The main legal point established in the judgment is that compounding fee for unauthorized construction is leviable only with regard to the actual area of unauthorized construction, as per the interpretation of Section 187-A of the Madhya Pradesh Municipalities Act, 1961.

( 1. ) THE petitioner has approached this Court raising a challenge to a Resolution No. 369 dated May 23, 2007, passed by the respondent-Municipality, and consequential demand raised through letter dated May 24, 2007, by the Municipality, whereby a demand of Rs. 40,69,073/-, as compounding charges, has been raised against the petitioner-company.

( 2. ) THE petitioner-company had purchased agricultural land measuring 4. 164 hectares through a registered sale deed dated July 5, 2005, with a view to establish a Farmers Facility centre and Godown, at Village Padliyakala Tehsil Nadga, District ujjain. After purchase, the said land was duly mutated in the revenue record in the name of the petitioner-company. For using the land for the purpose, for which it had been purchased, a diversion order was sought and was issued by the Sub divisional Officer, Nagda, and the land in question was permitted to be used for commercial use. The requisite plan for construction of the Farmers Facility Centre and Godown was also approved by the Town and Country Planning Department. A corresponding building permission was also sought by the petitioner-company from the respondent-Municipality, vide an application dated December 23, 2005, received in the Office of municipality on December 24, 2005.

( 3. ) THE petitioner-company claiming that the said application had never been rejected by the Municipality, therefore, under Section 187 of the Act, deemed permission was to be treated as having been granted, raised a construction of the Farmers Facility Centre and Godown.

( 4. ) HOWEVER, a demand was raised against the petitioner-company for an amount of Rs. 22,74,662/-, through a demand notice dated February 1, 2006. The said demand included development charges of Rs. 22,40,232/- raised against the petitioner-company. The petitioner-company raised a contest with regard to the aforesaid development charges to the extent of Rs. 22,40,232/-and maintained that only balance amount was to be paid by the petitioner-company.

( 5. ) CONSEQUENTLY, the petitioner-company approached this Court through a writ petition, being W. P. No. 1699/2006. An interim order was passed by this Court on April 27, 2006, in the said writ petition. The petitioner-company was directed to deposit an amount of Rs. 11,00,000/- within a period of one week from the date of the said order. It was also required to furnish a bank guarantee with regard to the remaining amount. With regard to any further construction to be raised by the petitioner-company, it was directed by the Court that the petitioner-company would be required to submit building plan, which would be dealt with in accordance with law, by the respondent-Municipality.

( 6. ) ULTIMATELY, the writ petition filed by the petitioner-company was taken up for final hearing and disposed of on september 26, 2006. The demand raised by the Municipality towards development and compounding charges was quashed and following directions were issued:

"1. That the petitioner shall submit a detailed representation before the respondent No. 2, regarding the nature of land and the actual area of unauthorized construction within a week.

2. If such a representation is submitted by the petitioner, the respondents shall submit the same before President-in-Council, who shall consider the same in accordance with section 187-A of the Act and also in accordance with the Guidelines issued by collector for the year 2006-07 and shall raise the demand accordingly.

3. The respondents shall pass a necessary order within a period of two weeks from the date of receipt of representation after giving an opportunity of hearing to the petitioner.

4. The amount already deposited by petitioner in compliance of the interim order passed by this Court shall be adjusted by the respondents.

5. Since the letter of demand annexure P/6 relating to Development charges has been quashed, therefore, the bank guarantee deposited by the petitioner in pursuance of the interim order passed