DALJIT SINGH AND OTHERS versus UNION TERRITORY CHANDIGARH THROUGH ITS CHIEF ADMINISTRATOR, U.T. CHANDIGARH AND ANOTHER

Citation: [2010] 2 S.C.R. 536 · Decided: 09-02-2010 · Supreme Court of India · Bench: G.S. SINGHVI · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2010] 2 S.C.R. 536 
DALJIT SINGH AND OTHERS 
v. 
UNION TERRITORY CHANDIGARH THROUGH ITS CHIEF 
ADMINISTRATOR, U.T. CHANDIGARH AND ANOTHER 
(Civil Appeal No.1640 of 2010) 
FEBRUARY 09, 2010. 
[G.S. SIN.GHVI AND ASOK KUMAR GANGULY, JJ.] 
Chandigarh (Sale of Sites & Buildings) Rules, 1960 - r. 
C 7-A(2) - Purchase of site in auction - Payment of 25% of bid 
money - Taking of physical possession of site - Surrender 
of site within 36 days of allotment - Acceptance of surrender 
by competent authority- Demand of penalty@ 2.5% of the 
premium ulr 7-A - After 2 Y2 years, demand of additional 2. 5% 
D of premium amount as penalty u/r. 7-A(2) - Legality of- Held: 
If surrender is made after possession is offered by competent 
authority, ·penalty @ 5% of the premium is leviable in terms 
of r. 
7~A(2) even if surrender is made within 180 days -
Transferee surrendered the site after taking possession thus. 
E comp_etent authority did not commit any illegality by 
demanding the balance penalty - However, the said demand 
having been raised after 2 Y2 years of acceptance of surrender 
of site, was arbitrary exercise of power and violation. of 
doctrine of fairness in state action -
Thus, demand of 
F additional penalty quashed and order of High Court set aside. 
Appellants purchased a residential site in an auction. 
They deposited 25% of the bid money and took physical 
possession of. the site. After one month they surrendered 
the site. Respondent no. 2 accepted the surrender of the 
G site and imposed penalty @ 2.5% of the premium under 
Rule7-A of the Chandigarh (Sale of ·Sites and Buildings) 
Rules, 1960. After 2 % years, respondent no.2 issued 
notice to the appellants requiring them to deposit 
H 
536 
DALJIT SINGH v. UNION TERRITORY CHANDIGARH THROUGH ITS 537 
CHIEF ADMINISTRATOR, U.T CHANDIGARH 
Rs.3,38,082/-, which was 2.5% of the premium as penalty 
A 
because in terms of Rule 7-A(2), penalty@ 5% of the 
premium ought to have been imposed. The appellants 
challenged the demand of additional amount and prayed 
for withdrawal of the request of surrender. Respondent 
no.2 rejected the same. The appellants then filed writ 
B 
petition. The Division Bench of the High Court dismissed 
the petition. Hence the present appeal. 
Allowing the appeal, the Court 
HELD: 1.1. A reading of the plain language of Rule 
C 
7-A of the Chandigarh (Sale of Sites and Buildings) Rules, 
1960 makes it clear that sub-rule (1) thereof is attracted if 
the transferee who has paid 25% of the premium of the 
site, surrenders the same within 180 days of the allotment 
and that too before possession of the site is offered by D 
the competent authority. In such a case, the surrender 
can be accepted by the competent authority subject to 
deduction of penalty @ 2.5% of the premium. If the 
surrender is made after possession is offered by the 
competent authority, penalty @ 5% of the premium is 
E 
leviable in terms of Rule 7-A(2) irrespective of the fact that 
the surrender is made within 180 days. To put it differently, 
if a transferee who has paid 25% of the premium and to 
whom possession is offered by the competent authority, 
surrenders the site the~ penalty @ 5% of the premium is 
leviable and he cannot avoid this consequence only on 
the premise that the surrender was made within 180 days 
F 
of the allotment. Only in exceptional cases the Chief 
Administrator can accept surrender after expiry of the 
period of 2 years subject, of course, to the payment of G 
penalty @ 5% of the premium [Rule 7-A(3)]. Under sub-
rule (4) of Rule 7-A, the Chief Administrator can, for 
reasons to be recorded in writing, reduce or waive off the 
penalty leviable in terms of sub-rules (1) and (2). [Para 1 O] 
[543-C-G] 
H 
538 
SUPREME COURT REPORTS 
[2010] 2 S.C.R. 
A 
1.2. The appellants had surrendered the site after 
taking possession thereof. Therefol'Ef, in principle the 
order of High Court that sub-rule (2) of Rule 7-A was 
applicable to their case and respondent no.2 did not 
commit any illegality when he called upon them to pay 
B balance penalty @ 2.5% of the premium is accepted. 
However, keeping in view the fact that the demand for the 
balance penalty was made after more than 2 years and 6 
months of the acceptance of surrender of the site and the 
appellants' legitimate prayer for withdrawal\of the letter 
c of surrender was rejected without any tangible reason, 
the High Court should have quashed the demand raised 
by respondent no.2 on the g

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