# M/S G.B. Lawns P Ltd v. State of U.P. & Ors

- **Citation:** (2023) 3 ILRA 304
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-02-21
- **Case number:** Writ C No. 5797 of 2008
- **Bench:** Mrs. Sangeeta Chandra, Manish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-g-b-lawns-p-ltd-v-state-of-u-p-ors-49798
- **Pages:** 7

## Headnote

instant case by the impugned order
Parishad demanded a fee of 5% of the
total
consideration
of
the
deed
of
assignment towards Mutation Fee - Held -
purpose of mutation is to register the
transfer in the records of the Parishad so
as to recover taxes from such taxpayers -
Once the application for mutation is made,
the same is to be examined by the
department concerned viz Parishad and
after hearing objection, if any entry in the
record is directed to be changed in favour
of the transferee, such exercise is only for
fiscal purpose to determine the liability to
pay as tax - fee is levied essentially for
services rendered and there is no element
of quid pro quo between the petitioner
and the Parishad as Avas Evam Vikas
Parishad does not render any service to its
allottees
or
transferees,
except
for
correction to be made in the records that
are maintained by it for its own purposes -
Even if any fee can be charged by the
Parishad to correct the entries in its
record, it cannot be ex-propriatory in
nature, and calculated ad valorem as the
expenses incurred in all such cases are
nominal in nature - function of the
Parishad with regard to the mutation
remains the same whether the applicant is
a transferee under a conveyance or a
lessee or a beneficiary under a will or in
case of intestate succession - Impugned
order set aside by court. (Para 21, 22, 23)
Allowed. (E-5)

List of Cases cited:

## Text

304 INDIAN LAW REPORTS ALLAHABAD SERIES
----------
(2023) 3 ILRA 304
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 21.02.2023

BEFORE

THE HON'BLE MRS. SANGEETA CHANDRA, J.
THE HON'BLE MANISH KUMAR, J.

Writ C No. 5797 of 2008

M/S G.B. Lawns P Ltd. ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Deepak Seth

Counsel for the Respondents:
C.S.C., I.B. Singh, Manish Jauhari

U.P. Avas Evam Vikas Parishad Adhiniyam,
1965 - Power to levy mutation fee - In the
instant case by the impugned order
Parishad demanded a fee of 5% of the
total
consideration
of
the
deed
of
assignment towards Mutation Fee - Held -
purpose of mutation is to register the
transfer in the records of the Parishad so
as to recover taxes from such taxpayers -
Once the application for mutation is made,
the same is to be examined by the
department concerned viz Parishad and
after hearing objection, if any entry in the
record is directed to be changed in favour
of the transferee, such exercise is only for
fiscal purpose to determine the liability to
pay as tax - fee is levied essentially for
services rendered and there is no element
of quid pro quo between the petitioner
and the Parishad as Avas Evam Vikas
Parishad does not render any service to its
allottees
or
transferees,
except
for
correction to be made in the records that
are maintained by it for its own purposes -
Even if any fee can be charged by the
Parishad to correct the entries in its
record, it cannot be ex-propriatory in
nature, and calculated ad valorem as the
expenses incurred in all such cases are
nominal in nature - function of the
Parishad with regard to the mutation
remains the same whether the applicant is
a transferee under a conveyance or a
lessee or a beneficiary under a will or in
case of intestate succession - Impugned
order set aside by court. (Para 21, 22, 23)
Allowed. (E-5)

List of Cases cited:

1. Calcutta Municipal Corp. & ors. Vs Shrey
Mercantile Pvt. Ltd. & ors. (2005) 4 SCC 245

(Delivered by Hon'ble Mrs. Sangeeta
Chandra, J.
&
Hon'ble Manish Kumar, J.)

1. Heard Shri Deepak Seth, learned
counsel for the petitioner, Sri Manish
Jauhari, learned counsel appearing for the
respondent Nos. 2 and 3 and learned
Standing Counsel appearing for the State
respondents.

2. This writ petition has been filed
praying for quashing of the orders dated
16.05.2008 and 15.04.2004 passed by the
respondent nos. 2 and 3 filed as annexure
nos. 1 and 2 to the writ petition
respectively. A Direction has also been
sought to the respondents not to realize or
demand any mutation fee from the
petitioner in pursuance to the impugned
orders dated 16.05.2008 and 15.04.2004.

3. It has been argued by the learned
counsel for the petitioner that the petitioner
is a Company incorporated under the
Companies Act. The present petition has
been filed through its Managing Director.
The Company purchased a commercial Plot
No. 5/C.P.-105 Indira Nagar, Lucknow
3 All. M/S G.B. Lawns P Ltd. Vs. State of U.P. & Ors.
305
admeasuring 3722.10 Sq. Mtrs for a total
consideration of Rs. 10,42,80,800/- through
registered
deed
of
assignment
dated
06.12.2008 registered in the office of Sub
Registrar-3 Lucknow from Mansarovar
Urban
Cooperative
Bank
Limited
(hereinafter referred to as, the Bank) which
in turn had purchased the same from U.P.
Awas Evam Vikas Parishad, Lucknow
(hereinafter referred to as, the Parishad)
through
registered
lease
deed
dated
25.08.1995 for a total premium of Rs.
68,52,258/-.

4. Immediately after the execution of the
deed of assignment dated 06.12.2006 in
favour of the petitioner, the petitioner started
paying House Tax, Water Tax and the Sewer
Tax etc to the Nagar Nigam, Lucknow after
due assessment. As the land was purchased
for raising a commercial building, the
petitioner submitted a building plan to the
Parishad, which was approved by the
Parishad and thereafter the petitioner raised
construction over the land in question. All of
a sudden, the Parishad vide its order
impugned dated 15.04.2004 decided to levy
mutation fee from subsequent purchaser of a
property, which had initially been alloted by
the Parishad to some other person. It
demanded a fee of 5% of the total
consideration of the deed of assignment
towards Mutation Fee. A demand was raised
by the Parishad and the petitioner represented
to the respondent no. 3 on 12.04.2007 stating
therein that there was no justification for
imposition of 5% mutation fee ad valorem as
it was very excessive, as compared to the
mutation fee charged by the other local
authorities including the L.D.A., which was
at that time only 1% charging of the sale
consideration.

5. Moreover, the L.D.A. may levy
mutation fee on deriving power from the
Uttar
Pradesh
Urban
Planning
&
Development Act, 1973 but no such power
could be usurped by the Parishad as the
U.P. Avas Evam Vikas Parishad Adhiniyam,
1965 does not give such power to the
Parishad to charge mutation fee, as
aforesaid.

6. In pursuance of the representation
of the petitioner, the Parishad ordered
mutation of the name of the petitioner in its
record subject to the condition that
petitioner would pay the requisite fee
within fifteen days, if any, after finalization
of the matter and the petitioner was
required to furnish an Indemnity Bond in
the said circumstances. The Indemnity
Bond was submitted by the petitioner on
25.04.2007. No further action was taken by
the Parishad till April, 2008 but on
16.05.2008, the Parishad served a notice
upon
the
petitioner
to
deposit
Rs.
52,10,940/- as a mutation fee within a
fortnight or else recovery proceedings
would be initiated against the petitioner for
recovery of same, as arrears of the land
revenue.

7. It has been argued by the learned
counsel for the petitioner that a fee is levied
essentially for services rendered and there
is no element of quid pro quo between the
petitioner and the Parishad as the Parishad
is not rendering any service to the
petitioner in pursuance of the payment of
such mutation fee except for maintaining
its record correctly. All services relating to
maintaining of the colony are being
provided by the Lucknow Nagar Nigam for
which the petitioner is paying the fee and
taxes levied by the Nagar Nigam. There are
no bylaws, Rules or Regulation or any
other provision in the Act, 1965 itself for
imposition or realization of mutation fee.
Such a mutation fee without rendering any
306 INDIAN LAW REPORTS ALLAHABAD SERIES
service amounts to imposition of tax for
which the Parishad has no authority
delegated to it by the State Government or
the State Legislature. The Act, 1965 confers
power to make Rules upon the Government
and the power to make Regulation subject
to the provisions of the Act and the Rules
by the Board of the Parishad. The
impugned orders have been passed without
jurisdiction and hence liable to be set aside.

8. It has also been argued by the
learned counsel for the petitioner that when
the petition was filed, the Court had been
pleased
to
stay
the
operation
and
enforcement of the order dated 16.05.2008
demanding Rs. 52,10,940/- from the
petitioner to be paid by it within 15 days or
else to face recovery proceedings till
further orders. Time was granted also to the
respondents to file their counter affidavit.

9. A counter affidavit has been filed by
the Parishad along with an application for
vacation of interim order wherein it has
been stated that the order dated 15.04.2004
has been passed in pursuance of a meeting
convened by the Housing Commissioner in
the interest of Parishad and taking into
account power conferred upon him under
Regulation 18 of Avas Evam Vikas
Parishad
ki
Sampatti
Ke
Nistaran
Sambandhi Viniyam, 1980, which provides
that
the
decision
of
the
Housing
Commissioner shall be final in any case
and he shall be competent to take decision
in the interest of Parishad. Therefore, the
Housing
Commissioner
has
taken
a
decision to levy 5% mutation charges of
transfer of commercial property.

10. It has been stated that initially the
commercial plot in question had been
allotted in favour of the Bank and the lease
deed was executed in favour of the Bank by
the Parishad on 16.08.1995. Although the
Indira Nagar Scheme has been transferred
to Lucknow Nagar Nigam, Lucknow, it is
only for maintaining the services of the
road, Sewer and Parks etc but the right
relating to the properties has not been
transferred and the Parishad continues to be
the owner of the property and the allottees
are lessees thereof and any lessee, who
further leases out the property must do so
with prior intimation to the Parishad. The
allotment in respect of the Bank had been
made subject to the condition that it may
transfer the said land, but only for the same
purpose for which it was originally allotted.
Under Section 95 of the Act, 1965, the
Board of the Parishad is authorized to
frame Regulations and the Regulations
have been framed in 1980. Power under
Regulation 18 was available to the Housing
Commissioner to issue the order levying
5% mutation fee.

11. It has further been stated that the
petitioner had furnished Indemnity Bond on
25.04.2007 and therefore it cannot deviate
from its liability of making payment and it
also cannot challenge the order passed by
the
Housing
Commissioner
dated
15.04.2004. It is only after obtaining the
Indemnity Bond that the name of the
petitioner was mutated on the property in
question by the Parishad.

12. A supplementary counter affidavit
has also been filed by the respondents
wherein mention has been made of the
Government Order dated 06.02.1997 issued
by the Principal Secretary directing all the
Vice-Chairman of development authorities
to determine mutation fee at their level. The
aforesaid Government Order has been
stated to be placed in the 198th Board
meeting of Uttar Pradesh Awas Evam Vikas
Parishad held on 21.07.2007 and it was
3 All. M/S G.B. Lawns P Ltd. Vs. State of U.P. & Ors.
307
decided to refer the matter relating to the
Parishad to the State Government.

13. There is no mention of any
decision
being
taken
by
the
State
Government conferring such power on
Parishad.

14. It has also been stated that the
order dated 15.04.2004 was amended by an
another
order
dated
29.04.2011
in
pursuance of the decision taken in the
216th Board meeting held on 14.03.2011
and it was decided that only 1% mutation
charges shall be taken in future but earlier
matters shall not be reopened. Copy of the
order dated 29.04.2011 and the Minutes of
Meeting of the Board held on 14.03.2011
are annexed as annexure no. 2 to the
Supplementary Counter Affidavit.

15. In the rejoinder affidavit filed by the
petitioner, the contents of the writ petition
have been reiterated relating to lack of power
in the Housing Commissioner to issue the
order impugned herein dated 15.04.2004 and
also to levy mutation fees on ad valorem
basis, which is in the nature of tax, which
requires sanction of law by the competent
legislature. It has also been submitted that
mere furnishing of Indemnity Bond would
not mean that petitioner has agreed by the
charging of such mutation fee ad valorem by
the Parishad.

16. In the case of Calcutta Municipal
Corporation & Others Vs. Shrey Mercantile
Pvt Limited & Others reported in (2005) 4
SCC 245 where the question which arose for
determination
has
been
mentioned
in
paragraph 1 of the report, which has been
framed as under:

" whether the imposition for the
process of change in the name of the owner,
in the assessment books of the Corporation
is in the nature of "a fee" or "tax"?.

17. Thereafter, the facts of the
particular Civil Appeal that was being
considered, have been discussed, where
certain property belonging to some persons
was sold by a deed of conveyance to the
respondents. The building was very old and
was in a dilapidated condition. The
developers decided to construct a new
building after demolishing the existing old
structure. The developers submitted the
building plan for sanction which the
Corporation refused to accept without the
names of the developers being brought on
record by way of mutation. The developers
applied for mutation by deletion of names
of the previous owners and substitution of
their name for which the Corporation
demanded mutation fee of Rs.3 lakhs under
the
Calcutta
Municipal
Corporation
(Taxation) Regulations, 1989, which was
challenged by filing of writ petition before
the Calcutta High Court. By judgement and
order dated 31.01.2000, the learned Single
Judge held that mutation was the process of
change of name of the owner in the books
of the Corporation; that the impugned
Regulations had failed to satisfy the
requirement of quid pro quo; and that the
Corporation was not justified in using its
power to levy fees on mutation by charging
large sums which partake the character of
taxation. Learned Single Judge was of the
considered opinion that in the garb of
imposition
of
mutation
fees,
the
Corporation had done nothing other than to
impose the tax. Accordingly, the writ
application was allowed.

18. Aggrieved by the said judgement
of
the
learned
Single
Judge,
the
Corporation
approached
the
Division
Bench and the Division Bench rejected the
308 INDIAN LAW REPORTS ALLAHABAD SERIES
appeal by observing that the essential
purpose of Section 183 of the Calcutta
Municipal Corporation Act was to mutate
somebody's name and that no other service
of any kind whatsoever was rendered to the
ratepayers, and that under Section 183 (5),
mutation fee was merely to be prescribed
by Regulations and not to impose a tax in
the garb of fees, that no such delegation
was
ever
made
in
favour
of
the
Corporation; that the rate of levy on ad
valorem basis itself indicated that the levy
was in the nature of a tax; that the different
rates prescribed for mutation in the case of
transfers vis a vis intestate succession
indicated that the levy was a tax and not a
fee; that the said provision was not for the
benefit of the owner of the premises but it
was for statutory compliance, failure to
comply wherewith was to attract penal
consequences;
that
no
benefit
was
conferred on the ratepayers and on the
contrary, the said provision was for the
benefit of the Corporation; that the nature
of the services rendered to the ratepayers
for mutation had no connection with the
quantum of fees sought to be levied; that
the
fee
was
neither
regulatory
nor
compensatory; and that the impugned
Regulations were discriminatory inasmuch
as the purchasers were subjected to a higher
fee than those who got the ownership of
property by way of intestate succession,
wholly overlooking the fact that both these
groups for all practical purposes of taxation
constituted one class by themselves.
Accordingly, the impugned Regulations
were held to be arbitrary and violative of
Article 14 and 246 of the Constitution.

19. The said judgement of the Division
Bench was affirmed by the Hon'ble
Supreme Court and while affirming the said
judgement, the Supreme Court has referred
to binding precedents for example, the
State of West Bengal Vs. Kesoram
Industries Ltd reported in (2004) 10 SCC
201; Synthetics and Chemicals Ltd Vs.
State of U.P. reported in (1990) 1 SCC 109
and CCE Vs. Chhata Sugar Company
Limited reported in (2004) 3 SCC 466,
wherein reference was made to distinction
made between Fee and Tax and it was
observed that in the garb of exercising the
power to regulate, any fee or levy which
has no connection with the cost or expenses
of administering the Regulation, cannot be
imposed and only such levy can be justified
as can be treated as a part of regulatory
measure. The power to regulate, develop,
or control would not include within its ken,
a power to levy tax or fee, except when it is
only regulatory in nature.

20. The Court has also observed that
undisputedly the appellant-Corporation was
collecting Tax from general public for
water supply, street light and approach
roads etc. and thus the Tax that was sought
to be imposed in the garb of service charges
or mutation fee could not be allowed. The
Court also observed in paragraphs 19, 20,
21 and 22 as follows:

19. In the case of Nand Kishwar
Bux Roy v. Gopal Bux Rai [AIR 1940 PC
93] the Court,

"[M]utation
proceedings
are
merely in the nature of fiscal inquiries,
instituted in the interest of the State for the
purpose of ascertaining which of the
several claimants for the occupation of the
property may be put into occupation of it
with the greater confidence that the revenue
for it will be paid."

20. Therefore, it is clear that
mutation enquiry is instituted in the interest
of the Corporation for tax purposes and not
for the benefit of the taxpayer.
3 All. M/S G.B. Lawns P Ltd. Vs. State of U.P. & Ors.
309

21. Now coming to the question
of challenge to the levy as arbitrary and
discriminatory and violative of Article 14,
we
find
that
the
functions
of
the
Corporation with regard to mutation
remain the same, whether the applicant is a
transferee under a conveyance or a lessee
or a beneficiary under a Will or an heir in
the case of intestate succession. Once an
application for mutation is made, the same
is examined by the department and after
hearing the objections, if any, the record is
ordered to be changed. Ultimately, the
exercise is for fiscal purpose. Similarly, the
property valuation may be below Rs 50,000
or above Rs 2 lakhs, the function of the
Corporation in making the mutation entry
remains the same. Similarly, whatever may
be the cause of mutation, whether it is a
case of transfer or devolution, the activity
of mutation remains constant in all the
cases. The expenses incurred in all the
cases also cannot vary, whatever be the
value of the property or the cause of
mutation. In the circumstances, there is no
reason given for charging different rates
depending on the value of the property and
the cause of transfer. By doing so, the
incidence of the levy falls differently on
persons similarly situated resulting in
violation of Article 14 of the Constitution.
Moreover,
the
quantum
of
fees
is
disproportionate to the so-called "services"
which is one more circumstance showing
arbitrariness in the levy of such imposition.
So far as Article 14 is concerned, the courts
in India have always examined whether the
classification was based on intelligible
differentia and whether the differentia had
a reasonable nexus with the object of
legislation. (See Om Kumar v. Union of
India [(2001) 2 SCC 386] .)

22. Applying the said tests to the
impugned levy, we find that the levy is
irrational, arbitrary, discriminatory and
beyond Section 183(5) of the said 1980
Act."

21. It is clear from the arguments and
the judgement of the Supreme Court, the
purpose of mutation is to register the
transfer in the records of the Parishad so as
to recover taxes from such taxpayers. When
no such taxes are payable to the Parishad
after the transfer of the colony to the Nagar
Nigam, there is no question of mutation fee
to be paid to the Parishad. The function of
the Parishad with regard to the mutation
remains the same whether the applicant is a
transferee under a conveyance or a lessee
or a beneficiary under a will or in case of
intestate succession. Once the application
for mutation is made, the same is to be
examined by the department concerned viz
Parishad and after hearing objection, if any
entry in the record is directed to be changed
in favour of the transferee, such exercise is
only for fiscal purpose to determine the
liability to pay as tax.

22. Even if any fee can be charged by
the Parishad to correct the entries in its
record, it cannot be expropriatory in nature,
and calculated ad valorem as the expenses
incurred in all such cases are nominal in
nature. This fact can also be ascertained
from the circumstances which existed prior
to the order dated 15.04.2004 as no
mutation fee was being charged by the
Parishad earlier.

23. This Court has found that the
judgment rendered by the Hon'ble Supreme
Court in the case of Calcutta Municipal
Corporation (supra) squarely applies. The
Parishad does not render any service to its
allottees
or
transferees,
except
for
correction to be made in the records that
are maintained by it for its own purposes.
Hence,
the
impugned
order
dated
310 INDIAN LAW REPORTS ALLAHABAD SERIES
15.04.2004 & 16.05.2008 are liable to be
set aside and are hereby set aside.

24. Consequences to follow.

25. In view of the discussion made
hereinabove, the present writ petition is
allowed.
----------
(2023) 3 ILRA 310
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 17.03.2023

BEFORE

THE HON'BLE PANKAJ BHATIA, J.

Writ C No. 7439 of 2023

M/s Sai Enterprises & Ors. ...Petitioners
Versus
Debts Recovery Appellate Tribunal, JL
Nehru Road, Tagore Town, Alld. & Anr.
 ...Respondents

Counsel for the Petitioners:
Sri Sanjay Kumar Gupta

Counsel for the Respondents:
Sri Pashupati Nath Tripathi

A. Practice and Procedure - Recovery of
Debts and Bankruptcy Act, 1993 - S. 21 -
Statutory appeal - Rider of pre-deposit -
Noncompliance thereof - Effect - Phrase
'Shall not be entertained' - Scope - Held,
Tribunal
is
barred
from
adjudicating/
deciding/applying its mind to the the appeal
and the petitioner/ appellant would not be
entitled to any benefit which accrue in
terms of the Act only on the ground of filing
of appeal as the appeal technically has not
even been entertained, if the deposit is not
made - The only benefit of filing an appeal
without
the
mandatory
deposit
under
Section 21 will be that the appellant would
be entitled to the benefit of limitation and
nothing more. (Para 7 and 8)
Writ petition allowed . (E-1)

List of Cases cited :-

1. Ananthesh Bhakta Vs Nayana S Bhakta;
(2017) 5 SCC 185

(Delivered by Hon'ble Pankaj Bhatia, J.)

1. The present petition has been filed
by the petitioner challenging the order
dated 03.01.2023 whereby the restoration
application filed by the petitioner has been
rejected on the ground of limitation.

2. The facts in brief are that the
proceedings
were
initiated
by
the
respondent Bank against the petitioner
before the Debts Recovery Tribunal, Patna
which was decided against the petitioner.
Against the order of DRT, Patna, the
petitioner preferred an Appeal before the
Debts
Recovery
Appellate
Tribunal,
Allahabad, however, the petitioner had not
made any deposit along with the appeal as
is required under Section 21 of The
Recovery of Debts and Bankruptcy Act,
1993.

3. From the documents as on record, it
appears that the petitioner was granted time
to make the deposit, however, he has not
deposited which led to the dismissal of the
appeal. Subsequently, when the petitioner
arranged
the
funds,
he
moved
an
application for deposit of an amount of
Rs.20,00,000/- and sought recall of the
order dated 21.01.2020 whereby the appeal
was dismissed for want of pre-deposit and
prayed that the said order be recalled and
decided
on
merit.
The
said
recall
application has been dismissed by means of
the impugned order dated 03.01.2023
mainly on the ground that the restoration
application has been filed after expiry of