Letters Patent Appeal No. 221 of 2013 · Patna High Court
Case Details
IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.221 of 2013 In Civil Writ Jurisdiction Case No. 1745 of 2001 ====================================================== 1. Bihar State Housing Board, Patna Through Its Managing Director, Mangles Road, Patna Versus 1. Rajeev Kumar S/O Late Ram Padarath Sharma R/O Vill-Ramibigha, P.S.-Asthama, Distt-Nalanda, At Present Residing In House No.P/540, Sector-P, Doctor's Colony, Kankarbagh, P.S.-Kankarbagh, Distt-Patna .... .... Appellant/s .... .... Respondent/s ====================================================== Appearance : For the Appellant/s : Mr. Anand Kumar For the Respondent/s : Mr. ====================================================== CORAM: HONOURABLE MR. JUSTICE NAVIN SINHA and HONOURABLE MR. JUSTICE SHIVAJI PANDEY ORAL ORDER (Per: HONOURABLE MR. JUSTICE NAVIN SINHA) 4 12-03-2013 We have heard learned counsel for the appellant and the respondent. The present appeal arises from order dated 7.9.2012 allowing C.W.J.C. No.1745/01 setting aside the decision of the Board to enhance the price of the plot in question from Rs.81,344.00 determined on 21.2.1981 to Rs.1,80,189.00 on 31.5.1997. On 21.2.1981 the Board allotted Plot No. P/540, Doctors Colony, Lohia Nagar, Kankarbagh to the respondent. The original price mentioned was Rs. 37,985/-. A hire purchase agreement was executed on 3.2.1981. It provided that the price fixed was tentative and
Legal Reasoning
Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 2 was subject to increase on account of cost of development, increase ordered in land acquisition proceedings, any decision/award by a Court of Law or Legislation affecting final valuation shall be paid by the settlee. Possession of the plot was given on 26.2.1981. The respondent has constructed his house and is residing on the same. The respondent asserts having paid Rs. 78,597/- till now to the Board. On 7.9.2000 he requested for execution of registered transfer deed. On 7.12.2000 in reply the appellant informed that the initial allotment at Rs. 37,985/- had been decided to be enhanced to Rs. 81,344/- and the total dues therefore work out to Rs. 1,80,189/- till 31.5.1997. This revised price determination was justified by the appellant Board on basis of auction price fetched for Plot No. GC 1 which was followed by a resolution dated 14.9.1984 to charge the same price from other contiguous allottees. The respondent assailed the same in the writ petition. The learned Single Judge held that the conditions for cost escalation were provided for in Clause-4 of the hire purchase agreement which reads as follows:- tentative. “4. That the total cost/premium indicated above is according to present estimate and hence in the cost of Increase purely development or due to increase in cost of land acquisition or due to any decision/award of court of law or legislation or due to final valuation or otherwise shall be payable by the settlee either in installments or in lump sum within the period decided by the Board……” Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 3 None of the clauses were applicable or invoked by the appellants to justify cost escalation under the agreement. The price fetched in an auction sale of an adjacent plot could not be justification for enhancing the price of the plot allotted to the petitioner in terms of the specific agreement entered between the parties.
Legal Reasoning
Learned counsel for the Board submitted that the agreement between the parties was contractual in nature containing an arbitration clause. Relying on (2008) 8 SCC 172 (Pimpri Chinchwad Municipal Corporation vs Gayatri Construction Company) and L.P.A. No. 359/09 (Ashok Kumar Bhattacharya for Food Corporation of India vs. Suryanath Mishra), it was submitted that the learned
Decision
Single Judge should not have entertained the writ petition and should have left it open for the respondent to pursue his remedies under the arbitration clause. The respondent was fully aware that the price fixed was tentative and the final price was to be determined at a subsequent valuation. The Board has not acted outside the terms of the agreement, but has invoked its powers under the same to determine fresh valuation. The Board was acting in a commercial relationship and had taken a decision based on certain norms for determination of the price derived from that fetched for an adjacent plot in an auction. The action is not arbitrary, Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 4 but has a reason. Merely because there may be another reason applicable also for not enhancing the price cannot be sufficient justification to substitute the other view if the actions of the Board were otherwise not devoid of reason or arbitrary. Even if a tentative price was fixed, the price fetched for an adjacent plot in an auction was not outside the purview of Clause – 4 as it would come within the terms of “final valuation or otherwise”. It was lastly submitted that those allotted a plot either by lottery or by bid in auction sale form one class only. The method of allotment has nothing to do with the fixation of the value of the plot. The Board is a „State‟ under Article-12 of the Constitution. Even if it enters into a contract with citizens, it has to act reasonably, responsibly and fairly. The Board cannot behave like a private body and act beyond the conditions of the agreement arbitrarily and upon objection urge that these matters can be better examined in an arbitration. The existence of an alternative remedy as a bar to a writ petition is not absolute law but more of a self imposed restriction by the Court, the discretion to be exercised dependent on the facts of a case. If arbitrariness and illegality be apparent to the Court on basis of undisputed facts, there can be no fetters on the powers of Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 5 the Writ Court despite the availability of an alternative remedy including that of arbitration. In Gayatri Constructions (supra) there were no issues with regard to absolute arbitrariness in conduct, but that the Corporation was itself guilty of not providing requisite infrastructure for carrying out the contractual obligations. It was in these circumstances that the Supreme Court held that the remedy appropriately lay in invoking the arbitration clause. In Ashok Kumar Bhattacharya (supra) it was held that if the contract was not statutory and an arbitration clause existed, the appropriate remedy lay in invoking the same on behalf of the respondents. It was submitted that in appropriate cases the High Court can interfere in exercise of writ jurisdiction also. That aspect of the matter was left undecided. In (2011) 5 SCC 697 (Union of India vs. Tantia Construction Pvt. Ltd.) on the specific objection regarding maintainability of a writ petition with remedy available by way of arbitration proceedings it was held at paragraph-33 and 34 as follows:- “33. Apart from the above, even on the question of maintainability of the writ petition on account of the arbitration clause included in the agreement between the parties, it is now well established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme such Court and alternative remedy, a writ petition would not be that without exhausting Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 6 maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by any alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution. 34. We endorse the view of the High Court that notwithstanding the provisions relating to the arbitration clause contained in the agreement, the High Court was fully within its competence to entertain and dispose of the writ petition filed on behalf of the respondent Company. We, therefore, see no reason to interfere with the views expressed by the High Court on the maintainability of the writ petition and also on its merits.” Even if an agreement was executed between the parties that the price was tentative justifying cost escalation, it had to be within the parameters laid down in the agreement itself. We are of the considered opinion that the learned Single Judge has rightly held that none of the items under Clause-4 was being invoked by the Board for purposes of cost escalation. The words “otherwise” was not a carte blanche for the Board to act on whims arbitrarily outside the terms of the agreement. The Board does not invoke any of the conditions in Clause – 4 for cost escalation occasioned due to cost of development, land acquisition, Court decision/award or Legislation. Those who applied pursuant to a tentative price fixed by the Board and allotment was followed by a lottery form one class different from the bidders in an auction. The former were not competing amongst themselves for Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 7 fixation of the price, but only that the allotment was to be made by a system of lottery where one person may be lucky to receive an allotment and another unlucky. The valuation of the plot was uniform for this class. In an auction sale more than one person was competing, each willing to offer a higher price to outweigh the other bidder and obtain the allotment. There was thus clearly an element of competition in fixation of price. We fail to understand how the Board seeks to classify them in one class. We are satisfied to hold that the action of the Board in putting the respondent, an applicant allotted a plot through lottery, at par with a bidder in an auction sale is contrary to Article 14 of the Constitution of India. We must also notice that even if an auction sale was held by the Board in 1984 after the allotment to the respondent in 1981, it slept over the matter for long years till the respondent asked for registration in the year „2000‟ when the Board sought to increase the valuation. There is no explanation given by the Board before us for this long stupor of inaction. In conclusion, we hold that the action of the Board is per se arbitrary and on grounds completely foreign to the agreement between the parties. To relegate the respondent to the remedy of an arbitral agreement shall only be giving an advantage to the Board for its own Patna High Court LPA No.221 of 2013 (4) dt.12-03-2013 8 lapses and actions contrary to the agreement. We find no reason to interfere with the order under appeal. The appeal is dismissed. K.C.jha/- (Navin Sinha, J) (Shivaji Pandey, J)