1996 (8) TMI 530 - SC - Indian Laws

Supreme Court Upholds Development Fees Power under Urban Planning Act

STATE OF U.P. Versus MALTI KAUL

STATE OF U.P. Versus MALTI KAUL - 1996 (5) Suppl. SCR 9, 1996 (10) SCC 425, 1996 (9) JT 601, 1996 (6) SCALE 577 Issues Involved:1. Power to levy development fee under the U.P. Urban Planning and Development Act, 1973.2. Legality of demands for malva charges (stacking charges) and water charges.3. Requirement of bank guarantees for development charges.Issue-Wise Detailed Analysis:1. Power to levy development fee under the U.P. Urban Planning and Development Act, 1973:The Supreme Court examined whether the appellants had the authority to levy development fees under the U.P. Urban Planning and Development Act, 1973 (the 'Act'). The High Court had previously ruled that there was no provision in the Act or the Rules to demand and collect the development fee. The Supreme Court analyzed various sections of the Act, including Section 4, which allows the State Government to constitute a Development Authority for any development area, and Section 7, which outlines the powers and objects of the Development Authority, including the provision of amenities and execution of works necessary for development.The Court noted that Section 33 of the Act empowers the Development Authority to provide amenities or carry out development at the cost of the owner in the event of default and to levy cess in certain cases. Additionally, Section 56 gives the Authority the power to make regulations for the administration of its affairs, including the collection of development fees. The Court concluded that the Act specifically provides the power to levy development fees, and the High Court erred in holding otherwise. The Court emphasized that the levy of fees is a compulsory exaction for services rendered as quid pro quo, and the Development Authority is enjoined under the Act to undertake planned development of the area.2. Legality of demands for malva charges (stacking charges) and water charges:The High Court found that the demands for malva charges and water charges were violative of the principles of natural justice, as they were levied in advance before the commencement of construction. The Supreme Court agreed with this finding, stating that the Authority has no power to levy charges for stacking materials or using water in advance. The Court clarified that such charges should be levied only when the materials are actually stacked on public streets or places, or when water is used for construction. The requirement for prior permission and payment of necessary fees should be based on actual usage.3. Requirement of bank guarantees for development charges:The Supreme Court addressed the issue of bank guarantees required by the Agra Development Authority for development charges. The High Court had directed the respondent to provide a bank guarantee at the rate of Rs. 180 per sq.mtr. and to undertake to pay the balance amount upon succeeding in the appeal. The Supreme Court noted that the respondent's counsel had agreed to provide a bank guarantee for the amount demanded at the rate of Rs. 500 per sq.mtr., which totaled Rs. 17,33,245. The Court directed that, after deducting the amount already covered by the initial bank guarantee, the respondent should provide a bank guarantee for the balance amount. The Agra Development Authority was instructed to release the sanction of the plan for execution upon receipt of the bank guarantee. The bank guarantee should remain in force until the development is completed and a satisfactory completion certificate is issued by the competent authority.Conclusion:The appeals were allowed, with the Supreme Court holding that the Development Authority has the power to levy development fees under the Act. The Court upheld the High Court's decision regarding the illegality of advance demands for malva charges and water charges. The requirement for bank guarantees was affirmed, with specific instructions provided for the respondent to comply with the demand. The appeals were allowed without costs.