Nagpur Improvement Trust Vs. Nagpur
Timber Merchants Association & ANR [1997] INSC 309 (18 March 1997)
S.C. AGRAWAL, S. SAGHIR AHMAD
ACT:
HEADNOTE:
[WITH CIVIL APPEAL NO. .2036 OF 1997 (arising
out of S.L.P. (Civil) No. 5594 of 1993)]
S.C. AGRAWAL, J.
Special leave granted.
These appeals raise common questions for
consideration.
The Nagpur Improvement Trust, the appellant
herein, has been constituted under the provisions of the Nagpur Improvement
Trust Act, 1936 enacted to provide for improvement and expansion of the town of
Nagpur. The said Act makes provisions for acquisition of land by the
Improvement Trust in connection with various schemes which are framed by the
Improvement Trust. After development the land is disposed of by the Improvement
Trust. The disposal of lands vested in the Improvement Trust is governed by the
Nagpur Improvement Trust (Land Disposal) Rules, 1955 (hereinafter referred to
as 'the Rules') made by the State Government, in exercise of powers conferred
by Section 76 read with Section 89 of the Nagpur Improvement Trust Act, 1936.
Rule 3 provides for transfer of land of Improvement Trust by (a) direct
negotiation with party; (b) public action; (c) inviting tenders; and (d)
concessional rates. Rule 4 prescribes that the land shall be disposed of at a
premium to be fixed in accordance with the provisions contained therein. In
addition to the amount of premium, the annually. Rule 7 lays down that every
transfer of Improvement Trust. If the purchaser by an application in writing
requests the Improvement Trust to convert the period of lease from thirty years
to ninety nine years, the Improvement Trust may do so after charging in
addition 15% of the premium fixed for thirty years of lease with proportionate
increase in annual ground rent. In certain specified circumstances the
Improvement Trust can dispose of land by outright sale or exchange. Rule 9 of
the Rules, which is relevant for the purpose of this case, reads as under :-
"Rule 9. Where land revenue is payable in respect of any plot so transferred
such land revenue shall be payable by the Trust." The other provisions of
the Rules have no bearing on the matter in issue.
The respondents in these appeals are lessees
in respect of lands of the Improvement Trust. Under the terms of Lease Deed
they are liable to pay the amount prescribed therein as premium and ground rent
periodically. Clause 1(b) of the Lease Deed contains the following provision :-
"(b) The lessee shall from time to time and at all times during the said
term pay and discharge all rates, taxes charges and assessments of every
description or imposed upon the said land hereby demised or the building
erected thereupon or upon the landlord or tenant in respect thereof." In
1978 the Government of Maharashtra initiated proceedings for assessment and
recovery of non-agricultural assessment charges under the provisions of the
Maharashtra Land Revenue Code, 1996 (hereinafter referred to as 'the Land
Revenue Code'). Non-agricultural assessment charges in respect of the plots
which had been allotted by the Improvement Trust to the respondent-lessees were
demanded by the State Government from the Improvement Trust. The Improvement
Trust, as per clause 1(b) of the Lease Deed asked the lessees to the make
payment of the non- agricultural assessment charges in respect of their lands.
The respondents and filed Writ Petitions in
the Bombay High Court Nagpur Bench, challenging the said demand of non-
agricultural assessment from them. The Writ Petitions which have given rise to
Special Leave Petitions (Civil) Nos.11018-23 of 1992 were disposed of by the
High Court by a common judgment dated September 3, 1991 whereby the High Court
has allowed the said Writ Petitions and has quashed the recovery notices issued
by the Improvement Trust and has restrained the Improvement Trust from making
recovery of non-agricultural assessment from the plot holders, like the
respondents or their members. The High Court has held that non-agricultural
assessment is nothing but land revenue and in view of Rule 9 of the Rules the
Improvement Trust is liable to pay the same and it could not recover it from
the lessees. The High Court has further held that clause 1(b) of the Lease Deed
does not include payment of land revenue by the lessees of plots held by them
and that such a construction of the said clause would be in consonance with
Rule 9 of the Rules and that if the said clause is interpreted to include even
land revenue then the said clause would be against Rule 9 which provides that
the land revenue of the plot transferred to the lessees is made payable by the
Improvement Trust and no one else and that the burden that is statutoril fixed
under Rule 9 cannot be shifted to others as is sought to be done by the
Improvement Trust. The High Court has also observed that since the respondents
or their member had no notice about the fixation or assessment beir undertaken,
they could not participate in those proceeding and that the Improvement Trust
failed to get proper fixated done because it took no interest in the proceedings
and the in these circumstances no liability could be fastened up the lessees.
Writ Petition No. 2351 of 1982, which has
given rise to Special Leave Petition (Civil) No. 5594 of 1993, was disposed of
by the High Court by its judgment dated September 6, 1991 on the basis of the
earlier judgment dated September 3, 1991 referred to above.
Shri V.A. Bobde, the learned senior counsel
appearing for the Improvement Trust, has urged that the High Court was in error
in holding that non-agricultural assessment is land revenue Trust alone which
is bound to pay the said charges and it cannot require the lessees to pay the
same. Shri Bobde has also placed reliance on clause 1(b) of the Lease Deed and
has submitted that the Improvement Trust is entitled to require the lessees to
pay the non-agricultural assessment that is being recovered by the State
Government from the Improvement Trust and that the High Court was in error in
holding that in view of Rule 9, clause 1(b) of the Lease Deed cannot be
construed to impose such a liability on the lessees.
The learned counsel appearing for the
respondents have, on the other hand, urged that the High Court has rightly
construed the expression "land revenue" in Rule 9 of the Rules to
include non-agricultural assessment and that in view of the mandate in Rule 9,
the Improvement Trust alone is liable to pay non-agricultural assessment and it
cannot pass on the liability for the same to the lessees. The submissions. of
the learned counsel is that clause 1(b) of the Lease Deed cannot be construed
as entitling the Improvement Trust to require the lessees to pay the non-
agricultural assessment and that, if clause 1(b) is so construed, it would be
inconsistent with the provisions contained in Rule 9 of the Rules.
We will first examine the question whether
Rule 9 of the Rules precludes the Improvement Trust to require the
respondent-lessees to pay the amounts sought to be recovered from the
improvement Trust by the State Government as non- agricultural assessment in
respect of the plots leased out to the respondents. For purpose, we will
proceed on the basis that the expression "land revenue" in Rule 9
includes non-agricultural assessment. A perusal of Rule 9 shows that it governs
the relationship between the State Government and the Improvement Trust in the
matter of recovery of land revenue payable in respect of lands disposed of
under the Rules. The said Rule imposes the liability for the payment of land
revenue in respect of the lands disposed of under the Rules on the Improvement
Trust. As a result, the State Government can recover the land revenue payable
in respect of the lands so disposed of from the Improvement Trust and it need
not take proceedings for recovery of such land revenue from the transferees of
the lands that are disposed of under the Rules. But that does not mean that the
Improvement Trust cannot pass on its liability to the lessees in respect of the
land revenue payable by it to the State Government in respect of the lands that
have been transferred to the lessees. The High Court has construed Rule 9 to
mean that the land revenue in respect of the plots transferred to the lessees
has to be paid by the Improvement Trust and no one else and that the said
burden which is statutorily fixed under Rule 9 cannot be shifted to others.
We find no warrant for adding the words
"no one else" in Rule 9 so as to preclude the Improvement Trust from
requiring the lessees to pay the land revenue which the Improvement Trust is
required to pay to the State Government in respect of the lands that have been
transferred to the lessees. Under Section 114 of the Land Revenue Code the rate
of non-agricultural assessment in respect of lands in urban areas is one-half
the standard rate if the land is used for the purpose of industry and it is
thrice the standard rate in other urban areas if the land is used for the
purposes of commerce. The possibility cannot be excluded that amount of the
non-agricultural assessment payable in respect of the plot of land disposed of
by the Improvement Trust may, in the course of time, exceed the amount of the
premium that is paid by the lessee at the time of grant of lease and, if the
Improvement Trust is precluded from recovering the amount of non-agricultural
assessment from the lessee, it may end up paying more by way of
non-agricultural assessment than the amount received by it as premium for the
land. By way of illustration we may refer to the Lease Deed dated October 15,
1956 (Annexure 'H' to the S.L.P.) executed in favour of Arya Pratinidhi Sabha
(petitioner in Writ Petition No. 2265 of 1982 before the High Court). The
amount of premium paid by the lessee was Rs. 6,534/- in respect of a plot
measuring 7,286 square feet and the ground rent is Rs. 10 per year.
The letter of demand dated May 29, 1982
(Annexure 'I' to the S.L.P.) shows that the non-agricultural assessment payable
in respect of the said plot @ Rs. 270.70 for the period from 1956 to 1982 was
Rs. 7038/-. The amount of non-agricultural assessment payable for the plot for
the period from 1956 to 1982 thus exceeds the premium that was received by the
Improvement Trust from the lessee. Surely it could not be the intention of the
rule making authority in Rule 9 that the Improvement Trust shall finance the
lessees in respect of lands that are disposed by the Improvement Trust under
the Rules.
The High Court has also referred to the
provisions of Rule 11 of the Land Disposal Rules, 1983 wherein it is expressly
stated that the lessee during the continuance of the lease shall pay land
revenue, non-agricultural assessment and cesses assessed or which may be
assessed on the demised land. The fact that under Rule 11 of the Land Disposal
Rules, 1983 it is expressly provided that the lessee is liable to pay land
revenue non-agricultural assessment in respect of land held by him does not
mean that in the absence of such an express provision Rule 9 of the Rules must
be construed to mean that the lessee is not liable to pay land revenue
non-agricultural assessment assessed on the demised land. As indicated earlier,
we are of the opinion that Rule 9 of the Rules did not preclude the Improvement
Trust from recovering from the respondent- lessees the amount of
non-agricultural assessment payable by it to the State Government in respect of
lands leased out to respondent-lessees. Since we have held that Rule 9 of the
Rules did not preclude the Improvement Trust from requiring the
respondent-lessees to pay in respect of the lands leased out to them
non-agricultural assessment which the Improvement Trust was required to pay to
the State Government, we do not consider it necessary to deal with the question
whether the expression "land revenue" in Rule 9 includes
"non-agricultural assessment".
The High Court has observed that liability
could not be passed on to the lessees because they had no notice of the
proceedings regarding fixation or assessment of non- agricultural assessment
and they could not participate in the proceedings. It is no doubt true that at
the stage of assessment of amount of non-agricultural assessment notice had
only been issued to the Improvement Trust and the lessees had no notice of the
proceedings and they had no opportunity of placing their case before the
concerned authorities. The grievance of the respondents in this regard would be
redressed if they are afforded an opportunity of making their representations
against determination of non- agricultural assessment in respect of plots
leased out to them and, in case such representations are made by the lessees,
the same are given due consideration by the concerned authority.
In the result, the appeals are allowed. The
impugned judgments of the High Court are set aside and the Writ Petitions filed
by the respondents in the High Court are disposed of with the direction that it
is permissible for the Improvement Trust to require the respondent-lessees to
pay the amount of non-agricultural assessment in respect of the lands leased
out to them. It would, however, be open to the respondents to submit their
representations to the concerned authority against the determination of non-
agricultural assessment in respect of lands leased out to them and, if such
representation is made within one month of this judgment, the same shall be
given due consideration by the concerned authority and it should be disposed of
within a period of two months from the date of submission of the
representation. The recovery of non-agricultural assessment shall not be made
from the respondent-lessee/lessees making the representation till the
representation is disposed of by the concerned authority. No order as to costs.
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