In a significant ruling by the Supreme Court of India, a case regarding land transfer and disputed dues settlement has been resolved. The case involved M/s. Shankar Saw Mills and the Authority, addressing issues of unearned increase on transferred land value. Stay tuned to learn more about the court’s decision and its implications on such cases.
Facts
- A Committee was constituted by the Government of Bihar to lay down modalities and fees for transfer of industrial estates.
- Appellant-Authority issued a letter to original writ petitioners regarding payment of 15% of the market value for 1.75 acres of land.
- After some correspondence, the amount was deposited on 12.04.2007.
- Recommendations of the Committee included the right for leaseholders to transfer or sell land by paying a fee of 15% of the present market value in case of transfer or sale.
- Office order was issued allowing change in the Constitution of the allottee after taking 15% of the circle rate for the land at the time and other dues payable.
- M/s. Hindustan Coca-Cola Beverages Pvt. Ltd. filed a writ petition against a demand raised, and a communication was sent regarding a change in the name with permission granted on payment of nominal fees.
- Specific order was issued on 12.03.2004 permitting transfer of land on payment of 15% of the prescribed rate.
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Arguments
- Mr. Gaurav Agrawal, counsel for the petitioner, argued that as per the Authority’s scheme, if the original allottee retains 51% shareholding in the company, it will not be considered a transfer, and no unearned increase liability arises.
- No factual evidence has been provided regarding the above argument.
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Analysis
- The case involves the transfer of allotted land by M/s. Shankar Saw Mills to Samras Products Pvt. Ltd.
- The legal issue revolves around the calculation of unearned increase on the transferred land.
- The High Court had ruled that the unearned increase would be based on the land value at the time of allotment plus development charges.
- The appellant-Authority argues for a share in the unearned income when land is commercially transferred.
- The disputed dues of Shankar Saw Mills were not paid for the period 2002 to 2007 due to a stay on Saw Mills licenses.
- The setting up of industrial estates at subsidized rates aimed to boost employment and tax revenue.
- The High Court has recognized the appellant-Authority’s right to recover unearned increase in transferred land value.
- Clause 4(i) of the Lease Deed prohibits the lessee from assigning, mortgaging, underletting, or parting with possession of the land without the lessor’s consent.
- Clause 4(ii) states that no transfer of lease or change in proprietorship or partnership shall be recognized without the lessor’s consent.
- The leasehold rights of Orient Beverages Ltd. were transferred to Bharat Coca-Cola Bottling North East Pvt. Ltd. in 1998 for a premium of Rs. 17,50,000.
- Later, a scheme of amalgamation was undertaken involving several Coca-Cola entities 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.
- In the case at hand, the High Court’s view that the unearned increase can only be charged based on the BIADA value plus development charges is disagreed with.
- The policy of BIADA, which determines the land cost based on the circle rate, is considered legal and valid.
- The individual cases will now be addressed separately.
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Decision
- Transfer date is 10.09.1999 and the value of land for price fixing should be the date of transfer.
- Original writ petitioner paid Rs.4,25,250/-.
- Amount demanded on 10.03.2005 and paid on 12.04.2007.
- Division Bench of the High Court directed the arrangement made for writ petitioner(s) not to be disturbed.
- Civil Appeal No.8219 of 2019 is disposed of accordingly.
- Amalgamation took place on 10.09.1999 for Civil Appeal No.8220 of 2019.
- Appellant entitled to interest at 9% per annum on Rs.4,25,250/- for the period 10.03.2005 to 14.04.2007.
- Appellant not entitled to recover any amount from the respondent(s) despite the law being decided in favor of the appellant.
- Interest to be paid within two months on the specified amount.
- Formal lease deed to be executed by the appellant-authority in favor of original writ petitioner(s) within two months of interest deposit.
Case Title: BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY Vs. AMIT KUMAR
Case Number: C.A. No.-008219-008219 / 2019
