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Friday, November 9, 2012

Voltas Limited (i) whether the Company breached any of the terms and conditions of the order of allotment; (ii) whether the notice of demand of 50% of unearned income is legal and valid; and (iii) whether the Company was required to be heard before passing of the impugned orders; We, therefore, hold that the State Government allowed the Company to change the use of the land and to develop the surplus land for purposes other than that for which the said land was originally allotted and such permission is in accordance with the terms and conditions as mentioned in the order of allotment dated 20.1.1969. The first question is thus answered in negative, in favour of the company. In the present case, the respondents have failed to show the category to which the Company belongs for determining its liability towards unearned income. 32. Before this Court the respondents have not produced GO dated 21.11.1957; in absence of 1957 policy it is not possible to decide whether the company is liable to pay any amount towards unearned income as per the said policy. The second question is, therefore, not answered and left open for determination. 33. So far as the third question is concerned, admittedly, no hearing was given to the Company before passing the impugned orders. There is nothing on record to suggest the basis on which the respondents determined the unearned income. It is a settled law that no Penal order can be passed without giving any notice and hearing to the affected person. In the present case, admittedly, the impugned orders were passed without giving such notice and hearing to the company; the impugned orders were passed in violation of the Rules of Natural Justice. The third question is thus answered in affirmative in favour of the company. 34. The High Court failed to notice the aforesaid facts and erred in holding that the Company breached terms and conditions of the order of allotment. 35. For the reasons aforesaid, we cannot uphold the impugned orders and the demand notice dated 6.3.2002 issued by the Collector and the order passed by the High Court. All the aforesaid orders are accordingly set aside. The matters are remitted to the Competent Authority to decide whether the Company is liable to pay any amount towards part of the unearned income. Before passing such order, the Competent Authority will issue a fresh show cause notice to the company referring therein the rule/order/guideline, if any, pursuant to which the company is liable to pay part of the unearned income. The company may file an effective show cause reply within four weeks thereof. Thereafter, the Competent Authority after hearing the Company will decide the question and pass an appropriate order in accordance with law. The appeals are allowed with the aforesaid observations and directions but there shall be no order as to costs.



                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 8557 OF 2003



VOLTAS LIMITED                               … APPELLANT
                             VERSUS

TEHSILDAR, THANE & ORS.                      … RESPONDENTS

WITH

CIVIL APPEAL NO. 8558 OF 2003

                               J U D G M E N T


SUDHANSU JYOTI MUKHOPADHAYA,J.


      The Government of Maharashtra acquired the land in question in  favour
of the appellant – Voltas Limited, (hereinafter  referred  to  as  ‘Company’
for short)  and issued a  Sanad  (order  of  allotment)  with  the  specific
condition that the Company shall not in any  way  whatsoever,  alienate  the
said land or any portion thereof by way  of  sale,  mortgage,  gift,  lease,
exchange  or  otherwise  howsoever  except  with  the  prior  permission  in
writing,  of the Government.  After about 24 years,  the order of  allotment
was stayed and the Company was called upon to show cause as to why the  land
should  not  be  forfeited  and  the  amount  of  Rs.14,11,45,851/-  towards
unearned income be not charged as it violated the terms  and  conditions  of
the order of  allotment  by  granting  rights  to  the  developers  for  the
construction  of  houses  and   selling  them  after  development,   thereby
benefiting  to  a  large  extent.  After  submitting   their    reply,   the
respondents issued the impugned orders  against  which  two  writ  petitions
were preferred by the Company for setting  aside  the  orders  imposing  the
charge towards unearned income and the demand notice,  both  of  which  were
dismissed by the impugned common  judgement  dated  10th  March,  2003.  The
Division Bench of the Bombay High Court held that  there  was  a  breach  of
terms and conditions of the order of allotment and, therefore, it  was  open
to the respondents to take the  appropriate proceedings in  accordance  with
law,  including the recovery of unearned profit.
2.    For proper understanding of the question involved, it is necessary  to
state a few facts as hereunder:
      The appellant, a Public Limited Company  engaged in manufacturing  air
conditioners, refrigerators and other items, set up a factory  in  the  year
1966 at Thane, to carry  out  manufacturing  activities  and  for  the  said
purpose, purchased land  admeasuring  about  98,000  sq.  mtrs.  at  village
Majiwada from a private party.  For additional land  needed  to  effectively
continue  with  the  manufacturing  process,  the  Company  approached   the
Government of Maharashtra with the request to acquire land for  the  company
under the provisions of the Land Acquisition Act, 1894 read  with  the  Land
Acquisition  (Companies)  Rules,  1963.   On  its  request,  the  State   of
Maharashtra acquired more than one lakh square metres  of  land  and  handed
it over to the Company.  An order of allotment was issued in favour  of  the
Company on 20.1.1969 with certain terms  and  conditions  mentioned  in  the
said order,  the Condition No.7 of which reads as under:
            “The Company shall not in anywise whatsoever alienate  the  said
           land or any portion thereof by  way  of  sale,  mortgage,  gift,
           lease, exchange or  otherwise  howsoever  except  with  previous
           permission in writing of the Government.”

3.    It was also mentioned in the order of allotment, that  the  land  will
be vested with the Company and shall be held by it as its property,   to  be
used for the purpose of constructing dwelling houses  for  workmen  employed
by the Company and  the  provisions  of  the  amenities  directly  connected
therewith, subject to the provisions of the Maharashtra Land  Revenue  Code,
1966 and the Rules framed thereunder.  It was also stipulated  that,  except
with the previous permission in writing of the Government,  the  land  shall
not be transferred, for any  purpose  other  than  that  for  which  it  was
acquired.  A condition regarding the construction of work was also  imposed,
 with a further  proviso, that should the Company commit  a  breach  of  the
terms and conditions, the transfer of land in favour of  the  Company  would
be treated as  null  and  void  and  the  land  would  revert  back  to  the
Government.
4.    In the year 1976, the Urban Land (Ceiling and  Regulation)  Act,  1976
(hereinafter referred to as  “the  Urban  Land  Ceiling  Act”)  came  to  be
enacted.  In accordance with the provisions of Section 20 of the Urban  Land
Ceiling Act, the Company  submitted  an  application  for  holding  land  in
excess of the ceiling limit by grant of  an  exemption.   The  Company  also
made an application under Section 21  of  the  Urban  Land  Ceiling  Act  on
23.3.1979 for granting an exemption for utilising the land for  construction
of dwelling units to accommodate the weaker sections of  society.   Pursuant
to the application, a Scheme under Section 21 of the Urban Land Ceiling  Act
was passed by the competent authority on 11.1.1984, permitting  the  Company
to use the land for the stated purpose.
      According to the Company, it complied  with  the  said  order  and  to
implement it, entered into an agreement  with  one  “Eversmile  Construction
Private Limited” (hereinafter referred to as ‘developers),  for  development
of the land.
5.    Since one of the conditions of  the  allotment  order,  was  that  the
Company could not alienate the land in any manner without  prior  permission
of the Government, the Company wrote a letter to the Collector and  also  to
the Competent Authority, Thane on 30.9.1986 and sought clarification  as  to
whether the conditions imposed under the Exemption  Orders  dated  11.1.1984
would prevail over and supersede the conditions of the  order  of  allotment
dated 20.1.1969.  In reply to the  said  letter  the  Deputy  Collector  and
Competent Authority, Thane, Urban Agglomeration issued  a  clarification  on
29.10.1986 stating  that  the  condition  relating  to  alienation  of  land
without prior permission as mentioned  in  the  order  of  allotment,  would
stand overridden by the terms of exemption granted under Section  21,  which
reads as