PETITIONER: COMMISSIONER OF WEALTH TAX, <NAME> Vs. RESPONDENT: <ORG>. DATE OF JUDGMENT: 05/10/1966 BENCH: <NAME>, VISHISHTHA BENCH: <NAME>, VISHISHTHA SHAH, J.C. RAMASWAMI, V. CITATION: 1967 AIR 509 1967 SCR (1) 761 CITATOR INFO : R 1967 SC1534 (7) RF 1971 SC2447 (1) ACT: Wealth Tax Act , s. 5(1) (xxi)-Exemiption--Criteria for period-"Set up" and "established", meaning-Question not raised before <ORG>, if could be raised in <ORG>. HEADNOTE: The respondent--Company was assessed to wealth-tax for the assessment year 1957-58 and the respondent claimed deduction of -an amount laid out for setting up a new unit. The licence for setting up the new unit was granted in 1955; the construction of the factory building was completed by December 1957; the erection of the machinery and plant was completed in several stages commencing from June 1957; the licence for working the factory was obtained in June 1958; and time given to complete the project also was extended by <ORG> up to March 17, 1959. The Wealth Tax Officer disallowed the claim on the ground that the unit was, set up prior to the date on which the Wealth Tax Act came into force, ie., April 1, 1957. This order was upheld in appeals. But in reference, <ORG> answered the question in favour of the assessee, for, it proceeded on the basis that the unit was completed and became ready to go into business after the Act had come into force. HELD : The assessee was entitled to the claim as it satisfied the condition laid down in cl. (xxi) of s. 5(1) of the Act. The criterion for determining the period of exemption is based on the commencement of the operations for establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, but must precede the actual setting up of the unit. [1764 G-H] The word "set up" in clause (xxi) of s. 5(1) of the Act, is equivalent to the word "established" but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the, proviso has, therefore, to be decided by finding -out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause.[1764 <CITATION> , 26 I.T.R. 151 referred to. In the present case, the <ORG> proceeded on the basis that whatever be the exact date of commencement of the operations for establishment of Ibis unit,, it was certainly before April 1, 1957 and that fact by itself is sufficient to entitle the assessee to claim the exemption. The Commissioner cannot be allowed to raise a new question and ask this Court to decide that the date of commencement of the operation for establishment of the unit by the respondent was different from that accepted by the <ORG>. That question was not raised and dealt with by the <ORG>, [766 <CITATION> ., 42 I.T.R. 589 relied on. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 674 of 1965. Ml 7 Sup. C. I/66 761 Appeal by special leave from the judgment and order dated March 14, 1962 of <ORG> in T. C. No. 209 of 1959.

<NAME> and <NAME>, for the appellant. <NAME>, and <NAME>, for the respondent. The Judgment of the Court was delivered by <NAME>. J. The respondent is a public limited company incorporated under the Indian Companies, Act, 1913 in the year 1939 and was carrying on the business of manufacture of absorbent cotton wool. In March 1955, <ORG> resolved to establish a new spinning unit under the name of <ORG> for which a licence was obtained from <ORG> under the Industries (Development and Regulation) Act , 1951 in August 1955. The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956. The construction of factory buildings was taken in hand in March, 1956, and these constructions were completed by December, 1957. The erection of the spinning machinery and the plant in the buildings was completed in several stages commencing from June, 1957. A licence from the Inspector of Factories for working the factory was obtained in June, 1958. The statement of the case further mentioned that the time given to complete the project was extended by the <ORG> up to 17th March, 1959. The respondent was assessed to wealth tax for the assessment year 1957-58, and in that year the respondent claimed that, in computing the wealth on the valuation date which was 30th September, 1956, an amount of Rs. 1,43,727 should be deducted as being the amount laid out in setting up this new unit. The Wealth Tax Officer disallowed the claim on the ground that the unit was set up prior to the date on which the Wealth Tax Act (hereinafter referred to as "the Act") came into force, i.e., 1st April 1957. On the same basis, the Appellate Assistant Commissioner and <ORG> upheld that order. Thereupon, at the request of the respondent, the following question of law was referred for opinion of <ORG>

"Whether the aforesaid asset of Rs. 1,43,727 is exempt under section 5(1)(xxi) read with the second proviso thereunder of the Wealth-tax Act ?"

<ORG> answered the question in favour of the respondent, and consequently, this appeal has been brought up to this Court by the Commissioner of Wealth Tax, Madras, by special leave.

The question that fell for determination depended on the interpretation of section 5(1)(xxi) of the Act read with the second proviso to that clause which are reproduced below:

.lm15 "5(1)(xxi) that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation to clause (d) of section 45 , as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking:- Provided that-

(a)

(b) Provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit."

It has been urged before us by learned counsel for the Commissioner that the main provision of clause (xxi) should be interpreted in conjunction with the second proviso so as to give a harmonious construction to both parts of the provision with which we are concerned. Relying on this principle, he urged that we should hold that a new and separate unit is set up only when the company commences operations for the establishment of such unit. He relied on the principle stated by <NAME> in his book 'On Inter- pretation of Statutes' 11th Edn. at P. 155 that there is no rule that the first or enacting part is to be construed without reference to the proviso. "The proper course is to apply the broad general rule of construction, which is that a section or enactment must be construed as a whole, each portion throwing light, if need be, on the rest." "The true principle undoubtedly is that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause, and proviso, taken and construed together is to prevail." The view taken by <ORG> was challenged on the ground that <ORG> had interpreted the principal clause without giving full effect to the language of the proviso.

<ORG> held that unless a factory is erected and the plants and machinery installed therein, it cannot be said to have been set up. The resolution of <ORG>, the orders placed for purchasing machinery, licence obtained from the <ORG> for constructing the machinery, are merely initial stages towards setting up, however necessary and essential they may be to further the achievement of the end. It is not, however, the actual functioning of the factory or its going into production that can alone be called setting up of the factory. The setting up is perhaps a stage anterior to the commencement of the factory. Thereafter, <ORG> referred to a decision of <ORG> in <CITATION> ,(') and on its basis, concluded that the proper meaning to be assigned to the expression "set up" in section 5(1)(xxi) would be "ready to commence business." We are unable to agree with the learned counsel for the Commissioner that in arriving at this view, <ORG> committed any error. A unit cannot be said to have been set up unless it is ready to discharge the function for which it is being set up. It is only when the unit has been put into such a shape that it can start functioning as a business or a manufacturing Organisation that it can be said that the unit has been set up. The expression used in the proviso, under which the period for which the exemption is available is to be deter- mined, is not the same as used in the principal clause. In the proviso, the period of five successive years of exemption has to commence with the assessment year next following the date on which the company commences operations for the establishment of the unit. Operations for the establishment of a unit, from the very nature of that expression, can only signify steps that have to be taken to establish the unit. The word "set up" in the principal clause, in our opinion, is equivalent to the word "established", but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause. This is also the meaning that <ORG> derived in the case of <ORG>(,) where that <ORG> was concerned with the interpretation of the expression "set up" as used in section 2(l1) of the Income-tax Act. That <ORG> held: "It seems to us that the expression 'settling up' means, as is defined in <ORG>, 'to place on foot" or 'to establish', and is contradistinction to 'commence.' The distinction is this that when a business is established and is ready to commence business, then it can be said of that business that it is set up. But before it is ready to commence business it is not set tip." This view was expressed when that <ORG> was considering the difference between the meaning of the expression "setting up a business" and " commencing of a business." In the case before us, the proviso does not even refer to commencement of the unit.. The criterion for determining the period of exemption is based on the commencement of the operations for the establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, as urged on behalf of the Commis- sioner, but must precede the actual setting up of the unit. In fact, (1)26 I.T.R 15 1.

it is the operations for establishment of a unit which ultimately culminate in the setting up of the unit. On this interpretation, it is clear that in this case, the claim put forward by the respondent for exemption has been rightly held to be allowable by <ORG>. In the statement of the case and in its appellate judgment, the <ORG> did not specifically record any finding as to the date when the unit was ready to go into business and to start production. In the appellate order, it was mentioned that according to the respondent, the unit was set up only when the Inspector of Factories issued a licence to the respondent for working the factory, which was in June, 1958. In the, statement of the case, the facts recited show that the construction of the factory buildings was completed by December, 1957 and the erection of the spinning machinery and plant was completed in several stages commencing from June, 1957. On these facts, <ORG>, and we consider rightly, proceeded on the basis that the unit was completed and became ready to go into business only after 1st April, 1957, when the Act had already come into force. Consequently, the condition laid down in the principal clause of s. 5(1)(xxi) was satisfied, and the company became entitled to exemption in respect of the value of the assets used up in setting up this unit.

Learned counsel for the Commissioner, however, challenged the right of the respondent to claim this exemption on another ground, viz., that the exemption was claimed in respect of money laid out in a period which was not covered by the period envisaged in the second proviso. It was urged that if it be held that the unit was set up after the Act had come into force on the 1 st April, 1957, it must also be held that the operations for the establishment of the unit had been commenced by the company almost simultaneously with the unit having been set up, and that date would, therefore, be a date subsequent to the assessment year 1957-58 in which year the exemption was claimed. This is a question which we do not think can be legitimately raised on behalf of the Commissioner at this stage. The only contention before the <ORG> on behalf of the Commissioner was that the operations for the establishment of the unit had been commenced by the respondent before the Act came into force, and that it should be held that the unit was also set ;up at the same time when those operations were commenced. There was no contention at any stage that the operations for the establishment of the unit were commenced at a subsequent stage. In fact, it was only for the purpose of urging that the principal clause was not applicable to the case of the respondent that the position was taken up on behalf of the Commissioner that the operations for establishment of the unit had been commenced before 1st April, 1957, and the unit must be held to have been set up at the same time when those operations were commenced. That submission, as we have indicated above, has no force.

In any case, the judgments passed by all the Wealth-tax Authorities show that it was at no stage in dispute that the operations for establishment of the unit had been commenced by the respondent prior to 1 st April, 1957. Para 5 of the statement of the case mentions that the the wealth-tax officer disallowed the claim on the ground that unit was set up prior to 1st April, 1957. The Appellate Assistant Commissioner also in his judgment said: "In this view of the matter, the appellant set up the undertaking even prior to 1st April, 1957 as operations were carried out prior to that date for the establishment of the undertaking. The operations consisted of the seeking of permission from the Government to install the unit, and placing of orders with manufacturers of machinery and advancing of moneys towards the purchase of machinery." The <ORG> also disallowed the claim on the basis that the respondent commenced operations for setting up the unit earlier than 1st April, 1957. It does not appear to be necessary for us to express any opinion as to the particular stage at which it can be said that a company commences operations for the establishment of a unit. In the present case, the <ORG> proceeded on the basis that, whatever be the exact date of commencement of the operations for establishment of this unit by the respondent, it was certainly before 1st April, 1957; and we consider that that fact, by itself, is sufficient to entitle the respondent to claim the exemption. The Commissioner cannot, at this stage, be allowed to raise a new question and ask this Court to decide that the date of commencement of the operations for establishment of the unit by the respondent was different from that accepted by the <ORG>. That question was not raised and dealt with by the <ORG>. It is not even a question that might have been raised before the <ORG> and the <ORG> might have failed to deal with, nor is it a question which may not have been raised before the <ORG> and, yet, was dealt with by it. On the principle laid down by this Court in <CITATION> .,(') such a question could not be canvassed before <ORG> and cannot be allowed to- be raised in this Court. The question referred to <ORG> had to be answered on the basis that the respondent did commence operations for establishing this unit before 1st April, 1957; and the further finding of fact recorded by the <ORG> is that a sum of Rs. 1,43,727/- had been invested in setting up the unit by 30th September, 1956, which was the valuation date for the assessment year 1957-58. The very first assessment year after the commencement of the operations for establishment of the unit was this assessment year 1957-58, In the Wealth Tax Act , assessment (1)  1 S.C.R 788:42 I.T.R. 589.

year has been defined to mean the year for which tax is chargeable under s. 3 of that Act. Since the Act came into force on the 1st April, 1957, the financial year 1957-58 was the first assessment year for which tax became chargeable, and consequently, for purposes of the second proviso to section 5(1)(xxi) , the assessment year following the commencement of operations for establishment of the unit in the case of any company which commenced the operations any time before the 1st April, 1957, will be the assessment year 1957-58. Prior to the year 1957-58, there was no assessment year as defined under the Act, and consequently, the first assessment year for which exemption could be claimed was this assessment year 1957-58. The respondent which had commenced operations for establishment of its new unit prior to 1st April, 1957, was rightly allowed exemption in respect of the amount that had been invested by it upto the relevant valuation date. The answer returned by <ORG> was, therefore, correct. The appeal fails and is Appeal dismissed.

dismissed with costs.

Y.P.


<NAME>, J.

1. <ORG> (hereinafter referred to as <ORG>) announced a scheme called the registration scheme on New Pattern 1979 of intending purchasers of flats to be constructed by the <ORG>. The object of the scheme was to reduce the sale price of <ORG>/Lower Income Group (for short MIG/LIG) and <ORG> flats so as to be within the reach of the common man. To facilitate the payment by such registrants the mode was also made easier. The registration scheme was opened on 1st September, 1979 and was closed on 30th September, 1979. Annual income of MIG category in a financial year 1978-79 was to be taken at Rs. 7201/- to Rs. 18,000/-. An applicant was required to deposit Rs. 4500 / -. The areas where flats were likely to be constructed were mentioned in the scheme and the likely cost of a flat was indicated at Rs. 42,000/-. <ORG> constructed flats at different times. According to <ORG> the term for allotment of petitioners came in 1991. Draw of lots were held from 1983-84 onward for allotment of specific flats to the registrants.

2. According to the petitioners on 18th February, 1991 draw of lots in respect of allotment of flats under the scheme took place for them. Clause 9 of the scheme is important and is reproduced here below :--

"The allotment of flats under this scheme will be by draw of lot like that of <ORG>. All the applicants who register between September 1, 1979 and September 30, 1979 will have equal seniority."

Another salient feature of this scheme was that 40 per cent of the <ORG> flats were to be allotted on cash down basis and 60 per cent of the flats on hire-purchase basis. <ORG> flats were to be disposed of on the basis of 25 per cent on cash down basis and 75 per cent on hire-purchase basis. In case of flats allotted under hire-purchase basis, the cost of the land plus 20 per cent of the balance cost of the flat was to be recovered as initial deposit at the time of allotment and balance amount was to be recovered in monthly Installments spread over a period of 7 years in case of <ORG>, 10 years in case of LIG and 15 years in case of <ORG> flats, though in this writ petition the challenge is not on cash down or hire-purchase scheme or its non-implementation by <ORG>.

3. The petitioners in this writ petition numbering 33 have challenged the quashing of the demand made by the respondent-DDA vide their letter of demand received by the petitioners in September 1991. According to the impugned demand letter the cost of MIG flat on the first floor was Rs. 3,45,300/-, second floor Rs. 3,33,300/-, on ground floor Rs. 4,05,400/-. third floor Rs. 3,17,500/-.

4. The petitioners represented to the respondent-<ORG> that the allotment of the MIG flats both at Jahangirpuri and Paschim Vihar at different floors was made by respondent-<ORG> without asking for their consent/choice and in an area which was not specifically mentioned in the original scheme of 1979. The petitioners further represented that the prices of the fiats now sought to be demanded by the <ORG> were astronomically high and were 10 times more than the prices which were offered by the <ORG>. According to the petitioners this demand, apart from being arbitrary and illegal, was untenable in view of the fact that for registrants of 1979 scheme in draw of lots held on 13th January, 1989 an MIG fiat at Shalimar Bagh at ground floor was allotted by <ORG> on payment of Rs. 1,66,500/- and on the third floor for Rs. 1,49,000/-. Similarly, in a draw of lot held on 5th April, 1989 for the registrants of 1979 scheme, at Sarita Vihar in South Delhi the price for a flat of MIG category was Rupees 2,87,000/- and Rs. 2,79,100/- respectively. It has been further alleged by the petitioners that the draw of lot held on 31st August, 1989 for the said category of registrants the <ORG> has demanded in Dilshad Garden (East Delhi) for MIG flats on ground floor Rupees 2,00,600/-.

5. According to the petitioners there is no justification for the <ORG> to ask more price in 1991 for the same category of registration at a higher price than those stated above. Even otherwise, the said increase is arbitrary, irrational and without any basis. The increase is not on account of cost of construction of change in plinth area as per the scheme, argued the counsel for the petitioners. In any event of the matter, the learned Counsel for the petitioners has argued that three times prices escalated in cost of construction which can be recovered by the <ORG>. According to him this is as per <ORG> rate schedule.

6. According to <ORG>, construction of these houses under the scheme had been taken up in 1980. In 2983 flats some defects were noticed by <ORG>. Since the contractor did not rectify the defects the contract was rescinded. On the other hand, learned Counsel for the petitioners argued that the petitioners had to wait for 12 years when <ORG> allotted flats to them. The delay in allotting the flats for 12 years was not on account of the petitioners but solely on account of <ORG>. According to the petitioners the increase in the cost of flats is illegal, arbitrary, irrational and unwarranted. According to the petitioners they had acted upon the offer made in the Scheme in 1979 and have done all that required to be done on their part and the respondent-authority cannot be allowed at this stage to go back from the scheme and unilaterally abrogate their obligation.

7. The learned Counsel appearing for the petitioners vehemently argued that respondent-authority is constituted under the Act of Parliament for providing amongst other things housing to the population of metropolitan city of Delhi at no profit no loss basis. The authority cannot be allowed to act in a manner of an unscrupulous private developer/builder wholly unrestrained by constraints of public welfare. Moreover, in view of the objective of the scheme to reduce the sale price of <ORG> and Janta Flats, the increase in price is wholly unjustifiable. Even otherwise, the demand made by the petitioners was too exhorbitant and totally unconnected with the reality and actual circumstances let alone matters of public policy.

8. The counsel for the petitioners has also urged that the raising of such high demand for MIG and other categories flats for different section of the population has made the scheme and its objects nugatory as it has become out of the reach of the people who were registered under the said scheme. According to the petitioners Clause 26 of the Scheme which inter alia lays down as under :--

"The above terms and conditions will be followed generally but the <ORG> reserves its right to alter any of them in its discretion as and when considered necessary."

9. According to the petitioners, the above clause was limited to the right of the respondent-authority to revise and modify terms and conditions depending upon the exigencies of layout, cost of construction but will not encompass in its fold power to disregard the scheme altogether and make exhorbitant demand as has been done in this case. Respondent-<ORG> has argued that in view of Clause 26 of the brochure <ORG> reserves its right to alter any terms and conditions in its discretion as and when considered necessary. According to them, the prices demanded are totally reasonable and there is nothing unreasonable about the same. In para 10 of their counter, respondent has admitted that the flats offered by the <ORG> are on no loss no profit basis. They have further stated that there has been tremendous increase in the cost of land, labour, material construction etc. over the years. Therefore, it is totally unreasonable to accept the cost in 1991-92 for the flats to be allotted at the tentative prices prevailing in the year 1979. It is further argued by learned Counsel for <ORG> that on account of tremendous rush under the 1979 Scheme a priority list was prepared according to which flats were allotted from time to time as per draw of lots according to seniority list. The stand of the <ORG> is that prices of the flats have been arrived at after meticulous calculations and after taking into consideration all relevant considerations and there is nothing arbitrary or irrational about the same. Counsel for the <ORG> has also relied upon <ORG> v.

<NAME>, and has argued that on that basis once the petitioner willingly enters into a contract with the public authority fully aware with the terms and conditions the petitioners are estopped from challenging the terms and conditions of the contract. Lastly, respondent has also contended that in view of Clause 15 of the brochure wherein some of the areas where construction was likely to be undertaken or flats were constructed were mentioned, that would not create a bar for construction being undertaken in other areas. The learned Counsel for the <ORG> has also cited judgment of this Court in CW 2265/ <CITATION> and CW 2787/ <CITATION> , to support his arguments.

10. It is in this background that we have to examine the facts of this case. At the outset it should not be forgotten that in the Union Territory of Delhi all land for the purpose of development <ORG> is the only agency. There is no private colonizer as no land is available for construction of houses in the hands of private individual. <ORG> is the monopolistic monolith. Citizens of Delhi have no other option but to look at <ORG> for land for residential, commercial, industrial, non-residential and non-industrial purposes. The land in Delhi has been acquired by <ORG> from time to time. There is an averment by the petitioner in the present case that the land was acquired by <ORG> much prior to the induction of Scheme of 1979 where the flats have been constructed. Time and again we asked the counsel for <ORG> to tell us as to when the land in question was acquired where the petitioners are being allotted respective flats. This was an important factor so as to understand the objective and policy of the <ORG> which time and again has stated in their counter-affidavit that the flats are offered on no profit no loss basis. Nothing was made available before us to indicate that the land was acquired in 1979 or 1980 or thereafter, or any period earlier to that. The irresistible conclusion which we draw is that the land was acquired much before the formulation of the Scheme of 1979. The stereo-type argument advanced by the counsel for <ORG> that <ORG> is a big organisation and acquisition of land is a continuous process does not cut much ice as the land under the scheme of the flats where the petitioners are being allotted the flats was acquired earlier than 1979. We are discussing this aspect in order to understand the basis on which the <ORG> has enhanced the prices of flats in question.

11. There are three essential components which may have bearing in escalation of cost, the land rate which includes cost of acquisition, future cost and additional price which State has to incur on account of enhancement of compensation cost of construction and cost of administrative expenses which may include profit to the contractor if it is to be constructed by the outside agency particularly speaking these are the basic cost which are essential for determining the fixation of price apart from other incidental cost which may not vary the cost to a large extent.

12. The petitioners have filed the rejoinder in which specific instances were given which are :--

(A) Mr. <NAME> registered under the same Scheme called New Pattern Registration Scheme (NPRS) 1979. By the lot drawn on 15th December, 1989 he was allotted flat No. 55, Block 'B', Pocket 7, Sector 10, 3rd floor in Rohini. This category of flat is also M.I.G. and the demand in respect thereof was for Rs. 1,55,700/- cash down. It may be stated that the area of Rohini is a much better locality as compared to Jahangirpuri and some other areas where flats have been offered to the petitioners. A flat offered to the petitioner on 3rd floor, in ' the area of Jahangirpuri is for Rs. 3,17,600/-. The only difference is that the draw in case of the petitioner was held on 18-2-91.

(B) Mr. <NAME>, who is also petitioner No. 10 in C.W.P. No. 3198 of 1991, was offered flat No. 289 A, Ground Floor, Pocket J & K, Dilshad Garden lots were drawn on 31-3-89 for Rs. 1,72,600/-. Mr. <NAME> requested that a flat could be allotted to him somewhere in North Delhi. He deposited the balance of the amount on 28-2-90 amounting to Rs. 1,65,768.78 P. In the draw of lots on 18-2-91 flat No. 251, Ground Floor in Jahangirpuri was offered to him at Rs.4,05,400/-.

(C) Mr. <NAME> was offered in Retired Persons Scheme (RPS Scheme) by lots drawn on 13-11-89 flat No. 61, 'D' block, C/A Shalimar Bagh, 3rd Floor for Rupees 1,66,500/-. This flat is also in M.I.G. category. Mr. <NAME> protested and by demand dated 29-6-89 the authorities scaled down the price to Rs. 1,49,000/-.

(D) Mr. <NAME> was offered on 5-4-89 under Self Financing Scheme V in Sarita Vihar flat No. 322 category 2, 3rd floor for Rs. 2,80,700/-. This flat is not only in much better locality but is of a much bigger area being 101 sq.m. i.e. about one and a half time more than that of M.I.G. flats offered to the petitioners. Even the construction in this respect is much superior. Mr. <NAME> protested and revealed that the Chairman of <ORG> a month earlier approved much lower price, i.e., Rupees 2,27,110/-. By demand dated 15-6-89 the flat was then offered to Mr. <NAME> for Rupees 2,27,100/-."

13. The <ORG> was afforded an opportunity to file additional affidavit to explain the circumstances under which aforesaid flats have been allotted, but nothing substantial was filed to controvert what has been stated by the petitioner, except that meticulous calculations were taken into consideration. The <ORG> has given some figures in additional affidavit filed by them. They have shown the total expenditures on various heads and divided by number of fiats thereby arriving at the cost of one single flat. One of the major components for increase in the price of flat is the revised land rate/land premium charged by the <ORG>. An interesting argument was raised that the land rate/land premium charged from the petitioner is perfectly valid and justified. According to the <ORG> the revision in land rate was well considered policy decision and there is nothing arbitrary or illegal about the same. It is not for us in normal course to go through the policy regarding fixation of land rate or land premium but in the instant case fixation of land rate by the <ORG> is so arbitrary and without any basis that we have to discuss this in detail.

14. Some statement of figures which has been filed by <ORG> along with additional affidavit show that this astronomical increase in the cost of the flats is on account of revision of land rate. In this connection they relied . upon letter No. E14(4)/81/PT.III dated 6-12-90 from Financial Adviser (Housing) which is a circular and reads :--

"Lt. Governor, Delhi has approved the land rates to be charged for the flats (including left out flats as approved by Vice-Chair- man, <ORG>) and fully developed land for allotment to various registrants in respect of plots as under :--

Rates of land to be charged for housing categories (Flats).

Rates of fully developed land for allotment to various registrants in r/o plots (excluding <ORG>)

1. EWS Rs.

500/- per sq. m

1. EWS Rs. 825/-

psm.

2. LIG Rs. 660/- --

do--

2. LIG R.

do--

3. MIG Rs. 970/- --

do--

3. MIG Rs. 1400/- --

do

4. SFS Rs. 975/- --

do--

4. SFS Rs 1700/- --

do In r/o flats, equalisation charges on plinth area at the following rates will also be charged.

Zones Rates

1. South & Central Rs. 100/- per s.m.

2. North and West Delhi Rs. 50/-

--do-

Category Area Pre-determined rates per sq. mtr.

EWS Rs. 498/-

LIG 32&48 Rs. 662/-

<ORG> 69&90 Rs. 996/-

MIG 140& above Rs. 8486/-

The above rates will take effect immediately."

15. It shows that rate which has been charged from the petitioners are at the rate of Rs.996/- for MIG and Rs.662/-for LIG with effect from 6-12-90. This also finds corroboration from page 69B of the paper book where in relation to ground floor flat in Jahangirpuri the land rate has been shown at the rate of Rs. 930/- per sq.mtr. We fail to understand that when initially the <ORG> in the brochure has estimated cost to be worked out as Rs. 42000/ - for MIG category this estimated cost obviously had taken into account all possible items of expenses including the land which had been acquired, cost of construction and other administrative expenses. According to the petitioner the land had been acquired much earlier and the land rate prevalent till 6th December 1990 had been Rs. 62/- per sq.mts. We cannot understand how the land premium had been raised from Rs. 62/- per sq.mtr. till 6-32-1990 to Rs. 930/- per sq.mtr. after that date. No material whatsoever in spite of our insistence as to what were the factors which were taken into consideration by Lt. Governor who happened to be the Chairman of the <ORG> and the Vice-Chairman of <ORG> for enhancing the land premium and before unilaterally issuing letter dated 6-12-90. Neither any reply nor any material was shown to the <ORG> except on harping that it is a policy decision and the <ORG> cannot go into this process. We are afraid we cannot sit with folded hands in writ jurisdiction and let the petitioners to be at the mercy of <ORG>, which under the garb of its position as a <ORG> wearing the hat of the power of the <ORG> can exploit the citizens. It will be fallacious to assume that the citizen is not even in a position to know as to how and on what basis the revision of land premium and land rate has been applied to his case. That will make mockery of law.

16. The main thrust of the argument of the learned counsel for the respondent was that the petitioner was not entitled for a flat in the year 1981 as per seniority list. Secondly even though the construction of the flats may have been delayed on account of disputes between the respondent and the contractor but the amounts so spent on account of delay of construction was totally not passed on to the petitioners. Thirdly, according to the learned counsel for the respondent no allottee could claim that he has an entitlement to a particular set of land rate which was prevailing at different times. According to him, it is a matter of policy decision to be determined by respondent authority as to what rate would apply for which year and court cannot go into the method of costing.

17. <NAME> learned counsel for the <ORG> has argued that the Court cannot go into the pricing policy of the respondent <ORG> as the same has been arrived at after due deliberation by respondent-authority. In his support he has cited the case <CITATION> , . We are afraid that this proposition cannot be of any help to the respondent as in that case the challenge was to a surcharge levied by the <ORG> as part of purchase price of the flat and petitioners before <ORG> were already allotted flats and <ORG> observed in that case that the real purpose of the petitioners to file the petition before <ORG> was to get back a . part of the purchase price of the flats paid by the petitioners after flats have been secured by them. Therefore, <ORG> in paragraph 8 thus observed :--

....Even if there may be any merit in this contention, though there is none, such a relief of refund cannot be the subject-matter of a petition under Article 32. And Art. 14 cannot camouflage the real bone of contention. Concerning for this submission that the authority has the trappings of a <ORG> or would be comprehended in other authority for the purpose of Article 12 , while determining price of flats constructed by it, it acts purely in its executive capacity and "is bound by the obligations which dealings of the <ORG> with the individual citizens import into every transaction entered into in the exercise of its constitutional powers. But after the <ORG> or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Art. 14 or of any other constitutional provision when the <ORG> or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the <ORG> in the contractual field which is apart from contract". Petitioners were under no obligation to seek allotment of flats even after they had registered themselves. They looked at the price and flats and applied for the flats. This they did voluntarily. They were advised by the brochure to look at the flats before going in for the same. They were lucky enough to get allotment when the lots were drawn. Each one of them was allotted a flat and he paid the price voluntarily. They are now trying to wriggle out by an invidious method so as to get back a part of the purchase price not offering to return the benefit under the contract, namely, surrender of flat. The <ORG> in its affidavit in reply in terms stated that it is willing to take back the flats and to repay them the full price. The transaction is complete, viz., possession of the fiat is taken and price is paid. At a later stage when they are secure in possession with title, petitioners are trying to get back a part of the purchase price and thus trying to reopen and wriggle out of a concluded contract only partially. In a similar and identical situation <ORG> this <ORG> in <CITATION> ., has observed that those who contract with open eyes must accept the burdens of the contract along with its benefits. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party findings its prudent to abide by the terms of the contract. By such a test no contract would ever have a binding force. The jurisdiction of this <ORG> under Article 32 of the Constitution is not intended to facilitate avoiding of obligations voluntarily incurred. It would thus appear that petitions ought not to have been entertained. However, as the petitions were heard on merits the contentions canvassed on behalf of the petitioners may as well be examined."

<ORG> further observed :--

".....What is forbidden by Art. 14 is discrimination amongst persons of the same class and for the purposes of allotment of flats scheme-wise, allottees of flats in the same scheme, not different schemes in the same income bricket, will have each such class there is unequal treatment or unreasonable or arbitrary treatment, the complaint that Art. 14 is violated cannot be entertained."

18. In the aforesaid case <ORG> was considering the levy of surcharge on the basis of the arguments advanced that <ORG> is meeting out discriminatory treatment inasmuch as no surcharge was levied on the fiats in MIG Scheme constructed and allotted prior to November 1976 and the January 1977 MIG flats involved in these petitions were constructed and were available for allotment in November, 1976 and the lots were drawn in January 1977. According to the petitioners before <ORG> there was another scheme of MIG fiats Munirka where allotment took place at and about the same time where no surcharge was levied. The amount of surcharge was only a couple of thousands rupees. While considering these circumstances of this case <ORG> held that levy of surcharge was not violative of Article 14 of the Constitution, whereas in the present case the revision of land premium or land rate is an exercise by the <ORG> under its statutory rights not depending on the terms of contract. Petitioners have, as a matter of fact, have fulfillled their objections under the contract. It is evidenced by <ORG> of its obligation under the contract taking the shield of its pre-contractual position of strength emanating from its power as a statutory authority.

19. Learned counsel for <ORG> has also cited <CITATION> . and <CITATION> . These authorities do not help the case of the respondents as <ORG> was considering the validity of S. 3(3-C) notification dated 28-11-1974 regarding prices fixed for various grades of sugar with reference to geographical-cum-agro-econo-mic consideration and average cost profiles of factories located in respective zones. In that case <ORG> was of the opinion that on account of exhaustive study by experts and conclusions reached by Government, it was not shown to be either discriminatory or unreasonable or arbitrary or ultra vires and price fixed on account thereof was a matter of policy and not within the province of the <ORG>. <ORG> further laid down that judicial function is exhausted when there is found to be a rational basis for conclusions reached by concerned authority. From the aforesaid observations in <ORG> case (supra) it is dear that the scope of judicial review in cases like the present one relating to fixation of price is limited but as stated earlier it would be only when it is found that there is a rational basis for the conclusion reached by <ORG> for fixation of price as has been done in the instant case, in our opinion, the respondent-authority had no basis for arriving at the rates fixed what to talk of rational basis. The authority <CITATION> , is not at all applicable to the case of the respondent as the question before <ORG> was whether <ORG>, Jalgaon could enter into an agreement with a private developer for financing and execution of project. Counsel for the respondent has also cited <CITATION> . We are afraid that this authority does not help the case of the respondent. Rather, it supports the case of the petitioners, as <ORG> held that in fixation of prices of essential commodities <ORG> should be guided by presumption of constitutionality and object of the action and effect of the action on prices a legitimate consideration in upholding the order, reasonable profit of dealer is not a sine qua non but interest of consumer a primary consideration. In this case <ORG> was dealing with case of fixation of price under the Essential Commodities Act where the ultimate interest of the consumers was the primary consideration for upholding the order of fixation of prices of essential commodities. Therefore, this authority, if at all helps, helps the case of the petitioners. The benefit of fixation of price must pass to the petitioners.

20. . Learned counsel for the petitioners cited <CITATION> , and argued that DDA is estopped from charging any higher price than mentioned in the brochure when the petitioners registered themselves and he argued that the time has gone when promissory estoppel as a doctrine has to be used only as a measure of defense. According to him in view of the judgment of <ORG> in that case the respondents are duty bound and they are estopped in law from charging any other price except for reasonable increase on account of cost of construction.

21. Learned counsel for the petitioners also cited <ORG> v. <ORG> (1956) 1 All ER 256 and (1854) 3 House of Lord's Cases 471 in support of his proposition.

22. Learned counsel for the respondent has also cited <CITATION> . This authority is of no help to the case of the respondent as <ORG> was examining altogether different issue involved in the matter. To fortify his argument the learned counsel for the respondent has cited <CITATION> , (1992) 42 DLT 295, which is a short judgment and has followed another judgment of this <ORG> in Civil Writ No. 2265/91 ( <CITATION> ). In <NAME> case in paragraph 7 the <ORG> while discussing the justification for escalated rates has stated as under :--

"As regards the question of payment on escalated rates, we find that Clause 14 of the Scheme specifically states that the plinth area of the flats indicated and the estimated price mentioned in the brochure are illustrative and are subject to revision/modification depending upon the exigencies of layout, cost of construction etc. The petitioner has entered into a contract with <ORG> being fully aware of the terms and conditions of the contract."

23. After this the <ORG> in paragraphs mentioned that the case is covered by the judgment of <CITATION> , , and on this short ground dismissed the petition.

24. Before dealing with <ORG> case we would like to mention the brief facts of <NAME> case in this regard. The <ORG> did not take into consideration in <NAME> case the true import, effect and scope of Clause 14 of the Scheme which is as follows :--

"It may please be noted that the plinth area of the flats indicated and the estimated prices mentioned in the brochure are illustrative and are subject to revision/modification depending upon the exigencies of layout, cost of construction etc."

25. The Division Bench in <NAME> case did not consider the arbitrary revision of land premium rates hiked by respondent-authority from Rs. 62/- per sq. mtr. to Rs. 930/- per sq. mtr. Even the land rates are not mentioned in Clause 14 on the basis of which the authority could revise the rate of the flat in question. As a matter of fact, in <NAME> case the Court was considering as to whether 40 per cent flats which were allotted on cash down basis under the scheme and 60 per cent of the flats on hire-purchase basis which were not put so. No assurance was given to any registrants that he will be allotted a flat on hire-purchase basis. Therefore, this authority is also of no help to the respondent-DDA. Another fallacy in the argument of learned Counsel for the respondent that there is no seniority of the registrants of the scheme is contrary to their own Clause 9 of the scheme which is reproduced as under :

"The allotment of flats under the scheme will be by draw of lot like that of <ORG>. All the applicants who register between September 1, 1979 and September 30, 1979 will have equal seniority."

26. Counsel for the respondent has argued that in view of <ORG> case , the writ petition itself is not maintainable. The learned Counsel overlooked the fact that <ORG> (for short <ORG>) dealt with cases where allottees after voluntarily accepting the conditions imposed by the <ORG> have entered into the realm of contract purely and simple with the <ORG> and hence allottees could only claim the right conferred upon them by the said contract and was bound by the terms of the contract. In the <ORG> case , the note given in the brochure clearly stated that the cost shown therein is only an estimated cost and would increase or decrease in the price only at the time of completion of the house/flat. Many persons got themselves registered for allotment of flats/houses. A notice was subsequently issued by the <ORG> increasing the price of houses, the amount of Installment and interest. The allottees were asked to send their written acceptance of the revised price/Installment to the <ORG>. Most of the allottees except few unequivocally accepted the revised demand. It was in these circumstances that <ORG> held that it was in the realm of contract pure and simple, more so the petitioner before <ORG> was highly educated and has accepted the revised terms of the <ORG>, therefore, and he was not entitled to any relief as the contract entered into between the <ORG> and the persons aggrieved was non-statutory and purely contractual and, therefore, the rights were governed only by the terms of the contract. <ORG> held that no writ or order can be issued under Article 226 of the Constitution of India. The flats were constructed within three to four years in that case.

27. Here we are confronted with the situation where the enhancement of one component of post is on account of land rate/land premium from Rs. 62/- per sq. mtr. to Rs. 930/- per sq. mtr. The same has been done by <ORG> without notice to the registrants. No notice was issued to the petitioners informing them of the revision of prices, no acceptance was asked for by the <ORG> from the petitioners as was done in the case of <ORG>, rather nothing has been brought on record by <ORG> as to how this land rate/land premium has been raised from 1989 to 1991 from Rs. 62/- per sq. mtr. to Rs. 930/- per sq. mtr. The revision of land rate/land premium is without any reasons, none has been disclosed to this <ORG>. We cannot understand as to how, on one fine morning, the Lt. Governor of Delhi who is also the Chairman of <ORG> by stroke of pen could enhance the land rate from Rs. 62/-per sq. mtr. to Rs. 930/-per sq. mtr. effecting the cost of the flats of the petitioners who registered themselves since 1979. How this revision of rales which adversely affected their rights could be notified at their back without petitioners having any say. This revision cannot be said to be in the realm of non-statutory and purely contractual matter. Can <ORG> without wearing the hat of the <ORG> or exercising its statutory powers enhance this huge amount without notice to the registrants is a main question. The <ORG> has not asked from these unfortunate petitioners who are waiting since 1979 that <ORG> is revising the land premium to such an extent, whether the petitioners are still interested in the Scheme or not. To agree with the proposition advanced by the <ORG>, will amount to give license to a public authority to play havoc with the citizens of Delhi. It will amount to giving a license to <ORG> to charge whatsoever amounts taking the plea of non-statutory contracts. Are courts so powerless under Article 226 of the Constitution, that when such a mischief so apparent is committed under the statutory powers, that the citizen can be non-suited on the pretext that it falls in the realm of contractual obligations and this <ORG> under Article 226 of the Constitution is a silent spectator.

28. We once again emphasise that in Delhi it is the <ORG> alone which deals with lands in Delhi. There is no other authority whether public or private which is authorised in the law to sell or dispose of land whereas in Uttar Pradesh the land does not belong to any single authority like <ORG>. Even in Bareilly there are other authorities/individuals owning lands for residential, agricultural and commercial purposes. The <ORG> has put further rider that once a person applies in any scheme for owning a flat/plot, he becomes disentitled for applying or owning any flat or plot of land in the Union Territory of Delhi. Look at the fate of these registrants who came from poor or middle class strata of <ORG>, applied in response to the scheme of <ORG> in 1979 for <ORG>, <ORG> and <ORG> category flats. <ORG> did not allot them flats till the year 1991. They could not have applied in any other scheme of allotment nor could have purchased any other flat and today they are in a situation that initially a flat which was costing to them Rs. 43,000/- as per the scheme, the <ORG> is charging exhorbitant amount of over Rs. 4 lacs. Is a citizen to suffer for non-construction of flats by the <ORG> or for delay in construction on account of substandard flats, or for any reason whatsoever. If this is accepted then that would be perpetuating illegalities and same cannot be sustained in the eye of law. We take strong exception to the stand of <ORG> that if the petitioners are not interested to get the allotment of flats on the increased rate, they are free not to take it. It smacks of not only monopolistic arrogance but exploitative stance of public authority. We strongly deprecate these kinds of arguments advanced before us by the <ORG>. Counsel for the <ORG> has also brought to our notice a recent decision of the Full Bench in case <CITATION> in Civil Writ Petn. No. 623 of 1993, in support of his contentions. We are of the opinion that the question involved in that case is not a similar to the one raised before us. This Court had the occasion to deal with the issue raised before it in <CITATION> , AIR 1985 Delhi 417, which reads as under (at pp. 431 and 434 of AIR) :--

"20. We shall proceed now to consider the applicability of the above principles to the situation before us. But, for doing that, we should first try to see what exactly it is that is happening here. The <ORG> is a public authority which is entrusted, inter alia, with the responsibility of providing houses to the citizens of Delhi. The statute and the regulations lay down the modalities by which the <ORG> can dispose of properties by way of sale or hire. The drawing up of scheme, the modes of registration and allotment, the fixation of a price and the mode of its payment, the execution of a deed and the conditions of transfer are all provided for in these "regulations. There is nothing in the regulations that compels the <ORG> to provide houses free of cost or at concessional rates or even at the cost of construction. It is open to the <ORG> to fix such price for the flats as it may deem fit. In doing so, it can keep a margin of profit for itself .take into consideration its overall working, consider the picture of town planning as a whole and off set deficits in one scheme while completing another and so on. In short, it is as free in fixing the price of flats as any private contractor will be, except only for the limitations of fair play and the need to avoid arbitrariness and discrimination that fetter the hands of a public authority which is amenable to Art. 226. So long as it conforms to these regulations, its actions cannot be challenged. But once some regulation is infringed or any arbitrariness or invidious discrimination creeps in, its action is liable to challenge under Art. 226. For example, if the <ORG> does not fix a price or the principles for its determination or if properties are sought to be allotted otherwise than the lots when there are more claimants than houses or plots or there is arbitrariness in allotment, the action of the <ORG> can be challenged in a writ petition. Perhaps even where the price is fixed arbitrarily and withput any basis for it, it can be challenged in writ proceedings. This is a pre-contractual statutory stage. Thereafter, when the <ORG> announces a scheme in conformity with these regulations and applications are received allotments are made and accepted, the general public scheme yields place to individual contracts between the <ORG> and each allottees. Now we reach the contractual stage in the domain of private law. It replaces the earlier stage of statutory obligations which was in the domain of public law. Here, any action by any one or more of the allottees to enforce the terms of the contract or to complain of their breach on the part of the <ORG> will lie, at general law, by way of a suit and not by way of a writ petition. To put it in other words, any complaint or grievance pertaining to the pre-cpotractual statutory stage can be aired under Art. 226 but any complaint or grievance pertaining to the contractual stage can be agitated only in a civil suit.

25. But it is argued for the <ORG>, this is also, at worst, only a breach of contract by the <ORG>. AH that be said is that the <ORG> agreed originally to give the flats at cost but now they refuse to do so and demand a higher price. For this it is open to the petitioners to sue the <ORG> for specific performance of the contract on the original terms or for damages for breach of contract or for other appropriate relief. A writ wilt not be maintainable. This argument, we think, is untenable; it attaches undue importance to the form and ignores the substance of the stand taken by the <ORG>. In all these matters, the <ORG> should look at the real effect of what has been done. The decided cases referred to above show that, if what is done is really an enforcement of the contractual terms, the affected party cannot be allowed to camouflage its grievances in the garb of fundamental rights or by attributing to the action of the authority a statutory flavour and seek redress by means of a writ petition. It should equally follow. We think, per contra that where what the authority has done is in effect a variation of the incidents of the pre-contractual stage, it cannot be rendered immune from proceedings under Article 226 merely because it can be dressed up or described as a mere breach of contract. So, in our opinion, where the <ORG> revises the earlier policy of price fixation and substitutes a new one, it is truely interfering with a step in the statutory stage amenable to writ jurisdiction and a writ petition cannot be dismissed as not maintainable merely on the ground that the result of the action also results in a breach of the original contract for which remedy is available in the ordinary civil <ORG>s. Looked at in the proper perspective, this is a case where the grievance of the petitioners falls under the second category of cases referred to in <NAME> case, ."

29. The unilateral revision of land rate/ premium whereby affecting the price of flats without any reasons is arbitrary and unreasonable. The action of the <ORG> in revising the estimate on that basis otherwise than on the terms of the original contract is, therefore, illegal and is liable to be quashed. We hold that by revising land rate/land premium the <ORG> in fact has varied the terms of pre-contractual stage, therefore the respondent is not immune from proceedings under Article 226 of the Constitution. We hold that this writ is maintainable as it deals with the stage which alter the parameter of statutory stage in the contract.

30. Even otherwise, the income groups on the basis of which <ORG> formulated the said scheme remains unchanged. That is to say, still the petitioners would fall in the same MIG/LIG categories as in the year 1979. When the petitioners applied for registration under the Scheme in 1979 they had a reasonable as well as legitimate expectation that they will be allotted the flats within a span of reasonable time. By no stretch of imagination 12 years taken by <ORG> can be construed as a reasonable time for allotment of flats to the petitioners. Having come to the conclusion that the revision of land premium is irrational, arbitrary and unreasonable the next question we have to answer is as to what should be the cost which should be paid by the petitioners to the <ORG>. <ORG> has not produced before us the cost of the individual flat worked out by them, though they have given some details, according to them, of the total expenditures incurred by the <ORG>. We feel it is not proper for us to go into this aspect of costing in this writ petition. This is the job of the <ORG>. But should we allow the <ORG> to work out the final cost and ask the petitioners to wait for more time, that would be unfair to , them in law as well as in equity.

31. Considering all the relevant circumstances including the Scheme of 1979 and the price of flats charged from various registrants under this scheme in the year 1989, we are of the opinion that the petitioners should be required to pay four and a half times the price of the flat as was mentioned in the year 1979 scheme. This demand would be on provisional basis subject to further directions as hereinafter given. Accordingly, we issue mandamus directing the <ORG> to handover possession of the flats to the petitioners on their making payment at the rate of Rupees 1,89,000/- for MIG flat, Rs. 81,000/ - for LIG flat and Rs. 36,000/- for Janta flat. The demand letters issued earlier are set aside and fresh demand letters shall be issued to the petitioners who shall make payment in terms of the demand calculated on the basis of the price above mentioned. In terms of those demand letters possession shall be handed over to the petitioners forthwith. We make it clear that the terms mentioned in the demand letters except for the price fixed by us shall remain the same.

32. We further direct that the <ORG> shall constitute an Expert Committee to go into the costing of these flats taking the land rate at Rs. 62/- per sq. mtr. The Expert Committee will take the actual cost of construction spent by the <ORG> on construction of the said flats. If <ORG> after working out the cost on the basis of aforesaid works out cost to be more than the price that has been provisionally fixed by us the <ORG> shall give such revise cost and its intimation to the petitioners who within one month from the date of intimation shall pay the same to <ORG>. We further direct that till the revised demand is paid by the petitioners, the petitioners shall not alienate, transfer or otherwise create any charge on their respective flats in question.

33. With these directions, the petition is allowed. The parties arc left to bear their own costs.

34. Petition allowed.


JUDGMENT <NAME>, J.

1. The suit which has given rise to these con-Khanam solidated appeals from a decree and judgment of <ORG> was instituted by the plaintiff-respondent in <ORG> for the redemption of a mortgage executed so long ago as the 6th of January 1830. The suit was brought on the 6th of January 1899, and the only and vital question presented at the <ORG> for determination in this case is whether the claim is barred by the Statute of Limitation (Indian Act XV of 1877).

2. The plaintiff <NAME> alleges that on the 6th of January 1830 her father, <NAME>, in conjunction with another relative named <NAME>, executed a mortgage by way of conditional sale in respect of twelve villages lying within the district of Cawnpore in favour of one <NAME>, since deceased. The other plaintiffs are persons who have ' acquired title from <NAME>. The principle defendant in the action was one <NAME>, who was the representative of <NAME>. He died since the decision by <ORG> in the appeal from the decree of the Subordinate Judge, and he is now represented by his widow, <NAME>, the appellant. The remaining defendants are assignees of interests created by the original mortgagee or his representatives in the mortgaged premises.

3. The mortgage deed is not forthcoming, but both the Courts in India have found that the contract between the parties to the transaction is, for all material purposes, substantially set forth in the proceeding of <ORG> dated the 18th of September 1830, on an application for mutation of names in <ORG>.

4. The contract of mortgage by conditional sale is a form of security recognised throughout India, and its incidents have been embodied in Section 58 of Act IV of 1882 (the Transfer of Property Act ). The form it usually takes is for the mortgagor to execute a deed of sale in respect of the mortgaged property in favour of the mortgagee who on his side executes an agreement covenanting that on the liquidation of the debt, according to the terms of the contract, the sale would be cancelled, and he would re-convey the property to the mortgagor. On the breach of the condition relating to repayment the contract executes itself, and the transaction becomes one of absolute sale.

5. The proceeding which contains the contract in this case is set out in full in the judgment of <ORG>. The only material part to which their Lordships need refer is the <NAME> ah clause relating to repayment, which runs as follows :

On being asked <NAME>, attorney of <ORG>, stated that his client had executed and made over to <NAME> and <NAME> an agreement to the effect that the salu would be cancelled on payment of the amount of consideration in nineyears, and that, there for the sale was not an absolute but a conditional sale.

6. The period of limitation under the Indian Statute for suits for redemption or for recovery of possession of mortgaged property is sixty years from the date of the accrual of the right to redeem or to recover possession ( Article 148 , Schedule II, Act XV of 1877). The Subordinate Judge was of opinion that limitation began to run from the date of the contract, and accordingly held that the suit was barred. <ORG> of Allahabad on appeal have taken a different view. The learned Judges considered inter alia that the right to redeem in respect of the seven villages which were in the possession of the mortgagee's representatives accrued only on the expiration of the period of nine years for which the contract was made, but that as regards the five villages which had been transferred by the mortgagee to third parties the claim was barred. They accordingly decreed the plaintiffs' claim in respect of seven villages and dismissed it with regard to the rest.

7. The defendants have appealed from the first part of the <ORG> decree, against which there is a cross-appeal on the part of the plaintiffs.

8. The first question to determine is whether the plaintiffs' right to redeem is affected by sixty year's limitation, for in that case her claim must fail in toto. The learned Judges dealing with this point give expression to their opinion in the flowing passage in their judgment:

If the moaning of this contemporaneous agreement was that the mort gagors might redeem at any time within the period of nine years, the plaintiffs' claim is barred by limitation. If, on the other hand, the intention of the parties was that the debt should remain outstanding for a period of nine years certain, then the right to redeem only accrued at the expiration of that period. Ordinarily, a mortgagor cannot, before the time limited for payment to the mortgagee expires, take proceedings to redeem. The reason for this is, that it was the agreement of the parties; that the mortgage should, during the intervening time, remain as security for the money advanced, and therefore it is not competent for either party to disturb that relation.

9. And they refer to a number of cases in support of their conclusion. Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period. But there is nothing in law to prevent the parties from making a provision that the mortgagor may discharge the debt within the specified period and take back the property. Such a provision is usually to the advantage of the mortgagor. In the present case had the matter depended only on the construction of the contract as given in the proceeding of the Collector, much might be said in support of <ORG> conclusions. The expression that " the sale would be cancelled on payment of the consideration in nine years " is certainly ambiguous.

10. But here the plaintiffs' case is that the mortgagors were entitled to recover the property within the period of nine years on the liquidation of the debt with the usufruct of the property. In the second paragraph of the plaint the plaintiffs state as follows:

The terms of the mortgage as agreed were that the mortgagee should remain in possession of the said mortgaged villages...that the amount of profits, if any, which shall remain after paying the Government revenue, interest, and pay of the persons making the collections would be owned by the mortgagors and applied in the payment of the principal, and that whenever the mortgage money would be satisfied (out of the usufruct) or paid (by the mortgagors) before or after the stipulated time the mortgaged property should be redeemed.

11. And the fact is emphasised in paragraph 8, which is in these terms:

The whole amount of the principal mortgage money with interest mentioned in the mortgage-deed was paid up at the end of the year 124 <NAME> acoording to the account which is annexed to this plaint and for part of it. No portion of the mortgage money, interest or any other is now due; on the other hand, there ia a surplus amount due to <ORG> plaintiffs.

12. In their Lordships' judgment this is not a case of a wrong Construction of a clause or condition in the contract. It is a distinct allegation of fact on which the right to recover possession is founded. But the matter does not rest there. The plain tiffs produce with the plaint a statement of accounts in respect of the twelve villages based on the settlement records to show the amounts realised by the mortgagee from 1830 to 1897. In this document it is clearly stated that the whole debt was satisfied in 1245 Fasli (4th September 18374th September 1838). From that time the balance of the realisations by the mortgagee after deduction of the legitimate outgoings is treated Husaiki by the plaintiffs as sums retained by him without any right. <NAME>

13. If the fact be, as the plaintiffs allege, that the mortgage debt <ORG> became satisfied under the contract in 1838, the right to recover possession accrued then, and the suit is clearly barred.

14. Their Lordships are, therefore, of opinion that the decree of <ORG> partly decreeing the plaintiffs' claim should be set aside, and the suit dismissed, which will involve the dismissal also of the cross-appeal.

15. With regard to the costs, their Lordships think that <NAME>, who represents the original assignee of the five villages in respect of which the plaintiffs' suit has been dismissed by both the Courts in India, is entitled to the costs decreed in <ORG> and in <ORG>, and to the costs of these appeals to His Majesty in Council. As regards the other parties, their Lordships think that the plaintiffs should bear the costs decreed against them in <ORG>, but that each of the parties should bear their respective costs of these appeals and of the appeals to <ORG>, including the costs incurred in the proceedings on remand.

16. And their Lordships will humbly advise His Majesty accordingly.