Pranab Kr. Bhattacharya And Anr. vs. Sail And Ors.

Facts

The appellants, members of housing societies formed by employees/ex-employees of Steel Authority of India Limited (SAIL), are appealing a High Court judgment that dismissed a writ petition filed by six such societies. SAIL had acquired land for these societies, and lease deeds were executed in 1993. The lease deeds contained covenants requiring the societies to pay all rates, taxes, and impositions, and not to assign, transfer, or part with possession without SAIL's prior written consent. The societies, in turn, executed sub-leases to their members for residential purposes, with members paying a nominal amount for the land and development costs. SAIL later constituted an Advisory Committee to revise service charges. The committee recommended imposing a one-time consideration amount of 15% on capital gains for plot transfers between members, and a Rs. 5,000/- charge for recording legal heirs or granting no objection for mortgage loans.

Held

The Court held that SAIL, as the absolute owner of the land, is entitled to a share of the benefit accruing to sub-lessees due to the increase in land value over the years. The Court found that a sub-lessee receiving a substantial profit from transferring a plot, which was initially allotted for a negligible sum, constitutes a commercial deal, justifying SAIL's imposition of a transfer charge as a precondition for permission. The Court also deemed the Rs. 5,000/- charge for recording legal heirs or granting no objection for mortgage loans to be reasonable and in the nature of a processing fee/charge, not exorbitant. The Court noted that while affording an opportunity of hearing might have been proper, it would be a futile formality as the imposition of charges was found to be justified. The Court agreed with the learned Single Judge's decision, finding no reason to interfere. The Court also observed that a vast majority of members did not challenge the decision, indicating general acceptance. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether SAIL is legally entitled to impose a transfer charge on the sub-leasehold interest of plots allotted to members of housing societies, particularly when the sub-lease deeds do not explicitly provide for such charges. 2. Whether the imposition of a Rs. 5,000/- charge for recording legal heirs or granting no objection for mortgage loans is justified and reasonable. Petitioner/Appellant Arguments: The appellants argued that SAIL is not rendering any service to the members of the housing societies, and the entire cost for the development of the land was borne by the members. They also contended that the sub-lease deeds do not contain any provision for imposing charges on plot holders wishing to deal with their land. Furthermore, they raised a grievance regarding the breach of the principles of natural justice, asserting that SAIL should have afforded an opportunity of hearing before imposing these charges. Revenue/State (SAIL) Arguments: SAIL contended that it remains the absolute owner of the land and is entitled to a share of the benefit accruing to sub-lessees due to the increase in land value over time. They argued that a transfer of a plot by a sub-lessee, especially for a significant profit, is a commercial deal, making it reasonable for SAIL to impose a transfer charge as a precondition for granting permission. Regarding the Rs. 5,000/- charge, SAIL argued it is a reasonable processing fee/charge for maintaining records and facilitating loans.