Holding

The Act expressly empowers the development authority to levy a development fee, but it does not empower the authority to levy stacking or water charges in advance.

Summary

The Supreme Court examined whether the Uttar Pradesh Urban Planning and Development Act, 1973 empowers a development authority to levy a development fee on applicants for plan sanction. The High Court had held that no such power existed, but the Supreme Court read Sections 14, 33, 41, 56 and related provisions as conferring the authority to impose the fee as a condition for granting sanction, with the fee being a compulsory exaction for services rendered. The Court affirmed that the Act authorises the authority to demand payment or bank guarantee for development charges, rejecting the contention that the power was absent. However, the Court agreed with the High Court that the authority cannot levy stacking (malva) charges or water charges in advance before actual use of public places or water. Consequently, the appeal was allowed, overturning the High Court’s decision on the development fee while upholding its view on stacking and water charges.

Issues considered

Whether the U.P. Urban Planning and Development Act, 1973 confers power on the development authority to levy a development fee.
Whether the development authority can levy stacking (malva) charges or water charges in advance of actual use.
Whether the High Court erred in holding that there is no provision for levying a development fee under the Act.

Legislation cited

Constitution of Indias. Article 265
U.P. Urban Planning and Development Act, 1973s. 14, s. 2(a), s. 2(e), s. 2(f), s. 2(g), s. 2(h), s. 2(i), s. 3, s. 33, s. 41, s. 56, s. 59, s. 7

Subjects

development feedevelopment authorityU.P. Urban Planning and Development Actlevy of feesstacking chargeswater chargesnatural justiceArticle 265planning permission

Judgment

STATE OF U.P. AND ORS. ETC. A
v.
SMT. MALTI KAUL AND ANR. ETC.
-\
}.
AUGUST 21, 1996

[K. RAMASWAMY AND G.B. PATTANAIK, JJ.) B

U.P. Urba11 Pla11ning and Developme11t Act, 1973 :

Sectio11s 2(a) (e) (f) (g) (h) (i), 3, 7, 14, 33, 41, 56 and 59.

Development Authority-Power to levy development fee-Respondents c.
filed plans for grant of sanction-Levy of developmellt fee-Challenge-High
Court holding that development authority was devoid of power to levy
development fe~Appeal-lleld Act specifically gives power to development
authority to levy development fee-High Court erred in holding that there is
no provision under the Act or the Rules to levy the development fee. D
Development Authority-Power to levy stacking charges (Malva Char-
ges) or water charges in advanc~A11y person using a public place for stackidg
material for construction has to pay prescribed fee and charges for user of the
water-But development authority has no power to levy in advance the charges
for stacking the material or user of the water. E
Fee-Nature of leVJ{..,evy of fee is a compulsory exaction for services
rendered as quid pro quo.

Alunedabad Development Authority v. Pasawalla, [1992) 3 SCR 328,
held inapplicable. F
The Hingir-Rampur Coal Co. Ltd v. The State of Orissa, (1961) 2 SCR
537, referred to.

...... CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9281 of
_, 1995 Etc. G
From the Judgment and Order dated 21.4.95 of the Allahabad High
Court in C.M.W.P. No. 34440 of 1994.

A.B. Rohtagi, Ashok K. Srivastava, M.P. Midha, Bharat Sangal, H.M.
Singh, Praveen Swarup Promod Swarup, Prashant Kumar and Joseph H
9
10 SUPREME COURT REPORTS (1996) SUPP. 5 S.C.R.

A Pokkatt for the appearing parties.
The following Order of the Court was delivered :

Application for intervention is dismissed. Leave granted in the Spe-
cial Leave Petition.
B
These appeals arise from the judgment of the. Allahabad High Court
dated April 21, 1995 declaring that the appellants are devoid of power to
levy the development fee under the U.P. Urban Planning and Development
Act, 1973 (11of1973) as amended from time to time (for short, the "Act").
c The undisputed facts are that the appellant-authority was constituted
under Section 4 of the Act as a development authority. When the respon-
dents filed plans for grant of sanction, a demand was made of ·them to
deposit the development fee. Calling the demands in question, the above
appeals came to be filed. Consequently, declaration was made. In addition,
D the High Court also found that the demands for malva charges (stacking
charges) and water charges were violative of principles of natural justice.
Accordingly, it directed the appellants to give opportunity of being·heard
to the respondents and then levy charges. Calling the decision in question,
these appeals have came to be filed. The High Court concluded that there
E is no provisions in the Act or the Rules made thereunder, the demand and
collect the development fee.

With a view to appn~ciate the contentions of the counsel on either
side and the findings recorded by the High Court, it is necessary to
ccinsider the relevant provisions of the Act.
F
Section 4 contemplates that the State Government may, by notifica-
tion in the Gazette, constitute, for the purpose of the Act, an authority
called "Development Authority" for any development area. "Development"
has been defined in Section 2 (e) with its grammatical variations, to mean
the carrying out of building, engineering, mining or other operations in, on,
•. ~- .
G over or under land, or the making of any material change in any building
or- land, and includes re--development. "Development Area" hl\s been
defined in Section 2 (f) to mean any area declared to be development area 11
under Section 3. It has been empowered, where the Government in exercise
of the power under Section 3 has declared that any area within the State
l••
H requires to be developed according to the plan, to declare such area to be
STATE v. MALTIKAUL 11

a development area. Section 7 envisages the objects of the authority and A
gives power to the developing authority to acquire, hold, manage or dispose
of a land and any other property, to carry out building, engineering, mining
and other operations, to execute works in connection with the supply of
water and electricity, to dispose of sewage and to provide and maintain
other services and amenities and generally to do anything necessary or
B
expedient for purposes of such development and for purposes incidental
thereto. "Amenity" has been so defined in Section 2(a) as to include road,
water supply, street lighting,: drainage, sewerage, public works and such
other convenience as the State Government may, by notification in the
Gazette specify to be an amenity for the purposes of the Act. The expres-
sion "engineering operations" has been defined under Section 2(h) and c
includes the formation or laying out means of access to a road or the lying
out of means of water supply. "Means of access" has been defined under
Section 2(i) and include any means of access, whether private or public,
for vehicles or for foot passengers, and includes a road.
D
i
It would thus be seen that the development authority has been
enjoined to undertake the development of the development area including
providing amenities or carrying out engineering operations or providing
means of access as envisaged under the Act or any other amenities that
may be specified by a notification by the State Government as part of
development plan undertaken under the Act. E

Section 14 in Chapter V on "Development of Land" gives power to
the development authority and provides that after coming into force of the
plan in any development area, no development shall be undertaken or
carried out or continued in that area unless such development is also in F
a<;CQrdance with the plans. Under sub-section (1) thereof, after the decla-
ration of any area as development area under Section 3, no development
shall be undertaken or carried out or continued in that area by any person
or body (including a department of Government) unless permission for
such development has been obtained in writing from the Vice-Chairman in G
accordance with the provisions of the Act. Therefore, before development '
is undertaken in accordance with the plan by any person or a body
including the department of the Government, he is enjoined to obtain in
writing from the Vice-Chairman sanction for development in accordance
with the provisions of the Act. When the levy of the development fee was
charged on the respondents, they came to question the power of the H
12 SUPREME COURT REPORTS [1996) SUPP. 5 S.C.R.

A authority.

. The question, therefore, is : whether such a power is traceable to the
provisions of the Act? Section 33 of the Act gives power to the develop-
ment authority to provide amenities or carry out development at the cost
of owner in the event of his default and to levy cess in certain cases. Under
B sub-section (1) thereof, if the Authority is satisfied, after conducting the
inquiry as contemplated therein or upon report from any of its officers or
other information in its possession, that any amenity in relation to any land
in development area has not been provided in relation to the land which,
in the opinion of the authority ought to have been or ought to be provided
c or that any development of the land for which permission, approval or
sanction has been obtained under the Act or under any other law in force
before the Act came into force, has not been carried out, then after giving
an opportunity to the owners of the land or persons providing or respon-
sible for providing the amenity a reasonable opportunity to show cause, it
D may impose the development charges. Sub-section (2) contemplates that if
any amenity is not provided or any such development is not carried out
within the time specified in the order, then the Authority mayitself provide
'
the amenity or carry out the development or have it provided or carried
out through such agency as it deems fit. By operation of sub-sectio!l (3),
all expenses incurred in that behalf by the development authority or the
E agency are to be recovered in the manner indicated in sub-;ection (4) and
the following sections the dletails of which are not material for the purpose
of this case.

Section 41 envisages control by the State Government in implemen-
F tation of the provisions of the Act Under sub-section (1) Thereof, the
Authority, the Chairman or the Vice-Chairman shall carry out such direc-
tions as may be issued to it'him from time to time by the State Government
for the efficient administration of this Act. Section 56 gives power to make
regulations under the A1;t. Sub-section (1) thereof provi\fe that any
Authority may, with the previous approval of the State Government, make ·
G regulations, not inconsistent with this Act and the rules made thereunder,
for the administration of the affairs of the Authority. Therefore, the general
power is available under Section 56 for the Authority to make regulations
for the administration of the affairs of the authority. In particular sub-sec-
tion (2) thereof provides that despite the generality of the power given in
H sub-section (1) specific power has been given by way of regulations as
STATE v. MAL11 KAUL 13

enumerated thereunder. Clause (i) which is a residuary clause provides for A
any other matter which has to be or may be prescribed by the regulations.

By operation of Section 59, any orders issued under the predecessor
Acts which are not inconsistent with the provisions of the Act shall con-
tinue to be in operation. Under Section 14 of the Uttar Pradesh (Regula-
tion of Building Operations) Act, 1958 (predecessor Act) which is pali
B
111ate1ia with Section 14 of the Act, regulations have been made which are
not inconsistent with that of Section 8, in that behalf provides for sanction
of plans and statements. Condition (vii) provide that the applicant has
entered into an agreement with the local body concerned for the develop-
ment of the land and for provision of other amenities and has either c
deposited the full estimated cost of the development and provision of other
amenities with that local body in advance or has given to it a bank
guarantee equivalent to such cost, or has entered into an agreement with
the local bo.dy, providing that the full cost thereof may be realised by it out
of the sale-proceeds of the plots that may be sold by the applicant; D
provided that any such agreement between the applicant and the local body
I
may provide for any part of the development and provision of other
amenities being carried out by the applicant himself, however, that in
respect of any such part he shall give adequate security to the local body
to secure that he shall carry out such part of the development and provide
other amenities in accordance with the approved standards and specifica- E
tions to the satisfaction of the Controlling Authority. Under the second
proviso also, power has been given to secure mortgage of the entire land
to be developed in favour of the local authority as a condition for granting
sanction with an agreement for providing the amenities and if the plots are
to be released for sale by the mortgagor then the amount has to be paid F
as prescribed thereunder, the details of which are not material for the
purpose of this case.

A ;reading of these provisions, would clearly indicate that in a
development area when an owner or body or a department of the govern-
ment undertakes to develop the land, two options are open to the develop- G
ment authority, namely, either it may itself undertake to provide amenities
or other means of access, engineering corporations as provided under the
Act or as a condition to grant sanction it can call upon 'the person who
undertakes development or the body of the developers who undertake
development to deposit the amount required for such development or H
14 SUPREME COURT REPORTS [1996) SUPP. 5 S.C.R.

A providing amenities etc.

In the light of direction 7 of the directions issued in the regulations
the owner or the body or the developer is enjoined either to deposit the
amount demanded or give bank guarantee or mortgage the property in
favour of the Development Authority so that it could secure sufficient
B security in advance for overseeing the development including providing
amenities as a scheme of the development as per the sanction. It is settled
law that levy of fee is a compulsory exaction for services rendered as quid
pro quo. It is seen that the Development Authority is enjoined under the
Act to undertake planned development of the development area in accord-
c ance with the provisions of the Act. When it undertakes such a develop-
ment it carries out the development as per the plan either itself or through
any person or body which undertakes to develop the land in accordance
with the sanction plan in which case necessary conditions to safeguard
providing the amenities are required to be secured.

D
Thus considered, we hold that the Act specifically gives such a
power. It is true that under Article 265 of the Conaitution no tax can be
levied without any authority of law. There is no quarrel on the proposition
of law. In this case, from a reading of the aforesaid provisions it the clear
that the statute, instead of prescribing the rate of developmental charges
E itself, has given power to the rule-making authority to regulate the collec-
tion of and payment for development fee. It is seen that under the direction
which is not inconsistent with the provisions of the Act, it indicate the
method and the manner in which the collection is to be secured so as to
see that the area is developed in a planned manner as per the sanctions
F given by the competent authority. The High Court, therefore, was clearly
in error in holding that there is no provision under the Act or the Rules
to levy the development fee.

The High Court has relied upon the judgment of this Court in
G Ahmedabad DevelopmentAutlwrity v. v. Pasawalla, [1992] 3 SCR 328. The
said ratio has no application to the facts in this case. In that case, it was
found as a fact that there was no express provision for levy and demand of
the developmental charges. They sought to rely on the doctrine of ejusdem
ge11eris is a source to levy the development fee. The High Court having
noticed that the authority under Section 19 has the heads enumerated in
H sub-section (1) of Section 91 as the source of funds. This Court found that
STATE v.MALTIKAUL 15

the doctrine of ejusdem generis cannot be applied to levy and charge of A
development fee.

In The Hingi,r-Rampur Coal Co. Ltd. v. Tiie State of Olissa, [1961] ·2
SCR 537, a Constitution Bench of this Court has held that a fee is levied
essentially for services rendered and there must be an element of quid pro
quo between the person who pays it and the public authority that imposes B
it. The public authority has the power to levy fee in respect of the services
rendered. Therefore, compulsory exaction by levy of fee was not ultra vires
the power of the authority.

It is sought to be contended for the respondents by the learned C
counsel that there is no express provision and that neither Section 33 or
Section 41 can be fallen back upon to levy development fee. It is true that
express mention is not made either in Section 33 or Section 41; but when
Section 14 and section 56(2) are read together, it gives right and power to
the sanctioning authority to impose a condition to the grant of sanction for
execution of the plan in a development area by imposing the condition of D
i either payment in advance towards the cost of the amenities or means of
access etc. or give bank guarantee or mortgage the plot which is to be
developed etc. as enumerated hereinbefore. Therefore, the learned counsel
is not right in contending that there is no provision under the Act to
demand payment or bank guarantee towards the developmental charges of E
the amenities.

The High Court has pointed out that the appellants have no power
to demand stacking charges (malva charges) or water charges in advance
even before starting the construction. We are of the view that the High
Court is right in that behalf. If and when any person uses any public place F
or street for stacking the material for construction, it would be obvious that
such person is required to obtain prior permi-;sion for user and as a
condition he has to pay the necessary fee prescribed in that behalf or when
he uses the water for construction of the building, necessarily he has to pay
the water charges as per the prevailing rates. But that would he a matter G
-~- as and when the material was stacked on the public street or at the public
place or water was in fact used. Therefore, the authority have no power to
levy in advance the charges for stacking the material or user of the water.

It is to be seen that as regards the Agra Development Authority's
demand for payment of Rs. 17,33,245, the direction issued by the Division H
16 SUPREME COURT REPORTS (1996] SUPP. 5 S.C.R.

A Bench is that the respondent should give bank guarantee at the rate of Rs.
180 per sq. mtr. and to undertake to pay the balance amount on his
succeeding in that appeal now pending in this Court. In view of the above
law, the learned counsel has rightly undertaken to give the bank guarantee
for the amount demanded at the rate of Rs. 500 per sq. mtr. in the
impugned demand which works out to Rs. 17,33,245. We are informed that
B he has already given the bank guarantee at the rate of Rs. 180 per sq. mtr.
After deduction of the amount of that bank guarantee, for the balance
amount also he should give the bank guarantee. On his giving the guarantee
for the balance amount, the Agra Development Authority would release
the sanction of the plan for execution. The bank guarantee will remain in
C force and should be kept alive till the development of the area and
satisfactory completion certificate is issued by the competent authority in
accordance with the rules. Jn the event of his completing the development
and providing all the amenities according to the sanctioned plan, the bank
guarantee given would get discharged. '
D The appeals are accordingly allowed, but, in the circumstances,
without costs.

T.N.A. Appeals allowed.