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Service & Administrative LawSupreme Court of India

Madhya Pradesh Housing and Infrastructure Development Board v. B.S.S. Parihar & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 1801 of 2015)Decided 21 Jul 2015
Civil Appeal No. 1801 of 2015
Justice V. Gopala Gowda · Justice R. Banumathi

Background

The appellant-Board advertised a "Riviera Towne" housing scheme in Bhopal in 2007, with an explicitly provisional advertised price, to be finalised only after the scheme's completion. After allotment and partial payment, the Board years later demanded a hugely enhanced final price, based on the District Collector's land-valuation guidelines for 2011-12, that was roughly double what allottees had anticipated. The allottees challenged this before the Madhya Pradesh High Court, which ruled in their favour at both the single-judge and Division Bench stages, quashing the Board's enhanced demand entirely. The Board appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that the Board did have the statutory right under Section 50 of the M.P. Griha Nirman Mandal Adhiniyam, 1972 and its own Accounts Rules to fix the final price only after the scheme's completion, since the advertisement itself made the initial price explicitly provisional, so the High Court was wrong to hold the Board powerless to revise the price at all. However, the Court also found that the Board's method of pegging the final price to the Collector's much higher 2011-12 market-valuation guidelines, instead of its own more moderate cost-based rules, was arbitrary, unreasonable, and failed the constitutional test of proportionality. The Court therefore struck a middle path itself: it fixed the price at the Board's own 2009 cost figure of Rs. 16,500 per sq. metre, escalated by 10% per year up to the date of demand, with 9% annual interest from the date of demand until payment.

Lesson Learnt

A public housing authority can lawfully charge a buyer the "final" price only once construction is complete even if an earlier price was quoted, but that final price must still be fair and proportionate to actual costs: a buyer is not bound by an arbitrary markup simply because the advertisement reserved the Board's right to revise the price.

Madhya Pradesh Housing and Infrastructure Development Board v. B.S.S. Parihar & Ors. – Legal Case Shots | LegalAware