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The Yamuna Expressway Industrial Development Authority’s (YEIDA) imposition of charges for the commercial transfer of land has been challenged by the South Indian Bank before the Allahabad High Court.
The South Indian Bank has challenged the validity of a YEIDA internal memo issued in 2017, which calls for the imposition of transfer charges for the transfer of a commercial plot of land at the rate of 10% of the market value/circle rate (whichever is higher). This is a rare instance where in an internal memo is being subject to such a challenge.
Opining that the matter requires further consideration, a Bench of Justices B Amit Sthalekar and Piyush Agrawal has restrained YEIDA was imposing any transfer charges on South Indian Bank in the meantime.
The South Indian Bank had been informed of the transfer charges in 2018, following a meeting with YEIDA. A sub-lease agreement had been created in favour of the bank for the transfer of certain land with respect to an industrial expressway project. A concession agreement for the project had originally been entered into in 2003.
However, the Bank was told by YEIDA that transfer charges would have to be paid before the transfer of land intended by the sub-lease could take place. This was first intimated by YEIDA representatives to the South Indian Bank during a meeting held in November 2018. YEIDA also said that the transfer charges were being levied on the basis of an internal memo, although exact details regarding the memo were not divulged at the time.
In February 2019, the Bank wrote to YEIDA twice, clarifying that the original concession agreement as well as the Master Lease did not envision the imposition of any additional charges, transfer charges or premiums before the transfer of land.
In support of this claim, the Bank’s petition before the Court refers to Clause (e) of Chapter IV of the Concession Agreement and Clause 4 of the Master Lease Deed. In this regard, it is stated,
“That, it is the case of the Petitioner that upon a bare perusal of the above clauses of the Concession Agreement and the Master Lease Deed, it is explicitly as well as impliedly clear that there does not exist any restriction whatsoever in relation to the sub lease … over the larger plot, including the Said Plot of the Petitioner, to any third party, without:
a. the requirement to seek any prior approval from the Respondent in this regard; and/or
b. Payment of any transfer charges this regard to the Respondent or to any other relevant authority.”
However, YEIDA insisted on the payment of such transfer charges, failing which it refused to grant the South Indian Bank the No-Objection Certificate (NoC) required for the registration of the sub-lease. In a meeting held on February 21, this year, YEIDA is also said to have said that the memo mandating such transfer charges was passing during an internal Board meeting in September 2017.
In its challenge to the validity of this memo, South Indian Bank has pointed out that the same was never notified by the authorities. Further, YEIDA has also not officially obtained the sanction of the concerned State authority to bring about the changes imposed by the memo. Therefore, it is only in the nature of an administrative order.
The imposition of transfer charges in this manner would be beyond the scope of the YEIDA’s jurisdiction, states the petition. It would fall afoul of its parent Act, The Uttar Pradesh Industrial Area Development Act, 1976.
As such, it has been contended before the High Court that the memo cannot take away the Bank’s rights under the Concession Agreement and Master Lease Agreement. In this background, the Bank has challenged the imposition of transfer charges by YEIDA as illegal, ultra vires, a violation of contractual obligations and an infringement of the Bank’s rights under Articles 14, 19 and 21 of the Constitution.
While challenging YEIDA’s illegal, highhanded and manipulative conduct in the matter, the South Indian Bank has also sought for the quashing of the 2017 internal memo altogether.
The matter has been posted to be taken up next on July 3.
The matter was argued by Senior Advocate Navin Sinha along with Parag Maini and Abhimanyu Chopra, Senior Associates at AZB & Partners, as well as Advocates Ram M Kaushik, Kaushalendra Nath Singh, Priyanka Midha. Standing counsel Aditya Bhushan Singhal appeared for the State.
Read the Allahabad High Court order: