Punjab Urban Planning Development Authority Vs Raghunath Gupta

(2012) 8 SCC 197

The Hon’ble Supreme Court of India has set out a strong precedent for future buyers of plots/ flats/ shops in Public Auctions. The Supreme Court recently held in Punjab Urban Planning and Development Authority and Others v. Raghu Nath Gupta and Others (2012) 8 SCC 197 that buyers were liable to the payment of interest, penal interest, penalty for belated payment of instalment and cannot deny their liability after having accepted the offer of commercial plots “as is where is basis” as provided in Public Auction notice and also having accepted the terms and conditions of auction letter.

Issue

The question before the Hon’ble court was whether the respondents are legally obliged to pay the interest, penal interest and penalty on account of delayed payment of instalment after having accepted the allotment of commercial plots by way of auction.

Facts leading to the dispute

The appellants conducted a public Auction and offered commercial plots/shops on “as is where is basis” where the Authority shall not be responsible for removing any structures thereon. The Respondent successfully bided for the shop. The Respondent was handed with the possession of the shop on the payment of 25 percent of the total price of the shop. An Allotment letter was issued to him that contained a provision whereby the remaining payment of the balance amount of the price of the shop could either be paid in lump-sum or through installment. The installment mode of payment had a superimposed condition that installment amount shall be paid by certain date (by 10th of the month) with interest and failing of which shall lead to imposition of penalty by the Estate Officer.

The respondent filed a writ petition to Punjab High Court seeking direction to PUDA not to charge interest on balance installment till the basic amenities were provided on the site. The writ petition was disposed off by the High court directing the Estate Officer to pass a speaking order. Estate officer rejected the demand made in the notice and writ petition was filed by the respondent against this. Another writ petition was filed by respondents and this was allowed by the High Court and held that respondent was not liable to pay penal interest for the period of 1.6.2001 to 31.12.2002 for belated payment of installment.

The Appellants have filed Special Leave petition against this judgment in the Supreme Court.

Punjab Urban Planning and Development Authority V. Raghunath Gupta case Decision of the Apex Court

The Apex Court relied on clauses 25 of auction notification and allotment letter accepted by the respondents for deciding the dispute.

The court observed that the plots were allotted on “as is where basis” and were also accepted by the Respondent on this basis only with open eyes subject to all the mentioned conditions. The Court said that allottees could have ascertained all the facilities that were available on the plots at the time of auction as these were being allotted on “as is where basis” and if they were not interested in taking the plots on “as is where is basis” then they should not have accepted these plots on “as is where is basis”.

The court further said that the respondent had accepted the plots on “as is where basis is” and were therefore estopped (stopped) from contending that basic facilities like sewage etc. were not being provided at the time when the plots were being allotted.

The court further said that electrical works and health works were completed by 24.12.2002 and 22.11.2002 and all the facilities like parking, roads were also provided.

The court also observed that High Court has not properly comprehended the judgment of Municipal Corporation, Chandigarh v. Shantikunj Investment (P) Ltd. (2006) 4 SCC 109 upon which the High court had relied upon while hearing writ petition against which this special leave has been filed and observed that this court had specifically held that in case when allotment of plots is by “as is where is basis” and the administration has promised that basic amenities shall be provided in due course of time ……. and plots have been handed over then that does not mean that all the facilities shall be provided first for so called enjoyment of the property as this was not the condition of the auction and the party knew the location and condition prevailing thereon.

The apex court further observed relying on UT Chandigarh v. Amarjeet Singh (2009) 4 SCC 660 that in public auction of sites, interested parties can inspect the sites that are being offered and participate in the auction only for the site that he chooses to acquire. The court said that this prospective purchaser of the plot who makes the bid after having opportunity to examine the site and keeping in view the conditions prevailing on the site and hence he cannot later say that he shall not pay the balance payment of price with interest on the ground that the some amenities are not provided.

The court held that respondent cannot say that they are not bound by the terms and conditions of auction notice and allotment letter after they have accepted the offer of commercial plots in a public auction with a superimposed condition i.e. as is where is basis and also terms and conditions of the allotment letter that includes installment facility for payment.

The Apex court held that high court was not justified in holding that the respondents were not liable for the penal interest, penalty for the period of 1.6.2001 to 31.12.2002 For the belated payment of installment and set aside the judgment of the High court.

Thus, the Apex Court held in the favor of Housing Board and held that purchasers/buyers cannot deny their liability of payment of penalty, penal interest when they have accepted the offer of the plot on “as is where is basis” and have also accepted the terms and conditions of the allotment letter on the ground that facilities have been not been provided. The court also held that there was no delay in providing basic amenities on the plot.