V. SIVARAMAN NAIR, J.

( 1 ) PETITIONER claims to be a Small Scale Industry. It purchased Plot Nos. 138 to 141 in Medchal Industrial Estate. Those plots have been developed by the industrial Infrastructurecorporation of thestate. Petitioner had paid the value fixed by the Corporation. According to it, the amount spent by the Corporation on developmentof the land was also included in the price. After the purchase, it applied to Medchal Gram Panchayat within whose area the Industrial Estate lies for permission to construct an industrial building. That application was submitted on 1st September, 1981. It commenced construction thereafter and completed the same in April, 1982. On 24th November, 1982,1st respondent hyderabad Urban Development Authority - issued a notice under Section 42 of the Andhra Pradesh Urban Areas (Development) Act, 1975 requiring it to demolish the unauthorised construction on the ground that it had not obtained. permission as provided for in Sections 13 and 14 of the Act. Petitioner filed an appeal to the second respondent - Vice-Chairman of the Hyderabad Urban development Authority - under Section 42 (2) of the Act. That appeal was filed on 11th December, 1982. The reliefs which the petitioner sought in the appeal were to withdraw the demolition notice issued by the Competent Authority under Section 42 (1) of the Act and to grant it ten days time for submission of necessary plans for approval. Thereafter, the third respondent-Competent authority-directed the petitioner to submit plans and remit an amount of rs. 8,667-50 ps towards application fee. By a letter dated 29th April, 1983, petitioner sought details of the charges from the respondents. In a reply dated 3rd June, 1983, petitioner was required to may the application fee of Rs. 8,667-50 ps. It complied with those demands by filling an application and remitting the application fee as abovementioned. By a subsequent letter dated 27th July, 1983, it was required to pay anamountof Rs. 38,115-15 ps to wards development charges and Rs. 10,000/- to wards compounding fee under the proviso to Section 41 of the Act. That was followed by a Demand Notice dated 24th September, 1983. It was at that stage that the petitioner filed writ petition No. 9276 of 1983 seeking a declaration that the above demand letter dated 24th September, 1983 was arbitrary, illegal and unenforceable. That writ petition was admitted on 28th October, 1983. The amount covered by the demand was not recovered during thependency of the writ petition. Subsequently, by another notice dated 5th May, 1987, development charges at the enhanced rate amounting to rs. 1,19,702/- and the compounding fee of Rs. 10,000/- were again demanded. Petitioner then filed Writ Petition No. 7827 of 1987 seeking a declaration that the letter dated 5th May, 1987 was arbitrary, illegal and unenforceable. We have heared these two writ petitions together.

( 2 ) COUNSEL for the petitioner submitted that the demand of development charge to the extent of Rs. 39,115-15 ps was not supported by authority of law. He submitted further that there was no occasion for levy of compounding fee of Rs. 10,000/- under the proviso to Section 11 of the Act,since the petitioner had not committed any violation of the statute. Counsel submitted that as soon as the petitioner was required to apply for permission under Sections 13 and 14 of the Act it had complied with therequisitionand had also remitted theapplication fee. Counsel submitted that the very fact that the petitioner commenced construction only after intimating the Medchal Gram Panchayat on 1st september, 1981 of its intention to construct is proof of its bona fides. Counsel also submitted that the petitioner was under an impression that engaging in construction in any area developed by the Corporation owned by the government, which had collected expenses for developing the area into an industrial Estate, did not require any further permission from the Hyderabad urban Developmen

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