Land Transfer Case: Disputed Dues Settlement and Interest Compensation

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.


  • 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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  • 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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  • 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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  • 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 Number: C.A. No.-008219-008219 / 2019

Click here to read/download original judgement

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