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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 240           OF 2013 (Arising out of SLP(C) No.11907 of 2009)

Municipal Corporation Rajasthan … Appellant

Versus

Sanjeev Sachdeva and others …. Respondents

WITH

CIVIL APPEAL Nos.242 & 241                     OF 2013 (Arising out of SLP(C) Nos.34347 & 14304 of 2009)

O R D E R

Delay condoned.

Leave granted.

Heard learned counsel on either side.

We are in these cases concerned with the interpretation of  

Section  173-A  of  the  Rajasthan  Municipalities  Act  1959,  as  

amended by the Rajasthan Municipalities Amendment Act 1999  

(Act No.19 of  1999),  which deals with the power of the State

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Government  to  allow  change  in  use  of  land  on  payment  of  

conversion charges.   

The Division Bench of  the Rajasthan High Court,  following  

the judgment of this Court in State of Rajasthan and others v.  

Pareshar Soni (2007) 14 SCC 144, disposed of all the appeals,  

holding  that  the  Municipal  Corporation  is  not  empowered  to  

demand any amount for change of use of the land.  We may refer  

to the facts in Civil  Appeal No.240 of 2013 @ SLP(C) 11907 of  

2009 for disposal of all these appeals, since common questions  

arise for consideration in all these appeals.

Respondents herein purchased a plot of land, with a house,  

on 9.9.2002, situated in a residential area by way of a registered  

sale  deed.   Later,  an  application  under  the  Rajasthan  

Municipalities (Change of Land Use) Rules, 2000 (for short ‘2000  

Rules”) was preferred for conversion of land use from residential  

to commercial.  They also deposited self-assessment amount of  

Rs.10,500/-  for  the said  purpose.   Municipal  Corporation,  while  

considering the said application gave a public notice on 22.7.2003  

inviting objections, if any, under Rule 4(1) of the 2000 Rules.  The

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Land Use Change Committee of the Corporation, on 23.2.2004,  

approved  the  request  for  conversion  of  land  use.   Municipal  

Corporation then demanded an amount of Rs.5,70,300/- as land  

use conversion charges in accordance with the 2000 Rules read  

with Section 173-A, as amended.    

Respondents  herein  filed  a  Writ  Petition  No.1844  of  2004  

challenging the vires of amended Section 173-A of the Act and to  

quash  the  demand  notice  dated  2.4.2004.   In  the  meanwhile  

another Writ Petition No.879 of 2003 was also filed by one Mewa  

Ram challenging the vires of the amended Section 173-A.  The  

Division Bench of the Rajasthan High Court vide its judgment in  

Mewa Ram v. State of Rajasthan  reported in 2007 (1) WLC  

(Raj)  1,  was  pleased  to  upheld  the  vires  of  Section  173-A  as  

inserted by Act  No.  19 of  1999.   Following that  judgment,  the  

Division  Bench  of  the  Rajasthan  High  Court,  on  28.11.2007,  

remanded  the  matter  to  the  learned  single  Judge  to  decide  

whether the writ petition be entertained or not.   The case was  

later registered as D.B.C. Writ Petition No.430 of 2008.  

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The learned Single Judge, however, placing reliance on the  

judgment  in  Pareshar  Soni’s  case  (supra)  allowed  the  writ  

petition and the notice dated 2.4.2004 was quashed,  though it  

was contended by the Corporation that the applicability of Section  

173-A (evidently as amended) was neither argued nor considered  

by this Court in Pareshar Soni case.  The Municipal Corporation  

then took the matter in appeal before the Division Bench in DB  

Civil  Special  Appeal  No.159 of  2009.   The court  dismissed the  

appeal  holding  that  the  issue  raised  stood  covered  by  the  

judgment in Pareshar Soni’s case (supra).

Dr.  Manish  Singhvi,  learned  Additional  Advocate  General,  

appearing  for  the  State  of  Rajasthan  submitted  that  the  High  

court has committed an error in taking the view that the issue  

raised stood covered by the judgment of this Court in Pareshar  

Soni’s case (supra).  Learned counsel pointed out that this Court  

was dealing with the un-amended Section 173-A of the Act in that  

case,  but,  so  far  as  the  present  appeals  are  concerned,  

applications have to be considered by the amended Section 173-A  

read with 2000 Rules.  

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Mr.  Sushil  Kumar  Jain,  learned  counsel  appearing  for  the  

respondents,  on  the  other  hand,  submitted  that  there  is  no  

illegality in the judgment of the Division Bench of the High Court  

of  Rajasthan  warranting  interference  by  this  Court.   Learned  

counsel submitted, in any view of the matter, the land in question  

falls in a commercial area as per the latest approved Master Plan  

and hence there is no question of paying any conversion charges.  

We are, in these cases, concerned with the question whether  

the  judgment  of  this  Court  in  Pareshar  Soni’s  case (supra)  

would  apply  to  the  demand  notices  issued  by  the  Municipal  

Corporation on the basis of Section 173-A, as amended by Act No.  

19 of 1999.

We may,  at  the  very  outset,  point  out  that  this  Court  in  

Pareshar Soni’s case (supra) was dealing with the un-amended  

Section  173-A  of  the  Act.   For  a  proper  consideration  of  the  

question raised, it would be profitable to refer to the un-amended  

Section 173-A as well as the amended Section 173-A of the Act.  

Section 173-A of the Act, prior to its amendment, reads as follows:

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“173-A (Power of the State Government to allow  change in the use of land)

(1) Notwithstanding  anything  contained  in  this  Act,  where any land has been allotted or sold to any  person by a municipality or the State Government  subject to the condition of restraining its use for a  particular purpose, the State Government may, if  it is satisfied so to do in public interest, allow the  owner or holder of such land to use it for any other  purpose other than the purpose for which it was  originally  allotted  or  sold,  on  payment  of  such  conversion charges as may be prescribed.

      Provided that the rates of conversion charges may  be  different  for  different  areas  and  for  different  purposes.

(2) The  conversion  charges  so  realized  shall  be  credited to the Consolidated Fund of the State or  to  the  fund  of  the  Municipality  as  may  be  determined by the State Government.

(3) Such  charges  shall  be  the  first  charge  on  the  interest of the person liable in the land the use of  which has been changed and shall be recoverable  as arrears of land revenue.”

Section 173-A of the Act as amended by the Amending Act No.  

19 of 1999 reads as follows:

“Section 173-A – Restriction on change of use of  land and power of the State Government to allow  change of use of land:

(1) No person shall use or permit the use of any land  situated  in  any  municipal  area,  for  the  purpose  other than that for which such land was originally

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allotted  or  sold  to  any  person  by  the  State  Government,  any  municipality,  and  other  local  authority  or  any  other  body  of  authority  in  accordance  with  any  law  for  the  time  being  in  force  or,  otherwise  than  as  specified  under  a  Master Plan, wherever it is in operation.

(2) In  the  case  of  any  land  not  allotted  or  sold  as  aforesaid and not covered under sub-section (1),  no person shall use or permit the use of any such  land situated in a municipal, area for the purpose  other than that for which such land-use was or is  permissible,  in accordance with the Master Plan,  wherever it is in operation, or under any law for  the time being in force.

(3) Notwithstanding anything contained in sub-section  (1)  of  sub-section  (2),  the  State  Government  or  any authority authorized by it by notification in the  Official Gazette, may allow the owner or holder of  any such land to have change of use thereof, if it  is satisfied so to do in public interest, on payment  of conversion charges  at such rates and in such  manner as may be prescribed with respect to the  following changes in use:-

(i) From  residential  to  commercial  or  any  other  purpose; or

(ii) From commercial to any other purpose; or (iii) From  industrial  to  commercial  or  any  other  

purpose; or  (iv) From  cinema  to  commercial  or  any  other  

purpose;

Provided that rates of conversion charges may be  different for different areas and for different purpose.  

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(4) Any person who has already changed the use of  land in  violation  of  the  provisions  of  this  Act  in  force at the time of change of use, shall apply to  the State Government or any authority authorized  by it under sub-section (3), within six months from  the  date  of  commencement  of  the  Rajasthan  Municipalities (Amendment) Act, 1999 (Act No.19  of 1999) for regularization of said use and upon  regularization of the change of use of land he shall  deposit  the  amount  contemplated  under  sub- section (3).

(5) Where  the  State  Government  or  the  authority  authorized by it under sub-section (3) is satisfied  that  a  person  who  ought  to  have  applied  for  permission  or  regularisation  under  this  Section,  has not applied and that such permission can be  granted or the use of land can be regularized, it  may proceed to determine the conversion charges  after due notice and hearing the party/parties and  the charges so determined shall  become due to  the  municipality  and  be  recoverable  under  sub- section (7).

(6) The  conversion  charges  so  realized  shall  be  credited to the fund of the municipality.

(7) Charges under section shall be the first charge on  the  interest  of  the  person  liable  to  pay  such  charges with respect to the land, the use of which  has  been  changed  and  shall  be  recoverable  as  arrears of land revenue.”

On a bare reading of un-amended Section 173-A(1) of the  

Act would indicate that the conversion for change of Land Use

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charges could  only  be realized  if  the  land was allotted by the  

Municipality or the State Government and there was a condition  

for restraining use for a particular purpose only.  Therefore, in the  

absence  of  land  being  allotted  by  the  State  

Government/Municipality  and  in  absence  of  any  specific  

stipulation regarding use of land, the conversion charges could  

not be claimed.  This was the ratio laid down in Pareshar Soni’s  

case (supra) interpreting the un-amended Section 173-A of the  

Act.  The Legislature, with a view to ensure planned and regulated  

development of the urban area felt it necessary to charge for the  

change of use in certain circumstances of those lands which were  

not sold or allotted by municipality or by the State Government.  

Further it is also felt that such a change of user be permitted only  

“in  public  interest”.   In  this  connection,  we  may  refer  to  the  

Statement of Objects and Reasons of the Amendment Act, 1999,  

which reads as under:

“Statement of Objects and Reasons:

The existing provisions contained in Section 173-A  of the Rajasthan Municipalities Act, 1959 provide that  where any land has been allotted or sold subject to the  condition of restraining its use for a particular purpose,  to  any  person  by  a  Municipality  or  the  State

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Government,  the  State  Government  may,  if  it  is  satisfied so to do in public interest, allow the owner or  holder of the land, to use it for any other purpose other  than the purpose for which it was originally allotted or  sold, on payment of such conversion charge as may be  prescribed.

With  a  view  to  ensure  planned  and  regulated  development  of  the  urban  areas  it  is  necessary  to  restrict  and  bar  the  change  of  use  in  certain  circumstances of those lands also which were not sold  or  allotted  by  Municipality  or  the  State  Government.  However,  the power of the State Government or any  other authority authorized by it, to allow change of use  of land, on payment of conversion charges is sought to  be retained.

With a view to achieve the aforesaid objective, the  existing section 173-A of  the Rajasthan Municipalities  Act, 1959 is proposed to be substituted.”  

Amended Section 173-A not only restricts the change of use  

of land, as the same has been allotted by the municipality or the  

State Government, but also put restrictions if the land has been  

allotted by any other local authority.  Section 173-A(2) covers the  

cases which are not even covered by Section 173-A(1) and brings  

in  its  fold   even  the  change   of  use  of  land  which  is  not  in  

consonance with the Master Plan.  Further Section 173-A(1) (2)  

and  (3)  also  contemplates  a  situation   wherein  the  State  

Government is entitled to levy conversion charges if the change

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in  use  from one  purpose  to  other  purpose.   Amendment  was  

necessitated since the State Legislature thought the provision of  

Section 173-A (un-amended) stood as an impediment for proper  

planning of urban areas.  In other words, with a view to ensure  

planned and regulated development of urban areas, it  was felt  

that  some restrictions have to be imposed and it  was for  that  

purpose that Section 173-A was amended.   

We may, in this respect,  also indicate that,  in exercise of  

powers conferred under Section 297 read with Section 173-A of  

the  1959  Act,  2000  Rules  were  promulgated.   It  is  under  the  

above-mentioned Rules that the respondents filed an application  

on  16.7.2003  for  change  of  land  use  from  residential  to  

commercial.  Following those Rules, the Corporation issued public  

notice inviting objections.  Later,  the Land Use Committee met  

and  approved  the  conversion  for  which  a  demand  notice  of  

Rs.5,70,300/- was raised by the Corporation on 2.4.2004.    We  

are  of  the  view  that  the  demand  is  legal  and  valid  and  in  

accordance with the provisions of Section 173-A, as inserted by  

Amendment Act 19 of 1999 read with 2000 Rules.  We are also of

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the view that the Rajasthan High Court has committed an error in  

applying  the  Judgment  of  this  Court  in  Pareshar  Soni’s  case  

(supra)  which  was  dealing  with  the  un-amended  provision  of  

Section 173-A.   

Learned  counsel  appearing  for  the  respondents,  however,  

submitted that the area in question is notified as commercial area  

under the Master Plan and, therefore, there is no question of any  

conversion of the residential property to commercial.  We notice  

that this point was not raised before the High Court and we are,  

therefore, not called upon to decide that question.  However, the  

respondents,  if  so  advised,  may take  up  this  issue before  the  

Corporation and it is for the Corporation to consider that issue in  

accordance with law.  Appeals are accordingly allowed and the  

judgments of the High Court are set aside.  However, there will be  

no order as to costs.  

…………………………..….J. (K. S. RADHAKRISHNAN)

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….…………………………J. (DIPAK MISRA)

New Delhi, January 8, 2013.