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2006 DIGILAW 1197 (DEL)

VIJAY ENTERPRISES v. UOI

2006-07-21

MUKUL MUDGAL, S.MURLIDHER RAO

body2006
MUKUL MUDGAL, J. ( 1 ) THE issue which arises in this writ petition is the date of determining the conversion rate of old grant' to 'freehold'. The order dated 26th may, 1982 passed by this Court reads as follow:"cw No. 1033/82 rule DB. CM No. 1536/82 the petitioners want to give an undertaking to this Court through their counsel, which is recorded as under-'the petitioners undertake to pay (i) the conversion costs in terms of the government letter dated 15/11/1976 viz. Rs. 12,87,000. 00 at Rs. 28. 00 per square foot which though payable by annual instalments spread over 5 years, the petitioners undertake to pay the said entire sum of Rs. 12,87,000. 00 within 8 weeks. The petitioners are agreeable that Government may accept the same without prejudice to their contention that higher conversion costs to be determined in future are payable by the petitioners-the petitioners however do not admit this contention but are agreeable that the matter be decided finally at the hearing of the petition, (ii) The petitioners further undertake to pay the higher conversion costs determined by the Central Government in respect of conversion of the cantonment lands at Pune into freehold if the same is held to be payable g by the petitioners at the hearing of the writ petition and undertake in the meanwhile to fully secure to the extent of Rs. 28/- lakh (viz. the difference between the amount to be paid under Clause (i) and the amount estimated on the present affidavit of the respondents as being payable under the new revenue Policy) by creating a charge on the petitioners' said land and buildings and structures now standing thereon and/or hereafter to be constructed after demolition of the existing buildings and/or structures. The petitioners are also agreeable that the order of Your Lordships and the undertaking may itself constitute a charge forthe said balance amount of Rs. 28. 00 lakh on the petitioners' said land and buildings'and structures now standing thereon and/or hereafter to be constructed after demolition of the existing buildings and/or structures. The petitioners are also agreeable that the order of Your Lordships and the undertaking may itself constitute a charge forthe said balance amount of Rs. 28. 00 lakh on the petitioners' said land and buildings'and structures now standing thereon and/or hereafter to be constructed after demolition of the existing buildings and/or structures. " ( 2 ) IN view of the above undertaking, pending disposal of the writ petition, the respondents, their servants and agents are restrained by an order of injunction from in any manner acting in furtherance of or implementing the conditions with regard to the conversion of the lands in dispute into freehold and/or from in any manner preventing the petitioners from putting up the construction on the said property in accordance with the plans as sanctioned or as may be sanctioned or such plans with any amendments or variations as the petitioners may be entitled to make on the basis of the undertaking heretofore he recorded. ( 3 ) IF any clarification, variation or modification of the above order is required or considered necessary to any of the parties before us, they have liberty to move the Court. Dasti. Application stands disposed of. " 2. It is not in dispute that the amount of Rs. 12,87,000. 00 pursuant to the above order has already been paid by the petitioner and the construction has been carried out. On 27th August, 1982, the sanction of the Ministry of Defence was received for the conversion of the land to freehold, three months after the above order of this Court. The said conversion order determined the transfer value at Rs. 39,04,010. 00 and a demand was made for the balance conversion charges of Rs. 26,16,974. 00. Pursuant to the above developments, the controversy in the present petition was narrowed down to the conversion rate. 3. The issue was crystallized in the order dated 15/7/2002 passed by this Court which reads as under:"the dispute centres round conversion rate viz. whether the rate was applicable as on the date of application made by the petitioner or on the date it was sanctioned by respondents. Petitioner has placed reliance upon (1991) 1 SC 63 in support but learned Counsel forthe respondents prays for adjournment to examine the matter and the Supreme Court judgment. " ( 4 ) THE petitioner also appears to have filed an application for amendment on 5. 8. Petitioner has placed reliance upon (1991) 1 SC 63 in support but learned Counsel forthe respondents prays for adjournment to examine the matter and the Supreme Court judgment. " ( 4 ) THE petitioner also appears to have filed an application for amendment on 5. 8. 2002 incorporating grounds and prayers to quash the additional demand of Rs. 26,16,9747- made in the letter dated 27/8/1982 by the first respondent, which amendment was allowed on 19/9/2002. Therefore, this is the only issue that remains to be considered in this writ petition. ( 5 ) IT is submitted by the learned Counsel forthe petitioner, Shri D. K. Singh that basis for the computation of the said amount was not indicated, particularly when the Standard Table of Rent (STR) was not revised even though it was recommended by the committee. ( 6 ) THE respondent's stand appears from the additional affidavit dated 28th november, 2001. In it a reference has been made to a letter dated 14th March, 1997 which purported to clarify that the Ministry of Defence had decided that in case of conversion from 'old grant' to 'freehold', the cost of conversion will be charged at the STR rates as valid on the date of sanction, i. e. the current rate of STR. The main plank of the case of the petitioner is that the application for conversion was made on 18th July, 1979 and obviously a later decision to grant such conversion could not determine the applicable conversion charges. It was contended that conversion charges had to be calculated with reference to the rate applicable on the date that the application for conversion was made, i. e. , 18th July, 1979. For this purpose, the learned Counsel for the petitioner has relied upon the judgments of the Hon'ble supreme Court in Union of India v. Dev Raj Gupta, (1991) 1 SCC 63 and Union of India v. Mahujan Industries Ltd. , (2005) 10 SCC 203 . ( 7 ) THE question in Union of India v. Dev Raj Gupta (supra) was whether the charges for conversion of use of land from residential to commercial had to be with reference to the date of application for change of user. ( 7 ) THE question in Union of India v. Dev Raj Gupta (supra) was whether the charges for conversion of use of land from residential to commercial had to be with reference to the date of application for change of user. On the facts of that case the hon'ble Supreme Court found that the application for change of the user of the land had been made on February 27,1981 and that this application was replied to only on January 12, 1994. Accepting the contention of the respondents in that case that the conversion charges had to be paid with reference to the date of the application, the Hon'ble Supreme Court observed as follows:"14. There is no explanation given by the appellants as to why the application made by the respondents on February 27, 1981 was not replied to till January 12,1984. Hence in the absence of anything else on record, it will have to be held that the date with reference to which conversion charges have to be counted is February 27, 1981. 15. The authority has calculated additional premium with reference to may 27,1981 on the footing that the outer limit for granting permission was three months from the date of the receipt of the application. There is no justification for the authority to hold thus, for they are expected to process the application as early as possible and not to wait till the end of three months. Unless there are valid reasons for them to do so or the delay is caused on account of an omission or commission on the part of the applicants, it is not proper to take the end of the three months as the date with reference to which the conversion charges should be calculated. " ( 8 ) IN Union of India v. Mahajan Industries Ltd. (supra) the appeal was against a judgment of the Division Bench of this Court dated 27. 10. 1998 which had followed an earlier Division Bench judgment Ansal and Saigal Properties (P) Ltd. v. L. andd. a, 74 (1998) DLT152 which had held that the crucial date for calculating the conversion charges had to be the date of the application for conversion. In this case the original owners of the property in question had requested for permanent conversion of the land use from residential to multi-storeyed complex. a, 74 (1998) DLT152 which had held that the crucial date for calculating the conversion charges had to be the date of the application for conversion. In this case the original owners of the property in question had requested for permanent conversion of the land use from residential to multi-storeyed complex. The Hon'ble supreme Court upheld the finding recorded by the High Court, and held that "the appellant is bound to grant permission for change of land use by charging the rates prevalent as on the date of the filing of the application. ( 9 ) THE learned Counsel for the respondent, Ms. Jyoti Singh submitted that in each of the above cases, the conversion was from either residential to commercial use or from residential to a multi-storeyed complex and therefore those principles were not applicable to the instant case where the conversion was from an 'old grant' to a freehold lease. We are unable to accept this submission for the simple reason that the nature of the conversion cannot determine the principle to be followed for determining the rate payable for such conversion. The view taken by the Hon'ble supreme Court in both these cases appears to be that the applicant seeking conversion should not be made to suffer on account of the delay by the authorities in granting the permission and that the applicant should not be asked to pay a rate higher than that which was prevalent on the date of the application. The principle enunciated by the Hon'ble Supreme Court, in our view, requires to be followed and applied even to the case on hand. ( 10 ) THE learned Counsel for respondent then contended that the present petitioner was one among over forty similar others in the Pune Cantonment Area who had approached the High Court of Judicature at Bombay by way of writ petition Nos. 2236-37/1983 (Kayum Roman Irani v. Pune Cantonment Board ). By a judgment dated 15. 4. 1987, a Division Bench of the Bombay High Court had while rejecting those writ petitions observed that without the conversion of land taking place, there could be no permission for construction. 2236-37/1983 (Kayum Roman Irani v. Pune Cantonment Board ). By a judgment dated 15. 4. 1987, a Division Bench of the Bombay High Court had while rejecting those writ petitions observed that without the conversion of land taking place, there could be no permission for construction. Para 3 of the relevant directions reads as under:" (3) The aforesaid condition further envisaged that till all the formalities required by the grantee of the conversion, including the payment in full of the cost of conversion, were completed by him, the conversion was not to be deemed to have been made and therefore the plans were not to be sanctioned by the Board till that time. The formalities of conversion were deemed to have been completed as soon as the cost in full was paid. It was not necessary to await the execution of a formal deed of conveyance. " ( 11 ) THERE was no specific direction in the said judgment about the rate at which the conversion charges would have to be paid. Importantly the Court in those cases held that the petitioners failed to make out a case of any deliberate delay on. the part of the respondents in granting sanction. The judgment of the Bombay High court was carried in appeal to the Hon'ble Supreme Court where the Hon'ble supreme Court observed as follows:"the appellants are at liberty to make constructions in accordance with the Building Plan as sanctioned by the Cantonment Board, Pune subject to the restrictions imposed by the order of the General Officer, Commanding-in-Chief, dated 24. 12. 1982, as implemented by the Cantonment board under its resolution dated 6/1/1983 provided the appellants pay the entire amount of conversion charges and they further comply with the necessary formalities for that purpose. While making the construction the applicants will strictly adhere to the directions contained in the order of the General Officer Commanding in Chief, dated 24/12/1982. " ( 12 ) THE learned Counsel for respondents also referred to another judgment dated 3/5/1991 of the High Court of Judicature at Bombay in the Writ Petition No. 5375/86, Sir Dinshaw Maneckji Petit v. Poona Cantonment Board where the earlier judgment of the Division Bench was followed. The Bombay High Court in this judgment noted that the petitioners had accepted the quantum of conversion charges and only asked that they be permitted to pay the same in instalments. The Bombay High Court in this judgment noted that the petitioners had accepted the quantum of conversion charges and only asked that they be permitted to pay the same in instalments. In those circumstances the Court declined to examine the question of reasonableness of the conversion charges. This matter was again carried in appeal to the Hon'ble supreme Court. While disposing of the appeals by an order 27. 1. 1997, the Hon'ble supreme Court said that "in the facts and circumstances of this case it would be appropriate in the interests of justice that the appellants may also be permitted to have their leasehold property converted into freehold on paying the balance amount of conversion charges with interest". ( 13 ) A perusal of the above judgments of the Bombay High Court and the orders of the Hon'ble Supreme Court would show that the specific question as to the relevant date with reference to which conversion charges had to be paid did not arise for consideration either because the point was not pressed or did not arise in the facts of the case. We do not find anything in these judgments which indicates that the petitioners in those cases had contended that they should be charged the rates for conversion only with reference to the date of their applications and that such a contention was expressly negatived. Further we also notice that the judgment of the Hon'ble Supreme Court in Dev Raj Gupta's case (supra) was not noticed and perhaps did not also require to be noticed in the facts and circumstances of those cases. We are, therefore, of the view that these judgments of the Bombay high Court and the orders of the Hon'ble Supreme Court cited by Counsel for the respondent do not provide the answer to the question arising for determination in the present petition. ( 14 ) THE learned Counsel for the respondent finally made a faint attempt to question the jurisdiction of this Court to hear the present matter when the properties in question are located in Pune. We are not inclined to entertain this objection for more than one reason. ( 14 ) THE learned Counsel for the respondent finally made a faint attempt to question the jurisdiction of this Court to hear the present matter when the properties in question are located in Pune. We are not inclined to entertain this objection for more than one reason. ( 15 ) THIS writ petition has been pending in this Court since 1982 and we find that although the preliminary objection as to jurisdiction was taken by the respondents in their reply affidavit dated 14/5/1982 they do not appear to have urged this at any of the hearings of this case till date. On the other hand pursuant to the order dated 26/5/1982 extracted hereinabove, the respondents by an order dated 27/8/1982 permitted the conversion. As of date, twenty-four years have passed by and we think it would not be in the interests of justice to permit the respondents to now urge this contention after numerous hearings have gone by, voluminous pleadings have been filed and interim orders passed and acted upon in this case. The petition was also permitted to be amended on 8/8/2002 to incorporate additional grounds and prayers. Accordingly, the objection of the respondents to the maintainability of this petition is negatived. ( 16 ) FOR the aforementioned reasons, this petition is allowed and it is directed that the petitioners are liable to pay the conversion charges only with reference to the date of the application made by the petitioners for conversion from old grant to freehold, i. e. , 18/7/1979. Consequently it is directed that the demand of Rs. 26,16,974/- made in the letter dated 27/8/1982 will not be enforced against the petitioner. The Counsel for the petitioner states that the conversion charges with reference to the date of application has already been paid and this is not disputed by the Counsel for the respondents. ( 17 ) THE writ petition accordingly stands allowed in the above terms with no order as to costs. Writ Petition allowed.