Can’t recover contract payments as land revenue arrears, says HC

The Bombay high court (HC) recently held that payments arising out of contractual arrangements cannot be recovered by revenue officials as arrears of land revenue.

The Bombay high court (HC) recently held that payments arising out of contractual arrangements cannot be recovered by revenue officials as arrears of land revenue. The court invoked provisions of the Maharashtra Land Revenue Code (MLRC) and struck down a notice issued by a tehsildar demanding ₹19.36 crore from a firm that used to run Grant Medical College Gymkhana on Marine Drive.

HT Image

The firm, Samani Decorators Private Limited, had approached the HC after the tehsildar on August 30, 2019, issued the notice demanding commercial rent for purported unauthorised use of additional land at Gymkhana for eight years – from November 2011 to August 2019.

The student association of the Grant Medical College along with Sir JJ Group of Hospitals run the Gymkhana, a ground-plus-one storey structure with open space. The firm was roped in and was allotted exclusive right to provide decoration and catering service at the gymkhana.

On February 1, 2019, the firm was served a termination notice on grounds of breach of agreement and was asked to pay mesne profits (profits received by a tenant in wrongful possession) for unauthorised use of the space for private businesses.

A bench of chief justice Pradeep Nandrajog and justice Bharati Dangre, however, held that the amount arose out of contractual agreement and therefore could not be recovered as arrears of land revenue. The bench has, however, granted the medical college the liberty to recover the amount by other legally permissible means.