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Judgment
In this writ petition, the competence of the Tirupathi Urban Development Authority, to insist upon intending sellers of Lands which form part of "development area" within the meaning of A.P. (Urban Area) Development Act, 1975, to ensure compliance with the conditions of layout and also to levy external development charges in respect of that area, is questioned.
Sri P. Ramachandra Reddi, learned counsel appearing for the petitioner submits that except development charges not exceeding rupees forty thousand per hectare as prescribed u/s 28 of the Act, the Tirupathi Urban Development Authority, has no power to levy or collect any other charges and that laying of roads, laying of electrical lines as also laying of lines for purpose of sewage and other amenities shall be provided only by the Tirupathi Urban Development Authority, from out of the development charges collected.
Sri Gopal Rao, learned Standing Counsel appearing for the Tirupathi, Urban Development Authority, however, submits that the development charges prescribed u/s 28 are of the nature of tax and that the Tirupathi Urban Development Authority, is certainly empowered to insist upon either cash deposits of sufficient amounts or Bank Guarantees therefore from the intending sellers to ensure compliance with all the conditions of layout relating to laying of roads, laying of electrical lines, laying of pipes for supply of drinking water and laying of pipes for purpose of sewage, besides laying of roads, etc.
As the questions raised in the writ petition are of frequent occurrence and general importance the same in my opinion shall be decided by a Division Bench of this court.
Place the papers before the Hon''ble Chief Justice for posting the case, before a Division Bench at an early date.
JUDGMENT (Judgment of the Bench delivered by Sivaraman Nair, J.,)
Petitioner is an Association of owners of lands in and around Tirupathi town. The Association was registered on 7-10-1986 with the object of promoting co-operation among real estate owners, to foster mutual interest and to avoid unfair competition among them. They intend to develop the areas within the local limits of Tirupathi Urban Development Authority, comprising of Tirupathi Municipality and the 89 villages situated in different Gram Panchayaths around the Municipality.
Tirupathi Urban Development Authority was created by notification in G.O.Ms.No. 1178 Municipal Administration and Urban Development Department, dt.6-11-1981. That was issued u/s 2(o) of the AJP. Urban Areas (Development) Act, 1975, hereinafter called ''the Urban Development Act. The 2nd respondent is the Vice-Chairman-cum-Managing Director of the Tirupathi Urban Development Authority (hereinafter referred to as the Development Authority). Petitioner association filed a representation on 6-8-1986 before the 2nd respondent requesting that members of the Association may not be required to pay Security Deposits for completing black-top roads or plantation of avenue trees and construction of cement drains or for the approval of lay-outs etc., since the intending purchasers of plots in the layouts normally belong to middle class and poor families who would not be able to pay the enhanced cost of land, consequent on such demands. In the alternative, they offered that they would lay gravel roads and provide normal drains. In the letter dt.11-8-1986, the 2nd respondent informed them that it would not be possible to accept the above proposals since the same was against the rules. Petitioner objects to the conferment of power on the 2nd respondent to levy development charges on the owners of the land falling within the local area of the Development Authority - in that it fetters the right of owners to dispose of their lands as house sites after making use of them for other development activities. Petitioner submits that the maximum rate of development charges prescribed u/s 28(2) of the Act is only Rs. 40,000/- per hectare, whereas the 2nd respondent is demanding Rs. 3,60,096/- and Rs.1,08,000/- per hectare respectively towards internal and external development charges. Petitioner submits that the aggregate demand of Rs. 4,68,096/- per hectare towards deposit of security for internal and external development cost etc., is highly excessive, arbitrary and illegal. Petitioner also assails Conditions 3(iii), 5,6, 8, 10 and 11 of the Procedures (Conditions) for the approval of layouts'', as being arbitrary, illegal and beyond the powers of the respondents. The relevant conditions are the following:
"3. The application shall be accompanied with the following particulars:-
(i) ......
(ii) .......
(iii) A statement of the arrangements made for providing plantation of avenue trees in addition to the arrangements indicated in the plan.
4........
The arrangements to be made for levelling metaling and black-topping roads with approaches from existing roads shall be in conformity with the specifications mentioned by the Executive Authority, TUDA.
Drains, street-lighting plantation of avenue trees, development of parks formation of roads and water supply works shall be executed by the applicant as per the specifications prescribed by the Executive Authority, TUDA.
7.......
A plot intended for residential purposes shall not be less than 200 sq.mts. with minimum width of 9 mts. in Municipal area and shall not be less than 160 sq. mts. in the non-municipal areas.
The size of the plots for non-residential buildings shall be fixed by TUDA.
No plot in a layout shall be sub-divided or utilised for any purpose other than the purpose for which the lay-out is approved except with the prior approval of TUDA.
9 ........
A non-interest bearing security deposit equivalent to the cost of development and amenities will have to be deposited with TUDA at the rate of Rs. 30/- Sq. Yard (Total area of land covered by the lay-out) or in lieu of cash deposit, a security in the form of Bank Guarantee equivalent to the amount of security deposit in prescribed form.
External development charges equivalent to 30% of lay-out development cost will be levied on the lay-out owner."
Petitioner submits that these conditions are violative of Articles 14 and 19 of the Constitution of India. It is its case that respondents cannot insist that the owners shall meet the cost of black topping roads or constructing cement drains, or providing street lighting, plantation of avenue trees, development of parks and water supply works, before the layout is approved. Petitioner also objects to the prescription of a minimum area of 200 Sq. Mts. for each plot intended for residential purpose in the Municipal area and 160 Sq. Mts. in the non-municipal area. It submits that such prescription of the area is unscientific and illegal. It objects to the condition of deposit of Rs. 30/- per Sq. Yard for the total area of the land covered by the layout and insistence on payment of 30% of the lay-out development cost towards external development charges. Petitioner''s case is that all the services, the cost of which petitioners are required to bear, are to be provided by the concerned local authority according to the provisions of the A.P. Municipalities Act, 1965 and the Gram Panchayat Act, 1964. Petitioner submits that the development authority itself had proposed to sell house plots as small as 133.3 Sq. Yards on the side of Palani Talkies situated on Rayalacheruvu Road within Tirupathi Municipal limits, whereas it insists that plots intended for residential purposes in private layouts shall not be less than 200 Sq.Mts. in municipal area, under Clause 8 of the Conditions. It submits that these conditions have not so far been prescribed by any Municipality or any other Urban Development Authority by framing rules or regulations under the relevant statutes. It objects to the conditions as operating as unreasonable restraint on the right to convert the lands into house sites and selling them. On these allegations, petitioner prays this court to declare that Section 27(3) of the Urban Development Act and conditions 3(iii), 5, 6, 8, 10 and 11 of the Procedures (Conditions) for the approval of layouts'', as unconstitutional, discriminatory, arbitrary and violative of Articles. 14 and 19 of the Constitution of India.
The 2nd respondent has filed a counter affidavit to the effect that the impugned provision of the Act and the conditions do not transgress the permissible limits. The respondent states that Section 184 of the A.P. Municipalities Act, 1965 provides that any person intending to make a layout shall, apart from complying with the other provisions, furnish deposit or security for the due fulfilment of the conditions like laying the streets, providing access and provision of amenities. Sub-section (3) of Section 184 is to the effect that the owner is not entitled to sell or utilise or dispose off the land unless the conditions are fulfilled. Gram Panchayath Act also contains similar provisions obliging the owner of layout to provide amenities at his cost. Respondent submits that similar conditions contained in Clauses 10 and 11 of the Conditions for approval of layouts cannot be objected to. It is submitted that the Development Authority is justified in insisting upon Security Deposit since otherwise, the dealers may walkout after selling the plots without providing for necessary access or basic amenities or other facilities which are absolutely essential for development of the layout Conditions relating to common amenities like roads, parks, water supply, drains etc., which are to be handed over to the local authority under the relevant Acts and the Town Planning Act, have to be provided at the cost of the developers. It is submitted that it is only natural to insist that owners of the land who layout their lands into plots for residential and other purposes should discharge the statutory obligation and meet the expenditure necessary for the same. Respondent asserts that there are three kinds of payments due to the authority - (1) Application fee, (2) Deposit as Security towards costs of amenities and services to be provided within and outside the layout so that the cost of providing such amenities and services will not be a drain the public fund (as per Clauses 10 and 11 of the Conditions for approval of layout), and (3) development charge, which is in the nature of a tax on land. These demands are sought to be justified (1) as licence fee for services (2) as deposit for cost of providing services and amenities and (3) as tax on land referable to entry 49 of list II of Schedule VII of the Constitution of India. Reference is made to Rule 15 of the rules made under the Act as adopted by the Tirupathi Urban Development Authority, under G.O.Ms. No. 713 Municipal Administration, dt. 6-11-1983. The assertion that the development charges work out to Rs. 3,60,096/- is stoutly controverted. Deposit of Rs. 30/- per Square Yard for enforcement of the conditions of layout did not include any development charges. 30% layout development cost covered by Clause 11 of the conditions is also excluded from development charge, which is provided by Sections 27 and 28 of the Act. It is also submitted that terms and regulations in the master plan (Town Planning Scheme) prescribed the minimum size of house plot and the same is adopted by the Development Authority. The only exception is given in favour of public bodies and that is for a reasonable cause. Respondent submits that the conditions and the payments are relatable to the functions of the Urban Development Authority, in which vested the powers and functions under the A.P. Town Planning Act, 1920, the Municipalities Act of 1965 and the Gram Panchayat Act, 1964. It is submitted that the development authority has power to enforce conditions regarding amenities in exercise of power under Sections 13 and 14 of the Act, read with the corresponding provisions in the Municipalities Act and the Gram Panchayat Act Reference is made to Section 32 of the Town Planning Act, casting the responsibility on the owners of the land who lays it out into plots to provide amenities including roads, water, supply, street lighting drainage, sewerage, public works, tourist spots, open spaces, parks and play fields and such other convenience, as the Government may specify. The ''cost of providing such amenities has been worked out to be about Rs. 60/- per square meter and that the authority is insisting upon deposit of only 50% thereof viz., Rs. 30/- per Sq.Yd. according to the conditions referred to above. External development charges covered by Clause 11 concern the cost to connect the layout with the main road by providing link roads, drainage, energy supply lines to the lands etc. It is submitted that owners of land who want to make commercial exploitation of the urbanized areas have to defray the cost of amenities which are to be provided to the persons who are likely to purchase the developed plots. The condition that they should meet the expenses of laying out the colonies of linking the layout with the external services and for providing public facilities and furnish security for such payment is said to be reasonable. Respondent asserts that the development charges which the Authority levies is far less than the maximum amount of Rs. 40,000/- per hectare and therefore there is no illegality or arbitrariness or any violation of Articles 14 and 19 of the Constitution of India.
We have to consider the provisions of the Urban Development Act, the A.P. Municipalities Act, 1965, the A.P. Gram Panchayath Act, 1964 and the Andhra Pradesh Town Planning Act, 1920, some provisions of each of which apply to the Urban area as notified u/s 13 of the Urban Development Act.
Chapter HI, Part V of the Municipalities Act applies to streets in Municipalities. Sections 171 to 183 apply to public streets which are to be maintained and repaired by the Municipal Council. The council has also extensive'' powers in relation to layout and making of public streets, construction of bridges in sub-ways, widening, opening, extending or otherwise improving any public street and other related matters. Sections 184 to 188 deals with Private Streets.
According to Section 184, the owner is obliged to make a lay out and to form a street or road when disposing of lands as building sites. It also obliges him to pay the council a conversion fee, if any agricultural land is intended to be utilised or sold for building purposes. The fee is prescribed to be not less than twenty five paise and not more than one rupee per square metre. Sub-section (2) of Section 184 obligates the owner, before he utilises, sells, leases or otherwise disposes of such land or any portion thereof, as sites for construction of buildings, to make a layout and form a street or road giving access to sites and connecting them with an existing public or private street except in the cases where the sites about on an existing public or private street. He has also to -
''set apart in the layout adequate area of land on such a scale as may be prescribed for a play-ground, a park, an educational institution or for any other public purpose.
"Sub-section (3) provides that-
"Unless the condition specified in clauses (a) and (b) of Sub-section (2) are satisfied, the owner shall not be entitled to utilise, sell, lease, or otherwise dispose of his land or any portion thereof for the construction of buildings.
"Sub-section (4) provides that-
"No permission for the construction of buildings in such land or portion thereof shall be granted unless-
(i) the street or road as required in clause (a) of Sub-section (2) is laid out and the conditions required in clause (b) thereof are fulfilled."
Section 185 of the Municipalities Act requires any person intending to make a layout and form a new private street or road to apply for permission specifying-
(a) the level, direction and width of the street
(b) the street alignment and the building line:
(c) the arrangements to be made for levelling, paving, metaling flagging, channeling, swearing, draining, conserving, lighting the street, and the provision for water supply mains; and
(d) the area set apart for public purposes under clause (b) of Sub-section (2) of Section 184.''
Sub-section (2) of Section 185 provides for payment of a conversion fee under Sub-section (1) of Section 184; and
"(ii) for the purpose of fulfilling the obligations imposed u/s 184, deposit as security such amount, as may be prescribed, in the municipal treasury, or give as security in favour of the municipality such extent of the land, and of such value, as may be prescribed, in the area covered by his layout."
Section 187 empowers the Commissioner to order work to be carried out or to execute it in default. Sub-section (4) of Section 187 provides that the cost of such works may be recovered from out of the deposit made by the owner or from the amount realised by auctioning the land given as security. Section 188 confers on the owner a right to require the street to be declared as public.
Andhra Pradesh Municipalities (Layout) Rules, 1970, (hereinafter referred to as layout Rules) were promulgated in G.O.Ms.No. 62, Municipal Administration, dt.28-1-1970 to give effect to Section 185 of the A.P. Municipalities Act. The rules provide for the manner in which the application has to be submitted, the contents thereof etc. Rule 5 requires the application to accompany a receipt of the Municipality showing the amount of non-interest bearing security deposit at the rate of Rs. 3.00 per Sq. metre for the due fulfilment of the obligations imposed u/s 184 or in lieu of cash deposit, a security in the stage of land of such extent equivalent to the value of cash deposit in the area covered by the layout through a mortgage in favour of the Municipality or in the form of Bank Guarantee equivalent to the amount of security deposit in the form prescribed in Appendix ''G''. Details of other obligations in respect of a layout are also covered by the Layout Rules.
The Andhra Pradesh Town Planning Act, 1920, hereinafter referred to, as the Town Planning Act provides for town planning schemes (Sections 10 to 14). Section 14(6) provides that the scheme shall have effect from the date of publication of the notification. It also provides for permission to be taken, for construction etc., after publication of draft scheme (Section 17), obligation on owners to comply with scheme after sanction in the matter of! construction or reconstruction or any alteration to buildings (Section 18), power of the responsible authority to enforce the scheme (Section 19), constitution of Town Planning trusts (Sections 45 and 46), vesting in municipal council of streets laid out or altered and open spaces provided by the trust under a scheme (Section 52), and transfer of proceedings from one authority to another (Section 55).
Rule 26(b) of the rules under Town Planning Act, deals with matters that may be dealt with in a scheme, for the reservations of land for streets, roads, open spaces, recreation grounds and sites for public buildings; Rule 70 empowers the trust to recover expenses for enforcement in cases where any owner commits default or delays in carrying out of any work or improvement ordered by a responsible authority under Sub-section (3) of Section 19 or by the Government in appeal.
The Government approved a general town planning scheme/master plan framed under the Town Planning Act, in respect of Tirupathi Municipality and surroundings in G.G.Ms.No. 1123 Municipal Administration published in Gazette No. 555 dt. 30-10-1981. Clause 6 of the scheme provides-
"If any owner of the land within the area covered by the scheme intends or proposes to layout a street lane or path-way or sub-divide, utilise, lease or otherwise dispose off such land, or any portion or portions of the same as site or sites for the building purposes, he shall submit for the approval of the responsible authority a site or layout plan showing the land and the site or sites intended for or proposed for building purposes and street or streets either existing already or intended to be laid out and made by the owner giving access to the site or sites.
"Sub-clause (ii) provides-
"Save in such cases as the site or sites intended for building purposes may abut an existing public street-or an existing private street made in conformity with the provisions of Sections 184 and 185 of the Municipal Act, the owner of the land shall make out a layout and make a street or streets giving access to the site or sites and connecting with the existing street and subject to the provisions of the scheme comply with the provisions of Sections 184 and 185 of the Municipal Act.
Sub-clause (iii) contains a prohibition against the owner to sub-divide, utilise, sell, lease or otherwise dispose off the site or sites intended for building purposes unless he has carried out or otherwise made arrangements to carryout the street works contemplated by Sections 184 and 185 of the Municipal Act and Sub-clause (i) and (ii) to the satisfaction of the responsible authority. Sub-clause (iv) provides that the responsible authority may order the street works to be carried out or to carryout the works by itself in the manner prescribed by Section 187 of the Municipal Act in which case, the cost of such works shall be recovered from the owner, Sub-clause (v) casts an obligation on the owner to provide and construct all proper approaches, embankments, culverts, retaining walls, Drains and other works connected therewith or incidental thereto.
We then come to the provisions of the Urban Development Act. Section 2(o) empowers government by notification to declare any area as an urban area. '' Chapter III deals with Master Plan and Zonal Development Plans. Section 36 of the Act enables the Government to transfer the power of the councils, Panchayats, Zilla Parishads etc, to the Development Authority. Sub-section (2) of Section 36 provides that the authority shall be deemed to be the local authority concerned and may exercise the powers transferred to it within the territorial jurisdiction of the local authority concerned. Sub-section (3) is to the effect that-
"Where the jurisdiction of the Authority includes the areas in which the Andhra Pradesh (Andhra Area) Town Planning Act, 1920 is in force, the Authority shall be the Municipal Council or the Town Planning Trust as the case may be to enforce the provisions of the said Act."
In other words, the Development Authority has the powers of the local Authority and Town Planning Trust in the areas covered by those acts and the Gram Panchayath in respect of those areas which are included within the jurisdiction of that Authority. Section 13 of the Act deals with declaration of development areas and development of land in those and other areas.
It is not in dispute before us that in G.O. Ms.No. 1178 Municipal Administration, dt.6-11-1981 the Government had extended the Urban Development Act to Tirupathi Municipality and 89 Gram Panchayaths in the surrounding area. This was followed by G.O.No. 713 dt.6-11-1983, whereby the Urban Development Authority (Hyderabad) Rules, 1977 which were issued in G.O.Ms.No. 2l5 Municipal Administration, dt.1-4-1977 were made applicable to Tirupathi Development area. In G.O.No. 41 Municipal Administration dt.23-1-1986 the Government directed the Tirupathi Urban Development Authority to stop the practice of granting relaxation from the provisions of the Zoning Regulations issued under the General Town Planning Scheme or Master Plan for Tirupati Municipality and directed to scrupulously follow the instructions issued under the Scheme or Master Plan, in future.
Sub-section (4) of Section 13 obligates that-
"no development of land within the development area shall be undertaken or carried out by any person or body including! any department of the Government, unless permission for such development has been obtained in writing from the Authority in accordance with the provisions of this Act''
Section 14 deals with ''Application for permission''. Sub-section (2) of that section provides that the application shall be accompanied by such fee as may be prescribed.
Chapter-VII deals with levy, Assessment and Recovery of Development charges. Section 27 empowers the authority to levy development charges on the institution of use or change of use of land or building or development of any land or building for which permission is required under that Act in the whole area or any part of development area within the maximum rates specified in Section 28. Proviso to Sub-section (2) of Section 28 imposes maximum limit of Rs. 40,000/- per hectare in the case of development of land and Rs. 10/- per square metre in the case of development of building as development charges. Assessment and recovery of development charges are provided in Section 29.
Section 32 empowers the authority to provide amenities or any other development, which the owner is obliged to provide. Sub-section (3) provides that-
"All expenses incurred by the Authority or the agency employed by it in providing the amenity or carrying out the development together with interest at such rate as the Government may by order fix from the date when a demand for the expenses is made until payment, may be recovered by the Authority from the owner or the person providing, or responsible for providing, the amenity as arrears of land revenue.
Section 33 deals with the power of the Authority to require local authority to assume responsibility for amenities in certain cases.
Rules are framed under the Urban Development Act. Rule 15 deals with application fee for grant of layout permissions. The rates of development charges are provided therein. Regulations have been framed providing Procedures (Conditions) for the approval of layouts''. Clauses 10 and 11 are relevant for the present purpose. We have referred to these conditions in detail earlier.
It is clear from the above recitals that there are three statues regulating grant of permission for layout or conversion of land in municipal/Panchayat/ Urban areas. The substance of the different provisions is one and the same. The owner of the land has to pay two separate levies and furnish security on two counts at specified rates. The two levies are conversion/application fee and development charges. The former is a fee for services and the latter is a" tax on the user of land. The deposits are in respect of cost of providing amenities specified in the Acts and cost of external development which connect the layout with the external world by providing link roads, water mains, drainage and sewerage facilities, extension of energy supply lines etc. The statutes and the rules make and maintain these dear out distinctions between the fees and tax on the one hand and security deposit for the cost of internal and external development on the other.
Under the Urban Development Act, it is competent for the Government to declare such urban area or group of Urban areas to be a development area for the purpose of the Act (Section 13). Such declaration in the present case was made by a notification issued in G.O.Ms.No. 1178 Municipal Administration, dt.6-11-1981. Government has approved and notified general town planning scheme/master plan in respect of Tirupathi town and surroundings in G.G. No. 1123 Municipal Administration dt.13-10-1981. That notification was published in the Gazette dt.30-10-81. The notified scheme is deemed to be a scheme prepared and sanctioned under the Urban Development Act, by virtue of the provisions contained in Section 11. The Hyderabad Urban Development Authority rules were made applicable to Tirupathi Municipality by reason of G.O.Ms.No. 41 dt2-3-86. Automatically, Rule 15 of the Hyderabad Urban Development Authority Rules applied to Tirupathi Urban Development area also. The scale of application fee and development charges were therefore made applicable to any development activity carried on within the Tirupathi Urban Development area as well.
Petitioner cannot therefore canvass the correctness of the levy of application fee or the development charges as provided in Sections 27 to 29 of the Urban Development Act.
The only limited extent to which any challenge can be raised relates to the limit fixed by the first proviso to Section 28 of the Act. It is asserted by the respondents that development charges in excess of Rs. 40,000/- per hectare has not been demanded from the petitioners. It is also submitted that the petitioners are confusing the cost of development including provision of amenities as provided in the Urban Development Act and the cost of external development which the owners are obliged to provide under Sections 184 to 187 of the Municipalities Act read with the Municipal Layout Rules, 1970 as forming part of the development charges.
The definite case of the respondents is that the cost of development (internal-amenities) and external, are provided by Clauses 10 and 11 of the procedures (Conditions) for approval of layouts. The definite assertion in the counter affidavit is that the amount of Rs. 30/- per sq. yard which the owner is required to deposit as security represents only about 50% of the cost of development and amenities and 30% thereof viz., Rs. 10/- per sq. yard is required to be deposited as security towards cost of external development which the owners are otherwise to incur.
Section 36 of the Urban Development. Act authorises the Government to suspend the powers of the authorities under the various local authorities Acts. Under Sub-section (3) thereof the authority has all the powers of the Municipal Council or the Town Planning Trust as the case may be to enforce the provisions of the Act. The authorisation in the Government to suspend the provision of the Act is ''notwithstanding anything in any other law or regulation in force''. Respondents have asserted that the Government had issued notification u/s 36 suspending the powers of the local authority concerned. The consequence of that notification is that the Urban Development Authority has got the powers of the Municipal Council and the Town Planning Trust in respect of control of development and use of the lands and buildings, under the respective enactments. This naturally means that it is competent for the development authority to exercise such of those powers of the Municipal Council as are comprehended by Sections 184 to 187 of the Municipalities Act and the corresponding provisions in the Layout Rules. It is also competent for the authority to discharge all the functions of the Town Planning Trust under the Town Planning Act.
The provisions of the three enactments which we have referred to above represent the obligation in relation to cost of internal development including amenities which are defined in the Urban Development Act as also enforcement of those obligations which are covered by Section 187 of the Municipalities Act. We are also reasonably certain that the provision of external development is also part of the obligation of the owner according to Sections 184(2)(a). It is undeniably obligatory on the part of the owner to connect the street or road atleast at one end with the street, which is already open, to extend energy supply to the lands as also to provide water mains, sewerage and various other facilities to the lay out in question. Extension of such facilities for the benefit of the lay out may naturally have to be made by the owner of the land as is evident from the Municipalities Layout Rules, 1970. Rules 11 and 12 of those rules provide for execution of an agreement in the prescribed form to execute the works as per the specifications". What is asserted in the counter affidavit is that the deposit which is required to be made represents only 50% of the internal development and the corresponding deposit required in relation to the cost of external development. Whatever it may be, it is clear that these are only deposits of security towards cost of development which has nothing to do with development charges under Sections 27 and 28 of the Urban Development Act.
On a consideration of the pleadings and the arguments of counsel on either side, we are satisfied that the petitioner cannot succeed on his contention that what is demanded of the owners amount to development charges only and the same is illegal as being in excess of the outer limit fixed under the first proviso to Section 28 of the Urban Development Act. The demand consists of four elements as we have found. The element of development charges properly so called does not exceed the statutory limit.
Deposit of security for cost of development - internal and external stand on a totally different footing. Owners of the land which are converted into housing or such similar Urban Development for purposes of sale cannot insist that the cost of all such development laid out for the benefit of such development shall be met by the local or development authority. If we read the provisions of the Urban Development Act and the Town Planning Act, along with the provisions of the Urban Development Act, it is crystal clear that the concerned local authority, in whose shoes the Urban Development Authority stands by reason of the provisions of Section 36(3) of the Urban Development Act, is entitled to demand of the owner, security deposit for fulfilling the obligations under Sections 184 and 185 of the Municipalities Act. The quantum of the cost of internal or external development is not a matter for adjudication in these proceedings. Petitioners have not chosen to challenge the provisions contained in Sections 184 to 187 of the Municipalities Act or Rules 11 and 12 of the Municipal Layout Rules. Nor have they challenged the provisions contained in Section 36 of the Urban Development Act. Petitioners do not disown their obligation to obtain permission for approval u/s 17 or obligation to comply with the scheme u/s 18 of the Town Planning Act. In the face of all these provisions, it is not easy for the petitioners to disown any obligation to pay the cost of providing amenities within the layout - otherwise called (internal) development cost and the cost (external) of linking up the layout with the existing roads or streets or sewerage or drainage facilities, electricity supply lines etc. There is a statutory assessment of the probable cost of internal development as Rs. 30/- per square yard and one third thereof as cost of external development viz., link facilities.
We are not persuaded to hold that the prescription made under Rule 15 of the Layout Rules read along with Procedures (Conditions) for the approval of layouts'' as arbitrary or unreasonable. As a matter of fact, excepting vague averments, no definite material indicating that such assessment or levy are excessive, has been made before us.
We, therefore hold that the Development Authority was right in requiring the owners of lands/layouts to pay Rs. 30/- per square yard towards cost of development (internal) and Rs. 10/- per square yard for external development. We also note that in addition to the statutory obligation contained in Section 185 of the Municipalities Act, there is an assurance contained in the counter affidavit to the effect that the security deposits which the owners are obliged to make will be adjusted towards cost of development and if there is any excess, such amount will be refunded.
We should deal with an objection raised by Sri P. Ramachandra Reddy, on behalf of the petitioners. He submits that provision of sanitation, water supply, electricity, roads and other amenities are obligatory duties of the local authority and therefore the Urban Development Authority is not entitled to collect the cost of such amenities and facilities from the owners of lands/ layouts. He invited our attention to Part-V, Chapter-I, relating to water supply, lighting and drainage, Chapter-II relating to Scavenging and Chapter-in relating to Public streets, as also the provisions contained in Part-II of the Municipalities Act to make out the point that these are obligatory functions of the local authority which it has to perform without requiring each individual owner of land or layout to defray the cost.
In the light of the provisions contained in Sections 184 to 187 of the Municipalities Act, the Municipalities Lay out Rules and the corresponding provisions of the Town Planning Act and the Urban Development Act and the Rules thereunder, we find it extremely difficult to accept this submission. What actually happens in the case of a layout is that land is converted for different use as accelerated by urbanisation and the development programmes. Layouts are prepared so as to convert land for more profitable use as a part of the Urban Development. It cannot be held that the local authority has an obligation to provide all facilities at its cost so as to enable the owners of lands/lay outs to reap profits of urbanisation without defraying the cost of such conversion/development. The obligation of municipality to maintain Private Streets arises only when 75% of the owners of lands concerned make it over to the local authority as provided in Section 188 of the Municipalities Act. Till such time as it is declared as a public street, the local authority has only a limited obligation for its maintenance and upkeep. It is obviously the cost of laying out the roads and its maintenance and upkeep till such time as it is taken over by the local authority that has to be met by the owner of the land/layout or the beneficiaries of the development The persons benefited out of the transaction primarily will be the owner of the land/layout. We do not find anything wrong in the State requiring the owner of the land who profits out of the transaction, to defray the cost of development. No element of tax for compulsory exaction is involved in requiring the owner of the layout to deposit security for the cost of internal or external development. The insistence on payment of an estimated amount towards such cost cannot also be considered as arbitrary, since there are statutory provisions enabling such demand.
This leads to the question of validity of the development charges. It is not disputed before us that the development charges excluding the deposit of cost do not exceed the outer limit fixed by Section 28 of the Urban Development Act. Hence the levy cannot successfully be assailed. We are satisfied that the balance amount after providing for security deposit at the rate of Rs. 30/- per sq.yard for internal development and Rs. 10/- for external development which was demanded from the owners of the land were not in excess of Rs. 40,000/- per hectare. As to the authority to levy development charges, we need only refer to the decisions of this court in V. Sesha Sarma v. State of A.P., 1960 A.P. 461, Anantha Kondayya Setty v. Commissioner, Kurnool Municipality, 1963 A.P. 379, Nizam Sugar Factory v. City Municipality, 1965 A.P. 91, Ramchand Maroti Mandwale v. Malkapur Municipal Council, Malkapur, 1970 Bombay 154. The question is put beyond any controversy by the decision in Ajay Kumar Mukherjee v. Local Board of Barpeta., 1965 S.C 1561.
As for the relief relating to Clause 3(iii), of the Procedures (Conditions) for the approval of layouts'' is concerned, we note that according to the Municipalities Act and the Town Planning Act as also the Lay out Rules and the Urban Development Act, it is the obligation of the owner of the land/lay out to provide plantation of avenue trees. However, it is now revealed that this condition has been relaxed to the benefit of the petitioner. We need not therefore go into the question of validation of Clause 3(iii). We have already dealt "with the obligation of the owners in relation to maintenance of street, laying out roads, black-topping them, providing drains, street lighting etc., in the context of the provisions of the Municipalities Act, Town Planning Act and the Urban Development Act. In view of the fact that the relevant statutory '' provisions which casts the same obligation on the owners of lands/lay outs, are not assailed, we do not find any substance in the challenge against conditions 5 and 6. This applies to condition numbers 10 and 11 as Well. This minimum extent of house plots which is provided for in Clause 8 with exemption in favour of public bodies only was provided for in the zoning regulations of the town planning scheme/master plan which was approved on 13-10-1981 and was published in the Gazette on 30-10-1981. We are therefore of the opinion that this condition is neither discriminatory nor arbitrary. As long as the provision in the town planning scheme is not of ely avoided, it is not possible to grant any relief in relation to condition.
In view of the above, we hold that petitioner is not entitled to the reliefs which it seeks in this Writ Petition.- We hold that Sub-section (3) of Section 27 of the Urban Development Act, 1975 and Conditions 3(iii), 5, 6, 8, 10 and 1 of the Procedures (Conditions) for approval of layouts, issued by the respondents are constitutionally valid and do not violate Articles 14 and of the Constitution of India. We hold that development charges relatable to Sections 27 and 28 of the Urban Development Act and Rule is of the rules have been validly levied well within the maximum limit prescribed under the first proviso to Section 28 of the Act. We hold that the Development charges is a tax on user of land and is relatable to entry 49, List II, VII Schedule of the constitution of India. We also hold that the respondents are right in insisting upon deposit of security in cash or by bank guarantee or by mortgaging a portion of the land equivalent to the value, at the rate of Rs. 30/- per square yard of the total area covered by the lay out towards cost of internal development and Rs. 10/- per square yard towards cost of development (external) and the same is legal and sustainable.
In the result the Writ Petition fails and is hereby dismissed with costs. Advocate''s fee Rs. 500/-.