Introduction:

In a landmark ruling, the Punjab & Haryana High Court has quashed the Greater Mohali Area Development Authority’s (GMADA) unilateral imposition of additional charges on subsequent buyers of plots allotted under its land pooling scheme. The case, Daulat Ram Bhatti v. State of Punjab [along with connected matters, 2025 LiveLaw (PH) 98], was heard by Justice Sureshwar Thakur and Justice Vikas Suri. The petitioners, who were either original allottees or transferees of plots allotted by GMADA, challenged the imposition of charges such as the Preferred Location Charge (PLC) and other financial demands introduced after the initial allotment. The Court held that GMADA could not unilaterally alter contractual terms or impose extra financial burdens not specified in the original scheme, declaring such novation as ultra vires to the constitutional right of property. The ruling ensures that subsequent buyers retain the same rights as the original allottees, marking a significant victory for property rights and contractual sanctity. The Court also directed GMADA to refund any additional charges already paid by the petitioners with 6% interest per annum and to deliver encumbrance-free possession of the plots within a fortnight.

Arguments of the Petitioners:

The petitioners, consisting of both original allottees and transferees, contended that the additional charges imposed by GMADA were arbitrary, unjust, and ultra vires to the contractual agreement initially entered into under the land pooling scheme. They argued that the scheme, as per the original allotment letter, did not include any provision for additional financial burdens beyond the agreed amount. The imposition of these charges at a later stage amounted to an impermissible unilateral modification of contractual obligations, which violated their property rights under Article 300A of the Constitution. The petitioners further asserted that since the scheme allowed transfers and facilitated them upon payment of a transfer fee, the transferees inherited all rights of the original allottees. Any attempt to differentiate between them was legally untenable and lacked any rational basis. Additionally, they pointed out that the demand for a Preferred Location Charge (PLC) and other fees was not only absent in the original scheme but was also an act of unjust enrichment by GMADA. The petitioners emphasized that GMADA’s actions resulted in a breach of contractual sanctity, causing financial hardship and uncertainty for property owners.

Arguments of GMADA:

Opposing the plea, GMADA argued that subsequent buyers of plots should not be treated on par with the original landowners who received plots under the land pooling policy. The authority contended that the additional charges were necessary due to increased development costs, which necessitated cost recovery from those who acquired the plots later. GMADA submitted that as per its policy, the original landowners were given plots in lieu of their acquired land, and their entitlement could not automatically be extended to subsequent transferees who purchased the plots at market value. The authority also defended its decision by stating that the added charges were levied to maintain fairness in urban development and prevent speculative gains by property traders. GMADA maintained that development costs had escalated since the time of initial allotment, and it was justified in recovering a proportionate amount from later buyers to balance the financial burden. It also suggested that the additional charges were a reasonable exercise of its administrative authority and did not constitute an arbitrary or capricious action.

Court’s Judgment:

After carefully considering the arguments, the Punjab & Haryana High Court ruled in favor of the petitioners, declaring GMADA’s imposition of additional charges as legally untenable and unconstitutional. The bench held that both original allottees and subsequent transferees stood on an equal footing under the land pooling scheme and that there was no intelligible differentia justifying differential treatment between them. The Court found that the demand for Preferred Location Charges (PLC) and other additional fees was an impermissible novation of the original contract, as these conditions were not explicitly mentioned in the original allotment letter. It observed that unilateral imposition of financial burdens violated contractual sanctity and amounted to an arbitrary expropriation of property rights. The Court further noted that the absence of any explicit provision in the original scheme for such additional charges rendered GMADA’s actions ultra vires. It rejected GMADA’s argument regarding increased development costs, stating that any such cost escalations should have been accounted for within the original scheme rather than retrospectively imposed on subsequent transferees. Accordingly, the Court directed GMADA to refund all amounts collected under the impugned charges, with simple interest at 6% per annum from the date of deposit, within two months. Additionally, the Court mandated GMADA to hand over encumbrance-free possession of the plots to the petitioners within fifteen days, ensuring that their rights as lawful allottees and transferees were fully upheld.