1. Verdict corner: In search of a clean landing

Verdict corner: In search of a clean landing

There are conflicting high court verdicts on the applicability of the provisions of the now-repealed Urban Land (Ceiling and Regulation) Act

By: | Updated: November 21, 2014 8:39 AM

In a matter related to the surrendering of surplus land to the state governments, the Supreme Court has decided to look into the applicability of Section 20, post repeal of the Urban Land (Ceiling and Regulation) Act 1976.

The Act was introduced by the then prime minister Indira Gandhi to ensure equitable distribution of urban land among the various sections of the society and also to avoid speculative transactions relating to land in urban agglomerations. The legislation was later repealed by various state governments as it failed to achieve its objective and had resulted in escalation of land prices.

Under Section 20 (1) of the Act, the state governments were empowered to exempt vacant land, subject to the imposition of certain specified conditions. Section 20(2) empowered the government to withdraw the exemption in cases where the conditions were not complied with.

However, the orders granting exemptions under Section 20 (1) of the Act was retained even after the repeal.

The repeal had also come under severe criticism as it was felt that it would benefit only the rich and was seen as a result of the understanding between the state governments and powerful real estate lobbies. This led to spate of litigation all over the country and various high courts have now given conflicting views on the interpretation of the provision.

A full bench of the Bombay High Court, in September, held that that the developers and landowners cannot escape liability of surrendering their excess land despite the repeal of the 1976 Act in 2007 and the state was empowered to cancel the schemes and recover the excess land for public housing from private landowners for violations under the now defunct Act.

The HC said that once the legislature holds an exemption order issued under Section 20(1) to be valid, all incidental powers which are necessary to preserve its validity would be available to the state. “Once held that the power to withdraw the exemption also survives the repeal of the principle Act, then all consequences must follow and the said power can be exercised by the state government in accordance with law,” it said.

According to the court, this would be, firstly, by the virtue of the clear provisions of Section 3(1)(b) of the Repeal Act and, secondly, by the virtue of the provisions of Section 6 of the General Clauses Act. Any other interpretation would be nothing short of doing a violence to the solemn intention of the legislature in saving validity of an exception order…,” the HC stated.

However, the Andhra Pradesh High Court, in 2012, ruled otherwise stating that the state cannot take the excess land as the law no longer exists. While interpreting the provisions, the AP HC said that “a harmonious reading of the provisions under Section 20(1) and Section 20(2) of the principle Act, coupled with Section 3 of the Repealing Act, makes it clear that orders granting exemption is saved only with a view to avoid repayment of any amounts collected by the state governments while granting exemptions. Thus, the government cannot refuse permission to use the land post repeal only on the ground that the conditions imposed in the exemption order shall continue to operate.”

According to HC, in the absence of any saving clause, except Section 20(2) of the principle Act even in cases where conditions are violated, the government is not empowered to withdraw the exemption granted prior the repeal Act 1999 and thus the exempted land has become free-hold land and conditions imposed would not operate any more.

It said that as the land in question (Surendra Raj Jaiswal vs AP government) has become the free-hold land in view of the Repealing Act 1999, there appears no reason or justification for not granting permission to Jaiswal to use the land covered by exemption proceedings for the purpose of multiplex theatre-cum-shopping complex.

Several builders, the Maharashtra Chamber of Housing Industry, the AP government and others have filed cross-appeals before the SC. Now, all eyes are set on the apex court which will hear and settle the issue finally on January 6.


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