Supreme Court Upholds Development Charges on Restored Land: Lucknow Development Authority vs. Gopal Das (2019)

Date of the Judgment: July 24, 2019

Citation: (2019) INSC 746

Judges: L. Nageswara Rao, J. and Hemant Gupta, J.

Can a development authority charge development fees when restoring land to its original owner, even if the specific land was not directly developed but is part of a larger developed scheme? The Supreme Court addressed this question in a case concerning the Lucknow Development Authority (LDA) and a landowner whose land was acquired but later sought to be restored. The core issue was whether the LDA could levy development charges on the landowner when the land was being restored, despite the fact that the land itself had not been specifically developed. This judgment was delivered by a two-judge bench of Justice L. Nageswara Rao and Justice Hemant Gupta, with the majority opinion authored by Justice Hemant Gupta.

Case Background

The Lucknow Development Authority (LDA) acquired 168.592 hectares of land in 1981 for the Sitapur Road City Extension Scheme. This acquisition was made under the Land Acquisition Act, 1894. Among the acquired land was 1.200 hectares belonging to the respondents. The respondents later sought to have their land released from acquisition under Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973, arguing that the land had not been utilized for the purpose it was acquired for. On May 23, 2011, the State Government ordered the restoration of the land to the respondents, subject to the payment of certain charges, including development fees. The LDA then demanded Rs. 1,57,22,056 from the respondents, which included the cost of acquisition and development fees. The respondents challenged this demand, leading to the present case.

Timeline

Course of Proceedings

The respondents challenged the demand for development charges before the Allahabad High Court, Lucknow Bench. The High Court quashed the LDA’s order dated July 29, 2011, and directed the LDA to recover the costs from the authorities who passed the impugned order. The High Court reasoned that the LDA could not levy development charges on the respondents because no development work had been carried out on or near their specific land. The High Court observed that the development activities were primarily on the eastern side of the railway line, whereas the respondents’ land was on the western side, and that there was no evidence that the respondents benefited from the development work carried out by the LDA. The LDA then appealed to the Supreme Court.

Legal Framework

The case primarily revolves around Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973, which deals with the compulsory acquisition of land. Specifically, the proviso to Section 17(1) is crucial, which states:

“Provided that any person, from whom any land is so acquired, may after the expiration of a period of five years from the date of such acquisition apply to the State Government for restoration of that land to him on the ground that the land has not been utilised within the period for the purpose, for which it was acquired and if the State Government is satisfied to that effect it shall order restoration of the land to him on re-payment of the charges which were incurred in connection with the acquisition together with interest at the rate of twelve per cent per annum and such development charges, if any, as may have been incurred after acquisition.”

This provision allows for the restoration of acquired land if it has not been used for its intended purpose within five years, subject to the repayment of acquisition costs, interest, and development charges.

Arguments

Arguments by the Lucknow Development Authority (LDA):

• The LDA argued that the land in question is part of a larger planned scheme and that substantial development work, including roads, electricity, water, and sewer lines, has been carried out in the area.
• The LDA contended that development under the Act means the development of the entire area as a whole and not just the land of individual landowners.
• The LDA submitted that 97.1% of the total acquired land has been developed, and the fact that the respondents’ specific land was not plotted or allotted does not mean that no development has taken place in the area.
• The LDA asserted that the respondents cannot avoid paying development charges when seeking the restoration of their land, as the development was for the entire area.

Arguments by the Respondents:

• The respondents argued that no development work has been carried out on their specific land or in its vicinity.
• The respondents relied on the High Court’s finding that the development was primarily on the eastern side of the railway line, while their land was on the western side.
• The respondents contended that they have not benefited from any development work done by the LDA and should not be subjected to development charges.
• The respondents also pointed out that some other land acquired as part of the same scheme has been released under Section 24 of the Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, and therefore, they should not be treated differently.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the court addressed was:

1. Whether the High Court was correct in setting aside the demand for development charges by the LDA.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court did not cite any specific cases or books in this judgment. The judgment primarily relied on the interpretation of Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973: The Court interpreted the proviso to Section 17(1) to mean that development charges are applicable if development has been carried out in the larger acquired area, not just on the specific land being restored.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the interpretation of the term “development charges” within the context of Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973. The court emphasized that the development of the entire acquired area should be considered, not just the specific land being restored. The court noted that 97.1% of the acquired land had been developed with infrastructure like roads, electricity, water, and sewer lines. This indicated that the LDA had indeed carried out substantial development in the larger area, even if the respondents’ specific land was not plotted or allotted. The court also considered the fact that the respondents’ land was part of a larger planned scheme, and the development was intended for the entire area.

The court reasoned that the High Court had incorrectly interpreted the term “development” in the context of the Act. The Supreme Court emphasized that the development should be considered for the entire acquired area, not just the specific land being restored. The court noted that 97.1% of the acquired land had been developed with infrastructure like roads, electricity, water, and sewer lines. This indicated that the LDA had indeed carried out substantial development in the larger area, even if the respondents’ specific land was not plotted or allotted. The court also considered the fact that the respondents’ land was part of a larger planned scheme, and the development was intended for the entire area.

The court highlighted that “It is not some part of the land acquired is required to be taken into consideration, to find out as to whether any development has been carried out in the land acquired.” The court also stated that “The development is to be examined in respect of the land acquired.” Furthermore, the court clarified that “It is categorical stand of the appellants that they have constructed road, provided electricity, water and laid sewer lines and, therefore, the respondents cannot avoid payment of development charges while seeking restoration of land in terms of Section 17 of the Act.”

The Supreme Court did not discuss any minority opinions since it was a unanimous judgment.

Key Takeaways

• Development charges can be levied on restored land if the larger acquired area has been developed, even if the specific land was not directly developed.
• Development under the Uttar Pradesh Urban Planning and Development Act, 1973, refers to the development of the entire acquired area, not just individual plots.
• Landowners seeking restoration of their land under Section 17 of the Act are liable to pay development charges if the development authority has carried out development in the larger area.

Directions

The Supreme Court set aside the demand letter/order dated July 29, 2011, and directed the LDA to communicate the amount incurred on acquisition and development charges to the respondents after giving them an opportunity of hearing. The court also clarified that it would be open to the respondents to seek remedy, if any, under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, in accordance with law.

Development of Law

The ratio decidendi of this case is that the term “development charges” under Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973, should be interpreted to include development of the entire acquired area, not just the specific land being restored. This clarifies that development authorities can charge development fees even if the specific land was not directly developed, provided development has been carried out in the larger acquired area. This judgment establishes a clear position on how development charges should be applied in cases of land restoration under the Act.

Conclusion

The Supreme Court’s judgment in Lucknow Development Authority vs. Gopal Das clarifies the scope of development charges under Section 17 of the Uttar Pradesh Urban Planning and Development Act, 1973. The court held that development charges can be levied on restored land if the larger acquired area has been developed, even if the specific land was not directly developed. This decision ensures that development authorities can recover costs for infrastructure development in larger schemes, even when specific pieces of land are restored to their original owners.