the Judgment and Order dated 21.5.97 of the Allahabad High
Court in c.M.W.P. Nos. 303 and 9478 of 1995.

Vikas Singh ancl Ms. Amrit Narayan for L.R. Singh for the Appellant.
D
Ranjeet Kumar, Ms. Bina Gupta, Ms. Rakhi Ray and Ms. Sreedevi
Raja for the Respondents.

The Judgment of the Court was delivered by

SHIVARAJ V. PATIL, J. Kanpur Development Authority (KDA) E
has filed these appeals challenging the correctness and validity of the
common order dated 21.5.1997 made by the Division Bench of the High
Court in Writ Petitions.

Three schemes were floated by KDA in September, 1978 with F
financial support of 'HUDCO' "on no profit no loss basis". The three
scheme were; (1) For Economically Weaker Section; (2) For lower Income
Group and (3) Middle Income Group. Applications were invited in the
prescribed form fixing the last date as 29.9.1978. The applications were
to be made in the prescribed form along with the earnest money for each
category. A brochure was issued showing the cost of each house and terms G
and conditions of the Schemes. In these cases, we are not concerned with
the houses constructed in two other schemes which were allotted to the
applicants on the basis of lottery on 25. l 0.1980 and cost specified in the
brochure and the possession of the houses was delivered to them. However,
the applicants (respondents herein) in the Middle Income Group were not H

l
380 SUPREME COURT REPORTS '[2003] SUPP. 6 S.C.R.
A allotted the houses and their applications were kept pending for more than
18 years for no fault of them.

As per the terms and conditions mentioned in the brochure inthe MIG
Category, the applications were to be made along with the earnest money
B by 29 .9 .1978. The estimated cost of each house was specified in the
brochure as Rs. 48,000. The persons wh0se income was between Rs. 601
to Rs. 1500 per month were eligible for Middle Income Group Houses: The
houses were to be.allotted among the valid applicants byfottery. After the
lottery was drawn and on receipt of letter of information-of allotment, the
applicants had to deposit balance of the 1/4th of the cost of the house.
c Thereafter, physical possession of the houses was to be delivered to the
allottees and the remaining 3/4th of the cost of the house i.e. Rs. 36,000
was to be paid by the allottees in 48 quarterly installments in 12 years with
11.5% interest as per the brochure. Since there were only 108 valid
applications altogether for 111 MIG houses, all the applicants could have
D been allotted MIG houses when l/4th cost of the house was deposited by
the applicants as on 31.3.1979, what remained was only to draw a lottery
among the I 08 valid applicants for the specific houses to each one of the
applicants. And thereafter the possession of specified house was to be
delivered to each allottee as the constructions of 111 MIG houses were
E completed in 1980.

However, KDA chose to include names of some more applicants after
the last date i.e. 29.9.1978, which gave rise to disputes.· Some affected
applicants filed suits in 198 Ill 982. None of these respondents were parties
F in those suits.

The court finding fault with the KDA decreed the suit and directed
it to allot the houses to I 08 valid applicants.keeping 8 houses reserved for
the person who are plaintiffs in those two suits. The appeals filed by the
KDA agair.st the decree passed by the trial court were also dismissed.
G Instead of complying with the decree, KDA increased the cost of each
houses from Rs. 48,000 to Rs. 2,08,000 by the notification dated 24.12.1994
stating that each applicant had to deposit a further sum of Rs. 40,000 and
in case of default the name of the applicant-would· not be included fa the
list of lottery for allotment of houses. In•these circumstances, some of the
H respondents were compelled to file writ petitions.
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI (PATIL, J.] 3lU

The writ petitions were admitted and interim orders were issued to A
include the names of 85 general category applicants in the lottery. In spite
of the interim order dated 4.1.1995, KDA again issued a notification on
l 0.1.1995 stating that the date of lottery had been extended to 17.1.1995.

The lottery was drawn among the 108 valid applications, keeping 8 B
houses reserved to the plaintiffs in the two suits. In February, 1995,
information of allotment was issued to all the allottees along with demand
for Rs. 24,000 from each one of them towards first 6th monthly installment.
The High Court in the writ petitions stayed this demand. The KDA filed
the counter affidavit in the writ petitions taking a stand that it was entitled C
to escalate the price as per the brochure; the initial price fixed as the cost
of the houses, was only tentative; the· delay in drawing of lottel')' and
allotment of house was on account of the suits filed and because of the
pendency of the cases. According to the KDA, the action taken by it in
increasing the cost of the. house to Rs. 2,08,000 was quite justified. The D
Division Bench of the High Court, after detailed consideration of the
respective contentions, allowed the writ petitions granting relief to the
respondents by quashing the order dated 24.12.1994 of the KDA increasing
the cost of the houses and directed it to .deliver the possession of the houses
to the respondents on the cost fixed in the brochure.
E
The learned counsel for the appellant urged that the High Court failed
to appreciate that the Vice Chairman of KDA could determine the cost of
the houses and the cost fixed by him was reasonable and fair; the High
Court could not have interfered with such determination of cost. The High·
Court should have .taken into consideration the position that the KDA F
brought out the scheme for allotment of houses on 'no pwfit and no loss
basis'; the cost fixed was based on the relevant materials and it was not ·
arbitrary so as to interfere with the same; it was not open to the High Court
to hold that the price of the house fixed was arbitrary and unreasonable
without going into the method or the basis for calculating the cost of the G
house. The delay in allotment of houses was not deliberate or intentional;
it was because of long pending litigation in courts. The learned counsel
added.that KDA constructed houses by raising loans under the HUDCO
Scheme; it has paid enormous amount of interest on the Joan raised; it had
to pay heavy compensation for acquisition of land.
H
382 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A On the other hand, the learned senior counsel for the respondents
argued fully justifying the impugned order. He submitted that the delay in
allotment of houses and delivering the possession of the same to the
respondents was on account of the appellant; the respondents complied
with the every condition contemplated in the brochure; the unreasonable
B stand and conduct of the appellant was responsible for delay and no blame
can be put on the respondents in that regard. Two suits were filed in 1981/
1982 by eight plaintiffs in all. Nothing prevented the appellant from
allotting the houses to the respondents keeping aside eight houses for the
eight· plaintiffs as they were available in excess of the applications. The
C appellant moved for vacating the interim order in those suits filed in 1981 I
1982-only in 1990. The present respondents were not' parties in those suits.
The-appeals filed by the KDA against the decree µassed in the suits were
dismissed on 24.5.1994. The learned counsel fmther contended that as per
the brochure issued by the appellant, escalation of cost of houses could not
exceed l 0%; cost of the houses should be determined as on the date of
'completion of the houses and not on the date of the allotment or delivering
-the possession of the houses. The appellant has tried fo prosecute parallel
remedies inasmuch as it filed review petitions before the High Court and
special° leave petition before this Court against the impugned order.· The
E respondents were salaried employees having income between: Rs. 601 to
Rs. 1500 per month; they had arranged their financial affairs with a hope
to get houses. Had they been given the possession of the houses immediately
after their completion in 1981, they could have saved money paying by
way of rent to houses where they were staying. The learned counsel drew
. · our attention to I.A. Nos. 7-8 of2003 filed by the respondents to take action
.F against the appe1la:-1t under Section 340 read with Section 195 of the Code
of Criminal Procedure by ordering an inquiry into the offences committed
by the appellant under Sections 193, 196, 199, 200, 463, 464, 465, 467,
468, 4 71 read with Section 120-B of the Indian Penal Code in ~espect of
production of false and fabricated documents and giving false evidence
G during the proceedings. In these applications it is specifically averred that
the appellant produced a translated copy of the brochure (Annexure A- I)
alleging the same to contain the 1978 Scheme for allotment of houses in
Mohalla Barra Third Phase, Kanpur. The correct copy (translated) of the
brochure that was given to the respondents at the time of application for
: H the said scheme is filed as Annexure A-2. The original copy in Hindi was
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.] 383

placed before us during the hearing. According to the respondents Annexure A
A-1 was filed before the High Court by the appellant, which is fake,
fabricated and materially different from the true translation of the original
brochure and that the said document has been filed by the appellant with
oblique motives to thwart/alter the course of justice. It is further stated in
these I.As. that the case of the appellant before this Court is based on the B
premise that "In the brochure Clause 4 relating to payment of price,
stipulated that the final price shall be determined by the Vice Chairman
of the KDA and that the said price shall be determined by the Vice
Chairman of the KDA and the price would be binding on the applicants.
The brochure for allotment of houses under the Scheme also provided that C
the Vice Chairman of the KDA is empowered to alter/change the price/
· shape of the houses shown in the brochure and it shall be binding on every
applicant". The prayer is made in these I.As. to order for a preliminary
inquiry into the offences committed by the persons responsible in the
appellant authority during the course of the judicial proceedings and after D
recording the findings make a complaint to the Chief Judicial Magistrate
for the prosecution of the accused persons in accordance with law. During
the course of hearing when the original brochure in Hindi was produced
on behalf of the respondents the learned counsel for the appellant did not
dispute its correctness and authenticity.
E
We have carefully considered the respective submissions made on
behalf of the parties and to appreciate them, it may be necessary to refer
to the relevant tenns and conditions under different headings contained in
the brochure. In the light of the controversy as to the translated copies of
F'
the brochures produced by the appellant and the respondents and in view
of what is stated above in relation to them the relevant terms and conditions
contained in translated copy of the brochure (Annexure A-2) filed along
with I.A. Nos. 7-8 on comparison of the same with the original in Hindi,
reads : -
G·
"Signature
(L.N. Tripathi) (Rubber stamp)
Head Cleark (Sales)
Kanpur Development Authority
H
384.· SUPREME COURT REPORTS [2003] SUPP. ·6 S.C.R.

BURRA HOUSING CONSTRUCTION SCHEME
(financially supported1·by. HUDCO)

Third Phase

(Application Form)

KANPUR DEVELOPMENT AUTHORITY

Price Rs. 5·

c "(Application form for applicant only)

KANPUR DEVELOPMENT AUTHORITY No;: .......... .
(without putting adverse effect)

Price Rs. 5
D;
BARRA·HOUSING SCHE\1E

To:

Vice Chairman
E Development Authority
Kanpur

Sir, .

f.: I/We: ..................................................................... son/wife of·
......................................................................................... apply for.
l:\ ·house in the proposed 'houses under "Barra~.iGran Ninnan
Yogna"· of Kanpur:Development Authority; the estimated cost of
which· is Rs. 48,000' (which ·can also exceed ·upto I 0%)
G:
"SYSTEM AND RULES OF ALLOTMENT OF HOUSES

(8) ·The Vice~Chairman can ·change any rulec.or,.cn~cancel and
f, can make other rule which shall be acceptable .to.the applicant."
H 1·
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.] 385

"KANPUR DEVELOPMENT AUTHORITY A
BARRA HOUSING CONSTRUCTION SCHEME
Details of House & Rule for Payment

SI. Category Area Details Monthly Sale Adv. 31.12.78 31.12.79 Qtly. Rate
No. of house of land
In sq.
of
house
income
of family
price
of
amt.
with
. install- of
ments intere- B
mt. Not house appli- st/year
exceeding which cation
can
increase
upto
10% c
1 2 3 4 5 6 7 8 9 10 11

1. ...............

2. ...............
D
1500 ' 2500 4500 11.5%
3. Middle 167.20 2 rooms, 48000 5000 48
Income drawing
Group dinning,
Bath&
Toilet
Room&
Lounge E
In the application form as prescribed by the KDA, it is clearly
mentioned that the estimated cost of the house in MIG schr,me is Rs, 48,i..OO
(which can also exceed up to 10%). There was some controversy with
regard to the terms and conditions mentioned in the brochure. It was F
contended on behalf of the respondents that there was deliberate misrep-
resentation by KDA before the High Court by filing incomplete and
incorrect extract of Brochure. Before us, not only translated copy but
original ofBrot:hure in Hindi itself was produced by respondents and there
. was no controversy as to the terms and conditions in relation to the relevant
clauses extracted above. As rightly contended on behalf of the respondents G
there is no clause 4 in the brochure re,lating to payment of price on which
the appellant claimed that the Vite-Chairman of the KDA has the right to
increase the price and fix the final price that would be binding on the
applicants. This being the position, the very foundation for increase of the
price of houses and justification thereof itself is destabilized and knocked H
386 SUPREME COURT REPORTS [2003] SUPP; 6 S.C.R.

A down. Cfause 4 of the brochure is altogether different, which reads:-
"(4) House category 2 and 3, the interested applicants to deposit
full amount of the house, will have to deposit balance of the
I/4th of cost by 3 l.12.1978. The if!formation of lottery will be
B sent by registered·post on the address mentioqed in the application
form. The remaining 3/4th .of the cost of the house will have to
be deposited in cash or by Bank draft in favour of Development
Authority within 60 days from the information of lottery given by
registered post, otherwise all proceedings regarding allotment will
be cancelled and the advance money will be forfeited."
c
It is not in dispute that the respondents made applications within the
' • l '
time fixed, satisfied the terms and conditions for allotment of houses and
they were not the plaintiff in the suits filed in 19810982. The construction
of houses was completed in 1980, the cost of the house was determined
D as on 24.12.1994. Nothing prevented the KDA from allotting houses to the
respondents, when the houses were :ready for al1otment. Particularly, when
houses available were more than the applications received before the last
date. For no fault of the respondents, they were made to wait for more than
18 years. As per the brochure, the house were to do allotted through lottery
E system by drawing lot among the eligible applicants, who got themselves
registered through the prescribed format within the time fixed and paid
required money withi.n time. In the instant case in MIG scheme, 111 houses
were available but the number of applications were less including the
respondents. Only 8 persons had filed suits in the years 1981/1982. There
F should have been no difficulty, in allotting fhe houses and delivering the
possession to the respondents immediately <?n their complet.ion in 1980. In
that event, the payment of interest on loan said to have been taken by the
authority would not have arisen. It can,not also be ignored that the
respondents were/are mostly salaried employees having monthly. inco!Ile
G of Rs. 601-1500. They must also have adjusted.and arranged their finances
and affairs to make payment towards the houses. It may also be kept in
mind that the allottees were expected to pay the remaining amount after,
initial deposit and first installment, in 48 jnstallments. Even having regard
to the payment of money in installments, the estimated cost which was
H fixed at Rs. 48,000 with a clear and express understanding that increase
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.] 387

in the cost of the house could be up to I 0% of the cost of the house. In A
the brochure, it is also mentioned that the price of the house~ mentioned
is totally approximate and that the final price of the houses would be
determined by the Vice Chairman, KDA, on the completion of the houses.
Prices of the houses in these cases were determined as on 24.12.1994 as
against the express clause that the determination of the final price shall be B
as on the date of completion of the construction of the houses i.e. in the
year 1980. As can be seen from the prescribed form of ai;plication and rules
for payment the increase of the cost of the house can be up to 10%. Further
it is clear from the prescribed form of application as filled by the
respondents that the estimated cost of the house is Rs. 48,000 which could C
exceed up to 10%. The argument advanced on behalf of the appellant to
the effect that the Vice Chairman has power to determine the prices of the
houses and the price determined is binding on the respondents, runs
contrary to brochure. Hence it cannot be accepted.

D
Further for no fault of the respondents they cannot be penalized to
pay the cost of construction as detenni~ed on 24.12.1994 when the hous.es
were ready in 1980. As can be seen from the impugned oraer, the High
Court has found thus : -

"It was undesirable conduct of the authority which gave rise to E
the civil litigation. There were no restraints and constraints for the
respondents in drawing the lottery and making the allotments to
the genuine applicants even during the pendency ofthe civil suit
and appeal before the District Judge. There is nothing in the
counter affidavit to demonstrate that the respondents were under F
legal obligation to refuse the allotment of the houses to the persons
or make delay in allotment of the houses to them. So in absence
of a reasonable and sufficient justification preventing the
respondents to make allotment in 1979, we feel that the respondents
should be blamed for delay in. making the allotment." G

The High Court has further observed :

"It may be mentioned that the petitioners deposited the installments
under the hope and trust that they will get the houses within the H
388 SUPREME COURT REPORTS [2003] SUPP. 6 S;C.R.

time schedule advertised at the initial.stage. Much time is elapsed
between the registration of the applications for aliotment of the
houses and actual construction and delivery of possession there-
after. It is worth mentioning that the petitioners might be living
in the rented house since 1979 and they might have managed their
financial position in such a manner that after the deposit of the
installments they will get the house of their own and thereafter
they will be· free- from· payment of house rent and then they wi II
be shifted from the rented ·house to the allotted house, but. on
account of inordinate delay in.delivery of possession of allotted
c house;.their financial calculation and expectation stands frustrated
causing.various types of financial loss to them. Ori the other hand,
once th~ authorities made-'Offers-and the same were accepted,by
the allottees, with. the legitimate -exception, the statutory obliga-
tion cast upon the authorities to complete the same within the time
schedule mentioned in the offer and if they fail to discharge the
D.:.
same, they should be held responsible for it and not the petition-
ers."

The High Court finally concluded that delay in allotting and in
E delivering the possession of the houses to the respondents was caused due
to the lapse on the part of the appellant, and, therefore, in the fairness of
things, the KDA should not be allowed to determine unjust and .unfair cost ·
of the houses in an arbitrary manner.

We have no good reason·to take a different view in the light of what
F is stated above. We have to note ·one more submission made on behalf of
the appellanLthat the appellant works on no loss and no profit basis and
it has raised ,huge .loan under. the HUDCO scheme for construction of
houses and iLhas to .pay heavy interest on the amount of loan raised. The
appellant neither urged nor laid any foundation for this argument before
G; the High Court. No,details and.particulars were given·as to the amount of
loan raised and the period for which interest has been paid in respect of
the houses constructed which are to be allotted to the respondents. ,

Further the final price ofthe houses had to be determined on the date
H of their completion. As found, there was delay on account of the appellant
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.) 389

and ifthat occasioned payment of interest, the respondents cannot be held A
responsible, having regard to the terms and conditions contained in the
brochure. This apart, no justifiable case is made out for escalation of price
of the houses in these cases, to say that the appellant could enhance the
prices for the unforeseen or compelling reasons beyond control of appel-
lants even as against the terms and conditions contained in the brochure. B

The learned counsel for the appellant cited two decisions in Delhi
Development Authority v. Pushpendra Kumar Jain, [1994] Supp. 3 SCC
494 and Prashant Kumar Shahi v. Ghaziabad Development Authority,
· [2000] 4 SCC 120, in support of his submissions. In our view both the
decisions do not help the appellant when we look at the facts of those cases C
and the views expressed therein.

In the case of Delhi Development Authority (supra) the facts were that
Delhi Development Authority (DDA) published a scheme called "Regis-
tration Scheme of New Pattern, 1979 of intending purchasers of flats to D
be constructed by Delhi Development Authority" providing a procedure
for allotment of flats. In the brochure, clause (11) provided schedule of
payment. Clause (14) was to the effect that "it may please be noted that
the plinth area of the flats indicated and the estimated prices mentioned
in the brochure are illustrative and are subject to revision/modification E
depending upon the exigencies of lay-out, cost of construction etc.". The
Court took notice that there were always more applicants than the number
of flats available. The DDA had been adopting the method of draw of lots
among the registered applicants to select the allottees. The writ petition was
filed by one of the allottees because between the date on which lots were
drawn and the date on which the allotment was communicated to the F
respondent, the land rates were revised by the DDA by the circular dated
6.12.1990, as the_re has been substantial enhancement of land rates in the
region of about 50 to 70%. Since the allotment was made ot allottee on
January 9/13, 1991, he was called upon to remit the amount on the basis
of revised land rates as aforesaid. The Division Bench of the High Court G
accepted the plea of the allottee writ petitioner. This Court, allowing the
appeal filed by the ODA, found fault with two reasons given by the High
Court:(l) Though the draw was held on 12.10.1990, the allotment-cum-
demand letter was issued to the respondent only on January 9/13, 199\.
This delay was the result of inefficiency of the DDA, and (2) as the issue H
390 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A of allotment-cum-demand letter was delayed in the office of DDA, it
cannot charge the revised land rates to the respondent inasmuch as the
respondent became entitled to get the flat on 12. l 0.1990; the revision of
land rates subsequent to the draw of lots cannot effect the respondent. This
Court held that there was no legal basis for holding that the respondent
B obtained the vested right to allotment on the draw of lots as the system of
drawing of lots was resorted to with a view to identify the allottee; it was
not the allotment by itself. Mere identification or selection of the allottee
does not clothe the person selected with a legal right to allotment at the
price prevailing on the date of draw of lots. The scheme did not say so
C either expressly or by necessary implication. On the contrary clause (14)
made provision for modification or revision of cost of construction, etc.
On facts it was also found that there was no unreasonable delay or
inefficiency on the part of the DDA. Further, the validity or justification
of the revision ofland rates by circular dated 6.12.1990 was not questioned
D in the writ petition. But in the present case the facts are entirely different.
On fa~ts it is found that there has been unreasonable and unjustified delay
on the part of the appellant in allotting and delivering the possession of
the houses. The clause in regard to determination of price is not similar
to clause (I 4) in the aforementioned case of DDA. The cost of escalation
could not exceed l 0% of the tentative cost. The cost of construction of
E house in these cases on hand was to be determined as on the date of the
completion of the construction of the house and not on the date of
delivering possession of the house. Unlike in the case of DDA it was n•)t
the case of revision of land rates alone, that too in the absence of any
circular indicating revision of cost of land before allotment or delivery of.
F possession of houses.

The case of Prashant Kumar Shahi, aforementioned, is also of no help
to the appellant. It supports the case of the respondents. This Court held
that if the authority is found to be re~ponsible for the delay in delivery of
G the possession of the plots in terms of the agreement arrived at or acc~rding
to the assurance given in the brochure~ the allottee cannot be burdened with
the interest on the balance amount not paid by him. But on the facts of
that case fault was found with the allottee in reagard to the delay in
payment. As already recorded above, in these appeals, with which we are
H concerned, delay was on account of the appellant. authority itself.
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.] 391

The learned counsel for the respondents in support of his submissions A
cited the decision of this Court in Indore Development Authority v.
Sadhana Agarwal (Smt) and Others., [1995) 3 SCC l. In the facts and
circumstances of that case having regard to the reasons for the increase in
the cost no interference was called for by the High Court. Further, the High
Court was justified in saying that in such circumstances, the authority owed B
a duty to explain and satisfy the court, the reasons for such high escalation.
The High Court has to be satisfied on the materials on record that the
authority has not acted in an arbitrary or erratic manner. In the said decision
reference is made to two earlier decisions of this Court including the case·
of DDA aforementioned. In paragraph 9 it is stated, thus : -
c
"9. This Court in the case of Bareilly Development Authority v.
Ajai Pal Singh, [1989) 2 SCC 116, had to deal with a similar
situation in connection with the Bareilly development Authority
which had undertaken construction of dwelling units for people
belonging to different income groups styled as "Lower Income D
Group", "Middle Income Group", "Higher Income Group" and
the "Economically Weaker Sections". The respondents to the said
appeal had registered themselves for allotment of the flats in
accordance with the tenns and conditions contained in the brochure'
issued by the Authority. Subsequently, the respondents of that E
appeal received notices. for the Authority intimating the revised
cost of the houses/flats and the monthly installment rates which
were almost double the cost and rate of installments initially stated
in the General Information Table. But taking all facts and
circumstances into consideration, this Court said that it cannot be
held that there was a misstatement or incorrect statement or any F
fraudulent concealment, in the brochure published by the Author-
ity. It was also said that the respondents cannot be heard to say
that the Autharity had arbitrarily and unreasonably changed the
tenns and conditions of the brochure to the prejudice of the
respondents. In that connection, it was pointed out that the most G
of the respondents had accepted the changed and varied tenns.
Thereafter they were not justified in seeking any direction from
the Court to allot such flats on the original terms and conditions.
Recently, the same question has been examined in the case of
Delhi Development Authority v. Puspendra Kumar Jain. In H
392 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A respect of hike in the price of the flats, it was said : (SCC p. 497,
Para 8)

"Mere identification or seledion of the allottee does not
clothe the person selected with a legal right to allotment at
the price prevailing on the date of draw of lots. The scheme
B evolved by the appellant does not say so either expressly or
by necessary implication. On the .contrary, clause (14)
thereof says ·that 'the estimated, prices mentioned in the
brochure are illustrative and are subject to revisions/modi-
fication depending upon the exigencies of lay out, cost of
c construction etc.'."

•Although this Court has from time to time, taking the special facts
,and circumstances of cases in question, has upheld the excess
charged. by the .development authorities over the cost initially
D announced as·estimated cost, but it should not be understood that
this Court has· held· that such development authorities hav~
absolute right-to hike the cost of flats, initially announced as
, approximate-or ·estimated cost for such flats. It is well known that
· persons belonging ·to· middle and lower income groups, before
registering themselves for such flats, have to take their financial
E capacity into consideration and in some cases it results in great
hardship when the· development authorities announce an estimated
·or approximate cost andideliver the same at twice or thrice of the
said· amount. The· final cost should be proportionate to the
approximate· or estimated cost.mtmtioned in the offers or agree-
. ments. With the high rate of inflation, escalation of the prices of
construction materials, and labour charges, if the scheme is not
· ready within•the time-frame, then-it is not possible to deliver the
flats or houses in question at the cos~ so announced. It will be
advisable that·before offering the flats to the public such devel-
G opment authorities should fix the estimated cost of the flats taking
into consideration'the·escalation ofthe cost during the period the
scheme is to be completed. In the instant case the estimated cost
for the LIO flat was given outat Rs. 45,000. But by the impugned
communication, the appellant.informed the respondents that the
actual cost of the flat shall be Rs. 1;16,000 i.e. the escalation is
KANPUR DEVELOPMENT AUTHORITY v. SHEELA DEVI [PATIL, J.] 393
more than 100%. The High Court was justified in saying that in A
such circumstances, the Authority owed a duty to explain and to
satisfy the Court, the reasons for such high escalation. We may
add that this does not mean that the High Court in such disputes,
while exercising the writ jurisdiction, has to examine every detail
of the construction with reference to the cost incurred. The High B
Court had to be satisfied on the materials on record that the
Authority has not acted in an arbitrary or erratic manner."

We are of the view that each case is to be decided in the facts and
circumstances of the case in·the light of the scheme published/framed and
the terms and conditions mentioned in the Brochure and/or in the pre- C
scribed form of application in the matter of escalation/determination of cost
of house/flat. However, cases where there is limit for fixing the escalation
of cost, normally the price of house or flat cannot exceed the limits so fixed.
The determination of cost of house/flat or escalation of cost cannot be
arbitrary or erratic. The authority has to broadly satisfy by placing material D
on record to justify the escalation of cost ofa house/flat. Whether the delay
was caused by the allottee or the authority itself is also a factor which has
bearing in determination of the. cost of house/flat. The unforeseen cause
or the reason beyond control of the authority in a given case may be another
facto.- to be kept in view. We may also notice that is these cases the E
tentative cost of houses was fixed at Rs. 48,000 but final cost was
detennining at Rs. 2,08,000. This increase is not mere escalation but it is
a multiplication by almost four and half time, although escalation could
not exceed I 0% as is evident from the contents of the Brochure read with
prescribed form of application for allotment of house itself. Contentions
of the KDA ruh contrary to the contents of its own Brochure on which the F
respondents acted adjusting their financial affairs understanding that the
cost of the houses would be fixed in terms of brochure and that too not
exceeding I 0% of the estimated cost fixed initially.

As to the complaint that the appellant having filed review petition G
before the High Court seeking review of the impugned judgment could not
prosecute parallel remedy by filing :::ILP in this Court, the learned counsel
for the appellant was not in a position to say as to what happened to the
review petition filed in the High Court. In our view it may be unnecessary
to say anything ·fu11her on this aspect in the view we have taken and are H
394 SUPREME COURT REPORTS [2003] SUPP. 6 S.C.R.

A disposing of these appeals themselves on merits. As regards the prayer
made by the respondents in I.As. 7-8 we do not think it necessary to probe
fu1ther in these proceedings. Hence no orders are required to be passed in
these I.As.

B Thus having regard to the facts found and in view of what is stated
above, we cannot find fault with the conclusions arrived at by the High
Court in the impugned judgment. Hence, finding no merit iP these appeals,
they are dismissed but with no order as to costs.

R.K.S. Appeals dismissed.