JAGADGURU SRI SHIVARATRESHWARA v. BANGALORE DEVELOPMENT AUTHORITY

Sri G.Krishnamurthy, learned Senior Counsel appearing for Smt.G.K.Bhavana, learned counsel for petitioner submitted that since both writ petitions were by same petitioner in respect of same civic amenity site, narration of facts would be by reference to Annexures appended to W.P.no.12395/2022, to avoid repetition. - 4 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020

3. It was submitted that petitioner was a Society established in year 1954 and registered under Societies Registration Act, 1960. It was submitted that petitioner was allotted portion of CA site no.9, Banashankari II Stage, Bangalore, for running educational institution under allotment letter dated 18.06.1977 as per Annexure-A. Thereafter, lease deed dated 06.11.1980 as per Annexure-C was executed and on 15.07.1981 issued possession certificate in respect of area measuring 175 ft. X 250 ft. It was submitted that petitioner has established Jagadguru Shree Shivarathreeshwara Public School from Nursery to Std. X under CBSE Syllabus.

4. It was submitted that period of lease was 30 years and would expire on 14.07.2011. Prior to said date, petitioner approached respondent no.1 - Bangalore Development Authority ('BDA' for short) for extension. Under intimation letter dated 29.04.2011 as per Annexure-E, petitioner was called upon to submit records for extension. Same were furnished under letter dated 14.06.2011 as per Annexure-F. Even though, petitioner was pursuing for extension, only on

02.09.2015, BDA issued letter calling upon petitioners to pay lumpsum lease rent of `4,21,84,246/- or `76,48,004/- per annum at rate of `10,382/- per sq mtr. referring to BDA order - 5 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 dated 13.01.2012. After securing copy of order, it was seen that enhancement of lease rent in respect of civic amenity sites ('CA sites' for short) come into effect from 20.12.2011, whereas extension of lease in favour of petitioner was to be from 14.07.2011. It was also noted that BDA had adopted Sub- Registrar guidance value of year 2015, instead of year 2011 for adding 10% thereof, and fixed lease rent of `2,500/- per sq.mtr. Thus, demand was excessive and erroneous. Lease rent properly calculated would be at `1,74,96,182/-. It was also found out that norm for fixation of renewal lease rent of CA sites by Development Authorities established under Karnataka Urban Development Authorities Act, was 1½ times of previous lease rent. But, BDA called upon petitioner to pay sum of `4,21,84,246/-. Even in subsequent letter dated 23.07.2016, it sought for fixation of renewal lease rent at 1½ times of previous lease rent.

5. But, BDA responded by issuing show-cause notice dated 05.11.2016 threatening cancellation for failure to pay renewal lease amount within 90 days as per Rule 10 (12) of Bangalore Development Authority (Allotment of Civic Amenity Sites) Rules, 1989, ('CA Site Rules' for short). In response, petitioner drew attention of BDA to its letters/representations - 6 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 submitted from time to time seeking renewal to contend that delay was not on its part and referring to Rule 10(14) of CA Site Rules providing for fixation of lease rent at 1½ times of original amount. And when BDA issued endorsement dated

07.02.2017 insisting payment of renewal lease amount of `4,21,84,246/-, under threat of cancellation of lease, petitioner paid demanded sum along with its letter dated 18.09.2017 at Annexure-P.

6. On 24.01.2018, BDA issued fresh endorsement as per Annexure-Q, calling upon petitioner to pay `1,62,51,838/- towards interest on renewal lease rent from 02.12.2015 to

24.09.2017 i.e., for 662 days. Though, petitioner sought BDA to rectify errors in demand by submitting representations on

20.10.2018 and 07.12.2019, issued final notice on

18.05.2020, reiterating demand of `1,62,50,620/- towards interest on delayed payment.

7. Challenging demand letter dated 02.09.2015; endorsements dated 07.02.2017 and 24.01.2018; and final notice dated 18.05.2020, petitioner filed W.P.no.8279/2020. And on 02.07.2020, interim order of stay of demand insofar as interest was granted. Thereafter, Government of Karnataka, issued order dated 09.12.2021, offering rebate of 50%, in case, - 7 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 if allottees of CA sites paid remaining 50% of interest portion within 180 days of publication of offer.

8. Interestingly, on 11.05.2022, BDA issued letter as per Annexure-Y calling upon petitioner to pay balance amount of `2,85,12,892/- towards 50% of interest portion within 180 days of publication on 15.01.2022, and with precondition of withdrawing W.P.no.8279/2020. Assailing said demand, and for seeking direction to respondents to execute registered lease deed for renewal period by refunding excess paid amount, petitioner filed W.P.no.12395/2022.

9. It was submitted that demand for enhanced renewal lease rent was based on resolution of BDA, which specified that it would come into effect from 20.12.2011, whereas, lease period of petitioner was to be extended from

14.07.2011. Without prejudice to above ground, it was submitted that BDA had adopted Sub-registrar guidance value of year 2015 instead of 2011 and therefore, on that count also demand was excessive and erroneous. Further, norm for fixation of renewal lease rent under Karnataka Urban Development Authorities Act, was 1½ of previous lease rent. When lease rent was `77,776/- per annum earlier, demand of `4,21,84,246/- was more than 540 times and therefore grossly - 8 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 excessive and disproportionate. It was further submitted that petitioner had promptly approached respondents for renewal of lease before its expiry and also tendered all necessary records, imposition of penal rate of interest for demand issued by respondents belatedly was also arbitrary. Said demand, in any case, also suffered from arithmetical errors. It was submitted that demand of `4,21,84,246/- was issued for first time on

02.09.2015. Same was without mentioning any claim towards interest. When petitioner had bonafide contested said demand by making representation against it being excessive and during pursuit of same, was compelled to pay it, respondents would not be justified in levying penal interest for period when respondents themselves were at fault. It was submitted that respondents had initially issued endorsement dated 24.01.2018 calling upon petitioner to pay interest for 662 days, i.e., from

02.12.2015 to 24.09.2017. However, under notice dated

14.05.2022, petitioner was called upon to pay interest for 2,259 days, which was erroneous and arbitrary. It was further submitted that on pretext of non-payment of excessive and exorbitant interest levied as stated above, respondents had not executed renewal lease deed. It was further submitted that during pendency of earlier W.P.no.8279/2020 and when interim - 9 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 order was in vogue, Government of Karnataka had evolved a scheme offering rebate of 50% on interest portion, in case, allottees of CA sites were to pay remaining 50% of interest portion within 180 days and to get renew lease deed executed. It was submitted that respondents had not taken note of said benefit available to petitioner.

10. It was further contended that there was adoption of erroneous method for assessment of lease rent and same was not in conformity with order at Annexure - H. Admittedly, petitioner was a Society registered under Societies Act and had established English Medium School, which was exempted from category - I classification in Circular, whereas category - III would apply to schools running in Kannada Medium etc. Thus, petitioner-institution could at best be considered under category - II attracting lease rent of `2,500/- per sq.mtr. + 10% of guidance value. Strangely, assessment of renewal lease rent of `4,21,84,246/- was by considering petitioner as falling within category - I, that too by adopting Sub-registrars guidance value of year 2015, which was irrelevant and excessive.

11. For aforesaid reasons, impugned demand was unsustainable and sought for allowing writ petition. - 10 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020

12. On other hand, Sri B.S. Sachin, learned counsel for respondent - BDA sought to oppose writ petition. It was submitted at outset that petitioner's challenge against renewal lease rent after having paid same without protest and that too after lapse of 3 years would be liable to be dismissed on ground of acquiescence.

13. It was submitted that as per extent procedure, petitioner was required to hand over original possession certificate, lease agreement etc. to BDA for consideration of application for renewal. Admittedly, petitioner defaulted in this regard. Further renewal of agreement was to be executed from date of expiry of earlier lease, which was 14.07.2011. Therefore, respondent-BDA was justified in demanding interest for belated payment as per Rule 10 (3) of CA Site Rules. On above grounds sought for dismissal of writ petition.

14. Heard learned counsel and perused writ petition record.

15. From above, it is clear that petitioner is questioning demand issued by BDA insofar as renewal of lease rent of CA site on quantum as well as interest leviable on it, while BDA seeks to justify same by referring to its order dated 13.01.2012 and Rule 10 (3) of CA Site Rules. - 11 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020

16. Insofar as challenge on ground of quantum of renewing lease rent, it is seen that agreement of lease at Annexure - C does contains provides for escalation of lease rent in Clauses 4 & 10. Thus lessor-BDA would be justified in revising lease rent. However, as BDA is a public authority, escalation cannot be arbitrary. For said purposes, it would be entitled to adopt norms and order dated 13.01.2012 at Annexure - H would be a valid exercise of power in this regard.

17. Challenge against order at Annexure-H is on ground that it does not provide details of basis and calculation. Careful perusal of said order would indicate that for purposes of fixation of renewal lease rent in respect of CA sites, BDA has divided lessee-institution into three categories and stipulated differential rates by adopting two factors. Firstly, basic fixed amount and secondly, addition of 10% of Sub-Registrar Guidance Value of property to basic fixed amount. Since there is no challenge against adoption of criterion for fixation of renewal lease amount on ground of arbitrariness or as being irrational or being unreasonable, it would suffice for present purposes to note that definite criterion providing basis for calculation of renewal lease rent are provided in order at Annexure-H. Thus, first prayer sought deserves to be rejected. - 12 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020

18. Challenge against demand of renewal lease rent by petitioner, however appears to be on different ground, namely that revision of renewal lease rent rates in terms of order dated

13.01.2012 at Annexure-H were to come into effect from

20.12.2011. As lease in favour of petitioner was up for renewal prior to said date, revised rates would not apply to it. Such contention though on first blush would appear substantial would require to be rejected on ground that Clauses no.4 and 10 of lease agreement at Annexure-C empower BDA to revise lease rent. It is also seen from notice at Annexure - T, that revise rates are applied uniformly in respect of all CA sites, by BDA. Therefore, demand on basis of order at Annexure - H would be justified.

19. Insofar as classification of petitioner in category-I, careful reading of order at Annexure - H would indicate that petitioner being a Society registered under Karnataka Societies Registration Act, would fall in category-II, prior to revision. But, as per revised classification, Educational Institutions running in Kannada Medium and registered under Societies Act, etc. would fall in category-III; while State and Central Government Department/Bodies and Institutions established for benefit of SC/ST etc. would fall in category-II and Educational Institutions - 13 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 running schools or colleges in English Medium are placed in category-I. Petitioner - Institution would answer said category- I, more closely than other two categories. Therefore application of renewal lease rent at `5,000/- + 10% of Sub-registrars Guidance value would be justified.

20. Insofar as error in adoption of guidance value, revised demand issued by BDA on 11.05.2022 at Annexure - Y, would indicate particulars of renewal lease rent at `8,229/- per sq. mtr. (i.e. `5,000/- + `3,229/-), thereby vindicating that demand as per endorsement dated 07.02.2017 was erroneous for having adopted guidance value of year 2015 instead of

2011. Thus, it is held that petitioner would be liable to pay renewal lease rent at `3,34,36,155/-, instead of `4,21,84,246/-.

21. Insofar as petitioner's prayer for refund, it is seen that in demand issued by BDA on 02.09.2015, was as follows: Area in Sq.mtr. Lease Amt. (one lumpsum) Annual Amt.

4063.21x10382 `4,21,84,246/- `76,48,004/- Lease Addl. Amt. `406/-

22. Though, petitioner seems to have agitated against said assessment, but full payment was made on 18.09.2017 as per Annexure – P. Contrary to submission of learned counsel, perusal of same does not reveal that such payment was made - 14 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 under protest. Therefore, whether petitioner would be entitled for claiming refund of amount paid without protest would require consideration.

23. Hon'ble Supreme Court in case of Salonah Tea Co. vs. Superintendent of Taxes1, has held that payment was made by a party labouring under mistake of law, it would be entitled to recover same and party receiving it would be bound to repay or return it. In instant case, demand notice at Annexure - G does not disclose break up of assessment, but only mentions total as `10,382/- per sq. mtr. After securing copy of order of BDA referred in said demand, petitioner claims to have realized that basis for said demand was erroneous and has been agitating against said demand. Merely on ground that petitioner had paid amount demanded, its claim refund/adjustment cannot be held as time barred, especially when W.P.no.8279/2020 was filed within three years of making payment.

24. Insofar as interest leviable on demand, same would be governed by Rule 10(3) of CA Site Rules, which provides that if lease amount or annual installment is not paid within 1 (1988) 1 SCC 401 - 15 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 period of 90 days, further extension of time not exceeding 60 days may be granted on payment of interest at rate of 18% per annum on amount for extended period. While, it is seen that petitioner had approached respondents seeking for renewal of lease before its expiry, respondents were able to issue demand only on 02.09.2015 as per Annexure - G. Admittedly, payment was made as per Annexure - P on 18.09.2017, i.e., after delay of 662 days. While contention of learned counsel for petitioner against levy of penal interest even for period when BDA itself was at fault in not issuing demand and such demand in any case would be time bared would appear substantial. In fact, while issuing demand on 24.01.2018, BDA had itself demanded interest only for 662 days. Therefore, it would be estopped from demanding interest for entire period from 19.07.2011 till payment. For period from demand till payment i.e. for 662 days, rate of interest would be at 18% p.a. as per Rule 10(3) of CA Site Rules.

25. But, in its statement of objections, BDA has stated that impugned demand at Annexure - Y was by giving benefit of rebate on interest as per G.O. dated 09.12.2021. Applying above on revised demand of `3,34,36,155/-, petitioner would be liable to pay as follows: - 16 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 `3,34,36,155/- + 50% of 18% i.e. 9% p.a. for 662 days: `3,34,36,155/- + `54,57,880/- = ````3,88,94,034/-. But, petitioner has paid `4,21,84,246/- and deducting amount payable would leave an excess payment of `32,90,211/- with BDA.

26. Hence, both writ petitions are allowed in part. i) Annexure-H dated 02.09.2015, Annexure-P

07.02.2017, Annexure-R

24.01.2018 and Annexure-V dated 18.05.2020 in W.P.no.8279/2020 and Annexure-Y dated

11.05.2022 in W.P.no.12395/2022 are to be read as demanding renewal lease rent of `3,34,36,155/- only with interest for period of 662 days only at 50% of rate of interest applicable under Rule 10(3) of CA Site Rules, in view of G.O dated 09.12.2021. ii) Since petitioner has made payment of entire renewal lease rent, respondent – BDA shall execute renewal lease deed in favour of petitioner within Six weeks from date of receipt of certified copy of this order. - 17 - NC: 2024:KHC:860 WP No. 12395 of 2022 C/W WP No. 8279 of 2020 iii) BDA shall refund excess received amount of `32,90,211/- to petitioner within four weeks from today, in which case, said amount shall not carry any interest. iv) In case of default, BDA would be liable to pay simple interest thereon at 9% p.a.