Real Estate – September - 2013
- Supreme Court's Judgements
1. Threesiamma Jacob &
Ors. v. Geologist,
Department of
Mining & Geology & Ors., decided on July 8,
2013.
Facts:
The petitioner’s husband had obtained jenmon assignment of 2 Acres of
granite rocks situated in some village in Malabar. The petitioner’s husband
obtained the property from the previous jenmy, C.P. Thampurankutty Menon.
Thereafter, the petitioner’s husband executed a registered gift deed. The
property was enjoyed by the earlier jenmy and thereafter by the petitioner
without any interference from the Government. Due to the ignorance of the legal
position, the petitioner entered into a lease agreement with the Department of
Mining and Geology to conduct quarrying operations in her property. Later, she
realised that it was not necessary to pay any royalty to the Government with
regard to the property belonging to her. In the above circumstances, she made a
fresh application to the ddepartment for licence. But the respondents failed to
provide necessary permits to the petitioner. When she received a notice from
the Kerala Minerals Squad directing her to stop the quarrying activities, she
gave a reply to reconsider her contention. Thereafter, she was informed by the
Department to renew the lease. The claim of the appellants was based on the
belief and assertion of the appellants that the holder of the jenmom rights is
not only the proprietor of the soil for which she has jenmom rights, but also
the owner of the mineral wealth lying beneath the soil.
Held:
The SC was of the opinion that there
is nothing in the law which declares that all mineral wealth/sub-soil rights vest in the State, on the other hand, the ownership
of sub-soil/mineral wealth should normally follow the ownership of the land,
unless the owner of the land is deprived of the same by some valid process. In
the instant appeals, no such deprivation is brought to the notice of the SC and
therefore the SC held that the appellants are the proprietors of the minerals
obtaining in their lands. The SC further made it clear that they are not making
any declaration regarding their liability to pay royalty to the State as that
issue stands referred to a larger Bench. The SC was also of the view that Mines
and Minerals Act is an enactment made by the Parliament to regulate the mining
activities in this country. The said Act does not in any way purport to declare
the proprietary rights of the State in the mineral wealth nor does it contain
any provision divesting any owner of a mine of his proprietary rights.
2. M/s. Rana Girders Ltd. v. Union of India &
Ors., decided on August 16, 2013.
Facts:
M/s. P.J. Steels
Pvt. Ltd. (“Borrower”) had taken
loans from the Uttar Pradesh Financial Corporation (“UPFC”). Due to consistent default on the part of the Borrower in
re-paying the loans, the UPFC took possession of the land and building of the
Borrower which were mortgaged/ kept as security with the UPFC. After taking physical
possession of the properties, the UPFC issued an advertisement in the
newspapers for public auction of the said properties. The public notice also
stipulated certain terms and conditions on which offer were invited. First
condition thereof, which is relevant for our purpose, is reproduced below:
“All the statutory liabilities arising out of
land shall be borne by purchaser (except electricity dues). Other terms and
conditions of sale may be sent at the office.”
In the public
auction conducted by UPFC, the appellant (which was earlier known as Sarju
Steels Private Limited) was the successful bidder. The sale deed was executed
in favour of the appellant qua the land and building. In the sale deed, it was specifically mentioned that the property
is free from all encumbrances by stating that “the vendor herein confirms that the property purchased through the sale
deed in favour of vendee is free from all charges and encumbrances.......”
Another condition in the sale deed, which was also mentioned in the public
notice was: “All the statutory
liabilities arising out of said properties shall be borne by the vendee and
vendor shall not be held responsible.”
Likewise, an
agreement was also executed in favour of the appellant conveying the ownership
of the plant and machinery. The Borrower had not questioned the validity of the
said auction which has attained finality. The Borrower was also required to
discharge the liability qua excise duty which had amounted to Rs.1,00,72,442/-.
To recover that amount, the Commissioner of Customs and Central Excise,
Meerut-I (respondent No.2) was pressing the appellant to discharge this
liability as purchaser and successor-in-interest of the land and building plus
plant and machinery of the borrower. The appellant resisted the demand with the
posture that since the aforesaid properties have been purchased by the
appellant in an open auction from the UPFC, free from all encumbrances, it is
not the liability of the purchaser to make payment of the dues of excise
department.
Held:
Setting aside
the impugned order of the High Court (“HC”),
and concluding that the judgment of the HC is unsustainable in law, the SC
quashed the notice of the excise department. The SC held that in so far as
legal position was concerned, the UPFC being a secured creditor had priority
over the excise dues. The SC further held that since the appellant had not
purchased the entire unit as a business, as per the statutory framework he was
not liable for discharging the dues of the Excise Department. The SC, while
interpreting the clause of the sale deed for land and building and similar
clause in Agreement of sale for machinery on the basis of which appellant is
held to be liable to pay the dues, noticed that in the first instance it was
mentioned not only in the public notice but there is a specific clause inserted
in the Sale Deed/Agreement as well, to the effect that the properties in
question are being sold free from all encumbrances. At the same time, there was
also a stipulation that “all these statutory liabilities arising out of the
land shall be borne by purchaser in the sale deed” and “all these statutory
liabilities arising out of the said properties shall be borne by the vendee and
vendor shall not be held responsible in the Agreement of Sale.”
The SC further
held that excise dues are not the statutory liabilities which arise out of the
land and building or the plant and machinery. Statutory liabilities arising out
of the land and building could be in the form of the property tax or other
types of cess relating to property etc. Likewise, statutory liability arising
out of the plant and machinery could be the sales tax etc. payable on the said
machinery. As far as dues of the Central Excise were concerned, they were not
related to the said plant and machinery or the land and building and thus did
not arise out of those properties. The dues of the Excise Department became
payable on the manufacturing of excisable items by the erstwhile owner,
therefore, the statutory dues were in respect of those items produced and not
the plant and machinery which was used for the purposes of manufacture.
- Policy
1.
Land
Policy in Delhi
The central government had modified the Master
Plan for Delhi- 2021 and has introduced the land policy (“Policy”). The new Policy is based on the concept of land pooling
wherein the land parcels owned by individuals or group of owners are legally
consolidated by transfer of ownership rights to the designated land pooling
agency, which later transfers the
ownership of the part of land back to the land owners for undertaking of
development for such areas. The policy is applicable in the proposed
urbanisable areas of the urban extensions for which Zonal Development Plans (“ZPD”) have been approved.
Under the Policy, the government/ Delhi
Development Authority (“DDA”) will
act as a facilitator with minimum intervention to facilitate and speed up the
integrated planned development. Under the Policy a land owner, or a group of
land owners (who have grouped together of their own volition/will for this
purpose) or a developer entity (“DE”)
will be permitted to pool land for unified planning, servicing and subdivision
/ share of the land for development as per prescribed norms and guidelines.
Each landowner will get an equitable return irrespective of the land uses assigned to their land in the ZDP
with minimum displacement.
The declarations of areas under land pooling and
preparation of layout plans and sector plans will be based on the availability
of physical infrastructure. The return of the prescribed built up space /
Dwelling Units for the economic weaker sections (“EWS”) would be as per the DDA policy.
Under the Policy, 50% of the EWS housing stock
shall be retained by DE and disposed only to the apartment owners, at market
rates, to house community service personnel working for the residents / owners
of the group housing. These will be developed by DE at the respective group
housing site / premises or contiguous site. Remaining 50% of EWS housing stock
developed by DE will be sold to DDA for EWS housing purpose at a base cost of
Rs. 2000/- per sq. ft.
The DE will be allowed to undertake actual
transfer/ transaction of saleable component under its share/ ownership to the
prospective buyers only after the prescribed land and EWS housing component is
handed over to the DDA.
- News
- Land Acquisition Bill becomes law after President's assent
The President gave his assent to the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013,
replacing a British-era law of 1894. The new law provides for fair compensation
to owners whose land is taken over, and brings transparency to the process and
also lays down measures for rehabilitation of those displaced.
2.
In a first, unauthorised
colony land acquired for hospital by Delhi govt
The Delhi government has approved the acquisition of 2.5 acres of land,
located in an unauthorised colony in West Delhi’s Uttam Nagar, for a hospital.
This is the first time the government has acquired land in an unauthorised
colony, setting the stage for similar projects in such colonies across Delhi.
The government had completed all the formalities to buy the plot of land for
the construction of a 200-bed hospital.
3.
Property fraud cases to now
get solved easily
The cases relating to forgery of registration of land and property in
Gautam Budh Nagar can be resolved at the department of stamps and registration
in Noida. Earlier, complainants had to move various courts to adjudicate these
matters, which often stretched for several years owing to pendency of cases.
The department has now been empowered to handle these cases through a recent UP
government order. According to the guidelines contained in the order, the
stamps department would be fully empowered to declare a registration as ‘null
and void’ if it is found to be incorrect in records available with it. The
order gives the department the right to declare a registration as ‘null and
void’ after two notices within a couple of months if respondents fail to turn
up. The department has also been empowered to register FIR’s with the police in
accordance with the order, if required in the case.
4.
DDA to offer service apartments
on minimum 2,000 sq mt plot
To meet short- and long-term housing requirements in the city, Delhi Development
Authority (DDA) gave final clearance for small dwelling units (service
apartments) under the Master Plan-2021 review process. The DDA has decided to
offer service apartments which will be introduced on a minimum plot size of
2,000 sq mt. The Floor Area Ratio (FAR) has been enhanced to 225 from 150. The
minimum size of the service apartments has been fixed as 40 sq mt and it will
be allowed on roads having width of 12 meters. The DDA has also approved
enhancement of permanent sample plots (PSP) FAR from existing 150 to 225 for
educational facilities such as vocational training centre, management
institute, teacher training centre, research and development institute or
professional college. For large university campus, the FAR has been enhanced
from 122 to 225. The proposal will be sent to Ministry of Urban Development for
final approval.
5.
HUDA’s drive against greenbelt
encroachers
The Haryana Urban Development Authority is planning to start a month-long
drive against violators encroaching greenbelts in the residential and
commercial areas in the city. The civic agency has registered FIR’s against
greenbelt encroachers in different sectors. In order to rein in violators HUDA
is also planning to rope in corporate houses to adopt greenbelts.
6. Failed Haryana SEZs set to
become lucrative realty projects, Ansal Properties, Parsvnath in list
Real estate giants and multinational firms which bought hundreds of acres
of land in Haryana to set up Special Economic Zones (SEZs) but could not do so,
have been given another chance to put it to use. The state government has
decided to denotify such SEZs and allow the blocked land to be used for other
purposes. As a result, nearly two dozen projects, many of them in the lucrative
real estate markets of Gurgaon and Faridabad are expected to be converted into
residential and commercial properties. Haryana had over the years notified 35
SEZs, of which only six have so far been set up. Although most of the 35 SEZs
were notified to focus on information technology and IT-enabled services, many
of them were promoted by real estate giants who will now benefit from a change
in land use.
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DISCLAMER
This newsletter is being provided to the recipient solely for the
purpose of his/her/its information. It is meant to be merely an informative
summary and should not be treated as a substitute for considered legal advice.
This update covers significant legal developments in the field of real estate
in the states of Delhi, Uttar Pradesh and Haryana for the month of September, 2013. If you wish to receive more information about any item in
this newsletter, please feel free to contact:
Sarthak Advocates & Solicitors
A – 35, Sector – 2, NOIDA 201 301
T: +91 120 430 9050
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