LexINDORE DEVELOPMENT AUTHORITY versus SMT. SADHANA AGARWAL AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
INDORE DEVELOPMENT AUTHORITY A v. SMT. SADHANA AGARWAL AND ORS. MARCH 7, 1995 [J.S. VERMA AND N.P. SINGH, JJ.) B Hm~sing Development Authority-Housing Scheme on hire purchase basi~Al lotment of fiats-Declaration of initial cost as probabale-Subsequent escala- C tion of cost of fiats-Development Authority should not act in Arbitrary or erratic manner-It owes a duty to exptain to the Court reasons for the high escalation-Escalation of costs on account of increase in cost of materials, area of fiats and litigation held justified. The appellant-Authority invited applications for allotment of LIG D and MIG flats on hire purchase basis. The advertisement stated that the price of fats was on estimated basis and the definite price will be intimated at the time of allotment. By its letter dated S.11.1979 the authority in- formed the resondent-allottees that the probable cost of MIG and LIG flats is expected to be Rs. 70,000 and Rs. 45,000 respectively. However, vide E Authority's letter dated 7 .10.1980 respondents were informed of the revised cost i.e. Rs. 60,000 for LIG and Rs. 95,000 for MIG flats. The respondent- allottees paid money from time to time. Though the flats were ready for allotment in 1982, possession was not given to the respondents because of a dispute pending in the Court as a result of which also there was increase in the cost of flats. · F Once again vide Authority's letter dated 26.1.84 the respondent-al- lottees were informed that on account of increase in prices of various materials and increase in the area of flats, the cost of LIG flat would be Rs. 1,16,000 while that of MIG flat would be Rs. 1,30,000. Iestead of paying the balance amount the respondents challenged the increase in cost of flats G before the High Court which held that (i) the appellant • authority had . acted in arbitrary and dictatorial manner; (ii) the escalation at different stages which amounted to 100% had not been explained to the satisfaction of Court; and (iii) the respondents be given possession of Oats on the basis of letter dated 7.10.1980 i.e. MIG Oats at the rate of Rs. 95,000 and LIG H 555 556 SUPREME COURT REPORTS [1995) 2 S.C.R. A flats at the rate of Rs. 60,000. The Development Authority preferred an appeal to this Court challenging the decision of the High Court. Allowing the appeal, this Court HELD: 1. Although this Court has from time to time taking the B special facts and circumstances of the cases in question has upheld the l!Xcess charged by the development authorities, over the cost initially announced as estimated cost, it should not be understood that this Court has held that such development authorities have absolute right to hike the cost of Oats_, initially announced as approximate or estimated cost for such C flats. It is well known that persons belonging to Middle and Lower Income Groups, before registering themseleves for such flats, have to take their financial capacity into consideration and in some cases it results in great hardhips when the development authorities announce an estimated or approximate cost and deliver the same at twice or thrice the said amount •. D The final cost should be proportionate to the approximate or estimated cost mentioned in the offers or agreements. With the high rate of inflation, escalation of the prices of constructJon materials and labour charges, if the scheine is not ready within the time frame, then it is not poss'ible to deliver. the flats or houses in question at the cost so announced. It will be advisable that before offering the flats. to the public such development E authorities should fix the estimated cost of the flats taking into considera· tion the escalation of the cost during the period the scheme is to be completed. [562·F·H, S63·A·B] 2. In the instant case the escalation is more than 100%. The High p Court was justified in saying that in such circumstances, the Authority owed a duty to explain and to satisfy the Court, the reasons for such high escalation. This does not mean that the High Court in such disputes, while ext:rcising the writ jurisdiction, has to examine every detail of the construe· tion with reference to the cost incurred. But the High Court has to be satisfied on the materials on record that the authority has not acted in an G arbitrary or erratic manner. However, in the facts and circumstances of the case, no interference was called for by the High Court. [563·C·D,
Excerpt shown. Read the full judgment & AI analysis in Lexace.