RAMESHWAR AND ORS v. STATE OF HARYANA & ORS.
Citation: [2022] 13 S.C.R. 711; 2022 INSC 738
Court: Supreme Court of India
Bench: UDAY UMESH LALIT , S. RAVINDRA BHAT, PAMIDIGHANTAM SRI NARASIMHA
Judgment date:
Case summary
2022 INSC 738. Supreme Court of India judgment dated 2022-07-21. RAMESHWAR AND ORS v. STATE OF HARYANA & ORS. Read the judgment and case details on LawSphereX.
Judgment text
[2022] 13 S. C. R. 711 711 RAMESHWAR AND ORS. A v. STATE OF HARYANA & ORS. (Miscellaneous Application No. 50 of 2019) B In (Civil Appeal No. 8788 of 2015) JULY 21, 2022 [UDAY UMESH LALIT, S. RAVINDRA BHAT AND PAMIDIGHANTAM SRI NARASIMHA, JJ. ] C Land Acquisition Act, 1894: ss. 4, 6 and 23 – Term ‘transfer’ in context of *Rameshwar & Ors vs State of Haryana’s case – Meaning and nature of – Exclusion of the land from the deemed award or forms part of the deemed award – On facts, issuance of Notification u/s. 4 on 27. 08. 2004, followed by the declaration u/s. 6 D and the receipt of objections from the landowners as also the matter posted for publication of the award on 26. 08. 2007 – However, on 29. 01.
2010 the State decided to withdraw from the acquisition – In the interim period, land owners induced to sell or transfer their land to colonizers/developers at significantly lower rates of E compensation – Most of the colonizers/developers entered into collaboration agreements after the notification u/s.
4 – They sought and were granted licenses by the Department of Town and Country Planning – Challenged to, in the *Rameshwar’s case - This Court held that decision to withdraw from the acquisition was a fraud on the power under the Land Acquisition Act and invalidated all F transfers effected from the date of publication to the date of publication of State’s decision to revoke the acquisition – Applications by the Haryana State Industrial and Infrastructure Development Corporation-HSIIDC and several others seeking clarification of *Rameshwar’s case – Held: Term ‘transfer’ used G in *Rameshwar’s case is not confined to sale, lease or other encrumbrance – It includes development and/or collaboration agreements, as well as licenses issued during the suspect period, whether or not in favour of the developer – Lands covered by licenses issued to Paradise (ultimately transferred to Green Heights); Karma (for which collaboration was entered into with Unitech); H 711 712 SUPREME COURT REPORTS [2022] 13 S.
C. R. A Ram Pyari, Balbir Singh, Earl and Frontier (ultimately used by Godrej); Express Greens (DLF); Kalinga and Innovative amount to transfer – With respect to Green Heights, a sum of 5 crores per acre is payable by Green Heights to HSIIDC – With respect to Godrej, a sum of 5 crores per acre is payable by Godrej to HSIIDC – Upon full compliance thereof, the lands covered by Green Heights B and Godrej’s projects would be excluded from the deemed award – With respect to Karma, the 25. 95 acres of land forms part of the deemed award – Lands belonging to R. P.
Estates and Subros, excluded from the deemed award – With respect to Kalinga, the HSIIDC to complete verification of all the relevant documents – C With respect to ABW, the HSIIDC to refund the amounts payable to the allottees of the entire project – With respect to Legend Heights, HSIIDC to hand over commercial units to allottees who were either granted occupation, and /or in whose favour conveyance was executed – Issuance of direction to the State to ensure that all D references pertaining to the acquisition are answered as expeditiously as possible. Disposing of the appeals, the Court HELD: 1.
It is clear that the collaboration agreements E formed the first element of a two-step process whereby the colonizers / developers (who might have been also land owners) having acquired lands, prior to the preliminary notification, went ahead and entered into commitments by executing collaboration agreements after the notification under Section 4, and even declaration under Section 6, with full knowledge. The F consideration for parting with developmental rights was far higher than the market value of the lands which they would have been entitled to. These acts ultimately culminated with the decision not to acquire the lands. The second step – and the important one persuading the State not to acquire the lands - was the G application for, and the grant of, development licenses. Uniformly, in all these cases, the applications were made prior to the scheduled date of publication of the award (26. 08. 2007).
This is a significant and tell-tale factor because there was no way the applicants would have ordinarily known that an award would not H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 713 be pronounced on the concerned date. In fact, the application A clearly indicates foreknowledge that their lands would not be ultimately acquired. This is what may be characterized as the proverbial ‘smoking gun’ which establishes the complicity of these individuals and entities. [Para 39][745-D-G] B 2. Land ownership typically carries with it a bundle of rights. A landowner has the right to possess, sell, lease, develop, sub– let, occupy, etc. On an overall analysis of the common features of all the collaboration agreements, it is evident that except for the empty husk of a title, the land owner parted with predominant and substantial rights over the property, including possession.
C In almost all the cases, these rights were parted for consideration which was far above the notified acquisition rates. This observation applies in the case of the two companies – Frontier and Karma, who continued to be the land owners of the land. Such ‘emptying out’ of all important attributes that constitute rights and interest D over the property cannot but be viewed as a ‘transfer’. To hold otherwise would mean that after receiving substantial amounts – equal to many times over the existing market rates (that could ordinarily have been claimed by the landowner in respect of their holding in acquisition proceedings) – and entitling the developer E to create third–party rights in respect of not a few but hundreds of people, nevertheless, the landowner could still hold out and claim their right to not part with the title. Such a conclusion would defy reason and commonsense and cannot be countenanced.
In the circumstances, it is held that the collaboration agreements in F all these cases which ultimately culminated in the grant of licenses would fall within the mischief of the term ‘transfer’ as envisioned in the main judgment, as it foreclosed the enjoyment and possession by the landowner, who willingly parted with such rights, for valuable consideration and acquiesced to irreversible changes on it. [Para 40][746-A-E] G 3. The findings are summarized as follows: a. The expression ‘transfer’ used in the main judgment, Rameshwar v State of haryana (2018) 6 SCC 215 is not confined H 714 SUPREME COURT REPORTS [2022] 13 S. C. R. A to sale, lease or other encumbrance. It includes development and/or collaboration agreements, as well as licenses issued (for development) during the suspect period, whether or not in favour of the developer. b.
As a corollary to the above, the lands covered by licenses issued to Paradise (ultimately transferred to Green Heights); B Karma (for which collaboration was entered into with Unitech); Ram Pyari, Balbir Singh, Earl and Frontier (ultimately used by Godrej); Express Greens (DLF); Kalinga and Innovative amount to transfer. c. With respect to Green Heights, a sum of 5 crores per C acre is payable by Green Heights to HSIIDC. With respect to Godrej, a sum of 5 crores per acre is payable by Godrej to HSIIDC. Upon full compliance with directions above, the lands covered by Green Heights and Godrej’s projects shall be excluded from the deemed award. D d. With respect to Karma, the 25. 95 acres of land subject of License No. 206 of 2008 forms part of the deemed award. e. Lands measuring 2. 9875 acres and 10. 881 acres respectively belonging to R. P. Estates and Subros, are excluded from the deemed award. E f.
With respect to Express Greens (DLF), contentions to exclude the project from the deemed award are rejected. g. With respect to Kalinga, it is directed that HSIIDC shall complete verification of all the relevant documents furnished by Kalinga. F h. With respect to ABW, it is directed that HSIIDC to refund the amounts payable to the allottees of the entire project. i. With respect to Speed Town, the contentions to exclude the land from the deemed award are rejected. It is held that Speed Town shall be entitled to the compensation to be decided, in G respect of the land, on the same basis as in the case of all others entitled to it. j. With respect Paramveer, the contentions to exclude the hotel block from the deemed award are rejected. All rights, title and interest in those portions of Innovative’s properties shall H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 715 vest in HSIIDC and be part of the deemed award.
Innovative A shall be entitled to amounts like in the case of all other developers/ owners in accordance with the main judgment. k. With respect to Legend Heights, HSIIDC is directed to Hand over commercial units to allottees who were either granted occupation, and /or in whose favour conveyance was executed. B l. With respect to Dharamveer and other petitioners, as well as similarly placed individuals the rights and title in respect of lands under their occupation is vested with HSIIDC. m. The State is directed to ensure that all references pertaining to the acquisition are answered as expeditiously as C possible. The concerned reference courts are hereby directed to conclude all the proceedings in 185 references received for 365 acres of land and pronounce the award in accordance with law within the stipulated period. n.
It is clarified that wherever the allottees have not paid D the full amounts (payable in terms of the agreements) HSIIDC shall be entitled to the same rights in law as in the case of the original builder/developer, which include, but are not limited to, insisting full payment before handing over possession to the allottees. [Para 121][770-A-D; F,H; 771-A, C; 772-E; 773-C-D, E F, G; 774-C, F-H] *Rameshwar v State of haryana (2018) 6 SCC 215 – Clarified. Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr. (2008) 10 SCC 345 : [2008] 10 SCR 697; Ashok Kumar F Jaiswal v. Ashim Kumar Kar AIR 2014 Cal 92; Sushil Kumar Agarwal v Meenakshi Sadhu & Ors. (2019) 2 SCC 241 : [2018] 12 SCR 756; Unitech Ltd. v. Union of India (2016) 2 SCC 569 : [2015] 12 SCR 992; Dharamvir v State of Haryana SLP (C) No. 5490 of 2021 – referred to.
G Case Law Reference [2008] 10 SCR 697 referred to Para 32 [2018] 12 SCR 756 referred to Para 35 [2015] 12 SCR 992 referred to Para 36 H 716 SUPREME COURT REPORTS [2022] 13 S. C. R. A CIVIL APPELLATE/INHERENT JURISDICTION : Miscellaneous Application No. 50 of 2019 In Civil Appeal No. 8788 of 2015. From the Judgment and Order dated 12. 03. 2018 in C. A. No. 8788 of 2015 passed by the Supreme Court of India. B With Diary No(s). 26552/2019, MA 2150/2020 in C. A. No. 8788/2015, MA 2149/2020 in C. A. No. 8788/2015, CONMT. PET. (C) No. 2226/ 2018 in C. A. No. 8788/2015, MA 1175/2019 in C. A. No. 8788/2015, Diary No(s). 24553/2019, Diary No(s). 45026/2019, SLP(C) No. 5490/ C 2021, Diary No(s). 7888/2020, CONMT. PET. (C) No. 513/2020 in C. A. No. 8788/2015, MA 1521/2020 in C. A. No. 8788/2015, MA 2067/2020 in C. A. No. 8788/2015, MA 2228/2020 in C. A. No. 8788/2015, SLP(C) No. 2147/2021, Diary No(s). 5699/2021, Diary No(s). 7775/2021, Diary No(s). 9505/2021, Diary No(s).
6705/2022, Diary No(s). 9002/2022, M. A. No. 864/2019, Diary No. 45009/2019. AND CONMT. PET. (C) No. D 716/2021 in MA 50/2019 in C. A. No. 8788/2015. Tushar Mehta, SG, K. M. Nataraj, Ms. Aishwarya Bhati, ASGs, Anil Grover, Alok Sangwan, Sr. AAGs, Brijender Chahar, Gopal Shankar Narayan, P. S. Patvalia, Sanjib Sen, Ranjit Kumar, Gopal Shankaranayan, Ms. Sonia Mathur, Pinaki Mishra, Randeep Roy, Nikhil Nayyar, R. S. E Rai, Ms. Kiran Suri, Sanjiv Sen, Sr. Advs. , Ms. Rashi Bansal, Amit Sharma, Rajan Kr. Chourasia, Sachin Sharma, Ashok Panigrahi, Arvind Kumar Sharma, Mrs. Jyoti Chahar, Karan Chahar, Ms. Pooja Chahar, Shashi Bhushan, Vinay Garg, Naman Joshi, Guneet Sidhu, Yuvraj Francis, Ms. Manisha Ambwani, Ankit Vijaywargiya, Aditya Verma, Prateek F Rathee, Sunny Choudhary, Piyush Singh, Aditya Parolia, Akshay Srivastava, Rajesh Kumar, Gaurav Goel, Nithin Chandaran, Parijat kishore, Abhay Singh, M. Saurabh tanwar, Anurag Ojha, Karan Aggarwal, Mrs. Shubhangi Tuli, Devashish Bharuka, Ms.
Sarvshree, Justimne George, Ms. Shriya Chanda, Kapil Choudhary, Siddhant Buxy, M. L. Lahoty, Paban K. Sharma, Anchit Sripat, Pranab Kumar Nayak, G Himanshu Shekhar, Nitin Bhardwaj, Ms. Anusha Magarajan, Mrs. Pragya Baghel, Ms. Samten Doma, Sourabh Tandon, Siddharth Batra, Ms. Shivani Chawla, Chinmay Dubey, Ankur Bansal, M. K. Maroria, Zoheb Hussain, Rajat Nair, Ms. Ruchi Kohli, Sughosh Subramaniyam, Raghav Sharma, Ms. Ameyavikrama Thanvi, Ms. Cleste Aggarwal, B. Krishna H Prasad, Ms. Noopur Singhal, Rahul Khurana, Satish Kumar, Sanjay RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 717 Kumar Visen, Navin Gupta, Ms. Babita Mishra, Suresh Kumar Bhan, A Ms. Ruby Singh Ahuja, Pravin Bahadur, Ms. Kritika Sachdeva, Lakshya Khanna, Jappanpreet Hore, M/S. Karanjawala & Co. , Mahesh Agarwal, Rishi Agrawala, Ankur Saigal, Himanshu Satija, Ms. Ayushi Amod, Kunal Dawar, E. C. Agrawala, Pulkit Deora, Udit Gupta, Akshay Goel, Ms.
Mahima Dayani, Anup Jain, Arnav Vidhyarthi for Udit Kishan & B Associates, Ms. Sugandha Batra, Ramendra Mohan Patnaik, Ayush Shrivastava, Ms. Rubina Virmani, Rituraj Singh, Shivendra Singh, Somesh Arora, Aviral Kashyap, Vimal Sinha, Ms. Gunjan Sinha Jain, Ramkrishna Veerendra, Chanchal Kumar Ganguli, Abhinav Agrawal, Rajiv K. Virmani, Gaurav Jain, Atul Malhotra, Himanshu, Sourav Jindal, Abhishekh Garg, Akshay Goyal, Shish Pal Laler, Hitesh Kumar, Atul Vedant Pradhan, C Aayush, Ravi Panwar, S. S. Jauhar, Ms. Swati Bhardwaj, Amit Pawan, Rajat Kapoor, Rohit Rajershi, Avadh Bihari Kaushik, Ranbir Singh Yadav, Amarjeet Singh, Umesh Kumar Khaitan, Mrs. Shally Bhasin, Ms. Meenakshi Chauhan, Vikas Mehta, Ms. Ranjeeta Rohatgi, Rameshwar Prasad Goyal, Advs. for the appearing parties. D The Judgment of the Court was delivered by S. RAVINDRA BHAT, J. INDEX Background…………………………………………….... para(s) 1-6 E I. Applications filed by: (a) M/s. Paradise Systems Pvt. Ltd…………………para(s) 7-10 (b) M/s.
Karma Lakelands Pvt. Ltd……………….. para(s) 11-18 (c) Frontier Home Developers Pvt. Ltd………..... para(s) 19-27 F (d) Analysis and conclusion of I (a) (b) and (c)…para(s) 28-45 II. Applications filed by: (a) M/s. R. P. Estates Pvt. Ltd and M/s. Subros Ltd……………………........................................... para(s) 46-50 G III. Applications filed by: (a) Express Greens / DLF Home Developer Ltd…para(s) 51-64 IV. Applications filed by: H 718 SUPREME COURT REPORTS [2022] 13 S. C. R. A (a) M/s Kalinga Realtors Pvt. Ltd………………... para(s) 65-75 V. ABW Infrastructure Ltd…………………………. para(s) 76-88 VI. Applications filed by: (a) Speed Town Planners Pvt. Ltd………………para(s) 89-101 B VII. Applications pertaining to Innovative Infradevelopers Pvt. Ltd. : (a) Legend Height Owners Welfare Association..... para(s) 102- 104 (b) Paramveer Distributors Pvt. Ltd…………... para(s) 105-106 C (c) Analysis of VII (a) and (b)……………………para(s) 107-113 VIII.
Applications filed by: (a) Dharamvir & Ors………………………………para(s) 114-118 IX. Other issues…………………………………….. para(s) 119-120 D Conclusion………………………………………. para(s) 121(a)-(p) Background 1. The present judgment will dispose of various applications filed by the Haryana State Industrial and Infrastructure Development E Corporation (hereinafter, “HSIIDC”) and others, by way of clarifications sought on the judgment delivered by this Court in Rameshwar v. State 1 of Haryana (hereinafter, “main judgment”). 2. The main judgment of this Court had, after duly considering the sequence of facts and developments which occurred after publication F of the notification under Section 4 of the (now repealed) Land Acquisition Act, 1894 (hereinafter, “Acquisition Act”) on 27. 08. 2004, read with the final decision of the State of Haryana (hereinafter, “State”) dated 29. 01. 2010 to not proceed with the said acquisition, declared as mala fide and inoperative the decision dated 29. 01. 2010.
The Court’s reasoning G was that the State, in principle, had decided to withdraw from the acquisition afterthe notification under Section 4, which was followed by the declaration under Section 6 and the receipt of objections from the concerned lands owners etc. , even when the matter was posted for publication of the award on 26. 08. 2007. In the interim period, land owners, 1 H Rameshwar & Ors. v. State of Haryana & Ors. , (2018) 6 SCC 215. RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 719 [S. RAVINDRA BHAT, J. ] alarmed by the prospect of losing their holdings, were induced to sell or A otherwise transfer their lands to colonizers / developers at significantly lower rates of compensation. Most of such colonizers / developers had entered into collaboration agreements after the notification under Section 4, sought (and were granted) licenses by the Department of Town and Country Planning of the State of Haryana (hereinafter, “DTCP”).
This B Court found that upon an overall consideration of the materials (which included relevant official notings in government files, ministerial decisions and notifications), the state machinery was used to further private ends. The Court held that such a decision to withdraw from acquisition was a fraud on power under the Acquisition Act. Therefore, the judgment invalidated all transfers effected from the date of publication of the C notification under Section 4, to the date of publication of the State’s decision to revoke the acquisition i. e. , from 27. 08. 2004 to 29. 01. 2010 (hereinafter, “suspect period”). 3. Apart from invalidating the State’s final decision, the judgment also contained consequential directions on various aspects. Before moving D further, it would be useful to extract these directions: “42. Having bestowed our attention to various competing elements and issues we deem it appropriate to direct: 42. 1.
The decisions dated 24-8-2007 and 29-1-2010 referred to hereinabove are set aside as being brought about by mala E fide exercise of power. In our considered view, those decisions were clear case of fraud on power and as such are annulled. 42. 2. The decision dated 24-8-2007 was taken when the matters were already posted for pronouncement of the award on 26-8-2007. Since all the antecedent stages and steps prior F thereto were properly and validly undertaken, and since the decision dated 24-8-2007 has been held by us to be an exercise of fraud on power, it is directed that an award is deemed to have been passed on 26-8-2007 in respect of lands: (i) which were covered by declaration under Section 6 in the present case, and G (ii) which were transferred by the landholders during the period 27-8-2004 till 29-1-2010. The lands which were not transferred by the landholders during the period from 27-8-2004 till 29-1-2010 are not governed by these directions.
H 720 SUPREME COURT REPORTS [2022] 13 S. C. R. A 42. 3. Subject to the directions issued hereafter, the lands covered under aforementioned Direction 42. 2 shall vest in HUDA/HSIIDC, as may be directed by the State of Haryana, free from all encumbrances. HUDA/HSIIDC may forthwith take possession thereof. Consequently, all licences granted in respect of lands covered by the deemed award dated 26-8- B 2007 will stand transferred to HUDA/HSIIDC. 42. 4. Since the dropping of acquisition on 24-8-2007 and subsequent decision dated 29-1-2010 have been set aside, the period between 24-8-2007 and up to the date of this judgment shall not be counted for the purposes of Section C 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. 42. 5.
All transactions entered into during the period from 24- 8-2007 till 29-1-2010, pursuant to which the original D landholders transferred their holdings in favour of builders/ private entities or third parties shall be subject to and the interest of the respective parties shall be governed by the directions issued hereafter. 42. 6. Consistent with the directions issued in para 33 of Uddar E Gagan [Uddar Gagan Properties Ltd. v. Sant Singh, (2016) 11 SCC 378: (2016) 4 SCC (Civ) 198], the builders/private entities will not be entitled to recover the consideration paid by them to the landholders. The sale consideration paid by the builders/private entities to the landholders shall be treated towards compensation under the award and the landholders F will not be required to refund any amount to such builders/ private entities. The landholders will be at liberty to prefer Reference under Section 18 of the Act within a period of three months from today.
For the purposes of maintaining such reference the reasoning that weighed while passing awards G dated 9-3-2006 and 24-2-2007 shall be the basis. If the Reference Court were to enhance the compensation, the amounts received by the landholders by way of consideration from the builders/private entities shall be appropriated towards such sum awarded by the Reference Court. If the landholders are still entitled to something more than what they had received H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 721 [S. RAVINDRA BHAT, J. ] from the builders/private entities, the differential sum shall A be made over to them by the State of Haryana towards acquisition of their interest in the lands in question. If, however, what the landholders had received towards consideration from the builders/private entities is found to be in excess of what is awarded by the Reference Court, the B remainder shall not be recovered from them. 42. 7.
Consistent with the directions issued by this Court in paras 33. 6 and 33. 7 in Uddar Gagan [Uddar Gagan Properties Ltd. v. Sant Singh, (2016) 11 SCC 378 : (2016) 4 SCC (Civ) 198] , the builders/private entities will be entitled to refund/ C reimbursement of any payment made to the landholders or the amounts that had been spent on development of the land, such payments shall be made by HUDA or HSIIDC on being satisfied about the extent of actual expenditure not exceeding HUDA or HSIIDC norms on the subject, as the case may be. Refund will however be in respect of amount at which the D landholders sold the land and not of subsequent sales. As regards subsequent transactions, the subsequent purchasers will have remedies against their respective vendors. Claims of builders/private entities entitled to refund will be taken up after settling claims of third parties from whom the builders/ E private entities had collected monies. No interest will be payable on such amounts. 42. 8.
The third parties from whom money had been collected by the builder/private entities will either be entitled to refund of the amount from and out of and to the extent of the amount F payable to the builder/private entities in terms of above direction, available with the State, on their claims being verified or will be allotted the plots or apartments at the agreed price or prevalent price, whichever is higher. Every such claim shall be verified by HUDA or HSI IDC . In cases where constructions have been erected and the entire project is G complete or is nearing completion, upon acceptance of the claim, the plots or apartments shall be made over to the respective claimants on the same terms and conditions. Except for such verified and accepted claims, the remaining area or apartments will be completely at the disposal of HUDA H 722 SUPREME COURT REPORTS [2022] 13 S. C. R.
A or HSIIDC, as the case may be, which shall be free and competent to dispose of the same in accordance with the prevalent policy and procedure. In order to facilitate such exercise all third parties who had purchased or had been allotted the plots or apartments shall prefer claims within one month from today, which claim shall be verified within two months from today. B 42. 9. As found by us in the preceding paragraphs, substantial sums were made over to “middlemen”. In the pending investigation, CBI may do well to unravel the truth. In any case, such hefty sums which were made over to “middlemen” cannot be said to be rightfully earned by and belonging to C them. In fact, this actually represents the return for being able to garner the lands in question and getting requisite licences under the provisions of the Haryana Act and a benefit derived out of fraud on power. In our view, this money rightfully belongs to the State and none other.
We direct the authorities of the State as well as the Central Government to reach the D depths of such transactions and recover every single pie and make it over to the State Government. A complete investigation in the transactions including unearthing unnatural gains received by “middlemen” shall be undertaken by CBI. ” 4. The present applications have been preferred by HSIIDC and E several colonizers / developers, transferees, license holders as well as associations of allottees of flats or commercial plots, consumers, etc. The primary question which this Court has been called upon to answer is as to the nature of the term ‘transfer’, adverted to in para 42 of the main judgment. F 5.
The colonizers / developers and license holders on the one hand submitted that so long as the lands were not ‘transferred’ by their owners (who continued to hold title), mere grant of developmental rights or other associated rights by instruments such as builder development agreements, collaboration agreements, and other contracts would not amount to ‘transfer’ within the meaning of the main judgment. The stand G of HSIIDC and the State (based upon the opinion of the learned Advocate General of Haryana) on the other hand was that entering into such development agreements or contracts was in fact a ‘transfer’ as it impeded the enjoyment of title by the owners. It was further submitted that such agreements led to issuance of licenses, which were the basis H for ultimately deciding not to acquire such lands. RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 723 [S. RAVINDRA BHAT, J. ] 6.
To appreciate the rival contentions, it would be necessary to A set out the facts in regard to the relevant transactions. I. Applications filed by (a) M/s. Paradise Systems Pvt. Ltd. ; (b) M/s. Karma Lakelands Pvt. Ltd. and (c) Frontier Home Developers Pvt. Ltd. B a. M/s. Paradise Systems Pvt. Ltd. and Green Heights Projects Pvt. Ltd. 7. Paradise Systems Pvt. Ltd. , (hereinafter, “Paradise”) purchased 2. 681 acres of land in village Lakhnaula on 06 - 07. 04. 2004, by registered 2 sale deeds. On 09. 09. 2007, Paradise entered into a collaboration C agreement with M/s. Sunshine Telecom Services Pvt. Ltd. (hereinafter, “Sunshine”). The consideration for that agreement was ` 75 lakhs -received by Paradise. In addition, Paradise was entitled to 35% share in the built-up commercial office space with proportionate land rights and common area rights of the developed property. Paradise granted the ‘absolute developmental right’ of land for construction of commercial D office space.
The agreement also recorded that the period for completion of the project was to be sixty months. 8. Based on this collaboration agreement, an application was made for grant of license to the DTCP, and License No. 59 of 2009 was granted on 26. 10. 2009. Paradise alleged that Sunshine did not adhere to E the terms of the collaboration agreement. Paradise claims to have refunded all amounts received by it and annulled that transaction by deed dated 30. 03. 2013. Paradise thereafter entered into another collaboration agreement with M/s. Green Heights Projects Pvt. Ltd. (hereinafter, “Green Heights”) for development of the same lands on 30. 03. 2013. This collaboration agreement referred to License No. 59 of F 2009, which was valid up to 25. 10. 2013. Paradise parted with all rights 3 of development to Green Heights. In terms of this collaboration agreement, Paradise received ` 28. 40 crores as consideration.
The collaboration agreement also recorded the liability of Paradise to the tune of ` 4. 25 crores to the DTCP. G 2 Referred to in the collaboration agreement between Paradise and Green Heights Projects Pvt. Ltd. dated 30. 03. 2013. The collaboration agreement was executed on behalf of Paradise by its then director, Mr. Lalit Modi and on behalf of Green Heights Projects Pvt. Ltd. by its director, Mr. Virendra Kumar Bhatia. 3 Detailed facts, with documents are set out in I. A. 112515/2020 in M. A. 2150 of 2020. H 724 SUPREME COURT REPORTS [2022] 13 S. C. R. A 9. Both Paradise and Green Heights contend that no ‘transfer’ took place in the suspect period. It was argued on their behalf by learned Senior Advocates Mr. P. S. Patwalia and Ms. Kiran Suri that parties were (and continued to be) the owners of the lands in question, which were purchased prior to the notification under Section 4 dated 27. 08. 2004.
In these circumstances, Paradise was legitimately entitled to enter into B collaboration agreements, first with Sunshine Telecom, and later with Green Heights. Paradise received valuable consideration in its agreement with Green Heights. It was argued that Green Heights had invested ` 144. 91 crores in the project and constructed a total of 371 units. Counsels further submitted that a sum of ` 139. 78 crores had been received from C allottees who booked the properties. The amounts received and the particulars of the allottees who had paid for respective allotted units 4 have been revealed to the Court by Green Heights . It was therefore urged that firstly, the transaction which Paradise entered into initially with Sunshine and subsequently with Green Heights, did not fall within the mischief of the proscribed transactions that were covered by the D main judgment.
Secondly, the project was completed and the allottees had paid almost the entire consideration which was utilized in the construction of the building. The counsels submitted that the Court should clarify that there was no ‘transfer’ in respect of the land covered by License No. 59 of 2009. E 10. HSIIDC and the State urged that though there was no ‘transfer’ or conveyance of the title in the strict sense, what was apparent was that in terms of the collaboration agreements, though the original landowner held nominal title, effective control of the lands was parted to the colonizer / developer. In the case of Sunshine, the consideration was F ` 75 lakhs, which was in excess by more than twice the value of compensation offered under the Acquisition Act in adjacent lands. In the case of Green Heights, Paradise received ` 28. 40 crores.
It was submitted that under the collaboration agreement, the colonizer / developer was entitled to develop the lands, build upon it, and allot the residential or commercial unit, as the case was, to those who entered into agreements G and paid valuable monies. Crucial rights such as possession, the right to construct as per one’s choice, and the right to sell, all devolved on the colonizer / developer, who would be entitled to a share of the proceeds. Therefore, it was urged that the real purpose behind the transactions 4 I. A. No. 118401 of 2020 in M. A. No. 2150 of 2020. H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 725 [S. RAVINDRA BHAT, J. ] ought to be viewed holistically, and not only one facet of it, i. e. , retention A of the title by the landowners. HSIIDC and the State therefore, contended that these lands clearly fell within the description of ‘transfers’ and should be included in the award deemed to have been passed on 26. 08.
2007 by the main judgment (hereinafter, “deemed award”). b. Karma Lakelands Pvt. Ltd. and Unitech Ltd. B 11. Karma Lakelands Pvt. Ltd. (hereinafter, “Karma”) had purchased lands in villages Manesar, Naurangpur and Lakhnaula, between 1996 and 2004. In respect of the total 207. 11 acres it had acquired, Karma was granted a conversion of land use (hereinafter, “CLU”) certificate by the State on 13. 03. 1996. C 12. The notification issued under Section 4 had included these 207. 11 acres, as well as another lot of 25. 95 acres in villages Naurangpur and Lakhnaula, owned by companies whose dominant shareholder (to the extent of 90%) was also the majority shareholder in Karma. When the declaration under Section 6 was published on 25. 08. 2005, Karma’s D lands, which were the subject of the CLU (207. 11 acres), were dropped from acquisition. This was apparently in tune with the existing policy of not acquiring lands whose use had been converted.
There is no controversy about those lands at present. 13. In these proceedings, it is the smaller parcel of 25. 95 acres of E land, which is the subject matter of consideration. Unlike the lands for which CLU had been obtained, these 25. 95 acres were included in the acquisition proceedings, in the declaration under Section 6. In respect of these lands, Karma had entered into a collaboration agreement on 16. 02. 2004, and a supplementary agreement on 24. 12. 2006, after the publication of the declaration under Section 6 i. e. , after 25. 08. 2005. The F collaboration agreement envisaged development of these lands by M/s Unitech Ltd. (hereinafter, “Unitech”). According to the arrangement, a large number of golf villas were to be built and given out on long-lease basis. During the proceedings before this Court, Unitech stated that it had paid ` 15 crores to Karma as consideration for the same. G 14. By the time the supplementary agreement was executed on 24. 12.
2006, the Delhi High Court approved a scheme of amalgamation of the land-owing companies, merging them with Karma. Karma then applied to the DTCP for a license to develop a group housing colony on 15. 01. 2007. Consequently, License No. 206 of 2008 was issued on H 726 SUPREME COURT REPORTS [2022] 13 S. C. R. A 16. 12. 2008. Thereafter, when the award scheduled for 26. 08. 2007 was not pronounced, and the decision of the State to not acquire lands was taken on 29. 01. 2010, these 25. 95 acres belonging to Karma were excluded from acquisition. 15. Mr. Brijender Chahar, learned Senior Advocate for Karma, B argued that the State’s attempt to include Karma’s land in the deemed award was untenable. He also urged that the landowning companies which eventually merged with Karma had as a matter of fact purchased these lands as early as the mid-1990s. Karma’s bona fides was evident from the fact that the largest portion of its acquired land, i. e. , 207.
11 acres, was left out of the acquisition on a proper application of the existing C policy, which the State consciously followed. By this policy, lands which had CLU certificates were excluded. Therefore, the 207. 11 acres earmarked for the development of the golf course which was a subject matter of the CLU obtained in 1996 was excluded; consequently, it did not find place in the declaration under Section 6. It was submitted that D even though the non-CLU lands, i. e. , 25. 95 acres, did not fulfill the terms of the policy, nevertheless, the justification for not letting the State proceed with their acquisition was that neither Karma nor its predecessors had attempted to influence the acquisition. Karma submitted that while these lands were included in the notification under Section 6, they stood on the same footing as the lands owned by other bona fide land owners, because E they were not the subject matter of any speculation.
The lands had been purchased at least ten years or so prior to the notification issued under Section 4. In the circumstances, Karma was justified in seeking a license after waiting for a reasonable period of time, even within the suspect period. Mr. Chahar also pointed out that no malice or ulterior motive F could be attributed to Karma because its collaboration with Unitech was entered into on 16. 02. 2004, which was prior to the notification under Section 4. 16. Learned Senior Advocate further submitted that Karma’s applications, i. e. , M. A. No. 1046/2019, and connected applications, were for directions for release of a total area of 9. 7 acres. It was submitted G that these were seven distinct units of land which Karma was forced to purchase because they fall in pockets within the larger area of 207. 11 acres, left out of the acquisition when the declaration under Section 6 was issued.
It was submitted that being a contiguous land, it interfered with the integrity of the golf course. Their inclusion in acquisition would H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 727 [S. RAVINDRA BHAT, J. ] ultimately disturb the peaceful enjoyment of land, which Karma was A legitimately entitled to. He also relied upon a policy of the State dated 5 14. 06. 2012 (issued under a letter ) which contained a comprehensive policy in respect of leftover pockets of land. It was submitted that this Court should grant liberty to the State to release the lands which were the matter of acquisition in view of this policy. However, at the end of B the hearings, Mr. Chahar sought and was granted liberty to withdraw the application (M. A. No. 1046 of 2019). The application was therefore dismissed as withdrawn on 19. 04. 2022. 17. Learned counsel for HSIIDC Mr. Sanjay Kumar Visen argued that even though Karma or its affiliates had purchased the lands earlier, C only 207.
11 acres was covered by a previously issued CLU. Its exclusion from acquisition was justifiable due to extant policy. However, with respect to 25. 95 acres, it was included in the declaration under Section 6, and there was no justification for its non-inclusion in the deemed award. It was urged that Karma’s intensions were clear because even after the declaration under Section 6 was issued, and much before the scheduled D date for the award, on an assumption that it still owned the land and could develop it, an application was made on 15. 01. 2007 for license. It was also submitted that Karma’s submissions that the collaboration agreement with Unitech was arrived at earlier, were of no avail given that the supplementary agreement was also executed by the parties after E the declaration under Section 6.
Clearly, these events were meant to create an impediment in the acquisition and ultimately led to the decision by which the proposed award was never announced in respect of these lands and finally, the State decided to drop the acquisition in respect of 25. 95 acres on 29. 01. 2010. F 18. It was also urged by the State and HSIIDC that unlike in other cases, there had been no development on the land. Further, interests like those of third party allottees was not involved. In these circumstances, the lands which were deliberately excluded from acquisition, after they formed part of the final declaration, by non-publication of the award, clearly fell within the mischief of what could be termed as ‘transfer’ in G the main judgment. c. Frontier Home Developers Pvt. Ltd. , Balbir Singh, Ram Pyari, M/s Earl Infotech Pvt. Ltd. , and Godrej Properties Ltd. 5 No. PF-31/7/10/2012-2 TCP dated 14. 06. 2012. H 728 SUPREME COURT REPORTS [2022] 13 S. C. R. A 19. Frontier Home Developers Pvt. Ltd.
(hereinafter, “Frontier”) had originally purchased 8. 568 acres of land at village Naurangpur on 16. 08. 2004 under its erstwhile name Conway Developers Pvt. Ltd. (hereinafter, “Lot 1”). The consideration paid was 5. 62 crores. Another parcel, i. e. , 5. 175 acres of land was jointly owned by one Balbir Singh and Ram Pyari (hereinafter, “Lot 2”). Both lots were included in the B notification under Section 4, as well as the declaration under Section 6. During this period, Balbir Singh and Ram Pyari entered into a collaboration agreement with M/s Earl Infotech Pvt. Ltd. (hereinafter, “Earl”) on 24. 08. 2006 for its development. Soon thereafter, Earl entered into a development collaboration agreement with Frontier in respect of Lot 2 C on 11. 12. 2006. Frontier agreed to jointly develop both lots. This agreement was followed up with a supplementary agreement between Balbir Singh, Ram Pyari, and Earl under which further amounts were given to the owners as consideration. 20. On 11. 12.
2006, Frontier applied to the DTCP for a license D enclosing the collaboration agreement and related documents. Along with this, a sum of 1. 17 crores was also paid for the license. On 07. 05. 2008, License No. 88 of 2008 was issued in the name of Frontier, Balbir Singh, Ram Pyari and Earl in respect of the entire composite area of 13. 743 acres (Lot 1 + Lot 2). After the final decision of the State to drop the acquisition on 29. 01. 2010, on 24. 06. 2010, the four licensees transferred E their rights to develop all 13. 743 acres to Godrej Properties Ltd. (hereinafter, “Godrej”). 21. In this agreement, Balbir Singh and Ram Pyari were to receive 55,328. 60 sq. ft. of built-up area. The agreement (by clause 2. 11) showed exact areas - including built up areas - which were to come up; what F was allocable for amenities, common facilities, etc. The consideration was that Frontier was to have a 30% right in the gross share of revenue, and Godrej the remaining 70%.
Godrej paid Frontier an interest-free deposit equal to 16 crores of which 5. 5 crores was non-refundable; in addition, Frontier’s expenses till then were reimbursed. The prior commitments of Frontier, including allotment of land to owners (55,328. 60 G sq. ft. ) and additional 1,00,000 sq. ft. for 50 residential flats in favor of the Jammu & Kashmir All India Service Officers Society was also agreed to. 22. The materials on record show that a group housing colony styled as “Godrej Frontier” was developed. The occupation certificate H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 729 [S. RAVINDRA BHAT, J. ] was granted by the DTCP on 16. 10. 2014 for residential, EWS and A commercial units, and on 19. 06. 2017 for community building. The group housing colony comprised of 567 units in total – 475 residential, 84 EWS and 8 commercial.
Godrej disclosed in its affidavit that it sold 357 residential units, 8 commercial shops and 83 EWS units from its share and a negligible number of units remained unsold, i. e. , 4 residential units; B 1 EWS unit and a nursery school. Of the group housing units developed by Godrej Frontier, 199 units were registered in favour of third-party buyers. 23. It was argued, on behalf of Godrej, by learned Senior Advocates Mr. Pinaki Misra and Mr. Randeep Singh Rai that the original landowners C in question were not aggrieved. They were neither parties before any forum, nor did they allege any fraud, influence nor were theydistressed. Landowners in the present case transacted voluntarily with the colonizers / developers. There was no allegation offraud or illegality against Godrej. It wasemphasized that the original landowners retained their respective titles in the project land.
It was urged that this Court’s main judgment D onlyapplied to cases involving forceful and fraudulent saleof lands at throwaway prices after the issuance of notification under Section 4 and declaration under Section 6. The basis of the main judgment was against the illegal monetary gains by thebuilders on purchasing land at throwaway prices fromfarmers by threatening them with effects of the acquisition. In E the present case, theownership of the land was intact and no illegal monetary gain was made. Moreover,no middle men were involved. Therefore, thepresent land was not covered by the purview of directionsgiven in the main judgment. 24. Counsels highlighted the following portions of the main F judgment: “42. 2. The decision dated 24-8-2007 was taken when the matters were already posted for pronouncement of the award on 26-8-2007.
Since all the antecedent stages and steps prior thereto were properly and validly undertaken, and since the G decision dated 24-8-2007 has been held by us to be an exercise of fraud on power, it is directed that an award is deemed to have been passed on 26-8-2007 in respect of lands: (i) which were covered by declaration under Section 6 in the present case, and H 730 SUPREME COURT REPORTS [2022] 13 S. C. R. A (ii) which were transferred by the landholders during the period 27-8-2004 till 29-1-2010. The lands which were not transferred by the landholders during the period from 27-8-2004 till 29-1-2010 are not governed by these directions”. B 25. In the present case, Balbir Singh and Ram Pyari owned Lot 2 much before the notification under Section 4,and these landowners continued to hold title of the land as on the date of filing their affidavits before this Court.
The only difference was that the flats developed on the land had been sold to bona fide consumers and conveyance deeds C had been executed in their favour by the landowners and the colonizers / developers. Out of the entire flats developed on the said land, some had been allocated to respective stakeholders including the landowners. The original landowner in the case of Lot 1 was always Frontier, which had also purchased the lands before the notification under Section 4. In these circumstances, the project should not be covered by the deemed D award as stipulated in the main judgment. 26. It was urged that entering into collaboration agreements, applying for licenses and issuing licenses could not be construed as ‘transfers’, or a burden on the title. It was submitted that these were legitimate activities that landowners with valid title could perform.
It E was also urged that Godrej in fact took over development five months after the lands were released from the cloud of acquisition (the collaboration agreement was dated 24. 06. 2010, whereas the decision of the State to drop the acquisition proceedings was taken on 29. 01. 2010). Godrej therefore could not be accused of any wrongdoing, because it entered into agreement with bona fide land owners after any kind of F impediment on collaboration had ceased. Furthermore, it developed the property by beginning construction only in 2011, after obtaining all permissions. 27. It was lastly urged that in case the interpretation of the main judgment were so as to include the present lands within the ambit of the G deemed award, then the purpose of carving out an exception in para 42. 2 would be defeated. Moreover, the main judgment was meant to protect the interests of farmers, and in this case, any alternate interpretation would end up harming their interests.
Likewise, the genuine interests of bona fide third-party consumers would be jeopardized. H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 731 [S. RAVINDRA BHAT, J. ] d. Analysis and conclusion of I (a) (b) and (c): A 28. To discern the content and nature of the transactions whereby landowners conferred rights upon colonizers / developers, it would be necessary to notice some relevant conditions in the collaboration agreements placed on record by the parties: Collaboration Agreement between Balbir Singh and Earl B Infotech (dated 24. 08. 2006) “7. That the Owners shall execute General Power of Attorney (GPA) and Special Power of Attorney and/or any other document or papers in favour of the Developer or it’s nominee to enable the Developer to apply for all regulatory approvals, C licenses, sanctions and no objections for development of the said land and to raise constructions thereon as agreed hereto.
However, in the event, any other/further document in respect of said land the Owners have to sign the same to enable to Developer to obtain the necessary license/permission and D complete the development of the colony on the said. Land. The Owners shall sign the same without raising any objection in any manner whatsoever and withinthe stipulated period. **** 9. That the Owners further undertakes that he/she/they shall E not deal with the said land in any manner whatsoever and shall henceforth keep thesaid land free from any change, lien, litigation, claim etc. And shall notcreate any obstruction or impediment in the development of the said landof the ‘Development’. F **** 12.
That Owners will hand over the actual physical possession of the said land to the developer for purpose of developing for the purpose of the residential/commercial Group Housing/ industrial/Special Economic Zone complex agreed to be G developed at the time of signing of this agreement and to enable the developer to discharge its part of obligations. **** 18. That the developer shall commence and complete the development of the said residential/Commercial/Group H 732 SUPREME COURT REPORTS [2022] 13 S. C. R. A Housing/Industrial Complex byproviding the entire finance, equipment, inputs material infrastructureand expertise necessary to develop the Special Economic Zone/residential/ Commercial/ Industrial Complex in accordance with thesanctioned plans and any modifications thereof as may becomenecessary or agreed to during the progress of the work.
B That theDeveloper is fully empowered and entitled to assign this agreement infavour of any Third Party at its absolute discretion without any recourseto the Owners and the Owners shall have no objection for suchassignment. xxxxxx xxxxxx xxxxxx C 21. The Owners shall not interfere with or obstruct in any manner with the execution and completion of the work of development the said residential/ commercial/Group Housing /Industrial complex and/or booking and sale of developer’s share of D development, built or unbuilt areas of the project. However, if any defect is pointed out in the development while the work is in the progress by the Owners, the same will be removed and rectified by the developer. 22. It is agreed between the parties that the possession of the E said land once delivered/handed over to the developer for the purpose of the aforementioned project shall not be disturbed nor any interference caused by the Owners till the project is complete.
1t is clarified that the ownership in the said land shall F continue to vest exclusively in the Owners and developer shall not be entitled to claim any right, title or interest in the said portion of the said land or any part thereof before successful completion of the project complex as provided herein after which the Ownership in the property shall be of both the G parties as per their respective shares. **** 24. That the Qwners shall be entitled to retain or let out or sell the areatheir respective share to any party either in whole or in parts, but subjectto Para No. 16 hereinabove. If in case H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 733 [S. RAVINDRA BHAT, J. ] the Owners are desirous of sale oftheir residential plots areas A forming part of their allocation, they shall firstoffer the same for purchase to the Developer.
It is however, madeclear that the Developer shall be afforded a period of two weeks from thedate of receipt of written intimation from the owners along with offer in writing, to communicate its decision pertaining B to purchase of the allocation of the owner, in case Developers is in a position to match the highest offer available with the Owners for sale of their property referred to above, it shall be entitled to pay the sale consideration amount within a period of 90 days from the date of receipt of intimation from the owners and to purchase the property being alienated by C the Owners. In case Developers fails to respond within the period of two weeks referred to above calculated from the date of receipt of written intimation by the Developers from the Owners, the Owners shall be at liberty to sell their area to third party.
The developer shall be entitled to enter into any D agreement to sell/lease/rent or to dispose of its share in any manner to receive the payments and to execute the necessary documents in favor of such purchaser. The Owners shall also join hands in executing the documents in favour of such purchaser and shall also do all other acts, deeds and things which may be required to be done in order to confer legal E and perfect title in favour of such purchaser and all receipt shall be issued for an on behalf of the owners and developer conclusively thereby binding both the parties for the transaction. ” (emphasis supplied) F Collaboration Agreement between Balbir Singh, Ram Pyari, Earl and Godrej (dated 24. 06. 2010) “2.
9 The Power of Attorney shall be irrevocable (except inaccordance with the terms of this agreement) and the G Developer shall be entitled to appoint one or more substitutesunder the said Power of Attorney for the exercise of any or all of the powers and authorities thereunder in favour of its Affiliates. ” **** H 734 SUPREME COURT REPORTS [2022] 13 S. C. R. A 4. 2 Marketing It is agreed between the parties hereto that the Developer shallhave the exclusive marketing rights of the Project. It shall alsobe the obligation of the Developer to sell and market the areareserved for Frontier commitments. B **** 6. 7 Developer shall have exclusive possession of the said property and shall allow reasonable access to Frontier as may be required. Developer also agrees to provide for inspection of all Project related information on a quarterly C basis to Frontier. **** 6. 8 The original title documents pertaining to Land B are inthe possession of Land B Owners.
Earl and Frontier shallprocure from Land B Owners to deposit the same withthe D Developer prior to the formation of a society of prospective purchaser of flats in the Project, in conformity with the Applicable law. ” (emphasis supplied) E In light of the above extracts of the documents, it would now be necessary to examine the true nature of the collaboration agreements whereby the owner (title holder) parted with possession to the colonizer / developer for payment of valuable consideration and allocation of a F certain number of constructed units or percentage of built-up area. 29. The common refrain of the colonizers / developers was that while the collaboration agreements were entered into during the suspect period, the title to the lands had never passed onto them. Further, (in some cases) licenses were obtained only after the time for announcing G the award had expired. 30.
The question then revolves around the true nature of these development rights, and whether the directions issued in the main judgment were applicable to their ‘transfer’. In these cases, undoubtedly transfer of such rights was done after the lands were notified under Section 4 (except in the case of Karma where apart from the original development H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 735 [S. RAVINDRA BHAT, J. ] agreement dated 16. 02. 2004, a supplementary agreement was entered A later into on 24. 12. 2006). Additionally, soon after the collaboration agreements were executed, licenses were applied for and issued (License Nos. 88 of 2008, 59 of 2009 and 206 of 2008) after the declaration under Section 6 but before the State’s final decision to not acquire the lands on 29. 01. 2010. B 31. The following are the features common to all the collaboration agreements: i. Possession was handed over to the colonizer / developer; ii.
Full rights of development – the nature, the kind of colony or group housing units to be constructed as well as their C numbers were at the absolute discretion of the colonizer / developer; iii. Substantial amounts were paid to the land owner (and in the case of Frontier, in addition to the original landowners, the intervening developer as well, such as Earl); D iv. Wherever intervening rights existed (such as those of Frontier which had already committed to allot a certain number of developed or constructed units to third parties) the ultimate developer (such as Godrej) took over such liability; E v. The landowners, and wherever applicable, the intervening developer, were in addition, entitled to a share in the proceeds and to a certain number of units of constructed or developed lands defined specifically in the agreement; vi. Power of attorney documents were executed in favour of F the colonizer / developer, to facilitate the latter’s intent to develop the lands; vii.
The consideration paid to landowners in all these cases far exceeded the market value of the lands, prevailing at the time of the notification under Section 4; G viii. The landowner – and wherever applicable, the intervening colonizer / developer – executed registered power of attorneys to the final developer, and in all cases agreed to execute registered sale deeds to the allottees of the colonizer / developer as and when called upon to do so; and H 736 SUPREME COURT REPORTS [2022] 13 S. C. R. A ix. In some cases, on the strength of these collaboration agreements, licenses were applied for by the landowner or by the intervening developer. 32. The nature of collaboration agreements has been discussed by this Court in Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & 6 Anr. In this case, the parties had entered into a collaboration agreement B for the construction of a residential building.
The usual conditions, such as handing over possession, non-interference in the project, handing over title documents to enable sale of constructed units to third parties, etc. were agreed to. Holding that the Consumer Protection Act, 1986 was applicable to the collaboration agreement, and that the parties could not C be viewed as constituting a ‘joint venture’ given the power inequality between them, this Court held as follows: “27. What then is the nature of the agreement between the appellant and the first respondent? The appellant is the owner of the land. He wants a new house, but is not able to construct a new house for himself either on account of paucity of funds D or lack of expertise or resources. He, therefore, enters into an agreement with the builder. He asks the builder to construct a house and give it to him.
He says that as he does not have the money to pay for the construction and will, therefore, permit the builder to construct and own additional floor(s) E as consideration. He also agrees to transfer an undivided share in the land corresponding to the additional floor(s) which falls to the share of the builder. As a result, instead of being the full owner of the land with an old building, he becomes a co-owner of the land with a one-third share in the land and absolute owner of the ground floor of the newly F constructed building and agrees that the builder will become the owner of the upper floors with corresponding two-third share in the land. As the cost of the undivided two-third share in the land which the landowner agrees to transfer to the builder, is more than the cost of construction of the ground G floor by the builder for the landowner, it is also mutually agreed that the builder will pay the landowner an additional cash consideration of Rs 8 lakhs. 28.
The basic underlying purpose of the agreement is the construction of a house or an apartment (ground floor) in 6 H Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr. , (2008) 10 SCC 345. RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 737 [S. RAVINDRA BHAT, J. ] accordance with the specifications, by the builder for the A owner, the consideration for such construction being the transfer of undivided share in land to the builder and grant of permission to the builder to construct two floors. Such agreement whether called as a “collaboration agreement” or a “joint venture agreement”, is not, however, a “joint venture”. B There is a contract for construction of an apartment or house for the appellant, in accordance with the specifications and in terms of the contract. There is a consideration for such construction, flowing from the landowner to the builder (in the form of sale of an undivided share in the land and permission to construct and own the upper floors).
To adjust C the value of the extent of land to be transferred, there is also payment of cash consideration by the builder. But the important aspect is the availment of services of the builder by the landowner for a house construction (construction of the owner’s share of the building) for a consideration. To that D extent, the landowner is a consumer, the builder is a service provider and if there is deficiency in service in regard to construction, the dispute raised by the landowner will be a consumer dispute. We may mention that it makes no difference for this purpose whether the collaboration agreement is for construction and delivery of one apartment or one floor to E the owner or whether it is for construction and delivery of multiple apartments or more than one floor to the owner. The principle would be the same and the contract will be considered as one for house construction for consideration.
The deciding factor is not the number of apartments F deliverable to the landowner, but whether the agreement is in the nature of a joint venture or whether the agreement is basically for construction of certain area for the landowner. ” (emphasis supplied) 33. The above judgment, while clarifying the purpose of G collaboration agreements, falls short of delving into the legal effects of the transfer of such development rights. Parting with rights which are fundamental to ownership, for valuable consideration (in cash or by handing over constructed units), leaving only the nominal ‘title’ with the landowner, is a common feature of such collaboration agreements. Given H 738 SUPREME COURT REPORTS [2022] 13 S. C. R. A the evolution in complexity of real estate contracts, and the absence of the definition of collaboration agreements in legislation, their interpretation by various High Courts assumes significance.
In a question pertaining to the applicability of the Specific Relief Act, 1963 to such contracts, a Full Bench of the Calcutta High Court in Ashok Kumar Jaiswal v. Ashim 7 Kumar Kar while addressing the nature of development agreements, B also answered the question in affirmative: “45. This leads to the unavoidable discussion as to what may be regarded as a Development Agreement as referred to in the questions framed for the reference and the Judgments of this Court cited by the parties. Without intending the discussion C to be an exhaustive treatise on Development Agreements of all hues, it may be recognized there can be several Agreements, which can be loosely described as Development Agreements in the sense that such expression has been used in the judgments cited in course of the present proceedings.
An owner D without any funds or the independent resources to construct a new building on such owner’s land may engage another for such purpose with the consideration for the construction being paid by allocation of a part of the constructed area. There could be several variants of the same basic structure of a Development Agreement with the Agreement either E providing for the owner being entitled to a sum of money in addition to a specified share in the constructed area or with a Developer being required to rid the land of its encumbrances, whether monetary or otherwise, prior to the construction being taken up. There may be other similar F Agreements under which the Developer is required to temporarily relocate an existing tenant or occupant and ultimately provide the tenant or occupant a part of the constructed area.
In the context in which certain Agreements pertaining to the construction of new buildings contemplate the construction to be undertaken or orchestrated by a person G other than the owner of the land, whether upon the demolition of the existing structure or otherwise, with such person other than the owner having a share in the constructed area, such Agreements have now come to be regarded as Development Agreements. Whether or not such Agreements are in the nature 7 H Ashok Kumar Jaiswal v. Ashim Kumar Kar, AIR 2014 Cal 92. RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 739 [S. RAVINDRA BHAT, J. ] of collaboration or joint venture, they are loosely referred to A as Development Agreements in several Judgments. Such Agreements are not merely for the construction of any building or for the mere execution of any other work on the land.
The Developer is not merely a Contractor engaged to undertake the construction; the Developer is, under the Agreement with B the owner, promised a part of the constructed premises as owner thereof together with the proportionate area of the land. In the context in which certain Agreements are referred to as Development Agreements and the non-owner party to such an Agreement is regarded as the Developer qua the nature of the work envisaged under the Agreement, the Developer always C has a share in the building or the area proposed to be constructed – which implies a proportionate share of the piece of earth – and such Agreement envisages the Developer to have a share of, and interest in, the final product which is the outcome of the Agreement. D 46.
In such sense, a Development Agreement which envisages the party thereto other than the owner being responsible for ensuring the construction of a building on the subject land and having a share therein, there is an inescapable contract to transfer immovable property. In form, a Development E Agreement which envisages the Developer to have a share in the building proposed to be constructed in terms of the Agreement, the Agreement may appear to be somewhat not resembling an Agreement for transfer of an immovable property; and, indeed, it is not an Agreement simpliciter for sale of an immovable property. In law, however, a Development F Agreement of the kind described herein entails the transfer of immovable property in the sense that the Developer or an assignee of the Developer, at the instance of the Developer, would be entitled not only to a part of the constructed area but the proportionate share of the land on which the G construction is made. ” (emphasis supplied) 34.
Thus, collaboration agreements which enable the colonizer / developer to retain a significant portion of the constructed area as consideration, are not in the nature of pure construction contracts. An H 740 SUPREME COURT REPORTS [2022] 13 S. C. R. A analysis of these agreements depicts the transfer of crucial rights and interests in the property, which otherwise are enjoyed only by the landowner, falling short only in respect of the ‘title’. 8 35. In Sushil Kumar Agarwal v Meenakshi Sadhu & Ors. , this Court stressed on the necessity to analyze the terms of the collaboration B agreement in order to determine if any ‘charge’ or ‘interest’ had been created in the land. If so, such agreements could attract the application of the Specific Relief Act, 1963: “17. The expression “development agreement” has not been defined statutorily.
In a sense, it is a catch-all nomenclature C which is used to be describe a wide range of agreements which an owner of a property may enter into for development of immovable property. As real estate transactions have grown in complexity, the nature of these agreements has become increasingly intricate. Broadly speaking, (without intending to be exhaustive), development agreements may be of various D kinds: 17. 1. An agreement may envisage that the owner of the immovable property engages someone to carry out the work of construction on the property for monetary consideration. This is a pure construction contract; E 17. 2. An agreement by which the owner or a person holding other rights in an immovable property grants rights to a third party to carry on development for a monetary consideration payable by the developer to the other.
In such a situation, the owner or right holder may in effect create an interest in the F property in favour of the developer for a monetary consideration; 17. 3. An agreement where the owner or a person holding any other rights in an immovable property grants rights to another person to carry out development. In consideration, the G developer has to hand over a part of the constructed area to the owner. The developer is entitled to deal with the balance of the constructed area. In some situations, a society or similar other association is formed and the land is conveyed or leased to the society or association; 8 H Sushil Kumar Agarwal v Meenakshi Sadhu & Ors. , (2019) 2 SCC 241. RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 741 [S. RAVINDRA BHAT, J. ] 17. 4. A development agreement may be entered into in a A situation where the immovable property is occupied by tenants or other right holders. In some cases, the property may be encroached upon.
The developer may take on the entire responsibility to settle with the occupants and to thereafter carry out construction; and B 17. 5. An owner may negotiate with a developer to develop a plot of land which is occupied by slum dwellers and which has been declared as a slum. Alternately, there may be old and dilapidated buildings which are occupied by a number of occupants or tenants. The developer may undertake to C rehabilitate the occupants or, as the case may be, the slum dwellers and thereafter share the saleable constructed area with the owner. 18. When a pure construction contract is entered into, the contractor has no interest in either the land or the construction D which is carried out. But in various other categories of development agreements, the developer may have acquired a valuable right either in the property or in the constructed area.
The terms of the agreement are crucial in determining whether any interest has been created in the land or in respect of rights in the land in favour of the developer and if so, the E nature and extent of the rights. 19. In a construction contract, the contractor has no interest in either the land or the construction carried out on the land. But, in other species of development agreements, the developer may have acquired a valuable right either in the property or F the constructed area. There are various incidents of ownership in respect of an immovable property. Primarily, ownership imports the right of exclusive possession and the enjoyment of the thing owned. The owner in possession of the thing has the right to exclude all others from its possession and G enjoyment. The right to ownership of a property carries with it the right to its enjoyment, right to its access and to other beneficial enjoyments incidental to it. (B. Gangadhar v. B. G. Rajalingam [B. Gangadhar v. B. G.
Rajalingam, (1995) 5 SCC 238, para 6] . ) Ownership denotes the relationship between a person and an object forming the subject-matter of the H 742 SUPREME COURT REPORTS [2022] 13 S. C. R. A ownership. It consists of a complex of rights, all of which are rights in rem, being good against the world and not merely against specific persons. There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned; and a right to consume, destroy or alienate B it. (Swadesh Ranjan Sinha v. Haradeb Banerjee [Swadesh Ranjan Sinha v. Haradeb Banerjee, (1991) 4 SCC 572] . ) An essential incident of ownership of land is the right to exploit the development, potential to construct and to deal with the constructed area. In some situations, under a C development agreement, an owner may part with such rights to a developer.
This in essence is a parting of some of the incidents of ownership of the immovable property. There could be situations where pursuant to the grant of such rights, the developer has incurred a substantial investment, altered the state of the property and even created third-party rights in D the property or the construction to be carried out. There could be situations where it is the developer who by his efforts has rendered a property developable by taking steps in law. In development agreements of this nature, where an interest is created in the land or in the development in favour of the E developer, it may be difficult to hold that the agreement is not capable of being specifically performed.
For example, the developer may have evicted or settled with occupants, got land which was agricultural converted into non-agricultural use, carried out a partial development of the property and pursuant to the rights conferred under the agreement, created F third-party rights in favour of flat purchasers in the proposed building. In such a situation, if for no fault of the developer, the owner seeks to resile from the agreement and terminates the development agreement, it may be difficult to hold that the developer is not entitled to enforce his rights. This of G course is dependent on the terms of the agreement in each case. There cannot be a uniform formula for determining whether an agreement granting development rights can be specifically enforced and it would depend on the nature of the agreement in each case and the rights created under it. ” (emphasis supplied) H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 743 [S. RAVINDRA BHAT, J. ] 36.
The recognition of transfer of valuable rights by collaboration A agreements was also commented upon in Unitech Ltd. v. Union of 9 India, whereinthis Court was concerned with whether a collaboration agreement constituted ‘transfer’ of property under Chapter XX-C of the Income Tax Act, 1961. Vidarbha Engineering Industries entered into a collaboration agreement with Unitech on 17. 03. 1994 for development B and construction of a commercial project at Dahipura and Untkhana in Nagpur. Unitech was to retain 78% of the total constructed area, transferring the rest 22% to Vidarbha. It is imperative to note that Vidarbha itself had leased said land from Nagpur Improvement Trust for a period of thirty years, and could not transfer title to any third party such as Unitech. The Court interpreted Section 269-UA of the Income Tax Act, C 1961 which included transfer of any ‘right’ or enabling enjoyment of immovable property, as follows: “6.
It is clear from the agreement that the transfer of rights of Vidarbha Engineering in its land does not amount to any sale, exchange or lease of such land, since, only possessory rights D have been granted to Unitech to construct the building on the land. Nor is there any clause in the agreement expressly transferring 22% of the building to Vidarbha after it is constructed by Unitech. Clause 4. 6 only mentions that as a consideration for Unitech agreeing to develop the property it E shall retain 78% and the share of Vidarbha Engineering will be 22%. In fact Parliament has defined “transfer”, deliberately wide enough to include within its scope such agreements or arrangements which have the effect of transferring all the important rights in land for future considerations such as part acquisition of shares in buildings F to be constructed, vide sub-clause (ii) of clause (f) of sub-section (2) of Section 269-UA.
There is no doubt that the collaboration agreement can be construed as an agreement and in any case an arrangement which has the effect of transferring and in any case enabling the enjoyment, of such G property. Undoubtedly, the collaboration agreement enables Unitech to enjoy the property of Vidarbha Engineering for the purpose of construction. There is also no doubt that an agreement is an arrangement. It must, therefore, be held that 9 Unitech Ltd. v. Union of India, (2016) 2 SCC 569. H 744 SUPREME COURT REPORTS [2022] 13 S. C. R. A the collaboration agreement effectuates a transfer of the subject land from Vidarbha Engineering to Unitech within the meaning of the term in Section 269-UA of the Act. It appears to be the intention of parliament to cover all such transactions by which valuable rights in property are in fact transferred by one party to another for consideration, under the word B “transfer”, for fulfilling the purpose of pre-emptive purchase i. e.
prevention of tax evasion. A judgment of the Patna High Court in Ashis Mukerji v. Union of India [Ashis Mukerji v. Union of India, (1996) 222 ITR 168 (Pat)] cited before us takes the view that a development agreement is C covered by the definition of “transfer” in Section 269-UA. We note the same with approval. ” (emphasis supplied) Thus, for the purposes of the Income Tax Act, the collaboration agreement was considered as a ‘transfer’, even though no title vested D with Vidarbha in order to pass the same to Unitech. 37. The features set out earlier in this judgment demonstrate that the landowner in all the cases were aware that the notification was issued under Section 4 on 27. 08. 2004. No doubt, such landowners did not acquire the land after such notification. However, during the E subsistence of the notification, which constituted the manifest intention of the State to acquire the lands, the third parties’ rights were consciously created for substantial consideration.
In the case of Paradise, the initial sum paid was 75 lakhs, and in the subsequent agreement with Green Heights, the sum paid was 28 crores for parting with development rights relating to 2. 681 acres. Similarly, in the case of Balbir Singh and F Ram Pyari, the initial agreement with Frontier entitled the landowners to 1000 sq. yds out of each developed acre plus 52 lakhs, and in the subsequent agreement with Godrej, the landowners were entitled to 55,328. 60 sq. ft. of built up units, and Frontier was entitled to 30% share of the receipts in the project. In the case of Karma, the developer Unitech G paid 15 crores and was entitled to a share of receipts of developed units sold. 38. The main judgment of this Court has carefully considered and gone into great lengths to examine the file notings which led to the final decision of the State not to acquire such lands. In the case of Frontier, H RAMESHWAR AND ORS. v. STATE OF HARYANA & ORS. 745 [S. RAVINDRA BHAT, J.
] the records clearly demonstrate that a noting was approved by the State A Government at the highest level that All India Service Officers of the Jammu & Kashmir cadre had requested for lands for their residential housing society. This request was the main basis for the decision not to acquire Frontier’s lands which was the subject matter of License No. 88 of 2008. After said decision, Frontier parted with all its rights to Godrej, B as did the owners of other parcels of land, i. e. , Balbir Singh and Ram Pyari. These facts clearly demonstrate how the entire state machinery was subverted. The collaboration agreement with Godrej shows that 50 residential units were committed to the Jammu & Kashmir cadre of All India Service Officers (just above 10% of the total number of flats ultimately constructed).
Likewise, in the case of Paradise, Frontier and C Karma too, entering into collaboration agreements and the seeking grant of licenses formed the basis for the State’s final decision not to go ahead with the acquisition even though a declaration under Section 6 had been published. 39. It is clear that the collaboration agreements formed the first D element of a two-step process whereby the colonizers / developers (who might have been also land owners) having acquired lands, prior to the preliminary notification, went ahead and entered into commitments by executing collaboration agreements afterthe notification under Section 4, and even declaration under Section 6, with full knowledge. The E consideration for parting with developmental rights was far higher than the market value of the lands which they would have been entitled to. These acts ultimately culminated with the decision not to acquire the lands.
The second step – and the important one persuading the State not 10 to acquire the lands - was the application for, and the grant of, development licenses. Uniformly, in all these cases, the applications were F made prior to the scheduled date of publication of the award (26. 08. 2007). This is a significant and tell-tale factor because there was no way the applicants would have ordinarily known that an award would not be pronounced on the concerned date. In fact, the application clearly indicates foreknowledge that their lands would not be ultimately acquired. G This is what may be characterized as the proverbial ‘smoking gun’ which establishes the complicity of these individuals and entities. 10 In the case of Frontier Developers (earlier known as Conway), the request for denotification was made, by a letter dated 17. 08. 2007, to the state of Haryana - a fact noted in the status report filed by the Enforcement Directorate (hereinafter, “ED”) before the Court. H 746 SUPR
Source: Supreme Court of India. Dataset: Dattam Labs. CC BY 4.0. Text extracted automatically; compare with the source PDF for layout and accuracy.