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TMI Blog2011 (4) TMI 1513X X X X Extracts X X X X X X X X Extracts X X X X ..... ested purchasers to make applications for allotment of industrial sites. Pursuant to the same, the Respondents herein, applied for the allotment of sites. It is a matter of record that the Respondents had applied for the allotment of sites at different points of time. Consequently, the Appellant issued letters of intent, indicating that it had resolved to allot all Respondents the sites shown in their cause titles at Tarihal Industrial Estate. The said letter also indicated the tentative price at which the land was sought to be allotted. 3. In response to the offer made by the Appellant No. 1, the Respondents being desirous of purchasing their respective plots indicated their willingness for the abovementioned site. Accordingly, they affirmed their interest to purchase the same. Thereafter, the letters of allotment were issued in favour of the Respondents incorporating the terms and conditions of allotment. Subsequent thereto, lease-cum-sale agreements were executed in favour of the Respondents on their complying with conditions of allotment. 4. One of the conditions mentioned in the lease-cum-sale agreement reads thus: 7(b) As soon as it may be convenient the Lessor will fix t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a discussion. According to the Respondents, during the course of discussions, they had sought for the detailed break up, based on which the enhanced claim was made. The board had furnished them a statement showing the basis for enhancement of the price. In the break-ups statement, as provided by the Appellant, it was shown that ₹ 34.17 lakhs were indicated to be the cost of future development. The Respondents having expressed their inability to pay the hiked prices, once again brought to the notice of the Appellants that the proposed enhancement was unjust and arbitrary. Thereafter, the Appellant No. 1, on consideration of the objections raised by the Respondents reduced the final allotment price marginally and issued demand notices to the Respondents as follows: Basic final prices fixed in the meeting held on 18.9.1997 Reduction in the final prices approved (Rs. in lakhs) 1. 1.08 lakhs 0.95 lakhs 2. 1.27 lakhs 1.10 lakhs 3. 2.01 lakhs 1.80 lakhs 4. 2.61 lakhs 2.40 lakhs 7. Aggrieved by the same, the Respondents filed a writ petition W.P. No. 23578-23617 of 1999 before the High Court of Karnataka at Bangalore and prayed for a writ in the nature of certiorari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been fixed at ₹ 40,500/- per acre in Tarihal Industrial Area. The allottees were to exercise option with regard to the mode of payment of the purchase price. The letter clearly indicated that the price was only tentative. The final price was fixed taking into account the cost of acquisition, development expenditure, statutory charges and interest. On the basis of the above criteria, the cost of land per allotable acre worked out approximately to 2.61 lakhs per acre. Therefore, the break-ups of the same was as follows: Therefore, keeping the above cost per acre as the basis, the Appellant Board, at its Board Meeting dated 18th September, 1997 resolved to fix the final price of the lands as follows: Allotment made at the basic tentative rates as per acre (in Rs.) Basic final prices fixed per acre (in Rs.) 1. 40,000/- 1.08 lakhs 2. 60,000/- 1.27 lakhs 3. 1.00 lakh to 1.25 lakhs 2.01 lakhs 4. 1.50 lakhs to 1.60 lakhs 2.61 lakhs 11. According to the learned Counsel, the aforesaid exercise carried out by the Board would clearly indicate that the decision has been taken upon consideration of all the relevant parameters for determination of the final price. Learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through newspapers, having circulation in and outside Karnataka State. Upon receipt of the applications, the allotment letter has to be issued in terms of Regulation 10. According to the learned senior counsel, the exercise of power with regard to the fixation of price by the Board has to be within four corners of the aforesaid statutory provisions. He further pointed out that the lease agreement between the applicants/lessee and the Board has to be executed in terms of Form IV contained in the third schedule. The Form is issued in terms of Regulation 10(c). The form being statutory, it was necessary to strictly comply with the aforesaid provisions. However, in the contracts entered into between the Appellant Board and the allottees, Clauses 7(a) and 7(b) have been introduced without amending the applicable Regulations or Form IV. Therefore, according to the learned senior counsel, the final price fixation is without any statutory basis. Learned senior counsel further submitted that in calculating the final price, the Respondents have not only included the cost of land acquisition which is not disputed, but also included future development costs and interest on investments. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at reasonable price to persons belonging to different income groups it would not be precluded from devising its own price formula for different income groups. If in so doing it uniformly collects something more than cost price from those with cushion to benefit those who are less fortunate it cannot be accused of discrimination. In this country where weaker and poorer sections are unable to enjoy the basic necessities, namely, food, shelter and clothing, a body like the Authority undertaking a comprehensive policy of providing shelter to those who cannot afford to have the same in the competitive albeit harsh market of demand and supply nor can afford it on their own meager emoluments or income, a little more from those who can afford for the benefit of those who need succor, can by no stretch of imagination attract Article 14. People in the MIG can be charged more than the actual cost price so as to give benefit to allottees of flats in LIG, Janata and CPS. And yet record shows that those better off got flats comparatively cheaper to such flats in open market. It is a well recognized policy underlying tax law that the State has a wide discretion in selecting the persons or object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such flats, have to take their financial capacity into consideration and in some cases it results in great hardship when the development authorities announce an estimated or approximate cost and deliver the same at twice or thrice of the said amount. The final cost should be proportionate to the approximate or estimated cost mentioned in the offers or agreements. With the high rate of inflation, escalation of the prices of construction materials and labour charges, if the scheme is not ready within the time-frame, then it is not possible to deliver the flats or houses in question at the cost so announced. It will be advisable that before offering the flats to the public such development authorities should fix the estimated cost of the flats taking into consideration the escalation of the cost during the period the scheme is to be completed. In the instant case the estimated cost for the LIG flat was given out at ₹ 45,000. But by the impugned communication, the Appellant informed the Respondents that the actual cost of the flat shall be ₹ 1,16,000 i.e. the escalation is more than 100%. The High Court was justified in saying that in such circumstances, the Authority owed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the tentative price fixed at the time of allotment. The High Court has correctly observed that Clause 7(b) does not contain any guidelines which would ensure that the Board does not act arbitrarily in fixing the final price of demised premises. Since the validity of the aforesaid Clause was not challenged, the High Court has rightly refrained from expressing any opinion thereon. 19. Even though the Clause gives the Board an undefined power to fix the final price, it would have to be exercised in accordance with the principle of rationality and reasonableness. The Board can and is entitled to take into account the final cost of the demised premises in the event of it incurring extra expenditure after the allotment of the site. But in the garb of exercising the power to fix the final price, it can not be permitted to saddle the earlier allottees with the liability of sharing the burden of expenditure by the Board in developing some other sites subsequent to the allotment of the site to the Respondents. The Respondents have placed on record sufficient material to show that acquisition and development of land in the industrial area has been in phases. Some areas and segments are fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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