Kanpur Sugar Works Ltd. Vs. State of
Bihar & Ors  INSC 55 (6 March 1970)
06/03/1970 SHAH, J.C.
CITATION: 1970 AIR 1539 1970 SCR (3) 903 1970
SCC (1) 628
Bihar Land Reforms Act (30 of 1950), ss. 5(1)
and 7(1)-Used us factory-Scope of.
The appellant was engaged in the business of
manufacture of sugar, in the respondent-State. It was in possession of
Zamindari property. Part of the area in its possession consisted of two
enclosures The factory buildings were situated in the inner enclosure and the
outer was used for residential quarters, garages, kitchens, clubs,
dispensaries, rest houses, out houses, office buildings, tubewell and water
tank, godown, cattle shed, weighbridge house etc.
Under the notification issued under the Bihar
land Reforms Act, 1950, the Zamindari vested in the State but homestead lands
and lands of the factory remained in the occupation of the appellant.
On the question whether the outer enclosure
was homestead land not liable to assessment under s. 5(1) of the Act or was
liable to assessment under s. 7(1).
HELD : Under s. 5(1) an intermediary is
entitled to retain possession of homestead lands as a tenant under the State
free of rent; and under s. 7(1) an intermediary is entitled to retain
possession as a tenant buildings or structures together with the lands on which
they stand subject to payment of such fair and equitable ground rent as may be
determined by the Collector if they are used as golas, factories or mills, for
the purpose of trade, manufacture or commerce. The expression employed is 'used
as' and not 'used for'. Therefore, merely because a factory has for the benefit
of the workmen and managerial staff working in the factory, constructed
buildings as quarters, clubs, kitchens, garage, dispensary, rest houses, out
houses etc., they cannot be deemed to fall Linder s. 7(1) when they are not
directly used as factory or mill buildings. The definition of 'factory' in the
Factories Act whose object and scheme are entirely different, cannot be a guide
in determining the meaning of the expression, 'factory' as used in Bihar Land
Reforms Act. [907 B-G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 169 of 1967.
Appeal from the judgment and decree dated
October 28, 1965 of the Patna High Court in Misc. Judicial Case No. 1262 of
M. C. Chagla, D. N. Mishra, J. B. Dadachanji
and O. C. Mathur, for the appellant.
D. Goburdhun, for the respondents.
904 The Judgment of the Court was delivered
by Shah, J. Kanppur Sugar Works Ltd.-a public limited Company- is engaged in
the business of manufacturing sugar in village Marhowrah, District Saran, in
the State of Bihar. Prior to 1956 it possessed a considerable-zamindari
property. Under a notification issued in exercise of the power under' the Bihar
Land Reforms Act 30 of 1950 the entire zamindari vested in the State with
effect from January 1, 1956. But by the provisions of the Act homestead lands
and lands of the factory remained in the occupation of the Company. The
Circle-Officer commenced a rent assessment proceeding under the Bihar Land
Reforms Act for determining-the rent payable by the Company. The Company
cliamed to classify lands in its occupation under three heads : (i) 12 bighas 9
kathas 7 dhurs on which the factory buildings stood, and on that account
assessable to rent under s. 7 of the Bihar Land Reforms Act, 1950; (ii) 50
bighas 3 kathas 13 dhurs of cultivable land under, Khas cultivation of the
Company liable to assessment of rent under s. 6 of the Act, and (iii) 71 bighas
2 kathas 12 dhurs as homestead land not liable to assessment under sub-s. (1)
of s. 5 of the Act.
By order dated February 10, 1961 the Circle
Officer fixed rent at the rate of -Rs. 187-8-0 per acre in respect of 80 bighas
16 kathas 151/2 dhurs of land under s. 7 of the Act.
The Circle Officer rejected the contention of
the Company that 71 bighas 2 kathas 12 dhurs of land on which there stood
residential bungalows, quarters, garage, kitchens, clubs, dispensary, rest
house, outhouses, office buildings, tube-well and water tank godown,
cattle-shed, weighbridge house etc. was homestead and was on that account
exempt from liability to pay rent. Appeal against that order was dismissed by
the Collector of Saran by his order dated August 6, 1962.
The Company then moved a petition in the High
Court of Patna for a writ quashing the order of the Circle Officer and the
Collector fixing the rent under s. 7 of the Bihar Land -Reforms Act, 1950, in
respect of the land claimed to be homestead. The High Court rejected the petition.
In the view of the High Court the expression "factory" could not mean
merely the place where the machinery is installed and the process for the
manufacture of sugar or distillation of liquor is carried on, but the whole
area of land including the courtyard necessary for carrying on various
The High Court recorded the conclusion as
follows "....... the buildings and structures used for the aforesaid
ancillary purposes of the factory must also be held to form part of the factory
and the land on which 90 5 they stand must include not only the actual site on
which the structures are erected but also the adjacent land necessary for the
convenient use of the said structures and buildings. The whole of the land
covered by the outer enclosure would, therefore, be, on a reasonable
interpretation of S. 7 (1) of the Act, included within the words "buildings
or structures" used as factories for the purpose of the said sub-section,
even though that area may include some vacant land as well." The High
Court further observed 'that the proviso to s. 5(1) of the Act had no
application, because (1) the staff quarters cannot be clearly demarcated from
the other structures and buildings located within the outer enclosure used for
the purpose of the factory, such as rest house, outhouses, office-buildings,
tube-well, water tanks, go downs, cattle-shed, weighbridge etc.; and (2) Though
the occupants of the staff quarters pay rent to the factory, nevertheless it
cannot be said that those quarters are used "for the purpose of letting
out on rent". The High Court then proceeded to state that "the mere
fact that some rent is incidentally collected from the occupants will not
detract from the main purpose for which the quarters are used, namely, to
facilitate the proper working of the factory. The occupation by -a member of
the staff of the factory of those quarters is that of a servant of the factory
and not that of an -ordinary tenant. It was not alleged, nor is there a finding
to the effect, that he can continue to occupy the quarters if he ceases to be a
member of the staff of the factory or else that he can sub-let the house to
some other person like an ordinary tenant. The relationship between the
occupant of these quarters and the factory continues to be that of a master and
servant and not that of an ordinary landlord and tenant." Against the
order dismissing the writ petition, this appeal has been filed with certificate
granted by the High Court.
In our view, the order passed by the High
Court cannot be sustained. It appears that there are two enclosures which
comprise the total area of 83 bighas odd in respect of which the dispute
arises. One is the inner enclosure in which are situate the buildings of the
factory in which-sugar is manufactured and the process of distillation of
liquor is carried on. The outer enclosure consists of an area of 71 bighas 2
kathas and 12 dhurs. In the statement of land in the Khas possession of the
Company all these lands are described as used for residential quarters,
cutcheri, dispensary, rest-house, bungalows, outhouses kitchen quarters,
latrines, garage, club, control 'office. water- tank. bakery house, cane office
quarters, godowns, cattle- shed weighbridge 10Sup Cl (NP)/70-13 90 6 house,
tube-well etc." The dispute raised by the Company is that the land on
which these buildings stand is homestead, and is governed by s. 5 of the Act.
By a notification issued under s. 3 of the
Bihar Land Reforms Act, 1950, the State Government may declare that an estate
or tenure of the proprietor or tenure-holder, specified in the notification has
passed to and become vested in the State. The consequences of vesting are set
out in s. 4. But the vesting under ss. 3 & 4 is subject to the provisions
of ss. 5, 6 & 7. Under sub-s. ) of s. 5 it is provided :
"With effect from the date of vesting,
all home steads comprised in an estate or tenure and being in the possession of
an intermediary on the date of such vesting shall, subject to the provisions of
sections 7A and 7B be deemed to be settled by the State with such inter-
mediary and he shall be entitled to retain possession of the land comprised in
such homesteads and to hold it as a tenant under the State free of rent
Provided that such homesteads as are used by the intermediary for purposes of
letting out on rent shall be subject to the payment of such fair and equitable
ground-rent as may be determined by the Collector in the prescribed
manner." Section 6 deals with the right of the previous holder of land
used for agricultural or horticultural purposes which were in khas possession
of an intermediary on the date of vesting. I this case, we are not concerned
With any dispute relating to such land. By S. 7 (1), insofar as it is relevant,
it is provided :
"Such buildings or structures together
with the lands on which they stand, other than any buildings used primarily as
offices or cutcheries referred to in clause, (a) of section 4, as were in the
possession of an intermediary at the commencement of this Act and used as
golas, factories or mills, for the purpose of trade, manufacture or commerce or
. . . and constructed or established and used for the aforesaid purposes before
the first day of January 1946, shall, . . . . be deemed to be settled by the
State with such intermediary and he shall be entitled to retain possession of
such buildings or structures together with the lands on which they stand as a
tenant under the State subject to the payment of such fair and equitable
ground-rent as may be determined by the Collector . . . ...
907 It is clear from a bare perusal of sub-s.
(1) of S. 7 that the buildings which are primarily used as offices or
cutcheries referred to in cl. (a) of s. 4 as were in the possession of an
intermediary at the commencement of the Act are excluded from the terms of s.
7(1). Again, sub-s. (1) only applies to such buildings or structures together
with the lands on which they stand which are used as golas, factories or mills
for the purpose of trade, manufacture or commerce or used for storing grains or
keeping cattle or implements for the purpose of agriculture. The expression
employed by the Legislature is "used as golas, factories or mills"
and not "used for golas, factories or mills". The expression
"lands on which they stand" may include the land which is necessary
for the efficient user of the building for the purpose for which it is intended
to be used. We are unable however to hold that because a factory has, for the
benefit of the workmen and managerial staff working in the factory, constructed
buildings used as bungalows, quarters for employees, clubs, kitchens, garage,
clubs, dispensary, rest house, outhouses etc., but which are not directly used
as factory or mill buildings, the buildings would be deemed to fall within s.
7(1) as buildings in the possession of an intermediary and used as golas,
factories or mills, In our judgment, these lands are homestead and are
claimable by an intermediary under s. 5 (1) : if they are used for the purpose
of letting out they would be liable to pay fair and equitable ground-rent under
the proviso to sub-s. (1) of s. 5.
The High Court was, we think, in error in
relying upon the definition of "factory" used in the Factories Act,
The scheme and object of the Factories Act
are different :
the Act is intended to regulate labour in
factories, to protect workmen from being subjected to unduly long working
hours, for making provision for healthy and sanitary conditions of service and
for protecting the workmen from industrial hazards. The definition of
"factory" in the Factories Act cannot be a guide, much less a useful
guide, in determining the meaning of the expression "factory" as used
in the Bihar Land Reforms Act,- 1950. The liability to pay rent under the Bihar
Land Reforms Act, 1950, on the footing that the land remained in the possession
of the intermediary on which buildings or structures used as golas, factories
or mills, for the purpose of trade, manufacture or commerce must be determined
on the terms used in the Bihar Land Reforms Act, and not by incorporating words
used in another statute of which the scheme and object are different.
The revenue authorities erred in holding that
the entire area ,of 83 bighas odd was liable to be assessed to rent under S.
7(1) of the Bihar Land Reforms Act, 1950.
Undoubtedly -an area of 908 12 bighas 9
kathas 7 dhurs in liable to be assessed to rent under S. 7(1) of the Act. If
there are other lands which strictly fall within the expression "buildings
or structures together with the lands" used as golas, factories or mills
for the purpose of trade, manufacture or commerce, it will be open to the
Collector to assess those lands to rent under S. 7 (1), but the lands not
covered by buildings and structures used for golas, factories or mills, will be
governed by s. 5 (1) of the Act.
We are, on the materials on the record,
unable to specify the buildings and lands falling within S. 7 of the Act for
the purpose of determination of assessment of rent. The evidence oft the record
before us is not clear as to what structures or buildings stand on the lands in
the outer enclosure and the purpose for which they are used. We are also not
clear as to the precise meaning of the expression "golas" used in s.
7-the expression not being defined in the Act.
The appeal is allowed and the orders of the
Circle Officer and of the Collector assessing rent in respect of 71 bighas 2
kathas and 12 dhurs in the outer enclosure in respect of which rent has been
assessed under s. 7 of the Bihar Land Reforms Act, 1950, are quashed. The
appellant will be entitled to its costs in this Court and in the High Court.