The Mayor Jaipur Municipal Corporation vs Thakur Shiv Raj Singh

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6030 OF 2019 (arising out of SLP(C)No.7710 of 2019)

THE MAYOR JAIPUR MUNICIPAL CORPORATION & ANR. … APPELLANT(S)

VERSUS

THAKUR SHIV RAJ SINGH & ORS. … RESPONDENT(S)

J U D G M E N T

ASHOK BHUSHAN, J.

The Jaipur Municipal Corporation has filed this

appeal challenging the Division Bench judgment of

Rajasthan High Court, Bench at Jaipur dated

12.01.2018 by which the Special Appeal filed by the

respondents questioning the judgment of learned

Single Judge has been allowed and the appellants have

been directed to refund the conversion charges

deposited by the respondents along with six percent

interest.

Signature Not Verified Digitally signed by SANJAY KUMAR

2. Date: 2019.08.05 17:05:48 IST Reason: Brief facts of case giving rise to this appeal

are:

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Lt. Col. Late Harnath Singh, the predecessor-in-

interest of the respondents by registered sale deed

dated 16.04.1959 had purchased the property in

question known as ‘Lal Niwas’ from His Highness Sawai

Man Singh of Jaipur. Lt.Col. Late Harnath Singh died

on 08.01.1997 after which the respondents became

owner of the property. The respondents, with intent

to develop by constructing a multi-storeyed building,

commercial-cum-residential complex in the area of

8080.14 square meter, made an application to

Corporation for conversion of land use as condition

precedent for sanction of building plan for

constructing commercial-cum-residential complex. The

Corporation issued an order dated 22.02.2003

directing the respondents to deposit an amount of

Rs.1,01,04,672/- towards the conversion charges. The

respondents reserving their rights deposited the

amount through pay order dated 20.03.2003. An order

dated 06.05.2003 was passed by the Corporation

allowing the conversion of the land use of the

aforesaid land. The building plan was thereafter

approved by the Corporation on 08.01.2004. The 3

respondents issued notice dated 28.04.2004 to the

Corporation calling upon the appellants to pay a sum

of Rs.1,13,86,703/- along with interest. The

respondents filed a Writ Petition No.4783 of 2004 in

the High Court of Rajasthan at Jaipur Bench praying

for following reliefs:

“(i) By an appropriate writ, order and direction impugned orders dated 22.02.2003 (Annexure.2), order dated 01.04.1003 (Annexure.4), 19.11.2003 & 20.12.2003 (Annexure.7) passed by the respondents No.2 & 3 may kindly be quashed and set aside.

(ii) By an appropriate writ, order or direction the respondents may be directed to refund the amount of Rupees 1,01,04,672/- charged/ extracted by the respondents towards conversion charges of the land in question and an amount of Rupees 6,31,542/- and Rupees 6,59,961/-

charged by the respondents towards Shahari Jama Bandi & interest thereon, thus totalling Rs.

1,13,96,175/- from the petitioners along with interest @ 18% p.a. thereon as damages for unnecessarily withholding the aforesaid amount w.e.f. date of deposit to the date of payment. The respondents may further be directed to refund the total amount as prayed hereinabove to the petitioners in the proportion viz. 30% to Thakur Shiv Raj Singh (Petitioner No.1) and 1/3rd of the remaining to each of the Petitioners No.2 to 4.

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(iii) Cost of litigation be awarded to the petitioners.

(iv) Any other order(s) as this Hon’ble High Court may deem fit and proper in the facts and circumstances of the present writ petition be also passed in favour of the humble petitioners and against the respondents.”

3. In the writ petition, the Corporation filed its

reply. The Corporation resisted the writ petition. A

learned Single Judge of the High Court vide its

judgment dated 04.07.2006 dismissed the writ

petition. Aggrieved against the judgment of learned

Single Judge, Special Appeal was filed by the

respondent before the Division Bench. The Division

Bench of the High Court vide its impugned judgment

dated 12.01.2018 allowed the Special Appeal and

directed for refund of the amount of Rs.1,01,04,672/-

with interest. The Corporation aggrieved by the

judgment of the Division Bench has come up in this

appeal.

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4. We have heard learned counsel for the appellants

as well as learned counsel appearing for the

respondents.

5. Learned counsel for the appellants submits that

it is the respondents who had submitted an

application for paying conversion charges to enable

sanction of building plan of commercial-cum-

residential complex in the premises in question. The

Corporation had directed for deposit of conversion

charges which were deposited by the respondents. The

respondents are not entitled to claim any refund.

They have themselves deposited the conversion

charges. It is submitted that in view of the land use

of plot in the Master Plan, which was in force at the

time when the application was moved by the

respondents, i.e., ‘residential’, it was obligatory

for the respondents to seek permission for using the

land for commercial purpose as required by Section

173-A of Rajasthan Municipalities Act, 1959 as

amended by Act 19 of 1999. It is submitted that the

respondents’ map for sanction of building plan for 6

commercial-cum-residential plot could not have been

sanctioned unless the conversion of land use was

permitted and the amount demanded by the Corporation

from respondents was the amount of conversion charges

of land use. It is submitted that the Division Bench

without considering the relevant issues and

provisions of Section 173-A allowed the appeal. The

Division Bench erred in directing for refund of the

amount deposited by the respondents.

6. Learned counsel for the respondents refuting the

submissions of the learned counsel for the appellants

contends that the respondents were forced to deposit

the amount of Rs.1,01,04,672/- by the Corporation.

The respondents deposited the amount under protest.

It is submitted that from the date property was

purchased in the year 1959, the property is being

used for commercial purposes. It is submitted that a

Company M/s. Hindustan Salts Limited was using the

premises for commercial purpose till M/s. Hindustan

Salts Limited handed over the premises in the year

1996 to Lt. Col. Late Harnath Singh. When the 7

premises was being used for commercial purpose since

before the date when building plan for constructing

commercial-cum-residential complex was made, there

was no occasion for payment of any conversion

charges. It is submitted that in Master Plan the land

use of plot in question as on date as well as at the

relevant time was commercial. It is submitted that

the respondents were not liable to pay any conversion

charges and the Corporation, having realised the

conversion charges illegally and arbitrary from the

respondents, is obliged to refund the amount. It is

submitted that the learned Single Judge also has

returned a finding that the land in question is being

used for commercial purposes.

7. We have considered the submissions of the learned

counsel for the parties and have perused the records.

8. Before we enter into the submissions made by the

learned counsel for the appellants, it is relevant to

notice the relevant provisions of Rajasthan

Municipalities Act, 1959 pertaining to land user. 8

Section 173-A is provision dealing with the power of

the State Government to allow the change of use of

land. Section 173-A was amended by Rajasthan

Municipalities (Amendment) Act, 1999. It is useful to

notice the provisions of Section 173-A before the

amendment and after the amendment which are as

follows:

“Section 173-A of the Act, prior to its amendment, reads as follows:

“173-A. Power of the State Government to allow change in the use of land.- (1) Notwithstanding anything contained in this Act, where any land has been allotted or sold to any person by a municipality or the State Government subject to the condition of restraining its use for a particular purpose, the State Government may, if it is satisfied so to do in public interest, allow the owner or holder of such land to use it for any other purpose other than the purpose for which it was originally allotted or sold, on payment of such conversion charges as may be prescribed:

Provided that the rates of conversion charges may be different for different areas and for different purposes.

(2) The conversion charges so realized shall be credited to the Consolidated Fund of the State or to the fund of the Municipality as may 9

be determined by the State Government.

(3) Such charges shall be the first charge on the interest of the person liable in the land the use of which has been changed and shall be recoverable as arrears of land revenue.”

Section 173-A of the Act as amended by the Amending Act No. 19 of 1999 reads as follows:

“Section 173-A - Restriction on change of use of land and power of the State Government to allow change of use of land.-(1) No person shall use or permit the use of any land situated in any municipal area, for the purpose other than that for which such land was originally allotted or sold to any person by the State Government, any municipality, and other local authority or any other body or authority in accordance with any law for the time being in force or, otherwise than as specified under a Master Plan, wherever it is in operation.

(2) In the case of any land not allotted or sold as aforesaid and not covered under sub-section (1), no person shall use or permit the use of any such land situated in a municipal area for the purpose other than that for which such land use was or is permissible, in accordance with the Master Plan, wherever it is in operation, or under any law for the time being in force.

10 (3) Notwithstanding anything contained in sub-section (1) or sub-

section (2), the State Government or any authority authorised by it by notification in the Official Gazette, may allow the owner or holder of any such land to have change of use thereof, if it is satisfied so to do in public interest, on payment of conversion charges at such rates and in such manner as may be prescribed with respect to the following changes in use:

(i) from residential to commercial or any other purpose; or

(ii) from commercial to any other purpose; or

(iii) from industrial to commercial or any other purpose; or

(iv) from cinema to commercial or any other purpose:

Provided that rates of conversion charges may be different for different areas and for different purposes.

(4) Any person who has already changed the use of land in violation of the provisions of this Act in force at the time of change of use, shall apply to the State Government or any authority authorised by it under sub-section (3), within six months from the date of commencement of the Rajasthan Municipalities (Amendment) Act, 1999 (19 of 1999) for regularisation on said use and upon regularisation of the change of use of land he shall deposit the amount contemplated under sub-section (3).

11 (5) Where the State Government or the authority authorised by it under sub-section (3) is satisfied that a person who ought to have applied for permission or regularisation under this Section, has not applied and that such permission can be granted or the use of land can be regularised, it may proceed to determine the conversion charges after due notice and hearing the party/parties and the charges so determined shall become due to the municipality and be recoverable under sub-section (7).

(6) The conversion charges so realised shall be credited to the fund of the municipality.

(7) Charges under this section shall be the first charge on the interest of the person liable to pay such charges with respect to the land, the use of which has been changed and shall be recoverable as arrears of land revenue.””

9. Statement of Objects and Reasons of the Amendment

Act of 1999 is also relevant to notice, which is to

the following effect:

“The existing provisions contained in Section 173-A of the Rajasthan Municipalities Act, 1959 provide that where any land has been allotted or sold subject to the condition of restraining its use for a particular purpose, to any person by a Municipality or the State Government, the State Government may, if it is satisfied so to do in public interest, allow the owner 12

or holder of the land, to use it for any other purpose other than the purpose for which it was originally allotted or sold, on payment of such conversion charge as may be prescribed.

With a view to ensure planned and regulated development of the urban areas it is necessary to restrict and bar the change of use in certain circumstances of those lands also which were not sold or allotted by Municipality or the State Government. However, the power of the State Government or any other authority authorised by it, to allow change of use of land, on payment of conversion charges is sought to be retained.

With a view to achieve the aforesaid objective, the existing Section 173-A of the Rajasthan Municipalities Act, 1959 is proposed to be substituted.”

10. The demand for conversion charges having been

raised in the present case in the year 2002, the

provisions of Section 173-A as amended by Act 19 of

1999 are applicable in the present case. A perusal of

unamended and amended Section 173-A indicates that

there is substantial change in the statutory

provision of Rajasthan Municipalities Act, 1959.

Prior to amendment, the power of the State Government

to allow the change in the use of land was confined

to a land allotted or sold by Municipality or the

State Government. The amended Section 173-A has not 13

only changed heading of the Section but contents

also. Section 173-A as amended contains restriction

on use of land. Both sub-section (1) and sub-section

(2) of Section 173-A now contain a restriction on

both the categories of land, i.e., (i) originally

allotted or sold by the State Government, any

Municipality and other local authority or any other

body or legal authority; (ii) in the case of any land

not allotted or sold and not covered under sub-

section (1). The restriction is that no person shall

use or permit the use of any such land situated in a

municipal area other than that for which such land

use was or is permissible, in accordance with the

Master Plan, wherever it is in operation. The amended

provision of Section 173-A has been brought on the

Statute book to ensure planned development of a

municipal area. Master Plans are to be prepared

according to the statutory Scheme keeping in view the

future developments of the city and the municipal

area. A clear distinction between the statutory

Scheme under Section 173-A, unamended and amended, is

visible. Earlier the restriction was there only with 14

regard to land, which has been allotted or sold to

any person by a Municipality or the State that too

restriction for land use for any other purpose other

than the purpose for which it was originally allotted

or sold. After the amendment restriction is with

regard to the land use as provided in Master Plan.

Even if prior to amendment in Section 173-A, a person

holding the land which was neither allotted nor sold

to it by Municipality or State could have used the

land for any purpose, the restriction has now been

placed by amended Section 173-A. In the facts of the

present case, even though prior to amendment of

Section 173-A the respondents were using the land for

commercial purposes that user is prohibited by virtue

of restriction brought by amended Section 173-A(2)

for using the land for a purpose other than one which

is permitted under Master Plan, permission of State

or any authority authorised by it, is required as

provided by sub-section (3) of Section 173-A.

11. We need to notice the land use as permissible in

the Master Plan, which was in operation at the 15

relevant time when respondents submitted an

application for sanction of building plan for

commercial-cum-residential complex.

12. The appellants have filed a rejoinder-affidavit

dated 26.07.2019 wherein Jaipur Development Authority

Land Use Plan-2011 has been brought on record as

Annexure-R/1, which indicates that Master Development

Plan was prepared and approved, which Plan for Jaipur

Region came into force with effect from 01.09.1998.

In paragraph 6(c) of the rejoinder-affidavit, it has

been pleaded that the Master Plan 2011 has been

notified on 01.09.1998. It was further pleaded that

with a view to ensure planned and regulated

development, the Master Plan 2011 for Jaipur Region

was notified in which the present area where the

property in question is situated was declared a

‘residential’ area. In the Land Use Plan 2011 of

Master Plan 2011 as per Annexure-R/1 Plot No.21, Lal

Niwas is mentioned as residential as submitted by the

learned counsel for the appellants. 16

13. Learned counsel appearing for the respondents has

submitted that Annexure-R/1 filed by the appellants

along with the rejoinder-affidavit is only a map

which cannot be read to mean that land use of Plot

No.21, Lal Niwas, has been shown as residential

except that it has been marked as residential by

officials of the Corporation. It has further been

pleaded in the rejoinder-affidavit that in Master

Plan 2025, which was brought into force on

01.09.2011, the property in question has now been

earmarked as commercial.

14. In event, the appellants claim that land use of

Plot No.21 in the Master Plan 2011 enforced w.e.f.

01.09.1998 is accepted as residential, the

restriction as imposed by sub-section 2 of Section

173-A as amended by Act, 1999 shall come into force

and for change of land use as given in Master Plan

2011, the respondents were obliged to seek permission

under sub-section (3) of Section 173-A and without

payment of conversion charges, they could not have

obtained sanction map for commercial use of the land. 17

This Court in Municipal Corporation, Rajasthan vs.

Sanjeev Sachdeva and others, (2013) 12 SCC 562, had

occasion to consider Section 173-A as amended by Act

19 of 1999.

15. In the above case also, the respondents therein

had purchased a plot of land with a house on

09.09.2002, situated in a residential area by way of

a registered sale deed. On an application submitted

for conversion of land use from residential to

commercial, certain amount was deposited by the

respondents. The respondents filed a writ petition

challenging the vires of the amended Section 173-A as

well as the demand notice. The writ petition after

some litigation was allowed by the learned Single

Judge and demand notice was quashed. The Division

Bench dismissed the appeal of the Corporation against

which judgment the Municipal Corporation had come to

this Court. This Court while interpreting Section

173-A laid down following in paragraph Nos.11, 12 and

13:

“11. A bare reading of unamended Section 173-A(1) of the Act would indicate that the 18

conversion for change of land use charges could only be realised if the land was allotted by the Municipality or the State Government and there was a condition for restraining use for a particular purpose only. Therefore, in the absence of land being allotted by the State Government/ Municipality and in absence of any specific stipulation regarding use of land, the conversion charges could not be claimed. This was the ratio laid down in Pareshar Soni case, (2007) 14 SCC 144, interpreting the unamended Section 173-A of the Act. The Legislature, with a view to ensure planned and regulated development of the urban area felt it necessary to charge for the change of use in certain circumstances of those lands which were not sold or allotted by municipality or by the State Government, Further, it is also felt that such a change of user be permitted only "in public interest". In this connection, we may refer to the Statement of Objects and Reasons of the Amendment Act, 1999, which reads as under:

“The existing provisions contained in Section 173-A of the Rajasthan Municipalities Act, 1959 provide that where any land has been allotted or sold subject to the condition of restraining its use for a particular purpose, to any person by a Municipality or the State Government, the State Government may, if it is satisfied so to do in public interest, allow the owner or holder of the land, to use it for any other purpose other than the purpose for which it was originally allotted or sold, on payment of such conversion charge as may be prescribed.

With a view to ensure planned and regulated development of the urban areas it is necessary to restrict and bar the 19

change of use in certain circumstances of those lands also which were not sold or allotted by Municipality or the State Government. However, the power of the State Government or any other authority authorized by it, to allow change of use of land, on payment of conversion charges is sought to be retained.

With a view to achieve the aforesaid objective, the existing Section 173-A of the Rajasthan Municipalities Act, 1959 is proposed to be substituted.”

12. Amended Section 173-A not only restricts the change of use of land, as the same has been allotted by the municipality or the State Government, but also put restrictions if the land has been allotted by any other local authority. Section 173-

A(2) covers the cases which are not even covered by Section 173-A(1) and brings in its fold even the change of use of land which is not in consonance with the Master Plan. Further Sections 173-A(1)(2) and (3) also contemplate a situation wherein the State Government is entitled to levy conversion charges if the change in use from one purpose to other purpose. The amendment was necessitated since the State Legislature thought the provision of Section 173-A (unamended) stood as an impediment for proper planning of urban areas. In other words, with a view to ensure planned and regulated development of urban areas, it was felt that some restrictions have to be imposed and it was for that purpose that Section 173-A was amended.

13. We may, in this respect, also indicate that, in exercise of powers conferred under Section 297 read with Section 173-A of the 1959 Act, 2000 Rules 20

were promulgated. It is under the abovementioned Rules that the Respondents filed an application on 16.7.2003 for change of land use from residential to commercial. Following those Rules, the Corporation issued public notice inviting objections. Later, the Land Use Committee met and approved the conversion for which a demand notice of Rs. 5,70,300/- was raised by the Corporation on 2.4.2004. We are of the view that the demand is legal and valid and in accordance with the provisions of Section 173-A, as inserted by Amendment Act 19 of 1999 read with the 2000 Rules. We are also of the view that the Rajasthan High Court has committed an error in applying the judgment of this Court in Pareshar Soni case which was dealing with the unamended provision of Section 173-A.”

16. The law laid down by this Court in the above case

is fully applicable in the facts of the present case.

The present case is also where sub-section (2) of

Section 173-A covers the case.

17. We may also notice one of the submissions

vehemently raised by the learned counsel for the

respondents that the respondents were forced to

deposit the conversion charges, which they deposited

under the protest. The copy of the writ petition

filed by the respondents has been brought on record 21

as Annexure-P/12. In paragraph Nos. 5,6 and 7,

following has been pleaded by the respondents:

“5. That the petitioners intended to get the aforesaid plot of land admeasuring 10067.14 sq.yards which is equivalent to 8420.56 sq. meters, developed by constructing a multi-storeyed commercial-cum-residential complex. In this connection, on having been approached the respondents No.2 & 3 asked to apply with them for land use conversion as a condition precedent so that maps of building plans can be approved for constructing commercial- cum-residential complex.

6. That the respondents No 2 & 3 vide order bearing No.F.13/At.Mu.N.Niyo./ dated 22.02.2003 directed to deposit an amount of 1,01,04,672/- towards conversion charges. The copy of the aforesaid order dated 22.02.2003 is being enclosed herewith and marked as Annexure.2.

7. That in pursuance of the aforesaid order passed by the respondents No.2 & 3, the humble petitioners reserving their rights deposited the amount so demanded i.e. a sum of Rs.1,01,04,672/- through pay order dated 20.03.2003 drawn on City Bank, M.I.Road, Jaipur vide duly filled challan dated 16.1.2003/20.3.2003 under Covering Letter dated 20.3.2003.

Consequently, receipt dated 20.3.2003 was issued from office of respondents No.2 & 3 in proof of said amount having been duly deposited. The photocopy of the Covering letter dated 20.3.2003 along with receipt dated 20.3.2003 and challan dated 16.1.2003/20.3.2003 are being enclosed herewith and collectively marked as Annexure-3.” 22

18. The above pleading of the respondents only

indicates that when they intended to construct multi-

storeyed building for commercial-cum-residential

complex they were told to deposit conversion charges

as a condition precedent for sanction map. Learned

Single Judge in its judgment had noted that the

respondents intended to deposit conversion charges

for the land use as commercial-cum-residential

complex. The submission of the learned counsel for

the respondents that they were forced to apply for

conversion of land use from residential to commercial

does not commend us. Whether the respondents were

liable to deposit the conversion charges is to be

determined in accordance with the statutory Scheme

and statutory requirement. In the event, under the

Statute they were obliged to obtain conversion of

land use from residential to commercial, they were

bound to do the same and the fact that they were

asked by the Corporation to do the same is

inconsequential.

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19. The Division Bench in the impugned judgment has

been unduly led by the fact that land which was

purchased in the year 1959 is being used for

commercial purpose. The Division Bench did not advert

to sub-section (2) of Section 173-A as amended by Act

19 of 1999 and its consequences. The total

consideration of the Division Bench on the entire

case is in paragraph Nos.7, 8 and 9 which are to the

following effect:

“7. We have gone through the property document which shows that the land was purchased in the year 1959 and the same property was used by the company for commercial purposes. In our considered opinion, with a view to avoid any delay in their construction activities, the appellants have paid the amount under protest to the respondents.

8. In that view of the matter, respondents are not entitled for conversion charges and the amount deposited by the appellants is required to be refunded with immediate effect.

9. The respondents are directed to refund the said amount alongwith interest @ 6% within a period of three months from today.

If the payment is not made within a period of three months, the appellants will be entitled for interest @ 9% and difference of 3% will be recovered from the officer who has made delay in making payment.” 24

20. We are of the view that the Division Bench did

not consider the issues raised in the appeal in the

correct perspective and has not adverted to the

effect and operation of the statutory Scheme as

delineated by sub-section (2) of Section 173-A as

amended by Act 19 of 1999. The judgment of the

Division Bench, thus, cannot be upheld.

21. We may also notice that this Court in Municipal

Corporation, Rajasthan (supra)although had allowed

the appeal but gave liberty to the respondents to

take up the issue before the Corporation regarding

land use in the Master Plan which was in operation at

the relevant time. In paragraph No.14 of the

judgment, following has been observed:

“14. The learned Counsel appearing for the respondents, however, submitted that the area in question is notified as commercial area under the Master Plan and, therefore, there is no question of any conversion of the residential property to commercial. We notice that this point was not raised before the High Court and we are, therefore, not called upon to decide that question. However, the Respondents, if so advised, may take up this issue before the Corporation and it is for the Corporation to consider that issue in accordance with law. Appeals are 25

accordingly allowed and the judgments of the High Court are set aside. However, there will be no order as to costs.”

22. In the present case, learned Single Judge has

made following observation:

“It is also not disputed that in the Master Plan area in question is ear marked for commercial use and it is also not disputed the earlier the area in question is used for commercial purpose. Therefore, the petitioner moved application for conversion for approval of map for constructing a commercial building.”

23. Although learned Single Judge made the above

observation, but the judgment does not indicate that

said observations were made after looking into the

Master Plan which was in force at the time of

submission of application by the respondents.

24. The Division Bench did not advert to either sub-

section (2) of Section 173-A or to the land use in

the Master Plan at the relevant time, i.e., in the

year 2002 when the respondents made an application

for sanction of building plan. The appellants

although have brought on record the Land Use Plan

2011, which is in force w.e.f. 01.09.1998 along with 26

their rejoinder-affidavit but since during the

submission learned counsel for the respondents has

contended that the said Land Use Plan 2011 does not

conclusively establish that land use of Plot No.21

was residential, we are, thus, of the view that ends

of justice shall be served in giving liberty to the

respondents to submit a representation before the

Corporation, if there are any materials and grounds

that in the Master Plan which was in operation in the

year 2002, when respondents submitted an application

that land use of Plot No.21, Lal Niwas was not

residential but commercial. Subject to the above

liberty, the appeal is allowed and the impugned

judgment is set aside. Parties shall bear their own

costs.

......................J. ( ASHOK BHUSHAN )

......................J. ( NAVIN SINHA )

New Delhi, August 05, 2019