M/S Esteem Arkay Pearl vs. The State Of Karnataka
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The Petitioner, M/s. Esteem Arkay Pearl, filed a writ petition challenging the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2021 (Karnataka Act No. 01 of 2022), and an office order issued by the Bruhat Bengaluru Mahanagara Palike (BBMP). The Petitioner also sought a direction to issue an occupancy certificate without insisting on various fees, including ground rent with GST, license fee, scrutiny fee, and arrears of ground rent and license fee, as demanded in a notice dated 18/05/2024. The Petitioner argued that these levies were unconstitutional and ultra vires. The case was heard by the High Court of Karnataka.
Held
The Court held that the core issue raised in the present writ petition was substantially covered and decided by a coordinate bench in a reported judgment. This coordinate bench had partly allowed writ petitions, quashing and setting aside the Karnataka Municipal Corporations and Certain Other Law (Amendment) Acts of 2021 and 2023. It was declared that Section 18-A of the Karnataka Town and Country Planning Act, 1961, read with Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, were applicable only to development proposals on plots exceeding 20,000 square meters. The Court also declared illegal the linkage of levies to market or guidance value under Section 45-B of the Karnataka Stamp Act, and consequently quashed all circulars and demand notices issued to give effect to such interpretations. Clause 3.8 of the BBMP Building Bye-laws, 2003, imposing 'Ground Rent', was also struck down. Therefore, the present writ petition was allowed, aligning with the operative portion of the coordinate bench's judgment.
Key Issues
1. Whether the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2021 (Karnataka Act No. 01 of 2022) is ultra vires the Constitution, as contended by the Petitioner? 2. Whether the demand notice dated 18/05/2024, demanding various fees including ground rent with GST and license fees, is illegal and liable to be quashed, as argued by the Petitioner? The Petitioner contended that the impugned Act and the demand notice were unconstitutional and illegal. The Petitioner relied on the principle that levies must have a legislative basis and cannot be arbitrary. The Respondents, the State of Karnataka and the BBMP, did not record specific arguments in the provided text, but the judgment indicates that the issue was substantially covered by a coordinate bench's decision.
Sections Cited
Section 18-A, Rule 37-A, Rule 37-C, Section 45-B, Clause 3.8
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER
The captioned petition is filed seeking the following reliefs:
a. Grant an order declaring that the entire Karnataka Municipal Corporations and (Amendment) Act, 2021 (Karnataka Act No. 01 of 2022) Other Certain Law notified on 13/01/2022 as contained in ANNEXURE-H as being ultra vires the Constitution; HC-KAR NC: 2025:KHC:27116 b. grant an order, direction or writ in the nature of certiorari quashing the Office Order No. HaNiNaYo/PR/461/2021-22 dated 09/03/2022 issued by Respondent No. 2 as contained in ANNEXURE-K; c. grant an order, direction or writ in the nature of mandamus directing the Respondent Nos. 2 to issue occupancy certificate to the Petitioner without insistence of the fees specified at Sl. No. 1 (i.e., ground rent with GST), Sl. No. 5 (i.e., License Fee), Sl. No. 6 (i.e., Scrutiny Fee), Sl. No. 7. (i.е., Ground rent (old arrears)), Sl. No. 8. (i.e., GST 18% for ground rent arrears) Sl. No.
(i.e., License fee (old arrears)) of the Calculation Sheet in demand notice bearing no. BBMP/Addl.Dir/JDNORTH/LP/0097/ 2016-17 dated 18/05/2024, as contained in ANNEXURE-L; d. grant an order, direction or writ in the nature of Mandamus, directing the Respondents to issue the Occupancy Certificate with respect to the Schedule Property to the Petitioner without insisting for payment of amounts demanded in the impugned demand notice; e. grant an order, direction or declare that the various fees levied on the basis of the guidance value of the property are all bad in law and unconstitutional; and f. grant such other relief or reliefs as this Hon'ble Court may deem fit to grant, including cost of the Petitioner, in the facts and circumstances of the case, in the interest of justice and equity. HC-KAR NC: 2025:KHC:27116
It is brought to the notice of this Court that across the Bar, the issue is dealt by the Co-ordinate Bench in the reported judgment in W.P.No.23086/2022 and connected matters. The Co-ordinate Bench, while deciding the issue, has set-aside the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2021 (Karnataka Act No.01 of 2022) and the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2023, (Karnataka Act No.37 of 2024). Therefore, this Court deems it fit to cull out the operative portion of the order, which reads as under; "ORDER (i) The writ petitions are partly allowed. (ii) The Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2021 (Karnataka Act No.01 of 2022), is hereby quashed and set aside. (iii) The Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2023, (Karnataka Act No.37 of 2024), is hereby quashed and set aside. (iv) It is hereby declared that the provisions contained in Section 18-A of the Karnataka Town and HC-KAR NC: 2025:KHC:27116 Country Planning Act, 1961, read with Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, are applicable only in respect of ‘Development Plan’ containing the proposal for construction on plots measuring more than 20,000 square meters in extent and not in respect of plots measuring less than 20,000 square meters. (v) It is hereby declared that if fee has been earlier collected for change of land use or while approving a layout plan, fee shall not be collected for subsequent ‘Development Plan’ in terms of the ‘Note’ found below TABLE I of Rule 37-A of the Karnataka Planning Authority Rules, 1965. (vi) It is hereby declared that the linking of the fee leviable under Rule 37-A of the Karnataka Planning Authority Rules, 1965, to the ‘market value’ or ‘guidance value’ as determined under Section 45-B of the Karnataka Stamp Act, 1957, is illegal. However, liberty is reserved to the respondent-State Government and the BBMP to re-fix a standard after collecting empherical data. (vii) Consequently, all the impugned Circulars which seek to give effect to the Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, are hereby quashed and set aside. (viii) It is hereby declared that Clause 3.8 of the Bengaluru Mahanagara Palike Building Bye- laws, 2003, HC-KAR NC: 2025:KHC:27116 providing for ‘Ground Rent’, is illegal and are accordingly quashed and set aside. (ix) Consequently, all the impugned Demand Notices raised by the respondent-BBMP, in respect of the writ petitioners herein are also quashed and set aside. It would be advisable that the BBMP may come out with a scheme for ‘One Time Settlement’ and settle the levy and collect the fee generally acceptable to the citizens of Bengaluru. This would also augment the present situation."
In the present writ petition, the core issue raised stands substantially covered and decided by the authoritative pronouncement of the coordinate bench, wherein the writ petitions were partly allowed and several consequential reliefs were granted. The Hon’ble Court, in unequivocal terms, quashed and set aside the Karnataka Municipal Corporations and Certain Other Law (Amendment) Acts of 2021 and 2023 (Karnataka Act Nos.01 of 2022 and 37 of 2024 respectively).
The Court further declared that the provisions under Section 18-A of the Karnataka Town and Country HC-KAR NC: 2025:KHC:27116 Planning Act, 1961, read with Rules 37-A and 37-C of the Karnataka Planning Authority Rules, 1965, are applicable only to development proposals concerning plots exceeding 20,000 square meters, and not to smaller plots. Importantly, it was also held that if a fee has been previously collected for change of land use or approval of layout plan, no further fee shall be levied for subsequent development plans, in view of the explanatory 'Note' to Table I of Rule 37-A.
The Court declared illegal the linkage of such levies to market or guidance value under Section 45-B of the Karnataka Stamp Act, and consequently, quashed all Circulars and demand notices issued to give effect to such unlawful interpretations. Clause 3.8 of the BBMP Building Bye-laws, 2003, imposing 'Ground Rent', was also struck down.
In view of these comprehensive declarations and findings, it is submitted that the controversy raised in the HC-KAR NC: 2025:KHC:27116 present writ petition no longer survives for adjudication independently, as it is squarely covered by the binding judgment of the coordinate bench. In the light of the law laid down in the reported judgment substantially covering the issue, which is raised in the captioned writ petition, the writ petition is liable to be allowed strictly aligning to the operative portion of the said writ petition.
In view of the above, this Court proceeds to pass the following; ORDER (i) The writ petition is allowed. (ii) The impugned demand notice dated 18.05.2024 issued by respondent No.3 as per Annexure-L is hereby set-aside. (iii) Respondent - BBMP is hereby directed to issue Occupancy Certificate in accordance with law in compliance of the construction strictly adhering to the approved building plan. HC-KAR NC: 2025:KHC:27116 (iv) Respondent- BBMP is hereby directed to forthwith process the petitioner's application seeking occupancy certificate, strictly in accordance with law. (v) It is made clear that the issuance of occupancy certificate shall not be withheld merely on the ground that the BBMP is contemplating to file an appeal against the reported judgment. (vi) If the occupancy certificate is issued, the same shall be subjected to the outcome of any appeal that may be filed by the BBMP against the judgment. Pending applications, if any, are also disposed off. (SACHIN SHANKAR MAGADUM) JUDGE
HDK List No.: 2 Sl No.: 14
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