PETITIONER: NAGPUR IMPROVEMENT TRUST Vs. RESPONDENT: NAGPUR TIMBER MERCHANTS ASSOCIATION & ANR. DATE OF JUDGMENT: 18/03/1997 BENCH: S.C. AGRAWAL, S. SAGHIR AHMAD ACT: HEADNOTE: JUDGMENT:
[WITH CIVIL APPEAL NO. .2036 OF 1997
(arising out of S.L.P. (Civil) No. 5594 of 1993)]
J U D G M E N T
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.