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PETITIONER: NAGPUR IMPROVEMENT TRUST

       Vs.

RESPONDENT: NAGPUR TIMBER MERCHANTS ASSOCIATION & ANR.

DATE OF JUDGMENT:       18/03/1997

BENCH: S.C. AGRAWAL, S. SAGHIR AHMAD

ACT:

HEADNOTE:

JUDGMENT:             [WITH CIVIL APPEAL NO. .2036 OF 1997      (arising out of S.L.P. (Civil) No. 5594 of 1993)]                       J U D G M E N T S.C. AGRAWAL, J.      Special leave granted.      These appeals raise common questions for consideration. The Nagpur Improvement Trust, the appellant herein, has been constituted under  the provisions  of the Nagpur Improvement Trust Act,  1936 enacted  to  provide  for  improvement  and expansion  of  the  town  of  Nagpur.  The  said  Act  makes provisions for  acquisition of land by the Improvement Trust in connection  with various  schemes which are framed by the Improvement Trust. After development the land is disposed of by the  Improvement Trust.  The disposal  of lands vested in the Improvement  Trust is governed by the Nagpur Improvement Trust (Land  Disposal) Rules,  1955 (hereinafter referred to as ’the Rules’) made by the State Government, in exercise of powers conferred  by Section  76 read with Section 89 of the Nagpur Improvement  Trust Act,  1936. Rule  3  provides  for transfer  of   land  of  Improvement  Trust  by  (a)  direct negotiation with  party; (b)  public  action;  (c)  inviting tenders; and  (d) concessional rates. Rule 4 prescribes that the land  shall be  disposed of  at a premium to be fixed in accordance  with   the  provisions   contained  therein.  In addition to the amount of premium, the annually. Rule 7 lays down that  every  transfer  of  Improvement  Trust.  If  the purchaser  by   an  application   in  writing  requests  the Improvement Trust to convert the period of lease from thirty years to  ninety nine years, the Improvement Trust may do so after charging  in addition  15% of  the premium  fixed  for thirty years of lease with proportionate increase in annual ground  rent.   In  certain   specified  circumstances   the Improvement Trust  can dispose  of land  by outright sale or exchange. Rule  9 of  the Rules,  which is  relevant for the purpose of this case, reads as under :-      "Rule  9.  Where  land  revenue  is      payable in  respect of  any plot so      transferred such land revenue shall      be payable by the Trust."      The other  provisions of  the Rules  have no bearing on

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the matter in issue.      The respondents in these appeals are lessees in respect of lands  of the Improvement Trust. Under the terms of Lease Deed they are liable to pay the amount prescribed therein as premium and  ground rent  periodically. Clause  1(b) of  the Lease Deed contains the following provision :-      "(b) The  lessee shall from time to      time and  at all  times during  the      said term  pay  and  discharge  all      rates,    taxes     charges     and      assessments of every description or      imposed upon  the said  land hereby      demised  or  the  building  erected      thereupon or  upon the  landlord or      tenant in respect thereof."      In  1978   the  Government   of  Maharashtra  initiated proceedings for  assessment and recovery of non-agricultural assessment charges  under the  provisions of the Maharashtra Land Revenue  Code, 1996  (hereinafter referred  to as  ’the Land Revenue  Code’). Non-agricultural assessment charges in respect  of  the  plots  which  had  been  allotted  by  the Improvement Trust to the respondent-lessees were demanded by the  State   Government  from  the  Improvement  Trust.  The Improvement Trust,  as per  clause 1(b)  of the  Lease  Deed asked  the   lessees  to   the  make  payment  of  the  non- agricultural assessment  charges in  respect of their lands. The respondents  and filed Writ Petitions in the Bombay High Court Nagpur  Bench, challenging  the said  demand  of  non- agricultural assessment  from them. The Writ Petitions which have given  rise to  Special Leave  Petitions  (Civil)  Nos. 11018-23 of  1992 were  disposed of  by the  High Court by a common judgment  dated September  3, 1991  whereby the  High Court has  allowed the  said Writ  Petitions and has quashed the recovery notices issued by the Improvement Trust and has restrained the  Improvement Trust  from making  recovery  of non-agricultural assessment  from the plot holders, like the respondents or  their members.  The High Court has held that non-agricultural assessment  is nothing but land revenue and in view  of Rule  9 of  the Rules  the Improvement  Trust is liable to  pay the same and it could not recover it from the lessees. The High Court has further held that clause 1(b) of the Lease  Deed does  not include payment of land revenue by the  lessees   of  plots  held  by  them  and  that  such  a construction of  the said clause would be in consonance with Rule 9  of  the  Rules  and  that  if  the  said  clause  is interpreted to  include even  land  revenue  then  the  said clause would  be against Rule 9 which provides that the land revenue of  the plot  transferred to  the  lessees  is  made payable by  the Improvement  Trust and  no one else and that the burden  that is  statutoril fixed under Rule 9 cannot be shifted to others as is sought to be done by the Improvement Trust. The  High Court  has also  observed  that  since  the respondents or their member had no notice about the fixation or assessment beir undertaken, they could not participate in those proceeding  and that  the Improvement  Trust failed to get proper  fixated done  because it took no interest in the proceedings and  the in  these  circumstances  no  liability could be fastened up the lessees.      Writ Petition No. 2351 of 1982, which has given rise to Special  Leave  Petition  (Civil)  No.  5594  of  1993,  was disposed  of  by  the  High  Court  by  its  judgment  dated September 6, 1991 on the basis of the earlier judgment dated September 3, 1991 referred to above.      Shri V.A.  Bobde, the  learned senior counsel appearing for the Improvement Trust, has urged that the High Court was

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in error in holding that non-agricultural assessment is land revenue Trust  alone which  is bound to pay the said charges and it  cannot require  the lessees  to pay  the same.  Shri Bobde has  also placed  reliance on clause 1(b) of the Lease Deed  and  has  submitted  that  the  Improvement  Trust  is entitled to  require the lessees to pay the non-agricultural assessment that  is being  recovered by the State Government from the  Improvement Trust  and that  the High Court was in error in  holding that in view of Rule 9, clause 1(b) of the Lease Deed cannot be construed to impose such a liability on the lessees.      The learned counsel appearing for the respondents have, on the  other hand,  urged that  the High  Court has rightly construed the  expression "land  revenue" in  Rule 9  of the Rules to  include non-agricultural  assessment and  that  in view of  the mandate  in Rule 9, the Improvement Trust alone is liable  to pay  non-agricultural assessment and it cannot pass on  the liability  for the  same to  the  lessees.  The submissions. of  the learned  counsel is that clause 1(b) of the  Lease   Deed  cannot  be  construed  as  entitling  the Improvement Trust  to require  the lessees  to pay  the non- agricultural assessment  and that,  if  clause  1(b)  is  so construed, it  would be  inconsistent  with  the  provisions contained in Rule 9 of the Rules.      We will  first examine  the question  whether Rule 9 of the Rules  precludes the  Improvement Trust  to require  the respondent-lessees to pay the amounts sought to be recovered from the  improvement Trust  by the State Government as non- agricultural assessment  in respect  of the plots leased out to the  respondents. For  purpose, we  will proceed  on  the basis that  the expression "land revenue" in Rule 9 includes non-agricultural assessment.  A perusal of Rule 9 shows that it governs the relationship between the State Government and the Improvement  Trust in  the matter  of recovery  of  land revenue payable  in respect  of lands  disposed of under the Rules. The  said Rule  imposes the liability for the payment of land  revenue in  respect of  the lands disposed of under the Rules  on the  Improvement Trust. As a result, the State Government can  recover the  land revenue payable in respect of the  lands so  disposed of from the Improvement Trust and it need  not take  proceedings for  recovery  of  such  land revenue from  the transferees of the lands that are disposed of under  the  Rules.  But  that  does  not  mean  that  the Improvement Trust  cannot  pass  on  its  liability  to  the lessees in  respect of the land revenue payable by it to the State Government  in respect  of the  lands that  have  been transferred to  the lessees.  The High  Court has  construed Rule 9 to mean that the land revenue in respect of the plots transferred to the lessees has to be paid by the Improvement Trust and  no one  else and  that the  said burden  which is statutorily fixed  under Rule 9 cannot be shifted to others. We find  no warrant  for adding  the words  "no one else" in Rule  9  so  as  to  preclude  the  Improvement  Trust  from requiring the  lessees to  pay the  land revenue  which  the Improvement Trust is required to pay to the State Government in respect  of the  lands that  have been transferred to the lessees. Under Section 114 of the Land Revenue Code the rate of non-agricultural  assessment in respect of lands in urban areas is  one-half the standard rate if the land is used for the purpose  of industry  and it is thrice the standard rate in other urban areas if the land is used for the purposes of commerce. The  possibility cannot be excluded that amount of the non-agricultural  assessment payable  in respect  of the plot of  land disposed  of by  the Improvement Trust may, in the course of time, exceed the amount of the premium that is

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paid by the lessee at the time of grant of lease and, if the Improvement Trust is precluded from recovering the amount of non-agricultural assessment  from the  lessee, it may end up paying more  by way  of non-agricultural assessment than the amount received  by it  as premium  for the  land. By way of illustration we  may refer  to the  Lease Deed dated October 15, 1956  (Annexure ’H’ to the S.L.P.) executed in favour of Arya Pratinidhi  Sabha (petitioner in Writ Petition No. 2265 of 1982  before the  High Court). The amount of premium paid by the lessee was Rs. 6,534/- in respect of a plot measuring 7,286 square  feet and  the ground  rent is Rs. 10 per year. The letter of demand dated May 29, 1982 (Annexure ’I’ to the S.L.P.) shows  that the  non-agricultural assessment payable in respect of the said plot @ Rs. 270.70 for the period from 1956 to  1982 was Rs. 7038/-. The amount of non-agricultural assessment payable  for the plot for the period from 1956 to 1982 thus  exceeds the  premium that  was  received  by  the Improvement Trust  from the  lessee. Surely  it could not be the intention  of the  rule making  authority in Rule 9 that the Improvement  Trust shall  finance the lessees in respect of lands  that are  disposed by  the Improvement Trust under the Rules.      The High  Court has  also referred to the provisions of Rule 11  of the  Land Disposal  Rules, 1983  wherein  it  is expressly stated  that the  lessee during the continuance of the  lease   shall  pay   land   revenue,   non-agricultural assessment and  cesses assessed  or which may be assessed on the demised  land. The  fact that  under Rule 11 of the Land Disposal Rules,  1983 it  is  expressly  provided  that  the lessee  is  liable  to  pay  land  revenue  non-agricultural assessment in respect of land held by him does not mean that in the  absence of  such an  express provision Rule 9 of the Rules must  be construed  to mean  that the  lessee  is  not liable  to  pay  land  revenue  non-agricultural  assessment assessed on  the demised  land. As indicated earlier, we are of the opinion that Rule 9 of the Rules did not preclude the Improvement  Trust  from  recovering  from  the  respondent- lessees the amount of non-agricultural assessment payable by it to the State Government in respect of lands leased out to respondent-lessees. Since  we have  held that  Rule 9 of the Rules did  not preclude the Improvement Trust from requiring the respondent-lessees to pay in respect of the lands leased out  to   them   non-agricultural   assessment   which   the Improvement  Trust   was  required   to  pay  to  the  State Government, we do not consider it necessary to deal with the question whether  the expression  "land revenue"  in Rule  9 includes "non-agricultural assessment".      The High Court has observed that liability could not be passed on  to the  lessees because they had no notice of the proceedings  regarding   fixation  or   assessment  of  non- agricultural assessment  and they  could not  participate in the proceedings.  It is  no doubt  true that at the stage of assessment of  amount of  non-agricultural assessment notice had only  been issued  to  the  Improvement  Trust  and  the lessees had  no notice  of the  proceedings and  they had no opportunity of  placing  their  case  before  the  concerned authorities. The grievance of the respondents in this regard would be  redressed if  they are  afforded an opportunity of making their  representations against  determination of non- agricultural assessment  in respect  of plots  leased out to them and,  in case  such representations  are  made  by  the lessees,  the  same  are  given  due  consideration  by  the concerned authority.      In the  result, the  appeals are  allowed. The impugned judgments of  the High  Court are  set aside  and  the  Writ

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Petitions filed  by the  respondents in  the High  Court are disposed of  with the  direction that  it is permissible for the Improvement  Trust to  require the respondent-lessees to pay the  amount of non-agricultural assessment in respect of the lands  leased out to them. It would, however, be open to the respondents  to  submit  their  representations  to  the concerned  authority   against  the  determination  of  non- agricultural assessment  in respect  of lands  leased out to them and, if such representation is made within one month of this judgment,  the same shall be given due consideration by the concerned  authority and it should be disposed of within a period  of two  months from  the date of submission of the representation. The  recovery of non-agricultural assessment shall not  be made from the respondent-lessee/lessees making the representation till the representation is disposed of by the concerned authority. No order as to costs.