TRISHUL INDUSTRIES Vs. STATE OF HARYANA

JUDGEMENT

(1.) This Judgment will dispose of the aforesaid five writ petitions (C.W.P. Nos.5036 of 1997, 3596 of 1997, 5551 of 1997, 15748 of 1998 and 2795 of 1998) as common questions of law are involved in all the aforesaid writ petitions. The basic issues raised in all the aforesaid writ petitions are identical. We have, therefore, made reference to the detailed pleadings as contained in the case of M/s Trishul Industries (C.W.P. No. 5036 of 1997). Reference to additional facts from other writ petitions have been made whilst noticing the submissions of the learned Counsel.

(2.) The petitioner is a partnership firm having its registered office in New Delhi. Inspired by the declaration and open policy of the Government of Haryana to develop tourism in the State, its progressive economic policy and liberalization, the petitioner-firm conceived a project of establishing a restaurant and resort hotel, in the area forming part of revenue estate of village Shekhopur, District Gurgaon. The Resort hotel and the restaurant would cover an area of 47,841 sq. yards, after excluding the area that falls within 50 meters of the restricted belt along the National Highway No. 8. The land on which the Hotel and the Restaurant were to be constructed, is owned and possessed by the petitioner- firm. The land being agricultural in nature, the petitioner approached the Director, Town and Country Planning (hereinafter referred to as "the Director") for grant of permission regarding change of land user. The permission is necessary under the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963 (hereinafter referred to as "the 1963 Act") and the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Rules, 1965 (hereinafter referred to as "the 1965 Rules"). By letter dated 8.3.1995 (Annexure P-1), the petitioners-firm was requested to fulfill certain conditions before granting permission for change of land use. The petitioner had to pay a sum of Rs. 9,56,820/- as conversion charges. The petitioner also supplied the other information as desired by the Director in the letter dated 8.3.1995. The petitioner claims that there is no provision in the 1963 Act or in the 1965 Rules under which the petitioner could be asked to pay conversion charges. The petitioner was further compelled to give an affidavit to the effect that it shall pay additional amount of conversion charges on revised rates and for variation of area at the site. The petitioner was also compelled to execute an agreement containing a similar clause. The agreement is to be executed as provided in Form CLU-II. The agreement had to be executed under Rule 26-D of the 1965 Rules which does not provide imposition of conversion charges while granting permission regarding the change of land use. The petitioner being at the receiving end had no choice but to pay the demand amount of Rs. 9,56,820/-and to accept the clauses regarding the payment of additional conversion charges as well as to give the affidavit. The petitioner claims that the acceptance of an illegal clause was obtained under misrepresentation, undue influence and coercion by taking advantage of the dominant position of the respondents. Subsequently, the petitioner was granted No Objection Certificate/Licence for Construction of the approach road to the Hotel and the Restaurant. Permission for change of land use for the establishment of the Restaurant and the Resort Motel was granted to the petitioner by the Director by letter dated 13.9.1995 (Annexure P-5). The project of the petitioner was also approved by the State Tourism Promotion Board, Haryana by letter dated 7.12.1995. Zoning plan for the project was approved on 18.12.1995. The petitioner furnished a bank guarantee in the amount of Rs. 25% of the cost of the development works. The building plans submitted by the petitioner were also approved by the Building Plan committee for controlled area, Gurgaon on 27.12.1995. The Project sought to be developed by the petitioner is aimed at attracting foreigners and the executives of the multi-national companies in and around Gurgaon District. The project is also aimed at achieving planned development in Gurgaon so as to make it an important place of attraction for the foreigners. The petitioner claims that the Project is a kind of attraction for the foreigners. The petitioner claims that the Project is a kind of eco-friendly project. The permission granted for change of land user as per Rule 26F of the 1965 Rules remains valid for a period of two years from the date of the order. During this period the development of the project had to be completed. However, the Director has the power to extend the period for another year. Final project plans have been approved by the competent authority on 29.7.1996. As per the approved project, Rs. 3.13 crores has to be spent in the first phase within one year. The petitioner has commenced construction from July, 1996; To the utter surprise, dismay and shock of the petitioner, the Director has issued Memo No. 2739 dated 17.3.1997 (Annexure P-8) in which the petitioner has been directed to pay a further sum of Rs. 4,68,84,180/-towards additional conversion charges. The demand of conversion charges at a rate of Rs. 1000/-per square yard is 50 times the original rate of Rs. 20/-per square yard which was fixed and demanded at the time of granting permission to the petitioner regarding change of land user. The amount of additional conversion charges now demanded is much more than the price of the land. The estimated price of the land in the area as fixed by the Government of Haryana is approximately Rs. 7.00 lacs per acre. But the respondents are demanding at the rate of Rs. 48 lacs per acre in the grab of additional conversion charges. Under the 1963 Act and the 1965 Rules, there was no provision for levying of conversion charges. However, w.e.f. 13.12.1996, Section 7 of the 1963 Act has been amended by the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Developments (Haryana Second Amendment) Act, 1996 (hereinafter referred to as "the Amended Act"). Section 7 of the Amended Act provides for the levy of conversion charges as prescribed by the Government from time to time. Even then, no notification prescribing the rate by the Government has been published in the Government Gazette and in fact no amendment in the 1965 Rules has been made incorporating any rates for conversion of land use. The petitioner, therefore, filed unmended writ petition challenging the Notice (Annexure P-8) under Article 226/227 of the Constitution of India. The aforesaid writ petition was disposed of, by order dated 2.11.2000, on the basis of a statement made by the Advocate General that the impugned notice will not be given effect to as the issue related to conversion charges is being considered by the State Government. This was stated in the context of deliberations made in 1997 by a special committee constituted by the Government for determining the rates of additional conversion charges. By letter dated 9.1.2002, the petitioner was informed by the Director that on reconsideration, the Government has taken a decision that the rates of conversion charges earlier fixed by the government are justified and there is no need to reduce the same. Thereafter, the petitioner was further informed that the permission of land use granted on 13.9.1995 had already expired. Therefore, the extension of validity period was also being examined. The petitioner, therefore, filed CM No. 9213 of 2002 praying for appropriate directions/clarifications and for stay of Memo dated 9.1.2002. By order dated 22.4.2002, the Division Bench of this Court restrained the respondents from taking any coercive action against the petitioner. It was made clear that the stated Government shall be free to pass appropriate orders in compliance with the directions contained in the order dated 22.11.2000. The petitioner was also granted liberty to file an application for recall of the order dated 22.11.2000 on the ground that the State Government had failed to comply with the directions contained therein. In July, 2002, the petitioner filed application for recall of the order dated 22.11.2000 and for hearing of the writ petition on merits. Thereafter, by letter dated 18.11.2002, the Director withdrew the earlier Memo dated 9.1.2002. The petitioner has been informed that the Government has reconsidered the entire matter and has taken the following decision:

(3.) The respondents have filed Amended common reply to the amended writ petition. On the legal issue as to whether the State Government had the power to levy conversion charges, it is submitted that Section 8(2) of the 1963 Act empowers the Director to grant permission for change of land use only on such condition as may be specified in the order. This provision exists under the 1963 Act. Therefore, the contention of the petitioner that there was no statutory basis for levy of conversion charges prior to Amended Act 16 of 1996 is denied being baseless. The State of Haryana has been levying conversion charges since the year 1974 for change of land user. The intent of the Amended Act was to further clarify the existing accepted practice which was never challenged earlier. The levy of conversion charges was justified earlier as well as now. It is justified by the respondents on the ground that any individual/firm that desires to change the use of its land in the "Controlled Area" is required to seek permission of respondent No. 2 under Section 7 and 8 of the 1963 Act. After permission for change of land use is granted to any individual his land becomes part and parcel of the envisaged sectorial plan to be provided with all essential facilities and services as would be ultimately enjoyed by the perspective allottee of that particular Sector on its development by the Government or its development agency. A permission granted by the Government for conversion of land from agriculture use to other usage like residential, commercial and industrial gives considerable benefits to the land owner in terms of its market value. The conversion charges are levied to share a part of unearned income of the land owner in a reasonable and justified manner. The respondents further claim that when permission for change of land user is granted for residential, commercial/industrial activities, a lot of development takes place in the area, thus causing additional liability on the State Government. The State Government has to augment its resources to provide facilities/infrastructure in the area like maintaining law and order, civic amenities, provision of transport etc. Civic staff has to be employed for managing and maintenance of various services which are to be provided in the developing towns due to increase in population. Therefore, to discharge the different types of obligations by the Slate Government the levy of conversion charges for granting permission for change of land user from agricultural to other projects is legally justified and rational. The State Government also takes some percentage of the unearned income from the beneficiary whose land value has increased due to the decision of the State Government in granting permission for change of land use. This is necessary for providing additional facilities. Keeping these facts in view, a policy was framed for levying of conversion charges in the year 1974. Rates of conversion charges were specified depending upon the potentiality of the area and location of the site. Therefore, before the permission for change of land user is granted to the individuals, an offer is made to the applicant in writing for payment of conversion charges. The applicant is required to furnish an undertaking for the payment of conversion charges at revised rates as and when determined by the Director in addition to the conditions mentioned in the letter of intent. This practice has been in vogue since 1987. The terms of the contract are based no mutual rights and liabilities of the parties. With regard to the rates of conversion charges, it is stated that initially the conversion charges were fixed way back in the year 1974. Since then the market forces have pushed prices of land as also for other development activities on phenomenal scales. Study of sale deeds executed in Gurgaon during the year 1969-1970 reveals that the rates of land were Rs. 23 per square yards whereas the same have increased to Rs. 800-825/-per square yard in the year 1996, an increase by 40 times in the land value. Similarly, the price of residential/industrial/commercial plots has shown phenomenal increase. The respondents rely on the following table: 1974 per square mtr. 1996 per sq. mtr. Approx.increase Residential Rs. 35/- Rs. 3250/-100 times. Industrial Rs. 10.45/- Rs. 1600/-150 times. Commercial Rs. 300/- Rs. 14,000/- 45 times (in 1978) From the aforesaid table, the respondents have justified the necessity for the government to commensurately increase charges for development activities. It is also stated that the matter for revision of conversion charges was under consideration of the department/State Government since 1987. Therefore, it was decided to take an undertaking from the applicants that as and when the rates of conversion charges revised, they would pay the same. On 6.9.1996, the Council of Ministers in its meeting approved the Schedule of rates of conversion charges per square yard in rupees. The petitioners were, therefore, asked to pay the rates approved by the Government. On this understanding, the petitioner had entered into agreements with the State and executed the necessary undertakings and the affidavits. The petitioners have voluntarily undertaken to pay the additional amount of conversion charges as and when determined and demanded by the department. The respondents have denied that the market price of land in Gurgaon is Rs. 7 lacs per acre. In the year 1996, the land prices in Gurgaon were more than Rs. 38 lacs per acre. With the increasing development of Gurgaon and its proximity to the national Capital, the land prices have sky-rocketed. Consequently, on the grant of permission for the change of land user, the unearned income of the owner also increases. The sites of the petitioners are situated in high potential zone of Gurgaon where the land prices are even higher than the other areas. A perusal of the table approved by the Council of Ministers dated 6.9.1996 (Annexure C/R-1) would reveal that different rates of conversion charges have been specified for different areas of the State, keeping in view the development potential, location of the site, nature of the land, use and to ensure balanced development of the State. Higher rates have been specified in the high potential zones, being near to Delhi commensurate with the market prices and to serve as a deterrent against convergence of facilities at a single location, whereas lesser rates have been specified in the areas, which are not so potential to attract investments in such areas for a balanced overall growth. While specifying the rates, consideration was also given to the location of the sites i.e. on National Highways, Scheduled Roads and other Roads and to maintain a balanced development of the State. Therefore, the rates have been specified logically in a reasonable and justified manner. There is rational classification of conversion charges depending on the factors which have been set out above. Higher rates of conversion charges have been specified in the controlled area of Gurgaon which is a very high potential zone, being near to Delhi.