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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.