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
