- 1 - NC: 2025:KHC:6158 WP No. 39309 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF FEBRUARY, 2025 BEFORE THE HON'BLE MR JUSTICE M.G.S. KAMAL WRIT PETITION NO. 39309 OF 2018 (BDA) BETWEEN: M/S MICO NAUKARARA GRUHA NIRMANA SAHAKARA SANGHA NIYAMITHA, FORMERLY KNOWN AS BANGALORE MICO SHRMA JEEVI KARMIKARA SAHAKARA SANGHA NIYAMITHA (REGD), HAVING ITS REGISTERED OFFICE AT NO. 341/24/1 OPP ULUCHUKAMME CHOULTRY, 8TH CROSS, WILSON GARDEN, BANGALORE - 560 027. REP BY ITS AUTHORISED SIGNATORY AND VICE PRESIDENT: SHRI. S B SHIVAKUMARAIAH …PETITIONER (BY SRI. SHYAM KOUNDINYA A S.,ADVOCATE) AND: 1. STATE OF KARNAATAKA DEPARTMENT OF URBAN DEVELOPMENT, MULTISTORIED BUILDING, DR. AMBEDKAR VEEDHI, BANGALORE - 560 001. REP BY ITS CHIEF SECRETARY. 2. BANGALORE DEVELOPMENT AUTHORITY HAVING ITS REGISTERED OFFICE AT T. CHOWDAIAH ROAD, Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:6158 WP No. 39309 of 2018 KUMARA PARK (WEST), BANGALORE - 560 027 REP BY ITS COMMISSIONER. 3. TOWN PLANNING MEMBER BANGALROE DEVELOPMENT AUTHORITY, OFFICE OF THE BANGALORE DEVELOPMENT AUTHORITY, T. CHOWDAIAH ROAD, KUMARA PARK (WEST), BANGALORE - 560 027. 4. DISTRICT REGISTRAR BANGALORE OFFICE OF THE DISTRICT REGISTRAR, 12TH MAIN ROAD, 4TH T-BLOCK, JAYANAGAR EAST, BANGLAORE - 560 011. …RESPONDENTS (BY SMT. B. SUKANYA BALIGA AGA FOR R1 AND R4; SRI. GOWTHAMDEV C. ULLAL., ADVOCATE FOR R2 & R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSITUTION OF INDIA PRAYING TO QUASH THE COMMUNICATION OF THE RESPONDENT NO.3 DATED 25.01.2018 TO THE EXTENT OF THE RESTRAIN DIRECTIONS AGAINST THE RESPONDENT NO.4 AT ANNEXURE-A AND ETC. THIS PETITION, COMING ON FOR FINAL HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.G.S. KAMAL - 3 - NC: 2025:KHC:6158 WP No. 39309 of 2018 ORAL ORDER Petitioner is before this Court seeking following reliefs; "i) issue a writ of certiorari or such other writ, quashing the Communication of the Respondent No.3 dated 25.01.2018 bearing reference No.BDA/NOC/PRL-36/2004-05/1911/2017-2018 to the extent of the restraint directions against the Respondent No.4 at Annexure-A AMENDED VIDE ORDER DATED 27.11.2018 ii) to issue a writ of certiorari or such other writ, quashing the demand notice issued by the Respondent No.3 dated 5.11.2018 bearing reference No.BDA/NOC/PRL-36/2004-05/MIS- 131/1400/2018-19 at ANNEXURE-G as being void and without any authority of law and grant such other relief/s as this Hon'ble Court deems fit to grant in the circumstances of the case including allowing this writ petition with costs in the interest of justice." 2. Case of the petitioner is that; (a) Petitioner being a Co-operative Housing Society registered under the provisions of Karnataka Co-operative Societies Act, 1959, constituted for the welfare of its members had acquired certain lands through private transactions for the purpose of formation for residential layouts and allotment of sites to its members at a reasonable price/s. In furtherance thereof, petitioner- - 4 - NC: 2025:KHC:6158 WP No. 39309 of 2018 society had apparently formed a layout in the land measuring an extent of about 69 acres 13 guntas at Begur Village and Hongasandra village. That petitioner- society had applied for sanction of layout plan by the respondent-BDA, in response to which, respondent- BDA had called upon the petitioner-society to pay a sum of Rs.3,97,29,422/- towards Supervision Charges, Improvement Charges, Examination Charges and Slum Clearance Development Charges and Mass Road Transport System Cess. b). That a demand was raised by the respondent- BDA in terms of a notice dated 17.11.1994 claiming the aforesaid amount. In pursuant thereof, a document titled "Indemnity Bond" came to be executed between the petitioner-society and the respondent -BDA in the year 1995, in terms of which petitioner had paid Rs.80 lakhs towards the part payment of the aforesaid demand and had agreed to pay the balance amount of Rs.3,17,29,472/- in four equal instalments within a period of one year. Non-payment of which gave rise to the dispute. - 5 - NC: 2025:KHC:6158 WP No. 39309 of 2018 c) That several cooperative societies/ land developers as that of the petitioner-society had approached this Court by filing writ petitions in W.P.Nos.11144/1993 connected with other writ petitions challenging the very source power under which the respondent -BDA had raised such demands. That Division Bench of this Court by its order dated 20.04.2001 had allowed those writ petitions by holding that the demands made by the respondent- BDA under Section 32(5-A) of the Bangalore Development Authority Act, 1976 was illegal as the same was contrary to the provisions of Article 14 of the Constitution of India and hence declared the same to be void and inoperative, consequently it was directed no demand thereafter should be raised by the respondent-BDA. Even the amount which was collected was directed to be refunded to the parties. Being aggrieved by the same, respondent -BDA carried the matter to the Apex Court in Civil Appeal Nos.7503- 7537/2002. The Apex Court framed following four questions for its consideration in the matter; "1) Whether Section 32(5A) of the 1976 Act is violative of Article 14 of the constitution; - 6 - NC: 2025:KHC:6158 WP No. 39309 of 2018 2) Whether Section 32(5A) of the 1976 Act suffers from the vice of excessive delegation of legislative power; 3) Whether the demand of charges under the Cauvery Scheme etc., amounts to tax and is, therefore, ultra virus the provisions of the Article 265 of the Constitution; and 4) Whether the BDA has collected charges of the house building societies and the allottees of sites of the layouts prepared by it far in excess of its contribution towards the Cauvery Scheme, MRTS, etc.," d) While answering aforesaid questions the Apex Court has answered the question Nos.1, 2 and 3 in the negative. However, while dealing with question No.4 at paragraphs 89, 90 and 91 of its judgment, allowed the appeal and dismissed the writ petitions filed by the respondents therein with directions to the respondent- State Government to take appropriate decision in the matter. e) Notwithstanding the directions issued by the Apex Court, respondent -BDA issued notice dated 25.01.2018 to the President of the petitioner-society produced at Annexure-A calling upon to pay a sum of Rs.3,17,29,422/- within seven days together with - 7 - NC: 2025:KHC:6158 WP No. 39309 of 2018 interest. Subsequently, yet another notice was issued by the respondent -BDA on 05.11.2018 produced at Annexure-G. Being aggrieved by the same, petitioner is before this Court. 3. Sri.Shyam Koundinya A.S, learned counsel for the petitioner reiterating the grounds urged in the memorandum of petition and extensively taking this Court through the orders passed by the Apex Court and various other judgments on the question of authority to levy fee and tax as held by the Apex Court in the various judgments vehemently submitted; (a) that the demand raised by the respondent -BDA impugned in this writ petition still suffers from lack of authority. He submits that though the Apex Court had set aside the order of the Division Bench, the operative portion of the order would indicate that unless the respondent -BDA and the respondent-State Government had complied with the directions by passing appropriate orders with regard to fixing the rates of demand made in respect of Supervision Charges, Improvement Charges, Examination Charges and Slum Clearance Development - 8 - NC: 2025:KHC:6158 WP No. 39309 of 2018 Charges and Mass Road Transport System Cess and communicating the same to the petitioner-society, the issuance of impugned demand notice is illegal. In other words, non-compliance of the directions of the Apex Court would render the provision enabling the respondent -BDA to raise the demand as illegal. (b) It is his submission that respondent -BDA cannot rely upon the terms of Indemnity Bond in isolation to the orders and directions issued by the Apex Court. Such an approach would negate the very direction issued by the Apex Court. Since the respondent -BDA being party to this proceedings not having raised the issue with regard to their so-called entitlement to demand the amount independent of the orders passed by the Apex Court, cannot now turn around and base their claim on the indemnity bond. c) He refers to the demand notice originally issued by the respondent -BDA on 17.11.1994 and submits that said demand was issued much prior to entering into indemnity bond, wherein even according to the - 9 - NC: 2025:KHC:6158 WP No. 39309 of 2018 respondent -BDA the amount demanded thereunder was provisional. Indemnity bond was only to ensure payment of this provisional amount subject to respondent -BDA communicating the petitioner the actual amount to be paid. He submits in any case the petitioner admittedly paid Rs.80 lakhs which the respondent -BDA is holding till date and without communicating the petitioner the actual amount to be paid as directed by the Apex Court, respondent -BDA cannot retain the same. Hence, seeks for allowing of the petition. 4. Per contra, Sri. Gouthamdev C. Ullal, learned counsel appearing for the respondent -BDA and Smt. B. Sukanya Baliga, learned AGA appearing for the respondent - State refer to a notification dated 21.06.2021 issued by the respondent -State Government published as required under sub-section (1) of Section 74 r/w Section 18 and 18A of the Karnataka Town and Country Planning Act, 1961 and submit that by virtue of said notification, Rule 37(A) of the Karnataka Planning Authorities Rules, 1965 has been amended by substituting table providing for percentage of market value per square meter of non-agricultural land to be collected towards - 10 - NC: 2025:KHC:6158 WP No. 39309 of 2018 the fee contemplated under Section 18 and 18A of the Karnataka Town and Country Planning Act, 1961. Thus, Learned counsel insist there has been a compliance by the respondent -State and respondent -BDA with regard to direction issued by the Apex Court at paragraph 89 of the judgment referred to above. Hence, seeks for dismissal of the petition. 5. Heard. Perused the records. 6. The impugned demands dated 25.01.2018 and 05.11.2018 as per Annexures-A and G respectively raised by the respondent -BDA apparently on the basis of an agreement that had been executed by the petitioner-society in favour of respondent-BDA on 30.10.1995 undertaking to pay sum of Rs.3,97,29,422.00 towards the tentative layout charges in consideration of respondent -BDA approving the layout plan. That the petitioner -society having paid a sum of Rs.80 lakhs being 20% of the aforesaid amount had apparently executed an indemnity bond agreeing to pay balance sum of Rs.3,17,29,422.00. Facts reveal that petitioner-society along with other similar House Building Co-Operative Societies had - 11 - NC: 2025:KHC:6158 WP No. 39309 of 2018 challenged the competency of respondent-BDA to impose and make demands for payment of the amounts as above. The Division Bench of this Court by order dated 20.04.2001 had allowed their writ petitions holding that the imposition of condition for payment of amounts relating to grant or approval of residential layouts as illegal, null and void. 7. The Apex Court had however reverse the aforesaid order of the Division Bench by its judgment dated 24.01.2012 in the case of Bangalore Development Authority vs. The Air Craft Employees Cooperative Society Ltd., and others, reported in 2012 (3) SCC 442. At the outset, it is necessary to extract paragraphs 89, 90 and 91 of the aforesaid judgment which read as under; "89. The only issue which survives for consideration is whether the charges demanded by the BDA are totally disproportionate to its contribution towards Cauvery Water Scheme, Ring Road, Mass Rapid Transport System, etc. We may have examined the issue in detail but in view of the affidavit dated 11.11.2009 filed by Shri Siddaiah, the then Commissioner, BDA to the effect that only Rs.34.55 crores have been collected between February, 1988 to 4.6.2005 towards the Cauvery Scheme and a sum of Rs.15.15 crores has been collected by way of Ring Road surcharge between 1992-93 and 2005-06 and that the State Government has directed that henceforth Ring Road surcharge, the Cauvery - 12 - NC: 2025:KHC:6158 WP No. 39309 of 2018 Water Cess and MRTS Cess should not be levied till appropriate decision is taken, we do not consider it necessary to adjudicate the controversy, more so, because in the written arguments filed on behalf of the BDA it has been categorically stated that the Government has to take a decision about the pending demands and the Court may issue appropriate direction in the matter, which the BDA will comply. In our view, ends of justice will be served by directing the State Government to take appropriate decision in the light of communication dated 03.05.2005. 90. So far as the levy of supervision charges, improvement charges, examination charges, slum clearance development charges and MRTS cess is concerned, it is appropriate to mention that the High Court has not assigned any reason for declaring the levy of these charges to be illegal. Therefore, that part of the impugned order cannot be sustained. Nevertheless, we feel that the State Government should take appropriate decision in the matter of levy of these charges as well and determine whether the same were disproportionate to the expenses incurred by it, the BDA or any other agency/instrumentality of the State. 91. In the result, the appeals are allowed, the impugned order is set aside and the writ petitions filed by the respondents are dismissed subject to the direction that within three months from the date of receipt/production of the copy of this judgment, the State Government shall take appropriate decision in the context of communication dated 03.05.2005. Within this period, the State Government shall also decide whether the levy of supervision charges, improvement charges, examination charges, slum clearance development charges and MRTS cess at the rates specified in the communications of the BDA was excessive. The decision of the State Government should be communicated to the respondents within next four weeks. If any of the respondents feel aggrieved by the decision of the State Government then it shall be free to avail - 13 - NC: 2025:KHC:6158 WP No. 39309 of 2018 appropriate legal remedy. The parties shall bear their respective costs." 8. Thus from the above directions issued by the Apex Court it is clear that the matter was relegated to the respondent-BDA and the respondent -State Government to take decision with regard to levy of Supervision Charges, Improvement Charges, Examination Charges, Slum Clearance Development Charges and MRTS Cess. Admittedly, no such decision is taken till date. The agreement and indemnity bond may, therefore as rightly contended by the learned counsel for the petitioner, may become enforceable upon such decision being taken by the respondent -State as directed by the Apex Court. 9. Alternatively it may also be necessary to note that Sections 18 and 18A of the Karnataka Town and Country Planning Act, 1961 provide for provisions for recovery of fees in certain cases where permission/change of land used or development of land or building is granted under Section 14A or Section 14-B and Section 15 and 17 of the Act. Section 18A provides for levy and collection of levy and surcharge. The said provisions are extracted as under; - 14 - NC: 2025:KHC:6158 WP No. 39309 of 2018 "18. Recovery of a fee in certain cases of permission for change in the use of land or building.- 1 [(1) Where permission for change of land use or development of land or building is granted under section 14-A or section 14-B or section 15 or section 17 and such change of land use or development is capable of yielding a better income to the owner, the Planning Authority may levy a prescribed fee not exceeding one-third of the estimated increase in the value of the land or building in the prescribed manner for permitting such change of land use or development of land or building]1 1[(1A) Where an application for permission for development of building or land or sanction for sub- division of plot or layout of Private Street is submitted under section 15 or 17 to any Planning Authority, such Planning Authority shall levy and collect an additional prescribed fee for rejuvenation of lakes or tanks, if any, in that local planning area.] (2) Any person aggrieved by the levy of fee under sub-section (1), may within such period as may be prescribed, appeal to the District Court having jurisdiction on the ground that the change or development is not capable of yielding a better income to the owner. The decision of the District Court on such appeal shall be final. [(3) The State Government may exempt any Board, Authority or body constituted by or under any law and owned or controlled by the State Government or Central Government or an infrastructure Project promoted or implemented by any Company or person and approved by the State Government or Central Government from the payment of fee specified under sub-section (1). Explanation:- For the purpose of this section and section 18A “Infrastructure Project “ means,- (a) road, bridge, air port, port, inland water ways and inland ports, rail system or any other public facility of a similar nature as may be notified by the State Government from time to time; (b) a highway project including housing or other activities being an integral part of that project; (c) water supply project, - 15 - NC: 2025:KHC:6158 WP No. 39309 of 2018 irrigation project, sanitation and sewerage system.” (d) a tourism project with an investment of not less than Rupees one hundred crores as may be notified by the State Government from time to time]. [18A. Levy and collection of cess and surcharge.- (1) Notwithstanding anything contained in this Act, the Planning Authority may while granting permission for development of land or building levy and collect from the owner of such land or building:- (i) a cess for the purpose of carrying out any water supply scheme; (ii) a surcharge for the purpose of formation of ring road; (iii) a cess for the purpose of improving slums; and (iv) a surcharge for the purpose of establishing Mass Rapid Transport System, (v) xxx at such rates but all the above levies together not exceeding one-tenth of the market value of the land or building as may be prescribed. (2) The cess and surcharge levied under sub-section (1) shall be assessed and collected in such manner as may be prescribed. (3) Any person aggrieved by the levy, assessment and collection of cess or surcharge under this section may within thirty days from the date of the order appeal to the prescribed authority whose decision shall be final. (4) The prescribed authority may after giving a reasonable opportunity of being heard to the appellant and the planning Authority pass such order as it deems fit. (5) The State Government may exempt any Board Authority or Body constituted by or under any law and owned or controlled by the State Government or the - 16 - NC: 2025:KHC:6158 WP No. 39309 of 2018 Central Government or an infrastructure Projects promoted or implemented by any company or person and approved by the State Government or Central Government from the payment of cess or surcharge leviable under sub-section (1)." 10. Rule 37A of the Karnataka Planning Authority Rules, 1965 provides the rates of fee to be levied for grant of permission for change in the use or development of land or building as contemplated under Section 18 of the aforesaid Act. 11. The notification dated 21.06.2021 now furnished by Learned counsel for the respondents contending to be the decision taken pursuant to the direction of the Apex Court effecting the amendment to Rule 37A(i) of the Karnataka Planning Authorities Rules, 1965 reads as under; "1. Amendment of Rule 37-A- In the Karnataka Planning Authorities Rules, 1965 (hereinafter referred to as the said rules) in Rule 37-A, in sub-rule (1), in clause (A),- (i) for the Table-I and the entries relating thereto, the following shall be substituted, namely:- TABLE-I Percentage of Market value per square meter of non agricultural land Sl. No. Local Planning Area and population Residential Industrial Commercial Others 1 Local Planning Areas within 0.2% subject to a 0.3% subject to a 0.5% subject to a minimum 0.2% subject to a - 17 - NC: 2025:KHC:6158 WP No. 39309 of 2018 Bangalore Metropolitan Region irrespective of population minimum of Rs.40/m2 minimum of Rs.60/m2 of Rs.100/m2 minimum of Rs.40/m2 2 Local Planning Areas with a population of ten lakh and above 0.2% subject to a minimum of Rs.25/m2 0.3% subject to a minimum of Rs.37.5/m2 0.5% subject to a minimum of Rs.62.5/m2 0.2% subject to a minimum of Rs.25/m2 3 Local Planning Areas with a population of one lakh and above but less than ten lakh 0.1% subject to a minimum of Rs.15/m2 0.3% subject to a minimum of Rs.22.5/m2 0.5% subject to a minimum of Rs.37.5/m2 0.1% subject to a minimum of Rs.15/m2 4 Local Planning Areas with a population of fifty thousand and above but less than one lakh 0.1% subject to a minimum of Rs.10/m2 0.3% subject to a minimum of Rs.15/m2 0.5% subject to a minimum of Rs.25/m2 0.1% subject to a minimum of Rs.10/m2 5 Local Planning Areas with a population of twenty thousand and above but less than fifty thousand 0.1% subject to a minimum of Rs.7.5/m2 0.3% subject to a minimum of Rs.11.25/m2 0.5% subject to a minimum of Rs.18.75/m2 0.1% subject to a minimum of Rs.7.5/m2 6 Local Planning Areas with a population of less than twenty thousand 0.1% subject to a minimum of Rs.5/m2 0.3% subject to a minimum of Rs.7.5/m2 0.5% subject to a minimum of Rs.12.5/m2 0.1% subject to a minimum of Rs.5/m2 12. Even though by virtue of the aforesaid Notification, the respondent -State seem to have fixed the rate at which the amounts to be collected under Sections 18 and 18A of the Karnataka Town and Country Planning Act, 1961, the said - 18 - NC: 2025:KHC:6158 WP No. 39309 of 2018 amendment does not cover the heads under which the respondent -BDA was required to clarify the rates of calculations of the amount as directed by the Apex Court namely, Supervision Charges, Improvement Charges, Examination Charges and Slum Clearance Development Charges and Mass Road Transport System Cess. There is a stark difference between the headings covered under Section 18 and 18A Karnataka Town and Country Planning Act, 1961 and the headings enumerated by the Apex Court at para 89 of the judgment as well as the items covered under the aforesaid notification effecting amendment to Rule 37A as noted above. Clearly, neither respondent -State nor the respondent -BDA have complied with the directions issued by the Apex Court for over 30 long years. 13. There is considerable force therefore in the submissions being made by the learned counsel for the petitioner that unless and untill the respondent -State comply with requirement/direction issued by the Apex Court at paragraph 89 as noted above, petitioner cannot be held to be under any obligation to pay the amount, as demanded in the impugned communication at Annexures-A and G merely - 19 - NC: 2025:KHC:6158 WP No. 39309 of 2018 because the petitioner had entered into and executed indemnity bond which aspect is clarified hereinabove. 14. In that view of the matter, following; ORDER (1) Petition is allowed. (2) The demand notices dated 25.01.2018 and 05.11.2018 at Annexure-A and Annexure-G respectively are hereby quashed. (3) Liberty is reserved to the respondent -State and respondent -BDA to raise the demand if so advised on compliance of the orders /directions issued by the Apex Court as extracted hereinabove. 15. Before parting necessary to note that the original demand is raised by the respondent -BDA as far back as on 17.11.1994, albeit, stating the same to be a provisional one. Despite the respondent -BDA claiming its financial crisis and having taken up the matter to the Apex Court which had directed the respondent -State to come out by fixing the rate, - 20 - NC: 2025:KHC:6158 WP No. 39309 of 2018 have done nothing for over 3 decades. Apathy on the part of respondent -authorities cannot be countenanced. Besides affect of which on the public exchequer also cannot be ignored. In that view of the matter, respondent -BDA and the respondent- State shall take necessary steps to implement/give effect to the directions issued by the Apex Court within an outer limit of three months from the date of receipt of certified copy of this order. Copy of this order be sent to the Chief Secretary, Department of Revenue. SD/- (M.G.S. KAMAL) JUDGE RU, List No.: 1 Sl No.: 31