Date of the Judgment: September 30, 2022
Citation: Civil Appeal No. 5809 of 2011
Judges: B.R. Gavai, J., B.V. Nagarathna, J.
Can a state government impose premium charges on the transfer of flats in a cooperative society when the land was initially leased to a builder and not directly to the society? The Supreme Court of India addressed this question in a recent judgment, clarifying the applicability of government resolutions regarding land transfers. The court held that when land is leased to a builder who then constructs flats and transfers them to individual buyers who form a cooperative society, subsequent government resolutions regarding concessional land allotment to cooperative societies do not apply. The judgment was delivered by a two-judge bench comprising Justice B.R. Gavai and Justice B.V. Nagarathna.
Case Background
In 1971, the State Government of Maharashtra invited bids for the lease of several plots of land. M/s. Aesthetic Builders Pvt. Ltd. bid for Plot No. 121 (later renumbered as 119) with the intention of constructing and selling flats on an ownership basis. The plan was that after the sale of flats, the purchasers would form a cooperative society, to which the builder’s rights would be transferred. The State Government accepted the bid and granted a license to the builder to construct a building according to the sanctioned plans.
The builder constructed a 22-story building named Jolly Maker Apartments No. 3, and sold flats to various parties. An occupation certificate for the building was issued on December 12, 1975. One of the flats, Plot No. 211, was initially sold to Mr. A. Madhavan in 1972. In 1977, the flat purchasers formed a cooperative society named Varuna Premises Co-operative Society Ltd., which was registered under the Maharashtra Co-operative Societies Act, 1960. Mr. A. Madhavan later sold his rights to Mrs. Reshmidevi Agarwal in 1978, who subsequently entered into an agreement with Mr. Aspi Chinoy (Respondent No. 1) in 2000. When Mr. Chinoy tried to register the transfer of the flat, the Sub-Registrar declined to do so without a No Objection Certificate (NOC) from the Collector, citing government resolutions requiring premium payments for such transfers.
Timeline:
| Date | Event |
|---|---|
| 1971 | State Government invites bids for lease of land. |
| 1972 | M/s. Aesthetic Builders Pvt. Ltd. wins bid for Plot No. 121 (119 New). |
| November 22, 1972 | Plot No. 211 sold to Mr. A. Madhavan. |
| December 12, 1975 | Occupation certificate issued for Jolly Maker Apartments No.3. |
| 1977 | Flat purchasers form Varuna Premises Co-operative Society Ltd. |
| May 23, 1978 | Mr. A. Madhavan sells his rights to Mrs. Reshmidevi Agarwal. |
| December 16, 2000 | Mr. Aspi Chinoy enters into an agreement to purchase Flat No. 211. |
| June 27, 2000 | Collector directs Sub-Registrar not to register transactions without NOC. |
| September 29, 2009 | High Court of Judicature at Bombay allows writ petition filed by the respondents. |
| September 30, 2022 | Supreme Court dismisses the appeals filed by the State of Maharashtra. |
Course of Proceedings
The respondents filed a writ petition in the High Court of Judicature at Bombay challenging the Collector’s letter dated June 27, 2000, which directed the Sub-Registrar to not register any flat transfers in the buildings without a No Objection Certificate (NOC) from the Collector. The High Court allowed the writ petition, ruling in favor of the respondents. The State of Maharashtra then appealed to the Supreme Court against this decision.
Legal Framework
The case involves the interpretation of the Maharashtra Land Revenue Code, 1966, specifically Section 40 and Section 295, along with the Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971.
Section 40 of the Maharashtra Land Revenue Code, 1966 empowers the State Government to dispose of any land on such terms and conditions as it deems fit. Section 295 of the same code deals with the disposal of lands and foreshore. The Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971, provide guidelines for the disposal of government lands.
The State Government also relied on two Government Resolutions: the 1983 Resolution and the 1999 Resolution. The 1983 Resolution provided for the grant of land to cooperative societies of different categories at concessional rates. The 1999 Resolution was introduced to modify and revise the 1983 policy, stating that some terms and conditions of the previous orders had become outdated.
Arguments
The State of Maharashtra argued that the cooperative society should fall under Class 9 of the Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971, and not Class 5 as held by the High Court. They also contended that the 1999 Resolution superseded the 1983 Resolution and should be applied, entitling the State to claim premium on the transfer of flats. The State also argued that the land allotment was subject to the execution of an Agreement to Lease, and the builder had agreed to abide by all the terms and conditions of the lease.
The respondents argued that the High Court had correctly considered all relevant aspects and that the government resolutions were not applicable to their situation. They contended that the land was not allotted to a cooperative society directly but to a builder, and therefore, the resolutions concerning concessional rates for cooperative societies did not apply.
| State of Maharashtra’s Submissions | Respondents’ Submissions |
|---|---|
|
✓ The Society falls under Class 9 of the Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971, not Class 5. ✓ The 1999 Resolution supersedes the 1983 Resolution and should be applied. ✓ The State is entitled to claim a premium for the transfer of flats as per the 1999 resolution. ✓ The land allotment was subject to the execution of an Agreement to Lease, and the builder had agreed to abide by all terms and conditions of the lease. |
✓ The High Court correctly considered all relevant aspects. ✓ The government resolutions are not applicable to their situation. ✓ The land was not allotted to a cooperative society directly but to a builder. ✓ The resolutions concerning concessional rates for cooperative societies do not apply. |
Issues Framed by the Supreme Court
- Whether the High Court was correct in holding that the Society concerned would fall under Class 5 as earmarked in Rule 10 (1) of the Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971.
- Whether the High Court erred in not considering Class 9 under which the Society in question would actually fall.
- Whether the High Court erred in going into the question as to whether the allotment of land was on a concessional rate or not.
- Whether the High Court erred in relying on the 1983 Resolution.
- Whether the 1999 Resolution is applicable to the present case.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Classification of the Society under the Rules | The Court did not delve into the classification of the society under the Rules, as it found that the resolutions were not applicable to the present case. |
| Applicability of 1983 and 1999 Resolutions | The Court held that the 1983 and 1999 Resolutions, which pertain to the allotment of land to cooperative societies at concessional rates, were not applicable because the land was initially leased to a builder, not a society. |
| Whether the allotment of land was on a concessional rate or not | The Court did not find it relevant to go into this question, as the land was not allotted to a society directly. |
Authorities
The Court considered the following authorities:
| Authority | Court | How it was considered |
|---|---|---|
| Anita Enterprises and Another v. Belfer Cooperative Housing Society Ltd. and Others [2008] 1 SCC 285 | Supreme Court of India | The Court distinguished this case, noting that it was not applicable to the present facts. |
| Section 40 of the Maharashtra Land Revenue Code, 1966 | Maharashtra State Legislature | The Court acknowledged that this section empowers the State Government to dispose of land on such terms and conditions as it deems fit. |
| Section 295 of the Maharashtra Land Revenue Code, 1966 | Maharashtra State Legislature | The Court noted that this section specifically deals with the disposal of lands and foreshore, including reclaimed land. |
| Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971 | Maharashtra State Legislature | The Court considered these rules in the context of the government resolutions. |
| Government Resolution dated 12th May 1983 | Government of Maharashtra | The Court noted that this resolution provided for grant of land to cooperative societies of different categories on concessional rates. |
| Government Resolution dated 9th July 1999 | Government of Maharashtra | The Court noted that this resolution was intended to modify and revise the 1983 policy. |
Judgment
| Submission by the Parties | How it was treated by the Court |
|---|---|
| The State of Maharashtra argued that the Society falls under Class 9 of the Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971, and the 1999 Resolution should be applied, entitling the State to claim premium on the transfer of flats. | The Court did not find it necessary to go into the classification of the society under the Rules. The Court held that the 1983 and 1999 Resolutions were not applicable because the land was not allotted to a society directly but to a builder. |
| The respondents argued that the High Court had correctly considered all relevant aspects and that the government resolutions were not applicable to their situation. | The Court agreed with the respondents and upheld the High Court’s decision, stating that the resolutions concerning concessional rates for cooperative societies do not apply in this case. |
| Authority | How it was viewed by the Court |
|---|---|
| Anita Enterprises and Another v. Belfer Cooperative Housing Society Ltd. and Others [2008] 1 SCC 285 | The Court distinguished this case, noting that it was not applicable to the present facts. |
| Section 40 of the Maharashtra Land Revenue Code, 1966 | The Court acknowledged the power of the State Government to dispose of land but did not find it relevant to the present case. |
| Section 295 of the Maharashtra Land Revenue Code, 1966 | The Court noted that this section deals with the disposal of lands and foreshore, including reclaimed land, but did not find it directly relevant to the issue at hand. |
| Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971 | The Court considered these rules in the context of the government resolutions, but ultimately found that the resolutions were not applicable. |
| Government Resolution dated 12th May 1983 | The Court found this resolution inapplicable as the land was not allotted to a cooperative society directly. |
| Government Resolution dated 9th July 1999 | The Court found this resolution inapplicable as the land was not allotted to a cooperative society directly. |
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the fact that the land was initially leased to a builder, not directly to a cooperative society. The Court emphasized that the 1983 and 1999 Government Resolutions, which provide for concessional rates for land allotted to cooperative societies, do not apply in cases where the land was first given to a builder who then constructed flats and transferred them to individual buyers who subsequently formed a society.
| Sentiment | Percentage |
|---|---|
| Factual analysis of land allotment | 60% |
| Inapplicability of government resolutions | 30% |
| Distinction from cited cases | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 70% |
| Law | 30% |
The Court reasoned that the government resolutions were specifically designed for cases where the land was directly allotted to cooperative societies at concessional rates. In this case, the land was leased to a builder who then sold the flats to individuals. The formation of a cooperative society by these individuals was a subsequent event, and therefore, the resolutions did not apply to them. The Court observed:
“It could thus be seen that, the present case is not a case where the land is allotted to a Co-operative Society by the Government. The land was leased out to the builder, who was the successful bidder and after the ownership of flats was transferred to the private individuals, a Society of the flat owners was formed.”
The Court further clarified: “In that view of the matter, in the peculiar facts and circumstances of the case, we do not find it necessary to consider the submissions advanced by Shri Naphade. As already discussed hereinabove, we find that in the facts of the present case, since the land was not allotted to a society but to a builder on lease, who has constructed flats for private individuals, who have subsequently formed a Co-operative Society, the 1983 Resolution and 1999 Resolution would not be applicable to the members of such a society.”
The Court also stated: “It is further to be noted that though Section 40 of the Code saves the power of the Government with respect to disposal of lands, Section 295 of the Code specifically deals with disposal of lands and foreshore. It is not in dispute that the land in question is a reclaimed land and therefore, is covered under Section 295 of the Code.”
There was no minority opinion in this case. Both the judges on the bench concurred with the decision.
Key Takeaways
- Government resolutions providing concessional rates for land allotted to cooperative societies do not apply when land is first leased to a builder who then sells flats to individual buyers who form a society.
- The crucial factor is the initial recipient of the land: if it is a builder, subsequent formation of a society by flat owners does not bring them under the ambit of resolutions meant for direct allotments to societies.
- This judgment clarifies the applicability of government resolutions and protects the rights of flat owners who purchased flats from builders on leased land.
Directions
The interim stay of the direction for refund of the amount granted by this Court shall stand vacated.
Development of Law
The ratio decidendi of this case is that government resolutions providing concessional rates for land allotted to cooperative societies do not apply when the land was initially leased to a builder. This clarifies the scope of such resolutions and provides relief to flat owners who have purchased flats from builders on leased land. There is no change in the previous position of law, but it clarifies the specific situations where these government resolutions will not be applicable.
Conclusion
The Supreme Court dismissed the appeals, affirming the High Court’s decision. The Court held that the government resolutions concerning concessional land allotment to cooperative societies do not apply when the land was initially leased to a builder who then sold flats to individual buyers who subsequently formed a society. This decision provides clarity on the applicability of government resolutions and protects the interests of flat owners in similar situations.
Category
Parent Category: Land Law
Child Category: Government Land Allotment
Child Category: Maharashtra Land Revenue Code, 1966
Child Category: Section 40, Maharashtra Land Revenue Code, 1966
Child Category: Section 295, Maharashtra Land Revenue Code, 1966
Child Category: Maharashtra Land Revenue (Disposal of Government Lands) Rules, 1971
Child Category: Cooperative Societies
FAQ
Q: What was the main issue in this case?
A: The main issue was whether government resolutions providing concessional rates for land allotted to cooperative societies apply when the land was initially leased to a builder who then sold flats to individual buyers who formed a society.
Q: What did the Supreme Court decide?
A: The Supreme Court decided that these government resolutions do not apply in cases where the land was initially leased to a builder. The resolutions are meant for direct allotments to cooperative societies.
Q: What is the practical implication of this judgment?
A: The practical implication is that flat owners who bought flats from builders on leased land, and then formed a cooperative society, cannot be charged premiums based on government resolutions meant for direct land allotments to cooperative societies.
Q: How does this affect the transfer of flats in such societies?
A: This judgment clarifies that the government cannot demand premium payments for the transfer of flats in these societies based on the resolutions meant for direct land allotments to cooperative societies.
Q: What should flat owners do if they are facing similar issues?
A: Flat owners facing similar issues can rely on this judgment to argue that the government resolutions do not apply to their situation. They should seek legal advice to understand their rights and options.