JUDGMENT B. K. Sharma, J.
1. Sri Dinesh Dwivedi has appeared for the petitioners in Civil Misc. Writ petition Nos. 4255 and 4189 of 1998 while in rest of the writ petitions, Sri Pankaj Mittal has appeared for the petitioner, Sri Pradeep Kumar, Advocate has appeared for the respondents in each of the petitions. Since in all these writ petitions, common questions of law and fact are involved, the same have been consolidated and have been heard together.
2. The admitted facts are that the Noida Industrial Development Authority (for short GNIDA), is a statutory body which gave an advertisement in local papers on 28-9-1996 inviting applications for allotment of land from Group Housing Societies registered in Uttar Pradesh. The petitioners and certain other societies, including I.A.S. Officers Society (Green Wood Sahkari Awas Samiti Limited) and M/s. Diby and Beverages Society Ltd. applied to GNIDA for allotment of land in response to the aforesaid advertisement. After considering the applications, GNIDA finally accepted in all eight societies applications, including the petitioner' societies as well as the aforementioned I.A.S. Officers Society and M/s. Dibyani Beverages Society for reservation/allotment.
3. N. T.P.C. Sahkari Awas Samiti Ltd., Ghaziabad, the petitioner of Writ Petition No. 4255 of 1998, had sought allotment of 40 acres of land. On 12-9-1997, the reservation letter was issued to them by respondent No. 1 stating that it has been decided to offer 40 acres of land to it at the rate of Rs. 650/-per sq. metre and required it to pay the reservation money less registration amount already deposited, within 30 days from the date of issuance of this letter and it was further mentioned that after the receipt of the reservation money, the allotment letter would be issued to it immediately. A copy of this reservation letter has been filed as annexure 5 to this writ petition. In pursuance of the same, the society sent a compliance letter dated 29-9-1997 (Annexure 6 to the writ petition) accompanied with necessary bank drafts which was received by the respondent No. 1 on the same day.
4. The petitioner of Civil Misc. Writ Petition No. 4189 of 1998, i.e. National Hydroelectric power Corporation Ex. Sah. Awas Samiti had sought allotment of 15 acres of land and the respondent No. 1 had issued a similar reservation letter dated 22-9-1997 (Annexure 5) to the Writ petition) offering 15 acres of land at the rate of Rs. 750/- per sq meter. This society also similarly sent a compliance letter along with a bank draft on 15-10-1997 (Annexure 6 to the writ petition) . This compliance letter indicated that it was received by the respondent No. 1 on 17-10-1997 along with the bank draft.
5. The petitioner of Civil Misc. Writ Petition No. 7822 of 1998, i.e. N.S.G. Sahkari Awas Samiti Ltd., had similarly sought allotment of 28.5 acres of land. The respondent No. 1 had also issued to it a similar reservation letter on 11-9-1997 with similar contents whose copy is Annexure 2 to the writ petition. In this reservation letter, GNIDA had offered 28.5. acres of land to it at the rate of Rs. 750/- per sq. metre. On 9-10-1997, this society sent its compliance letter (Annexure 3 to the writ petition) along with the necessary draft from the bank. This letter was also delivered to the respondent No. 1 on the same day.
6. The petitioner of Civil Misc. Writ Petition No. 7830 of 1998 Mitra Sahkari Awas Samiti Ltd. Noida applied for allotment of 50 acres of land. The respondent No. 1 sent to it reservation letter dated 11 -9-1997 offering 30 acres land at the rate of 750/- per sq. mtr. on the terms mentioned in the letter, similarly giving 30 days time for compliance and stipulating that on receiving of reservation money, allotment will be issued to it immediately. A copy of this reservation letter was Annexure 2 to this writ petition (Civil Misc. Writ) Petition No. 7830 of 1998). In this letter, the area of land was by mistake mentioned as 30 acres and this mistake was corrected by the respondent No. 1 by sending a subsequent letter dated 25-9-1997. This society also sent a compliance letter dated 7-10-1997 sending with it bank draft for the requisite amount meeting the requirement in the reservation letter. A copy of this compliance letter was Annexure 3 to this writ petition. This compliance letter was received by the respondent No. 1 on 7-10-1997 itself.
7. The petitioner in Civil Misc. Writ Petition No. 7832 of 1998 U.P.S.E.B. Engineers Sahkari Awas Samiti Ltd., similarly applied for allotment of 2 acres of land and similar reservation letter dated 11-9-1997 was delivered to them by the respondent No. 1 offering 2 acres of land to them at the rate of Rs. 960/- per sq. Mtr. In this reservation letter also, 3 days time was given for compliance and it was stipulated that on receiving of reservation money, allotment will be issued to it immediately. On 8-10-1997, the society delivered compliance letter to respondent No. 1 along with the draft for the requisite amount. A copy of this letter was Annexure 3 to its writ petition.
8. Now on similar application of M/s. Dibyani Beverages Society, the respondent No. 1 offered allotment of 4 acres of land of it at the rate of Rs. 960/- per sq. mt. by means of reservation letter dated 10-9-1997 sent to it (M/s. Dibyani Beverages Society), similarly stating that on receipt of reservation money, allotment letter will be issued to it immediately. Its copy was Annexures 6 to the writ petition No. 7822 of 1998, Annexure 6 to the writ petition No. 7830 of 1998. Similarly, in the case of I.A.S. officers society, reservation letter was issued offering allotment of 30 acres of land on similar terms at the rate of Rs. 750/- per sq. mtr. and it also similarly deposited the necessary amount at the rate of Rs. 750/- per sq. mt. and complied with the formalities required in the reservation letter. In accordance with the reservation letter dated 10-9-1997 aforesaid, the respondent issued letter of allotment dated 16-9-1997 (allotment intimation letter in favour of M/s. Dibyani Beverages Ltd. This allotment intimation letter dated 16-9-1997 was issued to it without any enhancement of the rate of land. A copy of this allotment intimation letter being Annexure 7 to the writ petition No. 7822 of 1998; Annexure 7 to the writ petition No. 7830 of 1998 and Annexure 7 to the writ petition No. 7832 of 1998, without enhancement of rate of land. Similarly, in the case of I.A.S. officers society, allotment intimation letter was issued to it in accordance with the original rate offered without making any enhancement whatsoever in the rate of land. But in the case of all the 5 petitioners, letters were sent by the respondents seeking consent for allotment at enhanced rates.
9. In the case of NTPC Sahkari Avas Samiti Ltd., Letter dated 16-1-1998 was sent by the respondent No. 1 to it intimating that due to the enhancement of rates of allotment of land in group housing in the meeting dated 28-10-1997 of GNIDA's Board, it (respondent No. 1) could issue the allotment of land to the society only at the current rate of Rs. 888/- per sq. mtr. and requesting it to communicate its consent to it (respondent No. 1) to the enhanced rate so that allotment letter may be issued in its favour. It was Annexure 1 to the writ petition No. 4255 of 1998. The respondent board further issued letter dated 21-1-1998 to the society on the subject of allotment intimation letter repeating the said averments and stating that a plot has been allotted to it in P 6 Sector and requiring it to make deposit of amount specified therein if the revised rate was acceptable to it, by 7-3-1998. Thus, in the case of the society as against the original offer of Rs. 650/- per sq. mtr. allotment was offered to be made at enhanced rate of Rs. 880 per sq, mtr. subject to acceptance of the enhanced rate. Copies of the letters dated 16-1-1998 and 21-1-1998 are Annexure 1 and 2 to the writ petition (No. 4255 of 1998) of the Society . In the case of National Hydro Electric Power Corporation Executive Sahkari Awas Samiti Ltd., N.S.G. Sahkari Awas Samiti Ltd. Mitra Sahkari Awas Samiti Ltd and U. P.S. E.B. Engineeres Sahkari Avas Samiti Ltd. similar letters dated 16-1-1998 and 21-1-98 or 23-1-1998 were issued to it with similar terms and conditions. In the case of N. H. E. P. C. Executive Sahkari Samiti Ltd., letters were dated 16-1-1998 and 23-1-1998, Annexure 1 & 2 to the writ petition and in these letters, enhanced rate given was Rs. 1000/- per sq. mtr. In the case of N.S.G.S. Avas Samiti Ltd., letters were dated 16-1-1998 and 21-1-1998, the rate demanded was Rs. 1000/- per sq. mtr. as against Rs. 750/- per sq. mtr. originally stipulated. These were Annexures 4 & 5 respectively to the writ petition of the society. In the case of Mitra Sahkari Avas Samiti Ltd., corresponding letters were dated 16-1-1998 and 21-1-1998 respectively whose copies were Annexures 4 & 5 to the writ petition of the society. In the case of this society, the enhanced rate of law was Rs. 1000/- per sq, mtr. as against 750/- per sq. mtr. as originally stipulated. Lastly, in the case of UPSEB Engineers Sahkari Avas Samiti Ltd., the corresponding letters were also dated 16-1-1998 and 21-1-1998. In this letter, the enhanced rate of land as demanded was Rs. 1280/- per sq. mtr. as against Rs. 960/- per sq. mtr. as originally stipulated.
10. All the 5 petitioner societies sent their consent letters regarding the enhancedrate. In the case of the N.T.P.C. society, this letter was dated 20-1-1998, Annexure 7 to the writ petition.
11. In the case of the N.T.P.C. Sahkari Samiti, it was claimed in para 6 of the counter-affidavit of respondent No. 1 in the leading writ petition that it is wrong to say that the N.T.P.C. society has complied with the required terms and conditions of the group housing scheme (GHS-02) relying on clause E-I of the brochure which requires that the applicant shall convey their consent about acceptance regarding the plot reserved for them within 15 days of the date of issue of reservation letter and that incase no communication is received within the above period, the authority shall be free to take any decision in the matter as it deemed fit. However, the counter-affidavit did not say that it had cancelled the allotment due to such delay in communication of the consent by the society to respondent No. 1. As a matter of fact, in para 9 of the same counter-affidavit, the respondent No. 1 has itself said that although the authority was free to take any decision under Clause-E 1 of the brochure (as above mentioned the status of the petitioner was not cancelled and opportunity was given to them as per procedure and principle. So, it is clear that if there was any delay on the part of the society in communicating its acceptance of the plots allotted the delay was condoned by the respondent No. 1 and consequently it cannot now take this delay as a shield against the claim of the society in its writ petition against it.
12. The learned counsel for the petitioners have challenged the enhancement of rates of the land in their respective cases on the ground of discrimination inasmuch as the respondent No. 1 had applied a different yardstick in the case of the I.A.S. officers society because it included superior I.A.S. Officers and because M/s. Dibyani Beverages were influential persons in whose cases the allotment letters were promptly issued without enhancement and in the case of all the 5 petitioners, the issue of allotment letters was deferred till the enhancement of rates was made in the meeting of the Board and then allotment was offered at enhanced rates. The contention of the learned counsel for all the petitioners is that the petitioner societies, which were not given this preferential treatment, and the aforesaid two societies which were given preferential treatments were absolutely similar circumstance. It had been pointed in this regard that all of them had applied for the same scheme in pursuance of the same advertisement and had been similarly selected, that the aforesaid two societies preferred, had deposited reservation fee around the same time as the petitioners' societies in pursuance of the reservation letters and that the difference in the rates as originally offered was only on account of the fact that the GNIDA had fixed different rates for different slabs of areas. It was contended that in respect of the said two preferred societies, the respondent No. 1 confined itself to the rates given in the reservation order while in the case of the petitioner societies, the respondent No. 1 was delaying the allotment orders. It was further argued that the enhancement of rates was not being implemented in respect of the said two preferred societies.
13. In regard to these contentions, in paragraph 5 of the counter-affidavit of Alok Nath filed in the leading writ petition, it was said that the petitioner was asked vide respondent authority's letter dated 16-1-1998 to accord its consent for allotment of plot on revised rate as approved by the Board of the Authority. The Photostat copies of the agenda and minutes of Board Meeting, letter dated 16-1-1998 and letter dated 20-1-1998 have been filed as Annexure CA-3, CA-1 and CA-2 respectively to this counter-affidavit. In CA-3 in item No. 6 of the agenda it was said that considering the increase in the expenses of acquisition of land and the rate of development being carried by the development authority, it was proposed to revise the rate for allotment of different category of plots. The annexures also contained a copy of the minutes of the Board's meeting dated 28th October, 1997 which contained the revised rates as approved for allotment of land of different categories and resolved that these will be enforced with immediate effect. The following table would show the existing rates for the year 1995-96 and the revised rates as approved with regard to the collective residential plots (with which we are concerned here) :--
Existing rate in the year 1995-96 per sq. mtr.
Approved rate per sq. mtr. for the year 1997-98 (ka) Plot less than 15 acres 960.00 1280.00 (kha) Plot with area of 15 to 30 acres.
750.00 1000.00 (Ga) Plot with area of 40 to 70 acres.
650.00 880.00 (Gha) Plot with area of 80 to 120 acres.
550.00 750.00 In para 7 of the counter-affidavit, it was averred that it is wrong to say that the respondent authority had delayed in issuing final allotment letters. It was further asserted that the respondent authority was empowered to enhance the rates. It also averred that it is also wrong to say that the enhancement is unjustified and arbitrary. It relied on Clause 3.4 of the Brochure which is as follows :--
"A-3.4 The total cost of the plot as mentioned above may vary due to increase in the cost of acquisition or development. In such case the increase of cost shall be borne by allottee."
It was claimed in para 8 that the rates were revised as the cost of acquisition and development had gone up. It was claimed in para 9 that the rates are chargeable which are final on the date of confirm allotment. It was also claimed in para 7 that the allotment was made by the respondent Authority after seeking consent for allotment on revised rates and contended that after giving unconditional consent, the petitioners had no right to challenge the revision of rates and say that the rates were revised without any right that the revised rates were final and conclusive and had binding effect on petitioners. It was further said in the counter-affidavit that the allotment was made in favour of Green Wood Sahkari Awas Samiti Ltd. prior to revision of rates which is matter of record : that the Greenwood Sahkari Awas Samiti Ltd. had deposited the required amount much earlier than the petitioner and the allotment was made in their favour on prevailing rates of date of allotment that it was denied that the respondent Authority had shown any discrimination in favour of members of I. A. S. Society (Greenwood (contd. on col. 2) Sahkari Awas Samiti Ltd.); that no delay was done mala fidely to issue allotment letter to the petitioner and the allotment letter was issued within the terms and condition of the brochure and consent of the petitioner. Regarding Greenwood Sahkari Awas Samiti Ltd., it was averred in the counter-affidavit that this Samiti had completed all the formalities and deposited the required amount within a short period much before from the petitioner. It was further averred in the affidavit that in case of increase in cost of the land compensation and development cost increased, the Authority is bound to enhance the rate to safeguard the interest of the Authority. It was further claimed that the case of Grenwood Sahkari Awas Samiti Ltd. is entirely different from the petitioner societies, that all legal formalities had been completed in the month of September by the Greenwood Sahkari Awas Samiti Ltd. Whereas the matter of petitioner societies took place In the month of October, 1995 (1997?). No documents were filed by the respondent development authority to show the respective dates on which the different formalities involved were completed in the case of the two alleged preferred societies.
14. In the rejoinder affidavit filed in the leading writ petition, it was said that the I.A.S. Society (the Greenwood S. A. Samiti Ltd.) and the petitioner societies were similarly circumstanced and both were simultaneously issued reservation orders and the terms and condition of the reservation letter dated 12-9-1997 were fully complied with within the stipulated time; that since the compliance had been made by the petitioner as in the case of the I.A.S. Society aforesaid within the stipulated period the allotment order should have been issued to the petitioner also as in the case of the I.A.S. Officers' Society aforesaid but the allotment order was delayed in the case of petitioner; that the responsibility for the delay in issue of allotment order in favour of the petitioner was of the respondent authority; that since the matter of allotment order was in the hands of the resplendent authority; it cannot take advantage of the fact of issue of allotment order on different dates to create discrimination.
15. The matter of M/s. Dibyani Beverages Society was raided in W.P. Nos. 7822 & 7830 of 1998. In writ Petition No. 7822/ 1998 a short counter-affidavit was filed relying on the counter-affidavit filed in the leading writ petition but nothing was said about the case of M/s. Dibyani Beverages Society. In Writ Petition No. 7830 of 1998 also a short counter-affidavit was filed by the respondents relying on the counter-affidavit filed in leading writ petition but there also nothing further was said. Thus nothing was said in these short counter-affidavits to deny or controvert the allegation of discrimination in favour of M/s. Dibynai Beverages Society made in the petitioners, even for name sake what to say of filing the documents relating to this society that may demonstrate that the case of this society was different from the case of the petitioner societies in these two writ petitions.
16. A short counter-affidavit was also filed in writ petition No. 7832 of 1999 but there also, the counter-affidavit filed in the leading writ petition was adopted without a word more than may put the Greenwood Sahkari Awas Samiti Ltd. and M/s. Dibyani Beverages Society at a different footing from the case of petitioner justifying a differential treatment.
17. Now from the material placed on record from the side of petitioner in the shape of documents and the averments in the five petitions, it is apparent that in the case of Writ Petition NO. 4255 of 1998, the reservation letter was dated 12-9-1997 and the compliance was made by the petitioner society on 29-9-1997 that in the case of Writ Petition No, 4189 of 1998, the reservation letter was dated 22-9-1997 and the compliance was made by the petitioner society on 17-10-97, that in the case of Writ Petition No. 7822 of 1998, the reservation letter was dated 11-9-1997 and the compliance was made on 9-10-1997 by the petitioner society that in the case of Writ Petition No. 7830 of 1998, the reservation letter was dated 11-9-1997 and the compliance was made by the petitioner society on 7-10-1997. In the case of Writ Petition No. 7832 of 1998, the reservation letter was dated 11-9-1997 and the compliance was made on 8-10-1997 by the petitioner.
18. It will be seen that the compliance in respect of these five societies was made between 29-9-1997 and 17-10-1997, It is also established that the compliance in each case was made by the petitioner society within the time permitted. It is also apparent from the material on record that in the case of M/s. Dibyani Beverages Society and Greenwood Sahkari Awas Samiti Ltd. in the same scheme, the compliance was made by the respective society within the time permitted and in the case of both these societies, the allotment intimation letters were issued prior to the date of enforcement of new rates, namely, 28th October, 1997 and in the case of petitioner societies, similar allotment intimation letters were not issued by the respondents prior to this date of enhancement, though as noted earlier, the compliance had been made by each petitioner society well before 28th October, 1997 w.e.f. which date the new rate was made applicable. No explanation whatsoever is forthcoming from the side of the respondents in any of the writ petitions as to why the allotment intimation letters were not issued in the case of the petitioners societies in the five writ petitions prior to the date of enhancement. Thus the respondents deliberately did not issue allotment intimation letters in their case and withheld or kept these pending till the fateful date when the Board resolved in its meeting dated 28th October, 1997 to enhance the rate of allotment of land. Therefore, there is substance in the contention of the petitioner societies that they have been discriminated against a favoured treatment has been accorded to the aforesaid two societies, namely Greenwood Sahkari Awas Samiti Ltd. and M/s. Dibyani Beverages Society. This discrimination is a stark fact. The respondents cannot by their act of deliberately delaying the issue of allotment intimation letters in the case of petitioner societies put their case in a different category from the one in which the two preferred societies aforesaid fell. In the ordinary course, allotment intimation letters would have been issued to all the five petitioner societies as well, as these had been issued to the above two preferred societies prior to the date of enhancement of the rate of allotment of land. If the matter of issue of allotment intimation letters had been kept in abeyance in the case of these five petitioner societies and the said two favoured societies till the matter of enhancement of the rate of allotment of land were finally determined by the respondent Board, no accusing finger could have been raised against it atleast on the ground of discriminatory treatment to societies falling in the same category. But here, the allotment intimation letters have been issued in favour of the above two preferred societies and letters have been withheld in the case of the petitioner societies till the rise in the rate of land by the resolution of Board on 28th October, 1997, and then demand letters were issued asking for taking land on higher prices at the rates as enhanced by the resolution dated 28th October, 1997.
19. It has been argued by the petitioner society that the aforesaid acts of the respondents were arbitrary and discriminatory and as such violated Article 14 of the Constitution of India. Consequently, the relief has been prayed in all these writ petitions.
20. The law on the subject has been laid down by the Apex Court in a series of its decisions.
21. In Erusion Equipment & Chemicals Ltd. v. State of West Bengal, 1975 (1) SCC 70 : (AIR 1975 SC 266) at page 75 in para 17, the Apex Court observed that neither the petitioner nor the respondent has any right to enter into a contract but they are entitled to equal treatment with others who offer tender or quotations for the purchase of the goods, services etc; that this privilege arises because it is the Government which is trading with the public and the democratic form of Govt. demands equality and absence of arbitrariness and discrimination in such transactions; that When public element is involved in the activities of the government, then there should be fairness and equality; that if the State does enter into a contract, it must do so fairly without discrimination and without unfair procedure; that the individual is entitled to fair and equal treatment with others and that a duty to act fairly can be interpreted as meaning a duty to observe certain aspects of rules of natural justice.
22. In Saghir Ahmad v. State of U. P., 1955 (1) SCR 707 : (AIR 1954 SC 728), the Constitution Bench of the Apex Court at the earliest buried fathom deep that the State is free to carry on trade or business in the same position as a private trader. In Kasturi Lal Lakshmi Reddy v. State of J. & K. 1980 (3) SCR 1338 : (AIR 1980 SC 1992) it was further held that every activity of the government has public element in it and it must, therefore, be informed with reason guided by public interest and that it cannot act in a manner which would benefit a private party at the cost of the State. In M.C. Mehta v. Union of India, (1987) 1 SCC 395 : (AIR 1987 SC 1086) another Constitution Bench of the Supreme Court held that it is dangerous to exonerate corporations from the need to have constitutional conscience which makes governmental agencies amenable to constitutional limitations that Court must adopt such standards against the alternative of permitting them to flourish as an imperium in imperio. It further held that law has to grow in order to satisfy the needs of the fast changing society and keep abreast with the economic developments taking place in the country. As new situations arise the law has to be evolved in order to meet the challenge of such new situations.
23. In L.I.C. of India v. Consumer Education & Research Centre, 1995 (4) JT SC 366 : (AIR 1995 SC 1811), the Apex Court observed : "Every action of the public authority or the person acting in public interest or its acts give rise to public element, should be guided by public interest. It is the exercise of the public power or action hedged with public element becomes open to challenge. If it is shown that the exercise of the power is arbitrary, unjust and unfair, it should be no answer for the State, its instrumentality, public authority or person whose acts have the insignia of public element to say that their actions are in the field of private law and they are free to prescribe any conditions or limitations in their actions as private citizens, simpliciter, do in the field of private law. Its actions must be based on some rational and relevant principles. It must not be guided by irrational or irrelevant considerations. Every administrative decision must be hedged by reasons."
24. The distinction between private law and public law remedy is now settled by the Apex Court in LIC v. Escorts Ltd., 1985 Supp (3) SCR 909 : (AIR 1986 SC 1370) by a Constitution Bench thus :--
"If the action of the State is related to contractual obligation or obligations arising out of the contract the Court may not ordinarily examine unless the action has some public law character attached to it. The Court will examine actions of State if they pertain to the public law domain............."
25. In Dwarkadas Marfata & Sons v. Board of Trustees of the Port of Bombay, 1989 (2) SCR 751: (AIR 1989 SC 1642) it was held by the Supreme court that the Corporation must act in accordance with certain constitutional conscience and whether they have so acted must be discernible from the conduct of such Corporations. Every activity of public authority must be informed by Seasons and guided by the public interest. All exercises of discretion or power by public authority must be judged by that standard................ The Apex Court further held that even in contractual relations the Court cannot ignore that the public authority must have constitutional conscience so that any interpretation put up must be to avoid arbitrary action, lest the authority would be permitted to flourish as imperium a imperia. Whatever be the activity of the public authority, it must meet the test of Article 14 and judicial review strikes an arbitrary action.
26. In Mahabir Auto Stores v. Indian Oil Corporation, AIR 1990 SC 1031, it was held by the Apex Court that the State when acting in its executive power, enters into contractual relation with the individual. Article 14 would be applicable to the exercise of the power. The action of the State or its instrumentality can be checked under Article 14. Their action must be subject to rule of law. If the Governmental action even in the matter of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. Rule of reason and rule against arbitrariness and discrimination, rules of fair play, natural justice are part of the rule of law applicable in situation or action by State/instrumentality in dealing with citizens. Even though the rights of the citizens, therefore, are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play and natural justice, equality and non-discrimination. It is well settled that there can be "malice in law". It was also further held that whatever be the act of the public authority in such monopoly or semi-monopoly, it must be subject to rule of law and must be supported by reasons and it should meet the test of Article 14.
27. The Apex Court has rejected the contention of an instrumentality or the State that is action is in the private law field and would be immune from satisfying the tests laid under Article 14. The dichotomy between public law and private law rights and remedies, though may not be obliterated by any straight jacket formula it would depend upon the factual matrix ......................... The distinction between public law and private law remedy has now become too thin and practically obliterated.
28. In the sphere of contractual relations the State, is instrumentality, public authorities or those whose acts bear insignia of public element, action to public duty or obligation are enjoined to act in a manner that is fair, just and equitable, after taking objectively all the relevant options into consideration and in a manner that is reasonable, relevant and germane to effectuate the purpose for public good and in general public interest and it must not take any irrelevant or irrational factors into consideration or be arbitrary in its decision. Duty to act fairly is part of fair procedure envisaged under Articles 14 and 21, Every activity of the public authority or those under public duty or obligation must be informed by reason and guided by the public interest.
29. In Kumari ShrilekhaVidarthi v. State of U. P., (1991) 1 SCC 212 : (AJR 1991 SC 537), the Apex Court in paragraph 22 pointed out that the private parties are concerned only with their personal interest but the public authorities are expected to act for public good and in public interest. The impact of every act is also on public interest. It imposes public law obligation and impress with that character, the contracts made by the State or its instrumentality............... to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions.
30. In Sterling Computers Ltd. v. M. & N. Publications Ltd., (1993) 1 SCC 445 : (AIR 1996 SC 51) at page 464 para 28, it was held that even in commercial contracts where there is a public element, it is necessary that relevant considerations are taken into account and the irrelevant consideration discarded. In Union of India v. M/s. Graphic Industries Co., (1994) 5 SCC 398, the Apex Court held that even in contractual matters public authorities have to act fairly, and if they fail to do so approach under Article 226 would always be permissible because that would amount to violation of Article 14 of the Constitution............................ The actions of the State, its instrumentality, any public authority or person whose actions bear insignia of public law element or public character are amenable to judicial review and the validity of such an action would be tested on the anvil of Article 14. While exercising the power under Article 226 of the Court would be circumspect to adjudicate the disputes arising out of the contract depending on the facts and circumstances in a given case. The distinction between the public law remedy and private law field cannot be demarcated with precision. Each case has to be examined on its own facts and circumstances to find out the nature of the activity or scope and nature of the controversy. The distinction between public law and private law remedy is now narrowed down.
31. The learned counsel for the respondent authority has relied on three authorities. The first authority relied upon in Bareilly Development Authority v. Ajay Pal Singh, AIR 1989 SC 1076. In this case, the Bareilly Development Authority had issued an advertisement offering to register names of intending applicants desirous of purchasing dwelling houses/flats in any one of the different income groups intended to be constructed by it. The respondents in the appeal got themselves registered for allotment of flats in different schemes. The brochure issued by the authority contained the terms and conditions. It gave only the estimated cost and stated that it would increase or decrease according to the rise or fall in the price at the time of completion of the houses/ flats. The names of the respondents were registered and they made the final deposits. Thereafter the Bareilly Development Authority (hereinafter referred as 'BDA') gave notices dated 19/20-1-1984 to the respondents intimating the revised cost of houses/ flats. Thereafter all except 4 respondents gave consent and after draw they made down payments in accordance with the said notice. The respondents then filed a writ petition before this Court and sought a writ of mandamus directing the B.D.A. to maintain the allotment of the flats in their favour on the original terms and conditions. The High Court, found the monthly instalments regarding M.I.G. group as arbitrary and unreasonable and held that the consent obtained is not a reasonable act on the part of the B.D.A. and consequently, directed it to redetermine the cost of the flats and instalments payable after hearing their grievances. The Apex Court found that all the respondents had applied for registration on the terms and conditions contained in the brochure and had accepted the changed terms and conditions which cannot be challenged in view of the materials before the apex Court:-- Clause 12 gave the B.D.A. the right to change, enhance or amend any of the terms and conditions, the brouchure showed only estimated cost subject to increase or decrease according to rise or fall in price at the time of completion of the property. The apex Court found that it was not only in the case of the applicants who belonged to the M.I.G. scheme but also of the applicant of the other categories that the increase had been made and that it cannot be said that the B.D.A. has arbitrarily and unreasonably changed the terms and conditions of the brochure to the prejudice of the respondents. It also held that having accepted the conditions imposed by the B.D.A., the respondents entered into the realm of concluded contract they were bound by its terms unless some statute steps in. The apex court further held that, where the contract entered into between the State and the persons aggrieved is non-statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple." The apex Court concluded that the High Court had gone wrong in its finding that there is arbitrariness and unreasonableness on the part of the B. D. A. in increasing the cost of the house/flats and the rate of monthly instalments and giving directions in the writ petitions as prayed for.
32. 'A' subsequent authority is L.I.C. of India v. Consumer Education & Research Centre, 1995 (4) JT SC 366 : (AIR 1995 SC 1811). In this authority the apex Court said in para 31 that, an unfair and untenable or irrational clause in a contract is also unjust, amenable to judicial review. The apex court discussed various British authorities and cited the observation of Hon'ble Madan, J. In the case of Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, 1986 (2) SCR 278 : (AIR 1986 SC 1571). These are as follows (at page 1610; of AIR):--
"Article 14 of the Constitution guarantees to all persons equality before the law the equal protection of the laws. The principle deducible conforms to the mandate of the great equality clause in Article 14. This principle is that the Courts will not enforce and will, when called upon to do so, strike an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power."
The apex court further observed :
"it will (also) apply where the inequality is the result of circumstances, whether of the creation of the parties or not"...................
This principle, however will not apply where the bargaining power of contracting parties is equal or almost equal. This principle may not apply where both parties are business men and the contract is a commercial trans action." The apex Court ultimately held "it is, therefore, the settled law that if a contract or a clause in a contract is found unreason able or unfair or irrational one must look to the relative bargaining power of the contracting parties."
33. So now even the Development authorities are subject to sway of Article 226 of the Constitution of India in cases of non-statutory concluded contract.
34. Then the respondents have relied upon the case Delhi Development Authority v. Pushpendra Kumar Jain, 1994 (6) JT 292 : (AIR 1995 SC 1). In this case, the Delhi Development Authority had published a scheme for registering of intending purchasers of flats to be constructed by the Delhi Development Authority. The estimated prices given therein were only illustrative prices and were subject to revision/modification depending upon the exigencies of layout, cost of construction etc. The method of drawal of lots was being adopted. One such draw was held on October 12, 1990 in which the respondent was successful and intimated about allotment of a flat and asked to remit the initial deposit, then between the date of draw of the lots and the date on which the allotment of flats was communicated to the respondents, the land rates were revised by the D.D.A. There had been a substantial enhancement of land rates in the region, hence the respondent was called upon to remit the first instalment of the price determined taking into account the revised land rates aforesaid. The respondent's contention in the writ petition was that only the land rates prevailing on the date of drawal of lots should be charged to him. He submitted that the revised land rates cannot be applied to him in as much as the said rates came into force after the draw of plots. The Delhi High Court upheld its contention holding that the allotment-cum-demand letter was delayed in the office of the respondents and in the meanwhile even if the land rates have been increased since the petitioner had become entitled to get the flats on 12-10-1990, the respondent could not charge enhanced rate to the petitioner. The appellant's case before the Apex Court was that the drawal of lots was held for nearly 3000 flats and since the land rate was revised meanwhile, the process of calculating the cost of each flat and sending of demand-cum-allotment letters to nearly 3000 allottees took some time and accepting these factual averments, the apex Court held that the said interval of 3 months cannot be characterised either as inordinate or as deliberate delay. The Apex Court found that the scheme itself did not prescribe the period within which the allotment had to be communicated from the date of drawal of lots. The Apex Court observed that it was of course to be done within a reasonable period. The Apex Court also found that the draw was not allotment by itself. The Apex Court also held that since the right to flat arises only on the communication of the letter of allotment, the price or rates prevailing on the date of such communication was applicable unless otherwise provided in the Scheme. The Apex Court specifically stated that the validity or justification of the revision of land rates by circular dated December 6, 1990 was not questioned in the writ petition nor had it been pronounced upon by the High Court nor had it been urged before it and it consequently proceeded on the assumption that the said revision of land rates was valid.
35. In my view, the case of D.D.A. v. P. K. Jain did not help the respondents. In that case the matter was of the allotment of 3000 flats and the process of issue of allotment letters about so many flats was bound to take time and so in the facts of that case, the Apex Court found that the delay was not shown to be unreasonable. In the present case, on the other hand, the matter related only to the five societies who are the petitioners in the present five writ petitioners and the two societies which have been mentioned here as the preferred societies namely Green Wood Sahkari Awas Samiti Ltd. v. Dibyani Beverages Society Ltd. and one more society, that even though the compliance was made by the five petitioner societies and the reservation letter was made by the petitioner societies within the time permitted during the period 29-9-1997 and 17-10-1997, the allotment letters were not issued to them and delayed beyond the date of enforcement of new rate namely 28-10-1997, while in the case of the two preferred societies, the aforesaid allotment intimation letters were issued prior to the date of enforcement of new rates namely 28-10-1997 and such mala fide on the part of the respondents was alleged by the petitioners in each of the five writ petitions and no reasonable explanation was forthcoming from the side of the respondents for the preferential treatment meted out to the two sets of societies, the result of which was that while the two preferred societies got the allotment on the old rates the present five petitioner societies were called upon and virtually forced to take allotment on the revised rates. We have noted earlier that in case the matter of issue of allotment, allotment letters would have been kept in abeyance in the case of all the seven societies, the respondents might get away with the plea that there was no unreasonable delay in issuing the allotment intimation letters. But, here the respondents have obviously by their deliberated action artificially and malafidely divided these seven societies into two categories, the first category consisting of the two preferred societies in whose case allotment intimation letters were promptly issued prior to the enhancement of the rates of land which was in contemplation and the other category in which the issue of allotment intimation letters was deferred till the revision of the rates of land took place and then revised demands were issued on the basis of the revised rates. Therefore, Article 14 of the Constitution stands breached by the mala fide conduct of the respondents and this Court ought to step in and grant relief to the petitioners by striking down the letter dated 16-1-1998 sent by the respondents to the N.T.P.C. Sahakari Avas Samiti Ltd. (Annexure 1 to its Writ Petition No. 4255 of 1998) and further letter dated 21-1-98 sent by the respondents to this society, Annexure 2 to the writ petition), letters dated 16-1-1998 and 23-1-1998 sent to the National Hydro Electric Power Corporation Ex. Sch. Awas Samiti (Annexures 1 and 2 to its Writ Petition No. 4189 of 1998), letters dated 16-1-1998 and 21-1-1998 sent to N.S.G. Sahkari Awas Samiti Ltd. (Annexures 4 and 5 to its Writ Petition No. 7822 of 1998), letters dated 16-1-1998 and 21-1-1998 sent to Mitra Sahkari Awas Samiti Ltd. (Annexures 4 and 5) to its Writ Petition No. 7830 of 1998) and letters dated 16-1-1998 and 21-1-1998, sent to U.P.S.E.B. Engineers Sahakari Awas Samiti Ltd. (Annexures 1 and 2 to its Writ Petition No. 7832 of 1998).
36. The learned counsel for the respondent has relied on the consent letters sent by the petitioner societies on the revised rates. In view of the above discussion, the respondents are not entitled to shut down the mouths of the petitioners using their consent as its sword and shield. Once we have found that the action of the respondents was mala fide, arbitrary and discriminatory, this consent by the petitioners who had no option but to send their consent in the circumstances where the refusal to accede to the demand of the respondents for payment at enhanced rates, these societies could not think of getting alternative sites for making group houses for their members at an equally suitable location. These consent letters, therefore would have to be discarded or ignored.
37. We may now refer to the last authority of the Apex Court relied upon by the respondents namely Shimla Development Authority v. Asha Rani, AIR 1996 SC 1519, in which the land allotted to the respondent Asha Rani had been acquired by the development authority under the Land Acquisition Act and the District Judge having enhanced the compensation payable for the land acquired under that scheme, the authority had asked the respondent allottee to deposit further amounts in accordance with the same and the Apex Court held that the allottee is bound to bear the burden of not only escalation in construction cost but also of escalation of value of land when the Court enhanced the compensation for land under provision of Land Acquisition Act at various stages. There could never be any quarrel with the proposition of law as laid down in this authority by the Apex Court. The petitioners in the present case would certainly be bound to pay any increase in the costs of the land allotted to them consequent upon the enhancement of the amount of compensation under the Land Acquisition Act by the District Judge or by the superior Courts. In the present case there is no such dispute.
38. The development authority had relied upon clause 3.4 of the brochure as reproduced about which rightly obliges the allottee to bear the increase in costs of acquisition or development but in the present case that is not the controversy.
39. Consequently, all these five writ petitions are allowed. Letters dated 16-1-1998 and 21-1-1998 (Annexures 1 and 2 to the Writ Petition No. 4255 of 1998 of N.T.P.C. Sahkari Avas Samiti Ltd.), letters dated 16-1-1998 and 23-1-1998 (Annexures 1 and 2 to the Writ Petition No. 4189 of 1998 of National Hydroelectric Power Corporation Executive Sahkari Avas Samiti), letters dated 16-1-1998 and 21-1-1998 (Annexures 4 and 5 to the Writ Petition No. 7822 of 1998 of N.S.G. Sahkari Avas Samiti Ltd.), letters dated 16-1-1998 and 21-1-1998 (Annexures 4 and 5 to the Writ Petition No. 7830 of 1998 of Mitra Sahkari Avas Samiti Ltd.) and letters dated 16-1-1998 and 21-1-1998 (Annexures 1 and 2 to the Writ Petition No. 7832 of 1998 of U.P.S.E.B. Engineers Sahkari Avas Samiti Ltd.), are struck down as violative of Article 14 of the Constitution of India. The respondents are commanded to issue allotment intimation letters in favour of each of the respective petitioner-societies on the rates applicable on the date on which their respective compliance letters were delivered by the respondents namely on 29-9-1997 in the case of N.T.P.C. Sahkari Avas Samiti Ltd. (Writ Petition No. 4255 of 1998 (On 17-10-1997 in the case of National Hydroelectric Power Corporation Executive Sahkari Avas Samiti (Writ Petition No. 4180 of 1998) on 9-10-1997 in the case of N.S.G. Sahkari Avas Samiti Ltd. (Writ Petition No. 7822 of 1998), on 7-10-1997 in the case of Mitra Sahkari Avas Samiti Ltd. (Writ Petition No. 7830 of 1998) and on 8-10-1997 in the case of U.P.S.E.B. Engineers Sahkari Avas Samiti Ltd. (Writ Petition No. 7832 of 1998). Subject to the other terms and conditions applicable as per the brochure within a month from today. However, it is made clear that the respondents shall be free to demand and realise from the petitioners of these five writ petitions any enhanced amount corresponding to the increase in the compensation amount by the District Judge or by the superior Courts in the proceedings of acquisition of land for the purposes of this scheme but without making any discrimination between these five societies and the other two societies namely Green Wood Sahkari Awas Samiti Ltd. and M/s. Dibyani Beverages Society Ltd.