Calcutta High Court (Appellete Side)
South City Project (Kolkata) Limited & ... vs Kolkata Metropolitan Development & Ors on 19 December, 2017
W.P. No. 23611 (W) of 2014
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
South City Project (Kolkata) Limited & Anr.
Vs.
Kolkata Metropolitan Development & Ors.
For the Petitioners : Mr. Abhrajit Mitra, Sr. Advocate
Mr. Satadeep Bhattacharya, Advocate
Ms. Arundhati Mukherjee, Advocate
For the K.M.D.A. : Mr. Satyajit Talukdar, Advocate
Hearing concluded on : December 13, 2017
Judgment on : December 19, 2017
DEBANGSU BASAK, J.:-
The petitioners have assailed two notices dated December 4,
2013 and February 28, 2014 imposing penalty and directing
interest to be paid. In the course of hearing of the writ petition, the
petitioners have limited their prayer to the Memo No.
923/KMDA/MM/EK-51/06 dated December 4, 2013 which
purports to impose penal charges with effect from December 24,
2010 till April 10, 2012 for a sum of Rs.3,01,40,188/-.
Learned Senior Advocate for the petitioner has submitted that,
the first petitioner was granted a licence on December 24, 2007 by
Kolkata Municipal Development Authority (KMDA) for construction
of an infrastructure tower at the premium specified to be paid
thereunder. Such deed of licence contains a schedule which
describes that, the land would be bound by a 24.10 meters wide
road on the eastern side. On the basis of such schedule, the first
petitioner had submitted a building plan for sanction with the
Kolkata Municipal Corporation (KMC) Authorities. KMC Authorities
were of the view that, the road would be 10 meters and, therefore,
required revised plans to be submitted on the basis of such 10
meters wide road. KMDA were made aware of such stand of the
KMC Authorities. Diverse correspondence ensued between the first
petitioner with the KMDA and KMC. KMDA had requested the KMC
to provide a 24.10 meters wide road on the eastern side of the plot.
However, KMC did not do so. A considerable period of time had
elapsed in the correspondence. The licence deed contemplates that,
a construction should commence within 2 years from the date of
execution of the deed of licence. A period in excess of 2 years had
elapsed due to reasons as enumerated above. Such reasons and
circumstances were beyond the control of the first petitioner.
Therefore, no penalty should be imposed. In any event, the licence
deed does not authorize the KMDA to impose a penalty. No statute
empowers KMDA to impose the penalty. Therefore, the imposition of
penalty as sought to be done by the impugned writing is bad in law
and should be set aside. In support of the contention that, a penalty
cannot be imposed de hors the statutory provisions or a contract to
such effect, learned Senior Advocate for the petitioners has relied
upon 2016 Volume 3 Supreme Court Cases page 643 (Shree
Bhagwati Steel Rolling Mills v. Commissioner of Central Excise
& Anr.) and an unreported judgment and order dated March 31,
2011 passed in W.P. No. 449 (W) of 2010 (Austin Distributors (P)
Ltd. & Anr. v. The State of West Bengal & Ors.). Referring to a
Division Bench judgment and order dated August 31, 2017 in MAT
1320 of 2017 with CAN 7567 of 2017 (The Secretary, Kolkata
Metropolitan Development Authority & Anr. v. Siddharth Co-
operative Housing Society Limited & Anr.), he has submitted
that, the factual situation in the present case is different than that
obtaining in Siddharth Co-operative Housing Society Limited &
Anr. (supra).
Learned Advocate appearing for the KMDA has submitted that,
KMDA is entitled to impose the penalty as sought to be done by the
impugned writing. He has referred to the deed of licence dated
December 24, 2007 particularly clauses 4(ii) and (iii) of the deed of
licence. He has submitted that, the KMD Authorities have taken a
policy decision in order to impose penalty upon the erring licensees
who did not commence construction within 2 years from the date of
the execution of the licence agreement. He has relied upon the
resolutions of the KMDA as also the Land and Flat Allotment
Committee meetings in this regard. Referring to the schedule to the
deed of licence dated December 24, 2007, learned Advocate for the
KMDA has submitted that, the description in the schedule of 24.10
meters wide road is a proposal. The schedule if read appropriately,
would mean that, there was a proposal for having a 24.10 meters
wide road on the eastern side of the plot. Such a description cannot
be read to mean that, KMDA had promised 24.10 meters wide road.
In any event, KMDA had supported the petitioners in the quest for
obtaining 24.10 meters wide road on the eastern side of the plot
from the KMC Authorities. However, the KMC Authorities did not
have a 24.10 wide road on the eastern side of the plot to give. As
the schedule describes the road to be a proposal for 24.10 meters,
the petitioners cannot be heard to contend that, there is any failure
on the part of the KMDA and KMC Authorities in providing a road
with 24.10 meters width. Absence of 24.10 meters wide road in the
eastern side of the plot is no justification for the first petitioner not
to commence construction within the stipulated period of 2 years
from the date of execution of the licence deed. Therefore, KMDA
were correct in imposing the penalty as sought to be done in the
impugned writing. On the power to impose such penalty, it has
been submitted that, clauses 4(ii) and (iii) of the deed of licence
dated December 24, 2007 authorizes and permits KMDA to impose
such penalty. Such power is also present in the provisions of the
West Bengal Town and Country (Planning and Development) Act,
1979. He has relied upon Sections 13, 17, 18 and 23 of the Act of
1979 in support of such contentions. The deed of licence being
executed on December 24, 2007 and the first petitioner obtaining
the sanction plan in 2011, admittedly, the first petitioner did not
commence construction within 2 years from the date of the
execution of the deed of licence and, therefore, the first petitioner is
liable to pay the penalty as imposed. The rate of penalty imposed
has been decided through a procedure known to law at the
appropriate level. Learned Advocate for the KMDA has fairly
submitted that, there is a stay granted by the Hon'ble Supreme
Court on Siddharth Co-operative Housing Society Limited &
Anr. (supra).
Does the KMDA have the authority to impose penalty as
sought to be done by the impugned writing under the contract or in
law is the issue that has fallen for consideration in the present writ
petition.
The first petitioner is the licensee under the deed of licence
dated December 24, 2007. Admittedly, it did not commence
construction within 2 years from the date of execution of the deed of
licence. According to the petitioners, the application for grant of
sanction of the building plan was initially made with a 24.10 meters
wide road on the eastern side. Such plan was objected to by KMC.
KMC Authorities did not provide a 24.10 meters wide road on the
eastern side of the plot. Correspondence was exchanged between
the KMDA, the first petitioner and the KMC with regard to the width
of the road. KMDA had supported the first petitioner on the request
of the first petitioner to have 24.10 meters wide road on the eastern
side of the plot. KMC however, did not provide such width of road.
The first petitioner had subsequently submitted a revised plan. It
had obtained sanction on such revised plan. In terms of clause 4(ii)
of the deed of licence dated December 24, 2007, the first petitioner
ought to have commenced construction by December 23, 2009. It
had commenced construction actually on December 3, 2012. By the
impugned writing, KMDA had imposed penalty for the failure of the
first petitioner not commencing construction within the period
stipulated under the agreement.
Shree Bhagwati Steel Rolling Mills (supra) has held that, a
penalty can be levied by a statutory authority in accordance with
the statute empowering such authority to do so. Austin
Distributors (P) Ltd. & Anr. (supra) has held that, in absence of
any statutory enactment or any term in the deed for imposition of
penalty, no question of penalty being imposed and that too
retrospectively arises. Therefore, a statutory authority such as
KMDA can impose penalty if it is statutorily empowered or if KMDA
is empowered under the contract between the parties to do so.
KMDA is a body corporate formed and constituted under the
provisions of the West Bengal Town and Country (Planning and
Development) Act, 1979. Section 13, 17, 18 and 23 have been
pressed into service to contend that, the KMDA have the statutory
power to impose a penalty. Such sections are as follows:-
"13. Powers and functions of Planning Authority and
Development Authority. -
(1) Subject to the provisions of this Act, and the rules made
thereunder and any direction which the State Government
may give from time to time -
(i) a Planning Authority shall have the following powers and
functions:
(a)................................................................................
(b)................................................................................
(c)................................................................................
(d)..............................................................................
(e)................................................................................
(ii) a Development Authority shall have the following
powers and functions:
(a)................................................................................
(b)................................................................................
(c).................................................................................
(d)................................................................................
(e)............................................................................
(f)............................................................................
(g)...........................................................................
(h) to acquire, hold and manage such property, both
movable and immovable, as the Development Authority
may deem necessary for the purposes of any of its
activities and to lease, sell or otherwise transfer any
property held by it;
(i)............................................................................
(j)............................................................................
(k)............................................................................
(l) to perform any other function which is supplemental,
incidental or consequential to any of the functions
aforesaid or which may be prescribed."
"17. Kolkata Metropolitan Development Authority. -
(1) Notwithstanding the repeal of the Kolkata Metropolitan
Development Authority Act, 1972 (West Ben. Act XI of
1972), by section 142 of this Act, the 1 [Kolkata]
Metropolitan Development Authority constituted under that
Act shall be known as the Kolkata Metropolitan
Development Authority under this Act and it shall be
deemed to be a Development Authority for the purposes of
this Act.
(2) All the provisions of this Act relating to a Development
Authority shall, if not inconsistent with the provisions in
this Chapter, apply to the Kolkata Metropolitan
Development Authority."
"18. Powers and functions of the Kolkata
Metropolitan Development Authority. - Subject to the
provisions of this Act and the rules made thereunder and
any direction which the State Government may give, from
time to time, the powers and functions of the Kolkata
Metropolitan Development Authority shall be as provided
in section 13 of this Act."
"23. Constitution of committees. -
(1) The Kolkata Metropolitan Development Authority may
constitute as many committees, consisting wholly of
members of such Authority or wholly of other persons or
partly of members of such Authority and partly of other
persons and for such purpose or purposes, as it may think
fit.
(2) A committee constituted under this section shall meet at
such place and at such time, and shall observe such rules
of procedure in regard to the transaction of business at its
meetings, as may be determined by regulations made in
this behalf.
(3) The members of a committee, other than the members
of the Kolkata Metropolitan Development Authority, shall
be paid such fees and allowances for attending its
meetings and for attending to any other work of the
Kolkata Metropolitan Development Authority as may be
determined by regulations made in this behalf."
Section 13(1) of the Act of 1979 deals with powers and
functions of the Planning Authority while 13(2) deals with the
powers and functions of the Development Authority. Section
13(1)(i)(h) allows the Development Authority to acquire, hold and
manage such property, both movable and immovable as the
development authority may deem necessary, for the purpose of any
of its activities. It also allows the Development Authority to lease,
sale or otherwise transfer the property held by it. The power of
imposition of penalty is absent in Section 13(1)(ii)(h). The same
cannot be read into it also. Section 13(1)(ii)(l) allows Development
Authority to perform any other function which is supplemental,
incidental or consequential to any of the functions as enumerated
in Section 13 or which may be prescribed. Imposition of penalty is
not prescribed under the Act of 1979. The words supplemental,
incidental or consequential to any of the functions of KMDA as
enumerated in Section 13 has to be read in terms of the previous
clauses of such sub-section. None of the sub-sections allows KMDA
to impose penalty even remotely. Therefore, Section 13(1)(ii)(l)
cannot be read to mean that KMDA has the authority to impose
penalty. It does not have statutory power to impose penalty. That
however, does not prevent it to enter into a contract which may
contain a covenant empowering KMDA to impose penalty. Section
17 recognizes, that, the KMDA constituted under the Kolkata
Metropolitan Development Authority Act, 1972 would mean the
KMDA under the Act of 1979 and would be deemed to be the
Development Authority for the purposes of the Act of 1979. Section
18 specifies that, the powers and functions of KMDA would be as
that specified under Section 13 subject to the provisions made
therein. Therefore, the present KMDA is a Development Authority
within the meaning of Section 13(1)(ii) apart from being the
Planning Authority under Section 13(1)(i). Section 23 allows KMDA
to constitute committees for such purposes as may be required
The deed of licence dated December 24, 2007 deals with the
rights and obligations inter se between the first petitioner and
KMDA. The Clauses of the deed of licence relevant to the present
context are as follows:-
"4. The Licensee hereby agrees and covenants with
the Authority as follows:
(i) To pay the license fee on the days and in the manner
aforesaid.
(ii) To pay all rent, taxes and other impositions in
respect of the aforementioned land and structures to
be erected thereon which are or may be assessed to
be payable by the owner or the occupier in respect
thereof during the term of the License commencing
from the date of taking over possession of the land.
(iii) At the own cost of the Licensee, within 2 years from
the date of getting license deed executed or within
such further time as the Authority may as its option
allow in writing on sufficient and reasonable
grounds, to start Construction for the purpose of
setting-up construction of Infrastructure Tower, with
boundary walls, sewers and drains in accordance
with plans, sanctions and specifications as shall be
approved by the appropriate authorities on payment
of such fees as required in accordance with the
Building Rules of the Kolkata Municipal Corporation,
with the requirement of any Land Use and
Development Control Regulations of the Authority or
the requirements of any other statutory rules and
regulations of local or statutory body framed for the
purpose."
...................................................................................
"6. PROVIDED ALWAYS AND IT IS HEREBY FURTHER EXPRESSLY AGREED AS FOLLOWS:
(i) If there be any breach of any covenant of the Licensee's part herein contained and to be performed or observed by the Licensee, it shall be lawful for the authority at any time thereafter to re-enter upon the land after determining this license."
...................................................................................
"SCHEDULE ABOVE REFERRED TO ALL THAT piece or parcel of land measuring 2.5 acres be the land a little more or less in situated within Sector-K, Nonadanga Mouza, comprising JL No. 10, Dag Nos. 520, 523, 591, 581 and 582. Plot no. IND-6, at East Kolkata Area Development Project in the District of 24 Parganas (S)/city of Kolkata. Butted and bounded as follows.
On the North 10.10 mts Wide Road
On the East Proposed 24.10 mts Wide Road
On the South 10.10 mts Wide Road
On the West Plot No. IND-6/1A, 6/3 and 6/4"
Clause 4 of the deed of licence dated December 24, 2007 enumerates the obligations of the first petitioner under the deed to KMDA. Clause 4(ii) of the deed of licence requires the first petitioner to pay all rent, taxes and other impositions in respect of the land and structure during the terms of the licence commencing from the date of taking over possession of the land. Such a clause to my understanding recognizes the obligations of the first petitioner as the licensee to pay all taxes and impositions of third parties in respect of the land in question such as municipal or corporation rates, taxes and other outgoings. The opening words of clause 4 specify that, the first petitioner is agreeing to discharge the obligations as enumerated under the various sub-clauses in such clause to the MKDA. Sub-clause (ii) of clause 4, therefore, has to be read to mean that, the first petitioner has agreed to pay rent, taxes and other impositions in respect of the plot of land and the structures to be erected as may be legitimately demanded and imposed by third parties. The obligation to make such payment is noted and secured in sub-clause (ii) of clause 4. The word "any other impositions" used in sub-clause (ii) of clause 4 would, therefore, mean that, the first petitioner as the licensee, is agreeing to pay any other impositions, in respect of the plot of land in question, that may be legally payable to third parties by the first petitioner as a licensee in respect of such plot. In the present case, the KMDA has sought to impose penalty for the failure of the first petitioner to commence construction within the agreed period.
It has been contended on behalf of the petitioners that, the clauses of the deed of licence should be construed strictly as against the first respondent, as the first respondent is the author of the deed of licence. Moreover, in the affidavit filed on behalf of the first respondent, no stand has been taken with regard to clause 4(ii) of the deed of licence. On the contrary, the stand that has been taken is on the basis of clause 4(iii) of the deed of licence.
The two clauses do not empower KMDA to impose penalty. Clause 4(ii) has not been spoken of in the affidavit. KMDA has relied upon Clause 4(iii) as the source of power to impose penalty in its affidavit. To my understanding Clause 4(iii) does not empower KMDA to impose penalty. The failure of the petitioner to commence construction within the stipulated period may or may not be attributable in its entirety to the first petitioner. However, in absence of statutory power or a contract for such purpose, KMDA is not authorised to impose penalty. Neither the West Bengal Town and Country (Planning and Development) Act, 1979 nor the deed of licence dated December 24, 2007 empowers KMDA to impose penalty as done by the impugned notice dated December 4, 2013. The impugned notice, therefore, is quashed. The issue is answered accordingly.
Siddharth Co-operative Housing Society Limited & Anr. (supra) deals with a situation where, there was a covenant allowing authority to impose penalty. The Court has been informed that, there is a stay on the judgment and order of Siddharth Co- operative Housing Society Limited & Anr. (supra).
In such circumstances, W.P. 23611 (W) of 2014 is disposed of. No order as to costs.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.
[DEBANGSU BASAK, J.]