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L H Mehta and 3 Vs Kandla Port Trust and 2 - Court Judgment

LegalCrystal Citation
SubjectContract
CourtGujarat High Court
Decided On
Case NumberSCA/1045/2010 37 JUDGMENT
Judge
Acts Major Port Trust Act, 1963 - Section 47-A , 47, 50
AppellantL H Mehta and 3
RespondentKandla Port Trust and 2
Cases ReferredCentral Inland Water Transport Corporation Ltd. vs. Brojo Nath Ganguly
Excerpt:
[r.v. raveendran; a. k. patnaik] indian penal code section 452 - house-trespass after preparation for hurt, assault or wrongful restraint -- after investigation, the police filed two challans on 02.02.2006 before the judicial magistrate, first class, ludhiana. after further investigation, the superintendent of police, city-ii, ludhiana, submitted his report to the deputy inspector general of police, ludhiana range. the relevant portion of the report of the superintendent of police, city-ii, ludhiana, which contains his conclusions after further investigation, is extracted herein below: "i found during my investigation that mohan singh, son of shri sher singh , dharmatma singh, harpal singh, jagdev singh and bhupinder singh, sons of mohan singh, residents of pullanwal, sold one plot.....1. the writ petition has been preferred by the petitioners challenging the resolution of board of trustees of kandla port trust dated 7.7.2009 and the consequential circular dated 29.10.2009 whereby the transfer fee in respect of transfer of sale of leasehold rights of a particular plot is sought to be levied with effect from 1.1.2004. further prayer has been made to declare that the transfer fee in respect of transaction of transfer of plots, the basis and criteria adopted for determining the transfer fee is artificial, unrealistic, arbitrary and very antithetic to the underlying purposes of levy of transfer fee.2. the first and the third petitioners are lessee, having leasehold rights on residential plot no.111, sector-2 in the township of gandhidham and plot no.a-119 of kandla port.....
Judgment:
1. The writ petition has been preferred by the petitioners challenging the resolution of Board of Trustees of Kandla Port Trust dated 7.7.2009 and the consequential circular dated 29.10.2009 whereby the transfer fee in respect of transfer of sale of leasehold rights of a particular plot is sought to be levied with effect from 1.1.2004. Further prayer has been made to declare that the transfer fee in respect of transaction of transfer of plots, the basis and criteria adopted for determining the transfer fee is artificial, unrealistic, arbitrary and very antithetic to the underlying purposes of levy of transfer fee.

2. The first and the third petitioners are lessee, having leasehold rights on residential plot No.111, Sector-2 in the township of Gandhidham and plot No.A-119 of Kandla Port Trust in the area known as Bhaipratapnagar, Gandhidham respectively.

2.1 The second petitioner is the Gandhidham Property Dealers' Association formed with an object to provide a platform to the grievances of inhabitants of the town relating to property matters and to solve property related grievances and the fourth petitioner a member of Gandhidham Chamber of Commerce and Industries, Gandhidham associated with various social and Gandhidham township activities. He is also a lessee owner of the leasehold rights of plot of Adipur-Kachchh.

3. The case was heard by the learned Single Judge and taking into consideration the fact that the petitioners have jointly filed the writ petition raising general question in public interest and pleaded that "the issue and the subject matter affects the entire population of the plot holders in the Gandhidham township and all residents and inhabitants in the township are affected persons", observed that writ petition is not adversary litigation and preferred in public interest of residents and inhabitants of the township of Gandhidham, referred to matter to the Division Bench to treat and hear the matter as a public interest litigation.

4. The respondents, on appearance, have challenged the maintainability of the writ petition as the allottees acquired right pursuant to agreement reached between the parties through their respective lease deeds.

5. The case of the petitioners is that Kandla Port Trust is a Board within the meaning of Section 2(b) of the Major Port Trusts Act, 1963 (hereinafter referred to as "the Port Trusts Act, 1963"). The constitution of the Board of Trustees of Kandla Port Trust is drawn from the provisions of the said Act, and the powers are derived from the said statute. The second respondent is the authority of Kandla Port Trust. The third respondent is the Tariff Authority for Major Ports (hereinafter referred to as "the Tariff Authority") set up under Section 47-A of the Major Port Trust Act, 1963 and was constituted on 10.4.1997. The third respondent Tariff Authority is vested with the powers under the Act in relation to regulating and determining the Port Tariff, services rendered in the Port area etc. within the scope of Sections 48 to 50 of the Act. The respondents are statutory authorities and are "State" within the ambit of Article 12 of the Constitution of India and, therefore, the writ is maintainable against them.

6. The submissions and propositions canvassed on behalf of the petitioners and challenge is made, particularly on the following grounds :-

(a) The respondent Kandla Port Trust is only an agent and manager on behalf of the Government of India in respect of leasing out of the subject matter lands. Therefore, the respondents are not entitled in law for levy of Transfer Fee. Even Kandla Port Trust's authority to act as an agent is not being established in law.

(b) Even if it is assumed that, respondent-Kandla Port Trust has such authority on behalf of Govt. of India, the lands are claimed to have been vested under the provisions of Major Port Trusts Act, 1963. The powers under the Act and more particularly sections 47 to 50 of the Act can be used for the purposes of the Port and port related activity so as to entitle the Kandla Port Trust to levy port tariffs and charges and not otherwise.

(c) Therefore, respondent No.3 Tariff Authority of India cannot be said to be validly drawing powers to approve Transfer Fee to be leviable by Kandla Port Trust in the plots within the Gandhidham Township and purported exercise such powers from Sections 47 to 50 or any other provision of the Major Port Trusts Act, 1963, tantamount to colourable exercise of powers.

(d) The Development Charge having been already levied in the first instance, the Transfer Fee based upon the Development Charges cannot be justified in as much as after initial leasing the plot, the Kandla Port Trust does not play any role and does not in any way contribute to the development of the plot. The charging of Transfer Fee in connection with every subsequent transfer is irrational. It amounts to profiteering. It is also dehors the powers on law.

(e) The Transfer Fee in its nature of levy becomes fee without quid pro quo. In the facts and circumstances, it is like a compulsory exaction, a kind of tax without authority in law.

(f) The levy of Transfer Fee is unreasonable fetter on disposition. It is in contravention of provisions of the Transfer of Property Act, 1882. The same is also violative of Article 300A read with Article 14 of the Constitution of India.

(g) The retrospective levy of Transfer Fee from 01.01.2004 contemplated in the circular at Annexure-A is not permissible in law. Further, in any case, cannot be justified in law by any yardstick in its criteria of levy as well.

7. The learned counsel for the petitioners would submit that the transfer fee is charged drawing the powers from the provisions of Sections 48 and 49 of the Port Trusts Act for which respondent Kandla Port Trust claimed to have sought permission from the Tariff Authority. The transfer fee is charged with reference to clause in the lease deed which respondent Kandla Port Trust has originally executed leasing out the plots in question. Further, inter-se transfer by way of sub-lease is permitted. In respect of every such subsequent sub-lease, the Kandla Port Trust levies the transfer fee, in other words, every successive event of sub-lease between the parties, inter-se would attract transfer fee, as claimed by the Kandla Port Trust.

8. By communication dated March 2009 through Estate Manager, Kandla Port Trust has admitted that Kandla Port Trust is only Administrator of the Gandhidham Township on behalf of Union of India and the Government of India is the owner of the land vested under the Major Port Trusts Act. In this view of the matter, the onus as to under what legal capacity, the Kandla Port Trust has acted to lease out the plot in its own name initially and consequentially the justification for demand of transfer fee on the basis of condition of lease deed, is upon the Kandla Port Trust. It has to establish its legal capacity and entitlement to lease out as owner of the land as well as that the plots/lands has vested in it under the law and not in the Government of India.

9. On the respondent's own showing, the Government of India is the owner and the respondent is only Administrator. The vesting is in the Government in distinction to in the Port Trust. The whole edifice of powers and authority claimed by the Port Trust would crumble in such facts and circumstances.

10. On behalf of the petitioners, the learned counsel would contend that the charging of transfer fee has lost its rationale and justification over the passage of time and is rendered an arbitrary extraction by the Kandla Port Trust.

(i) The transfer fee has the basis of development charge and what is claimed is percentage of unearned increase between the development charges already at the previous point of time and market value of land at the time of transfer. Transfer fee is thus in the nature of a Development Charge extracted from every subsequent transferee.

(ii) The rationale for justification of levy of Transfer Fee as measure of development charges for every successive transfer can be said to have ceased to exist long back. The Gandhidham Township land was historically developed to provide a support and boost to port of Kandla, which was planned after independence as one of the major ports in the western part of the country after Karachi fell in the territory of Pakistan. The idea was to resettle the migrant Sindhus, for which the then ruler of Kutch State donated the land.

11. He would contend that the transfer fee in the initial times was contemplated as measure of development inasmuch as the Kandla Port Trust was to contribute and manage the development of the entire township. After passage of almost five decades, the role of Kandla Port Trust in development and providing infrastructural facilities for Gandhidham Township no longer continues, the entire area is developed, the infrastructure is developed. The entire administration of Gandhidham township is now with Gandhidham Municipality for the purpose of providing civic facilities and infrastructure like roads, street lights, water supply etc.. The letter dated 20.8.1987 issued by Kandla Port Trust to the Chief Officer, Gandhidham Municipality, Gandhidham would show that the roads constructed for Gandhidham township were taken over by the Municipality.

12. In its very concept, according to the learned counsel, as per the proviso to Section 2(12), transfer fee is equated with what is called 'unearned increase'. The unearned increase is taken as difference between the premium already paid and the market value at the time of transfer and the payment of such difference was made condition precedent for mutation of transfer to be effected in the records of the Development Commissioner. What was contemplated was that the Kandla Port Trust to whom the land in question was given, should be compensated for the expenditure incurred by it over the plots and the consequential increase in the market value of the plot, the transfer fee cannot be permitted as a recurring levy.

13. Next it was contended by the learned counsel for the petitioners that the exercise of power of transfer fee sought to be derived from Sections 48 and 49 of the Port Trusts Act are not justified inasmuch as the said provisions deals with levy and prescription of scales of rates for services at the port (Section 48) and scales of rates and statement of conditions for use of property belonging to the Board which are within the limits of the port or port approaches and used for purposes related to port (Section 49).

The power is confined in relation to the services performed for port activities and with regard to the property within the limits of port and port approaches. Section 48 contemplates, inter-alia, that power may be exercised in respect of any services specified and performed under Section 48 of the Act. Similarly, Section 49 incorporates the purposes for use of property in connection with which the rates can be framed and the controlling conditions can be imposed. The various sub-clauses in this section form a group and operate for port based purposes and have to be construed accordingly. Therefore, power under the provisions of the Act cannot be said to have been conferred and cannot be said to be enabling the respondents to levy the transfer fee in respect of a plot which is residential or of other kind in the township zone not forming part of the actual port area.

14. It was submitted that Gandhidham township area is not a port area. The actual port area is separate. It cannot extend to township area. There has to be a specific demarcation. The respondents have not denied that port area is separate than the Gandhidham township area, which has residential and commercial area. The township is divided into two sectors. The transfer fee is levied in respect of transfer of plots in these sectors which are residential, commercial etc.. These plots and the activities thereon are in no way can be said to be port related activity. The Kandla Port has its own area and the plots in question of Gandhidham township are not part of port area. It is a residential township and has no nexus with port or port related activity. Therefore, the powers under Sections 48 and 49 of the Act are not available and the levy of transfer fee cannot be justified with exercise of these powers.

15. Alternatively, it was submitted that Kandla Port Trust had sought approval from the Tariff Authority as is evident from the order dated 22.4.2008 issued by the Tariff Authority approving the rate structure for Gandhidham township therein development charges are not approved by the Tariff Authority.

16. The Tariff Authority has also clarified that the Development charges proposed by the Kandla Port Trust are not in conformity with the guidelines of the Central Government on the Land use plan for major ports. The Government is being approached to include development charges as part of the rate revision and what was proposed by the Kandla Port Trust were draft scale of rates what is provisionally approved by the authority. What is approved is lease rate per annum as shown in the table and referred to in different paragraphs of the pleadings. Therefore, according to the petitioners, while in the impugned decision taken for levy of transfer fee, the Kandla Port Trust claims that the development charges have been approved by the Tariff Authority is far from truth and in fact the development charges are not at all contemplated under the law.

17. While it is accepted that the development charges may be one of the permissible head of charges required to be approved by the Tariff Authority, according to the petitioners, no such proposal was made by the Kandla Port Trust, nor any such development charges were approved by the Tariff Authority as a matter of fact. The whole basis of the Board of Trustees' resolution and the consequential circular dated 29.10.2009 and the notices for levy of transfer fee are de-hors justification in law and without any authority.

18. According to the petitioners, the very condition in the lease deed as regards the transfer fee at every event of successive transfer and authorization of such levy by Kandla Port Trust, who has no role in the development of township becomes a condition in the nature of restraint against free transfer. The transfers to which the condition of compulsory payment of transfer fee can be said to be void to that extent as the same is in breach of Sections 10 and 11 of the Transfer of Property Act.

19. In other words, when a deed of transfer executed inter-se incorporate a condition of transfer fee as levied by Kandla Port Trust, the mode and manner of such levy contravenes the provisions of Transfer of Property Act and such conditions are rendered void.

20. The learned counsel further contended that the condition for transfer fee and its recurring applicability at every successive transfer can be said to be a condition of transfer repugnant to the nature of estate. The original lease in favour of the individual is for 99 years, which is as good as sale in its legal incidences, the de facto domain over the demised plot is lost by the Kandla Port Trust, it does not contribute in any manner in developing or increasing the value of the plot, the civil amenities for the various plots are provided by the Gandhidham Municipality.

21. It is also alleged that the nature of levy of transfer fee assumes character of fee without quid pro quo and the retrospective demand and imposition of transfer fee is patently illegal.

22. The first respondent-Kandla Port Trust, as stated above, while has raised the question of maintainability of the writ petition, also justified the authority to levy transfer fee. Having regard to the provisions of the lease deed, particularly clause 6(I)(A) and sub-clauses (k), (I)(A) wherein it is stipulated that the lessee shall not assign, sublet, transfer or otherwise part with the demised premises without prior permission in writing from the competent officer of the Kandla Port Trust and at the time of such transfer or assignment of the demised premises, the lessor shall be entitled to claim and recover from the lessee effecting the transfer or assignment, 50% of the unearned increase i.e. the difference from the lumpsum development charges already paid and the market value at the time of transfer. It was also made clear that unless such amount is paid by transfer or the mutation of such transfer, shall not be effected in the records of the lessor.

23. According to the first respondent, the Tariff Authority in its earlier order dated 21.3.2002 had clarified that though the Tariff Authority had no authority to approve levy of transfer fee, the Port Trust at their discretion and responsibility can do so.

24. It was submitted that all properties of the Port have been vested with the Kandla Port Trust as per Section 29(1)(a) of the Major Port Trusts Act, 1963. The land is allotted on lease to different persons including most of the petitioners by Kandla Port Trust as 'Lessor'. The lessees are bound by the terms and conditions of the lease deed which envisages payment of transfer fee as per the other provisions of the lease deed. The power flows out of the lease deed which cannot be challenged by filing a public interest litigation.

25. The learned counsel for the petitioners had relied on the Supreme Court decision in LIC of India vs. Consumer Education & Research Centre reported in (1995) 5 SCC 482 wherein the Supreme Court observed that, "if it is shown that the exercise of power is arbitrary, unjust and unfair, it should be no answer for the State, its instrumentality, public authority or person whose acts have the insignia of public element to say that their actions are in the field of private law and they are free to prescribe any conditions or limitations in their actions as private citizens simpliciter do in the field of private law. Its actions must be based on some rational and relevant principles. It must not be guided by irrational or irrelevant considerations".

26. The learned counsel for the first respondent would contend that the aforesaid decision is not applicable in the present case, the actions being based on rational and relevant principles. He relied on the Supreme Court decision in Central Inland Water Transport Corporation Ltd. vs. Brojo Nath Ganguly reported in AIR 1986 SC 1571 wherein the Supreme Court observed as follows :-

"This principle is that, the Courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today's complex world of giant corporations with their vast infrastructural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances."

27. He would contend that the aforesaid principle will not apply in the case of contracts of commercial transaction, particularly when all individual intends to derive profit out of transfer and alienation of land which was leased earlier in favour of such persons for residential purpose.

28. The learned counsel would also refer to the cause-title of the petitioners, one of them is Gandhidham Property Dealers Association (second petitioner) and the other a member of Gandhidham Chamber of Commerce and Industries (fourth petitioner). He would contend that the filing of the writ petition by aforesaid two petitioners shows that they have equal bargaining power, who wants to develop the residential plots for their business. It was contended that the writ petition is not in public interest.

29. The learned counsel would contend that the question of approval of transfer fee by Tariff Authority does not arise as Section 49 of Port Trusts Act, 1963 does not envisage approval or fixation of the development charges by Tariff Authority. It is guided by clause 6(I)(A)(i) of the lease deed as per which transfer fee is levied at 50% of the development charges as originally paid by lessee and the market price as on the date of transfer, the difference thereof.

30. He would further contend as per guidelines issued by the Central Government, the annual rent is to be charged at 6% of the market value. This is so referred to in paragraph 10.1 of the order dated 22.4.2008 passed by the Tariff Authority. The market value of the plots for different sectors are based on various factors, which include -

(a) rates earlier approved by the Tariff Authority,

(b) rates fixed by the Government of Gujarat for the purpose of stamp duty,

(c) rates fixed on upfront basis for the auction held in a particular year,

(d) highest, lowest and average premium quoted for plots offered in different sectors at Gandhidham in the auction held in a particular year,

(e) highest, lowest and average consideration amounts, voluntarily declared by the lessees in the applications submitted for transfer of their plots in different sectors during particular period of years etc..

The different market prices also depends on potential and use of the land, such as residential sector, commercial area, office area, light industrial area, godowns, manufacturing area, composite zone etc.. The prices for each sector submitted by the Kandla Port Trust are referred to in the table. Based on that market price, 6% thereon was to be approved as annual rent. The Tariff Authority has approved 6% of the market value as annual rent in its order dated 22.4.2008 at paragraph

13. Thus market price has been inherently approved by the Tariff Authority in the process of approving annual rent chargeable at the rate of 6% of the market value.

31. It was submitted that annual rent at the rate of 6% of the market value could not have been approved without considering/ accepting the market value. The process of approving the rates of annual rent thus inherently involved the process of approving the market price as well. Section 49 of the Major Port Trusts Act, 1963 does not envisage any such approval of development charges by the Tariff Authority.

32. The learned counsel for the respondents also justified the retrospective effect as given effect from 1.1.2004. It was submitted that the Kandla Port Trust had moved proposal for revision of rates for Gandhidham Township land in the year 1999. However, because of the application by the petitioners and others, it was stated pending the process on account of post earthquake scenario, objections filed by others, including the second and the fourth petitioners, the matter remained pending and the rate structure which was reviewed in January 2004 when it was culminated and approval was granted by order dated 22.4.2008. Therefore, the rates have been approved with effect from 1.1.2004 for which the matter was earlier sought for and could not be given effect.

33. The counsel for the first respondent would further contend that the land of Gandhidham township has vested with Kandla Port Trust. The said Port Trust is the owner. The very Gandhidham township is in existence because of the Kandla Port and all shipping agents, stevedores, commissioning and handling agents are residing in the township area having their offices and residences. The activities in the Gandhidham township are directly related to the activities of the Kandla Port. Moreover, it would be evident from the order dated 22.4.2008 passed by the Tariff Authority that Kandla Port Trust is incurring expenditure on drainage of the township and for horticulture. The details of the expenses incurred from 2001-2002 to 2005-2006 have been shown in the table at page 100. Therefore, according to the first respondent, the Kandla Port Trust can levy transfer fee for the lands situated in the Gandhidham township.

34. We have heard the learned counsel for the parties in length, perused the record and the relevant provisions of law.

35. From the statement of object and reasons of the Major Port Trusts Act, 1963, it will be evident that there are six major ports in the country, namely, Calcutta, Bombay, Madras, Vishakhapatnam, Cochin and Kandla. The first three ports were used to be administered by the Port Trust while other three including Kandla Port were administered directly by the Government of India. Taking into consideration the fact that statutory port trust have successfully administered three older ports of Calcutta, Bombay and Madras for many years, it was proposed by the Parliament to constitute Port Trust at Vishakhapatnam, Cochin and Kandla also. With such object the Major Port Trusts Act, 1963 was enacted, which came into force from 16.10.1963. Section 29 relates to transfer of assets and liabilities of Central Government etc., the relevant provisions of which are quoted hereinunder :-

"29. Transfer of assets and liabilities of Central Government, etc. - (1) As from the appointed day in relation to any port -

(a) all property, assets and funds and all rights to levy rates vested in the Central Government or, as the case may be, any other authority for the purposes of the port immediately before such day, shall vest in the Board; (b) to (f) .. ... ... ... .. ... . (2) Notwithstanding anything contained in clause (a) of sub-section (1), the right to fix rates vested in the Board shall vest in the Authority as from the date it is constituted under sub-section (1) of Section 47A."

36. From the aforesaid provisions, it will be evident that not only the Central Government property, assets and funds vested with the Board of Trustees of the Kandla Port Trust, so far as it relates to Kandla Port all rights to levy rates also vested with the Board under clause (a) of sub-section (1) of Section 29. However, in view of sub-section (3) of Section 29 the right to fix rates vested with the Tariff Authority. Therefore, power to levy rates remained with the Board, but fixation of the rates vested in the Tariff Authority. Under this provision, Board of Trustees of Kandla Port Trust will decide what are the items on which it will levy fee, but the rate of such levy will be fixed by the Tariff Authority.

37. It is pursuant to an acquisition of 1952, where the Land Acquisition Officer, Adipur-Kachchh vide memo dated 9.2.1953 had handed over the sub-merged area admeasuring approximately 346.5 sq. miles to the erstwhile Kandla Port Organization for development, which originally remained with the Central Government, but the said land subsequently vested with the Kandla Port Trust in view of clause (a) of sub-section (1) of Section 29.

37.1 Out of the aforesaid 346.5 sq. miles of land, 6900 acres of land has been demarcated for development of Gandhidham township, out of which, approximately 2600 acres of land has already been developed under the efforts of Kandla Port Trust. It is informed that a further area of 1560 acres, within the township area, is in contemplation for development and/or is being developed.

38. The Kandla Port Trust Board is competent to enter into and perform any contract necessary for the purpose of its function, subject to the provisions of Section 34. The mode of executing a contract on behalf of the Trustees of the Kandla Port Trust Board is prescribed under Section

39. Under second proviso therein, it has been clearly stipulated that no contract for sale of immovable property or for the lease of any such property for a term exceeding 30 years, and no other contract whereof the value or amount exceeds such value or amount as the Central Government may from time to time fixed in this behalf, shall be made unless it has been previously approved by the Central Government.

40. Under sub-section (3) of Section 34, no contract which is not made in accordance with the provisions of the Act and the regulations made thereunder shall be binding on the Kandla Port Trust Board, as evident from the said provisions and quoted hereunder:-

"34. Mode of executing contracts on behalf of Board. - (1) Every contract shall, on behalf of a Board, be made by the Chairman or by any such officer of the Board not below the rank of the Head of a Department as the Chairman may, by general or special order, authorise in this behalf and shall be sealed with the common seal of the Board: Provided that no contract whereof the value or amount exceeds such value or amount as the Central Government may from time to time fix in this behalf shall be made unless it has been previously approved by the Board:

41. Provided further that no contract for the acquisition or sale of immovable property or for the lease of any such property for a term exceeding thirty years, and no other contract whereof the value or amount exceeds such value or amount as the Central Government may from time to time fix in this behalf, shall be made unless it has been previously approved by the Central Government.

(2) Subject to the provisions of sub-section (1), the form and manner in which any contract shall be mad under this Act shall be such as may be prescribed by regulations made in this behalf.

(3) No contract which is not made in accordance with the provisions of this Act and the regulations made thereunder shall be binding on the Board."

42. The case of the petitioners is that the Board of Trustees of the Kandla Port Trust entered into a lease agreement for a stretch of 99 years. One of the agreement has been enclosed with the writ petition, which shows 99 years lease deed executed on 12.10.1995 between the Board of Trustees of Kandla Port Trust and one Shri Pannalal Multanmalji Taled. Under clause (6), the lessee covenants with the lessor, certain terms and conditions, relevant of which are quoted hereunder:-

"6. The Lessee covenants with the Lessor as follows (that is to say) :- (a) to (k) ... ... ... ... (I) (A) The Lessee shall not assign, sublet, transfer or otherwise part with the demised premises without prior permission in writing from the Chairman or such officer or body as the Lessor may authorise in this behalf and if such permission be given all assignees and transferees and the heirs of the Lessee shall be bound by all the covenants and conditions herein contained and be answerable therefore to the Lessor in all respects.

(i) Provided that at the time of such transfer or assignment of the demised premises the Lessor shall be entitled to claim and recover from the Lessee effecting the transfer or assignment 50% of the unearned increase i.e. the difference between the lumpsum development charges already paid and market value at the time of transfer and unless the said amount is paid by the transfer or the mutation of such transfer will not be effected in the records of the Lessor nor shall such transfer or assignments recognised by the Lessor.

(B) Notwithstanding anything contained in sub-clause 1(A) and proviso (i) thereto, above, the Lessee may, with the previous consent in writing of the Chairman, mortgage or charge the Plot and the building thereon to such person/Bank/Financial Institution as may be approved by the Chairman in his absolute discretion.

(i) Provided that, in the event of the sale or foreclosure of the mortgaged or charged property, the Lessor shall be entitled to claim or recover fifty percent of the unearned increase in the value of plot, as aforesaid and the amount of the Lessor's share of the said unearned increase, shall be a first charge, having priority over the said mortgage or charge. The decision of the Chairman in respect of the market value of the said plot shall be final and binding on all parties concerned.

(ii) The Lessee shall register all changes in the possession or ownership of the whole of the demised premises or of the buildings thereon whether by transfer, succession or otherwise in the register kept in the office of the Lessor for this purpose, within two calendar months from the respective dates of such changes, and in case the Lessee shall without sufficient cause neglect to register such changes in the manner aforesaid, he shall be liable to pay to the Lessor for every such neglect a penalty not exceeding Rs.100/- as may be levied by the latter, in addition to any other remedies enforceable against him under these presents."

43. From the aforesaid clauses, it will be evident that the lessee reached lease agreement with the lessor- Board of Trustees of Kandla Port and agreed that he will not assign, sublet, transfer or otherwise part with the demised premises without prior permission in writing from the Officer as may be authorised by lessor and at the time of transfer or assignment of the demised premises, if so allowed, the lessor, Board of Trustees of Kandla Port, shall be entitled to claim and recover from the lessee effecting the transfer or assignment, 50% of the unearned increase paid and market value at the time of transfer, and such amount is paid by the transferor or the mutation of such transfer shall not be effected in the records of the lessor nor such transfer or assignment will be recognised by the lessor.

44. We have noticed proviso to sub-section (1) of Section 34 whereunder no contract for lease of any such property for a term exceeding 30 years would have been made unless it has been previously approved by the Central Government. Under sub-section (3) of Section 34, if contract is made not in accordance with the provisions of the Act and regulations made thereunder, such contract is not binding on the Board of Trustees of Kandla Port.

45. In the present case, there is nothing on the record to suggest that the Board of Trustees of Kandla Port while reaching a lease agreement for 99 years, obtained previous approval of the Central Government. In absence of any such statement, it is not possible for this Court to decide whether the petitioners or any other individual can claim any right of transfer under the lease deed.

46. One of the pleas taken by the petitioners to assail the resolution dated 7.7.2009 and consequential circular dated 29.10.2009 issued by the Board of Trustees of Kandla Port is that the Tariff Authority has not approved the rate.

47. From the record, it will be evident that the Tariff Authority had passed order on 29.10.1999 approving the revision of rates structure of Gandhidham township land as proposed by the Kandla Port Trust. Subsequently, a corrigendum was notified on 31.12.1999 stating that the provision as regards levy of transfer charge at the rate of 50% of the unearned increase was not approved as it was not within the mandate of the Tariff Authority. It was rightly issued as the transfer charge at the rate of 50% of unearned increase is a part of the agreement reached between the Board of Trustees of Kandla Port and individual lessee and was not under Section 49 of the Port Trusts Act.

48. From the order dated 21.3.2002 passed by the Tariff Authority, it will be evident that in pursuance to the order passed by the Tariff Authority on 29.10.1999, a number of representations were received from various user organizations for review of the increase of rates approved. A joint hearing was held on 7.3.2002 at the Kandla Port Trust premises in Kandla wherein submissions were made by parties as recorded at para 9.1 of the order dated 21.3.2002 and quoted hereunder:-

"9.1 A joint hearing in this case was held on 7 March 2002 at the KPT premises in Kandla. At the joint hearing, the following submissions were made:- Kandla Port Trust (KPT)

(i) Entire Municipal Administration- roads, water supply, electricity supply, and drainage was with us. Between 1975 and 1985, the administration of roads, water supply and electricity supply were given up. The administration of drainage even now is with us.

(ii) In the same vein, we have also been allotting lands.

(iii) We collect lease rent and ground rent to establish our title; and, to recover our Developmental Charges.

(iv) District Revenue authority is collecting much higher rates with respect to the current market values. We are not on that track. We have not to take into account stamp duty, etc.. We only go by our Development Charges.

(v) There are three components of rates applicable on land;

(a) Development Charges as a one time payment.

(b) Ground Rent is collected annually @ 21/2% of Development Charges.

(c) Transfer Fee.

(vi) 1 January 1999 is the cut-off period. Old rates shall apply to old leases even for transfer. That is our Board's proposal.

The Gandhidham Chamber of Commerce and Industry (GCCI)

(i) There is no logic in the rates proposed earlier. The increase proposed are abnormal.

(ii) The earlier Board Resolution and the TAMP Order must be rescinded. The new proposal is okay.

Kandla Port Karamchari Sangh (KPKS) A very nominal rate is applied on leases to employees. But development charge is being levied on part with all others. We must be protected.

The Gandhidham Property Dealers Assocation (GPDA)

(i) We are also residents of Kandla. We help the public to transact their property dealings. That is our interest in this case.

(ii) Let the KPT charges 'Process Fee' and not 'Transfer Fee'. The formula can be different and need and not be tied to development charges.

(iii) Land is likely to be returned to Gujarat Government. When then meddle with the rates now?

Transport and Dock Workers Union

(i) If the TAMP accepts the new proposal there will be no problem.

(ii) Employees were allotted lands under a Special Scheme. They must, therefore, be exempted from this increase.

(iii) Employees Special Scheme is a unique scheme in the KPT. Any proposal to apply general rates in cases of employees will militate against the concept of the Special Scheme."

49. From the aforesaid submissions made by the parties and noticed at paragraph 9.1 of the order of the Tariff Authority dated 21.3.2002, it will be evident that there are three components of rate applicable on land -

(a) Development Charges as a one time payment;

(b) Ground Rent collected annually, and

(c) Transfer Fee.

50. From paragraph 10 of the order dated 21.3.2002, it will be evident that the Tariff Authority vide order dated 15.3.2000 clarified the correct legal position. It was made clear that the Tariff Authority had no jurisdiction to approve such levies in absence of the specific provision and the Port Trusts can, at their discretion and responsibility, take their own decisions on the subject without involving the Tariff Authority.

51. Relevant portion of paragraph 10 of the order dated 21.3.2002 of the Tariff Authority is quoted hereunder:-

"10. With reference to the totality of information collected during the processing of this case, the following position emerges for consideration:

(i) & (ii) ... ... ... ...

(iii) As has already been mentioned, the issue of the jurisdiction of this Authority to prescribe 'transfer fee'/ 'mortgage fee' has already been settled. It has also been clarified that the intention of this Authority was not to declare 'transfer fee'/ 'mortgage fee' as illegal. The legal position is that this Authority does not have the jurisdiction to approve such levies in the absence of a specific provision therefor in the Major Port Trust Act. This Authority has not asked the Port Trusts to stop recovering such fees. The Port Trusts can, at their discretion and responsibility, take their own decisions on the subject without involving this Authority.

Even though the position explained above has already been communicated to all the major ports and the Government, this Authority likes to reiterate its earlier decision in this case since it transpires that the KPT levies a transfer fee on its lands at the Gandhidham township."

52. From the order dated 22.4.2008, it appears that the Tariff Authority while disposing of the revisional proposal received in November 2001 from Kandla Port Trust passed an order on 21.3.2002 vacating the interim stay and ordered to review entire rate structure from January 2004. The revision matter was taken up and Kandla Port Trust on 3.1.2006 filed its proposal for revision of rate structure. The salient points made in the proposal were summarized at paragraph 4.1 of the order dated 22.4.2008, they being important, are quoted hereunder:-

Tariff Authority for Major Ports Case No.TAMP/9/2006-KPT Kandla Port Trust ... Applicant

O R D E R

(Passed on this 22 day of April 2008) This case relates to a proposal received from the Kandla Port Trust (KPT) for rate revision of Gandhidham Township Land (GTL). 3.1 This Authority while disposing off the revised proposal received in November 2001 from KPT passed the following Orders on 21 March 2002

a) The interim stay of operation is vacated.

b) The revised rates approved vide Order dated 29 October 1999 will not apply in respect of plots allotted prior to 1 January 1999, the pre-revised rates will continue to apply in these cases.

c) The revised rates approved vide order dated 29 October 1999 will apply in respect of plots allotted on or after 1 January 1999.

d) The entire rate structure will be reviewed in January 2004.

3.2 In this backdrop, the KPT on 3 January 2006 filed its proposal for revision of rate structure of GTL.

4.1 The salient points made by the port in its proposal are summarized below

(i) A rate revision committee under the chairmanship of Chairman, KPT, was constituted for submitting the proposal for revision of the rate structure. The committee comprised of KPT officers including the Deputy Collector, Anjar.

(ii) The committee took into consideration the various factors like

(a) Rates earlier approved by TAMP.

(b) Rates fixed by the Govt. of Gujarat for the purpose of stamp duty.

(c) Rates fixed on upfront basis for the auction held 2004.

(d) The highest, lowest and average premium quoted for plots offered in Sector Nos.8, 9, 10, 11, 12, 1-A and NU-3 at Gandhidham in the auction held in 2004, and

(e) The highest, lowest and average consideration amounts voluntarily declared by the lessees in the applications submitted for transfer of their plots in different sectors during the period July 2004 and August 2005."

53. From paragraph 7.2 of the aforesaid order dated 22.4.2008, it will be evident that on various points clarification was sought for by the Tariff Authority from the Kandla Port Trust, which was replied on 6.11.2006 and 13.11.2006 at Sr. 24 of its clarifications forwarded by Kandla Port Trust, the draft scale of rate was forwarded by Kandla Port Trust, including the conditionalities attached thereto relating to lease rents of land at Gandhidham, which was forwarded as follows :-

The KPT is also requested to forward a draft Scale of Rates, including the conditionalities attached thereto, relating to lease rents of land at GTL.

The draft scale of rates along with conditionalities is furnished below:

54. Subsequently, Kandla Port Trust was advised to furnish more information, which was forwarded on 23.7.2007 whereby Kandla Port Trust which was requested to confirm that the development charge referred to in the proposal is in conformity with the guidelines of the Central Government, it was intimated, as evident from Sr. 6 of the question and reply, which is part of the order dated 22.4.2008 passed by the Tariff Authority and quoted hereunder:-

KPT is once again requested to confirm that the development charges referred to in its proposal is in conformity with the guidelines issued by Central Government on the land use plan for Major Port Trusts.

Development Charges referred to in the earlier proposal sent vide KPT's letter dated 03.01.2006 is not in conformity with the guidelines of the Central Government on the land use plan for Major Ports. Hence, Govt. is being approached in this regard to include Development Charges also as a part of rate revision and direct TAMP accordingly as all the existing lease deeds of Kandla Port Trust has the terminology of "Development Charges" and "Ground Rent".

55. At paragraph 10.1 of the same very letter, the Government guidelines instructing port to take 6% of the market value as a rent per annum and the proposal of the Kandla Port Trust as forwarded by letter dated 8.8.2007 and 29.8.2007 was placed for approval, as shown hereunder:-

56. The proposal of the Kandla Port Trust aforesaid relating to rate of revision of Gandhidham township land was provisionally approved by the Tariff Authority for Major Ports by their notification dated 16.6.2008, as quoted hereunder:-

(To be published in Part-III Section 4 of the Gazette of India, Extraordinary)

TARIFF AUTHORITY FOR MAJOR PORTS

No.TAMP/9/2006-KPT Mumbai 16 June, 2008

NOTIFICATION

In exercise of the powers conferred under Section 49 of the Major Port Trust Act, 1963 (38 of 1963), the Tariff Authority for Major Ports hereby provisionally approves the proposal of the Kandla Port Trust for rate revision of Gandhidham Township Land as in the order appended hereto.

57. The aforesaid decision of the Tariff Authority was communicated to the Chairman, Kandla Port Trust by letter dated 23.6.2008 along with the summary of comments received from the port users/ different user organizations and arguments made in the said case during the joint hearing before the authority. From the said letter, it will be evident that the decision of the authority has been notified in the Gazette of India Extraordinary (Part-III Section 4) on 17.6.2008 vide Gazette No.100. It is only thereafter the Board of Trustees of Kandla Port issued the impugned resolution dated 7.7.2009 followed by the impugned consequential circular dated 29.10.2009. Notice of payment was issued to individual, who asked for transfer of the lease thereafter. One of such notices was issued to one of the petitioners on 6.12.2009, which is enclosed at page 46.

58. From the aforesaid facts, it will be evident that the tariff rate has been approved by the Tariff Authority, including the draft scale of rates along with conditionalities for different sectors and areas of Gandhidham.

59. The petitioners have raised the jurisdiction of respondent- Kandla Port to levy fee as development charges for transfer of land by lessee to another person. While they have alleged that the development charge for such transfer has no rationale, they have further alleged that such clause, as stipulated in their lease deed, is arbitrary, without jurisdiction and has no nexus with the development of port or port related activities.

60. Section 49 relates to scale of rates and statement of conditions for use of property belonging to Board of Trustees of Kandla Port. Under sub-section (1) of Section 49, the authority was required to frame scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of, the Board, or the port approaches may be used for different purposes. Under sub-section (3) of Section 49, the Board may, by auction or by inviting tenders, lease any land or shed belonging to it or in its possession or occupation at a rate higher than that provided under sub-section (1), as evident from the said provision and quoted hereunder :-

"49. Scale of rates and statement of conditions for use of property belonging to Board. - (1) The Authority shall from time to time, by notification in the Official Gazette, also frame a scale of rates on payment of which, and a statement of conditions under which, any property belonging to, or in the possession or occupation of, the Board, or any place within the limits of the port or the port approaches may be used for the purposes specified hereunder:-

(a) approaching or lying at or alongside any buoy, mooring, wharf, quay, pier, dock, land, building or place as aforesaid by vessels;

(b) entering upon or plying for hire at or on any wharf, quay, pier, dock, land, building, road, bridge or place as aforesaid by animals or vehicles carrying passengers or goods;

(c) leasing of land or sheds by owners of goods imported or intended for export or by steamer agents;

(d) any other use of any land, building, works, vessels or appliances belonging to or provided by the Board.

(2) Different scales and conditions may be framed for different classes of goods and vessels.

(3) Notwithstanding anything contained in sub-section (1), the Board may, by auction or by inviting tenders, lease any land or shed belonging to it or in its possession or occupation at a rate higher than that provided under sub-section (1)."

61. The power to execute a contract for sale of immovable property or lease of any such property of Kandla Port Trust is vested with the Chairman of the Board or with such an officer of the Board not below the rank of Head of a Department as the Chairman by general or special order authorise in this behalf under Section 34 of the Port Trusts Act, 1963. However, the scale of rates and statement of conditions for use of property belonging to the Board can be framed only by the Tariff Authority under sub-section (1) of Section 49. However, the Board, by auction or by inviting tenders, lease any land at a rate higher than that provided under sub-section (1), which will be evident from sub-section (3) of Section 49. Therefore, it will be clear that the Board is empowered to lease any land at a rate higher than the rate prescribed by the Tariff Authority.

62. Vested with such power, the Board appears to have executed a lease deed for 99 years, some of which have been brought to the notice of the Court. As per clause 6(I)(A) of the 99 years lease deed dated 12.10.1995, enclosed as Annexure-F, the lessees cannot assign, sublet, transfer or otherwise part with the demised premises without prior permission in writing of the Chairman or the competent authority, authorised officer of the Kandla Port Trust. At the time of such transfer or assignment of the demised premises, if so permitted, the lessor shall be entitled to claim and recover from lessee effecting the transfer or assignment, 50% of the unearned increase i.e. the difference between the lumpsum development charges already paid and the market value at the time of transfer.

63. It is a common feature that the cost of a undeveloped land is much less than developed land. Once undeveloped land is developed, the market value of such property goes up.

64.1 It has been brought to our notice that the acquisition of land for Kandla Port Organization was made on 9.2.1953 when sub-merged area admeasuring approximately 346.5 sq. miles were handed over to Kandla Port Organization for development. It is only after development of the sub-merged area that the lands were leased in favour of one or the other lessees, including some of the petitioners. Now if they want to transfer the developed land, it is always open to the Board of Trustees of Kandla Port, who is the owner of the land, to ask for 50% of the unearned increase i.e. the difference between the lumpsum development charges already paid and market value as, by that time, the market value has gone up only because of development made by the Kandla Port Trust.

65. All the lessees, including the second and the third petitioners, derive a right to hold lease land under the lease deed. The right to assign, sub-let, transfer the land, which belongs to Kandla Port Trust, they can derive only under clause 6(I)(A) of the lease deed. Therefore, they cannot challenge clause 6(I)(A) or part thereof, which, if annulled, will take away their claim to assign, sublet, transfer or otherwise part with the demised premises.

66. In any case, the lease deed not being under challenge in the writ petition, it is not open to the petitioners to assail the same before this Court. This apart, they cannot raise such question of legality and propriety of lease deed reached between them with the Kandla Port Trust in a proceeding under Article 226 of the Constitution of India. Such lease deed can be challenged, subject to law of limitation, before a civil Court of competent jurisdiction.

67. In view of the finding and reasons recorded above, while we uphold the resolution dated 7.7.2009 and the consequential circular dated 29.10.2009 issued by the Board of Trustees, we are not inclined to interfere with the demand notice dated 6.12.2009 issued by the respondent-Kandla Port Trust to the third petitioner.

68. In absence of any merit, the writ petition is dismissed, but in the facts and circumstances, there shall be no order as to costs.


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