SMT.JAIKUMARI AMARBAHADURSING & OTHERS. vs. THE STATE OF MAH.& ANOTHER.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 4433 OF 1999
Smt. Jaikumari Amarbahadursingh
& 8 others :: PETITIONERS
Versus
The State of Maharashtra, through
the Secretary, Revenue & Forest Deptt.
& Anr. :: RESPONDENTS
ALONG WITH FOLLOWING CONNECTED WRIT PETITIONS
WRIT PETITION NO.1607 OF 1990
AND
WRIT PETITION NO.908 OF 1991
AND
Writ Petitions all of 2002
920 , 3351, 3352, 3744, 3924, 4326, 4327, 4605,
4606, 4746
AND
OF 2003
825, 1086, 1185, 1186, 1187, 2118, 2258, 2411,
2412, 2853, 2858, 2859, 2860, 2861, 2862, 2863,
2864, 2893,2894, 3059, 3060, 3061, 3211, 4685,
4686, 4687, 4690, 4694, 4695, 4757.
AND
OF 2004
24, 36, 39, 40, 43, 44, 48, 227, 293, 298, 527,
673, 674, 675,991, 1276, 1284, 1952, 1953, 2043,
2057, 2058, 2059, 2604, 2605, 2985, 3100, 3195,
3220, 3223, 3225, 3303, 3728, 4037, 4075, 4077,
4078, 4121, 4193, 4290, 4321, 4333, 4552, 4826,
5073, 5074, 5078, 5254, 5451, 5771, 5918, 5933.
AND
OF 2005
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: 2 :
217, 269, 270, 320, 321, 596, 630, 746, 747, 748,
749, 750, 751, 797, 798, 799, 1026, 1070, 1093,
1094, 1095, 1223, 1226, 1227, 1229, 1230, 1277,
1343, 1430, 1447, 1918, 1938, 1963, 1965, 2239,
2242, 2243, 2244, 2249, 2251, 2298, 2635, 2989,
2991, 3093, 3368, 3514, 3515, 3518, 3529, 3621,
3623, 3890, 3911, 3997, 4185, 4189, 4637, 4651,
4678, 4679, 4680, 4786, 5038, 5211, 5212, 5213,
5214, 5215, 5232, 5234, 5235, 5238, 5311, 5320,
5344, 5627, 5644, 5645, 5708, 5721, 6084, 6086,
6244, 6289, 6290, 6291, 6299, 6476, 6478, 6482,
6500, 6504, 6505, 6506, 6508, 6535, 6538, 6539,
AND
OF 2006
215, 365, 372, 378, 380, 382, 383, 399, 427, 739,
971, 973, 978, 980, 981, 982, 983, 984, 1273, 1274,
1297, 1299, 1300, 1301, 1410, 1638, 1639, 1817,
1818, 1819, 1878, 1945, 1946, 1970, 2048, 2052,
2068, 2071, 2072, 2073, 2074, 2075, 2076, 2207,
2265, 2269, 2273, 2284, 2286, 2302, 2308, 2351,
2366, 2368, 2373, 2380, 2381, 2412, 2428, 2453,
2701, 2785, 2791, 2792, 2793, 2794, 2795, 2852,
2853, 2858, 2860, 2871, 3015, 3020, 3021, 3211,
3378, 3379, 3380, 3381, 3382, 3420, 3453, 3462,
3510, 3680, 3681, 3682, 3683, 3710 3782, 3846,
3878, 3896, 4011, 4012, 4048, 4084, 4086, 4119,
4120, 4146, 4147, 4162, 4288, 4306, 4307, 4353,
4355, 4377, 4421, 4441, 4461, 4525, 4564, 4571,
4629, 4695, 4773, 4774, 4775, 4779, 4782, 4783,
4852, 4869, 4915, 4916, 4973, 4978, 4981, 4984,
4996, 5086, 5088, 5100, 5106, 5112, 5140, 5180,
5184, 5196, 5208, 5214, 5216, 5227, 5228, 5279,
5446, 5526, 5531, 5534, 5552, 5557, 5572, 5593,
5653, 5693, 5775, 5822, 5826, 5827, 5866, 5882,
5967, 5988, 6036, 6075, 6076, 6108, 6141, 6142,
6143, 6167, 6174, 6233, 6234, 6261, 6262, 6297,
6362, 6364, 6365, 6366, 6372, 6373, 6374, 6375,
6381, 6405, 6417, 6422, 6423, 6424, 6425, 6426,
6437, 6477, 6478, 6489, 6490, 6491, 6492, 6493.
AND
OF 2007
181, 281, 369, 370, 418, 437, 472, 497, 506, 547,
567, 577, 597, 601, 602, 603, 604, 605, 608, 648,
706, 707, 726, 781, 794, 878, 879, 921, 988, 990,
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997, 1000, 1001, 1002, 1003, 1004, 1005, 1006,
1007, 1008, 1015, 1018, 1019, 1020, 1021, 1022,
1023, 1024, 1025, 1026, 1027, 1029, 1032, 1033,
1298, 1425, 1462, 1492, 1498, 1533, 1534, 1601,
1620, 1703, 1705, 1714, 1735, 1736, 1737, 1766,
1767, 1768, 1801, 1810, 1922, 1979, 1980, 1987,
1988, 1989, 1990, 2092, 2093, 2098, 2125, 2135,
2156, 2227, 2228, 2230, 2430, 2447, 2477 2696,
2786, 2751, 2942, 2971, 2972, 2973, 3987, 4214,
4471, 4483, 4593, 4605, 4612, 4691, 5146, 5147,
5148, 5314, 5358, 5366, 5456, 5480, 5481, 5482,
5483, 5484, 5593, 5594, 5595, 5596, 5597, 5598,
5613, 5625, 5626, 5627, 5635, 5636, 5637, 5643,
5892, 5911, 5965 5973, 5974, 5975, 5976,
AND
OF 2008
35, 57, 148, 149, 150, 151, 152, 153, 263, 264,
265, 266, 321, 391, 436, 500, 616, 638, 647, 675,
873, 904, 905, 906, 918, 933, 957, 1013, 1016,
1025, 1030, 1141, 1142, 1143, 1153, 1221, 1280,
1299, 1300, 1316, 1379, 1380, 1404, 1405, 1419,
1423, 1424, 1430, 1455, 1456, 1506, 1507, 1508,
1517, 1518, 1519, 1526, 1527, 1578, 1579, 1601,
1602, 1603, 1636, 1637, 1638, 1639, 1640, 1774,
1775, 1776, 1777, 1778, 1779, 1780, 1781, 1782,
1783, 1784, 1785, 1786, 1787, 1788, 1789, 1790,
1791, 1792, 1793, 1835, 1838, 1839, 1840, 1841,
1842, 1844, 1845, 1846, 1847, 1848, 1849, 1887,
1888, 1891, 2137.
S/Shri S.V.Manohar, V.R.Thakur, Anjan De,
A.H.Lohiya, V.R.Mundra, Girish Mundra and Anand
Parchure, Advocates for Petitioners.
Shri B.H.Dangre, Addl.G.P.for State.
.....
CORAM: A.M.KHANWILKAR & CORAM: A.M.KHANWILKAR & CORAM: A.M.KHANWILKAR &
R.C.CHAVAN, JJ. R.C.CHAVAN, JJ. R.C.CHAVAN, JJ.
DATE : DATE : 30th September, 2008. DATE : 30th September, 2008. 30th September, 2008.
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JUDGMENT :(Per A.M.Khanwilkar,J) JUDGMENT :(Per A.M.Khanwilkar,J) JUDGMENT :(Per A.M.Khanwilkar,J)
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 Narain Prasad Aggarwal V. State of Narain Prasad Aggarwal V. State of
M.P. reported in (2007) 11 SCC 736 M.P. reported in (2007) 11 SCC 736 means land or M.P. reported in (2007) 11 SCC 736
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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
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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
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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
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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
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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.
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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:- 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.
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2. As to the regularization of the violation of As to the regularization of the violation of As to the regularization of the violation of
terms & conditions: terms & conditions: 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.
-----------------------------------------------------------
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(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 As to the allotment of land by ownership As to the allotment of land by ownership
right. right. 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.
-------------- -------------- -------------- --------------
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(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. 4. 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;
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--------------------------------------------------------------
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. 5. 5. As to the Transfer hereafter/Change of User.
(A) After taking action as above as per para 2
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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)
------------ --------------- ---------- ---------- ----------
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(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
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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
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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
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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 State of Bombay vs.Damodhar Tukaram State of Bombay vs.Damodhar Tukaram
Mangalmurti in Appeal No.699 of 1946 and 700 of Mangalmurti in Appeal No.699 of 1946 and 700 of Mangalmurti in Appeal No.699 of 1946 and 700 of
1946 1946 dated 19th June 1959, which part of the said 1946
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
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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
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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
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the Constitution of India. Reliance was placed on
Calcutta
the decision of Apex Court in the case of Calcutta Calcutta
Municipal Corporation & Ors. vs. M/s.Shrey Municipal Corporation & Ors. vs. M/s.Shrey Municipal Corporation & Ors. vs. M/s.Shrey
Mercantile Pvt.Ltd. & Ors. reported in AIR 2005 Mercantile Pvt.Ltd. & Ors. reported in AIR 2005 Mercantile Pvt.Ltd. & Ors. reported in AIR 2005
SC 1879 SC 1879. The Apex Court has noted the main SC 1879
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
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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
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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.
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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 legitimately exercise the power to
levy revenue such as unearned income on all lands
under whatever title which may include even lands
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held by occupants - Class-I, if the law so permits.
In other words, even if the Government Grant should
necessarily be regulated by its own terms, that
would not preclude the State to enact a law at any
time in future to provide for restrictions so as to
regulate the transfer of land subject however to
the Constitution. Such Law can even govern the
subsisting grants so as to expressly or by
implication repeal or revoke or modify not only all
the provisions of the grant or transfer but also
the relevant governing enactments on the subject.
We can usefully refer to the decision of the Apex
Court in Kanwarlal Vs. IInd Add. Dist. Judge, Kanwarlal Vs. IInd Add. Dist. Judge, Kanwarlal Vs. IInd Add. Dist. Judge,
Nainital reported in AIR 1995 SC 2078. Nainital reported in AIR 1995 SC 2078. In that Nainital reported in AIR 1995 SC 2078.
case the question posed was whether the State could
amend the Grants Act, which is a pre-Constitutional
Central Statute by its own enactment. That is
answered in the affirmative on the basis that the
State enactment concerns the rights in or over the
land etc., which are all subjects covered by Entry
18 of List II. Reliance is rightly placed by the
Counsel for the State on the exposition of the
Privy Council in the case of Thakur Jagannath Baksh Thakur Jagannath Baksh Thakur Jagannath Baksh
Singh Vs. The United Provinces Singh Vs. The United Provinces reported in AIR Singh Vs. The United Provinces AIR AIR
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1946 PC 127 1946 PC 127, wherein it is observed that no Court 1946 PC 127
can annul the enactment of a legislative body
acting within the legitimate scope of its Sovereign
Competence.
17. Ordinarily, unearned income would mean
income from investment rather than from labour. It
is the difference between the premium paid and the
market value of the lease plot at the time of sale.
Nevertheless, in law, it is a land revenue
recoverable from the grantee/lessee by the State
Government if the law enacted on the subject or the
terms of lease or grant so permits. Suffice it to
observe that the State Legislature has authority to
enact law authorising the State Government to claim
unearned income from the grantee/lessee for
recognising or approving the transfer of land in
question. The law enacted by the State Legislature
on that subject can never be covered by entry 82 in
List I of Schedule VII of the Constitution of India
but in substance, is a law legislated by the State
Legislature on the subject of "land" and "land
revenue" and matters related thereto of regulation
and control, which is well within its competence.
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Though it may appear that the State Government
would share income of the grantee; but in
substance, it is the price to be paid for approving
the transfer of the land by the grantee/lessee to
third party and recognising the right so
transferred to enable the transferee to enjoy the
Government property in question. The State remains
the owner of the land and the right enjoyed by the
grantee/lessee is a limited right granted under the
Grant and not the entire bundle of rights of the
State Government who is the real owner thereof.
Indeed, the State Government can do so only if the
State Legislature specifically authorises it in
that behalf.
18. The Petitioners would then contend that for
over 100 years the State had never demanded
unearned income to recognise transfer effected by
the original grantee. Therefore, the State was
estopped from claiming unearned income. This
argument deserves to be stated to be rejected.
For, if the law authorises State to levy unearned
income, then there can be no estoppel against the
statute. The fact that the State abdicated its
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authority to levy unearned income though
permissible in law cannot take the matter any
further. In fact, any enactment permitting State
to levy such charges would cast duty upon the
Executive to recover the same. Counsel for the
Petitioners relied on the exposition of the Apex
Court in the case of State of Orissa Vs. Mangalam State of Orissa Vs. Mangalam State of Orissa Vs. Mangalam
Timber Products reported in 2003(9) Scale 578 and Timber Products reported in 2003(9) Scale 578 and Timber Products reported in 2003(9) Scale 578 and
State of Punjab Vs. Nestle India Ltd. State of Punjab Vs. Nestle India Ltd. reported in State of Punjab Vs. Nestle India Ltd.
2004(5) Scale 529. 2004(5) Scale 529. In the former reported case the 2004(5) Scale 529.
State intended to recover royalty from back date.
Besides, whether the Petitioners were given any
promise will be a disputed question of fact. In
the present case, however, it is unnecessary to
elaborate any further for the view that we intend
to take.
19. For the time being, we may safely proceed on
the basis that as of now, there is no legislation
enacted by the State Legislature which would govern
the field of power to levy unearned income. We
hasten to record this opinion after having analysed
the relevant enactment and in particular the
provisions of M.L.R.C. There is no express
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provision therein nor it is possible to suggest
that the State Legislature purports to do so by
implication. The learned Counsel for the State is
unable to substantiate with reference to any
specific provision of M.L.R.C. which would suggest
to the contrary. Indeed, the statutory rules
framed under the MLRC, titled as the Maharashtra
Land Revenue (Disbursal of Government Lands) Rules,
1971, carve out exception about existence of such
authority in relation to grant of land for
industrial and commercial purposes. That position
is spelt out from clause (c) of sub-rule (2) of
Rule 31 read with Rules 35 and 41 of the said
Rules. There is no corresponding provision
enabling the State Government to claim or levy
unearned income in respect of grant of land for
Agricultural use under Part III or residential use
under Part IV of the said Rules. Besides, going by
the provisions of the said Rules it would apply to
fresh grants in respect of unoccupied lands. In
other words, the State Government as of now has no
authority to levy unearned income in respect of
lands in question under whatever title, which would
obviously include lands held by occupants-Class I.
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In absence of a specific law on this subject, the
State Government or its Officers cannot usurp to
itself power to levy such charges on the basis of a
Government Resolution. That power to levy unearned
income can be invested in the State Government only
if the State Legislature expressly or by
implication authorises it to do so and not
otherwise. By no means such power can be usurped
by an Executive fiat in the form of a Government
Resolution. Suffice it to observe that a
Government Resolution cannot be substitute for a
"law" to be enacted by the competent legislature-
so as to affect the unconditional right of the
Grantees to transfer and inherit the property.
Till such law is enacted, the State Government and
its Officers are bound to honour the commitment in
the Lease Deed if already executed and in any case,
give effect to the extant provisions of law. To
that extent, the Resolution will have to be held as
inconsistent with the Scheme of MLRC and the Rules
framed thereunder; In particular, with reference
to grant of land other than for commercial or
industrial purpose. In that, insofar as grant of
land for commercial and industrial purposes, there
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is express provision in the Rule 31(2)(c) enabling
the State Government to claim half the unearned
income where the land is sold without any
construction. We are not called upon to consider
the validity of that provision.
20. Counsel for the Petitioners had relied on
the decision in the case of Sunil Vasudeva & Sunil Vasudeva & Sunil Vasudeva &
Ors.vs.Delhi Development Authority reported in AIR Ors.vs.Delhi Development Authority reported in AIR Ors.vs.Delhi Development Authority reported in AIR
1988 Delhi 184 1988 Delhi 184. That decision proceeds on the 1988 Delhi 184
finding that the transfer was covered by the
Government Grants Act, 1895 and in view of Section
3 of that Act the lease is supreme and cannot be
superseded. It is also found as of fact that the
terms of lease do not provide for charging of any
fee, levy, cess or payment for grant of consent by
the DDA. It is for that reason the recovery in
relation to transfer of the property on the land
under lease was held to be not valid. We have no
difficulty in accepting this proposition. However,
we respectfully disagree with the wide statement
that the terms of lease cannot be superseded even
by a (subsequent) law.
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21. According to the Learned Counsel for the
State, the enactment which is in vogue empowers the
State to demand unearned income. For that reliance
was placed on the provisions of the Government
Grants Act, 1895(hereinafter referred to as Grants
Act") The Statement of Objects and Reasons of the
said Act explains the need of enacting the said
legislation. It reads thus:
. "The Transfer of Property Act,
1882, Sections 10-12 invalidate with certain
exceptions all conditions for the forfeiture
of the transferred property on alienation by
the transferee and all limitations over
consequent upon any such alienation or any
insolvency of or attempted alienation by
him. The Crown is not specifically
mentioned in the Act, and it may be assumed
that it was not designed to impose fetters
of this description upon the discretion of
the Crown, especially as to the creation of
inalienable jahgirs in grants made for
public service; but it has been thought
better to set the question at rest by
express legislation.
. Upon a late occasion the
Government of India were advised that it is
not competent for the Crown to create an
inalienable and impartible estate in the
land comprised in any Crown grant, unless
such land has heretofore descended by custom
as an impartible Raj. The second
sub-section of the Bill is intended to
obviate this inconvenience by providing that
all Crown grants are to be construed
according to their tenor, notwithstanding
any rule of law which might otherwise affect
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their operation."-Gazette of India, 1895,
Part V, page 169."
Preamble of the Act postulates that it is an act to
explain the Transfer of Property Act, 1882, so far
as it relates to grants from the Government and to
remove certain doubts as to the powers of the
Government in relation to such grants. It is
further mentioned that doubts have arisen to the
extent and operation of the Transfer of Property
Act, 1882 and as to the power of the Government to
impose limitations and restrictions upon grants and
other transfers of land made by it or under its
authority, and it is expedient to remove such
doubts. In this backdrop, the Grants Act was
enacted to explain the provisions of Transfer of
Property Act. Section 2 of the said Act envisages
that provisions of Transfer of Property Act, 1882
shall not apply to the Government grants. Section
3 of the said Act postulates that the Government
grants shall take effect according to its tenor.
The said provisions read thus:
"2. Transfer of Property Act, 1882, not to Transfer of Property Act, 1882, not to Transfer of Property Act, 1882, not to
apply to Government grants.- apply to Government grants.- Nothing in the apply to Government grants.-
Transfer of Property Act, 1882, contained
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shall apply or be deemed ever to have
applied to any grant or other transfer of
land or of any interest therein heretofore
made or hereafter to be made [by or on
behalf of the Government)] to, or in favour
of, any person whomsoever; but every such
grant and transfer shall be construed and
take effect as if the said Act had not been
passed."
3. Government grants to take effect Government grants to take effect
Government grants to take effect
according to their tenor- according to their tenor- All provisions, according to their tenor-
restrictions, conditions and limitations
over contained in any such grant or transfer
as aforesaid shall be valid and the effect
according to their tenor, any rule of law,
statute or enactment of the Legislature to
the contrary notwithstanding."
The purport of the above said provisions is no more
res integra. The Apex Court in the case of Hajee Hajee Hajee
S.V.M.Mohamed Jamaludeen Vs. Government of .V.M.Mohamed Jamaludeen Vs. Government of .V.M.Mohamed Jamaludeen Vs. Government of
1997) 3 SCC 466 has examined
TamilNadu TamilNadu reported in (1997) 3 SCC 466 TamilNadu 1997) 3 SCC 466
the same. The question posed in the said decision
was: can the Government unilaterally rescind a
contract if the terms thereof so provide?
According to the Government, the Agreement was
created only as a licence which was revocable at
the will of the grantor. The Government therefore,
defended its action of revoking the contract as
necessitated in the larger public interest. For
that the Government had relied on Clause-7 of the
Agreement which empowered the Government to remove
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the Contractor. The Learned Single Judge of the
High Court accepted the stand of the grantee that
Clause-7 was unenforceable. On that finding, the
Court went on to hold that the grantee was entitled
to entire damages claimed by him and the Suit came
to be decreed accordingly. In Appeal, The Division
Bench of the High Court set aside the decree and
dismissed the Suit holding that Clause-7 of the
Agreement was valid and enforceable in view of the
provisions of the Grants Act. The Apex Court while
referring to Sections 2 and 3 of the Grants Act, in
paragraph-10, has observed as follows:
"10. The combined effect of the above two
sections of the Grants Act is that terms of
any grant or terms of any transfer of land
made by a Government would stand insulated
from the tentacles of any statutory law.
Section 3 places the terms of such grant
beyond the reach of any restrictive
provision contained in any enacted law or
even the equitable principles of justice,
equity and good conscience adumbrated by
common law if such principles are
inconsistent with such terms. The two
provisions are so framed as to confer
unfettered discretion on the Government to
enforce any condition or limitation or
restriction in all types of grants made by
the Government to any person. In other
words, the rights, privileges and
obligations of any grantee of the Government
would be completely regulated by the terms
of the grant, even if such terms are
inconsistent with the provisions of any
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other law." (emphasis supplied)
There is no difficulty in applying the said
principle to answer the point in issue. However,
the question as to whether the terms of the grant
provide for such power is a question which will
have to be addressed on case to case basis by the
appropriate authority in the first instance. If
the Authority were to hold that the grant makes
provision to empower the State Government either to
impose new conditions during the lease period or
for that matter at the time of renewal of the lease
and/or to claim unearned income as precondition for
recognising the transfer effected by the grantee of
the subject land, then obviously the principle
expounded in this Judgment will come into play.
However, on the other hand, if there is no
provision in the grant or lease deed authorising
the Government to resort to any of the above
option, obviously in such a case, the provisions of
Grants Act cannot come to the aid of the State
Government. Counsel for the State invited our
attention to the exposition of the Apex Court in
the case of The State of U.P. Vs. Zahoor Ahmad & The State of U.P. Vs. Zahoor Ahmad & The State of U.P. Vs. Zahoor Ahmad &
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Anr. Anr. reported in AIR 1973 SC 2520, Anr. AIR 1973 SC 2520, to contend that AIR 1973 SC 2520,
the Government Grants Act declares the unfettered
discretion of the Government to impose such
conditions and limitation as it thinks fit, no
matter what the general law of the land be.
Indeed, there can be no difficulty in accepting
this proposition. However, the question that needs
to be addressed is at what stage and in which cases
such discretion is available. That is available
till the lease is executed and before the grantee
is put in possession of the land. Once the grantee
is put in possession of the land, parties are bound
by the terms of the lease; and by virtue of the
provisions of the Grants Act, the lease would
prevail. If the lease does not keep the option to
the Government to add, modify, alter or delete any
condition of the lease, then the discretion of the
Government cannot be taken forward unless the
lessee put in possession of the land was to accept
such change. Similarly, if there is renewal clause
in the lease the Government will be obliged to
renew the lease on the same terms and conditions.
22. Here we may usefully refer to the decision
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of the Apex Court in the case of Express Newspapers Express Newspapers Express Newspapers
AIR 1986 SC
Pvt.Ltd.Vs.Union of India Pvt.Ltd.Vs.Union of India reported in AIR 1986 SC Pvt.Ltd.Vs.Union of India AIR 1986 SC
872. 872. Reliance is placed by the Petitioners on 872.
para-79 of this decision wherein the purport of
provisions of the Grants Act has been considered.
The Apex Court went on to restate the
well-established legal position that the overriding
effect of Section 3 of the Grants Act is that a
grant of the property by the Government partakes
the nature of law since it overrides even legal
provisions which are contrary to the tenor of the
document. As aforesaid, the Competent Authority
will have to examine the fact as to whether the
terms of the grant provide that it is open to the
Government to delete any of the conditions therein
or to add a new condition so as to levy unearned
income and only then answer the controversy on case
to case basis.
23. To get over this position, learned Counsel
for the State would contend that on conjoint
reading of the provisions of Sections 2 and 3 of
Grants Act, it is possible to take the view that
the Government is free to impose new condition at
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any time including during subsistence of lease and
also at the time of renewal of the lease. This
argument has been rightly countered by the Counsel
for the Petitioners by additionally placing
reliance on the decision of the Division Bench of
our High Court in Mangalmurti Mangalmurti(Supra). That
Mangalmurti
decision arose out of the appeals filed by the
State of Bombay against the decree passed by the
trial Court in a Suit filed by the
Respondent/Plaintiff in representative capacity.
The case made out by the Plaintiff was that the
lease given in respect of the plots was for 30
years with a covenant for renewal in each
successive period of 30 years. The Plot was leased
to be for building purpose only with condition that
the lessee shall commence the construction within
one year from the date he is put in possession of
the land leased to him. The Lease Deed also made
provision for renewal of the lease. It was agreed
that the lessor at the end of the terms of 30 years
and thereafter from time to time at the end of each
successive further term of years as shall be
granted at the request and cost of the lessee
execute to him a renewed lease of the land for the
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: 41 :
term of 30 years provided, rent of the land shall
be subject to such fair and equitable enhancement
as the lessor shall determine on the grant of every
renewal of lease. The Covenant further provided
that every such renewed lease of the land shall
contain such of the covenants, provisions and
conditions in the said presents contained as shall
be applicable and shall always contain a covenant
for further renewal of the lease. When the lease
period was to expire and the lessee requested for
renewal of the lease, the Revenue authority offered
lease for enhanced lease rent and also proposed
certain terms which did not originally exist in the
former lease. The Plot holders did not agree to
the said proposal of the Government for enhancement
of lease rent and in respect of certain conditions
which were to be newly added in the renewed lease.
In that backdrop, the suit was filed in a
representative capacity on the cause of action that
the Government refused to renew lease on the same
terms offered in the earlier lease. The first
Appellate Court, amongst others, held that the
State Government had no right to insist on adding
new condition in the renewal lease to the prejudice
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of the lessees. This view is unambiguously
recorded by the Division Bench of our High Court in
the said decision which has approved the opinion of
the first Appellate Court. The Division Bench has
then adverted to the principal contention argued on
behalf of the Government-as regards the question of
fair and equitable enhancement of the rent-in the
following words:
"We have, therefore, now to give our
decision on two questions, namely, whether
the decision as given by the learned lower
Appellate Court as regards the fair and
equitable enhancement of the rent should be
set aside and secondly whether the State
Government, that is, the defendant, was
entitled to insert new conditions in the
leases to be granted to the Plot-holders by
way of renewal of the original leases."
The Court then proceeded to hold that leases in
question were given for a period of 30 years
containing clause of perpetual renewal. It then
found that the lessees have option to terminate the
lease but so long as they continue as lessee, it is
not possible for the Government to terminate lease
unless lessees committed breach of terms of the
contract or failed to pay the rent. The Court
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positively found that the leases have got a
character which is akin to a perpetual lease. It
is then noted that there is no term in the lease
that the fresh premium would be demanded at the
time of renewal of the lease or the rent would be
revised as existing on the date of the renewal. It
is further held that renewal of the lease cannot be
considered on the same footing like fresh grant of
the lease. The Court has also adverted to the
question as to whether the insertion of new
condition in the lease deed to be granted by the
renewal of the original lease could be insisted by
the Government. The Court rejected the argument of
the Government that renewal of the lease would mean
grant of a fresh lease of the land or that the
Government had right to add new conditions at the
time of renewal. The correctness of this opinion
of the Division Bench of our High Court was tested
in appeal filed by the then State of Bombay before
the Apex Court being Civil appeal No.215 of 1962,
which was dismissed on 27th August, 1964.
Significantly, the Apex Court while narrating the
facts has clearly noticed that the finding of the
High Court that no new additional conditions can be
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imposed has not been challenged before it. The
Apex Court has also adverted to the finding given
by the Division Bench of our High Court that the
renewal of the leases cannot be placed on the same
footing as that of granting a fresh lease for the
first time and so the market value of the land
should not be made sole basis for determining the
fair and equitable rent which could be charged at
the time of renewal. No doubt the only issue
contested before the Apex Court was whether the
enhancement of lease rent at the time of renewal
insisted by the Government could be said to be just
and fair approach. In the penultimate paragraph of
the decision that aspect has been considered. The
Apex Court went on to observe as follows:
". It is obvious that in a case of
this kind it is not easy to determine
definitely as to what should be treated as
fair and equitable enhancement in 1939. It
is true that in deciding the question, the
Court should not ignore the position as it
obtained in 1905 when the plots were
acquired by the Government as well as the
position that obtained in 1909 when the
plots were let out to the respective
lessees. The premium paid by each one of
the lessees has also to be taken into
account and its relation to the then
prevailing market value cannot be ignored.
Nevertheless, it would, we think, be
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unrealistic not to take into account the
increase in the market value of the
property. It is true that the importance of
this fact should not be unduly exaggerated
and there would no difficulty in accepting
the argument of the respondents that in
fixing fair and equitable enhancement, the
increase in the market value should not be
treated as a decisive factor by itself. But
it seems to us that the High Court has not
attached any significance to this factor,
and that, in our opinion, is an infirmity in
the approach adopted by the High Court...."
Relying on the abovesaid decision in the case of
Mangalmurti(supra), Mangalmurti(supra), the Petitioners have rightly Mangalmurti(supra),
contended that it was not open to the State
Government to delete the condition in the
lease/grant which permitted the grantee to transfer
the leased plot and/or at the same time introduce a
new condition for the first time, inter alia,
providing for levy of unearned income, during
subsistence of the lease or for that matter at the
time of renewal of the lease. For, renewal of
lease is not the same as granting a fresh lease
especially when the former lease provides for
renewal on same terms and conditions. The
Petitioners have relied on the principle underlying
the exposition of the Apex Court in the case of
Biman Krishna Bose V/s. United Insurance Co. Biman Krishna Bose V/s. United Insurance Co. Biman Krishna Bose V/s. United Insurance Co.
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reported in 2001(4) Scale 675 2001(4) Scale 675 in particular para-5 2001(4) Scale 675
thereof, wherein it is held that a renewal of an
insurance policy means repetition of the original
policy. The only change brought about is in
relation to a different date of its expiration
albeit on identical terms of the original policy.
We may usefully also refer to the exposition of the
Apex Court in the case of Shri Sudarshan Mineral Shri Sudarshan Mineral Shri Sudarshan Mineral
Co. Ltd. V/s. Union of India Co. Ltd. V/s. Union of India reported in (1975) Co. Ltd. V/s. Union of India (1975) (1975)
1 SCC 527. 1 SCC 527. That was a "converse case" where the 1 SCC 527.
original lease had "no renewal clause". Yet the
Government granted renewal of the lease for further
period of 20 years in accordance with Rule 26 of
the Mineral Concession Rules, 1960, while fixing
dead rent for the renewed lease at enhanced rate.
The Apex Court observed that if the original lease
had contained renewal clause giving a right to the
lessee of renewal for further period of 20 years at
its option then it was possible that the renewal
had to be done on the same terms and conditions.
In such a case the clause inserted in the original
lease could possibly be said to override the
mandatory requirement of Rule 27(1) (c) of the said
Rules. It went to further observe that in absence
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of such a right of renewal to the lessee the
clauses in the original lease would be operative
and effective only during the period of the
original lease; and in that case the lease renewed
for the subsequent period was renewal of the
original lease in once sense and a fresh lease in
another. In such a case the governmental authority
will have to grant fresh lease in conformity with
the statutory provisions and would have no power to
relax the same contrary to the Rules in vogue. It
necessarily follows that if the original(former)
lease did not provide for obligation to pay
unearned income to the State, such condition could
not be introduced at a subsequent point of time
during the subsistence of the lease or for that
matter at the time of renewal of lease. On the
other hand, if the original or previous lease
contains condition authorising the Governmental
authority to introduce new condition or is silent
about renewal clause, it will be open to the
authority to introduce new condition consistent
with the law enacted by the State legislature on
that subject. Suffice it to observe that the
provisions of Grants Act would save and protect the
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restrictions, conditions and limitations contained
in the grant or lease deed, but cannot be pressed
into service by the State Government to assert that
the same would enable the State Government to do so
in manner otherwise than by enacting a specific law
on that subject.
24. To get over this position, Learned Counsel
for the State would contend that the decision in
the Mangalmurti(supra) Mangalmurti(supra) is distinguishable as it Mangalmurti(supra)
does not specifically deal with the point in issue.
It is not possible to countenance this submission.
Indeed, in the case of Mangalmurt Mangalmurti(supra), the Apex Mangalmurt
Court was called upon to consider only one issue of
whether the revision of lease rent can be said to
be fair and just. However, in our opinion, the
Division Bench of our High Court, while upholding
the view taken by the first Appellate Court,
specifically adverted to the issue as to whether
new conditions can be imposed by the State
Government at the time of renewal of the lease and
that stand of the Government has unambiguously been
rejected. At the cost of repetition we may observe
that the decision of Mangalmurt Mangalmurti was in respect of Mangalmurt
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a suit filed in the representative capacity. We
are conscious of the fact pointed out by the
Counsel for the State that the said matter dealt
with the terms of the lease produced in that case.
Nevertheless, in our opinion, the said decision
would bind the State Government atleast in cases
having similar leases, unless the State legislature
was to enact a law to overcome the said decision
and to empower the State Government to add new
conditions at the time of renewal of the lease or
for that matter to levy unearned income. In
absence thereof, we have no hesitation in taking
the view that it is not open to the State
Government to impose new conditions for the first
time either during subsistence of the lease or at
the time of renewal of the lease which conditions
may be prejudicial to the grantee and inconsistent
with the tenor of the original lease in absence of
law on that subject or condition incorporated in
the original lease in that behalf. The Government
pleader would then contend that the decision in
Mangalmurti’s Mangalmurti’s case is not binding on the State Mangalmurti’s
Government. Even this submission does not commend
to us. We have already adverted to the issues
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raised in Mangalmurti’s case Mangalmurti’s case before this Court and Mangalmurti’s case
the Apex Court in appeal. The view taken on the
points in issue has become final. It is not only
binding on the State Government but also on us. It
was then argued that the decision in Mangalmurti’s Mangalmurti’s Mangalmurti’s
case case is per incuriam as it has not adverted to the
case
efficacy of Sections 2 and 3 of the Grants Act.
Indeed, neither this Court nor the Apex Court has
specifically adverted to the provisions of the
Grants Act. However, for the view we have taken,
in our opinion, it would make no difference on
account of the fact that the provisions of Grants
Act have not been adverted to in Mangalmurti’s Mangalmurti’s Mangalmurti’s
case. case. case.
25. As aforesaid, the exposition in that case
will apply on all fours to the occupants who are
covered by the definition of the Occupants Class-I
as specified in Section 29 of the MLRC. Inasmuch
as, occupants class-I have unfettered right to
alienate their interest in the land in question.
In some of the Petitions reliance was placed on
condition which permitted the grantee to transfer
the lands in question. It would necessarily follow
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that these grantees have had full occupancy and
complete right to alienate the property; Whereas,
in case of occupants covered by occupants class II
and Government lessees situation would be somewhat
different. In that, sofar as the occupants
Class-II and Government Lessees are concerned,
their right is not an absolute or unfettered right
but is restricted as is provided in the governing
statutes. In other words, the State Government
will be free to impose such conditions and
restrictions permissible by law in respect of
occupants Class-II and Government lessees, which
may include levying of unearned income.
26. To get over this position, Counsel for the
Petitioners would contend that "Government lessees"
would be covered as occupants Class-I category and
would possess rights and privileges similar to
occupants Class-I. This argument deserves to be
stated to be rejected. Inasmuch as the legislature
has noted the distinction between three classes of
person holding land as mentioned in Section 29 of
the MLRC. Section 29 reads thus:
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"29. Classes of persons holding land 29. Classes of persons holding land 29. Classes of persons holding land
(1) There shall be under this Code the
following classes of persons holding land
from the State, that is to say-
(a) Occupants -Class I
(b) Occupants -Class II
(c) Government lessees.
(2) Occupants - Class I shall consist of
persons who -
(a) hold unalienated land in perpetuity and
without any restrictions on the right to
transfer;
(b) immediately before the commencement of
this Code hold land in full occupancy or
Bhumiswami rights without any restrictions
on the right to transfer in accordance with
the provisions of any law relating to land
revenue in force in any part of the State
immediately before such commencement; and
(c) notwithstanding any notification or
order issued under Section 150 of the Madhya
Pradesh Land Revenue Code, 1954, and holders
of land in Bhumidhari Bhumidhari rights in any local Bhumidhari
area in Vidarbha and are permitted
hereafter, subject to the rules made by the
State Government in this behalf, on payment
of a premium (not exceeding three times the
assessment payable in respect of such land)
to be included in occupants -Class I.
(3) Occupants -Class II shall consist of
persons who,-
(a) hold unalienated land in perpetuity
subject to restrictions on the right to
transfer;
(b) immediately before the commencement of
this Code hold-
(i) land in Vidarbha in
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Bhumiswami Bhumiswami rights with Bhumiswami
restrictions on the right to
Bhumidhari
transfer or in Bhumidhari Bhumidhari
rights under the Madhya Pradesh
Land Revenue Code, 1954; and
(ii) elsewhere hold hand in
occupancy rights with
restrictions on the right to
transfer under any other law
relating to land revenue; and
(c) before the commencement of this Code
have been granted rights in unalienated land
under leases which entitle them to hold the
land in perpetuity, or for a period not less
than fifty years with option to renew on
fixed rent, under any law relating to land
revenue and in force before the commencement
of this Code; and all provisions of this
Code relating to the rights, liabilities and
responsibilities of Occupants - Class II
shall apply to them as if they were
Occupants - Class II under this Code."
Besides, section 29 even section 39 of the MLRC
would throw light on this issue. Section 39 reads
thus:
"39. Occupant to pay land revenue and 39. Occupant to pay land revenue and 39. Occupant to pay land revenue and
Government lessee to pay rent fixed Government lessee to pay rent fixed
Government lessee to pay rent fixed
Every occupant shall pay as land revenue the
assessment fixed under the provisions of
this Code and rules made thereunder; and
every Government lessee shall pay as land
revenue lease money fixed under the terms of
the lease."
When it comes to the payment of revenue, even at
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that stage, distinction between the occupants
referred to in Clauses (a) and (b) of sub-section 1
of section 29 in contradiction to the Class of
Holder, i.e. Government lessees in clause (c) has
been kept in mind by the Legislature. The
Occupants referred to in clauses (a) and (b) are
obliged to pay "land revenue", whereas the
Government lessee covered by clause (c) has to pay
"rent". Notably, a "Government Lessee" is defined
in Section 2(11) of the MLRC to mean a person
holding land from Government under a lease provided
by Section 38 of MLRC. Whereas, an "Occupant" is
defined in Section 2(23) of MLRC to mean a holder
in actual possession of unalienated land, "other
than a tenant or Government lessee", provided that,
where a holder in actual possession is a tenant,
the land holder or the superior landlord, as the
case may be, shall be deemed to be occupant.
27. We shall now examine the legislative history
governing the issue of grant of land by the
Government. As has been observed earlier, in all
these cases, the Petitioners claim to be in
possession of the respective land as
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grantee/lessees either on account of grant directly
in their favour or in the name of their
predecessor. Insofar as the lands which were then
covered by erstwhile Central Provinces areas, there
may be cases where the grant was given even before
the Central Provinces Land Revenue Act, 1881 was
enacted(hereinafter referred to as CPLRA). As we
have noted earlier, insofar as Central Provinces
area is concerned, we have one set of cases where
lease deed has been executed. On expiry of the
original lease in some cases the lease has been
renewed, but in some cases renewal lease deed has
not been executed. In cases where the lease deed
has been renewed it is noticed that the renewal was
on the same terms and conditions as in the original
lease. However, in cases where renewal has not
been done so far is either on account of opposition
of the grantee to the insistence of the Government
to impose new conditions for the first time for the
renewal of lease or may be on account of failure of
the lessees to apply for renewal. Insofar as the
latter category is concerned, it is doubtful
whether the occupation of the land by the concerned
person can be said to be on the same terms and
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conditions as in the original lease or
unauthorised. That is a question of fact which
will have to be addressed on case to case basis.
However, in cases where renewal has been delayed
because of insistence by the State Government to
impose new condition and opposition of the lessees
to accept those conditions, those matters will have
to be considered independently keeping in mind the
legal position.
28. In cases where the lease deed is silent
about Government power to add new condition but the
Government is insisting to impose new conditions,
there can be no doubt that such insistence of the
State Government is without authority. However, in
those cases, limited enquiry to be done is whether
the lease deed relied by the concerned occupants
expressly or by implication authorises the
Government to add new conditions during the
subsistence of the lease and/or at the time of
renewal. All these matters essentially, being
questions of fact and in some cases disputed, we
would leave the same open to be decided by the
Competent Authority in the first instance. Hence
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we would relegate all the Petitioners before the
appropriate authority who in turn will have to
consider the relevant aspects and record finding of
fact on case to case basis.
29. Reverting to the provisions applied to
erstwhile Central Provinces area, the earliest
enactment was CPLRA of 1881 which was followed by
Central Provinces Land Revenue Act,
1917(hereinafter referred to as CPLRA, 1917). The
Central Provinces Area thereafter was merged in the
State of Madhya Pradesh which area was governed by
Madhya Pradesh Land Revenue Code, 1954. Later on
Central Provinces Area after reorganisation of the
States became part of State of Maharashtra and is
governed by Maharashtra Land Revenue Code, 1966.
Significantly none of the above enactments make
specific provision empowering the State Government
to alter or modifying the subsisting lease
conditions at the time of renewal of the lease or
for that matter to levy unearned income to
legitimise proposed transfer.
30. Insofar as the lands situated in the
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erstwhile Berar area, same were governed by the
Hyderabad Assigned District Land Revenue Code,
1896. Later on Berar Land Revenue Code, 1928 was
introduced which became applicable to the said
lands. The said Berar area later on amalgamated
with the Central Provinces, which area was governed
by Madhya Pradesh Land Revenue Code, 1954; and
after reorganisation of the States now the same are
governed by provisions of Maharashtra Land Revenue
Code, 1966. Even these enactments make no specific
provision to empower the State Government to alter
or modify the subsisting lease conditions or to
impose new conditions at the time of renewal of the
lease or for that matter to levy unearned income to
legitimise the proposed transfer.
31. Indubitably, as of now the provisions of
Maharashtra Land Revenue Code, 1966 uniformly apply
to the erstwhile Central Provinces area as well as
Berar area. Insofar as provisions of MLRC are
concerned, Section 20 unambiguously provides that
title of State in all lands, public roads etc,
which are not property of persons legally capable
of holding property, and except insofar as any
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rights of such persons may be established, in or
over the same, and except as may be otherwise
provided in any law for the time being in force are
and are hereby declared to be, with all rights in
or over the same, or appertaining thereto the
property of the State Government. It enables the
Collector subject to the Orders of the
Commissioner, to dispose of the property of the
State Government in such manner as may be
prescribed by the State Government in this behalf,
subject always to the rights of way, and all other
rights of the public or of individuals legally
subsisting. Section 22 of the Code provides that
subject to the general orders of the State
Government, it shall be lawful for a Survey Officer
during the course of survey operations under this
Code, and at any other time for the Collector, to
set apart unoccupied lands (not in the lawful
occupation of any person) in villages or parts
thereof for forest or fuel reserve, for free
pasturage of village cattle or for grass or fodder
reserve, for burial or cremation ground, for
gaothan gaothan, for camping ground, for threshing floor, gaothan
for bazaar, for skinning ground, for public
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purposes such as roads, lanes, parks, drains or for
any other public purposes; and, the lands assigned
shall not be otherwise used without the sanction of
the Collector and in the disposal of lands under
Section 20 due regard shall be had to all such
special assignments. Chapter III deals with
aspects relating to lands. Section 29 which is
part of Chapter III defines the classes of persons
holding land from the State to which reference is
already made earlier.
32. Section 31 envisages that it shall be lawful
for the Collector subject to such rules as may from
time to time be made by the State Government in
this behalf, to require the payment of a price for
unalienated land or to sell the same by auction,
and to annex such condition to the grant as may be
prescribed by such rules "before land is entered
upon" under section 30. The price(if any) paid for
such land shall include the price of the Government
right to trees thereon and shall be recoverable as
an arrears of land revenue. The language of
section 31 reinforces the position that conditions
to grant are to be annexed as may be prescribed by
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the Rules "before land is entered upon under
section 30". This express provision would militate
against the argument of the State Government that
condition can be annexed even after land is entered
upon under section 30 after the grant.
33. What is significant to note is the sweep of
Section 36 of MRLC which postulates that an
occupancy shall, subject to the provisions
contained in Section 72 and to any conditions
lawfully annexed to the tenure, and save as
otherwise provided by law be deemed as heritable
and transferable property. This provision
presupposes that if no condition regarding transfer
has been annexed to the tenure, the occupant would
enjoy complete right to transfer his interest
therein. In a given case if contrary condition is
annexed to the tenure then the enquiry to be
undertaken is whether such condition is lawfully
annexed. Even this provision reinforces the
argument of the Petitioners that State Government
by its fiat in the form of Government Resolution
cannot unilaterally alter the conditions of the
tenure or for that matter add new conditions. Once
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the grantee has already entered upon the land
pursuant to a lawful grant, if the condition to be
added or modified is acceptable to the grantee,
only then it can be said to be lawful tenure and
not otherwise. We have already noticed that merely
because the lease is due for renewal, that cannot
be taken as occasion by the State Government to
insist insertion of a new condition though not
acceptable to the holder. Besides, the condition
to be so annexed should be as provided by law which
is enacted by the competent legislature. In
absence thereof, such condition can neither be said
to be lawfully annexed to the tenure nor affect the
indefeasible right in the holder created by legal
fiction to have heritable and transferable
property. No doubt section 37 would reveal that an
occupant is entitled to the use and occupation of
his land in perpetuity conditionally on the payment
of the amount due on account of the land revenue
for the same, according to the provisions of this
Code, or of any rules made under this Code or of
any other law for the time being in force, and on
the fulfilment of any other terms or conditions
lawfully annexed to his tenure. However, this
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provision does not dilute the efficacy of right
flowing from Section 36 of MLRC to enjoy the right
of transferability and inheritance, so long as the
lease tenure does not put any restriction thereon.
34. Power to grant leases is bestowed on the
Collector in terms of section 38 of the MLRC. We
may reproduce Section 38 to 40 as the same are of
some relevance which read thus:
"38. Power to grant leases 38. Power to grant leases 38. Power to grant leases
. It shall be lawful for the
Collector at any time to lease under grant
or contract any unalienated unoccupied land
to any person, for such period, for such
purpose and on such conditions as he may,
subject to rules made by the State
Government in this behalf, determine, and in
any such case the land shall, whether a
survey settlement has been extended to it or
not, be held only for the period and for the
purpose and subject to the conditions so
determined. The grantee shall be called a
Government lessee in respect of the land so
granted.
39. Occupant to pay land revenue and 39. Occupant to pay land revenue and 39. Occupant to pay land revenue and
Government lessee to pay rent fixed Government lessee to pay rent fixed Government lessee to pay rent fixed
. Every occupant shall pay as
land revenue the assessment fixed under the
provisions of this Code and rules made
thereunder; and every Government lessee
shall pay as land revenue lease money fixed
under the terms of the lease.
40. Saving of powers of Government 40. Saving of powers of Government 40. Saving of powers of Government
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. Nothing contained in any
provision of this Code shall derogate from
the right of the State Government to dispose
of any land, the property of Government, on
such terms and conditions as it deems fit."
Indeed section 38 authorises the Collector to grant
leases of any unalienated, unoccupied land to any
person, for such period, for such purpose and on
such conditions subject to rules made by the State
Government in that behalf. It is further provided
that the grantee shall be called a Government
lessee in respect of the land so granted. The
Government lessee is one who has been granted land
by the Government under this Code. The other
holders are either falling in Class of occupants
Class-I or occupants Class-II as the case may be.
The purport of Section 40 no doubt is wide enough
to enable the State Government to dispose of any
land, which is the property of the Government on
such terms and conditions as it deems fit and the
provisions of the Code shall not derogate that
right of the Government in any manner. In our
view, however, this provision will be of no avail
to the State Government so as to contend that it
can impose new conditions for the first time either
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during the subsistence of the lease or at the time
of renewal of the lease.
35. Section 41 to 49 provide for use of land and
the restrictions in that regard. Section 50 to 54
deal with encroachment of land and measures to
remove the same. Section 55 to 60 deal with
relinquishment of land and section 61 to 63 deal
with protection of certain occupancies for process
of courts. Chapter IV however deals with the
issues of land revenue. Even on close scrutiny of
provisions under section 64 to 78 enacted under
chapter IV, it is not possible to take the view
that the State Government can impose new conditions
or modify the existing conditions of subsisting
lease or at the time of renewal of lease.
36. The learned Counsel for the State argued
that leases executed since 1921, the renewal of
leases is in Form which contains condition enabling
the State to alter, modify or add new condition.
According to the learned Counsel even Rules 34 of
the Maharashtra Land Revenue (Disposal of
Government Lands) Rules 1971 empowers the Collector
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to grant temporary leases on such terms and
conditions as he may annex to the grant. In so far
as the existence of condition in the grant, that is
a matter to be enquired into by the Competent
Authority on case to case basis. We express no
opinion in that behalf. In so far as Rule 34 is
concerned, that is a provision empowering the
Collector to annex such terms and conditions to the
grant. That provision will be of no avail to
contend that it would authorise the Collector to
add, delete or modify any condition during the
subsistence of the grant or at the time of renewal.
Besides, this provision governs only temporary
leases.
37. Taking over all view of the matter, we have
no difficulty in accepting the claim of the
petitioners that provisions enacted by the State
Legislature as of now would not authorise the State
Government to insert new conditions or modify any
condition during the subsistence of lease period or
for that matter at the time of renewal of the
lease. The renewal of the lease necessarily should
be on same terms and conditions as in the earlier
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lease except the change or revision in respect of
Annual lease rent.
38. The next question is whether the enhancement
of annual lease rent by the Government in terms of
Resolution dated 19th June, 2007 can be said to be
illegal, unjust and unfair. There can be no
dispute that the Government is entitled to increase
the lease rent from time to time. Indeed, revision
in annual lease rent at the time of renewal of the
lease cannot be said to be addition of new
condition as such. The only limitation on the
State Government would be to revise the lease rent
on fair and just basis. Indeed, there is no
provision in the Code-atleast brought to our
notice, which would limit the power of the State
Government to enhance the lease rent in a
particular manner or in terms of quantum. As there
is no such limitation placed in the land revenue
code, the only test to be applied is whether the
proposed revision is just and fair. While dealing
with the point under consideration we have kept in
mind the principle expounded by the Apex Court in
both the decisions of Mangalmurti’s Mangalmurti’s case, namely, Mangalmurti’s
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the first decision reported in AIR 1959 SC 639 AIR 1959 SC 639 and AIR 1959 SC 639
the subsequent unreported decision dated August 27,
1964. We find that the State Government has
introduced the Government Resolution dated 19th
June, 2007 on this subject after due deliberation.
The State Government was anxious to evolve a
formula for revision of lease rent which could be
uniformly applied throughout the State. Relying on
the recommendation of the one man Committee
appointed for that purpose, the Government has
taken a policy decision to revise the lease rent as
per the stated formula. The formula for
determining the annual lease rent is that of amount
equal to the prime lending rate only on the 20% of
existing market value of the land. In other words,
if the prevailing prime lending rate is 10% and the
existing market value of the land is around Rs.One
Lakh, the Annual lease rent would be around
Rs.2000/-(i.e. 10% of Rs.20,000/-). That would be
only about 2% of the prevailing market value of the
property. This formula attempts to factorise the
inflation cost, cost of administration and
escalation impact. This basis will be uniformly
applied to all leases in the State. Obviously
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while fixing this parameter the State was conscious
of the fact that the grantees have already paid
premium when the grant was made. As a result, the
attempt is to arrive at a realistic and fair return
on the property whose owner is primarily the State
Government. The formula is arrived at on just and
fair basis and not capricious or arbitrary.
39. However, the Counsel for the Petitioners
would contend that the annual lease rent which was
fixed while executing the earlier lease was very
nominal. Whereas, on applying the above formula
the annual lease amount to be fixed at the time of
renewal will be staggering and absurdly excessive.
The argument though attractive at the first blush
will have to be rejected. In the first place,
there is no legislation limiting the quantum of
annual lease rent to be levied by the State
Government. The grievance is that, when the lease
was granted in some cases in the year 1900, for a
nominal amount of Rs.7/-, that will now be
substantially enhanced manifold. In some cases it
may even be to the extent of 2000 times the last
annual rent. That cannot be the basis to hold that
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the formula evolved by the State Government is
unjust and unfair. One cannot be oblivious of the
degeneration of Rupee value over the years. In our
opinion, the State Government has taken a policy
decision to recover fair uniform returns in
relation to the Government property throughout the
State which amount would factorise the inflation
cost, cost of administration and escalation impact.
The formula adopted by the State Government on the
recommendation of the committee, is "equivalent to
prime lending rate only on the 1/5th(20%) (not the
full) value" of the existing market rate of the
property. That would not work out to be even two
digits percentage of the market value of the land,
to be paid as the annual lease rent. To make the
annual lease rent upto two digits percentage of the
market value, the prime lending rate itself will
have to reach upto 100% on the investment- which is
almost next to impossible. No material is produced
before us to indicate that as per the prevailing
Commercial market practise almost same amount is
payable towards lease rent in respect of free hold
lands. In absence of such evidence it is not
possible for us to assume that the formulae evolved
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by the Government results in indulging in
profiteering or being comparable to commercial
trend- so as to be labelled as unreasonable, unjust
and unfair. Accordingly, the formulae adopted by
the State cannot be said to be unreasonable and
arbitrary or unconscionable at all. Besides, there
is sound rationale behind such formulae. We may
usefully refer to the decision of the Apex Court in
the case of Style (Dress land) V/s. Union Style (Dress land) V/s. Union Style (Dress land) V/s. Union
Territory, Chandigarh reported in (1997) 7 SCC 89. Territory, Chandigarh reported in (1997) 7 SCC 89. Territory, Chandigarh reported in (1997) 7 SCC 89.
The Apex Court rejected similar challenge that the
annual lease rent was increased manifold (from
Rs.2671/- per month to Rs.14000/- per month within
10 years) at the time of renewal of lease. In that
case the Court proceeded on the finding that the
procedure adopted and made the basis for enhancing
the rent, could not be termed arbitrary,
discriminatory or unreasonable.
40. Much emphasis is placed on the observations
of the Apex Court in Mangalmurti’s case(supra) Mangalmurti’s case(supra) Mangalmurti’s case(supra)
which has noted that the Court cannot ignore the
position that when the plots were let out to the
respective lessees, the lessees have paid premium.
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The fact remains that the earlier lease period
either had expired or was likely to expire and new
lease is to be entered. Significantly, the Apex
Court had noted that it would be unrealistic not to
take into account increase in the market value of
the property. Indeed, the Apex Court added word of
caution that importance of that fact should not be
exaggerated and that should not be a decisive
factor itself. However, the proposed revision of
annual lease rent is founded on the policy decision
of the State Government to introduce lease rent
fixation formula to be uniformly applied to all the
Government leases in the State. Ostensibly, it may
appear that the formula adopted by the State
Government is a complete departure from the
modality of fixation of annual rent in the past.
But that has been necessitated in larger public
interest both for deriving realistic and fair
return on the Government property and also to bring
in uniformity and simplification of procedure for
computation and levy of such charges. To wit, if
in the same area, two different leases were to
become due for renewal around the same time and the
earlier lease rent was to be taken as the sole
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basis, it is quite likely that the two plot holders
will end up in paying different rates of annual
lease rent after its renewal. In that case,
certainly, the holder who is required to pay higher
lease rent can complain of discrimination by the
State. By applying uniform pattern to revise the
annual lease, such anomaly will be ruled out.
Suffice it to note that the State has taken a
considered and conscious policy decision and has
advisedly simplified the revision of annual lease
rent by applying a uniform formula of amount
commensurate with the amount of prime market
lending return only on 20%(1/5th) of the existing
market value of the property. By no standard, such
approach can be said to be unjust and unfair or
rack-renting, profiteering and indulging in
whimsical or unreasonable bargains. The argument
of the Petitioners that such enhanced or revised
annual lease rent is unconscionable and would
result in confiscatory action will have to be
stated to be rejected. The State has acted in the
larger public interest and has taken policy
decision based on the recommendation of the
experts’ opinion in that behalf. The larger public
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interest reckoned by the State Government in
relation to regulation and control of the
Government property shall necessarily prevail over
the private interest of the Petitioners. Just and
equitable does not mean that the annual lease rent
should be so structured that in the perception of
the lessee the same is affordable to him;
irrespective of the fact that such low rent may not
be able to subsume the inflation cost, cost of
administration and escalation impact. That would
militate against the larger public interest and of
economics of sustainable regulation and control of
the Government property. A priori, to this extent,
the Government Resolution will have to be upheld.
41. To sum up, we hold that the principle stated
in Mangalmurti’s case (supra) that it is not open
to the State Government to add new condition during
the subsistence of the lease or at the time of
renewal of the lease unless the conditions of the
tenure so provide is binding. However, if the
conditions of the grant or lease imposes such
restriction, condition or limitation, obviously,
that would be protected by Section 3 of the
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Government Grants Act, 1895. In cases where such
condition has been imposed, obviously, those cases
will not be covered by the definition of "occupants
Class-I" so as to enjoy permanent and transferable
right in the land.
42. According to the Petitioners insofar as
Berar Land Revenue Code, 1928 is concerned, Section
56 thereof provided that subject to personal law,
the rights of occupant shall be permanent and
transferable and on his death shall pass by
inheritance, bequest or survivorship, as the case
may be. According to the Petitioners they were
enjoying the lands in question as Bhumiswami. It
was argued that, that right was protected by the
subsequent legislation of Madhya Pradesh Land
Revenue Code, 1954 (Section 152) or for that
matter, MLRC(Sections 336, 337). Indeed, if the
holder of the land possessed permanent and
transferable right in the property, he would fall
within the definition of "occupant-Class-I" within
the meaning of Section 29 of the MLRC. Whether he
is covered by definition of occupant-Class-I or not
is a question of fact to be examined by the
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appropriate authority on case to case basis.
43. For the time being, suffice it to observe
that if any restriction has been noted in the Lease
Deed, such cases will have to be considered
independently. We are conscious of the fact that
insofar as Berar area is concerned, the holders
were having B-tenure patta and not a formal Lease
Deed as in the case of Central Provinces Area. The
appropriate Authority will have to examine every
case on its own merits as the nature of right of
the party will have to be established in the first
place. That will have to be decided keeping in
mind the governing provisions of the relevant
enactments at the time of grant and subsequent
legislations as would be applicable to that case.
Similar approach will have to be adopted in
relation to lands covered by the then Central
Provinces area where the Petitioners are unable to
produce the lease deed/grant. In those cases the
Competent Authority will have to examine the matter
on the assumption that the lease was as per the
governing provisions of the concerned enactment
when the grant was made. That will mean that the
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Competent Authority will be justified in assuming
that the grant was on terms provided in the "Form
of Grant/Lease" prevailing at the relevant time of
grant prescribed under the relevant Act and Rules
formed thereunder. In other words, if the
prescribed "Form" at the relevant time incorporates
any condition authorising the Government to delete
any condition or add any new condition during the
subsistence of the lease or at the time of renewal,
it may be legitimate for the Authority to do so.
Dependent on the nature of right possessed by the
holder, the question whether he would fall in
occupant class-I or otherwise, can be addressed.
In other words, where the alienation has been
permitted under the Lease Deed, such holders would
be covered by definition of occupants-Class-I. On
the other hand, where the relevant lease or the
governing law imposed restriction on transfer or
alienation of right in the property, any alienation
made by the holder without prior approval of the
local authority, such alienation will be illegal,
unless regularised by the Authority. Indeed,
regularisation will have to be done as per the
terms to be imposed in that behalf including upon
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payment of unearned income. In such cases, the
argument that no new condition can be imposed,
cannot be pressed into service. All these matters
will have to be examined by the appropriate
authority in the first place and only then, the
Authority can insist for imposing new condition on
the occupants of the land, if permissible in law.
44. We shall now revert to the Government
Resolution dated 19th June 2007. We are in
agreement with the argument of the Petitioners that
by Government Resolution, it is not open to the
State Government to repeal provisions of Madhya
Pradesh Land Revenue Code, 1954 pertaining to the
lease of Nazul lands in Nagpur and Amravati region
and the Rules incidental thereto framed by the
Government dated 22nd May 1956 and amendments
thereto carried out by the Government of
Maharashtra on 23rd May 1961 and 14th August 1963.
The repeal of enactment will have to be done by the
State Legislature. Assuming that the purport of
Clause (1) of the Government Resolution is to
indicate that the provisions of the stated
enactment were inapplicable to the lands now
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governed by the MLRC hereafter, even so, that could
not have been done by issuing a Government
Resolution in absence of delegation by the Code in
that behalf. As such, clause (1) of the said
Government Resolution cannot be sustained.
45. Insofar as clause (2) of the Resolution is
concerned, it provides for regularisation of the
violation of terms and conditions. The Petitioners
who have violated the terms and conditions of the
lease would suffer the consequence of such
violation if the same was not to be regularised.
The violation will have to be reckoned only in
those cases which expressly provide for such
restriction in the Lease Deed or by virtue of some
statutory provision. That is a matter to be
enquired into on case to case basis by the
appropriate authority. If Clause (2) of this
Resolution was to be set-aside, there would be no
other option available to the concerned land
holders but to suffer the consequence of having
violated the terms and conditions by transferring
the lands unauthorisedly. In that case, along with
the original land holder, even the subsequent
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purchaser would suffer the same consequence. The
provision is in the nature of allowing the
concerned holders of land to get the irregularity
validated but on payment of specified unearned
amount of the market value of the land as on the
date of violation of the condition. We find no
merit in the stand taken on behalf of the
Petitioners that such mechanism provided by the
State Government to enable the land holders to
regularise the violation as illegal in any manner.
46. Insofar as clause (3) of the said Government
Resolution is concerned, it is an opportunity
provided to the land holders of allotment of land
on ownership right basis subject to paying
specified amount of ownership right of the existing
market value of the land. Once again, this would
apply to occupants who are not covered by the
occupants Class-I category. They would get
ownership rights and would be reckoned as occupants
Class-I, on payment of specified amount and
complying with other formalities. The option was
available only for two years from the date of the
Resolution. That period has already expired. It
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is for the State Government to consider whether to
extend the period provided in sub-clause (b) of
Clause (3) of the Resolution. We express no
opinion in that behalf. Suffice it to observe that
we find no merit in the challenge to Clause (3) of
the stated Resolution.
47. Insofar as challenge to Clause (4) of the
Resolution which deals with holding land on lease
and the annual lease rent, we have already held
that the same is just and fair and in larger public
interest.
48. Insofar as Clause (5) is concerned, that
deals with the transfer after coming into force of
the Resolution and change of user. Insofar as
regularisation of change of user is concerned, that
presupposes that there has been violation of terms
and conditions of lease. If the concerned land
holder has to avail of the opportunity of
regularisation, he cannot be heard to complain that
the amount specified is excessive. In our opinion,
the amount specified for such regularisation is a
fair and just amount provided in the Government
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Resolution. If the concerned land holder was to
succeed in the challenge to this clause, it would
necessarily follow that the said land holder will
have to suffer the consequence of having violated
the terms and conditions of lease, which may
include eviction from the property. Thus
understood, we find no basis even in this
challenge.
49. The remaining provisions in the Resolution
are consequential in nature. As we have expressed
our opinion with regard to substantive provisions,
it is not necessary to dilate any further on this
aspect.
50. We may place on record that the Advocates
appearing for the respective parties invited our
attention to the relevant documents including
Government Resolutions/Circulars as well as
provisions of enactment and reported decisions in
support of their contention. However, we do not
think it necessary to elaborate on those aspects
for the reasons already recorded in the earlier
part of the Judgment. Moreover, we are not
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expressing any opinion either way on the efficacy
of the documents or the status of any of the
Petitioners before us. Instead, we keep all
questions in that behalf open to be considered by
the Competent Authority in the first place.
51. Accordingly, we would relegate the
Petitioners to the appropriate authority who in
turn will examine all relevant aspects on case to
case basis and pass appropriate order in accordance
with law.
52. The Petitioners shall approach the
appropriate authority within eight weeks from the
date of this decision. We make it clear that the
present decision governs only the subsisting lease
at the relevant time of transfer. In case, the
transfers have been effected after the expiry of
lease period, it is for the appropriate authority
to consider whether such transfer is legitimate and
in any case, could be regularised. All questions
in that behalf will have to be considered on its
own merits. In the event, the appropriate
Authority finds that the occupant is unauthorised
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occupant, it will be free to take such action as
may be permissible in accordance with law. The
question where applications for renewal of leases
are pending with the Government or the appropriate
authority, whether they are legitimate occupants or
otherwise is also an issue which will have to be
considered by the appropriate authority on its own
merits and in accordance with law.
Re: Writ Petition No.1607 of 1990
53. That takes us to Writ Petition No.1607 of
1990. As has been mentioned in the opening part of
this Judgment, this Writ Petition is in respect of
Plot No.32 purchased in the year 1952 for
commercial use from Nagpur Improvement Trust. It
is common ground that provisions of MLRC are not
applicable to this case. The Petitioners have more
or less adopted the same argument referred to
earlier. In that, the Nagpur Improvement Trust had
no power to impose condition of unearned income in
absence of express provision in the Nagpur
Improvement Trust Act in that behalf. It was
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further argued that the Resolution passed by the
Trust on 2nd May 1982 provided that in case of
sub-division of Trust plot, if found divisible as
per Nagpur Improvement Trust Rules and the lease
holder is sub-dividing the plot for the purpose of
selling, in that case, permission for sub-division
shall be granted subject to agreement to deposit
50% (unearned income) being difference of market
value prevailing at the time of application and the
original purchase price. According to the
Petitioner, the amount of 50% demand under this
Resolution, assuming it to be legitimate, cannot be
sustained as it is unconscionable provision.
Besides, such a new condition cannot be imposed at
the time of renewal of the lease. It was also
argued that the mechanism provided by the Trust
results in discrimination between the auction
purchaser and direct lessee and also because it is
applicable only in case of sub-division of the plot
and not to transfer of the entire plot. It is
argued that the plot lease holder has had no option
but to succumb to the pressure of the Trust to pay
the demanded amount under protest.
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54. The argument though attractive at the first
blush, clearly overlooks the fact that in the
original lease, no sub-division was allowed. It is
the Petitioner who asked for such permission and in
that context condition has been incorporated by way
of modification at the instance of the Petitioner
on condition that he would pay unearned income, to
which he agreed upon. It is therefore not a case
of renewal of the lease agreement as such.
Whereas, it is a case of modification of the lease
term at the request of the lease plot holder and in
the nature of a fresh lease. In such a case, we
would hold that the Petitioner himself was
responsible for introducing such change in the
lease terms. Thus understood, it is not open to
the Petitioner to now challenge that action. The
Petitioner cannot be allowed to aprobate and
reprobate at the same time. Hence, this Petition
will have to be rejected.
Writ Petition No.908 of 1991:
55. Insofar as Writ Petition No.908 of 1991 is
concerned, even this Petition is in respect of land
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which is leased by the Nagpur Improvement Trust to
the Petitioner. Even in this Petition, similar
stand is taken as in the companion Petition
referred to above. However, on perusal of the
lease deed of 5th December 1986, it is noticed that
express condition has been imposed that the lessee
shall not assign, transfer or part with the
possession of the demised premises so as to cause
any sub-division therein or otherwise to alter the
nature of present demise. Proviso to clause (i)
further postulates that the lessor may subject to
such terms and conditions as it may fix, grant
permission to the lessee to assign, transfer or to
part with possession of demised premises so as to
cause any sub-division therein or otherwise alter
the nature of this present demise. The second
proviso to clause (i) further provides that where
sub-division of the demised plot is permissible as
per the Rules and the lessee with an intention to
sell the sub-divided plot, applies for sub-division
and the permission to sell the sub-divided plot and
when such permission is granted, then the lessee
shall have to pay 50% of the unearned income. It
further provides that in case there is dispute
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regarding market price of the sub-divided plot, the
decision of the Chairman shall be conclusive and
final and binding on the lessee. Clause (h-1)
reads thus:
"(h-1) The lessee shall not disturb,or build
over, or otherwise deal or interfere with
any of the service lines referred to in
sub-clause (g) without the previous
permission in writing of the authority which
laid the service line
(i) The lessee shall not assign, transfer or
part-with the possession of the demised
premises so as to cause any sub-division
therein or otherwise to alter the nature of
this present demise.
Provided, however, that the lessor may
subject to such terms and conditions as it
may fix grant permission to the lessee to
assign,transfer or to part-with possession
of the demised premises so as to cause any
sub-division therein or otherwise alter the
nature of this present demise.
Provided further that where sub-division of
the demised plot is permissible as per the
rules and the lessee with an intention to
sell the sub-divided plot applies for
sub-division and the permission to sell the
sub-divided plot and when such permission is
granted,then the lessee shall have to pay
50% of the unearned income i.e.,difference
between premium paid and the market price of
the land prevailing on the date of sale. In
case there is dispute regarding market price
of sub-divided plot, the decision of the
Chairman,shall be conclusive and final and
binding to the lessee."
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56. On a fair reading of Clause (h-1), there is
no manner of doubt that the restriction on transfer
of whole plot is unaffected. The limited
indulgence shown to the lease holder is of allowing
him to sub-divide the plot if permissible as per
the rules so as to enable him to sell the
sub-divided plot. This provision in fact is to
allow the lease holder to sell the sub-divided
plot, but on payment of specified unearned income.
The Petitioner having agreed to such lease terms,
has bound himself by the contractual obligation
stated therein. The argument that there is no
provision in the Nagpur Improvement Trust Act that
would authorise the Trust to demand unearned
income, cannot be countenanced at the instance of
the Petitioner who willingly accepted such
condition or restriction, which, to his
understanding, was in his interest. In fact, such
lease condition is saved by the provisions of the
Grants Act and would prevail. Accordingly, there
is no merits in the grievance made by the
Petitioner in this Petition as well.
57. We place on record our appreciation for the
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able assistance given by the Counsel appearing for
the respective parties, without which it would not
have been possible for us to conclude the argument
in shortest possible time irrespective of the large
number of Petitions, which are required to be
disposed of by this common judgment.
58. Accordingly, we proceed to pass following
order :
(1) Writ Petition No.1607 of 1990 and 908 of
1991 are dismissed. Rule stands discharged
in both the Petitions.
(2) All other companion Petitions are partly
allowed. The relief claimed by the
respective Petitioners to challenge the
revision of annual lease rent is rejected.
The Government Resolution dated 19th June,
2007 is upheld to this extent.
(3) Insofar as the other reliefs claimed in
the respective Petitions, the Petitioners
are relegated before the appropriate
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authority. The Petitioners shall file
proceedings before the appropriate authority
within eight weeks from today asking for
reliefs as may be permissible in law. All
questions in that behalf are left open, to
be decided by the appropriate authority on
its own merits in accordance with law
keeping in mind the observations made in the
earlier part of this Judgment.
(4) The State Government will be free to
consider extending the time to apply for
allotment of land on ownership right under
clause 3(D) of the Government Resolution
dated 19th June 2007, if so advised.
(5) No order as to costs.
(R.C.CHAVAN,J) (A.M.KHANWILKAR, J). (R.C.CHAVAN,J) (A.M.KHANWILKAR, J). (R.C.CHAVAN,J) (A.M.KHANWILKAR, J).
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