NAGPUR IMPROVEMENT TRUSTversusNAGPUR TIMBER MERCHANTS ASSOCIATION AND ANR. ETC.

.•
                NAGPUR IMPROVEMENT TRUST                                                A
                           v.
     NAGPUR TIMBER MERCHANTS ASSOCIATION AND ANR. ETC.

                                   MARCH 18, 1997

                                                                                        B
                (S.C. AGRAWAL ANDS. SAGHIR AHMAD, JJ.)

           Land Laws : Maharashtra Land Revenue Code, 1966-Nagpur Im-
     provement Tmst (Land Disposal) Rules, 1955-Rule 9 making it obligatmy
     on the Nagpur Improvement Tmst to make payment of land revenue-Lease
     Deed imposing the duty on the lessee to discharge all rates, taxes, charges and    C
     assessments imposed on the land. Held, Rule 9 which makes the Improvement

-    Tmst liable for payment does not preclude it fro/11 requiring the lessees to pay
     the amount of non-agricultural assessment.

            The Nagpur improvement Trust has been constituted for improve-              D
     ment and expansion of the town of Nagpur. The disposal of lands vested
     in the Trust is Governed by the Nagpur Improvement Trust (Land Dis-
     posal) Rules, 1955. Land is transferred by lease and in certain circumstan-
     ces by outright sale or exchange. The Government of Maharashtra
     initiated proceedings for assessment and recovery of non-agricultural
     assessment charges under the provisions of the Maharashtra Land                    E
     Revenue Code, 1966. It demanded the charges from the Improvement
     Trust. The Trust asked the lessees to make the payment.

            The lessees disclaimed their liability for non-agricultural assess-
     ment. They filed Petitions in the High Court. High Court allowed the F
     petitions and restrained the Trust from making recovery from the plot-
     holders. It held that non-agricultural assessment was nothing but land
     revenue and in view of Rule 9 of the Rules the Trust was liable to pay the
     same. It further held that Cl. 1(b) of the Lease Deed did not provide for
     payment of land revenue by the lessees and that such a construction of the
     clause was in consonance uith Rule 9. It also emphasized that burden of G
     payment was statutorily fixed under Rule 9 which could not be shifted to
     others and that payment was to be made by the Trust and no one else. The
     Court also observed that the lessees had no notice of the proceedings
     regarding fixation or assessment and so the liability could not be passed
     on to them. Aggrieved by the judgment, the appellant Trust had filed the H
                                           21
    22                    SUPREME COURT REPORTS                   [1997] 3 S.C.R.

A present appeal.
          Allowing he appeal, this Court

          HELD : 1.1. Rule 9 of the Nagpur Improvement Trust (Land Dis-
    posal) Rules, 1955 which governs the relationship between the State
B   Government and the Improvement Trust imposes liability for the payment
    of land revenue on the Trust. [25-F-H]

        1.2. Rule 9 cannot be construed to mean that the burden which is
  statutorily fixed on the Trust cannot be shifted to others. There is no
  warrant for adding the words "no one else" in Rule 9 so as to preclude the
C Trust from re11uiring the lessees to make the payment. [26-A-C]

          13. In case the Trust is made liable to pay, there is a possibility that
    it may end up paying more by way non-agricultural assessment than the            ...
    amount received by it from the lessees as a premium from the land. It
D   could not be the intention of the rule making authority that the Trust shall
    finance the lessees in respect of the land disposed by it. [26-D-H, 27-A-B]

         1.4. It is permissible for the Improvement Trust to require the
    respondent-lessees to pay the amount of non-agricultural assessment in
    respect of the lands leased out to them. [28-A-B]
E
         CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2030·
    2035 of 1997 Etc.

         From the Judgment and Order dated 3.9.91 of the Bombay High
    Court in W.P. No. 2292, 1898, 2075, 2172, 2251 and 2265 of 1982.
F
          V.A. Bobde, G.L. Sangbi, Dr. R.B. Masodkar, S.C. Patel, S.K. Gam-
    bir, Vivek Gambhir, Diwakar Chaturvedi, (D.M. Nargolkar) (NP), S.V.
    Deshpande, Pramit Saxena and AK. Sanghi for the appearing parties.

          The Judgment of the Court was delivered by
G
          S.C. AGRAWAL, J. Special leave granted.

          These appeals raise common questions for consideration. The Nag,,
    pur Improvement Trust, the appellant herein, has been constitut.ed under
    the provisions of the Nagpur Improvement Trust Act, 1936 enacted to
H , provide for improvement and expansion of the town of Nagpur. The said
     NAGPUR IMPROVEMENT TRUST v. NAGPUR TIMBER MERCHANTI5 ASSN. [S.C. AGRAWAL, l.)   23

Act makes provisions for acquisition of land by the Improvement Trust in A
 connection with various schemes which are framed by the Improvement
Trust. After development the land is disposed of by the· Improvement
Trust. The disposal of lands vested in the Improvement Trust is governed
by the Nagpur Improvement Trust (Land Disposal) Rules, 1955
(hereinafter referred to as 'the Rules') made by State Government, in B
exercise of powers conferred by Section 76 read with Section 89 of the
Nagpur Improvement Trust Act, 1936. Rule 3 provides for transfer of land
of Improvement Trust by (a) direct negotiation with party; (b) public
auction; (c) inviting tenders; and (d) concessional rates. Rule 4 prescribes
that the land shall be disposed of at a premium to the fixed in accordance
with the provisions contained therein. In addition to the amount of C
premium, the transferee is liable to pay ground rent at 2% of the premium
annually. Rule 7 lays down that every transfer of Improvement Trust land
shall be made by lease which shall be either for thirty years or ninety nine
years as may be determined by the Improvement Trust. If the purchaser
by an application in writing requests the Improvement Trust to convert the D
period of lease from thirty years to ninety nine years, the Improvement
Trust may do so after charging in addition 15% of the premium fixed for
thirty years of lease with proportionate increase in annual ground rent. In
certain specified circumstances the Improvement Trust can dispose of land
by outright sale or exchange. Rule 9 of the Rules, which is relevant for the
purpose for this case, reads as under :                                      E
           "Rule 9. Where land revenue is payable in respect of any plot so
           transferred, such land revenue shall be payable by the Trust."

         The other provisions of the Rules have no bearing on the matter in .
issue.                                                                                    F

       The respondents in these appeals arc lessees in respect of lands .of
the Improvement Trust. Under the terms of Lease Deed they are liable to
pay the amount prescribed therein as premium and Ground rent p~ri­
odically. Clause l(b) of the Lease Deed contains the following provision.: G

           "(b) The lessee shall from time to time and at all times during the
           said term pay and discharge all rates, taxes, charges and assess-
           ments of every description or imposed upon the said land hereby
           demised or the building erected thereupon or upon the landlord
           or tenant in respect thereof." ·                                    H
    24                   SUPREME COURT REPORTS                  (1997] 3 S.C.R.

A        In 1978 the Government of Maharashtra initiated proceedings for
  assessment and recovery of non-agricultural assessment charges under the
  provisions of the Maharashtra Land revenue Code, 1966 (hereinafter
  referred to as 'the Land Revenue CLde'). Non-agricultural assessment
  charges in respect of the plots which had been allotted by the Improvement
  Trust to the respondent-lessees were demanded by the State Government
B from the Improvement Trust. The Improvement Trust, as per clause l(b)
  of the Lease Deed asked the lessees to make payment of the non-agricul-
  tural assessment charges in respect of their lands. The respondents dis-
  claimed their liability for non-agricultural assessment and filed Writ
  Petitions in the Bombay High Court, Nagpur Bench, challenging the said
C demand of non-agricultural assessment from them. The Writ Petitions
  which have given rise to Special Leave Petitions (Civil) Nos. 11018-23 of
  1992 were disposed of by the High Court by a common judgment dated
  September 3, 1991 whereby the High Court has allowed the said Writ
  Petitions and has quashed the recovery notice issued by the Improvement
D Trust and has restrained the Improvement Trust from making recovery of
  non-agricultural assessment from the plot holders, like the respondents or
  their members. The High Court has held that non-agricultural assessment
  is nothing but land revenue and in view of Rule 9 of the Rules the
   Improvement Trust is liable to pay the same and it could not recover it
  from the lessees. The High Court has further held that clause l(b) of the
E Lease Deed does not include payment of land revenue by the lessees of
   plots held by them and that such a construction of the said clause would
  be in consonance with Rule 9 of the Rules and that if the said clause is
   interpreted to include even land revenue then the said clause would be
   against Rule 9 which provides that the land revenue of the plots transferred
F to the lessees is made payable by the Improvement Trust and no one else
   and that the burden that is statutorily fixed under Rule 9 cannot be shifted
   to others as is sought to be done by the improvement Trust. The High
   Court has also observed that since the respondents or their member had
   no notice about the fixation or assessment being undertaken, they could
   not participate in those proceedings and that the Improvement Trust failed
G to get proper fixation done because it took no interest in the proceedings
   and then in these circumstances no liability could be fastened upon the
   lessees.

           Writ Petition No. 2351 of 198~, which has given rise to Special Leave
H    Petition (Civil) No. 5594 of 1993, was disposed of by the High Court by its
      NAGPUR IMPROVEMENT1RUST v. NAGPUR TIMBER MERCHANTS ASSN. [S.C. AGRAWAI., J.]   25

 judgment dated September 6, 1991 on the basis of the earlier judgment                    A
 dated September 3; 1991 referred to above.

        Shri V.A. Bobde, the learned senior counsel appearing for the Im-
 provement Trust, has urged that the High Court was in error in holding
 that non-agricultural assessment is land revenue and that in view of Rule
 9 of the Rules it is the Improvement Trust alone which is bound to pay the               B
 said charges and it cannot require the lessees to pay the same. Shri Bobde
 has also placed reliance on clause l(b) of the Lease Deed and has sub-
 mitted that the Improvement Trust is entitled to require the lessees to pay
 the non-agricultural assessment that is being recovered by the State
 Government from the Improvement Trust and that the High Court was in                     C
 error in holding that in view of Rule 9, clause l(b) of the Lease Deed
 cannot be construed to impose such a liability on the lessees.

         The learned counsel appearing for the respondents have, on the
 other hand, urged that the High Court has right construed the expression D
 "land revenue" in Rule 9 of the Rules to include non-agricultural assess-
 ment and that in view of the mandate in Rule 9, the Improvement Trust
 alone is liable to pay non-agricultural assessment and it cannot pass on the
 liability for the same to the lessees. The submissions of the learned counsel
 is that clause l(b) of the Lease Deed cannot be construed as entitling the
 Improvement Trust to require the lessees to pay the non- agricultural E
 assessment and that, if clause l(b) is so construed, it would be inconsistent
 with the provisions contained in Rule 9 of the Rules.

         We will first examine the question whether Rule 9 of the Rules
  precludes the Improvement Trust to require the respondent-lessees to pay p
  the amounts sought to be recovered from the Improvement Trust by the
  State Government as non-agricultural assessment in respect of the plots
  leased out to the respondents. For that purpose, we will proceed on the
  basis that the expression "land revenue" in Rule 9 includes non-agricultural
  _assessment. A perusal of Rule 9 shows that it governs the relationship G
  between the State Government and the Improvement Trust in the matter
  of recovery of land revenue payable in respect of lands disposed of under
  the Rules. The said Rule imposes the liability for the payment of land
  revenue in respect of the lands disposed of under the Rules on the
· Improvement Trust. As a result, the State Government can recover the land
  revenue payable in respect of the lands so disposed of from the Improve- H
    26                     SUPREME COURT REPORTS                    [1997] 3 S.C.R.

A . ment Trust and it need not take proceedings for recovery of such land              iii!.'.·
                                                                                           ..·.
   revenue from the transferees of the lands that are disposed of under the             'ii
   Rules. But that dose not mean that the Improvement Trust cannot pass on
   its liability to the lessees in respect of the Jarid revenue payable by it to the
   State Government in respect of the land that have been transfer to the
B lessees. The High Court has construed Rule 9 to mean that the land
   revenue in respect of the plots transferred to the lessees has to be paid by
   the Improvement Trust and no one else and that the said burden which is
    statutorily fixed under Rule 9 cannot be shifted to others. We find no
    warrant for adding the words "no one else" in Rule 9 so as to preclude the
    Improvement Trust from requiring the lessees to pay the land revenue
C which the Improvement Trust is required to pay to the State Government
    in respect of the lands that have been transferred to the lessees. If it is so
    held, the Improvement Trust would be saddled with the liability to pay
    non-agricultural assessment which would vary with the user of the land by
    the lessees. Under Section 114 of the Land Revenue Code the rate of
D non-agricultural assessment in respect of lands in urban areas is one-half
    the standard rate if the land is used for the purpose of industry and it is
    thrice the standard rate in certain area' including Nagpur and twice the
    said rate in other urban areas if the land is used for the purposes of
    commerce. The possibility cannot be excluded that the amount of the non-
E · agricultural assessment payable in result 0f the plot of land disposed of by the
    Improvement Trust may, in the course of time, exceed the amount of premium
    that is paid by the lessee at the time of grant of lease and, if the Improvement
    Trust is precluded from recovering the amount of non-agricultural assessment
    from tlie lessee, it may end up paying more by way of non-agricultural
  . assessment than the amount received by it as premium for the land. By way
F of illustration we may refer to the Lease Deed dated October 15, 1956
    (Annexure 'H' to the S.L.P.) executed in favour of Arya Pratinidhi Sabha
    (petitioner in Writ Petition No. 2265 of 1982 before the High Court). The
     amount of premium paid by the lessee was Rs. 6,534 in respect of a plot
     measuring 7,286 square feet and the ground rent is Rs. 10 per year. The letter
G of demand dated May 29, 1982 (Annexure 'I' to the S.L.P.) shows that the
     non-agricultural assessment payable in respect of the said plot @ Rs. 270.70
     for the period from 1956 to 1982 was Rs. 7038. The amount of non-agricul-
     tural assessment payable for the plot for the period from 1956 to 1982 thus
     exceeds the premium that was received by the Improvement Trust from the
H lessee. Surely it could not be the intention of the Rule making authority in
         NAGPURIMPRO'IEMENTTRUSf» NAGPUR TIMBER MERCHANTSA5SN. [S.C. AGRAWAL,J.J   27

     Rule 9 that the Improvement Trust shall finance the lessees in respect of          A
     lands that are disposed by the Improvement Trust under the Rules.

            The High Court has also referred to the provisions of Rule 11 of the
     Land Disposal Rules, 1983 wherein it is expressly stated that the lessee
     during the continuance of the lease shall pay land revenue, non-agricultural
     assessment and cesses assessed or which may be assessed on the demised             B
     land. The fact that under Rule 11 of the land Disposal Rules, 1983 it is
     expressly provided that the lessee is liable to pay land revenue non-agricul-
     tural assessment in respect of land held by him does not mean that in the
     absence of such an express provision Rule 9 of the Rules must be construed
     to mean that the lessee is not liable to pay land revenue non-agricultural         C
     assessment assessed on the dismised land. As indicated earlier, we are of
     the opinion that Rule 9 of the Rules did not preclude the Improvement
     Trust from recovering from the respondent-lessees the amount of non-
     agricultural assessment payable by it to the State Government in respect
     of lands leased out respondent-lessees. Since we have held that Rule 9 of          D
     the Rules did not to preclude the Improvement Trust from ~.:quiring the
     respondent-lessees to pay in respect of the lands leased out to them
     non-agricultural assessment which the Improvement Trust was required to
     pay to the State Government, we do not consider it necessary to deal with
     the question whether the expression "land revenue" in Rule 9 includes
     "non-agricultural assessment".                                                     E

            The High Court has observed .that liability could not be passed on
     to the lessees because they had no notice of the proceedings regarding
     fixation or assessment of non-agricultural assessment and they could not
     participate in the proceedings. It is no doubt true that at the stage of F
     assessment of amount of non-agricultural assessment notice had only been
     issued to the Improvement Trust and the lessees had no notice of the
     proceedings and they had no opportunity of placing their case before the
     concerned authorities. The grievance of the respondents in this regard
     would be redressed if they are afforded an opportunity of making their
     representations against determination of non-agricultural assessment ill G
     respect of plots leased out to them and, in case such representations are
     made by the lessees, the same are given due consideration by the. con-
     cerned authority.

          In the result, the appeals are allowed. The impugned judgments of             H
,·
    28                   SUPREME COURT REPORTS                 [1997) 3 S.C.R.

A the High Court are set aside and the Writ Petitions filed by the respondents
  in the High Court are disposed or with the direction that it is permissible
  for the Improvement Trust to require the respondent-lessees to pay the
  amount of non-agricultural assessment in respect of the lands leased out
  to them. It would, however, be open to the respondent to submit their
B representations to the concerned authority against the determination of
  non-agricultural assessment in respect of lands leased out to them and, if
  such representation is made within one month of this judgment, the same
  shall be given due consideration by the concerned authority and it should
  be disposed of within a period of two months from the date of submission
   of the representation. The recovery of non-agricultural assessment shall not
C be made from the respondent-lessee/lessees making the representation till
   the representation is disposed of by the concerned authority. No order as
   to costs.

   . J.N.S.                                                   Appeals allowed .