ULC premium to be imposed only on surplus vacant land and not land held within ceiling limits.



The Urban Land (Ceiling and Regulation) Act, 1976 (“the ULC Act”) stood repealed by the Urban Land (Ceiling and Regulation) Repeal Act, 1999 (“the Repeal Act”). On 3rd September 2014, a Full Bench of the Bombay High Court considered the effect of the Repeal Act in Maharashtra Chamber of Housing Industry & Ors v State of Maharashtra & Anr.   The majority held that exemptions granted under Section 20 of the ULC Act did not abate on repeal. The State Government (“State Government”) appointed a committee under the chairmanship of Mr. Justice B.N. Srikrishna (as he then was) and this committee recommended that the issue of exemption orders under Section 20 could and should be closed by accepting a certain payment. This led to the State Government issuing two Government Resolutions dated 1st August 2019 (“2019 GR”) and 23rd June, 2021 by which it effectively offered to close all pending issues regarding surplus land and retention land by accepting a payment, called a premium.


Although these government resolutions were a welcome step towards resolving and removing restrictions in development and transfer of affected lands, the computation of the premium payable and the basis of calculation of the same, have not been without controversy.


Orders under Section 20 of the ULC Act (“S. 20 Orders”) usually include a schedule which sets out the total land holding of the person in question. To this total landholding, certain permissible deductions are made of areas which the person is allowed to hold, for example, of areas which are non-vacant or which are affected by reservations. The balance land which is left over i.e. the “surplus vacant land” or a portion thereof was then granted exemption under Section 20 subject to certain terms and conditions. These terms and conditions typically contained restrictions on use and transferability and such restrictions were replicated on revenue records to ensure compliance.


It appears that different interpretations were being drawn by the authorities of the 2019 GR and in some cases, premium was computed and demanded basis the entire landholding, and not only basis the exempted land. In other cases, premium was computed and demanded basis only the exempted land. To further confuse matters, even in cases where premium was demanded only on the exempted land and was accordingly paid, authorities refused to remove the entries in revenue records citing the reason that the entry related to the entire parcel of land and not just the exempted land, and as premium was not paid on the entire parcel, the entry could not be removed.


By a recent judgment, the Hon’ble Bombay High Court has finally decided on the correct interpretation of the 2019 GR which should, going forward, hopefully lead to consistency in the computation and demand of premium under the 2019 GR.








The facts of the matter before the Bombay High Court in brief were as follows:

The petition was filed by a landowner and developer (“Petitioners”) in reference to a land admeasuring17,429 square metres or thereabouts comprised in two city survey numbers, CTS 124 and 125 in Marol, Andheri, Mumbai.


A S.20 Order was passed by the competent authority on 15th May 2008 in respect of this land. A schedule to this S.20 Order set out details relating to this land and basis certain deductions on account of reservations and land not in possession, the “net balance land” was computed as 8,377.40 square metres.


From this “net balance land”, retainable land within the ceiling limit under the ULC Act and not being vacant was stated to be 2990.23 square metres. Deducting this  “retainable land” from the “net balance land”, the surplus vacant land was computed as 5,387.17 square metres.


We note here that although the judgment consistently refers to this land of 5,387.17 square metres as “surplus vacant land”, considering this was a S.20 Order, presumably this area of  5,387.17 square metres was actually the land exempted under Section 20 subject to certain terms and conditions for implementation of the particular scheme set out in the S. 20 Order.


Although not stated in the judgment, from a perusal of the online revenue records available for CTS 124 and 125 admeasuring 14,477 square metres and 1,192 square metres respectively, we note that the property cards of both the CTS numbers reflect an entry stating that the land has been exempted under Section 20 of the ULC Act and cannot be sold without prior permission of the State Government . This entry does not mention any area or portion of these city survey numbers as affected in particular.


On the basis of the applications made by the Petitioners under the aforestated government resolutions, the Government made a demand of premium of Rs.5,15,40,741/- but in doing this, the Government took into consideration 5,271.75 square metres. An area of 115.42 square  metres (which together would have made up 5,387.17 square metres) was left out. The Petitioners paid this demand.


The Petitioners thereafter offered to make payment for the remaining 115.42 square metres and asked that the demand be raised in that regard as well. The State Government then informed the Petitioners that on payment of the amount for the balance area of 115.42 square metres, the entries in the Records of Rights and other records regarding the entire property as being affected by the ULC order would continue to remain in force. In other words, despite the payment, the Revenue Records would continue to reflect the original S. 20 Order.


Being aggrieved by the aforesaid i.e. despite the payment of the premium, the Revenue Records would continue to reflect the original Section 20 order with its restrictions, the Petitioners filed the subject writ petition.





Stand of the Government


The Government’s submission was two-fold. First, that the premium must be charged on the entirety of the land i.e., the “net balance land” of 8,377.40 square metres for the simple reason that it is the failure of the Petitioners to implement the Section 20 scheme that has resulted in this situation in the first place. The second submission is that following any principle of purposive construction, avoidance of mischief, or a principle of executive interpretation, the 2019 GR plainly read speaks of the whole land or the entire land (“ekun shetra” in Marathi). This cannot be, according to him, a reference to a part of the land and has to be a reference to the net balance land. The net balance land is a figure arrived at after already making deductions for reservations and also adjusting for any discrepancies in the then existing land survey records.


The counsel for the Government accepted that the premium being charged as a composite must be so calculated. He however submitted that revenue entries must continue against the entirety of the land because what is being permitted now is a development over what was then computed as “surplus vacant land”, i.e., 5,387.17 square metres, until the premium is paid on the whole land.


Counter Submission of the Petitioners:


The counsel for the Petitioners agreed that it is 5,387.17 square metres which should be the basis of the computation. But there cannot be a continuance of the Section 20 order in the revenue entry against the whole of the land. The retention land, i.e., that which was within the ceiling limit, permissible under the ULC Act and was non vacant land, i.e., 2,990.23 square metres cannot be computed or reckoned for the purposes of computing a premium; and no revenue entry under Section can apply to it. The expression “entire land” or “ekun shetra” (in Marathi) in the 2019 GR means the whole of the surplus vacant land.


Observations of the Hon’ble Bombay High Court:


  1. The decision of a fiveJudge Bench of the Supreme Court in Maharao Sahib Shri Bhim Singhji v Union of India & Ors which dealt with a challenge to the constitutionality of the ULC Act was noted by the Court. In this case, the Supreme Court upheld the constitutionality of the ULC Act except for Section 27(1) because this restricted the transfer of any urban or urbanisable land with a building or a portion of a building and which was within the ceiling area. Effectively, the Supreme Court held that such a restriction on property would be unconstitutional and could not be sustained. (Emphasis supplied)


  1. The Court noted that the Government’s interpretation of charging premium on the entirety of the land, in this case also on the 2,990.23 square metres which was retainable within the ceiling limit would, in light of the Supreme Court judgment in Maharao Sahib render itself entirely unconstitutional. The Court observed that the Petitioners’ counsel was also correct in saying that if the Government’s interpretation of the 2019 GR is to be accepted then this will be nothing but a reintroduction of Section 27(1) in a different form although this has already been held to be


  1. The Court’s attention was also drawn to OlgaTellis and Ors v Bombay Municipal Corporation and Ors. whereby the Supreme Court clearly enunciated the principle that where two interpretations are possible, a Court must strive towards an interpretation that is consistent with a constitutional mandate e., a manner by which we can uphold and enforce the GR.


  1. In view of the above, the Court was of the view that it is true that the Government Resolution dated 1stAugust, 2019 uses the words “entire land” but this has to be read in context and cannot be unreasonably expanded to include lands that under no process of logic or law could be subjected to a premium.


  1. The Court further observed that for land which the Petitioners were always entitled to continue to hold, there cannot be a premium, nor can there be a revenue entry relating to Section 20 of the ULC Act. For the surplus vacant land however, the Petitioners have paid the full premium and therefore are entitled to have the revenue entry deleted.




Though not done in the judgment at hand, we have seen many instances where the State Government had demanded premium on not only net balance land (as was argued by the State Government in this case), but on the entire landholding of the owner (including areas under reservations etc). This judgment now makes clear that this interpretation of the 2019 GR would render the entire GR unconstitutional and all entries on revenue records reflecting a S. 20 Order should be deleted if premium is paid on the surplus vacant land exempted under the S. 20 Order.    This decision will hopefully lead to a consistent manner of (i) raising demands of premium under the 2019 GR and (ii) removal of S. 20 Order entries in revenue records and will allow all stakeholders to evaluate costs more accurately. Although this decision would, in itself, not affect any premium already paid on the basis of the entire landholding, it would remain open for stakeholders to challenge the demand for such payment on the basis of the principles of this judgment.

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