Delhi Development Authority v. Dinesh Kumar

1. The present Appeal has been filed against Judgment dated 11.07.2022 (hereinafter referred to as “the Impugned Judgment”) wherein the learned Single Judge has set aside the demand raised by the Appellant/Delhi Development Authority (hereinafter referred to as “DDA”) to pay interest on balance 10 % disposal cost to be paid for of an allotted Flat.

2. The brief relevant facts are as follows:

(i) The Appellant had launched a Housing Scheme for approximately 25,000 flats in the category of Low Income Group (hereinafter referred to as “LIG”) under DDA Housing Scheme 2014 (hereinafter referred to as “the Scheme”).

(ii) Subsequent to a draw of lots, the Respondent was allotted Flat

No. 14, 3rd Floor, Block B-11, Pocket -3, Sector G-8, Narela, New Delhi-110040 (hereinafter referred to as “the Flat”) on 25.11.2014.

(iii) On 19.01.2015, a demand letter was received by the

Respondent, wherein a payment of Rs. 12,19,237/- which amounted to 90% of the cost of the Flat, was demanded by DDA. The Respondent made that payment and an Agreement to Sell dated 17.06.2015 was executed between the Respondent and DDA.

(iv) Thereafter, on 11.07.2021, the Respondent received a letter dated 01.07.2021 from DDA wherein a demand for the balance consideration of 10% for the Flat was made as well as a demand for interest was made from the Respondent in the sum of Rs. 84,416/-, being the interest payable on the balance consideration of 10% paid after 5 years. The Respondent paid the balance sale consideration but paid the interest component of Rs. 84,416/-, under protest.

(v) The Respondent filed a Writ Petition i.e. W.P.(C) 8552/2021, challenging the levy of interest on this balance consideration of 10% stating that the same was arbitrary and unjustified and seeking an appropriate direction that the letter dated 01.07.2021 be withdrawn by DDA or a direction be passed for the refund of Rs. 84,416/- to the Respondent.

(vi) As discussed above, the learned Single Judge has set aside the impugned letter dated 01.07.2021 and directed DDA to issue a new letter of demand stating the amount, required to be paid by the Respondent.

(vii) Aggrieved by these directions, DDA has filed the present

3. It was submitted by learned Counsel for DDA that the terms and conditions as contained in the (i) Brochure, (ii) Demand cum Allotment Letter and (iii) Agreement to Sell which are all part of the contractual terms between DDA and an allottee. The interest on balance 10% disposal cost of the Flat as levied is part of the contract and documents executed by an allottee and Respondent has agreed to these terms at the time of the allotment. Reliance has been placed on Clause 16(c) of the Scheme which provides that interest on the 10% balance consideration of an allotted Flat is to be paid after five years. 3.[1] It was further submitted by the learned Counsel for DDA that the clause envisages delay in payment of balance 10% consideration of a flat was inserted in the Scheme, so that genuine end-users and not unscrupulous elements and property brokers obtain flats from DDA. It was also submitted that the reason for charging the interest is based on the fact that DDA had to recover the cost of capital that was incurred by DDA on account of cost of construction of the Flats. Furthermore, it was submitted that by the Circular No. F1(303)N&C/H/2013/Pt.1/150 dated 25.01.2019 issued by DDA (hereinafter called the “2019 Circular”), the embargo on execution of Conveyance Deed till after 5 years has now been removed.

4. On the other hand, it was argued by learned Counsel for the Respondent before the learned Single Judge that interest on the 10% balance consideration payment is arbitrary and illegal. It was submitted that DDA could not as a matter of right includes, a condition that the Respondent has to pay the balance amount after a period of five years and then charge interest on the same. In view of the fact that the Allotment Letter itself provides for a payment after five years, DDA gives no option to an allottee to pay it earlier. Hence, the Respondent submitted that the Scheme envisages that interest should be levied and may be charged by DDA only if there is a delay in payment of the balance 10% consideration and not for the entire 5 years.

5. To better understand this “balance 10% payment”, it is relevant to refer to the Scheme. Clause 16(a) and (c) of the Scheme reads as follows: “(a) To prevent speculative applications and to ensure that only genuine persons apply, as per demand-cum-allotment letter a successful allottee, including an allottee under the EWS and PD category making payment on cash down basis, upon payment of 90% of the cost of the flat and completion of other formalities/submission of documents, execute an Agreement to Sell with DDA in the prescribed format which shall be registered with the Sub-Registrar as per law whereupon the possession of the flat shall be handed over to such allottee. ……

(c) A Conveyance Deed in the prescribed format transferring the title of the flat shall be executed in favour of the original allottee, which shall be registered with the Suboriginal allottee, after a period of 5 (five) years from the date of handing over possession subject to payment of the balance 10% cost of the flat alongwith interest as per policy and the conversion charges and all other dues provided the original allottee has not in any manner sold, transferred or alienated the whole or any part of the flat by any agreement of whatsoever nature and parted with possession thereof.” [Emphasis is ours] 5.[1] As can be seen from the aforegoing clause, in the first instance, an allottee is required to make a payment of 90% of the cost of the Flat and complete other formalities including submission of documents in order to execute an Agreement to Sell with DDA. 5.[2] Thereafter, after a period of five years from the date of handing over of possession, and on a payment of the balance 10% cost of the Flat and interest on this balance 10% consideration and other charges, can a Conveyance Deed be executed in favour of the allottee. 5.[3] Therefore, as per the Scheme, an allottee has no option to make 100% payment at once, but is required to make 10% balance consideration payment after a period of five years.