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Madhya Pradesh High Court · body

2009 DIGILAW 768 (MP)

I. T. C. Ltd. v. Nagda Municipality

2009-07-04

VINEY MITTAL

body2009
ORDER (Oral) 1. The petitioner has approached this Court raising a challenge to a Resolution No.369 dated May 23, 2007, passed by the respondent Municipality, and consequential demand raised through letter dated May 24,2007, by the Municipality, whereby a demand of Rs.40,69,073/-, as compounding charges, has been raised against the petitioner-company. 2. The petitioner-company had purchased agricultural land measuring 4.164 hectares through a registered sale-deed dated July 5,2005, with a view to establish a Farmers Facility Centre and Godown, at Village Padliyakala Tehsil Nagda, District Ujjain. After purchase, the said land was duly mutated in the revenue record in the name of the petitioner company. For using the land for the purpose, for which it had been purchased, a diversion order was sought and was issued by the Sub Divisional Officer, Nagda, and the land in question was permitted to be used for commercial use. The requisite plan for construction of the Farmers Facility Centre and Godown was also approved by the Town and Country Planning Department. A corresponding building permission was also sought by the petitioner-company from the respondent-Municipality, vide an application dated December 23, 2005, received in the office of Municipality on December 24,2005. 3. The petitioner-company claiming that the said application had never been rejected by the Municipality, therefore, under section 187 of the Act, deemed permission was to be treated as having been granted, raised a construction of the Farmers Facility Centre and Godown. 4. However, a demand was raised against the petitioner-company for an amount of Rs.22,74,662/-through a demand notice dated February 1,2006. The said demand included development charges of Rs.22,40,232/raised against the petitioner-company. The petitioner-company raised a contest with regard to the aforesaid development charges to the extent of Rs.22,40,232/- and maintained that only balance amount was to be paid by the petitioner-company. Consequently, the petitioner-company approached this Court through a writ petition, being Writ Petition No. 169912006. An interim order was passed by this Court on April 27, 2006, in the said writ petition. The petitioner-company was directed to deposit an amount of Rs.11,00,000/-within a period of one week from the date of the said order. It was also required to furnish a bank guarantee with regard to the remaining amount. An interim order was passed by this Court on April 27, 2006, in the said writ petition. The petitioner-company was directed to deposit an amount of Rs.11,00,000/-within a period of one week from the date of the said order. It was also required to furnish a bank guarantee with regard to the remaining amount. With regard to any further construction to be raised by the petitioner company, it was directed by the Court that the petitioner-company would be required to submit building plan, which would be dealt with in accordance with law, by the respondent-Municipality. Ultimately, the writ petition filed by the petitioner-90mpany was taken up for final hearing and disposed of on September 26, 2006. The demand raised by the Municipality towards development and compounding charges was quashed and following directions were issued:' "1. That the petitioner shall submit a detailed representation before the respondent No.2, regarding the nature of land and the actual area of unauthorized construction within a week. 2. If such a representation is submitted by the petitioner, the respondents shall submit the same before President-in-Council, who shall consider the same in accordance with section 187-A of the Act and also in accordance with the guidelines issued by Collector for the year 2006-07 and shall raise the demand accordingly. 3. The respondents shall pass a necessary order within a period of two weeks from the date of receipt of representation after giving an opportunity of hearing to the petitioner., 4. The amount already deposited by petitioner in compliance of the interim order passed by this Court shall be adjusted by the respondents. 5. Since the letter of demand Annexure P-6 relating to development charges has been quashed, therefore, the bank guarantee deposited by the petitioner in pursuance of the interim order passed by this Court stands discharged. 6. It is made clear that if any further construction is raised, then the same shall be within the permission/sanction of the respondents." 5. It appears that the matter was taken up by respondent-Municipality by filing a writ appeal, being WA No.457/2006. The Division Bench vide order dated February 27, 2007, upheld the directions issued by the learned Single Judge with regard to the fact that no demand/charges could have been levied by the respondent-Municipality as development charges. It appears that the matter was taken up by respondent-Municipality by filing a writ appeal, being WA No.457/2006. The Division Bench vide order dated February 27, 2007, upheld the directions issued by the learned Single Judge with regard to the fact that no demand/charges could have been levied by the respondent-Municipality as development charges. Even directions issued by the learned Single Judge with regard to the compounding fee were affirmed, since it was observed that the matter had been left to the discretion of the Municipality itself for determination of the compounding charges, in terms of section 187 -A of the Act. However, Division Bench issued further directions to the company, by requiring it to make a further deposit of RS.9,00,000/-, in addition to Rs.11,00,000/deposited earlier, and also to give an undertaking that if eventually a demand is raised by the Municipality then the said demanded amount would be duly deposited. Corresponding directions were also issued to the Municipality that in case of any excess amount being deposited by the company, refund shall be given by the Municipality. 6. It appears that in terms of the directions issued by the Court in the said litigation, the petitioner-company filed a representation on March 19, 2007, copy whereof has been appended as Annexure P-12 with the present petition. It was informed that out of the .ota11and purchased by the petitioner-company, the total area of construction of the Farmers Facility Centre is only 6557.46 square meters. The petitioner -company also requested that compounding charges may be determined, keeping in view the rates of sale of land, as determined by the Collector of Stamps. The said rates were also indicated in the said representation. 7. The said representation filed by the petitioner-company has been decided by the respondent-Municipality and a communication in this regard has been issued to the petitioner-company on May 24, 2007. The petitioner-company has been informed that the total compounding charges have been determined at Rs.40,69,073/-, and after deducting Rs.20,00,000/ already deposited by the petitioner-company, a demand of Rs.20,69,073/ has been raised. The aforesaid communication issued by the respondent Municipality to the petitioner-company has been appended as Annexure P-13 with the petition. 8. The petitioner-company has been informed that the total compounding charges have been determined at Rs.40,69,073/-, and after deducting Rs.20,00,000/ already deposited by the petitioner-company, a demand of Rs.20,69,073/ has been raised. The aforesaid communication issued by the respondent Municipality to the petitioner-company has been appended as Annexure P-13 with the petition. 8. The petitioner-company appears to have raised a protest against the said assessment/demand raised by the Municipality through a representation (Annexure P-15) dated June 12,2007/- However, when the said representation remained un-responded, the petitioner-company has approached this Court through the present petition, raising a challenge to the aforesaid assessment of compounding charges, and consequential demand raised by the respondent-Municipality. . 9. It has been maintained by the petitioner-company that as per the proviso to section 187-A of the Madhya Pradesh Municipalities Act, 1961, assessment of compounding fee with regard to the unauthorized construction was leviable on the actual area of the unauthorized construction, as per the rates of the land determined by the Collector of Stamps. The grievance raised by the petitioner-company is that rather than assessing the compounding charges on the actual constructed area, total purchased land of the petitioner-company i.e. 4.164 hectares has been taken into consideration, for assessing the compounding fee, which was not permissible in law. 10. The claim made by the petitioner-company has been contested by the respondent-Municipality. A reply has been filed. The assessment of compounding charges and consequential demand raised against the petitioner by the Municipality has been defended. It has been maintained that as per the law, the entire area owned by the owner, which includes the constructed area, was required to be taken into consideration, for assessment of the compounding charges. 11. I have heard Shri S.C. Bagadia, learned senior counsel appearing for the petitioner-company and Shri C.L. Yadav, learned senior counsel appearing for the respondent-Municipality, and with their assistance have gone through the record of the case. Both the learned senior counsel for the parties, during the course of arguments have reiterated the pleas raised by the parties, in their respective pleadings. 12. After taking into consideration the facts and circumstances of the case, I find that the only question which needs to be adjudicated by this Court is the interpretation of the provisions of section 187- A of the Madhya Pradesh Municipalities Act, 1961. 12. After taking into consideration the facts and circumstances of the case, I find that the only question which needs to be adjudicated by this Court is the interpretation of the provisions of section 187- A of the Madhya Pradesh Municipalities Act, 1961. It would be advantageous to reproduce the aforesaid provision, as under: "187-A. Compounding of offences of construction of buildings without permission, -- Notwithstanding anything contained in this Act or any other Act, for the time being in force or any rules or bye-laws made there under, the offence of constructing buildings without permission or contrary to the permission granted, may be compounded, if - (a) such contravention does not effect the regular building line; and (b) the area of unauthorized construction made in the marginal open spaces or in excess of the prescribed floor area ratio does not exceed ten percent of the prescribed floor area ratio; (c) area notified by the State Government as a hill station or a place of tourist importance or sensitive/fragile from the point of ecology; (d) area specified for parking of vehicles; . (e) area coming within the road or area affecting alignment of public roads; (t) area specified for tanks (Talab); (g) area of construction affecting regular building life: Provided that in compounding the cases fees shall be charged, as under in respect of the area of unauthorized construction on the basis of the rate of sale of land determined by the Collector of Stamps for the area concerned: (a) If the construction relates to a plot of one hundred square meter, ten percent of the rate of sale, in respect of residential building and fifteen percent of the rate of sale, in respect of non-residential building; . (b) If the construction relates to a plot of one hundred square meter, but does not exceed two hundred square meter, twenty percent of rate of sale, in respect of residential building and thirty percent of the rate of sale, in respect of non-residential building; (c) If the construction relates to a plot of two hundred square meter, but does not exceed three hundred fifty square meter, thirty percent of the rate of sale, in respect of residential building and forty five percent of the rate of sale, in respect of non-residential building; (d).If the construction relates to a plot of three hundred square meter, forty percent of the rate of sale, in respect of residential building and sixty percent of the rate of sale, in respect of non-residential building: . Provided further that the compounding shall be made in case of residential construction by the Chief Municipal Officer and in case of non-residential construction with the permission of President-in-Council: Provided also that nothing contained in this section shall apply to any person who does not have any right over the building for the land on which the construction has been made." (emphasis supplied) 13. The dispute in the present case pertains to the interpretation of proviso to section 187-A. Whereas respondent-Municipality maintains that the total area of land owned by the owner, including the area on which the unauthorized construction is raised by the land owner, is required to be considered for determination of the compounding charges, even if the unauthorized construction is merely on a portion thereof, on the other hand, the petitioner-company maintains that only the actual area of unauthorized construction is required to betaken into consideration for determination of the compounding charges. 14. A bare perusal of the proviso in question, appended to section 187-A, indicates that compounding fee shall be charged on the basis of rate of sale of land determined by the Collector of Stamps for the area concerned. It is, thus, clear that compounding fee is leviable only with regard to the actual area of unauthorized construction. However, rate for the said compounding fee is calculable on the basis of the rate of sale of land determined by the Collector of Stamps. The said proviso comprises of two parts; first part specifies the area for which compounding fee is leviable and later part stipulates the rates, on which the compounding fee is chargeable. However, rate for the said compounding fee is calculable on the basis of the rate of sale of land determined by the Collector of Stamps. The said proviso comprises of two parts; first part specifies the area for which compounding fee is leviable and later part stipulates the rates, on which the compounding fee is chargeable. The rate would be the rate of sale of land determined by the Collector of Stamps. It is apparent that while interpreting the said proviso, Municipality has taken the entire language of proviso, as comprised in one part only and, therefore, apparently, has fallen into an error of law. The said interpretation adopted by the Municipality has resulted in levying such compounding fee on the petitioner-company, which could not be levied. It was not even envisaged under the provisions of the Act, nor the Municipality was authorized in law to charge the same. 15. Consequently, the present petition is allowed. Resolution No.369 dated May 23, 2007, passed by the respondent-Municipality, and the consequential demand letter dated May 24, 2007, issued by the respondent Municipality, whereby compounding charges have been determined at Rs.40,69,073/-, to the petitioner-company are quashed. The compounding fee shall be leviable for only the actual area of unauthorized construction raised by the petitioner-company. In this regard, a fresh assessment order shall be passed by the respondent-Municipality, after associating a representative of the petitioner-company, in the matter. 16. The requisite process shall be completed by the respondent Municipality within two months from the date of appearance of the representative of the petitioner-company. Obviously, after such an assessment, the amount of compounding fee, so determined, shall be adjusted from the amount of Rs.20,00,000/- deposited by the petitioner company already, and the remaining amount, if in excess, shall be refunded to the company forthwith. 17. To facilitate the authority to undertake the said process, a representative of the petitioner-company shall appear before the. Chief Executive Officer of Nagda Municipality, Nagda, on August 17, 2009. Thereafter, requisite proceedings shall be taken before the competent authority, in accordance with law.