Calcutta High Court (Appellete Side)
Kolkata Metropolitan Development ... vs Siddharth Co-Operative Housing ... on 31 August, 2017
Author: Biswanath Somadder
Bench: Biswanath Somadder
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
Present:
The Hon'ble Mr. Justice Biswanath Somadder
And
The Hon'ble Justice Asha Arora
MAT 1320 of 2017
with
CAN 7567 of 2017
The Secretary,
Kolkata Metropolitan Development Authority & Anr.
Vs.
Siddharth Co-operative Housing Society Limited & Anr.
For the appellants/applicants: Mr. P.S. Basu
Mr. Satyajit Talukdar
For the State: Mr. Sudipta Panda
Ms. Rajlakshmi Ghatak
For the respondent no.1/ Mr. Pramit Roy, Sr. Adv.
Writ petitioner: Mr. Sunil Kumar Chakraborty
Heard on: 31st August, 2017.
Judgement on: 31st August, 2017.
Biswanath Somadder, J.
By consent of the parties, the appeal is treated as on day's list and taken up for consideration along with the application for stay.
The appeal arises out of a judgement and order passed by a learned Single Judge on 17th July, 2017, in WP 2471 (W) of 2016 (Siddharth Co-operative Housing Society Ltd. vs. The State of West Bengal & Ors.). The appellants before us are the Secretary, Kolkata Metropolitan Development Authority, and the Assistant Controller of Finance and Accounts of Kolkata Metropolitan Development Authority.
It appears that the respondent no.1/writ petitioner, which is a Cooperative Housing Society, filed a writ petition before the learned Single Judge in the year 2016, praying, inter alia, for the following reliefs:-
"a) A Writ in the nature of Mandamus do issue directing the respondent authorities and/or their men and agents and/or their officers and/or their successors in office to show cause as to why the demand for payment of Rs.1,95,14,488.00 shall not cancelled and/or rescinded and/or withdrawn;
b) A Writ in the nature of Mandamus do issue directing the respondent authorities and/or their men and agents and/or their officers and/or their successors in office to withdraw, rescind and cancel the notice of demand dated 21.01.2016 bearing Memo No.2082/KMDA/MM/EC/GRH III/W-37 dated 5.1.2012, Memo. bearing Memo. No.1486/KMDA/MM/EC/GRH III/W-37 dated 9.10.2012, Memo. bearing Memo. No.444/ KMDA/MM/EC/GRH-III/W-37 dated 24.07.2014, Memo. bearing Memo.
No.939/KMDA/MM/EC/GRH-III/W-37 dated 15.10.2014, and the notice Memo. bearing Memo. No.1094/ KMDA/MM/EC/GRH-III/W-37 dated 21.01.2016;
c) A Writ in the nature of certiorari do issue directing the respondent authorities and/or their men and agents and/or their officers and/or their successors in office not to take any coercive measure against the writ petitioner to give effect or further effect to the letter/letters dated 5.01.2012, 9.10.2012, 24.7.2014, 15.10.2014 and 21.01.2016;"
It is noticed that the principal subject-matter of challenge in the writ petition was a demand notice dated 21st January, 2016, for an amount of Rs.1,95,14,488/-. The said demand notice dated 21st January, 2016, is reproduced hereinbelow:-
"Kolkata Metropolitan Development Authority Estate (M&M) Unit, K.M.D.A. V.I.P. Block, Unnayan Bhawan Salt Lake City, Kolkata - 700091 Speed Post Memo No.1094/KMDA/MM/EC/GRH-III/W/-37 Date: 21/01/16.
From : Asstt. Controller of Finance & Accounts
Estate (M & M) Unit, KMDA
To : The Secretary
Siddharth Co-operative Housing Society Ltd.
Block - AP, Plot No. GRH - 15,
1573, Rajdanga Main Road,
Kolkata - 700107.
Sub: Demand Notice (Land)
Sir,
The undersigned is directed to request you to deposit an amount of Rs.1,95,14,488/- (Rupees One Crore Ninety-five Lakh Fourteen Thousand Four Hundred Eighty Eight Only) as the Penal Charges for delay in construction and Service Tax thereon, in favour of Kolkata Metropolitan Development Authority by Demand Draft/Pay Order to the office of the Deputy Secretary, Estate (M & M) Unit, KMDA, Unnayan Bhawan, Salt Lake City, Kolkata, Pin - 700 091 on or before 30 (Thirty) days from the date of issuance of this letter, failing which the allotment will be cancelled.
Details of calculation are stated below
1. Penal Charges for delay in Construction w.e.f. 08-03-2004 to 29-02-2016 Rs.1,70,43,221/-
2. Service Tax @ 14% on above charges Rs. 23,86,051/-
3. Swach Bharat cess @ 5% Rs. 85,216/-
Total Demand Rs.1,95,14,488/-
Yours faithfully,
Asstt. Controller of Finance & Accounts
Estate (M & M) Unit, KMDA
Memo No: /KMDA/MM/EC/GRH-III/W-37 Date:
Copy forwarded for kind information to:
1) The Deputy Secretary, Estate (M&M) Unit, KMDA Asstt. Controller of Finance & Accounts Estate (M & M) Unit, KMDA"
The genesis of the aforesaid demand notice is a lease agreement which was entered into by and between the lessor, namely, Calcutta Metropolitan Development Authority (now known as Kolkata Metropolitan Development Authority) and the writ petitioner, Siddharth Co-operative Housing Society Limited, being the lessee. Such an agreement was entered into on 8th of March, 2001. The lease agreement has several clauses. However, for the purpose of deciding the issue which is sought to be raised in the instant appeal, we propose to take notice of the relevant clause that was taken note of by the learned Single Judge while allowing the writ petition upon quashing of the demand notice as mentioned in prayer (a) of the writ petition. The relevant clause is reproduced hereinbelow:-
"The LESSEE shall be liable to pay to the authority charges as may be imposed by the authority from time to time in respect of the demised land;"
The learned Single Judge, sitting in Constitutional writ jurisdiction, has proceeded to give his own view in order to interpret the said clause, which reads as follows:-
"... This clause of the agreement, in my view, (emphasis supplied by us) related to charges that may be payable by the lessee for enjoyment of the property like maintenance charges, facility usage charges so on. This clause did not in my opinion (emphasis supplied by us) authorise the lessor to impose penal charges of substantial sums of money for delay in completing the construction envisaged in the lease deed."
Following the aforesaid reasoning, the learned Single Judge has proceeded to further observe as follows:-
"The authority could have specifically mentioned that those penal charges would be payable and realisable, in the lease deed. For that no legislative sanction was necessary. It would have been a condition of the contract. Due to inadvertence or oversight this contingency was not in the mind of the authority when this lease was drawn up. Now, unilaterally, without the consent of the lessee, charges cannot be imposed by the lessor.
The authority has to seek a legislative mandate for this purpose or modification of the lease deed or enter into an independent contract with the petitioner.
For all those reasons, this writ application succeeds. ..."
The plain language of the clause which makes the lessee liable to pay to the authorities charges "as may be imposed by the authority from time to time" in respect of the demised land is wide enough to include in its fold, imposition of such charges which could be penal in nature. The interpretation sought to be given by the learned Single Judge to the said clause was the Court's subjective view which could have been best avoided by the learned Single Judge sitting in the Constitutional writ jurisdiction. It goes without saying that taxes and penal charges, which are statutory in nature, can be imposed by a public authority only by sanction of the legislature. However, if there is a specific covenant in a lease agreement where a lessee agrees to be liable to pay to the authority, being the lessor, charges as may be imposed by the authority from time to time, such a clause is wide enough to include in its fold - as observed earlier - penal charges, for which no sanction of the legislature is required. In fact, the learned Single Judge has specifically observed in the impugned judgment the following observation, which has been quoted above: "The authority could have specifically mentioned that those penal charges would be payable and realisable, in the lease deed. For that no legislative sanction was necessary."
We notice that a clause contained in a purely commercial lease agreement was sought to be interpreted by the learned Single Judge in a narrow restrictive manner in order to quash the demand notice imposed by Kolkata Metropolitan Development Authority upon the lessee, namely, Siddharth Co-operative Housing Society Limited. This imposition of changes was on account of delay in making construction with effect from 8th March, 2004 to 29th February, 2016. The writ Court, in the facts and circumstances of the instant case, ought not to have entertained the writ petition at all, especially in the absence of any element of arbitrariness, and ideally relegated the matter for adjudication before a competent civil Court. The reason is, for effective adjudication, certain factual aspects were required to be looked into; such as, whether there was actually any delay in construction and why the lessee did not act on the basis of the earlier demand notices issued by Kolkata Metropolitan Development Authority, which culminated in the final demand notice dated 21st January, 2016.
For reasons stated above, we allow the appeal by setting aside the impugned judgement and order dated 17th July, 2017. The respondent no.1/writ petitioner, however, is at liberty to challenge the demand notice dated 21st January, 2016, before a competent civil Court in accordance with law. The application for stay is accordingly disposed of.
Urgent photostat certified copy of this order, if applied for, be given to the learned advocates for the parties.
(Biswanath Somadder, J.) I agree.
(Asha Arora, J.) pg .