Bhardwaj Packaging Industries & Ors. v. Delhi State Industrial & Infrastructure Development Corporation Limited & Anr.

4. Secondly, it is sqbmitted that this elemelt of the cost was nevet corlmunicated to the Petitioners either when the applications were inviteci in 1996 ol' even when the allotments were made in 2006' The omnibus clause in the allotment letter statilg that the cost was 'tentative' could not be open-ended. According to tlre Petitioners, this did not permit tire DSIIDC to add an elernent of cost which was not originally envisaged while indicating the tentative cost to each of thern' Reliance is placed orr tlre decision of a Full Bench of this Court in P.N. Verma v' (Jnion cf Inclict AIR 1gS[5] Dethi 417,whrch was upheld by the Supreme Coutl' aud the decision of the Supreme Court in Delhi Developrnent Autlrorit'y"r'' Joint Action conmtittee, Allofiee of sFS Flats AIR 2008 ^sc 1343 ' It is '\o further submitte<l that the stand of the Respondent DSIIDC that they were rnerely abiding by the policy of the Government of National Capital Telitory of Delhi ('GNCTD') and had no choice in the matter, was uot a satisfactory explanation. It is pointed out that neither in the Bawana-I Scheme, nol in the Narela Scheme, was any element of cross-subsidy towarcls EWS housing sought to be added to the cost of the industrial plots. Referring to certain obseryations of a Division Bench of this Court rn DSIIDC tt. yssltpsl Madan 148 (200s) DLT 642 (DB), it is pointecl 0ut that even where the cost of the plots in Narela was deterrnined at lrrs. 24,0001- per sq. m., the EWS cross-subsidy was not sought to be recovered fiom those plot-holders.

5. Thirdly, it is submitted that there were around 23,000 pcrsons who faced displacement on account of their running units in non-conlbrrning areas prior to 19th ApriI tgg[6]. Nearly 19,000 were allottecl altelnative plots in different areas including Bawana-I and Narela' They were not chalged any component of cross-subsidy'1ev7nr:ds EWS housing' It is, ther.efor-e, sgbmitted that tire Petitioners, belonging to the same class, cannot be discriminated against and be made to pay towards cross-subsiety for the EWS housing. It is submitted that while the Petitioncrs arp prepar-ed to pay the cost as indicated in the first'dernand raised in 2006. the preseut cost of Rs. 15,5661- per sq' m. was double the said cost aud. was clearly arbitrary ancl exorbitant. Even if they wele extended assistalce with loans fiom the Delhi Financial Corporation ('DIIC') a1id other financial institutions, them. the financial burden would be too heavy on

6. In another set of petitions, it was submitted that charging Rs. 1000f per sq. m. towards O &. M cost (Corpus Fund) was also arbitraly at-''ci unreasonable. In an earlier communication in response to an applicaticir filed under the I{ight to Infomation Act,2005 ('RTI Act') the Respondeni DSIIDC maintained that they were charging 2.5o/o of the land val'.re towards annual maintenance apart from charging 2.5% towalds the annual grognd rent. This would amount to charging twice for rnaintenance' Tircr Petitioners have also questioned the charging by the DSIIDC of interest fiom them at 18% per annum for the delayed payment while paying to them interest only at IOo/o per annum for the amounts already deposited,by them with the DSIIDC. It is ftiither pointed out that the inlerest was being pai<l only for the per.iod l't April 2009 to 31't March 201I whereas the amounts were deposited fiom 1996 onwards. In this connection, reliance has been placed on the judgment of the Suprerne Court in Videocott P.roperties Ltd. v. Dr. Bhalchsnclra Luboratories AIR 2004 sc 1787' '

7. Inthe reply filed by t6e DSIIDC in W.P.(C) 7768 of 2010 (which repiy is common to all the writ petitions) the basis for'charging the cotnponertt for cross-subsidy towards category such as EWS has'been explained'in parallasunder: "'fhat during the last 3-4 years, the answering respondent has \v conlpletecl the development in Bholgarh industrial at'ea and after taking into account the enhanced land compensations and enhanced project costs, the costs per sq.fiit of saleable area has been calculated as Rs.8158/- per sq.mt in Financial Year 2008-09' Tire' matter was placed before the Government, and the government, after taking into consideration the cost determination tnethocl 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 Rs' 85 18' 10 b)Costofcapital@10%p'a.for2009-IIRs'1788.80 c) 50% of gross cost added as per Govt' Policy for Light industry (for cross subsidies towards categories such as EWS) d) Future O & M cost (CorPus Fund) e) Cost Per sq. mt. (a+b+c+d) Rs.4259.10 Its. 1000.00 Rs.15566.00" 8, A copy of the governlnent 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 Committee was constituted complising the Additional Commissionbr of Industries (GNCTD) as Chailman, the Deputy commissioner of Industries (GNCTD), chief Manager (Relocation), DSIIDC, Deputy Financial Advisor' (works), DSIIDC ancl Executive Engineer (Bhorgarh), DSIIDC. The Committee deteilnined tlre cost based on the expenditure incurred and projected by the DSIIDC' The cornmittee noted that the cobt of the plots had increased fi'om the i'itial estimate of Rs. 5J501- pel sq. m. to about Rs. 8,5201- pet sq' ln' due to various factors'lsuch as improvement of street lighting, inclusion of 60 m' better connectivity, construction of an rurderground \3 reservoil- and effluents purnping station, increase. in the cost inder, increase in the Delhi Jal Board charges and in increase in electrifioation costs etc. This Cornrnittee also took note of the pioblems of maintenance faced by industrial estates set up earlier and suggested the setting up of a colpus for a long-ten[1] maintenance fund. Accordingly, it was sllggested that Rs. 1,000/- per sq. m. should be charged fi'orn each allottee fo[1] cr-eation of the l-und so that it rnay generate a corpus of Rs. 75 cro.res. A copy of the minutes of the Committee has been enclosed with the affidavit.

9. It appears that the rationale for including a component towards cl'osssubsidy for IIWS irousing was based on the prevalent practice of ljre DDA. In paras 15 and 16 of the affidavit, it has been explained as undet':,,15. That the rnultiplier of 1.[5] applied for Bholgarh is the same as that applied by the DDA for plots under 'Light Industt'y' category in the size range of 50 sq. meter to 400 sq. meter. f'he rnultiplier of 1.[5] has been applied as per the directions and approval of the Govemment. The amount so genelated is to be used towards noutargeted closs subsidy for development of Economically Weaker sections (EWS) housing, JJ & squatters, settlement, etc.

16. 'lhat the DDA has been applying the multiplier at least ftom Igg[2] onward. In this regard, the docurnents obtained fi'om DDA toward costing of Dwarka Project in 1992 and Tikri I{alan Plastic Bazaar in 1999; and some notifications of Predetermined Land Rates issued by the Ministry of urban Development and Poverty Alleviation, Government of India in 2009 and 2010 are enclosed as Annexures-C (Colly) respectively' \\ The perusal of DDA land costing methodology (Annexure Cl) would cleally reveal that in Dwarka Project in 1992, 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; whereas lower rate of Rs.550.22 per sq.int. iras been charged for EWS and JJ & SquatLers settlement. Lower lates have also been charged fi'om some other categoribs, like LIG, charitable institutions, and utilities. Sirnilarly, DDA Resolution of 1ggg (Arurexul e C[2]) notilies the rate of industrial plots of 300 sq. meters and 495 sq. meters as Rs' 2305 per sq. rneter and Rs. 2689 per sq. rneter against the Ilreak Even Rate of Rs. 1536 per sq. meter; wheleas much lower/lominal costs have been fixed for lalds for police station, fire station, health services, utilities, etc' The Governrnent of India, Ministry of.Urban Developtnent notifications {Annexures C[3] (Colly)} of pre-determined rates for Plastic Bazaar, Tilai Kalan for year 2008-09 and jOOg-10 also apply multiplier of 1.[5] for 'Light Industry' plots of 300 sq. meters in size. Flom the above it would be kindly seen that the policy of applying nultiplier 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 yeals of development. A number of eligible applicants had opted out of those allotments and sought refund of the earrrest money deposited' f-Iowever' the experience as regards the Bhorgarh plots has been different' It is pointed out that the rnarket rate for the sale disposal of the land and for \( 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,r54 36,469" 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11' 1 1. It is fuilher stated as under:..It is pertinent to mention that the market rate for industrial land notified by the government for 20t0-I[1] fol Bawana Industrial Area is Rs. 36,4691- per square tneter. Therefore the marlcet rate for Bhorgarfi rnay be taken as Rs' 36,4691- per sq' meter. at par with the rate of learby estates. Cotnpared to the nrarket rates, the allotment nrade by the respondent @ Rs.15,566 l- per sq. ineter is still much on the lower side and is reasonable. Even the circle rate determined by the Government of NCT of Delhi is approximately Pts'27,400/-;'

12. ThePetitioners have, however, disputed the above figures' 'fhis courL has no means, in a petition under Article 226 of the Constitution' to determine the above disputed cluestion of fact' Thele is no basis for tl'e Court to doubt the correctness of th" details set out by the DSIIDC in its affidavit as regards prevalent market rate and circle rates. for plots in t. \!t

13. On a consideration of the submissions of the learned counsel fol the parlies, one of the first questions that this Court is called upon to consider is whether the t'ecovely. of 5Oo/o of the gross cost for light industries {br cross-subsidy towards EWS housing, amounting to Rs' 4259'10 per sq' m., in terms of the policy of the GNCTD, iS arbitrary or unreasonable in tlre context of Article 14 0f the constitution? This court finds that the decision to charge Rs. 4259.10 as cross-subsidy towards categories sucir as EWS housing is based on a government policy' The allotment letters were issued to about 4615 units in Bholgarh in 2005 and 2006' It was clearly indicated at that time that the cost per plot was Rs' 5,t50/-.per sct: m. but also that it was a,tentative one. The precise clause in the allottnent letter in this regard read as under: "Tl" tentative cost of the plot is Rs. 5150/- per squale metel, which is subject to change depending upon the actual cost of development of the industrial plot and directions issued by the Government of Delhi in this regard' This is to inform you that the cost indicated above is tentative' The allottee will be liable to p1y any increase in the cost of the plot due to any reason(s) wltatsoever'"

14. Thele were two distinct caveats in the above clause' The first was that the cost was itself tentative. It depended on the actual cost of developnent' of the industrial plot. The second was that it also depended on the directions issued by the GNCTD. The addin g of 50Yo of the gross cost' of cross-subsidy fol EWS housing to the cost of the plots is relateable to t]re \1. clirections issued by the GNCTD. In view of the above clause in: allotrnent letter, the Petitioners cannot claim to have been takeu surprise on account of the increase ih the cost on the above score',15. In this connection, this Courl would like to observe that there is a clear distinction b"twe"n the facts in the case of P. N' Vgrnm v' Union of Indict and the presenl case. Para 4 of the judgment in P'N' Vernm sets out the relevant clause in those cases as regards cost of the SFS flats' The said 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 locatiol of each scheme, specifications and design of flats, cost of construction prevailing at the time of the execution of the schetne, fluctuations in other cost'factors'" \

16. It is plain that in the above clause in P.N. Vernta, uo caveat was entered that the cost woulcl increase on account of the directions issued by goventlnelt fiom time to time. Secondly, those wele SFS flats ancl no parallel can be clrawn with a scheme like the preseut one involving allotment of i'dlstrial piots. F'or the sane l'eason, the judgrneut of tlre suprerne court in DDA v. roiltt Actiort comnilttee is also distinguishable'

17. The decision of the DSIIDC, not to l'ecover fiorn the allottees of plol's at Bawana-I or Nalela, any element of cross-subsidy towarcls EWS housing, is really a natter of policy. The DSIIDC would have had to the by tb acco*nt for several factors incl'di'g the way in which the market behaved on tlre earlier occasion. The view of the DSIIDC that, given the respollse of the allottees of plots in Bawana-I, it would not be advisable to increase further thd cost of the plots by adding any element of EWS cross-snbsidy, cannot be said to be unreasonable or albitrary. The situation now is obvio'sly different. The figrres set out in the connter-affidavit of the DSIIDC show that there has been a marked increase in the market i-ates of plots in Bawana-Il. The rate which was Rs. 10,080/- per sq. m' in 2006-07 increased to Rs. 27,400 per sq. rn. in 2007-08. The submission that the Respondents by not adding al element of EWS cross-subsidy to the cost of the plots at Narela, whete the rnarket price was determined at Rs.24,000 l- per sq. 1n., acted albitrarily is again to no avail. It is really for the Respondents to decide whether or not they would charge the crossstrbsidy element frorn different set of allottees at'a given point iil tifire' It is difficult to hold such dccision to be either arbitrary or discrimi'atory i' terms of Article 14. In rnatters 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 simply seen to be rnaking profit and were expected to operate on a no-profit-no-loss basis' If one went by the figures given by the Respondents i[1] their cottnter affidavit, then a plot of land for which the circle rate deterrnined by the GNCTD is Rs. 27,4QOl- pef scl. tn., and for which the market rate is I{s' \^ 36,4601-per Sq. m., is beirrg allotted at.arate of Rs. 15,5661- pel.ScI. m. Surely, it cannot be said that the DSIIDC is profiteering fi'om the sale of plots at llawana-Il (Bhorgarh). It can well be said that the Petitioners are getting tire plots at subsidised rates'

19. It was not pracdcal to expect the Respondents to offer the alternative plots to all the 23,000 plot-holders running industrial r-ruits in nouconformitlg area as on 19tl' April lgg6'at one go' Alternative land hacl to be located and then developed to tnake it suitable for industrial purposes' The relocation had to obviously be done in phases and ovel a period cf time.Itisinevitableintlreprocessthattlreallotmentofplotslradtotre secluential. This would inevitably result in the later allottnents being tnade at a cost higher tltun the earlier allotments' The market value of the lanti has gone up in.the meanwhile and that too dramatically' The latel allottees cannot be said to be prejudiced on this score' Moreover' admittedly tlre allolteeshavebeenextendedthefacilityofavailingofloansfl.otn finarrcialinstitutionstortlreentirecostoftheplot.

20. In its orcler dated 27't' October 2010 in Moltd' faun v' DSIIDC' this courl had, while disrnissilg the writ petitions, obsetved as uncler: ''l ' c,2. This Court finds that the scope of interfel'ence by this Court in exerciseofitspowersunclerAr.ticle226oftheCorrstitutiorritrnratters involving fixation of plice by the authorities for land is narrow' In. Ifuvita Attuiu v. Dellti stute Industriat & InJrastructw)e, Developtnent corltorcttiort Ltd- (decision datecl 16tr' Februaty 2010 itt collsidering L0 the challetrge to r;hc action of the DSIIDC in chargitlg Rs' 4,2001- pet sq. m. for plots in Bawana Industrial area,Its. 5,400/- per sq' rn' for plots in the Industrial estate at Narela, Jhilmil and Badli and Rs' 7,5601- per sq. rn. for plots in Patparganj Industrial atea. A Sirigle Juclge of this court had set aside the dernand for the increased cost ou the ground that the DsIIDC failed to show that it had unclertaken auy developurent activity or incurred any expenditure loss fol the plots' This was reversed by the Division Bench of this coutt by a juclgtnqnt dated 22"d February 2008. The Division Bench qpheld the actiou of the DSIIDC of charging I\s. 7,7761- per sq. m- fo[1] the plots at Narela' 'Ihis juclgmell was challelged in the Supreme Courl and the order cf the Division Bench of this Court was upheld. In pala 13, it was observed by the Supreme Court as under:,.13. The price of Rs. 54001- per sqm fixed in 2001 is not clisputed by the allottees. Having regard to the interest on the investment by way of financi'g'cost, overheads ancl other factors, if the policy of the NCT of Delhi is to. increase tire price every year by 2OoA, it cannot be stated that the said i'crease is u*easonable or arbitrary. I-Iaving regardtothefactt1ratthe1andsarebeingcontitrttously. acclrrired and developed and allotted, it will be vct.y difficult to calculat" ih" actual costs dL any giving point of time. so long as the colporation has shown that it had adopted u,.u*ruble method of fixation of allotment prices and has assefled that price fixation.is on u '19 profitnoloss,basis,thepriceisnoJopenfordealtwith the issue appropriately and has rightly upheld the price of Fts.77761- Per sq'rl'"

3. l'his court fincls that, in principle, the supreme court declined tc inter.fere with the enhanced cost demanded'by the DSIIDC in the Narela cases on account of several factors'') '

21. Thereaftet, in para 6 it was observed as under':,,6. There are no judicially manageable standards to enable this court to determine whether the charging of Rs. 15,5661- per s!l' i1!'; for a plot at Bhorgah is arbitrary or unreasonable' Lealned colursel t. for the Respondents iuforms this Coutt that the cost revisioir was based on Several factors and that the figure was arrived at aller an elaborate exercise, records for which are available with the Respondents. Be that as it tnay, given the judgin"l of the Supremb Courl rn l(avita Ahuja, it is not possible for this Court to interfere in the rnatter of enhancement of the costs for the industrial plots at Bhorgah in Bawana Industrial Area."

22. As regards the charging of interest by the DSIIDC fi'om the allottees at 18% per annum on the delayed paYments, while paying th,em interest at i0% pe[1] annum on the amounts deposited by them, this Courl finds that. this again is dictated by the way the money market behaves. It is not peculiar to the present cases. This appears to be the standard practice o1' financial institutions and banks.

23. As regards the creation of the cotpus fund for maintellance, this Court fi1ds.the explanation offerecl in the counter-affidavit based on tbe recotRneldations of the Committee to be leason'able and plausible. It is lot possible fol this Court to sit in appeal over such determination and 1cr hold it to be arbitrary or unreasonable. Neverlheless, it has beeu clari{heci by Ms. Salwan, the leatned counsel appearing for DSIIDC that with the Petitioners being made to pay Rs. 1,000/- pel sq. m. towards cleation of tlre corpus fund for rnaintenance, the sum of 2.5% of land value towarcis annuai mainlenanse wouid not be charged. It was furlher clarified that i[, at alater point in time, the maintenance fund was found to be inadequate -fior the putpose, a fuilher lump sum might be charged fiom each of tlie' *c 0? allpttees. I

24. In the above c.ircumstances, this Court is unable to be persuaded to I I holdlthat the charging of Rs. 1 5,5661- per sq. m' for the plots at Bawana-Il I I (Bhorgalh) by the DSIIDC is arbitrary or unreasohable.

25. The writ petitions are disrnissed but in the circumstances with no orders as to costs. Applications also stand dismissed

S. MURALIDHAR,:I.