Indian Register Of Shipping And ... vs State Of Maharashtra And Ors.
2004 Latest Caselaw 836 Bom

JUDGMENT

Rebello F.I., J.

1. Petitioners by an order of grant dated 24-1-1985, were allotted Government land in village Kopari Survey No. 1 pt., admeasuring 24281 sq. mtr. The grant was subject to amongst others, the following terms and conditions: -

(i) the grantee shall pay to Government the provisional occupancy price of the land of Rs. 22,74,990/-.

(ii) the grantee shall pay to Government the interest at the rate of 8% per annum over and above the amount of occupancy price as determined in condition No. 1 above, from the date of taking over possession of the land till the date of payment of the occupancy price.

(xi) the grant shall be subject to the conditions laid down in Rules 31 and 41 of the M.L.R. (Disposal of Government Lands), 1971 and such other conditions deemed fit by the Collector.

In the agreement entered into, Clause 7 read as under:-

"Provisions of the Maharashtra Land Revenue Code, 1996 applicable:

The provisions of the said Code and all Rules and orders for the time being in force thereunder shall apply to our occupation of the said land so far as the same may be applicable."

In Schedule II, Clause 2(b) and 2(c) provided as under:-

(b) the grantee shall pay to Government the provisional occupancy price of the land of Rs. 22,74,990/- (Rs. Twenty Two Lakh Seventy Four Thousand Nine Hundred Ninety Only);

(c) the grantee shall also pay to Government the interest at the rate of Rs. 8% per annum over and above the amount of occupancy price as determined in condition No. (b) above, from the date of taking over possession of the land till the date of payment of occupancy of price;

(d) in case the final value is more than the amount of provisional occupancy indicated in condition (b) above, the grantee shall pay the difference in provisional and final occupancy price and shall also pay interest at 8% per annum on such difference from the date of taking over possession of the land till payment of final occupancy price of the land;

(1) the grant shall be subject to the conditions laid down in Rules 31 and 41 of the Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971 and such other conditions deemed fir by the Collector;

2. The petitioner paid the sum of Rs. 22,74,990/- towards the provisional possession and possession was also been given to the petitioner's on 12-4-1983.

It is the case of the petitioner that they were surprised to receive letter dated 1-1-1997 from the respondent. Under Item 7, of the letter the respondent claimed interest @ 15% per annum from 1-7-1992 to 7-12-1996 in the sum of Rs. 49,48,976=56. In response to that letter the petitioners by their letter dated 7-2-1997 addressed to the respondents pointed out that in the allotment letter issued to the petitioners and in the agreement signed by them, interest was provided only @ 8% p.a. and consequently, respondents were not entitled to claim or charge interest @ 15% per annum. There is some dispute with regard to valuation, which need not be adverted to as that issue has not been raised at the time of hearing of the petition. In response to the letter, petitioner's received a reply on 14-3-1997, pointing out that the final price of the land is charged as per the prevailing Government rate and sofar as interest is concerned, it is charged as per the orders issued by the Government from time to time and no concession could be made in favour of the petitioner. Further correspondence was exchanged. In the meantime, on account of failure by the petitioners to pay the interest, as deemed, the Tahsildar by letter dated 29-7-1998 after setting out various amounts paid by the petitioners set out that balance amount due was in the sum of Rs. 23,09,534/-. The petitioners were called upon to pay the amount within 3 days, failing which proceedings for recovery would be initiated under provisions of Land Revenue Code. The petitioners represented against the same. Representation then was also made to the Principal Secretary, Revenue. However, no relief was granted in favour of the petitioner. By letter of 30-9-1998, the Bank of Baroda informed the petitioners of an order dated 29-9-1998 issued by the office of Tahsildar attaching their amount of Rs. 23,09,534/-. The petitioners were therefore, called upon to make immediate arrangements, or alternatively they would debit petitioners current account with the said sum. As the amount was not paid, by letter of 10-10-1998, office of Tahsildar informed the Manager, Bank of Baroda that the bank account of the petitioners be frozen. It is not necessary to refer to the other correspondence. Suffice it to say that the petitioners have thereafter filed the present petition. Rule was issued on 14-8-2001. The order of status quo granted on 1-8-2001 was continued till the hearing and final disposal of the matter.

3. A reply has been filed on behalf of the respondents by Shri Ashok Ahilu Pawar, Additional Chitnis in the office of Collector, Mumbai Suburban District. After adverting to the various documents, it is pointed out that the Government of Maharashtra had issued resolution dated 30-6-1992, thereby fixing the rate of interest to be levied for the recovery of arrears of payment of the final occupancy price under the Maharashtra Land Revenue Code @ 15% per annum instead of 8% per annum. The demand, therefore, according to the respondents is based on this resolution of 30-6-1992 and that demand is in conformity with the various documents, wherein the land was given to the petitioner. Translated copy of the G.R. has been available.

4. At the hearing of the petition, on behalf of the petitioner, their learned Counsel contends that there is no provision under the Maharashtra Land Revenue Code, 1966 or the Maharashtra Land Revenue (Disposal of Government Land), 1971, for charging of interest or enhancing of interest. It is there- fore, submitted that it is the terms of the order of allotment/provisional grant, which will govern the term's between the parties. In the instant case, when the Government had decided to grant the land to the petitioners, the interest payable was 8%, which was payable in view of the terms of the grant and agreement between the parties. The subsequent G.R., which is sought to be relied on by the respondents is of 30-6-1992, will only apply in respect of those grants and/or leases, which are made on or after 30-6-1992 or thereafter. Even otherwise, it is pointed out, invoking the doctrine of promissory estoppel that the respondents are estopped after having held out to the petitioners that the interest chargeable would be 8% from making the demand at the higher rate of interest® 15%. It is pointed out that land and possession was taken based on the terms of the allotment and that the petitioner's thereby materially altered their position. The respondent now cannot charge the rate of interest. Reliance for that purpose is placed 6n the judgment of the Apex Court in the case of The Gujrat State Financial Corporation v. M/s. Lotus Hotels Pvt. Ltd., in the case of M/s. Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay, A.I.R. 1981 S.C. 1642 and the case of Kumari Srilekha Vidyarthi v. State of Utter Pradesh and Ors., . It is submitted that a demand made by the respondents is without jurisdiction. The petitioners are not bound to pay the same and consequently, petitioners are entitled to reliefs as prayed for in their petition.

5. On the other hand, on behalf of the respondents, their learned Counsel admits that there is no provision providing for charging of interest under the Land Revenue Code and/or the Rules. It is however, submitted that there is enabling power in the Government to pass resolution provided for charging of interest on Government lands and even otherwise, under the administrative powers of the State. It was, therefore, open to the State Government to increase the interest and once that be the case and considering the terms of the offer and agreement, whereby the petitioners agreed to abide by the provisions of Land Revenue Code and/or Rules framed thereunder, the petitioners now can not contend that they were not bound to pay the interest @ 15%.

In answer to the contention of the petitioners, invoking the doctrine of promissory estoppel, it is pointed out that the doctrine of promissory estoppel, cannot in the present case be invoked against the respondents, to prohibit the State in exercising it's legislature powers or in making subordinate legislation. The Rules issued are in the form of subordinate legislation and the doctrine of promissory estoppel on the facts of the present case, will not apply.

6. Having heard the learned Counsel, question is whether based on the GR of 30-6-1992, the respondents were right in making the demand as is sought to be done by them. In the earlier part of the judgment, we have adverted to the order of allotment as well as to the agreement. The terminology used in the order as also in the agreement, is that the grant shall be subject to the conditions laid down in Rules 31, 41 of the Maharashtra Land Revenue (Disposal of Government Land) Rules, 1971 and other conditions deemed fit by the Collector. In the agreement, it is provided that provisions of the said Code and of Rules and orders for the time being in force therein, shall apply to the occupancy of the said land sofar as may be applicable. In other words, the provisions of the Land Revenue Code and the Rules would apply to the use of the land by the respondents. It does not mean and cannot be read to mean that it was open to the respondents to impose conditions not provided for by the Act and or the Rules.

It is not necessary at this stage to go into provisions of the Land Revenue Code and the Rules in the matter of occupancy of the land by the petitioners. The question is whether the G.R. of 30-6-1992 would be applicable. Official translation of the said G.R. paragraph 1 reads as under :-

" Vide Government Circular, Revenue & Forest Department Numner LND 1077/3507/CR-263/G-5 dated 16th May, 1978 orders have been issued that, after giving the possession of the Government land, on the possessory right amount of such land, interest shall be charged at the rate of 8% from the date of payment of final possessory right amount, after determining the same. Moreover the rate of lease rent of the Government lands is prescribed as 8% of the entire market value. In that regard, Government has made reconsideration and now Government orders that in both these cases, hereinafter, change in the rate shall be made as to 15% instead of 8%"

It is therefore, clear that the decision of the Government was to change the interest rate of 8% to 15% in the matter of the difference payable between provisional and final occupancy price of the Government land. Would that mean that in the instant case, like that of the petitioner, where the original occupancy was given as far back as 1982 and the provisional price fixed in the year 1982, because the final price had not been fixed, for no fault of the petitioner to charge interest at the enhanced rate. There is no difficulty in accepting the contention that as the parties had agreed to take possession based on the provisional price, the State will have to be compensated when the final price was fixed for the difference between the provisional price and the final price as the money remains with the grantee. That also has not been seriously disputed. The question is whether on such excess amount after entering into an agreement about the rate of interest to be paid, was it open to the respondents to alter the terms agreed and charge the petitioner at a higher rate of 15%. If the respondents are able to show a specific provisions under the Land Revenue Code and/or the Rules for increasing the interest rate, then perhaps the petitioner would have had no answer to the demand considering the terms of the grant and the agreement, whereby they had agreed to abide by the provisions of the Land Revenue Code and the Rules. The respondents, have been unable to show any provisions under the Act or Rules, under which they could increase the interest component. Learned Counsel for the respondent has fairly conceded that there are no specific provisions for charge of interest. The interest levied can be based on the fact that possession is given before the final price is determined. The grantee is allowed to take possession based on a provisional price. The State would have been entitled to the real price from the date of handing over possession. Interest is in the nature of a compensation to the State for the grantee being allowed to take possession and exploit the land before determination of the final price. Once there is no provision, then it is not open to the respondents to rely on Clause (xi) of the order dated 24-1-1985 or for that matter Clause (vii) of the condition of the agreement in the schedules. Once that be so and as respondents have been unable to show a power, it is the terms of the contract that will govern the parties.

The terms of the contract clearly contemplate payment of interest at the rate of interest @ 8%. This will be the term, which will govern the parties. These are purely in the field of contract, between the petitioner on the one hand and the respondents on the other, though the frant of land is governed by the provisions of the Land Revenue Code and Rules framed thereunder. The petitioner therefore have also rightly invoked the doctrine of promissory estoppel, as the high interest claimed is not pursuant to any legislative power and/or an exercise in subordinate legislation as laid down by the Apex Court. These respondents will be bound by the terms as contained in the contract. At the highest, a proper reading of the G.R. would mean that interest of 15% will only be in respect of those lands, which are given on or after 30-6-1992. Admittedly, in sofar as the petitioners are concerned, G.R. of 30-6-1982 will not be attracted. Consequently, petition will have to be allowed.

Rule is made absolute in terms of prayer Clauses (a) and (b). It is further made clear that if on computation, factually there are amount due and payable calculated @ 8% interest as a difference between the provisional price and or the final price and or on delayed payment of the final price, the petitioners will be bound to pay the difference on respondents issuing on the petitioners a revised demand notice for the said amount in terms of this judgment.