Sushil Kumar Nagrath vs State Of U.P. And Another
2021 Latest Caselaw 1158 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


 
							 AFR	
 

 
							Court No. - 29
 

 
					Writ - C No. 21540 of 2020
 

 
Petitioner :- 			Sushil Kumar Nagrath
 
Respondent :- 			State of U.P. and others
 
Counsel for Petitioner :- 	Rohan Gupta
 
Counsel for Respondent :- C.S.C., M.C. Chaturvedi, Shivam 						Yadav
 

 

 
Hon'ble Pankaj Naqvi, J.

Hon'ble Piyush Agrawal, J.

Heard Sri Rohan Gupta, learned counsel for the petitioner, Sri M.C. Chaturvedi, the learned Senior Counsel assisted by Sri Shivam Yadav for respondent no.2 and the learned standing counsel for the State.

The moot issue involved in this petition is as to whether NOIDA is empowered to levy transfer charges on conveyance executed by its lessees / sub-lessees.

1. Learned counsel for the petitioner has challenged the levy principally on the ground that it has no statutory flavour as also the lease deed dated 29.1.1990 contains no such power or authority to levy transfer charges in respect of subsequent conveyances. He places reliance on the decisions of the Apex Court in Ultratech Cement Ltd. v. State of Maharashtra and Another, (2011) 13 SCC 497 and Tata Iron and Steel Company Limited and another vs. State of Bihar and another, (2018) 12 SCC 107.

2. The learned Senior Counsel for the respondent - authority opposed the submission on the ground that levy of transfer charge is not a tax but a fee which the authority is empowered to collect under the terms of the lease deed dated 29.1.1990.

3. A lease deed dated 29.1.1990 was executed by NOIDA (lessor), an authority constituted under Section 3 of the U.P. Industrial Area Development Act, 1976 in favour of the Army Welfare Housing Organization (AWHO- the lessee), in respect of the plot of land.

4. The petitioner, a sub-lessee intended to transfer the property in favour of one Rajiv Kumar Singh under an agreement to sell dated 4.9.2013 applied before NOIDA seeking permission, the authority under orders dated 21.10.2019 and 9.1.2020 granted requisite permission but subject to payment of 5 % of the circle rate as transfer charge.

5. We by our order dated 11.1.2021 called upon learned counsel for the authority to place on record a copy of the lease executed by the NOIDA in favour of AWHO (original lessee) and in compliance thereto a xerox of the same (lease deed dated 29.1.1990) is placed on record, after showing / serving a copy thereof to learned counsel for the petitioner who did not challenge the correctness thereof.

6. The relevant clause which binds the lessee (AWHO) and its sub-lessees under the above deed are sub-clause (c) and (d) of Clause (I) which are extracted hereunder:

(c) That the lessee shall in no case assign relinquish (except in favour of the lessor), let, transfer, or part with possession of the demised premises to any one except, by way of conveyance deed as provided in this lease, to the cooperative society of the registrants or directly to the individual registrants of the lessee. Any subsequent transfer by the allottees with prior permission in writing of the AWHO or cooperative society (as the case may be) and NOIDA, and will be subject to condition of payment of transfer charges to the lessor as levied from time to time but subject to a maximum of 25 % of the unearned increase in the value of the property and these will not be more than the transfer charges being recovered by the lessor (NOIDA) from its direct allottes.

(d) This lease deed will form a part of sub-lease executed between the AWHO and cooperative society or the individual allottees (as the case may be) all conditions contained herein are binding on the sub-lessor / registrant allottee also.

7. Similarly, the lessee (AWHO) under sub-clause (b) of Clause -3 agreed to the following covenants:

(b) The sub-lessee shall be liable to pay all rates, local taxes, charges and assessment by whatever name called for every description in respect of plot of land or building constructed thereon assessed or imposed from time to time by the lessor and / or any authority / Government.

8. A perusal of sub-clause (c) of Clause 1 as aforesaid would manifest that an allottee of AWHO i.e. a sub-lessee had to obtain prior permission in writing of the lessee or a cooperative society as the case may be, and that of NOIDA, the lessor before any transfer is effected by the allottee/sub-lessee. This transfer is subject to a condition of payment of transfer charges to the lessor i.e. the NOIDA as levied from time to time but subject to a ceiling of 25 % of the unearned increase in the value of the property which will not be more than the transfer charges to be recovered by the NOIDA from its direct allottees. Sub-clause (d) of Clause-1 provides that the lease deed dated 29.1.1990 will form a part of subsequent sub-lessee and all conditions contained in the lease deed dated 29.1.1990 shall be binding on the sub-lessee and the registrant allottee.

9. Sub-clause (b) of clause -3 further binds the sub-lessee with a liability to pay all rates, local taxes, charges and assessments by whatever nomenclature in respect of the property assessed or imposed from time to time.

10. It is well settled that tax and fee are compulsory mode of exaction and to that extent there is no generic difference between the two but in the case of former, there may not be any liability to render any service / amenity while latter presupposes delivery of service / amenity, thus there is an element of quid pro quo.

11. The U.P. Industrial Area Development Act, 1976 has been enacted to provide for the constitution of authority for the development of certain areas in the State of Uttar Pradesh into industrial and urban township and for matters connected therewith. Once an authority is established, it is expected to provide amenities such as road, water supply, street lighting, power supply, sewerage, drainage connection, disposal of industrial waste, town refuse and other community services.

11. Section - 6 of the Act provides functions of the authority which essentially is a planned development of industrial development area. To achieve the above purpose, the authority is empowered to acquire land, prepare plan for development, provide amenities and in particular to allocate and transfer by way of sale and lease or otherwise plots of land for industrial / residential purposes.

12. Section - 7 of the Act in so far is relevant for the present case is extracted hereunder:-

7. Power to the Authority in respect of transfer of land. - The Authority may sell, lease of otherwise transfer whether by auction, allotment or otherwise any land or building belonging to the Authority in the industrial development area, on such terms and conditions as it may, subject to any rules that may be made under this Act, think fit to impose.

13. A perusal of the aforesaid manifests that the authority while executing a conveyance can put the lessee to such terms and condition as it may, subject to any rules, that may be made under this Act, think fit to impose.

14. We, after carefully perusing Section -7 of the Act, are of the considered view that once terms and conditions, have been incorporated in the conveyance, the said incorporation cannot be faulted on the ground that no rules have been framed under the Act.

15. Learned counsel for the petitioner has not challenged the levy on the premise that no amenity / service is being rendered by the authority, rather the challenge is only on the ground that the levy has no statutory sanction.

16. To answer the challenge, we will have to revert to the original lease dated 29.1.1990 which contained an express covenant that on every subsequent transfer, transfer charges would be made at a certain rate with a ceiling limit of 25 % of the market value vide sub-clause (c) of Clause-I. There is an additional covenant in sub-clause (d) of Clause-I that all conditions which of course would include transfer charges shall be deemed to have been contained in the subsequent conveyances so that NOIDA gets an unfettered right to collect the said amount on every subsequent transfer from new sub-lessees to discharge its obligation for rendering services and providing amenities in the area. A covenant attached to the land runs with the land. The petitioner fully cognizant of the aforesaid covenant voluntarily obtained sub-lease cannot now take a somersault. Levy is under a contract executed by an instrumentality of State.

17. Learned counsel for the petitioner on the strength of the authorities cited above, submitted that no fee could be collected without authority of law. We do not dispute the said proposition but the same would have no application in the present case as the said levy is under a deed executed by NOIDA i.e. a state instrumentality with an express covenant which is to run with the land which is also fortified by the decision of the Apex Court in NOIDA vs. Army Welfare Housing Organization and others, (2010) 9 SCC 354 wherein it held as under:

29. We are, therefore, of the opinion that in this background the impugned notices postulating the execution of tripartite deeds flows not only from the clauses of the lease deed executed between the NOIDA and AWHO but also from the supervisory authority which is placed on NOIDA by virtue of the provisions of Section 7 of the 1976 Act. The observation of the High Court that the structures built on funds provided by the sub-lessees is to our mind of no consequence. Even assuming that such was the position, this was an arrangement inter-se AWHO and its members and would not detract from the obligations placed on AWHO and the sub- lessees to execute tripartite deeds.

18. A perusal of the aforesaid judgment would indicate that the Apex Court held that conditions contained in the original deed will be binding on the sub-lessee.

19. We are, thus, of the considered view that even though transfer charge may not be having a statutory flavour in its traditional sense as urged by learned counsel for the petitioner but once NOIDA an instrumentality of State in exercise of its supervisory power under Section 7 of the Act, stipulates a condition of payment of transfer charges to be paid to NOIDA, lessor on every subsequent transactions and makes the said stipulation binding on subsequent sub-lessees, it becomes a contractual liability for all sub-lessees to comply with the same.

No other plea is urged.

The writ petition lacks merit and is dismissed.

Order Date:- 20.1.2021

Chandra

(Piyush Agrawal, J) (Pankaj Naqvi, J)