Executive Decisions Operate Prospectively Unless Expressly Stated Otherwise: Bombay High Court Restores Land Conversion Order Set Aside By Revenue Minister

The Court was hearing a writ petition challenging a revisional order passed under Section 257 of the Maharashtra Land Revenue Code, 1966, by which the revenue minister set aside the Collector’s order permitting conversion of leasehold rights in land used for a petrol pump into Occupancy Class-I rights.

A Single Judge Bench of Justice Kamal Khata held that the Government Resolution issued after the conversion order could not be applied retrospectively to divest rights already crystallised under the statutory Conversion Rules.

The Court observed: “The restriction upon the conversion of lands set out in the Government Resolution dated 14th July, 2021 is introduced for the first time. Since this restriction does not find any place in either the MLRC or Conversion Rules of 2019, it is nothing else but purely an executive policy decision. Therefore, the contention that the executive decision should be effected retrospectively and thereby modify the conversion order would be wholly untenable. It is a well settled principle of law that all executive decisions operate prospectively unless expressly stated. The Government Resolution dated 14th July, 2021 does not expressly state that it will operate retrospectively.”

Senior Advocate Y.S. Jahagirdar appeared for the petitioners, AGP Usha Rahi appeared for the State, and Senior Advocate Pankaj Savant appeared for BPCL.

Background

The petitioners challenged the Revenue Minister’s common revisional order, which set aside the Collector’s earlier order granting conversion of leasehold rights in a land parcel at Versova, Mumbai Suburban District, into Occupancy Class-I under the Maharashtra Land Revenue (Conversion of Occupancy Class-II and Leasehold Lands into Occupancy Class-I Lands) Rules, 2019.

The conversion order had been passed on payment of the premium under the 2019 Rules. The petitioners argued that the later Government Resolution could not retrospectively override the statutory framework or take away vested rights. They also disputed findings of alleged lease breaches, alleged sub-letting, construction of a garage and motor parts shop, and non-employment of handicapped persons.

The State relied on the Government Resolution to argue that land allotted for essential services could not be converted from leasehold or Class-II category into Occupancy Class-I. BPCL, which had earlier been connected with the petrol pump on the land, also opposed the petition and claimed an interest in the proceedings.

Court’s Observation

The Court first examined whether the Government Resolution could be applied retrospectively to invalidate the Collector’s earlier conversion order. It held that the language of the Government Resolution itself indicated prospective operation.

The Court stated: “I find merit in the submission of the learned senior counsel Mr. Jahagirdar appearing for the Petitioners that, the Government Resolution dated 14th July, 2021 is merely an executive instruction and cannot be applied retrospectively; it must necessarily be read as operating only prospectively. A perusal of the Government Resolution dated 14th July, 2021 bears testament to this submission and proposition to be operating only prospectively from the wordings stated therein. In the introductory paragraph, the Government Resolution states as under:-”

The Court further noted: “The expressions “in the future” and “henceforth” negate the submissions of the Respondents that, it reflects a binding policy decision to be effected retrospectively. Consequently, the reliance on the Government Resolution by the Revisional Authority to the Petitioners case is unsubstantiated and unwarranted.”

The Court held that the Conversion Rules of 2019 framed under the MLRC laid down eligibility conditions, procedure and consequences for conversion of leasehold land into Occupancy Class-I, but did not bar conversion of land being used as a petrol pump.

The Court observed: “The reliance placed upon the judgment in Vanshakti (supra) clearly applies to the present case. The Conversion Rules of 2019 framed under the MLRC, set out the eligibility conditions, procedure and consequences of conversion of leasehold lands to Occupancy Class-I. It does not contain any restriction on conversion of lands that are being used as petrol pumps.”

Relying on Suchitra Component Ltd. v. Commissioner Central Excise, Guntur (2006), the Court held that an order valid when passed could not be invalidated by a subsequent policy change.

The Court held: “The reliance placed on Suchitra Component Ltd. (supra) that, an order which was valid and lawful when passed cannot be invalidated by subsequent change in policy, supports the aforesaid view. It evident from the report that the Conversion Order dated 20th April, 2021 was passed by the Competent Authority namely the Collector under the Conversion Rules of 2019 in accordance with the law. The order is therefore not open to challenge as there were no restrictions or policy decision of the Government at that time.”

The Court also noted that the petitioners had held the lease for nearly 30 years and had paid substantial premium, thereby crystallising their right before the later Government Resolution.

On BPCL’s objection, the Court held that conversion from leasehold rights to Occupancy Class-I was a matter between the State as lessor and the petitioners as lessees. BPCL’s interest, if any, was confined to structures and contractual arrangements, not the land itself.

The Court observed: “With regard to the locus standi of Respondent No.5, I find merit in the submission of the Petitioners counsel that, the issue of conversion from leasehold rights to Occupancy Class-I is a matter between the lessor namely the State and the lessee namely the Petitioner. The sub-lessee namely the BPCL will have absolutely no right, title or interest in the subject property. The terms of sub-lease dated 14th May, 2003 revealed that, Respondent No.5’s interest is only limited to the structures constructed on the subject property. The terms and conditions of the sub-lease expressly provide that the acts of direct payment of rent on behalf of the Petitioner will not confer any special right or any right whatsoever on the sub-lessee namely the BPCL. Even the Collector’s Order dated 2nd June, 2001 whereby permission to sub-lease was granted in favour of Respondent No.5 (BPCL) expressly provided that, the permission granted for sub-leasing the subject property will not give any right in the subject property to Respondent No.5.”

The Court further found that BPCL’s sub-lease had expired before the conversion order and rejected its plea of continuation by holding over.

The Court held that BPCL could not use revision proceedings to challenge the conversion order. If it had any grievance over non-renewal of the petrol pump arrangement or investments made on the property, its remedy lay before a civil court.

The Court stated: “The reliance placed on the judgment in Lakshmi Narayan Guin (supra), for the proposition that the person who is not formally a party to the proceedings, but whose rights are directly and substantially affected by the Order in such proceedings has locus standi to challenge the same is misplaced in the facts of the present case. The LOI issued by the Respondent No.5 is abundantly clear. It required the Petitioner to procure a suitable plot of land either by purchase or on lease for more than a period of 10 years. The Petitioner No.1 had accordingly opted for land on lease and accordingly entered into an agreement with the Respondent No.5. Thus, the conversion of the land from leasehold to Occupancy Class-I cannot be challenged by the Respondent No.5. In the event, that the agreement to run the petrol pump is not renewed, the Respondent No.5 has a remedy before the Civil Court to recover the losses or damages, if any, caused to it on account of the investments made by it on the subject property. Respondent No.5, however, can have no right to challenge the Conversion Order itself.”

The Court held that the Revenue Minister, acting as a revisional authority under Section 257 of the MLRC, could not adjudicate civil or contractual disputes between the lessee and sub-lessee.

The Court underscored: “The Revisional Authority established under Section 257 of the MLRC is a supervisory jurisdiction. It does not have plenary jurisdiction to adjudicate all disputes that may arise between the lessee and the sub-lessee or the civil rights between them. The Revisional Authority cannot adjudicate rights that are required to be established by a Civil Court.”

It added: “In my view, by adjudicating upon the contractual rights between the Petitioner and Respondent No.5, the Revisional Authority travelled beyond its jurisdiction under Section 257 of the MLRC and thereby constituted a jurisdictional error.”

The Court also found that the suo motu revision was unwarranted and belated, having been initiated more than 540 days after the conversion order. It noted that no documentary evidence was produced to prove continuing breaches that would disentitle conversion.

The Court highlighted: “The Suo Motu Revision Proceedings initiated by Respondent No.3 is also unwarranted. The record indicates that the same was initiated belatedly after more than 540 days of passing the Conversion Order. The grounds for initiating the same are not substantiated by any previous complaints or breaches that continued till the date of the application for conversion. It appears that the authority has attempted to rake up non-issuance in the Suo Motu Revision Proceedings. The Respondent Nos.1 to 4 have not produced any documentary evidence to prove the continuing breaches by the Petitioner, which by itself would disentitle him for the conversion. On the contrary, the inspection report submitted by the Tahsildar, Andheri, dated 22nd December, 2020 after a physical inspection of the site clearly revealed that, there was no breach of any condition of the lease agreement dated 5th October, 1993.”

Conclusion

The Court accordingly allowed the petition, quashed the Revenue Minister’s revisional order, and restored the Collector’s order converting the land from leasehold occupancy to Occupancy Class-I. It held that the conversion order would remain valid and subsisting, and also refused to stay its decision.

Cause Title: Dharampal Sharma & Ors. v. State of Maharashtra & Ors.

Appearances

Petitioners: Senior Advocate Y.S. Jahagirdar, with Senior Advocate Girish Godbole, Advocates Jai Kanade, Aneesha Munshi and Sonam Pandey, instructed by Divya Shah Associates

Respondents: Usha Rahi, AGP, Senior Advocate Pankaj Savant, with Advocate Aarti Abhyankar, instructed by Indus Law

Click here to read/download Judgment