Ramjee Sah vs The State Of Bihar And Ors
2022 Latest Caselaw 1730 Patna

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                    Letters Patent Appeal No.1294 of 2016
                                       In
               Civil Writ Jurisdiction Case No.13485 of 2013
     ==============================================

Ramjee Sah Son of Bhikham Sah Resident of Suhiya, Police Station Shahpur, District-Bhojpur

... ... Appellant/s Versus

1. The State Of Bihar

2. The Bihar Industrial Area Development Authority 1st Floor, Udyog Bhawan, East Gandhi Maidan, Patna

3. The Managing Director, Bihar Industrial Area Development Authority, Udyog Bhawan, Gandhi Maidan Pat

4. Bihar State Financial Corporation, Fraser Road, Patna through its Managing Director

... ... Respondent/s ============================================== Appearance :

For the Appellant/s : Mr. Manik Vedsen, Adv.

Mr.Subhash Chandra Bose, Adv.

Ms. Shilpa Singh, Amicus Curiae For the Respondent/s : Mr.Prasahnt Kumar, AC to SC-05 For the BIADA : Mr. Lalit Kishore, Sr. Adv.

                            :       Mr. Yashraj Bardhan, Adv.
     For BSFC               :       Mr. Raj Nandan Prasad, Adv.

============================================== CORAM: HONOURABLE MR. JUSTICE ASHUTOSH KUMAR and HONOURABLE MR. JUSTICE ANJANI KUMAR SHARAN ORAL JUDGMENT (Per: HONOURABLE MR. JUSTICE ASHUTOSH KUMAR)

Date : 10-03-2022

1. Heard Mr. Manik Vedsen, the learned

counsel for the appellant, Mr. Yashraj Bardhan for the

respondent nos. 2 and 3, namely, Bihar Industrial Area

Development Authority through its Managing Director and Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

Mr. Raj Nandan Prasad for the Bihar State Finance

Corporation. The State is represented by Mr. Prashant

Kumar, learned AC to SC-05.

2. The appellant had preferred a writ petition

seeking quashing of the demand of the respondent BIADA of

the transfer fee of Rs. 1,71,329/- from the appellant / writ

petitioner for transferring the concerned plot to him which he

had purchased in the auction sale of the plot by the

mortgagee/ Bihar State Finance Corporation (hereinafter

referred to as "BSFC") but the question in the present

appeal is limited to whether the BIADA is justified in

charging the transfer fee and if so, what should be the

quantum of the same.

3. Be it noted that the demand of the BIADA

of the transfer fee of Rs. 1,71,329/- has already been paid

by the appellant along with the dues of the erstwhile allottee

but without prejudice to his rights and contentions.

4. The plot in question was allotted to one

M/s Bhojpur Bucket Industry on 16.06.1977 for setting up

a unit for manufacturing buckets. The aforesaid allottee had Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

obtained loan on the said plot on mortgaging it to Bihar

State Finance Corporation. Because of the default in re-

payment of loan, the plot along with the lease hold land and

the machinery was put to auction sale by the BSFC and the

appellant had purchased the same on a consideration

amount of Rs. 4,10,000/- with further stipulation that the

dues payable to BIADA by the original lessee / allottee would

also be restituted by the appellant.

5. When the appellant applied before the

respondent /BIADA for change in the name of the proprietor

and the project along with the prescribed fee of Rs. 1,000/-,

the same was refused on the ground that the lease in favour

of original allottee had been cancelled before the lease hold

land was auction sold to the appellant.

6. It further appears that the appellant

approached the High Court vide C.W.J.C. No. 15639/2009

when a Bench of this court referred the dispute to the

Principal Secretary, Department of Industries, who was

holding the post of Chairman of BIADA as also the Chairman

of BSFC. He, on enquiry and on hearing the parties, Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

validated the sale of lease-hold land but held that the

appellant would be required to pay the transfer fee before

the plot could be transferred in his name for a different

project.

7. Pursuant to the aforesaid decision by the

Principal Secretary, Department of Industries, the appellant

was asked to pay an amount of Rs. 2,53,819/- towards the

dues incurred by the erstwhile allottee along with a transfer

fee of Rs. 1,71,329/- as well as the general charges of Rs.

4,532/-.

8. The transfer fee appears to have been

calculated at the rate of 15% of the value of land evaluated

at Rs. 271.95/- per sq. ft.

9. This was questioned by the appellant vide

C.W.J.C. No. 13485 of 2013, which has been disposed off

by judgment dated 18.05.2016 which has been impugned in

the present appeal, holding that since the policy decision of

the BIADA to charge transfer fee has not been challenged,

such demand could not be asked to be quashed. However,

the rate at which the quantum of transfer fee would be Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

calculated was left open by the learned Single Judge as

according to him, no document was placed by the parties for

any deteriminative decision in that regard.

10. The reliance of the appellant on the

judgment of this Court in M/s Vikramshila Transformers vs.

State of Bihar 1994 (1) PLJR 604 was not accepted by the

learned Single Judge as in the aforesaid case, a fresh price

was demanded from the purchaser of the lease-hold land

whereas in the present case, the appellant was only asked

for the transfer fee as the primary ownership of the land

always remained with BIADA.

11. Since the appellant had been suffering

losses on account of non-transfer of the land in his name

and consequently no permission to change the project, the

transfer fee as demanded by the respondent / BIADA was

paid but only under protest.

12. It is the contention of the appellant that

the BIADA is not entitled to claim anything over and above

the dues payable by the original lessee as the appellant had,

with the purchase of the plot in question in auction-sale by Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

the mortgagor / BSFC, had entered into the shoes of the

original allottee with complete lease-hold rights over the

said plot of land for which the lease deed had originally been

executed for 99 years.

13. As opposed to the aforesaid contention,

the respondent / BIADA has taken the plea that the

appellant not only sought a change in the name and of the

project; rather he had asked for the transfer of the land

from one individual unit to another, may be on auction

purchase of the lease hold rights. The transfer fee charged

from the appellant is stated to be in consonance with the

established principles as well as the policy decision of the

BIADA, which principle is not unknown and is in vogue in

other Corporations and Authorities under the statute or by

the statute like Municipal Corporations, Housing Board etc.

The practice of seeking certain percentage of the enhanced

value of land as transfer fee is a well accepted norm. It has

also been urged by Mr. Bardhan, the learned counsel for the

BIADA that the quantum of 15% of the prevailing market

rate as transfer fee cannot be said to be arbitrary or without Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

any basis as BIADA has to spend money in providing

facilities and security in the Industrial Areas. It has also

been been brought to the notice of the Court that the Bihar

Industries Association had also recommended for a specially

constituted committee by the Department of Industries for

recommending the modalities for maintenance of

infrastructural facilities in the Industrial Areas in the State of

Bihar, which committee had recommended for a 15% of the

current land value as the transfer fee in cases of transfer of

sale.

14. The aforesaid policy decision has been

adopted by the Board of Directors of BIADA in its 4 th

meeting on 19.02.2004 whereafter every such transfer or

sale has been subjected to the transfer fee calculated at the

rate of 15% of the current market value of land.

15. Taking objection to the aforesaid

submissions urged on behalf of the respondent / BIADA, Mr.

Manik Vedsen, the learned Advocate has submitted that a

policy decision of 2004 ought not to govern and cover a

concluded contract wherein it was never in the contemplation Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

of the purchaser that he shall be subjected to any transfer

fee and that also at the current market value of the land. No

doubt, the appellant had agreed at the time of transfer to

pay the dues of original lessee / allottee but no covenant in

the sale deed provided for payment of any transfer fee by

the BIADA. It has further been submitted that calculating

the transfer fee at the rate of 15% of the current market

value of the land is absolutely unjustified and to a large

extent arbitrary because with the permitted sale of the lease

hold property, the purchaser enters into the shoes of the

erstwhile lessee and under no circumstance, he ought to be

charged anything more than what was charged from the

original lessee. While calculating the transfer fee, the BIADA

has also not taken into account that the original lease was

for 99 years but many years have passed by and now there

would only be approximately 64 years left for the lease to

expire. Thus, it has been submitted that even if it is found

that transfer fee is in the nature of charges by the BIADA

for the upkeep of the Industrial Area and continuous

maintenance of infrastructural facilities, the quantum Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

charged is questionable. The circle rate cannot be the index.

The logic behind the justification of the BIADA as the

primary owner of the land to pocket part of the unearned

increase in the value of the land is highly misplaced as

BIADA is an agency of the Government and not a

commerce-driven organization.

16. We have examined the issues raised by

the parties and we find that there is no parallel with the facts

of M/s Vikramshilla Transformers (supra) which has been

relied upon by the appellant.

17. In M/s Vikramshilla Transformers Pvt. Ltd

(supra), the company had purchased the lease hold plot of

the then Patna Industrial Area Development Authority in

auction sale as the original lessee had defaulted in payment

of loan to the Bihar State Financial Corporation with which

the land was mortgaged. When permission was sought by

the company for transfer of the land in its favour, the Patna

Industrial Development Authority had put up a demand of an

amount equivalent to the price of the land at the new rate. A

Division Bench of this Court in the aforesaid case held that a Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

lease creates an interest in the lease-hold land and the

lessee acquires a transferable interest which could be

transferred in favour of any third party but subject to other

terms and conditions of the lease. Any restrictive covenant

in the lease has to be given effect to but in the absence of

any such restrictive covenant, there cannot be any further

demand on the purchaser for payment of price of land

again at the market value. The Bench, therefore, held that

since no prior permission was required for sale from the

Patna Industrial Development Authority and the mortgage in

favour of the BSFC had been created by the erstwhile lessee

in terms of the lease deed itself, it logically followed that the

mortgagee could enforce the mortgage by selling the

mortgaged assets. The purchaser stepped into the shoes of

original mortgagor, who could be subjected to, at best, the

same terms and conditions of the lease to which the original

lessee / mortgagor was subjected to. Thus, it was held that

the purchaser, namely, M/s Vikramshila Transformers Pvt.

Ltd. could not have been asked for the market price of the

land all over again.

Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

18. In the present case, the BIADA has not

charged the price of the land but has saddled the appellant

with a transfer fee and that also in accordance with its policy

decision which is regularly being followed in all such transfer

or sale, be it auction or distress sale or sale by choice.

19. The question, therefore, which arises for

consideration is whether the transfer fee should be

calculated at the rate of 15% of the circle rate of the land

i.e. the current market value at the time of transfer or of the

BIADA rate which is a subsidized rates for development of

Inustrial Zones and facilitating investors.

20. To answer the aforesaid poser, Mr.

Bardhan, learned counsel for the BIADA has brought to out

notice a judgment of the Supreme Court in Bihar Industrial

Area Development Area Authority and Others v. Amit Kumar

and Others 2019 (10) SCC 733, in which a decision of the

Division Bench of the Patna High Court in L.P.A. No.

68/2018 and other analogous appeals holding that the

BIADA was entitled to demand 15% of the BIADA rate and

not the circle rate of the land, was set aside and it was held Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

that there was no arbitrariness in charging the transfer fee

on the basis of current market rate of the land in question.

21. The Supreme Court was of the view that

in cases of original allotments, a fixed price is charged by the

BIADA. However, when the allottee transfers and gets

something more for the land at the current market value,

there would be no reason why the owner of the land /BIADA

ought not be benefited by the unearned increase in the value

of the land.

22. Mr. Vedsen, learned Advocate submits that

the facts of this case is entirely different where original

lessee had sought permission to sell the lease-hold land at a

profit. This is not the case in the present litigation where the

mortgaged lease-hold land had been put to auction-sale

where any purchaser could have entered into the shoes of

the original lessee, which might obligate him to pay the dues

of the original lessee but there could be no justification for

charging any transfer fee as it would not be in the nature of

any share in the unearned increase of the land. The price at

which the lease-hold is auction-purchased in that case Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

becomes much more, which might not have been in the

contemplation of any buyer / appellant.

23. We had asked Mr. Yashraj Bardhan to

inform us as to the basis for calculation of the transfer fee.

The chart provided by him today indicates that the value of

the land has been assessed at the circle rate of 118.16 per

acre and the transfer fee has been calculated by computing

15% of the multiple of the value of the land at the rate of

271.95 per sq. ft. With the aforesaid calculation, the figure

comes to 1,71,329/-.

24. We do not find any arbitrariness in the

aforesaid calculation and the consequent demand of the

transfer fee from the appellant.

25. However, we do find that while computing

the quantum of transfer fee the BIADA has not at all taken

into account that now only 64 years are left for the lease to

expire and before any transfer fee could have been

calculated on any rate, there ought to have been

depreciation in terms of the number of years left in the

currency of the lease. That not having been done, the Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

imposition of the transfer fee of the amount of Rs.

1,71,329/- is not justified and reflects, to some extent, non-

application of mind towards that aspect of the matter.

26. We reject the contention of the BIADA

that once the amount of transfer fee has been paid by the

appellant even under protest and subject to his rights and

contentions later, it could not have been questioned in the

present appeal. The very concept of conditional and on

protest payment is that such levy could be challenged in any

competent forum.

27. We, therefore, hold that BIADA is entitled

to charge 15% of the current market value of the land with

reference to the date of sale but it ought to take into

account that depreciation is required to be made for the

lesser number of years of the lease in currency.

28. The appeal, is thus, disposed of with a

direction to the appellant to make a representation before

the Chairman-cum- Managing Director of the BIADA within a

period of 30 days to take into account the aforesaid aspect

of the matter and re-calculate the transfer fee qua the Patna High Court L.P.A No.1294 of 2016 dt.10-03-2022

number of years of lease left and any amount which is

required to be depreciated from the amount which has been

saddled on the appellant and which has already been paid by

him under protest, be refunded to him.

29. It is expected that the concerned

respondent shall take up the matter in right earnest and

shall take an informed decision in that regard within a period

of three months thereafter.

30. Before parting with this matter, we also

express our gratitude to Ms. Shilpa Singh, the learned

Amicus who has provided us with a number of decisions of

different High Courts and of other judicial bodies where this

issue has been discussed.

31. The appeal stands disposed off accordingly.

(Ashutosh Kumar, J)

( Anjani Kumar Sharan, J) sunilkumar/-

AFR/NAFR              AFR
CAV DATE              N/A
Uploading Date        12.03.2022
Transmission Date     N/A