Premium can’t be demanded for entire land to release surplus portions: HC

The Bombay High Court has ruled that the state government cannot demand a premium for the entire land under the Urban Land (Ceiling and Regulation) Act, 1976. The government can only demand a premium for the portion of the land declared surplus under the Act. This decision came in response to a petition filed by residents of the JVPD Scheme who were asked to pay a premium of INR 6.09 crore for closing the ULC proceedings and developing their property.

Mumbai: In a relief to owners whose lands are stuck in proceedings under the Urban Land (Ceiling and Regulation) (ULC) Act, 1976, the Bombay high court has held that the state government cannot demand a premium – 15% of the Ready Reckoner value – for the entire land to allow the owners to develop the portions which have been declared surplus under the repealed enactment.

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The division bench of justice Gautam Patel and justice Neela Gokhale said the government can demand a premium only on the portion of the land that is declared surplus under the enactment and not on the entire land.

The bench was hearing a petition filed by Jemini Salot and eight other residents of the JVPD Scheme, challenging the order passed by the District Collector, Mumbai suburban district and Competent Authority under the Urban Land (Ceiling and Regulation) Act, 1976, demanding premium of ₹6.09 crore for closing the ULC proceedings in respect of their 4,849-sq mt plot at Chandivali and allowing them to develop the property.

After the ULC Act was repealed in Maharashtra in November 2007 and in 2014, the high court interpreted the provisions of the Repeal Act, the state government appointed a committee under the chairmanship of justice BN Srikrishna and the committee recommended that the issue of exemption orders under section 20 of the ULC Act could and should be closed by accepting a certain payment.

The government accepted the recommendation and on August 1, 2019, came out with a Government Resolution (GR) that provided for closure of all pending ULC matters on receipt of certain payments.

Since 1,606 sq-mts of the petitioner’s plot was declared surplus under provisions of the ULC Act, the petitioners decided to avail themselves of the benefit of the August 2019 GR and applied to the collector for exemption. On February 9, 2023, the Collector issued the order, demanding a premium of ₹6.09 crore – 15% of the Ready Reckoner value of the entire area of 4,849-sq mt.

The high court accepted the petitioner’s contention that the government cannot demand a premium for the entire land, but only for the land declared surplus under the Act.

“It does not stand either to reason or law that a premium can be charged on the land that is retainable and is in the ownership of and has vested in the petitioners. It is unclear and on what basis, or by what power under a statute, the Government can require the petitioners to pay a premium for the Petitioners’ own land (which is retainable by the petitioners under the ULC Act),” the bench said.

“If the GR is made to apply to the entirety of the land, it would fall afoul of Article 300A of the Constitution of India and be unconstitutional,” said the court, clarifying that the government can demand premium only as regards portions of lands declared surplus under the ULC Act. The court added that the government cannot also enter its name as the owner of the entire lands and can record its ownership only over the surplus portions.