Bombay High Court
M/S. Redstone Realtors And Anr vs State Of Maharashtra And 3 Ors on 18 January, 2017
Author: S. C. Dharmadhikari
Bench: S.C. Dharmadhikari, B.P.Colabawalla
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 3086 OF 2016
M/s Redstone Realtors and Another ..Petitioners
Vs.
State of Maharashtra and Others ..Respondents
Dr. Milind Sathe, Senior Counsel a/w Mr. Yadunath
Chaudhari, Ms. Jaswandi Khatu i/b Mr. Susmit Sanjay
Phatale,for the Petitioners.
Mr. L. T. Satelkar, Asst. Govt. Pleader, for the Respondents
State.
CORAM :- S.C. DHARMADHIKARI &
B.P.COLABAWALLA , JJ.
DATE :- JANUARY 18, 2017.
ORAL JUDGMENT (Per S. C. Dharmadhikari, J.)
Rule. Respondents waive service. By consent, rule made returnable forthwith.
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2 By this Petition under Article 226 of the
Constitution of India, the Petitioners who are a firm carrying on business of development and redevelopment of properties have approached this Court pointing out that there was a lease deed executed on 14th April, 1910 by the then British Government. A lease of a certain property more particularly described in paragraph 2 of the Petition was granted in favour of one Aga Shamsudin Shah. That was for a period of 99 years commencing from 1st September, 1903. The Petitioners have stepped in as lessee. In respect of this property, pursuant to a deed of assignment executed on 13 th September, 2006, the Petitioners are relying upon a certain clause in the lease deed which enables transfer of the rights in favour of third parties. Thus, the reversionary rights could be transferred and equally the transferee is free to apply for renewal of the deed for a further period. Relying on this clause, it is submitted that a request was made in writing to renew the lease. The argument is that the Collector, who is the successor in interest of the then Government is obliged to renew the lease. In the same breath, what is being argued is Aswale 2/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 that there was a Civil Suit filed praying for a declaration to the above effect. It is in these circumstances the rights of the erstwhile lessee and flowing in favour of the Petitioners are being enforced. The Petitioners also sought to register the document by which they stepped into the shoes of the erstwhile lessee. It is stated that Respondent Nos.1 and 2 refused to register the instrument / document of assignment and demanded a sum of Rs.9,66,27,928.50 towards unearned income on the ground that the said assignment was made without prior permission of the Respondents. 3 Dr. Sathe, learned Senior Counsel appearing on behalf of the Petitioners submits that the urgency in the matter is that though the direction to pay the unearned income was challenged before the Minister of Revenue, the Government of Maharashtra who passed an order on 6 th September, 2007, directed renewal of the lease on execution of the indemnity bond and deed of guarantee. What has transpired thereafter, according to him, ought to shock the judicial conscience of this Court. There was no direction to Aswale 3/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 initiate any coercive measures in the order of the Minister of Revenue, Government of Maharashtra. On the other hand, the Petitioners could have proceeded to enforce their rights under the lease deed. They desired to demolish the old structures standing on the land and construct a new building by which they would rehouse the existing occupants and after discharging such an obligation exploit the potential of the land in the market. That is how they proceeded and obtained the requisite permissions and approvals so also sanctions from the Municipal Corporation of Greater Mumbai. It was thereafter that they started to pursue their request for renewal of the lease. They have completed the construction of the building. They have rehoused 206 residential tenants and 39 non-residential tenants. Though this project is on going, the second Respondent directed the registration office not to register the documents brought by the Petitioners for registration. The Petitioners pointed out their difficulties when they objected to such a stand of Respondent No.2- Collector. Dr. Sathe has invited our attention to the Communications, copies of which are annexed to the Writ Aswale 4/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 Petition and points out that instead of registering the documents as prayed so as to enable the flat purchasers / unit holders to obtain the documents of title, the second Respondent granted a conditional permission but on the footing that the Petitioners submit to her demand of payment of unearned income to the extent of Rs.16.50 Crores. 4 Mr. Sathe, therefore, submits that the Petitioners had to bring to this Court's notice that such linking of independent issues was not permissible. Firstly, the refusal to register the document on the above ground is unknown to law. Secondly, no demand of unearned income can be raised in the manner done by the Collector. For that must precede an adjudication. No such adjudication has been held and in terms of the directions contained in the order of the Minister. Hence, on both counts this stand is challenged in law. 5 The Petition was moved, because on 12th January, 2017, though this Court had in the presence of the advocates for the State passed a detailed ad-interim order, the Aswale 5/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 registration may have taken place but for the demand having not been allegedly met and relying on certain observations in that order, the Collector and District Magistrate Bombay has directed the Superintendent of the Land Records to attach the bank accounts of the Petitioners so as to enable the amount to be recovered.
6 It is this Communication which is also under challenge.
7 When this matter was listed as per the earlier order today, we called upon Mr. Satelkar appearing on behalf of Respondent Nos.1 and 2 to take instructions as to whether the Collector of the City of Mumbai is agreeable to the legal position brought to our notice, and therefore, on her own withdraw the impugned communication. Mr. Satelkar on second call of this matter informed the Court that it is not possible for the Collector to take such steps. The matter is, therefore, left to Court.
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prod.3.wpl3086.14 8 It is in these circumstances that we are required to pass this final order.
9 We have perused even the additional affidavit filed on behalf of the Petitioners. In that additional affidavit, relying upon the order of the Revenue Minister, it is urged that due to sheer urgency and to avoid any confrontation, the Petitioners have made payment of Rs. 1 Crore. However, the basis on which the demand is raised has never been disclosed. There is no hearing and preceding the impugned Communication.
10 We find much substance in the contentions of Mr. Sathe. The impugned Communication based on which the further steps are taken is dated 15 th October, 2016. It is on the subject of short levy of unearned income of Rs. 6.84 Crores on unauthorized assignment / transfer of land to the Petitioners. The Communication recites that the subject immovable property was lent to Aga Shamsudin Shah and Burjorji Sorabji Shroff. The lease was for 99 years and has Aswale 7/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 come to an end on 30th August, 2002. It is in these circumstances and relying upon the request made by the Petitioners to register their agreement / assignment that this Communication refers to the audit carried out for the period 2007-2010. That reveals that this prime property situated at Mazgaon, Mumbai has been illegally transferred. The transaction value is Rs. 22 Crores. Further, relying upon the letter of the Section Officer of the Revenue and Forest Department addressed to the Collector and District Magistrate dated 30th September, 2006, it is stated that the value of the government land should be on the basis of the prevailing rates as mentioned in the ready reckoner. If that rate as mentioned in the reckoner is lesser than the transaction value or an out-rate transfer value, then, the Collector must ensure that there is no loss caused to the Government. Meaning thereby, the prices and values are determined by the parties of their own but they may not protect the interest of the Government. The Government may not be able to derive any benefits and particularly in monetary terms from such transactions. In the present case, Aswale 8/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 since the transaction value is of Rs. 22 Crores, the Collector proceeded to determine 75% of this sum and amounting to Rs.16.50 Crores as the unearned income. Since the Petitioners have deposited a sum of Rs. 1 Crore, the balance 15.50 Crores should be deposited within a period of 20 days in the account of the Government of Maharashtra / treasury, else recovery by resorting to coercive means as permissible under the Maharashtra Land Revenue Code, 1966 could be made.
11 Admittedly no factual statement in the Writ Petition is denied. We have not been shown any order besides this communication by which the sum of Rs. 16.50 Crores as alleged unearned income is determined. There is no speaking order passed admittedly and which can be passed only after hearing the Petitioners and with due compliance with the principles of natural justice by disclosing to them the records and materials based on which the calculations and computations have been made. Since this has never preceded Aswale 9/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 the impugned communications dated 15th October, 2016 and 12th January, 2017, then, we cannot in the facts and circumstances of the present case sustain such recovery by coercive means.
12 We have found that the Petitioners have raised the ground and in terms that after Ministry of Revenue's order dated 16th September, 2007, their transaction cannot be termed as ex-facie illegal. The direction to renew the lease was granted as also registration of the documents which must follow such renewal but the Collector has proceeded in the above noted manner, is the essential grievance before us. That has not been controverted. Neither, the allegation in that regard has been controverted nor any justification is provided for the steps that have been taken. For these reasons we cannot sustain both the communications. We proceed to quash and set aside the same.
13 The Respondents ought to be aware that it is a basic fact that only an amount and due or payable, can be Aswale 10/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 recovered in the above manner. In the case of State of Kerala and Others v/s V. R. Kalliyanikutty and Another reported in AIR 1999 SC 1305 : (1999) 3 SCC 657, the Hon'ble Court held as under:-
"8. Looking to the object of Section 71 we have to examine whether time-barred claims of the State Financial Corporation and the banks can be recovered under it. Is the object only speed of recovery or is it also enlargement of the right to recover? The respondent-institutions rely on the words "amount due" in Section 71 as encompassing time-barred claims also. Now, what is meant by the words "amounts due"
used in Section 71 of the Kerala Revenue Recovery Act as also in the notifications issued under Section 71? Do these words refer to the amounts repayable under the terms of the loan agreements executed between the debtor and the creditor irrespective of whether the claim of the creditor has become time-barred or not? Or do these words refer only to those claims of the creditor which are legally recoverable? An amount "due" normally refers to an amount which the creditor has a right to recover. Wharton in Law Lexicon defines "due" as anything owing; that which one contracts to pay to another. In Black's Law Dictionary, 6th Edn., at p. 499 the following comment appears against the word "due": "The word 'due' always imports a fixed and settled obligation or liability; but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context. It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at sometime in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived. But commonly and in the absence of any qualifying expressions, the word 'due' is restricted to the first of these meanings, the second being expressed by the term 'overdue' and the third by the word 'payable'."
There is no reference in these definitions to a time-barred debt. In every case the exact meaning of the word "due" will depend upon the context in which that word appears. Aswale 11/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 :::
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9. In the case of Hansraj Gupta v. Dehra Dun-Mussoorie Electric Tramway Co. Ltd.[AIR 1933 PC 63 : 60 IA 13] the Privy Council was required to interpret the words "money due" under Section 186 of the Companies Act, 1913. Section 186 dealt with the recovery of any money due to the company from a contributory. Interpreting the words "money due", the Privy Council said that the phrase would only refer to those claims which were not time-barred. It noted that the section is concerned only with moneys due from a contributory. A debtor who is not a contributory is not affected by it. Moneys due from him can be recovered only by a suit in the company's name. Secondly, the section creates a special procedure for obtaining payment of moneys. It is not a section which purports to create a foundation upon which to base a claim for payment. It creates no new rights. Thirdly, the power of the court to order payment under that section is discretionary. It may refuse to act under that section, leaving the liquidator to sue in the name of the company. Therefore, the respondent under the procedure of Section 186 cannot be deprived of some defence or answer open to him in a suit for the same moneys.
10. The same reasoning would apply in the present case also. The Kerala Revenue Recovery Act does not create any new right. It merely provides a process for speedy recovery of moneys due. Therefore, instead of filing a suit, (or an application or petition under any special Act), obtaining a decree and executing it, the bank or the financial institution can now recover the claim under the Kerala Revenue Recovery Act. Since this Act does not create any new right, the person claiming recovery cannot claim recovery of amounts which are not legally recoverable nor can a defence of limitation available to a debtor in a suit or other legal proceeding be taken away under the provisions of the Kerala Revenue Recovery Act. In fact, under Section 70 of the Kerala Revenue Recovery Act, it is provided that when proceedings are taken under this Act against any person for the recovery of any sum of money due from him, such person may, at any time before the commencement of the sale of any property attached in such proceedings, pay the amount claimed and at the same time deliver a protest signed by himself to the officer issuing the demand or conducting the sale as the case may be. Sub-section (2) of Section 70 provides that when the amount Aswale 12/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 is paid under protest, the officer issuing the demand or the officer at whose instance the proceedings have been initiated, shall enquire into the protest and pass appropriate orders. If the protest is accepted, the officer disposing of the protest shall immediately order the refund of the whole or part of the money paid under protest. Under sub-section (3) of Section 70, the person making a payment under protest shall have the right to institute a suit for the refund of the whole or part of the sum paid by him under protest.
11. Therefore, under Section 70(3) a person who has paid under protest can file a suit for refund of the amount wrongly recovered. In law he would be entitled to submit in the suit that the claim against which the recovery has been made is time-barred. Hence no amount should have been recovered from him. When the right to file a suit under Section 70(3) is expressly preserved, there is a necessary implication that the shield of limitation available to a debtor in a suit is also preserved. He cannot, therefore, be deprived of this right simply by making a recovery under the said Act unless there is anything in the Act which expressly brings about such a result. Provisions of the said Act, however, indicate to the contrary. Moreover, such a wide interpretation of "amount due" which destroys an important defence available to a debtor in a suit against him by the creditor, may attract Article 14 against the Act. It would be ironic if an Act for speedy recovery is held as enabling a creditor who has delayed recovery beyond the period of limitation to recover such delayed claims.
14. In our view if such a wide interpretation is put on the words "amount due" under the Kerala Revenue Recovery Act, there is every likelihood of the provisions of Article 14 being attracted. This Court in the case Director of Industries, U.P. v. Deep Chand Agarwal [(1980) 2 SCC 332 : AIR 1980 SC 801] justified the special procedure for recovery of certain debts under the U.P. Public Moneys (Recovery of Dues) Act, 1965 on the ground that the amounts which were advanced by the State or by the financial institutions were for the economic betterment of the people of that State. Speedy recovery of these amounts was necessary so that these amounts could be reutilized for the same public purpose. It is doubtful if this public purpose would extend to granting exemption to these claims from the statute of limitation. The Aswale 13/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 law of limitation itself rests on the foundations of public interest. The courts have expressed at least three reasons for supporting the existence of statutes of limitation:
(1) that long dormant claims have more of cruelty than justice in them;
(2) that a defendant might have lost the evidence to disprove a stale claim; and (3) that persons with good causes of action should pursue them with reasonable diligence.
(See Halsbury's Laws of England, 4th Edn., Vol. 28, para 605.) In Nav Rattanmal v. State of Rajasthan [AIR 1961 SC 1704] the statutes of limitation have been considered as statutes of repose and statutes of peace. The generally accepted basis for such statutes is that they are designed to effectuate a beneficent public purpose. Whether public purpose of speedy recovery would outweigh public purpose behind a statute of limitation is a moot point. But we need not examine this aspect any further in view of our interpretation of the words "amounts due" in Section 71.
15. It has been submitted before us that the statute of limitation merely bars the remedy without touching the right. Therefore, the right to recover the loan would remain even though the remedy by way of a suit would be time-barred. Reliance was placed on Khadi Gram Udyog Trust v. Ram Chandraji Virajman Mandir [(1978) 1 SCC 44] in this connection. The Court there observed that though a debt may be time-barred, it would still be a debt due. The right remains untouched and if a creditor has any means of enforcing his right other than by action or set-off, he is not prevented from doing so. In Punjab National Bank v. Surendra Prasad Sinha [1993 Supp (1) SCC 499, 503-504 : 1993 SCC (Cri) 149] (SCC at pp. 503-504) this Court held that the rules of limitation are not meant to destroy the rights of parties. Section 3 of the Limitation Act only bars the remedy but does not destroy the right which the remedy relates to. Excepting cases which are specifically provided for, as for example, under Section 27 of the Limitation Act, the right to which the remedy relates subsists. Though the right to enforce the debt by judicial process is barred, that right can be exercised in any manner other than by means of a suit. For example, a creditor's right to make adjustment against time-barred debts exists."
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prod.3.wpl3086.14 14 We have been repeatedly noticing that since Dr. Ashwini Joshi has taken over as Collector, Mumbai city, such orders and communications are issued. 15 In an enthusiasm to demonstrate that in her tenure she can make recoveries of this nature and thereafter the Government Treasury will be able to generate more funds in relation to all such properties, the directions and orders of the aforesaid nature are issued by her. Today, also we enquired from Mr. Satelkar as to whether she is ready and willing to withdraw such communications as are impugned in the present Petition but the response was that there is no such power. We are surprised and rather shocked at this response. When we questioned the authority and power to pass such orders and directions, we are not enlightened at all by her. When we point out the fallacy, defect and deficiency in her order and approach, the response is that once the orders are passed she is functus officio and can do nothing. Aswale 15/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 :::
prod.3.wpl3086.14 Therefore, the approach appears to be 'I can cause and perpetuate injustice but having been shown that the orders and directions result in the same, I am helpless'. We do not think that the Collector of the District of Mumbai who is the custodian and trustee of public lands and properties can function in such a manner. When effecting such recoveries something more than enthusiasm is needed. A elementary knowledge of legal proceedings if not possessed, can be acquired as there are competent legal advisors available for the State and its machinery. Their services can be utilized. Equally, a thorough study and proper research with their assistance would enable the Collector and District Magistrate to make recoveries. True it is that in larger public interest the dealings and transactions in relation to Government lands are required to be probed and if a prima facie view is taken that the deals and transactions of the above nature caused loss to the Government, then, legal proceedings have to be initiated and concluded by adhering to the provisions of law as interpreted in the judgments of not only the Hon'ble Supreme Court but also this Court. Therefore, a Collector Aswale 16/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 may be justified in proceeding to demand money but it is elementary that such demand must precede a proper adjudication and known to the process of law. Therefore, we do not see how we can resist making these observations, particularly, after noting the response of the Collector. It plainly means that the Collector refuses to abide by the law. That is hardly expected and from such a high functionary. In these circumstances, we are constrained to observe that in the event we notice such orders and actions in the future, we would be compelled to direct that remarks of this Court and particularly about the approach of the Collector be entered in the service records and ought to be taken into consideration while granting any benefits or higher pay scales. Equally, her promotional avenues ought to be determined by taking into consideration these observations and remarks. We hope that the present Collector does not wish to invite such a response from this Court. We deem it fit and proper to end this judgment here.
16 Rule is made absolute in the above terms. There Aswale 17/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 ::: prod.3.wpl3086.14 will be no order as to costs.
17 The Prothonotary and Senior Master of this Court is directed to forward a copy of this order to the Principal Secretary, Department of Revenue and Forests, Government of Maharashtra and the Collector Bombay and Bombay suburban district.
18 Needless to clarify that if any appropriation or recoveries have been made from the bank accounts of the Petitioners over and above the sum of Rs. 1 Crore already deposited by the Petitioners, then, all such amounts shall be returned to the Petitioners within eight days from today, failing which we would be constrained to direct payment of interest on the same personally by the Collector. Every seizure action necessarily comes to an end. Any seals and locks placed on the immovable properties be removed forthwith. All bank accounts are also released from attachment forthwith.
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prod.3.wpl3086.14 19 The parties to act on an ordinary copy of this order.
20 We clarify that we have not gone into the merits of the controversy. Our order and direction will not prevent the Collector from initiating such proceedings, as are permissible in law. Beyond noting the contentions of Mr. Sathe and relying upon our tentative and prima facie findings in the earlier order of the Division Bench, we have observed nothing insofar as the wider controversy.
21 The original copy of the Communication dated 12 th January, 2017 is returned to Mr. Satelkar on his undertaking that the certified true copy of the same shall be retained on the file of this Court.
(B. P. COLABAWALLA, J.) (S. C. DHARMADHIKARI , J.) Aswale 19/19 ::: Uploaded on - 30/01/2017 ::: Downloaded on - 27/08/2017 13:36:55 :::