TaxTMI 
TaxTMI 
2017 (8) TMI 1519
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....the renewal of a lease granted by Ujjain Development Authority ("UDA") to Ajar for the period from 21 December 2012 till 20 December 2042; (ii) directed that possession of the land in dispute be taken back; (iii) that in order to fetch the best price, the land be put to a public auction; and (iv) directed that the transfer fee which was charged to Ajar should be fixed on the basis of the guidelines for 2011-2012 and the differential be recovered with interest at eight percent per annum. These directions have been issued by the High Court while entertaining a petition filed in public interest by the first and second Respondents. 3. UDA is a statutory body constituted under the Madhya Pradesh Town and Country Planning Act, 1973. On 16 July 1985, a deed of lease was executed by UDA of land admeasuring 43,407.00 square meters, situated at Sanwer Road and comprised in Nanakheda Scheme No. 23 at Ujjain in favour of a company by the name of IISCO Stanton Pipe & Foundry Company Ltd. ("IISCO"). The term of the lease was thirty years and an amount of Rs. 4,34,070 was charged as premium. The annual lease rent was fixed at Rs. 8, 681 at the rate of two percent of the total premium. The sali....
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....f re-entry, upon which the amount paid by the lessee would be refunded with a deduction of twenty percent (Clause 6); and (vii) The lease would be governed by other requirements of UDA, the municipal corporation and by the bye-laws of the government then prevailing or as would be made applicable from time to time (Clause 12). 4. IISCO, which was a subsidiary of Steel Authority of India Limited (a public sector undertaking of the Union government), was ordered to be wound up by the High Court of Judicature at Calcutta in BIFR Case No. 503 of 1994 instituted under the Sick Industrial Companies (Special Provisions) Act 1985. The Official Liquidator took over the movable and immovable assets of the company, including the leased land in dispute. 5. On 9 May 2003, the Official Liquidator invited offers for the purchase of the assets of IISCO including the leased land on an "as is where is whatever there is basis". The leasehold rights were valued at Rs. 1.35 crores. 6. On 6 June 2003, UDA issued a notice to the Official Liquidator stating that it had cancelled the lease and would re-enter upon the land. The ground for cancellation was that in breach of the lease conditi....
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....unt of Rs. 2,44,052 after deducting twenty percent of the premium paid. This, it was stated was as a result of the failure of IISCO to utilise 30,506.50 square meters out of the leased land admeasuring 43,407 square metres. 10. On 4 August 2003, the Official Liquidator informed UDA that the leasehold rights had already been sold, together with the other assets of the company, by an order dated 4 July 2003 of the High Court in consequence of which the cheque for refund was returned. 11. By an order dated 18 August 2003, the Company Judge rejected an application filed by a third party for setting aside the sale of the assets of the company liquidation. The sale consideration was, however, enhanced from Rs. 20 crores to Rs. 20.50 crores. The sale consideration is stated to have been deposited on 17 September 2003 and Ajar was nominated by the purchaser as the entity to whom the assets which were sold in the auction were to be transferred. According to Ajar, possession of the land and assets was handed over to it on 30 September 2003. 12. Ajar, by its letter dated 29 March 2004 requested UDA to mutate and transfer the land in its favour. UDA by its letter dated 18 May 2004 dec....
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....ficial Liquidator assigned all the leasehold rights of IISCO in favour of Ajar. The deed of assignment records that out of a total sale consideration of Rs. 20.50 crores, the valuation of the leased land had been apportioned at Rs. 1,35,20,183. The recital in the deed of assignment reads thus: (n) For the purpose of valuation the said property has been valued at Rs. 1,35,20,183/- (Rupees One Crore Thirty Five lakhs Twenty thousand One hundred Eighty Three) only being the apportioned purchase price of the said property out of the total sale consideration of Rs. 20,50,00,000/- (Rupees Twenty Crores Fifty Lacs only) as was directed to be apportioned by an order dated 6th July 2004, passed by the Hon'ble High Court at Calcutta. The deed of assignment records that (i) the assignment of the leasehold land to Ajar was for the remainder of the lease term that is, upto 21 December 2012; (ii) the lease was being assigned subject to the rights and privileges of the original lessee under the lease agreement dated 16 July 1985. The material recitals in the deed of assignment are thus: (o) In or about August, 2004 the said Ujjain Vikash Pradhikaran, the said origin....
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....ished in the newspaper which is admittedly within the knowledge of the Appellant since the Appellant did not take any steps in the matter for a long time. After the sale was confirmed, the properties were handed over and that too, only for the residuary part of the first terms of the lease. The Appellant filed this application and there is no reasons has been (sic) shown in the petition in support of such delay caused by the Appellant. In these circumstances, we have to come to the conclusion that the Appellant had due notice of the facts of this case including the fact that the properties have been transferred and sold at this state. In our considered opinion, the possession of the property cannot be changed in any manner whatsoever since the order has given effect to. It is to be noted that the Appellant did not taken any steps in the matter for a long period. 16. On 28 February 2011, the Governing Board of UDA resolved to file a Special Leave Petition before this Court. The Special Leave Petition was dismissed on the ground of delay on 29 April 2011. 17. In the meantime, Ajar had, by its letters dated 16 February 2006 and 8 July 2010 requested UDA to tran....
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....ehold. Leave was granted by the High Court to amend the writ petition to challenge the order of UDA dated 28 May 2013 and the deed of conveyance dated 12 July 2013. During the pendency of the writ proceedings, Ajar claims to have obtained on 19 September 2013 permissions and approvals for building upon and developing the land. Ajar claims to have entered into registered sale deeds in respect of 67 plots and to have incurred an expenditure of Rs. 18.39 crores on the project. Ajar claims to have received notice of the writ petition on 15 September 2014. 22. By its judgment and order dated 8 February 2016, the High Court cancelled the deed of renewal dated 21 May 2012 executed by UDA in favour of Ajar and directed that possession of the land be taken over. The High Court also directed UDA to obtain the best price for the land by putting it to public auction. UDA was also directed to calculate the transfer fees on the basis of the guidelines prevailing in 2011-2012 and to recover the differential together with interest at eight percent per annum in regard to the transfer of the lease from IISCO to Ajar. 23. The principal findings of the High Court are summarised below: (....
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....he land; (b) market value of adjoining land; and (c) the fact that the land had not been leased to Ajar to achieve a constitutionally sanctioned purpose under Part IV of the Constitution. UDA ought to have made efforts to obtain the best available price while renewing the lease. UDA renewed the lease on a nominal premium to confer a benefit on a private developer; (vii) The actions of UDA were contrary to public interest and it acted in a manner in which a responsible authority would conduct its affairs. 24. The judgment and order of the High Court has been questioned in three proceedings initiated Under Article 136 of the Constitution before this Court. One of them has been initiated by Ajar Enterprises Private Limited, the transferee of the leasehold interest and in whose favour the lease was initially renewed before the land was eventually converted into freehold. The court has also been moved on behalf of third party purchasers who claim to have purchased plots from the developer. They were not parties to the proceedings before the High Court. The third set of proceedings has been initiated by UDA. In addition, I.A. 6 of 2017 has been filed by 54 applicants who clai....
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....or renewal in the lease is enforceable both Under Section 182(1) and Rule 25. Moreover Section 181-A empowers the state government to convert leases granted for residential or commercial purposes in urban areas into freehold. The state government has promulgate the Madhya Pradesh Grant of Freehold Rights in respect of Land on Lease situated in Urban Area Rules 2010. UDA had issued a public notice inviting applications for conversion to freehold. UDA processed as many as 425 renewals in the city of Ujjain; (iv) All transactions were in terms of statutory provisions and were effected by duly registered instruments. The provisions of Sections 181, 181-A and 182 as well as the provisions contained in the Rules of 1977 and 2010 have not been challenged by the original Petitioners before the High Court. Hence, they were not entitled to question the mode of renewal or the rate at which the renewal of the lease or conversion to freehold could be affected. The High Court ignored the statutory provisions holding the field; (v) The decision of the Constitution Bench of this Court, in re: Natural Resources Allocation indicates that a public auction is not a mandatory requirem....
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....09) as a result of which it obtained a further sum of Rs. 64 lacs. UDA was bound by the terms of lease as well as the 1977 Rules while effecting renewal and it could not have demanded the market value of the land in 2012. The conversion to freehold is in accordance with the Rules of 2010. UDA issued advertisements for such conversion and approved as many as 152 properties for conversion to freehold. 27. On the other hand, it has been urged on behalf of first and second Respondents by Ms. Kamini Jaiswal learned Counsel that: (i) According to the Rules of 1977, land can be allotted by only four modes: (i) by direct negotiations; (ii) by auction; (iii) by tender; or (iv) under concessional terms. In the present case, the land was transferred to IISCO on concessional terms. Upon a default by IISCO of its obligations under the original lease deed, UDA cancelled its allotment and re-entered upon the land. The Official Liquidator could not have conveyed a better title than that which was held by IISCO. The fresh agreement between UDA and Ajar was for the residuary term of the original lease namely, for seven years ending on 20 December 2012. Under Rule 25, only a person holdin....
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....interest; and (viii) From the documents produced before this Court by Ajar it emerges that nearly one-fourth of the sale deeds were executed post September 2015 after the hearing in the writ petition had concluded. Ajar has hence acted with a lack of bona fides only to defeat the final orders that would be passed in the public interest petition. 28. These submissions need to be considered. 29. Chapter XXIII of the Madhya Pradesh Land Revenue Code 1959 is titled "Government Lessees and Service Land". Section 181, as its marginal note indicates, deals with government lessees. Sub-Section 1 of Section 181 provides as follows: 181. Government Lessees.--(1) Every person who holds land from the State Government or to whom a right to occupy land is granted by the State Government or Collector and who is not entitled to hold land as a bhumiswami shall be called a Government lessee in respect of such land. Section 182 provides for the rights and liabilities of government lessees: 182. Rights and liabilities of a Government lessee.-- (1) A Government lessee shall, subject to any express provisions in this Code, hold his land in accordance wi....
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....h is maintained by the Authority. Under Rule 4 all other land shall be transferred in accordance with the Rules which follow. Four modes have been stipulated in Rule 5 for transfer of Authority land. These are: (i) direct negotiations; (ii) public auction; (iii) invitation of tenders; and (iv) on concessional terms. If any other mode is to be used, Rule 5(A) (inserted on 26 September 2005) stipulates that the Director Town and Country Planning Department shall forward his opinion to the state government which shall take a decision on the proposal. 32. The Rules contain specific provisions in regard to the modalities to be followed for the disposal of land. Rule 6 adverts to the procedure where land is disposed of by direct negotiations. Rule 6 inter alia provides for (i) the mode of fixing the premium by the authority in accordance with a scale of premium sanctioned by the government; (ii) due publicity of the proposed negotiations in newspapers and in stipulated public offices; (iii) invitation of offers accompanied by the stipulated earnest money deposit; (iv) procedure to be followed where more than one person makes an offer to take on lease the same plot; (v) mode of deposit....
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....ipulates that every transfer of land has to be (subject to the provisions contained in the rules) by lease. Every lease has to be either for thirty years or ninety nine years as determined by the authority with a right of renewal by the lessor. Rule 24 indicates that it is subject to the provisions contained in the Rules. Moreover, while Rule 24 does contemplate a provision for renewal, the expression "right of renewal by the lessor" is of significance. The provision does not embody an absolute or indefeasible right of renewal. Undoubtedly, a development authority as a public body cannot act arbitrarily or at its own whims, in deciding whether or not to renew the lease. Its decisions must be guided by public interest. Public interest postulates both protecting the interests of the authority and ensuring fairness to the leaseholder who may have constructed on the land in pursuance of the leasehold. Neither Rule 24 nor Rule 25 can be read to divest the authority of the element of discretion on whether to renew the lease. However, exercise of discretion must meet the touchstone of Article 14 of the Constitution. As a public authority, the decision must be fair, reasonable and guided b....
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.... on this basis that the premium to IISCO was charged at a market rate. What is, however of significance is that UDA has not disclosed before this Court the rate at which other adjoining lands were transferred. 37. The original lease deed dated 16 July 1985 was executed in favour of IISCO specifically for the purpose of the constructing residential houses and for the development of a colony. The total extent of the land leased was 43,407 square meters. The premium was Rs. 4,34,070 with an annual lease rent of Rs. 8681 computed at two percent of the premium. Under the terms of the lease, there was a prohibition on the transfer of the land unless the lessee, which had been granted the land to develop a colony and construct residential houses had done so. In the event that the lessee wished to transfer the land due to 'special circumstances', UDA could consider such a request subject to the payment of stipulated transfer fees. The original lease agreement contemplated that the term of the lease could be renewed for two further periods, each of thirty years, with an enhancement of the lease rent at the time of every renewal. We have duly considered both English translation of....
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....se of land admeasuring 150.856 hectares was acquired against the payment of compensation and the allotment of land on lease to IISCO. UDA has produced no material to indicate that it had followed the procedure laid down in Rule 6 of the 1975 Rules when it proceeded to make the original allotment in favour of IISCO. While UDA claims that the land was allotted to IISCO at Rs. 10 per square metre excluding development charges "without any concession", it has remained silent on the rates at which other adjoining land was allotted to parties other than IISCO. There is intrinsic merit in the submission which has been urged by Ms. Kamini Jaiswal, learned Counsel for the first and second Respondents that the allotment in the present case was not referable to Rule 5(a) which speaks of a transfer of land by direct negotiations. Since the allotment to IISCO was neither by way of public auction Under Rule 5(b) nor by inviting tenders Under Rule 5(c) the allotment would only be referable to Rule 5(d) which is an allotment on concessional terms. The power to grant land on concessional terms is subject to Rule 19 under which a grant is contemplated to a public institution or body registered under....
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....he basis that after the decision of the Calcutta High Court, it had no option but to renew the lease. Even before this Court, the submission of UDA is that once its objections were overruled by the Calcutta High Court it had no option but to renew the lease. This submission betrays a lack of understating of the judgment of the Calcutta High Court as well as of the terms of the original lease. The judgment of the Calcutta High Court made it abundantly clear both to the assignee who had successfully bid for the leasehold interest as well as to UDA that what was being transferred was the interest of the company liquidation under the lease deed dated 16 July 1985. Undoubtedly, this comprised besides the residue of the unexpired term of seven years, the benefit of the original lease agreement which contains a renewal clause. However, both on the interpretation of that Clause by the Calcutta High Court as well as on the plain terms of the clause, it is evident that there was no indefeasible right of renewal. The Clause for renewal provided that the lease could be renewed, not that it must or shall be renewed. Moreover, Rules 24 and 25 of the 1977 Rules cannot be read to preclude UDA, as ....
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....ublic interest. UDA has acted in a manner that has ensured the conferment of a largesse upon the private developer in disregard of the public interest in ensuring the disposal of lands belonging to the authority in a transparent manner which ensures the realization of the best possible return. The renewal of the lease dated 10 May 2012 for a further term of thirty years from 20 December 2012 to 21 December 2042 was manifestly flawed. 43. The conversion of the land to freehold in favour of Ajar has evidently followed upon the renewal of the lease deed in favour of Ajar on 10 May 2012. Rule 5 of the 2010 Rules for the grant of freehold rights provides as follows: 5. Class of land eligible for conversion-Any land situated in an urban area and which is,- 1. Granted on leasehold basis for a period of thirty years or more by the State Government or by an Officer authorised to do so for residential or commercial purpose; or 2. given on leasehold right of thirty years or more for residential or commercial purpose, by virtue of a lease executed in favour of any person by the Madhya Pradesh Housing Board or a Development Authority or a Housing Co-operative Socie....
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....im application. The purchasers of plots claim their interest through the developer. 46. It is necessary to note in this context that the public interest litigation before the High Court was instituted on 2 July 2013. By that date, the developer had on 10 May 2012 obtained a renewal of the lease for a period of thirty years and had applied for conversion of the land into freehold. UDA executed a deed for the conversion of the leasehold land to freehold on 12 July 2013. It is thereafter on 19 September 2013 that Ajar claims to have obtained approvals for construction and development on the property. Even according to Ajar, the third party transactions were entered into by it during the pendency of the writ proceedings before the High Court. The developer was aware of the pendency of the proceedings before the High Court and it is in this background that the claim of his having created third party rights needs to be evaluated. Ajar tendered during the course of these proceedings, a summary containing the third party rights stated to have been created on the land in dispute. According to the statement, the total land available for sale is 24,688.06 square meters and the remaining ar....
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.... policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximizing private entrepreneurs, adoption of means other than those that are competitive and maximize revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution. Justice Jagdish Singh Khehar (as the learned Chief Justice then was) in his concurring judgment held that: 200. I would therefore conclude by stating that no part of the natural resource can be dissipated as a matter of largess, charity, donation or endowment, for private exploitation. Each bit of natural resource expended must bring back a reciprocal consideration. The considerati....
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....fordable housing to members of the Scheduled Castes or Tribes or to implement housing schemes for Below the Poverty Line (BPL) families. In other cases where natural resources are alienated for commercial exploitation, a public authority cannot allow them to be dissipated at its unbridled discretion at the cost of public interest. 50. The present case is indeed an illustration of a situation where a public body has acted oblivious to and in disregard of public interest. The land was originally leased out to IISCO, a subsidiary of SAIL (an undertaking of the Government of India). The purpose for allotting such a large tract of land admeasuring 43,407 square meters was to enable IISCO to construct and develop a residential colony for its employees. The land was not being allotted for commercial exploitation to a developer. The terms of the lease clearly evince the manner in which the land was to be utilized and the consequences of breach. When IISCO went into liquidation, the Official Liquidator placed its assets including the leasehold land for sale. Ajar under the deed of assignment acquired the leasehold rights for the remaining term of the lease on 1 September 2005 together wi....
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....lic resource. When public bodies are vested with control over land-in this case over land which was acquired for facilitating planned development, no authority can claim an immunity from its accountability to matters of public interest. 51. We will not interfere with the direction of the High Court to the effect that the transfer charges for the deed of assignment of lease shall be determined on the basis of the guidelines prevailing in 2011-2012. The relevant date would have to be 7 June 2011 on which the deed of assignment was executed by UDA. 52. For the above reasons, we find no reason to interfere with the judgment of the High Court. However, we must, in the exercise of our jurisdiction Under Article 142 of the Constitution suitably mould the relief so as to ensure the protection of persons with whom the developer has entered into registered sale deeds prior to the judgment of the High Court. We have done so after finding some weight in the equities asserted on behalf of this class of purchasers who have registered sale deeds in their favour against the payment of full consideration. We have been informed that they have taken loans from public financial institutions and ....
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....¿à¤ 25. डोगा जैसा के पà¥à¤°à¤¾à¤§à¤¿à¤•à¤¾à¤°à¥€ दà¥à¤µà¤¾à¤°à¤¾ अवधारित किया जाठसाथ ही पटà¥à¤Ÿà¤¾à¤•à¤¤à¥‹à¤‚ को नवीनीकरण के बाबत अधिकार डोगा. जब पटà¥à¤Ÿà¥‡ की कालावधि 30 वरà¥à¤· नियत कर दी जाठतो नवीनीकरण का अधिकार पà¥à¤°à¤¤à¥à¤¯à¥‡à¤• नवीनीकरण पर बढ़ाये हà¥à¤ à¤à¥‚-à¤à¤¾à¤Ÿà¤• के 50 पà¥à¤°à¤¤à¤¿à¤¶à¤¤ से अनधिक क....