Bombay HC Quashes 75% Transfer Premium on Tenure “D” Land, Orders Refund to Developer
The Bombay High Court held that Tenure “D” land held in perpetuity under pre-independence revenue law is freely transferable, making the State's 75% transfer premium levy illegal and directing its refund within two weeks.
The Bombay High Court has partly allowed a writ petition filed by M/s. M.P. Homes, a developer, against an order of the State of Maharashtra that had directed it to deposit 75% of the Ready Reckoner valuation of two land parcels as a transfer premium and 100% as a charge for regularising change of user to non-agricultural purpose. Justice Milind N. Jadhav, sitting singly, found that the subject lands — classified as Tenure “D” in the revenue record — were granted in perpetuity and freely transferable under both pre- and post-independence land revenue law. The 75% transfer premium was quashed as having no basis in any applicable statute, rule, or government resolution. The 100% charge for change of user was upheld, with the petitioner itself having conceded that levy. The State was directed to refund the transfer premium component within two weeks.
The Two Land Parcels and Their Revenue History
The dispute concerned two parcels of land in Panvel bearing CTS Nos. 456/1 and 456/2, admeasuring 249.6 square metres and 111.2 square metres respectively. Both were classified as Tenure “D” — lands granted in perpetuity — during the pre-independence era.
CTS No. 456/1 was originally held by one Savlaram Trimbak Natu as a perpetual lessee. After his death in 1934, his wife Smt. Sitabai Savlaram Trimbak was mutated in the revenue record. She sold portions of the land in 1950 and 1953 to Dwarkabai Vishwanath Joshi and Ramabai Atmaram Athavane respectively. Their legal heirs eventually sold the land to M/s. M.P. Homes by a registered sale deed dated 10 September 2013.
CTS No. 456/2 was originally held by Shridhar Trimbak Natu. It passed through several hands — to Purushottam Narayan Gone in 1931, then to Gopal Bhikaji Phatak, then to Sushilabai Vishnu Kulkarni, whose heirs sold it to the petitioner again on 10 September 2013.
By the time M/s. M.P. Homes purchased the lands, each parcel had changed hands at least five times. None of those prior transfers attracted any objection or premium demand from the revenue authorities.
Development, Complaint, and the Impugned Order
After purchasing the lands, M/s. M.P. Homes obtained the requisite permissions from the local Corporation (Respondent No. 2) and developed multi-storey buildings on the subject lands. A Part Occupancy Certificate was issued in 2021.
A private complainant, Respondent No. 5, filed a complaint dated 3 November 2017 with the Tehsildar, Panvel (Respondent No. 4), alleging that the petitioner was developing the lands in violation of the original lease terms. The petitioner responded by filing an application dated 20 November 2017 before the Tehsildar seeking change of tenure from “D” to “A”.
The District Collector (Respondent No. 3) wrote to the petitioner on 3 March 2018 stating that the application could not be allowed in view of a Government Resolution dated 27 August 2019. Further complaints followed from Respondent No. 5 in June, October, and November 2018. The District Collector conducted a hearing and on 26 March 2019 forwarded the petitioner's application to the State Government for appropriate orders.
The petitioner challenged the orders of 3 March 2018 and 26 March 2019 before the Divisional Commissioner, Konkan Division, who by order dated 30 September 2020 held that the application was pending before the Minister. The petitioner then filed Revision Application No. 239 of 2020 before Respondent No. 1 — the Minister. By the impugned order dated 11 November 2020, the Minister partly allowed the application but directed the petitioner to deposit 75% of the Ready Reckoner valuation as a transfer premium and 100% of the Ready Reckoner valuation for regularising change of user to non-agricultural purpose.
Under protest, the petitioner deposited Rs. 1,20,75,145/- with the District Collector on 16 December 2020 and was issued a challan. It then filed Writ Petition No. 1561 of 2022 before the Bombay High Court seeking to set aside the impugned order and obtain a refund of the deposited amount.
The Legal Dispute: Were the Lands Freely Transferable?
The central question before the court was whether the subject lands, classified as Tenure “D”, required the State Government's permission for transfer and whether any premium was lawfully leviable on such transfer.
The petitioner's counsel, Mr. Drupad Patil, argued that Rule 43 of the Bombay Land Revenue Rules, 1921 (“Bombay Rules, 1921”) governed the subject lands. Rule 43(1)(a) provides that land granted in perpetuity shall be transferable. He submitted that the Bombay Land Revenue Code, 1879 (“BLRC”), which preceded the present law, also treated land granted in perpetuity as freely transferable without any embargo. After the BLRC was repealed, the Maharashtra Land Revenue Code, 1966 (“MLRC”) came into force. Section 29(2)(b) of the MLRC classifies as Class I Occupants those who, immediately before the MLRC's commencement, held land without any restrictions on the right to transfer under the then-applicable revenue law. The petitioner argued that the subject lands fell squarely within this provision.
The petitioner further argued that the three Government Resolutions relied upon by the State — dated 8 September 1983, 27 August 2014, and 20 February 2016 — had no application. The 1983 resolution pertained to Class II Occupancy lands; the 2014 resolution pertained to Class II lands in Raigad district; and the 2016 resolution dealt with uniformity in occupancy charges without mentioning any 75% or 100% premium. Rule 35 of the Maharashtra Land Revenue (Disposal of Government Land) Rules, 1971, relied upon by the State for the 100% charge, was said to pertain only to grant and renewal of leases for unoccupied land, not to regularisation of tenure or change of user.
The State, through Mrs. V.S. Nimbalkar, AGP, contended that the lease period for the subject lands had expired on 5 June 1961 and was never renewed, causing ownership to revert to the State Government. She argued that the lands were leased for plantation of trees and could not be used for any other purpose without State permission. She relied on Rule 55 of the Bombay Rules, 1921 — which deals with unalienated land to which no other rule applies — and Section 73A(1) of the BLRC, which requires permission for transfer or change of use of allotted land. She submitted that the petitioner had suppressed material facts from the Planning Authority to obtain a sanction plan and had sought regularisation only after being directed to do so.
Private Respondent No. 5, through Mr. Saurabh Railkar, supported the State's position and argued that the petitioner was fully aware that the lease had expired in 1961 and that ownership had reverted to the State, yet proceeded to purchase and develop the lands without permission.
How the Court Reasoned
Justice Jadhav examined Rule 43 of the Bombay Rules, 1921 in detail. The rule provides that land for building sites shall be granted in perpetuity and shall be transferable, subject to the provisions of Section 68 of the BLRC. The court found that Rule 43(1)(a) does not mandate Government permission or payment of any premium for transfer of Tenure “D” lands, nor does it restrict change of user of such land.
The court noted that the Property Register of Panvel City, District Kolaba (now Raigad), appended to the petition, showed that the subject lands were classified as Tenure “D” and governed by Rule 43 of the Bombay Rules, 1921. The lands had changed hands at least five times before being purchased by the petitioner, and none of those transfers attracted any objection or premium demand from Respondents No. 3 and 4.
On the post-independence position, the court held that Section 29(2)(b) of the MLRC applied squarely to the subject lands. Since the lands were held without any restrictions on transfer under the BLRC and the Bombay Rules, 1921, the occupants qualified as Class I Occupants under the MLRC. Class I Occupants hold land freely transferable without State permission or premium.
A significant admission by the State itself weighed heavily in the court's analysis. The affidavit-in-reply filed by Respondents No. 3 and 4 on 11 August 2023 stated that the subject lands were classified as Tenure “D” and could be alienated without prior permission of Respondent No. 3. The court held that this admission was directly contrary to the finding in the impugned order levying 75% transfer premium, and that the State was therefore precluded from maintaining that position.
The court rejected the State's reliance on Rule 35 of the Maharashtra Land Revenue (Disposal of Government Land) Rules, 1971, finding that this rule pertains to grant and renewal of leases for unoccupied land and does not provide for levy of 100% premium towards regularisation of tenure. The three Government Resolutions were similarly rejected: the 1983 resolution applied to Class II Occupancy lands, not Class I; the 2014 resolution applied to Class II lands in Raigad district; and the 2016 resolution made no mention of any 75% or 100% premium.
The court also found that Respondent No. 1 had not cited any Government Resolution, statutory provision, or judicial decision to justify the quantification and imposition of the 75% levy, describing this as “a patent illegality on the face of record.” The Planning Authority had granted a Commencement Certificate and issued a Part Occupancy Certificate in 2021, and Respondents No. 3 and 4 had ratified the petitioner's purchase by mutating its name in the revenue record. The court held that the State could not simultaneously ratify the purchase and then levy a transfer premium for the same transaction.
On the 100% charge for change of user to non-agricultural purpose, the court took a different view. The subject lands were undisputedly agricultural lands granted for plantation of trees. None of the five prior holders had ever applied for or obtained permission to change the user to non-agricultural purpose. The petitioner, as developer, had effected the change of user. In its affidavit-in-rejoinder dated 15 July 2025, the petitioner expressly stated that it was ready and willing to forfeit 75% of the total 175% amount paid and sought refund only of the remainder. The court read this as a concession that the 100% charge for change of user was acceptable to the petitioner. Accordingly, the 100% levy for regularisation of change of user to non-agricultural purpose was upheld.
On Respondent No. 5's standing, the court observed that the private complainant was neither a State officer nor a person claiming to be affected by the development. The court held that Respondent No. 5 had failed to show any reason to interfere with the petitioner's development and that, prima facie, Respondent No. 5 had no locus before the court on the issue at hand.
Outcome
The impugned order dated 11 November 2020 was partially upheld. The State Government's direction to levy 100% of the Ready Reckoner valuation for regularisation of change of user of the subject lands to non-agricultural purpose was confirmed. The State is directed to retain the amount deposited by the petitioner towards this charge.
The levy of 75% of the Ready Reckoner valuation for regularisation of conveyance as transfer premium was quashed and set aside. The State Government was directed to refund the corresponding amount to the petitioner within two weeks from the date of the order, on the basis of a server copy of the judgment, without any further delay. The court warned that failure to comply within the stipulated period would render the State Government liable for appropriate action.
The court directed that a copy of the judgment be brought to the notice of the concerned officers of the State Government, specifically Respondents No. 2 and 3, for effective compliance. The AGP was directed to ensure that the concerned State officer was duly informed of the order.
After the judgment was pronounced, Mrs. Nimbalkar applied for a stay of the judgment's effect and validity to enable the Government to challenge it before the Supreme Court. Justice Jadhav rejected the request, stating that in view of the observations and findings in the judgment, he was not inclined to grant a stay.
The petition was partly allowed and disposed of accordingly.