India: Premium Application: Surplus Vacant Land Under The Urban Land (Ceiling And Regulation) Act, 1976

This article discusses a ruling by the Bombay High Court on March 30, 2023 in a case involving Salim A Porbanderwalla and Shivranjani Properties LLP (Petitioners) against the State of Maharashtra and The Additional Collector and Competent Authority (Competent Authority) (Respondents). The court decided that payment of premium should only be required for surplus vacant land under The Urban Land (Ceiling and Regulation) Act, 1976 (ULCA). Upon payment of the premium, the entry in the revenue records, indicating that the lands are affected by Section 20 ULCA, should be deleted This ruling has important implications, which and we will examine in detail.

Petitioner No. 1 owned two pieces of land in Marol, Andheri, measuring 15,669.20 square meters as per the property card. Petitioner No. 2 is a developer. On May 15, 2008, the Competent Authority under the ULCA exempted certain vacant lands (Exemption Order). The Competent Authority declared 5,387.17 square meters as surplus vacant land and 2,990.23 square meters as non-vacant land that could be retained within the ceiling limit under the ULCA. The surplus vacant land had a reservation for rehabilitating project-affected persons.

The ULCA was abolished by the Urban Land (Ceiling & Regulation) Repeal Act in 1999 (Repeal Act). In a case of Maharashtra Chamber of Housing Industry & Ors v State of Maharashtra & Anr., the Court's Full Bench discussed the impact of the Repeal Act on the exemptions granted under Section 20 of the ULCA. The majority opinion concluded that these exemptions did not cease to exist despite the repealing of the ULCA. To resolve these exemption orders, the Government of Maharashtra set up a committee led by Justice BN Sri Krishna. The committee recommended a solution involving a one-time payment called "premium."

The State Government's proposal was accepted by the Supreme Court in a Civil Appeal on July 2, 2019. Consequently, the State Government issued a resolution on August 1, 2019 (GR dated August 1, 2019), offering to resolve pending issues regarding surplus and retained land by accepting premium payment.

On June 23, 2021, the State Government issued a second Government Resolution (GR dated June 23, 2021) to simplify the process of implementing the GR dated August 1, 2019 and providing a basis for computation.

The Petitioners applied to the State Government in September, October, and November 2021, expressing their interest in benefiting from the schemes mentioned in the Government Resolutions dated August 1, 2019, and June 23, 2021(GRs). They requested the State Government to (i) accept their payment, (ii) release them from the conditions of the Exemption Order, and (iii) calculate the amount they required to pay.

In November 2021, the Competent Authority asked the Petitioners to pay a premium for 5,271.75 square meters of surplus vacant land. However, they did not include 115.42 square meters of surplus vacant land in the payment request. The Petitioners paid the premium for the specified area.

In February, 2022, the Petitioners offered to pay for the remaining 115.42 square meters of surplus vacant land. They requested the State Government to raise a payment demand for this area as well. However, on April 22, 2022, the State Government informed the Petitioners that even if they paid for the balance area, the entries in the Records of Rights and other records indicating that the entire property is affected by the ULC order would continue to remain in force. In simpler terms, despite their payment, the Revenue Records would continue to show the original Exemption Order.

In September, 2022, the Competent Authority demanded premium for the remainder 115.42 square meters. which the Petitioners paid. The Petitioners submitted the payment receipt to the State Government in November, 2022.

The controversy revolves around the interpretation and implementation of the GR dated August 1, 2019.

The Government's understanding of the GR dated August 1, 2019, is that the premium should be charged for the entire land. They argue this because the Petitioners didn't adhere to the Section 20 scheme, and the GR dated August 1, 2019 doesn't specify specific parts of the land but refers to the entire property. Additionally, the Government believes that revenue entries should remain for the entire land until the premium is paid for the whole property, as development is allowed on the surplus vacant land.

The Court acknowledged the concerns of the Respondents' counsel about the significant financial implications. Nevertheless, the Court emphasized that the amount of money involved should not be the primary factor when determining the validity and constitutionality of the matter. The Court stressed the importance for the Government to steer clear of any situation that could make the Government Regulation (GR) dated August 1, 2019, vulnerable. Consequently, the Court declined any proposal that could potentially trigger a serious constitutional challenge against the GR implemented on August 1, 2019.

The Petition claims that it is illegal to (i) continue showing the Exemption Order in the revenue records for the land they legally own, even after paying the premium for the extra vacant land, and (ii) require them to pay an additional premium to remove the records for their own land, which was already within the allowed limit since May 15, 2008.

The Petition argues that it is illegal to (i) keep the entries of the Exemption Order in the revenue records of the within ceiling retained land even after payment of premium for the surplus vacant land and (ii) demand that the Petitioners must pay premium to remove the entries for the exempted land which the Petitioner No. 1 owns and which is within the ceiling limit since May 15, 2008.

The Court decided that the term "entire land" should be interpreted specifically and should not apply to lands for which a premium should not be charged. If the Government's interpretation is accepted, it would be like reintroducing an unconstitutional provision (Section 27(1)) in a different form. To put it in simple terms, there are two parcels of land: one that the Petitioners can keep without paying a premium, and the other is the surplus vacant land for which they have already paid the full premium. The Petitioners are entitled to remove the revenue entry for the entire land.

The Court issued an order to invalidate and reject the Competent Authority's communication dated April 22, 2022. It instructed the Respondents to delete all records associated with the surplus vacant land within six weeks since the Petitioners had already paid the full premium for it. The land should now be considered free from all conditions mentioned in the Exemption Order.

In conclusion, the Court's order has limited the State Government's authority to charge premium to only the surplus vacant land. Once the premium is paid, the entry of the land being affected by section 20 of the ULCA in the revenue records must be deleted. To prevent any future legal disputes on this issue, the State Government must issue a notification to implement the Court's order in relation to transfer of all surplus vacant lands.

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