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Court strikes down resolution on compounding fees from Pune builders
Any demand by a statutory body is required to be backed by an authority of law , says court
The Bombay high court (HC) recently struck down a May 2011 general body resolution of the Pune Municipal Corporation (PMC) under which civic officers recovered from builders crores of rupees for violating the Maharashtra Regional and Town Planning Act, 1966.
The PMC had collected the money as ‘compounding charges’. The division bench of justice SC Dharmadhikari and justice BP Colabawalla also struck down a circular issued by the PMC in June 2011 for levying and recovering the ‘compounding charges’.
The bench said that any demand by a statutory body is required to be backed by an authority of law and such charges cannot be levied and recovered only on the strength of general body resolutions of a municipal corporation. “We have clearly found the absence of a legal backing to the demand,” the court said while striking down the circular. The HC was hearing a bunch of petitions challenging the validity of both, the resolution and the circular.
One of the petitions was filed by Divgi Metal Wares Private Limited, which was developing a property within PMC limits. The firm had received a notice from the civic body on April 23, 2012.
The notice demanded a sum of ₹3.61 cr from the company towards compounding charges, for three different violations unauthorised occupation, unauthorised usage and construction beyond sanction. Petitioners contended that as a planning authority, the PMC has power to take action against offences committed under the Maharashtra Regional and Town Planning Act, 1966. However, they said the legal provisions dealing with unauthorised development do not empower the authority to recover any money and it can only prosecute the wrongdoers.
