IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.8829 of 2002 1. AWDESH KUMAR Minor son of Yogendra Prasad Yadav represented through his father Yogendra Prasad Yadav. 2. Jayant Devi wife of Ashok Kumar Both resident of Mohalla- Fortarea, Police Station- Kotwali, District- Munger. . . . . . Petitioners. Versus 1. THE STATE OF BIHAR, through the Secretary, Department of Revenue and Land Reforms, Old Secretariat, Patna. 2. The Additional Secretary, Department of Revenue and Land Reforms, Old Secretariat, Patna. 3. The District Magistrate, Munger. 4. The Khas Mahal Officer, Munger. 5. The Additional Collector (Revenue), Munger. 6. The Circle Officer, Munger. 7. The Divisional Commissioner, Munger, District- Munger. . . . . . Respondents. with CWJC No.12604 of 2002 RAJAN KUMAR SHARMA, Son of Late Nand Lal Sharma, Resident of Mohalla- Puraniganj, Ghoti Mirzapur, P.S.- Kasim Bazar, District- Munger. . . . . . Petitioner. Versus 1. THE STATE OF BIHAR through the Commissioner-cum-Secretary, Department of Revenue and Land Reforms, Old Secretariat, Patna. 2. The Additional Secretary, Department of Revenue & Land Reforms, Old Secretariat, Patna. 3. The Collector-cum-District Magistrate, Munger. 4. The Khas Mahal Officer, Munger. 5. The Additional Collector (Revenue), Munger. 6. The Circle Officer, Munger, District- Munger. 7. The Divisional Commissioner, Munger, District- Munger. . . . . . . Respondents. with CWJC No.1912 of 2005 OM PRAKASH S/o Sri Ghanshyam Das, resident of Mohalla- Garden Bazar, P.S.-Kotwali, District- Munger. . . . . . . Petitioner. Versus 1. THE STATE OF BIHAR through the Commissioner-cum-Secretary, Department of Revenue and Land Reforms, Old Secretariat, Patna. 2. The Additional Secretary, Department of Revenue, Land Reforms, Old Secretariat, Patna. 3. The Collector-cum-District Magistrate, Munger. 4. The Khas Mahal Officer, Munger. 5. The Additional Collector (Revenue), Munger. 6. The Circle Officer, Munger. 7. The Divisional Commissioner, Munger, District- Munger. . . . . . . Respondents. - 2 - with CWJC No.3199 of 2005 KUMAR BICKRAM S/o Sri Ghanshyam Das, resident of Mohalla- Garden Bazar, P.S.- Kotwali, District- Munger. . . . . . . Petitioner. Versus 3. THE STATE OF BIHAR through the Commissioner-cum-Secretary, Department of Revenue & Land Reforms, Old Secretariat, Patna. 4. The Additional Secretary, Department of Revenue, Land Reforms, Old Secretariat, Patna. 5. The Collector-cum-District Magistrate, Munger. 6. The Khas Mahal Officer, Munger. 7. The Additional Collector (Revenue), Munger. 8. The Circle Officer, Munger, District- Munger. 9. The Divisional Commissioner, Munger, District- Munger. . . . . . . Respondents. ----------- 9/ 22.02.2010 Heard learned counsel for the petitioners and the State. All these four cases have come back on remand to this Court pursuant to order dated 27.07.2009 passed in L.P.A. No. 740 of 2009 heard analogous with L.P.A. No. 873 of 2009, L.P.A. No. 869 of 2009 and L.P.A. No. 882 of 2009, for considering the challenge to policy decision dated 15.04.1999 of Department of Revenue and Land Reforms, Government of Bihar, as contained in Annexure-6 to C.W.J.C. No. 8829 of 2002. The aforesaid policy decision is also annexed in other writ applications as well. This Court earlier dismissed the writ applications with an observation that proper remedy for ventilating any issue out of Khas Mahal property enforcing any terms of lease can be gone into in more effective manner in a civil suit before the competent civil court. The petitioners are purchasers of lease hold premises of Khas Mahal Estates from vendees of the original lease holders or lease holder themselves. The Government had executed 30 years lease in favour of original lease holders on certain terms and conditions. This Court is - 3 - taking note of only such terms and conditions which are relevant for decision of these cases. One such conditions mandate no lessee will transfer, assign sublet or part with the possession of the demised land and premises or any part thereof, save and except with the previous sanction of the Collector in writing. Similarly the lessee will not erect any building or make construction or make any addition to or any alteration without the previous consent of the collector in writing. The Collector will have an option to renew the lease on expiry of 30 years, in case the lessee wants lease to be renewed on payment of higher rent. The petitioners, who are purchasers from original lessee or vendees of lessee made applications for renewal of lease before the Collector, Munger and for approving such transfers made in their favour. It would be pertinent to point out that neither the petitioners nor their vendees took the previous sanction of the Collector for such transfers and execution of sale deeds. It would appear that in all these cases transfers have been made to the petitioners without previous sanction of the Collector in writing, which is in violation of the terms of the lease. The Collector, thus by various notices called upon the writ petitioners to pay 100 % Salami at the rate of market value of the premises with a rental of 2 % of such market value. The aforesaid notice were in terms of the policy no. 8/97 (Part 1)/ 644 dated 15.04.1999 of Government. It was further stipulated that in case the aforesaid amount would not be paid, appropriate steps would be taken for their removal from the premises. - 4 - The petitioners submit that charging of Salami at the rate of 100 % of the market value is in violation of rule 9 of the Bihar Government Estates (Khas Mahal) Manual. They submit that the Government policy is bad, as at time of every renewal, respondents would be entitled to charge Salami and the rental would become double. So in this way every after 30 years the rental would become double in a flat manner. The petitioners state that while charging Salami, the respondents are bound to take into account whether the infrastructure have improved or not. The petitioners state that the then Collector vide his letter no. 133 dated 13.06.2002 contained in Annexure-7 of C.W.J.C. No. 8829 of 2002 suggested charging of Salami and rental at a lower rate. Thus he contends that rate of Salami and fixation of rental value on the basis of market valued contained in letter dated 15.04.1999 was excessive. According to the respondents, as per the terms of the original lease deed they had a right to enter upon the lease hold land and take possession of it, where such lease hold land has been transferred without permission of Collector, which was one of the essential conditions of original lease document. The stand of the respondent State is that the land / plots are situated in Urban area of Munger township. The Salami is being levied in accordance with policy decision of the government contained in letter dated 15.04.1999 issued by Commissioner-cum-Secretary, Department of Revenue and Land Reforms. The aforesaid policy decision has laid down a general guideline in respect of fresh lease, - 5 - renewal of lease, charge of Salami, levying of rent and meeting cases of trespassers and unauthorized occupants. The issue to be decided is whether the decision of the Government contained in letter dated 15.04.1999 is contrary to the provisions of the Bihar Government Estates (Khas Mahal) Manual (hereinafter referred to as Khas Mahal Manual) particularly Rule 9 of the Act For this purpose it would be necessary to notice Rule 9 as well as impugned policy decision of Government contained in letter dated 15.04.1999. Rule 9 (i) relates to levying of Salami for settlement of agricultural and Diara lands with which we are not concerned. Rule 9(ii) relates to levying of Salami in Town Khas Mahal Land. According to this rule although the circumstances cannot be precisely visualized and defined, but Salami can be taken if the circumstances would fall within one of the following cases enumerated hereinbelow: (a) Where the value of the land is for some particular reason known to be appreciating rapidly. (b) Where a new area has been added to a town or an unoccupied area in a town is being developed. (c) Where a good site is leased for the purpose of building a house or houses. (d) Subject to clause (v)(b) below, where permission is taken for converting agricultural land into building sites. Rule 9 (iv) states that Salami will ordinarily be levied on original leases but where the progressive increase in the value of land - 6 - or other special circumstances justify it a fresh salami can be taken for the renewal of a lease. Rule 9(vi) states that the amount levied should be such as is equitable in view of prospect of future increment of the value of the land within the period of lease. Rule 9 (vii) states that where the levy of Salami were introduced for the first time in large area, it would be necessary to adopt a general policy of levying Salami. It further provides that when Collector himself is in doubt as to the suitable amount, he should refer the case to the Commissioner for orders. Letter dated 15.04.1999 was in fact issued in terms of certain clarification sought for in letter dated 07.02.1998 of Division Commissioner, Munger and letter dated 24.08.1999 of Collector, Munger. The Government in paragraph 3 of the letter clarified that there is no conflict vis a vis Government resolutions issued in the provisions of Bihar Government Estates (Khas Mahal) Manual. It was further stated in paragraph 3 that letter no. 2452 dated 24.09.1977 and other letters contained guidelines in respect of renewal, fresh lease, Salami and the rental that is to be charged. The decision of the Government dated 15.04.1999 laid down guidelines regarding levying of Salami in respect of new lease vide paragraph 5, renewal of lease vide paragraph 6. Paragraph 8 (kh) deals with cases where there has been no renewal and where transfer has been made in violation of terms of the lease. In such circumstances, the person in possession would be considered an encroacher and trespasser. - 7 - However, respondents in its discretion can ask such unauthorized occupants vendees to execute fresh lease with them. The case of all the petitioners would fall in last category dealt in paragraph 8(kh). It is not in dispute, that in all these cases, the lease hold land has not been renewed and the same has been transferred without the previous sanction of Collector which infringed mandatory conditions of lease, not to transfer the lease without such prior permission. In such cases, as per the Government policy and the terms of the lease deed, Government could have initiated the process of removing such persons from unauthorized possession. Paragraph 8 (kh) of impugned decision dated 17.04.1999 however, stipulates that in such cases, the respondents at their option could ask such persons / vendees to execute a new lease in accordance with term and conditions mentioned therein. Paragraph 5 of the policy contains in letter dated 15.04.1999 states that in case of new lease, the Salami would be charged at the prevailing market and the rental would be at the rate of 2 % and 5 % of such market value in case of residential and commercial lease. It is important to keep in mind that execution of fresh lease is different than renewal of lease as contained in paragraph 6 of the policy decision. There is distinction between renewal of lease and execution of new lease. Generally the lease is renewed in cases, where there is no transfer of the lease hold premises to another person. Renewal of lease would denote renewal of the same after expiry of lease hold period by - 8 - the original lessee or their heirs, executors, administrators, representatives or assignee as mentioned in terms of lease. In respect of such renewal the annual rental would be doubled. Rule 9 (iv) of Khas Mahal Manual provides that in cases there has been progressive increase in the value of the premises on account of development or special circumstances, Salami can also be charged even in cases falling under category of renewal of lease. Thus levying of such Salami would not be matter of course, but would be dependent on various indicators of improvements. Such Salami may not necessary be as per market value, but would be a nominal sum, as renewal of lease is distinct from execution of fresh lease. Rule 9(ii) provides for charging of Salami in Khas Mahal Town land, if circumstances fall in the categories mentioned therein. The case of the petitioners would be one of entering into fresh lease with respondents, as they are not heirs or assignees of original lessee. As noticed above, the cases of the petitioners would fall under category 8 (kh) of the policy decision. The lease deed to be executed with petitioners would be a fresh lease deed and cannot be deemed to be renewed of the old lease deed, as transfer was affected without the permission of the Collector, as stipulated in the original lease deed. If the Government decides to execute new lease in favour of such persons, who have come in possession in unauthorized manner at against terms of original deed, no arbitrariness can be alleged, if Salami is levied at relevant market rate. The Government as a policy decision may relax there conditions in case of allotment of fresh lease, if the - 9 - same is allotted pursuant to any social and welfare measures, with a view of attaining certain objectives. Here, the petitioners have thrust themselves upon the respondents by purchasing the land from original lessee without prior permission. The impugned letter of the Government states that value of the land would be calculated as per the market value of such land. Rule 9(ii) (a) states that Salami can be charged, when value of land has appreciated rapidly. The market value being charged from the petitioners cannot be said to be unreasonable. For instance in C.W.J.C. No. 3199 of 2005 (Kumar Bickram Vs. State of Bihar & Ors) the petitioner himself admits that he has purchased the premises for Rs. 4,50,000 in 2001. Whereas the Collector, Munger has called upon him to pay Rs. 2,98,810 as Salami. The petitioners while referring to Welfare Economic have also referred to decreasing and constant returns to scale. He has referred to divergence between private and social costs and benefits. Such submissions would not be applicable in these cases, as the policy decision required that the fresh lease be executed on prevailing market value, in case of persons falling in unauthorized possession having got such transfers without permission of Collector. If the market value decreases or increases, Salami will be levied on decreased or increased market value at the time of filing of such applications. If certain area is less developed, the market value of such lease hold premises would be assessed accordingly. The Salami is to be levied as per the prevailing market rate in such areas at the time of filing of such applications by - 10 - petitioners. The other apprehensions of the petitioners that every time lease would be renewed, they will have to pay 100 % market value of the premises, is unwarranted. As I have stated earlier, at the time of renewal, Salami would not be charged as a matter of course. On execution of fresh lease, the petitioner would step into the shoes of original lessee. The Government has rejected the proposal of the then Collector contained in letter no. 133 dated 13.06.2002, as contained in Annexure-7 for lenient levying of Salami and annual rental. It is not in dispute that the policy of the Government to realize Salami for grant of lease of Khas Mahal as contained in letters issued from time to time referred in impugned decision dated 15.04.1999 has been prevalent since long. I do not find any arbitrariness in this policy. The Hon’ble Apex Court in case of Council of Scientific and Industrial Research and Others Vs. Ramesh Chandra Agrawal and Ano. reported in (2009) 3 SCC 35 has held that policy of the Government can be interfered only on the ground of irrationality. In case of Tata Cellular Vs. Union of India reported in (1994) 6 SCC 651 the Hon’ble Supreme Court has observed that the court should exercise restraint while interfering with the fiscal policy of the Government, save and except, if it is in contravention of constitutional and statutory provisions. I do not find that the decisions regarding levying of Salami at 100 % of market rate in respect of persons, who have unauthorizedly purchased the Khas Mahal land from lessee or their vendee in violation - 11 - of terms of original lease is arbitrary, irrational and in teeth of constitutional provisions or Rule 9 of the Khas Mahal Manual. The respondents are directed to fix the valuation on the date of the application of the petitioners on the basis of prevailing rate in the area and issue fresh letter of demand. The writ petitioners may be granted liberty of making payment within reasonable period. So far as levying of rental value at the rate of 2 % of such market value in case of residential use and 5 % of such market value in case of commercial use, seems excessive having no nexus with the objects sought to be achieved. Charging of such annual rent as a percentage of the market value would be irrational, as Salami is already being charged at market value. The respondents may consider levying of annual rental as certain percentage of annual rental value in place of market value. The respondents may fix rental at the same rate but on annual rental value, as the above method is more rational and acceptable mode of calculation of annual rent. Once the petitioners execute fresh lease deed they will step into the shoe of original lessee. At the time of next renewal on expiry of term of lease, renewal would be in terms of Rule 9 of the Khas Mahal Manual. Thus, I find that the fixing of rental value at the rate of 2 % and 5 % of market value of residential and commercial use is arbitrary, irrational and the same is struck down. However, I find no arbitrariness in policy of Government contained in letter dated 15.04.1999 regarding levying of Salami and the same is upheld. These writ applications are - 12 - dismissed, while partially interfering with clauses pertaining to charging of rental on the basis of 100 % market value. A.F.R. Uday/ (Samarendra Pratap Singh, J.)