M/S. Raj Homes Pvt.
Ltd. & Ors. Vs. State of M.P. & Ors.  INSC 1437 (26 August 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOs.7732-7733 OF 2004 Raj
Homes Pvt. Ltd. & Another .. Appellants Versus State of Madhya Pradesh
& Others .. Respondents
Dalveer Bhandari, J.
appellants aggrieved by the order of the High Court of Judicature at Jabalpur
dated 26.8.2003 in Writ Petition Nos.6269 and 27171 of 2003 have preferred this
appeal with the prayer that the respondent State of Madhya Pradesh be 2
restrained from imposing and collecting any premium under the impugned rule 14
of the Notification dated 24.1.2002.
facts giving rise to the present appeal are recapitulated as under:
The respondent State
of Madhya Pradesh has imposed premium at flat rate irrespective of use and
purpose of the diverted land or any relation whatsoever with the land revenue
imposed on the land. According to the appellants, the impugned rule 14 of the
Madhya Pradesh Land Revenue Code, 1959 (for short "the Code") is
arbitrary, unreasonable and as such violative of Article 14 of the Constitution
of India. The imposition of premium under rule 14 has been assailed, therefore,
it would be imperative to refer to the relevant provisions regarding imposition
of premium as under:
13. When the land
assessed for any non-agricultural purpose is diverted to any agricultural
purpose no premium shall be imposed under Sub-section (5) of Section 59 of the
14. (1) For the
purpose of levy of premium on agricultural land other than the land specified
in the proviso to Sub-section (5) of Section 59 of the Code 3 diverted to
non-agricultural purposes, in any towns and villages in the State of Madhya
Pradesh shall be divided into the following classes as specified in Column (1)
of the Schedule appended to these rules and the premium shall be imposed
according to the rates specified in Column (2) and (3) of the said Schedule as
the case may be:
Provided that with
the sanction of the State Government the Sub-Divisional Officer may include any
particular village in higher or lower class than that prescribed in this rule:
Provided further that
no premium shall be payable on agricultural land diverted into residential
purposes if the area of diverted land is not exceeding one hundred square metre
and "Kachha" construction is built on such land.
Explanation I.- When
the `abadi' of two or more villages adjoins, the population shall be taken as
the population of the combined villages.
`Kachha' construction means such construction in which only clay and wood
(excluding timber wood) are used.
The Schedule framed
under rule 14 reads as under:
SCHEDULE Classes For
residential and other purpose For Commercial and Industrial Purpose (excluding
Commercial and Industrial Purpose) (1) (2) (3) Class-I In Municipal Upto 4 kms.
From 4 Kms. In Upto 4 Kms. From 4 Kms. Corporation From To 8 Kms. Municipal
From To 8 Kms. Area Municipal From the Corporation Municipal From the
Corporation area of Area Corporation area of Area Municipal Area Municipal
Corporation Corporation 1 2 3 1 2 3 4 Entire Rs. 10 per Rs.7.50 per Rs.5 per
Rs.20 per Rs.15 per Rs.10 per Municipal Square Square Metre Square Metre Square
Square Metre Square Metre Corporation Metre Metre area of Gwalior, Indore,
Ujjain, Bhopal, Jabalpur, Raipur and Durg and upto 8 Kms. from the outer limits
of Municipal Corporation Classes For residential and other purpose For
Commercial and Industrial Purpose (excluding Commercial and Industrial Purpose)
(1) (2) (3) Class-II In Municipal Upto 4 From 4 In Municipal Upto 4 From 4
Corporation kms. From Kms. To 8 Corporation Kms. From Kms. To 8 Area Municipal
Kms. From Area Municipal Kms. From Corporatio the area of Corporatio the area
of n Area Municipal n Area Municipal Corporatio Corporation n 1 2 3 1 2 3
Entire Rs. 7.50 per Rs.5.00 Rs.3.75 Rs.15 Rs.10 Rs.7.50 Municipal Square Metre
per Square per Square per Square per Square per Square Corporation Metre Metre
Metre Metre Metre area excluding the abovementio ned Municipal Corporation s
shown in Class I and upto 8 Kms. from the outer limits of Municipal
residential and other purpose For Commercial and Industrial (excluding
Commercial and Industrial Purpose Purpose) (1) (2) (3) 5 Class-III In
Municipal Upto 5 Kms. From In Municipal Upto 5 Kms.
Council Council From Area Municipal Council area 1 2 1 2 Entire area of Rs.
5.00 per Rs.3.75 Rs.10 Rs.7.50 Municipal Square Metre per Square Metre per
Square Metre per Square Council more Metre than 50 thousand Population and upto
5 Kms. from the outer limits of Municipal Council.
residential and other purpose For Commercial and Industrial (excluding
Commercial and Industrial Purpose Purpose) (1) (2) (3) Class-IV In Municipal
Upto 3 Kms. From In Municipal Upto 3 Kms. From Council Municipal Council area
Council Municipal Council Area area 1 2 1 2 Entire area of Rs.3.00 Rs.1.50
Rs.6.00 Rs.3.00 Municipal per Square per Square per Square per Square Council
of 20 Metre Metre Metre Metre to 50 thousand population and upto 3 Kms. from
the outer limits of Municipal Council.
residential and other purpose For Commercial and Industrial (excluding
Commercial and Industrial Purpose Purpose) (1) (2) (3) Class-V In the area of
Upto 3 Kms. From Nagar In the area of Upto 3 Kms. From Nagar Panchayat area
Nagar Panchayat Nagar Panchayat Panchayat area 1 2 1 2 6 Entire area of
Rs.1.50 Rs.1.00 Rs.3.00 Rs.1.50 Nagar per Square per Square per Square per
Square Panchayat Metre Metre Metre Metre and upto 3 Kms. from the outer limits
of Nagar Panchayats Class-VI Within limits Outside the limits of Within village
Out of village area of village village area area area 1 2 1 2 Villages whose
Rs.0.75 Nil Rs.1.50 Nil population is per Square per Square more than 2 Metre
appellants submitted that reading of section 59 with rules 1 to 12 and sections
77, 78, 79, 81, 82 and 98 of the Code shows that the land revenue is imposed on
the land on the basis of use, purpose, location, area, size of plot, rental
value, assessment rates, advantages and disadvantages etc.
In this view of the
matter, it would be appropriate to set out section 59 of the Code as under:
Variation of land revenue according to purpose for which land is used.- (1) The
assessment of land revenue on any land shall be made with reference to the use
of land-- (a) for the purpose of agriculture or such farm house, which is
situated on holding of one acre or more;
7 (b) as sites for
(c) for purposes
other than those specified in items (a), (b), (d) or (e);
(d) for industrial or
(e) for the purpose
of mining under a mining lease within the meaning of Mines and Minerals
(Regulation and Development) Act, 1957 (No.67 of 1959);
Provided that the
assessment of land revenue on any land situated in the areas which are
constituted as reserved or protected forests under the Indian Forest Act, 1927
(16 of 1927), with reference to use of land for any of the purposes aforesaid
shall not be proceeded with or any procedure relating to the assessment to be
followed under the relevant provisions of the Code shall not be commenced
except on a certificate permitting the use of land issued by an officer of the
Forest Department duly authorised by the State Government in this behalf;
Explanation: For the
purpose of clause (a) "Farm House" means such building or
construction which is any improvement as defined in clause (j) of sub- section
(1) of Section 2, the plinth area of which shall not exceed one hundred square
meter and the built up area shall not exceed one hundred fifty square meter.
(2) Where land assessed
for use for any one purpose is diverted to any other purpose, the land revenue
payable upon such land shall, notwithstanding that the term for which the
assessment may have been fixed has not expired, be liable to be altered and
assessed in accordance with the purpose to which it has been diverted.
8 (2-a) The
alteration or assessment referred to in sub-section (2) shall be carried out by
the Sub- Divisional Officer.
(3) Where the land
held free from the payment of land revenue on condition of being used for any
purpose is diverted to any other purpose it shall become liable to the payment
of land revenue and assessed in accordance with the purpose to which it has
(4) The assessment
made under sub-section (2) and (3) shall be in accordance with the rules made
by State Government in this behalf and such rules shall be in accordance with
the principles contained in Chapter VII or VIII, as the case may be.
(5) Where land for
use for any one purpose is diverted to any other purpose, and land revenue is
assessed thereon under the provisions of this section, the Sub-Divisional
Officer shall also have power to impose a premium on the diversion in
accordance with rules made under this Code:
Provided that no
premium shall be imposed for the diversion of any land for charitable purpose.
any usage or grant or anything contained in any law, the right of all persons
holding land, which immediately before the coming into force of the Madhya
Pradesh Land Revenue Code, 1954 (II of 1955), was held in malik makbuza right,
to exemption from payment of premium on diversion of such land is hereby
abolished; but every such person shall, on diversion of such land, be entitled
in lieu of such right to a rebate equal to the land revenue for one year
payable for such land from the amount of premium determined under sub-section
would be appropriate to recapitulate rules pertaining to imposition of premium.
ALTERATION OF ASSESSMENT AND IMPOSITION OF PREMIUM [Notifications
No.175-6477-VII-N (Rules); dated the 6th January 1960 and as amended by
No.1400-VII- N-1, dated 21st May 1971, published in M.P. Raj. Pt.
4G, dated 11.6.1971,
p. 270 and by No.F.11-7-VII- S-8-89 dated 24.1.2000]
1. In these rules
"Code" means the Madhya Pradesh Land Revenue Code, 1959 (No.20 of
A. ALTERATION OF
ASSESSMENT (i) Diversion from a non-agricultural purpose to an agricultural
purpose in non-urban and urban areas.
2. When land already
diverted to a non- agricultural purpose and re-assessed on that basis is
rediverted to an agricultural purpose the assessment as refixed shall be equal
to the agricultural assessment on the land as fixed at the last settlement.
3. When land already
diverted to a non- agricultural purpose and assessed on that basis is
rediverted to an agricultural purpose and there is no agricultural assessment
to fall back upon, the assessment on rediversion shall be fixed at the rate
adopted for similar soil in the same village or in a neighbouring village at the
4. The assessment
fixed under rules 2 and 3 shall remain in force till the next succeeding
settlement of the village.
(ii) diversion from
an agricultural purpose to a non-agricultural purpose.
(a) Non-Urban areas
any land assessed at agricultural rates is diverted to a non-agricultural
purpose, the assessment thereon shall be revised in accordance with any of the
methods specified below according to the circumstances of the case, Viz.:-- (a)
If the area in which the land is situate has an assessment rate as approved by
the State Government under Sub-section (2) of Section 77 of the Code, then in
accordance with the assessment rate so prevailing.
(b) If there be no
assessment rate in force as aforesaid, then the Sub-Divisional Officer shall
calculate the estimated rental value of the land to be assessed in accordance
with rules 33, 34, 35 and 36 of the rules framed under Clauses (viii), (ix),
(x) & (xii) of Sub-section (2) of section 258 of the Code, as far as they
may apply and fix the assessment of the land up to the maximum of 33 percent of
the estimated rental value of the land, taking into account the advantages or
disadvantages and other circumstances peculiar to the survey number to be
fixing the actual assessment, the area of a survey number of Sub-division
measuring less than 5 sq. metres shall be taken to be 5 sq. metres.
In other cases areas
up to 5 sq. metres shall be ignored, and areas exceeding 5 sq. metres but 11
below 10 sq. metres shall be taken as 10 square metres. The assessment shall be
correct to the nearest naye Paise.
assessment fixed under rule 5 shall remain in force till the next succeeding
settlement of the village.
(b) Urban Areas
any land in an urban area assessed at agricultural rate is diverted to an
non-agricultural purpose, its assessment shall be altered by fixing the actual
assessment on the basis of the standard rate prevailing for the area in which
the land is situated, if, in such area, a standard rate as approved by the
State Government under rule 30 of the rules framed under clauses (xvi), (xvii)
and (xviii) of Sub-section (2) of Section 258 of the Code, is in force.
no such standard rate is in force, the average letting value of the land shall
be calculated, as far as may be, in accordance with rules 25, 26, 27 and 28 of
the rules made under the clauses specified in rule 8 above and a standard rate
determined in accordance with the provisions of rule 30 of the said rules.
such standard rate being calculated, the Sub-Divisional Officer shall fix the
actual assessment on the land diverted to a non- agricultural purpose up to
one-third of the estimated annual rental value of the land, if the land is held
for the purposes mentioned in clause (b) or (c) of Sub-section (1) of Section
59 of the code and up to one-half of the estimated annual rental value, if the
land is held for purposes mentioned in clause (d) of the said Sub-section.
fixing the actual assessment, the area of a plot measuring less than 5 sq.
metres shall be taken to be 5 sq. metres. In other cases areas up to 5 sq.
metres shall be ignored, and areas exceeding 5 sq. metres but below 10 sq.
metres shall be taken as 10 sq. metres. The assessment shall be correct to the
nearest naye paise.
assessment fixed under rule 10 shall remain in force till the next succeeding
settlement of the village.
x x x x "
5. Sections 77, 78,
79, 81, 82 and 98 are also set out. Section 77. Fixation of assessment rates.-
(1) On completing the necessary inquiries, as may be prescribed, the Settlement
Officer shall forward to the State Government his proposals for assessment
rates for different classes of land in such form and along with such other
particulars as may be prescribed.
(2) The State
Government may approve the assessment rates with such modifications as it may
deem fit. Section 78. Maximum and minimum limits for the rate of assessment.-
The maximum and minimum limits for the assessment rate shall respectively be
one and quarter times and three- fourth of the assessment rate in force for the
Provided that in the
event it is considered desirable to alter the minimum or maximum limits,
aforesaid, a proposal to that effect shall be laid on 13 the table of the
Legislative Assembly for its approval and the limits of assessment rate shall
thereafter be altered in accordance with the proposals as approved.
Section 79. Fixation
of fair assessment.- The Settlement Officer shall fix the assessment on each holding
in accordance with the assessment rates approved under section 77 and the
provisions of the section 81 and such assessment shall be the fair assessment
of such holding.
Principles of assessment.- (1) The fair assessment of all lands shall be
calculated in accordance with the principles and restrictions set forth in the
(2) No regard shall
be had to any claim to hold land on privileged terms.
(3) Regard shall be
had in the case of agricultural land to the profits of agriculture, to the
consideration paid for leases' to the sale prices of land and to the principal
moneys on mortgages, and in the case of non-agricultural land, to the values of
the land for the purpose for which it is held.
(4) The fair
assessment on land used for non-agricultural purposes shall not exceed thirty-
three per centum of the estimated rental value of the land.
(5) Where an
improvement has been effected at any time in any holding held for the purpose
of agriculture by or at the expense of the holder thereof, the fair assessment
of such holding shall be fixed as if the improvement had not been made.
(6) Except for
special reasons to be approved in each case by the State Government, no
increase in the fair assessment of a holding for the purpose 14 of agriculture
shall exceed fifty per centum of the existing assessment.
Announcement of settlement.- (1) When the assessment of any land has been fixed
in accordance with section 79, notice thereof shall be given in accordance with
rules made under this Code, and such notice shall be called the announcement of
(2) The assessment of
any land, as announced under this section, shall be the land revenue payable
annually on such land during the term of the settlement unless it is modified
in accordance with the provisions of this Code, or any other law.
Section 98. Fixation
of standard rates of assessment.- The Collector shall keep a record in
accordance with the rules made under this Code of all registered sales and
leases of lands in the different blocks in urban areas in respect of land held
for each of the purpose mentioned in sub- section (1) of section 59.
(2) The average
annual letting value of lands in each block in respect of land held for
purposes mentioned in sub-section (1) of section 59 shall be determined
separately in the prescribed manner on the basis of transactions of sales and
leases in respect of the land held for each of the aforesaid purposes in such
block during the period of five years immediately preceding the year in which
the letting value is being determined, so far as the information about such
transactions is available:
Provided that if the
transactions which have taken place in any block in respect of any land held
for any of the aforesaid purpose are not sufficiently representative
transactions in respect of the land held for the corresponding purpose during
the same 15 period in adjacent block may be taken as basis for determining the
(3) The standard rate
of assessment for lands held for purposes mentioned in clause (b) or (c) of
sub-section (1) of section 59 shall be equal to one-third of the average annual
letting value determined or the block in respect of such land under sub-section
(2) and for purposes mentioned in clause (b) of sub-section (1) of section 59
shall be one half of the average annual letting value determined for the block
in respect of such land.
(4) The standard
rates for lands held for agricultural purposes shall be fixed with due regard
to soil and position of land and to the profits of agriculture to the
consideration paid for leases and to the sale prices of such lands.
6. Mr. A.K. Sanghi,
the learned counsel for the appellants submitted that there are restrictions
for not exceeding the rental value and assessment rates under sections 81(4)
& 81 (6) and rule 5 (b) of section 59, which are quoted above. Mr. Sanghi
also submitted that the imposition of land revenue is guided by number of
factors, principles, restraints which are not to be found while imposing premium
under section 59(5) or the impugned rule 14. There are no guidelines or nexus
either with section 59 or the Code itself.
7. Mr. Sanghi further
submitted that the impugned Rule 14 which imposed a flat rate of premium
irrespective of the factors or considerations which go in imposing land revenue
is in excess and violative of section 59(5) and section 258(2)(iii) of the
Code. The premium which is sought to be levied cannot exceed the land revenue
itself. The land revenue is the main object and purpose of the M.P. Land
Revenue Code, 1959.
8. Mr. Sanghi
contended that the preamble of the Code says that it is an Act to consolidate
and amend the law relating to land revenue, the powers of the Revenue Officers,
rights and liabilities of the holders of land from the State Government,
agriculture tenures and other matters relating to land and the liabilities
incidental thereto in Madhya Pradesh. As such, the premium under sub-section
(5) to section 59 which has been charged for diverting the land use from
agricultural to non- agriculture is only a part of the land revenue and is
being charged by way of additional revenue.
9. According to Mr.
Sanghi, the premium has to be less than the land revenue imposed on the
diverted land. It 17 cannot exceed the land revenue itself. According to him,
in the present case, the premium sought to be imposed is about 100 times than
the existing one and is admittedly more than the land revenue in most of the
10. Ms. Vibha Datta
Makhija, learned counsel appearing for the respondent State of Madhya Pradesh
submitted that the appellants own 10.48 acres of agricultural land situated in
village Narela Shankari, Bhopal, Madhya Pradesh. After obtaining permission for
diversion of the land being sought from agricultural purpose to residential
purpose, a demand of Rs.4,05,000/- was made on account of premium and the
modified land revenue of Rs.52,756. In the case of Indraprastha Grah Nirman
Sahakari Sanstha Ltd., a demand for Rs.1,72,054/- was made on account of
premium under the impugned Rule 14 and a sum of Rs.2,42,400/- towards land
11. Ms. Makhija,
learned counsel for the State submitted that the appellant herein made the
following two submissions before the High Court:
18 i) The State did
not have the power to impose premium since the power prescribed under section
258 which is the source of rule making power in the Code is limited to
"regulation" of land revenue; and ii) Rule 14 and the Schedule
appended thereto was ultra vires the constitutional provisions since it
violated the mandate of Article 14, inasmuch as, it was arbitrary, and the
categories of land therein did not take into account any intelligible
differentia while prescribing different slabs of flat rates for imposing
premium upon diversion of the use of land."
12. Other grounds
which were though challenged in the High Court were not pressed by the
appellants before this court.
Learned counsel for
the appellants has also conceded that there is no lack of power on behalf of
the State to impose the premium but has argued that the classification of the
rates is 19 illegal and arbitrary since it does not take into account various
factors that are statutorily required to be taken into account for the purpose
of assessment of land revenue It has been argued that there is a cap on the
quantum of land revenue that can be imposed under section 81(4) and rule 5(b)
regarding alteration of assessment and imposition of premium, the premium could
also be imposed only within the limits of such a cap.
13. Ms. Makhija,
learned counsel for the respondent submitted that the objects and reasons of
the Revenue Code state that the Code has been enacted to consolidate the
different set of laws regarding land revenue, agricultural tenures and other
matters relating thereto in force in different regions of the State of Madhya
Pradesh with the purpose of having uniform legislation in the whole of the
14. Section 258 is
the source of the rule making power of the State which reads as under:
rule making power.- (1) The State Government may make rules generally for the
20 purpose of carrying into effect the provisions of this Code.
(2) In particular and
without prejudice to the generality of the foregoing powers such rules may
provide for-- (i) .... ....
(ii) .... .....
(iii) regulation of
assessment of land revenue on diversion of land to other purposes and
imposition of premium under section 59.
15. Learned counsel
for the State also submitted that the Revenue Code is comprehensive Code
encompassing all aspects pertaining to land. Under the scheme of the Code,
ownership of all lands of the State is vested in the Government except for
legally vested private rights in lands. Section 58 of the Revenue Code empowers
the State Government to levy land revenue on all land except the land that has
been exempted from such liability by special grant or contract with the State Government.
Learned counsel for the State also contended that section 58(2) states that
such revenue is "land 21 revenue", and that the term includes all
moneys payable to the State Government for land, notwithstanding that such
moneys may be described as premium, rent lease money, quit- rent or in any
other manner, in any enactment, rule, contract, or deed. As such, the State
Government has been empowered to levy "land revenue" on all land,
under different heads which would not only include the yearly assessment of
revenue on the land, but also other heads like premium, quit-money etc.
16. Section 59
mandates the variation of land revenue according to the purpose for which land
is used. Thus, in the event of diversion of land from a particular land use to
another land use, a reassessment of the land revenue is prescribed. In
addition, the Government has also been empowered to impose a premium for such a
17. Section 59(2)
empowers the State Government to re- assess and re-fix the land revenue leviable
on such a parcel of land the use of which is required to be converted/diverted.
In addition to the levy of the land revenue, section 59(5) prescribes a one
time levy of premium on such 22 conversion/diversion in accordance with the
Rules made under the Revenue Code.
18. Learned counsel
for the State further submitted that in exercise of powers under section 258
and section 59, the State Government framed the Rules regarding alteration of
assessment and imposition of premium vide notification No. 175-6477-VII-N
(Rules); dated the 6th January 1960 and as amended by Notification
No.1400-VII-N-1, dated 21st May 1971, published in M.P. Raj. Pt. 4G, dated
11.6.1971, p. 270 and by Notification No.F.11-7-VII-S-8-89 dated 24.1.2000. As
per the amendment made in the year 2000, the Schedule prescribes the premium
leviable on the conversion of the use of land increased manifold keeping in
account the steep escalation in land values.
19. Learned counsel
for the State also argued that it is clear that the Government has full power
to not only fix land revenue rates, re-fix them upon conversion/diversion of
land for another use, but also charge premium upon the diversion 23 of land
for another use. Thus, the levy of premium on conversion of the use of land by
the Government is unequivocal, legal and valid and cannot be questioned.
20. In reply to the
argument of learned counsel for the appellants with regard to arbitrary
imposition of rates of revenue, the learned counsel for the State submitted
that the imposition of the land revenue is guided by number of factors and
principles. According to various provisions of the Code, they are not imposed
in an arbitrary fashion.
21. Learned counsel
for the State further submitted that bare perusal of the scheme of Revenue Code
clearly empowers the State Government to impose a premium in addition to the
land revenue. The Statement of Objects and Reasons of the Revenue Code as well
as the explanation of the term "land revenue" in section 58(2)
clearly establishes that land revenue includes a recurrent periodic levy and
other levies on the land as prescribed under the Code. According to the learned
counsel for the State, reliance of the appellants on sections 75 24 to 98 is
of no relevance in the present case since they pertain to the initial fixation
of the land revenue. The factors as prescribed in these provisions mandate that
the land revenue should be directly proportionate to the use and value of land
and must be arrived at after determining all the factors that would govern the
value of a particular parcel of land.
22. Learned counsel
for the State further submitted that the factors that determine the land
revenue of a particular parcel of land cannot be the determining factors for
fixing the rates of premium to be imposed on conversion/diversion of the land
for a different use. Learned State counsel submitted that the factors governing
the imposition of premium are inherently different from those governing the
assessment/determination of land revenue. This is so since the purpose and
object of both the levies are inherently different in character. While the land
revenue is a levy closely identifiable with the benefits arising out of
occupation of land, premium is a charge on the benefit arising out of
betterment of ones holding. The land revenue is of a recurrent nature which is
required to 25 determine in relation to a particular parcel of land and its
actual value whereas premium is a one time charge, the basis of determination
of which is the estimated value of benefit that is estimated to accrue by
virtue of a change in better land use.
This basis is
fortified by the existence of rule 13 which prescribes that when any land
assessed for any non- agricultural purpose is diverted to any agricultural
purpose no premium shall be imposed under section 59(5). Similarly, rule 15
prescribes that upon re-diversion of land from other uses to agricultural,
although the premium shall not be refunded, no further premium shall be charged
for re-diversion. Thus, upon amalgamation of agricultural lands in urban areas,
the value of such lands inherently undergo a betterment in value and thus the
premium is validly charged a condition for granting permission to better the
usage of land. Thus, the charge i.e. the premium which has a direct nexus to
the opportunity of betterment of a parcel of land shall be valid and legal.
23. Learned counsel
for the State further submitted that the classes prescribed in Schedule under
rule 14 are based on an intelligible differentia taking into account the
location of land.
Since the location of
land is determinative of the value of the potential use of the land, the
criteria of classifying the categories according to the area in which the
property falls has a direct nexus to the potential value of the land. The
Schedule prescribes different classes according to the municipal area or the
rural area that the parcel of land is situated. Within the categories of
various municipal areas/village areas, the distance of the property from the
center of municipal area is also taken into account. Different rates for
different areas are prescribed. As such, the estimated appreciation of value is
assessed on the basis of the location of the property which is the
determinative factor for this purpose. The said criteria are clearly directly
related to the development policies of the government to amalgamate rural
holdings falling within and/or outside the municipal areas of various cities.
The classification of various cities is again determined as per the values of land
in these cities, the extent 27 of population of these cities, and the
character of cities. Thus, the important cities of the State are classified
differently from the smaller cities and towns, as also according to their
population. Further, the villages are also classified differently, and the rate
for levying premium for conversion is accordingly prescribed. As such, the
schedule is based on a reasonable differentia after taking into account
relevant factors for this purpose, and is thus non-arbitrary and
As such, neither the
rule 14 nor the Schedule prescribed therein is ultra vires Article 14 of the
Constitution of India.
24. Learned counsel
for the State also submitted that the requirement of classifying various
cities, towns and villages according to rational criteria is also based on the
requirement of having uniformity of levies in the whole of the State, which is
the very primary object of the Revenue Code. Learned counsel for the State
submitted that in the instant case, the legislature has not exceeded its
jurisdiction in legislating the impugned rule 14 and the scheduled thereto.
Rule 14 and 28 schedule thereto are not arbitrary and have a direct nexus with
the objective still to be achieved.
25. Learned counsel
for the State submitted that in the impugned judgment, the Division Bench of
the High Court was justified in arriving at the conclusion that the rule which has
been assailed on the ground that the rule making authority has gone beyond the
statute is totally without any basis or foundation. Learned counsel further
submitted that the High Court was justified in coming to the conclusion that
the classification made therein neither suffers from absence of intelligible
differentia nor does it invite the wrath of equality clause as engrafted under
Article 14 of the Constitution.
According to the
learned counsel for the respondent, the Division Bench was justified in
concluding that the respondent was fully empowered to the premium on conversion
of land. Learned counsel for the respondent also submitted that the impugned
judgment has correctly analysed and interpreted the various provisions of the
Revenue Code and hence no interference is warranted by this court.
26. We have carefully
perused the pleadings, impugned judgment and the submissions made on behalf of
the appellants and respondent State of Madhya Pradesh.
27. Careful analysis
of the facts and reasons of the Revenue Code lead to the following
conclusions:- I) The State Government enjoys ample powers of not only to fix
land revenue rates or to re-fix them upon conversion/diversion of the land for
another use but also charges premium upon diversion of land for another use.
II) The premium is
one time charge for diversion of land for better land use under rule 14 of the
Code. Rule 13 prescribes when land is assessed for any non-agricultural purpose
is diverted to any agriculture purpose, no premium shall be imposed under
section 59 (5). The scheme of the Act clearly reveals that the premium is
charged only when land use is 30 converted for betterment. In this view of the
matter, the State is fully justified in charging the premium and the same is in
consonance with the spirit, objects and reasons of the M.P.
Land Revenue Code.
On careful analysis
of the entire scheme of the Act and the provisions of the Code it cannot be
said that rule 14 is violative of Article 14 of the Constitution.
classification of various cities in the State is determined as per the values
of land in different cities, the extent of population of those cities and the
character of those cities.
The important cities
of the State are classified differently from smaller cities and towns as also
according to their population. Similarly, villages are also classified
differently and rate of levying premium for conversion is accordingly
prescribed. The Schedule is based on reasonable differentia taking into
account 31 relevant factors for the purpose and it cannot be called arbitrary
28. In view of our
aforesaid findings these appeals filed by the appellants being devoid of any
merit are accordingly dismissed. In the facts and circumstances of the case,
the parties are directed to bear their own costs.
(Lokeshwar Singh Panta)