Holding

An allottee under a self‑finance housing scheme must bear the burden of both construction‑cost escalation and the increased land value resulting from a court‑enhanced compensation under the Land Acquisition Act.

Summary

The respondent applied for a flat under the Shimla Development Authority's Self‑Finance Scheme in 1986, paid an earnest deposit and was initially quoted a construction cost of Rs 1,44,000. In 1991 the Authority raised the cost to Rs 2,73,332 due to material price hikes and, after the District Judge enhanced the compensation payable for the land acquired under the Land Acquisition Act (award dated 30 April 1993 under Section 26), the Authority demanded the escalated amount from the respondent. The respondent challenged the demand in the Himachal Pradesh High Court, which ordered the Authority not to recover the additional sum. On appeal, the Supreme Court held that an allottee is contractually bound to bear any increase in construction cost as well as any increase in the value of the land resulting from a court‑determined enhancement of compensation under Sections 26, 54 and 18 of the Land Acquisition Act. The earlier precedent D.DA v. Pushpendra Kr. Jain was held inapplicable. Consequently, the High Court's direction was set aside and the writ petition dismissed.

Issues considered

Whether the allottee is liable to pay escalation charges arising from increased construction costs and from the enhanced compensation for land acquired under the Land Acquisition Act.
Whether the decision in D.DA v. Pushpendra Kr. Jain is applicable to the present facts.

Legislation cited

Land Acquisition Acts. 18, s. 26, s. 54

Subjects

Self‑Finance SchemeLand AcquisitionCompensation enhancementEscalation chargesAllottee liabilityConstruction cost increaseSupreme Court

Judgment

...... SHIMLA DEVELOPMENT AUTHORITY A
v.
ASHA RANI

FEBRUARY 26, 1996

(K. RAMASWAMY AND G.B. PAITANAIK, JJ.) B

Housin[j-Allotment of flat under Shimla Development Auth01ity Self
Financing Scheme--Escalation charges demanded on account of enhanced
compensation payable for the lands acquired construction offlats-High Cowt
directing not to recover the escalation charges-On appeal held, allottee not
only to bear burden of escalation in construction costs but also of the la·zd
c
when the Court enhanced compensation under the provisions of Land Ac-
quisition Act.

D.DA. v. Pushpendra Kr. Jain, JT (1994) 6 SC 292, held inapplicable.
D
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4388 of
1996 Etc.

From the Judgment and Order dated 6.6.95 of the Himachal Pradesh
High Court in R.P. No. 88 of 1995.
E
H.K. Puri, Rajesh Srivastava, Ujjwal Banerjee and S.P. Lanka for the
Appellants.

S.K. Bagga Seeraj Bagga, Ms. S. Bagga and Ms. Monika Bhanot, for
the Respondents.
F
The following Order of the Court was delivered :

Leave granted.

We have heard the counsel on both sides.

These appeals by special leave arise from the order of the High Court G
of Himachal Pradesh at Shimla made on june 6, 1995 in W.P. No. 88/95.

- The admitted facts are that the respondent had applied under Self-Finance
Scheme in 1986 for allotment of the flats. The respondent had deposited a
sum of Rs. 13, 800 for 'A' type house. On November 13, 1986, the respon-
dent was informed that she had to pay a tentative cost of Rs. 1,44,000 which H
1065
1066. SUPREME COURT REPORTS [1996] 2 S.C.R.

A included earnest money of Rs. 13,800 already deposited. In other words,
she was required to deposit Rs. 1,30,200 in installments stated in the letter.
There after, she was informed by letter dated November 1991 that cost of
construction had been increased, on account of the hike in prices of the
material, to Rs. 2,73,332 as against Rs. 1,44,000; and she was directed to
pay the balance amount in the manner indicated in the letter. On reference
B
under Section 18 of the Land Acquisition Act, the District Judge by his
award and decree dated April 30, 1993 enhanced the compensation pay-
able to the land acquired for the construction of flats under the Self
Finance Scheme. Consequently, by the letter dated April 12, 1993 respon-
dent was called upon to pay the escalated charges. Respondent, as stated
C earlier, approached the High Court challenging the demand. The High
Court allowed the writ petition ·and directed the appellant-Authority not
to recover the amount from the respondent. In view of the letter written
by_ the appellant on two occasions earlier, the only question is : whether
the High Court is right in its direction not to recover the amount from the
D respondent? The admitted position, as stated earlier, is that the land of a
private owner was acquired under t~e Land Acquisition Act for the Self
Finance Scheme. As a matter of fact, when scheme is for construction and
allotment of the houses to the allottees is initiated, allottee is bound to bear
the cost of the value determined by the civil Court under Section 26 of
the Land Acquisition Act by award and decree or thereafter if an appeal
E is filed and further increase is made under Section 54 of the Act. In this
case, admittedly, on reference under Section 18, the Court had determined
the compensation by award and decree made under Section 26 on April
30, 1993. Therefore, the earlier demand was required to be modified,
consistent with the escalation in the cost of the value of the land as a result
F of determination of the compensation by the civil Court.

Shri Bagga, learned counsel for the respondent placed reliance on
the judgment of this Court in D.DA. v. Pushpendra Kr. Jain, JT (1994) 6
SC 292. Therein the cost of the value was increased by the ODA between
the date of the draw by the DOA and the date of communication to the
G respondent and the respondent was called upon to pay the difference of
the amount. In that case, the draw was made on October 12, 1990 and. the
intimation of the successful draw in favour of the respondent anq all~tment
was given on January 13, 1991. In th~.mean,while, land price was unilaterally
increased by D.D.A. Under those circumstances, this Court had held that
·-
H unless otherwise provided 'in the scheme, the allottee is li~ble to. make
SHIMLA DEV. AUTHORITY v. ASHA RANI 1067

payment of the price as on the date of the communication of the letter of A
allotment. The ratio therein is inapplicable to the facts in this case. As held

- earlier, the allottee is to bear the burden of not only the escalation in
construction costs but also of the escalation of the value of the land when
the Court enhanced the compensation under provisions of the Land Ac-
quisition Act at various stage. Otherwise, who would pay the escalation cost
value of the land etc. The appellant is not a private builder for profit. B
The appeals are accordingly allowed. The order of the High Court
is set aside. The writ petition stands dismissed. No. costs.

G.N. Appeals allowed.

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