The Supreme Court of India (“Supreme Court“), vide its Order dated 2nd July 2019, in the matter of Maharashtra Chamber of Housing Industry, through Chief Manager Finance Mr. Chandra Prakash Goyal & Ors. vs. The State of Maharashtra, through Secretary Urban Development Department & Ors., bearing Civil Appeal No. 558 of 2017 (“Order“), permitted the State of Maharashtra to implement the recommendations of Committee headed by Hon’ble Justice Shri B. N. Srikrishna, retired Judge of the Supreme Court (“Committee“), made in its Report dated 9th August, 2018 (“Report“), which inter alia provides for imposing of one premium for completion of Schemes under Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976 (“ULC Act“). In pursuance of the said Order, the Government of Maharashtra (“State Government“), through Urban Development Department vide Government Order No. ULC-2018/Case No. 51/ULC-1 dated 1st August 2019 (“Government Order“), decided to impose one time premium in respect of development of areas under the scheme exempted for various purposes under Section 20 of the ULC Act.

BRIEF HISTORY OF ULC ACT AND BACKGROUND OF THE CASE:

The ULC Act was enacted by the Parliament of India in the year 1976 with a laudable object to inter alia impose ceiling on the holding of vacant land; to prevent concentration of urban properties in the hand of few persons and to ensure equitable distribution/ utilization of urban vacant lands. The ULC Act was adopted by many States in India including the State of Maharashtra. The ULC Act was enforced in nine (9) agglomerations of the State of Maharashtra by the State Government. When the ULC Act was enforced, the possession of surplus vacant lands was taken by the concerned authority by following the procedure prescribed under the ULC Act. In 1986, the State Government issued a circular dated 22nd August 1986 and decided to exempt certain surplus vacant lands from the provisions of Chapter III of the ULC Act and adopted the practice of granting exemptions under Section 20 of the ULC Act, where the vacant lands were to be utilized for specified purposes. Under the specified guidelines, the exemptions under Section 20 were granted for various purposes and the exemption holder was obligated to implement the terms and conditions of the exemption order.  

However, the ULC Act failed miserably to achieve its precise intent and object, but rather resulted in pushing up the land prices in the State to an exorbitant level. It further led to copious opportunities for corruption. The Parliament, therefore, thought to repeal the ULC Act. The ULC Act came to be repealed by the Urban Land (Ceiling & Regulation) Repeal Act, 1999 (“Repeal Act“). The Repeal Act, however, enabled the different State Legislatures to adopt and implement the repeal from different dates. The Maharashtra State Legislature adopted the Repeal Act with effect from 28th November 2007.

Section 3 of the Repeal Act provided that the repeal of the ULC Act shall not affect the vacant lands which had already been vested under Section 10(3) of the ULC Act, of which the possession had been taken over by the State Government or by the Competent Authority, before coming into force of the Repeal Act and (ii) the validity of any order granting the exemption under Section 20(1) of the ULC Act or any action taken thereunder, notwithstanding any judgment of any Court to the contrary. The text of Section 3 of the Repeal Act is reproduced hereinbelow verbatim:

This provision of the Repeal Act brought up several issues and concerns arose mainly in cases where action under the ULC Act had been initiated but was not concluded. These issues and concerns invited interpretation of saving clauses of the Repeal Act, and broadly, whether State Government could take any action in case of breach of conditions of exemption order issued under Section 20(1) of the ULC Act.  

To add to the anguish, even pursuant to the Repeal Act, the Competent Authority under the ULC Act issued certain circulars whereby it directed the municipal corporations not to sanction building plans, as also prohibited registration of conveyance/ agreements in respect of flats constructed under Section 20(1) of the ULC Act. Further, Municipal Corporation refused to sanctioned plans for the tenements of larger size if the scheme sanctioned under Section 20(1) of the ULC Act provided that the tenement should be constructed of smaller size.

The provision of the Repeal Act was challenged by filing of several writ petitions before the Hon’ble Bombay High Court (“Bombay High Court“) which resulted in conflicting judgments. Ultimately, the position of law was clarified by the Full Bench of the Bombay High Court vide its judgment dated 23rd June 2014 which upheld the validity of the exemption order granted under the ULC Act and clarified that Section 3(1)(b) of the Repeal Act did not expressly bar or take away the rights and liabilities under the exemption order issued to persons who sought and held surplus vacant land by virtue of such exemption order. Further, the repeal of the ULC Act would not affect the rights, privileges, obligations or liability, acquired or accrued, or incurred under the ULC Act qua Section 20(1) of the exemption order. The Full Bench judgement of the Bombay High Court came to be challenged in the Supreme Court in the Maharashtra Chamber of Housing Industry & Ors. vs. The State of Maharashtra & Ors. (Supra).

During the pendency of the appeal, the State of Maharashtra constituted a Committee (Supra) vide Government Resolution dated 16th June 2017 (i) to explore the possibility of imposing one time premium for completion of schemes under Section 20 of the ULC Act; (ii) to suggest the measures to be taken with regards to the lands exempted from the ULC Act for agricultural and industrial purposes; and (iii) to suggest measures to be taken for redevelopment of the schemes under Section 20 of the ULC Act already constructed.

In the light of the existing ground realities submitted in the Report of the Committee, the Committee was of the view that the objective of the ULC Act could be achieved by granting permission for development in the exempted lands upon charging appropriate premium to develop which could be utilized for meeting the objective of the ULC Act.

The suggestions made by the Committee in its Report were accepted by the Appellant and the State of Maharashtra. The aforesaid Civil Appeal in the Supreme Court came to be disposed of, thereby permitting the State Government to implement the recommendations made in the Report of the Committee. Further, the Supreme Court also clarified that if any of the categories of the exemption are not covered in the Report, then it is open to such exemption holders to make a representation to the State Government and it will be incumbent for the State Government to consider the same keeping in mind the recommendations made in the Report.

CONCLUSION:

Considering the Report of the Committee, the Urban Development Department of the State Government has passed the said Government Order thereby giving effect to the recommendations made by the Committee in its Report and laying down the conditions for implementing the recommendations. The State Government made the following decision and levied the following premium for regularizing the land exempted under Section 20 of the ULC Act:

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