Pranab Kumar Bhattacharya & Anr vs Steel Authority Of India Limited & ...
2023 Latest Caselaw 3913 Cal

           IN THE HIGH COURT AT CALCUTTA
                     Civil Appellate Jurisdiction
                           (Appellate Side)

                          MAT 1038 of 2022

                Pranab Kumar Bhattacharya & Anr.
                                 -Versus-
               Steel Authority of India Limited & Ors.



Before:           The Hon'ble Justice Arijit Banerjee
                                &
                  The Hon'ble Justice Apurba Sinha Ray



For the Appellants          : Mr. Ashit Kumar Chakraborty, Adv.
                              Mr. Sunanda Mohan Ghosh, Adv.

For the SAIL                : Mr. L.K. Gupta, Sr. Adv.
                              Mr. Arjun Ray Mukherjee, Adv.
                              Mr. Debapriya Mitra, Adv.
                              Mr. Joyjeev Medhi, Adv.


For UOI                       Mr. Bhudeb Chatterjee, Adv.


Judgment On                 : 19.06.2023

Arijit Banerjee, J. :-

1. This appeal is directed against a judgment and order dated April 7, 2022,

whereby a writ petition filed by 6 Cooperative Housing Societies (Kallol Co-

operative Housing Society Limited & Ors. v. Steel Authority of India
                                      2




Limited & Ors.) was dismissed. The appellants were eo nominee not parties

to the writ petition. They were members of the one of the writ petitioner

housing societies. They have preferred the instant appeal with leave of the

Court.

2. The brief facts of the case are that with a view to providing

accommodation for employees/ex-employees of Steel Authority of India

Limited (in short SAIL), who were employed at the Durgapur Steel Plan unit

of SAIL, the State Government, at the instance of SAIL, acquired about 150

acres of un-developed land. The Government also issued 'no objection' to

settle such land by executing leases in favour of the cooperative housing

societies to be formed by the employees/ex-employees of SAIL at Durgapur.

3. A good number of housing societies were formed, having in all

approximately 1876 members who are all employees /ex-employees of SAIL.

In 1993 lease deeds were executed by SAIL in favour of the housing

societies. Initially the grant was for 33 years, renewable for two similar

periods of time.

4. Two of the relevant covenants of the lease deed that bound the lessee

housing society are in sub-clauses 2 and 13 under clause 3 of the lease deed

which read as follows:-

         "3(2).To pay all rates, taxes, charges including water and other

         service charges, duties, burdens, assessments, outgoings and

         impositions whatsoever whether parliamentary parochial local or

         otherwise which now are or shall at any time hereafter daring the

         said term be charged rated assessed or imposed upon or in respect
                                       3




         of the land hereby demised or the said building/quarters and other

         erection that may be erected by the Lessee thereon or on the

         Lessor or the Lessee or the occupier in respect thereof respectively.

         13.Not to use the land for any purpose other than that for which it

         has been demised and not to assign, transfer, mortgage or sublet

         or otherwise deal with or part with possession of or the lessee's

         interest of and in the said land hereby demised or any part thereof

         or the said buildings to be erected thereon by the lessee as

         aforesaid and all other buildings and erections that may at any

         time be in or upon the said land or part thereof without previous

         consent in writing of the Lessor and in case of any such transfer or

         other dealings with the prior approval of the Lessor as aforesaid or

         in case of devolution of interest by operation of the law furnish the

         Lessor with a certified true copy of the relative document or other

         evidence in respect of such transaction or devolution as aforesaid

         within one month from the date thereof."

5. In turn, the housing societies executed sub-leases in favour of their

members. About 3 cottahs of land was allotted to each member by way of

sub lease at and for "the prime cost of Rs. 1988.34/-" and payment of

development costs by the sub-lease to the Sub-lessor (i.e.) by the concerned

member to the concerned housing society. The sub leases were for a term of

32 years with effect from May 5, 1993. Some of the relevant clauses of a

standard document of sub lease are noted below:-
                               4




"The Sub-Lessee shall, within a period of one year from the date

hereof or such further time as may be allowed in writing by the

Lessor/Sub-lessor erect on the demised land buildings suitable for

his/her residential purpose only with necessary erections and

structures, drains, boundary walls and fences in accordance with

plan, elevation and specifications which are to be approved of by

the Lessor and in conformity with the provisions of any statute

applicable thereto and the bye laws and regulations of the local

authorities and to pay all fees and charges payable to such

authorities in relation thereto."

...

"To pay all rates, taxes, charges including water and other service

charges, duties, burdens, assessments, outgoings and impositions

whatsoever whether parliamentary parochial, local or otherwise

which now are or shall at any time hereinafter during the said term

be charged, rated, assessed or imposed upon in respect of the land

hereby demised or the said building/quarters and other erections

that may be erected by the Sub-lessee thereon or the Sub-lessor or

the Sub-lessee or the occupier in respect thereof respectively."

....

"Not to use the land for any purpose other than that for which it

has been demised and not to assign, transfer, mortgage or sublet

or otherwise deal with or part with possession of the Sub-Lessee's

interest of and in the said land hereby demised or any part thereof

or the said buildings to be erected thereon by the Sub-lessee as

aforesaid and all other buildings and erections that may at any

time be in or upon the said land or part thereof without previous

consent in writing of Steel Authority of India Limited i.e. the

Lessor/Sub-lessor and in case of any such transfer or other

dealings with the prior approval of the Lessor as aforesaid or in

case of devolution of interest by operation of the law furnish the

Lessor with a certified true copy of the relative document or other

evidence in respect of such transaction or devolution as aforesaid

within one month from the date thereof."

6. It is pertinent to note that for the purpose of computation of stamp duty a

3 Cottah plot was valued at Rs. 4.50 lakh.

7. Sometime in August 2017 an Advisory Committee was constituted by the

management of SAIL for revision of rates charged for different services

offered by its Town Services Department. The agenda for such Committee

was:-

"(a) Revision of existing charges on the services rendered by Town

Services Department to all, except to the employees of SAIL;

(b) Introduction of fresh/new charges where service is presently being

rendered free of cost; and

(c) To explore new avenues for generation of additional revenue and

recommend charges for the same."

8. The Advisory Committee submitted an interim report, the relevant portion

whereof reads as follows:-

"As per agreement between DSP and SAIL Co-operative, the plot of land

was allotted to the employee/ex-employee for his residential purpose.

For services like record of transfer of ownership etc. the co-operative

takes up with DSP Town Administration for needful endorsements.

Erstwhile, these services were provided free of cost by DSP although the

co-operatives have a transfer fees in place.

Identifying that these services can be made chargeable on

onetime basis, for earning revenue, the committee explored the means

for levying transfer consideration charges. The committee expressed its

concern whether DSP can claim any transfer charges for the aforesaid

plots of the SAIL Cooperative Member from law department was co-

opted for detailed discussions on 10-11-2017 and obtaining reasoned

opinion. After examining the DSP agreement with the cooperative, Sr.

Manager (LAW) opined that it would not be illegal in principle if

SAIL/DSP stipulates payment of an amount (to be calculated on a

demonstrably reasonable basis) as a precondition for granting

permission for transfer of the lease-hold interest however such amount

should not be termed as Transfer Fee, administrative charges etc

(observations of Sr. Manager Law placed at Annexure-III)

The land was allotted to the Co-operatives in the year 1990-91

and subsequently Co-operatives developed the land/plots by about

1993-94 before allotting to the constituent DSP employee/ex-employee

members. It was felt that levy of 50% of difference amount like ADDA

was not appropriate in view of the fact that initial acquisition by

allottees was based on development charges only. As per SAIL Board

guidelines dated 30-04-16 for leased quarters, 15% of capital gain is

being collected for lease hold transfer charge (Annexure-IV). Taking a

cue from this, Committee recommended one time consideration amount

of 15% on capital gains against transfer of plot from one member to

another when the cooperative approaches TA department for the

requisite endorsements/record updation. For assessment of cost of

Acquisition on reasonable basis it is decided to adopt Cost Inflation

Index (CII) published by the IT department (copy of IT department's CII

for each FY upto 2016-17 is placed at Annexure-V)

CII for the year 2016-17 Indexed Cost of acquisition = Cost of acquisition X ................................................................................................................................................................................................................................................... ..........................................................

CII for the year 1993-94 (year in which development was done)

Thus, as cost of development of land per 3 Cottah of plot was Rs.

40500/- in the year 1993-94, the indexed cost of acquisition (present

day) works out to (40500 X 1125/244)= Rs. 186731.55/-

Cost of 3 kathas of SAIL co-operative plot at City centre as per present

ADDA rate is Rs. 6,00,000 X 3= Rs.1800000

The different amount =Rs. (1800000-186731.55)= Rs.1613268.45

The consideration amount for transfer = 15% of Rs. 1613268.45=Rs.

241990.27

As the consideration amount is proposed to be fixed for a maximum

period of 5 years committee agreed to round it to Rs. 2,50,000.

However this consideration amount for transfer of lease hold right as

above would not apply to transfers to spouse/legal heir/next of kin of

the lessee. In such cases committee recommends a token amount of Rs.

5000 only during transfer."

9. The aforesaid suggestion of the Advisory Committee was approved by

the Competent Authority on February 15, 2018.

10. By a letter dated March 13, 2018, the Assistant General Manager, (TS-

TA), Durgapur Steel Plant, wrote to the secretaries/Chairmen of the various

housing societies, to the following effect:-

"The following charges have been made applicable on and from

15.02.2018 for the services rendered by DSP related to your Co-

operative Housing Society.

a) Co-option of new member in place of outgoing member - Rs.

2,50,000/- (Rupees Two Lakhs Fifty Thousand) only.

b) Legal heir in place of deceased member - Rs. 5,000/- (Rupees

Five Thousand) only

c) No objection for mortgaging lease hold plot for securing House

Building Loan - Rs. 5,000/- (Rupees Five Thousand) Only

GST @ 18% or as applicable extra.

Total inclusive of GST @ 18% Rs. 5,900/- (Rupees Five Thousand

Nine Hundred) only for b) & c) and Rs. 2,95,000/- (Rupees Two

Lakhs Ninety Five Thousand) only for a)."

11. By a letter dated April 11, 2018, addressed to the

secretaries/Chairmen of the Housing Societies, SAIL intimated that GST

would not be applicable for co-option of new member/substituting legal heir

in place of deceased member/no objection for mortgaging lease hold plot.

12. The two letters dated March 13, 2018 and April 11, 2018 were

challenged by six housing societies before the learned Single Judge. Broadly

speaking their contention was that no charge/fee could be levied by SAIL for

co-option of member/substitution of legal heir in place of deceased

member/granting no objection for mortgaging the lease hold plot of land.

The learned Judge, primarily relying on the decision of the Hon'ble Supreme

Court in the case of Bihar Industrial Area Development Authority & Ors.

v. Amit Kumar & Ors.; reported at (2019) 10 SCC 733, rendered in Civil

Appeal No. 8219 of 2019, dismissed the writ petition. Hence this appeal by

the writ petitioners.

13. The arguments that were advanced on behalf of the parties before the

learned Single Judge as would appear from the impugned judgment, have

been more or less repeated before us.

14. On behalf of the appellants who are 2 members of one of the housing

societies, the following points were argued:-

(i) Referring to Section 92(3) of the West Bengal Cooperative Societies

Act, 2006 (in short the 2006 Act), learned Counsel argued that a plot of

land or a house or an apartment in a building in a cooperative housing

society constitutes a heritable and transferrable immovable property

within the meaning of any law for the time being in force. Hence, a

member of a housing society is at liberty to deal with such property

whether by way of mortgage or otherwise and no authority can impose

any charge for the same. Although a plot holder cannot transfer or deal

with the same without prior written consent of SAIL, no charge or fee

can be levied by SAIL as a pre-condition for giving such consent.

(ii) The entire 150 acres of land was in undeveloped state. The members

of the housing societies have developed the land at their own cost. They

are all retired employees of SAIL. The land value has appreciated

because of such development made by them and SAIL had no role to

play in such development. Hence, SAIL cannot claim any portion of the

enhanced value of land by imposing charges for granting 'no objection'

to enable a plot holder to deal with the land.

(iii) Learned Counsel referred to Section 76 of the 2006 Act which reads

as follows:-

"76. Nomination by member.- Subject to the by-laws of a Co-

operative society, any member of such co-operative society may in

accordance with the rules nominate a person in whose favour the co-

operative society shall dispose of the share or interest of such member

on his death."

In this connection reference was also made to rules 117,

131(3)(a) and 138 of the West Bengal Cooperative societies Rules,

2011.(in short the 2011 rules)

It was submitted that the legal heir of a deceased member of a

Cooperative Housing Society has a statutory right to step into the shoes

of the deceased member. SAIL cannot levy any charge in that regard.

(iv) SAIL renders no service at all. Hence, there can be no question of

levy of service charge. All the Civic Services are rendered by Durgapur

Municipal Corporation against payment of applicable charges. In this

connection learned Advocate referred to paragraph 6 of the affidavit in

reply filed by the writ petitioners before the learned Single Judge, the

material portion whereof reads as follows:-

"It is stated that the Durgapur Steel Plant, Steel Authority of India

Limited is not giving any service to the members of the petitioner

Co-operative Societies. The Durgapur Steel Plant by a letter

bearing No. ESTATE/LA/5/182(5)/151 dated June 6th 1998,

requested the Deputy Mayor, Durgapur Municipal Corporation to

impose taxes in respect of Co-operative Societies Land to be paid

by individual members and co-operative Societies and in the said

letter Durgapur Steel plant specially referred to Clause 3(2) of the

said lease deed and the same should be borne by the Societies not

like the Deed of Township Buildings/Shops etc. as such clause

3(2) of the said lease deed/sub-lease deed will not be applicable in

respect of SAIL Co-operative Lands. It is further stated that from

the aforesaid letter it will appear that Durgapur Steel Plant shifted

the responsibilities to Durgapur Municipal Corporation and

individual members regarding services such as electricity, water

supply etc."

(v) Starting from 1993 till 2018, SAIL approved all transfers in case of

genuine need without levying any charge. Suddenly transfer charge

cannot be introduced and that to, unilaterally. In the lease deed there is

no provision for imposing any charges or fees for giving consent to a

plot holder to deal with the property.

(vi) There has been a breach of the principles of natural justice in as

much as the members of housing societies were not granted any

opportunity of hearing before SAIL introduced the so-called service

charges.

15. Appearing for SAIL, Mr. L.K. Gupta, learned Senior Advocate urged the

following points:-

(i) The plots of land were leased out to the members of the society for a

pittance. The valuation of three cottahs of land was Rs. 4.50 Lakh and

based thereon stamp duty was paid. However, the lease was granted for

a consideration of Rs. 1988.34/- per plot. The land value has

appreciated. The members of the society cannot reap the benefit of such

enhanced value to the exclusion of SAIL. SAIL as owner of the land in

question, is entitled to a share of the increased value of the land.

(ii) Asansol Durgapur Development Authority charges 50 per cent for

granting no objection for transfer of Cooperative Housing Society

property. SAIL has decided to charge a modest 15 per cent of the

transfer value. In this connection learned Senior Counsel relied on the

decision of the Hon'ble Supreme Court in Bihar Industrial Area

Development Authority and others v. Amit Kumar and Others

(supra) and in particular on Paragraphs 11 and 12 of the reported

judgment which read as follows:-

"11 We may note that it is standard practice throughout this

country, specially at the time when these leases were executed to

set up industrial estates wherein lands were given at very low price

and sometimes at subsidised rates to help in the setting up of

industrial estates in the State. It was expected that establishment

of these industrial estates with flourishing industries would

generate a lot of employment and would also generate revenue

both in the nature of direct and indirect taxes. The issue is

whether when the allottee transfers the land for commercial

reasons why should the Authority not get a reasonable portion of

the unearned income earned by the allottee of the plot just by

transferring the plot in question. The premium on the unearned

increase is being charged only on the value of the land and not on

the value of the transaction. Once an industry is set up it may

have various components including the value of the immovable

assets, the value of the machinery, etc. and also the value of the

goodwill which the company has generated. On the other hand

there are companies which are loss making units where debts and

liabilities due to employees and sundry creditors will have to be

factored into while calculating the value of the total assets of the

unit. Those are not to be taken into consideration while assessing

the unearned increase of the cost of the land.

12. The land was given to the original allottee at a price fixed by

BIADA. When the allottee transfers and gets something more for

the land or the market value as reflected in the circle rate is much

more than the price at which the land was allotted to the allottee,

we see no reason why the allottee should pocket all this unearned

increase and BIADA, which was the original owner of the land

should be deprived of a reasonable portion of the unearned

increase from the value of the land. Therefore we are not in

agreement with the High Court that the unearned increase can be

charged only on the basis of the BIADA value plus development

charges and in our opinion the policy of the BIADA fixing the cost

of the land on the basis of the circle rate applicable is legal and

valid."

(iii) Only two persons out of 1876 members of the different cooperative

housing societies have filed this appeal. The remaining 1874 members

are not aggrieved by the decision of SAIL to charge transfer fees. This

also indicates that the decision of SAIL is a reasonable one.

(iv) Mr. Gupta relied on Clause 3(2) of the lease deeds executed by SAIL

in favour of the housing societies which is to the effect that all charges

will be payable by the societies.

(v) No writ petition is maintainable as the present case does not have

any public law element.

(vi) SAIL is not bound by the provisions of the 2011 Rules.

(vii) In the decision of the Hon'ble Supreme Court in the case of Bihar

Industrial (supra), the Hon'ble Court did not consider it relevant as to

whether or not there was a clause in the lease deed permitting

imposition of transfer fees or the like.

Court's view

16. The material facts of the case are not in dispute. To alleviate the

problem of scarcity of quaters/accommodation for employees/ex-employees

of SAIL working in Durgapur Steel Plant, about 150 acres of land was

acquired by the Government with SAIL being the requiring authority. The

land was leased out by SAIL to various Cooperative Housing Societies. Each

society executed sub-leases in favour of its members who were employees

/ex-employees of SAIL at the Durgapur Steel Plant.

17. The relevant clauses of a standard deed of sub lease have been

extracted above. The plot of land sub leased to a member of a Housing

Society is about 3 cottahs in measurement. The same was sub-let against

payment of prime cots of Rs. 1988.34/- "and the development cost paid by

the sub lessee to the sub-lessor (the receipt whereof the sub-lessor both

hereby admit and acknowledge) and also in consideration of the annual

rent." The sub lessee also covenanted to pay all out goings and impositions,

present and future in respect of the land. The sub-lessee was also prohibited

from parting with possession of the land without the previous written

consent of SAIL.

18. From 1993, when the leases were executed by SAIL in favour of the

Housing Societies and the sub leases were executed by each Housing Society

in favour of its members, till 2018 SAIL did not charge anything from the

Housing Societies or their members for according written permission for

transfer of the land in occupation of a sub-lessee. As per the report of an

Advisory Committee constituted by SAIL, which was approved by the

competent authority, SAIL decided to impose charges as mentioned in the

letters dated March 13, 2018, the material portion whereof has been

extracted in paragraph 9 above, read with the letter dated April 11, 2018.

These two letters were impugned in the writ petition before the learned

Single Judge.

19. We have noted above, the rival contentions of the parties.

20. In so far as impositions of charges for co-option of a member of a

society in the place and stead of an outgoing member who has surrendered

the plot of land in favour of the incoming member for valuable consideration,

we do not find the same to be unreasonable. The plots of land were allotted

to the members of the Housing Societies for a pittance, as noted above. No

particulars of development costs allegedly incurred by the members of the

societies have been disclosed before us. For the purpose of stamp duty a 3

cottah plot was valued at Rs. 4.50 lakh in 1993. It is common knowledge

and one should take judicial notice of the fact that land value in and around

Durgapur has appreciated considerably over the years. The members of the

societies are sub lessees of the concerned land. SAIL remains the absolute

owner of such land. If a sub lessee wishes to transfer the land that was sub

let to him albeit in favour of another employee/ex-employee of SAIL at the

Durgapur Steel plant, it is only fair that SAIL as the owner of the land gets a

share of the benefit accruing to the concerned sub lessee by reason of

increase in the value of the land over the years. This is the ratio, as we

understand, of the decision of the Hon'ble Supreme Court in the case of

Bihar Industrial Area Development Authority (supra), the relevant

paragraphs whereof we have set out herein before. Although in that case the

leases may have been executed to set up industrial estates and lands were

given at very low price, the fact that in the present case lands were given for

almost nothing for residential purpose, would not make any difference. The

main point is that the concerned land appreciated in value considerably with

the passage of time.

21. The Advisory Committee in its interim report arrived at the figure of

Rs. 2.50 lakh applying a formula which makes complete sense. We have

extracted the relevant portion of that report hereinabove. It is also

noteworthy that in similar cases, Asansol and Durgapur Development

Authority Charges 50% instead of 15%.

22. A sub lessee who was allotted a plot of land in 1993 for a negligible

sum of money i.e. less than Rs. 2,000/-, is likely to receive several lakhs of

rupees by transfer of the land that he is holding. In other words, he would

be making a huge profit by transfer of the land which would really be a

commercial deal, and it is not unreasonable for SAIL to impose a transfer

charge as a pre-condition for granting permission for such transfer.

23. In so far as the charge/fee of Rs. 5,000/- has been imposed to record

the name of the legal heirs of a deceased member in the place and stead of

such member and also for granting 'no objection' for mortgaging a plot for

securing house building loan, the same, in our view is not unreasonable.

Such levy is in the nature of a processing fee/charge. The amount is

reasonable and by no means exorbitant. Maintenance of proper records also

entails some amount of cost. We are unable to find fault with the decision of

SAIL to impose a token charge for substituting the names of the legal heirs

of a deceased member in the relevant records or for granting 'no objection' to

enable the allottee of a plot to mortgage the land for raising house building

loan.

24. The various provisions of the 2011 Rules relied upon by learned

Advocate for the appellants do not help the appellants. Such rules are not

binding on SAIL.

25. In so far as the appellants' argument as regards SAIL not rendering

any service to the members of the housing societies is concerned, in the

impugned letters, SAIL may have stated that the charges were being made

applicable for services rendered by Durgapur Steel plant to the housing

societies, but in our view, nomenclature makes no difference. It may be that

apart from maintaining records, SAIL does not render any other service to

the Housing Societies. However, we have upheld the imposition of charge on

account of a transfer of a plot or mortgage of a plot for securing housing

loan, on other grounds discussed above.

26. The appellants have also complained that SAIL has not taken into

consideration the fact that the entire cost for development of the land in

question has been borne by the members of the housing societies. This is

not entirely correct. In the formula applied by SAIL in arriving at the

amounts of charges on various accounts, SAIL has taken into consideration

the development cost.

27. The appellants also contended that in the deed of sub lease, there is

no provision for imposing charges on the plot holders who wish to deal with

their land. In our opinion that would not make any difference. It is a policy

decision of SAIL to introduce charges for granting permission for transfer of

the plots of land which are in the possession of the members of the housing

societies. There is no specific bar against such imposition which have been

made on considerations which we have been discussed above.

28. As regards the appellants' grievance of breach of the principles of

natural justice, it may have been proper for SAIL to afford an opportunity of

hearing to the representatives of the concerned Housing Societies prior to

taking a final decision to impose the charges which are impugned in this

proceedings. We could direct SAIL to reconsider the matter after giving an

opportunity of hearing to the representatives of the housing societies.

However, the same would be a futile formality. In any event, we have held

that the imposition of charges for grant of approval for transfer of land and

on two other accounts is justified in the facts of the case.

29. It is also significant that only 6 out of 60 odd Housing Societies

approached the learned Single Judge as writ petitioners. None of the writ

petitioners challenged the learned Single Judge's order. Only two gentlemen

who are members of one of the Housing Societies and who are 2 out of 1876

members of the Housing Societies taken together, have come up by way of

this appeal. This would also show that a vast majority of the members of the

Housing Societies does not consider the decision of SAIL to introduce

transfer charges etc, to be unreasonable.

30. In view of the aforesaid, we agree with the decision of the learned

Single Judge. There is no reason to interfere with the judgment and order

impugned before us. The appeal is accordingly dismissed. There will be no

order as to costs.

31. Urgent certified website copies of this judgment, if applied for, be

supplied to the parties subject to compliance with all the requisite

formalities.

(ARIJIT BANERJEE, J.)

I agree.

(APURBA SINHA RAY, J.)