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Home / Mumbai News / Bombay high court upholds State’s power to recover ‘unearned income’ on leased lands

Bombay high court upholds State’s power to recover ‘unearned income’ on leased lands

The bench struck down demand notices issued by the revenue department against certain companies.

mumbai Updated: May 09, 2018, 00:34 IST
Kanchan Chaudhari
Kanchan Chaudhari
Hindustan Times
Bombay High Court
Bombay High Court(HT Photo)

The Bombay high court has upheld the state government’s power to levy and recover ‘unearned income’ if lease-hold rights in government lands are transferred or assigned to another person or entity. The court has, however, held the amendment to the Maharashtra Land Revenue (MLR) Code to be applicable prospectively – to the transfers or assignments entered into after August 22, 2016, the day on which the amendments came into force, thus resulting in substantial loss to the state exchequer.

The division bench of Justice SC Dharmadhikari and Justice Bharati Dangre declared the 2016 amendments to the MLR Code – addition of Section 37A and amendment to Section 295 as constitutional, legal and valid. The sections empowered the government to allow the transfer or assignment of lease-hold rights of government lands and also to charge and recover from the lessee the unearned income – the difference between sale price and the occupancy price paid to the government.

While the bench upheld constitutionality of the amendments to the MLR Code, it struck down demand notices issued by the revenue department to Hindustan Unilever Limited, Glider Buildcon Realtors Private Limited and Mangla Hospitality Limited. The government had demanded sum of ₹94.24 crore from Hindustan Unilever, ₹20.03 crore from Mangala Properties; and ₹454.35 crore from Glider Buildcon Realtors, which has purchased close to 30,915 square meters of land abutting Byculla Zoo from Mafatlal Industries.

The companies and realty firms had approached the high court to challenge the demand notices issued to them on various grounds and had also challenged constitutional validity of the 2016 amendment to the MLR Code.

The court, however, rejected their challenge to the 2016 amendment. “If one bears in mind that this is in relation to government land or public property, then, it is but expected that if these leasehold rights, which are capable of being further assigned or transferred, shall be done so only with the prior permission of the Collector,” it said, adding, “That shall be also subject to payment of such premium on account of unearned income and transfer fees or charges, at such rates, as may be specified by the government by an order from time to time.”

The bench added that eventually, the sharing is for the benefit of the public at large. “The gains are computed in terms of money and would only augment public revenue. This will ultimately benefit the public exchequer. This will enable the government of the day to spend these monies for the benefit of the urban and rural poor. This benefit will be passed on to the deserving beneficiaries.”

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