Govt Cannot Demand Premiums For Private Exempted Land: Bombay HC While Citing Unconstitutionality Of Section 27(1) Of ULC Act

A Division Bench of Justice G.S. Patel and Justice Neela Gokhale while deciding as to whether a demand was valid for the entire land observed that, “If the GR is made to apply to the entirety of the land, it would fall afoul of Article 300-A of the Constitution of India and be unconstitutional. Alternatively, it would imply a reintroduction of Section 27(1), though that has been struck down as unconstitutional. We cannot accept an interpretation that would invalidate the GR.”

The petitioner acquired land under a conveyance in 1975. The petitioner filed a statement under Section 6(1) of the ULC Act in 1977. An order under Section 20 exempted the property from Chapter III of the ULC Act. The petitioner applied in 2022 to remove a remark from the property card. A demand for a premium was issued in 2023 for the entire land, including vacant portions.

Advocate Mayur Khandeparkar appeared for the Petitioner and Advocate Himanshu Takke appeared for the Respondents.

The Court stated that the matter had similarities with previous cases. It referred to decisions in Salim Alimohomed Porbanderwalla & Anr v. State of Maharashtra & Anr, 2023 SCC OnLine Bom 731, Voltas Ltd & Anr v. Municipal Commissioner of Thane Municipal Corporation & Ors, and RR Realtors v. State of Maharashtra & Ors. to address the issue of demands raised for the entire area under ULC Act proceedings.

The Court discussed the sections of the ULC Act dealing with ceiling limits, acquisition of surplus land, exemptions, and disposal of vacant land. The ULC Act was repealed by the Urban Land (Ceiling and Regulations) Repeal Act 1999. The Repeal Act had a savings clause in Section 3.

The Court referred to a Full Bench decision of Maharashtra Chamber of Housing Industry & Ors v State of Maharashtra & Anr. where it was held that exemptions under Section 20 of the ULC Act did not abate on repeal.

The Court noted that a committee had recommended closing exemption orders under Section 20 by accepting payments. A proposal by the State Government was accepted by the Supreme Court which resulted in Government Resolutions (GRs) aiming to close pending issues of surplus and retention land through payment.

The 1st August 2019 GR imposed a one-time premium for development on areas exempted under Section 20. The petitioner sought implementation of the 2019 GRs and interpretation of the court's 2023 order. The petitioner also requested to quash a communication dated July 5, 2023.

The Court was of the view that the Porbanderwalla decision and subsequent orders provide the correct position post the Repeal Act. Past cases involving Section 21 and Section 8 were not directly relevant.

The Court referred back to the Porbanderwalla decision to understand the 1st August 2019 Government Resolution (GR). The Court noted that 1st August 2019 GR addressed the repeal of the ULC Act, exemptions under Section 20, and actions under Section 10(3) and 10(5). It mentioned court orders validating the exemption and protection of such actions.

The Court finally laid down that:

• No demand from the 1st August 2019 or later GR of 23rd June 2021 can apply to retainable (exempted) land owned by private individuals.
• The government lacks authority to impose a premium on private land.
• Retention land, within the permissible ceiling limit and not vacant, cannot be used to calculate a premium.
• The expression "entire land" refers to surplus vacant land, not including retainable land.
• Demanding a premium for retainable land is illegal, unconstitutional, and unlawful.
• Section 20 orders cannot continue against the entire land.
• Revenue entry under Section 20 doesn't apply to retention land.
• Revenue entries for retainable land by the State Government are illegal.

This Court clarified that this judgment's applicability extends beyond this case to all cases involving the GRs of 1st August 2019 and 23rd June 2021. The Court directed that the State Government must adhere to the judgment and cannot demand premiums or make revenue entries for retainable land, which is private property. Such actions would be illegal and unconstitutional.

Cause Title: Modern Paints v. The State of Maharashtra & Anr., 2023:BHC-OS:8757-DB

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