The Bombay High Court has clarified that no transfer premium can be levied on land held in perpetuity under Tenure D, as such land qualifies as Class I occupancy under the Maharashtra Land Revenue Code, 1966. While upholding the 100% charge for change of use to non-agricultural purposes, the Court struck down the 75% levy for conveyance regularization, emphasizing that pre-independence and post-independence land revenue laws permit free transfer without state consent or payment.
Background & Facts
The Dispute
The petitioner, M/s. M.P. Homes, purchased two parcels of land bearing CTS Nos. 456/1 and 456/2 in Panvel, Raigad district, totaling 360.8 square meters, through registered sale deeds dated 10.09.2013. These lands were historically classified under Tenure "D" in revenue records, indicating perpetual leasehold status granted during the pre-independence era for agricultural purposes, specifically tree plantation. The petitioner developed the land into a multi-storey residential project and obtained a Part Occupancy Certificate from the Panvel Municipal Corporation in 2021. Subsequently, a private complainant, Respondent No. 5, filed complaints alleging unauthorized use and transfer. The State Government, through Respondent No. 1, issued an order dated 11.11.2020 directing the petitioner to pay 100% of the Ready Reckoner valuation for change of use to non-agricultural purposes and 75% as transfer premium for conveyance regularization.
Key Facts
- The original lessees of CTS No. 456/1 were Savlaram Trimbak Natu (pre-1934) and his wife Smt. Sitabai, with subsequent transfers to Dwarkabai Vishwanath Joshi and Ramabai Atmaram Athavane.
- CTS No. 456/2 was originally leased to Shridhar Trimbak Natu, later transferred to Purushottam Narayan Gone, then Gopal Bhikaji Phatak, and finally Sushilabai Vishnu Kulkarni.
- The petitioner acquired both parcels from the legal heirs of these predecessors via registered sale deeds on 10.09.2013.
- Revenue records consistently classified both parcels as Tenure "D" under Rule 43 of the Bombay Land Revenue Rules, 1921.
- Five prior transfers of these lands occurred between 1934 and 2013, all recorded in revenue records without any premium or permission being levied or sought.
- The petitioner applied for change of tenure from "D" to "A" on 20.11.2017, following complaints by Respondent No. 5.
- The State issued Government Resolutions dated 08.09.1983, 27.08.2014, and 20.02.2016, which the petitioner argued were inapplicable to Tenure "D" lands.
- The petitioner deposited Rs. 1,20,75,145/- on 16.12.2020 under protest, comprising 100% for change of use and 75% for transfer premium.
Procedural History
- 10.09.2013: Petitioner purchased subject lands via registered sale deeds.
- 03.11.2017: Respondent No. 5 filed complaint with Tehsildar, Panvel.
- 20.11.2017: Petitioner applied to Tehsildar for change of tenure from "D" to "A".
- 03.03.2018: District Collector (Respondent No. 3) rejected application citing Government Resolution dated 27.08.2019.
- 07.06.2018, 23.10.2018, 14.11.2018: Further complaints filed by Respondent No. 5.
- 26.03.2019: District Collector forwarded petition to State Government for directions.
- 30.09.2020: Divisional Commissioner, Konkan, dismissed Revision Application No. 243 of 2020, holding matter pending before Respondent No. 1.
- 11.11.2020: Respondent No. 1 (Minister) passed impugned order directing deposit of 175% of Ready Reckoner valuation.
- 16.12.2020: Petitioner deposited Rs. 1,20,75,145/- under protest.
- 15.01.2021: Petitioner filed Revision Application No. 239 of 2020 before Respondent No. 1.
- 12.06.2022: Writ Petition No. 1561 of 2022 filed before Bombay High Court.
- 08.06.2026: Judgment delivered by Justice Milind N. Jadav.
The Parties' Positions
Petitioner: Argued that Tenure "D" lands under Rule 43 of Bombay Rules, 1921, are freely transferable and classified as Class I occupancy under Section 29(2)(b) of MLRC, 1966. No transfer premium is legally permissible. The 75% levy is arbitrary and contradicts prior state conduct.
Respondents (State): Contended that the land remained State property after lease expiry in 1961, governed by Rule 55 of Bombay Rules, 1921, and that transfer and change of use required permission. Relied on Government Resolutions to justify 75% and 100% levies.
Respondent No. 5: Supported the State’s position, alleging suppression of facts and illegal development.
Relief Sought
The petitioner sought quashing of the order dated 11.11.2020 and refund of Rs. 1,20,75,145/- paid towards the 75% transfer premium, while agreeing to retain the 100% change-of-use charge.
The Legal Issue
The central question was whether Section 29(2)(b) of the Maharashtra Land Revenue Code, 1966 classifies land held in perpetuity under Tenure "D" as Class I occupancy, thereby rendering the levy of a 75% transfer premium for conveyance illegal, and whether the 100% charge for change of use to non-agricultural purposes is legally sustainable.
Arguments Presented
For the Petitioner
The petitioner relied on Rule 43(1)(a) of the Bombay Land Revenue Rules, 1921, which permits free transfer of Tenure "D" lands without state permission. It argued that such lands automatically became Class I occupancy under Section 29(2)(b) of MLRC, 1966, as they were held without restriction on transfer prior to the Code’s commencement. The petitioner emphasized that five prior transfers occurred without any premium, and the State had never objected, thereby estopping it from imposing charges now. It further contended that Rule 35 of the Maharashtra Land Revenue (Disposal of Government Land) Rules, 1971 governs lease grants, not regularization of transfer, and that the Government Resolutions cited were applicable only to Class II occupancy, not Class I. The petitioner offered to forfeit the 75% premium and accept the 100% change-of-use charge.
For the Respondent/State
The State contended that the lease expired in 1961, reverting ownership to the State under Rule 55 of the Bombay Rules, 1921, which applies to unalienated land. It argued that Section 73A(1) of BLRC required permission for change of use, and that the petitioner concealed the lease status to obtain planning approvals. The State relied on Government Resolutions dated 08.09.1983, 27.08.2014, and 20.02.2016 to justify the 75% transfer premium and 100% change-of-use charge. It asserted that Rule 43 did not apply because the petitioner failed to produce certified documents under Rule 43(1)(a), and that the property extract was not a government document.
The Court's Analysis
The Court undertook a detailed examination of the historical and statutory framework governing land tenure in Maharashtra. It held that Rule 43(1)(a) of the Bombay Land Revenue Rules, 1921 explicitly permits perpetual grants of land for building sites, which are freely transferable. The Court noted that the subject lands were classified as Tenure "D" in revenue records since pre-independence times and had undergone five prior transfers without any premium or permission being demanded.
"It is seen that Rule 43(1)(a) of Bombay Rules, 1921 does not mandate permission of the Government nor payment of premium to transfer lands classified as Tenure 'D' nor does the aforementioned Rule hinder change of user of such land."
The Court then turned to Section 29(2)(b) of the Maharashtra Land Revenue Code, 1966, which defines Class I Occupants as those who held land without restriction on transfer under pre-existing land revenue laws. The Court concluded that Tenure "D" lands, governed by Rule 43, squarely fall within this definition. The State’s own affidavit admitted that Tenure "D" lands are alienable without prior permission, rendering its subsequent imposition of a 75% transfer premium legally untenable.
The Court rejected the State’s reliance on Rule 35 of the Maharashtra Land Revenue (Disposal of Government Land) Rules, 1971, noting that it pertains to grant of new leases, not regularization of transfers. The Government Resolutions cited were held inapplicable because they specifically targeted Class II occupancy, not Class I. The Court emphasized that the State’s prior acquiescence in five transfers estopped it from now demanding a premium.
Regarding the 100% change-of-use charge, the Court found that while the petitioner had not obtained prior permission for change of use, the land was historically agricultural (for tree plantation). The Court accepted the petitioner’s own admission in its rejoinder affidavit that it was willing to pay the 100% charge under Rule 3(4)(B) of the MLRC Conversion Rules, 2019, which permits conversion of Class II and leasehold land to Class I upon payment of premium. The Court held that this charge was legally sustainable as it compensated the State for the unearned income from change of use.
The Verdict
The petitioner succeeded in part. The Court quashed the 75% transfer premium levy and directed the State to refund Rs. 90,56,359/- (75% of Rs. 1,20,75,145/-) to the petitioner within two weeks from the date of judgment. The Court upheld the 100% change-of-use charge of Rs. 30,18,786/-, which the State is permitted to retain. The State is directed to issue a refund order within 14 days, failing which it shall be liable for contempt proceedings. Costs of Rs. 50,000/- are awarded to the petitioner.
What This Means For Similar Cases
Class I Occupancy Precludes Transfer Premiums
- Practitioners representing landowners with Tenure "D" classification must assert Section 29(2)(b) of MLRC, 1966 to claim Class I status and resist any transfer premium demands.
- Any demand for transfer fees on such land, even if framed as "regularization," is illegal if based on post-independence rules like Rule 35 or Government Resolutions meant for Class II.
- Revenue records showing consistent Tenure "D" classification and prior transfers without premium are decisive evidence.
Change of Use Fees Are Lawful, But Must Be Statutorily Grounded
- While change-of-use charges for agricultural-to-non-agricultural conversion are permissible, they must be linked to specific rules like Rule 3(4)(B) of MLRC Conversion Rules, 2019.
- Practitioners should advise clients to proactively apply for change-of-use permissions before development to avoid retroactive penalties.
- The Court’s acceptance of the petitioner’s voluntary agreement to pay the 100% charge sets a precedent: such charges are not punitive but compensatory, and may be negotiated if the statutory basis is clear.
State’s Acquiescence Creates Estoppel
- Where the State has permitted multiple prior transfers without objection, it cannot later impose fees on subsequent transferees.
- This principle applies to all land revenue matters: conduct over time can override statutory interpretation if it reflects consistent administrative practice.
- Legal notices demanding transfer premiums should be challenged on grounds of estoppel and violation of settled administrative practice.
