Gujarat High Court
Rajkot District Co-Operative Purchase ... vs State Of Gujarat And Anr. on 24 August, 1998
Equivalent citations: (1999)2GLR1717
JUDGMENT R. Balia, J.
1. The petitioner is a marketing co-operative society registered under the provisions of Gujarat Co-operative Societies Act. It owned and possessed the land admeasuring 5 acres 11 gunthas of Revenue Survey No. 79 Paiki permission for its uses for non-agricultural purposes was granted on 28-4-1980. The petitioner applied for grant of adjoining land which was also part of Survey No. 79. Out of that survey number, the petitioner was granted 12,425 sq.m. of the land on 17-8-1982, on payment of Rs. 24,850/-. The terms of the grant inter alia included that in case the purchaser transfers the unearned land as a part of its business as a going concern or as a result of its inability to redeem the mortgage he shall be liable to pay 75% of unearned profit on the transfer of such land to the State Government. The condition also envisages that if the land were to be utilized for any other industrial purpose other than for which it has been allotted, the allottee shall have to obtain a prior approval from the State Government for such change in user and in that event also he shall be liable to surrender 75% of the unearned profit on such transfer of land in question, to the State Government which the Collector shall be entitled to recover. With these conditions appended to the grant, the petitioner decided to sale out the plant existing on the land in question by its resolution dated 5-10-1994, and the contract came to be executed in pursuance thereof on 7-11-1994. On 19-12-1994, the petitioner surrendered its manufacturing licence and applied for transfer of the sale in favour of M/s. Khedut Sovex Private Limited. The Collector vide his order dated 5-4-1995 passed prohibitory order against the petitioner not to dispose of the land admeasuring 12,425 sq. mtrs. The petitioner society made another application on 26-1-1995 for granting permission for handing over the land admeasuring 12,425 sq. mts. to Khedut Sovex Private Limited. On 17-1-1997, the Collector determined 75% of the unearned profit on the transfer of the land at Rs. 10,66,425/- by valuing the land at Rs. 110/- per sq.m. This amount the petitioner has paid. It may be noticed that this determination by the Collector quantifying 75% of the unearned profit on the proposed transfer made while application of the petitioner for granting permission to transfer land along with plant existing thereon, on hire-purchase basis was pending. The market rate of the land has been determined on ad hoc basis, subject to final determination. Thereafter, the licence was temporarily granted in favour of the transferee for a period upto 30-9-1997. However, when the application for renewing the licence after 30-9-1997 was made, the licensing authority rejected the said application on 22-10-1997 and thereafter vide letter dated 29-11-1997 the petitioner was informed that the Chief Town Planning Officer, Gandhinagar has finally assessed the price of the land in question as on date at Rs. 130/- per sq.m. However, it further said that after deducting the price paid by the time of allotment the unearned profit on transfer would be Rs. 15,90,400/-, and made an order that 150% of this unearned profit amounts to Rs. 23,85,600/-. The petitioner should pay after deducting amount already paid by him under order dated 19-1-1997 which he should pay as agreed by him before the Chief Town Planning Officer, Gandhinagar failing which same shall be recovered as arrears of land revenue. In these circumstances, petitioner has filed this petition challenging the demand of 150% of unearned profit quantified by the Collector on 29-11-1997.
2. It is contended that the respondents have acted arbitrarily and unreasonably in exercise of their power to extract from the petitioner more amount as a price for permitting the transfer of land than what is permissible under law. In fact demand made is more than the market price of the land in question. Learned Counsel for the State Mr. Desai drew my attention to condition Nos. 5 and 8 of the terms of grant and urged that what is required to be payable to the State Government in case of breach of condition of transferring the land without permission of the Collector is the minimum payable for the breach of condition and not the maximum. The petitioner having agreed to pay 150% of the unearned profit to the State Government, he is now estopped from challenging the same.
3. I have carefully considered the rival contentions and perused the material placed before me. To the extent that the petitioner is liable to 75% of the unearned profit if the transfer takes place in any manner, of the land in question, there is no dispute. There is no dispute about the method of calculating the unearned profit on the transfer of the land involved in the transaction of business as a going concern. Learned Government Pleader invited the attention of the Court to resolution dated 7-10-1977, so that the premia chargeable will be a percentage as denoted therein, viz., the difference between the price at which plot/land was sold by the Government and the price of the land/plot as on the date of order should be determined by the competent authority, that is to say, that for fixing 75% of the unearned profit on the first instance 100% of the unearned profit should be calculated and for that purpose the price at which the plot was granted and the price of the land as on the date when order is being made are the relevant considerations. Learned Counsel for the petitioner also does not dispute that as the price of the land determined on 19-1-1997 was provisional and was subject to final determination, which has been determined at Rs. 130 per sq.m. in place of Rs. 110/- determined on ad hoc basis vide order dated 19-1-1997, that may be, the final basis for arriving at the figure of unearned profit for the purposes of determining the amount payable by the petitioner to the State in case of transfer is to be founded on that basis. However, the further question that requires consideration is whether the petitioner is liable to pay only 75% of the unearned profit so computed or he is liable to pay 100% of the unearned profit, or 150% as charged by the respondents.
4. A glance at the facts would show that in all cases of transfer of land except when it is for different use in terms of condition 8a prior permission of the Collector is required, for which the transferor is required to make an application.
5. There is no dispute about the fact that petitioners have transferred the land before obtaining permission of the Collector, on 5-10-1994 reference to which was made in agreement dated 7-11-1994.
6. On the aforesaid precincts, it was first contended by the learned Counsel for the petitioner that he is only liable to pay 75% of unearned profit as has been determined by the Collector and which he has already paid, he is not liable to anything more and the subsequent demands were not justified.
7. This contention of the learned Counsel for the petitioner does not appear to be well founded. The very document on which reliance has been placed by learned Counsel for the petitioner goes to show that under Clause 5, it has been stipulated that if the allottee transfer the entire land along with his business as a going concern or he is forced to transfer the land because of his inability to redeem the mortgage, he has to surrender 75% of unearned profit to the State Government. Like consequences follow if the allottee makes the use of such land for any purpose other than the original industrial purpose for which it has been granted. For the purposes of this clause even change in the constitution of the firm has been deemed to be a transfer of land. On this premise, the petitioner's case is that he has transferred the land, he is liable to pay 75% of the unearned profit which he has paid. However, he is unable to say why Clause 8 is not applicable. About applicability of Clause 8, his submission is that Clause 8 also envisages surrender of 75% of unearned profit in case transfer is made without prior permission of the Collector. This is obvious misreading of Clause 8. Clause 8 clearly stipulates that if transfer of land takes place without permission of the Collector in any manner, then, the Collector is entitled to recover unearned profit in respect of that transfer. Clause 8 is not inhibited by any reduction in the quantum of unearned profit accrued to the allottee as a result of allotment at concessional rate and the higher price recovered on such transfer. The determination of unearned profit has also been left within the jurisdiction of Collector. This clearly goes to show that in case transfer is without prior permission of the Collector, the allottee has to surrender full amount of unearned profit accrued to him as a result of such transfer, as determined by the Collector. Thus, in my opinion, the contention that the petitioner is liable only to 75% of unearned profit cannot be accepted and he is liable to surrender 100% unearned profit as determined by the Collector as breach of condition 8 of the allotment is not in dispute. As noticed above, there is no dispute that as per final determination, the unearned profit which was computed by the Collector on transfer of the land came to be Rs. 15,90,400/-. Thus, the liability of the petitioner as a result of unauthorized transfer cannot be less than 15,90,400/-.
8. The next question that arises for consideration is that whether petitioner is liable to pay 150% of the unearned profit as has been demanded by the Collector vide his letter dated 29-11-1997 followed by the demand vide letter dated 19-12-1997. The claim to raise demand at 150% of the unearned profit computed by the Collector is founded on the ground that petitioner has agreed to pay the premium fixed by the Government. The attention of the Court has been invited to the letter dated 15-6-1986 addressed to the Collector, Rajkot wherein the petitioner has written to the Collector stating that he is prepared to pay premium at any reasonable price that may be fixed by him. Thus, on this basis it is urged that petitioner is now stopped from challenging the demand made by the Collector. Firstly, I am unable to read any such concession made on behalf of the petitioner to surrender to a demand at the rate of 150% of unearned profit through that letter. It has been noticed above that transfer of land in accordance with terms of agreement entailed surrender of minimum of 75% of the unearned profit and the transfer of the land without prior permission of the Collector entailed surrender of 100% of unearned profit. The terms of allotment also envisages determination of unearned profit on such transfer by the Collector. It has also been brought to the notice of the Court by the learned Counsel for the State that method of computing the unearned profit is valuing the land in question at the market rate as on the date of order and from that price reducing the amount paid at the time of allotment. The balance is to be taken as unearned profit. Thus, under the terms of agreement itself for the purposes of determining premium by way of unearned profit payable to the State Government there is direct reference to determination of the price of the land by Collector. By the letter dated 15-6-1996, the petitioner has stated nothing more than that he is prepared to pay the premium at any reasonable rate that may be fixed. The said document cannot be read to mean that he has surrendered to pay price which is more than the rate fixed under the terms of agreement or under any other law. It is further to be seen that letter dated 15-6-1996 is of the date even prior to the first determination of 75% of unearned profit by the Collector vide his order dated 19-1-1997. It was only because in order dated 19-1-1997, the Collector has referred to provisional determination of rate of the land which necessitated final determination of the price. The element of charging 150% of profit was not at all there when order dated 19-1-1997 was made. As on 19-1-1997, the only further order was contemplated in the nature of finalisation the price of the land and determination of unearned profit which is to be recovered from the petitioner under the terms of agreement.
9. Any subsequent concession, if any, will have to be viewed in the light of facts that followed. Petitioner has submitted an application on 19-12-1994 for surrendering the manufacturing licence and to transfer the same in favour of M/s. Khedut Sovex Private Limited, transferee, to the licensing authority, who is Deputy Town Planning Officer. Before acting on that on 5-4-1995 prohibitory against the petitioner has been issued restraining him from making transfer of the land. In the wake of aforesaid prohibitory order, petitioner has applied for vacating the interim order and granting him permission to hand over the land in question to the transferee ex post facto on 26-6-1995. That application was pending. The Deputy Town Planning Officer had taken market value of the land in question at Rs. 100/- per sq.m. While these proceedings were pending the petitioner wrote aforesaid letter which prompted the Collector to make an order fixing the rate of land provisionally at Rs. 110/- per sq.m. and demanding 75% of unearned profit at Rs. 10,06,425/- which the petitioner had paid. On payment of such premium only the licence in favour of the transferee was granted that too only for a short period upto 30-9-1997. The application for renewal was made and that was rejected on 22-10-1997 before the impugned order. The alleged acceptance of liability to pay at 150% has also not been placed on record. Assurance to pay 150% of unearned profit to the licensing authority appears to have been extracted thereafter at the pain of withholding renewal of licence, notwithstanding that final price has not been determined by the Collector though the petitioner has paid 75% of unearned profit as provisionally determined. Notwithstanding that petitioner has submitted the letter of his agreement to pay the reasonable price fixed by the Collector has provisionally determined the amount to be payable by the petitioner at 75% of unearned profit which amount has been paid by the petitioner.
10. Neither the licensing authority renewed the licence in favour of the transferee nor the Collector accorded permission of transfer. But while determining price of the land for the purpose of determining the premium payable by the petitioner to the State Government, made a demand of 50% extra than the market price prevalent on that date. That is to say an attempt has been made to recover more price for the land than the market price fixed by the authority itself, at which it was disposable. One fails to understand under which principle the State authorities were seeking to extract more price than market price. It has to be noticed that the terms of agreement itself envisage recovery of 75% of the market price in the case of transfer in accordance with the terms of agreement and 100% of the market price if the transfer was not in accordance with the terms of agreement. At no stage recovery of more amount than the market price of the land as on the date of order was envisaged. The breach of condition of prior permission or non-payment did not result in cancellation of allotment, it only lead to liability to surrender unearned profit to the extent envisaged and its recovery as arrears of land revenue in case of default. Thus, no additional price or resumption of land was envisaged for the alleged breach of condition even under the term of allotment. Under the circumstances, demand for making payment of 150% of unearned profit by the Collector as consequence of transfer of land in question without prior permission under the threat of its recovery as arrears of land revenue and as a condition for granting permission of the transfer or as a condition for recognising the transfer in favour of the transferee and for the purpose of renewing license in favour of transferee is wholly arbitrary and unreasonable and cannot be sustained.
11. As a result this petition partly succeeds. The determination of premium to be charged from the petitioner to the extent it exceeds 100% of the unearned profit vide Government resolution dated 1-9-1997 and order of the Collector dated 29-11-1997 followed by demand dated 9-12-1997 are quashed. The petitioner is liable to premium on transfer made without prior permission of the Collector of the land in question at Rs. 15,90,400/-, 100% of the unearned profit as determined by the Collector as per condition 8 of allotment and is liable to pay balance amount after adjusting the amounts already paid by the petitioner under order 17-1-1997.
Rule made absolute as aforesaid.
There shall be no orders as to costs.