BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY & ORS. versus AMIT KUMAR & ORS.

Citation: [2019] 14 S.C.R. 1 · Decided: 22-10-2019 · Supreme Court of India · Bench: DEEPAK GUPTA · Disposal: Disposed off

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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BIHAR INDUSTRIAL AREA DEVELOPMENT
AUTHORITY & ORS.
v.
AMIT KUMAR & ORS.
(Civil Appeal No. 8219 of 2019)
OCTOBER 22, 2019
[DEEPAK GUPTA AND ANIRUDDHA BOSE JJ.]
Industrial Development – Recovery of unearned increase –
Entitlement to – An allotment was made to the allottee of a land for
industrial purposes – A lease deed was entered into between the
State of Bihar (rights were later transferred to Bihar Industrial Area
Development Authority (BIADA)) and the allottee – A committee was
constituted by the Government of Bihar to lay down the modalities
and fees for transfer of industrial estates from allottees to some
other persons – Pursuant thereto, BIADA fixed the cost of the land
on the basis of the circle rate applicable for further transfer – High
Court held that when the allottee of land further transferred land
to some other entity, the BIADA was only entitled to recover the
unearned increase on the basis of cost of land and development
and not on the basis of the market value of the land or the circle
rate of the land – Propriety of – Held: Not proper – The land was
given to the original allottee at a price fixed by BIADA – When
allottee transfers and get something more for the land or the market
value as reflected in the circle rate is much more than the price at
which the land was allotted to the allottee, there is no reason why
the allottee should pocket all the unearned increase and BIADA,
which was the original owner of the land should be deprived of a
reasonable portion of the unearned increase from the value of the
land – Therefore, fixing the cost of land on basis of the circle rate
applicable by BIADA was legal and valid.
Disposing of the appeal, the Court
HELD: 1.  It is standard practice throughout this country,
specially at the time when these leases were executed to set up
industrial estates wherein lands were given at very low price and
   [2019] 14 S.C.R. 1
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SUPREME COURT REPORTS
[2019] 14 S.C.R.
sometimes at subsidized rates to help in the setting up of
industrial estates in the State. It was expected that establishment
of these industrial estates with flourishing industries would
generate a lot of employment and would also generate revenue
both in the nature of direct and indirect taxes. The issue is whether
when the allottee transfers the land for commercial reasons why
should the Authority not get a reasonable portion of the unearned
income earned by the allottee of the plot just by transferring the
plot in question. The premium on the unearned increase is being
charged only on the value of the land and not on the value of the
transaction. Once an industry is set up it may have various
components including the value of the immovable assets, the
value of the machinery etc. and also the value of the goodwill
which the company has generated. On the other hand there are
companies which are loss making units where debts and liabilities
due to employees and sundry creditors will have to be factored
into while calculating the value of the total assets of the unit.
Those are not to be taken into consideration while assessing the
unearned increase of the cost of the land. [Para 10] [5-F-H;
6-A-B]
2. The land was given to the original allottee at a price
fixed by BIADA. When the allottee transfers and gets something
more for the land or the market value as reflected in the circle
rate is much more than the price at which the land was allotted to
the allottee, there is no reason why the allottee should pocket all
this unearned increase and BIADA, which was the original owner
of the land should be deprived of a reasonable portion of the
unearned increase from the value of the land. Therefore, this
Court is not in agreement with the High Court that the unearned
increase can be charged only on the basis of the BIADA value
plus development charges and in opinion of this Court the policy
of the BIADA fixing the cost of the land on the basis of the circle
rate applicable is legal and valid. [Para 11] [6-C-D]
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 8219
of 2019.
From the Judgment and Order 11.05.2015 of the High Court of
Judicature at Patna in LPA No. 68 of 2008 in CWJC No. 9696 of 2005.
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BIHAR INDUSTRIAL AREA DEVELOPMENT AUTHORITY v.
AMIT KUMAR
With
C.A. Nos. 8220/2019, 8221/2019, 8222/2019.
Gaurav Agrawal, Ms. Anisha Upadhyay, Rajiv Tyagi, Neeraj
Shekhar, Animesh Kumar, Sumit Kumar, Ashutosh Thakur, Ms. Ekta
Bharati, Advs. for the appearing parties.

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