V.GOPALA GOWDA, CJ & B.N.MAHAPATRA, J. W.P.(C) NO.1738 OF 2009 (Decided on 17.05.2011) MAHENDRA KUMAR PUJARI & ANR. ………Petitioners. .Vrs. STATE OF ORISSA & ANR. …….…Opp.Parties. ORISSA DEVELOPMENT AUTHORITIES ACT,1982 (ACT NO.14 OF 1982) For Petitioner - M/s. Biswajit Mohanty, S.Patra, P.K.Mohapatra, A.Panda, S.J.Mohanty and D.D.Sahu. For Opp.Parties- Addl. Govt. Advocate (For O.P.No.1) M/s. Dayananda Mohapatra, M.Mohapatra, G.R.Mohapatra & S.P.Nath (for O.P.No.2) B.N. MAHAPATRA, J. This writ application has been filed with a prayer for quashing order No.24977/CDA/dated 28.11.2008 (Annexure-2) passed by opposite party No.2-Secretary, Cuttack Development Authority wherein petitioner no.1-Mahendra Kumar Pujari has been intimated that his request for 3rd party transfer of Plot No. C/1167 under ‘C’ Category will be considered subject to payment of Rs.3,38,354/-, Rs.15,000/- and Rs.5,760/- towards Administration & Processing fees, building charges and service charges from 1996 to 2007 respectively. Alternatively the petitioners have prayed for reducing the above charges by taking into consideration the rates prevailing as on 01.02.2005 i.e. the date on which the transferor made application for transfer of the said plot in favour of petitioner no.2-Rukmini Satapathy within a specified time. 2. Petitioners’ case is that petitioner no.1 was allotted with Plot No.C-1167 under ‘C’ category in Sector 6 of Bidanasi Project Area. After taking possession, the petitioners constructed a two storied building thereon. Since petitioner no.1 was badly in need of money, he acceded to the request of petitioner no.2 for transfer of the said plot with building thereon. According to petitioner no.1, on 01.02.2005 he submitted an application along with all the requisite documents for transfer of the said plot in favour of petitioner no.2-Smt. Rukmini Satapathy in the office of opposite party no.2-Secretary, Cuttack Development Authority. Thereafter petitioner no.1 sent a reminder on 10.10.2006 with a request to take early decision in the matter. By notice dated 30.06.2006 petitioner no.1 was directed to remove deviation portion from roof projection of the building. According to petitioner No.1, that is a fresh allegation and the same was not taken note of in the earlier order passed on 15.09.1999 in U.C. No. 31 of 1998. The order dated 15.09.1999 directing payment of compounding amount fixed therein was complied with on 27.09.1999. In response to the notice dated 30.6.2006, petitioner No.1 intimated the Cuttack Development Authority (for short, ‘C.D.A.’) that the allegation made is misconceived and illegal. However, on receiving the order on 27.03.2008 fixing the second compounding amount, petitioner no.1 paid the same on the next date i.e. 28.03.2008. Thereafter by notice dated 11.06.2008, petitioner no.1 was directed to appear along with the prospective transferee for verification of the signature and establish his identity along with the documents mentioned in the said letter. Petitioner no.2 also in the said letter was requested to submit an undertaking in the form of affidavit to take the liability of the building. Again petitioner no.1 received notice dated 22.7.2008 to appear on 11.8.2008 for hearing of U.C. Case No.31 of 1998. After repeated requests, the C.D.A. vide their order No.19751 dated 09.09.2008 intimated petitioner no.1 that his proposal for third party transfer would be considered subject to deposit of Rs.3,93,435/- i.e. 50% of unearned increase towards administration and processing fees Rs.5,760/- and Rs.15,000/- towards service charges and building charges from 1996 to 2007 respectively, besides the ground rent of Rs.720/- up to 2009. 3. Being dissatisfied with the order dated 09.09.2008, petitioner No.1 preferred an appeal before the Commissioner-cum-Secretary, Urban Development Department, Government of Orissa praying for down ward revision of fees assessed on different heads. The Vice-Chairman, C.D.A. heard the matter and while reducing the administration and processing fees to Rs.3,38,354/-, he kept other fees in tact. Thereafter, opposite party no.2 issued the impugned order vide Annexure-2. Hence, the present writ petition. 4. Mr. Mohanty, learned counsel appearing on behalf of the petitioners submitted that the order passed under Annexure-2 is illegal, arbitrary, unusual, highly unreasonable, irrational, without any authority of law and a product of total non- application of mind. It is submitted that without any reason, the C.D.A. is making inordinate delay in disposing of the application for third party transfer. He further submitted that the cost of the land should have been assessed on the basis of the rate prevalent on the date the application for transfer was made. The cost should not be the rate prevailing on the date of issuance of order dated 28.11.2008. Similarly, the fees under different heads, as prevalent at the time of/or on the date the application for transfer of the plot to 3rd party was made, should have been charged. The said other charges should not have been fixed as per the rates prevailing on the date of issue of order dated 28.11.2008. It is further argued that prior to July, 2007 there was no provision for 3rd party transfer and also fixation of fees. The impugned order is neither a speaking one nor a reasoned order. Therefore, it is not sustainable in law. It was further submitted that while Bhubaneswar Development Authority is charging 10% of the unearned increase towards administration and processing fees, there is no reason as to why C.D.A. is charging 50% of the unearned increase. Thus, there should be one set of rate in both the cities. Disparity in charging the administration and processing fees with reference to unearned increase is hit by Article 14 of the Constitution. The C.D.A. should not be allowed to have unbridled power with regard to 3rd party transfer. Therefore, the impugned order is liable to be quashed. 5. Mr. D. Mohapatra, learned counsel appearing for opposite party no.2 submitted that the lease granted by C.D.A. did not provide to create subsequent allottee. However, as per the decision of the authority and on consideration of requirement of allottees and their need, C.D.A. allowed them to find out purchasers who are to be regarded as lessee under C.D.A. on termination of lease in favour of the original allottee subject to compliance of provisional allotment letter read with brochure conditions. The allotment clearly mentioned that the allottee requiring transfer of allotted plot should deposit 50% of unearned increase which is calculated on the basis of the assessment made i.e. difference between the premium paid and market value of the plot on the date of 2 transfer/sale/assigning etc. besides payment of processing fees etc. In the instant case, the transfer was approved by the Vice-Chairman, C.D.A. on 06.08.2008 and the differential cost along with other charges were calculated at Rs.4,14,914/-. It is further submitted that some inadvertent mistakes occurred in different communications including Annexure-2 mentioning the unearned increase as the administration and processing fees. The amount charged is nothing but differential cost payable as specified in the allotment letter and brochure condition read with the decision of the Authority. Subsequently, petitioner no.1 made a representation to the Commissioner- cum-Secretary, Urban Development Department on 20.10.2008 which was referred to C.D.A. for consideration. In consideration of his representation, the differential cost was charged on the basis of market value for the year 2007-2008 and accordingly, the amount was reduced to Rs.3,59,834/- against the earlier demand of Rs. 4,14,914/-. The application for 3rd party transfer is subject to payment of 50% of the differential cost calculated as per the procedure prescribed in the brochure. Processing fee and consolidation fee charged for the building also form part of the processing fee besides ground rent etc. if any, found due. On deposit of the aforesaid amount, the original allottee is required to cancel the lease deed and the prospective purchaser chosen by the original alottee is put in as a lessee with the condition fixed by the C.D.A.. The lease deed executed is subject to payment of registration fee and payment of stamp duty before the Sub-Registrar by the 3rd party for the standing construction as per the valuation made by the 3rd party. Clause-7 of the brochure stipulating condition of the provisional allotment letter (Annexure-A/2), clearly mentioned the procedure and criteria to be complied with in case of 3rd party transfer. Petitioner no.1 keeping his eyes open agreed to such conditions and accepted the allotment. Subsequently, any challenge to the said conditions and/or praying for annulment of the same before this Court in exercise of its writ jurisdiction is not sustainable. Moreover, this is a purely contractual matter and petitioner no.1 having agreed to such condition, now is estopped from raising any contention in that regard before this Court either on the ground of maintainability or on the ground of merit. 6. On rival contentions of the parties, the following questions fall for consideration by this Court: (i) Whether the Cuttack Development Authority has any power/authority to charge and recover 50% of the unearned increase in the value of the plot (i.e., difference between the premium paid and market value of the plot on the date of transfer) at the time of sale/transfer/assigning etc. of an allotted plot to a third party in terms of clause 7 of the provisional allotment brochure? (ii) Whether recovery of 50% of the unearned increase in the value of the plot (i.e. difference between the premium paid and the market value of the plot on the date of transfer) as claimed by the C.D.A. is unreasonable/arbitrary and hit by Article 14 of the Constitution particularly when Bhubaneswar Development Authority functioning in twin city is charging 10% of such unearned increase in the value of the plot? 7. Question no.(i) relates to power/authority of CDA to levy and recover 50% of unearned increase in the value of the plot (i.e. difference between the premium paid and market value of the plot on the date of transfer) at the time of sale of an allotted plot to a 3 third party. In order to deal with question No.(i), it is necessary to know what is contemplated in Clause -7 of the Provisional Allotment letter. “7. That you will not be entitled to transfer the plot with building by way of sale or otherwise part with possession of the whole or part of the same (except by way of inheritance ) without the previous consent of the Authority in writing. The authority reserves the right to refuse to give such consent, in its absolute discretion, without assigning any reason therefor. In the event of transfer or otherwise parting with possession of the plot with building, made without obtaining previous consent of the Authority in writing, such transfer or parting with possession shall not be recognized by the Authority and it shall be open to the Authority to cancel the allotment/terminate the lease and résumé the plot. In the event of the consent being given to such transfer the Authority reserves the right to impose such terms and conditions for such transfer, as it may think fit and the Authority shall be entitled to claim and recover a portion of the unearned increase in the value of the plot (i.e. difference between the premium paid and the market value of the plot on the date of transfer) at the time of sale/transfer/assigning etc; the amount recoverable being 50% of the unearned increase. The decision of the Authority, regarding fixing of the market value of the plot referred to above, shall be final and binding. In case the Authority feels that the plot, if transferred, will cause inconvenience to the neighboring allottees or the plot is required for its own use, it shall exercise the right of pre-emption and will pay to you the market value of the plot minus 50% of the unearned increase plus the depreciated cost of building, if any, as determined by registered valuers. Provided that in case of transfer to direct blood relations (sons, daughters, parents only) 50% of the unearned increase in value would not be payable.” 8. Mr. D. Mohapatra, learned counsel appearing on behalf of the C.D.A. fairly conceded that except the Urban Development Act no rule has been framed to regulate the activities of the Developmental Authorities in urban area and in the Urban Development Act, there is no such provision which empowers the Cuttack Development Authority to charge 50% of the differential value between the premium paid and the market value of the plot on the date of sale/transfer/assigning etc. Mr. Mohapatra except saying that such a condition is stipulated in the brochure as per the decision taken by the Developmental authorities, he has not drawn our attention to any statutory provision from which the C.D.A. derives power to collect 50% of the differential amount between the premium paid and the market value of the plot on the date of transfer under any head or nomenclature including ‘administration and processing fees’. Thus, any condition put in the allotment brochure/letter or lease deed by the Authority, which is not provided in the Statute, cannot have the legal sanction behind it and therefore, the same is not valid. 9. The other important aspect of the case is that levy and collection of 50% of the differential value between premium paid and market value of the land at the time of sale/ transfer/assigning by C.D.A. from allottee-transferor is nothing but a levy on the income earned by the allottee on sale of his asset. In other words, it is a tax on the income. 4 Mere giving of the nomenclature like “Administration & Processing Fees” cannot change the characteristics of levy. Any charge/levy on such income is nothing, but a tax on income which is covered under Entry No.82 of List-I – Union List of Seventh Schedule to the Constitution of India. Thus, imposition of such levy is beyond the legislative competence of the State or its instrumentalities as levy on income is a Union subject under List-1 of Schedule-VII of the Constitution. Moreover, for earning such income on sale of the allotted plot, petitioner No.1 is required to pay income tax under the Income Tax Act, 1961 and also is required to pay 50% on the self-same income to CDA which is not permissible under the law. As noted above, even there is no provision in the statute for charging and collecting such levy. 10. In view of the above, we are of the considered view that C.D.A. has no power/authority to charge and recover 50% of the differential amount between the premium paid and market value of the plot at the time of sale/transfer/assigning etc. of an allotted plot by an allottee to a third party in terms of clause 7 of the provisional allotment brochure. The provisions contained in clause 7 of the provisional allotment brochure to that extent are void. 11. Question No.(ii) is whether recovery of 50% of the unearned increase in the value of the plot (i.e. difference between the premium paid and the market value of the plot on the date of transfer) as claimed by the C.D.A. is unreasonable/arbitrary and hit by Article 14 of the Constitution particularly when Bhubaneswar Development Authority functioning in twin city is charging 10% of such unearned increase in the value of the plot. 12. In view of our finding that CDA has no authority/power to levy and recover 50% of the differential amount between the premium paid and market value of the plot on the date of sale/transfer/assigning etc. there is no need to answer question No.(ii) as the same is merely an academic issue in this case. 13. For the reasons stated in the preceding paragraphs, we quash the order dated 28.11.2008 passed under Annexure-2 by opposite party No.2-Secretary, Cuttack Development Authority so far as it relates to asking petitioner No.1 to pay 50% of the differential amount between the premium paid at the time of the allotment and market value of the plot on the date of sale/transfer/assigning etc. The C.D.A. is directed to transfer the property in favour of petitioner No.2-Smt. Rukmini Satapathy without charging and collecting 50% of the differential amount between the premium paid and the market value of the plot on the date of sale/transfer/assigning etc. within a period of two months from today subject to payment of other charges directed to be paid in the said order. 14. In the result, the writ petition is allowed to the extent indicated above. Writ petition allowed. 5