Case: Tata Motors Ltd Vs. Talathi Of Village Chikhali

Under Lease Deed dated 3.1.1995, Pimpri-Chinchwad New Town Development Authority (6th respondent herein - for short `the Development Authority) granted a lease of land measuring 164.5 acres in Sectors No.15 and 15A in Village Chikhali, Taluka Haveli, District Pune, converted to industrial use, to the appellant herein for a term of 99 years commencing from 21.11.1994. The consideration for the lease was a premium of Rs.17,91,40,500/- (at the rate of Rs.25/- per sq.ft.) paid by the appellant apart from a yearly rent of rupee one. The appellant utilized the said plot and adjoining plot obtained on lease from Maharashtra Industrial Development Corporation (for short `MIDC) for construction of its factory. The appellant commenced construction of its plant in or about the year 1997 and on completion, commenced actual use for industrial purpose, in the year 1999.2. The appellant was served with a demand notice dated 26.2.2002 by the Gar Kamgar Talathi, Chikhali, demanding payment of Rs.45,25,538/- as non-agricultural cess and additional non-agriculture cess, for the period 1995-96 to 2001-02. As the said payment was not made, default notices dated 1.3.2002 and 5.3.2002 were issued under Section 174 of the Maharasthra Land Revenue Code, 1966 (`Code for short) informing that if the amount demanded was not paid within seven days, the amount due will be recovered with 25% of the amount due as penalty. At that stage the appellant filed a writ petition before the Bombay High Court for quashing the demand notice 26.2.2002, 1.3.2002 and 5.3.2002. The appellant contended that it was a. Alternatively, it was contended that it was the tenant of the Development Authority. It was submitted that neither a government lessee nor a tenant of the Development Authority was liable to pay the non-agricultural assessment under the provisions of the Code.3. The High Court, by judgment dated 4.7.2007 rejected the contention that appellant was a government lessee. It held that as lessee under the Development Authority, the appellant was liable to pay the non-agricultural assessment. The High Court however held that having regard to section 115 of the Code, non-agricultural assessment could be levied only with effect from the date on which the land was actually used for non-agricultural purpose, and as appellant commenced actual non-agricultural use in the year 1999, the non-agricultural assessment was due by it only from 1999-2000. As a consequence, the High Court allowed the writ petition in part, quashed the demand relating to the period 1995-96 to 1998-99 and upheld the claim for the non-agricultural assessment from the year 1999-2000 onwards. The said order is challenged in this appeal by special leave contending that it is not liable to pay the non-agricultural assessment as it is a government lessee.Alternatively it is contended that being the tenant of the `occupant, it is liable to pay the land revenue, as only the `occupant is liable to pay the land revenue under section 39 of the said Code.Code.3. The High Court, by judgment dated 4.7.2007 rejected the contention that appellant was a government lessee. It held that as lessee under the Development Authority, the appellant was liable to pay theassessment. The High Court however held that having regard to section 115 of the Code,assessment could be levied only with effect from the date on which the land was actually used forpurpose, and as appellant commenced actualuse in the year 1999, theassessment was due by it only fromAs a consequence, the High Court allowed the writ petition in part, quashed the demand relating to the period99 and upheld the claim for theassessment from the year

Court's reasoning:
we find no error in the order of the High Court. Consequently this appeal is dismissed reserving liberty however to the appellant to file representations/objections before the concerned Revenue Authority, if it has any objection or grievance in regard to the quantum of non-agricultural assessment claimed in regard to the property leased tostatus, objects, functions and area of operation of MIDC and the Development Authority are different. Any decision or clarification issued in regard to lands held by MIDC or lands leased by MIDC will not apply to lands held or leased by the Development Authority. As noticed above, the circular dated 29.3.1975 relied upon by the appellant is not relevant as it applies only to lessees of MIDC, which as agent of the state government granted certain leases and consequently such lessees as government lessees were exempted from paying theassessment. The said notification did not refer toNew Town Development Authority as the agent of the state government in regard to grant of leases to appellant and others. In fact there is no document which shows the state government to be the owner of the lands leased by the Development Authority, nor any document to show that the state government had either constituted or recognized the Development Authority as its agent in regard to leased lands.9. To know whether the Development Authority was an agent of the state government and to ascertain its status, it is necessary to refer to the relevant provisions of the Maharashtra Regional and Town Planning Act, 1966 (for short `MRTP Act). Section 113 of MRTP Act provides for designation of new towns and constitution of Development Authorities for those newis a corporation which would fall under113(3A) whereas the Development Authority falls under section 113(2) of MRTP Act. The circular issued with reference to MIDC is therefore of no assistance to contend that land leased by the Development Authority to appellant is a government land. The contention of appellant that the Development Authority is the agent of state government and that the appellant is a government lessee are thereforeis no dispute that section 39 of the Land Revenue Code, fastens liability to pay land revenue upon the occupant and not on the tenant of the occupant. Section 168(1)(a) of the Code also reiterates that in the case of unalienated land, the occupant shall be primarily liable to the state government for making the payment of land revenue including all(2) of section 168 provides that in case of default of the person primarily liable, the land revenue shall be recoverable from any person in possession of the land. It is therefore contended by the appellant that the state government can make the demand for any land revenue only upon the occupant, that is, the Development Authority in this case, which is primarily liable. It is submitted that only if it defaults, the amount could be recovered from the person in possession, as provided under section 168(2) of the Code. It is submitted that the notice of demand, directly issued to the appellant, should be quashed, as there is nothing to show that a demand was first issued to the Development Authority, that it defaulted in payment of the amount demanded, and that the impugned notices were issued only thereafter, under section 168(2) of the Act. It is submitted that the liability to pay land revenue being that of the Development Authority, the demand notices issued to the lessee as if it is person primarily liable are liable to be quashed. It is further submitted that if and when the Development Authority pays the land revenue to the government, in turn, it would be entitled to make a demand upon the appellant, if the lease permitted such a demand; and when such a demand is made, the appellant as lessee would deal with the demand in terms of the lease and if there is any dispute between the Development Authority and the appellant as lessor and lessee, that will be settled in accordance with law.12. It is no doubt true that the primary liability to pay the land revenue which includesassessment is on the occupant, under Section 39 of the Code. The definition of `occupant excludes not only `government lessee but also every tenant. Whenever the person in actual possession of the land is the tenant, the land holder or the superior landlord who granted the lease to such tenant is deemed to be an occupant. In this case the appellant has taken the lease from the Development Authority and therefore the Development Authority as the landlord and occupant, will be primarily liable to pay the land revenue. But the matter does not rest there.13. In exercise of the powers conferred by Section 159 of the MRTP Act, the Development Authority, with the previous approval of the state government, has made regulations for regulating the disposal of land acquired by it or vesting in it in theNew Town, known as theNew Town Development Authority (Disposal of Land) Regulations,(`Regulations for short). Regulation 1(ii) provides that the said Regulations shall apply to the lands acquired by or vested in theNew Town Development Authority for the development ofNew Town. Regulation 5 relates to disposal of land byfor the statutory obligation created under regulation 10(iv) and (v) of the Regulations, in the normal course, a demand should have been made upon the occupant (landlord) who is primarily liable and only if the landlord fails to pay, recourse could be had to(2) of section 168 which enabled a claim being made against the tenant in terms of the said subsection. But where the liability to pay land revenue is fastened on the lessee under the statutory regulations, it is not be necessary for the state government to make a claim upon the occupant, leading to a demand by the Development Authority, in turn, upon its lessee, for payment of land revenue. The state government can directly make the demand as the lessee, by taking note of the liability statutorily fastened on the lessee under the Regulations. When the liability of the lessee to pay the land revenue is not open to challenge, having regard to the provisions of the Regulations and terms of the lease, no purpose would be served by requiring the state government to recover the amount from the Development Authority (occupant) and then require the Development Authority to make a demand upon the lessee to recover the amount. Having regard to the statutory liability created upon the lessee, under theNew Town Development Authority (Disposal of land Regulations), 1973, the position of the lessee would be similar to a tenant referred to in1(c) of section 168 of the Code which provides that in the case of the land in possession of a tenant, such tenant if he is liable to pay land revenue therefore under the relevant tenancy laws, shall be primarily liable to the state government for the payment of land revenue, including all arrears. The liability of the appellant as tenant, to pay the land revenue, though not under a `tenancy law in its strict sense, but is nevertheless under a statutory regulation governing the tenancy and therefore the demand by the state government directly against the appellant, can be justified by the principle underlying section 168(1)(c). In the view we have taken, it is not necessary to consider the further submission that the term `tenancy laws used in section 168(1)(c) should be understood in a broad sense, and if so interpreted, would include any law regulating or governing tenancies, and as the Regulations govern tenancies by the Development Authority, the Regulations will fall within the term `tenancy laws and consequently the primary liability to pay land revenue would be upon the appellant under section 168(1)(c). Be that as it may.16. However, as we have held that a demand can directly be made upon the lessee, the lessee can give a representation or file objections before the revenue authorities of the state government, if it has any grievance in regard to the determination of the quantum of theassessment or the demand therefore.17.(2) of section 168 no doubt provides that in case of default by any person who is primarily liable under(1), the land revenue including arrears shall be recoverable from any person in possession of the land provided that where such person is a tenant the amount recoverable from him shall not exceed the demands of the year in which the recovery is made. Thisno doubt implies the demand should be made upon the occupant and only if the occupant defaults, a demand can be made upon the person in occupation, that is the lessee. We are of the view that(2) of section 168 will operate where the tenant is not primarily liable under section 168(1) of the Code, or where there is no statutory liability upon the lessee to bear and pay the land revenue. The procedure under(2) would apply where the liability to pay the land revenue is on the lessor, and where the lessee is not liable therefor or where the liability of the lessee to pay the land revenue is merely contractual, as contrasted from a statutory obligation. Where the liability of the lessee is a statutory liability, we see no reason why that recovery should be delayed and protracted by requiring a demand by the state government on the lessor and a consequential demand by the lessor on the lessee. We may further note, if the lessee commits default in paying the land revenue, it may amount to a breach leading tounder clause (4) of the lease deed. Be that as it may. However, having regard to the pendency of these proceedings, if the payment of the land revenue dues is made within four months from today it shall not be treated as a default or breach of the terms of the lease deed for the purpose of