On Escalation of Cost

left unanswered in 1993 were addressed in 64 cases on housing, all of which were decided together in 2002. The decision of all these cases was given in a lead case of Ghaziabad Development Authority versus Dinesh Kumar. Some of these cases went into further appeal and the final verdict on all issues, applicable to all these cases, was given in 2004 in the matter of Ghaziabad Development Authority versus Balbir Singh.

The issue of escalation of cost was also discussed in all the above SC cases. The court held that a board could charge more on the basis of prevailing rate at the time, if cost of material increased in the duration of the construction of a house.

Interestingly, at the same time, SC also made it clear that in circumstances where allottee was not able to pay more due to his financial situation or other constraints, he could surrender the allotment and he would then be entitled to interest on his deposits. This consumerfriendly order stands against a regular clause in the prospectus issued by the housing boards which says deduction will be done on the deposited amount if the applicant surrenders his application.

Whatever the case may be, courts interpret the law as spelled out in their own rules; they do not change the basic structure of the legislature.

Points to Note