Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Gau) 1136

THE GAUHATI HIGH COURT, (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
ANJAN MONI KALITA, J.

Arunoday Construction Co. (P) Ltd, Represented By Its One Of The Director Namely Sri Avadesh Lahoty, Fathers Name Sri Om Prakash Lahoty – Petitioner
Versus
The Union Of India, Represented By The Secretary, Ministry Of Railways And Ors. – Respondents
WP(C)/5082 of 2022
Decided On : 02-06-2026

Advocates Appeared:
For the Petitioner:Mr. A. Goyal. Advocate
For the Respondents: Ms B. Sarma, CGC

Where an authority continues to permit land usage by issuing multiple work orders after the expiry of a formal license, the occupation is not 'unauthorized.' Consequently, fee assessments must follow policy guidelines for 'pending cases' rather than treating the matter as a 'fresh case' based on current market valuations.

Headnote:(A) Constitution of India - Article 226 - Writ jurisdiction - Challenge to arbitrary demand notices for license fees - Breach of departmental policy guidelines.

(B) Land Licensing - Policy circulars regarding commercial usage of land - Applicability of assessment criteria - Distinction between 'fresh cases' and 'pending cases' - Continued user permitted by authority through issuance of multiple work orders post-expiry of formal agreement precludes classification of occupation as unauthorized - License fee calculation must follow existing guidelines for pending cases rather than market-linked rates for new allotments. (Paras 20, 22, 27)

Facts of the case:
The petitioner, a manufacturer, occupied land based on a license agreement which expired. The authority continued to issue work orders for over a decade, allowing the manufacturer to utilize the land for contractual obligations. Subsequently, the authority issued demand notices for license fees, characterizing the possession as unauthorized and subjecting it to a fresh assessment based on current market rates.

Findings of Court:
The consistent conduct of the authority in issuing work orders while the petitioner remained on the land negates the contention that the possession was unauthorized. The relationship is deemed a 'pending case' under the relevant policy circulars, requiring fee calculation based on established formulas rather than fresh market valuation.

Issues: Whether the continued occupation of land after the expiration of a formal license, accompanied by the issuance of multiple work orders, renders the possession unauthorized and subjects it to 'fresh case' assessment criteria.

Ratio Decidendi: Where an authority continuously engages a party for work and permits land use post-expiry of a formal agreement, it recognizes the continuity of the relationship. Such a scenario constitutes a 'pending case' under the governing policy guidelines, and the fees must be determined according to the procedures for subsisting or extended agreements, not as a new market-value-based allotment.

Result: Petition allowed; impugned demand notices set aside and matter remanded for re-calculation.

JUDGMENT :

ANJAN MONI KALITA, J.

Heard Mr. A. Goyal, learned counsel appearing for the petitioner. Also heard Ms B. Sarma, learned CGC appearing for the respondents.

2. The instant application under Article 226 of the Constitution of India has been filed by the petitioner, challenging the following Demand notices issued by the Railway Authorities to the petitioner: -

i) Demand notice dated 01.01.2009, whereby the Railway Authorities ex-parte revised the land licence fees for the period 01.04.2008 to 31.03.2009 and thereby it was directed to recover Rs.9,39,132/- from the petitioner.

ii) Demand notice dated 12.01.2009, whereby the Railway Authorities ex-parte revised the land licence fees for the period of 01.04.2002 to 31.3.2008 and thereby it was directed to recover Rs. 39,59,246/- from the petitioner.

iii) Demand notice dated 06.10.2009, whereby the Railway Authorities ex-parte revised the land licence fees for the total period of 01.01.2002 to 2010and deducted an amount of Rs.59,03,259/- from the running bills of the petitioner.

3. The petitioner challenged the aforesaid demand notices on the ground that the Railway Authorities have violated the guidelines of the Railways Board as contained in the circular No.2005/LML/18/8 dated 10.02.2005 andcircular No.W/214/Pt-VIII/W-4 dated 07.09.2005. The petitioner contends that since the aforesaid demand notices were issued in violation of the aforesaid two circulars, the demand notices are illegal, without authority of law and therefore, the same are liable to be set aside and quashed.

4. The petitioner’s case is that the petitioner is a registered small-scale industry engaged in the business of manufacturing Concrete Sleepers at their factory situated in Jagiroad, Morigaon, Assam for use by the respondents. The petitioner was awarded a contract for manufacture and supply of Monoblock Concrete Sleepers of metre-gauge railway to the Railway authorities to be supplied within a period of 5(five) years from the date of the contract order No.88/Track-II/22/18/1 dated 27.04.1988. Pursuant to the aforesaid contract, a Lease Agreement dated 28.06.1989 was executed between the petitioner and the Railway Authorities. Accordingly, the petitioner set up a manufacturing unit at Jagiroad covered by plot No.253 admeasuring an area of 8.34 Bighas (11,491.094 sq. mtrs) and started manufacturing for supplying of Concrete Sleepers from the said unit upon payment of required licence fee for used of the land provided by the respondent authorities for the aforesaid purpose. Subsequently, another plot of land admeasuring about 9,108.531 sq. mtrs was allowed to be used by the petitioner w.e.f. 01.04.2003. Therefore, a total area of land under the possession of the petitioner is about 20,599.625 sq. mtrs.

5. It is contended by the petitioner that from 1988 till 2010, the Railway Authorities have issued 35 numbers of work orders in favour of the petitioner and one of the last work orders was issued on 17.12.2009, for which, necessary contract agreement was executed on 25.03.2010 vide No.CE/CS-21 of 2010. It is contended by the petitioner that the petitioner had paid the licence fees w.e.f. December, 1988 till November, 2008 to the respondent authorities as per the circulars issued by the respondent authorities.

6. It is further the case of the petitioner that Railway Board had issued a circular dated 10.02.2005 being No.2005/LML/18/8 to all the General Managers of the Indian Railways and Production Units regarding Policy guidelines for commercial licensing of railway land. In terms of the Clause 3 of the aforesaid circular dated 10.02.2005, for fixing of rates of licence fee, it was provided that the licence fee of plots would be continued to be fixed as a percentage of the land value, determined as per the procedure detailed in para-5 of the said circular. The percentage applicable w.e.f. 01.04.2004 to various types of plots have been described therein. Clause 4 of the aforesaid circular provides for fixation of land

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