G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors.

on 19 September, 1997

Karnataka High Court Karnataka High Court G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors. on 19 September, 1997 Author: A Sadashiva Bench: A Sadashiva ORDER A.J. Sadashiva, J. 1. The question that falls for consideration in these petitions is as to, whether the Bangalore Development Authority, hereinafter called "the BDA", has authority of law to impose and collect penalty to extend the time for construction of buildings in the sites allotted by BDA? and, if so, whether the imposition of penalty is in accordance with law? 2. In view of the question of law and fact being similar in all these petitions, they are heard together and disposed of by this common order. 3. All these petitioners except the petitioners in the first set, are the allottees of sites by Bangalore Development Authority on various dates, varying from October 10, 1986 to August 3, 1989. The petitioners in W.P.Nos. 3090-91/1987 are the purchasers of sites at the public auction conducted by the erstwhile City Improvement Trust Board, Bangalore, in the year 1965 and 1968 respectively. The sites in question are situated either in Hennur-Banasawadi layout or Nagarabhavi IInd Stage or Hosur-Sarjapur layout excepting the site in W.P.16350/1997 which is situated in Banashankari IIIrd Stage. 4. The allotment of sites have been made in accordance with the provisions of the Bangalore Development Authority (Allotment of Sites) Rules, 1984, hereinafter called the 'Rules'; That according to the Rules, the allottee should execute a lease-cum-sale agreement and the site allotted to him will be held by him as a lessee for a period of ten years and on the completion of which the BDA would execute the sale deed conferring the absolute title on the allottee. The allottee is also required to construct a building for the purpose for which the site is allotted within a period of two years from the date of possession or within the extended period; The BDA is also empowered to cancel the allotment and resume the site for non-compliance with any of the provisions of the Rules or the terms and conditions of lease-cum-sale agreement. 5. The petitioners in these petitions, admittedly, have not put up any constructions in the sites alloted to them. Some of the petitioners filed applications for execution of the sale deed in view of expiry of lease period and some have filed applications to sanction the plan and issue licence, to construct a house in the site allotted to them. As there is breach of conditions of allotment or the sale, as the case may be, the Bangalore Development Authority, hereinafter called the 'BDA', issued notices similar to Annexure-G and H produced in first petition imposing penalty upon the petitioners in different sums varying from Rs. 20,000/- to Rs. 1,02,856/- in order to execute the sale deed and to issue licence for construction of the houses by extending the time. These notices are stated to have been issued in view of the Circular dated December 3, 1996 issued by the BDA. The petitioners having been aggrieved by the Circular and the notices have filed these petitions to quash the notices and the Circular by issuing a writ of certioraris, that the same have been issued without authority of law. 6. It is contended by the petitioners that they could not take up construction of houses, since essential services, like water supply, electricity and underground drainage has not been provided in the layouts and if the petitioners were to have constructed the house within the time it would have been impossible for them to have lived in the house for want of essential services required for want of habitation. It is their case that even now some of the basic amenities are not provided in the layouts. In support of their case, the petitioners in one of the petitions, have produced the proceedings of the Karnataka Legislative Assembly dated March 20, 1997 wherein the question of recovery of penalty by BDA, came up for discussion. In answer to the question, if
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G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors. on 19 September, 1997

there is any instance of failure to provide essential services like water supply and underground drainage in the BDA layouts formed 10 years back, and if true, what are the reasons therefore, it is stated that the work in respect of water supply and underground drainage has been entrusted by BDA to the Bangalore Water Supply and Sewerage Board in respect of certain layouts like, Hennur-Bellary Road Layout, NGEF East Layout, OMBR Layout, Sarakki 4th Phase layout, Nagarabhavi 1st and 2nd stage layouts, Chandra layout and Hosur Sarjapur Road layout and the work is in progress in different stages. It is further stated that there was some delay in securing certain materials, and steps are being taken to complete the work expeditiously. Under these circumstances, it is the contentions of the petitioners that the petitioners are not liable to pay any penalty as they could not complete the construction for want of basic necessities required to be provided by the BDA. The petitioners have further contended that the circular issued by the BDA is unauthorised, without jurisdiction and not empowered by the provisions of the BDA Act and the Rules and it is violative of Article 14 of the Constitution; A financial levy, whether penalty, tax, fee or any other charge can be imposed only by a statute and not even by rules and therefore the imposition of penalty by means of a resolution followed by a Circular is without authority of law. The petitioners have further contended that neither the rules nor the letter of allotment nor the terms and conditions of lease-cum-sale agreement provide for imposition of penalty and therefore, the resolution and the circular to impose penalty is beyond the powers of the BDA; and even if the BDA has authority of law to impose penalty, the imposition on the petitioners is unwarranted as they could not complete construction for want of basic amenities. 7. Per contra, the BDA has contended that the Act allows a Revision to the Government against any order made by BDA in any proceedings and the petitioners cannot maintain these petitions without exhausting the remedy of revision; The BDA decided to impose penalty against the petitioners for their non-compliance with the rules of allotment and the terms and conditions of allotment of sites and, if the levy is in breach of the terms and conditions, it is contended by BDA, that, the only remedy available to the petitioners is to institute suit for appropriate relief and the Writ Petition for breach of contract is not maintainable. That as per Clause (10) of the agreement non-compliance with any of the conditions entails in cancellation of the allotment and resumption of the site; The decision of the authority to levy penalty and extend time is to avoid inconvenience to the allottees; The BDA in order to avoid hardship to the petitioners has adopted a linient view to impose penalty instead of canceling the allotment and to resume the sites; and the authority has passed the resolution and issued circular to impose penalty for extension of time in view of the powers vested in BDA by virtue of Section 72 of the Act and Rule 13 of the allotment rules. 8. The petitioners in reply, have, contended that these petitions have not been filed for redressal of their grievances arising from breach of any contract. The BDA has no legal authority either to pass a resolution or to issue a circular to impose penalty to extend the time for construction of the houses in the sites allotted. Neither Section 72 of the Act nor Rules 18 of the Rules vest any power in the authority to impose penalty for non-compliance with the terms and conditions of the rules of allotment of the lease-cum-sale agreement; Section 72 of the Act provides, for reasons mentioned therein to punish any person with fine and BDA is not the machinery empowered to enforce Section 72 of the Act; the fine contemplated therein being a mode of punishment for contravention of the provisions of the Act, Rules, etc., is therefore, referable only to an offence and not a civil consequences. The petitioners have further contended that even if Section 72 of the Act is attracted the imposition of penalty shall be on the basis of individual cases depending upon the nature of contravention as the penalty cannot be disproportionate to the extent of contravention; That the BDA cannot impose penalty either at an uniform rate or on the basis of size of the site; the imposition of penalty should be on the basis of the contravention and the reasons for such contravention. 9. Section 72 of the Act reads as follows : "72. Penalty for breach of the provisions of the Act: Whoever contravenes any of the provisions of this Act or of any rule, regulation, or bye-law or scheme made or sanctioned thereunder shall be punished with fine which may extend to twenty five rupees and in the case
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G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors. on 19 September, 1997

of a continuing contravention, with fine which may extend to five rupees for each day after the first during which the contravention continues." Sub-Rules (6) and (7) of Rule 13 of the allotment rules reads as under: "13(6). The allottee shall construct a building within a period of two years from the date of execution of the agreement or such extended period as the Authority may in any specified case by written order permit, if the building is not constructed within the said period the allotment may, after reasonable notice to the allottee, be cancelled, the agreement revoked, the lease determined and the allottee evicted from the site by the Authority and after forfeiting twelve and half percent of the value of the site paid by the allottee, the Authority shall refund the balance to the allottee. [7](i) On the expiry of a period of ten years from the date of lease-cum-sale agreement and if the allotment has not been cancelled or the lease has not been determined in accordance with these rules or the terms of the agreement the Authority shall by notice call upon the allottee to get the sale deed of the site executed at his own cost within the time specified in the said notice. [ii] If the allottee fails to get the sale deed executed within the time so specified the Authority shall itself execute the same and recover the cost and other charges if any incidental thereto from the allottee as if the same amount are due to the Authority." In view of the rules, the allottee is required to construct a house in accordance with the sanctioned plan within the period prescribed in the rules or within the extended period. The terms and conditions of the lease-cum-sale agreement are also to the same effect. In case the allottee fails to comply with the rules and the terms and conditions of the lease-cum-sale agreement, BDA is empowered to cancel the allotment and to resume the site. Under Sub-rule (7) of Rule 13 it is incumbent on BDA to call upon the allottee by a notice to get the sale deed executed after the expiry of lease if the allotment is not cancelled or the lease is not determined for the non-compliance with any of the rules or the terms and conditions of agreement during the lease period and in case the allottee fails to get the sale deed executed the BDA shall on its own execute and register the sale deed and recover the cost of execution from the allottee. Neither the rules nor the terms and conditions mentioned in the lease-cum-sale agreement provide for imposition of penalty for non-compliance with any of the rules of the terms and conditions of the lease-cum-sale agreement. 10. However, Section 72 provides punishment with fine for contravention of the provisions of the Act or of any Rule, or Regulations or Byelaws, or scheme made or sanctioned thereunder. It is significant to note that Section 72 of the Act, though makes every person whoever contravenes the provisions of the Act or of any Rules or Regulation or Byelaws or scheme made or sanctioned thereunder liable for punishment with fine, it confers no power in BDA to punish such persons with fine: The jurisdiction to try any offence shall vest in the court not inferior to that of a Magistrate of a first class as per Section 59 of the Act. It is further material to see that, it deals with the punishment with fine for contravention of the Act and the Rules etc., and not with levy and collection of any fee or charge for non-compliance with any terms and conditions. It is well settled that no financial levy whether by way of penalty, tax, fee, cess or any other charge shall be levied or collected except by authority of law. The imposition of fine prescribed by Section 72 of the Act is by way of punishment for contravention of the Act or the Rules etc., and it is nothing to do with the collection of money to extend the time to do an act prescribed by the provisions of the Act or the Rules; Section 72 of the Act is therefore, not attracted. 11. Either to impose penalty or to collect fees, the BDA must have the authority of law. In KHEMKA AND CO. (AGENCIES) PVT. LTD. v. STATE OF MAHARASHTRA, the Supreme Court considering the question as to whether the Assesses under the Central Sales Tax Act could be made liable for penalty under the provisions of the State Sales Tax Act, has held that the pecuniary liabilities must be created by clear and
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G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors. on 19 September, 1997

unambiguous and express enactment and neither the pecuniary liability can be imposed nor an offence be created by mere implication. It reads as follows: "....it is an imposition of a pecuniary liability which is comparable to punishment for the commission of an offence. It is well settled canons of construction of statutes that neither a pecuniary liability can be imposed nor an offence created by mere implication. It may be debatable whether a particular procedural provision creates a substantive right on liability. But I do not think that the imposition of pecuniary liability, which takes the form of a penalty or fine for breach of a legal obligation, can be relegated to the region of mere procedure and machinary for the realisation of tax. It is more than that. Such liabilities must be created by clear, unambiguous, and express enactment. The language used should leave no serious doubts about its effect so that the persons who are to be subjected to such a liability for the infringment of law are not left in a State of uncertainty as to what their duties and liabilities are. This is an essential requirement of a good government of laws. It is implied in the constitutional mandate formed in Article 265 of our Constitution: "No tax shall be levied or collected except by authority of law." There is no provisions either under the Act or under the Rules empowering BDA to impose penalty for non-compliance with the allotment rules or the terms and conditions of the lease-cum-sale agreement where the BDA has power to extend the time. Where the law prescribes a particular consequence either for commission of an act or for its omission, only such consequences must ensue and not others which is not prescribed by law. The BDA has no authority of law, howsoever benevolent it may be to impose fine or to take action in the manner not otherwise provided. The rules of allotment and the terms and conditions of the lease-cum-sale agreement would not authorise the BDA to impose penalty against the allottees for not constructing the buildings within the period prescribed and in the absence of any provision of the imposition of penalty is without authority of law. 12. Sri. N.K. Patil, learned Counsel appearing for the BDA sought to rely on a decision of this Court in SHIVAJI EDUCATION SOCIETY v. THE COMMISSIONER OF PUBLIC INSTRUCTION, wherein it is held that, "Where a power to issue directions or orders exists, then it is implicit that the authority is invested with the power to enforce those directions or orders." There cannot be two opinions in respect of the aforesaid proposition of law. It is well settled that where an authority is vested with power to do an act under a statutory provision it has all the powers to secure compliance with such provision. In the instant case, the consequences for non-compliance with the provisions of the allotment rules and the terms and conditions of lease-cum-sale agreement is also provided and therefore the compliance with the provisions of the rules and the terms and conditions shall be secured only in the manner it is provided and not otherwise. The imposition of penalty is not one of the modes prescribed to secure compliance with the provision of the allotment rules and the terms and conditions of the lease-cum-sale agreement. 13. Even otherwise the penalty is not imposed under any provisions of the BDA Act or the Rules framed thereunder. It is imposed in pursuance of the Circular dated December 3. 1996, issued pursuant to the resolution of the authority in Subject No. 1927 96 dated September 30, 1996, The Circular dated December 3, 1996 reads as follows. "No. BDA/Commr/FM/607/96-97 Office of the Commissione r,
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G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors. on 19 September, 1997

Bangalore Development Authorit y, Bangalore, Dated: 3rd Dec. 1996. CIRCULAR SUB:- Levy of penalty for grant of extension of time for construction of building and for issue of Absolute Sale deed for vacant sites. Ref: 1. Authority Resolution No. 192/96 dated 30.9.96. 2. Public Notice No/BDA/Commn/162/96-97 dt. 28.11.1996 (Copy enclosed). 3. Meeting of Officers in the Commissioner's chambers on 2.12.1996. 1. The levy of penalty for grant of extension of time for construction ot building and also for issue of Absolute Sale Deed for vacant sites will be regulated in accordance with the Authority Resolution No. 192/96 dated 30.9.1996 as notified in our Public Notice dated 28.11.1996. 2. The following clarifications are issued in this connection for the guidance of all concerned: 1. Cases where lease period was over prior to 1.12.96. i) in cases where the allotees have applied for absolute sale deed before 1.12.1996, old rates will apply. ii) In case where the allottees apply for Absolute Sale Deed after 1.12.1996, penalty at the new rates, vide item II in the Public Notice is leviable. iii) In cases where the allottees apply tor extension of time for construction of building, penalty at the new rates vide item I in the Public Notice is leviable for the entire period not extended by extension of time. II. Cases where lease period not over as on 1.12.96. i) In cases where extension of time was sought prior to 1.12.96, the old provisions will apply. ii) In cases where extension of time is sought after 1.12.96, penalty at the new rates vide item i in the Public Notice, is leviable for the entire period not covered by extension of time. iii) In cases where the allottees apply for Abosulte Sale Deed, penalty for extension of time for extension of time for the period for which extension was not obtained and penalty for issue of Absolute Sale Deed at the new rates, vide items I and II in the Public Notice, should be levied. (iv) Cases covered by Court litigation etc, should be dealt with on a case to case basis. Table Ready-Reckoner showing the rates of penalties leviable for extension of time and for issue of Absolute Sale Deed is enclosed. Sd/Commissioner,
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G.S. Ravindra And Ors. vs The Chairman, B.D.A. And Ors. on 19 September, 1997

Bangalore Development Author ity, Bangalore. 14. From the Circular, it is not possible to infer whether any enquiry had been held or contemplated, to ascertain whether there was any contravention and the reasons for such contravention. It is settled that, all contraventions would not make the contravenor liable for punishment if such contraventions are due to any reasons beyond one control. Penalty should be imposed depending upon the facts and circumstances of individual cases, on the basis of the nature of contravention and the reasons therefor. There cannot also be a uniform rate of penalty on the basis of duration of contravention and the size of the site. 15. In HINDUSTAN STEEL LTD. v. THE STATE OF ORISSA, the Supreme Court has held that, "....An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances- Even if a minimum penalty is prescribed, the authority competent to impose the penatly will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." In SHIV DUTT RAI FATEH CHAND v. UNION OF INDIA AND ANR., the Supreme Court has held as follows: "...first the default committed by the dealer should be established at an enquiry after giving the dealer concerned an opportunity of being heard. The degree of remissness involved in the default is a relevant factor to be taken into account while levying penalty. The section provides both the minimum and the maximum amount of penalty levialbe and it is correlated to the amount of tax which would have been avoided if the turnover returned by such dealer had been accepted as correct. The order levying penalty is quasi judicial in character and involves exercise of judicial discretion. The considerations which should weigh with the authorities while imposing penalty are well known and have been settled by many decisions. Hindustan Steel Ltd. v. State of Orrisa is one such decision." 16. It is no doubt true that the petitioners have not constructed buildings in the sites allotted to them or purchased by them at public auction. The allottees may or may not be liable for all consequences provided in the allotment rules. The power is vested in the BDA to extend time if sufficient cause is shown for not constructing the building. The BDA has not held any enquiry to ascertain the reasons for non-compliance with the allotment rules. No action has been taken to ascertain whether the persons like petitioners are entitled for extension of time for the reasons mentioned in their representation. No opportunity of being heard was given to the petitioners. On the other hand a resolution was passed and a circular has been issued on the basis of the resolution prescribing penalty for, extension of time or execution of the sale deed as the case may be. The procedure adopted by the BDA is against the principles of natural justice. 17. In the result, these petitions are allowed. Rule made absolute. The Circular dated December 3,1996, in No. BDA/Commr/FM/607/ 96-97 and the demand notices impugned in these petitions are hereby quashed. 18. In the circumstances of the case, there is no order as to costs.
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