Karnataka High Court
M/S Vakil Housing Development vs State Of Karnataka on 5 September, 2024
Author: R Devdas
Bench: R Devdas
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 5TH DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE MR.JUSTICE R.DEVDAS
WRIT PETITON NO. 25302 OF 2023 (LB-RES)
BETWEEN
1. M/S VAKIL HOUSING DEVELOPMENT
CORPORATION LTD.,
NO.78, KORAMANGALA INDUSTRIAL AREA,
JYOTHI NIVAS COLLEGE ROAD,
BENGALURU -560095
REP BY ITS MANAGING DIRECTOR,
2. MOHSIN ALI VAKIL
S/O WAHID ALI VAKIL,
AGED 70 YEARS,
R/A NO.78,
KORAMANGALA INDUSTRIAL AREA,
JYOTHI NIVAS COLLEGE ROAD,
KORAMANGALA, BENGALURU -560095.
...PETITIONERS
(BY SRI. B RAMESH., ADVOCATE)
AND
1. STATE OF KARNATAKA
DEPARTMENT OF URBAN DEVELOPMENT,
VIKASHA SOUDHA, DR AMBEDKAR VEEDHI,
BENGALURU 560001
REP BY ITS SECRETARY
2. BANGALORE METROPOLITAN
DEVELOPMENT AUTHORITY
NO 1, ALI ASGAR ROAD,
BENGALURU 56005
REP BY ITS COMMISSIONER
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3. ANEKAL DIVISION TOWN PLANNING AUTHORITY
ANNA NO.430, HENNAGARA GATE,
HOSUR MAIN ROAD,
BENGALURU 560099
REP BY ITS MEMBER SECRETARY
........RESPONDENTS
(BY SMT. PRATHIMA HONNAPURA., AAG A/W
MS. SPOORTHI V., HCGP FOR R1
SRI. YOGESH D NAIK., ADVOCATE FOR R2 & R3 )
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227
OF THE CONSTITUTION OF INDIA PRAYING TO
QUASH THE DEMAND NOTICE DATED 19/06/2023 BEARING
NO.ASYOPRA/LAO/148/2013-14 ISSUED BY R3 AUTHORITY
WHICH IS PRODUCED AND MARKED AS ANNEXURE-G AND
QUASH THE NOTIFICATION DATED 22/11/2018 BEARING
NO.NAAE 60 YAPRA 2018 ISSUED BY R1 WHICH IS PRODUCED
AND MARKED AS ANNEXURE-F IN SO FAR AS THE PETITIONERS
ARE CONCERNED AND ETC.
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
ON 23.07.2024 AND COMING ON FOR PRONOUNCEMENT OF
ORDERS, THIS DAY, THIS COURT MADE THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE R DEVDAS
CAV ORDER
(PER: HON'BLE MR JUSTICE R DEVDAS)
The petitioners are before this Court aggrieved of the
impugned demand notice dated 19.06.2023 at Annexure 'G'
and the petitioners have also raised a challenge to the
notification dated 22.11.2018 at Annexure 'F', seeking its
quashment and application insofar as the petitioners are
concerned.
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2. The petitioners are in the business of developing
residential layouts. The petitioners submitted a plan seeking
approval at the hands of the third respondent-Anekal
Division Town Planning Authority (hereinafter referred to as
the 'Planning Authority' for short), to carve out 515
residential sites of various dimensions in 30 Acres of land in
Gourenahalli Village, Kasaba Hobli, Anekal taluk. The third
respondent-Planning Authority approved the plan by order
dated 29.04.2014. Prior to the approval, in terms of the
directions issued by the Planning Authority, the petitioners
executed a relinquishment deed dated 24.04.2014,
relinquishing all the civic amenities cites, roads and parks,
in favour of the Planning Authority. However, the petitioners
realized that about 3 Acres and 3 Guntas of land were under
dispute and therefore, the petitioners submitted a modified
plan seeking approval in respect of 27 Acres and 3 Guntas,
while seeking cancellation of the previous approval. Again,
at the directions of the Planning Authority a cancellation
deed was executed by the petitioners along with the
Planning Authority on 09.10.2015, canceling the
relinquishment deed dated 24.04.2014. Thereafter, as
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directed by the Planning Authority, a relinquishment deed
was once again executed by the petitioners on 09.10.2015,
releasing the civic amenity sites, roads and parks in favour
of the Planning Authority. Thereafter, approval was granted
by the Planning Authority to the modified plan on
30.10.2015. Along with the order of approval dated
30.10.2015, the Planning Authority also released 40% of
the sites. Accordingly, the petitioners proceeded to form the
residential layout, in terms of the plan sanctioned by the
Planning Authority.
3. It is contended by the petitioners that after forming
the layout in the first stage, the petitioners approached the
Planning Authority seeking release of sites for sale.
Accordingly the approval was granted by the Planning
Authority on 22.09.2018, releasing the next consignment of
30% of sites for sale. After completion of the second stage
of layout, the petitioners once again approached the
Planning Authority for release of remaining extent of 30%
as final installment. The application was submitted by the
petitioners on 20.07.2022. However, the impugned demand
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notice dated 19.06.2023 was issued to the petitioners
seeking payment of penalty of Rs.1,27,49,700/-, on the
ground that the petitioners delayed the development of the
layout, beyond the time granted for completion of the
project. When enquired, the petitioners were told that the
impugned demand notice has been raised in terms of the
impugned notification dated 22.11.2018.
4. Learned Counsel for the petitioners contended that
the notification dated 22.11.2018 is not applicable to the
petitioners, since admittedly the impugned notification is
applicable only in such cases where the development of
layout were abandoned by the developers. It is contended
that in terms of the approval granted on 30.10.2015, the
petitioners developed the first stage of the layout and
thereafter approached the Planning Authority for release of
the next installment and accordingly approval was granted
by the Planning Authority on 22.09.2018 releasing 30% of
the sites for sale. After completion of the project, the
petitioners approached the Planning Authority seeking
release of the remaining extent of 30%.
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5. Moreover, the impugned notification dated
22.11.2018 cannot be made applicable to the petitioners,
since admittedly the notification would apply only to those
layouts which were approved between the period from 2005
to 2015. The intent of the notification dated 22.11.2018 is
to levy penalty on those developers who did not develop the
layouts for more than 5 years from the date of the approval
granted by the Planning Authority. The petitioners have
diligently developed the layout in three stages, as per the
directions of the Planning Authority. At no stage have the
petitioners defaulted or delayed the developmental activity.
It was further pointed out that this Court had an occasion,
recently to consider similar issue in the case of M/s.
Bhagyalakshmi Homes LLP and Another Vs. State of
Karnataka and others, in W.P.No.11441/2024, dated
12.07.2024, wherein it was noticed that the impugned
notification dated 22.11.2018 was purportedly issued
invoking powers conferred under Section 76-K of the
Karnataka Town and Country Planning Act, 1961,
(hereinafter referred as 'the KTCP Act, for short). It was
held that having regard to the powers conferred under
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Section 76-K exercisable for the efficient administration of
the Act will not clothe the State Government with powers to
issue directions to the Planning Authority to levy penalty
which is in the nature of fiscal measures. It was also held
that Section 34 of the Karnataka Urban Development
Authority Act, 1987 (hereinafter referred to as 'the Act,
1987' for short), provided for a reasonably elaborate
procedure to address the contingency where a promoter
does not carry out the project. However, without noticing
the express provision as contained in Section 34 of the Act
1987, the State Government issued the notification dated
22.11.2018. Although the petitioners therein had not raised
a challenge to the impugned notification, nevertheless, this
Court proceeded to hold that if the demands are raised
through executive orders and not through legislation, such
demands are required to be held as unauthorized in law.
Learned Counsel submits that in this petition the petitioners
have raised a challenge to the impugned notification dated
22.11.2018 and therefore, the same is required to be
declared as unconstitutional.
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6. Per contra, learned Additional Advocate General
appearing on behalf of the respondent-State contended that
the case in M/s.Bhagyalakshmi Homes LLP (supra) cannot
be compared to the present case, since in that case, the
petitioners had obtained orders at the hands of the Real
Estate Regulatory Authority (RERA) and the decision was
rendered having regard to the express permission granted to
the petitioners therein to proceed to complete the project.
That is not so in the present case. It was further contended
that reliance placed by this Court on Section 34 of the Act,
1987, was uncalled for and misplaced, since the provision of
the Act, 1987, is not applicable to the respondent-Planning
Authority, viz., the Anekal Town Planning Authority. It was
also contended that when admittedly the first approval was
granted to the petitioners on 29.04.2014 and the second
approval was granted on 30.10.2015, and both the
approvals were accorded between the years 2005 and 2015,
and the fact that the application for release of the final
installment was submitted on 20.07.2022, after lapse of
more than 5 years from the date of approval, the petitioners
cannot escape the rigors of the impugned notification.
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7. Learned Counsel Sri. Yogesh D Naik, appearing for
the respondents No.2 and 3, Planning Authorities supported
the submissions made by the learned Additional Advocate
General.
8. Heard the learned Counsel for the petitioners,
learned Additional Advocate General for the respondent-
State and learned Counsel Sri.Yogesh D Naik for the
respondents No.2 and 3-Planning Authorities and perused
the petition papers.
9. Although the submissions of the learned Additional
Advocate General and the learned Counsel for the Planning
Authorities are that since both the approvals were granted in
favour of the petitioners between the period from 2005 to
2015, as contemplated in the impugned notification dated
22.11.2018, the rigors of the notification would apply to the
petitioners, nevertheless, that by itself may not be enough to
permit levy of penalty on the petitioners. On facts, it is
admitted that the modified plan was approved on
30.10.2015 and the petitioners have proceeded to form the
first stage of the layout. After completion of the formation of
first stage of the layout, approval was accorded by the
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Planning Authority on 22.09.2018, releasing the next 30% of
sites for sale. After completion of the formation of the
second stage of the layout, the petitioners filed an
application before the Planning Authority on 20.07.2022
seeking release of the last installment of 30% of the sites.
It is therefore clear that the petitioners had not abandoned
the formation of the layout. It is also clear from the
impugned notification dated 22.11.2018 that similar
Circulars were issued earlier by the State Government on
26.05.2005 seeking to levy penalty on such developers who
did not complete the project within five years from the date
of the approval. Such Circulars were issued on 03.12.2012
and 27.09.2014. However, as rightly pointed out by the
learned Counsel for the petitioners, the Circulars, including
circular/communication dated 27.09.2014 was held to be
without force of law, in the case of Sri.Y.B.Shiva Reddy and
Others Vs. State of Karnataka and Others, in
W.P.Nos.12468-12472/2017 and connected matters, by
order dated 04.07.2017. In view of such declaration made
by this Court, the impugned notification was issued on
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22.11.2018, purportedly exercising powers under Section
76-K of the KTCP Act.
10. This Court has already held in M/s.Bhagyalakshmi
Homes LLP (supra) that powers to issue directions for better
administration of the Act will not clothe the State
Government with powers to issue directions to Planning
Authority to levy penalty, which are in the nature of fiscal
measures, imposing financial burden on the promoters.
However, having regard to the fact that the impugned
notification was not under challenge in the said writ petition,
this Court did not go into the validity or consider the vires
or the provision found in the impugned notification.
However, in the present case, the petitioners have raised a
challenge to the impugned notification dated 22.11.2018.
11. In paragraphs No.9 and 19 of the judgment in
M/s. Bhagyalakshmi Homes LLP (supra) it was held as
follows:
"9. The powers of the State Government in the matter
of issuance of the notification, having regard to
Section 76-K of the KTCP Act, 1961, is also
questionable having regard to a decision of a Division
Bench of this Court in the case of Leena Fernandes
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Vs. Planning Authority, ILR 1992 KAR 3068:
1992 SCC OnLine Kar. 184. It was held that the
purpose of Section 76-K is to vest an administrative
power in the State Government and is in the nature of
a power of superintendence. It was therefore held
that the orders passed by the Government would
amount to modifying the statutory provision, reducing
the setback prescribed under the Zonal Regulations
and therefore, such order is patently unauthorized.
The notification dated 22.11.2018 also exceeds such
power in seeking to levy penalty on the promoters,
which could not have been done in exercise of powers
conferred under Section 76-K of the KTCP Act, 1961.
The notification is therefore required to be ignored.
............
19. In Bimal Chandra Banerjee Vs. State of
Madhya Pradesh (1970) 2 SCC 467, the Apex
Court has held, while considering whether such clause
seeking to levy penalty is valid in law, that no tax can
be levied on the basis of a contract nor can tax be
levied by executive orders. Tax can only be levied by
the Legislature. The Apex Court also considered the
question as to whether the Government was entitled
to amend its rules and add such penal clause as a part
of the licence conditions. Having regard to the
provisions of the statute, it was held that such
Sections did not empower the rule-making authority
viz., the State Government to levy tax on excisable
articles; the rule-making authority has not been
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conferred with any power to levy duty on any articles
which do not fall within the scope of the substantive
provision. It was further held that the State
Government, quite clearly, purported to levy duty on
liquor which the contractors failed to lift. In so doing
it was attempting to exercise a power which it did not
possess. The Apex Court therefore held at paragraph-
13 as follows:
"13. No tax can be imposed by any bye-law or rule or
regulation unless the statute under which the
subordinate legislation is made specially authorizes
the imposition even if it is assumed that the power to
tax can be delegated to the executive. The basis of
the statutory power conferred by the statute cannot
be transgressed by the rule-making authority. A rule-
making authority has not plenary power. It has to act
within the limits of the power granted to it."
12. It is also pertinent to note that the Hon'ble Apex
Court in the case of Commissioner of Income Tax, Udaipur,
Rajasthan Vs. McDowell and Co. Ltd., (2009) 10 SCC 755
has held that "Tax", "Duty", "Cess" or "Fee" constituting a
clause denotes various kinds of imposts by the State in its
sovereign power of taxation to raise revenue for the State.
Within the expression of each specie each expression
denotes a different kind of imposts depending on the
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purpose for which it is levied. This power can be exercised in
any of its manifestations only under any law authorizing levy
and collection of tax as envisaged under Article 265 which
uses the expression that no "tax" shall be levied and
collected except as authorized by law. It in its elementary
meaning conveys that to support a tax, legislative action is
essential, and a tax cannot be levied and collected in the
absence of any legislative sanction by exercise of executive
power of State under Article 73 by the Union or Article 162
by the States.
13. In the light of the law laid down by the Hon'ble
Supreme Court in the decisions cited hereinabove, it is
apparent that in absence of legislative sanction, the State
Government, in exercise of its executive powers under
Article 162, cannot levy and collect penalty, merely by
issuing a notification. It is also noticeable that the expression
"Notification", as defined in sub-section (4) of Section 2 of
the KTCP Act means, a notification published in the official
gazette. The impugned notification dated 22.11.2018 is not
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gazetted. In that view of the matter, the impugned
notification dated 22.11.2018, cannot be sustained.
14. It was argued by the learned Additional Advocate
General that Section 34 of the Act, 1987, is not applicable to
the respondent-Anekal Town Planning Authority. This
argument also is untenable, since the Karnataka Urban
Development Authorities Act, 1987 extends to the whole of
the State of Karnataka except to the Bangalore Metropolitan
Area, in terms of Section 1 of the Act. In
M/s.Bhagyalakshmi Homes LLP (supra), this Court has held
that the impugned notification has been issued without
noticing Section 34 which provides for elaborate procedure
to address a contingency where the promoter does not carry
out the project. Section 34 reads as follows:
"34. Power of Authority to order work to be
carried out or to carry it out itself in default.-
(1) The authority may, -
(a) if any person who applies for permission
under Section 32 and is permitted
expressly by it to carry out himself the
work relating to the forming of the
extension or layout or the making of a
street, does not so carry it out; or
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(b) if any private street or part thereof is not
levelled, paved, metalled, flagged,
channelled, sewered, drained, conserved or
lighted to the satisfaction of the authority,
by notice, require the person forming the
extension or layout or the owners of such
street or part and the owners of buildings
and lands fronting or abutting on such
street or part, including in cases where the
owners of the land and the building thereon
are different the owners both of the land
and of the building, to carry out any work
which in its opinion, may be necessary and
within such time as may be specified in
such notice.
(2) If any such work is not carried out within the
time specified in the notice under sub-section (1),
the authority may, if it thinks fit, execute itself or
cause it to be executed and the expenses incurred
shall be paid by the persons or owners referred to
in sub-section (1) in such proportions as may be
determined by the authority. Such expenses may
be recovered from the person concerned as if
they were arrears of land revenue."
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15. It is therefore clear that if any such work is not
carried out within the time specified in the notice under sub-
section (1), the Planning Authority can proceed to execute
the project or cause it to be executed and recover the
expenses from the person concerned as if they were arrears
of land revenue. This provision is reasonable, practicable
and takes care of the interest of the buyers, without seeking
to levy and collect penalty from the promoter. The impugned
notification on the other hand only seeks to levy penalty on
the promoter, without passing on the same as compensation
to the buyers or for completion of the project.
16. Consequently, this Court proceeds to pass the
following:
ORDER
(i) The writ petition is allowed.
(ii) The impugned notification bearing No.NAAE 60 MYAPRA 2018, dated 22.11.2018, at Annexure-F, issued by the Under Secretary to State Government, Urban Development Department, is hereby declared as ultra -18- vires the Constitution of India and is accordingly, quashed and set aside.
(iii) Consequently, the impugned demand notice dated 19.06.2023 at Annexure-G, issued by the third respondent-Anekal Town Planning Authority, is hereby quashed and set aside.
(iv) Directions are hereby issued to the third respondent-Anekal Town Planning Authority to reconsider the application dated 20.07.2022 given by the petitioners for release of the remaining 30% sites, and issue necessary orders as expeditiously as possible and at any rate within a period of four weeks from the date of receipt of a copy of this order.
Ordered accordingly.
17. Pending I.As., if any, stand disposed of.
Sd/-
(R DEVDAS) JUDGE DL CT: JL