Property - Lease - Petition filed for direction to concern authority for renewal of lease - Petitioner asserted that land in question is ‘Nazul’ land - Lease condition provided for right to transfer or alienate and inheritance - Lease condition postulates that on expiry of lease period Authority will renew lease for further period on same terms and conditions - Claim of petitioners rejected - Court directed petitioners to file proceedings before appropriate authority asking for relief as may be permissible in law
Bombay High Court
Smt. Jaikumari Amarbahadursingh vs The State Of Maharashtra, Through on 30 September, 2008
Bench: A.M. Khanwilkar, R. C. Chavan
Citation: 2009 (1) ALL M R343 ;
1. In all these matters, overlapping issues have been raised by the respective Petitioners, for which reason, by consent, the same were heard together and are being disposed of by this common Judgment.
2. These matters broadly form two groups. One group pertains to land from erstwhile Central Provinces area (i.e.Nagpur, Bhandara, Gondia, Wardha and Chandrapur). The second group is in relation to lands from erstwhile Berar area (i.e.Amravati, Akola, Washim, Buldhana and Yeotmal). In most of the Petitions, it is asserted that the land in question is Nazul land. In other words, only in few matters the land in question may be a non-Nazul land. Nevertheless, the issue that needs to be addressed in all these matters is common. The term Nazul land as observed by the Apex Court in Narain Prasad Aggarwal V. State of M.P. reported in (2007) 11 SCC 736 means land or : 5 :
buildings in or near towns or villages which have escheated to the Government; property escheated or lapsed to State; commonly applied to any land or house property belonging to the Government either as an escheat or as having belonged to a former Government. As per Revenue Book Circular Section 4, Nazul Land is a land which has "site value" as opposed to "Agricultural Value". It further states that it is plots under building whether Government or Private encompassing grounds, parks, plots as used as building markets Symmetric, Potential building sites and lands likely to be needed for public purposes in near future. Nazul will also include the Government plots occupied by or vested in local bodies for schools, sarias, pounds, market.
3. Insofar as the matters pertaining to the Central Provinces Area, those matters can be further sub-divided into two groups. In the first group of cases, the Petitioners assert that the land in question was allotted to them and/or their predecessors pursuant to a Lease Deed executed by the competent Authority. In the second group of : 6 :
cases, it is asserted that no Lease Deed was either executed and/or is available.
4. In relation to matters where land in question was allotted pursuant to a Lease Deed, it is the case of the Petitioners that the lease condition provided for right to transfer or alienate and inheritance. Further, the lease condition postulates that on expiry of the lease period the Authority will renew the lease for further period on the same terms and conditions. However, on expiry of the lease period, the competent authority failed to execute the requisite renewal lease in favour of the concerned Petitioners; and instead was insisting that the Petitioners should accept new conditions to be incorporated at the time of renewal of lease, which conditions are prejudicial to the right and interest of the Petitioners. In the said set of cases, it is stated that insistence by the Authority to impose any new condition such as putting restriction on the right to alienate the land only after taking prior approval of the Competent Authority and upon payment of unearned : 7 :
income, was ex-facie illegal, impermissible and ultra vires. Whereas, in law, the Authority was obliged to renew the lease on the same terms and conditions which obtained in the former lease.
5. In cases where no lease is executed and/or available, the Petitioners are relying on the governing provisions of the Act and the Rules as were applicable at the relevant time in the concerned areas as well as the extant regulations governing grant of lease and the terms and conditions thereof. Even these Petitioners assert that they were enjoying right to transfer and inheritance. For that reason the Competent Authority was bound to recognise transfer of land effected by the lessee/grantee in favour of third party, irrespective of permission therefor of the Competent Authority is not obtained. For, there is no obligation to take prior permission- as the Petitioners(Grantee) had complete and unconditional freedom of alienation and inheritance of the land in question. It is also asserted that neither the concerned Act nor the Rules contemplate any power bestowed upon the Competent Authority to claim or : 8 :
levy unearned income as pre-condition to legitimise the transfer by the grantee/lessee.
6. Insofar as Petitions from Berar area, in almost all cases (except about 14 matters), the Petitioners have asserted that they have had a 'B' tenure patta in relation to the land in question. As a result, they were recognised as occupants Class-I having complete and unconditional right of alienation and inheritance of the concerned land. It is asserted that having regard to that status, it was not open to the Competent Authority to insist for its prior permission to legitimise the transfer of the land in question. Even in this set of Petitions, it is asserted that there was no power in the revenue authority to levy or claim unearned income as precondition to legitimise the transfer in respect of the concerned land. To buttress this stand, the Petitioners have relied on the relevant provisions of the Act and Rules as applicable at the relevant time as also the extant provisions of law. In cases where the occupant does not have a 'B' tenure patta (occupant Class I status), this plea is unavailable. For, the : 9 :
occupation or holding of land would not be free from condition regarding alienation and inheritance.
7. Be that as it may, during the pendency of most of these cases, the State Government issued Government Resolution dated 19th June 2007. The issues raised in the present set of Petitions would revolve around the terms of the said Resolution issued by the Deputy Secretary, Revenue and Forest Department. The preamble of the said Resolution records that the Government considered the recommendation made by the Committee to the Government and other facts, whereafter the Government took decision regarding the renewal of lease, regularisation of violation of terms and conditions of allotment/grant of Government land in the region. The free translation of the said Government Resolution has been placed on record. The said Resolution reads thus:
"REVISED POLICY ABOUT THE
NAZUL/GOVT. LAND LEASED IN
NAGPUR & AMRAVATI REGION.
: 10 :
GOVT.OF MAHARASHTRA
Revenue & Forest Department
Govt.Resolution No.land 2499/C.N.23/J-8,
Mantralaya, Mumbai - 400 032,
Date:- 19th June, 2007.
INTRODUCTION :-
The fact of bringing coordination in the existing orders pertaining to Nazul/Govt. lands in Nagpur & Amravati region leased for residential, commercial & Industrial purpose by the then Madhya Pradesh or C.P.& Berar Govt. and renewal of lease,regularization of violation of condition and in view of other matters,the fact of determining revised & full proof policy was under the consideration of the Government. In various writs filed before the Hon'ble Court has observed that prima facie the assessment of unearned income being done for the violation of conditions of lease in Vidarbha is more. Similarly as ordered by the Hon'ble High Court,a one man committee was set up for making recommendations in connection with unearned amount to be assessed for violation of terms & conditions.On taking into consideration recommendations made by the committee to the Govt.and other facts, the Govt. has taken following decision in view of renewal of lease,regularization of violation of terms & conditions and other facts of Nazul/ Govt. lands in Nagpur & Amravati region given on lease for residential,commercial and Industrial purpose by the then Madhya Pradesh & C.P. & Berar Govt.
GOVT.RESOLUTION:-
GOVT.RESOLUTION
1. The provisions in Madhya Pradesh Land Revenue Code,1954 pertaining to the lease of Nazul Lands in Nagpur & Amravati Region and the rules incidental thereto framed by the then Madhya Pradesh Govt. on 22nd May, 1956 and amendments thereto carried out by the Govt. of Maharashtra on 23.05.1961 and 14.8.1963 are repealed hereby. : 11 :
2. As to the regularization of the violation of terms & conditions:
(A) Those who have violated the terms & conditions in the lease of the land or transferred lands unauthorizedly for more than ones,in such cases the lands in questions in whose possession those lands are shall be regularised in the name of that person as below:
------------------------------------------------------------- Point The land Land is Land is is currently currently
currently used for used for
used for commerc Educatio
residenti ial/ nal/
al industrial Charitable
purpose purpose purpose.
----------- --------------- ---------- ---------- ---------- Regulari- (1) In case of 20% 25% 10% zation of submission of unearned unearned unearned Violation registered amount of amount of amount of of Terms & document as the the the Conditions evidence for market market market /unautho purchase of value of value of value of rized land or change the land the land the land transfer. of user of the as on the as on the as on the land. date of date of date of violation violation violation
of the of the of the
condition. condition. condition.
(2) In case 20% 25% 10% registered unearned unearned unearned document is amount of amount of amount of not submitted the the the then in such existing existing existing cases it is market market market necessary to value of value of value of register first the land. the land. the land. the transfer
and after
submission of
registered
document.
----------------------------------------------------------- : 12 :
(B) While acting as above,the responsibility of making available the authorised papers pertaining to the transfer or change of user shall be of the concerned person.
(C) Those lessee who have used the land jointly for residential, commercial,social,educational purpose then in that case the unearned amount admissible in para 2 (A) above shall be charged in the proportion of land used for that purpose as per the admissible F.S.I.
(D) In cases in which both the terms for
instance unauthorized sale purchase and change of user have been violated then in such cases the action as per para (A) and (2) above shall be taken.
3. As to the allotment of land by ownership right.
(A) 4% rise shall be done per year in the amount of annual lease in that year in which the lease was expired from the date of its expiry till the issuance of orders of Govt. in that regard and arrears of lease till the date of this order be circulated and arrears of said lease shall be recovered from the person in whose possession it is at present and later on from the date of this order the land shall be categorized in occupancy Class-2 by charging the amount of ownership right as below: -------------------------------------------------------------- Point The land is Land is Land is currently currently currently used for used for used for residential commercial/ Educational/ purpose industrial Charitable purpose purpose.
-------------- -------------- -------------- -------------- Allotment of 20% amount of 25% amount of 10% amount of Land on ownership ownership ownership ownership right of the right of the right of the right existing existing market value market value market value of the land. of the land. of the land.
-------------- -------------- -------------- -------------- : 13 :
(B) In cases in which the lease was not expired and the concern lessee wants the land on ownership right, then in such cases the option of taking land on ownership right by paying amount of ownership right as per para 3 (A) above shall be kept open for the lessee.
(C) In such cases interest shall not be charged on the outstanding amount for the period from the date of issuance of Govt. resolution and serving of notice for payment of amount.
(D) In case of above paras Nos. 2 & 3 that
means the provisions of the options of regularization of terms & conditions/ unauthorized transfer and allotting land on ownership right shall be applicable for only two years from the date of this order. Thereafter, action as per existing policy will be taken.
4. Holding land on lease.
The earlier Govt.Resolution NO.Revenue &
Forest Department No.LND-4981/14707/G-8, Dated 11.1.1983 & Govt. Resolution No.Revenue & Forest Department No.LND- 4977/405/C.No.173/G-8, Dated 28.1.1983 issued for Amravati & Nagpur region regarding the renewal of lease are repealed
hereby. Action as below shall be taken in
case of those lessee who wants to hold land
on lease instead of ownership right.
(A) 4% rise shall be done per year in the amount of annual lease in that year in which the lease was expired from the date of its
expiry till the issuance of orders of Govt.
in that regard and arrears of lease till the date of this order be calculated and arrears of said leased shall be recovered from the
person in whose possession it is at present. No interest shall be charged till issuance
of notice to the lessee for payment of the
said amount. Thereafter, the lease shall be
renewed for further 30 years and while
renewing as such;
: 14 :
-------------------------------------------------------------- Point The land is Land is Land is currently currently currently used for used for used for residential commercial/ Educational/ purpose industrial Charitable purpose purpose.
-------------- -------------- -------------- -------------- Allotting Annual lease Annual lease Annual lease Land on equal to the equal to the equal to the lease prime lending prime lending prime lending rate on 20% rate on 25% rate on 10% amount of amount of amount of the existing existing existing market value market value market value of the land. of the land. of the land. -------------- -------------- -------------- -------------- (B) In this manner the lessee can purchase land on ownership right by paying amount of
ownership right as provided in para 3 above
in future (However upto 2 years from the
date of this order) for this purpose lease
shall be charged as per para 4(A) above till the date of sanctioning land on ownership
right and land shall be sanctioned on
ownership right.
(C) Those lessee who have used the land combinely for residential, commercial, social, educational purpose then in that
case the amount of ownership right shall be
charged as per para 2 & 3 above and amount
of lease shall be charged as per para 4 in
the proportion of land used for that purpose as per the admissible F.S.I.
(D) Every after 10 years the rate of the lease shall be revised on the basis of the market rate prevailing at that time by assessing lease as per the provisions in (A) above.
5. As to the Transfer hereafter/Change of User. (A) After taking action as above as per para 2 : 15 :
or para 3 above, regularizing the violation
of terms & condition or change of user, on
regularizing the lease in the name of the
new person or in case if the land is in the
name of the original person in the absence
of any transfer or on sanctioning land on
ownership right or lease as per para 3 & 4
above, while granting permission hereinafter for every sale / transfer or change of user
and moreover while regularizing unathorized
transfer / sale hereinafter or regularizing
the change in user, the unearned amount
shall be recovered as follows:
------------------------------------------------------------- Point The land Land is Land is is currently currently
currently used for used for
used for commerc Educatio
residenti ial/ nal/
al industrial Charitable
purpose purpose purpose.
------------ --------------- ---------- ---------- ---------- Sale / Granting 20% 25% 10% Transfer or prior unearned unearned unearned change in permission. amount of amount of amount of user the the the hereinafter market market market (Every value of value of value of time). the land the land. the land. (only in
case of
transfer)
Regularization 40% 50% 20% of transfer/ unearned unearned unearned change in user amount of amount of amount of without the the market the market obtaining market value of value of prior value of the land. the land. permission. the land
(only in
case of
transfer)
------------ --------------- ---------- ---------- ---------- : 16 :
(B) The provisions in this para will be applicable for the State of Maharashtra till coming into existence revised policy regarding violation of terms and on coming
into existence the revised policy action
shall be taken as per the provisions in that policy.
(C) On sale/transfer of land sanctioned on lease as per the above provisions, the purchaser
of land will hold the land on lease and
moreover on sale/transfer of land sanctioned on ownership right, the purchaser of said
land will hold the land in occupancy class-2.
6. The current market rate of the land for all the abvoe purpose shall be determined on the basis of the ready reckoner and for this
purpose the rate of developed land shall be
considered (cost of construction on the land shall not be considered in the said rate
whereby the rate of the said land will be
less than the rate of the open land).
7. The powers for allotting land on ownership right or renewal of lease as the case may be as per this Govt. Resolution are hereby
conferred upon the Collector.
8. While taking action in this regard as per para 2, 3, 4 & 5 above, the Collector shall
calculate the amount to be paid as per rules on due verification of the request of the
lessee and inform the concern for payment of the said amount and on making available the
copy of the challan in that regard by the
concerned, the Collector shall issue necessary orders in that regard.
The said order issued with the concurrence
of the finance department vide its unofficial reference No.267/07/Exp-9, dated 6.6.2007.
The said Govt. Resolution has been made
available on the web site of the Govt.(www.maharashtra.gov.in) and its Computer : 17 :
Code No.is 20070619124117001.
By Order & in the name of the Governor of Maharashtra,
Sd/-Rajendra Surve
Dy.Secretary,
Revenue & Forest Department
8. At the cost of repetition, we may reiterate that the principal challenge in all these Petitions is to the power of the Revenue Authority to - (i) impose new condition in the subsisting lease providing for seeking prior permission of the Authority to legitimise the proposed transfer of the land in question;
(ii) insist for inserting new condition requiring the grantee/lessee to take prior permission of the Revenue Authority before effecting transfer of the land in question at the time of renewal of the lease which has already expired or was likely to expire in the near future;
(iii) delete the existing condition in the lease which permits the lessee of free transfer or : 18 :
alienability and inheritance;
(iv) impose condition to claim/levy unearned charges so as to legitimise and regularise the transfer of the land by the grantee/lessee; and (v) demand enhanced annual rent in respect of land in question which was not only ex-facie unjust and unfair but absurdly excessive.
9. According to the Petitioners, if the original Lease Deed does not contain restriction regarding permission of the Competent Authority or of payment of unearned income to recognise or legitimise the proposed transfer of the land in question, it is not open to the Revenue Authority to insert such condition at a later point of time or for that matter, at the time of renewal of the lease. In that, in law, the the Competent Authority is obliged to honour the terms of the subsisting lease as it is as also to renew the lease on same terms and conditions which prevailed during the earlier lease period. The Authority could do otherwise only if the provisions of the : 19 :
Municipal Law expressly empowers it in that behalf. For the present, neither the erstwhile laws nor the extant regulations expressly authorise the Revenue Authority to do so. To buttress this contention the Petitioners have essentially relied on the exposition of the Division Bench of our High Court in the case of State of Bombay vs.Damodhar Tukaram Mangalmurti in Appeal No.699 of 1946 and 700 of 1946 dated 19th June 1959, which part of the said decision has been upheld by the Apex Court in Civil Appeal No.215 of 1962 filed by the State of Bombay (now the State of Maharashtra) decided on August 27, 1964. The said decision was rendered in a Suit filed by the Plaintiff therein in representative capacity. That decision having become final, is binding on the State and its Officials. The impugned action of the Revenue Authorities which is inconsistent with the principle expounded in the said decision, will have to be treated as void ab initio. Even with regard to the grievance that it is impermissible to increase the annual lease rent at absurdly excessive level, according to the Petitioners, has been answered in the said Judgment. The Petitioners would submit that the : 20 :
well established position is that the lease amount should be just and fair and that principle should be kept in mind even at the time of renewal of lease. These are the broad issues that have been agitated before this Court in all these matters.
10. For the view that we would take, we do not think it necessary to burden this judgment with the facts of each case. Instead, we would deal with the general issues and arguments pressed before us at the time of hearing; and relegate the parties before the concerned Revenue Authority who in turn will have to decide each matter on its own facts applying the established legal principles and the observations in the present decision. In the said enquiry the concerned Petitioner to succeed, will necessarily have to establish before the Revenue Authority that his occupation of the land in question was as occupant Class-I as defined in Section 29 of the Maharashtra Land Revenue Code, 1966 (hereinafter referred to as 'the MLRC') or that he held the land in full occupancy and the grant/lease (original and/or renewed) in his favour did not place any restriction on his right to : 21 :
transfer the land in question in accordance with the provisions of any law relating to land revenue in force.
11. Insofar as Writ Petition No.1607 of 1990 and Writ Petition No.908 of 1991 are concerned, these Petitions pertain to land governed by the provisions of Nagpur, Improvement Trust Act, 1936. It is common ground that provisions of MLRC will not be applicable to those two cases. Even in those two cases, some of the questions raised in other companion cases have been raised, for which reason, the same are dealt with together.
12. The principal question that needs to be examined is: whether the State has authority to levy or claim unearned income? The argument of the Petitioners is twofold.
13. In the first place, contends Counsel for the Petitioners that claim of unearned income by the State Government is in the nature of levy of tax. If so, that claim will impinge upon the subject covered by Entry 82 of List I of Schedule VII of : 22 :
the Constitution of India. Reliance was placed on the decision of Apex Court in the case ofCalcutta Municipal Corporation & Ors. vs. M/s.Shrey Mercantile Pvt.Ltd. & Ors. reported in AIR 2005 SC 1879.
1879 The Apex Court has noted the main distinction between tax and fee. It has observed that a charge or fee, if levied for the purpose of raising revenue under the taxing power is a "tax". Similarly, imposition of fees for the primary purpose of "regulation and control" may be classified as fees as it is in the exercise of "police power", but if revenue is the primary purpose and the regulation is merely incidental, then the imposition is a "tax". In that case on analysing the provisions of the relevant Regulations the Court opined that the inevitable conclusion is that the levy of fees on ad volarem basis was in "exercise of power of taxation" under the Act to augment the revenues primarily and not as a part of regulatory measure. It found that no special benefit results to the transferee who is made statutorily liable to inform the Corporation of the change, if any, in the name of the person primarily liable to pay the tax. Further, the : 23 :
mutation enquiry is instituted in the interest of the Corporation for tax purposes and not for the benefit of the tax payer.
14. Indubitably, the claim regarding unearned income will fall within the expansive definition of Land Revenue in Section 2(19) of the MLRC, which reads thus:
"2.Definitions
In this Code, unless the context otherwise requires.-
(1) to (18) ......
(19) "land revenue" means all sums and
payments,in money received or legally claimable by or on behalf of the State
Government from any person on account of any land or interest in or right exercisable
over land held by or vested in him, under
whatever designation such sum may be payable and any cess or rate authorised by the State Government under the provisions of any law
for the time being in force; and includes
premium, rent, lease money, quit, rent, judi payable by a inamdar or any other payment
provided under any Act, rule, contract or
deed on account of any land;
15. The question is whether the amount claimed by the Revenue Authority towards "unearned income" to legitimise the proposed transfer of the land in question is for the purpose of raising revenue : 24 :
under the taxing power as such. The answer is an emphatic 'No'. For, the claim towards unearned income is essentially to levy charge in respect of the property in question legally claimable by the Competent Authority from the Grantee or the prospective purchaser as the case may be in relation to the land or interest in or right exercisable over land held by or vested in him. That claim is ascribable to power of regulation and control in respect of the land, which is exercised as a police power of the State. Indeed, the State would incidentally generate revenue but the primary purpose of the levy of charges under designation "unearned income" is regulation and control of the Government property. The levy of unearned income being land revenue is also specifically referable to, amongst others, Entries 18 and 45 of list II of the Seventh Schedule of the Constitution. Notably, Entry 45 is an inclusive entry. It postulates all kinds of land revenue or charges; and would envelope charges collected from the grantee or the prospective purchaser to regulate and control the land(Government property) or interest in or right exercisable over land held by or vested in him. : 25 :
16. The demand of unearned income is essentially relating to the difference between the premium paid by the grantee/allottee at the time of original allotment and the market value of the plot at the time of proposed transfer. That is a price to be paid towards the entire bundle of rights held by the State Government in the land as landlord and enabling the grantee/lessee only to transfer his remaining rights which were enjoyed by him or her under the grant/lease. It is well established position that the Government is the real owner of the land. If the original grant/lease is not exempted from revenue, the Legislature of the State has power to direct levy of revenue on all lands under whatever title they may be held whenever and so long as the exigencies of the State may render such levy necessary. That power is vested in the Legislature, which position is restated in the proviso to Section 64 of the MLRC. If the Legislature were to enact law on that subject, the Authority could legitim
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