Allowed

Mysore Urban Development Authority v. Smt Radhika Bhat

Karnataka HC1 Oct 2024WA/369/2022

Case brief

AI extract

What is this about?

In a writ appeal, the Division Bench examined whether an allottee of a site from 1991 is liable to pay a penalty to obtain a sale deed without constructing a building. The Court held that while the rule permitted penalty for 2001-2005 allottees, the court must consider the allottee's conduct and delay.

What did the court decide?

The writ appeal is allowed, the impugned order of the learned Single Judge is set aside, and the writ petition filed by the respondent is disposed of as infructuous.

Mysore Urban Development Authority Vs Smt Radhika Bhat — Land Acquisition | Karnataka HC (2024)

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WA No.369 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 1^ST DAY OF OCTOBER, 2024

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PRESENT

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THE HON'BLE MR JUSTICE V KAMESWAR RAO

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AND

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THE HON'BLE MR JUSTICE C M JOSHI

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WA NO. 369 OF 2022

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BETWEEN:

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MYSORE URBAN DEVELOPMENT AUTHORITY, JHANSI RANI LAKSHMI BAI ROAD, K.G. KOPPAL, MYSURU, KARNATAKA - 570 005. REPRESENTED BY COMMISSIONER.

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…APPELLANT

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(BY SRI. VIVEKANANDA T P, ADVOCATE)

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AND:

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SMT. RADHIKA BHAT, AGED ABOUT 53 YEARS, W/O LATE VENKATESH VISHWANATH BHAT, R/A NO.907, 10^TH CROSS, 24^TH MAIN ROAD, J.P. NAGAR, II PHASE, BENGALURU - 560 078.

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…RESPONDENT (BY SRI. ARUN KUMAR, SENIOR COUNSEL FOR SMT. RAKSHITHA PAI, ADVOCATE AND SRI. SUNDARA RAMAN M V., ADVOCATE)

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THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT, 1961 PRAYING TO ALLOW THE WRIT APPEAL

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AND SET ASIDE THE ORDER DATED 20/12/2021 PASSED BY THE LEARNED SINGLE JUDGE IN WP NO.22550/2019, ETC.

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THIS WRIT APPEAL HAVING BEEN RESERVED FOR JUDGMENT ON 08.07.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, V KAMESWAR RAO J., DELIVERED THE FOLLOWING:

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CORAM: THE HON'BLE MR JUSTICE V KAMESWAR RAO AND

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THE HON'BLE MR JUSTICE C M JOSHI

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CAV JUDGMENT

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(PER: THE HON'BLE MR JUSTICE V KAMESWAR RAO)

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The challenge in this appeal by the appellant-Mysore

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Urban Development Authority (‘the Authority’ for short) is to an order dated 20.12.2021 passed by the learned

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Single Judge in WP No.22550/2019 whereby the learned Single Judge has allowed the writ petition by stating in paragraph No.18 of the impugned order as under:

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“18. For the aforesaid reasons, I pass the following:

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ORDER

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(i) Writ Petition is allowed and the impugned endorsement dated 23-11-2016 stands quashed.

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(ii) The respondent is directed to refund the entire sum of Rs.6,60,000/- to the petitioner with applicable rate of interest that the said amount has earned with its deposit in the Bank as obtaining from time to time.

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(iii) The aforesaid amount of Rs.6,60,000/with determined interest shall be refunded to the petitioner within eight weeks' from the date of receipt of a copy of this order, failing which, the petitioner shall become entitled to interest at 12% per annum from the date of this order, till payment.”

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Some of the facts that need to be noted for the purpose of decision in this appeal are, the father-in-law of the respondent herein (petitioner before the learned Single Judge) was allotted site No.7 by Karnataka State Group-D Employees House Building Co-operative Society on 23.12.1988. Thereafter on 15.11.1991, the appellantAuthority executed a lease-cum-sale agreement in favour of the father-in-law. The two clauses on which reliance

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has been placed by the counsel for the appellant are, clause-3 and clause-12 respectively, which are reproduced as under:

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“Clause:3 - The Lessee/Purchaser shall construct the building as per the approved plan under the provisions of Mysore City Municipalities Act, 1969 and the Rules made thereunder and the bye-laws within two years from the date of the lease-cum-sale agreement.”

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“Clause:12 - If the Lessee/Purchaser performs the conditions stipulated in the agreement without any breach, after expiry of 10 years as stipulated above, the property shall be sold to the Lessee/ Purchaser by exempting stamp duty and registration charges.”

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The site No.7 was handed over to the father-in-law of the respondent on 21.08.1992.

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On 08.11.1998, the father-in-law of the respondent died and the mother-in-law of the respondent succeeded to the property. She also died intestate on 21.04.2007 leaving behind her son, the only legal heir. Thereafter, the husband of the respondent also died on 19.09.2012 leaving behind the respondent and her two children.

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During the lifetime of the original allottee i.e., father-in-law of the respondent and thereafter, the legal

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representatives, no construction was put up on the allotted site. The respondent approached the appellant-Authority requesting for execution of absolute sale deed to her name. In response to which, the Authority issued an endorsement dated 23.11.2016 calling upon the respondent to pay a penalty of 25% of the guidance value i.e., Rs.6,60,000/- since no construction is made on the allotted site.

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The respondent paid the amount of Rs.6,60,000/-

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under protest and submitted a representation dated 31.08.2017 to the appellant-Authority contending that the Authority has no power to impose penalty on her under any provision of law as she had not sold the property, but she had retained it.

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On payment of the amount, the appellant executed the sale deed dated 14.03.2018 conveying title of site No.7 in favour of the respondent. The aforesaid sale deed was executed after 9 months from the date of payment of the aforesaid amount. After one year from the date of execution of the absolute sale deed, the

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respondent approached the learned Single Judge by way of writ petition challenging the endorsement dated 23.11.2016.

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The case of the respondent before the learned Single Judge was that, the appellant by erroneously interpreting the rules, has charged the penalty of 25% of the sital value, which is only leviable if the allottee had sold the site and not retained the site. The case was also that, after 10 years, the appellant has to come forward to execute the sale deed or order cancellation of the allotment, but no such action was taken by the appellant, therefore it cannot demand penalty from the respondent.

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The case of the appellant before the learned Single

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Judge was that, it is not for the appellant to come forward for execution of the sale deed but the allottee should come

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forward and get the sale deed executed within the stipulated time. It was also the case that, the appellant could have even cancelled the allotment and as such, the respondent cannot contend that she is not liable to pay the penalty of 25% as till date, the allottee or the respondent

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has not constructed the house on the site and kept the

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same as a land bank.

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The learned Single Judge, after referring to Rules 19 and 20 of the Karnataka Urban Development Authorities (Distribution of Sites) Rules, 1991 (‘the Rules’ in short), was of the following view:

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“12. Therefore, the said clause was not in existence when the allotment was made in favour of the father-in-law of the petitioner. The proviso itself restricts imposition of 25% upon an allottee of such allotment that has been made between 2001- 2005. It is not in dispute that the subject site was allotted in favour of father-in-law of the petitioner on 15-111991 at which point in time, admittedly the penalty clause aforementioned was not in existence. The Rule also does not direct imposition of penalty upon allottees of sites before 2001 as the amendment for the first time was brought into effect from 23-062005 and the next amendment was on 02.05.2013 wherein the penalty of 25% was introduced.

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13. On a coalesce of facts aforesaid, the provisions of the Rules would mandate that an allottee has to construct a building within 5 years from the date of execution of lease-cum- sale agreement; on expiry of 10 years from the date of lease- cum-sale agreement if the allotment has not

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been cancelled, MUDA shall execute the sale deed on its own cost after notice to the allottee or if the allottee fails to get the sale deed executed within the time frame stipulated by authority, the authority shall execute the sale deed and recover the cost from the allottee. All these circumstances have never happened in the case at hand. Original allottee never constructed the house, MUDA never issued any notice directing execution of sale deed after 10 years or cancelled the allotment invoking the afore-quoted clauses in the Rules and the penalty clause coming into effect long after the allotment would not empower the respondent/MUDA to impose the penalty in terms of the impugned endorsement as the Rule itself restricts imposition of penalty only to allotments made beyond 2001 and not prior to it.

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14. It is trite law that, even a single rupee of penalty cannot be imposed against a citizen, except in accordance with law. The law in the case at hand i.e., the Rules does not permit imposition of such penalty on the allottee.

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15. The submission of the learned counsel appearing for MUDA that Government has clarified by way of a communication to MUDA that all the allotments made beyond 1991 would attract penalty for such violation is unacceptable, as any clarification contrary to the Rules by way of an ordinary

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communication can hardly be pressed into service as a justification for imposition of penalty.

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16. When the Rule prohibits it, the communication cannot permit it, as it is well-worn law that a Circular or a Government order by itself cannot be contrary to law, much less, an ordinary communication of the Government from the Urban Development Department to MUDA. Such a communication cannot be elevated to the status of Circular or order by Government having the effect of amending the Rule. Even circulars or Government orders cannot be contrary to the Act or the Rules.

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17. Therefore, imposition of impugned penalty is contrary to law, apart from the fact that the charging section under the Karnataka Urban Development Authorities Act, 1987 itself does not empower framing of such a Rule that imposes penalty, as penal clauses must have a statutory sanction from the charging section. The petitioner has contended and appended documents that she has paid the amount so demanded by MUDA, under protest. Therefore, since the demand itself is contrary to law and the amount is paid under protest, MUDA will have to now refund the amount of Rs.6,60,000/- demanded as penalty for execution of the sale deed in favour of the petitioner along with interest that has accrued on the deposit made by the

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petitioner, as obtaining in the Banks from time to time.

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18. For the aforesaid reasons, I pass the following:

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ORDER

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(1) Writ Petition is allowed and the impugned endorsement dated 23-11-2016 stands quashed.

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(ii) The respondent is directed to refund the entire sum of Rs.6,60,000/to the petitioner with applicable rate of interest that the said amount has earned with its deposit in the Bank as obtaining from time to time.

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(iii) The aforesaid amount of Rs.6,60,000/with determined interest shall be refunded to the petitioner within eight weeks' from the date of receipt of a copy of this order, failing which, the petitioner shall become entitled to interest at 12% per annum from the date of this order, till payment.”

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The submissions of Sri. T.P.Vivekananda, learned

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counsel for the appellant are the following:

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i) neither the original allottee nor the successors-in-

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interest of the site in question have complied with the terms and conditions of allotment more particularly the construction of residential house on the allotted site within

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a period of two years from the date of allotment;

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ii) merely because the appellant Authority has not exercised its right to cancel the allotment on the ground of non-construction of the building on the allotted site, the allottee would not be entitled to seek execution of absolute sale deed even though there is a breach of the terms and conditions of the allotment;

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iii) immediately after the expiry of ten years, neither the allottee nor the successors-in-interest have approached the appellant to perform its obligation of execution of absolute sale deed on the ground that no proceedings have been initiated for cancellation of allotment on the ground of non-construction of the house;

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iv) the request for execution of absolute sale deed has been made in the year 2018 and the same has been considered in terms of the amendment to Rule 20 read with clarification dated 20.12.2013 issued by the State Government;

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v) Proviso to Rule 20 has been inserted by

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notification dated 20.03.2013. The relevant clause of the said notification is proviso 4(c);

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vi) the said proviso stipulates that the allottees of sites from 2001 to 2005 who have not obtained the sale deeds, may obtain the sale deed by paying penalty of 25% of the guidance value;

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vii) the proviso inserted in the year 2013 did not make any provision in respect of the allottees of sites from the year 1991 till 2001. The appellant received several requests from the allottees of sites from 1991 to 2001 for providing the benefit of execution of sale deed with penalty. In the circumstances, the appellant wrote to the Government seeking clarification as to whether the amended provisions to Rule 20 may be applied to the allottees of sites from 1991 to 2001. In response to which, the State Government by its communication dated 20.12.2013 clarified that the Authority may consider the execution of the sale deeds by restricting the amended

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provisions of Rule 20 only to the allotments made from 1991 to 2005;

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viii) but for the amendment to Rule 20 brought in the year 2013 coupled with the clarification of the State Government dated 20.12.2013, the appellant would not have considered the request of the petitioner for execution of absolute sale deed. If the amended provisions of Rule 20 and the communication dated 20.12.2013 were not in place, the respondent/petitioner was required to construct the residential house and thereafter seek execution of absolute sale deed;

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ix) after having obtained the benefit of the amended provisions of Rule 20 and the communication dated 20.12.2013 of the Government, the respondent cannot be allowed to contend that the amended provisions of Rule 20 and the communication are not applicable to the case on hand since the amendment to Rule 20 is applicable to the allottees of sites from 2001 to 2005;

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x) as regards the interpretation to Rule 19(6) and (7) are concerned, they cannot be read in isolation. If the entire provisions of Rule 19 and 20 are read together, it is clear that construction of a building on the allotted site is a must, in order to obtain the absolute sale deed from the Authority. The allottees who do not wish to construct the building and yet seeks the execution of the absolute sale deed is liable to pay penalty of 25% of the guidance value;

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xi) by only placing reliance on the latter part of Sub-Rule (6) and Sub- Rule (7)(i), the respondent cannot be allowed to contend that since the appellant has not exercised its power of cancellation of allotment on the ground of non-construction of the building, therefore it is bound to execute the sale deed on its own immediately after the expiry of ten years and without insisting for construction of the building, as such an argument if accepted, shall defeat the very purpose and object of the allotment of site at a subsidized price by the Development Authorities;

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xii) even if the appellant has not exercised its power to cancel the allotment on the ground of non-construction of the building, the status of the allottee even after expiry of ten years of lease would continue to be of a Lessee until the allottee constructs the building and obtains absolute sale deed, as is clear from Sub-Rules (4) and (5) of Rule 19 which reads as follows:

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Sub-rule (4):

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"Until the site is conveyed to the allottee, the amount paid by the allottee for the purpose of the site shall be held by the Authority as security deposit for the due performance of the terms and conditions of the allotment and the lease-cum-sale agreement entered into between the Authority and the allottee".

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Sub-rule (5):

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"The allottee shall comply with the conditions of the agreement executed by him and the buildings and other bye-laws of the Authority or Corporation or Municipality as the case may be for the time being in force".

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xiii) that on a combined reading of Sub-Rules (4),

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(5), (6) and (7) of Rule 19, it is clear that the allottee has an obligation under the terms and conditions of the

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allotment as enumerated in the lease-cum-sale agreement for the purpose of obtaining the absolute sale deed immediately after completion of the lease period of ten years to construct the site. The argument that if within a period of ten years to the allotment is not cancelled, the appellant Authority is obliged to execute the absolute sale deed is not legally acceptable and would be contrary to the purpose of the enactment;

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xiv) the execution of lease-cum-sale agreement is a statutory contract between the Authority and the allottee. Since the lease-cum-sale agreement is executed in FormIII as referred to in 2nd proviso to Rule 19(1), therefore Form-III is part and parcel of the Statutory Rules and the Clauses contained in the lease-cum-sale agreement are enforceable by each of the parties. If any one of the parties commits breach of any one of the conditions of the lease, the party who breaches the condition has no right to enforce the other clauses contained in the very same lease-cum-sale agreement;

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xv) the breach committed by the allottee/respondent

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is condoned by imposition of penalty of 25% of the guidance value and if the respondent was not intending to pay the penalty of 25% of the guidance value, it was open for her to construct the building and then seek for absolute sale deed;

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xvi) the allottees of sites cannot, as a matter of right, seek execution of absolute sale deed in respect of the vacant sites immediately after completion of lease period of ten years on the ground that the Authority has not cancelled the allotment for breach of conditions of lease agreement as that would be innocuous situation of executing the sale deeds in favour of the allottees in respect of vacant sites, which is not the intent of the registration;

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xvii) the amended provisions of Rule 20 and the clarification of the Government dated 20.12.2013 are in place since 2013. Hundreds of allottees have obtained the benefit of the said Rule by paying penalty of 25% of the guidance value. If at the instance of the respondent if it is

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held otherwise, it would have serious financial repercussion on the Authority and every allottee who has obtained the sale deed by paying 25% of the penalty would approach this Court seeking refund of the amount paid by them;

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xviii) another significant aspect is that even after bringing it to the notice of the respondent that the demand of 25% of the guidance value was made in terms of the amended provisions of Rule 20 and the clarification dated 20.12.2013, no challenge was laid to the said amendment. Therefore, the respondent cannot be heard to contend that the amendment and the communication dated 20.12.2013 are not in accordance with law;

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xix) that under section 65 of the Karnataka Urban Development Authorities Act, 1987, the Government is empowered to issue such directions to the Authority as in its opinion are necessary or expedient for carrying out the purpose of the Act and it shall be the duty of the Authority to comply with such directions. The communication dated

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20.12.2013 could be construed as a direction to the Authority in terms of section 65 of the KUDA Act, 1987;

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xx) the order passed in WP No.1571/2013 dated 18.12.2023 covers the issue in which the learned Single Judge by taking note of the amendment to Rule 20 and the conditions stipulated in the lease-cum-sale agreement has come to the conclusion that the allottee who seeks for execution of the absolute sale deed without complying with the requirement of the lease-cum-sale agreement is liable to pay the penalty of 25% of the guidance value and accordingly the similar prayer of refund of the amount already deposited has been rejected.

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He seeks the prayer made in the appeal.

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On the other hand, Sri. Arun Kumar, learned Senior Counsel for the respondent had submitted the following:

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i) Rule 19(6) governs the incidents of noncompliance with the obligation to construct as required by the Rules / Lease cum Sale Agreement;

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ii) Rule 20 governs incidents of alienations made in violation of the conditions against alienation in the Rules / Lease cum Sale Agreement;

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iii) while Rule 19(6) gives the authorities the power to extend the time fixed for construction, the right vested in the authorities for cancellation or revocation of agreement is subject to reasonable notice and consideration of response of the allottee, power to extend time fixed and in the case of termination subject to refund of 88.5% of consideration paid. Cancellation is therefore at the discretion of the authorities, depending on the facts and circumstances each case presents;

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iv) Rule 19(7) says that if the power under Rule 19(6) is not exercised within a period of ten years, then the authority is bound to execute a Sale Deed in favour of the allottee. In fact the mandatory obligation in Rule 19(7) thrusts an obligation upon the Authority to execute the Sale Deed at the cost and expense of the Authority, recoverable from the allottee;

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v) It is therefore clear that under the Rules the

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power to cancel under Rule 19(6) has to be exercised before the expiry of the lease period. In other words it should be exercised between the 5th and 10th year after the execution of the lease-cum-sale agreement;

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vi) this proposition of law is supported by the judgments of this Court in the following judgments:

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a. Lalithamma -Vs.- Belgaum Urban Development Authority [WP No.72486/2012, decided on 27.10.2022 ]

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b. Sidharth -Vs.- Dayanand Patil and Another [CCC No.200217/2023 connected with WA No.200032/2024 , decided on 19.02.2024 ]

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vii) the principle on which Rule 19(6) is based is that all or any action that the Authority is required to take, must be taken within a reasonable period of time. In Ram

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Chand and Others -Vs.- Union of India and Others

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[(1994) 1 SCC 44] , the Supreme Court has observed thus:

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"14. … … … It is settled that in a statute where for exercise of power no time-limit is fixed, it has to

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be exercised within a time which can be held to be reasonable. … … …"

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viii) the scheme of Rule 19(6) prescribes that the reasonable time for exercising the power to cancel the allotment for non-compliance with the obligation to construct upon the site, is a maximum period of 5 years;

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ix) the mandate in Rule 19(7) is clear that a Sale Deed has to be executed if the Authority has not cancelled the allotment or determined the lease in accordance with the Rules or the terms of the Agreement. The conditions upon which Rule 19(7) operate are definite. The obligation is mandatory. There is no room to relieve the authority of this obligation on the ground that the allottee is yet to undertake the construction;

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x) in the instant case the authority has not sought to exercise any such power for the last 24 years;

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xi) Rule 19 does not contemplate the stipulation of any penalty, as is sought to be done by the appellants;

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xii) a 'proviso' to a rule only embraces the field which is covered by Rule 20. A proviso to Rule 20 cannot be an exception to Rule 19, where there is no similar stipulation. Reference: Tribhovandas Haribhai Tamboli -Vs.Gujarat Revenue Tribunal and Others [(1991) 3 SCC 442] ;

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xiii) a penalty cannot be levied except by way of the authority of statutory law. Reference: Shree Bhagwati Steel Rolling Mills -Vs.- Commissioner of Central Excise and Another [(2016) 3 SCC 643] ;

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xiv) A penalty cannot be imposed retrospectively. Reference: Income Tax Officer, Alleppy -Vs.- M.C. Ponnoose and Others [(1969) 2 SCC 351] ;

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xv) The payment of penalty was made by the Petitioner under protest as is evident from Annexure-M at page 45. As such the judgment of this Court in I.S. Ponnappa -Vs.Mysore Urban Development Authority and Another [WP No.1571/2023 , decided

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on 18.12.2023 ] would not be applicable. He seeks dismissal of the appeal.

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Analysis:

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Having heard the learned counsel for the parties and perused the record, the issue which arises for consideration is whether the learned Single Judge is right

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in directing the appellant to refund the amount of Rs.6,60,000/- to the respondent with interest by quashing endorsement dated 23.11.2016?

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By the endorsement dated 23.11.2016, the appellant had called upon the respondent to pay an amount of Rs.6,60,000/- for execution of sale deed as the respondent has not constructed the house on the site in question which amount is 25% of the rate prescribed.

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The site was allotted to the father-in-law of the respondent on 15.11.1991. The terms of the lease executed includes clauses-3 and 12, which we have already reproduced above. Rules 19 and 20 of the Karnataka Urban Development Authorities (Distribution of

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Sites) Rules, 1991 of which the reference is made by the learned Single Judge, governs the grant of lease to the respondent have already been reproduced at paragraph No.12 above.

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Before we deal with the submissions of the counsel for the parties, it is necessary to state here that the State Government had issued a notification dated 20.03.2013 whereby the Government, in exercise of powers conferred under Section 71 of the Karnataka Urban Development Authorities Act, 1987, amended Rule 20 of the Karnataka Urban Development Authorities (Distribution of Sites) Rules, 1991, thereby adding “Proviso” clauses after clauses 3(a) and 3(b) in the following manner (the English Translation as filed by the counsel for the appellant):

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“Provided

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In wherein allottees cases who are allotted sites allotted as per Karnataka Urban development authorities site allotment Rules, 1991, have directly alienated/ sold by constructing house/ without constructing the house by violating the allotment condition within 10 years lease period, sale deed

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shall be executed by collecting penalty at the rate of 50% of the registration charges fixed by the government from time to time from the purchasers;

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b. In cases wherein allottees who are allotted sites allotted per as Karnataka Urban development authorities site allotment Rules, 1991, have directly alienated/ sold by constructing house/ without constructing the house after completion of 10 years lease period without obtaining the Sale Deed, sale deed shall be executed by collecting penalty at the rate of 25% of the registration charges fixed by the government from time to time from the purchasers;

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c. In cases wherein allottees of the sites who are allotted sites during the period from 2001 to 2005 [i.e. during the period from 1991 till amendment rules 2005 under Government notification No.UDD 123 BenRuPra issued as per amendment to Karnataka Urban development Authorities (site allotment) Rules, 1991 under Government notification No. NaAaE 257 MIB 98 dated 15/11/2001 have not yet obtained Sale deed, sale deed shall be executed by collecting penalty at the rate of 25% of the registration charges fixed by the government from time to time from the purchasers;

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d. Only in cases of purchase of sites/ houses through GPA by entering into GPA before obtaining Sale deed by constructing/ without constructing

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house before completion or after completion of the lease period by the allottees of sites allotted with sites as per Karnataka urban development authorities site allotment Rules, 1991, Sale deed shall be executed by collecting penalty at the rate of 50% of the market value fixed by the Sub-Registrar from the purchasers.

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For the purpose of this appeal, we are concerned with proviso (c).

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It may also be stated here that learned Senior Counsel for the respondent has also filed translation of amendment to Rule 20 in the following manner:

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"PROVIDED that

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(a) Where an allottee of a site allotted under the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 alienates the same either before or after construction of a building thereon, within the lease period of 10 years, the Authority shall execute a sale deed after collecting from the purchaser a penalty of a sum equivalent to 50% of the guideline value fixed by the Government from time to time.

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(b) Where an allottee of a site allotted under the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 alienates the site

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after completion of the lease period of 10 years, whether with or without construction of a building thereon, but before the Authority has executed a sale deed in his/her favour, the Authority shall execute a sale deed after collecting from the purchaser a penalty of a sum equivalent to 25% of the guideline value fixed by the Government from time to time.

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(c) Where allottees of sites allotted between the years 2001 and 2005 (i.e., between the commencement of the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 as amended vide Government Notification bearing No. �� 257 �� 98 d ated 15-11-2001 AND the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 as amended vide Government Notification bearing No. �� 123 �� 2005 dated 23-5-2005) have not secured a sale deed of the site in his/her favour, the Authority shall execute a sale deed after collecting from the allottee a penalty of a sum equivalent to 25% of the guideline value fixed by the Government from time to time.

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(d) Only in cases where an allottee of a site allotted under the Karnataka Urban Development Authorities (Allotment of Sites) Rules 1991 has alienated the site by executing a general power of attorney (GPA), either with or without construction of

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a building thereon, whether before or after completion of the lease period of 10 years but before execution of a sale deed by the authority, the Authority shall execute a sale deed after collecting from the purchaser a penalty of a sum equivalent to 50% of the guideline value fixed by the Government from time to time.”

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Pursuant to certain communications of the appellant-Authority dated 10.09.2019 and 05.11.2013, the Government of Karnataka has addressed a communication

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dated 20.12.2013 to the Commissioner, Mysore Urban Development Authority, the translation of which reads as under:

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“Sub: Issuing Sale Deed for the sites allotted from the Authority reg.

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Ref: 1. Your letter No.MUDA/AaAaSaSha/ 2013-14 dated 11/09/2013.

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2. Your letter No.ManUDA /AaDruPa/13/2013-14 dated 05/11/2013. ***

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With regard to above subject, on examining the proposal in the letter at reference, the following clarification is issued:

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Amended rules published through Government notification dated 20/03/2013 has come into force

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from the date of publication of the notification and it is mentioned that, the said amended rules are applicable only to the sites allotted prior to the said amendment Rules, 2005. In the said amendment order, no amendment is made to the provisions of rule 19 of Karnataka Urban development authorities site allotment Rules, 1991. Amendment inserting new provisions by amending Rule 20 is applicable only to limited extent i.e. for the sites allotted by various authorities from 1991 to 2005. This amendment rule is not applicable to the sites allotted after 2005. Wherefore, whatsoever rule 19 of Karnataka Urban development authorities site allotment Rules, 1991, I am directed to inform you to examine with regard to issuing Sale deed by restricting the amendment to Rule 20 only to the sites allotted between 1991 and 2005.”

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Suffice to state, the English translations filed by

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both the counsel are at variance. Sri. Vivekananda did argue that the proviso inserted in the year 2013 did not make any provision in respect of the allottees of sites between the years 1991 to 2001. But, as the appellant received several requests from the allottees of sites from 1991 to 2001 for providing the benefit of execution of sale deed with penalty, the appellant sought clarification from

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the State Government; in response to which, the State Government clarified that the appellant may consider the execution of sale deeds by restricting the amended provisions to Rule 20 only to the allotments made from 1991 to 2001.

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The submission of Sri. Vivekananda that it is in view of the clarification of the State Government dated 20.12.2013 that the appellant had considered the request of the respondent for execution of the sale deed, is appealing, as without construction of the site, the sale deed could not have been executed.

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The learned Single Judge held that a single rupee in penalty cannot be imposed against a citizen except in accordance with law as the rules do not permit imposition of such penalty on the allottee. His conclusion is also that the clarification cannot be relied upon to impose penalty. The submission is appealing on a first blush. But it is seen an anomalous position has arisen in as much as an allottee between the years 2001 to 2005, who has not constructed the site is fastened with penalty, but not an allottee of the

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prior period between 1991 to 2000. In fact, Sri. Vivekananda has submitted that hundreds of allottees have obtained the benefit of the said rule by paying 25% penalty of the guidance value and if at the insistence of the respondent, it is held otherwise, there would be serious financial repercussion on the appellant, as every allottee who has paid 25% penalty would seek refund.

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In any case, what is also required to be seen in the facts of this case is, the conduct of the respondent. The site in the case in hand, was allotted in the year 1991. It was not constructed till 2016 when a request for execution of the sale deed was made. This request was after 25 years of allotment. So, in other words, the construction which was to be made within 2 years or for that matter 10 years was not made; even after 25 years. There is nothing on record to confirm that construction has been made as of today. Be that as it may, it is on the representation of the respondent dated 03.05.2016 for execution of the sale deed that the appellant had vide its

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endorsement dated 23.11.2016, stated as under (being

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the English translation):

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“ENDORSEMENT

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Sub: Sale deed sought for site No.7/10 measuring 40x60 feet at Saathagalli ‘D’ Group layout, Mysore city - reg.

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Ref: Your application dated 03/05/2016.

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* * *

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With regard to above subject, on examining the request made by you, you have sought sale deed for site No.7/10 measuring 40x60 feet of Saathagalli 'D' group layout. You are hereby informed that, as you have not constructed house in the said site, action regarding your request would be taken on submitting the receipt by paying 25% portion at the present rate amounting to Rs.6,60,000/-.”

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The thrust of the communication is that, as the respondent has not constructed any building in the site, action on her request would be taken on her submitting the receipt by paying 25% penalty i.e., Rs.6,60,000/-. From the contents of the letter, it is clear that it is because of non-construction of the site that the penalty was imposed. The respondent had an option, as stated by Sri. Vivekananda, that she could have constructed the site

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and then approached the appellant for execution of the sale deed. But the respondent without constructing the site, by stating without prejudice, has paid the penalty of Rs.6,60,000/- to the appellant and got executed the sale deed. In such circumstance, the plea that payment was without prejudice, shall be of no effect/no consequence and cannot enure to the benefit of the respondent when the respondent had the option to construct the site before approaching the appellant for execution of sale deed. In fact, even under the rules, the execution of sale deed is only after the construction of the site.

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The respondent having opted for execution of sale deed without construction of site and paid the penalty, even if it is without prejudice, could not have resulted in the challenge to the endorsement dated 23.11.2016. In fact we find the appellant had, in its response to the writ petition, taken a stand, if the respondent/petitioner had raised the objection on the demand made by the appellant, the appellant would have insisted the respondent/petitioner to construct the

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residential house on the site and thereafter approach the appellant-Authority for execution of the registered sale deed.

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So, we are of the view that the learned Single Judge has erred in not considering the above factual aspect of the case showing the conduct of the respondent which shall surely disentitle the respondent the prayer(s) as sought by her in the writ petition.

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Sri. Vivekananda is also justified in relying upon the judgment of learned Single Judge of this Court in the case of I.S. Ponnappa (supra), wherein the learned Single Judge has, in paragraph No.8, on identical facts in respect of the same Rule 20, stated as under:

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“8. A perusal of Sub-clause (3) To the said Rule 20, proviso 3 would indicate that in the event of allottee wishing to obtain a sale deed without complying the requirements of lease-cum-sale agreement, 25% penalty would have to be levied. The said proviso (3) would only apply if a allottee were to seek for execution of the sale deed in his favour without complying the requirements of the lease-cum-sale agreement. In the event of the conditions of lease- cum-sale agreement having

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been complied with, the question levy of any penalty would not arise.”

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Insofar as the judgments relied upon by Sri. Arun Kumar, learned Senior Counsel for the respondent are concerned, in the case of Sidharth -Vs.Dayanand Patil and Another (supra), the Court was concerned with an endorsement dated 14/16.08.2023 cancelling the allotment made in the year 2009 in favour of the petitioner therein. The Division Bench was concerned with Rule 19 of the allotment rules of the Urban Development Authority and not Rule 20 or for that matter, imposition of penalty for execution of sale deed. Hence, the judgment is distinguishable. Insofar as the judgment in the case of Lalithamma -Vs.- Belgaum Urban Development Authority (supra) is concerned, there also the issue was in respect of cancellation of the allotment for the reason the construction was not made. In the case in hand, though construction was not made, but there is no cancellation, rather it is a case seeking execution of sale deed without construction. The other judgments on which

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