SHRIDHAR C. SHETTY (DECEASED) THR. LRS. versus THE ADDITIONAL COLLECTOR AND COMPETENT AUTHORITY AND ORS.

[2020] 6 S.C.R.

ASHRIDHAR C. SHETTY (DECEASED) THR. LRS.

THE ADDITIONAL COLLECTOR AND COMPETENTAUTHORITY AND ORS.

(Civil Appeal No. 2019 of 2010)

SEPTEMBER 02, 2020

[R. F. NARIMAN AND NAVIN SINHA, JJ.]

Urban Land (Ceiling and Regulation) Act, 1976:

Css. 2(d), 20, 21 and 38(4) – Failure of landowner to handoverseven tenements to Government nominees as required under theconditions of exemption granted u/ss. 20 and 21 – Demand of marketvalue of seven tenements plus interest, penalty and recovery expensesas arrears of land revenue – Demand affirmed by appellate authorityas well as High Court – Appeal to Supreme Court – Held: There hasDbeen breach by the land-owner in terms of the exemption – TheAuthority also did not take any action to withdraw the exemption inview of the breach – The tenements, since have been sold, nodirection can be issued to hand-over seven more tenements from theconstruction – The demand for the market value of the sevenEtenements, fall outside the purview of the Act, and hence cannot beconstrued as money due to the Government so as to vest in it thenature of arrears of land revenue recoverable u/s. 265 ofMaharashtra Land Revenue Code, 1966 – The competent Authoritybeing the creature of statute u/s. 2(d) cannot act beyond its statutoryjurisdiction and shall remain circumscribed by the provisions of theFAct – The demand being de hors the provisions of the Act and beingbeyond statutory powers of the Competent Authority is Arbitraryand hence unsustainable.

Allowing the appeal, the Court

GHELD: 1.1 Sections 20 and 21 of the Urban Land (Ceilingand Regulation) Act, 1976 contain provisions that if theGovernment or the competent authority, as the case may be issatisfied that any of the conditions subject to which exemptionwas granted, is not complied with, it shall be competent for it towithdraw the order of exemption or to declare such land to beH

excess land under Section 21 of the Act with its attendantconsequences as provided under the Act. [Para 9][1009-F-G]

S. Vasudeva v. State of Karnataka and Ors. (1993) 3SCC 467 : [1993] 2 SCR 715 – relied on.

1.2 In the nature of the composite exemption granted, thefailure of the authorities to cancel or withdraw the exemption forbreach by transfer of development rights to respondent Nos. 2to 4 or construction on one plot only and the consequent claimbased on the “No Objection Certificate” dated 08.06.1993 issuedfor purposes of water connection, is of no avail to the appellantas the certificate expressly recites that so far only seventenements had been handed over meaning thereby that the furtherseven tenements remained to be handed over. The certificatewas therefore conditional in nature and not absolute. [Para13][1012-E-F]1.3 Subsequent to the grant of exemption, the appellantentered into development agreement with respondent Nos. 2to 4 as early as on 29.08.1988 describing himself as the ownerand also handed over the title deeds of the property. But theappellant informed the authorities of this fact very belatedly on15.04.2005. The building plan was approved in the name of theappellant on 19.10.1988. The permission to commenceconstruction was issued in his name on 28.02.1989. He alonehad applied for extension of the scheme leading to issuance ofthe corrigendum dated 29.12.1988. The appellate authority inhis order dated 12.07.2006 has adequately noticed that it was theappellant who was the de facto owner of the plot, had submittedthe application for exemption, given an undertaking on stampedpaper dated 16.05.2005 to fulfil the conditions of the exemptionby providing the additional seven tenements or market value inrespect thereof. The question of any estoppel, therefore, doesnot arise. Therefore, any dispute between the appellant andrespondents Nos. 2 to 4 under the development agreementbetween them falls in the realm of private dispute and does notdetract from the exclusive liability of the appellant under the orderof exemption. [Para 14][1012-H; 1013-A-C]

A1.4 There is thus no dispute with regard to the fact thatthere had been breach by the appellant in terms of theexemption. The authority under the Act also did not take anysteps to withdraw the exemption because of such breach. Thetenements have been constructed and sold. No directionstherefore can be issued to hand over seven more tenements fromBthe constructions so raised. [Para 16][1013-E-F]

2. The question whether the competent authority under theAct possesses the power to recover the market value of seventenements for failure to hand over possession in terms of theorder of exemption, being pure question of law, the facts beingCundisputed, there is no reason not to allow the appellant to raisethe same before this Court for the first time. The competentauthority under the Act could have certainly withdrawn theexemption in the event of breach along with all its attendedconsequences. Failure to do so did not deprive the statutory

Dauthority of its powers to proceed appropriately under the Act.But the competent authority being creature of the statute underSection 2(d) of the Act, cannot act beyond its statutory jurisdictionand the exercise of its powers shall remain circumscribed by theprovisions of the Act. The undertaking dated 16.05.2005 by theappellant, to pay the price of the same in the event of the failureEto do so cannot expand the statutory powers of the competentauthority under the provisions of Sections 20 and 21 of the Act.The demand for the market value of the remaining seventenements, falling outside the purview of the Act, cannot beconstrued as money due to the Government so as to vest in itFthe nature of arrears of land revenue recoverable under Section265 of the Maharashtra Land Revenue Code, 1966. Therefore,the impugned demand is dehors the provisions of the Act andunsustainable being beyond the statutory powers of the competentauthority and thus arbitrary. [Paras 16 and 17][1013-F-H; 1014-A-D]GM/s Shantistar Builders v. Narayan Khimalal Totameand Others (1990) 1 SCC 520 – held inapplicable.

Naraindas Indurkhya v. The State of Madhya Pradeshand Others (1974) 4 SCC 788 : [1974] 3 SCR 624;

SHRIDHAR C. SHETTY (DECEASED) THR. LRS. v. ADDL. COLLECTORAND COMPETENT AUTHORITY

Karmarahi Kanji Chandan v. The State of Maharashtraand Ors. Writ Petition No. 2629 of 1992 dated03.12.1992; Nargis Jal Haradhvala v. State ofMaharashtra and Ors., (2015) 4 SCC 259 : [2015] 1

SCR 8 – referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No.2019 of2010.

From the final Order dated 21.06.2007 of the High Court ofJudicature at Bombay in Writ Petition No.2542 of 2006.

Amar Dave, Mahesh Agarwal, Ankur Saigal, Gaurav Goel, YatinR. Shah, Anirudh Bhatia, E.C. Agrawala, Advs. for the Appellant.

Sachin Patil, Adv. for the Respondents.

The Judgment of the Court was delivered by

NAVIN SINHA, J.

1. The appellant is aggrieved by the order of the High Courtaffirming the demand dated 15.10.2005 by respondent No.1 forRs. 51,97,196/- plus interest, penalty and recovery expenses as arrearsof land revenue. The demand was raised consequent to the failure ofthe appellant to handover seven tenements to government nominees asrequired under the conditions of exemption granted under Sections 20and 21 of the Urban Land (Ceiling and Regulation) Act, 1976 (hereinafterreferred to as the Act”) (since repealed in 1999). The AdditionalCommissioner, Konkan Division, Mumbai as the appellate authorityaffirmed the same by his order dated 12.07.2006.

2. Shri Amar Dave, learned counsel for the appellant submittedthat exemption was granted under Section 20 of the Act on 02.03.1988for raising construction over two plots being CTS No. 261 and CTS No.245. In lieu thereof the appellant was required to surrender 20 per centof the constructed area to government nominees. The competent authority

Adespite being aware that construction had been raised on only one plot,never withdrew the exemption. On the contrary, it consciously issued a“No Objection Certificate” acknowledging that seven tenements hadbeen handed over. It was next submitted that if there had been anybreach of the conditions of exemption, the Act empowered the authoritiesto withdraw the exemption with all its attendant consequences. OurBattention was invited to provisions of Sections 20 and 21 of the Act.

3. It was next submitted that respondent no.1 did not have anystatutory authority under the Act to levy the impugned demand muchless recover it as arrears of land revenue. Relying upon Section 38(4) ofthe Act, Shri Dave submitted that the appellant could statutorily imposeCa punishment of fine, order imprisonment or impose both. The demandbeing dehors the provisions of the Act must be struck down. Reliancewas placed on Naraindas Indurkhya vs. The State of Madhya Pradeshand Others, (1974) 4 SCC 788.

4. Contending that the “No Objection Certificate” dated 08.06.1993Dwas post 30.01.1990 judgment of this Court in M/s Shantistar Buildersvs. Narayan Khimalal Totame and Others (1990) 1 SCC 520, theauthorities at best could have enforced 5% limit for handing over oftenements to government nominees.

5. Shri Dave next submitted that the appellant, to the knowledgeEof respondent no.1, had entered into development agreement for theexempted lands with respondent nos. 2 to 4 and given power of Attorney.The liability for breach, if any, and payment in respect thereof were,therefore, the exclusive responsibility of the said respondents who alonewere responsible for the occasioned breaches. Acknowledging the same,the authorities had also made direct communication with the saidFrespondents on 20.01.1994 and 27.01.1994.

6. Shri Sachin Patil, learned counsel for Respondent Nos. 1 and 5submitted that in view of the prohibition contained in Clause 13 of theexemption order, the appellant could not have transferred the developmentGrights to respondent nos. 2 to 4. Any illegal transfer made cannot be ofany avail to the appellant by urging that the liability for payment, therefore,rested with the said respondent to the exclusion of the appellant. Theexemption granted under the Act was composite in respect of two plots.It is not open for the appellant to contend that construction having beenraised on one plot only, he was not bound by the original conditions ofHexemption. The no objection certificate relied upon by the appellant wasnot conclusive as it expressly recited that seven tenements had beenhanded over so far, meaning thereby that the remaining seven tenementswere yet to be handed over.

7. Shri Patil, refuting the submission on behalf of the appellantthat the liability for payment, if any, rested upon respondent Nos. 2 to 4alone, submitted that it was the appellant who had applied for theexemption under the power of attorney given by the actual land owner.He alone had applied and was granted permission to start construction.The building plans were submitted under his signature. Since the appellanthas profiteered by reason of the misuse of the exemption order, theimposition for recovery of the market value of seven tenements alongwith penalty, interest etc. as arrears of land revenue calls for nointerference. The appellant himself on 16.05.2005 undertook in writingto purchase seven tenements in adjoining areas for government nomineesor else pay the market value of seven tenements.

8. Referring to the submissions for cap of 5 per cent tenementsto be provided only, it was submitted that M/s Shantistar Builders (supra)has been interpreted as prospective in nature by the Mumbai High Courtrelying on Karmarahi Kanji Chandan vs. The State of Maharashtraand Ors., Writ Petition No. 2629 of 1992 dated 03.12.1992 and whichhas been followed in other writ petitions. He also drew our attention toNargis Jal Haradhvala vs. State of Maharashtra and ors., (2015) 4SCC 259 in context of the same. It was next submitted that any inter sedispute between the appellant and respondent nos.2 to 4 in raising theconstructions under the original order of exemption pertains to the realmof private dispute between the parties, and with which the authoritiesunder the Act are not concerned. It was lastly submitted that mandamusmay be issued to the appellant for handing over seven tenements in theevent that this court finds that the impugned demand was unsustainablefor any reason. None has appeared on behalf of respondent nos.2 to 4despite service of notice.

9. We have considered the respective submissions made on behalfof the parties. Relevant provisions of the Act which fall for considerationare Sections 2(d), 20, 21 and 38(4) which are set out hereinunder: -

“2(d) “competent authority” means any person or authorityauthorised by the State Government, by notification in the OfficialGazette, to perform the functions of the competent authority under

this Act for such area as may be specified in the notification anddifferent persons or authorities may be authorised to performdifferent functions.

20. Power to exempt. —(1) Notwithstanding anything containedin any of the foregoing provisions of this Chapter—

(a) where any person holds vacant land in excess of the ceilinglimit and the State Government is satisfied, either on its ownmotion or otherwise, that, having regard to the location of suchland, the purpose for which such land is being or is proposed tobe used and such other relevant factors as the circumstancesof the case may require, it is necessary or expedient in thepublic interest so to do, that Government may, by order, exempt,subject to such conditions, if any, as may be specified in theorder, such vacant land from the provisions of this Chapter;

(b) where any person holds vacant land in excess of the ceilinglimit and the State Government, either on its own motion orotherwise, is satisfied that the application of the provisions ofthis Chapter would cause undue hardship to such person, thatGovernment may by order, exempt, subject to such conditions,if any, as may be specified in the order, such vacant land fromthe provisions of this Chapter: Provided that no order underthis clause shall be made unless the reasons for doing so arerecorded in writing.

Provided that no order under this clause shall be made unless thereasons for doing so are recorded in writing.

(2) If at any time the State Government is satisfied that any of theFconditions subject to which any exemption under clause (a) orclause (b) of subsection (1) is granted is not complied with by anyperson, it shall be competent for the State Government to withdraw,by order, such exemption after giving reasonable opportunity tosuch person for making representation against the proposedwithdrawal and thereupon the provisions of this Chapter shall applyGaccordingly.

21. Excess vacant land not to be treated as excess in certaincases.—

(1) Notwithstanding anything contained in any of the foregoingprovisions of this Chapter, where person holds any vacant land

in excess of the ceiling limit and such person declares within suchtime, in such form and in such manner as may be prescribed beforethe competent authority that such land is to be utilised for theconstruction of dwelling units (each such dwelling unit having aplinth area not exceeding eighty square metres) for theaccommodation of the weaker sections of the society, inaccordance with any scheme approved by such authority as theState Government may, by notification in the Official Gazette,specify in this behalf, then, the competent authority may, aftermaking such inquiry as it deems fit, declare such land not to beexcess land for the purposes of this Chapter and permit suchperson to continue to hold such land for the aforesaid purpose,subject to such terms and conditions as may be prescribed, includinga condition as to the time limit within which such building are to beconstructed.

(2) Where any person contravenes any of the conditions subjectto which the permission has been granted under subsection (1),the competent authority shall, by order, and after giving such personan opportunity of being heard, declare such land to be excess landand thereupon all the provisions of this Chapter shall applyaccordingly.”

38(4) If any person contravenes any of the provisions of this Actfor which no penalty has been expressly provided for, he shall bepunishable with imprisonment for term which may extend totwo years or with fine which may extend to one thousand rupeesor with both.”

Both the Sections 20 and 21 of the Act, therefore, contain provisionsthat if the Government or the competent authority, as the case may be issatisfied that any of the conditions subject to which exemption was grantedis not complied with, it shall be competent for it to withdraw the order ofexemption or to declare such land to be excess land under Section 21 ofthe Act with its attendant consequences as provided under the Act.

10. This court in S. Vasudeva vs. State of Karnataka and ors.,(1993) 3 SCC 467 interpreting the provisions of Sections 20 and 21 ofthe Act held as follows:

A“35. This distinction between Sections 20 and 21 may be noticedat this stage. In the first instance, the power given under Section20 is to the State Government and not to the competent authority.The power given is to exempt the land, and the exemption is to begranted to person. The purpose of exemption is either publicinterest or relief from personal undue hardship. It does not appearBto be obligatory on the State Government to prescribe anyconditions while granting the exemption. However, if any conditionsare specified and if the State Government is later satisfied thatthere is noncompliance with any of the conditions, the StateGovernment is given power to withdraw the exemption.C36. As far as Section 21 is concerned, the power conferred by itis not to exempt the land but to declare it not to be excess for thepurposes of Chapter III. The power is given to the competentauthority itself. It is to be exercised by it only under onecircumstance. That circumstance is that the holder of the vacantDland should declare before it within specified time and in theprescribed form and manner, that he desires to utilise the land forthe construction of the dwelling units of not more than the particularsize mentioned therein for accommodating the weaker sectionsand in accordance with any scheme approved by the specifiedauthority. It is the competent authority which is required to makeEinquiry as it deems fit into such declaration, and if it is satisfied,to declare that such land shall not be excess within the meaningof the said chapter. However, it appears that the competentauthority is required to prescribe certain terms and conditions whiledeclaring the land not to be an excess land, including conditionFwith regard to the time-limit within which such buildings are to beconstructed, and on the breach of any of the conditions, thecompetent authority is also given power to declare the land to bean excess land.”

11. Shri Bhaskar Govind Bhoir and Shri Waman Govind BhoirGwere the original owners of the lands which were declared surplus underthe Act on 31.07.1980. The agreement for sale dated 12.03.1984executed by the owners in favour of the appellant, who was the proprietorof M/s. Jay Pali Builders, itself recited that the sale would be subject tothe provisions of the Act and that the appellant would obtain all permissionsfor development under the same. general power of attorney datedH15.01.1985 was then executed by the owners in favour of the appellant

inter alia authorising him to pursue matters before the competentauthority under the Act and to obtain all necessary permissions,exemptions etc. for development on the lands. The appellant then appliedfor exemption which was granted on 02.03.1988 by the State Governmentunder the guidelines issued under Section 20 of the Act being GovernmentResolution, Housing and Special Assistance Department SS 1086/2340/XIII dated 22.08.1986. The exemption was granted in respect of 78tenements to be constructed on the exempted lands identified as SurveyNo. 37 (part corresponding to CTS No. 261) and Survey No. 34 (PartCTS No. 245). The exemption mandated 20 per cent (15 tenements) tobe handed over for allotment to government nominees belonging toweaker sections of the society. corrigendum was issued on 29.12.1988by the State Government at the request of the appellant, increasing thearea for construction under Section 8(4) of the Act from 3785 sq.mtrs to4412.10 sq.mtrs. The 20 per cent requirement for government nomineesaccordingly stood enhanced to 18 tenements. As out of the two CTSplots for which exemption was granted, the appellant developed onlyone plot bearing CTS No. 261, he was therefore liable to surrender 588sq.mtrs. i.e. 20% of the built-up area in form of 14 tenements for allotmentto Government nominees.

12. The order of exemption dated 02.03.1988 contained conditionswhich were in accord with the statutory provisions. Clauses 5, 9, 13, 17and 18 are considered relevant and are extracted hereinunder: -

“5. The said person shall commence construction of the tenementswithin period of 1 year from the date of this exemption ordershall complete the construction work within 3 years, falling theexemption shall stand withdrawn. If only part of the land utilizedby the said person and aprt remains vacant at the end abovedate 22.02.1991 the exemption for the part which remain vacantor where the buildings are incomplete, for the land underincomplete building and the land appurtenant thereto shall bedeemed to have been withdrawn and vacant land and such landwith structure and land appurtenant shall be acquired as per chapterIII of the Urban Land (Ceiling and Regulation) Act, 1976.

9. The said person shall sell 20% of the permitted floor space tothe allottees nominated by the Government of Maharashtra at therate of Rs. Sq.ft. (illegible).

A13. The said person shall not transfer the exempted lands or withoutbuilding thereon or any part thereof to any other person, exceptfor the purpose of mortgage in favour of any financial institutionsspecified in sub-section (1) of section 19 of the for raising financefor the purpose of construction of any one of the tenementsmentioned above, breach of this conditions shall that exemptionBgranted under this order stands withdrawn.

17. If at any time, the State Government is satisfied that there is abreach of any of the conditions mentioned in this order, shall beCcompetent for the State Government to withdraw by an theexemption order from the date specified in the order. Providedthat, before making any such order the state Government shallgive reasonable opportunity to the person whose are exemptedfor making representation against the proposed withdrawal.

D18. when any such exemption is withdrawn or deemed to bewithdrawn under these conditions, the provisions of the Chapter-III of the said Act shall apply to the lands as if the land had notbeen adopted under this order.”

13. We are of the considered opinion that in the nature of theEcomposite exemption granted, the failure of the authorities to cancel orwithdraw the exemption for breach by transfer of development rights torespondents nos.2-4 or construction on one plot only and the consequentclaim based on the “No Objection Certificate” dated 08.06.1993 issuedfor purposes of water connection, is of no avail to the appellant as thecertificate expressly recites that so far only seven tenements had beenFhanded over meaning thereby that the further seven tenements remainedto be handed over. The certificate was therefore conditional in natureand not absolute.

14. The plea of the appellant that the liability under the impugneddemand rested upon respondent nos. 2 to 4 alone in view of theGdevelopment agreement between the parties, and that the authoritieshad made any direct communication with the said respondents also doesnot merit any consideration in view of the facts of the case coupled withthe provisions of the Act. Subsequent to the grant of exemption, theappellant entered into development agreement with respondent nos. 2to 4 as early as on 29.08.1988 describing himself as the owner and alsoH

handed over the title deeds of the property. But the appellant informedthe authorities of this fact very belatedly on 15.04.2005. The buildingplan was approved in the name of the appellant on 19.10.1988. Thepermission to commence construction was issued in his name on28.02.1989. He alone had applied for extension of the scheme leading toissuance of the corrigendum dated 29.12.1988. The appellate authorityin his order dated 12.07.2006 has adequately noticed that it was theappellant who was the de facto owner of the plot, had submitted theapplication for exemption, given an undertaking on stamped paper dated16.05.2005 to fulfil the conditions of the exemption by providing theadditional seven tenements or market value in respect thereof. Thequestion of any estoppel, therefore, does not arise. Shri Patil is thereforeright in his submission that any dispute between the appellant andrespondents nos. 2 to 4 under the development agreement between themfalls in the realm of private dispute and does not detract from theexclusive liability of the appellant under the order of exemption.

15. The appellant having failed to hand over the remaining seventenements, the impugned demand dated 15.10.2005 then came to beraised by respondent no.1 as being the current market value rate of theremaining seven tenements pursuant to the undertaking of the appellantdated 16.05.2005. This was preceded by repeated request to the appellantfor handing over seven tenements.

16. There is no dispute with regard to the fact that there had beena breach by the appellant in terms of the exemption. The authority underthe Act also did not take any steps to withdraw the exemption becauseof such breach. The tenements have been constructed and sold as wewere informed. No directions therefore can be issued to hand over sevenmore tenements from the constructions so raised. The question that arisesfor consideration however is whether the competent authority under theAct possesses the power to recover the market value of seven tenementsfor failure to hand over possession in terms of the order of exemption.The undertaking dated 16.05.2005 by the appellant, to pay the price ofthe same in the event of the failure to do so, in our opinion cannot expandthe statutory powers of the competent authority under the provisions ofSections 20 and 21 of the Act. The appellant has justifiably raised purequestion of law before us for the first time, which was acknowledgednot to have been raised earlier either before the appellate authority orthe High Court under Section 38(4) of the Act.

A17. It being pure question of law, the facts being undisputed, wesee no reason not to allow the appellant to raise the same before us forthe first time. The competent authority under the Act could have certainlywithdrawn the exemption in the event of breach along with all its attendedconsequences. Failure to do so did not deprive the statutory authority ofits powers to proceed appropriately under the Act. But the competentBauthority being creature of the statute under Section 2(d) of the Act,cannot act beyond its statutory jurisdiction and the exercise of its powersshall remain circumscribed by the provisions of the Act. Any undertakingby the appellant cannot expand the statutory jurisdiction of the competentauthority. The demand for the market value of the remaining sevenCtenements, falling outside the purview of the Act, cannot be construedas money due to the Government so as to vest in it the nature of anarrears of land revenue recoverable under Section 265 of the MaharashtraLand Revenue Code, 1966. We have, therefore, no hesitation inconcluding that the impugned demand is dehors the provisions of the Actand unsustainable being beyond the statutory powers of the competentDauthority and thus arbitrary.

18. The submission of Shri Amar Dave with regard to cap of 5per cent on the tenements to be handed over in view of the judgement inM/s. Shantistar Builders (supra) has to be stated to be rejected. Asnoticed above, M/s. Shantistar Builders (supra) has been interpretedEto be prospective in nature. bare perusal of paragraphs 21 and 22 ofthe judgement leaves no doubt in our mind also that it was intended to beonly prospective in nature in its operation.

19. The order of the High Court is set aside. The appeal standsallowed.F

Kalpana K. Tripathy

Appeal allowed.