Calcutta High Court (Appellete Side)
Siddhartha Co-Operative Housing ... vs The State Of West Bengal & Ors on 17 July, 2017
Author: I.P. Mukerji
Bench: I.P. Mukerji
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
W.P. No. 2471 (W) of 2016
Siddhartha Co-operative Housing Society Ltd.
v.
The State of West Bengal & Ors.
For the petitioners:- Mr. Asish Kumar Sanyal
Mr. Jayanta Banerjee
...Advocates
For the Respondent
Nos. 2 & 3: Mr. Satyajit Talukdar
.....Advocate
For the State: Mr. Bhakti Prasad Das
......Advocate
Judgement on:- 17th July, 2017
I.P. MUKERJI, J.
The question to be answered in this case is whether the Kolkata Metropolitan Development Authority (KMDA), the respondent no.2 can, as the lessor of the subject land demand any penal charges for delayed construction by the lessee Siddhartha Co-operative Housing Society Ltd. the petitioner and for the extension of time granted by them to it, to complete it.
The facts are these.
On 8th March, 2001 the said respondent by a lease deed granted a 99 year's lease to the petitioner of the subject land with a condition that they had to complete the construction on it within three years. There is no doubt that the petitioner made considerable delay in submitting the building plan for sanction. In fact, it was submitted for sanction in 2006 and sanctioned in September of the same year. Although in May, 2009 the respondent authority was contemplating determination of the lease by issuing a show cause notice dated 5th May, 2009 asking the petitioner why the lease should not be determined, it took no steps in that direction. It extended the time to complete the construction upto 31st December, 2011. On 5th January, 2012 they wrote to the petitioner stating that since the time period for completion of the work had been extended from 8th March, 2004 till 31st December, 2011, they were required to pay Rs. 37,53,974 to the authority as penal charge for delayed construction. Again by a letter dated 5th October, 2012 time was extended till 30th September, 2012, subject to payment of Rs. 42,48,216/- as penal charges. Again by the letter dated 19th October, 2012 time to make construction was extended till 31st March, 2013 upon making payment of Rs. 45,87,258 as penal charges. On 20th January, 2016 another notice was issued by the respondent authority demanding Rs. 1,95,14,488 from the petitioner as penal charges from 8th March, 2004 to 29th February, 2016.
The idea of claiming penal charges has its genesis in the 9th meeting of the Land and Flat Allotment Committee of the authority held on 21st January, 2009 in Kolkata. Agenda-6 noted that often, the lessees ask for extension of time to complete the construction. Imposition of penal interest would compel them to complete it within time. The committee felt that suitable modifications in the Land and Flat Allotment Policy should be made, approved by the Pricing Committee. The meeting of the Pricing Committee was held on 12th February, 2009. It resolved that if construction was not started within time or completed within time, penal charges would be imposed at the rates mentioned in the table. On 27th March, 2009 the decision was ratified at the 159th meeting of the authority. Significantly, the decision included penalty in "past cases".
The writ petitioners have challenged in this writ application the successive notices claiming penal charges.
Now, the question is: was this demand justified? Now, what is the nature of this penal charge imposed and demanded by the respondent authority? It is more in the nature of a tax than anything else because the state machinery, the respondent authority is asking for money from the petitioner without rendering any service. If they had rendered service and asked for compensation it would more appropriately be termed as a fee. Article 265 of the Constitution of India enacts that no tax shall be levied or collected except by authority of law. Under Schedule-VII List-II, of our Constitution being the State List, the state legislature has got the power to impose taxes on lands and buildings (Entry-49). Under Entry-5 it has the power to create local authorities like the respondent and delineate its powers. Entry-66 empowers the State legislature to prescribe fees in respect of any matter in the list excluding court fees. If you consider the respondent to be falling under the description of the Municipalities in Article-243 of the Constitution, under that Article the legislature of a State may by law authorise, a municipality to, levy collect and appropriate inter alia taxes and fees.
Learned Counsel for the respondent referred to Section-18 of the said Act which provides that the powers and functions of the Kolkata Metropolitan Development Authority shall be as provided in Section 13 of the Act. Thereafter, he cited Section-13 (1) (ii) (h) and (l) of the Act which empowers the authority to manage such property as felt necessary by it and to inter alia lease or transfer such property. Section 13 (1) (ii) (l) empowers the authority to perform any other function which was connected to the functions entrusted with it under the above sub-section 13(1) (ii) of the Act. In my opinion, these are only the general powers granted to the development authority to acquire and manage properties under its control. It does not authorise it to impose any tax or penal charges. As discussed earlier, tax and penal charges can only be imposed by sanction of the legislature. The power to tax or to realise a charge akin to a tax or fee must be expressly conferred by the legislature. The above provisions, in no manner authorise the development authority to levy penal charges.
It follows and it goes without saying that the authority had no power to issue any kind of tax or charge retrospectively.
Now, the other question which falls for consideration of this court is whether by virtue of the lease deed or the contract between the parties the said authority had the power to levy penal charges. Learned Counsel for the authority relied on 2 (b) of the lease deed which said that the lessee would be liable to pay to the authority "charges as may be imposed by the authority from time to time in respect of demised land". This clause of the agreement, in my view, 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 authorise the lessor to impose penal charges of substantial sums of money for delay in completing the construction envisaged in the lease deed. 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 demand notices mentioned in the prayers of the petition are quashed. The respondents are restrained from enforcing against the petitioner the demand of Rs. 1,95,14,488 mentioned in prayer (a) of the petition. This writ application is allowed to the above extent.
Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.)