Case Note & Summary
The Petitioner, Prabhat Sadan Properties Private Limited, owned a leasehold property in Byculla, Mumbai, under a lease from the Municipal Corporation of Greater Mumbai (MCGM). In 2012, the Petitioner sought MCGM's consent to assign the lease to a third party. MCGM granted consent subject to payment of a transfer premium of Rs 24,71,300/-, which the Petitioner paid without protest. The assignment was completed. In 2022, MCGM issued two fresh demand notices for an additional transfer premium of Rs 72,94,268/- plus interest from 2012, claiming that the earlier premium was insufficient. The Petitioner challenged these demands by way of a writ petition under Article 226 of the Constitution. The main legal issue was whether MCGM could unilaterally reopen a concluded transaction and demand a second transfer premium on the same transfer after having accepted the earlier payment without any reservation. The Petitioner argued that the earlier payment was accepted without qualification, and the subsequent demand was arbitrary and without authority of law. MCGM contended that the earlier demand was based on an incorrect calculation and that it had the power to revise the premium. The Court analyzed the provisions of the Mumbai Municipal Corporation Act, 1888, particularly Section 68, which governs transfer of leasehold rights. The Court held that transfer premium is a one-time charge payable at the time of transfer. Once the transfer was completed and the premium accepted without any protest or reservation, the transaction was concluded. MCGM could not reopen it unilaterally. The Court emphasized that public authorities must act fairly and cannot revisit settled matters. The Court quashed the impugned demand notices and directed MCGM to refund any amount paid under protest, if any, with interest. The petition was allowed.
Headnote
A) Administrative Law - Concluded Transactions - Finality - Public Authority cannot reopen a concluded transaction and demand additional transfer premium after accepting payment without reservation - Held that once a transfer premium was paid and accepted without any qualification, the MCGM is estopped from making a fresh demand for the same transfer (Paras 3, 10-12, 18-20). B) Property Law - Transfer Premium - Lease - Assignment - Section 68 Mumbai Municipal Corporation Act 1888 - Transfer premium is a one-time charge payable on transfer of leasehold rights - Held that the MCGM's demand for a second transfer premium on the same transfer is without authority of law and arbitrary (Paras 4-9, 15-17). C) Constitutional Law - Article 226 - Writ Jurisdiction - Legitimate Expectation - A party who has paid a transfer premium without protest cannot later challenge the levy, but the authority cannot use the earlier payment as a basis to demand more - Held that the principle of legitimate expectation applies to prevent the authority from acting arbitrarily (Paras 3, 18-20).
Issue of Consideration
Whether a public authority (MCGM) can unilaterally reopen a concluded transaction and demand a second transfer premium on the same transfer after having previously accepted and retained a transfer premium without any reservation or protest.
Final Decision
The Court allowed the petition, quashed the demand notices dated 13th January 2022 and 31st May 2022, and directed MCGM to refund any amount paid under protest with interest at 12% per annum from the date of payment until refund.
Law Points
- Transfer premium
- concluded transaction
- public authority
- finality
- legitimate expectation
- estoppel
- Article 226
- Mumbai Municipal Corporation Act 1888
- lease
- sub-lease
- assignment
