HON’BLE SRI JUSTICE R. SUBHASH REDDY WRIT PETITION Nos.17432 & 17438 of 2004 Date : 26.11.2009 Between : Sri Manoj Kumar & others. …..Petitioners And Municipal Corporation of Hyderabad, rep. by its Commissioner and another. …..Respondents For the petitioners : Sri T.S.Praveen Kumar and Sri M. Papa Reddy, Advocates. For the Respondents : The Addl. Advocate General and Sri R.Ramachandra Reddy (SC for Municipal Corporation of Hyderabad) < Gist: > Head Note: ? CITATIONS: 1. AIR 1971 SC 1182 2. AIR 1975 SC 2193 3. AIR 1983 SC 617 4. AIR 1983 SC 1246 5. (1996) 3 SCC 74 C/15 HON'BLE SRI JUSTICE R. SUBHASH REDDY WRIT PETITION Nos.17432 & 17438 of 2004 Date : 26.11.2009 Between : Sri Manoj Kumar & others. …..Petitioners And Municipal Corporation of Hyderabad, rep. by its Commissioner and another. …..Respondents HON'BLE SRI JUSTICE R. SUBHASH REDDY WRIT PETITION Nos.17432 & 17438 of 2004 COMMON ORDER : As on similar set of facts, common questions of law arise for consideration, both these writ petitions are heard together and are being disposed of by this common order. For the purpose of disposal, I refer to the facts as stated in W.P.no.17432 of 2004. 2. The petitioners seek directions to the respondents for refund of building permit fee deposited by them along with their applications for approval of building plans. In the writ petition in W.P.No.17432 of 2004, petitioners claim for refund of an amount of Rs.1,34,262/-, whereas the petitioners in W.P.No.17438 of 2004, seek for refund of an amount of Rs.83,063/-. 3. On 05.06.2002, the petitioners have applied for permission to construct row-houses consisting of ground plus one upper floor in Plot Nos.33, 34, 35 and 36 in Sy.No.74/9 of East Marredpally, Secunderabad. Along with the said application, they have paid a permit feet of Rs.1,34,262/-. When there were objections for approval of plans for construction of row-houses, they have applied for grant of permission to construct individual houses by paying a total permit fee of Rs.3,95,993/- and have constructed the same. They contend that since their initial application for permission to construct row-houses was not approved, they are entitled for refund of an amount of Rs.1,34,262/- which was paid by them towards the permit fee. When such claim for refund of permit fee was made by the petitioners, the same was rejected by the respondents, by referring to bye-law Nos.5.2 and 5.3 of the building bye-laws, stating that in view of withdrawal of the application by the petitioners, they are not entitled for refund of permit fee. 4. In the writ petition, it is the case of the petitioners that as much as there was no approval for the plan submitted by them for construction of row-houses, they are entitled for refund of permit fee paid by them pursuant to their application dated 05.06.2002. It is their case that as much as they have already paid separate permit fee, when they applied for grant of permission to construct individual houses, there is no reason or justification to withhold the permit fee deposited by them along with the application dated 05.06.2002. 5. Counter affidavit and additional counter affidavits are filed on behalf of the respondents. In the counter affidavit filed, while admitting the receipt of application from the petitioners and payment of an amount of Rs.1,34,262/- towards the permit fee, it is stated that building permits are governed by Sections 428 to 431 of the Hyderabad Municipal Corporation Act, 1955, and the Municipal Corporation bye-laws of 1981. It is stated that in view of bye-law No.5.3, petitioners are not entitled for refund of permit fee. In the counter, it is stated that the impugned rejection letter is in conformity with the bye- laws, and that there is no illegality committed by the respondents in issuing such letter. 6. In variation to the stand taken in the counter affidavit, an additional counter affidavit is filed. In the additional counter affidavit, it is stated that petitioners have submitted building permission application on 05.06.2002 along with requisite permit fee of Rs.1,34,262/-. It is stated that the said application was scrutinized by the Town Planning Section of the Municipal Corporation of Hyderabad and found that petitioners have proposed three metres set back in between two blocks/rows against the required six metres as per Rule 9 of G.O.Ms.No.423, dated 31.07.1998. It is also stated that as much as the petitioners have proposed the open area at three different places with a narrow width, a decision was taken to reject the proposed constructions, and accordingly, the proposals were rejected and plans were returned unapproved. Counter affidavit further states that as much as the petitioners have not availed the benefit of adjustment of fee by re-submitting the revised plan, they are not entitled for refund of permit fee. By making a further reference to bye-law No.5.2 (c), it is stated that no permit fee is chargeable for re-submission of revised plan by the party within six months, where the area does not exceed the area of previous sanctioned plan. It is further stated that in cases where the revised plans are submitted after the expiry of six months, 50% of the original permit fee is chargeable. It is submitted that as much as the petitioners have not submitted any revised plans by availing the option of adjustment of fee, they are not entitled for refund of any permit fee. 7. Heard Sri T.S.Praveen Kumar for the petitioners and Sri A.Satya Prasad, learned Additional Advocate General appearing for the respondent-Corporation. 8. It is submitted by the learned counsel for petitioners that as much as it is evident from the additional counter affidavit filed on behalf of respondents that the proposals of the petitioners for construction of row-houses were rejected, in that view of the matter, they are entitled for refund of permit fee. It is submitted that as much as there is no quid pro quo service for the levy, there is no reason for withholding the permit fee paid by the petitioners. Learned counsel submits that in the absence of any provision in the bye-laws for withholding the amount in case of non-approval of plans, the respondents cannot withhold the permit fee deposited by the petitioners. To substantiate his contentions, the learned counsel has relied on the judgments of the Hon’ble Supreme Court in the cases of (1) The Indian Mica and Micanite Industries Ltd. v. State of Bihar[1], (2) The Municipal Council, Madurai v. R. Narayanan[2], (3) Municipal Corporation of Delhi v. Mohd. Yasin[3] and (4) Sreenivasa General Traders v. State of A.P.[4]. 9. On the other hand, it is submitted by the learned Additional Advocate General appearing for the respondent-Corporation that though the petitioners have applied for construction of row-houses, but the said plans were scrutinized by the Town Planning Department and as the proposed constructions were not in accordance with the rules in vogue, the proposals were rejected. It is further submitted that though there was a provision to seek for adjustment of permit fee by submitting the revised plans, but the petitioners did not choose to do so and applied for permission to construct independent houses, by paying the separate permit fee and obtained permissions. It is submitted that in the absence of any provision in the bye-laws for refund of the permit fee, petitioners are not entitled for such refund. The learned Additional Advocate General, in support of his argument, has placed reliance on a judgment of the Hon’ble Supreme Court in the case of Union of India v. Shri Ram Rayons[5]. 10. The Municipal Corporation Building Bye-laws, 1981 are framed in exercise of powers conferred by Section 589 of the Hyderabad Municipal Corporation Act, 1955. The fee for building permits is governed by bye-law No.5. As per bye-law No.5.1, no application for building permit as referred to in bye-laws 4.1 to 4.2 shall be deemed valid, unless and until the person giving notice has paid the fee as per bye-law No.5.2 and attested copy of receipt of such payment shall be attached to the application. As per bye- law No.5.2, building permit fee shall be as decided by the authority. The withdrawal of the application is provided under bye-law No.5.3. As per the said bye-law, the applicant may withdraw his application and plans at any time prior to the sanction and such withdrawal shall terminate all proposals with respect to such application by the fees paid shall, in no case, be refunded. So far as refusal of building permission is concerned, it is governed by bye-law No.6. Prior to the framing of the bye-laws in G.O.Ms.No.905, dated 7th August 1981, there was a set of bye-laws framed by the Government in G.O.Ms.No.763, dated 4th October, 1972. In the said bye-laws, the fee payable was under bye-law No.7, which reads as under : “7. Fees : No notice referred to in bye-laws 3 and 6 shall be deemed valid unless the person giving notice has paid to the Commissioner in advance the fees determined by the Commissioner from time to time with the previous approval of the Corporation for the grant of permission and a receipt in token of such payment of such fee is attached to the notice. If the building permit is refused, ¾ (three-fourths) of the fees so paid shall be refunded to the applicant by a cheque or through money order in the Form specified in Appendix B after deducting the necessary costs.” As per the aforesaid bye-law, if the building permit was refused, applicants are entitled for refund of ¾ th of the fee paid by them, but curiously, in the present bye-laws of 1981, there is no provision for refund of any amount, even in case, if the building permit is refused for any reason. 11. In the case of The Indian Mica and Micanite Industies Ltd. (1 supra), the Hon’ble Supreme Court has held that the power of any legislature to levy fee is conditioned by the fact that it must be by and large a quid pro quo for the services rendered. In the same judgment, it is held that ‘a fee’ is generally defined to be a charge for a special service rendered to individuals by some Governmental agency, and the amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering such service. 12. In the case of The Madurai Municipality (2 supra), the Hon’ble Supreme Court has held that the authority, to justify the levy qua fee, must render some special services to the category from whom the amount is extracted and the total sum so collected must have a reasonable correlation to the cost of such services. 13. In the case of Municipal Corporation of Delhi (3 supra), the Hon’ble Supreme Court has drawn the distinction between the fee and the tax and explained the basic differences in levy of fee and imposition of tax. 14. The fee, which is being collected towards the permit also is not uniform and it is fixed by the Corporation from time to time, depending on the category, namely, residential, non-residential etc., and also having regard to the location of the site and the extent of the plot. Though there is no provision either in the scheme of the Act or the bye-laws made therein, explaining the service, which is to be expected on approval of the plans from the Corporation, but from the nature of levy, it is evident that whenever plans are approved, the constructions are to be supervised by the staff of the Corporation so as to ensure that constructions are being made in accordance with the sanctioned plan. Major portion of such permit fee is for the purpose of rendering services by the Municipal Corporation for the proposed constructions. The larger the area of construction, the higher the amount payable towards the permit fee, which is evident from the schedule of rates notified from time to time. When such is the basis for levy by way of fee, there appears no reason or justification for withholding such permit fee when the application for approval of plans is rejected even at the stage of scrutiny itself. The very collection of fee is conditioned by the fact that it must be the quid pro quo for the services rendered. When such levy is imposed by way of collecting the fee for the entire services to be rendered till completion of the building as well as after completion of construction, there is no reason or justification on the part of the respondents to withhold the entire amount even in cases where applications are rejected at the stage of scrutiny. Rightly, though there was an express provision in the bye-laws of 1972 for refund of permit fee in cases of rejection, but such provision is absent in the present bye- laws framed in G.O.Ms.No.905, dated 07.08.1981. Though the claim of the petitioners was rejected, by referring to bye-law No.5.3, which is applicable only in cases of withdrawal of building permit applications, but even as per the stand of the respondents, which is now taken in the additional counter affidavit, it is clearly a case where applications of the petitioners for grant of approval are rejected on the ground that the plans were not in accordance with the rules framed in G.O.Ms.No.905. If that be the case, the bye-law No.5.3 cannot be made applicable. Even in the absence of any express provision for refund, the respondents cannot withhold the entire permit fee merely because they have not applied for revision of the plans within the period of six months as stated in the counter affidavit. When the plans were not approved on the ground that the proposals were not in accordance with the rules framed in G.O.Ms.No.905, the petitioners have changed their plans so as to construct independent houses instead of row-houses and paid separate set of permit fee, which was received and plans were approved. If that be so, there is no reason or justification for withholding the permit fee which is deposited by the petitioners along with their initial application seeking permission for construction of row- houses. 15. Though the learned Additional Advocate General has relied on the judgment of the Hon’ble Supreme Court in the case of Union of India v. Shri Ram Rayons (5 supra), but the same is a case relating to an application for grant of supplementary license under the Imports (Control) Order, 1955, wherein, after the application is made, in view of change of policy, the license was not granted. In the said circumstances, the Hon’ble Supreme Court has held that the applicant is not entitled for refund of license fee. But having regard to the fact situation in the case on hand, as referred above, the said judgment will not render any assistance in support of the argument advanced by the learned Additional Advocate General appearing for the respondents. 16. For the aforesaid reasons, the impugned action of respondents in withholding the entire amount and refusing to refund the permit fee to the petitioners is not only illegal, but such action infringes the fundamental rights guaranteed under Article 14 of the Constitution of India. The respondent-Corporation being a Statutory body under the control of the Government, is not expected to retain the money of private citizens without rendering proportionate service after collecting such fee. As per the bye-laws, it is clear that even to make the very application, one has to pay the entire permit fee, and if it is rejected for any reason, the respondents cannot withhold the entire amount, which is collected to render services not only till completion of the building, but also after its completion. 17. For the aforesaid reasons, I allow both the writ petitions, directing the respondents to refund an amount of Rs.1,34,262/- to the petitioners in W.P.No.17432 of 2004, and an amount of Rs.83,063/- to the petitioners in W.P.No.17438 of 2004, within a period of six weeks from the date of receipt of a copy of this order. No order as to costs. _____________________ R.SUBHASH REDDY, J 26th November 2009 N.B : L.R. copy be marked. (b/o) ajr [1] AIR 1971 SC 1182 [2] AIR 1975 SC 2193 [3] AIR 1983 SC 617 [4] AIR 1983 SC 1246 [5] (1996) 3 SCC 74