JUDGMENT
B.H. Marlapalle, J.
1. All these three petitions, filed under Article 226 of the Constitution, raise a common question viz. the power of respondent Nos. 2 and 3 – the City and Industrial Development Corporation of Maharashtra (CIDCO) to levy and collect service charges from the residents of New Aurangabad and hence they are being decided by this common judgment.
2. In the first petition, the petitioners are residents of New Aurangabad who were allotted residential plots by CIDCO for construction of residential dwellings, whereas in the second petition a co-operative housing society is the petitioner. The third petition has been filed by a public trust registered for the purpose of welfare activities in the N-5 sector of CIDCO, Aurangabad. In the first petition the respondent No. 3 had issued, sometimes in February/March, 1990, bills for service charges and called upon the plot owners to pay the same at the rate of Rs. 4/- per square meter for residential plots [built up area] and Rs. 6/-per square meter for the commercial plots. Similarly, notices were issued on 18th January, 1991 as well as 16th September, 1991 demanding service charges at the rate of Rs. 4/- per square meter of the plot area. It has been submitted before us by the learned counsel for the petitioners that (a) CIDCO does not have the power to levy such service charges; (b) even if they have such power, the service charges cannot be demanded unless the civic amenities are provided and the demand for the same is made thereafter; (c) service charge at the rate of Rs. 4/-per square meter is arbitrary, unjust and unreasonable; and (d) in some cases the service charge has been demanded at the rate of Rs. 4/- per square meter for the built up area whereas in some other cases it has been charged at the rate of Rs. 4/-per square meter of the total plot area.
Reliance has been placed on the report dated 11th December, 1988 submitted by the Commissioner appointed by this Court in Writ Petition No. 421 of 1986. This was a public interest petition filed by some of the residents of CIDCO praying for directions to take steps to provide and maintain the civil amenities like playground, open spaces, shopping complex, gardens and parks, drainage and sewerage lines, water supply lines, roads and other cultural activities. The Commissioner, appointed by this Court, had submitted a report highlighting the lack of all these civic amenities in the New Township named CIDCO. It was pointed out that the drainage system was inadequate and insufficient while in some areas it was not provided. The drainage lines were laid adjacent to the water supply pipelines and if there was leakage in the drainage line, the water supply line was getting affected. The water supply was inadequate and the PVC pipes used for water supply lines were broken in some parts of the township. In almost all the localities there were complaints of inadequate water supply. Conservancy services, construction and maintenance of roads, street lighting were found to be inadequate. Tree plantation and gardens as well as parks was another deficiency and CIDCO had failed to provide for cultural and sports facilities. It appears that some of the petitioners and dignitaries had also raised doubts about the civic amenities provided by CIDCO. Legal notices were issued challenging the bills for service charges. Some residents claimed that on receipt of these bills they had approached CIDCO to make the payments but they were not accepted as they were belated by few days or months and unless interest on the amounts was paid CIDCO would not accept the principal amounts. There was a meeting held on 21st September, 1989 between the representatives of residents and the CIDCO authorities in which the issues like provision for school plots, market areas, hospitals, community centers, open spaces, entertainment facilities, post office, government offices, stadia, garden, childrens park, play grounds, plots for temples, water supply, drainage system and conservancy etc. were discussed and steps taken by CIDCO were listed out. A contempt petition came to be filed in Writ Petition No. 421 of 1986 after the Court Commissioner had submitted his report. Affidavit in reply submitted in the said contempt petition has also been relied upon in these petitions. It is contended that when no steps were taken to provide the basic civic amenities by CIDCO, the residents could not have been called upon to pay the service charges and service charge being a quid pro quo, CIDCO was first required to provide these amenities and then demand payment of service charges, if at all the Corporation had any such power/authority to impose service charges.
3. Affidavit in reply has been filed in support of CIDCO’s authority to levy service charges and demand the same. There is no dispute that CIDCO allotted plots for residential as well as commercial purposes on long lease basis in different sectors of the New Township (North of Jalna road) by way of a written agreement which was a basic document with its terms and conditions binding upon both the parties. The initial agreements of lease signed in 1979 as well as the subsequent lease agreements contained a specific clause regarding payment of service charges i.e. Clause No. 3(ee). In the first set of agreements, signed in 1979, the said clause reads as under:
“3. The Licensee hereby agrees to observe and perform the stipulations following, that is to say —
(ee) That he will on and from 1-11-1981 or completion of construction or its part whichever is earlier make to the Corporation a yearly payment at the rate of Rs. 4 (Four) per square meter of built up area as his contribution to the cost of establishing and maintaining civic amenities such as roads, water, drainage, conservancy for the land regardless of the extent of benefit derived by him from such amenities. However, the service charges are subject to revision and he shall be liable to pay to the Corporation the service charges as may be revised from time to time, provided that no payment shall be made one year after such civic amenities have been transferred to a Local Authority constituted under any law for the time being in force. The payment shall be paid on the first day of January in each year or within 20 days therefrom.”
Whereas in the subsequent lease agreements, signed after 1980, the clause was amended and it read as under :
Payment of Service charges.
(ee) that he/they/it will, on the efflux of 3 years from the date hereof or from the date of obtaining a completion and occupancy certificate from the Corporation whichever is earlier, make to the Corporation a yearly payment at the rate as may be determined and notified from time to time by the Corporation as his/their/its contribution to the cost of establishing and maintaining civic amenities such as roads, water, drainage, conservancy for the said land regardless of the extent of benefit derived by him/them/it from such amenities. Provided that no payment shall be made one year after such civic amenities have been transferred to a local Authority constituted under any law for the time being in force. The payment hereunder shall be paid on the first day of January in each year or within 20 days therefrom.”
In this amended clause the rate of service charges was not specified and it was not clear whether the service charges would be levied on the built up area or on the total plot area. On the other hand in the earlier agreements, the above referred clause had clearly stipulated that service charges would be levied at the rate of Rs. 4/- per square meter on the built up area and not on the total plot area. However, the lease agreement clearly laid down payment of service charges on the efflux of two years (1st November, 1981) or three years, or as the case may be, from the date of obtaining a completion and occupancy certificate, whichever event occurred earlier, as contribution to the cost of establishing and maintaining civic amenities such as roads, water, drainage, conservancy for the locality, regardless of the extent of benefit derived by the plot owner or owners. It was also made clear that no payment shall be made one year after such civic amenities were transferred to the Municipal Corporation. This clause, which is binding on the residents/plot owners has empowered CIDCO to levy service charges and, therefore, we do not agree with the contentions raised before us that the CIDCO had no such authority to levy and demand service charges.
4. It was contended that even if the lease agreements provide for a specific clause for payment of service charges to CIDCO, such demand could not have been made unless the civic amenities, as set out in the clause in the lease agreement, were first provided. This contention is also based on fallacious presumptions. The clause specifically stated that service charges are required to be paid by way of contribution to the cost of establishing and maintaining civic amenities. The levy of service charge was contemplated even for establishment of the civic amenities and/or their maintenance. This clause empowered the CIDCO to collect service charges on expiry of two years or three years, as the case may be, from the date of agreement or the date of obtaining completion and occupancy certificate, whichever was earlier. The CIDCO had, right in the beginning, twisted in its favour the authority to levy service charges and demand the same from the plot owners even for establishment of the civic amenities and it was not necessary that these charges could have been demanded only after the civic amenities were provided. It being a Special Development Authority appointed by the State Government under the provisions of Section 140 of the M.R.T.P. Act, it was expected to provide civic amenities to the New Township it was entrusted to develop and being an authority created under a statute it had ensured that the service charges would be collected even before the civic amenities are actually provided. The plot owners are bound by the terms of the lease agreement as they voluntarily accepted the said terms being binding upon them. In addition, we do not find such a condition either arbitrary, unreasonable or capricious. A public body has to create funds for providing amenities to the residents and further funds are required for their maintenance. When the lease rate of the plots was fixed, the CIDCO had made it clear that over and above the same, some other taxes, service charges as well as land revenue would be payable by the plot owners. The contentions that service charges were not payable unless CIDCO had provided adequate civic amenities cannot be accepted. We have also noted that the plot holders were allowed sufficient time to construct the dwellings before the collection of service charges could commence.
5. The documents submitted in the first petition itself indicated that after the Commissioner’s report was submitted in Writ Petition No. 421 of 1986 the CIDCO had already initiated steps for providing the civic amenities. The minutes of the meeting dated 21st September, 1989, held between the Administrator of CIDCO and some of the residents (petitioner No. 4) indicated that some of the civic amenities were already provided. These were schools, market areas, hospitals, community centers, open spaces, post offices, government offices, stadia, garden and childrens park, entertainment facilities, play grounds, water supply, drainage system etc. The expenditure incurred by CIDCO as on 31st March, 1989 for providing civic amenities was Rs. 125.72 Lakhs in 1988-89 and Rs. 121.70 Lakhs in the next year i.e. 1989-90 (upto December, 1989) for the construction of sewerage treatment plant, laying of trunk sewer lines and construction of sump and pump well etc., total Rs. 600 Lakhs were provided and out of the same an amount of Rs. 300 Lakhs was proposed to be spent during the year 1990-91 to 1992-93. It was clarified in its affidavit in reply filed on or about 14th February, 1991 that an amount of Rs. 1,89,54,327/- was spent by CIDCO on the maintenance and upkeep of the civic amenities in the New Aurangabad area and the arrears on account of unpaid service charges had staggered in the region of Rs. 1.44 crores. The revenue collected as service charges from the citizens was only Rs. 40,62,752/- thereby causing a huge burden on CIDCO on account of maintenance of civic amenities. The revenue and expenditure statement attached to the said affidavit in reply upto 31st March, 1990 showed the expenditure incurred by CIDCO on the maintenance of roads, sewerage drains, water supply, sewerage, street lights, conservancy services and security etc., as under:
Upto 31-3-1980 ... Rs. 15,95,383.00
1980-81 ... Rs. 6,78,811.00
1981-82 ... Rs. 4,87,214.00
1982-83 ... Rs. 6,30,516.00
1983-84 ... Rs. 10,15,883.00
1984-85 .... Rs. 12,41,049.00
1985-86 ... Rs. 22,34,753.00
1986-87 ... Rs. 26,38,022.00
1987-88 ... Rs. 22,43,175.00
1988-89 ... Rs. 32,24,552.00
1989-90 ... Rs. 29,64,969.00
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Total upto 31-3-1990 .. Rs. 1,89,54,327.00
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6. The statement showing demand and recovery of service charges for the period 1980-81 to 1989-90 showed that the demand was to the tune of Rs. 1,82,34,565/- whereas the recovery was only to the extent of Rs. 40,62,758/-. The percentage of recovery against total arrears varied from 4.55 to 44.12%. It is, thus, clear that, CIDCO, as the Special Planning Authority, had taken due steps for providing the civic amenities and the capital outlet made by it was utilized for providing such amenities right from 1979-80 onwards. Its authority to levy and demand service charges, as per the lease agreement, is unsustainable, more so when the terms of the lease agreement are binding on both the parties.
7. Now coming to the, issue of interest being charged on the arrears of service charges, it has been noted that these interest amounts have been waived from time to time. The latest resolution No. 8906 has been passed by CIDCO on 22nd January, 2004 and the interest amount has been waived if the outstanding amount is paid in two equal quarterly instalments in next six months with effect from 1st February, 2004. This issue, therefore, does not remain to be adjudicated upon by us. It is for the concerned residents/petitioners to approach the CIDCO and remit the arrears of service charges, if any, as per the said resolution which has been duly notified and adequately publicised in the local press. If the arrears of service charges are paid in two equal quarterly instalments with effect from 1st February, 2004, the CIDCO itself has agreed not to charge interest on these arrears. We hope that the plot holders would respond well to this concession.
8. As has been pointed out earlier, the initial agreements stipulated that service charges would be levied at the rate of Rs. 4/- per square meter of the built up area and not the plot area, whereas the same clause in the subsequent agreements was amended stipulating that an appropriate amount of service charge would be levied. Shri Bajaj, the learned counsel for the CIDCO submitted that the CIDCO has passed resolution and the rate of Rs. 4/- per square meter for residential and Rs. 6/- per square meter for commercial plots has been maintained. It was further clarified by him that the service charges are being levied on the total plot area and not on the built up area. The reasons for this change have been explained in the affidavit in reply filed before us. It has been clarified that though the residential dwellings were required to be built within two or three years of taking possession of the plots, the plot holders failed to do so in a good number of cases. In some cases, for name sake, 10% to 15% plot area was utilised and remaining was left open. The available F.S.I. was 1:1 and, thus, the plot holders were allowed to construct upto the total plot area. As CIDCO was incurring huge losses in establishing and providing civic amenities, it decided, by subsequent resolution, to levy service charges on the total plot area rather than on built up area. It has framed New Towns Disposal of Land Regulations, 1992 and Clause 3(xv), in Chapter III of the said regulations, regarding payment of service costs, and it reads, as under :
Payment of Service cost
(a) The lessee shall make to the Corporation a yearly payment at such rate as the Corporation may determine from time to time as his contribution to the cost of establishing and maintaining civil amenities such as roads, water drainage, conservancy for the demised land regardless of the extent of benefit derived by him from such amenities provided that no payment shall be due to be made one year after such civil amenities have been transferred to a Local Authority constituted under any law for the time being in force, provided further that if the period to be calculated for such payment is less than a year, the payment shall be made on pro-rata basis.
(b) The payment shall be paid on the first day of January in each year or within 30 days therefrom.”
9. It is true that CIDCO being a Special Planning Authority, it has to generate revenue so that its investment/expenditure does not exceed its revenue but, at the same time, there must be a correlation between service cost and the areas utilised for residential dwellings. While we do not find any unreasonableness in levying service charges at Rs. 6/- per square meter for the total commercial plot area, we do not approve of charging service costs at the rate of Rs. 4/- per square meter for the total residential plot area in every case. If the plot has not been utilised for residential dwelling and though it has been occupied with some construction for name sake, CIDCO would be justified in levying service charges on the total plot area. The residential plots came to be allotted, keeping in mind the genuine residential requirements and if these plots have not been utilised for years together, for whatever reasons, the CIDCO is justified in levying service charges for the entire plot area and not on the basis of the built up area alone. However, there may be some genuine cases where the plot holders did not want to or could not built their residential dwellings to the entire extent i.e. to exhaust the total F.S.I. and they have, for example, built house admeasuring 1000 sq.ft. on a plot area of 3000 or 5000 sq.ft. there is no justification that such a family should be called upon to pay service charges for the entire plot area. The plot has been upto bona fide use and as and when the built up area is increased CIDCO has the authority to increase the amount of service charges but there is no reasonable nexus in levying service charges on the total plot area and the services required for such residential dwelling. This is an issue which CIDCO must reconsider and whenever plot has been put to bona fide use for self occupation and for residential purposes the families occupying the plot, there is no justification for levying service charge on the total plot area. The initial clause in the first agreement was very just, proper and in tune with the philosophy for which a special planning authority like CIDCO came to be established by the State Government. Profit making is not permissible to CIDCO and it must have its revenue resources so as to off set its expenditure. The service charges must commensurate with the services utilised or extended by CIDCO on the basis of the floor area in respect of plots which have been put to bona fide use.
10. In the result, we hold that CIDCO has the power to levy and demand service charges as per the lease agreement. The service charges levied at the rate of Rs. 4/- per square meter of the built up area for residential plots and Rs. 6/- per square meter on the plot area for the commercial plots is payable by the plot holders/flat holders or shop/office holders, as the case may be. In respect of the plots, which have not been put to bona fide use, the CIDCO is justified in levying service charges for the entire plot area. However, in respect of the residential plots, which have been put to use for bona fide purpose and the plot holders are occupying the residential dwelling for self use i.e. for actual residence in the said dwelling, there is no justification in CIDCO levying service charges on the total plot area and in such cases the service charge should be levied on the built up area i.e. at the rate of Rs. 4/- per square meter on the total built up area, as at present.
11. The petitions are disposed of in terms of the above orders with no order as to costs.