Karnataka HC sets aside retrospective validation of ground rent collected by BBMP

Justice R Devdas passed this order while allowing hundreds of petitions filed by the residents and builders raising a challenge to the amendments raised by the BBMP.

Bengaluru: In a setback to the state government, the Karnataka High Court has set aside the retrospective validation of amount collected by the Bruhat Bengaluru Mahanagara Palike (BBMP) as ground rent, licence fee, scrutiny fee, security deposit etc from residents and builders in Bengaluru city.

Justice R Devdas passed this order while allowing hundreds of petitions filed by the residents and builders raising a challenge to the amendments and the consequential imposts/levy in terms of demands raised by the BBMP.

The court set aside the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2021 as well as the Karnataka Municipal Corporations and Certain Other Law (Amendment) Act, 2023.

In October 2021, a single bench of the high court quashed the very levies as unenforceable stating that such action was based on circulars which had no force of law. The state government and the BBMP chose to amend and insert the provisions in the Karnataka Municipal Corporations Act, 1976 and the BBMP Act, 2020 with retrospective effect at the time of sanction of building plans and grant of commencement certificate and completion certificate.

In these fresh petitions challenging the amendment, the petitioners that the levy and imposts in the matter of consideration of the applications for plan sanction, issuance of completion certificate and issuance of occupancy certificate should have uniform application and cannot vary from locality to locality and the same does not depend on the market value of the properties.

The petitioners contended that by way of the amendment, such fee is once again linked to guidance value. It was also submitted that empirical data is not collected before proceeding to introduce the impugned provisions in the Act and the Rules.

After perusing the provisions the court noted that while the state and the BBMP had an opportunity to reconsider the rate of levy and imposts while formulating the new law/provisions, they simply reiterated the rate of levy and imposts which were struck down in the 2021 judgement.

“The BBMP did not place any material before the Government and the Government did not undertake any exercise to collect empirical data to fix the rates and provide any reason to link the rates with the guidance value,” Justice Devdas said.

The court further said, “It is never the case of the Government or the BBMP that the impugned levy and imposts are in the nature of tax. Therefore, when admittedly, the impugned levy and imposts are in the nature of fee, leviable and collectable on account of the services rendered by the BBMP, while considering the applications for plan sanction, issuance of completion certificate and issuance of occupancy certificate, the applicable rates should be commensurate to the services rendered by the BBMP. In other words, the concept of quid pro quo is definitely applicable in the facts and circumstances of the case. “

The court also said that there is no acceptable reason or logic in linking the rates with the guidance value. “Apparently, there is no rational nexus between the rates and linking of the same to the guidance value. Therefore, this Court is also of the considered opinion that the linking of the impugned levy and imposts to the guidance value cannot be sustained,” the court said.

The court said the ground rents linked with the guidance value has caused anguish and agony to the citizens. “While on the one hand, the statutory provision mandates public roads and pavements to be scrupulously maintained for public use, on the other hand, such provision being made in the Building Bye-laws to stock construction materials on public roads/ pavements would militate against the statutory provisions,” the court said.