A) ABSTRACT / HEADNOTE

The judgment in Shridhar C. Shetty (Deceased) Through LRs v. The Additional Collector and Competent Authority & Ors. examines the scope and limits of statutory power exercised by authorities under the Urban Land (Ceiling and Regulation) Act, 1976. The dispute arose from the failure of the landholder to comply with the conditions attached to an exemption granted under Sections 20 and 21 of the Act, specifically the obligation to surrender a stipulated number of residential tenements to Government nominees. Upon breach, instead of withdrawing the exemption as statutorily envisaged, the competent authority issued a demand for recovery of the market value of seven tenements along with interest and penalties, treating the amount as arrears of land revenue.

The Supreme Court decisively addressed whether such a monetary demand was legally sustainable. While affirming that a clear breach of exemption conditions had occurred, the Court drew a sharp distinction between statutory consequences expressly provided under the Act and administrative actions taken dehors the statute. The Court held that the competent authority, being a creature of statute, could not enlarge its powers by relying upon undertakings or administrative convenience. The absence of any statutory provision authorising recovery of market value as arrears of land revenue rendered the demand ultra vires.

The ruling reinforces foundational principles of administrative law, statutory interpretation, and jurisdictional discipline. It reiterates that even in cases of admitted breach, State authorities must act strictly within the four corners of the enabling legislation. The decision also clarifies the prospective operation of earlier precedent and confines private disputes between developers and landowners to the civil domain, without diluting statutory responsibility under exemption orders.

Keywords: Urban Land Ceiling, Statutory Jurisdiction, Exemption Withdrawal, Ultra Vires Action, Arrears of Land Revenue

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The controversy in the present case emanates from the implementation of exemption provisions under the Urban Land (Ceiling and Regulation) Act, 1976, a welfare legislation intended to prevent concentration of urban land and ensure equitable distribution, particularly for weaker sections of society. The Act empowered the State to grant exemptions from ceiling limits subject to stringent conditions, the breach of which attracted clearly defined statutory consequences.

The appellant, acting under powers of attorney from original landowners, sought and obtained an exemption under Section 20 of the Act for development of two plots of land. The exemption was conditional upon surrendering 20% of the constructed tenements for allotment to Government nominees. Over time, development occurred only on one plot and only seven tenements were handed over instead of the required fourteen. Despite awareness of this deviation, the authorities did not invoke their statutory power to withdraw the exemption.

Years later, instead of proceeding under the mechanism prescribed by the Act, the competent authority raised a monetary demand equivalent to the market value of the remaining seven tenements, adding interest and penalties, and sought recovery as arrears of land revenue. This demand was affirmed by the appellate authority and the Bombay High Court, prompting the appeal before the Supreme Court.

The case thus raised a critical question regarding statutory limits of administrative power, especially where breach is admitted but remedial action deviates from legislative prescription. The background also reflects recurring tensions between urban development, regulatory compliance, and executive overreach in land ceiling jurisprudence.

D) FACTS OF THE CASE

The lands in question were originally declared surplus under the Act in 1980. Through an agreement for sale dated 12.03.1984 and a general power of attorney dated 15.01.1985, the appellant acquired authority to pursue exemptions and development permissions. Acting in that capacity, the appellant secured an exemption order dated 02.03.1988 under Section 20 of the Act.

The exemption covered two plots and permitted construction of 78 tenements, subject to the condition that 20% of the constructed area be surrendered to Government nominees belonging to weaker sections. A subsequent corrigendum dated 29.12.1988 expanded the permissible construction area, thereby enhancing the surrender obligation to 18 tenements. However, development was undertaken only on CTS No. 261, limiting the surrender obligation to 14 tenements.

Only seven tenements were handed over. A “No Objection Certificate” dated 08.06.1993 issued for water connection expressly recorded this partial compliance. Despite breach of conditions, the exemption was never withdrawn. The appellant had also entered into a development agreement with private respondents, transferring development rights contrary to exemption conditions, but disclosed this fact to authorities only in 2005.

On 16.05.2005, the appellant furnished an undertaking to either provide the remaining tenements or pay their market value. Relying on this, the competent authority issued a demand dated 15.10.2005 for Rs. 51,97,196/- with interest and penalties, treating it as arrears of land revenue. This demand formed the core dispute.

E) LEGAL ISSUES RAISED

i. Whether the competent authority under the Urban Land (Ceiling and Regulation) Act, 1976 possesses statutory power to recover the market value of unhanded tenements as arrears of land revenue?
ii. Whether an undertaking given by the landholder can enlarge or create statutory powers not contemplated by the Act?
iii. Whether failure to withdraw an exemption disentitles the authority from imposing alternative monetary liabilities?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the appellant submitted that Sections 20 and 21 provide an exhaustive mechanism for dealing with breach of exemption conditions. Upon breach, the only permissible course was withdrawal of exemption, not imposition of monetary recovery. It was argued that the Act nowhere authorises recovery of market value of tenements.

Reliance was placed on Naraindas Indurkhya v. State of Madhya Pradesh to contend that administrative authorities cannot travel beyond express statutory provisions. It was further contended that Section 38(4) contemplates only penal consequences and not civil recovery. The undertaking dated 16.05.2005 was argued to be legally irrelevant for expanding jurisdiction.

G) RESPONDENT’S ARGUMENTS

The counsels for the respondents argued that the appellant had profiteered from breach and could not escape liability. It was contended that the exemption was composite and non-compliance justified recovery. Reliance was placed on M/s Shantistar Builders v. Narayan Khimalal Totame to argue reasonableness of surrender obligations, though concededly prospective.

The respondents also argued that disputes with private developers were irrelevant and that the appellant remained the de facto owner responsible under the exemption order.

H) JUDGEMENT

The Supreme Court unequivocally held that while breach of exemption conditions was admitted, the demand raised was without statutory authority. The Court emphasised that Sections 20 and 21 expressly provide for withdrawal of exemption as the consequence of breach. No provision permits recovery of market value as arrears of land revenue.

The Court rejected reliance on the appellant’s undertaking, holding that jurisdiction cannot be created by consent or undertaking. It further held that Section 265 of the Maharashtra Land Revenue Code could not be invoked in the absence of statutory debt.

The High Court’s order was set aside, and the appeal was allowed.

a. RATIO DECIDENDI

The ratio of the judgment rests on the principle that statutory authorities must act strictly within the powers conferred by legislation. The competent authority under the Urban Land (Ceiling and Regulation) Act, 1976 is a creature of statute and cannot impose liabilities not contemplated by the Act.

The Court clarified that Sections 20 and 21 form a complete code for exemption and its withdrawal. The absence of any express provision permitting recovery of market value renders such demand ultra vires. The undertaking furnished by the appellant was held incapable of expanding statutory jurisdiction. The Court reinforced the doctrine that administrative convenience cannot substitute legislative authority.

b. OBITER DICTA

The Court observed that administrative authorities often attempt to balance equities by imposing monetary liabilities in cases where statutory remedies appear inconvenient. Such approaches, though pragmatic, undermine rule of law. The Court cautioned that failure to exercise statutory powers at the appropriate time cannot justify assumption of new powers later.

c. GUIDELINES

i. Statutory exemptions must be enforced strictly in accordance with enabling provisions.
ii. Breach of exemption conditions must be addressed through withdrawal mechanisms, not ad hoc recovery.
iii. Undertakings cannot confer jurisdiction.
iv. Recovery as arrears of land revenue requires express statutory sanction.

I) CONCLUSION & COMMENTS

The judgment is a reaffirmation of jurisdictional discipline and statutory fidelity. It underscores that even admitted breaches cannot justify administrative actions beyond legislative mandate. The ruling protects individuals from arbitrary fiscal demands and preserves the separation between executive discretion and legislative authority.

It also serves as a cautionary tale for regulatory authorities to act decisively within prescribed timelines. Failure to invoke statutory remedies cannot be cured through creative enforcement. The decision strengthens predictability in urban land regulation and reinforces constitutional values of non-arbitrariness and rule of law.

J) REFERENCES

a. Important Cases Referred

i. S. Vasudeva v. State of Karnataka, [1993] 2 SCR 715
ii. Naraindas Indurkhya v. State of Madhya Pradesh, [1974] 3 SCR 624
iii. Nargis Jal Haradhvala v. State of Maharashtra, [2015] 1 SCR 8

b. Important Statutes Referred

i. Urban Land (Ceiling and Regulation) Act, 1976
ii. Maharashtra Land Revenue Code, 1966