Shridhar C.Shetty (Deceased) … vs Addl.Collector And Competent … on 2 September, 2020


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Supreme Court of India

Shridhar C.Shetty (Deceased) … vs Addl.Collector And Competent … on 2 September, 2020

Author: Navin Sinha

Bench: Rohinton Fali Nariman, Navin Sinha, Hon’Ble Ms. Banerjee

                                                                    REPORTABLE

                                    IN THE SUPREME COURT OF INDIA
                                     CIVIL APPELLATE JURISDICTION


                                 CIVIL APPEAL NO(s). 2019 OF 2010

          SHRIDHAR C. SHETTY (DECEASED)
          THR. LRS.                                              ...APPELLANT(S)

                                               VERSUS
          THE ADDITIONAL COLLECTOR AND
          COMPETENT AUTHORITY AND ORS.                        ...RESPONDENT(S)



                                               JUDGMENT

NAVIN SINHA, J.

The appellant is aggrieved by the order of the High Court

affirming the demand dated 15.10.2005 by respondent No.1 for

Rs. 51,97,196/­ plus interest, penalty and recovery expenses as

arrears of land revenue. The demand was raised consequent to

the failure of the appellant to handover seven tenements to

government nominees as required under the conditions of

exemption granted under Sections 20 and 21 of the Urban Land

(Ceiling and Regulation) Act, 1976 (hereinafter referred to as the

Act”) (since repealed in 1999). The Additional Commissioner,
Signature Not Verified

Digitally signed by
INDU MARWAH
Date: 2020.09.02
17:29:16 IST
Reason:

1
Konkan Division, Mumbai as the appellate authority affirmed the

same by his order dated 12.07.2006.

2. Shri Amar Dave, learned counsel for the appellant

submitted that exemption was granted under Section 20 of the

Act on 02.03.1988 for raising construction over two plots being

CTS No. 261 and CTS No. 245. In lieu thereof the appellant was

required to surrender 20 per cent of the constructed area to

government nominees. The competent authority despite 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

had been handed over. It was next submitted that if there had

been any breach of the conditions of exemption, the Act

empowered the authorities to withdraw the exemption with all its

attendant consequences. Our attention was invited to provisions

of Sections 20 and 21 of the Act.

3 It was next submitted that respondent no.1 did not have

any statutory authority under the Act to levy the impugned

demand much less recover it as arrears of land revenue. Relying

2
upon Section 38(4) of the Act, Shri Dave submitted that the

appellant could statutorily impose a punishment of fine, order

imprisonment or impose both. The demand being dehors the

provisions of the Act must be struck down. Reliance was placed

on Naraindas Indurkhya vs. The State of Madhya Pradesh

and Others, (1974) 4 SCC 788.

4. Contending that the “No Objection Certificate” dated

08.06.1993 was post 30.01.1990 judgment of this Court in M/s

Shantistar Builders vs. Narayan Khimalal Totame and

Others (1990) 1 SCC 520, the authorities at best could have

enforced a 5% limit for handing over of tenements to government

nominees.

5. Shri Dave next submitted that the appellant, to the

knowledge of respondent no.1, had entered into a development

agreement for the exempted lands with respondent nos. 2 to 4

and given a power of Attorney. The liability for breach, if any,

and payment in respect thereof were, therefore, the exclusive

responsibility of the said respondents who alone were

3
responsible for the occasioned breaches. Acknowledging the

same, the authorities had also made direct communication with

the said respondents on 20.01.1994 and 27.01.1994.

6. Shri Sachin Patil, learned counsel for Respondent Nos. 1

and 5 submitted that in view of the prohibition contained in

Clause 13 of the exemption order, the appellant could not have

transferred the development rights to respondent nos. 2 to 4.

Any illegal transfer made cannot be of any avail to the appellant

by urging that the liability for payment, therefore, rested with

the said respondent to the exclusion of the appellant. The

exemption granted under the Act was composite in respect of

two plots. It is not open for the appellant to contend that

construction having been raised on one plot only, he was not

bound by the original conditions of exemption. The no objection

certificate relied upon by the appellant was not conclusive as it

expressly recited that seven tenements had been handed over so

far, meaning thereby that the remaining seven tenements were

yet to be handed over.

4

7. Shri Patil, refuting the submission on behalf of the

appellant that the liability for payment, if any, rested upon

respondent Nos. 2 to 4 alone, submitted that it was the

appellant who had applied for the exemption 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 appellant

has profiteered by reason of the misuse of the exemption order,

the imposition for recovery of the market value of seven

tenements along with penalty, interest etc. as arrears of land

revenue calls for no interference. The appellant himself on

16.05.2005 undertook in writing to purchase seven tenements in

adjoining areas for government nominees or else pay the market

value of seven tenements.

8. Referring to the submissions for a cap of 5 per cent

tenements to be provided only, it was submitted that M/s

Shantistar Builders (supra) has been interpreted as

prospective in nature by the Mumbai High Court relying on

Karmarahi Kanji Chandan vs. The State of Maharashtra

5
and Ors., Writ Petition No. 2629 of 1992 dated 03.12.1992 and

which has been followed in other writ petitions. He also drew our

attention to Nargis Jal Haradhvala vs. State of Maharashtra

and ors., (2015) 4 SCC 259 in context of the same. It was next

submitted that any inter se dispute between the appellant and

respondent nos.2 to 4 in raising the constructions under the

original order of exemption pertains to the realm of a private

dispute between the parties, and with which the authorities

under the Act are not concerned. It was lastly submitted that a

mandamus may be issued to the appellant for handing over

seven tenements in the event that this court finds that the

impugned demand was unsustainable for any reason. None has

appeared on behalf of respondent nos.2 to 4 despite service of

notice.

9. We have considered the respective submissions made on

behalf of the parties. Relevant provisions of the Act which fall

for consideration are Sections 2(d), 20, 21 and 38(4) which are

set out hereinunder: ­

“2(d) “competent authority” means any person or
authority authorised by the State Government, by
notification in the Official Gazette, to perform the

6
functions of the competent authority under this Act
for such area as may be specified in the notification
and different persons or authorities may be
authorised to perform different functions.

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

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

(b) where any person holds vacant land in excess
of the ceiling limit and the State Government,
either on its own motion or otherwise, is satisfied
that the application of the provisions of this
Chapter would cause undue hardship to such
person, that Government may by order, exempt,
subject to such conditions, if any, as may be
specified in the order, such vacant land from the
provisions of this Chapter: Provided that no
order under this clause shall be made unless the
reasons for doing so are recorded in writing.
Provided that no order under this clause shall be
made unless the reasons for doing so are recorded in
writing.

(2) If at any time the State Government is satisfied
that any of the conditions subject to which any
exemption under clause (a) or clause (b) of
sub­section (1) is granted is not complied with by any
person, it shall be competent for the State
Government to withdraw, by order, such exemption

7
after giving a reasonable opportunity to such person
for making a representation against the proposed
withdrawal and thereupon the provisions of this
Chapter shall apply accordingly.

21. Excess vacant land not to be treated as excess in
certain cases.—
(1) Notwithstanding anything contained in any of the
foregoing provisions of this Chapter, where a person
holds any vacant land in excess of the ceiling limit
and such person declares within such time, in such
form and in such manner as may be prescribed
before the competent authority that such land is to
be utilised for the construction of dwelling units
(each such dwelling unit having a plinth area not
exceeding eighty square metres) for the
accommodation of the weaker sections of the society,
in accordance with any scheme approved by such
authority as the State Government may, by
notification in the Official Gazette, specify in this
behalf, then, the competent authority may, after
making such inquiry as it deems fit, declare such
land not to be excess land for the purposes of this
Chapter and permit such person to continue to hold
such land for the aforesaid purpose, subject to such
terms and conditions as may be prescribed, including
a condition as to the time limit within which such
building are to be constructed.

(2) Where any person contravenes any of the
conditions subject to which the permission has been
granted under sub­section (1), the competent
authority shall, by order, and after giving such
person an opportunity of being heard, declare such
land to be excess land and thereupon all the
provisions of this Chapter shall apply accordingly.”
***
38(4) If any person contravenes any of the provisions
of this Act for which no penalty has been expressly
provided for, he shall be punishable with
imprisonment for a term which may extend to two

8
years or with fine which may extend to one thousand
rupees or with both.”

Both the Sections 20 and 21 of the Act, therefore,

contain provisions that if the Government or the competent

authority, as the case may be is satisfied that any of the

conditions subject to which exemption was granted is not

complied with, it shall be competent for it to withdraw the

order of exemption or to declare such land to be excess land

under Section 21 of the 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 of the Act held as follows:

“35. This distinction between Sections 20 and 21
may be noticed at this stage. In the first instance,
the power given under Section 20 is to the State
Government and not to the competent authority. The
power given is to exempt the land, and the exemption
is to be granted to a person. The purpose of
exemption is either public interest or relief from
personal undue hardship. It does not appear to be
obligatory on the State Government to prescribe any
conditions while granting the exemption. However, if
any conditions are specified and if the State
Government is later satisfied that there is
noncompliance with any of the conditions, the State

9
Government is given power to withdraw the
exemption.

36. As far as Section 21 is concerned, the power
conferred by it is not to exempt the land but to
declare it not to be excess for the purposes of
Chapter III. The power is given to the competent
authority itself. It is to be exercised by it only under
one circumstance. That circumstance is that the
holder of the vacant land should declare before it
within a specified time and in the prescribed form
and manner, that he desires to utilise the land for
the construction of the dwelling units of not more
than the particular size mentioned therein for
accommodating the weaker sections and in
accordance with any scheme approved by the
specified authority. It is the competent authority
which is required to make inquiry as it deems fit into
such a declaration, and if it is satisfied, to declare
that such land shall not be excess within the
meaning of the said chapter. However, it appears
that the competent authority is required to prescribe
certain terms and conditions while declaring the land
not to be an excess land, including a condition with
regard to the time­limit within which such buildings
are to be constructed, and on the breach of any of
the conditions, the competent authority is also given
power to declare the land to be an excess land.”

11. Shri Bhaskar Govind Bhoir and Shri Waman Govind Bhoir

were the original owners of the lands which were declared

surplus under the Act on 31.07.1980. The agreement for sale

dated 12.03.1984 executed by the owners in favour of the

appellant, who was the proprietor of M/s. Jay Pali Builders,

itself recited that the sale would be subject to the provisions of

10
the Act and that the appellant would obtain all permissions for

development under the same. A general power of attorney dated

15.01.1985 was then executed by the owners in favour of the

appellant inter alia authorising him to pursue matters before the

competent authority under the Act and to obtain all necessary

permissions, exemptions etc. for development on the lands. The

appellant then applied for exemption which was granted on

02.03.1988 by the State Government under the guidelines

issued under Section 20 of the Act being Government

Resolution, Housing and Special Assistance Department SS

1086/2340/XIII dated 22.08.1986. The exemption was granted

in respect of 78 tenements to be constructed on the exempted

lands identified as Survey No. 37 (part corresponding to CTS No.

261) and Survey No. 34 (Part CTS No. 245). The exemption

mandated 20 per cent (15 tenements) to be handed over for

allotment to government nominees belonging to weaker sections

of the society. A corrigendum was issued on 29.12.1988 by the

State Government at the request of the appellant, increasing the

area for construction under Section 8(4) of the Act from 3785

sq.mtrs to 4412.10 sq.mtrs. The 20 per cent requirement for

government nominees accordingly stood enhanced to 18

11
tenements. As out of the two CTS plots for which exemption was

granted, the appellant developed only one plot bearing CTS No.

261, he was therefore liable to surrender 588 sq.mtrs. i.e. 20% of

the built­up area in form of 14 tenements for allotment to

Government nominees.

12. The order of exemption dated 02.03.1988 contained

conditions which were in accord with the statutory provisions.

Clauses 5, 9, 13, 17 and 18 are considered relevant and are

extracted hereinunder: ­

“5. The said person shall commence construction of
the tenements within a period of 1 year from the date
of this exemption order shall complete the
construction work within 3 years, falling the
exemption shall stand withdrawn. If only a part of
the land utilized by the said person and a aprt
remains vacant at the end above date 22.02.1991 the
exemption for the part which remain vacant or where
the buildings are incomplete, for the land under
incomplete building and the land appurtenant
thereto shall be deemed to have been withdrawn and
vacant land and such land with structure and land
appurtenant shall be acquired as per chapter III of
the Urban Land (Ceiling and Regulation) Act, 1976.

***

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

***

12

13. The said person shall not transfer the exempted
lands or without building thereon or any part thereof
to any other person, except for the purpose of
mortgage in favour of any financial institutions
specified in sub­section (1) of section 19 of the for
raising finance for the purpose of construction of any
one of the tenements mentioned above, breach of this
conditions shall that exemption granted under this
order stands withdrawn.

***

17. If at any time, the State Government is satisfied
that there is a breach of any of the conditions
mentioned in this order, shall be competent for the
State Government to withdraw by an the exemption
order from the date specified in the order. Provided
that, before making any such order the state
Government shall give reasonable opportunity to the
person whose are exempted for making
representation against the proposed withdrawal.

18. when any such exemption is withdrawn or
deemed to be withdrawn under these conditions, the
provisions of the Chapter­III of the said Act shall
apply to the lands as if the land had not been
adopted under this order.”

13. We are of the considered opinion that in the nature of the

composite exemption granted, the failure of the authorities to

cancel or withdraw the exemption for breach by transfer of

development rights to respondents nos.2­4 or construction on

one plot only and the consequent claim based on the “No

Objection Certificate” dated 08.06.1993 issued for purposes of a

water connection, is of no avail to the appellant as the certificate

13
expressly recites that so far only seven tenements had been

handed over meaning thereby that the further seven tenements

remained to be handed over. The certificate was therefore

conditional in nature and not absolute.

14. The plea of the appellant that the liability under the

impugned demand rested upon respondent nos. 2 to 4 alone in

view of the development agreement between the parties, and that

the authorities had made any direct communication with the

said respondents also does not merit any consideration in view

of the facts of the case coupled with the provisions of the Act.

Subsequent to the grant of exemption, the appellant entered into

a development agreement with respondent nos. 2 to 4 as early as

on 29.08.1988 describing himself as the owner and also handed

over the title deeds of the property. But the appellant informed

the authorities of this fact very belatedly on 15.04.2005. The

building plan was approved in the name of the appellant on

19.10.1988. The permission to commence construction was

issued in his name on 28.02.1989. He alone had applied for

extension of the scheme leading to issuance of the corrigendum

dated 29.12.1988. The appellate authority in his order dated

14
12.07.2006 has adequately noticed that it was the appellant who

was the de facto owner of the plot, had submitted the application

for exemption, given an undertaking on stamped paper dated

16.05.2005 to fulfil the conditions of the exemption by providing

the additional seven tenements or market value in respect

thereof. The question of any estoppel, therefore, does not arise.

Shri Patil is therefore right in his submission that any dispute

between the appellant and respondents nos. 2 to 4 under the

development agreement between them falls in the realm of a

private dispute and does not detract from the exclusive liability

of the appellant under the order of exemption.

15. The appellant having failed to hand over the remaining

seven tenements, the impugned demand dated 15.10.2005 then

came to be raised by respondent no.1 as being the current

market value rate of the remaining seven tenements pursuant to

the undertaking of the appellant dated 16.05.2005. This was

preceded by repeated request to the appellant for handing over

seven tenements.

15

16. There is no dispute with regard to the fact that there had

been a breach by the appellant in terms of the exemption. The

authority under the Act also did not take any steps to withdraw

the exemption because of such breach. The tenements have

been constructed and sold as we were informed. No directions

therefore can be issued to hand over seven more tenements from

the constructions so raised. The question that arises for

consideration however is whether the competent authority under

the Act possesses the power to recover the market value of seven

tenements for 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 of the same in the event of the failure

to do so, in our opinion cannot expand the statutory powers of

the competent authority under the provisions of Sections 20 and

21 of the Act. The appellant has justifiably raised a pure

question of law before us for the first time, which was

acknowledged not to have been raised earlier either before the

appellate authority or the High Court under Section 38(4) of the

Act.

16

17. It being a pure question of law, the facts being undisputed,

we see no reason not to allow the appellant to raise the same

before us for the first time. The competent authority under the

Act could have certainly withdrawn the exemption in the event of

breach along with all its attended consequences. Failure to do so

did not deprive the statutory authority of its powers to proceed

appropriately under the Act. But the competent authority being

a creature of the statute under Section 2(d) of the Act, cannot

act beyond its statutory jurisdiction and the exercise of its

powers shall remain circumscribed by the provisions of the Act.

Any undertaking by the appellant cannot expand the statutory

jurisdiction of the competent authority. The demand for the

market value of the remaining seven tenements, falling outside

the purview of the Act, cannot be construed as money due to the

Government so as to vest in it the nature of an arrears of land

revenue recoverable under Section 265 of the Maharashtra Land

Revenue Code, 1966. We have, therefore, no hesitation in

concluding that the impugned demand is dehors the provisions

of the Act and unsustainable being beyond the statutory powers

of the competent authority and thus arbitrary.

17

18. The submission of Shri Amar Dave with regard to a cap of 5

per cent on the tenements to be handed over in view of the

judgement in M/s. Shantistar Builders (supra) has to be stated

to be rejected. As noticed above, M/s. Shantistar Builders

(supra) has been interpreted to be prospective in nature. A bare

perusal of paragraphs 21 and 22 of the judgement leaves no

doubt in our mind also that it was intended to be only

prospective in nature in its operation.

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

allowed.

…….……………………….J.

(Rohinton Fali Nariman)

……………………………..J.

(Navin Sinha)
New Delhi,
September 02, 2020

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