Sushil Kumar Ganguli vs State of West Bengal

Ruma Pal, J.—The issue involved in this writ application is whether the Petitioner No. 1 is entitled to transfer a flat allotted to him by the West Bengal Housing Board (referred to as the Board for short) to the Petitioner No. 2. The Petitioner No. 2 are not related to the Petitioner No. 1. The flat in question is in a block of apartments built by the Board and known as Purbachal Housing Estate in the Salt Lake area of the city.

The Petitioner No. 1 applied to the Board for allotment of a flat in the Housing Estate. The Petitioner No. 1 was a member of the Purbachal Housing Cluster III Co-operative Society Limited (referred to as the Society). Both the Society and the Petitioner No. 1 requested the Board that the demise should be made to the Society and that the Petitioner No. 1, as the allottee, would be entitled to the leasehold right of the said flat for a period of 999 years commencing from February 15, 1984 by virtue of his membership of the society. Pursuant to that application a lease deed was executed between the Board and the Society on February 15, 1984 which records that the Petitioner No. 1 had been allotted a flat in the Housing State. The flat was transferred by the Board to the society for 999 years against the consideration paid by the Petitioner. Under the lease deed the society and the Petitioner No. 1 were fixed with various obligations which, however, did not include any clause by which the Petitioner No. 1, as the allottee, was restrained from transferring his interest in the apartment to a third party.

In 1991 the Petitioner No. 1 entered into an agreement with the Petitioner No. 2 by which the Petitioner No. 1 agreed to transfer the flat and transferred his share certificates in the society to the Petitioner No. 2. A declaration to this effect was made in an instrument dated October 15, 1991 executed by both the Petitioners. The Petitioner No. 2 undertook to hold the shares of the Petitioner No. 1, and any amount not credited as well as the flat allotted by the society to the Petitioner No. 1 along with the fittings and fixtures including the present liability, if any, and the liabilities to be discharged in future in terms of the bye-laws of the society. The instrument also recorded that all the dues of the society both in respect of the apartment as well as the membership had been cleared till October 14, 1991.

On this basis the society duly mutated the Petitioner No. 2''s name in its record and issued a share certificate to the Petitioner No. 2 covering the shares of the Petitioner No. 1. The new membership of the Petitioner No. 2 in the society were approved by the Deputy Registrar of Co-operative Societies. The approval issued by the Co-operative Department of the Government of West Bengal reads as follows:

In terms of Rule 14291 of W.B.C.S. Rules 1987 read with Clause 6 of the registered bye-laws of your society permission is hereby accorded to admit Sm. Ira Kanjilal, wife Sri R.K. Kanjilal to the membership of your society for flat No. N-1 in place of Sri Sushil Kr. Ganguli, subject to the fulfilment of the following conditions:

That the society shall not collect fee or donation for transfer of the flat pending publication of the notification by the State Govt. as per Rule 142(2) of W.B.C.S. Rules, 1987.

That the transferee member shall give an undertaking to the society to pay such fee or donation to the Society at the rate to be fixed by the State Govt. in terms of the aforesaid Rule.

That the transferor and the transferee fulfil all terms and conditions relating to such transfer according to law.

That the flat is unencumbered.

The Petitioner No. 2 was allotted a new membership number in the society on April 19, 1993. The Petitioner No. 1 had in the meanwhile handed, over possession of the flat to the Petitioner No. 2 after receiving the full consideration money. The Petitioners are desirous of registering the transaction under the Registration Act, 1908.

The relevant provision of law relating to registration at that time was Section 22A of the Registration Act, 1908. Section 22A(1) of the Registration Act, 1908 was introduced by the Registration (West Bengal Amendment) Act, 1981. The Section provides:

22A. (1) The State Government may, by notification in the Official Gazette, declare that the registration of any document or class of document is opposed to public policy.

(2) Notwithstanding anything contained in the Act, the registering officer shall refuse to register the document to which a notification made under Sub-section (1) is applicable.

Pursuant to this power, the notification was issued on May 21, 1988 whereby the State Government declared that any document:

(a) transferring any vacant land or land with building, or

(b) delegating right of enjoyment and management of any land or building by executing a power of attorney (including irrevocable power of attorney), or

(c) creating tenancy on any land or building for twenty years and above, or

(d) creating mortgage or charge or incumbrances and transferring right of enjoyment of any land or building to the mortgagee at Salt Lake, Calcutta, to which the State Government is not a party and made without the prior permission of the Metropolitan Development Authority, Government of West Bengal, shall be opposed to public policy.

On May 8, 1995 a second notification was issued by the State Government.

With the issue of notification No. 452 Regn. dated 21.5.88 Government in the M.D. Department (now Deptt. of Urban Development) has been granting permission for transfer of flats constructed by West Bengal Housing Board at Salt Lake. For leasehold property guideline of West Bengal Housing Board was followed i.e. transfer was allowed only among close relations in case of freehold property no such restriction was imposed and transfer was allowed outside close relations. In order to check speculative activities on the part of unscrupulous transfer''s Govt. for sometimes past has been considering to restrict the transfer only among close-blood relations for all types of flats at Salt Lake constructed by W.B. Housing Board.

The Governor of West Bengal is now pleased to decide that henceforth no permission for assignment/ transfer of a flat constructed by W.B. Housing Board shall be granted except to the close relations of the transferor. The term close relations, for the purpose, shall mean and include father, mother, brother, sister, son, daughter, husband and wife.

The subject matter covered by the two notifications were enacted in the form of the West Bengal Government Land (Regulation of Transfer) Act, 1993. The Act came into force on March 4, 1997. It places restrictions on transfer of all government land.

On September 16, 1997 the Petitioner No. 1 applied to the Respondent No. 2 for permission to register the deed of transfer of the flat. There was no response.

This writ application was filed on December 1, 1997 by the Petitioners for, inter alia, a direction on the Respondents Nos. 1 and 2 to grant permission for transfer/assignment of the flat by the Petitioner No. 1 to the Petitioner No. 2 and for a direction on the Respondents Nos. 3 and 4 to register the deed of assignment. Section 22A and the notifications dated May 21, 1988 and May 8, 1995 had also been challenged in the petition as being unconstitutional. However, the Petitioners neither have pressed their challenge to the constitutionality of Section 22A of the Registration Act nor the 1988 Notification in their arguments.

As there was no dispute relating to the facts the matter was argued by the parties without filing of affidavits only on questions of law. The parties submitted written notes of arguments.

The Petitioners submitted: First that the transfer had taken place before the second notification, and that therefore the restrictions placed on transfer in the second notification had no application. It was further argued that the restrictions only related to the prior permission of the registration of the deed and not to prior permission for transfer of land. Drawing an analogy from Section 269 of the Companies Act 1956 it was submitted that the transfer could be subsequently ratified and that the transaction could take place earlier and approval obtained later. According to the Petitioners since the transfer had taken place prior to the 1995 notification, the rights of the parties should be decided according to the law as it existed when the action had begun. The decision in Venugopal v. Krishnaswami AIR (30) 1943 F.C. 24 and AIR 1941 16 (Federal Court) have been relied upon in support of this submission. Reliance has also been placed on a passage at page 220 in Maxwell, the Interpretation of Statutes (12th Edition).

The second submission made by the Petitioners was that the transaction had been completed by the execution of the agreement between the Petitioners 1 and 2 on October 13, 1991. This created a right in favour of the Petitioner No. 2 to specifically enforce the same which could not be defeated.

The third submission is that the 1995 notification was ultra vires the constitution because it discriminated between flats constructed by-the Housing Board and flats constructed by Non-Government bodies and between two classes of transferees namely, close blood relations of the lessee and other persons. According to the Petitioners such a classification is not based on any intelligible differentia and that the notification was based on the assumption that the transfer to persons other than close blood relations were speculative. The Petitioners say that speculative transactions had been curbed by Section 80H of the Registration Act, 1908 as well as chapter XXC of the Income Tax Act, 1961. As such there was no need to provide for any other measure to cover the same object.

The next submission is that the 1993 Act did not apply to the Petitioners because it did not deal with lease-hold flats and also because the 1993 Act could not be given retrospective effect.

The final submission of the Petitioners is that in the absence of any restrictive clause in the lease agreement and having regard to the provisions of ''s 4 of the West Bengal Apartment Ownership Act, 1972, the operation of which had not been excluded by the 1993 Act, the transfer could be effected. The Petitioners have cited the cases of State of West Bengal and another Vs. Kailash Chandra Kapur and others, ; Prabir Kumar Kar v. The State of West Bengal and Ors. 1992 (2) C.L.J. 260; Tarachand Dalmia v. The State of West Bengal and Ors. 1994 (1) C.H.N. 15 and orders passed in W.P. No. 2398 of 1996 - Dr. Ajit Kumar Poddar v. State of West Bengal and Ors. and in W.P. No. 389 of 1997 - Utpal Chakraborty and Ors. v. The State of West Bengal and Ors. in this context.

The State Respondents on the other hand have submitted that the challenge to Section 22A of the Registration Act could not stand scrutiny as the Petitioners had not been able to indicate which particular provision of the Constitution had been violated by the Section. It is said that both the 1988 and 1995 notifications were issued in exercise of the statutory powers and were executive orders. On the question of classification it was submitted that the Salt Lake area within which the apartment complex of the society fell, was developed by the Government and was highly subsidised at public cost with the object of providing accommodation to the middle class and the Government had accordingly sought to take steps by issuance of the 1995 notification to ensure that such object was achieved by discouraging speculation in such property which was highly subsidised at public cost. It was submitted that merely because the Registrar of Co-operative Societies granted permission to the Petitioners to transfer the shares of the society inter se, did not mean that the permission of the Urban Development Department was obliged to be granted as the latter had a different object altogether it is finally submitted that the 1993 Act applied to the Petitioner''s case as the Petitioner No. 1 had applied for permission to transfer only after the 1993 Act came into force. According to the Respondents Section 22A of the Registration Act and the 1993 Act overrode the provisions of the Apartment Ownership Act and the Transfer of Property Act.

Before considering the submissions it is necessary to consider the relevant provisions of 1993 Act. Section 3 says that notwithstanding anything contained in any other law or in any other instrument or any decree or order of the Court, nothing contained in the Transfer of Property Act, 1882 or the Indian Contract Act, 1872 or the West Bengal Premises Tenancy Act, 1956 shall apply, shall be deemed to ever have applied, to transfer of any government land to a lessee.

Government Land has been defined in Section 2(e) of the Act as meaning any land comprised in a Government Estate which has been defined in Section 2(d) to mean, in relation to any local area, an area planned or developed by the State Government or any Government undertaking for residential or commercial purpose.

However, the inflexible restriction in the 1995 notification limiting transfers of government land to close relations has been to a large extent relaxed in the 1993 Act. Under the 1993 Act transfer of land may be effected by lessees to persons other than a relation. While Section 7 provides for transfer by Government land to relations, Section 8 provides for the transfer of the right of enjoyment of Government land by a lessee to any person for a limited period on account of his being unable to undertake the maintenance of any building. Section 9 provides for the transfer of management of government land by a lessee to any person by an instrument creating a power of attorney/Section 10 the disposal of Government land by the lessee to any person not being a relation.

Disposal of Government Land by lessee.-(1) Notwithstanding anything contained in this Act, a lessee, who intends to dispose of any Government land held by him on lease for pecuniary or other compelling reasons but who is unable to dispose of such Government land in favour of his relation, may make an application to the competent authority for permission for disposal of such Government land in favour of any person named in the application, not being a relation, in such manner as may be prescribed. A copy of every such application shall be sent by the lessee to the Secretary to the Government of West Bengal, Urban Development Department.

(2) On receipt of the application under Sub-section (1), the competent authority may, if it is satisfied after such enquiry as it thinks fit that the reasons stated by the lessee for the disposal of such Government land are cogent and that the person named in the application is eligible for allotment of such Government land under any scheme of allotment by the State Government of such Government land for the time being in force, and if the State Government does not give any notice to the competent authority within a period of sixty days from the date of the application under Sub-section (1) of its intention to exercise the right of pre-emption within a period of one hundred and twenty days from the date of the notice, grant permission for the disposal of such Government land in favour of the person named in the application under Sub-section (1) on such condition and in such form as may be prescribed:

Provided that if the State Government exercises the right of pre-emption within the period of one hundred and twenty days as aforesaid:

(a) the building, if any constructed by the lessee on such Government land shall be taken over by the State Government at such valuation as may be made by the competent authority on the basis of the cost of construction of such building less depreciation at the rate in vogue or at the market value of such building, whichever is less, and

(b) the lease of Government land shall determine upon payment to the lessee the value of such Government land which shall be the amount of salami or premium paid by him to the State Government in consideration of, the price thereof and an interest at the rate admissible, to the deposit in the savings, bank account, current at any nationalised bank:

Provided further that in the case of any dispute between the parties in respect of the valuation of the building, such dispute shall be decided by the competent authority and the decision of the competent authority shall be final and binding on both the parties.

Any order passed by the competent authority is appealable u/s 12 to the Appellant Authority constituted under the Act. Section 23 gives the State Government the power to dispense with or relax the requirement of any of the provisions of the Act in respect of any Government land to such extent and subject to such conditions as it may deem fit if it considers necessary to do so.

The Petitioners say that the 1993 Act does not apply because the transfer of the flat had taken place in 1991 even though no registration had taken place. But no distinction can be drawn between transfer of the immovable property and registration of a deed divesting the transferor of his right to immovable property of the value of more than Rs. 100. Unless registration takes place there can be no transfer of any such right in such immovable property. Transfer is effected by registration. This is clear from a reading of Section 54 of the Transfer of Property Act and Section 17(1)(b) of the Registration Act, 1908. The flat in question is admittedly valued at more than Rs. 100.00. Therefore by virtue of Section 22A read with the 1988 notification no registration, and consequently no transfer, could take place of the flat in question without the prior permission of the competent authority. What took place between the Petitioner in 1991 between the Petitioner Nos. 1 and 2 was merely an execution of an agreement for transfer of the flat and a transfer defacto but not a transfer de jure. The Petitioner now wants registration. The question of the Petitioner''s right to transfer the flat, therefore, will have to be considered with reference to the date of the application for permission i.e. September, 1997 at the earliest. By this time the 1993 Act had already come into force. The 1993 Act being applicable to the Petitioners case the Petitioners'' challenge to the 1995 notification is, in the circumstances, academic.

The submission of the Petitioners that the permission now required can only be by way of ratification of what had already taken place is unacceptable. The reference by the Petitioners to Section 269 of the Companies Act, 1956 in this context is wholly irrelevant. Section 269 of the Companies Act relates to the appointment of a managing or whole time director or manager. It provides for the grant of approval by the Central Government to such an appointment. The section specifically provides that the approval is ex post facto i.e. after the appointment is made. The word ''approval'' also indicates that the action of which approval is sought must precede it. There is a distinction between an approval of an action already taken and a permission which is expressly required to be obtained prior to the action.

Approval according to its dictionary meaning suggests that what has to be approved has already taken place; it is in the nature of ratification of what has already happened or taken place. The word ''approval'' in contrast with the words ''previous permission'' shows that the action is taken first and approval obtained afterwards. (See: Lord Krishna Textile Mills v. its Workmen : (1961) 1 L.L.J. 211)

In any event there was never, at least at any material point of time, an absolute right in the Petitioner No. 1 to legally effect a transfer of the flat to the Petitioner No. 2. The 1988 Notification, although it did not limit the person to whom transfer could be affected, required prior permission to be obtained from the Metropolitan Development Authority. The question of the Petitioner No. 1 being deprived of any such right by the 1993 Act does not arise. The authorities cited by the Petitioner in support of their submission have no application.

The principle enunciated by Maxwell on the interpretation of Statutes is that ''in general, when the substantive law is altered during the pendency of an action, the rights of the parties are decided according to the law as it existed when the action was begun, unless the new statute shows a clear intention to vary such rights''. The word ''action'' refers to a legal proceeding and not, as contended by the Petitioners, to an agreement between the parties.

Thus in Venugopala v. Krishnaswamy (Supra) the Federal Court had to consider whether a Court which had the jurisdiction to try a suit when it was instituted could be subsequently divested of such jurisdiction. The question arose in connection with a suit filed in respect of property, a large chunk of which was in Burma. Burma ceased to be a part of India on April 1, 1937. The Defendants contended that the Court had lost jurisdiction to deal with the Burma properties. The Division Bench of the Madras High Court in reversing the order of the trial Court, said that the right to continue a duly instituted suit was in the nature of a vested right and could not be taken away except by a clear indication to that effect.

Similarly, in United Provinces v. Atiqua Begum (Supra) cases were pending challenging certain orders of the government which were admittedly incompetent. During the pendency of the litigation an Act was passed covering the same subject matter. The Federal Court construed the provisions of the Act and found that there were no express words to show that pending actions were affected or the challenge to the earlier orders debarred. it was said:

Undoubtedly, an Act may in its operation be retrospective, and yet the extent of its retrospective character need not extend so far as to affect pending suits.

In this case, however, there was no pending litigation nor there any vested right in the Petitioners to obtain registration and therefore of transfer in 1991 The right even then was subject to Section 22A of the Registration Act. Now the right to registration of the transfer is subject to Section 4 of the 1993 Act. Section 4 of the Act overides Section 22A and provides:

Bar to registration of document-Notwithstanding anything contained in the Registration Act 1908 no registering officer shall register any document relating to the transfer of Government land held by any leasee on lease in favour of any person not being the State Government (sic) Government undertaking except with the permission granted by the competent authority in writing in this behalf.

The object of the 1993 Act as stated in its preamble is as follows

Whereas it is expedient to provide for the regulation of transfer of Government land leased to persons of different categories of income and different cross-section of people with a (sic) to preventing illegal transfer of such Government land and Section thereof for speculative purposes and ensuring the use of such Government land by persons, eligible for allotment of such Government land, for whom, and for the purpose for which, such Government land is intended and for certain incidental matters.

The above objects of the 1993 Act is to ensure that the housing provided by the State Government for persons of different income groups were in fact used by such persons and to see that the benefit conferred on them at subsidised rates at the expense of the public exchequer was not transferred into a personal profit making business. The policy cannot be faulted nor is it the case of the Petitioner that the State Government lacked the legislative competence to enact the statute.

That the right of transfer of Government land may be affected by statute has been recognised by the Supreme Court in State of West Bengal and Anr. v. Kailash Chandra Kapur and Ors. (Supra). In that case a lease for 999 years was granted by the Governor of West Bengal in Bidhannagar (Salt Lake) in Calcutta. The lessee had executed a will be questing leasehold premises in favour of the first Respondent, a stranger to the family. The lessee died. The legatee applied for mutation which was objected to on the ground that the legatee was not a member of the lessees family. The Supreme Court construed the covenants in the lease deed and found that Clause (12) of the lease dealt with the case of a lessee dying after executing a will. It was held that the heirs of the lessee, whether by virtue of testate or intestate succession, had a right by inheritance and that this was not a transfer and that-

Transfer connotes, normally, between two living persons during life; will takes effect after demise of the testator and transfer in that perspective becomes incongruous.

As, in that case, there was no such restrictive covenant contained relating to bequest in favour of a stranger it was said:

We find no express prohibition as at present under the terms of the lease. Unless the Government amends the rules or imposes appropriate restrictive covenants prohibiting the bequest in favour of the strangers or by enacting appropriate law, there would be no statutory power to impose such restrictions prohibiting such bequest in favour of the strangers. It is seen that the object of assignment of the government land in favour of the lessee is to provide him right to residence. If any sucy transfer is made contrary to the policy, obviously, it would be defeating the public purpose. But it would be open to the Government to regulate by appropriate convenants in the lease deed or appropriate statutory orders as per law or to make a law in this behalf. But so long as that is not done and in the light of the permissive language used in Clause (12) of the lease deed, it cannot be said that the bequest in favour of strangers inducting a stranger into the demised premises or the building erected thereon is not governed by the provisions of the regulation or that prior permission should be required in that behalf.

It is to be emphasized that the Supreme Court was not considering a transfer inter vivo, which is the case before me. But the observation quoted makes it abundantly clear that right may be curtailed by statute or statutory orders. The Supreme Court in fact took care to say:

This order does not preclude the Government from taking such step as is warranted under law to prohibit transfer in violation of the covenants or defeating the public policy.

That is exactly what the 1993 Act sets out to do. It is of interest that the decision of the Supreme Court was rendered on November 29 1996 and the 1993 Act came into force on March 4, 1997.

in the decision of Prabir Kumar Kar v. State of West Bengal (4) relied on by the Petitioners a Learned Single Judge of this Court had to consider the effect of Sections 2 and 3 of the Government Grants Act, 1895 in connection with Section 10 of the Transfer of Property Act. Section 10 of the Transfer of Property Act provides that except in certain cases a transfer of property, subject to a condition restraining alienation, would be void. Sections 2 and 3 of the Government Grants Act carved out a further exception to the application of Section 10 of the Transfer of Property Act in respect of government grants. In other words a government grant made with a condition restraining alienation would not be considered void. In that particular case a government grant had been made in the form of a lease. The lease contained no restrictions whatsoever on alienation. In the circumstances, the Learned Judge rightly, in my respectful opinion, held that the refusal to mutate the property in the name of the transferee by sighting the Government Grants Act was wrong.

The same Learned Judge in Tara Chand Dalmia v. State of West Bengal (Supra) followed his earlier decision in Prabir Kumar Kar (Supra) in setting aside a refusal by the Government to mutate transfer of a lease hold interest. The Court held that if the Government had intended to impose a restriction on assigning of a lease, a clause to that would have been included in the deed itself. There being no such clause, it was held that the Government could not refuse to mutate the names of the transferee in place of the original lessee.

Neither of the decisions dealt neither with the 1988 and 1995 notifications or the 1993 Act and are not material to this case. Also the Petitioners reliance on two unreported judgments of this Court viz., Sri Nirmal Kumar Lahiri and Anr. v. State of West Bengal (W.P. No. 1841 of 1996 judgment dated 23.7.96) and Dr. Ajit Kumar Poddar and Ors. v. State of West Bengal and Ors. (W.P. No. 2398 of 1996 judgment dated 21.11.96) is inapposite. Both the decisions were given before the 1993 Act came into force.

The next submission of the Petitioners namely, the 1993 Act did not apply to leasehold flats is unacceptable in the face of the clear provisions of the Act. Restrictions in the 1993 Act are on a lessee of a leasehold land. Land has been defined in Section 2(g) to include buildings. Transfer of government land has been defined in Section 2(m) of the Act as including the transfer of any right, title, interest or possession in such land, either in whole or in part. A flat being part of a building would therefore come within the definition of land and be subject to the same restrictions.

The fact that the lease executed by the Housing Board does not contain any restrictive clause is of no consequence. By virtue of Section 22, the 1993 Act has overriding effect notwithstanding anything to the contrary contained inter alia, in any contract. Similarly, by virtue of Section 22 the West Bengal Apartment Ownership Act, 1972 must be read subject to the provisions of the 1993 Act.

Section 22 reads as follows:

Act to have overriding effect. The provisions of this Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force or in any judgment, decree or order of any Court, tribunal or other authority, or in any instrument having effect by virtue of any law other than this Act, or in any contract, express or implied, or in any custom or usage.

Moreover, although the lease cast certain obligations on the Petitioner No. 1 to comply with the provisions of the West Bengal Apartment Ownership Act, the Petitioner No. 1 could not claim to be the owner of the flat in question. The Housing Board did not effect an absolute transfer by the lease deed and the lease deed itself provides for a right of re-entry and forfeiture by the Board (Vide Clause 3).

For all these reasons the reliefs as prayed for by the Petitioners in the writ application cannot be allowed in the manner claimed. However, as the 1993 Act allows transfer of governmental land to strangers u/s 10 by a lessee, the Petitioner No. 1 will be entitled to apply in the prescribed manner to the competent authority for transfer of his rights in the flat to the Petitioner No. 2 with a copy to the Secretary, Government of West Bengal, Urban Development Department. Upon receipt of the application the matter must be disposed of by the Competent Authority strictly in terms of such Section 2 of Section 10 and within the time frame specified therein after hearing the Petitioners and with a reasoned order in the event the permission is refused.

The writ application is accordingly disposed of. There will be no order as to costs.