Mangalore Urban Development Authority vs M/s. Hindustan Petroleum Corporation Ltd., State of Karnataka and The Karnataka Industrial Areas Development Board

K.L. Manjunath, J.—The legality and correctness of the order passed by the learned Single Judge in W. P. No. 25593/2002 dated 12.3.2009 is called in question by the appellant Mangalore Urban Development Authority, who was respondent No. 2 before the learned Single Judge. The facts leading to this appeal are as hereunder:

The writ petition was filed by M/s. Hindustan Petroleum Corporation Ltd., a Government of India enterprises. The Karnataka Industrial Areas Development Board formed an industrial estate in a large chunk of land at Kuthethur, Bala, Permude, Thokur and Kalavaru in the District of D.K. Out of 1500 acres of land, large chunk of land was handed over to M/s. Mangalore Refinery and Petro Chemical Ltd., on lease-cum-sale agreement dated 8.12.1994. Out of that 436.37 acres of land is granted to M/s. Hindustan Petroleum Corporation Ltd., Accordingly, lease-cum-sale agreement came to be registered. In order to provide infrastructure facilities, the petitioner was required to obtain plan from KIADB and KIADB is the regulatory authority to regulate the construction and developmental activities to be carried on within the industrial area. After obtaining necessary licence and plan, the writ petitioner proceeded with the construction.

During the period of construction, the appellant Mangalore Urban Development Authority called upon the writ petitioner said to be exercising power under the provisions of Karnataka Town & Country Planning Act, 1961, hereinafter referred to as ''the Act'' for short, demanding a sum of Rs. 5,36,44,563/- and the same was later reduced to Rs. 1,31,32,563/- as per the notice dated 3.10.2000. Contending that the appellant has no power to demand the development charges in a sum of Rs. 1,31,32,563/- and that there is no necessity for the writ petitioner to get plan sanctioned for construction of the building, the writ petition was filed.

It was contended by the appellant herein that as per the provisions of the Act, it is the authority of the appellant to regulate the development and construction activities of the writ petitioner exercising its powers u/s. 14 of the Act and it is contended that it was justified in demanding the development charges.

The Karnataka Industrial Area Development Board who was the third respondent before the learned Single Judge, filed detailed counter supporting case of the writ petitioner. According to the KIADB, the appellant Mangalore Urban Development authority has no right to demand the development charges from the allottees of an Industrial Shed made by the KIADB and it is the prerogative of the KIADB to form an industrial area under the provisions of the Karnataka Industrial Area Development Act, the KIAD Act for short. Accordingly, industrial area was established, industrial sites were earmarked, roads were provided including water and electricity and drainage facilities under the Act and Rules. It is the KIADB who has to regulate and monitor the sanctioning of the licence and plan and constructional activities by the allottees within the industrial area and the demand made by the appellant is invalid. Accordingly, the KIADB requested the Court to allow the writ petition of M/s. Hindustan Petroleum Corporation Ltd.,

The learned single judge considering the arguments advanced by all the parties, came to the conclusion, the amount demanded by the appellant from the petitioner relying upon Section 14, 15 & 18 of the Act was impermissible and that the writ petitioner cannot be compelled to obtain permission from the appellant in order to proceed with construction. Accordingly, writ petition was allowed. Challenging the legality and correctness of the order of the learned Single Judge, present appeal is filed.

We have heard the learned counsel for the appellant and the learned counsel for the respondents. It is contended by the appellant counsel that the learned Single Judge has committed an error in allowing the writ petition holding that the provisions of the Act has no application in regard to the developmental activities made by the allottees of the industrial shed within the industrial area as the appellant has to be considered as a local planning authority under the Karnataka Urban Development Authorities Act 1987. According to him, the learned Single Judge has erroneously held that the development charges collected for grant of licence and plan for construction of sheds and to monitor and regulate the constructional activities, cannot be considered as a fee. Therefore, he requested the Court to allow the appeal.

Mr. Narayan, learned counsel for the respondent contends that when an industrial area has been established by the KIADB'' pursuant to the provisions of the KIAD Act, the appellant has no power to exercise its power under the provisions of the Act and all constructional activities including development activity within the industrial area would come under the provisions of the KIAD Act and the appellant has no jurisdiction to exercise its power over an industrial area. He also contends that the demand made by the appellant in a sum of Rs. 1,31,32,563/- in respect of entire area of 405 acres for grant of licence to construct building in a small area is not commensurate with the alleged powers u/s. 14, 15 & 18 of the Act. In the circumstances, he requests the court to dismiss the appeal.

Though two contentions are raised by the learned counsel for the appellant, if we answer the first question in regard to right of the appellant to claim development charges within the industrial area, it would answer the second question, whether the appellant can demand the development fee in order to construct the building by the allottees of the industrial sheds. Therefore, what is required to be considered by us is whether the appellant has got jurisdiction to exercise its powers arising out of Sections 14, 15 & 18 of the Act in respect of an industrial area established by the KIADB. Karnataka Industrial Area Development Act 1966 has come into force with effect from 26.5.1966 on which date it was gazetted in the Karnataka gazette, though it received assent of the President on 14.5.1966. It is a special enactment made for securing the establishment of industrial areas in the State of Karnataka and generally to promote establishment and orderly development of industries therein and for that purpose to establish an Industrial Areas Development Board and purpose connected with the matter aforesaid. It extends to whole of State of Karnataka. The lands are being acquired under the provisions of the aforesaid KIAD Act and industrial areas have been established and industrial sheds are established by providing infrastructural facilities for research, development, communication, transport, banking and making technology park and township for the purpose of establishing Trade and Tourism centres and any other facilities as the State Government may by notifications specify to be an industrial infrastructural facilities for the purpose of KIAD Act. u/s 3 of KIAD Act, a notification is required to be issued by the government declaring any area in the State to be an industrial area for the purpose of the Act.

It is not in dispute that 405 acres of land allotted to M/s. Hindustan Petroleum Corporation Ltd., in an industrial area is declared u/s. 3(1) of the Act and all infrastructure including civic amenities like formation of road, drainage, water supply, electricity have been provided by the KIADB to the writ petitioner and as per the provisions of the allotment, plan has to be obtained by the allottees from the industrial area board and buildings are to be constructed in accordance with the plan sanctioned by the Board. Therefore, it is clear that regulating construction of building and development of industries shall vest with the KIADB and not with Mangalore Urban Development Authority. When the buildings are being constructed by the writ petitioner within an industrial area, we are of the view that the Act has no application and the MUDA cannot encroach the powers vested with the KIADB under the KIAD Act, a special enactment.

Therefore, we are of the view that the learned Single Judge is justified in holding that the appellant has no power to demand respondent to pay a sum of Rs. 1,31,32,563/- towards development charges when no facilities are given by the appellant and when it has no power to regulate or monitor the activities of the writ petitioner. In the circumstances, we are of the view that no error is committed by the learned Single Judge in allowing the writ petition. Accordingly, appeal is dismissed.