VOLTAS LIMITED versus TEHSILDAR, THANE & ORS.

Citation: [2012] 12 S.C.R. 514 · Decided: 08-11-2012 · Supreme Court of India · Bench: G.S. SINGHVI · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2012] 12 S.C.R. 514 
VOLTAS LIMITED 
v. 
TEHSILDAR, THANE & ORS. 
(Civil Appeal No. 8557 of 2003) 
NOVEMBER 8, 2012 
[G.S. SINGHVI AND SUDHANSU JYOTI 
MUKHOPADHAYA, JJ.] 
Land Acquisition Act, 1894 -
Land Acquisition 
C (Companies) Rules, 1963 - State Government acquired land 
and issued order of allotment in favour of appellant-company 
- High Court held that there was a breach of terms and 
conditions of the order of allotment and, therefore, it was open 
to the respondents to take appropriate proceedings in 
D accordance with law, including recovery of unearned income 
- Justification - Held: From the terms and conditions of the 
allotment order, it is apparent that a restriction was imposed 
on appellant-company to transfer the land or change use of 
the land etc. only with prior permission of the State Government 
E - Appellant-company had decided to develop the land as per 
Housing Scheme through a Developer and had so intimated 
to the State Government which agreed to the proposal - State 
Government thus allowed the appellant-company to change 
the use of the land and to develop it for purposes other than 
F that for which it was originally allotted and such permission 
was in accordance with the terms and conditions mentioned 
in the order of allotment - High Court therefore erred in 
holding that appellant-company breached terms and 
conditions of the order of allotment - Further, the order of 
G allotment and the housing scheme did not stipulate any 
charge on the unearned income - Nothing on record to 
suggest the basis on which the respondents determined such 
unearned income - A/so no prior hearing was given to the 
appellant-company - Settled law that no Penal order can be 
H 
514 
VOLTAS LIMITED v. TEHSILDAR, THANE & ORS. 
515 
passed without giving any notice and hearing to the affected 
A 
person - Impugned orders were passed without giving such 
notice and hearing to appellant-company; thus passed in 
violation of the Rules of Natural Justice - Matters remitted to 
Competent Authority to decide whether appellant-company 
was liable to pay any amount towards unearned income. 
B 
The Government of Maharashtra acquired the land in 
question in favour of the appellant-company and issued 
a Sanad (order of allotment) with the specific condition 
that the Company shall not in any way whatsoever, 
alienate the said land or any portion thereof by way of C 
sale, mortgage, gift, lease, exchange or otherwise 
howsoever except with the prior permission in writing, of 
·the Government. It was also mentioned in the order of 
allotment, that the land will be vested with the company 
and shall be held by it as its property, to be used for the 
D 
purpose of constructing dwelling houses for workmen 
employed by the Company and the provisions of the 
amenities directly connected therewith, subject to the 
provisions of the Maharashtra Land Revenue Code, 1966 
and the Rules framed thereunder. After about 24 years, 
E 
the order of allotment was stayed and the Company was 
called upon to show cause as to why the land should not 
be forfeited and the amount of Rs.14,11,45,851/- towards 
unearned income be not charged as it violated the terms 
and conditions of the order of allotment by granting 
F 
rights to the developers for the construction of houses 
and selling them after development, thereby benefiting 
to a large extent. After submission of their reply, the 
respondents issued the impugned orders imposing 
charge towards unearned income and the demand notice, 
G 
against which two writ petitions were preferred by the 
Company. Both the writ petitions were dismissed by the 
impugned common judgement passed by the High Court 
which held that there was a breach of terms and 
conditions of the order of allotment and, therefore, it was 
H 
516 
SUPREME COURT REPORTS 
[2012] 12 S.C.R. 
A open to the respondents to take the appropriate 
proceedings in accordance with law, including the 
recovery of unearned profit. 
In the instant appeals, the following questions arose 
8 for consideration: (i) whether the appellant-company 
breached any of the terms and conditions of the order of 
allotment; (ii) whether the notice of demand of 50% of 
unearned income was legal and valid; and (iii) whether 
the appellant-company was required to ~e heard before 
C passing ~f the impugned orders. 
Allowing the appeals, the Court 
HELD: 1.1. The conditions at Clauses 2, 4, 5, 7 and 
10 of the 'order of allotment' dated 20.1.1969 

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