Bihar Industrial Area Development Authority & Ors. vs Amit Kumar & Ors.

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.8219 OF 2019 (ARISING OUT OF SLP(CIVIL) NO.35887 OF 2015)

BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY & ORS. APPELLANT(S)

VERSUS

AMIT KUMAR & ORS. RESPONDENT(S)

WITH

CIVIL APPEAL NO.8220 OF 2019 ARISING OUT OF SLP(CIVIL) NO.28213 OF 2016

CIVIL APPEAL NO.8221 OF 2019 ARISING OUT OF SLP(CIVIL) NO.31141 OF 2016

CIVIL APPEAL NO.8222 OF 2019 ARISING OUT OF SLP(CIVIL) NO.5251 OF 2017

J U D G M E N T

Deepak Gupta, J. (Oral)

Leave granted.

The legal issue involved in these appeals is

whether the Patna High Court was right in holding that

when the allottee of land, allotted for industrial

purposes, further transferred the land to some other

Signature Not Verifiedentity, the Bihar Industrial Area Development Authority Digitally signed by ARJUN BISHT Date: 2019.10.26 12:48:28 IST Reason: (BIADA) was only entitled to recover the unearned

increase on the basis of cost of land and development

1 charges and not on the basis of the market value of the

land or the circle rate of the land.

In view of the decision that we intend to take in

these four cases before us, it is not necessary to give

the facts of each case in detail. However, for the

purposes of decision of these set of appeals, we may

refer to the facts in C.A. No.8222/2019 (arising out of

SLP(C) No.5251/2017). Clause 4(i) of the Lease Deed

entered into between the State of Bihar and M/s. Orient

Beverages Ltd. to which the land was granted on lease for

a period of 99 years for a sum of Rs.42,000/- plus rent

of Rs.87.50 per year, reads as follows:

"Clause 4(i):-

That the lessee will not assign, mortgage, underlet or part with the possession over the land or any right or interest therein or in respect thereto without the previous consent of the lessor or its nominee."

Clause 4(ii) of the Lease Deed provided that no

transfer of lease shall take place unless specifically

permitted by the State. The said clause reads as follows:

"Clause 4(ii):-

No change in the lease, proprietorship or partnership, if it is a private limited or unlimited company or a registered or an unregistered firm, shall be recognized without the previous written consent of the lessor or his nominee."

It is not disputed that the rights of the State of

Bihar have finally been transferred to the BIADA though,

2 in between, there may have been some other authorities

also but that is not relevant for the decision of this

case.

In the year 1998, the original lessee M/s. Orient

Beverages Ltd. applied for transfer of the leasehold

rights in favour of M/s. Bharat Coca-Cola Bottling North

East Pvt. Ltd. and a sum of Rs.17,50,000/- was paid as

premium at the time of the said transfer. It appears that

the transfer by Orient Beverages Ltd. in favour of Bharat

Coca-Cola Bottling North East Pvt. Ltd. was made for a

sum of Rs.2.02 crores. Later in the year 1999, a scheme

of amalgamation was entered into between Bharat Coca-Cola

Bottling North West Pvt. Ltd., Bharat Coca-Cola Bottling

South East Pvt. Ltd. and Bharat Coca-Cola North West Pvt.

Ltd. (transferee of the lease) and all these three

amalgamated to form Hindustan Coca-Cola Bottling South

West Pvt. Ltd. This scheme of amalgamation was approved

by the Delhi High Court on 10.09.1999. The name of M/s.

Hindustan Coca-Cola Bottling South West Pvt. Ltd. was

changed to M/s. Hindustan Coca-Cola Beverages Pvt. Ltd.

which is the respondent before us and the original writ

petitioner before the High Court. Thereafter, a

communication was sent to the appellant(s) that there was

change in the name and the name should be changed in the

record of the appellant-Authority and this permission was

granted on payment of some nominal fees.

3 In the meantime, a Committee was constituted by the

Government of Bihar to lay down the modalities and fees

for transfer of industrial estates from the allottees to

some other person. The relevant recommendations of the

Committee are as follows:

"(a) The Lease holders should have the right to transfer or sale the land by paying fee if land use is not changed;

(b) The amount recommended was 15% of the present market value in case of transfer or sale;"

On 18.12.2003, an office order was issued by the

Appellant-Authority permitting change in the Constitution

of the allottee after taking 15% of the circle rate for

the land at the time and other dues payable. On

12.03.2004, a specific order was issued permitting

transfer of a land on payment of 15% of the prescribed

rate. Thereafter, on 10.03.2005, a letter was issued by

the appellant-Authority to the original writ petitioners

that 15% of the market value of 1.75 acres of land works

out to Rs.4,25,250/-. After some correspondence, this

amount was deposited on 12.04.2007. Thereafter, it

appears that a decision was taken to assess the 15%

market value on the basis of the circle rate and not

merely on the rate reflected in the transaction. Relying

upon this latter decision of 15.05.2007, a fresh demand

of Rs.45,17,318/- was raised and after adjusting the

amount already paid, balance payable was assessed as

4 Rs.40,64,523/-. Aggrieved against this demand, M/s.

Hindustan Coca-Cola Beverages Pvt. Ltd. filed a writ

petition bearing CWJC No.5553 of 2013 before the Patna

High Court.

We shall deal with the factual aspects of the case

at a later stage but the legal issues raised before us

are whether the appellant-Authority is entitled to

recover unearned increase and if so on what basis. As far

as the entitlement to recover unearned increase in the

value of the transferred allotted land is concerned even

the High Court has upheld this right of the appellant-

Authority. However, the High Court has held that the

calculation of this unearned increase will be on the

basis of the value at which appellant-Authority allots

the land plus development charges.

The contention raised by Mr. Gaurav Agrawal,

appearing for the appellant-Authority, is that there is

no reason why, when the transfers are normally made for

commercial reasons, the appellant-Authority should not

get its fair share in the total unearned increase in the

value of the leased property.

We may note that it is standard practice throughout

this country, specially at the time when these leases

were executed to set up industrial estates wherein lands

were given at very low price and sometimes at subsidized

5 rates to help in the setting up of industrial estates in

the State. It was expected that establishment of these

industrial estates with flourishing industries would

generate a lot of employment and would also generate

revenue both in the nature of direct and indirect taxes.

The issue is whether when the allottee transfers the land

for commercial reasons why should the Authority not get a

reasonable portion of the unearned income earned by the

allottee of the plot just by transferring the plot in

question. The premium on the unearned increase is being

charged only on the value of the land and not on the

value of the transaction. Once an industry is set up it

may have various components including the value of the

immovable assets, the value of the machinery etc. and

also the value of the goodwill which the company has

generated. On the other hand there are companies which

are loss making units where debts and liabilities due to

employees and sundry creditors will have to be factored

into while calculating the value of the total assets of

the unit. Those are not to be taken into consideration

while assessing the unearned increase of the cost of the

land.

The land was given to the original allottee at a

price fixed by BIADA. When the allottee transfers and

gets something more for the land or the market value as

reflected in the circle rate is much more than the price

at which the land was allotted to the allottee, we see no

6 reason why the allottee should pocket all this unearned

increase and BIADA, which was the original owner of the

land should be deprived of a reasonable portion of the

unearned increase from the value of the land. Therefore

we are not in agreement with the High Court that the

unearned increase can be charged only on the basis of the

BIADA value plus development charges and in our opinion

the policy of the BIADA fixing the cost of the land on

the basis of the circle rate applicable is legal and

valid.

We shall now deal with the individual cases. As far

as the first case i.e. Civil Appeal No.8219 of 2019

arising out of SLP(C) No.35887 of 2015 is concerned, we

find that the Division Bench of the High Court of Patna

vide order dated 09.03.2010 had directed that the

arrangement made in respect of writ petitioner(s) shall

not be disturbed. Therefore, though we decide the

question of law in favour of appellant, but it will not

be entitled to recover any amount from the respondent(s).

The appeal is disposed of accordingly.

As far as Civil Appeal No.8220 of 2019 arising out

of SLP(C) No.28213 of 2016 is concerned, amalgamation

took place on 10.09.1999. The transfer date, which is the

material date, is 10.09.1999 and in our view in all cases

the value of land for purposes of fixing the price should

be the date of transfer and in this case it should have

7 been 10.09.1999. Having held so, in view of the fact that

the original writ petitioner paid the amount of

Rs.4,25,250/- we do not want to open up the entire

litigation for a small amount. The amount was demanded

only on 10.03.2005 and was actually paid on 12.04.2007.

The appellant shall be entitled to interest at the rate

of 9% per annum on this amount of Rs.4,25,250/- for the

period 10.03.2005 to 14.04.2007.

We direct that, on this amount, the interest be

paid within two months. On payment of the interest, the

formal lease deed be executed by the appellant-Authority

in favour of the original writ petitioner(s) within two

months of the deposit of interest. The appeal is disposed

of accordingly.

In view of the order passed hereinabove, the CA

No.8222 of 2019 arising out of SLP(C) No.5251/2017 is

disposed of.

As far as Civil Appeal No.8221 of 2019 arising out

of SLP(C) No.31141 of 2016 is concerned, land measuring

0.50 acres was allotted to the respondent on 07.12.2000.

The allottee was M/s. Shankar Saw Mills through its

proprietor Sukhdev Paswan. It is admitted case that the

dues payable by Shankar Saw Mills were not paid for the

period 2002 to 2007. The case of the appellant is that

the payment could not be made because of the orders

8 passed by this Court in the case of T.N. Godavarman vs.

Uniion of India whereby the licence of Saw Mills

throughout the country was stayed. It is not disputed

that finally under a one time settlement scheme floated

by the appellant-Authority, the original writ

petitioner(s) paid all the dues as payable under the

scheme on 30.07.2000. However, while paying this amount

the writ petitioner(s) also prayed for permission of

transfer of the land in favour of transferee company

known as Samras Products Pvt. Ltd in which it was claimed

that the appellant was a Director. There is no material

before us to show what is the exact shareholding of

Sukhdev Paswan in M/s. Samras Products Pvt. Ltd.

Mr. Gaurav Agrawal, learned counsel, has submitted that

as per the scheme of the Authority if the original

allottee retained 51% of the shareholding in the company

then it will not be treated to be a transfer and there is

no liability to pay any unearned increase. There are no

facts in this regard placed on record. Therefore, while

setting aside the order of the Patna High Court on the

legal issues, we remit the matter back to the Patna High

Court where the parties may produce documents in this

regard. If the documents, as existing, at the time of the

initial incorporation of M/s. Samras Products Pvt. Ltd.,

indicate that Sukhdev Paswan had more than 51%

shareholding then obviously he is not liable to pay any

transfer charges but if his shareholding is less than 51%

9 then he will pay the unearned increase as decided by us

heareinabove. Since we have remitted the matter, the Writ

Petition No.4325 of 2009 shall be restored to its

original number so that it is given due seniority for

decision.

The appeal is disposed of accordingly.

...................J. (DEEPAK GUPTA)

...................J. (ANIRUDDHA BOSE)

New Delhi;

October 22, 2019

10 ITEM NO.6 COURT NO.15 SECTION XVI

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s).35887/2015

(Arising out of impugned final judgment and order dated 11-05-2015 in LPA No. 68/2008 11-05-2015 in CWJC No. 9696/2005 passed by the High Court Of Judicature At Patna)

BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY & ORS.Petitioner(s)

VERSUS

AMIT KUMAR & ORS. Respondent(s)

WITH SLP(C) No.28213/2016 (XVI) SLP(C) No.31141/2016 (XVI) SLP(C) No.5251/2017 (XVI) (FOR CONDONATION OF DELAY IN FILING ON IA 1/2017 IA No.1/2017 - CONDONATION OF DELAY IN FILING)

Date : 22-10-2019 This petition was called on for hearing today.

CORAM :

HON'BLE MR. JUSTICE DEEPAK GUPTA HON'BLE MR. JUSTICE ANIRUDDHA BOSE

Counsel for the parties:

Mr. Gaurav Agrawal, AOR

Mr. Amit Sibal, Sr. Adv.

Mr. Rajiv Tyagi, AOR Mr. Rohit Gupta, Adv.

Ms. Anisha Upadhyay, AOR

Mr. Neeraj Shekhar, Adv.

Mr. Animesh Kumar, Adv.

Mr. Sumit Kumar, Adv.

Ms. Ekta Bharati, Adv.

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

Mr. Neeraj Shekhar, learned counsel, submitted that the

original counsel has now been appointed as counsel for the BIADA,

11 so he cannot put in appearance but he however filed his memo of

appearance and has argued the matter.

The appeals are disposed of in terms of the signed reportable

judgment.

Pending application(s), if any, stands disposed of.

(ARJUN BISHT) (RENU KAPOOR) COURT MASTER (SH) BRANCH OFFICER

(signed reportable judgment is placed on the file)

12