Kerala High Court
Cochin Port Leaseholders' Association vs Union Of India on 2 November, 1981
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE SMT. JUSTICE P.V.ASHA
WEDNESDAY, THE 24TH DAY OF JANUARY 2018 / 4TH MAGHA, 1939
WP(C).No. 16851 of 2014
PETITIONER:
COCHIN PORT LEASEHOLDERS' ASSOCIATION,
BRISTOW ROAD, WILLINGDON ISLAND, KOCHI-682 003
REP. BY ITS PRESIDENT, MR.RAJESH GIRDHARDAS ASHER.
BY SRI.N.NANDAKUMARA MENON,SENIOR ADVOCATE
ADVS.SMT.KRIPA ELIZABETH MATHEWS
SMT.C.B.SUMA DEVI
SMT.ROSY GEORGE
SRI.SURESH SAMUEL
SRI.V.M.SYAM KUMAR
RESPONDENT(S):
1. UNION OF INDIA,
REP. BY SECRETARY TO THE MINISTRY OF SHIPPING,
NEW DELHI- 110 001.
2. TARIFF AUTHORITY FOR MAJOR PORTS,
4TH FLOOR, BHANDAR BHAVAN, M.P.ROAD,
MAZAGON, MUMBAI-400 020.
3. BOARD OF TRUSTEES,
COCHIN PORT TRUST, WILLINGDON ISLAND,
KOCHI -682003
4. CHAIRMAN, COCHIN PORT TRUST,
WILLINGDON ISLAND, KOCHI -682 003.
R1 BY SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL OF INDIA
R2 BY ADV.SRI.ISSAC THOMAS
R3 & R4 BY ADVS. SRI.V.ABRAHAM MARKOS
SRI.BINU MATHEW
SRI.TOM THOMAS (KAKKUZHIYIL)
SRI.ABRAHAM JOSEPH MARKOS
SMT.LATHA KRISHNAN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 17-01-2018,ALONG WITH WP(C).NO.32292 OF 2014 AND CONNECTED
CASES, THE COURT ON 24-01-2018 DELIVERED THE FOLLOWING:
sts
WP(C).No. 16851 of 2014 (F)
APPENDIX
PETITIONER(S)' EXHIBITS
EXT.P1 - COPY OF THE LETTER DTD. 18-6-2014
BEARING NO.EM/MISC/SUB-LEASE/14
EXT.P2 - COPY OF THE NOTE DTD. 30-05-2014 ISSUED BY THE 4TH RESPONDENT
EXT.P3 - COPY OF THE POLICY QUIDELINES FOR LAND MANAGEMENT BY MAJOR
PORTS,2014
EXT.P4 - COPY OF THE LEASE AGREEMENT.
EXT.P5 - COPY OF THE SCALE OF RATES WITH EFFECT FROM 10-7-2013
EXT.P6 - COPY OF THE CERTIFICATE OF REGISTRATION DATED 2/11/1981 ISSUED
BY THE REGISTRAR OF SOCIETIES TO THE PETITIONER
RESPONDENT'S EXHIBITS:
EXT.R4(A)- COPY OF THE NOTIFICATION G.NO.39 DATED 31/03/2005 NOTIFIED BY
THE 2ND RESPONDENT
EXT.R4(B)- COPY OF THE SCALE OF RATES ISSUED BY THE 2ND RESPONDENT BY
NOTIFICATION DATED 11/06/2010
EXT.R4(C)- COPY OF THE CIRCULAR DATED 17/08/2010 CONFIRMING APPROVAL OF
BOARD TO THE SUB-LEASE LEVY OF RS.25/- PER SQ.MT. FROM
01/09/2010
EXT.R4(D)- COPY OF THE POLICY GUIDELINES FOR LAND MANAGEMENT 2014 AS
AMENDED BY ORDER DATED 17/07/2015 OF THE GOVERNMENT OF INDIA
/TRUE COPY/
P.S.TO JUDGE
sts
P.V.ASHA, J.
--------------------------
W.P(C) Nos.16851 of 2014-F, 32292/2014-J,
32299/2014-J and 32305/2014-K
-------------------------------------------
Dated this the 24th day of January, 2018
JUDGMENT
These writ petitions are filed by lease holders Union and individual leaseholders of Cochin Port Trust against the enhancement of levy on subletting to 50% of the rent collected by the lessees from the sub lessees. Hence all these writ petitions were heard together and are disposed of by this common judgment. Parties and documents referred to in this judgment are as described in W.P.(C) No.16851 of 2014.
2. By Ext.P1 letter dated 18.6.2014, the Senior Assistant Estate Manager informed the lease holders that the sublease levy to be remitted is 50% of the rent collected by the lessees from the sub lessees, in accordance with the new Land Policy Guidelines, 2014 issued by the Ministry. It was stated that the rate was being raised based on the sub lease agreement W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 2 submitted and that future renewal/permission for sublease etc. would be subject to the payment of enhanced sublease levy along with arrears from 2.1.2014. Ext.P1 letter was issued on the basis of Ext.P2 note dated 30.05.2014 of the Chairman, in the light of Ext.P3 policy guidelines issued in the year 2014. In Ext.P2 it was directed that expired leases, along with sub leases, should be processed and put up urgently in strict compliance of the provisions of the Land Policy Guidelines, 2014. It is stated that there are 473 sub lessees for the Port.
3. As per clause 17B of the Land policy Guidelines (hereinafter referred to as the `guidelines') sub letting shall be in accordance with the land use plan. Before allowing sub letting the Port shall recover 50% of the rent charged by the lessee from the sub lessee for the entire period of sub lease irrespective of the fact whether the land was originally allotted on upfront basis or annual rental basis. It was clarified that the original lessee would continue to remain responsible for payment of lease rent and for adherence to the terms and conditions of lease. In the case of leases which shall be entered into after the issuance of the guidelines in case the lessee is not able to utilise the entire land leased to him, the portion of the lease premises not required by him should be surrendered and no sub letting shall W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 3 be permitted. It was directed that in the case of new leases after the coming into force of the guidelines the portion of the lease which is not required by him should be surrendered and no subletting including renewal also shall be permitted. The sub lease is permitted only for the same purpose for which the main lease was given. In cases where he is unable to renew, the Port can take over the building from the lessee and can directly enter into sub lease following auction cum tender. Ext.P1 letter was issued on 18.6.2014 by the Senior Assistant Estate Manager on the basis of Ext.P2 note of the Chairman issued on 30.05.2014. Ext.P3 is the policy guidelines which provides for recovery of 50% of the rent charged by the lessee from the sub lessee.
4. The writ petition is filed challenging Ext.P1 letter alleging that the Senior Assistant Estate Manager does not have any authority to issue the same. It is also the case of the petitioner that the enhancement of levy to 50% of the rent collected by the lessees is arbitrary and unconscionable. It is also alleged that clause 17B of Ext.P3 guidelines does not provide for such a levy and even assuming that it provides for the same, it is liable to be held unconstitutional as it is arbitrary and unreasonable. According to the petitioners the guidelines, 2014 do not apply to sub leases of buildings or parts thereof constructed by the lessees. The 4th respondent has leased out W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 4 only the land; the policy guidelines apply only to the land leased out by the Port Trust. It is also pointed out that it would be harsh, illogical and unreasonable as well as practically impossible to remit 50% of the rent for the entire period of sub lease, that too, in advance; the sub lease can be terminated at any time by the sub lessee. It is pointed out that the lessees have constructed buildings in the land leased out by the Port Trust, incurring huge expenditure, with the legitimate expectation that it can be sublet. The petitioners had been paying ground rent and sublease levy of about 20% along with taxes. Levy was collected based on the area of the building i.e, per square feet. Enhancement of levy to 50% of the rent would force them to demolish the building and to leave the Island which will never be in the interest of Port Trust. It is further alleged that the enhancement does not have any approval of the 2nd respondent - the Tariff Authority of Major Ports (TAMP), and in the absence of such approval the 4th respondent will not be able to implement the same. The power to fix levy/licence fee etc. is conferred on the TAMP under Section 49 of the Major Port Trust Act, 1963 and therefore the levy fixed by the 4th respondent without the approval of the 2nd respondent is without authority.
5. The petitioners point out that implementation of the enhanced W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 5 levy as proposed would be disastrous as the lease holders would be compelled to demolish the buildings constructed. It is their case that the buildings are owned by the lessees; constructed by them out of their own funds. The Port cannot have any right to impose levy on such buildings when the lessees lease out such buildings. It is also pointed out that the basis of the levy is also incorrect. Enhanced levy is on percentage basis; whereas rent on sub lease is calculated per square feet. The petitioners submit that the sub lease levy was being charged @ Rs.100/- per 10 sq.metre for godown and @ Rs.125/- per 10 sq.metre per month for office; it was raised to Rs.250/- per month for 10 sq.metre from 1.9.2010 onwards; that levying structure is changed from 1.1.2014 onwards as 50% of rent paid by sub lessees.
6. Respondents 3 and 4 have filed counter affidavit stating that the enhancement of sub lease levy is on the basis of the new policy guidelines of the Government of India and the Port Trust is only implementing the said guidelines. Under Section 111 of the Major Port Trusts Act, 1963 (hereinafter referred to as the `MPT Act' for short), the Central Government is empowered to issue directions to the Major Ports on questions of policies and the Port Trust as well as the Tariff Authority are bound by such W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 6 directions. When the Government has issued land policy guidelines, the Port Trust is bound to implement the same under Section 111 of the Act. It is stated that the land policy guidelines were issued by the Govt. of India in the years 2004, 2010 and 2014. Ext.P3 land policy guidelines are issued with the objective to ensure that land resources are put to optimum use as per the approved land use plan. Under Ext.P3 guidelines Central Government is to fix the sub lease levy to be imposed by a Major Port. The power to lease land of Major Port is conferred under Section 34(1) of the Act. Ext.P3 is applicable to all Major Ports including the 4th respondent, which are to be complied with by the Port Trust. Therefore, levy of sub lease charge is duly authorised. It is also pointed out that the Port Trust as well as the Tariff Authority are bound by the directions issued by the Government of India under Section 47A of the Act. The Government of India has issued Ext.R4(a) guidelines for regulation of tariff. These regulations are notified in the gazette of India No.39 dt.31.3.2005. The 2nd respondent had issued Ext.R4(b) scale of rates on 11.7.2010 under Section 49 of the MPT Act. This includes the land as well as buildings in the land belonging to the Port. In Ext.R4(b) the Tariff Authority made it clear that the rates at which the levy is to be realised is upto the Port Trust to decide. The jurisdiction to W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 7 prescribe the ground/lease rent by which lands can be leased by the Port and levies of charges to be collected for sub lease or for transfer of lease shall be as prescribed by the Port Trust or as directed by the Central Government. In clause xvi of paragraph 15 of Ext.R4(b) order issued on 4.5.2010, it was stated that the authority had already clarified in its orders dt.4.2.2000 and 31.8.2000 that TAMP does not have the authority to approve levy of lease transfer fee/mortgage fee by the Major Ports in the absence of a specific provision in the MPT Act, 1963. It was also stated that the authority had already clarified that order dated 31.8.2000 specifies that TAMP does not have any power to disapprove such levies and it is upto the discretion of the Port Trusts to take its own decision in the matter without involving the authority. Paragraph xvi deals with the scale of rates for sub lease; the rates for subleasing the godown and office space accommodation from 1.10.1996 was Rs.100/- and Rs.125/- respectively per 10 square meter per month with an annual escalation of 5% till March, 2004 and with 2% escalation thereafter. It refers to the proposal to revise the rate of sub lease as Rs.25/- per square meter per month. After considering the request of the Port Trust it was made clear that the involvement of the authority is not necessary in respect of the rate of lease rent as well as the levy.
W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 8
7. The respondents stated that when the land belongs to Port Trust and major Ports are permitted to lease out their lands, the lessees cannot enjoy any right other than what is provided in the agreement and the Port Trust is free to impose any restrictions on the enjoyment of the leased out property. The lease is not permitted for a period exceeding 30 years and it is leased out only for purposes relevant to port related activities. Clause 17B of Ext.P3 directs collection of enhanced sub lease levy. Under clause 3 of Ext.P4 agreement executed between the Port Trust and lessee, the lessees are liable to pay all charges, fees or levy as prescribed by the lessor from time to time. Under clause 2(c) though the lessee can use the land for construction of building, that can be only for the purpose for which the land was leased out. Any subletting by the lessee would be subject to the restrictions to be imposed by the Port Trust. The sublease can only be with the consent in writing of the lessor and it is only conditional under clause b and is liable to pay all charges, fees for levy and approval would be granted from year to year. The sub lease levy was collected at the rate of Rs.25/- per sq.meter per month for godown/office, which is enhanced to 50% of the sublease rent collected by the lessee. As per Ext.R4(c) circular issued on 17.08.2010 the Board had approved the enhancement of service levy to W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 9 Rs.25 per sq.metre. According to respondents 3 and 4, in view of clause xiv of para.15 of Ext.R4(b) order issued by the authority, the contention of the petitioners that approval from the 2nd respondent is necessary for enhancement of levy to 50% is unsustainable.
8. Respondents 3 and 4 filed I.A.No.11652 of 2015 producing Ext.R4(d) amended policy guidelines issued on 17.7.2015. Ext.R4(d) is issued on the basis of a report received from a 2 member committee which was constituted as per order dt.8.8.2014 to look into the ambiguity in any of the provisions of Land Policy Guidelines 2014. On the basis of this report some of the provisions of the land policy guidelines were modified to provide clarity in implementation of policy guidelines. It was stated that the amended guidelines were issued for implementation with immediate effect under Section 111 of the MPT Act. The letter begins saying that the 2014 policy guidelines for land management were issued to all major ports for implementation as some clarifications were sought by different stake holders to improve the land policy guidelines. Clause 5 of this order provides that the policy is applicable to all major ports except for the land relating to township areas of Kandla, Mumbai and Kolkata Ports for which separate policies were formulated. It was also stated that these guidelines W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 10 supersede the previous guidelines issued on the subject. Clause 12B provides for subletting. While permitting sub lease it is provided that it would be in accordance with the land use plan and before allowing subletting the port shall recover 50% of the rent charged by the lessee from the sublessee for the entire period of sub lease irrespective of the fact that whether the land was originally allotted on upfront basis or annual rental basis. It was clarified that the original lessee would continue to remain responsible for payment of lease rent and for adherence to the terms and conditions of lease. It is also stated that the Port Trust shall refund proportionate lease rental when allotted on upfront premium basis. It is further clarified that leased premises also includes structures built on lease land for the purpose of recovering of subletting fees. It also provides that exemption from collecting subletting fee may be given in certain cases. In effect clause 17B of Ext.P3 guidelines is replaced by clause 12B of Ext.R4(d). The respondents therefore say that by virtue of Ext.R4(d) there cannot be any dispute with respect to the applicability of guidelines for the buildings also. At the same time, it is argued for the petitioners that Ext.R4(d) was issued only in the year 2015 and there is no order issued on the basis of Ext.R4(d) and nothing prevented the respondents from issuing W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 11 any such order. It is pointed out that the petitioners are challenging the order issued in 2014.
9. The Government also filed counter affidavit supporting respondents 3 and 4. According to the Government, the policy guidelines are issued in exercise of powers under Section 111 and the Government have authority to issue binding directions to major ports as well as the tariff authority of major ports, in order to regulate allotment and management of ports' land. The policy guidelines were issued with approval of the cabinet dated 2.1.2014 and the land use policy guidelines 2014 is applicable to all the 12 major ports in India. Similar guidelines were issued in 2004 and 2010 also and such policy guidelines are issued after consultation of stakeholders including port users and other related agencies/departments. It is stated that a draft policy for land management was prepared by 1st respondent and circulated to various stakeholders and it was put in the office website of the Ministry of Shipping for inviting comments and suggestions. The guidelines were finalised after analysing the comments and suggestions thus received and after deliberation at the level of group of officers/committee of Secretaries headed by the cabinet secretary. Under clause 17B of Ext.P3, 50% of the rent can be levied by the Port Trust. The W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 12 lessees have agreed in Ext.P4 agreement that they would be governed by the provisions of the MPT Act and all directions issued by the Government from time to time. It is pointed out that lessees have never challenged the quantum of sub lease levy which was being paid by them as per the land policy guidelines issued from time to time. The land policy guidelines issued under Section 111 are having statutory force. It is also pointed out that "land" defined under Section 2(k) of the MPT Act means anything attached to earth or permanently fixed to earth including buildings and structures. It is stated that paragraph 17B of Ext.P3 guidelines has to be read in conjunction with the definition clause of land as stipulated under Section 2 (k) of the MPT Act. Relying on the judgment in Balco Employees Union v. Union of India in paragraph 234, the respondents have stated that the matters of policy shall not be interfered by the courts.
10. The petitioners filed a reply affidavit to the counter affidavit of respondents 3 and 4 denying the contentions in the counter affidavit. According to the petitioners, the policy guidelines Ext.P3 cannot be said to be one issued under Section 111 of the MPT Act. Section 111 only empowers the Central Government to issue directions to the Board and authority. It does not provide that either the Port Trust or the Board has to W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 13 discharge its functions as per the directions of the Central Government on questions of policies contrary to statutory provisions, and policy guidelines can never be contrary to the statutory provisions contained in the Major Port Trust Act, 1963. The statutory power conferred on the authority under Section 49 to prescribe the tariff and the scale of rates can only be subject to Section 49(1) of MPT Act. At any rate, the policy guidelines cannot be unreasonable. It is also their contention that Ext.P3 pertains to the land owned by the Port Trust and not the buildings owned by the lessees. It is also their case that no other Major Port in India has implemented Ext.P3 and Ext.P3 only applies to the land and not to the buildings. It is stated that the materials produced by respondents would only show that the scale of rate dealt with therein is with respect to the land and not to the buildings. According to the respondents, Section 49 of the Port Trust Act cannot be superseded by the policy guidelines and if at all the levy is to be enhanced it can be only by the 2nd respondent.
11. Heard the learned Senior counsel for the petitioners as well as the respondents and the learned ASGI.
12. The main contention of the petitioners is that the authority to fix any levy or fee is on the TAMP under Section 49 of the MPT Act. Chapter W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 14 VI of the MPT Act provides for the imposition and recovery of rates at Ports. Section 49 which provides for the scale of rates and statement and conditions for use of property belonging to Board, reads as follows:
"49. Scale of rates and statement of conditions for use of property belonging to Board.--1[The Authority shall from time to time, by notification in the Official Gazette, also frame a scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of, the Board, or any place within the limits of the port or the port approaches may be used for the purposes specified hereunder:
(a) approaching or lying at or alongside any buoy, mooring, wharf, quay, pier, dock, land, building or place as aforesaid by vessels;
(b) entering upon or plying for hire at or on any wharf, quay, pier, dock, land, building, road, bridge or place as aforesaid by animals or vehicles carrying passengers or goods;
(c) leasing of land or sheds by owners of goods imported or intended for export or by steamer agents;
(d) any other use of any land, building, works, vessels or appliances belonging to or provided by the Board.
(2) Different scales and conditions may be framed for different classes of goods and vessels.
(3) Notwithstanding anything contained in sub-section (1), the Board may, by auction or by inviting tenders, lease any land or shed belonging to it or in its possession or occupation at a rate higher than that provided under sub-
section (1)."
13. On a reading of Section 49, it is seen that the authority to fix the scale of rates as well as the conditions under which any property including building on it is the TAMP, constituted under Section 47A in Chapter VA. Such rates and conditions have to be published in official gazette also.
14. However respondents 3 and 4 rely on Ext.R2(b) order of the TAMP, when they approached the 2nd respondent in the year 2010, in which the authority declined its involvement saying that it is completely within W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 15 their jurisdiction. Government has issued the policy guidelines considering the purpose object for which the land is to be used by the Ports. In Ext.R2(b) notification, the 2nd respondent fixed the rate of lease rent following the Policy Guidelines. In the case of sublease rental the 2nd respondent declined its involvement. Ext.R2(b) order is passed on the proposals made by the Cochin Port Trust for fixation of lease rent submitted on 04.06.2007 and on 17.08.2007. Proposal no. iv was "the rate of sublease is proposed to be increased by 100%. Its answer given in clause xiv in para 15 is as follows:
"15(xvi) The existing scale of rates of COPT which was earlier approved by government sanction provides for sublease. For subleasing of godown and office space accommodation the rates prevailing with effect from 1 October 1996 (with an annual escalation of 5% till March 2004 and 2% escalation thereafter) is rupees hundred and Rs. 1 25 respectively per 10 square meter per month. The Port has now proposed to revise the rate of sublease as Rs. 25 per square metre per month or part thereof. As per the earlier policy guidelines for land/waterfront management for major ports issued by the government under number PT 17011/55/87/-Pt dated 1st April 1995. The leased property shall not be transferred by the lessee to any 3rd party either by way of sub-lease, rent or any other means. The same policy guidelines also state that any subletting assignment without the prior approval of the authority which sanction the lease shall make the lease liable for cancellation. As a corollary it means that subletting is permissible if the COPT approves it. As per the government's land policy for Major Ports issued in March 2004, subject to the fulfillment of the conditions specified therein, lessees can be permitted to transfer the lease (in case of leases granted on upfrontal basis) on payment of a fee to the Port equal to 50% of the difference between the current upfront premium and the original upfront premium weighted for the balance lease period. In case of leases which were originally granted on annual lease rent basis, in addition to the W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 16 charges stated above, as per government's land policy, transfer can be allowed subject to the payment of an upfront premium, equivalent to the NPV of the lease rent calculated as prescribed in the policy document for the remaining period in accordance with the prevailing of SOR/Rates approved by the competent authority. On the issue of transfer fees, this authority has already clarified under its earlier orders dated 4 February to 2000 and 31st of August 2000 in Case No.TAMP/10/2000/-Gen that TAMP does not have the authority to approve levy of lease transfer fee/mortgage by the Major Ports in the absence of a specific provision in the MPT Act 1963. In the order dated 31st of August 2000 it has also been clarified that TAMP does not have the authority to disapprove such levies and the Port Trusts can at their discretion and responsibility take their own decision in this matter without involving this authority."
This action of TAMP cannot be accepted. Even though the action of the respondents in not seeking approval consequent to Ext.P3 guidelines of 2014 is justifiable in view of Ext.R2(b) order, the action of the authority in not exercising its jurisdiction conferred under the statute and the enhancement of rates by respondents 3 and 4 without approval of authority cannot be justified. When the statute prescribes that fixation of rates and framing of conditions under which the property of the Port can be used are to be by the authority in a particular manner, it has to be done by that authority following the procedure prescribed in the Act. In Clause xvi of paragraph 15 of Ext.R4(b) order, the 2nd respondent has abdicated its jurisdiction and failed to exercise its power saying that it has no authority to disapprove the levy made by the Port Trust. Sublease is of the building in the property of the W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 17 Port, which is leased out, which comes under clause (c) of subsection 1 of Section 49. Therefore, the action of the 2nd respondent declining involvement in fixing the levy on sublease rental is not correct or proper.
15. The fact that the petitioners did not have a complaint over the levy of fee till Ext.P1 order was issued cannot stand in their way in challenging the proceedings based on Exts.P1 and P2. As and when they became adversely affected, by way of exorbitant enhancement ordered in Ext.P1, they have challenged it. There was no occasion for them to challenge the same till such enhancement. Therefore, they cannot be non-suited on that ground.
16. The next question to be examined is whether Ext.P3 guidelines will stand in the way of the 2nd respondent in exercising its power to fix the rate or that whether it is not necessary to fix the rates when land use policy guidelines are issued by the Government of India despite the statutory provision contained in Section 49 of the Act. The policy guidelines are issued by the Central Government. It is pointed out that Government of India issues directions to the Ports to implement these guidelines and that these guidelines are issued under Section 111 of the Act and hence are having statutory force. Along with policy guidelines, directions are issued by the W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 18 Government to the Ports to follow the same. Such directions are having statutory force. Section 111 of the MPT Act reads as follows:
"111. Power of Central Government to issue directions to Board.-- [(1) Without prejudice to the foregoing provisions of this Chapter, the Authority and every Board shall, in the discharge of its functions under this Act be bound by such directions on questions of policy as the Central Government may give in writing from time to time:
Provided that the Authority or the Board, as the case may be, shall be given opportunity to express its views before any direction is given under this sub- section.
(2) The decision of the Central Government whether a question is one of policy or not shall be final."
17. Section 111 makes the Board as well as the authority liable to follow directions issued by the Central Government on questions of policy. Therefore, in case there is any direction issued by Central Government on question of policy regarding the lease or sublease of the property of the Port or its rates, that would be binding on the Board as well as the Authority. The petitioners assert that there is no direction based on Ext.P3, which enables the respondents to enhance the levy on sublease rent. Respondents 3 and 4 submit that there was a direction as shown in Ext.R4(d) when Ext.P3 was forwarded, directing them to implement the same. Anyway such a letter is neither produced nor referred to in the counter affidavit. In the counter affidavit of the 1st respondent it is stated that the policy guidelines are issued exercising power under Section 111 of the Act and it is binding on all the 12 W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 19 Major Ports. Chapter IX of the Act deals with supervision and control of the central Government over the Board. Section 111 confers overriding power on Govt. to issue directions to the Board as well as authority after giving them opportunity to express their views. The counter affidavit does not refer to any opportunity that was given to the authority. Respondents 3 and 4 also do not say anything regarding the opportunity afforded to them with respect to any direction issued for implementation of Ext.P3. At any rate, policy guidelines would not take away the powers to be exercised by the 2nd respondent under Section 49 of the Act.
18. In the event of a direction issued for implementation of Ext.P3 guidelines the 2nd respondent would have to follow the same while fixing the rates under Section 49. Such a notification fixing the rates is not issued so far. In the absence of a notification regarding levy as provided in Section 49, the fact that revisions in sublease levy were effected from time to time, which the petitioners continued to remit without objection, will not validate the action of the respondents, when statutory provisions are not complied with.
19. The next contention is based on the Clause 2(k) of Ext.P6 agreement executed between the lessee and the lessor- the 3rd respondent. W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 20 Sub clause (d) of Ext.P4 reads as follows:
" The lessee shall be governed by provisions of Major Port Trusts Act , 1963, Indian Ports Act 1908 and all directives issued by the Government of India from time to time. It shall be binding upon the lessee to comply with all such directives issued by the Government of India and communicated by the lessor."
Further clause 3(d) provides that:
"d) Any subletting, assignment without prior approval of the authority, which sanctioned the lease, shall make the lease liable for cancellation. The lessee shall also be liable to any levy or charges to the Lessor for permitting sub lease as mentioned above at the rates prescribed by the Lessor from time to time."
In view of the aforesaid provisions -Clause 2(k) and 3(d) in Ext.P6 agreement, the respondents assert that the petitioners cannot be heard to object to any enhancement and they are bound by the directions of Government and are bound to pay any levy or charges to the lessor for permitting sublease. From the aforesaid provisions in the agreement it is clear that the lessees are bound by the directions issued by Government of India. They are bound by the provisions in the Act also. But any such directions can only be in accordance with provisions in the Act. Section 111 does not provide that when a direction is issued for implementation of policy, the authority need not fix the rates under Section 49. It can only mean that when the authority fixed the rate it should follow the direction. It is evident from Ext.R2(b) that the 2nd respondent has fixed such rates in W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 21 respect of lease in accordance with the policy guidelines.
20. It is also necessary to have a look at clause 17B of Ext.P3, which reads as follows:
"17B. The lessee may be allowed to sublet/partially sublet the leased premises to another party for the same purpose for which it was originally allotted. Also, such subletting shall be in accordance the Land Use Plan and before allowing this, the Port shall recover 50% of the rent charged by the lessee from the sublessee for the entire period of sublease irrespective of the fact whether the land was originally allotted on upfront basis or annual rental basis. It is clarified that the original lessee would continue to remain responsible for payment of lease rent and for other parents to the terms and conditions of lease. However in respect of leases which shall be entered into after the coming into effect of these guidelines, in cases where, the lessee is not able to utilise the entire land leased to him, the portion of the lease premises not required by him should be surrendered and no sub letting shall be permitted."
21. Clarifications were issued to Ext P3 Policy guidelines in Ext R4(d) forwarded as per letter dated 17.07.2015. The provisions in clause 17B of Ext P3 are given in clause 12 B therein adding to the clarification that leased premises includes the structures built on the leased premises also. Relevant portion of Clause 12B of R4(d) read as follows:
12B. Xxxxxxx Port trust shall refund proportionate lease rental when allotted on upfront premium basis. It is further clarified that leased premises also includes structures built on leased land for the purpose of recovering of subletting fee. Exemption from collecting subletting fee may be given in case of FTZ/SEZ wherein the business model is based on subletting only.
Contention of the petitioners is that Clause 17B did not deal with buildings W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 22 in the land which was leased out and that clarification was issued only 2015;
whereas Ext.P1 order was issued in 2014. However, as pointed out by the learned Counsel for the respondents going by the definition of the land under Section 2(k) of the Port Trust Act, land includes building also.
2(k) "land" includes the bed of the sea or river below high-water mark, and also things attached to the earth or permanently fastened to anything attached to the earth;
Under Section 3 of the Transfer of Properties Act, 1882, 'attached to earth"
means "(a) rooted in the earth, as in the case of trees and shrubs;
(b) imbedded in the earth, as in the case of walls or buildings; or
(c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached;
Therefore, when the land is leased out it is inclusive of the buildings in the land also. Therefore, even though Ext.R4(d) was issued only in 2015 when Ext.P3 specifically provides for lease rent, whenever lease of land is referred to, that land has to be understood as land along with buildings in it.
22. There cannot be any doubt that Ext.P3 Land Use Policy guidelines are issued in order to ensure that land resources are put to maximum use and to prevent misuse. It is also clear that the directions issued for implementation of Land Use Policy guidelines are binding on the W.P(C) Nos.16851 of 2014-F, 32292/2014-J, 32299/2014-J and 32305/2014-K 23 Board as well as the 2nd respondent. The 1st respondent has in the counter affidavit explained the purpose for which Ext P3 is issued as well as the course of action preceding the issuance of Ext P3. It is pointed out that the draft notification was published in the notification and it was finalised after discussion with all stakeholders. Therefore, this Court will not be justified in interfering with clause 17B of Ext.P3 guidelines under Article 226 of the Constitution of India. However, the rate of sublease levy is to be fixed by the 2nd respondent, as it is one of the factors given under Section 49 of the Major Ports Act, 1963, for determination of the 2nd respondent and, at any rate, not excluded from the purview of 2nd respondent. Therefore, Ext.P1 order will stand set aside.
23. The 2nd respondent is free to fix the rate of levy on sublease rent in accordance with Section 49 of the Act.
These Writ Petitions are allowed to the above extent.
Sd/-
(P.V.ASHA, JUDGE) rtr/