21 August 1996
Supreme Court


Case number: C.A. No.-009281-009281 / 1995
Diary number: 13599 / 1995






DATE OF JUDGMENT:       21/08/1996




JUDGMENT:                             WITH        C.A. No.11539 of 1996 and SLP (C) No.27591 AND         C.A.Nos.9534-35 OF 1995 and 9729-47 OF 1995.                          O R D E R      Application for intervention is dismissed.      Leave granted in the Special Leave Petition.      These appeals  arise form the judgment of the Allahabad High  Court   dated  April   21,  1995  declaring  that  the appellants are  devoid of  power to levy the development fee under the  U.P. Urban Planning and Development Act, 1973 [II of 1973]  as amended  from time  to  time  [for  short,  the "Act"].      The undisputed  facts are  that the appellant authority was constituted  under Section  of the  Act as a development authority. When  the respondents  filed plans  for grant  of sanction  a   demand  was   made  of  them  to  deposit  the development fee.   Calling the demands in question the above appeals came  to be  filed.   Consequently  declaration  was made. In  addition, the  High  Court  also  found  that  the demands for  malva  charges  (stacking  charges)  and  water charges were  violative of  principles of  natural  justice. Acoordingly, it  directed the appellants to give opportunity of being  heard to  the respondents  and then  levy charges. Calling the  decision in question these appeals have come to be  filed.  The  High  Court  concluded  that  there  is  no provision in the Act or the Rules made thereunder, to demand and collect the development fee.      with a  view   to appreciate  the  contentions  of  the counsel on either side and the findings recorded by the High Court, it  is necessary  to consider the relevant provisions of the Act.      Section 4  contemplates that  the State Government may, notification in  the Gazette, constitute, for the purpose of the Act, an authority called "Development Authority" for any development area.  "Development" has been defined in Section 2 (e)  with its grammatical variations, to mean the carrying out of building, engineering, mining or other operations in,



on, over or under land, or the making of any material change in  any  building  or  land,  and  includes  re-development. "Development Area" has been defined in Section 2 (f) to mean any area declared to be development area under Section 3. It has been  empowered, where the Government in exercise of the Power under  Section 3 has declared that any area within the State requires  to be  developed according  to the  plan, to declare such  area to  be  a  development  area.  Section  7 envisages the  objects of  the authority  and gives power to the developing authority to acquire, hold, manage or dispose of a  Land and  any other  property, to  carry out building, engineering, mining  and other  operations, to execute works in connection  with the  supply of water and electricity, to dispose of sewage and to provide and maintain other services and amenities  and generally  to do  anything  necessary  or expedient for  purposes of such development and for purposes incidental thereto. "Amenity" has been so defined in Section 2 (a)  as to  include road,  water supply,  street lighting, drainage, sewerage,  public works and such other convenience as the  State Government may, by notification in the Gazette specify to  be an  amenity for  the purposes of the Act. The expression "engineering  operations" has  been defined under Section 2 (h) and includes the formation or laying out means of access  to a  road or  the lying  out of  means of  water supply. "Means  of access"  has been defined under Section 2 (i) and  include any  means of  access, whether  private  or public, for  vehicles or for foot passengers, and includes a road.      It would  thus be  seen that  the development authority has been  enjoined  to  undertake  the  development  of  the development area  including providing  amenities or carrying out engineering  operations or  providing means of access as envisaged under  the Act  or any other amenities that may be specified by  a notification by the State Government as part of development plans undertaken under the Act      Section 14 in chapter v on "Development of Lands" gives power to  the developing  authority and  provides that after coming into  force of  the plan  in any development area, no development shall  be undertaken or carried out or continued in that  area unless  such development is also in accordance with the  plans. Under  sub-section (1)  thereof, after  the declaration of any area as development area under Section 3, no  development  shall  be  undertaken  or  carried  out  or continued in  that area  by any  person or body (including a department  of   Government)  unless   permission  for  such development has  been obtained  in writing  from  the  Vice- Chairman in  accordance with  the  provisions  of  the  Act. Therefore, before  development is  undertaken in  accordance with the  plan  by  any  person  or  a  body  including  the department of  the Government,  he is  enjoined to obtain in writing from  the Vice-Chairman  sanction for development in accordance with  the provisions of the Act. When the Levy of the development  fee was  charged on  the respondents,  they came to question the power of the authority.      The question,  therefore, is:  whether such  a power is traceable to  the provisions  of the  Act? Section 33 of the Act gives  power to  the development  authority  to  provide amenities or  carry out  development  authority  to  provide amenities or  carry out  development at the cast of owner in the event  of his default and to Levy cess in certain cases. Under  sub-section   (1)  thereof,   if  the   Authority  is satisfied, after  conducting  the  inquiry  as  contemplated therein or  upon report  from any  of its  officers or other information in  its possession, that any amenity in relation to any  land in  development area  has not  been provided in



relation to  that  land  which,  in  the  opinion    of  the authority ought  to have ben or ought to be provided or that any  development  of  the  land  of  for  which  permission, approval or  sanction has  been obtained  under the  Act  or under any other law in force before the Act came into force, has not been carried out then after giving an opportunity to the owners  of the  land or persons providing or responsible for providing  the amenity  a reasonable opportunity to show cause, it   may impose the development charges.  Sub-section (2) contemplates  that if any amenity is not provided or any such  development   is  not  carried  out  within  the  time specified in  the  order,  then  the  Authority  may  itself provide the  amenity or carry out the development or have it provided or carried out through such agency as it deems fit. By operation  of sub-section  (3), all  expenses incurred in that behalf  by the  development authority or the agency are to be  recovered in  the manner indicated in sub-section (4) and the  following sections  the details  of which  are  not material for the purpose of this case.      Section 41 envisages control by the State Government in implementation of  the provisions  of the  Act.   Under sub- section (1) thereof, the Authority the Chairman or the Vice- Chairman shall  carry out such direction as may be issued to it/his from  time to  time by  the State  Government for the efficient administration  of this  Act.   Section  56  gives power to  make regulations   under the Act.  Sub-section (1) thereof provides  that any  Authority may  with the previous approval of  the State  Government,  make  regulations,  not inconsistent with  this Act  and the  rules made thereunder, for the  administration of  the affairs  of  the  Authority. Therefore, the  general power  is available under Section 56 for the Authority to make regulations for the administration of the  affairs of the authority.  In particular sub-section (2) thereof  provides that  despite the  generality  of  the power given in sub-section (1) specific power has been given by way  of regulations  as enumerated thereunder.  Clause i) which is  a residuary  clause provides  for any other matter which has to be or may be prescribed by the regulations.      By operation  of Section  59,   any orders issued under the predecessor  Acts which  are not  inconsistent with  the provisions of  the Act  shall continue  to be  in operation. Under  Section  14  of  the  Uttar  Pradesh  (Regulation  of Building Operations)  Act 1958  [Predecessor Act]  which  is pari materia  with Section  14 of  the Act, regulations have been made which are not inconsistent with that of Section of plans and  statements.   Condition (vii)  provide  that  the applicant has  entered into an agreement with the local body concerned for  the development of the land and for provision of  other  amenities  and  has  either  deposited  the  full estimated cast  of the  development and  provision of  other amenities with that local body in advance or has given to it a bank  guarantee equivalent  to such  cost, or  has entered into an  agreement with  the local  body, providing that the full cost  thereof may  be realised  by it  out of the sale- proceeds of  the plots  that any  such agreement between the applicant and the local body may provide for any part of the development and  provision of  other amenities being carried out by  the applicant  himself, however,  that in respect of any such  part he  shall give adequate security to the local body to  secure that  he shall  carry out  such part  of the development and  provide other  amenities in accordance with the   approved   standards   and   specifications   to   the satisfaction of  the Controlling Authority. Under the second proviso also, power has been given to secure mortgage of the entire land to be developed in favour of the local authority



as a  condition for  granting sanction with an agreement for providing the  amenities and if the plots are to be released for sale  by the mortgagor then the amount has to be paid as prescribed thereunder, the details of which are not material for the purpose of this case.      A reading  of these  provisions, would clearly indicate that in  a development  area when  an owner  or  body  or  a department of the government undertakes to develop the land, two options  are open  to the  development authority namely, either it may itself undertake to provide amenities or other means of  access, engineering corporations as provided under the Act or as a condition to grant sanction it can call upon the person  who undertakes  development or  the body  of the developers who  undertake development  to deposit the amount required for such development or providing amenities etc.      In the light of direction 7 of the directions issued in the regulations  the owner  or the  body or the developer is enjoined either  to deposit the amount demanded or give bank guarantee  or   mortgage  the  property  in  favour  of  the Development Authority  so that  it could  secure  sufficient security in advance for overseeing the development including providing amenities  as a  scheme of  the development as per the sanction.  It is  settled law  that levy  of  fee  is  a compulsory exaction  for services  rendered as quid Pro quo. It is  seen that the Development Authority is enjoined under the Act  to undertake planned development of the development area in  accordance with  the provisions of the Act. When it undertakes such a development it carries out the development as per  the plan either itself or through any person or body which undertakes  to develop the land in accordance with the sanction  plan   in  which   case  necessary  conditions  to safeguard  providing   the  amenities  are  required  to  be secured.      Thus considered,  we hold  that Act  specifically gives such a  power. It  is true  that under  Article 265  of  the Constitution no  tax can  be levied without any authority of law. There is on the proposition of law. There is no quarrel on the  proposition of  law. In this case, from a reading of the aforesaid  provisions it clear that the statute, instead of prescribing the rate of developmental charges itself, has given power  to the  rule-making authority  to regulate  the collection of  and payment  for development  fee. It is seen that under  the direction which is not inconsistent with the provisions of the Act, it indicate the method and the manner in which  the collection  is to be secured so as to see that the area  is developed  in  a  planned  manner  as  per  the sanctions given  by the competent authority. The High Court, therefore, was  clearly in error in holding that there is no provision under the Act or the Rules to levy the development fee.      The High  court has  relied upon  the judgment  of this Court in  Ahmedabad Development  vs. Pasawalla [(1992(3) SCR 328]. The said ratio has no application to the facts in this case. In that case, it was found as a fact that there was no express provision  for levy  and demand of the developmental charges. They  sought to  rely on  the doctrine  of  ejusdem generis as  a source  to levy  the development fee. The High Court having noticed that the authority under Section 19 has the heads  enumerated in subsection (1) of Section 91 as the source of  funds. This  Court found  that  the  doctrine  of ejusdem generis  cannot be  applied to  levy and  charge  of development fee.      In The  Hingir-Rampur Coal  Co.Ltd. vs.  The  State  of Orissa [(1961)  2 SCR  537], a  Constitution Bench  of  this Court has held that a fee is levied essentially for services



rendered and  there must  be an  element  of  quid  pro  quo between the person who pays it and the public authority that impose it. The public authority had the power to levy fee in respect  of  the  service  rendered.  Therefore,  compulsory exaction by levy of fee was not ultra vires the power of the authority.      It is sought to be contended for the respondents by the learned counsel  that there is no express provision and that neither Section  33 or Section 41 can be fallen back upon to levy development  fee.   It is  true that express mention is not made  either in  Section 33  or  Section  41:  but  when Section 14  and Section  56(2) are  read together,  it gives right and  power to  the sanctioning  authority to  impose a condition to the grant of sanction for execution of the plan in a  development area  by imposing  the condition of either payment in  advance towards  the cost  of the  amenities  or means of  access etc, or give bank guarantee or mortgage the plot  which   is  to   be  development  etc,  as  enumerated hereinbefore.   Therefore, the  learned counsel is not right in contending  that there  is no  provision under the Act to demand payment  or bank  guarantee towards  the  development charges of the amenities.      The High Court has pointed out that the appellants have no power to demand stacking charges (malva charges) or water charges in advance even before starting the construction. We are of the view that the High Court is right in that behalf. If and  when any  person uses any public place or street for stacking the  material for construction, it would be obvious that such  person is required to obtain prior permission for user and  as a  condition he  has to  pay the  necessary fee prescribed in  that behalf  or when  he uses  the water  for construction of  the building, necessarily he has to pay the water charges  as per  the prevailing rates.  But that would be a  matter as  and when  the material  was stacked  on the public street  or at  the public  place or water was in fact used.   Therefore, the  authority have  no power  to levy in advance the charges for stacking the material or user of the water.      It is to be seen that as regards the Agra Development Authority’s  deemed   for  payment  of  Rs.17.33.245/-,  the direction  issued   by  the   Division  Bench  is  that  the respondent  should  give  bank  guarantee  at  the  rate  of Rs.180/- per  sq. mtr.  and to  undertake to pay the balance amount  on his succeeding in that appeal now pending in this Court. In  view of  the above  law, the  learned counsel has rightly undertaken to give the bank guarantee for the amount demanded at  the rate  of  Rs.500/-  per  sq.mtr.  i  n  the impugned demand  which works  out to  Rs.17,33,245/-. We are informed that he has already given the bank guarantee at the rate of  Rs.180/- per  sq.mtr. After deduction of the amount of that  bank guarantee,  for the  balance  amount  also  he should give  the bank guarantee, for the balance amount also he should  give  the  bank  guarantee.  On  his  giving  the guarantee for  the  balance  amount,  the  Agra  Development Authority  would  release  the  sanction  of  the  pain  for execution. The  bank guarantee  will  remain  in  force  and should be  kept alive  till the  development of the area and satisfactory  completion   certificate  is   issued  by  the competent authority  in accordance  with the  rules. In  the event of  his completing  the development  and providing all the amenities  according to  the sanctioned  plan, the  bank guarantee given would get discharged.      The  appeals  are  accordingly  allowed,  but,  in  the circumstances, without costs.