Bawana II, Bhorgarh Industrial Relocation Plot Owner's Association v. Govt of NCT & Ors

6. In another set of petitions, it was submitted that charging Rs' 10001 per sq. m. towards o &. M cost (corpus Fund) was also arbitrary anci unreasonable. In an earlier communication in response to an applicatic'ir filed under the Right to Information Act, 2005 ('RTI Act',) the I{espondent DSIIDC maintained that they wele charging 2'5% of the lancl value towar-ds annual maintenance apart frorn charging 2.5% towards the annua.l ground rent. This would amount to charging twice for rnaintenancc' 'fire Petitioncrs have also questioned the charging by the DSIIDC of intelest fi.om them at ISLA per annum for the delayed payment while paying to them interest only at I0o/o pet annum fbr the amounts already deposited by them with the DSIIDC. It is fuither pointed out tliat the inlerest was being paid only for the peliod 1" April 20Og to 31't March 2011 whereas the' arnounts were deposited fiom 1996 onwards' In this connection' reliance has been placecl, on the juclgrnelt of thg Supretne Court in Videocott Properties Ltcl. v. Dr. Bhulchandra I. aboratories AIR 2004 sc 1787'

7. In the reply filed by the DSIIDC in w.P.(C)7768 of 2010 (which replv is cornrnon to all the writ petitions) the basis for charging the component for cross-subsidy towards category such as EWS has been explained in parallasunder: "T'hqt cluring the last 3-4 Years, the answering resPoudent has the financial burden would be too heavy on t \V \ institutions, other thern. completed the development in Bhorgarh industrial area and aftet' taking into account the enhanced land compensations and "nhu"""dYt pr.oject costs, the costs)per sq.mt of saleable area has be"'y'V calculated as Rs.S158/- per sq.mt in Finaricial Year' 2008-09' Tbe matter was placed before the Government, and the governmedt, after taking into consideration the cost deterrnination methoc{ adopted by DDA and the future maintenance needs of the industrial area, approved the following cost: a) Gloss cost per sq.mt. in 2008-09 b) Cost of capital @10% p'a' for 2009-11 c) 50% of gross cost added as per Govt' Policy for Light industry (for cross subsidies towalds categories such as EWS) ' d) Future O & M cost (CorPus Fund) e) Cost Per sq. mt. (a+b+c+d) Rs. 8518.10 Rs. 1788.80 Rs.4259.10 Rs. 1000.00 Rs.15566.00"

8. A copy of the government Circular dated 17tr' August 2010 notifying the rate for the Industrial Estate - Bhorgarh at Bawana-Il has been enclosed. It is pointed out that a comrrittee was constituted cornprising the Additional Commissioner of Industries (GNCTD) as Chairman' the Deputy commissioner of Industries (GNCTD), chief Manager (Relocation), DSIIDC, Deputy Financial Advisor (works), DSIIDC ari<l Executive Engineer (Bhorgarh), DSIIDC. The committee determined tlre cost based on the expenditure incurred and projected by the DSIIDC' The cornmittee noted that the cost of the plots had increased from the initial estimate of Rs. 5,150/- per sq. rn. to about Rs. 8,520/- pcr sq'ln'due to various facto1s such as improyement of street lighting' inclusion of 60 m' wide Mp Road fbr better connectivity, construction of an underground reselvoir and effluents pumping station, increase in the cost indexr IY i'crease i' the Delhi Jal Board charges and in increase in electrification! {.costs etc. This Cornrnittee also took note of the problems of maintenance faced by industlial estates set up earlier and suggested the setting up of a cotpus for a long-tern maintenance fund. Accordilgly, it was sllggested that Rs. 1,000/- per sq. rn. should be chalged fi'orn each allottee fo[1] cleation of the fuird so that it may generate a colpus of Il"s' 75 crores' A coily of the minutes of the Committee has been enclosed with the affrrdavit.

9. It appears that the rationale for including a component towards, crosssubsidy for EWS housing was based on the prevalent plactice of tire DDA. In paras I[5] and 16 of the affidavit, it has been explained as undet':,.1-5. That the multiplier of 1.[5] applied for Bhorgarh is the same as that applied by the DDA for plots under 'Light Industry' category in the size range of 50 sc[1]. meter to 400 sq. meter. The rnultiplier of 1.[5] has been applied as per the directions ancl approval of the Govenment. The amount so generated is to be used towards Lontargeted cross subsidy for development of Econornically Weaker sections (EWS) housing, JJ & scluatters, settlement, etc.

16. That the DDA h.as beeu applying the multiplier at least fiom Igg[2] onwald. In this regard, the documents obtained fi'om DDA toward costing of Dwarka Project in 1992 and Tikri I(alan Plastic Bazaar in,1999; and some notifications of Predeternin'ed Land Rates issued by the Ministry of Urban Development and Poverty Alleviation, Goverrunent of India in 2009 and 20L0 are enclosed as Annexures-C (Colly) respectively' The perusal of DDA lancl costing rnethodology (Annexule Cl) would cleally reveal that in Dwarka Project in I99\,.against the break-even rate of Rs. 1100.46 per sq.mt., a higher rate of I{s:. I375.54 has been charged for industrial land, wheteas lower rate of Rs.550.22 per sq.mt. has been charged for Ews and JJ & Squatters settlement. Lower rates have also been charged fi'om solrre other categori'es like LIG, charitable institutions; and utilities. Sirnilarly, DDA Resolution of 1999 (Annexure C[2]) notifies the rate of inclustrial plots of 300 sq. meters and 495 sq' meters as Rs' 2305 per sq. rneter and Rs. 2689 pel sq. meter against the Break Even Rate of Rs. 1536 per sq. meter; whereas tnuch lower/nominal costs have been fixed for lands for police station, fire station, health setvices, utilities, etc' The Government of India, Ministry of.urban Development notifications {Annexures C[3] (Colly)} of pre-detefmined rates for Plastic Bazaar, Tikri l(alan for year 2008-09 and 2009-10 also apply rnultiplier of 1.[5] for 'Light Industry' plots of 300 sq' meters in size. From the above it would be kindly seen that the policy of applying rnultiplier is reasonable and is in use for a long time'"

10. It is explained that the DsIIDC did not apply the above rnultipliel of 1.[5] for Bawana-I plots since it had a low market price in the initial years o:[ development. A.number of eligible applicanls had opted out of those allotments and sought refund of the earnest'money deposited' Howevet' the experience as regarcls the Bhorgarh plots has been different' It is pointed out that the nalket late for the sale clisposal of the lald and flor coritinuously \( increased as under: "Year Rate of Industrial land at Bawana (Rupees Per square meter) 6,720 8,400 10,080 27,400 30,140 33,I54 36,469" \t 2004-05 2005-06 ' 2006-07 2007-08 2008-09 2009-10 2010-1 I 1 1. It is fuither stated as under: "It is pertinent to mention that the market rate for industrial land notified by the government for 2010-11 for Bawana Industrial Area is Rs. 36,4691- per Square meter. Therefore the market r.ate for Bhorgarrr may be taken as Rs. 36,4691- per sq. meteratparwithtlrerateofnearbyestates.Comparedtothe marketrates,theallotrnentmadeby'therespondent@ Rs.15,5661-persq.meterisstillmuchonthelowersidearrdis reasonable. Even the circle rate determined by the Govetntnent of NCI of Delhi is approximately ks'27 '4001-;'

12. The Petitioners have, howevet, disputed the above figures' 'fhis CourL has no, means,. in a petition under Article 226 of the Constitution' to determine the above disputed question of fact' There is no basis for tlie Court to doubt the co*ectness of the details set out by the DSIIDC in its affidavit as regards prevalent market rate and circle rates for plots in

13. On a consideration of the submissions of the'learned counsel for the parties, one of the first questions that this Court is called upon to consicler is wlrether the lecovery of 50% of the gross cost for light industries for cross-subsidy towards EWS housing, atnounting to Rs' 4259'10 per sq' m., in terrns of the policy of the GNCTD, is arbiirary or unreasonable in the context of Article t[4] 0f the constitution? This court finds that the clecision to charge Rs. 4259.10 as cross-subsidy towards categories such as EWS housing is based on a government policy' The allotment letters were issued to about 4615 units in Bhorgarh in 2005 and 2006' It was clearly indicated at that time that the cost per plot was Rs' 5,1501- per sq' rn. but also that it was a tentative one. The precise clause in the allotrnent letter in this regard read as under:..Tlre tentative cost of the plot is Rs. 5I5Ol- per square tneter, which is subject to change depending upon the actual cost of developrnent oI the industrial plot and directions issired by the Governrnent of Delhi in this regard' This is to inform you that the cost ildicated above is teltative' The allottee will be liable to pay any increase in the cost of the plot due to any reason(s) whatsoever'"

14. There were two distinct caveats in the above clause. 'fhe first was that the cost was itself tentative. It depended on the actual cost of development of the inclustrial plot. The second was that it also dependecl on the directions issued by the GNCTD. The addin g of 50Yo of the gross cost of cross-subsidy for EWS housing to the cost of the' plots is relateable to the \? directions issued by the GNCTD. In view of the above clause m allotment lettet, the Petitioners cannot clairn to have been taken surprise on account of the increase in the cost on the above score'

15. In this connection, this Courl would like to observe that there is a clear distinction between the facts in the case of P. N. Vernm v' (Jnion of Indio and the present case. Para 4 of the judgment in P.N. Vermu sets out the relevant clause in those cases as legards cost of the SFS flats' The saicl clause reads as under:- "The estimated cost of flats on each floor would be announced whenever specified schemes have been prepared taking into consideration the location of each scheme, specifications an'd design of flats, cost of construction prevailing at the time of the execution of the scheme, fluctuations in other cost factors'"

16. It is plain that in the above clause in P.N. Vernra, no caveat was enterecl that the cost would increase on accounl 0f the directions issued by goverurment fi.om time to time. Secondly, those were SFS flats ancl no parallel can be drawn with a schetne like the preseut one involving allotment of industrial plots. F'or the same reason, the judgrnent of the Supreme court tn DDA v. roint Actiotr comndttee is also distinguishable'

17. The decision of the DSIIDC, not to lecover from the allottees of plol's at llawana-I or Na1ela, any element of cross-subsidy towards EWS housing, is really a mattel of policy. The DSIIDC would have had to the l'rrr account for several factoi's including the way in which the market behaved \( \\ o' ih. ear-lier occasion. The view of the DSIIDC that, given the response of the allottees of plots in Bawana-I, it would not be advisable to increase ftirther the cost of the plots by adding any element of Ews cross-subsidy, calnot be said to be nnreasonable or arbitrary. The situation now is obviously different. The figures set out in the counter-affidavit of the DSIIDC show that there has been a rnarked increase in the rnarket rates of plots in Bawana-Il The rate which was Rs. i0,080/- per sq' m' in 2006-07 increased to Rs. 27,400 per sq. m. in 2oO7-08. The submission that the Respondents by not adding an element of EWS cross-subsidy to the cost of the plots at Narela, where the rnarket price was deterrnined at Rs.24,000 l- per sQ. ffi., acted arbitrarily is again to no avaif it is really for the Respoldents to decide whether or not they Wo1ld charge the cross subsidy element from different set of allottees at a given point iir time' It is diffic'tt to hold such dccision to be either arbitrary or discriminatory in terms of Afticle 14. In matters of allotrnent of land at subsidised rates, the passage of tirne and the behaviour of the market are relevant factors which cannot be ignored by the Respondents'

18. It is urged that the Respondents should not be sirnply seen to be rnaking profit and were expected to operate on u no-profit-no-loss basis' If one went by tlr.e figrres given by the Respondents in their coturter affidaviL, then a plot of land for which the circ.le rate determined by the GNCTD is Rs. 27,4001- per sq. rn., anrJ for which the market rate is Rs' I 36,4601-per sq. m., is being allotted di ardceof Rs. 15,5661- pel sq' *1'P Surely, it cannot be said that the DSIIDC is profiteering fi'om the sale o[ plots at Bawana-Il (Bhorgarh). It can well be said that the Petitiollers a're getting the plots at subsidised rates'

19. It *ur rrot practical to expect the Respondents to offer the alternative plots to all the 23,000 plot-holders runuing industrial r-urits in nouconforming area as on 19tl' April 1996 at one go' Alternative lancl had to be located a1d then developed to make it suitable for ildustrial purposes' The relocation had to obviously be done in phases and over a period of time. It is inevitable in the pl'ocess that the allotment of plots had to be sequential. This would inevitably result in the later allotrnents being made at a cost higher than the earlier allotments. 'fhe markct value of the lantl has gone r-rp in the meanwhile and that too dramatically' The later allottees cannot be said.to be prejucliced on this score' Moreover, adtnittedly the allottees have been extended the facility of availing of loans fio[1] finarrcial institutions for the entire cost of the plot.

20. In its order dated 27tt' October' 201 0 tn Mohd' fuun v' DSIIDC' ilris Court lrad, wlrile dismissing the writ petitions, obser.ved as under:,.2. This Court f,r'ds that the scope of interfel'ence by this Court in exercise of its powers uncler Article 226 ofthe Con'stitution in matters involving fixation of price by the authorities for land is narrow' ln Ifuvita Ahuiu t). Dellti State lrtdustriul & InJiustructur)e Developnrcnt Corporation Lttl. (dectsion dated 16tl' Febru ary 20i0 i' was considering the challenge to the action of the DSIIDC in charging Rs' 4,2001-O"t?\ sq. ln. for.plots in Bawana Industrial area, Rs. 5,4001- per sq. tn. fof plots iu the Inclustrial estate at Narela, Jhilmil and"Badli and Rs' 7,5601- per sq. m. for plots in Patparganj Industrial area. A Single Judge of this Court had set aside the demand for the increased cost ou the ground that the DSIIDC failed to show that it had undeftaken any developrnelt activity or incuned any expenditure loss for the plots' This was reversed by the Division Bench of this Court by a judgmQnt dated 22"d Februaly 2008. The Division Bench uphelcl the action of the DSIIDC of charging F(s. 7,7761- per sq. m. for the plots at Narela' This judgment was challenged in the supreme courl and the otder of the Division Belch of this Court was upheld. In para 13, it was observed by the Supreme Court as under:..13.ThepriceofRs.5400l-perSqmfixedin200lisnot disputed by the allottees. Having regard to the intelest on the investment by way of financing cost, overheads and other factors, if the policy of the NCT of Delhi is to increasetlrepriceeveryyearby20oA,itcannotbestated that the said increase is unreasonable or albitrary' Flaving regard to the fact that the lands are being cotltiuuously acquiredanddevelopedandal1otted,itwillbevcry difficult to calculat. ih".actual costs ilt any giving point.oftime.SolongastlreCorporatiol|rasshownthatithad aclopted u l."u*nuble method of fixation of allotment prices und hu, assefted that price fixation is on a 'no profit no loss' basis, the price is 1o-t open for dealt with tb.eissueappropriatelyandlrasriglrtlyupheldtlrepriceof Fts.77761- Pel' sq.m."

3. 'Ihis courl fin<ls that, in principle, the supreme courl declined tc interfere with the enhanced cost demanded by the DSIIDC in thc Narela cases on account of several factors'"

21. Thereafter, in para 6 it was observed as under: "6. There ale no judicially manageable standards to enable this courl to determine whether the charging of Rs. 15,5661- per sQ';fi: for a plot at Bhorgah is arbitrary or urueasonable. Learned counsel for the l{espondents informs this Court that the cost levision *u}/ based on several factors and that the figure was arrived at aftel an elaborate exercise, records for which are available with the Respondents. Be that as it tnay, given the judgment of the Suprernb Court in Ifuvita Ahuia, it is not possible for this Court to interfere in the matter of enhancement of the costs for the industrial plots at Bhorgah in Bawana Industrial Area."

22. Asregards the charging of interest by the DSIIDC fi'om the allottees at lBYo per annum on the delayed payments, while paying them intelest at I0o/o per annum on the arnounts deposited by them, this Court finds that this again is dictated by the way the tnoney market behaves. It is not peculiar to the present cases. This appears to be the standard practice of financial institutions and banks.

23. As regards the creation of the corpus fund for maintenance, this Corjrt fi1ds the explanation offered in the counter-afficlavit bascd 'on the tecorunendations of the Cornmittee to be reasonable and plausible' It is 1ot possible for this Court to sit in appeal over such detennination and 1"o hold it to be arbitrary or unreasonable. Neveftheless, it has been claritiecl by Ms. Salwan, the learned counsel appearing for DSIIDC that with the Petitioners being made to pay Rs. 1,000/- per sq' m. towards creation of the corpus fund fbr maintenance, the sum of 2.5o/o of land value towarcis arurual maintenance would not be charged. It was furlhel clariFred. that it, at a later point in time, the maintenance fund was found to be inadequate for the purpose,, a further lump sum might be charged fiom each of the rf allottees. i i 24.in the above c.ircumstances, this Courf is unable to be persuadecl io I I I lroldithat the charging of Rs. 15,5661- per sq. m. for the plots at Bawana-Il I (Bhorgarh) by the DSIIDC is arbitrary or rmreasonable'

25. -Ihe writ petitions are dismissed but in the circumstances with orders as to costs. Applications also stand dismissed s. MUnALIDHAII, J. DECEMBER. L,IOLO akg Certified tp ha True Coily 0/o^ Exa m jri:' I "lr.ld, i:i::l [].":i,irr]'aent l.Jii;ir Crlrrt 0f ijcihl,-af Authoriuati I,in;*r $e:;iion Z0 I n u' itr,l f v-lti an e q! of.r.(. T)