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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION   

CIVIL     APPEAL     NO.     5887       OF     2012      @ SPECIAL LEAVE PETITION (CIVIL) NO. 8734 OF 2009

Punjab Urban Planning & Dev. Authority & Ors. …   Appellants

Versus

Raghu Nath Gupta & Ors. … Respondents

WITH

CIVIL     APPEAL     NO.      5888      OF     2012      @ SPECIAL LEAVE PETITION (CIVIL) NO. 22823 OF 2009

J     U     D     G     M     E     N     T   

K.S.     Radhakrishnan,     J  .

1. Leave granted.

2. The questions raised in both these appeals are the same, hence,  

we are disposing of both the appeals by a common judgment.

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3. The question that has come up for consideration in these appeals  

is whether the respondents are legally obliged to pay the interest,  

penal interest and penalty on account of the delayed payment of  

installments after having accepted the allotment of commercial plots  

by way of auction.  The High Court has taken the view that since there  

was delay on the part of the Punjab Urban Planning and Development  

Authority (for short “PUDA”) in providing the basic amenities like  

parking, lights, road, water, sewerage etc. in time, PUDA cannot legally  

claim the interest, penal interest as well as penalty on account of the  

delayed payment of installments.   The High Court placed reliance on  

the judgment of this Court in Municipal Corporation, Chandigarh  

and Ors. v. Shantikunj Investment (P) Ltd. (2006) 4 SCC 109 to  

reach that conclusion.    

4. We heard Mrs. Rachna Joshi, learned counsel appearing on behalf  

of PUDA as well as Shri P.S. Patwalia, learned senior counsel assisted  

by Mr. Tushar Bakshi, appearing for the respondents.   

5. For the disposal of these appeals, we may refer to the facts of  

Civil Appeal No. ……  of 2012 [arising out of SLP (Civil) No. 8732 of  

2009], as follows:   

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PUDA, on 16.3.2001, conducted a public auction for sale of the  

commercial plots. Raghu Nath Gupta, the respondent was the  

successful bidder of a single storey shop no. 134 in Phase III BIT, for a  

total consideration of Rs.31,75,000/-.  The possession of the said shop  

was handed over to the respondent on 25.5.2001 on payment of  

Rs.7,93,750/- being 25% of the total cost of site.  Installment facility  

was extended to the respondent for paying the balance 75% of the  

amount, that was Rs.23,81,250/-  The relevant clauses of the  

Allotment Letter dated 16.3.2011 are extracted below for easy  

reference:

“4. The sum of Rs.7,93,750/- being 25% of the total cost  of the site deposited by you after the ….. been  adjusted as 25% of the sale.

5. The balance amount i.e. Rs.23,81,250/- being 75% of  above piece of the writ, can be paid in lump sum  without interest within 60 days from the date of  auction or in 4 equated yearly installments along with  interest @ 15 % per annum.

6. The annual quoted installment with interest @ 15%  per annum will be payable as per the following  schedule:

Installment Due date Amount of  Installment

Interest Total amount  payable

1st 16.3.2002 5,95,313/- 3,57,188/- 9,52,501/-

2nd 16.3.2003 5,95,313/- 2,67,891/- 8,52,501/-

3rd 16.3.2004 5,95,312/- 1,78,594/- 7,73,906/-

4th 16.3.2005 5,95,312/- 89,297/- 6,84,609/-

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23,81,250/- 8,92,970/- 32,74,220/-

In case the installment is not paid on the 10th of the month following  

the month in which it falls due, PUDA can impose penalty.  The penalty  

Clause 9 reads as follows:

“9. In case the installment is not paid by the 10th of the  month following the month, in which it falls due, the  Estate Officer shall proceed to take action for  imposition of penalty charged @ 2% per month of the  amount i.e. from the due date in addition to normal  simple interest.  In case of non-payment of the  installment along with interest due thereon for a  continuous period of 3 months, the whole or any part  of the money paid in respect of the site shall be  forfeited and the Estate Officer shall cancel the  allotment and resume the site, after giving you  appropriate notice and an opportunity of being heard  shall continue to be charged in the whole due amount  till the date of payment of amount due.”

6. Above mentioned conditions were accepted and the plot was  

allotted.  On getting possession after payment of 25% of the total  

cost, respondent raised construction on the allotted site in the year  

2002.  PUDA completed the development work by 20.12.2002 and  

provided all the facilities for the enjoyment of the various commercial  

plots allotted.   

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7. Respondent filed CWP No. 6156 of 2002 before the High Court  

seeking a direction to PUDA not to charge interest on the balance  

installments till the basic amenities were provided on the site. The writ  

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petition was disposed of by the High Court on 22.4.2002 directing the  

Estate Officer, PUDA, Mohali to pass a speaking order.  Consequently,  

the Estate Officer passed the order on 5.9.2002 rejecting the demand  

made in the notice, which was challenged by the respondents by filing  

CWP No. 18753 of 2002, which was disposed of vide order dated  

13.7.2006 directing the respondents to file detailed representations  

before the Additional Chief Administrator.  Consequently, a detailed  

representation was filed by the respondents on 29.8.2006 before the  

Additional Chief Administrator stating that since PUDA had failed to  

provide the basic amenities like drinking water, drainage and public  

toilets, respondents were not legally obliged to pay interest, penal  

interest, penalty etc. on the delayed installments. PUDA took up the  

stand before the Additional Chief Administrator that the basic  

amenities like parking, lights, roads, water, sewerage etc. were not  

provided at the site when they were allotted, but the toilet was shown  

near SCF No. 124-125.   PUDA submitted that the electrical works had  

been completed by 24.12.2002, public health works had been  

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completed by 22.11.2002 and the development of the commercial  

pocket had been completed by 20.12.2002.    

8. After having examined the contentions raised by both,  

respondents and PUDA, the Additional Chief Administrator rejected the  

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representation vide his order dated 31.3.2007, which was challenged  

by the respondents before the High Court by filing CWP No. 6929 of  

2007.  The High Court allowed that CWP vide its judgment dated  

5.11.2008 placing reliance on the judgment of this Court in  

Shantikunj Investment (supra), which is impugned before this  

Court.   

9. Mrs. Rachana Joshi took us through the terms and conditions of  

Auction Notice and also to the various terms and conditions of the  

allotment, as well as the judgment of this Court in Shantikunj  

Investment (supra).

10. Shri P.S. Patwalia submitted that the High Court was justified in  

allowing the writ petition, since there was a failure on the part of PUDA  

in providing the necessary facilities for enjoyment of the plots allotted  

to the respondents.   Further, it was also contended by the learned  

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senior counsel that the High Court had rightly applied the principle laid  

down by this Court in Shantikunj Investment (supra).   

11. We are of the view that the terms and conditions stipulated in the  

auction notification for allotment of commercial plots, published by  

PUDA, has got considerable bearing in resolving the disputes between  

the parties.   We, therefore, called for the auction notification -

published by PUDA and the same was made available to us.   There  

was no dispute that the plots were auctioned on 16.3.2001 on the  

basis of the terms and conditions stipulated therein.  Clause 25 is the  

most important clause, which binds both the parties, reads as follows:

“25. The site is offered on “as is where is”  basis and the  Authority will not be responsible for leveling the site or  removing the structures, if any, thereon.”

In other words, the plot in question was auctioned on “as is where is”  

basis and the same was accepted by the respondent on “as is where  

is” basis.  Plot was allotted to the respondent by PUDA vide Memo No.  

A-5/2001/3192 dated 25.5.2001.   The relevant terms and conditions  

of the allotment have already been referred to by us in the earlier part  

of the judgment.   Respondents could have paid the entire amount in  

lump sum, however, they availed off the installment facility offered.  It  

was made clear in the allotment letter that, in case, there was a failure  

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to pay the installment by the 10th of the month following the month in  

which the payment fell due, the Estate Officer should proceed to take  

action for imposition of penalty charged @ 2% per month of the  

amount i.e. from the due date in addition to normal simple interest.  

Further, it was also stated in the allotment letter that in case of non-

payment of installment along with interest due thereon for a -

continuous period of three months, the whole or any parts of the  

money paid in respect of the site, should be forfeited and the Estate  

Officer could even cancel the allotment.   

12. We notice that the respondents had accepted the commercial  

plots with the open eyes, subject to the above mentioned conditions.  

Evidently, the commercial plots were allotted on “as is where is” basis.  

The allottees would have ascertained the facilities available at the time  

of auction and after having accepted the commercial plots on “as is  

where is”  basis, they cannot be heard to contend that PUDA had not  

provided the basic amenities like parking, lights, roads, water,  

sewerage etc.   If the allottees were not interested in taking the  

commercial plots on “as is where is”  basis, they should not have  

accepted the allotment and after having accepted the allotment on “as  

is where is”  basis, they are estopped from contending that the basic  

amenities like parking, lights, roads, water, sewerage etc. were not  

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provided by PUDA when the plots were allotted.     Over and above,  

the facts would clearly indicate that there was not much delay on the  

part of PUDA to provide those facilities as well.   As noted, the  

electrical works and health works were completed by 24.12.2002 and  

22.11.2002 respectively and all the facilities like parking, lights, roads,  

water, sewerage etc. were also provided.   

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13. On facts, we find that this is not a case where PUDA was callous  

or indifferent or had caused an inordinate delay in providing the basic  

facilities to allottees.  In our view, the High Court has not properly  

comprehended the scope of the judgment of this Court in Shantikunj  

Investment (supra) and the terms and conditions of the auction.  

This Court, in that case, has specifically held as follows:

“26…….It is the common experience that for full  development of an area it takes years. It is not possible in  every case that the whole area is developed first and  allotment is served on a platter. Allotment of the plot was  made on an as     is     where     is     basis   and the Administration  promised that the basic amenities will be provided in due  course of time.  It cannot be made a condition  precedent………….

28. It is true that once allotment of the land has  been made in favour of the allottee, he can take possession  of the property and use the same in accordance with the  Rules. That does not mean that all the facilities should be  

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provided first for so called enjoyment of the property as this  was not the condition of auction. The party knew the  location & condition prevailing thereon. The interpretation  given by the Division Bench of the High Court of Punjab &  Haryana and contended before us cannot be accepted as a  settled proposition of law………….

      (emphasis supplied)”

We may also refer to another judgment of this Court in UT  

Chandigarh Administration and Anr. v. Amerjeet Singh and Ors.  

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(2009) 4 SCC 660, in which, after having referred to the judgment of  

this Court in Shantikunj Investment case, this Court held as follows:

“19. …………In a public auction of sites, the position is  completely different. A person interested can inspect the  sites offered and choose the site which he wants to acquire  and participate in the auction only in regard to such site.  Before bidding in the auction, he knows or is in a position to  ascertain, the condition and situation of the site. He knows  about the existence or lack of amenities. The auction is on  `as is where is basis'. With such knowledge, he participates  in the auction and offers a particular bid. There is no  compulsion that he should offer a particular price.

20. Where there is a public auction without assuring  any specific or particular amenities, and the prospective  purchaser/lessee participates in the auction after having an  opportunity of examining the site, the bid in the auction is  made keeping in view the existing situation, position and  condition of the site. If all amenities are available, he would  offer a higher amount. If there are no amenities, or if the  site suffers from any disadvantages, he would offer a lesser  amount, or may not participate in the auction. Once with  open eyes, a person participates in an auction, he cannot  

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thereafter be heard to say that he would not pay the  balance of the price/premium or the stipulated interest on  the delayed payment, or the ground rent, on the ground  that the site suffers from certain disadvantages or on the  ground that amenities are not provided.”

14. We are of the view that the judgment in Amarjeet Singh  

(supra) is a complete answer to the various contentions raised by the  

respondents.   We may reiterate that after having accepted the offer of  

the commercial plots in a public auction with a super imposed  

condition i.e. on “as is where is” basis and after having accepted the -

terms and conditions of the allotment letter, including installment  

facility for payment, respondents cannot say that they are not bound  

by the terms and conditions of the auction notice, as well as that of  

the allotment letter.  On facts also, we have found that there was no  

inordinate delay on the part of PUDA in providing those facilities.  

15. We are of the view that the High Court was not justified in  

holding that the respondents are not liable to pay the interest, penal  

interest and penalty for the period commencing from 1.6.2001 to  

31.12.2002 for the belated payment of installments.  Consequently,  

the judgments of the High Court are set aside and the writ petitions  

would stand dismissed and the appeals would stand allowed as above.  

There will be no order as to costs.

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……………………………J.     (K.S. Radhakrishnan)

……………………………J.     (Madan B. Lokur)

New Delhi; August 16, 2012

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