Interpretation of Price Clause in Lease-cum-Sale Agreement

The common judgment of the High Court vide which five Regular Second Appeals were decided has been impugned.

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The learned counsel for the appellant did not point out at the time of hearing that there is any other appeal pending in this Court challenging the common judgment of the High Court with reference to the aforesaid two appeals. In second appeal filed by the appellant, the judgment and decree of the lower appellate court was reversed.

Bhat, learned Senior Counsel appearing on behalf of the appellant submitted that plots were allotted to the Respondents-Plaintiffs vide allotment letter dated 12.11.1990. Asha Rani

it was submitted that in the aforesaid case, this Court had allowed the Shimla Development Authority to charge additional amount from the allottees on account of enhancement of compensation for the land acquired.

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On the other hand, learned counsel for the Respondents-Plaintiffs submits that neither in the allotment letter nor in the lease-cum-sale agreement there is any clause in terms of which the Appellant could demand additional price from the allottees except on account of variation of size. The value of the site is Rs.50,000/-+10% Augmentation of water supply charges is Rs.5,000/-

Tentatively =Rs.55,000/-.”

“Lease-cum-Sale Agreement: “whereas there were negotiations between the lessee/purchaser on the one hand and the lessor/ vendor on the other for allowing the lessee/ purchaser to occupy the schedule property as lessee until the payment in full of the price of the schedule property as might be fixed by the lessor/ vendor as hereinafter provided;

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” 12.

Interpreting the aforesaid clause, this Court held that as per the condition provided for in the hire-purchase tenancy agreement, the cost of the tenements can be increased either on account of cost of construction or enhancement of compensation for acquisition of land. A conjoint reading of the allotment letter and Clause 2(w) of the hire-purchase tenancy agreement makes it clear that the price of the tenement specified in the allotment letter is tentative and the Board can revise the price after receiving final bills representing the cost of construction or if as a result of an order of the court or an award made by the arbitrator it is required to pay higher cost for the land used for construction of the tenements. Unfortunately, the learned Single Judge and the Division Bench of the High Court did not give due weightage to the prohibition contained in Clause 2(w) of the hire-purchase tenancy agreement and negatived the appellants’ challenge to the demand of additional price by assuming that the Board is vested with the power to revise the price at any time. Referring to the Section 2(aa) of the Punjab Urban Estate (Sale of Sites) Rules, 1965 which defines “additional price”, as the allotment was in terms of the aforesaid rules, demand of additional price on account of enhanced compensation for the acquisition of land which was utilized for carving of the plots was upheld by this Court. In Tamil Nadu Housing Board’s case (supra), Clause 18 of the Agreement therein clearly provided that after the finalization of the total cost of construction of flats in case the value of the land is increased in terms of the enhancement of compensation by the Court, the allottee shall be liable to pay the difference.


Case Number: C.A. No.-002950-002950 / 2023

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