IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 9626 of 1993 with SPECIAL CIVIL APPLICATION No 9722 of 1993 For Approval and Signature: Hon'ble MR.JUSTICE KUNDAN SINGH ============================================================ 1. Whether Reporters of Local Papers may be allowed : to see the judgements? Yes. 2. To be referred to the Reporter or not? Yes. 3. Whether Their Lordships wish to see the fair copy of the judgement? No. 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? Yes. 5. Whether it is to be circulated to the Civil Judge? : Yes. -------------------------------------------------------------- RELIANCE INDUSTRIES LTD Versus STATE OF GUJARAT -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 9626 of 1993 MR KS NANAVATI for Petitioners MR. JM THAKORE ADVOCATE GENERAL WITH MS HARSHA DEWANI, AGP for Respondent No.1 & 2. MR MD PANDYA for Respondent No. 3 RULE SERVED for Respondent No. 4 MR SN SHELAT for Respondent No. 5 2. Special Civil ApplicationNo 9722 of 1993 MR KS NANAVATI for Petitioners MR JM THAKORE ADVOCATE GENERAL WITH MS HARSHA DEWANI AGP for Respondent No.1 & 2 RULE SERVED BY DS for Respondent No. 3 RULE SERVED for Respondent No. 4 MR SN SHELAT for Respondent No. 5 -------------------------------------------------------------- CORAM : MR.JUSTICE KUNDAN SINGH Date of decision:-22/08/2000 ORAL JUDGEMENT In both these petitions parties are same and common issues are involved and hence both these petitions are tagged with each other and are being disposed of by this common judgment. 2. Spl. C.A. No. 9722/93 has been filed for quashing the scrutiny fee, security deposit and premium. Whereas Spl.C.A. No. 9626/93 has been filed for quashing the development charges imposed and levied by the respondents on the petitioners. Reliance Petrochemicals Ltd. is a Corporate Company of the petitioner no. 1. The land situated in Hajira was a low lying marshy land subject to tidal inundation and natural floods and after construction of Ukai dam the low lying area came up above the high water mark. However, the lands were saline and marshy and unsuitable for agriculture and therefore were lying waste and unutilized. A High Power Committee appointed by the Central Government selected Hazira as the place for development for utilization of Bombay High Gas and Hazira was selected as shore point for the costal gas pipeline. On this Project Report the State of Gujarat took a decision to create development facilities for industrial development of Hazira area. They invited industrialists to set up their units at Hazira. The Gujarat Industrial Development Corporation (GIDC) was appointed as the Operating Agency. For this purpose of preparing blue print for development of the area. Government of Gujarat made representations to the industrialists that all administrative and executive sanctions would be smoothly granted and there would be no bureaucratic interference and hindrances in setting up the industrial units. The units proposed to be set up in Hazira area were also assured that they will not be subject to the property taxes by the local authorities for the specified period. On the assurance of the State Government the petitioner decided to set up Petrochemicals complex at Hazira. On 17th October, 1985 the Government of Gujarat issued a notification through its Urban Development and Urban Housing Department, declaring the area mentioned in the said Notification as Hazira development area and constituted Hajira Area Development Authority for the state development area. They will be referred to as HADA. The notification includes area of eight villages of Chorasi Taluka of Surat District and HADA was constituted as an authority for that purpose by the said notification dated 7-10-1985. The authority acquired the land and were allotted to the various industries. GIDC acquired the lands for the petitioners and the petitioners were allotted approximately about 285 hectares of lands in three instalments between 1986 to 1990. The first allotment was made of 122 hectares on 8-10-1986 and the possession was handed over to the petitioners by GIDC. An area of 152 hectares was allotted and handed over to the petitioners some times on or about 7-6-1989 by the GIDC and a small portion thereafter in third instalment. The lease documents have been executed for the three allotments between the petitioners and GIDC. The entire piece of land was marshy low lying saline lands. It was unfit for any purpose whatsoever including agriculture or construction of any building. The petitioners have spent approximately about Rs.35 crores in levelling the land allotted to them for a building site and for setting up their Petrochemicals units. On 20-12-1988 the petitioners applied to the Deputy Executive Engineer (Road and Buildings) Surat, Division No. 1 of GIDC for permission to construct the boundary wall. The said Engineer granted such permission on 21-12-1988. When the construction of the wall started the Sarpanch of village Mora objected to the petitioners' construction by the letter dated 8-2-1989 as the project was falling in the territorial limits of village Panchayat Mora. The petitioners were asked to obtain permission from the village Panchayat. Hence, the petitioners applied on 3-3-1989 to the Sarpanch, Mora Gram Panchayat for permission. The Mora Gram Panchayat granted the permission by the letter dated 12-5-1989 for construction of the boundary wall. The petitioners prepared development plans with all requisite details as required for the construction of the industrial units for phase no. 1 of their Petrochemical Complex and sent them through the GIDC to the HADA for approval and grant of necessary permission. HADA by its letter dated 20-3-1989 informed the petitioner Company that the question of granting development permission to the petitioners did not arise since the draft development plan as contemplated under Section 9 of the Act had not been published by the respondents as yet. The petitioners applied to the Village Panchayat of Mora village for permission of their industrial construction of phase no. 1 of Petrochemical Complex under the provisions of the Gujarat Panchayats Act, 1961. Mora Village Panchayat by its letter dated 17-6-1989 granted permission accordingly. The petitioners started construction and have completed the phase - I project in accordance plans sanctioned by the Village Panchayat, Mora under the provisions of Gujarat Panchayat Act, 1961 for non-agriculture use. 3. The notification was published by the Government of Gujarat on 21-8-1989 and that draft development plant was published under the provisions of Sections 9 and 13 of Gujarat Town Planning and Urban Development Act, 1976 which will be hereinafter referred to as the Act. It was in II Column, one containing the plan and second containing General Development Control Regulations. On 21-8-1989 the notices were issued in the newspaper inviting objections and suggestions to the draft development plan and the General Development Control Regulation Published by the State Government prepared by HADA. Relevant provisions of the Draft Development Plan and General Development Control Regulation published by the authority relating to scrutiny fee, security deposit and premium, which reads as under : (a) Part III of the Draft Development Plan and Development Control Regulations 1989 prescribe the procedure for securing development permission. (b) Rule 3.3 prescribe that any person applying for development permission shall have to pay scrutiny fee at the rate prescribed therein which is Rs. 1 per sq. meter of built up area and Ps. 50 per sq. meter of plot area for residential uses and double the above rates for other rates. Rule 3.3 reads as under : "3.3 Scrutiny fee :- A person applying for a permission for carrying out any development work on any land shall with his application pay to the Authority scrutiny fees at the following rates : (i) Rs.1/- per sq. mt. of built up area of all floors of the intended development or part thereof and 50 paise per sq. met. of plot area of the building unit subject to minimum of Rs.300/- (Rupees Three Hundred only) for residential uses and double the above rate for the uses other than residential except for development for hospital, dispensary, school or college or a place of worship to be constructed by public charitable trust, registered under Public Trust Act, 1950. (ii) For revalidation of lapsed development permission Rs.300/- (Rupees Three Hundred only) for application with prescribed time limit & Rs.50/- (Rupees Fifty only) as penalty per month beyond prescribed time limit and for revision of development permission Rs.50/- (Rupees Fifty only). (iii) In case of mining, quarrying and brick kiln operations the fees will be as under: (a) Mining, quarrying and Rs.500/- per 0.4 Hect. brick kiln operations or part thereof and a maximum of Rs.2500/. (b) brick - kiln, Rs.25/- per 0.1 Hect. (without chimney) or part thereof and a maximum of Rs.500/-. (c) Processing of Sagol Rs.25/- per o.1 Hect. line etc. without or part thereof and a construction. maximum of Rs.250/-. (d) Renewal of Mining, Rs.50/- for one year quarrying brick kiln operations (e) brick-kiln Rs.25/- for one year. (without chimney) (f) Processing of Sagol, Rs.10/- for one year. line etc. without construction. (c) Rule 5.3 provides for Security Deposit; B. Regulation 5.3 provides for Security Deposit :- "5.3 The applicant shall deposit and keep deposited as security deposit an amount at the rates mentioned below for the due observance and performance of the conditions of the Development Permission. The amount shall be deposited on intimation before issue of "Development Permission". (i) Rs.3/- (Rupees Three only per sq. mts. of total built-up area of all floors of the proposed development (construction). (ii) The amount of security deposit shall be paid in cash only. (iii) Government, semi-Government, local authorities and public charitable trusts registered under the Public Trusts Act, 1950 are exempted from this provision. (iv) These rates are liable to be revised every two years from the date on which these rates come into force. (v) The security deposit shall be refunded without interest after grant of the occupancy certificate. (vi) The security deposit shall be forfeited either in whole or in part at the absolute discretion of the Authority for breach of any of the provisions of these regulations and conditions of the development permission. Such forfeiture shall be without prejudice to any other remedy or right of the Authority." 5.5 Notwithstanding any development permission granted under the Act and these regulations, any person undertaking any development work shall continue tobe wholly and solely liable for any injury or damage or loss whatsoever that may be caused to any one inor around the area during such construction and no liablity whatsoever in this regard shall be on the authority." D. Regulation 5.7 and 5.8 prescribe for deviation from development permission during construction and the levy of premium for such deviation. Regulation 5.7 and 5.8 are extracted as under: "5.7 Deviations during construction : If during carrying out of development, any departure of a substantial nature from the approved plan is intended to be made, the revised plan showing the deviations shall be submitted and the procedure laid down for the original proposal shall apply mutatis mutandis. No deviation or departure from the approved plan shall be made without proper permission from the concerned authority. 5.8 Development though in accordance with the General Development Regulations with the General Development Regulations but without prior permission or in deviation of the granted development permission. In case where development has already been started or completed on any site on or after .8.1989 and for which Development permission in writing of the Authority is not obtained, but where this development on a site may be in accordance with the provisions of these Regulations, the "development permission" may be granted by the competent authority on the merits of such case. For such developments works over and above such other charges/fees as may be otherwise leviable premium shall be charged as per following rates : --------------------------------------------------------- Sr. Type of development Rate of premium as % of the cost of development carried out : For For residential development development other than residential. --------------------------------------------------------- 1. Development in accordance 1.0% 2.0% with General Development Control Regulations started before obtaining written permission though applied. 2. Development though in 1.5% 3.0% accordance with the development Control Regulations Control Regulations, but not applied for. 3. Development though in 2.0% 4.0% accordance with the General Development Control Regulations, but in deviation of the granted development permission. 4. Brick kiln, Mining 25 paise sq.mt. or quarrying and all other portion of land in which development is made or has started. --------------------------------------------------------- NOTE : 1. For Residential Development minimum permission will Rs.250/-. 2. For Development other than Residential minimum premium will be Rs.1000/-. 3. For Charitable trust relaxation in premium shall be made by Chief Executive Authority taking into consideration is merits purpose of trust, type of development etc. after recording reasons thereof. 4. Norms for assessing cost of development carried out for different type of constructions shall be, as may be prescribed by the Authority from time to time." D Regulation 5.9 provides that if the permission has already been granted before the publication of the draft plan by the competent authority, i.e., the local Authority under the relevant law for the time being in force, nonetheless the permission will be required of the Authority. The said Regulation 5.9, reproduced as under : "5.9 Development though in accordance with the applicable Government orders/Building Regulations/Bye-laws/Rules etc. but without prior permission or in deviation of the granted permission. In the case, where development had already been started and completed on any site prior to for which necessary permission in writing of the concerned competent authority at the relevant time was not then obtained but where this development made on site is in accordance with the relevant rules, building regulations, byelaws etc. as framed by the local authority or the Government orders as in force at the relevant time, the "development permission" for such works on site without prerequisite permission or development though in accordance with the relevant rules, building regulations, byelaws, Government order as in force at the relevant time, but in deviation of the granted permission can be granted by the competent authority on merits of the each cases; for such development works, over and above such charges/ from as may be otherwise leviable, premium shall be charged as per rates prescribed under Regulation 5.8. Provided, however, that no such permission shall be given in respect of developments which are in violation of the development plan and town planning scheme proposal as in force." 4. The petitioners and other industrialists and interested persons made objections against levy of scrutiny fee, security deposit and premium, which will be narrated at the relevant place. 5. Regarding development charge some meeting was held by the officials of HADA on 18-9-1989 wherein the proposal was made for levy and imposition of development charges. Notification was published u/s 99 of the Act proposing levy and imposition of development charge at the rates specified for different users on 29-9-1989. Notifications were published on 30-9-1989 and 1-10-1989 in the newspaper inviting the objections to the proposal of levy and imposition of development charges as proposed by HADA. Number of times between October 1989 and August 1990 the meetings were held between the representatives of the petitioners and the officers of HADA in which the proposal of development charges and also the development plans were discussed. The petitioners have lodged their protest and objections regarding levy and imposition of development charges. In the month of August 1990 HADA's officers gave hearing to the persons who had lodged objections and proposals in respect of the development charges as published in the notification dated 29-9-1989. The Southern Gujarat Chamber of Commerce also raised objections to the proposal of levy and imposition of development charges in the month of August, 1990. In the meeting held on 24-3-91 it was decided to submit proposal of the development charges to the State Government for its approval and accordingly it was submitted by their letter dated 25-4-1991. On 21-12-1991 the State of Gujarat addressed a letter to HADA through its Urban Development and Urban Housing Department purporting to approve their proposal of development charges as submitted. In the meeting held on 31-1-1992 it was decided to implement levy and imposition of development charges and on 4-2-1992 a notification was published in the official gazette notifying levying of development charges as proposed in the notification dated 29-9-1989 without any modification therein. On 31-1-1992 HADA in its meeting decided to to implement levy and imposition of development charge. Accordingly, on 4-2-1992, a notification was published in the official gazette notifying levy of development charges as proposed in the initial notification dated 29-9-1989. 6. On 16-10-1989 HADA issued a Circular to all industries in their area indicating that prior development permission was compulsory for the development and the development without permission would be illegal. On 21-12-1989 the Chief Executive Officer of HADA, called upon the petitioners to stop the construction of their project Phase - 1 which he termed as unauthorized construction and asked the petitioners to remain present at their office on 1-1-1990. On 4-1-1990 the Chief Executive Officer again addressed a letter to the petitioners calling upon them to stop the construction of their phase-I project which was termed by him as unauthorized and asking the petitioner to remain present on 15-1-1990. By the letter dated 11-1-1990 the petitioners submitted a complete list of their construction activity of Phase-I and its basic drawings to HADA. The petitioners also pointed out that the work of phase-I was in progress in accordance with the plans sanctioned by the Village Panchayat, Mora under the provisions of the Gujarat Panchayat Act. On 15-2-1990 the petitioners were again directed to submit fresh plans in the prescribed proforma duly signed by the Architect approved by the HADA. The demand for scrutiny fee was also made under the proposal of the General Development Control Regulations. All the details required by the Chief Executive Officer of HADA were furnished by the petitioners by the letter dated 17-2-1990. The Secretary, Hazira Area Industries Association sent a letter dated 28-2-1990 to HADA protesting about the exorbitant scrutiny fee. The Chief Executive Office of HADA replied that the payment of scrutiny fee was a statutory requirement. The President, Hazira Area Industries Association sent another letter dated 14-4-1990 to the Minister, Urban Development and Urban Housing Development regarding scrutiny fees and other proposals in the development plan. The Chief Executive Officer of HADA issued the letter dated 18-4-1990 to all the industries asking to pay scrutiny fees as development without permission would be illegal. The Chief Executive Officer HADA issued a Circular dated 13-6-1990 to all the industries including the petitioners requiring to take development permission from HADA. The petitioners gave reply by the letter dated 23-7-1990 that HADA could not be the competent authority to grant permission for construction which has already been commenced before draft development plan was even published. HADA again sent letter dated 24-10-1990 requiring the petitioners to submit their plan for approval or face demolition proceedings regarding the construction already made. The petitioners replied by the letter dated 6-11-1990 and explained that the permission was not necessary. HADA again sent the letter to the petitioners requiring them to produce nonagricultural permission and approved the plans within seven days. Permission for nonagricultural purpose was not required if the land is used for industrial purpose and the plans were duly approved by the competent authority - Mora Village Panchayat. As the authorities were making constant demand of scrutiny fee etc. the petitioners made payment of Rs. 4 lakhs under protest. The HADA asked the petitioners by the letter dated 10-4-1991 to pay full scrutiny fee as leviable under the Draft Development Regulations. On 22-4-1991, the petitioners submitted a detailed layout plan to HADA and pointed out that N.A. permission was not necessary in view of the Government Circular to that effect in respect of the lands acquired for industrial purposes specifically. HADA issued a notice dated 23-8-1991 to the petitioners u/s 29 (5) and u/s 36 of the Act, to restore the land to its original position within 7 days, failing which the construction of the industrial unit will be demolished. The petitioners pointed out that the scrutiny fee is unreasonable and unsustainable and threat of demolition was illegal and not maintainable by the letters dated 4-9-1991 and 20-9-1991. The Chief Executive Officer sent another letter dated 8-1-1992 u/s 29 of the Act for alleged violation of Section 27 of the Act. The petitioners again replied the same. The petitioners also by the letter dated 20-1-1992 submitted plans to HADA for approval only in respect of the project activity for which Gram Panchayat permission was not previously obtained. HADA raised various queries and required the petitioners to comply with the same. The petitioners again sent a letter dated 30-3-1992 to HADA pointing out that threat given to the petitioners for demolition of petitioners' buildings was uncalled for as the petitioners have already obtained permission from Village Panchayat for construction of Phase - I and the petitioners had applied for permission to HADA which was not granted as there was no draft development plan in existence at the relevant time. Accordingly, the petitioners were required by the letter dated 27-4-1992 of the HADA for compliance of the queries raised by the HADA in the letter dated 24-2-1992 as well as 7-3-1992 including the matters relating to payment of scrutiny fees, security deposit etc. HADA issued the notice dated 1-7-1992 to the petitioners for sum of Rs.8.19 crore on account of security deposit, scrutiny fees and development charges in respect of the entire lands of the petitioners as well as the construction undertaken and the construction underway. It was also threatened that if such demands are not complied with the respondents would take action u/s 36 of the Act. The petitioners complied with all the queries raised by the respondent in the letter dated 7-3-1992 in respect of the planning permission which the petitioner had sought for the balance in phase-I project. The petitioners also supplied additional information on 21-9-1991 and the application of the petitioners was rejected on 6-10-1992. It appears that the said rejection is on the ground of nonpayment of security deposit, scrutiny fees and development charges. HADA again sent the notice on 25.2.93/9.3.93 u/s 36 of the Act demanding the amount under various heads otherwise to take coercive action for demolition of petitioners's construction by HADA and demanded Rs.8,15,89,931/- and out of this amount a sum of Rs.3,38,12,420/- was towards the development charges and remaining towards scrutiny fees and security deposit. 7. On 4-3-1993 HADA filed a Regular Civil Suit for declaration and injunction that the petitioners' construction was not in accordance with law and the same is liable to be demolished and for demolition of the present construction and required the petitioners to take development permission for the proposed construction. The application for interim relief was also filed and the Court passed the order directing the parties to maintain status-quo. The petitioners filed their written statement on 15-3-1993 along with the injunction application against the authority restraining the authority from taking any steps for demolition of the petitioners' structure. Counter affidavit was filed by the authority concerned. By the order dated 25-5-1993 2nd Jt. Civil Judge (SD), Surat passed the orders and the petitioners were restrained from making any further construction without obtaining necessary permission from the authority and the petitioners' application for interim relief was granted on 11-6-1993. The petitioners filed stay application and the Court passed an order staying of the interim order till the appeal is filed by the petitioners and the plaintiff was restrained from demolishing the suit construction till the appeal is filed by the defendants - petitioners. The petitioners filed the appeal on 2-7-1993 before the District Court, Surat against the order dated 25-5-1993 and also applied for stay of the order dated 25-5-1993 of the trial Judge. On 29-7-1993 the authority filed cross objections in the appeal. Under these circumstances, the petitioners