In a ruling likely to offer significant relief to landowners and real estate developers in Maharashtra, the Hon’ble Bombay High Court (“BHC”) in the matter of Salim Alimahomed Porbanderwalla and Anr (“Petitioners”) vs. The State of Maharashtra and Anr. (“Respondent”), has vide its order dated March 30, 2023, ruled that the Government of Maharashtra (“GOM”) cannot charge a premium or make any entry in revenue records [to the effect that the land is affected by the Exemption Order passed under Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976 (since repealed) (“ULC Act“), and transfer prohibited without prior permission] vis-a-vis land retainable under the ULC Act (i.e. the land which is not a surplus vacant land).
- The ULC Act was, inter alia, enacted to prevent concentration of urban lands in the hands of a few and to achieve equitable distribution of land in urban agglomeration for the common good. Pursuant to the ULC Act, no person was entitled to hold, except as provided under the ULC Act, any vacant land in excess of the ceiling limit as prescribed in the ULC Act (i. e. the surplus vacant land). This surplus vacant land was to be acquired by the State Government after following the procedure laid down under the ULC Act. Under Section 20 of the ULC Act, the State Government was empowered to exempt any surplus vacant land on the grounds of the location of such land, the purpose for which such land is being used or proposed to be used or such other relevant factors as the circumstances of the case required or on grounds of undue hardship, by passing an exemption order on such conditions, if any, as may be specified in such order. The ULC Act was not able to achieve its objective. Consequently, the ULC Act was repealed by the Urban Land (Ceiling & Regulation) Repeal Act, 1999 (“Repeal Act”), which was adopted by the Maharashtra State Legislature on November 29, 2007. However, Section 3 of the Repeal Act provided that the repeal of the ULC Act shall not affect:-
“(a) the vesting of any vacant land under sub-section (3) of Section 10, possession of which has been taken over the State Government or any person duly authorised by the State Government in this behalf or by a competent authority;
(b) the validity of any order granting exemption under sub-section (1) of Section 20 or any action taken thereunder, notwithstanding any judgment of any court to the contrary;
(c) any payment made to the State Government as a condition for granting exemption under sub-section (1) of Section 20.”
B. GOVERNMENT RESOLUTION FOR CHARGING ONE-TIME PREMIUM:
In the matter of Maharashtra Chamber of Housing Industry and Ors vs. The State of Maharashtra, the Hon’ble Supreme Court of India vide its order dated July 2, 2019, inter alia, permitted the State of Maharashtra to implement the recommendations of the committee headed by Hon’ble Justice Shri B.N. Shrikrishna, (as he then was). In pursuance thereof, GOM, through its Urban Development Department issued Government Resolution dated August 1, 2019 (“Resolution”), read with Government Resolution dated June 23, 2021, inter alia, for imposing a one-time payment (premium) for permitting development of lands exempted under Section 20 of the ULC Act. The Resolution also provided that once the payment of one-time premium has been made for the surplus vacant land and the permission to develop has been granted by the Competent Authority, then the remarks in the other rights column (of records of rights) shall be deleted only in respect of such land and as regards the remaining land (being the land which was anyways retainable under the ULC Act), the entry in the record of rights shall be deleted only on payment of premium in respect of such remaining land.
ii. Pursuant to the Resolution, the GOM started calculating premium on the entire concerned land, of an exemption holder, instead of only the surplus vacant land forming part thereof.
C. ISSUE INVOLVED
i. The question before the BHC was whether one-time payment (premium) can be charged by the GOM on the entire land (consisting the surplus vacant land and the land retainable under the ULC Act) or only on the surplus vacant land?
Illustration:- If A owns a land admeasuring approximately 10,000 square metres, comprising 4,000 square metres of surplus vacant land and 6,000 sq. metres of retainable land, then can the GOM charge premium on the entire land i.e. 10,000 square metres, instead of only on the surplus vacant land i.e. 4,000 square metres?
D. THE BHC VERDICT
i. In the aforesaid matter before the BHC, the land in question comprised of about 5,387.17 square metres of surplus vacant land and about 2,990.23 square metres of retainable land. The Petitioner paid the premium on the surplus vacant land to GOM as per the demands made by its Urban Development Department. The GOM’s stand was that despite the premium paid on the surplus vacant land, the entry of the entire land (i.e. the surplus vacant land and the retainable land) being affected by ULC order would continue in the revenue records until the premium is paid on the retainable land.
ii. The Division bench of the BHC (comprising Justices Gautam Shirish Patel and Neela Gokhale) has while disposing the aforesaid Writ Petition clarified that though the term used in the Resolution is “entire land”, it has to be read in context. It cannot be unreasonably expanded to include lands that by no logic or law be subjected to a premium. If the GOM interpretation of the Resolution is to be accepted, this will be nothing but the reintroduction of Section 27(1) of the ULC Act (which was held to be unconstitutional by the Apex Court), relating to restriction on transfer of urban or urbanisable land, with a building or portion of a building on it, however, in a different form.
iii. The BHC has held that the GOM cannot charge a premium on retainable land (i.e. the land which the Petitioners were anyway entitled to continue to hold) and there cannot be any revenue entry relating to Section 20 ULC exemption order in respect of such retainable land. It further held that against the payment of premium on the surplus vacant land, the Petitioners are entitled to have the revenue entry deleted. The BHC Order also goes on to clarify that on payment of premium on surplus vacant land, the land becomes free of all conditions stipulated by the Section 20 exemption order.
- The aforesaid judgment would put an end to the practice of (i) GOM charging a premium on land which is not surplus vacant land (i. e. the retainable land) and (ii) continuing the transfer prohibition entry in the land revenue/ city survey records until premium is paid against the retainable land as well. It may be noted that while the Resolution, inter alia, refers to one time premium for permitting development and redevelopment, it makes no reference to permitting sale/ transfer/ assignment of the surplus vacant land. In many matters where permissions were sought for sale/ transfer, permissions which have been issued by GOM are for development/ redevelopment of the properties concerned (without reference of any permission for sale/ transfer/ assignment). However, with the BHC having specifically clarified under its aforesaid order that upon payment of premium on the surplus vacant land, the land will be free from all conditions stipulated by Section 20 Exemption Orders, it can be said that the restrictions on sale/ transfer as contained in the Exemption Orders would cease to be applicable.
- The issue of how excess premium charged by the GOM from landowners/ developers in the past on the entire land will be dealt with by GOM and/ or the courts, will have to be seen.
- The GOM would be expected to come out with the necessary clarifications, in line with the aforesaid BHC order, so that the Competent Authority, ULC/ Urban Development Department would stop the practice of charging a premium on the entire land. This will save the exemption holders (land owners/ holders) and real estate developers from the hardship of filing writ petitions before the BHC for similar relief as granted by the BHC in the above matter and avoid multiplicity of litigations.
 Writ Petition No. 4849 of 2022 of Bombay High Court
 Civil Appeal No. 558 of 2017 of the Supreme Court
 Government Resolution No. ULC-2018/Case No. 51/ULC-1 dated August 1, 2019