# Shri Sushil Kumar Nagrath v. State of U.P. & Anr

- **Citation:** (2021) 2 ILRA 302
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-01-20
- **Case number:** Writ C No. 21540 of 2020
- **Bench:** Pankaj Naqvi, Piyush Agrawal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/shri-sushil-kumar-nagrath-v-state-of-u-p-anr-46737
- **Pages:** 5

## Headnote

A. U.P. Industrial Area Development Act (6
of 1976), S.3, S.6, S.6A, S.7 - Lease deed -
Levy of transfer charges - Issue - whether
NOIDA is empowered to levy transfer
charges on conveyance executed by its
lessees / sub-lessees? - Petitioner
challenged the levy on the ground that it
has no statutory sanction / flavour - Held
- Levy of transfer charge is not tax but fee
which authority is empowered to collect
under terms of lease deed - Transfer
charge may not be having statutory
flavour in its traditional sense as urged by
petitioner but once NOIDA instrumentality
of State in exercise of its supervisory
power under S. 7, stipulates condition of
payment of transfer charges to be paid to
NOIDA,
lessor
on
every
subsequent
transactions and makes said stipulation
binding on subsequent sub-lessees, it
becomes contractual liability for all sublessees to comply with same
- No
interference warranted. (Para 19)

B. Tax & Fee - Difference - tax and fee are
compulsory mode of exaction - but in case
of tax there may not be any liability to
render any service / amenity while fee
presupposes delivery of service / amenity,
thus there is an element of quid pro quo
(Para 10)

Lease deed executed by NOIDA (lessor) in
favour of Army Welfare Housing Organization
(lessee) - Petitioner, sub-lessee intended to
transfer property in favour of third person -
applied before NOIDA seeking permission -
2 All. Shri Sushil Kumar Nagrath Vs. State of U.P. & Anr.
303
authority granted permission but subject to
payment of 5 % of the circle rate as transfer
charge - No illegality.

Writ Petition dismissed. (E-4)

List of Cases cited: -

## Text

302 INDIAN LAW REPORTS ALLAHABAD SERIES

14. In the present case, the dispute
having not yet been referred for arbitration
to the arbitral tribunal and no arbitral
proceedings being pending the question of
settlement of the dispute under Section 30
of the Act, 1996, and making an arbitral
award in terms thereof would not arise at
the present stage.

15. Learned counsel for the petitioner
at this stage makes a prayer that he may be
permitted to invoke the arbitration clause as
contained in the CMR agreement for
appointment of an arbitrator, by moving an
appropriate application before the authority
concerned, and in the event of failure to act
as required as per the procedure provided
under the arbitration clause he may invoke
the provisions under sub-section (6) of
Section 11 of the Act, 1996.

16. In this regard, we may observe
that in the event, the agreement entered into
by the petitioner with the State authorities
for milling of the paddy procured by the
State agencies, contains an arbitration
clause, as asserted by the petitioner, it
would be open to the petitioner to make an
appropriate application to the authority
concerned for referring the dispute for
arbitration as per terms of the agreement.

17. With the aforesaid observations,
the writ petition stands disposed of.

18. It is made clear that we have not
expressed any opinion on the merits of the
claim sought to be set up by the petitioner.
----------
(2021)02ILR A302
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.01.2021

BEFORE
THE HON'BLE PANKAJ NAQVI, J.
THE HON'BLE PIYUSH AGRAWAL, J.

Writ C No. 21540 of 2020

Shri Sushil Kumar Nagrath ...Petitioner
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Petitioner:
Sri Rohan Gupta

Counsel for the Respondents:
C.S.C., Sri M.C. Chaturvedi, Sri Shivam
Yadav, Sri Kaushalendra Nath Singh

A. U.P. Industrial Area Development Act (6
of 1976), S.3, S.6, S.6A, S.7 - Lease deed -
Levy of transfer charges - Issue - whether
NOIDA is empowered to levy transfer
charges on conveyance executed by its
lessees / sub-lessees? - Petitioner
challenged the levy on the ground that it
has no statutory sanction / flavour - Held
- Levy of transfer charge is not tax but fee
which authority is empowered to collect
under terms of lease deed - Transfer
charge may not be having statutory
flavour in its traditional sense as urged by
petitioner but once NOIDA instrumentality
of State in exercise of its supervisory
power under S. 7, stipulates condition of
payment of transfer charges to be paid to
NOIDA,
lessor
on
every
subsequent
transactions and makes said stipulation
binding on subsequent sub-lessees, it
becomes contractual liability for all sublessees to comply with same
- No
interference warranted. (Para 19)

B. Tax & Fee - Difference - tax and fee are
compulsory mode of exaction - but in case
of tax there may not be any liability to
render any service / amenity while fee
presupposes delivery of service / amenity,
thus there is an element of quid pro quo
(Para 10)

Lease deed executed by NOIDA (lessor) in
favour of Army Welfare Housing Organization
(lessee) - Petitioner, sub-lessee intended to
transfer property in favour of third person -
applied before NOIDA seeking permission -
2 All. Shri Sushil Kumar Nagrath Vs. State of U.P. & Anr.
303
authority granted permission but subject to
payment of 5 % of the circle rate as transfer
charge - No illegality.

Writ Petition dismissed. (E-4)

List of Cases cited: -

1. Ultratech Cement Ltd. Vs St. of Mah. & anr.
(2011) 13 SCC 497

2. Tata Iron & Steel Co. Ltd. & anr. Vs St. of
Bih. & anr. (2018) 12 SCC 107

3. NOIDA Vs Army Welfare Housing Org. & ors.
(2010) 9 SCC 354

(Delivered by Hon'ble Pankaj Naqvi, J.
&
Hon'ble Piyush Agrawal, J.)

Heard Sri Rohan Gupta, learned
counsel for the petitioner, Sri M.C.
Chaturvedi, the learned Senior Counsel
assisted
by
Sri
Shivam Yadav
for
respondent no.2 and the learned standing
counsel for the State.

The moot issue involved in this
petition is as to whether NOIDA is
empowered to levy transfer charges on
conveyance executed by its lessees / sublessees.

1. Learned counsel for the petitioner
has challenged the levy principally on the
ground that it has no statutory flavour as
also the lease deed dated 29.1.1990
contains no such power or authority to
levy transfer charges in respect of
subsequent
conveyances.
He
places
reliance on the decisions of the Apex
Court in Ultratech Cement Ltd. v. State
of Maharashtra and Another, (2011) 13
SCC 497 and Tata Iron and Steel
Company Limited and another vs. State
of Bihar and another, (2018) 12 SCC
107.

2. The learned Senior Counsel for the
respondent
-
authority
opposed
the
submission on the ground that levy of
transfer charge is not a tax but a fee which
the authority is empowered to collect
under the terms of the lease deed dated
29.1.1990.

3. A lease deed dated 29.1.1990 was
executed by NOIDA (lessor), an authority
constituted under Section 3 of the U.P.
Industrial Area Development Act, 1976 in
favour of the Army Welfare Housing
Organization (AWHO- the lessee), in
respect of the plot of land.

4. The petitioner, a sub-lessee
intended to transfer the property in favour
of one Rajiv Kumar Singh under an
agreement to sell dated 4.9.2013 applied
before NOIDA seeking permission, the
authority under orders dated 21.10.2019
and 9.1.2020 granted requisite permission
but subject to payment of 5 % of the circle
rate as transfer charge.

5. We by our order dated 11.1.2021
called upon learned counsel for the
authority to place on record a copy of the
lease executed by the NOIDA in favour of
AWHO
(original
lessee)
and
in
compliance thereto a xerox of the same
(lease deed dated 29.1.1990) is placed on
record, after showing / serving a copy
thereof
to
learned
counsel
for
the
petitioner who did not challenge the
correctness thereof.

6. The relevant clause which binds
the lessee (AWHO) and its sub-lessees
under the above deed are sub-clause (c)
304 INDIAN LAW REPORTS ALLAHABAD SERIES
and (d) of Clause (I) which are extracted
hereunder:

(c) That the lessee shall in no case
assign relinquish (except in favour of the
lessor),
let,
transfer,
or
part
with
possession of the demised premises to any
one except, by way of conveyance deed as
provided in this lease, to the cooperative
society of the registrants or directly to the
individual registrants of the lessee. Any
subsequent transfer by the allottees with
prior permission in writing of the AWHO
or cooperative society (as the case may be)
and NOIDA, and will be subject to
condition of payment of transfer charges
to the lessor as levied from time to time but
subject to a maximum of 25 % of the
unearned increase in the value of the
property and these will not be more than
the transfer charges being recovered by
the lessor (NOIDA) from its direct allottes.

(d) This lease deed will form a
part of sub-lease executed between the
AWHO and cooperative society or the
individual allottees (as the case may be) all
conditions contained herein are binding on
the sub-lessor / registrant allottee also.

7. Similarly, the lessee (AWHO) under
sub-clause (b) of Clause -3 agreed to the
following covenants:

(b) The sub-lessee shall be liable
to pay all rates, local taxes, charges and
assessment by whatever name called for
every description in respect of plot of land
or building constructed thereon assessed
or imposed from time to time by the lessor
and / or any authority / Government.

8. A perusal of sub-clause (c) of
Clause 1 as aforesaid would manifest that
an allottee of AWHO i.e. a sub-lessee had
to obtain prior permission in writing of the
lessee or a cooperative society as the case
may be, and that of NOIDA, the lessor
before any transfer is effected by the
allottee/sub-lessee. This transfer is subject
to a condition of payment of transfer
charges to the lessor i.e. the NOIDA as
levied from time to time but subject to a
ceiling of 25 % of the unearned increase in
the value of the property which will not be
more than the transfer charges to be
recovered by the NOIDA from its direct
allottees. Sub-clause (d) of Clause-1
provides
that
the
lease
deed
dated
29.1.1990 will form a part of subsequent
sub-lessee and all conditions contained in
the lease deed dated 29.1.1990 shall be
binding on the sub-lessee and the registrant
allottee.

9. Sub-clause (b) of clause -3 further
binds the sub-lessee with a liability to pay
all
rates,
local
taxes,
charges
and
assessments by whatever nomenclature in
respect of the property assessed or imposed
from time to time.

10. It is well settled that tax and fee
are compulsory mode of exaction and to
that extent there is no generic difference
between the two but in the case of former,
there may not be any liability to render any
service / amenity while latter presupposes
delivery of service / amenity, thus there is
an element of quid pro quo.

11.

The
U.P.
Industrial
Area
Development Act, 1976 has been enacted to
provide for the constitution of authority for
the development of certain areas in the
State of Uttar Pradesh into industrial and
urban township and for matters connected
therewith. Once an authority is established,
it is expected to provide amenities such as
road, water supply, street lighting, power
supply, sewerage, drainage connection,
2 All. Shri Sushil Kumar Nagrath Vs. State of U.P. & Anr.
305
disposal of industrial waste, town refuse
and other community services.

11. Section - 6 of the Act provides
functions of the authority which essentially is
a
planned
development
of
industrial
development area. To achieve the above
purpose, the authority is empowered to
acquire land, prepare plan for development,
provide amenities and in particular to allocate
and transfer by way of sale and lease or
otherwise plots of land for industrial /
residential purposes.

12. Section - 7 of the Act in so far is
relevant for the present case is extracted
hereunder:-

7. Power to the Authority in
respect of transfer of land. - The Authority
may sell, lease of otherwise transfer
whether by auction, allotment or otherwise
any land or building belonging to the
Authority in the industrial development
area, on such terms and conditions as it
may, subject to any rules that may be
made under this Act, think fit to impose.

13. A perusal of the aforesaid manifests
that
the
authority
while
executing
a
conveyance can put the lessee to such terms
and condition as it may, subject to any rules,
that may be made under this Act, think fit to
impose.

14. We, after carefully perusing Section
-7 of the Act, are of the considered view that
once terms and conditions, have been
incorporated in the conveyance, the said
incorporation cannot be faulted on the ground
that no rules have been framed under the Act.

15. Learned counsel for the petitioner
has not challenged the levy on the premise
that no amenity / service is being rendered
by the authority, rather the challenge is only
on the ground that the levy has no statutory
sanction.

16. To answer the challenge, we will
have to revert to the original lease dated
29.1.1990 which contained an express
covenant
that
on
every
subsequent
transfer, transfer charges would be made at
a certain rate with a ceiling limit of 25 %
of the market value vide sub-clause (c) of
Clause-I. There is an additional covenant
in sub-clause (d) of Clause-I that all
conditions which of course would include
transfer charges shall be deemed to have
been
contained
in
the
subsequent
conveyances so that NOIDA gets an
unfettered right to collect the said amount
on every subsequent transfer from new
sub-lessees to discharge its obligation for
rendering services and providing amenities
in the area. A covenant attached to the land
runs with the land. The petitioner fully
cognizant of the aforesaid covenant
voluntarily obtained sub-lease cannot now
take a somersault. Levy is under a contract
executed by an instrumentality of State.

17.
Learned
counsel
for
the
petitioner
on
the
strength
of
the
authorities cited above, submitted that no
fee could be collected without authority
of law. We do not dispute the said
proposition but the same would have no
application in the present case as the said
levy is under a deed executed by NOIDA
i.e. a state instrumentality with an express
covenant which is to run with the land
which is also fortified by the decision of
the Apex Court in NOIDA vs. Army
Welfare Housing Organization and
others, (2010) 9 SCC 354 wherein it held
as under:
306 INDIAN LAW REPORTS ALLAHABAD SERIES

29. We are, therefore, of the
opinion that in this background the
impugned
notices
postulating
the
execution of tripartite deeds flows not
only from the clauses of the lease deed
executed between the NOIDA and
AWHO but also from the supervisory
authority which is placed on NOIDA by
virtue of the provisions of Section 7 of
the 1976 Act. The observation of the
High Court that the structures built on
funds provided by the sub-lessees is to
our mind of no consequence. Even
assuming that such was the position, this
was an arrangement inter-se AWHO and
its members and would not detract from
the obligations placed on AWHO and the
sub- lessees to execute tripartite deeds.

18. A perusal of the aforesaid
judgment would indicate that the Apex
Court held that conditions contained in the
original deed will be binding on the sublessee.

19. We are, thus, of the considered
view that even though transfer charge may
not be having a statutory flavour in its
traditional sense as urged by learned
counsel for the petitioner but once NOIDA
an instrumentality of State in exercise of its
supervisory power under Section 7 of the
Act, stipulates a condition of payment of
transfer charges to be paid to NOIDA,
lessor on every subsequent transactions and
makes the said stipulation binding on
subsequent sub-lessees, it becomes a
contractual liability for all sub-lessees to
comply with the same.

No other plea is urged.

The writ petition lacks merit and is
dismissed.
----------
(2021)02ILR A306
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.01.2021

BEFORE

THE HON'BLE PANKAJ NAQVI, J.
THE HON'BLE PIYUSH AGRAWAL, J.

Writ C No. 22342 of 2020

M/s Mahalakshmi Industries ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Kaushalendra Nath Singh

Counsel for the Respondents:
C.S.C., Sri Ashish Agrawal, Sri Sunil Kumar
Misra, Sri Ashok Singh

A. Central Excise Act (1 of 1944) - Excise
dues - Liability of auction purchaser of
unit to pay excise dues of the erstwhile
owner - Held - dues of central excise are
not a charge on the plant & machinery or
land & building - dues of central excise
become payable on the manufacturing of
excisable items - these statutory dues are
in respect of those products and not the
plant & machinery which were used for
manufacturing
-
same
cannot
be
recovered from the auction purchaser.
(Para 9)

Bank invited bids for auction of Industrial Plot
- petitioner a successful bidder deposited the
earnest & the remaining amount - Bank
issued sale certificate & the deed clearly
stated that the industrial plot free from all
encumbrances - petitioner applied for
transfer of the plot - however CGST requested
UPSID
not
to
transfer
plot
as
some
outstanding dues were pending against the
erstwhile owner which were liable to be
recovered from the plot - Held - Court
directed the UPSIDC to execute the transfer
deed of the industrial plot in favour of the
petitioner (Para 3,5,11)