Case Note & Summary
By way of background, the dispute pertained to a leasehold plot in Santacruz (West), Mumbai, originally categorised in the service industrial zone and later notified for residential use. The State Government granted a 30-year lease of the subject plot to the lessee under Section 38 of the Maharashtra Land Revenue Code, 1966, with the lease period running from 01.08.2005. The lessee passed away on 19.04.2018, and the petitioner, as executor under a Joint Will dated 15.01.2014, obtained probate in Testamentary Petition No.401 of 2020 on 12.07.2021. The subject plot formed part of Final Plot No.17 of Santacruz TPS VI and comprised sub-plot No.16, admeasuring about 501.5 square meters. Initially zoned as service industrial, the plot was later included in the residential zone by a notification dated 27.05.2019. The lessee had sought change of user from industrial to residential and use of permissible TDR; correspondence in 2012 indicated a 3% premium for change of user. The State approved the proposal but did not issue the statutory notification under Section 37(2) of the Maharashtra Regional and Town Planning Act, 1966, leading to an earlier writ petition. In the interregnum, the Government Resolution dated 12.12.2012 set out policy for renewal of leases, annual rent and conversion charges; this was followed by Notification dated 08.03.2019 and the Maharashtra Land Revenue (Conversion and Occupancy Class-II and Leasehold Lands into Occupancy Class-I Lands) Rules, 2019. The petitioner applied for conversion from leasehold to freehold on 02.11.2019 and 23.11.2021. When the Collector did not respond, the petitioner filed Writ Petition No.860 of 2022; the High Court on 21.02.2022 directed the petitioner to file a comprehensive application and the Collector to decide. The Collector passed an order on 28.02.2022 demanding Rs.1,31,31,629 as differential lease rent and Rs.2,92,80,078 as premium at 50% of 2020-2021 market value. That order was challenged in Writ Petition No.1505 of 2022; in the interim, the petitioner agreed to pay 25% conversion charges on the market value of Rs.5,85,60,155. Thereafter the Collector, after hearing the petitioner on 04.07.2022, passed the impugned order dated 10.10.2022 levying Rs.4,39,20,116 (unearned income), Rs.1,46,40,039 (conversion charges for change of user at 25% of 2022 market value) and Rs.13,74,849 (differential lease rent from 01.01.1975 to 31.07.2022). The petitioner filed detailed objections on 14.10.2022 and, upon receiving no response, filed the present writ petition under Article 226 of the Constitution of India. The legal issues framed for consideration included whether unearned income could be levied for creation of interest by will without prior permission, whether differential lease rent could be demanded despite prior recovery and fixed annual rent, and whether conversion charges should be computed on the 2012 market value rather than 2022. The petitioner argued that the unearned income demand was based on the probated will and was illegal; that the lease rent demand was made for the first time under the 2012 lease agreement and was otherwise wrong; and that conversion charges should be recalculated at 3% or 25% of the 2012 market value. The extracted portion of the judgment ends during the petitioner's submissions; therefore, the respondent's arguments, the court's detailed analysis, and the final operative decision are not contained in the available text.
Headnote
A) Writ Jurisdiction - Article 226 Constitution of India - Challenge to Collector's Order - Constitution of India, Article 226 - The petitioner invoked writ jurisdiction to quash part of the Collector's order dated 10.10.2022 levying unearned income, differential lease rent and conversion charges; the Court heard the matter for final disposal by consent, with the petitioner seeking recalculated conversion charges and direction to issue occupancy Class-I conversion upon payment. (Paras 3-4) B) Maharashtra Land Revenue Code - Leasehold Rights and Conversion - Section 38 Maharashtra Land Revenue Code, 1966 - State granted leasehold rights for 30 years from 01.08.2005; petitioner as executor sought conversion to Occupancy Class-I under applicable rules; dispute concerned correct premium and whether unearned income could be levied for creation of interest by will. (Paras 5.1-5.4, 5.8, 5.10) C) Maharashtra Land Revenue (Conversion & Occupancy Class-II and Leasehold Land into Occupancy Class-I Lands) Rules, 2019 - Rule 3 Conversion to Occupancy Class-I - Rules, 2019, Rule 3 - Petitioner sought conversion of the subject plot to Occupancy Class-I freehold upon payment of conversion charges as per Rule 3; the Collector's order computed conversion charges at 25% on 2022 market value, which petitioner contended should be based on 2012 market value when change of user application was made. (Paras 5.10-5.14) D) Unearned Income and Differential Lease Rent - Government Resolution dated 12.12.2012 - Levy and Recovery of Conversion Charges - Maharashtra Land Revenue Code, 1966 and Government Resolution dated 12.12.2012 - The Collector levied unearned income on the ground that the lessee created interest by will without prior government permission, and differential lease rent from 01.01.1975 to 31.07.2022; petitioner challenged these as illegal, asserting prior recovery of lease rent and fixed annual rent under registered lease. (Paras 5.14-6.2)
Issue of Consideration
Whether the Collector could levy unearned income of Rs.4,39,20,116 on the ground of creation of interest by will without prior permission; whether differential lease rent of Rs.13,74,849 from 01.01.1975 to 31.07.2022 was payable despite prior recovery and fixed annual rent; whether conversion charges of Rs.1,46,40,039 for change of user from industrial to residential should be calculated at 25% of market value prevalent in 2022 or at market value of 2012 when the application for change of user was made; and whether the Collector was bound to follow Rule 3 of the 2019 Rules.
Law Points
- Article 226 Constitution of India permits judicial review of administrative orders by High Court
- Section 38 Maharashtra Land Revenue Code
- 1966 governs grant of leasehold rights by State Government
- Rule 3 of Maharashtra Land Revenue (Conversion and Occupancy Class-II and Leasehold Lands into Occupancy Class-I Lands) Rules
- 2019 prescribes conversion to Occupancy Class-I
- Section 37(2) Maharashtra Regional and Town Planning Act
- 1966 requires statutory notification for variation of Town Planning Scheme
- Government Resolution dated 12.12.2012 and Notification dated 08.03.2019 lay down policy for renewal
- rent and conversion charges
